By Overnight Delivery and Electronic Mail
Internet Corporation for Assigned Names
Dear Mr. Touton:
By this letter, Verio, Inc. formally requests that ICANN terminate Register.com's accreditation for its breaches of the Registrar Accreditation Agreement (the "Accreditation Agreement").
Register.com has breached the Accreditation Agreement in two areas:
There can be no dispute that Register.com has committed these breaches. Both ICANN and the U.S. District Court for the Southern District of New York have concluded that Register.com acted in excess of its authority under the Accreditation Agreement.
Nor can there be any dispute that ICANN is a proper forum, and dis-accreditation a proper procedural vehicle, for resolving Register.com's breaches. ICANN urged the U.S. District Court to refer the dispute between Verio and Register.com to ICANN and to its dis-accreditation procedures, and the Court agreed with ICANN.
If ICANN fails to take action to enforce the terms of the Accreditation Agreement, it will be providing registrars with a significant competitive advantage over other members of the Internet community in the marketing of value-added services. Furthermore, it will be allowing larger registrars, like Register.com, to erect significant barriers to competition in the market for domain name renewals and domain name transfers. By refusing to provide access to its Whois database, Register.com prevents other registrars and non-registrars from contacting its customers to offer them a more economical service. In essence, Register.com seeks to establish intellectual property ownership rights over Whois data to prevent others from using the information to compete with it. During the process of drafting the Accreditation Agreement, ICANN specifically rejected permitting registrars to control use of Whois data in this manner.
Verio urges ICANN to act fairly and expeditiously in responding to this petition, and to follow the logic of ICANN's own prior pronouncements on Register.com's behavior by terminating its accreditation. What is at stake here is not only the particulars of Register.com's breaches and their effect on the system of domain name governance so painstakingly established last year. The larger issue is whether ICANN can be entrusted to discipline one of the more vocal and powerful participants in that system. Register.com's blatant breaches of the Accreditation Agreement threaten the stability of the domain name governance system, and ICANN's response to this petition will be seen by many as a litmus test of its governing effectiveness.
On August 3, 2000, Register.com filed a lawsuit and preliminary injunction motion against Verio in the United States District Court for the Southern District of New York styled Register.com v. Verio, Inc., No. 00-Civ-5747 (BSJ). The dispute focuses on Verio's use of information obtained from Register.com's Whois database for marketing purposes.1 In this petition, Verio relies on the extensive record developed in that lawsuit, a record that includes ICANN's conclusion that Register.com breached its Accreditation Agreement.
Some of the most carefully designed elements of the Accreditation Agreement are the provisions relating to access to Whois data. The Accreditation Agreement requires that each registrar:
The pro-competitive policies underlying these provisions are clear. Absent public access to Whois data, domain name registrars would have greater access to "their" customers for both domain name renewals and value-added services. That is why the Accreditation Agreement imposes strict limitations on a registrar's ability to control use of Whois data for marketing purposes:
Accreditation Agreement § II.F.5 (emphasis added).
The pro-competitive policies underlying bulk-access are equally clear. Under the Accreditation Agreement, bulk access is to be maintained until ICANN adopts a different policy with respect to access to Whois data in general, or there is a demonstration:
Accreditation Agreement § II.F.7 (emphasis added).
The Accreditation Agreement also embodies an "opt-out" provision that unequivocally mandates equal access to Whois data for marketing purposes. This provision allows an individual registrant to "opt-out," but then not only third-parties but also registrars are precluded from marketing value-added services to such individuals:
Accreditation Agreement § II.F.6.f. (emphasis added).
The purpose of these provisions is to create a "level playing field" for marketing of value-added services. No registrar is to have superior access to Whois data for marketing purposes, whether measured against another registrar or against non-registrar third-parties. Register.com itself specifically advocated for this "level playing field" when the Accreditation Agreement was being designed.3
Now that Register.com is itself a large incumbent registrar with many domain name registrants among its customers, it has imposed broad limitations on the use of its Whois database for marketing purposes. Without seeking any change in policy from ICANN, Register.com unilaterally imposed unauthorized restrictions on use of query-based Whois data for marketing purposes, and specifically barred Verio from any marketing activities using such data. Moreover, when Verio and others sought bulk access to data, Register.com refused to make such data available, or did so only on onerous terms that clearly violate the Accreditation Agreement.
Register.com has also turned the Accreditation Agreement's "opt-out" provision on its head to favor exclusive marketing access for Register.com and its business affiliates.4 As noted above, the Accreditation Agreement envisioned a system by which individual domain name holders could "opt-out" of the bulk access provisions. See Accreditation Agreement § II.F.6.f. Third-parties and the registrar itself were then barred from direct marketing to those individuals. Id.
To avoid the leveling effect of these provisions, Register.com has instituted a system that includes an "opt-in" provision whereby individuals must affirmatively choose to be included in the bulk access database, and an "opt-out" provision whereby individuals can elect not to be included in the bulk Whois database but still must agree to receive solicitations from Register.com and its affiliates. The first provision runs counter to the express conditions of the Accreditation Agreement, which mandate an "opt-out" policy, rather than an "opt-in" policy.5
More importantly, taken as a whole, both provisions give Register.com an unfair advantage in the marketing of value-added services. Whatever choice the individual makes, he will still receive solicitations from Register.com and its affiliates. Register.com has ignored its obligations under the Accreditation Agreement, which provides that if individuals choose to "opt-out" of the bulk access database, Register.com is precluded from marketing to them.
Register.com no longer acts solely as a domain name registrar. Directly or through its myriad of affiliates, Register.com has become a full service Internet value-added service provider. Register.com offers web site hosting, email services, escrow services, and corporate services such as international brand protection, domain name management, and domain name surveillance.6 Furthermore, through affiliates, Register.com offers a number of business and retail services such as: credit card services, trademark application services, insurance, online retail shopping, office supplies, web site promotion, business cards, hardware and software accessories, mailing and shipping services, credit card processing services, and financial and investment services.7
Register.com thus now competes directly with Verio and offers many of the same value-added services. Preventing Verio from gaining access to its Whois database would give Register.com a decided advantage in competing with Verio and others in the value-added services market.
Register.com has not masked its anti-competitive intent in restricting use of the Whois database. As its General Counsel, Jack Levy, stated in court:
Transcript of Proceedings before the Honorable Barbara S. Jones, District Judge, September 15, 2000, at 61:8-11 (Ex. E).
Register.com's violations go to the heart of ICANN's purpose and authority. As the Accreditation Agreement itself states, ICANN is in business in large part to promote competition, not to restrict it:
ICANN shall, during the Term of this Agreement, . . . not unreasonably restrain competition and, to the extent feasible, promote and encourage robust competition.
Accreditation Agreement § II.C.2 (emphasis added). In requesting that ICANN terminate Register.com's accreditation, Verio is merely asking that ICANN enforce its own agreements with Register.com and fulfill its founding mission: to promote robust competition in the context of domain name registration and associated marketing.
On September 12, 2000, in connection with the pending litigation between Register.com and Verio, the U.S. District Court asked ICANN to submit a memorandum describing its position on the interpretation of the Accreditation Agreement. In response, on September 22, 2000, ICANN submitted an Amicus Curiae Submission.8
In its Amicus Brief, ICANN concluded that the Accreditation Agreement limits Register.com's ability to place conditions on use of the data it provides the public through its query-based Whois services. As noted above, the Accreditation Agreement specifically provides:
Accreditation Agreement § I.F.5. (emphasis added).
Despite these clear restrictions, since April 2000, Register.com has posted terms of service on its query-based access page that restrict use of the data for all marketing purposes:
Register.com Whois Terms and Conditions of Use (December 20, 2000) (emphasis added).9
In view of this record, in its Amicus Brief, ICANN made the following findings with respect to Register.com's conduct:
Amicus Brief at 2 (emphasis added).
As ICANN is well aware, Register.com has not merely posted a notice that represents a breach of its promise to ICANN; it has gone to court to enforce its terms against Verio, and Verio has been preliminarily enjoined from using Whois data for all marketing purposes. In the course of granting the injunction and enforcing Register.com's Terms and Conditions of Use, the Court cited with apparent approval ICANN's determination that Register.com had exceeded its authority under the Accreditation Agreement. See December 8, 2000 Order at 6 n.3. (Ex. A).
The basis for the Court's ultimate ruling, moreover, was not that Register.com's restrictions were permitted under the Accreditation Agreement, but rather that the "no third party beneficiary" language of the Accreditation Agreement barred Verio from invoking the Accreditation Agreement as a defense to Register.com's claim. In so doing, the Court stated as follows:
December 8, 2000 Order at 18 n. 8 (Ex. A).
ICANN asked for the exclusive authority to address Register.com's breaches, and the Court effectively agreed with ICANN, enjoining Verio even while acknowledging Register.com's violation of its Accreditation Agreement. Now it is up to ICANN to carry through on its commitment, and to terminate Register.com's accreditation as the appropriate remedy for its blatant and continuing breaches.
In addition to the contractually prohibited terms and conditions of use that Register.com has imposed on query-based Whois data, Register.com has engaged in a pattern of obstructionist conduct to prevent third party bulk access to Whois data. Register.com accomplishes this by seeking to impose unreasonable conditions in "take-it-or-leave-it" bulk access agreements.
Almost a year ago, Verio orally requested bulk access to Register.com's Whois database. Register.com, however, flatly refused to provide bulk access to Verio under any conditions. Register.com essentially forced Verio to resort to other means to obtain that to which it was rightfully entitled.
Several months ago, Verio made its latest request for bulk access to Register.com's Whois database.10 In that request, Verio indicated that it would agree "to pay an annual fee, not to exceed US $10,000, for such bulk access to the data." Verio stated, however, that it would not agree to post a multi-million dollar bond to obtain access to the database. Such a hidden fee would clearly impose costs above the maximum allowable fee set forth in the Accreditation Agreement. In fact, Register.com has acknowledged that ICANN does not condone Register.com's imposition of a bond for obtaining bulk access.11
Verio also agreed that it would not "use the data to allow, enable, or otherwise support the transmission of mass unsolicited, commercial advertising or solicitations via e-mail (spam)," as specifically prohibited by ICANN. Verio, however, notified Register.com that any other use restriction would conflict with ICANN's stated interpretation of the allowable limitations under the Accreditation Agreement.12
Shortly thereafter, Register.com responded to Verio's request for bulk access.13 Register.com accepted Verio's offer to prepare the first draft of the bulk access agreement. Register.com, however, indicated that it had the discretion to refuse to provide bulk access to its Whois database if it has a good faith belief that the party requesting bulk access is likely to use that data to send spam.14 Therefore, Register.com claimed an obligation to consider Verio's past use of email to communicate with customers while negotiating the terms of a bulk access agreement.
A little over a week later, Verio sent Register.com a draft of a bulk access agreement.15 In drafting this agreement, Verio copied most of the terms from a bulk access agreement used by the Accredited Registrar, Melbourne IT. In the agreement, Verio specifically addressed Register.com's stated concerns about the use of email and agreed to implement "an internal policy requiring that no email be sent to a domain name registrant of which Verio first becomes aware via Registrar's Data unless such registrant first requests such email from Verio." Verio asked for any comments that Register.com may have regarding the terms of this draft agreement but received no response.
As time passed without receiving any comment from Register.com, Verio sent a letter to the Court pointing out that it had requested bulk access from Register.com but that Register.com was proceeding in a dilatory fashion in executing the agreement. Verio complained to the Court that Register.com was effectively foreclosing all access to Register.com's Whois database.
Register.com's counsel responded to the Court claiming that Verio's draft of the bulk access agreement failed to address the concerns set forth in Register.com's September 29, 2000 letter.17 Expressing its intention to forego negotiating with Verio, Register.com stated that it would await guidance from the Court's pending decision before negotiating with Verio.
Although Register.com represented to the Court that its concerns were not addressed in the draft agreement, Verio had specifically provided that it would have a policy against sending "unsolicited" emails to individuals whose identities were obtained through bulk access to Register.com's Whois database. Contrary to Register.com's representation to the Court, Verio directly addressed Register.com's primary concern, i.e., the use of email.
The Court has now provided Register.com with its guidance. As discussed above, the Court issued its Order on December 8, 2000. Verio intends to fully comply with the terms of that Order. To date, however, Verio has heard nothing from Register.com about providing bulk access.
As with Register.com's breaches of the provisions on query-based access, ICANN has already reached a determination that Register.com has breached the provisions governing bulk access to the Whois database. Last spring and summer, eNIC, a company unrelated to Verio, sought bulk access to the Whois database for marketing purposes. On May 31, 2000, Register.com told eNIC that "Register.com has reviewed this interpretation with ICANN, and ICANN is in agreement that Register.com has the discretion to refuse to license its proprietary Whois data if it has a good faith belief that such data will be used for the purpose of enabling unsolicited commercial telephone calls, or the sending of unsolicited direct or electronic mail."18
On June 7, 2000, however, Register.com retracted this representation and admitted that "ICANN is not in agreement with register.com's position that register.com has the discretion to refuse to license its proprietary Whois data solely on the basis of a good faith belief that such data will be used for the purpose of making unsolicited commercial telephone calls or sending unsolicited commercial direct mail."19 Apparently, ICANN, which had been copied on Register.com's original letter, told Register.com that it disagreed with Register.com's efforts to impose restrictions on marketing uses of bulk data beyond those specifically allowed in the Accreditation Agreement.
Despite ICANN's stated position on Register.com's inclusion of these broad marketing restrictions in its bulk access agreement, Register.com continued to include that language in future bulk access agreements that it proposed to third parties. For instance, the same restrictions were included in a bulk access agreement provided to Dun & Bradstreet.20 In fact, Mr. Forman testified that although several companies have sought bulk access, Register.com has never provided bulk access to anyone.21
Closing its Amicus Brief, ICANN stated that "[i]f Verio had concerns regarding Register.com's conditions for access to Whois data, it should have raised them within the ICANN process." Amicus Brief at 13-14. ICANN also stated:
Amicus Brief at 13. Verio requests that ICANN immediately commence these procedures with a view toward terminating Register.com's accreditation.
Despite repeated notice of ICANN's position that registrars are to be stewards of the Whois database for the public trust, Register.com continues to flout its obligations to comply with the Accreditation Agreement. Just as Register.com complained about NSI in the past, Register.com now seeks to hold onto its Whois data to the exclusion of others. In so doing, seeks to create a captive market out of its registrants.
If ICANN allows Register.com to exclude others from access to its Whois database for use for marketing purposes, other accredited registrars will follow suit, and the consumer will be the real loser. Those individuals who "opt-out" and choose not to receive marketing solicitations will hopefully not receive any marketing promotions, but those individuals who have not "opted-out" will hear only one voice: that of the registrar who first obtained their business. They will, in effect, only be made aware of value added services that their registrar seeks to offer them despite other providers who may offer the same service at a lower price.
Furthermore, when it comes time for these individuals to renew their domain name registrations or seek a domain name transfer, competitive registrars will be unable to inform them that they could receive the same service at a lower price. By preventing competitive registrars from accessing its Whois database, the original registrar will not be as pressed to compete on price with other registrars. Thus, customers will pay higher prices for their domain name renewal or domain name renewal than they may have paid if made aware of other options. If ICANN does not act, consumers will be harmed, competition between registrars will be harmed, and competition between registrars and independent providers of value-added services will be harmed. This would not be the "level playing field" that Register.com claimed to promote and ICANN promised to protect.
If you have any questions regarding this or any other matter, please feel free to contact us.
cc: Scott Brown, Esq.
1 On December 8, 2000, the Honorable Barbara S. Jones issued an order granting Register.com's Motion for a Preliminary Injunction. See December 8, 2000 Order (Ex. A). Although Verio does not agree with the decision and plans to appeal it, Verio intends to comply fully with the terms of the Order during the period that it remains in force.
2 A copy of the Accreditation Agreement is available on ICANN's web site. (<http://www.icann.org//nsi/icann-raa-04nov99.htm>)
3 At the time, of course, Register.com's advocacy, pursued by its president, Richard Forman, was directed to the unlevel playing field between NSI and other registrars. Forman's public statements advocating equal access to Whois data include the following:
¤ I choose not to include my personal data in the bulk WHOIS data file that will be licensed by register.com to third parties, but I would like to continue receiving register.com-sponsored communications.*
¤ I choose to include my personal data in the bulk WHOIS data file that will be licensed to third parties.
* As you know, from time to time register.com communicates with you regarding your account with us. These communications are intended to inform you of important information regarding your account, or about general services provided by register.com. If at any time you decide that you are not interested in receiving future communications from register.com, you may opt-out of these communications by following the instructions that accompany each such communication."
See Register.com Privacy Statement (Ex. C) (emphasis added).
5 See deposition of Richard Forman, taken August 24, 2000 (hereinafter "Forman Deposition Transcript"), 65:22-25 (Ex. D) ("Q: Is the policy that you were referring to in your answer earlier an opt-in policy or an opt-out policy. A: Opt-in policy").
6 See Screen Shot <http://www.register.com/index.cgi?1|2208453274>.
7 See Screen Shot <http://www.register.com/business-resources/index.cgi?1|2208453274|>.
8 A copy of the Amicus Brief is available on ICANN's web site. (<http://www.icann.org/announcements/advisory-24sep00.htm>)
9 Register.com's Terms and Condition of Service appear upon entering a Whois query on a domain name registered through Register.com such as "www.register.com." See (<http://www.register.com/whois-results.cgi?2b4b13f9b696b05e989687c31bcb28dd0a8d11ee1cb37ced1f1972dbe3442580>).
10 See September 28, 2000 Letter from Kyle M. Hall to Jack S. Levy (Ex. F).
11 See Forman Deposition Transcript, 59:6-9 (Ex. D) ("I get the sense that no one is happy with the bond. Q: Including ICANN? A: I'm referring to ICANN").
12 In its Order, the Court did not hold that Verio's use of email constitutes "spam" as defined by ICANN in the Accreditation Agreement. See December 8, 2000 Order at 11 n.4 [sic, n.6]. (declining to decide whether "Verio's e-mails constitute 'spam'") (Ex. A).
13 See September 29, 2000 Letter from Kenneth A. Plevan to Kyle M. Hall (Ex. G).
14 Without providing any evidence, Register.com claims that ICANN confirmed to Register.com that registrars have the discretion to refuse to provide bulk access to their Whois databases if the registrar has a good faith belief that the party requesting such a license is likely to use the data for the purpose of sending spam. Verio, however, seriously doubts that ICANN would authorize a registrar to employ such a subjective standard to deny bulk access on the mere suspicion of unauthorized conduct. Such discretion has the potential for serious abuse. If it became apparent that the third party breached the terms of the bulk access agreement, the registrar could simply seek to terminate the agreement based on the breach.
15 See October 9, 2000 Letter from Kyle M. Hall to Kenneth A. Plevan (Ex. H).
16 See October 26, 2000 Letter from James E. Hough to Judge Jones (Ex. I).
17 See October 27, 2000 Letter from Scott Brown to Judge Jones (Ex. J).
18 See May 31, 2000 Letter from Scott D. Brown to Derek Newman (Ex. K).
19 See June 7, 2000 Letter from Scott D. Brown to Derek Newman (Ex. L).
20 See Forman Deposition Transcript, 62:16-63:16 (Ex. D).
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