[CWG-Stewardship] [client com] IPR Memo

Steve Crocker steve.crocker at icann.org
Tue Jan 12 14:35:09 UTC 2016


Jonathan, et al,

Thanks for sharing this.  I have pasted the portion of the Sidley memo that speaks to Scenario 3 and added my comments.  I am speaking on my own, not expressing an official position of the ICANN Board or the staff.

For reference, I participated in the formation of the IETF Trust and served as one of its initial set of trustees.

In brief, I think placing the IANA IPR into the IETF Trust is the simplest, fastest and least expensive approach and is more than adequate to meet the needs of all parties.

See specific comments in line.

Thanks,

Steve


> 3. An Independent Trust Becomes the Registered Owner of the IANA IPR (Scenario 3)
> 
> In Scenario 3, IANA IPR ownership would be transferred from ICANN to an independent trust, such as the IETF Trust. This structure differs from Scenario 2, however, because it contemplates transferring control over the IANA IPR to an independent entity. The trust could not merely take possession of the IANA IPR, but must also exert control over the quality of services distributed under the IANA IPR.
> 
As noted in the sentences that follow immediately, the mechanism for ensuring the quality of the services provided by the IANA function are already provided.  While it may be common in other situations for the trademark holder to use its licensing power to oversee the quality of the services provided by the licensee, this is definitely not the primary avenue of control in this situation.  The trademark is a secondary aspect of the overall function.
> As such, the trust would either need to acquire these capabilities directly, or it would need to designate a third party to exercise this oversight of PTI on its behalf. Presumably under the current transition structure, this third party would be ICANN, which, together with the multistakeholder community, is already exercising periodic review of the IANA functions by PTI under the CWG final proposal. However, the trust also would need to make commitments to the multistakeholder community regarding its own use and disposition of the IANA IPR, as we discuss further below.
> 
> There are advantages to Scenario 3 including:
> 
> Meeting the recommendation of the Internet Number Community who, through CRISP, submitted a recommendation that an independent trust – rather than the IANA functions operator – hold ownership of the IANA IPR following the transition and indicated the IETF Trust would be a suitable repository. Although the protocol parameters community was silent on this issue initially, in response to CRISP’s recommendation, the protocol parameters community indicated that it had no objection to the approach recommended by CRISP.
> 
> Under this structure, the trust would license the rights to the IANA IPR to PTI (directly or through ICANN) to be used by PTI in the performance of the IANA functions. Similar to Scenario 1, this results in a structure in which the “owner” and “user” of the IANA IPR are different entities, thus facilitating the implementation of checks and balances, through the IANA IPR license to PTI.
> 
> From a bankruptcy perspective, there may be advantages to transferring ownership of the IANA IPR to an independent trust. In the event either ICANN or PTI were to commence a bankruptcy proceeding, provided the trust is properly structured, the IANA IPR would not become part of the bankruptcy estate. Moreover, only “business trusts” are eligible to commence bankruptcy proceedings under the U.S. Bankruptcy Code. As a result, provided the independent trust does not meet the criteria for becoming a business trust under the bankruptcy code, it would be unable to file for U.S. federal bankruptcy relief.
> 
> Scenario 3 has a number of disadvantages.
> 
> • Of the three scenarios, Scenario 3 will require the most effort to implement. The following is an initial list, but there may be additional items and issues that emerge. Ultimately, since this ownership scenario introduces a third party, and would not be encompassed in the existing IANA functions transition structure already in place, it is the more costly and administratively burdensome of the three scenarios to implement and maintain from a governance and accountability perspective.
> 
> o Consideration will need to be given to whether the IETF Trust should be the trust to hold this IANA IPR. We acknowledge that CRISP has expressed a preference that IANA IPR ownership be transferred to an entity independent from PTI, suggesting the IETF Trust as the repository, a suggestion to which the protocol parameters community indicated it had no objection. However, if a trust were viewed as the optimal structure, it may be preferable to establish a new trust. Consider initially that the current beneficiary of the IETF Trust is the IETF itself. Given the nature of these IANA IPR assets, the community may want a broader multistakeholder organization or association as the beneficiary. This could be achieved through amendment of the IETF trust agreement to add the broader community as a beneficiary with respect to the IANA IPR. In addition, the IETF trust document would have to be amended to provide for safeguards against transfer, and specific instructions regarding disposition of the IANA IPR, which instructions and safeguards would have to be protected against amendment by the trustees without ICANN’s approval. This could be accomplished by providing in the amendment of the IETF trust agreement that no amendment to the trust agreement that would modify such instructions and safeguards would be valid or effective without the approval and consent of ICANN (or its successor in interest).
> 
> o An assignment of IANA IPR will need to be prepared to transfer ownership to the trust (similar to what would be required to transfer ownership to PTI under Scenario 2). Domain name registrations also will need to be transferred.
> 
Not necessarily and, in my opinion, almost certainly not.  It is vital that the IANA function operator have operational control over the domain name.  Provision for control to pass back to the IPR holder or to be transferred to another IANA function operator can be provided through a contractual agreement.

This is an implementation detail.  There is no disagreement about the underlying principle.

> In addition, the registered owner of the IANA IPR, and all future goodwill arising from PTI’s use of the trademarks, also would be owned by the trust.
> 
> o Following the assignment of ownership to the trust, there will need to be a separate license agreement to PTI, granting it the right to use the IANA IPR in the performance of its duties as the IANA functions operator. This will need to be a separate agreement from the IANA Functions Agreement, as the trust will need to be a party to this license.
> 
> o Regardless of whether the IETF Trust is selected, or a new trust is created, the trust documents will need to be amended (in the case of the IETF Trust), or drafted (in the case of a new trust), to reflect the duties and responsibilities of the trustees with respect to the IANA IPR, and their handling of the IANA IPR under certain circumstances such as a transfer of the IANA functions operator responsibilities away from PTI. To maintain accountability by the trust and to ensure it properly maintains the IANA IPR, additional contracts with accountability mechanisms may be needed. Such mechanisms may include community oversight or involvement. Further, the trust documentation would need to provide for the immediate transfer of title away from the trust, if the trustee breaches its duties with respect to the IANA IPR. These will be very important commitments from the trust to the multistakeholder community, and will need to be clear that the trustees will take direction from ICANN, acting as the voice of the that community.
> 
> o Also, irrespective of whether a new trust is formed, or the existing IETF Trust is used, consideration will need to be given as to the tax attributes of the trust. If the trust is holding property for charitable purposes, it would be desirable to obtain tax-exempt status for the trust in the event the trust ever realizes income from the IANA IPR. The type of tax-exempt status (Internal Revenue Code section 501(c)(3) charitable organization (either a public charity or a private foundation), or an organization for the promotion of social welfare under section 501(c)(4)) would depend upon the possible income producing activities of the trust.
> 
> In addition, from the perspective of the USPTO, the IETF Trust is not a separate legal entity, thus the requirement that the trustees of the IETF Trust collectively own the IANA IPR, at least from the perspective of the USPTO. If the trustees of the trust rotate on a regular basis, care will need to be taken to maintain the federal registries and assign ownership of the IANA IPR to whichever new trustees are currently in office.
> 
The IETF Trust’s trustees do indeed rotate regularly.  I presume this piece of administrivia  is taken care of on a regular basis.
> As noted previously, we have been advised that the IANA IPR is limited to US registrations. The legal status of a trust, and the role of a trustee, is well recognized in the U.S. However, if there are intellectual property registrations required in foreign jurisdictions, care would need to be taken to ensure that the trust will be a recognized legal entity, capable of enforcing all rights attendant to ownership.
> 
Perhaps this is worth mentioning to the IETF Trust trustees.  I don’t think it’s necessary to change the current arrangements.


On Jan 12, 2016, at 5:20 AM, Jonathan Robinson <jrobinson at afilias.info> wrote:

> All,
>  
> A reminder of the work that Sidley undertook on the IANA IPR issue.
>  
> Of the three scenarios discussed by Sidley as follows:
>  
> ·        ICANN maintains ownership of the IANA IPR,
> ·        PTI becomes the registered owner of the IANA IPR, and
> ·        An independent trust, such as the IETF Trust, becomes the registered owner of the IANA IPR.
>  
> Only the third scenario remains under consideration by the CWG. It is discussed in detail on pages 5-7 of the attached.
>  
> Thank-you,
>  
>  
> Jonathan
>  
>  
> From: Flanagan, Sharon [mailto:sflanagan at sidley.com] 
> Sent: 05 August 2015 04:06
> To: Client Committee <cwg-client at icann.org>
> Subject: [client com] IPR Memo
>  
> Dear All,
>  
> Attached is a memo on the IPR issue under the three ownership structures.  Please let us know if you have any questions or would like to discuss.
>  
> Best regards,
>  
> Holly, Josh and Sharon
>  
> SHARON FLANAGAN
> Partner
> 
> Sidley Austin LLP
> +1.415.772.1271
> sflanagan at sidley.com
>  
>  
>  
> 
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