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July 29 — Nu Dotco LLC won the auction for the .web top-level internet domain for $135 million, the highest amount ever spent in a domain auction run by the Internet Corporation for Assigned Names and Numbers.
In another unprecedented move, a second applicant, Vistaprint Ltd., won the right to operate a similar domain, .webs, for just $1.
The auction was the first in which two competing applicants for identical or similar domains prevailed. Vistaprint had been trying for at least two years to show that .web and .webs could coexist without creating confusion.
Seven applicants for .web and one applicant for .webs competed in an auction that started July 27 and concluded the next day, ostensibly to determine who would get to operate one of the domains. ICANN announced the results late July 28.
A panel at the International Centre for Dispute Resolution had determined in 2014 that .web and .webs were confusingly similar and that only one of them could exist in the domain name system, in response to an objection by one of the seven .web applicants (19 ECLR 191, 2/5/14).
The objection delayed the auction for several years, but the outcome restored fairness to the process, Flip Petillion, the attorney for Vistaprint and a partner at Crowell & Moring LLP in Brussels, told Bloomberg BNA July 29.
The value of .webs is now confirmed, Petillion said. “And the price for reinstalling justice was low, let’s say relatively low,” he said.
Vistaprint applied for .webs during the first round of ICANN's new generic-top-level domain program. Web.com Group Inc., one of seven applicants for .web, argued that the two strings were too similar to each other and objected to Vistaprint's application.
After ICANN accepted the ICDR panel's determination, Vistaprint invoked ICANN's reconsideration and independent review processes—two pre-established mechanisms designed to check ICANN actions—to attempt to overturn the decision. But .web and .webs remained in what ICANN calls a “contention set,” a group of applied-for domains that are identical or confusingly similar. Competing applicants who haven't been able to resolve the contention set privately must bid at ICANN-run auctions.
ICANN said in a July 28 statement that .web and .webs were in “indirect contention,” which exists when “two or more applications are in direct contention with a third application, but not with one another.” Because .webs was only in direct contention with Web.com's application for .web, Vistaprint could prevail in the auction as long as Web.com wasn't the highest bidder.
The other six applicants for .web didn't object to Vistaprint's application, according to Petillion.
The previous record-winning price in an ICANN auction was $41.5 million, paid earlier this year for the .shop domain (21 ECLR 137, 2/3/16).
The winning price for .web will bring the total auction proceeds to more than $230 million. ICANN is segregating the proceeds into a special fund until it can determine how they should be used.
Nu Dotco had the highest winning bid for .web, but it had been the subject of a challenge from another .web bidder just days before the auction. A subsidiary of domain registry Donuts Inc. had sued ICANN July 22 for allegedly failing to properly investigate a potential application process violation by Nu Dotco (21 ECLR ???, 8/3/16). Donuts attempted to postpone the auction via a temporary restraining order, but a federal district court denied its request July 26.
The U.S. District Court for the Central District of California denied the TRO on substantive and procedural grounds but has allowed Donuts to amend its complaint. It is unclear whether the lawsuit will have an impact on Nu Dotco's launch of .web.
Jonathon Nevett, Donuts co-founder and executive vice president, told Bloomberg BNA July 29 that the auction results confirmed the company's evidence that Nu Dotco resold, transferred or assigned the rights that it had in its .web application. “It is unfortunate that ICANN refused to do an appropriate investigation prior to the auction,” Nevett said.
Donuts' amended complaint is due Aug. 8.
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The auction results are available at http://src.bna.com/hfj.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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