XXX Saga Continues

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Sex and the internet.
Put the two together and you are bound to find an interesting story.
While the saga surrounding sex.com took a new twist in the last couple of days, with the current owners going dotbomb, the .xxx story also took an interesting turn.

ICM Registry LLC applied to ICANN to run the .xxx TLD. You don’t need to be a genius to work out which sector .xxx was aimed at – adult entertainment / mature content.

For several years ICM and ICANN tangoed.

In the end the ICANN board voted during the Lisbon meeting (March 30th 2007) against .xxx and focus shifted to other events. The Lisbon meeting was the first ICANN meeting that I attended and I remember the tension in the hotel bar on the night before the board meeting. You could have cut the air with a knife. ICM and their supporters were literally in one camp, while those in opposition were in another. Westerdal’s article (linked above) covers most of the salient points in the history of the .xxx bid to that date.

However the story of .xxx did not end in Lisbon.

But ICM weren’t going to simply “roll over”. They’d already had one application for the .xxx TLD rejected and so they then asked for an independent review. That was back in September of last year, with parts of the process taking place earlier in the year.

The independent review involved testimony from not only ICM executives, but also former ICANN CEO Dr Paul Twomey, Dr Vint Cerf and many many others.

For those involved with the new TLD process the outcome of any review of ICM’s .xxx application will be examined very closely. The new TLD application guidebook, which is still being drafted, will obviously be influenced by any previous TLD applications. Any review process that takes place outside the “normal” ICANN process could be a source of concern not only for ICANN, as an organisation, but also for organisations wishing to launch a new domain extension. If the ICANN procedures and processes can be shown to be flawed then there may be a whole range of issues for both ICANN and the applicants to deal with prior to any forward movement in the new TLDs.

So earlier this evening ICANN CEO, Rod Beckstrom, tweeted that the independent review had found in ICM’s favour – with a vote of 2 – 1.

Shortly afterwards the actual decision was published on the ICANN website.

If you have the time you can plough through the entire document (about 80 pages), but the key “takeaway” from this is that ICANN has lost.

The ICANN board’s decision has been shown to be flawed.

The panel states:

…the Panel finds ground for questioning the neutral and objective performance of the Board, and the consistency of its so doing with its obligation not to single out ICM Registry for disparate treatment

Not good. That strongly suggests that ICANN’s board may have been influenced by external forces – in all likelihood the US government.

The rest of their findings are worth quoting, as they are very important and shine a spotlight on the inconsistencies:

The Panel concludes, for the reasons stated above, that:
First, the holdings of the Independent Review Panel are advisory in
nature; they do not constitute a binding arbitral award.
Second, the actions and decisions of the ICANN Board are not entitled
to deference whether by application of the “business judgment” rule or
otherwise; they are to be appraised not deferentially but objectively.
Third, the provision of Article 4 of ICANN’s Articles of Incorporation
prescribing that ICANN “shall operate for the benefit of the Internet
community as a whole, carrying out its activities in conformity with relevant
principles of international law and applicable international conventions and
local law,” requires ICANN to operate in conformity with relevant general
principles of law (such as good faith) as well as relevant principles of
international law, applicable international conventions, and the law of the
State of California.
Fourth, the Board of ICANN in adopting its resolutions of June 1, 2005,
found that the application of ICM Registry for the .XXX sTLD met the required
sponsorship criteria.
Fifth, the Board’s reconsideration of that finding was not consistent
with the application of neutral, objective and fair documented policy.
Sixth, in respect of the first foregoing holding, ICANN prevails; in
respect of the second foregoing holding, ICM Registry prevails; in respect of
the third foregoing holding, ICM Registry prevails; in respect of the fourth
foregoing holding, ICM Registry prevails; and in respect of the fifth foregoing
holding, ICM Registry prevails. Accordingly, the prevailing party is ICM
Registry. It follows that, in pursuance of Article IV, Section 3(12) of the
Bylaws, ICANN shall be responsible for bearing all costs of the IRP Provider.
Each party shall bear its own attorneys’ fees. Therefore, the administrative
fees and expenses of the International Centre for Dispute Resolution, totaling
$4,500.00, shall be borne entirely by ICANN, and the compensation and
expenses of the Independent Review Panel, totaling $473,744.91, shall be
borne entirely by ICANN. ICANN shall accordingly reimburse ICM Registry
with the sum of $241,372.46, representing that portion of said fees and
expenses in excess of the apportioned costs previously incurred by ICM
Registry.

 
Note the financial portion of the judgement. ICANN, which has already had a budget overrun, gets hit again, this time for nearly half a million dollars.

You can download the full text of the review panel’s decision from the ICANN website, although some sections have been redacted by ICM for reasons of confidentiality.

Since this was released on a Friday night it’s unlikely that there will be much public reaction from either ICANN, ICM or any others until next week, but I suspect that there will be some very interesting discussions surrounding this decision.

Amazing how a single document can rock the boat, isn’t it?

UPDATE: Since this story has attracted quite a bit of attention from ICANN observers some of their comments on Twitter and elsewhere have led to extra material worth citing. Former ICANN board member Susan Crawford made a very interesting statement about the Board’s vote, which is worth reading. (Thanks to Antony Van Couvering for the link)

UPDATE 2: Milton Mueller who was one of the expert witnesses during the review of .xxx has posted on the subject as well.