Many brand owners are holding out to see whether the Federal Trade Commission (FTC), or any other government agency in the United States or elsewhere, takes action against Vox Populi Registry Ltd. (Vox Populi) over what some have claimed is a “predatory scheme.” They may want to reconsider. Vox Populi, while the subject of congressional hearings and coming under attack from all sides, is defending itself and the right to create a platform for “legitimate critical commentary.” Will the right to free speech and a capitalistic system, at least in the United States, prevail over the anger and mistrust of scorned brand owners throughout the world?
As reported in a previous Wilson Elser Alert, the Internet Corporation for Assigned Names and Numbers, known as ICANN, recently approved more than a thousand new general top-level domains (gTLDs), which are anticipated to launch over the next few years. One of the recently approved gTLDs is the “.sucks” or “dotSucks” gTLD. Vox Populi, however, set a sunrise period for brand owners to buy domains that include their trademarks. As of March 30, 2015, trademark owners who had registered their marks with the Trademark Clearinghouse (TMCH) have had an opportunity to purchase a .sucks gTLD before the sale opens to the general public on June 1, 2015. Vox Populi established a suggested retail price of $2,499 per year for domain names registered during the sunrise period. After the sunrise period sets, the standard registration fee will be approximately $249 per name. However, Vox Populi is offering a discounted price to those who commit to using the domain for complaints about a company and agree to host their forum on the everything.sucks website. This “consumer-advocate subsidized” price tier will cost $9.95 each and will become available in September 2015.
Brand owners revolted at the significant cost for acquiring the domain or using a domain block on the name. Some have even described this as extortion. In late March, ICANN’s Intellectual Property (IP) Constituency, a group that represents IP owners at the international body, made a plea to stop the rollout, arguing that Vox Populi was engaging in a “shakedown scheme” by establishing a pricing structure that “subsidized” complaint sites for brands that fail to buy the domain. The Constituency related that it believed “that the registry operator’s actions in establishing this predatory scheme are complicit in, and encourage bad faith registrations by third parties at the second level of the .sucks gTLD, and thus drastically increase[s] the likelihood of trademark infringement, all for commercial gain.”
Two weeks later, ICANN asked the FTC and Canada’s Office of Consumer Affairs to determine whether Vox Populi’s pricing plan was illegal. On May 13, 2015, in the midst of congressional hearings on the planned handover of the operations of ICANN from government control to an independent body, Representative Darrell Issa (R-CA), defended his right to call the pricing structure “legalized extortion.” Mr. Issa is far from the only politician who has expressed outrage over the odd pricing structure. Representative Jerrold Nadler (D-NY), the ranking member on the subcommittee presiding over the hearing, said it “looks to many people like extortion.”
Mei-lan Stark, an IP attorney at Fox Entertainment and the former president of the International Trademark Association (INTA), testified at the hearing that Vox Populi's pricing structure “violates the spirit” of ICANN’s process. Previously, former Senator Jay Rockefeller (D-WVA), who chaired the Senate Commerce Committee, spoke out against ICANN’s approval of the gTLD, saying that the ownership of .sucks acts as “little more than a predatory shakedown scheme.” Senator Rockefeller further explained that “… any potential this gTLD might have to increase choice or competition in the domain name space is overwhelmed by the ways it will be used to unfairly defame individuals, nonprofit organizations, and businesses.”
But is all this outrage fair, and will it prevent the closing of the sunrise period and the opening of the sale of the domains in two weeks? John Berard, the man who prefers to say he is “in front” of Vox Populi rather than “behind it,” has launched an attack of his own, hiring a prominent law firm to send letters warning against defamation by advising that further unwarranted attacks will leave the company with “no choice but to pursue any and all remedies available.” The letter notes that the accusations about .sucks fails to identify “any law [that] might actually have been broken,” and rather, it appears that brand owners are actually trying to block the domain's publicly stated goal of being a platform for public criticism. The letter continues, “ICANN appears concerned that registrations on the .SUCKS registry will be used to aggregate uncomplimentary commentary about companies and products – the very purpose for the registry that Vox Populi identified in the application it submitted to ICANN, and that ICANN approved.”
Does the pricing plan announced by Vox Populi violate any laws, or is it the shrewd strategy of a marketing veteran? Vox Populi has acknowledged that its pricing plan is different from other gTLDs but noted that it has the right to “set the price for these registrations … at a level that the market will bear.” This is the only gTLD that Vox Populi owns and according to Mr. Berard, he reviewed other gTLD ideas but never found one that seemed to have the same potential for success as .sucks. ICANN did not require that .sucks be sold to or operated by a nonprofit organization and Vox Populi appears at present to be honoring its commitment to offering a platform for public criticism. While brand owners may detest the availability of this gTLD, it is a reality that must be confronted in a society that cherishes free speech. For years, gripe-sites have operated under [Brand]sucks.com. Brand owners have taken different strategies to confront those sites, from allowing them to operate as gripe-sites, to acquiring them at significant cost, to litigating over defamation. It is likely that brand owners who choose not to engage in Vox Populi’s offering will have the same options.
The closing of the sunrise period is two weeks away and there does not seem to be any action being taken to halt the opening of the public acquisition period. Companies will therefore need to make the decision whether to pay the relatively high price up front, take their chances on trying to acquire the name for a lesser amount during the public purchase period or follow their current strategy with [Brand]sucks.com websites.