The President of the ICM Registry, Stuart Lawley posted an open letter on Circle ID, clearly going on the offense in its bid to get the contract from ICANN to run the proposed .XXX registry.

The open letter is addressed to “ICANN and the Internet Community”, and is republished below:

ICM first applied to run the registry for the .XXX extension in 2000, reapplied in 2004 and is currently awaiting ICANN’s final decision after a recent three member “Independent Review Process” Panel found that ICANN wrongfully denied the application.

I met with Mr. Lawley in his offices last week and he talked about the $9 Million + dollars his company has spent in pursuit of the .XXX extension.

Over $5 Million was spent in the Independent Review Process (IRP) which took over 2 years from the start to the ruling.

According to ICANN 2010 budget they record an “unexpected excess legal charge” of over $1.5 M.  Lawley believes that most or all of this amount was spent on ICANN’s attorneys fees for the IRP.  Actually Lawley believes that ICANN total legal bill for the IRP exceeded $2.2 Million.

However in addition to legal fees, each side had to pay $241,000 in cost which went to pay the three member panel.  ICANN was ordered by that same panel to reimburse ICM for the $241K they paid in.

So all totaled up, ICANN may have spent close to $3 Million just for the IRP process and lost.

Now with the Brussels meeting coming up in about 2 months the issue seems to be heading for a final show down.

If ICANN approves the extension and gives the contract to ICM, they will need just 200,000 registration at the proposed $50 registration fee, to recoup their costs.

However if ICANN denies the application or further delays a decision, Lawley told me that ICM will file suit for damages, including all of its costs, legal fees and lost revenue going back to 2007 when ICANN rejected the application.

No matter how you feel about the .XXX extension, you have to be some what concerned about the costs ICANN will incur in the defense of such a case and the possible judgment which could run into the 8 and possibly even 9 figures, as domain holders fund ICANN.

The question also should be asked if so much time, costs and expenses have been incurred by ICANN on one proposed extension how are they ever going to add hundreds, possibly thousands of new extensions?

“”ICM Registry will shortly issue an in-depth response to ICANN’s paper outlining “possible process options” for addressing the declaration of the Independent Review Panel regarding .xxx, which is now open for public comment.

This letter provides a shorter and more personal perspective on this paper and the six-year process that has led ICM Registry, and ICANN, to this point.

We are, frankly, disappointed and dismayed that ICANN staff would seriously contemplate simply disregarding the findings of the independent panel of eminent jurists in the Independent Review. But that is exactly what two of the three options put forward by staff would do.

The Independent Review Process offered ICANN and ICM a mechanism to finally resolve the status of ICM’s application. Let’s be clear here: this was no five-minute hearing. The IRP process went on for nearly two years and both sides were given ample opportunity to present their arguments in depth; which they both did, including at an in-person hearing with witnesses and in hundreds of pages of written briefs.

It cost both ICM Registry and ICANN several million dollars each, and the process was fair, thoughtful, and rigorous. As a result, we acknowledged well before the panel issued its declaration, that we would respect the Panel’s declarations even if the decision went against us.

And the Panel’s findings are clear. Not only did it find in our favour on all the important issues in the case, but it also clearly rejected the arguments put forward by ICANN’s management, often in strong terms.

The Panel did find that its declaration was not binding on the ICANN Board but we expected that ICANN would respect the views of the Panel and honour, in ICANN’s own words, its “ultimate” accountability mechanism. It is profoundly disappointing then that the options paper, which was produced by the same team whose arguments were dismissed by the IRP, effectively ignores every other aspect of the panel’s declaration.

The fact is, as independent experts have now confirmed, that the ICANN Board’s decision to reject dot-xxx in 2007 was the product of bad advice. And the Board continued to rely on that bad advice all the way through the IRP process where it was eventually disregarded by some very serious legal minds. So the current Board should be very cautious about following the advice it has now received in the form of three options that disregard the Panel’s conclusions (even the option to accept the Panel’s findings contains subsequent steps that ignore those same findings).

Neither the ICANN Board nor the ICANN community is well served by this approach. What’s more, it is costing ICANN, ICM and the Internet community millions of dollars to continue down this path.

Our biggest concern, however, remains not the cost, nor the self-serving refusal to accept failed legal arguments. What really concerns ICM Registry is that if ICANN is willing to disregard its own processes and obligations, it risks undermining the organization and model itself.

ICM Registry has always been a big defender of ICANN’s private sector led, bottom-up and multi-stakeholder decision-making process, even though that has meant a slow, expensive and frustrating journey for us in our effort to improve one small part of the Internet. But it is something we have always believed in as it allows everyone affected by the Internet to have a say in the Internet’s evolution.

In Nairobi and in the on-topic public comments on the staff’s options paper, serious members of the ICANN community—including those who opposed creation of dot-xxx in the first instance—have urged ICANN to respect its own accountability mechanisms. We sincerely hope that the ICANN Board is listening.

This is a critical test of ICANN’s maturity as an organization, especially considering that it has recently been freed from direct oversight by the US government. We take no pleasure at all in finding ourselves in the position of having to insist that ICANN demonstrate the maturity it needs to maintain the confidence of the global Internet community, and to do so in a clear and unambiguous decision.

ICANN should simply do the right thing and approve the creation of a dot-xxx top-level domain without delay and without seeking to cover mistakes of the past with a curtain of additional processes.

Sincerely
ICM Registry”””