ICANN Resolutions » Options for Addressing Registries Stakeholder Group's (RySG) Request for Refund of TMCH Registry RPM Access Fee
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Whereas, the Trademark Clearinghouse (TMCH) is a global repository for trademark data established by ICANN org in March 2013.
Whereas, the need for the TMCH was foreseen during the development of the New gTLD Program and the Applicant Guidebook (AGB).
Whereas, the TMCH fees for registries are defined in Section 6.4 of the Registry Agreement (RA), which states that a registry is to pay a one-time rights protection mechanism (RPM) access fee of $5,000 and also a $0.25 transactional fee per Sunrise Registration and Claims registrations.
Whereas, in October 2017, the RySG requested a refund of the one-time RPM access fee of $5,000 for each registry that accessed the TMCH from remaining New gTLD Program funds.
Whereas, the ICANN Board has determined that while the concept for the TMCH was foreseen in the AGB, the pricing and fees were not. The $5,000 fee was first defined in the 2013 version of the RA, and was not specified in the RA version included with the AGB or the version made available prior to the application period.
Whereas, the New gTLD Program is nearly complete, and there is more clarity surrounding the availability of the remaining New gTLD Program funds, but it could take several additional years before all risks and liabilities are fully known and quantified.
Resolved (2018.05.13.10), the ICANN Board directs the President and CEO or his designee(s) to take all steps necessary to provide a refund of $5,000, as soon as practicable, to the contracted registries or registry operators (including those that have terminated their contracts or whose TLD delegation has been revoked) that have paid to ICANN the one-time RPM access fee as defined in Section 6.4 of the RA.
Why is the Board addressing the issue now?
In October 2017, the Registries Stakeholder Group (RySG) requested a refund of the one-time RPM access fee of $5,000 for each registry. The RySG contends that "[a]ll other systems and programs related to the New gTLD Program were funded from application fees. The TMCH should have been no different and there was no reason to "double-charge" registries for this one piece of the program." The RySG also contends that the one-time RPM access fee was not provided for in the AGB [as published prior to the opening of the application window] and that "ICANN added [the fee] on its own after all applications were accepted and without community input".1 Based on this, the RySG requests refunding of the "overcharge" from the remaining New gTLD Program funds.2
What are the options being considered? What factors did the Board find significant?
In considering the RySG request, the Board contemplated a range of options, including maintaining the status quo (no refund), refunding now, or deferring consideration of the request until the end of the New gTLD Program. In weighing these options, the Board considered a number of factors, including: Is providing a refund consistent with the AGB or RA? Is it consistent with other New gTLD Program Funding Approaches? Does providing a refund now allow ICANN org to account for other risks/costs?
With regard to not providing a refund, the Board considered that the TMCH fee provision seeks to cover costs associated with providing TMCH services. Indeed, the primary argument in favor of this approach is that the concept for the TMCH was foreseen in the AGB, and the RA—agreed to by the registries—contains provisions for the TMCH fees.
However, the Board also considered that, while the concept for the TMCH was foreseen in the AGB, the pricing and fees were not. The $5,000 fee was first defined in the 2013 version of the RA, and was not specified in the RA version included with the AGB or the version made available prior to the application period. Additionally, funding the TMCH by collecting pass-through fees from registry operators is not consistent with the approach used to fund other operational services in support of the New gTLD program operations. Other aspects of the program were paid for directly out of application fees.
As such, the Board considered the option of providing the refund, and whether that could be done now or should be done at the close of the New gTLD Program. The Board considered that it may be prudent to wait to consider this request until the close of the New gTLD Program. This option allows for completion of the risk assessment and quantification effort currently underway, prior to providing the refund to the registries. If—at the close of the New gTLD Program—it has been determined that all risks and other costs have been accounted for, then the Board could consider at that time to provide a refund of the $5,000 RPM access fee to all registries. The Board also considered that many requests for refunding or offsetting fees have been and/or will be received and that other aspects of ICANN org's New gTLD Program operations that may require additional funding over the next few years.
However, the Board also considered that the New gTLD Program is largely complete, and there is already more clarity surrounding the availability of New gTLD Program funds and that it could require several additional years before all risks and liabilities are fully known and quantified. The Board also weighed, as noted above, that the fees were first defined in the 2013 version of the RA, and not in the RA version included with the AGB or made available prior to the application period. Additionally, refunding the fees is also consistent with the approach used to fund other operational services in support in the New gTLD Program, as it would be using application fees to cover the cost of the TMCH for registries. For these reasons, the Board has determined that the option to refund the fee to the registries is the most reasonable.
What significant materials did the Board review?
In adopting this resolution, the Board has reviewed, in addition to the options provided by ICANN org, various materials, including, but not limited to:
Applicant Guidebook, Section 5.4 and Terms & Conditions ("Trademark Clearinghouse") (https://newgtlds.icann.org/en/applicants/agb/guidebook-full-04jun12-en.pdf [PDF, 5.9 MB])
January 2012 version of the Applicant Guidebook (https://newgtlds.icann.org/en/applicants/agb/guidebook-full-11jan12-en.pdf [PDF, 3.8 MB])
Registry Agreement Section 6.4 (https://www.icann.org/resources/pages/registries/registries-agreements-en)
New gTLD Program Trademark Clearinghouse Microsite (https://newgtlds.icann.org/en/about/trademark-clearinghouse)
Trademark Clearinghouse Requirements (http://newgtlds.icann.org/en/about/trademark-clearinghouse/rpm-requireme... [PDF, 386 KB])
RySG to Akram Atallah, 14 March 2017 (https://www.icann.org/en/system/files/correspondence/diaz-to-atallah-et-... [PDF, 713 KB])
Akram Atallah to RySG, 29 August 2017 (https://www.icann.org/en/system/files/correspondence/atallah-to-diaz-29a... [PDF, 364 KB])
RySG to Akram Atallah, 3 October 2017 (https://www.icann.org/en/system/files/correspondence/diaz-to-atallah-03o... [PDF, 127 KB])
Akram Atallah to RySG, 22 December 2017 (https://www.icann.org/en/system/files/correspondence/atallah-to-diaz-22d... [PDF, 174 KB])
Are there fiscal impacts or ramifications on ICANN?
The Board's action will have a fiscal impact on ICANN. The funding of the refund is expected to come from the unspent portion of the New gTLD program application fees. The estimated amount of these new gTLD program funds remaining available to cover for "hard-to-predict" costs (including risks), in addition to the evaluation expenses remaining to be incurred, is expected to be $81,609,000, resulting from the most recent projections produced as part of the Draft FY19 Operating Plan and Budget. The total refund amount of $6,210,000 would come to reduce by as much the estimated amount of funds remaining available to cover for "hard-to-predict" costs.
Are there positive or negative community impacts?
Taking this action will help support ICANN's mission to ensure the stable and secure operation of the Internet's unique identifier systems. This action benefits the ICANN community as it provides transparency regarding use of the New gTLD Program remaining funds.