ICANN Resolutions » Consideration of BAMC recommendation on Reconsideration Request 19-4

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Consideration of BAMC recommendation on Reconsideration Request 19-4


Resolution of the ICANN Board
Meeting Date: 
Sun, 26 Jan 2020
Resolution Number: 
2020.01.26.12 – 2020.01.26.14
Resolution Text: 

Whereas, Merck KGaA and Merck Registry Holdings, Inc. (Requestors) submitted Reconsideration Request 19-4 seeking reconsideration of ICANN organization's denial of their mutual request for a second postponement of a string contention auction for the .MERCK generic top-level domain (gTLD) (Second Request).

Whereas, the Requestors claim that ICANN Staff failed to consider material information and violated established ICANN policies favoring voluntary string contention settlement and permitting discretionary waiver of deadlines when it denied the Second Request.

Whereas, the Requestors further claim that denial of the Second Request violated ICANN's Commitment in its Bylaws to "[m]ake decisions by applying documented policies neutrally and objectively with integrity and fairness."

Whereas, the Board Accountability Mechanisms Committee (BAMC) previously determined that Request 19-4 is sufficiently stated and sent Request 19-4 to the Ombudsman for consideration in accordance with Article 4, Section 4.2(j) and (k) of the ICANN Bylaws.

Whereas, the Ombudsman recused himself from this matter pursuant to Article 4, Section 4.2(l)(iii) of the Bylaws.

Whereas, the BAMC carefully considered the merits of Request 19-4 and all relevant materials and recommended that Request 19-4 be denied because ICANN Staff did not fail to consider material information and did not violate ICANN's Commitments, Core Values or established ICANN policy(ies) in its denial of Requestors' Second Request.

Whereas, the BAMC recommended that the Board ask ICANN organization to seek an update from Requestors and, if the Requestors jointly declare they have made progress since filing Request 19-4 and that they are very close to private resolution, to consider providing some form of discretionary relief to allow the Requestors time to finalize a private resolution.

Whereas, the Requestors submitted a Rebuttal to the BAMC's Recommendation pursuant to Article 4, Section 4.2(q) of the ICANN Bylaws.

Whereas, the Rebuttal provided an update on the Requestors' progress toward reaching private resolution of the string contention issue and stated that the Requestors are not likely to resolve their disputes concerning .MERCK in the next month, and requested postponement of the auction until the end of August 2020.

Resolved (2020.01.26.12), the Board adopts the BAMC Recommendation and thereby denies Reconsideration Request 19-4.

Resolved (2020.01.26.13), the Board directs the President and CEO, or his designee(s), to seek an additional update from the Requestors on settlement progress. If the Requestors jointly declare they have made progress since filing Request 19-4 and ICANN organization is satisfied that the Requestors are very close to private resolution, the Board asks the President and CEO, or his designee(s), to consider providing the Requestors with some form of discretionary relief to allow them a short amount of time to finalize a private resolution.

Resolved (2020.01.26.14), if the Requestors do not provide an additional update regarding their settlement progress and/or if ICANN organization is not satisfied that the Requestors are very close to private resolution, the Board directs the President and CEO, or his designee(s), to continue processing the .MERCK applications, including scheduling an auction if ICANN organization deems it appropriate.

Rationale for Resolution: 

Brief Summary and Recommendation

The full factual background is set forth in the BAMC Recommendation on Request 19-4 (BAMC Recommendation), which the Board has reviewed and considered, and which is incorporated here.

On 19 December 2019, the BAMC evaluated Request 19-4 and all relevant materials and recommended that the Board deny Request 19-4 because ICANN Staff did not fail to consider material information and did not violate ICANN's Commitments, Core Values or established ICANN policy(ies) in its denial of Requestors' Second Request.

On 3 January 2020, the Requestors submitted a Rebuttal to the BAMC Recommendation (Rebuttal) pursuant to Article 4, Section 4.2(q) of ICANN's Bylaws. The Requestors claim that: (1) the BAMC mischaracterized the history of the Requestors' disputes over trademark rights involving the word "Merck"; (2) the Applicant Guidebook's rule prohibiting multiple renewals does not apply to the Requestors; (3) the BAMC improperly penalized the Requestors for not submitting evidence that ICANN Staff failed to consider material information; (4) by denying the Second Request, ICANN Staff discriminated against the Requestors; and (5) although Requestors initially expected that they would be able to resolve the string contention by early 2020, the Requestors now ask ICANN Staff to postpone the auction until the end of August 2020 to allow adequate time for the Requestors to privately resolve the string contention.

The Board has carefully considered the BAMC's Recommendation, as well as all relevant materials for Request 19-4, and concludes that Request 19-4 is denied. Consistent with the BAMC's Recommendation, the Board will ask ICANN organization to seek an additional update from the Requestors on settlement progress although the Rebuttal suggested that private resolution, even if achieved, would not occur until August of 2020. If the Requestors jointly declare they have made progress since filing Request 19-4 and ICANN organization is satisfied that the Requestors are closer to private resolution than the Rebuttal suggests, then the Board asks ICANN organization to consider providing the Requestors with some form of discretionary relief that could allow them some limited time to finalize a settlement.

Issue

The issues are as follows:

Whether ICANN Staff failed to consider material information when it denied the Requestors' mutual request for a second postponement of the .MERCK contention set auction.

Whether ICANN Staff violated established ICANN policies favoring voluntary settlement of string contentions and allowing for discretionary waiver of deadlines when it denied the Requestors' mutual request for a second postponement of the .MERCK contention set auction.

Whether ICANN Staff violated ICANN's Commitment to "[m]ake decisions by applying documented policies consistently, neutrally, objectively, and fairly" when it denied the Requestors' mutual request for a second postponement of the .MERCK contention set auction.

Analysis and Rationale

ICANN Staff Did Not Fail to Consider Material Information Before Denying the Second Request

ICANN Staff considered all material information in denying the Second Request. The Requestors argue that ICANN Staff disregarded the history of multijurisdictional litigation between them concerning the "Merck" trademark, the fact that the Requestors expected to receive judgments in several pending cases "in the coming months," and the fact that the Requestors were "hopeful" that they would be able to resolve their contention over .MERCK "soon" via voluntary agreement.5 And the Requestors suggest that these facts were material to their Second Request.6 The BAMC concluded that: (1) the Requestors have not presented any evidence to support their belief that ICANN Staff failed to consider the history of the Requestors' dispute; (2) the Requestors' lengthy history of dispute is well known to ICANN Staff; (3) ICANN Staff was aware of the Requestors' ongoing efforts at private resolution; and (4) in any event, information regarding the Requestors' dispute or attempts at private resolution was not material to ICANN Staff's decision on the Second Request.7

In their Rebuttal, the Requestors argue that they were not required to present evidence supporting their belief that ICANN Staff failed to consider the material information, and that it would be impossible to prove such a negative.8 The Board acknowledges that ICANN Staff did not expressly reference Requestors' "legally-complex and politically-sensitive background"9 in its decision on the Second Request; however, the record shows the exact opposite of what the Requestors are asserting, namely that ICANN Staff was well aware of that background. The Requestors must, but have failed to, rebut this evidence. Accordingly, the BAMC concluded and the Board agrees that the Requestors' long and contentious history was well known to ICANN Staff.10

The Requestors also challenged ICANN Staff's suggestion, in its denial of the Second Request, that two weeks might be enough "time to pursue and complete the self-resolution of the contention set." Requestors assert that "ICANN Staff did not understand the full extent" of Requestors' ongoing efforts at voluntary settlement; otherwise (according to Requestors), ICANN Staff would have realized that two weeks was not enough time for these parties, given their legally complex and sensitive background, to resolve their disputes.11 However, ICANN Staff's denial of the Second Request merely conveyed that the denial did not, in itself, require the parties to stop trying to privately resolve the string contention. The statement merely makes clear that the parties were free to continue negotiations until the deadline for withdrawing from string contention. Nothing in ICANN Staff's denial of the Second Request demonstrates that ICANN Staff did not appreciate the complexity of the Requestors' dispute. The Board agrees with the BAMC that there is no evidence that ICANN Staff failed to consider this information.

In any event, the BAMC concluded that information regarding the Requestors' history of disputes and resolution attempts was not material or relevant to ICANN Staff's decision on the Second Request.12 The Board agrees. ICANN Staff denied the Second Request consistent with ICANN's rule against granting more than one request to postpone the auction for any contention set, regardless of the reason for the request.13

ICANN Staff Did Not Violate ICANN Policies Favoring Voluntary Settlements.

The Requestors claim that ICANN Staff's denial of the Second Request violated ICANN organization's policies favoring voluntary settlements of contention sets and treating contention set auctions as a means of last resort only.14 The BAMC concluded, and the Board agrees, that the denial of the Second Request was consistent with and did not violate ICANN's policy favoring the voluntary resolution of string contentions and treating auction as a tie-breaker method only.15

In their Rebuttal, the Requestors challenge the BAMC's reliance on the Applicant Guidebook's statement that postponement is "a one-time option; ICANN will grant no more than one such request for each set of contending applications."16 Requestors assert that this language does not apply to them because it is in the section of the Applicant Guidebook discussing Community Priority Evaluation procedures when "more than one community-based application is found to meet the criteria" for Community Priority, and neither of the community-based applications for .MERCK met the criteria for Community Priority.17

However, although the Applicant Guidebook's discussion of the one-postponement rule comes in the section of Community Priority Evaluations, the language in the Applicant Guidebook makes clear that mutual requests for postponements of auctions will be granted once and only once. Further, and notably, as the BAMC pointed out and Requestors acknowledge, the Applicant Guidebook is not the only document referencing that one-postponement only rule. ICANN's "Auction Date Advancement/Postponement Request Form" (the Postponement Request Form) explains that "ICANN may accommodate one postponement request per contention set."18 As the BAMC noted, the current version of the Auction Rules for New gTLDs refers to the Postponement Request Form.19 The Postponement Request Form "provides applicants who have received an intent to Auction notification the ability to request an advancement or postponement to their scheduled Auction Date" if all contention set members agree on postponing (or advancing) the auction date.20 The form is available for postponement requests from any group of applicants in any contention set (so long as all members of the contention set agree to the postponement). The Postponement Request Form does not limit the one-postponement rule to any certain type of contention set – rather, it is applicable to all.21

The Board concludes that the Postponement Request Form evidences ICANN organization's rule to grant only one mutually requested postponement of an auction, and that the references to postponing auctions in the Applicant Guidebook and the Auction Rules do not evidence an intent to limit the applicability of that rule to certain types of contention sets, or to permit multiple postponements for certain types of contention sets.

The Requestors also suggest in their Rebuttal that although they have sought to resolve the .MERCK contention set in good faith during the more than five months (now more than eight months) since the auction for the contention set was first scheduled on 2 May 2019, "the picture is far more complex" – presumably suggesting that five months is not enough time.22 However, it should be noted that the Requestors have had much more than five months to resolve their disputes. The Requestors have been involved in disputes with each other for decades. The Requestors have known that their applications were destined for an auction if they did not reach a private resolution since their 2012 submission of competing .MERCK applications; or, at the very least, since March 2013 when Merck KGaA filed Legal Rights Objections against Merck Registry Holdings, Inc.'s application specifically relating to the use of the "Merck" name.23 As such, this argument by the Requestors does not support reconsideration.

The BAMC concluded and, for the reasons stated above and those set forth in the BAMC Recommendation, the Board agrees that the denial of the Second Request, and ICANN's rule against second postponements of contention set auctions more broadly, is consistent with and does not violate ICANN's policy favoring the voluntary resolution of string contentions and treating auction as a tie-breaker method only. In addition, it should be noted that the rule against second postponements does not prevent settlements, but merely prevents parties from indefinitely prolonging gTLD disputes by providing an auction deadline. This use of the auction process to provide a backstop if settlement efforts fail after a reasonable time is consistent both with ICANN's pro-settlement policy and with its designation of auctions as a method of last resort to resolve string contention.

ICANN Staff Did Not Violate ICANN's Commitment to Apply Policies Neutrally and Objectively.

The Requestors claim that ICANN Staff's denial of the Second Request violated ICANN's Commitment to make "decisions by applying documented policies neutrally and objectively with integrity and fairness." The BAMC concluded, and the Board agrees, that neither ICANN's Commitment to apply policies neutrally nor any other Commitment precludes the use of ICANN's rule against second postponements or requires the use of case-by-case discretion in all instances.

In their Rebuttal, Requestors suggest that, "given the uniqueness of the circumstances here," ICANN Staff were required to apply "flexibility and discretion" in considering the Second Request, even if ICANN organization would otherwise prohibit second postponements.24 The "unique[] . . . circumstances" present here, according to the Requestors, are that the two Requestors are "completely aligned" insofar as they "are in complete alignment to postpone the auction."25 But those circumstances are not unique; agreement among applicants is a prerequisite for requesting any auction postponement.26 The Board concludes that this argument does not support reconsideration.

The Requestors disagree with the BAMC's conclusion that applying a one-postponement rule "treats every request for a second postponement equally, by providing that all such requests will be denied."27 The Requestors suggest that ICANN Staff's denial of the Second Request has the effect of "discriminating against [the Requestors]."28 As the Requestors note, ICANN's Commitment to make "decisions by applying documented policies neutrally and objectively with integrity and fairness"29 "specifically aims at preventing discrimination 'singling out any particular party'."30 However, the Requestors have not demonstrated that ICANN Staff singled out any particular party for disparate treatment, because they have not identified any party that ICANN Staff treated differently nor have they identified any instance where ICANN suggested its policy was other than allowing just one mutually requested auction postponement. The Board agrees with the BAMC's conclusion that the single-postponement rule in fact allows ICANN Staff to treat all second postponement requests equally. Accordingly, this argument does not support reconsideration.

The Requestors' Disagreement with the Rule Against Second Postponements of Auctions is Not a Basis for Reconsideration.

The Requestors essentially disagree with ICANN organization's rule denying second postponements in all cases.31 The BAMC concluded that none of the Requestors' arguments demonstrated that the rule contradicts ICANN's Mission, Commitments, Core Values, and/or established ICANN policy(ies), or otherwise provided a basis for reconsideration of the denial of the Second Request.32

On rebuttal, the Requestors clarify that they are not challenging the rule against second postponements itself but rather, they are challenging "the motivation of ICANN Staff to deny the second postponement of the auction."33 For the reasons set forth in the BAMC's Recommendation, the Board concludes that ICANN Staff's motivation in denying the Second Request was to comply with ICANN organization's one-postponement rule. The Board concludes that the Requestors' arguments concerning ICANN Staff's motivation do not support reconsideration.

The Requestors' Update Concerning Settlement Discussions.

In the Rebuttal, the Requestors provide an update on the status of the ongoing litigation that they assert is related to their negotiations concerning .MERCK. The Requestors initially claim that they are "very close to the resolution" of their disputes, yet their new projected dates for the conclusion of the outstanding litigations in Australia, China, India, Switzerland, the U.S., and the U.K. is approximately June 2020; and that "[o]nce we have the above-mentioned decisions and hearings, we will be in a better position to seek to finalize a settlement." The Requestors currently request until the end of August 2020 to attempt to resolve the string contention.34

The Board believes that directing ICANN organization to obtain another update in the near future is unlikely to produce new or different information. Nonetheless, the Board acknowledges the Requestors' offer to "provide the Board with a more detailed update on the court rulings which are expected in January 2020 and the progress they have made toward settlement."35 Accordingly, for good measure, the Board has directed the President and CEO, or his designee(s), to seek an update from the Requestors on: (i) whether the Requestors have received any of the court rulings that the Requestors expect in January 2020; and (ii) what progress, if any, the Requestors have made toward settlement. If the Requestors jointly declare they have made progress since filing Request 19-4 and ICANN organization is satisfied that the Requestors are very close to private resolution, the Board will ask ICANN organization to consider providing the Requestors with some form of discretionary relief that could allow them a limited amount of time to finalize a settlement. If the Requestors do not provide an additional update regarding their settlement progress and/or if ICANN organization is not satisfied that the Requestors are very close to private resolution, the Board directs the President and CEO, or his designee(s), to continue processing the .MERCK applications, including scheduling an auction if ICANN organization deems it appropriate.

This action is within ICANN's Mission and is in the public interest as it is important to ensure that, in carrying out its Mission, ICANN is accountable to the community for operating within the Articles of Incorporation, Bylaws, and other established procedures. This accountability includes having a process in place by which a person or entity materially affected by an action of the ICANN Board or Staff may request reconsideration of that action or inaction by the Board. This action should have no financial impact on ICANN and will not negatively impact the security, stability and resiliency of the domain name system.

This decision is an Organizational Administrative Function that does not require public comment.