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Reconsideration Request 04-3

16 November 2004

Subject: ICANN's purported consent to the revision of the form of the .com and .net Registry-Registrar Agreements proposed by VeriSign, Inc.
From: Bobby N. Turnage, Jr., Vice President and General Counsel, Network Solutions
Date: 16 November 2004

Pursuant to Article IV, Section 2 of the Bylaws for Internet Corporation for Assigned Names and Numbers (“ICANN”), Network Solutions, LLC (“NSL”) submits this Request for Reconsideration and provides the following information as required by Article IV, Section 2.6 of the ICANN Bylaws. Nothing contained in this Request shall constitute a waiver of any rights, remedies or defenses NSL may have now or in the future concerning this or any other subject matter.

a. Requesting party contact information
Network Solutions, LLC, 13200 Woodland Park Drive, Herndon, Virginia, 20170, Bobby N. Turnage, Jr., Vice President and General Counsel, Network Solutions, LLC, 13200 Woodland Park Road, Herndon, Virginia 20171, (P) 703-668-5500, (F) 703-668-5959, email bturnage@networksolutions.com

b. Action to be reviewed
ICANN’s purported consent to the revision of the form of the .com and .net Registry-Registrar Agreements proposed by VeriSign, Inc. (“VeriSign”). This consent was given by ICANN without any notice to or input from Accredited Registrars.

c. Date of action to be reviewed
The purported ICANN consent was contained in a letter apparently sent from Daniel E. Halloran, Deputy General Counsel of ICANN to Charles A. Gomes, Vice President of VeriSign on November 1, 2004. NSL was first provided with a copy of the letter by VeriSign on November 10, 2004.

d. Adverse affects of action
The adverse consequences of the action taken by ICANN to NSL (and other .com and .net Registrars) are far-reaching and severe. By consenting to the revisions of the Registry-Registrar Agreements between VeriSign and NSL (and between VeriSign and other Registrars) proposed by VeriSign, without any notice to affected parties or allowing for any comments by those affected parties, ICANN has violated its own standards and procedures and it has violated the terms of the Registrar Accreditation Agreement. In addition, the VeriSign-sponsored revisions to the Registry-Registrar Agreements violate ICANN’s newly implemented Policy on Transfer of Registrations between Registrars (the “Transfer Policy”) by allowing VeriSign to refuse to undo an improper transfer under certain circumstances, even though an “undo” is otherwise expressly required under the Transfer Policy. Finally, the proposed revisions to the Registry-Registrar Agreements materially change the manner in which the Registry-Registrar Agreements may be amended in the future by granting VeriSign the unilateral power to amend the Registry-Registrar Agreements without ICANN consent upon thirty (30) days’ prior written notice to Registrars.

e. Extent of adverse affect
NSL submits that each and every Registrar under the .com and .net Registry-Registrar Agreements, as well as all registrants of domain names with the .com or .net TLD, will be adversely affected by the ICANN action.

f. Request for temporary stay
NSL requests a temporary stay of ICANN’s apparent consent to the VeriSign-sponsored revisions to the Registry-Registrar Agreements. Additionally, if ICANN does not require VeriSign to comply with the Transfer Policy and provide a First Level dispute process for all registrars (without VeriSign-imposed conditions not permitted in the Transfer Policy), NSL also requests that enforcement of the Transfer Policy be stayed until such time as a fully-functional First Level dispute procedure that is available to all Registrars has been implemented. If a stay of the consent is not granted, VeriSign will not provide the “First Level” dispute procedure to all Registrars as required under the Transfer Policy. In addition, if a stay of the consent is not granted, VeriSign may attempt to declare that the Registrars that have not executed these over-reaching and improper Amendments are in default of the Registry-Registrar Agreements. Finally, if VeriSign refuses to comply with the requirements of the Transfer Policy as stated, and a stay of the enforcement of the Transfer Policy is not granted, Registrars who are not willing to sign the overreaching and improperly approved amendments will not, according to VeriSign, have access to the less expensive and more timely First Level dispute process provided for (and required) in the Transfer Policy.

g. Facts presented to the staff and violation of ICANN policies
Given the secretive nature in which VerSign sought and ICANN apparently provided consent to the revision of the form .com and .net Registry-Registrar Agreements, NSL is unable to provide a detailed explanation of the facts presented to the ICANN staff or the basis for the staff’s action other than the limited information contained in the “soft copy” of an unsigned letter dated November 1, 2004 from Daniel E. Halloran to Charles A. Gomes. A copy of the unsigned letter accompanies this Request for Reconsideration as Exhibit 1. NSL does not have the email to Kurt Pritz referred to in this letter or the actual text of the proposed revisions provided to ICANN. The only rationale for this action contained in the email from ICANN is a comment thanking VeriSign for sending “the proposed revisions to the .COM and .NET registry-registrar agreements which will facilitate the implementation of the new transfer policy in those TLDs.” There is no discussion concerning the provision in the proposed Amendments purporting to allow VeriSign to refuse to undo an improper transfer under the Transfer Policy or granting to VeriSign the unilateral power to amend the Registry-Registrar Agreements in the future on thirty days’ written notice to the Registrar.

VeriSign sent the proposed Amendments to the Registry-Registrar Agreements to NSL at 5:09 p.m. on November 2, 2004, by an email from Barbara Knight. A copy of that email and the two proposed Amendments accompany this Request for Reconsideration as Exhibit 2. In that email, VeriSign states that it is providing notice that the Registry-Registrar Agreements “are being amended to update Exhibit B with the new ICANN Policy on Transfer of Registrations between Registrars effective 12 November 2004.” In its email, VeriSign fails to state that the proposed amendment not only substitutes a new Exhibit B implementing the recently adopted Transfer Policy, but that it also exempts VeriSign from complying with the terms of the Transfer Policy in certain instances and it materially alters the manner in which the Registry-Registrar Agreements may be amended in the future.

ICANN’s provision of its consent to the respective Registry-Registrar Agreement amendments (the “Amendments”) proposed by VeriSign was inconsistent with, in direct conflict with, and in breach of ICANN’s policies, procedures and agreements in at least three respects. First, ICANN granted the consent without any input from or notice to the parties that would be directly impacted by the proposed Amendments – the Registrars. Second, paragraph 3 of the Amendments gives VeriSign the right to refuse to undo an improper transfer in circumstances where the Tansfers Policy and the Registrar Transfer Dispute Resolution Policy (the “TDRP”) otherwise require VeriSign to undo a transfer, contrary to the express requirements of such policies. Third, ICANN has improperly consented to VeriSign’s attempt to use the implementation of the Transfer Policy as a vehicle to materially change the manner in which the Registry-Registrar Agreements can be amended in the future so that VeriSign would have the unilateral power to amend the Agreements on thirty days’ notice to the Registrar.

ICANN VIOLATED ITS POLICIES AND PROCEDURES AND THE TERMS OF THE REGISTRAR ACCREDITATION AGREEMENT

ICANN consented to these far-reaching amendments to the Registry-Registrar Agreements without any notice to, or input from, the Registrars. As set forth in the ICANN Bylaws, ICANN’s core values include:

Employing open and transparent policy development mechanisms that (i) promote well-informed decisions based on expert advice, and (ii) ensure that those entities most affected can assist in the policy development process.

Acting with a speed that is responsive to the needs of the Internet while, as part of the decision-making process, obtaining informed input from those entities most affected.

Article III of the ICANN Bylaws, Section 1 titled PURPOSE also provides “ICANN and its constituent bodies shall operate to the maximum extent feasible in an open and transparent manner and consistent with procedures designed to ensure fairness.”

In addition, the Registrar Accreditation Agreement provides in 2.3.1 that ICANN shall “exercise its responsibilities in an open and transparent manner.”

The manner in which this “consent” was provided by ICANN was far from open or transparent and it did not seek any input from those entities most affected by the action – the Registrars. Apparently, VeriSign sent a request to ICANN by email on October 27, 2004, containing a version of revisions to the Registry-Registrar Agreements that was never provided to the Registrars before it was submitted, and ICANN did not provide any notice to the Registrars or the public that it was considering approving amendments to the Registry-Registrar Agreements.

Finally, there are questions as to whether the appropriate entities have approved the revisions to the Registry-Registrar Agreements. One question is whether the Department of Commerce (“DOC”) was required to approve the revisions to the Registry-Registrar Agreements suggested by VeriSign. As set forth in Amendment 3 to the Memorandum of Understanding between the DOC and ICANN, ICANN is to obtain DOC approval of any material amendment to the .com and .net Registry Agreements. The Registry-Registrar Agreements are attached to and a part of those Agreements. The amendments proposed by VeriSIgn to the Registry-Registrar Agreements are material in that they not only implement new policies and procedures, but they provide VeriSign with the unilateral power to amend the Registry-Registrar Agreements. In addition, there is a question concerning whether the ICANN Board of Directors considered and approved VeriSign’s request.

Accordingly, ICANN’s consent to the VeriSign-proposed changes to the Registry-Registrar Agreements was improper and should be withdrawn. Consent in this context, if any, should be obtained pursuant to the requirements of ICANN’s bylaws and the Registrar Accreditation Agreement.

PARAGRAPH 3 OF THE VERISIGN AMENDMENT
CONFLICTS WITH THE POLICY ON TRANSFER OF REGISTRATIONS
BETWEEN REGISTRARS AND THE REGISTRAR TRANSFER DISPUTE POLICY

The Transfer Policy, in Section A.6, clearly requires that Registries “must” undo a transfer within 14 days of a Registry dispute decision to reverse a transfer unless a court action is filed. Additionally, Section C of the Transfer Policy, further obligates Registries to follow the procedures set out in the TDRP:

Procedures for handling disputes concerning inter-registrar transfers are set forth in the Transfer Dispute Resolution Policy. Procedures in this policy must be followed by the applicable Registry Operators and ICANN accredited Registrars.

(Emphasis added.) Thus, where the facts warrant a reversal of a transfer in a first-level dispute at the Registry, the Registry is obligated to undo the transfer within 14 days unless a court action is filed. This is in accordance with the Transfer Policy.

In consenting to the amendments to the Registry-Registrar Agreements proposed by VeriSign, however, ICANN has allowed VeriSign to refuse to comply with the Transfer Policy and its TDRP, in direct violation of that Policy. Paragraph 3 of the proposed Amendments states:

Undo Command
REGISTRAR acknowledges and agrees that VERISIGN shall have no obligation to undo a transfer in accordance with the Transfer Policy if both REGISTRAR and the other Registrar to the dispute have not executed amendments to their .COM [or .NET] Registry-Registrar Agreement with VERISIGN to include the Transfer Policy.

As recently as November 11, 2004, VeriSign indicated that it interprets this language to allow it to refuse to undo a transfer if either of the Registrars to the dispute has not executed the amendmen 1. Therefore, according to VeriSign’s interpretation of its proposed Amendments, if NSL did sign the Amendments and had a dispute with a Registrar that had not signed the Amendments, VeriSign would not undo an otherwise improper transfer, thereby denying NSL a “First Level” dispute procedure. Such a result is unfair, unjust and should not be permitted by ICANN 2. ICANN should not permit VeriSign to force upon Registrars an overreaching amendment as a condition of VeriSign’s compliance with the Transfer Policy. The Transfer Policy provides for no such condition, and its attempted imposition by VeriSign is improper.

PARAGRAPH 4 OF THE VERISIGN AMENDMENT
MATERIALLY ALTERS THE REGISTRARS’ RIGHTS UNDER
THE REGISTRY-REGISTRAR AGREEMENTS AND IMPROPERLY GIVES
VERISIGN THE POWER TO AMEND THOSE AGREEMENTS UNILATERALLY

As a part of the process to implement the Transfer Policy, VeriSign sought and ICANN apparently consented to a change in the manner in which the Registry-Registrar Agreement could be amended in the future. Initially, it is clear that this provision has absolutely nothing to do with the implementation of the Transfer Policy. Significantly, this provision serves, instead, to give VeriSign the unilateral right to amend the Registry-Registrar Agreements in the future on thirty days’ notice, without ICANN approval, if VeriSign believes the amendment is necessary to comply with an ICANN mandated policy or procedure 3.

It is interesting that VeriSign has attempted through its proposed amendments to replace the current language in Section 6.5 of the Registry-Registrar Agreements (which requires all amendments to be in writing and duly executed by both parties), instead of attempting to link the unilateral right to amend with the current language in Section 6.1 (which deals with ICANN or DOC approved amendments). In essence VeriSign has sought and ICANN has consented to an amendment giving VeriSign the unfettered right to amend the Registry-Registrar Agreement without ICANN approval as long as VeriSign “believes” the amendment is necessary to comply with an ICANN mandated polic 4. – all without any notice to the affected Registrars or seeking any comments from them.

Such a far-reaching and substantive revision to the rights of the parties to the Registry-Registrar Agreements mandates a considered and open process whereby the affected parties can provide their input 5. It is difficult to imagine a situation where Registrars would more clearly have an interest in the decisions being made by ICANN than in a situation such as this – an attempt by a Registry to materially change the rights afforded Registrars in their respective contracts with that Registry. ICANN should not permit such changes without notice to and input from the affected Registrars. ICANN’s consent was improper and should be withdrawn 6.

h. Board action
NSL does not know whether the ICANN Board was aware of or involved in the consent provided to VeriSign.

i. Relief requested
NSL requests that ICANN immediately withdraw its consent to the Amendments proposed by VeriSign. In the event VeriSign seeks to have ICANN approve an amendment to the form Registry-Registrar Agreements, ICANN should institute an open and transparent process whereby the affected parties can provide input to ICANN prior to a decision being made. NSL also requests that ICANN require VeriSign to provide all Registrars the remedies set forth in the First Level dispute procedure (as required by the Transfer Policy and its TDRP) or, in the alternative, that ICANN stay enforcement of the Transfer Policy until such time as a fully-functional First Level dispute procedure has been implemented.

j. Grounds for requested relief
The grounds for the action requested by NSL are that the consent provided by ICANN to the amendment to the form Registry-Registrar Agreement violated the policies and procedures of ICANN, it contradicts the core values and purpose of ICANN, and it violates the provisions in the Registrar Accreditation Agreement as set forth in section g. above.

k. Documents in support of request
Accompanying this Request for Reconsideration is a letter dated November 1, 2004 from ICANN to VeriSign (Exhibit 1), and an email from VeriSign to NSL with attachments dated November 2, 2004 (Exhibit 2).


1 A literal reading of the language in paragraph 3 gives VeriSign the right to ignore a transfer request only when both Registrars involved in the dispute have not executed the amendment. Given these conflicting interpretations, it is unclear what this provision in the Amendments actually means.

2 For reasons unknown to NSL, ICANN has apparently supported the VeriSign Registry's refusal to fully comply with a consensus policy while at the same time demanding compliance by Registrars with that very same policy.

3 There is a provision in VeriSign's .com and .net Registry Agreements with ICANN that requires VeriSign to seek ICANN approval for changes to the Registry-Registrar Agreements; however, Registrars are not parties to those Registry Agreements and, therefore, they do not have a contractual right under those Registry Agreements to enforce compliance by VeriSign. Additionally, VeriSign and ICANN might in the future mutually agree to remove that provision from the Registry Agreements. Under any analysis, the VeriSign amendments unfairly and unjustifiably remove a material contractual right currently enjoyed by Registrars under the .com and .net Registry-Registrar Agreements.

4 In fact, under the proposed amendment, ICANN has arguably permitted VeriSign to set up two different methods by which VeriSign will be able to amend the Registry-Registrar Agreements. One method is pursuant to Section 6.1, where either ICANN or DOC has approved the amendment in advance (whether or not related to a consensus policy), and the other method is pursuant to the proposed new language in Section 6.5, where ICANN approval is not necessary but the amendment is instead effective if VeriSign “believes” a change is necessary to comply with an ICANN-mandated policy.

5 If VeriSign’s goal was to achieve a process that would not require it to obtain “signed” amendments when amendments are necessary in the future, such a result could have been achieved in a much less drastic manner. Assuming any change to the Registry-Registrar Agreement is properly approved by ICANN or DOC, as appropriate, providing for a 30-day notice provision (as opposed to requiring return of a signed amendment) would not seem to substantially alter the rights of Registrars under the current Registry-Registrar Agreements. Instead, the current proposed amendment goes much further and removes the ICANN approval requirement altogether if the new amendment is related to a consensus policy.

6 It should be noted that NSL is prepared to sign an amendment to the Registry-Registrar Agreements with VeriSign that memorializes the substitution of the Transfer Policy for the former policy contained in Exhibit B to those Agreements. NSL objects not to that provision, but to the improper attempt by VeriSign to avoid compliance with the Transfer Policy and to remove the ICANN approval requirement currently included in the Registry-Registrar Agreements.

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