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<p class="MsoNormal"><span style="font-size:11.0pt">In the event we get to Agenda Item 3 tomorrow, below is a more refined version of the Compromise Proposal I circulated on July 1.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">I’d like to ask the Co-Chairs and Staff to add it to the working document so it is more easily displayed to those participating in the Zoom call tomorrow.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
<p class="MsoNormal"><b>Objective: <br>
</b>Increase transparency and accountability in contention resolution to improve the perception of ICANN and the new gTLD program.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b>Compromises contained</b><o:p></o:p></p>
<p class="MsoNormal"><b> </b><o:p></o:p></p>
<p class="MsoNormal">Some WG participants wanted an opportunity for creative resolutions to contentions via JVs and other corporate structuring.<o:p></o:p></p>
<ul type="disc">
<li class="MsoListParagraph" style="mso-list:l0 level1 lfo6">90-day window to negotiate and announce those to ICANN.<o:p></o:p></li></ul>
<p class="MsoNormal">Some WG participants expressed a strong desire for losers in auctions to get paid. Others were concerned ICANN would “line its pockets” if all auctions were auctions of Last Resort.<o:p></o:p></p>
<ul type="disc">
<li class="MsoListParagraph" style="mso-list:l0 level1 lfo6">Parties in a contention set may opt for an ICANN administered 3<sup>rd</sup> Party Auction where losers get paid as opposed to ICANN.
<o:p></o:p></li></ul>
<p class="MsoNormal">Advocates for Vickery Auction wanted sealed bids submitted at time of application to eliminate possibility of collusion. Others raised concerns about the burden on applicants who would not be in a contention set.<o:p></o:p></p>
<ul type="disc">
<li class="MsoListParagraph" style="mso-list:l0 level1 lfo6">Only parties in contention sets will have to submit a sealed bid. Bids will be submitted 30 days into the 90 Day Resolution Period.
<o:p></o:p></li><li class="MsoListParagraph" style="mso-list:l0 level1 lfo6">While this does not eliminate the collusion concerns, it does narrow the window for that type of activity to occur.<o:p></o:p></li></ul>
<p class="MsoNormal">Advocates for “applicant support” applicants and single TLD applicants were concerned with the 2012 practice of rolling private auctions proceeds from one auction to another to overwhelm a single applicant or applicants who receive applicant
support.<o:p></o:p></p>
<ul type="disc">
<li class="MsoListParagraph" style="mso-list:l5 level1 lfo7">Conducting all 3<sup>rd</sup> party Auctions at the same time eliminates this.<o:p></o:p></li></ul>
<p class="MsoNormal"><b>Benefits of the Compromise Proposal:</b><o:p></o:p></p>
<ul type="disc">
<li class="MsoListParagraph" style="mso-list:l5 level1 lfo7">Full transparency, ICANN oversight and competition authority review mitigate community concerns about nefarious activity and add legitimacy to the process.<o:p></o:p></li><li class="MsoListParagraph" style="mso-list:l5 level1 lfo7">Unlike the 2012 round, access to data from this point forward can inform future policy making efforts in the program.<o:p></o:p></li><li class="MsoListParagraph" style="mso-list:l5 level1 lfo7">Private Auctions are eliminated but applicants can still receive proceeds from a 3<sup>rd</sup> Party Auction if all applicants in a contention set agree.<o:p></o:p></li><li class="MsoListParagraph" style="mso-list:l5 level1 lfo7">Research shows sealed bids result in lower auction prices so decreased auctions proceeds to ICANN in Last Resort auctions.<o:p></o:p></li><li class="MsoListParagraph" style="mso-list:l5 level1 lfo7">The compromise position increases efficiency and speeds up the process allowing more applicants to withdraw applications prior to evaluations resulting in greater refund amounts and faster processing
of remaining applications. In 2012 millions of dollars were wasted on evaluations of applications that never had a chance of operating a TLD and those applicants had to wait years to get significantly reduced refunds from withdrawing.<o:p></o:p></li></ul>
<p class="MsoNormal"><b>Proposed process:</b><o:p></o:p></p>
<ul style="margin-top:0in" type="disc">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level1 lfo4">
String Similarity evaluation completed<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level1 lfo4">
On Reveal Day, ICANN announces contention sets including names of applicants.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level1 lfo4">
A 90-day Resolution Period begins <o:p></o:p></li><ul style="margin-top:0in" type="circle">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
Members of a contention set may <o:p></o:p></li><ul style="margin-top:0in" type="square">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
Form a JV or other corporate structure <o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
Find a different creative resolution<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
Withdraw<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
Fail to resolve<o:p></o:p></li></ul>
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
Members of a contention set may not<o:p></o:p></li><ul style="margin-top:0in" type="square">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
Participate in a private auction or auction like mechanism.<o:p></o:p></li></ul>
</ul>
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level1 lfo4">
30 days into the Resolution Period, all parties in a contention set will be required to submit a sealed bid for each string for which they are in a contention set.
<o:p></o:p></li><ul type="circle">
<li class="MsoListParagraph" style="mso-list:l1 level2 lfo4">If a JV, other corporate structure, or different creative resolution process is utilized, bids are destroyed and never revealed.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
If at the end of the 90-day Resolution Period, parties chose one of the two auction paths, bids submitted will be used for the auction the contention set decides to participate in.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
As part of AGB and communications plan, ICANN must make potential applicants aware that they should be considering these bids, including securing financing where necessary, as part of their business planning and application process.
<o:p></o:p></li></ul>
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level1 lfo4">
No later than the close of the 90-day Resolution Period, remaining contention sets will be required to provide ICANN with their decision on how to resolve the contention. They will have decided to:
<o:p></o:p></li><ul style="margin-top:0in" type="circle">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
Agree to create a partnership or other form of joint venture that would allow two or more applicants within a contention set to jointly run and/or operate the applied for string. Application Change Request requirements will apply, including public comment
period and ICANN would have to approve.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
Agree to participate in a sealed bid “3<sup>rd</sup> Party Auction” which is overseen by ICANN. Proceeds are distributed amongst the losing applicants in the contention set.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
If parties are unable to agree to either of the two previous options, an ICANN Auction of Last Resort will be conducted using the sealed bids. Proceeds go to ICANN Auctions Proceeds fund.<o:p></o:p></li></ul>
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level1 lfo4">
Auctions of Last Resort and 3<sup>rd</sup> Party Auctions will take place as soon as possible after the 90 day Private Resolution Period and before application evaluation takes place.
<o:p></o:p></li><ul style="margin-top:0in" type="circle">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
For 3<sup>rd</sup> Party Auctions <o:p></o:p></li><ul style="margin-top:0in" type="square">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
All auctions are conducted as sealed bids by the same auction provider ICANN chooses for Last Resort auctions. The applicant that submitted the highest sealed bid amount pays the second-highest bid amount. The auction provider and ICANN must attest that the
participants fully disclosed all required information and followed the rules before the funds are released to the losers.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
As discussed previously, All bids for all unresolved contention sets are due on the same date, no more than 30 days after reveal of contention sets/into the resolution period. Auctions for contention sets involving objections, CPE or other outstanding accountability
challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period.
<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
All auctions are to be conducted in an identical fashion using publicly available procedures.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
All results are disclosed on a similar timeline as ICANN auctions of last resort from 2012 round, which was typically 72 hours. All parties partaking in the auction as well as winning bidder and amount paid are disclosed.<o:p></o:p></li></ul>
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level2 lfo4">
Auctions of Last Resort <o:p></o:p></li><ul style="margin-top:0in" type="square">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
If parties fail to form a JV or other Corporate structure, find a different creative resolution, or participate in a 3<sup>rd</sup> Party Auction, bids submitted during the 90 Day Resolution Period will be used. Auctions for contention sets involving objections,
CPE or other outstanding accountability challenges may be delayed but bids are still due no more than 30 days after reveal of contention sets/into the resolution period.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
On the auction date, the applicant that submitted the highest sealed bid amount pays the second-highest bid amount.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l1 level3 lfo4">
Once payment is received, the applicant may proceed to evaluation and eventually the Transition to Delegation.<o:p></o:p></li></ul>
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In the unlikely event that a winning bidder in either auction format does not pass evaluation (none failed in 2012), of fails because of a CPE determination or outstanding accountability challenge, the next highest bidder is selected for evaluation.<o:p></o:p></li></ul>
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<o:p></o:p></p>
<p class="MsoNormal"><b>Requirements:</b><o:p></o:p></p>
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Add T&Cs warning applicants that they may not participate in any of the following activities (Prohibited Application Activities):
<o:p></o:p></li><ul style="margin-top:0in" type="circle">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level2 lfo5">
They shall not submit applications largely for the purpose of financially benefiting from the resolution of contention sets<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level2 lfo5">
During the 90-day Resolution Period, they will not participate in the resolution of contention sets where non-winning applicants receive financial benefit to withdraw and not participate in the operation of the TLD.<o:p></o:p></li></ul>
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level1 lfo5">
The Registry Agreement must include a mandatory Public Interest Commitment stating that the registry:
<o:p></o:p></li><ul style="margin-top:0in" type="circle">
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level2 lfo5">
has not submitted applications for the purpose of financially benefiting from the resolution of contention sets.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level2 lfo5">
has not participated in an auction or auction like mechanisms outside of the ICANN 3<sup>rd</sup> Party and ICANN Auction of Last Resort.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level2 lfo5">
Agrees to punitive measures for violations listed above, which may include the potential loss of the registry as well as a bar on participation in any future rounds (both for the individuals as well as the entities (and their affiliates) involved.<o:p></o:p></li></ul>
<li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level1 lfo5">
The auction provider must agree to fully disclose all information about the auctions as requested by ICANN.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level1 lfo5">
The auction provider and ICANN must assert that all rules were followed before releasing auction funds.<o:p></o:p></li><li class="MsoListParagraph" style="margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l2 level1 lfo5">
All contention set resolutions including JVs, creative resolutions, 3<sup>rd</sup> Party Auction and ICANN Auctions of last resort must be referred by ICANN to relevant competition authorities for review.<o:p></o:p></li></ul>
<p class="MsoNormal"><b> </b><o:p></o:p></p>
<div>
<p class="MsoNormal"><span style="font-size:11.0pt">Jim Prendergast<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">The Galway Strategy Group<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt">+1 202-285-3699<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:11.0pt"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:11.0pt">From:</span></b><span style="font-size:11.0pt"> Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org>
<b>On Behalf Of </b>Julie Hedlund<br>
<b>Sent:</b> Monday, July 6, 2020 2:50 PM<br>
<b>To:</b> gnso-newgtld-wg@icann.org<br>
<b>Subject:</b> [Gnso-newgtld-wg] Proposed Agenda - New gTLD Subsequent Procedures PDP WG - Thursday, 09 July at 20:00 UTC for 90 Minutes<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:11.0pt;color:black">Dear WG Members,</span><o:p></o:p></p>
<p class="MsoNormal" style="font-variant-caps: normal;orphans: auto;text-align:start;widows: auto;-webkit-text-size-adjust: auto;-webkit-text-stroke-width: 0px;caret-color: rgb(0, 0, 0);word-spacing:0px">
<span style="font-size:11.0pt;color:black"> </span><o:p></o:p></p>
<p class="MsoNormal" style="font-variant-caps: normal;orphans: auto;text-align:start;widows: auto;-webkit-text-size-adjust: auto;-webkit-text-stroke-width: 0px;caret-color: rgb(0, 0, 0);word-spacing:0px">
<span style="font-size:11.0pt;color:black">Please find below the proposed agenda for<span class="apple-converted-space"> </span>the WG meeting on<span class="apple-converted-space"> </span></span><b><span style="font-size:11.0pt">Thursday, 09<span style="color:black">
July<span class="apple-converted-space"> </span>2020 at<span class="apple-converted-space"> </span></span>20<span style="color:black">:00 UTC for 90 minutes.</span></span></b><o:p></o:p></p>
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<span style="font-size:11.0pt;color:black"> </span><o:p></o:p></p>
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<span style="font-size:11.0pt;color:black">Proposed Agenda:</span><o:p></o:p></p>
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<span style="font-size:11.0pt;color:black"> </span><o:p></o:p></p>
<ol style="margin-top:0in;caret-color: rgb(0, 0, 0);font-variant-caps: normal;orphans: auto;text-align:start;widows: auto;-webkit-text-size-adjust: auto;-webkit-text-stroke-width: 0px;word-spacing:0px" start="1" type="1">
<li class="MsoNormal" style="color:black;mso-list:l3 level1 lfo3"><span style="font-size:11.0pt">Review Agenda/Updates to Statements of Interest</span><o:p></o:p></li><li class="MsoListParagraph" style="color:black;margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l3 level1 lfo3">
Review the updated Predictability Framework, see: <a href="https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTwXL4/edit?usp=sharing">https://docs.google.com/document/d/1vBckhFQCCQ-zyvfGGcDB3NWQhodVsffdqbyb6kTwXL4/edit?usp=sharing</a>.
Also attached, please find the updated concerns/mitigation document and process flow.<o:p></o:p></li><li class="MsoListParagraph" style="color:black;margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l3 level1 lfo3">
<span style="color:windowtext">R</span>eview Private Resolutions/Auctions: Hybrid Proposal 2+ and Proposal 4:<span class="apple-converted-space"> </span><a href="https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZzjHw/edit?usp=sharing">https://docs.google.com/document/d/1X8F8zHkgMzQg2WqGHpuoEP78rhpDkFOjD2qKrZZzjHw/edit?usp=sharing</a><o:p></o:p></li><li class="MsoListParagraph" style="color:black;margin-top:0in;margin-bottom:0in;margin-bottom:.0001pt;mso-list:l3 level1 lfo3">
AOB<o:p></o:p></li></ol>
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<span style="font-size:11.0pt;color:black"> </span><o:p></o:p></p>
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<span style="font-size:11.0pt;color:black">If you need a dial out or would like to submit an apology, please email <a href="mailto:gnso-secs@icann.org" title="mailto:gnso-secs@icann.org">gnso-secs@icann.org</a>.</span><o:p></o:p></p>
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<span style="font-size:11.0pt;color:black"> </span><o:p></o:p></p>
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<span style="font-size:11.0pt;color:black">Best,</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Julie</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:11.0pt">Julie Hedlund, Policy Director</span>
<o:p></o:p></p>
<p class="MsoNormal"> <o:p></o:p></p>
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