[gnso-gac-closed-generics] Closed Generics Updates - 14 April 2023 [SEC=OFFICIAL]

Wed Apr 19 08:53:15 UTC 2023

OFFICIAL

Good evening colleagues,

As painful as this conversation is on competition law, I think it strikes to the heart of the closed generics issue, and so I am glad we are having this exchange. I just wanted to share some of my thoughts here, as I won’t be on the call later tonight.

I don’t disagree that it should be a sovereign right of each country to police and enforce their own competition regulation, and that ICANN isn’t in the business of competition law. My concern is that if we don’t establish a sufficiently robust system within ICANN, with a clear and strong baseline through either the application or evaluation process, then we are likely to see closed generics push into a myriad of trade issues the GAC are extremely sensitive to.

I think it’s easy to default to thinking about single jurisdictions making decisions within their own borders. That is unlikely to be the case if we are not precise in our framework. When there are competing sets of regulation or legislation, from more than one country, ICANN ends up in the middle having to arbitrate the issue whether they like it or not, and there are always losers. I know I’m preaching to the converted, but these outcomes erode trust in ICANN as an institution, and this is something I and much of the GAC are acutely aware of. To be honest, I don’t think we can completely negate these types of outcomes from occurring, but we can steer this framework towards a spot where the frequency is less likely.

ICANN must have some ability to enforce contractual provisions as relevant to closed generics. If we design a framework where ICANN has to wait for disputes to escalate or rely on governments to weigh in on the issue, then we’re opening up a huge can of worms, and designing a system that will inevitably put ICANN in a tough spot when the stakes are much higher.

It starts with the application, and my thinking at this stage is that the original language of “competitive neutrality, non-discrimination, and transparency” as explained by Jorge, go quite some ways to safeguarding against these outcomes.

Many thanks!

Ian
OFFICIAL

From: gnso-gac-closed-generics <gnso-gac-closed-generics-bounces at icann.org> On Behalf Of Nigel Hickson via gnso-gac-closed-generics
Sent: Wednesday, 19 April 2023 4:46 PM
To: Greg Shatan [NARALO] <gregshatanalac at gmail.com>
Cc: gnso-gac-closed-generics at icann.org
Subject: Re: [gnso-gac-closed-generics] Closed Generics Updates - 14 April 2023

Greg and colleagues

Good morning and thanks for this Greg which I found really useful.

What you say seems eminently sensible; ICANN must be able to enforce such provisions and thus be pro-acrive where necessary in seeking views of the appropriate authorities.

Best

Nigel

On Wed, 19 Apr 2023, 06:41 Greg Shatan [NARALO], <gregshatanalac at gmail.com<mailto:gregshatanalac at gmail.com>> wrote:
All,

Jeff has proposed the following:

In other words, it would not be for ICANN to determine what is “anti-competitive”, but rather such determinations would be made by courts of national jurisdiction.  If they found a violation of law, then ICANN would have to ensure the registry takes remedial actions.  ICANN Compliance should never be in the position of having to determine whether an action is ”anti-competitive” in any jurisdiction.

Philippe wrote something similar:
As I observed during our last call, I think asking the applicant “to commit” is the right thing to do, and I don’t think this can call for more than ticking a box or a “Yes we commit.” sort of response: I don’t expect a panel/committee or even compliance to be in a position to determine whether a particular behaviour is anticompetitive or not, as authority on the matter lies with national/regional competition authorities/agencies.

I’m not saying that a closed generics may not lead to an anticompetitive behaviour (I don’t know) but from a practical standpoint, I can only expect “ICANN” to rely on those authorities to decide/rule on whether that is the case, and act accordingly in the event, based on the fact that the applicant didn’t live up to their “commitment”.

This runs counter to the concept of enforceability and to the reality of how contracts are enforced.  It is utterly common for contracts to contain provisions that obligate a party to comply with (and/or not to violate) specified laws, and more generally to comply with applicable law.  In my experience and observation, a contracting party will just about always determine for itself (through the advice of appropriate counsel) whether the other party is breaching one of these provisions and will take appropriate action (notice of breach, possible suspension or termination for cause, notice and demand for "cure"/remediation, etc. -- including "softer" or more nuanced approaches).  If the parties cannot resolve the issue between themselves, they may end up in court, but that is only a small percentage of the time.  Even then, it is much more common for the parties to settle rather than litigate to a verdict.

The only times I have observed a party wait until there's a court verdict or regulatory finding is when the contract provision specifically and expressly states that that is the threshold for breach.

To state the obvious, courts (in most jurisdictions) cannot initiate a case on their own initiative -- there must be a plaintiff (either a private party (in civil litigation) or the state (which can be civil or criminal)) who initiates the case (by filing a complaint or other similar action).

These proposals would utterly tie the hands of ICANN in contract compliance and enforcement.  ICANN, like any other party to a contract, must be free to determine for itself when a contract is being breached and to take appropriate action.  It would be far too extreme to require ICANN to go straight to a lawsuit when it believes that a contractual obligation to comply with laws is being violated.  It would be even more extreme to prohibit ICANN from taking any action and require it to wait for a third party to bring a case or a government to bring a case or initiate an investigation and secure a verdict or make a regulatory determination before ICANN can take appropriate action.  That would take us massively backward on concepts of contractual compliance and enforcement that have gradually improved over time.

Of course, there could be times when cases are brought and verdicts are secured that find behavior that violates contracts with ICANN, and ICANN will of course be able to react and take appropriate enforcement action regarding contracts.  But those times frankly are edge cases. That cannot be our standard for any type of contractual commitment, including (but not limited to), commitments relating to closed generics.

Best regards,

Greg

On Tue, Apr 18, 2023 at 4:37 PM <philippe.fouquart at orange.com<mailto:philippe.fouquart at orange.com>> wrote:
Thanks John. Your suggestion works for me too for the reasons given in my previous post.
Best,
Philippe

Le 18 avr. 2023 22:04, John McElwaine <john.mcelwaine at nelsonmullins.com<mailto:john.mcelwaine at nelsonmullins.com>> a écrit :

Jeff,

That was my intent.

John

From: Jeff Neuman <jeff at jjnsolutions.com<mailto:jeff at jjnsolutions.com>>
Sent: Tuesday, April 18, 2023 4:02 PM
To: John McElwaine <john.mcelwaine at nelsonmullins.com<mailto:john.mcelwaine at nelsonmullins.com>>; Melissa Peters Allgood <melissa.allgood at icann.org<mailto:melissa.allgood at icann.org>>; gnso-gac-closed-generics at icann.org<mailto:gnso-gac-closed-generics at icann.org>
Subject: RE: [gnso-gac-closed-generics] Closed Generics Updates - 14 April 2023

Thanks John.  I can live with your number 2 If all of those acts are predicated in violation of national laws.

In other words, if I were to rewrite your #2 as I am ok with it being interpreted, it would be:

.            For “non anti-competitive behaviour”, applicants must commit that its use of this closed generic gTLD will not be used to violate applicable national laws prohibiting unfair methods of competition.  This includes, but is not limited to, , such as collusion, restraints of trade that prohibit third parties from supplying or offering to supply goods or services, or otherwise monopolistically controlling, limiting, or restricting the supply of goods or services.

In other words, it would not be for ICANN to determine what is “anti-competitive”, but rather such determinations would be made by courts of national jurisdiction.  If they found a violation of law, then ICANN would have to ensure the registry takes remedial actions.  ICANN Compliance should never be in the position of having to determine whether an action is ”anti-competitive” in any jurisdiction.

Hopefully this is what you meant John.  If so, I can support.  If not, it is a red line for me to have ICANN compliance act as a substitute for regulator of national laws.

Sincerely,

Jeff

Jeffrey J. Neuman

Founder & CEO

JJN Solutions, LLC

p: +1.202.549.5079

E: jeff at jjnsolutions.com<mailto:jeff at jjnsolutions.com>

http://jjnsolutions.com<https://urldefense.proofpoint.com/v2/url?u=http-3A__jjnsolutions.com&d=DwMGaQ&c=qmi9WrYRGQEDDOxOwKrAjW7mWovpzN_EKyRbeK_zbP0&r=Kepk-9GEB6JgOj0vUGl8c0hdrRM7FW-8Is-VAQU1VAm5U0rBXiZs3BfB3GfKU2uR&m=MeoIhLexdpwao9NQLMENEawFWz_0kTVclFlB0Xk_SAtHPNGbTYinOoLoeRir7-ho&s=ez0rB5lxV3bl0kZ1GOvz_DjYm-vAme9Rusom0REQMCk&e=>

From: gnso-gac-closed-generics <gnso-gac-closed-generics-bounces at icann.org<mailto:gnso-gac-closed-generics-bounces at icann.org>> On Behalf Of John McElwaine
Sent: Tuesday, April 18, 2023 11:59 AM
To: Melissa Peters Allgood <melissa.allgood at icann.org<mailto:melissa.allgood at icann.org>>; gnso-gac-closed-generics at icann.org<mailto:gnso-gac-closed-generics at icann.org>
Subject: Re: [gnso-gac-closed-generics] Closed Generics Updates - 14 April 2023

With respect “representativeness”, I must respectfully state that the following is a redline for me:

1.       For “representativeness”, applicants must demonstrate that the applicant represents all or a significant part of the businesses (or has their agreement) in the industry or grouping related to the closed generic term.

The revisions would only allow for a closed generic applicant that was an international trade association of businesses.  This is far afield from what we have discussed and would fall into the category of an impermissible Policy determination.

I agree with the concept of  “Non Anti-Competitiveness” as a part of the Framework process as a part of the delegation section, which is Section IV.  However, we are discussing this mostly in a double-negative way.  Moreover, this is an area of law that I fear we are trying to define and which is outside of our knowledge.  I prefer something like Proposed Alternative #1, which I would suggest is revised as follows:

2.            For “non anti-competitive behaviour”, applicants must commit that its use of this closed generic gTLD will not be used to violate national laws prohibiting unfair methods of competition, such as collusion, restraints of trade that prohibit third parties from supplying or offering to supply goods or services, or otherwise monopolistically controlling, limiting, or restricting the supply of goods or services

Thanks,

John

From: gnso-gac-closed-generics <gnso-gac-closed-generics-bounces at icann.org<mailto:gnso-gac-closed-generics-bounces at icann.org>> On Behalf Of Melissa Peters Allgood
Sent: Friday, April 14, 2023 2:34 PM
To: gnso-gac-closed-generics at icann.org<mailto:gnso-gac-closed-generics at icann.org>
Subject: [gnso-gac-closed-generics] Closed Generics Updates - 14 April 2023

◄External Email► - From: gnso-gac-closed-generics-bounces at icann.org<mailto:gnso-gac-closed-generics-bounces at icann.org>

Hi all –

I want to share a bit of the work that staff has done to support your efforts and provide more detail about the approach to our upcoming calls.

Discussion Draft v2.1<https://urldefense.proofpoint.com/v2/url?u=https-3A__docs.google.com_document_d_1wtLVcyWhyrCaYl1iqlAncaIyrqpS-2D-2D0aPCTjpwMue7I_edit&d=DwMGaQ&c=qmi9WrYRGQEDDOxOwKrAjW7mWovpzN_EKyRbeK_zbP0&r=Kepk-9GEB6JgOj0vUGl8c0hdrRM7FW-8Is-VAQU1VAm5U0rBXiZs3BfB3GfKU2uR&m=ODO8endu2yFS9Q7WIZvDyDo1jWyvQo0fVRf64r8ZyBJHmS1kTm2DEU42C8rV4FGM&s=n6Zv8I5X6-mQu2qIZs8CpuYTk5kqq3ZsvNMfiqiSDUM&e=>

We will continue to work our way through all your inputs into this document. It has been cleaned up slightly, hence the v2.1, but nothing of substance has been altered. We will move through this document in the following manner:

  *   Section III.  Applying for a Closed Generic gTLD
  *   Section IV. Evaluating a Closed Generic gTLD Application
  *   Section V. Contracting & Post-Delegation Review
  *   Definitions
  *   Policy questions and possible implementation questions based on group discussions to date

     *   I don’t anticipate getting into the substance of these and will simply ask if the areas detailed properly encapsulate other conversations had by this group

In comments, staff have identified possible areas of duplication in upcoming points under discussion. When such areas arise, I will ask for the temperature of the room on the duplication issue before possibly moving onto the substance of the framework element.

Closed Generics Framework v3<https://urldefense.proofpoint.com/v2/url?u=https-3A__docs.google.com_document_d_1u0Nb9-5FCJ-2D6R-5FZF4bt9wbkzxLhMKu64aKY-5FvzS3QixgQ_edit&d=DwMGaQ&c=qmi9WrYRGQEDDOxOwKrAjW7mWovpzN_EKyRbeK_zbP0&r=Kepk-9GEB6JgOj0vUGl8c0hdrRM7FW-8Is-VAQU1VAm5U0rBXiZs3BfB3GfKU2uR&m=ODO8endu2yFS9Q7WIZvDyDo1jWyvQo0fVRf64r8ZyBJHmS1kTm2DEU42C8rV4FGM&s=k27Asp9yNGvBNSgyJY2Pi8f1F7M5gBtFQCRbjkgfgm0&e=>

This is a clean copy of framework elements from Discussion Draft v2.1 where the group has demonstrated broad agreement. This document will continue to evolve as you work through the remaining sections of Discussion Draft v2.1. Please keep this document clean. We will consider this document as a whole after we complete the remaining work found in Discussion Draft v2.1.

Proposed Edits to Representativeness or Non Anti-Competitiveness

Sophie has shared proposed edits to this element on the mailing list. Please respond on the mailing list if:

  1.  You disagree and this a red line for you
  2.  You wish to state a preference between the options presented

Staff will incorporate your feedback on this element into Discussion Draft v2.1.

Upcoming Discussions

As we continue to work through Discussion Draft v2.1, I’d remind you that this is not the time to rehash previous positions. We all understand that many elements under discussion may not be the preference of a given individual while also not rising to the level of personal red line. Accordingly, I ask you limit interventions to clarifying questions and/or indications that the text under discussion is a personal red line.

Finally, at this point in the work I ask you focus your energy on the spirit and intention of each framework element under discussion rather than details of the text. I recognize this is far easier said than done, but I ask we all try.

As always, my sincere thanks for your continued hard work. We are getting there!

Wishing you all a lovely weekend,

Melissa

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