New gTLD .WEB Appeal by Ruby Glen (Donuts), ICANN's Answering Brief

New gTLD .WEB Litigation Ruby Glen, LLC v. ICANN:  ICANN's Answering Brief filed Oct 30, 2017, in the Ninth Circuit. The appeal was brought by Ruby Glen LLC (Donuts affiliate) from the Final Judgment (pdf) and Order (pdf) dismissing Ruby Glen's First Amended Complaint (FAC) with prejudice, entered by the U.S. District Court at Los Angeles.

Answering Brief excerpt (page 23 of 75):

ICANN's Answering Brief's Conclusion:

ICANN's Answering Brief [pdf, 393 KB] 30 October 2017, full embed below:

See also:

• Plaintiff's Opening Appellate Brief [pdf, 370 KB] 30 August 2017

• Plaintiff's Notice of Appeal Regarding Dismissal [pdf, 35 KB] December 20, 2016

• Exhibit 1 [pdf, 70 KB] and Exhibit 2 [pdf, 43 KB]

Also note: "How long does it take from the time of the notice of appeal until oral argument? For civil, agency, or bankruptcy appeals, cases are typically scheduled for oral argument 12- 20 months from the notice of appeal date. If briefing isn’t delayed, this is typically approximately 9-12 months from completion of briefing."--The Appellate Lawyer Representatives’ Guide To Practice in the United States Court of Appeals for The Ninth Circuit (June 2017 ed.) (pdf), p. 16 (emphasis added).

Opinion and Analysis by the Editor of Domain Mondo: 
Donuts (Ruby Glen) has an extremely weak case, which it should have never filed. By appealing, Donuts is setting itself up--and all other registry operators and new gTLD applicants, now, and in the future (under the common law principle of stare decisis)--for a Ninth Circuit decision that will (but for a few narrow exceptions) "close the courthouse door" to all future wannabe gTLD litigants.

Verisign $VRSN is in no hurry to launch .WEB, as there is a pending CID from the Antitrust Division of the U.S. Department of Justice, and ICANN also has a pending CEP (pdf) with Donuts and Ruby Glen. In the meantime, most other new gTLDs are "dying on the vine" in the global market for domain names as "essentially, an unwanted and defective product."  The further away from the stench of the failing new gTLDs that Verisign is able to position .WEB, the more successful .WEB will be once launched. Once launched (and properly marketed), few doubt that Verisign will quickly recoup all of its upfront investment in .WEB  ($135Million+) and will thereafter enjoy years of a recurring cash flow stream well in excess of a hundred million dollars annually. As others have also noted, .WEB is, potentially, the only "must have" new gTLD for developers, investors, speculators, and trademark registrants, alike.

For further background, see on DomainMondo.com: News Review: ICANN Webinars ...  2) Other ICANN news a. New gTLD .WEB Litigation Sep 10, 2017, excerpt:

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New gTLD .AMAZON IRP Final Declaration, What Happens Next?

ICANN Loses Another New gTLD IRP: Amazon EU S.à.r.l. v. ICANN (.AMAZON) | ICANN.org:

New gTLD .AMAZON IRP Final Declaration (pdf)

Independent Review Process Final Declaration (IRP) (pdf, 293KB) 11 July 2017, excerpt (pp. 2-3):

The [ICANN] Board, acting through the NGPC [ICANN’s New gTLD Program Committee], acted in a manner inconsistent with its Articles, Bylaws and Applicant Guidebook because, as more fully explained below, by giving complete deference to the consensus advice of the Government Advisory Committee (“GAC”) regarding whether there was a well-founded public policy reason for its advice, the NGPC failed in its duty to independently evaluate and determine whether valid and merits based public policy interests existed supporting the GAC’s consensus advice. In sum, we conclude that the NGPC failed to exercise the requisite degree of independent judgment in making its decision as required by Article IV, Section 3.4(iii) of its Bylaws. (See also ICANN, Supplementary Procedures, Rule 8(iii) [hereafter “Supplementary Procedures”] ... While the GAC was not required to give a reason or rationale for its consensus advice, the Board, through the NPGC, was. In this regard, the Board, acting through the NGPC, failed in its duty to explain and give adequate reasons for its decision, beyond merely citing to its reliance on the GAC advice and the presumption, albeit a strong presumption, that it was based on valid and legitimate public policy concerns. An explanation of the NGPC’s reasons for denying the applications was particularly important in this matter, given the absence of any rationale or reasons provided by the GAC for its advice and the fact that the record before the NGPC failed to substantially support the existence of a well-founded and merits-based public policy reason for denying Amazon’s applications ..." (emphasis added)

Costs, fees, expenses and attorney fees (p. 53):

"ICANN shall reimburse Amazon the sum of US$163,045.51, representing that portion of said fees and expenses in excess of the apportioned costs previously incurred by Amazon ... Each side will bear its own expenses and attorneys’ fees."

 So what happens next? 

"The practical effect of the Panel's ruling is that the dispute is remanded for further proceedings. In other words, Brazil, Peru, the GAC and ICANN, as well as Amazon, may now supplement and strengthen their positions. The Applicant Guidebook states that the objective for ICANN is to "determine whether approval would be in the best interest of the internet community." §5.1. Here, all the interested parties, including Brazil, Peru and the GAC, are members of that community. See Bylaws, Art. I, § 2(11). They all share a common objective and potentially a common benefit in promoting their respective interests anew in light of this Declaration."--Hon. A. Howard Matz, IRP supra, p.67 (emphasis added)

Domain Mondo's analysis and opinion:

Upon "remand" and in accordance with the "objective for ICANN" referenced by Judge Matz above, Brazil, Peru, and the GAC, may very well prevail. As I have noted before, ICANN's dot BRAND new gTLDs were a BAD idea and completely contrary to the historic principles of the internet, see RFC 1591 and News Review: ICANN's Extortionate .BRAND Scam Failing.

Trademarks as generic top-level domains, and presumptive rights of renewal (of gTLD registry agreements), are two of the worst corruptions of the global internet DNS foisted by inept ICANN and its corrupt GNSO upon the global internet community. All TLDs are global public resources, NOT property, in accordance with RFC 1591 and the U.S. government's argument in the recent Weinstein case (pdf). But greed, conflicts of interest, cronyism, and incompetence govern ICANN policy-making and implementation.

"[W]hen a decision is taken about a possible new top-level domain, ICANN's job is to work out, in a transparent and accountable manner, whether it is really in the best interest of the world as a whole, not just of those launching the new domain."--Sir Tim Berners-Lee at the Net Mundial Conference, April, 2014, in São Paulo, Brazil.

-- John Poole, Editor, Domain Mondo 

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New gTLD WEB Loser, Ruby Glen, Files Amended Complaint vs ICANN

UPDATE: August 23, 2016, Order (pdf) that "Defendant’s [ICANN] time to answer, move to dismiss or otherwise respond to the Amended Complaint shall be extended by thirty (30) days to Monday, September 26, 2016."

UPDATE in Ruby Glen, LLC v. ICANN: On August 8, 2016, Plaintiff Ruby Glen filed

• Amended Complaint [PDF, 614 KB] (embed below), and
• Exhibits A to C to Amended Complaint [PDF, 5.44 MB]. 

In its amended complaint, plaintiff Ruby Glen relies, in part, on Section 6.10 (see graphic above) of the Applicant Guidebook. However, plaintiff's interpretation of the last sentence in 6.10 may be misplaced. Reportedly, other new gTLD applicants have utilized arrangements similar to Nu Dot Co and Verisign (.WEB), including for new gTLDs .BLOG and .TECH, without objection from any party or ICANN. Also, reportedly, Donuts own affiliate, Covered TLD LLC (which owns Ruby Glen LLC), granted Rightside rights to acquire Covered TLD’s 100+ applied-for new gTLDs.

Relationship between Ruby Glen LLC, Covered TLD, LLC and Donuts Inc.
as disclosed in the Amended Complaint

Donuts, a privately-held corporation, through its affiliate(s), applied for over 300 new gTLDs and currently operates almost 200 new gTLDs, far more than any other new gTLD registry operator. How much "due diligence" ICANN has actually done regarding the ownership and control of Donuts Inc. is unknown. ICANN hides, or "buries" from public view on its website, much information about new gTLD applicants and their affiliates, subsidiaries, parent organizations, and other "minority" or "controlling" interests. In many, if not most, cases, unless a new gTLD registry operator is a publicly-traded company on a major stock exchange, domain name registrants really have no way of knowing who actually controls the registry of their new gTLD domain name. Ownership and control can easily be hidden from public view by privately-held corporations as indicated in the Panama Papers.

Some have speculated that Ruby Glen (Donuts) never intended to acquire .WEB, but intended to "share in the spoils" as a losing bidder in a "private auction"--a casino-like process sanctioned by ICANN in its new gTLDs program--in which, after paying the new gTLD application fee (or ante) of $185,000 to ICANN, "losing bidders" receive the private auction's net proceeds, as explained here: ICANN New gTLD Private Auctions, 2015 Patsy of the Year Nominees? | DomainMondo.com.

If so, it was unfortunate for Donuts affiliate Ruby Glen, and the other losing bidders, that Verisign was wise to the private auction casino scheme, and as a result, Nu Dot Co insisted on a "last resort" auction where all net auction proceeds are escrowed with ICANN pending their use for public beneficent purposes in accordance with the guidebook. If .WEB had been a private auction, Ruby Glen (Donuts) stood to receive a share of that $132 million, which could have been $22 million or more. Of the 7 bidders for .WEB, all dropped out after the bidding reached the level of $57,500,000 to $71,900,000 (pdf), except Nu Dot Co and 1 other undisclosed bidder (2nd UPDATE: now confirmed to be Afilias not Google/Alphabet's Charleston Road Registry Inc. as earlier reported here). Three of the bidders dropped out very early (by the time the bids reached the level of $15,000,000 to $18,800,000).

As the plaintiff concedes in its amended complaint, Verisign disclosed information to the public by way of its 10-Q filed with the SEC, and a press release a few days later, about its funding agreement with Nu Dot Co in connection with new gTLD .WEB. Unlike privately-held Donuts, Verisign Inc.(NASDAQ: VRSN) is a U.S. publicly-traded corporation, and must comply with all rules of the NASDAQ Stock Market as well as all U.S. laws including disclosure requirements imposed by the U.S. Securities and Exchange Commission (SEC). In addition, as operator of market-dominant  gTLD .COM, Verisign must comply with Amendment 32 of the Cooperative Agreement with the U.S. Department of Commerce, and is also subject to the jurisdiction of the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice.

Plaintiff, in its amended complaint, refers to the recent Dot Registry IRP Declaration, and also raises similar claims as raised by the plaintiff in the DotConnectAfrica [DCA] Trust vs. ICANN litigation concerning the enforceability of the "Purported Release" of ICANN in the Applicant Guidebook. However, the relevance of either the Dot Registry IRP or DCA Trust litigation, to the facts in this case, is questionable.

This is the kind of case that law firms like Jones Day (domain: jonesday.com), ICANN's legal counsel, love. The U.S. District Court Judge has already denied plaintiff's motion for a temporary restraining order, so you can expect an aggressive defense on behalf of ICANN.

ICANN has two weeks to file its answer to the amended complaint in accordance with Rule 15 of the Federal Rules of Civil Procedure (a) (3), which provides "Unless the court orders otherwise, any required response to an amended pleading must be made within the time remaining to respond to the original pleading or within 14 days after service of the amended pleading, whichever is later."

Amended Complaint (highlighting added):


See previously on Domain Mondo: New gTLD WEB, Ruby Glen, LLC v. ICANN, Complaint & TRO Request

See also: Applicant Guidebook | ICANN New gTLDs


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