Historical Resolution Tracking Feature » Consideration of Independent Review Process Panel's Final Declaration in Merck KGaA v. ICANN
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Consideration of Independent Review Process Panel's Final Declaration in Merck KGaA v. ICANN
Whereas, on 11 December 2015, an Independent Review Process (IRP) Panel (Panel) issued its Final Declaration in the IRP filed by Merck KGaA (Merck) against ICANN (Final Declaration).
Whereas, in its IRP, Merck challenged the Board Governance Committee's (BGC) denial of Reconsideration Request 14-9, which in turn challenged the expert determinations overruling Merck's legal rights objections (LROs) to new gTLD applications submitted by its former affiliate, U.S.-based Merck Sharp & Dohme Corporation, for strings incorporating the "Merck" mark (Expert Determinations).
Whereas, the Panel denied Merck's IRP Request and, among other things, declared that the Board's actions did not in any way violate ICANN's Articles of Incorporation (Articles), Bylaws, or the Applicant Guidebook (Guidebook). (See Final Declaration, ¶¶ 41-68, https://www.icann.org/en/system/files/files/irp-merck-final-declaration-... [PDF, 1.47 MB].)
Whereas, in accordance with Article IV, section 3.21 of ICAN's Bylaws, the Board has considered the Panel's Final Declaration.
Resolved (2016.02.03.10), the Board accepts the findings of the Panel's Final Declaration: (1) ICANN is the prevailing party in the Merck KGaA v. ICANN IRP; (2) the Board acted without conflict of interest in taking its decision; (3) the Board exercised due diligence and care in having a reasonable amount of facts in front of them; (4) the Board exercised independent judgment in taking the decision, believed to be in the best interests of the company; (5) the Board (including the Board Governance Committee) did not violate the Articles, Bylaws, or Guidebook; and (6) Merck shall reimburse ICANN costs in the amount of US$48,588.54.
Merck KGaA (Merck) filed a request for an Independent Review Process (IRP), which arose out of its legal rights objections (LROs) to new gTLD applications submitted by its former affiliate, U.S.-based Merck Sharp & Dohme Corporation, for strings incorporating the "Merck" mark. Merck's LROs were overruled (Expert Determinations). Merck filed Reconsideration Request 14-9 challenging the Expert Determinations. The Board Governance Committee (BGC) denied Reconsideration Request 14-9, finding that Merck had not stated proper grounds for reconsideration and that the Request failed to demonstrate that the expert panel had acted in contravention of established policy or procedure. Merck's IRP Request challenged the denial of Reconsideration Request 14-9 and, among other things, also argued that the Board should have taken further action with respect to the Expert Determinations.
On 11 December 2015, the three-member IRP Panel (Panel) issued its Final Declaration. After consideration and discussion, pursuant to Article IV, Section 3.21 of the ICANN Bylaws, the Board adopts the findings of the Panel, which are summarized below, and can be found in full at https://www.icann.org/en/system/files/files/irp-merck-final-declaration-... [PDF, 1.47 MB].
Using the applicable standard of review, the Panel found that: (1) ICANN is the prevailing party in the Merck KGaA v. ICANN IRP; (2) the Board acted without conflict of interest in taking its decision; (3) the Board exercised due diligence and care in having a reasonable amount of facts in front of them; (4) the Board exercised independent judgment in taking the decision, believed to be in the best interests of the company; and (5) the Board's actions or inactions did not, in any way, violate the Articles of Incorporation (Articles), Bylaws, or Applicant Guidebook (Guidebook). (See Final Declaration, ¶¶ 41-68.)
More specifically, as the Panel found, the standard of review for an IRP is specifically prescribed in Article IV, Section 3.4 of the Bylaws, and "the Panel may not substitute its own view of the merits of the underlying dispute." (Id. at ¶¶ 21-22.) The Panel further found that the reconsideration process is "of limited scope" as set forth in Article IV, Section 2.2 of the Bylaws, and "[n]one of th[e] three bases for the Request for Reconsideration process requires or even permits this Panel to provide for a substitute process for exploring a different conclusion on the merits." (Id. at ¶ 47.) The Panel also found that: "this Panel does not, because of the precise and limited jurisdiction we have, have the power to second guess [the BGC's determination] that the Sole Panel Expert [in the legal rights objection proceedings] did not apply the wrong standards." (Id. at ¶ 49.) The Panel was also clear that "a referral or appeal process for LRO decisions…was not included in the [Guidebook] and it is not open to this Panel to create it." (Id. at ¶ 60.) In summary, the Panel explained that "Merck's complaints are, in short, not focused on the applicable test by which this Panel is to review Board action, but rather are focused on the correctness of the conclusion of the Sole Panel Expert [, which] is not a basis for action by this Panel…." (Id. at ¶ 50.)
Merck also claimed that ICANN discriminated against Merck through the Board's (and the BGC's) acceptance of the Expert Determinations because the "Board has provided the possibility for third-party review of some prima facie erroneous expert determinations while denying the same to other, similarly situated parties, including the Claimant." (Id. at ¶ 53(emphasis in original).) In response to this claim, the Panel found that:
As to the claim of discrimination, this Panel finds that it was within the discretion of the BGC and Board…to conclude that the Sole Expert had applied the correct legal standard to the correctly found set of facts. Of course, in different cases, the BGC and Board are entitled to pursue different options depending upon the nature of the cases at issue. It is insufficient to ground an argument of discrimination simply to note that on different occasions the Board has pursued different options among those available to it. [¶] In conclusion, Merck was not discriminated against.
(Id. at ¶ 61.)
As required, the Board has considered the Final Declaration. As this Board has previously indicated, the Board takes very seriously the results of one of ICANN's long-standing accountability mechanisms. Accordingly, and for the reasons set forth in this Resolution and Rationale, the Board has accepted the Panel's Final Declaration as indicated above. Adopting the Panel's Final Declaration will have no direct financial impact on the organization and no direct impact on the security, stability or resiliency of the domain name system. This is an Organizational Administrative function that does not require public comment.