FTC Dodges ICANN Request for Guidance on Legality of .Sucks Pricing

Ramirez said she “cannot comment on the existence of any pending investigations, [but] I can assure you that the FTC will monitor the actions of registries and other actors in this arena.” Ramirez said the FTC had raised concerns about the potential for increased risk of “consumer confusion” over ICANN’s rollout of the new gTLDs in policy recommendations the agency submitted in 2011. Many registries “have also engaged in troubling tactics, even if not as egregious as those of Vox Populi,” and those issues aren’t ones “that can be feasibly addressed on a case-by-case basis,” Ramirez said.

ICANN should “consider whether the current rights protection mechanisms adequately perform their intended function,” Ramirez said. Vox Populi and others “may be violating the spirit, even if not the letter,” of current ICANN mechanisms like the Trademark Clearinghouse, which means stronger mechanisms or amendments to registry agreements may be needed "to ensure that IP rights holders are adequately protected," Ramirez said. ICANN needs to “take steps” to address verification issues for gTLDs associated with highly regulated industries like the .bank gTLD, Ramirez said. She noted the ICANN board’s rejection of its Governmental Advisory Committee (GAC) recommendation on domain owner credential verification, including screening those credentials before a domain owner does business with the public. The “more lax approach” ICANN adopted, which requires domain owners only to “represent” that they have the proper credentials, “increases the risk of consumer fraud,” Ramirez said. ICANN also “needs to address the potential for consumer confusion regarding new gTLDs” by encouraging the best practice of having all domain name holders “prominently identify themselves to the public on their individual websites,” Ramirez said. Vox Populi has marketed its .sucks domains to both activists seeking to voice complaints and to executives seeking to improve customer satisfaction, she said.

“We greatly appreciate [Ramirez’s] stated understanding and appreciation of the importance of the concerns ICANN had conveyed regarding the .SUCKS gTLD rollout, as well as the broader set of consumer protection issues relating to the new gTLD program that the FTC has restated in the Chairwoman’s letter,” ICANN General Counsel John Jeffrey said in a statement to us. “The FTC’s comments on consumer protection issues throughout the new gTLD program have been an important part of the dialogue of the ICANN community relating to these topics.”

Vox Populi CEO John Berard told us he’s not surprised by the FTC’s response to ICANN’s request, noting that “we didn’t think there was anything to see here either.” Berard has previously disputed criticism of Vox Populi’s pricing practices (see 1503180011) and the registry’s lawyers said in a letter to ICANN earlier this month that the nonprofit should cease actions that would “impede Vox Populi's ability to operate” the .sucks registry (see 1505120045). “By every measure, we have stayed within the lines” of ICANN’s current policies for the new gTLDs, Berard said. The FTC’s recommendations to ICANN for policy changes to the gTLD program are generally “good advice,” though Vox Populi will need to “take a harder look at them” before it decides whether to voluntarily make changes to its own policies, Berard said.

Vox Populi announced Thursday that it’s pushing the sunrise period for the .sucks gTLD to June 19, with the gTLD now set to become publicly available June 21. The sunrise period was previously to end Friday. “We are concerned about the extent of awareness and rush, and so have decided that the responsible move is to add a bit more time to the equation,” said Vox Populi Chief Operating Officer Christina Beavis in an email.

The FTC’s letter “made very clear that Vox Populi hasn’t broken any laws under the FTC’s purview” and placed the onus for improving gTLD policies back onto ICANN, FairWinds Partners CEO Nao Matsukata said in an interview. The FTC has traditionally “been very reserved about making comments about things that are going on at ICANN,” Matsukata said. “They’re basically telling ICANN to go back to their community and work with GAC to improve this situation.” The FTC “is not interested in being ambiguous on this issue,” he said. ICANN’s request for federal regulatory involvement in the .sucks controversy also raises questions about how ICANN decides which issues require government action, which has the potential to be a “slippery slope,” Matsukata said. “If you have websites that are pirating and selling counterfeit goods, is that not something you should go to law enforcement about?” Milton Mueller, Syracuse University professor of information studies, said he believes ICANN’s decision to take the .sucks controversy to federal regulators “is another example of the undue influence that American trademark owners” have on the nonprofit’s decision-making process.

The FTC is putting responsibility for policing gTLD registries “back on ICANN’s shoulders,” said Squire Patton Internet and IP lawyer Deborah Lodge. Ramirez’s recommendations highlight important verification issues within the gTLD program, particularly with the upcoming rollout of the .bank gTLD, Lodge said. Ramirez’s letter “reiterated the need for domain name holders to make it clear who they’re speaking on behalf of,” and that the FTC needs to modify registry agreements to more clearly indicate that misrepresentation violates those agreements, Lodge said.