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<p class="MsoNormal">This seems overcomplicated and I also don’t think removes the incentives.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b><span style="font-size:8.0pt;font-family:"Georgia",serif;color:black">Marc H. Trachtenberg
</span></b><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black"><br>
Shareholder<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black">Chair, Internet, Domain Name, e-Commerce and Social Media Practice<br>
Greenberg Traurig, LLP <br>
77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 <br>
T +1 312.456.1020 <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black">M +1 773.677.3305<br>
</span><a href="mailto:trachtenbergm@gtlaw.com"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39">trac@gtlaw.com</span></a><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39"> | </span><a href="http://www.gtlaw.com/"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39">www.gtlaw.com</span></a><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black">
| </span><a href="https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39">View GT Biography
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<p class="MsoNormal"><img border="0" width="192" height="31" style="width:2.0in;height:.3229in" id="Picture_x0020_10" src="cid:image001.png@01DAC350.03F8FBE0" alt="Greenberg Traurig Logo"><o:p></o:p></p>
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<p class="MsoNormal"><b>From:</b> Jothan Frakes <jothan@jothan.com> <br>
<b>Sent:</b> Thursday, June 20, 2024 3:27 PM<br>
<b>To:</b> Trachtenberg, Marc H. (Shld-Chi-IP-Tech) <trachtenbergm@gtlaw.com><br>
<b>Cc:</b> samlanfranco@gmail.com; subpro-irt@icann.org<br>
<b>Subject:</b> Re: [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions<o:p></o:p></p>
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<p class="MsoNormal">I was considering, as we were al kvetching about the fees in another thread, that one concept that might be a creative method of isolating the contention set resolution _stuff_ might be to withhold any discounting refunds for the applications
within those sets until the contention set is resolved, and isolate any fees associated with the remedy of the contention to being funded from that pool of moneys, isolated from the other applications.<o:p></o:p></p>
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<p class="MsoNormal">Here is an illustration hypothetical example of how this might work:<o:p></o:p></p>
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<p class="MsoNormal">Marc applies for .cryptoschmutz, I apply for .cryptoschmutz, and there are maybe eight others that apply for .cryptochmutz, for a population of 10 .cryptoschmutz TLD applications.<o:p></o:p></p>
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<p class="MsoNormal">We all paid a higher application fee, based upon ICANN's prediction that there would only be 1000 applications, and ICANN receives a thundering herd more than that, say 3000, to where the fee is reduced and a portion is eligible to be refunded.
To keep it simple, let's use 50k as the refundable amount.<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal">Because we were all in a contention set, the refunds would be withheld, and there would be a pool of 10x50k, 500k available to use as the contention set resolution funding pool to cover any costs associated with the .cryptoschmutz TLD.
Whatever occurs to narrow the pool of applicants to 1, any costs, legal or otherwise, are paid solely from that pool, and then 1/10 of any remainder is distributed to each applicant AFTER the contention set is addressed. So, let's say it cost 50k to resolve,
then there is 450k remaining and that gets distributed as 45k each to the applicants.<o:p></o:p></p>
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<p class="MsoNormal">This could financially disincentivize intentionally joining a set, as you end up with stuck money, and the attraction of being refunded could be an incentive for more applicants rapidly arriving at contention set resolutions.<o:p></o:p></p>
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<p class="MsoNormal">-Jothan<o:p></o:p></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt"><br>
Jothan Frakes<br>
Tel: +1.206-355-0230<o:p></o:p></p>
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<p class="MsoNormal">On Thu, Jun 20, 2024 at 12:08 PM trachtenbergm--- via SubPro-IRT <<a href="mailto:subpro-irt@icann.org">subpro-irt@icann.org</a>> wrote:<o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">Personally, I think that permitting private auctions in the next round will completely distort and destroy it as the majority of applications will be speculative in nature trying
to get a payout via private auction. We already know anecdotally that there are a number of people setting up funds to do this and many others have already publicly expressed an interest in doing this. And certain strings are obvious targets. This will
junk up the process, waste ICANN resources, and increase time and cost for all applicants, and be detrimental to the general public. Frankly, I don’t know anyone that thinks permitting private auctions is a good idea and will be beneficial other than those
who have expressed interest in participating in them.<o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">Of course it is a different question of
<i>how</i> to prohibit private auctions. I am not sure how this can be effectively accomplished. Maybe we prohibit all private resolution of contention sets for monetary (or equivalent) consideration other than the ICANN auction of last resort. Could applicants
still do this secretly – of course. But if they wee found out, the winner could lose its TLD. If we all think that having private auctions is detrimental then we should take steps here to prohibit them, as ICANN is not doing so (although they have expressed
concern) and have kicked it back to the GNSO. Yes of course there will be ways to game any method we choose but the possibility of gaming is too often used in ICANN-land as a reason/excuse not to do things and to keep the status quo. The reality is that
any system/rule/process can be gamed and the best we can do is try to set up the process to reduce opportunities for gaming and increase penalties for doing so.<o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto">Best regards,<o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b><span style="font-size:8.0pt;font-family:"Georgia",serif;color:black">Marc H. Trachtenberg
</span></b><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black"><br>
Shareholder</span><o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black">Chair, Internet, Domain Name, e-Commerce and Social Media Practice<br>
Greenberg Traurig, LLP <br>
77 West Wacker Drive | Suite 3100 | Chicago, IL 60601 <br>
T +1 312.456.1020 </span><o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black">M +1 773.677.3305<br>
</span><a href="mailto:trachtenbergm@gtlaw.com" target="_blank"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39">trac@gtlaw.com</span></a><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39"> | </span><a href="http://www.gtlaw.com/" target="_blank"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39">www.gtlaw.com</span></a><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:black">
| </span><a href="https://www.gtlaw.com/en/professionals/t/trachtenberg-marc-h" target="_blank"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:#BE9B39">View GT Biography
</span></a><o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b>From:</b> SubPro-IRT <<a href="mailto:subpro-irt-bounces@icann.org" target="_blank">subpro-irt-bounces@icann.org</a>>
<b>On Behalf Of </b>Sam Lanfranco<br>
<b>Sent:</b> Thursday, June 20, 2024 1:20 PM<br>
<b>To:</b> <a href="mailto:subpro-irt@icann.org" target="_blank">subpro-irt@icann.org</a><br>
<b>Subject:</b> [SubPro-IRT] GAC Advice on Private Auctions and ICANN Last-Resort Auctions<o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"> <o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;margin-bottom:12.0pt"><b><span style="color:#0E0E3F">*EXTERNAL TO GT*</span></b><o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:12.0pt;font-family:"Aptos",sans-serif;color:black">Comment by Sam Lanfranco</span><o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:12.0pt;font-family:"Aptos",sans-serif;color:black">I do not believe that the GAC understands the complexities in its advice with regard to not using auctions
in the resolution of contention sets.</span><o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:12.0pt;font-family:"Aptos",sans-serif;color:black">FIRST: Once a contention set is determined, there is really no mechanism by which the contenders can work
out a resolution on their own that can be prevented by ICANN. In a contention set an agreed payment scheme would avoid an auction, but an auction ban could not be enforced. Even insisting on an ICANN auction of last resort could not prevent a prior agreement
between contending parties, and the ICANN auction would just a formality in terms of a private agreement.</span><o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:12.0pt;font-family:"Aptos",sans-serif;color:black">SECOND: Auctions exist to solve a problem of excess demand for unique (non-fungible) commodities. A gTLD
is a unique supply of one item, the thing being sought is right to be the registry for that one item (vertical supply line at Q = 1). Money as the numéraire in which the price is expressed and the auction as a way of selecting a buyer when there are competing
interests are a “form follows function” solution to the competing interests. It was invented precisely for this purpose when there is no overriding reason to award the "item" (gTLD registry) to any one contender. </span><o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:12.0pt;font-family:"Aptos",sans-serif;color:black">GAC proposed no alternatives to resolving the contention set without an auction. Any alternative would
require a consensus on an outside agent who would have neither regulatory guidelines not case law to reach a decision. That would mean that there are no objective criteria for selecting an outside agent.</span><o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:12.0pt;font-family:"Aptos",sans-serif;color:black">My view here would be to explain this to GAC, and politely ask if they have guidance on how an acceptable
outside agent might be identified. In the end I see no way around an ICANN auction of last resort, even if there is a way of preventing a private resolution within the contenders in the contention set. This situation is precisely why humans with agency created
auctions in the first place.</span><o:p></o:p></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:12.0pt;font-family:"Aptos",sans-serif;color:black">Sam Lanfranco</span><o:p></o:p></p>
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