Donuts Increases Damages Claim Against ICANN to $22.5 Million in .web Auction Suit
Domain names registry Donuts upped the ante Monday in its lawsuit against ICANN over the auction of the .web generic top-level domain, increasing its proposed damages demand in the gTLD case to $22.5 million -- plus interest -- from its…
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original $10 million damages demand, in an amended complaint (in Pacer). The $22.5 million damages demand better reflects what Donuts' “share” of the $135 million in proceeds from the .web auction would have been if the auction had been private, the registry said in the complaint filed with U.S. District Court in Los Angeles. Donuts filed the original version of its suit in July, days before the .web auction. Donuts didn't succeed in temporarily halting the auction over its claims ICANN didn't adequately investigate what it believed to be possible changes in the ownership or control of rival bidder Nu Dot Co (see 1607250051 and 1607270027). Nu Dot Co won the .web auction, then Verisign said it funded the purchase with the understanding that control of .web would pass to the .com domain registry (see 1608010008). Donuts now claims ICANN “intentionally failed to abide by its contractual obligations to conduct a full and open investigation into Nu Dot Co’s admission because it was in ICANN’s interest that the .web contention set be resolved” via a public auction. The Cross-Community Working Group on New gTLD Auction Proceeds is deciding how funds from public gTLD auctions will be spent, since ICANN is prohibited from using the proceeds for its own operations. “ICANN deprived Donuts and the other applicants for the .web gTLD of the right to compete for .web in accordance with established ICANN policy,” Donuts said. “Court intervention is necessary to ensure ICANN’s compliance with its own accountability and transparency mechanisms.” That Donuts’ suspicions about an outside party influencing Nu Dot Co’s participation in the .web auction were correct bolsters the claims they made in their suit against ICANN, but it’s still unclear whether Donuts can prove ICANN’s handling of Donuts’ claims constitutes willful negligence, a domain names industry executive told us. ICANN didn’t comment.