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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DISCLAIMER

ICANN New gTLD Private Auctions, 2015 Patsy of the Year Nominees?

“If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.” ― Warren Buffett

ICANN designed a grand casino game for its new gTLDs (new generic top-level domains) program, whereby the gamblers a/k/a new gTLD applicants can mutually agree on a private auction, and, as in other casino games, it pays to know the rules, and know who the "patsy" is, in each round.

The new gTLD private auctions have become a way for new gTLD applicants to make money (or recoup some of their losses) by participating in the private auction, bid up the price, and then lose in the end to the patsy a/k/a winner of the auction who must pay the second-highest bid which is then divided evenly among the other gamblers a/k/a participating new gTLD applicants. Of course to be admitted to the game, you have to ante up $185,000 (new gTLD application fee to ICANN) and then stay in the "game" until the patsy gets stuck with the winning bid. Note that under ICANN rules, this is all allowed to be done in secret, no one even knows for sure, at this point, how much .BLOG actually sold for, although there has been speculation it was as high as $30 million (see below).

Fast forward to the private auction of new gTLD .BLOG:

TheDomains: Minds + Machines Pockets $3.5+ Million By Losing .Blog & .Store...

Got it? You WIN by LOSING! This is definitely a casino game loved by domain-name-industry- captured-ICANN insiders! So who were all the "Losers" (i.e., the real Winners) in the .BLOG auction? Besides Minds + Machines (see link above), included were industry giants Google, Afilias, Donuts, and reportedly four others. Clue #1: when you outbid companies like Google AND Afilias AND Donuts AND Minds + Machines, for a new gTLD, you are probably the patsy for that round.

Of course, while many observers were privately snickering at what reportedly happened in the .BLOG auction, predictably, some pundits in the domain name industry got the .BLOG story all wrong, here are but two examples:

1. ICANN's Auction Piggy Bank Just Got Twice As Big - actually, no, neither ICANN nor the global multistakeholder community received anything from the private auction of .BLOG and that is the way ICANN designed it--private auctions of new gTLDs were allowed in order to enhance private profit-making, thereby dispensing with any notion of the global public interest! Good Ol' ICANN--LOL!

2. "If anyone thinks that the new gTLD program is failing, I think they should have a look at ...[citing story that $30 million was reportedly paid by the private auction "winner" for .BLOG]... - actually, the new gTLDs program IS failing, badly, and the .BLOG reported sale just means one poor unfortunate new gTLD registry operator is now starting out $30 million in the hole.

Unsurprisingly, the reported "winner" of the .BLOG auction, when contacted, "didn't want to talk." 

Caveat Emptor!

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