[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                 ICANN GENERIC TOP-LEVEL DOMAINS (gTLD) 

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         INTELLECTUAL PROPERTY,
                     COMPETITION, AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 4, 2011

                               __________

                           Serial No. 112-37

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov


                               __________

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66-155 PDF                     WASHINGTON : 2011 

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                       COMMITTEE ON THE JUDICIARY

                      LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina         JERROLD NADLER, New York
ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT, 
BOB GOODLATTE, Virginia                  Virginia
DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana                  MAXINE WATERS, California
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
TED POE, Texas                       JUDY CHU, California
JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
TIM GRIFFIN, Arkansas                LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania             DEBBIE WASSERMAN SCHULTZ, Florida
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
[Vacant]

      Sean McLaughlin, Majority Chief of Staff and General Counsel
       Perry Apelbaum, Minority Staff Director and Chief Counsel
                                 ------                                

  Subcommittee on Intellectual Property, Competition, and the Internet

                   BOB GOODLATTE, Virginia, Chairman

                   BEN QUAYLE, Arizona, Vice-Chairman

F. JAMES SENSENBRENNER, Jr.,         MELVIN L. WATT, North Carolina
Wisconsin                            JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
STEVE CHABOT, Ohio                   JUDY CHU, California
DARRELL E. ISSA, California          TED DEUTCH, Florida
MIKE PENCE, Indiana                  LINDA T. SANCHEZ, California
JIM JORDAN, Ohio                     DEBBIE WASSERMAN SCHULTZ, Florida
TED POE, Texas                       JERROLD NADLER, New York
JASON CHAFFETZ, Utah                 ZOE LOFGREN, California
TIM GRIFFIN, Arkansas                SHEILA JACKSON LEE, Texas
TOM MARINO, Pennsylvania             MAXINE WATERS, California
SANDY ADAMS, Florida
[Vacant]

                     Blaine Merritt, Chief Counsel

                   Stephanie Moore, Minority Counsel




















                            C O N T E N T S

                              ----------                              

                              MAY 4, 2011

                                                                   Page

                           OPENING STATEMENTS

The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Subcommittee on 
  Intellectual Property, Competition, and the Internet...........     1
The Honorable Melvin L. Watt, a Representative in Congress from 
  the State of North Carolina, and Ranking Member, Subcommittee 
  on Intellectual Property, Competition, and the Internet........     3
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, Ranking Member, Committee on the 
  Judiciary, and Member, Subcommittee on Intellectual Property, 
  Competition, and the Internet..................................     4

                               WITNESSES

Kurt Pritz, Senior Vice President, Stakeholder Relations, 
  Internet Corporation for Assigned Names and Numbers (ICANN)
  Oral Testimony.................................................     6
  Prepared Statement.............................................     8
Mei-lan Stark, Senior Vice President, Intellectual Property, Fox 
  Group Legal, and Treasurer, International Trademark Association 
  (INTA)
  Oral Testimony.................................................    29
  Prepared Statement.............................................    31
Michael D. Palage, President and CEO, Pharos Global
  Oral Testimony.................................................    44
  Prepared Statement.............................................    45
Steven J. Metalitz, Counsel, Coalition for Online Accountability
  Oral Testimony.................................................    49
  Prepared Statement.............................................    51
Steve DelBianco, Executive Director, NetChoice
  Oral Testimony.................................................    66
  Prepared Statement.............................................    68
Joshua Bourne, President, Coalition Against Domain Name Abuse 
  (CADNA)
  Oral Testimony.................................................    74
  Prepared Statement.............................................    77

                                APPENDIX
               Material Submitted for the Hearing Record

Letter from Kurt Pritz, Senior Vice President, Stakeholder 
  Relations, Internet Corporation for Assigned Names and Numbers 
  (ICANN), in response to post-hearing questions submitted by the 
  Honorable Howard Coble, and further information on questions 
  raised during the hearing......................................   110
Submission from Steve DelBianco, Executive Director, NetChoice, 
  in response to request from Representative Melvin L. Watt 
  during the hearing.............................................   118


                 ICANN GENERIC TOP-LEVEL DOMAINS (gTLD)

                              ----------                              


                         WEDNESDAY, MAY 4, 2011

              House of Representatives,    
         Subcommittee on Intellectual Property,    
                     Competition, and the Internet,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:12 a.m., in 
room 2141, Rayburn Office Building, the Honorable Bob Goodlatte 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Goodlatte, Coble, Chabot, Issa, 
Jordan, Poe, Griffin, Marino, Watt, Conyers, Lofgren, Jackson 
Lee, and Waters.
    Staff present: (Majority) Vishal Amin, Counsel; Olivia Lee, 
Clerk; and Stephanie Moore, Minority Counsel.
    Mr. Goodlatte. Good morning. The Subcommittee on 
Intellectual Property, Competition, and the Internet will come 
to order.
    I have an opening statement.
    Today we are holding an oversight hearing on ICANN's 
proposed generic top-level domain, or gTLD, proposal. We all 
understand the important role that ICANN, a nonprofit company, 
plays in supporting the infrastructure of the Internet while 
taking into account the needs of stakeholders and governments. 
But this proposed expansion of gTLD's has raised many 
questions, both positive and negative.
    The gTLD proposal is designed to dramatically expand the 
number of top-level domains available. This expansion will 
raise significant revenue for ICANN, possibly launch new 
businesses to manage the new gTLD's, and create more options 
for registrars to sell domain names to consumers. The 
investment and economic potential from these new domains may be 
significant, but investment in economic potential should not 
necessarily be the focus of whether the gTLD proposal moves 
forward. We need to ask ourselves the tough questions.
    How will this expansion affect trademark holders?
    Will it create opportunities for fraud, increased consumer 
confusion, and IP theft?
    Besides ICANN, who is asking for these new gTLD's, 
consumers, registrars, or those looking to create businesses 
around these new top-level domains, is the gTLD proposal simply 
a solution that is in search of a problem that may or may not 
exist?
    Given the concerns expressed by some of ICANN's current 
enforcement efforts, how effective will ICANN be in enforcing 
its policies for an unlimited number of new gTLD's?
    As we consider this proposal, it is important to remember 
that ICANN is a nonprofit corporation with a specific and 
clearly defined mission. As ICANN works to advance their 
proposal, governments and stakeholders need to be convinced 
that these gTLD's are necessary, not that they are simply 
profitable, but they are necessary to ICANN's mission to help 
ensure the safe functioning and infrastructure of the Internet.
    Some have raised the concern that this proposal appears to 
be driven more by money than need to establish a program that 
will raise incredible amounts of revenue, potentially hundreds 
of millions of dollars. I think stakeholders, governments, and 
those of us here in Congress would like to know how this 
revenue will be utilized. Does ICANN have sufficient 
contracting, budget, and compliance staff to properly handle 
such large amounts of money, to prevent waste and even fraud? I 
think that before ICANN makes its final decision to move this 
proposal forward, a clear and transparent long-term draft 
budget plan needs to be developed hopefully before ICANN's June 
board meeting in Singapore.
    Learning from the experiences of other industries, I am 
certain that ICANN will take a tough line to ensure that their 
potential budget is not wasted on corporate retreats, outsized 
salaries, bonuses, and other perks that are oftentimes 
associated with for-profit entities.
    It is also important to remember that this hearing and all 
of our discussions on the new gTLD proposal are part of the 
backdrop for upcoming discussions between ICANN and the 
Commerce Department over renewal of ICANN's authority over an 
IANA function. As the Commerce Department establishes the 
conditions for contract renewal, I think that it may make sense 
for the Department to consider new conditions. We all agree 
that ICANN should remain a separate nonprofit corporation, but 
there needs to be safeguards in place to ensure that its focus 
remains on its core mission. That way precious resources can be 
targeted toward building up ICANN's core functions and ensure 
the stability of the Internet for everyone.
    ICANN will need to continue working hard to be an effective 
steward for the whole community of stakeholders and governments 
that use the Internet, not just those who stand to make a 
profit from it. The goal for today's hearing will be to learn 
more about the positive and negative benefits for the Internet 
if the gTLD proposal moves forward. I would ask that we balance 
the costs and benefits of this proposal before a final decision 
is made to go forward, and in the end, if the costs of this 
proposal outweigh the benefits, it probably makes sense for 
ICANN to consider slowing down a bit, address the outstanding 
concerns, and extend the timeline for their final board 
decision.
    Today we are going to hear from witnesses that will 
describe some of the outstanding concerns and how they are or 
are not being addressed. A major concern revolves around 
intellectual property protections. With every new gTLD that is 
created, a brand holder will be forced to replicate their 
Internet domain portfolio. Apart from the massive cost to 
register, brand holders will also need to set up policing 
operations to ensure that their trademarks are not being 
infringed. It doesn't seem fair to create hundreds of new 
gTLD's and then force brand owners to spend millions of dollars 
to police something that they did not create or operate. The 
rollout of these new gTLD's will also complicate copyright 
enforcement, making it harder and more costly to find and stop 
online infringers.
    I understand that ICANN is working to address these and 
other concerns by establishing a trademark clearinghouse and 
developing specific safeguards to protect brand holders and 
possibly consider a globally recognized trademark block list.
    ICANN's new Applicant Guidebook also includes protections 
that the law enforcement community believes will help take into 
account some of the cyber security concerns raised by the gTLD 
proposal.
    I look forward to hearing from all of our witnesses and 
hope that we can have a spirited discussion on the gTLD 
proposal and the steps that need to be taken to ensure that the 
backbone of the Internet remains strong, effective, and 
accountable to the global Internet community.
    It is now my pleasure to recognize the Ranking Member of 
the Subcommittee, the gentleman from North Carolina, Mr. Watt.
    Mr. Watt. Thank you, Mr. Chairman, and thank you for 
scheduling today's hearing.
    The role of ICANN to the world community cannot be 
understated. As the entity charged with developing policy for 
the Internet, its reach is far and wide. ICANN's website notes 
that it is, ``dedicated to keeping the Internet secure, stable, 
and interoperable.'' It furthers states that it, quote, 
promotes competition and acknowledges that although it does not 
control content on the Internet, through its coordination role 
of the Internet's naming system, it does have an important 
impact on the expansion and evolution of the Internet.
    Today's focus on ICANN's proposed expansion of the generic 
top-level domain names complements our work in other areas to 
ensure that the Internet remains a free, robust, and 
trustworthy environment for legitimate commerce. Of particular 
interest in that regard is ICANN's maintenance of the Whois 
database. Whois is intended to obtain personal contact 
information from domain name registrants, in part to provide 
the public access to the identity of the registrant. The 
accuracy of the Whois database is critical to providing 
accurate information to consumers, to assisting law 
enforcement, and to protecting intellectual property rights 
holders.
    With the proposed expansion of the gTLD's comes increased 
concerns about whether ICANN will be able to enforce the 
assemblage of truthful information into the Whois database. 
This is especially important if, as anticipated, the new gTLD's 
may be registered in a number of countries. ICANN maintains 
that the expansion of top-level domain names will stimulate 
competition and innovation. These are both laudable goals. 
Safeguards must be in place, however, to protect against the 
initiatives that threaten the rights of IP right holders, 
potentially expose consumers to fraudulent markets, and provide 
sanctuary through anonymity and inaccuracy to cyber criminals.
    An accurate Whois database is a prerequisite to each of 
those protections. And I hope to hear how ICANN intends to 
correct the existing database and guarantee that any expansion 
will have mechanisms in place to guarantee accuracy of 
information on the front end of all future domain name 
assignments.
    With that, Mr. Chairman, I thank you again for scheduling 
this important hearing and yield back.
    Mr. Goodlatte. We have a very distinguished and unusually--
before we get to that distinguished panel, we have a 
distinguished Ranking Member of the full Committee, and I want 
to recognize him for his comments. The gentleman from Michigan 
is recognized.
    Mr. Conyers. Thank you, Chairman Goodlatte. I join you in 
your next assignment of welcoming all the witnesses, especially 
Mr. Pritz who carries a particularly large burden at this 
hearing.
    We are here to look at what will happen to trademark owners 
and to intellectual property protection as a result of this 
Subcommittee's important work. I am worried that the benefits 
will not outweigh the concerns raised by so many stakeholders. 
I have heard from a lot of people on this. They are not anxious 
to have more new names issued because they believe that this 
expansion will require them to register countless domain names 
that will have to be registered to prevent online criminals 
from getting the names and confusing consumers. There are a lot 
of examples I could use to demonstrate that.
    So the bottom line is it hasn't been made sufficiently 
clear that the new generic domain names will actually 
facilitate more open speech and commerce.
    It is also clear that trademark holders and businesses will 
have to play active defense to protect their trademarked brands 
and reputations. So new generic domains will, unfortunately, 
create new opportunities for the sale of counterfeit goods, 
copyright infringement, and some forms of cyber crime. And so 
consumers will have to navigate these new criminal enterprises 
and be further vigilant.
    Now, American and international law enforcement seeking to 
thwart crimes such as identity theft and child pornography 
could find it more difficult to locate and prosecute 
perpetrators using top-level domains set up in nations without 
working relationships with the United States. And so I see 
pitfalls that accompany the debut of new gTLD's.
    This hearing serves as an appropriate place to start 
exploring these issues, but it is clear that ICANN has more 
work to do with regard to transparency, to creating safeguards 
to protect against the cyber crimes and property infringements 
that seem to me to be quite worrisome. And so I applaud the 
Subcommittee Chairman and the Ranking Member for having this 
hearing today.
    I thank you for your time.
    Mr. Goodlatte. I thank the Ranking Member.
    And now we will turn to that distinguished and unusually 
long panel of witnesses today.
    Each of the witnesses' written statements will be entered 
into the record in its entirety, and I ask that each witness 
summarize their testimony in 5 minutes or less. To help you 
stay within that time, there is a timing light on the table. 
When the light switches from green to yellow, you have 1 minute 
to conclude your testimony. When the light turns red, it 
signals that the witness' 5 minutes have expired.
    Before I introduce our witnesses, I would like them to 
stand and be sworn.
    [Witnesses sworn.]
    Mr. Goodlatte. Thank you and be seated.
    Our first witness is Mr. Kurt Pritz, Senior Vice President 
for Stakeholder Relations at ICANN. Mr. Pritz has served at 
ICANN for 7 years. He is charged with managing ICANN's key 
stakeholder relationships and is leading ICANN's implementation 
of the new gTLD program. His team delivered the first new gTLD 
document to the U.S. Government in 2004. Since then, he has led 
the effort to develop the gTLD Applicant Guidebook which was 
released in April, just a couple of weeks ago.
    Prior to joining ICANN, Mr. Pritz spent nearly a decade at 
Walt Disney Imagineering. He also served at Eaton Corporation.
    Mr. Pritz holds a B.S. and M.S. in physics, an M.B.A. and a 
J.D., and is admitted to the California State Bar.
    Our second witness is Mei-lan Stark. Ms. Stark serves as 
the Senior Vice President for Intellectual Property at Fox 
Entertainment Group. In this role, Ms. Stark heads the group 
responsible for all trademark, copyright, domain name, and 
patent work for all of Fox Entertainment, including 20th 
Century Fox, Fox Searchlight Pictures, and Blue Sky Animation. 
Her group also supports the broadcast television network Fox, 
the cable TV networks, including FX, Speed, Fox Sports, Fox 
News, and the National Geographic Channel.
    Prior to joining Fox, Ms. Stark spent several years with 
the Walt Disney Company and began her career as an IP attorney 
at Kilpatrick Stockton following her graduation from Yale Law 
School.
    Ms. Stark currently serves as the treasurer on the 
International Trademark Association board of directors.
    Our third witness is Mr. Michael Palage. Mr. Palage is an 
intellectual property attorney and an information technology 
consultant. He has been actively involved in ICANN operational 
and policy matters since its inception in both an individual 
and leadership role, including a 3-year term on the ICANN board 
of directors. He is also President and CEO of Pharos Global, 
Incorporated that provides consulting and management services 
to domain name registration authorities and has worked with 
over 45 percent of all new registry operators approved by ICANN 
over the last decade.
    Mr. Palage holds a BSEE from Drexel University and a J.D. 
from Temple University School of Law.
    Our fourth witness is Mr. Steven Metalitz. Mr. Metalitz is 
a partner at Mitchell, Silberberg and Knupp. He has been an 
active participant in ICANN since its inception and served six 
terms as President of ICANN's intellectual property 
constituency and is currently its Vice President. He is also 
counsel to the Coalition on Online Accountability representing 
seven leading copyright industry companies, associations, and 
membership organizations on a range of ICANN-related matters.
    Earlier in his career, he held several senior staff 
positions with the U.S. Senate Judiciary Committee, including 
Chief Nominations Counsel and Chief Counsel and Staff Director 
of its Subcommittee on Patents, Copyright and Trademarks.
    Mr. Metalitz received his B.A. from the University of 
Chicago and his law degree from Georgetown University.
    Our fifth witness is Mr. Steve DelBianco. Mr. DelBianco is 
the Executive Director of NetChoice where he focuses on issues 
dealing with Internet governance, online consumer protection, 
and Internet taxation. Mr. DelBianco has served as stakeholder 
advocate at meetings of the Internet Governance Forum and 
ICANN.
    Before joining NetChoice, he served as the President of 
Financial Dynamics, an IT consulting firm.
    Mr. DelBianco holds degrees in engineering and economics 
from the University of Pennsylvania and an M.B.A. from the 
Wharton School.
    Our sixth witness is Mr. Joshua Bourne. Mr. Bourne is the 
President of the Coalition Against Domain Name Abuse, or CADNA. 
CADNA is a nonprofit association dedicated to consumer 
protection through building awareness about and advocating 
action to stop online trademark infringement. Mr. Bourne is 
also co-founder of Fairwinds Partners, a domain name strategy 
consultancy based in Washington, D.C. Mr. Bourne has had over a 
decade of experience working with brand owners on actions to 
take within the domain name space.
    I want to welcome all of you and we will begin with Mr. 
Pritz.

  TESTIMONY OF KURT PRITZ, SENIOR VICE PRESIDENT, STAKEHOLDER 
RELATIONS, INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS 
                            (ICANN)

    Mr. Pritz. Mr. Chairman, Ranking Member Watt, and Members 
of the Subcommittee, I am Kurt Pritz, Senior Vice President of 
Stakeholder Relations for ICANN, the Internet Corporation for 
Assigned Names and Numbers. And I am very pleased to be 
testifying before you today.
    With the Internet scaling to over 2 billion users and 
enabling more than $2 trillion in global commerce each day, 
ICANN is hard at work promoting the goals set out in ICANN's 
mission: security, stability, and choice.
    ICANN, together with the Internet community, has increased 
competition in the registrar marketplace and lowered the price 
of domain name registrations. ICANN, together with the Internet 
community, deployed internationalized domain names allowing 
users to use their own language across the Internet, and ICANN, 
working with the NTIA and VeriSign, has made the Internet safer 
through the deployment of DNSSEC, a certification/verification 
technology.
    What is ICANN? We are a nonprofit public benefit 
corporation organized under California law. ICANN was created 
in 1998 by the United States Department of Commerce and 
Internet pioneers to be the private-led company that reflects 
the diversity of the Internet and enables the introduction of 
competition into the domain name system. By entrusting these 
mandates to a multi-stakeholder organization, the United States 
Government committed to take Internet policy out from a purely 
regulatory or a UN-type governance process. Lawrence 
Strickling, the Assistant Secretary of Commerce and head of the 
NTIA, recently confirmed that ICANN's multi-stakeholder model 
is the best way to protect and preserve the security and 
stability of the Internet.
    ICANN's multi-stakeholder model gives an effective role to 
all those who wish to participate: governments through ICANN's 
Governmental Advisory Committee; business interests through 
ICANN's Generic Name Supporting Organization; and Internet end 
users through ICANN's At-Large Advisory Committee. They reflect 
the global diversity of the Internet and work toward developing 
policy and promote Internet stability and benefits for users.
    The ICANN community follows clearly defined processes to 
form Internet policy. In 2007, through the bottom-up process, 
ICANN's broad base of stakeholders recommended that new top-
level domains, the names to the right of the dot, such as dot 
com and dot org, be introduced in order to realize the benefits 
accruing from the opening of markets, introducing competition, 
serving communities, and encouraging innovation.
    The ICANN community has also guided the implementation of 
that policy. Since 2008, ICANN stakeholders have contributed 
over 2,400 comments on implementation work, participated in 47 
separate public comment periods, discussed six versions of a 
draft program guidebook, and 55 explanatory memoranda and 
independent reports. ICANN reviews and considers every comment 
provided and proposes changes to facilitate the development of 
Internet community consensus. Comments are heard and acted 
upon. Good faith and intensive participation from the people at 
this table and those that they represent led to the creation of 
a suite of trademark and consumer protection mechanisms that 
will help make this environment safer than it is now.
    Participation by the governments through ICANN's 
Governmental Advisory Committee led to additional improvements 
in those right protection mechanisms.
    In a diverse community, consensus building can be difficult 
and take time, and we have carefully spent the time needed to 
consider every possible perspective. After the ICANN Board of 
Directors considers the Applicant Guidebook on June 20th, the 
protections and processes will continue to evolve. The program 
calls for continual improvement and review.
    Today, after more than 7 years of policy development and 
implementation work, it is time to move to the next phase. 
Through extensive work mentioned earlier, new gTLD's will offer 
more consumer protections and more trademark rights protections 
than exist today. Many stakeholders not represented at this 
table have waited years for the new gTLD program to launch, and 
careful planning on their part has been ongoing.
    We will continue working hard to promote Internet security, 
stability, and choice and do our best to fulfill the vision of 
a private sector, bottom-up, multi-stakeholder model.
    Thank you for inviting me to testify. I would be happy to 
answer any questions after this.
    [The prepared statement of Mr. Pritz follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

                               __________
    Mr. Goodlatte. Thank you, Mr. Pritz.
    Ms. Stark, welcome.

TESTIMONY OF MEI-LAN STARK, SENIOR VICE PRESIDENT, INTELLECTUAL 
    PROPERTY, FOX GROUP LEGAL, AND TREASURER, INTERNATIONAL 
                  TRADEMARK ASSOCIATION (INTA)

    Ms. Stark. Good morning, Chairman Goodlatte, Ranking Member 
Watt, and the Members of the Subcommittee. Thank you for this 
opportunity to present the views of intellectual property 
owners on the issues related to the introduction of new gTLD's.
    My name is Mei-lan Stark and I am Senior Vice President of 
Intellectual property at Fox Entertainment Group, and I am 
appearing here today on behalf of INTA where I serve on a 
voluntary basis as treasurer and as a member of the board of 
directors. INTA is a not-for-profit association with 5,600 
member organizations in over 190 countries.
    It is an honor for me to appear before this Subcommittee 
which has long exercised leadership in the protection of IP and 
the fight against counterfeiting and piracy, including the 
consideration of rogue website legislation which will become 
even more important as new gTLD's are launched.
    As trusted indicators of source and authenticity of goods 
and services, trademarks perform an important consumer 
protection role, preventing consumer confusion and allowing 
consumers to make rapid and informed choices among competitive 
offerings. But the societal benefits provided by intellectual 
property in general and trademarks in particular are threatened 
when the good will associated with a brand is misappropriated. 
So let me share a recent example that happened to Fox.
    Our local Fox affiliate in Detroit, Channel 2, operates a 
website at myfoxdetroit.com. Well, a third party registered the 
name ``myfox2detroit.com,'' and that leads to a pornographic 
site. So it is not difficult to imagine a scenario in which a 
child is researching a school report, looks online to find 
information that was contained in the local Fox evening news 
and finds themselves inadvertently on this pornographic site.
    Mr. Chairman, there are currently 21 gTLD's such as dot 
com, and these top-level domain names introduced over the past 
dozen years have proven to be an absolute bonanza for those who 
use the anonymity, flexibility, and market reach of the 
Internet to deceive consumers as in my example.
    Abusive domain name registrations also impose significant 
costs on business, costs that do not contribute to the creation 
of productive jobs, to innovation, or to overall financial 
health of companies. Given these costs, IP owners have been 
concerned about ICANN's proposal from the outset and believe 
that ICANN has not met its burden of proof that the societal 
benefits of the proposed gTLD expansion outweigh the harms and 
is truly in the public interest.
    ICANN and others who will benefit financially as domain 
name registrars and registries suggest certain benefits that 
might arise from the proposal. However, the economists retained 
by ICANN, who delivered reports in 2010, did not confirm such 
benefits. They concluded that new, undifferentiated gTLD's are 
not likely to improve competition and that any other purported 
benefits are speculative at best. To the extent they exist at 
all, they are most likely to arise from differentiated gTLD's 
such as IDN's or community-based domains.
    On the other hand, the economists had no difficulty in 
identifying the cost for businesses and Internet users, 
including the effects from abusive registration, the harm to 
consumers from the spread of malware, phishing, and counterfeit 
products, reduced investment in IP by owners as a result of 
increased opportunities for misappropriation, and finally the 
losses from failed gTLD's themselves.
    So let me focus for a minute on misappropriation of IP.
    Despite recommendations from WIPO, the IPC, INTA, and the 
U.S. Government, and others, ICANN has not yet developed 
adequate trademark protection mechanisms. The ICANN Government 
Advisory Committee, or the GAC, made up of representatives of 
more than 100 countries, including the United States 
represented by the NTIA, has also recommended stronger rights 
protection mechanisms. We greatly appreciate the efforts of the 
NTIA and the GAC for identifying trademark and consumer 
protection as one of the 12 issues in ICANN's proposal in need 
of resolution.
    Despite these objections from governments, IP owners, and 
others in the community, ICANN has announced that it will not 
undertake any more economic studies, that it does not plan to 
make any significant adjustments in the rights protection 
mechanisms, as announced, that it has the authority to accept 
only that part of the GAC advice with which it agrees, and that 
it hopes to finish this process and plans to begin the 
expansion of the gTLD space following the June meeting in 
Singapore.
    We encourage ICANN not to press for a resolution next month 
but to take the time necessary to address the legitimate 
concerns of the public including intellectual property owners 
as to the protection of intellectual property and consumers, 
ICANN's commitment to enforce not only existing but all new 
registrar and registry agreements, the need to protect the 
investments in existing brands through defensive acquisition of 
new gTLD's, and underlying all of the above, the concern that 
ICANN has not properly weighed the potential costs and benefits 
to the public to arrive at a demonstrable net public good.
    Mr. Chairman, thank you again for this opportunity to be 
here today. INTA looks forward to continuing to work with 
ICANN, the stakeholder community, and this Subcommittee in the 
responsible evolution of the domain names.
    [The prepared statement of Ms. Stark follows:]

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                               __________

    Mr. Goodlatte. Thank you, Ms. Stark.
    Mr. Palage, welcome.

   TESTIMONY OF MICHAEL D. PALAGE, PRESIDENT AND CEO, PHAROS 
                             GLOBAL

    Mr. Palage. Chairman Goodlatte, Ranking Member Watt, and 
distinguished Members of the Subcommittee, my name is Michael 
Palage, and I would like to thank you for holding this 
important hearing on ICANN's current proposal for the unlimited 
expansion of new generic top-level domains.
    Based upon my work with domain name registration 
authorities, I have a clear interest in wanting to see the new 
gTLD process move forward in a controlled, responsible manner. 
I have written extensively on this subject for pretty much over 
the last decade. And one of the reasons I have been so 
outspoken on this particular issue is ICANN's failure to get it 
right threatens the very core of the private sector leadership 
model which has made the Internet what it is today.
    Over the last several months, ICANN has engaged in good 
faith negotiations with the Government Advisory Committee to 
resolve their outstanding differences. I am pleased to report, 
based upon the recent exchange between ICANN and GAC, that 
there appears now to be 14 remaining issues in which there is a 
material difference. My concern, however, is that there is very 
little time between now and June 20th in which to resolve these 
14 remaining issues.
    While I believe that over 97 percent of the Applicant 
Guidebook is finalized in a manner which is mutually agreeable 
to the community, it is this remaining 3 percent which causes 
me concern between now and June 20th. So what I would like to 
do is discuss three specific proposals to be constructive, and 
these changes, hopefully will be able to address the concerns 
of government, law enforcement, intellectual property owners in 
providing an adequate safety net should ICANN move forward next 
month.
    The first change deals with a recent proposal that ICANN 
made in the draft Applicant Guidebook that includes the 
following statement. A consensus statement from the GAC that an 
application should not proceed as submitted will create a 
strong presumption for the board that that application should 
not be approved. Now, I think this has been a positive step 
taken by ICANN. However, I do not believe that it goes far 
enough. What I am proposing is a bylaw amendment that would 
treat that consensus advice on the same equal footing as a 
super majority vote from the GNSO. Now, the GNSO is the 
supporting organization within ICANN responsible for gTLD 
policy recommendations, and the current requirement under the 
ICANN bylaws is that a GNSO super majority vote requires a 66 
percent vote by the ICANN board to override it. So what I am 
proposing is that the Government Advisory Committee should be 
treated on equal par. So again, this is a private-public 
partnership. We are asking that ICANN recognize in its bylaws 
the same equality.
    The second proposed change. Again, this would be a bylaw 
change. Under the current ICANN bylaws, there is a requirement 
that nine directors affirmatively vote in support of ICANN 
entering into a contract with a registry operator. I am 
proposing that the bylaws be changed to require 66 percent of 
nonconflicted directors to vote in favor of a contract before 
moving forward. While some in the community may argue that a 
simple majority would be sufficient, I respectfully disagree. 
The entry of a string into the Internet's authoritative root is 
not an insignificant undertaking. It is a change to the core 
foundation of the Internet. Just like two-thirds of the House 
and Senate are required to propose an amendment to the 
Constitution, I submit that a similar heightened standard 
should be applied in this standard.
    The third point which I would like to address is holding 
ICANN accountable. Having been involved in ICANN over the 
years, I have seen a number of changes by ICANN in its 
agreements with registry operators, as well as some of the 
memorandums of understanding that it has engaged with other 
institutions. But what I would like to talk about today is a 
recent amicus brief that ICANN filed in the Ninth Circuit, and 
in this it claimed protection under the Noerr-Pennington 
doctrine.
    Now, under this doctrine, private entities are immune from 
liabilities under the antitrust laws for attempts to influence 
the passage or enforcement of laws, even if those laws advocate 
it would have anticompetitive effects. Now, in its brief, ICANN 
made the following statement. Conduct in recommending the grant 
of registry operator rights is a core petitioning activity and 
its conduct in these decisions is not self-executing, but 
rather is implemented only by proposing conduct to the 
Department of Commerce which, in turn, decides whether to adopt 
ICANN's proposals.
    As an organization that is potentially going to reap 
hundreds of millions of dollars in revenue, I don't believe it 
is appropriate that they should be seeking to potentially avoid 
liability by claiming that it is not making self-executing 
decisions but mere recommendations. Therefore, I would 
encourage this Committee to work with the NTIA in any future 
IANA services agreement with these particular services to make 
sure that there is no future immunity going forward.
    Thank you again for allowing me to testify today and I look 
forward to answering any questions.
    [The prepared statement of Mr. Palage follows:]
  Prepared Statement of Michael D. Palage, President and CEO, Pharos 
                                 Global

    Chairman Goodlatte, Ranking Member Watt, and distinguished members 
of the Subcommittee: My name is Michael Palage, and I would like to 
thank you for holding this important hearing on ICANN's current 
proposal for the unlimited expansion of new generic top-level domains 
(gTLDs).
    While some in the community have questioned the timing and 
objective of these oversight hearings so close to ICANN's self-
proclaimed June 20th approval date, I am reminded of an old Chinese 
saying that ``true gold does not fear the refiner's fire.'' If what 
ICANN has produced through this multi-year process is true gold, then 
there are no questions asked today which should not have a full and 
satisfactory answer.
    As someone that has worked with almost 50% of all new gTLDs 
approved by ICANN over the last decade (.INFO, .ASIA, .MOBI, .POST, 
.JOBS and .COOP) as well as currently working with several new gTLD 
applicants I have a clear financial interest in wanting to see the new 
gTLD process move forward. I have been involved in the new gTLD 
implementation process since day one and have written extensively on 
the shortcomings of this process. The reason I have been so outspoken 
is because ICANN's failure to get it right threatens the very core of 
the private sector leadership model which has made the Internet what it 
is today.
    Over the last several months the ICANN Board has engaged in good 
faith negotiations with the Governmental Advisory Committee (GAC) of 
which the United States Government is an active member. During this 
time ICANN has been addressing a scorecard produced by the GAC which 
identified 80 outstanding points of concern, many of which are directly 
related to the mandate of this committee: law enforcement, 
intellectually property protection, and mitigating malicious conduct. 
I'm pleased to report that only 14 issues remain in which material 
differences appear to remain. My concern, however, is that there is 
very little time between now and June 20th to resolve these key 
differences.
    Attached as an appendix to my witness statement is a compilation of 
articles which I have authored detailing the shortcomings in ICANN's 
new gTLD implementation process. In an ideal world and with the benefit 
of 20/20 hindsight, ICANN could have gone about this implementation 
process in a more prudent fashion to prevent the showdown it now faces 
with government representatives from around the globe.
    The 14 remaining issues that the ICANN Board and the GAC must 
resolve before this process is finalized and the new gTLD Program 
starts fall within 4 broad subject matter areas:

          community string designation;

          registry/registrar separation;

          intellectual property protections, and

          geographic identifiers.

    While some of the other witnesses have or will delve into specifics 
of the intellectual property issues, I would like to focus on what I 
believe is the biggest stumbling block toward the successful conclusion 
of the new gTLD implementation process: community string designation.
    The current applicant guidebook provides a preference for 
applicants seeking a gTLD string if they achieve a ``Community Priority 
Evaluation.'' To achieve this designation, applicants need to undergo a 
separate community designation evaluation and receive a minimum of 14 
out of 16 total points from criteria developed by ICANN. If there is no 
successful community based applicant for that string, ICANN's default 
mechanism for resolving this contention is an auction between otherwise 
qualified applicants, without taking into account the quality of the 
application or which applicant would better represent the community.
    The GAC has recommended a broadening of the definition of community 
strings to include all applications seeking to represent a cultural, 
linguistic, religious, or ethnic community, as well as those strings 
involving a nationally regulated sector (i.e. .bank, .pharmacy, etc.) 
in order to ensure that these particular assets are not just given to 
the ``highest bidder'', but if delegated, are put into the hands of a 
registry that can best represent the interests of the natural 
community. The GAC has further recommended that an application/string 
should be rejected if: (i) in the absence of documented support from 
the affected community or (ii) the proposed string is either too broad 
to identify a single entity as the relevant authority, or is 
sufficiently contentious.
    To illustrate the concerns of the GAC consider the following 
example. The American Banking Association (ABA) and BITS, a division of 
the Financial Services Roundtable, have announced their intention to 
pursue a financial services gTLD. BITS has been active within the ICANN 
community over the past several years, including participation within 
the ICANN High Security Zone TLD Advisory Group, of which I served as 
chairman. If the ABA and BITS were to apply for specific financial 
services string and fail to score fourteen points, under ICANN's 
current criteria a venture capital backed applicant with no formal ties 
to the financial services community could be awarded that gTLD string 
if they were the highest bidder.
    What many in the community struggle with is how a California public 
benefit corporation that is supposed to serve as a trustee of a global 
public resource can opt to award a top level domain like .bank to the 
party with the deepest pockets rather than giving it to a well-
established and more responsible community-based organization.
    In an effort to be constructive and suggest improvements, there are 
two changes that could to be made in the next six weeks to address this 
and the other short-comings in the Draft Applicant Guidebook that would 
allow for the new gTLD program to launch, while providing governments, 
law enforcement, and intellectual property owners adequate safety nets 
to address their concerns.
    One recent change to the Draft Applicant Guidebook reads as 
follows: ``a consensus statement from the GAC that an application 
should not proceed as submitted . . . will create a strong presumption 
for the Board that the application should not be approved.''
    While this may seem like a positive change, in light of recent 
actions taken by ICANN, it is potentially insufficient to address the 
concerns of the GAC. Specifically, ICANN's Supporting Organization 
responsible for gTLD policy has a provision in the ICANN bylaws 
requiring the Board to accept a Supermajority vote of that Supporting 
Organizations Council, unless 66% of the ICANN Board members determines 
that ``it is not in the best interests of the ICANN community or 
ICANN.''
    Instead of inserting text into the latest version of the Draft 
Applicant Guidebook that states there is a strong presumption that the 
Board will follow GAC Consensus Advice, I submit that the ICANN Bylaws 
should be amended to put GAC Consensus policy advice on parity with the 
gTLD Supporting Organization. If 66% of the ICANN Board disagrees with 
this GAC advice because it is not in the best interests of the ICANN 
community or ICANN, then is should not be accepted. Given the private-
public partnership that ICANN is supposed to founded upon this should 
be a no-brainer.
    Second, under the current ICANN Bylaws there is a requirement for 
nine affirmative votes amongst the 16 sitting directors for ICANN to 
approve entering into a new gTLD registry contract with a prospective 
applicant. I propose that this should be changed to require 66% of non-
conflicted directors to vote in favor of the contract before ICANN 
enters into a registry agreement.
    While ICANN is unlikely to accept this change, I would urge this 
committee to communicate this safeguard to the Department of Commerce 
so that the NTIA can incorporate it into any future IANA services 
agreement. This would ensure that ICANN or any other successor 
organization would be required to have a heightened level of approval 
from its Board prior to proposing entry of a string into the root.
    While some in the community may argue that a simple majority should 
be sufficient, I respectfully disagree. The entry of a string into the 
Internet's Authoritative Root is not an insignificant undertaking. It 
is a change to the foundation of the internet. Just like it takes two-
thirds of the House and Senate to propose an amendment to the US 
Constitution, I submit a similar heightened standard should apply in 
this situation.
    One of the concerns raised by the Government Advisory Committee has 
been the inclusion of terms and conditions into the new gTLD 
application which preclude an applicant's recourse to the courts, and 
instead limit an aggrieved applicant to one of ICANN's internal review 
mechanisms, e.g. its reconsideration process, internal independent 
review, and ombudsman. ICANN has obtained legal opinions from multiple 
jurisdictions supporting the reasonableness of this waiver.
    In seeking to hold ICANN accountable for its actions in connection 
with the new gTLD program it is interesting to look at ICANN's actions 
and representations over the last decade. In the original registry 
agreements that ICANN entered into with each respective registry 
operator, there was a cross indemnification between the parties. 
Specifically, ICANN would indemnify the Registry Operator in connection 
with their compliance with an ICANN specification or policy. Beginning 
in 2004, this cross indemnification was systematically withdrawn from 
the agreement, and now there is only a one-way indemnification in 
ICANN's favor. Therefore, a Registry Operator can be sued and held 
liable for doing what ICANN requires it to do, but have no recourse for 
indemnification under the registry agreement.
    In 2007, ICANN entered into a Memorandum of Understanding with the 
United Nations Economic and Social Commission for Western Asia (UN-
ESCWA). Paragraph 5 of this Agreement claimed that ``nothing in this 
MoU may be interpreted or construed as a waiver, expressed or implied, 
or a modification, of the privileges, immunities and facilities which 
ICANN enjoys by virtue of the international agreements and national 
laws applicable to it.'' A California not-for profit corporation should 
not be allowed to claim privileges and immunities in a contract with a 
UN agency.
    But perhaps most egregious is the recent amicus brief that ICANN 
filed before the Ninth Circuit in which it claimed protection under the 
Noerr-Pennington Doctrine. Under this doctrine, private entities are 
immune from liability under the antitrust laws for attempts to 
influence the passage or enforcement of laws, even if the laws they 
advocate for would have anticompetitive effects. Specifically, ICANN 
claimed that its ``conduct in recommending the grant of registry 
operation rights is core petitioning activity'' and that its ``conduct 
in these decisions is not self-executing, but rather is implemented 
only by proposing conduct to DOC, which, in turn, decides whether to 
adopt ICANN's proposals.'' \1\
---------------------------------------------------------------------------
    \1\ http://www.icann.org/en/legal/cfit-v-icann/cfit-v-icann-amicus-
brief-13jul09-en.pdf
---------------------------------------------------------------------------
    An organization that seemingly could reap hundreds of millions of 
dollars in revenue should not be able to avoid potential liability by 
claiming it was not making self-executing decisions but mere 
recommendations. When you look at ICANN's actions over the last decade 
you see a California not-for-profit corporation that acts more like a 
for-profit corporation in seeking to maximize revenue while minimizing 
liability, instead of striving to act as a trustee of a global public 
resource.
    I respectfully submit that the way to proactively address this 
fundamental wrong is to have the Department of Commerce include a 
provision in the next IANA services agreement that ICANN or any 
successor organization shall not be able to claim any immunity as a 
direct/indirect result of that agreement.
                                appendix
Michael Palage, What ICANN Can Learn from Humpty Dumpty, CircleID, 
April 29, 2011, http://www.circleid.com/posts/
what_icann_can_learn_from_humpty_ dumpty/

Michael Palage, Bringing a Responsible Closure to the gTLD 
Implementation Process, CircleID April 18, 2011,http://
www.circleid.com/posts/20110418_bringing_a_ 
responsible_closure_to_the_gtld_implement_process/

Michael Palage, David Taylor and Faisal Shaw, A Phased Array Early 
Warning 
System,, CircleID, April 7, 201, see http://www.circleid.com/posts/
a_phased_ array_early_warning_system/

Michael Palage and Berin Szoka, Request for Comments on the Internet 
Assigned Numbers Authority (IANA) Functions, TechFreedom, National 
Telecommuni-
cation Infrastructure Agency, Notice of Inquiry, April 1, 2011, http://
www.ntia.doc.gov/comments/110207099-1099-01/comment.cfm?e=46EEF30B-
3611-4088-A2FC-F49CEF8D0B3F

Michael Palage, GAC New gTLD No Fly Zone, Circle ID, March 15, 2011, 
http://www.circleid.com/posts/20110315_gac_new_gtld_no_fly_zone/

Michael Palage, New gTLDs and Children, CircleID, February 27, 2011, 
see http://www.circleid.com/posts/new_gtlds_and_children/

Michael Palage, New gTLD Auctions and Potential Unintended 
Consequences, CircleID, January 26, 2011, http://www.circleid.com/
posts/new_gtld_auctions_ and_potential_unintended_consequences/

Michael Palage, MOPO--The Latest Speed Bump on ICANN's New gTLD 
Superhighway, CircleID, September 10, 2010, http://www.circleid.com/
posts/20100910_ 
mopo_the_latest_speed_bump_on_icanns_new_gtld_superhighway/

Michael Palage, Top Three Reasons to Just Say No to ICANN's Current EOI 
gTLD Proposal, Progress and Freedom Foundation, Progress Snapshot 
Release 6.3 January 2010, http://www.pff.org/issues-pubs/ps/2010/ps6.3-
top-three-reasons-to-just-say-no.html

Michael Palage, New gTLD Expressions of Interest: Proceed with Caution, 
Progress on Point 16.24, Nov. 2009, http://www.pff.org/issues-pubs/
pops/2009/pop16.24-new-gTLD-expressions-of-interest.pdf

Michael Palage, New gTLDs: Let the Gaming Begin--Part I: TLD Front 
Running, Progress on Point 16.17, Aug. 2009, http://www.pff.org/issues-
pubs/pops/2009/pop16.17-new-gTLDs-gaming-front-running.pdf

Michael Palage, ICANN's Economic Reports: Finding the Missing Pieces to 
the Puzzle, Progress Snapshot 5.4, June 2009, http://www.pff.org/
issues-pubs/ps/2009/ps5.4icanns-economic-reports.html

Michael Palage, ICANN's Implementation Recommendation Team for New 
gTLDs: Safeguards Needed, Progress on Point 16.10, Mar. 25, 2009.

Michael Palage, ICANN's ``Go/No-Go'' Decision Concerning New gTLDs, 
Progress 
on Point 16.3, Feb. 2009, http://www.pff.org/issues-pubs/pops/2009/
pop16.3gTLD gonogo.pdf.

                               __________

    Mr. Goodlatte. Thank you, Mr. Palage.
    Mr. Metalitz?

           TESTIMONY OF STEVEN J. METALITZ, COUNSEL, 
              COALITION FOR ONLINE ACCOUNTABILITY

    Mr. Metalitz. Mr. Chairman, Mr. Watt, thank you very much 
for the opportunity to testify here on behalf of the Coalition 
for Online Accountability. It is our sixth time presenting 
testimony to this Subcommittee or its predecessors, and we 
appreciate the continued oversight that this Subcommittee 
hearing represents.
    The new gTLD program is the initiative that more than any 
other is the yardstick by which the success of the ICANN model 
will be judged. That model is an innovative approach to the 
global management of a key Internet resource, not by 
governments through regulation and treaties, but by a private 
sector-led organization through contracts and agreements.
    Our coalition supports that model. We have striven for 
years to make that model work, but on the threshold of the 
launch of this new gTLD program, we have to ask the question: 
Is ICANN actually acting in accordance with that model? Our 
answer, which we deliver here with regret, is no.
    On some of the particulars of the new gTLD program, there 
are some positive signs. We discuss that in our written 
testimony. We appreciate these changes. Clearly the sixth 
iteration of the new gTLD Applicant Guidebook is far better 
than the version ICANN started out with. But in many areas, as 
our statement outlines, ICANN still has very far to go.
    More importantly, on the most fundamental question, we 
think ICANN seems to have gotten it wrong. From all over the 
world, ICANN heard calls for a measured, targeted rollout of 
new gTLD's focused on those areas where there are clearly unmet 
needs. They heard this from copyright and trademark owners, but 
they also heard it from a wide swath of international business. 
They heard it from many governments including, I am glad to 
say, the U.S. Government. They even heard it from the expert 
economists they themselves hired. All of those calls ICANN has 
spurned. It is poised to plunge ahead with virtually the same 
framework it unveiled 3 years ago: fling open the doors to an 
unlimited number of new gTLD's, process them through a system 
that is biased toward approval, and make virtually no 
differentiation of these proposals. One size fits all. Let the 
chips fall where they may.
    How did this happen? Under the ICANN model, the 
organization is supposed to be private sector-led, but on this 
issue, a very small and unrepresentative sliver of the private 
sector is leading, primarily the companies whose businesses are 
franchises created by ICANN itself, the accredited registrars 
on whom ICANN has bestowed a monopoly of the retail domain name 
registration business, present and future, and the existing 
gTLD registry operators, many of whom see this program as a 
bonanza to be outsourcing sources for their ostensible 
competitors.
    New gTLD's are ICANN's future, but what about the present? 
Remember, under the model, we are substituting contracts for 
regulation, but what we see are weak contracts that are weakly 
enforced. And I would like to illustrate this with an issue 
that has already been mentioned and that this Committee has 
been concerned with for more than a decade: accurate and 
reliable Whois data. We all know that all Internet users need 
this to know who they are dealing with when they visit a 
website.
    Unfortunately, today just like 12 years ago when the 
Subcommittee first held a hearing on Whois, anyone who wants to 
register a domain name in dot com or dot net can simply lie 
about who they are. If you get caught and your registrar asks 
you to correct the data, you can just submit new and equally 
false data. No registrar will turn you down. ICANN will close 
its file, if it has even opened one. Or better yet, you don't 
have to submit any contact data at all for public access. You 
just use a proxy registration service that substitutes its 
contact data for yours. One in five gTLD registrations is now 
done this way, and while there are legitimate uses for these 
services, they are especially attractive to wrongdoers.
    The registrar has the real data on who you are, but many of 
them will refuse to turn it over without a court subpoena even 
if there is overwhelming evidence that you are using the 
registration to commit piracy, counterfeiting, or other abuses. 
Why? Because there are weak contracts between ICANN and the 
registrars and they are weakly enforced through a contract 
compliance staff that does its best but never has enough 
resources to do the job right.
    At the last ICANN meeting in San Francisco, all the eyes 
were on the main hall where the ICANN board and the Government 
Advisory Committee were discussing the new gTLD program, 
ICANN's future. But the reality of how the ICANN model works 
today was on display in a much smaller room. The issue was 
whether to move ahead with negotiation of a newer, stronger 
contract with registrars, one that would deal more effectively 
with this huge problem of unregulated proxy registrations, as 
well as a lot of other issues. Every business representative 
voted to move ahead. Every nonprofit, noncommercial 
representative voted to move ahead. But the registries and the 
registrars, the companies that ICANN set up in business, all 
voted no. Under ICANN math, that 12 to 6 vote, there was no 
consensus and contract reform is at a standstill.
    So these realities of ICANN's present are why we can't be 
as optimistic as we would like to be about ICANN's future, and 
in particular, we can't be optimistic that the new gTLD rollout 
will overcome its fundamentally flawed premise and truly 
deliver benefits to the public without saddling third parties, 
notably trademark and copyright owners, with much of the costs.
    Thank you very much for this opportunity and I look forward 
to responding to any questions.
    [The prepared statement of Mr. Metalitz follows:]

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                               __________

    Mr. Griffin [presiding]. Thank you.
    Mr. DelBianco?

                 TESTIMONY OF STEVE DELBIANCO, 
                 EXECUTIVE DIRECTOR, NetCHOICE

    Mr. DelBianco. Thank you and I would like to thank the 
Committee for holding an oversight hearing on whether ICANN, in 
its quest to launch the new top-level domains, has really stuck 
to its mission and is really meeting its obligations under the 
Affirmation of Commitments.
    I had the chance to testify at your last ICANN oversight 
hearing in September of 2009. And the questions dogging that 
hearing were things like was ICANN doing enough to mitigate 
abuse and minimize defensive registrations, the question of 
whether ICANN could ensure contract compliance for hundreds of 
new TLD's. Now, some aspects of those questions are still on 
the table. You have heard them today. But a lot has changed 
since 2009.
    You remember on the day of that hearing, we were exactly 1 
week away from the expiration of the U.S. Government's long-
term agreement to transition ICANN to independence. Well, a 
week later, we had the Affirmation of Commitments, and I would 
submit that is a very promising framework for global 
accountability of ICANN.
    Now, also in that 2009 hearing, the Chairman and Members of 
the Committee might recall that I also brought a label-maker 
with me to the hearing to use as a simple metaphor for what a 
TLD produces, these little labels that they would sell to 
website owners which would help people and users to find the 
website.
    Well, since the 2009 hearing, ICANN has been listening to 
governments, businesses, and law enforcement concerns. So now 
the metaphorical label maker is way bigger and way more 
complicated. It has got trademark claims services. It has got 
rapid suspension, security standards, and community eligibility 
criteria. In fact, the new TLD metaphor doesn't even work any 
more. It is not a label maker. It is one of those big T-shirt 
printing machines that you see at arcades and print shops, only 
it doesn't print T-shirts, it prints TLD-shirts. The machine is 
so big that the guards in Rayburn wouldn't let me bring it into 
the building. But I did manage to smuggle in a T-shirt that I 
printed with it. And I have got it here with you. And it has 
got dot steve on it, which is my favorite new TLD, dot steve.
    Now, this T-shirt is a lot more than just a little white 
strip that comes from a label maker because this will help 
people to find domains and it helps to define the guy who is 
wearing the shirt because all Steves, as you know, aspire to be 
as cool as Steve McQueen. So I think motorcycle.steve is going 
to be a very popular domain name.
    Okay. So now that the T-shirt maker is so big and so 
complex and expensive, TLD applicants are going to need even 
more funding and more technical and legal experts to run a new 
registry. Well, that is going to be phenomenonally challenging 
for a TLD that is going to serve a small community, 
particularly a small language or script community. But the 
Affirmation of Commitments that ICANN signed says they have to 
serve global Internet users, and that includes the 5 billion 
people who aren't even online yet, and most of them don't even 
use our Latin alphabet. Now, these people do need names and 
email addresses in their own scripts and languages, and I think 
ICANN can address this three ways.
    First--and this is on the new TLD plan--they got to do some 
serious outreach all over the globe to tell businesses and 
organizations about the coming TLD revolution and how the next 
billion people are going to know how to get into the window 
when the applications begin.
    Second, ICANN has got to help smaller, less experienced 
applicants navigate the complex process and find affordable 
help for technical, financial, and legal process.
    Third, ICANN has got to give incentives, even discounted 
fees, to a TLD applicant so that they will offer lots of 
versions in different languages. I mean, we have got dot steve 
here and that is Latin script English language. But what about 
a dot stephanos in Greek letters? Or how about a dot stebu, 
which is Steve in Japanese letters? Those are necessary to 
serve the global public interest. And if ICANN doesn't do these 
things, most of the new TLD's we will see a year from today are 
going to be Latin scripts in the English language.
    Then I ask you how will ICANN claim that is serving the 
global public interest as required? And I fear that outcome is 
going to play into the hands of ICANN critics at the United 
Nations where China leads a group of governments--they call it 
the G-77, but it more like 130 countries--who are demanding 
that the UN, quote, solve the issue of unilateral control of 
critical Internet resources. Translation: they want to take 
away the U.S. dominance of critical Internet resources like the 
DNS and IANA.
    Now, if governments lose confidence and trust in ICANN 
through the expansion of these new gTLD's, we could lose the 
multi-stakeholder private sector model of a single global 
Internet. And ICANN's path, the government confidence building 
is through the reps on the GAC, the Governmental Advisory 
Committee. ICANN has got to cultivate the GAC as a partner and 
ally, not as an afterthought, which brings me to another TLD-
shirt, only this time TLD doesn't stand for top-level domain. 
It stands for top-level directive. Take a look at this one. You 
know how they say mind the gap when you board a train in 
Europe? Well, this is the T-shirt we use in San Francisco. It 
says mind the GAC. And I can tell you this T-shirt demands your 
attention too. When ICANN is evaluating a new TLD application, 
we should mind the GAC. When you apply for a city name or a 
sensitive string, you have got to mind the GAC. When you 
operate a TLD and you get Whois inquiries from law enforcement, 
you have got to mind the GAC.
    And GAC has begun to find its voice. We are just not always 
sure what the GAC is saying. Triple X is a great example. They 
approved it at the ICANN board meeting in March, but despite 
the fact that the GAC said there is no active support from the 
GAC for the introduction of dot xxx. Well, to those of us in 
the business and technical community, that really sounded like 
passive acceptance. So there is no surprise that the ICANN 
board approved xxx. They might have voted the other way if the 
GAC has been very clear because it is going to take a lot of 
time for us in the private sector and technical to understand 
what the GAC means. I mean, I have been married 26 years and 
there are still a lot of times I have no idea what my wife 
really means when she says what she says.
    So I will close by saying that congressional oversight is 
very helpful here, but I don't believe Congress should ask for 
specific changes to ICANN's new process. Nor should Congress 
send one of those back-off warnings to the United Nations right 
now, as Chairman Goodlatte did back in 2005. In today's 
atmosphere, I think that would provide ammunition to 
governments who complain about U.S. control of critical 
Internet resources, and it really raises the risk of having 
ICANN's private sector model get displaced by the UN. And that 
UN is a place where every country gets one vote, but the 
private sector gets no votes at all.
    Thank you.
    [The prepared statement of Mr. DelBianco follows:]
  Prepared Statement of Steve DelBianco, Executive Director, NetChoice

    Chairman Goodlatte, Ranking Member Watt, and distinguished members 
of the Subcommittee: My name is Steve DelBianco, and I thank you for 
holding this oversight hearing on whether ICANN, in its drive to expand 
top-level domains, is staying true to its mission and accountable to 
Internet stakeholders.
    I serve as Executive Director of NetChoice, a coalition of e-
commerce and online leaders such as eBay, Expedia, News Corporation, 
VeriSign, and Yahoo, plus several thousand small online businesses. At 
the state and federal level and in international venues, NetChoice 
works to improve the integrity and availability of the Internet. 
NetChoice attended the last 17 ICANN meetings, where I serve as Vice 
Chair for Policy Coordination for the Business Constituency. I have 
also participated in all 5 meetings of the Internet Governance Forum 
(IGF) and testified in three previous Congressional hearings on ICANN 
and Internet governance.
    In our testimony we compare issues now before this subcommittee to 
issues in play during your September 2009 ICANN oversight hearing, 
``Expansion of Top Level Domains.'' In the 19 months since your last 
ICANN hearing, many difficult questions have been answered but several 
critical oversight issues remain and merit the subcommittee's 
attention.
    In your September 2009 hearing there was palpable tension between 
advocates and skeptics of ICANN's new TLD program. ICANN management 
joined with businesses eager to operate new TLDs in predicting that 
innovation and competition would result from new domain labels. Other 
witnesses, including NetChoice, testified that online content and 
service innovation is not so dependent upon having new TLDs, since 
we've seen an explosion of new Internet sites and services under 
today's limited set of top-level domains.
    However, we did acknowledge that one huge class of Internet users 
was truly in need of new TLDs. Over half of the world's population 
reads and writes in scripts other than the Latin alphabet. These 
Internet users could not enter websites or email addresses in their 
native script and language, and we encouraged ICANN to accelerate 
availability of Internationalized Domain Names, or IDNs.
    Other business witnesses testified in the 2009 hearing that ICANN 
was failing to minimize defensive registrations and mitigate fraud as 
it expanded the TLD space. Early in the process of developing policies 
for new domains, these concerns were out-voted by others on ICANN's 
policy council. Consequently, ICANN's first draft Guidebook for new 
TLDs lacked even minimum requirements to reduce abusive registrations, 
and the second draft gave applicants a passing grade for merely 
describing intended mechanisms, even if they were likely to have little 
effect in preventing abusive registrations.
    The 2009 subcommittee heard conflicting views and questions on 
ICANN's new TLD plan: Were the costs to registrants justified by 
planned benefits to global Internet users? Was ICANN doing enough to 
mitigate abuse? Was ICANN ready to ensure contract compliance over 
hundreds of new TLDs?
    On the day of that hearing, 23-September-2009, the US Government's 
latest agreement to transition ICANN to independence was expiring in 
just one week. All in the hearing room were wondering how ICANN would 
fare in a post-transition world.
    Next, let's examine what's occurred in the 19 months since your 
2009 oversight hearing.

 ICANN's transition from a US Government experiment to an independent, 
        multi-stakeholder organization led by the private sector

    By September of 2009, the US Government had spent over a decade 
transitioning out of DNS management, as envisioned in President 
Clinton's 1998 White Paper:

        ``The President directed the Secretary of Commerce to privatize 
        the Domain Name System in a way that increases competition and 
        facilitates international participation in its management.'' 
        And, ``The U.S. Government is committed to a transition that 
        will allow the private sector to take leadership for DNS 
        management.'' \1\
---------------------------------------------------------------------------
    \1\ The ``White Paper'' on Management of Internet Names and 
Addresses, US Department of Commerce, Jun-1998, see http://
www.ntia.doc.gov/ntiahome/domainname/6_5_98dns.htm

    The transition was expected to take a few years, but by 2009 ICANN 
and the Department of Commerce (DOC) had extended the transition 
several times, the latest being a Joint Project Agreement (JPA) that 
was expiring on September 30, 2009--just a week after the hearing. 
NetChoice was among those calling for another JPA extension to give 
ICANN time to develop permanent accountability mechanisms. We were even 
more concerned about ICANN's vulnerability to government capture, 
especially after seeing proposals by the United Nations and European 
Commission to assume control over a newly-independent ICANN.
    A week later, we were surprised when DOC and ICANN unveiled their 
new agreement, the Affirmation of Commitments \2\. The Affirmation 
established periodic reviews giving governments a defined oversight 
role in assessing ICANN's performance. This was like a welcome mat for 
governments who'd been wary of ICANN's unique multi-stakeholder 
process, and those who resented the legacy oversight role of the US 
government. The Affirmation also gave the global Internet community 
what it wanted: independence for ICANN in a framework bringing 
governments alongside private sector stakeholders, with a sharpened 
focus on security and serving global internet users.
---------------------------------------------------------------------------
    \2\ Affirmation of Commitments, 2009, http://icann.org/en/
documents/affirmation-of-commitments-30sep09-en.htm
---------------------------------------------------------------------------
    So, what's happened since the Affirmation was signed? The first 
Affirmation review for ``Ensuring accountability, transparency and the 
interests of global internet users'' was completed last year, and 
generated sensible recommendations that ICANN has pledged to implement 
quickly. Two more Affirmation reviews are underway now. The second 
review is assessing ICANN's plan for ``Preserving security, stability 
and resiliency''. A third review will ``assess the extent to which 
WHOIS policy is effective and its implementation meets the legitimate 
needs of law enforcement and promotes consumer trust.''
    The fourth review required under the Affirmation addressed new 
gTLDs. Review 9.3 addressed ICANN's commitment for delivering promised 
results with its new gTLD plan:

        ``If and when new gTLDs (whether in ASCII or other language 
        character sets) have been in operation for one year, ICANN will 
        organize a review that will examine the extent to which the 
        introduction or expansion of gTLDs has promoted competition, 
        consumer trust and consumer choice, as well as effectiveness of 
        (a) the application and evaluation process, and (b) safeguards 
        put in place to mitigate issues involved in the introduction or 
        expansion.'' \3\
---------------------------------------------------------------------------
    \3\ Ibid.

    It's too early to know whether these Affirmation reviews will meet 
their overarching goal: to hold ICANN sufficiently accountable to 
global stakeholders so as to build acceptance of ICANN's unique model 
of private-sector leadership. But the Affirmation deserves a chance to 
succeed, just as ICANN deserves a chance to show it can deliver new 
gTLDs responsibly and effectively.
    However, ICANN's present board and management have adopted a 
different stance on the Affirmation and its oversight mechanisms. 
First, consider ICANN's answer to the Commerce Department's March 2011 
Request for Comments on the Internet Assigned Numbers Authority (IANA) 
Functions. ICANN contends that the US ``relinquished its oversight 
role'' when it signed the Affirmation of Commitments.\4\ ICANN offered 
this insight to urge Commerce to similarly relinquish its oversight 
role for IANA functions.
---------------------------------------------------------------------------
    \4\ p.3 of ICANN response, March 25, 2011, at http://
www.ntia.doc.gov/comments/110207099-1099-01/attachments/ACF2EF%2Epdf
---------------------------------------------------------------------------
    It's true that DOC relinquished oversight for the transition 
process described above. But the US government did not relinquish its 
role of holding ICANN accountable to its Bylaws, Articles of 
Incorporation, and the Affirmation of Commitments. Instead, the 
Affirmation broadens ICANN's accountability to serve the global public 
interest from this point onward.
    Unless and until more governments sign the Affirmation, the US 
Commerce Department is the only entity to formally commit to the ICANN 
model and to holding ICANN accountable to its commitments. Commerce 
takes that commitment seriously, as shown by senior officials engaging 
in the Governmental Advisory Committee (GAC) and in Affirmation 
reviews. Many other ICANN stakeholders are engaging in Affirmation 
reviews too, with the expectation that this framework is how the global 
community will assess and improve ICANN's adherence to core commitments 
and accountability to global Internet users.
    However, ICANN can terminate the Affirmation with just 120 days 
notice. And within a year of signing the Affirmation, ICANN's chairman 
told a group of European parliamentarians that he saw the Affirmation 
as a temporary arrangement that he'd like to eventually terminate.
    This sentiment seems to hold true for more than just the Chairman 
of ICANN. In a meeting last summer in Brussels, we asked ICANN board 
members if the commitments in the Affirmation should be permanently 
adopted as part of ICANN's official charter. One board member 
immediately disagreed, saying the Affirmation made no commitments not 
already in ICANN's bylaws. We responded that the Affirmation includes 
important new commitments in paragraphs 3, 4, 7, and 8, plus those 
periodic reviews required in paragraph 9. But the present board saw no 
need to enshrine the Affirmation of Commitments as a permanent fixture 
in ICANN's future.
    All of this to say that ICANN needs a persistent and powerful 
reminder that it serves at the pleasure of global stakeholders; that it 
has no permanent lock on managing the Internet's name and address 
system. We believe that ICANN's role in IANA functions should disappear 
the moment it walks away from the Affirmation of Commitments.

      China and the United Nations don't support ICANN's model of 
                       private sector leadership

    Several years after the US Government and the private sector 
created ICANN, governments around the world began waking-up to the idea 
that the Internet would be important to their future. And governments 
reflexively believe that anything that important just has to be run by 
governments. The United Nations (UN) jumped into Internet Governance at 
its 2005 World Summit on the Information Society. Discussions and 
resolutions there prompted Congress to respond, when Chairman Goodlatte 
and Congressman Boucher introduced HC Res 268 with these resolutions:

        (1)  it is incumbent upon the US and other responsible 
        governments to send clear signals to the marketplace that the 
        current structure of oversight and management of the Internet's 
        domain name and addressing service works, and will continue to 
        deliver tangible benefits to Internet users worldwide in the 
        future; and

        (2)  therefore the authoritative root zone server should remain 
        physically located in the United States and the Secretary of 
        Commerce should maintain oversight of ICANN so that ICANN can 
        continue to manage the day-to-day operation of the Internet's 
        domain name and addressing system well, remain responsive to 
        all Internet stakeholders worldwide, and otherwise fulfill its 
        core technical mission.

    For the next 5 years, the UN determined to co-exist with ICANN by 
holding an annual meeting called the Internet Governance Forum (IGF). 
IGF meetings have become increasingly productive and substantive, yet 
some governments now want to reform the IGF by reducing private sector 
participation and addressing more of the issues that ICANN handles 
today.
    In its July-2010 statement to the UN, China's government declared 
its priority for UN work on Internet governance, saying, ``First, the 
future IGF should, in accordance with the provision of Tunis Agenda, 
focus on how to solve the issue of unilateral control of the Critical 
Internet Resources.'' Translation: Unilateral control means US custody 
of the IANA contract and a US signature on ICANN's Affirmation 
agreement. Critical Internet Resources means IP addresses, root 
servers, and the policy setting and management of the DNS.
    China wields tremendous voting power at the UN today. Its allies 
include over 130 governments who support China's call to reform the 
IGF, including migration of key ICANN and IANA functions to the 
International Telecommunication Union (ITU) of the United Nations.
    Founded in 1865 to facilitate international telegraph agreements, 
the ITU predates the UN by more than 80 years. But while the ITU was 
still regulating telephone circuits, the Internet was evolving a multi-
stakeholder model that draws on collective talents of industry, 
technologists, civil society, and Internet stakeholders around the 
world. In organizations like ICANN and the IETF representatives of 
governments, civil society and the private sector sit as equals, 
resolving matters through consensus building instead of political 
horse-trading.
    UN/ITU leadership hasn't hidden their distaste for a model where 
governments share power with industry and civil society technologists. 
One ITU Secretary-General actually called this multi-stakeholder model 
a ``waste of time,'' and warned ICANN leaders that sooner or later 
governments would take greater control of the organization.
    The most obvious problem with ITU control of the Internet is the 
glacial pace at which UN organizations respond to changes in their 
policy environment. The ITU holds its major policy meeting once every 
four years--about the time it takes for a generation of Internet 
technology to be developed, deployed, and replaced by something better.
    More troubling is how the United Nations' ``one nation, one vote'' 
policy is often manipulated by rich nations to influence the votes of 
needy nations. China is particularly adept at leveraging its economic 
investments in developing countries to curry votes in the UN.
    Our request to this subcommittee is to endorse the ICANN model and 
help resist efforts to impose the UN governance model on technology 
innovation that is truly changing the world.

 The Governmental Advisory Committee (GAC) has found its voice at ICANN

    It hasn't been an easy learning process, but Governments and the 
private sector are gradually learning how to co-operate in a multi-
stakeholder model. For its part, the GAC has been progressively 
engaging more deeply in ICANN policymaking for new gTLDS. It began with 
``GAC Principles Regarding New gTLDs'' in March 2007, and added high-
level comments on TLD Guidebook drafts in August 2009 and March 2010. 
Already this year, the GAC offered several detailed documents, 
including its extensive Scorecard for new gTLDs.
    A year ago, after the ICANN meeting in Brussels, we warned the 
ICANN board that it risked ICANN's very existence if influential 
governments or the GAC felt alienated or ignored. But the ICANN board's 
interaction with the GAC was still obviously and dangerously strained 
through the March 2011 meeting.
    While the current face-off between the GAC and ICANN Board is about 
the expansion of top-level domains, the underlying tension comes from 
more than just one policy decision--even one as big as new gTLDs. Even 
if the Board were 100 percent right on new gTLDs and the GAC were 100 
percent wrong, ICANN's failure to adequately cultivate its relationship 
with governments seems like self-destructive behavior.
    Support for the ICANN model among world governments is hardly 
universal. As noted above, many governments have been working through 
the United Nations to exert greater control over the Internet's 
addressing system.
    Meanwhile, many members of the GAC are actively participating in 
ICANN's multi-stakeholder process while asking their home governments 
to protect ICANN from UN encroachment. GAC members have the potential 
to be ICANN's best advocates in the ongoing global debate over Internet 
governance, but first ICANN must adapt its processes to engage the GAC.
    Fortunately, the strained face-to-face ICANN meetings in San 
Francisco this March were a turning point. ICANN can also make major 
repairs to its GAC relationship by implementing recommendations of the 
Accountability & Transparency Review. Ultimately, the ICANN community 
must recognize that governments are stakeholders, too. That will 
involve helping governments to understand new TLD proposals and 
assisting them in addressing rational objections. And it may also 
involve ICANN being flexible with governments who lack a mechanism to 
pay fees required to file objections.
    The loss of government support is the largest threat to ICANN's 
future. On the other hand, the GAC can be ICANN's best ally if they're 
treated right. When ICANN holds its next meeting on new gTLDs, we hope 
to see more community members sporting ``MIND THE GAC'' T-shirts.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


      Promoting Generic TLDs for half the world that doesn't use 
                           our Latin alphabet

    In 2009, ICANN supported only Latin characters in domain names and 
email addresses. But, as noted in my 2009 testimony, over 56% of the 
world's population reads and writes in scripts other than Latin \5\. 
The lack of Internationalized Domain Names (IDNs) threatened to 
splinter the net if other governments emulated China's solution to add 
Chinese TLDs within its borders.
---------------------------------------------------------------------------
    \5\ John Paolillo, ``Language Diversity on the Internet,'' pp. 43-
89, in John Paolillo, Daniel Pimienta, Daniel Prado, et al., Measuring 
Linguistic Diversity on the Internet, UNESCO Publications for the World 
Summit on the Information Society 2005. See http://www.uis.unesco.org/
template/pdf/cscl/MeasuringLinguisticDiversity_En.pdf
---------------------------------------------------------------------------
    This chart helps to visualize the domain space of Latin and IDN 
scripts in generic and country-code top-level domains:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The top half of this chart refers to 260+ Latin-script domains that 
were in the DNS in 2009. The bottom of the chart shows examples of 
generic and country-code domains that would use non-Latin scripts once 
ICANN made them available. For a decade, governments, business, and 
civil society clamored for IDNs in order to bring information, 
commerce, and communications to more of the world's potential Internet 
users.
    When the gTLD expansion plan began to bog-down, it looked as if IDN 
domains would be delayed, too. In reaction to governments' concerns 
about this delay, ICANN created a `fast track' for IDNs--but only for 
country-code domains that are controlled by governments. In November 
2009, ICANN launched the ``fast track'' for Country Code domains 
(ccTLDs), but generic domains (such as .com and .org) were left on the 
slow track when it comes to serving the half of the world's population 
that doesn't use our alphabet. Websites seeking to reach non-Latin 
users now must use a country-code domain, where governments can enforce 
local restrictions on domain ownership and site content.
    For example, an Arabic user seeking to access YouTube.com in all-
Arabic could only choose from among Arabic versions of YouTube domain 
that were permitted by governments who control Arabic country-code 
domains (youtube.sy in Syria; youtube.ly in Libya; etc.) It would 
undoubtedly be more convenient and empowering for Arabic users to 
access the global, generic address youtube.com--entirely in Arabic.
    But ICANN's ccTLD fast track gave government-controlled ccTLDs a 
two-year head start against IDN versions of generic TLDs in terms of 
building market share of registrations and mindshare of Internet users. 
While non-government applicants can propose IDN versions of new gTLDs, 
they may find it hard to justify a million dollar investment to reach 
small linguistic communities, particularly if ICANN's fast-track let a 
ccTLD get there first.
    In the upcoming round of new gTLDs, ICANN should actively promote 
and support gTLDs for small linguistic communities--particularly IDN 
scripts. ICANN can start by expanding its communications plan to 
educate global governments, businesses, and users about the ways that 
new gTLDs can serve local language communities. Next, ICANN should 
change its application fee schedule to create incentives for new gTLD 
applicants to offer versions of their TLD in additional scripts and 
languages. A simple incentive would be to reduce the $185,000 
application fee for additional script versions. Moreover, the fee 
reductions could be structured to match the cost savings ICANN has 
acknowledged it would realize when evaluating multiple strings from the 
same applicant.
    By whatever methods, ICANN should be encouraged to promote generic 
TLDs to serve all scripts and languages in the new gTLD process. To do 
otherwise would fail to meet the Affirmation of Commitments, which 
stressed ``the importance of global Internet users being able to use 
the Internet in their local languages and character sets.'' \6\
---------------------------------------------------------------------------
    \6\ Affirmation of Commitments, 2009, http://icann.org/en/
documents/affirmation-of-commitments-30sep09-en.htm
---------------------------------------------------------------------------

           Lessons learned from the .xxx debate and decision

    The proposal for .xxx--the adult content gTLD--wasn't even on the 
agenda during the subcommittee's 2009 hearing. Now .xxx is part of the 
DNS, and the domain search.xxx resolves to the registry operator's 
website. What lesson can the subcommittee and ICANN community learn 
from the .xxx decision?
    First, it's essential to remember that .xxx won't automatically 
expand adult Internet content, which already accounts for 12% of 
websites and 25% of search requests. The .xxx TLD just creates new 
labels for the 400 million adult pages already on the Internet, along 
with new services like micro-payments, virus checking, and content 
labeling.
    The main lesson for ICANN is to understand how to communicate and 
interact with governments and the GAC on sensitive TLDs like .xxx, 
since there may be many sensitive strings in the upcoming round of new 
gTLDs. ICANN and the GAC are already moving towards consensus on early 
warning mechanisms and objection processes for sensitive strings, but 
the .xxx controversy at ICANN's last meeting demonstrates how difficult 
it can be for the private sector to comprehend nuanced government 
messages.
    Surprisingly, there is still a question of whether the GAC was 
expressing a consensus objection when it said, ``There is no active 
support of the GAC for the introduction of a .xxx TLD.'' \7\ The lack 
of active support sounds like passive acceptance to a business or 
technical audience, so ICANN's board voted to proceed with .xxx. But 
ICANN's board might have voted the other way if it thought the GAC was 
clearly allied against .xxx. In the upcoming round, the GAC should be 
more explicit and ICANN should ask for clarification if it has any 
doubt about a GAC position.
---------------------------------------------------------------------------
    \7\ GAC Communique--San Francisco, 18 March 2011, see http://
gac.icann.org/system/files/GAC-communique-SFO.pdf
---------------------------------------------------------------------------
    Finally, Commerce Department officials expressed disappointment 
with ICANN's decision on .xxx, but there's an upside to that 
disappointment. It demonstrates that the US government does not 
exercise unilateral control at ICANN, as China and others often 
complain.

 ICANN has made significant improvements to respond to government and 
              business concerns about its new gTLD program

    Our testimony has addressed oversight issues that concern ICANN's 
plan for new TLDs. We explained how ICANN's new Affirmation of 
Commitments should be used to hold ICANN accountable for its new gTLD 
policy decisions and compliance. We described the genuine threat from 
UN agencies and governments that don't embrace the multi-stakeholder 
model. We recognized improvements in GAC--ICANN interaction and 
encouraged continued improvements there, including lessons learned from 
the .xxx decision. And we called on ICANN to proactively encourage new 
gTLDs for smaller language communities and non-Latin scripts in order 
to serve the next billion global Internet users.
    All of this provides context for the subcommittee to assess ICANN's 
new gTLD plan, but we have not gone into specific substantive changes 
needed in the new gTLD Guidebook. NetChoice is continuing to press 
those points directly to ICANN via the public comment process. We are 
also seeking support from other stakeholders and from members of the 
GAC. In other words, we are still trying to use the ICANN process to 
make improvements in ICANN policies.
    This is not to say that the Committee shouldn't inquire about 
detailed deficiencies in the new gTLD plan. Indeed, we share many of 
the specific concerns expressed by our business colleagues on this 
panel today.
    We just don't think that this subcommittee should contemplate 
legislation or resolutions addressing specific changes to ICANN's new 
gTLD process. Nor should Congress attempt to warn-off the UN and other 
governments with a resolution like that adopted in 2005, which would 
give China and its UN allies a proof point for their complaints about 
US control of ICANN.
    In 2011, we are growing more concerned about the long-term 
prospects for the ICANN model of private sector leadership. Congress 
can do more to help preserve the ICANN model by supporting the 
Affirmation of Commitments as a permanent fixture, and to support our 
Commerce and State Departments in their efforts to secure broader 
government participation in ICANN.

                               Conclusion

    We believe that the appropriate role for Congress and the Commerce 
Department is to hold ICANN accountable to the Affirmation of 
Commitments. The White Paper vision for ICANN must be preserved: ICANN 
should be led by, and accountable to the private sector interests that 
will make the huge investments to bring connectivity, content, and 
commerce to the next billion Internet users.
    Congressional oversight is helpful to support NTIA and hold ICANN 
accountable to the Affirmation of Commitments--in all ways--not just 
for new gTLDs. But if Congress were to weigh-in on specific policies at 
ICANN, it would provoke those governments who complain the US maintains 
control over the domain name system. While there would be benefits of 
Congressional guidance to ICANN on new gTLDs, it could raise the risk 
of having ICANN's private sector model displaced by a UN model where 
every government--no matter who--gets one vote, and where the private 
sector gets no votes at all.
                               __________

    Mr. Griffin. Thank you.
    Mr. Bourne?

            TESTIMONY OF JOSHUA BOURNE, PRESIDENT, 
          COALITION AGAINST DOMAIN NAME ABUSE (CADNA)

    Mr. Bourne. Well, I would like to thank Chairman Goodlatte, 
Ranking Member Watt, Members of the Committee for the 
opportunity to submit testimony and, more importantly, for 
convening this hearing on such an important topic, about which 
too few Americans and Internet users across the world have 
sufficient awareness or understanding. Your decision to convene 
this hearing is a continuation of your strong leadership on 
Internet issues and the protection of our intellectual 
property.
    To begin, I would like to provide a background on the 
organization I represent, the Coalition Against Domain Name 
Abuse. We established CADNA 4 years ago, along with 10 
companies, when we recognized there was no group dedicated to 
finding a meaningful and lasting public policy solution to the 
problems of cybersquatting and online infringement. Through our 
efforts to find creative and effective solutions to these 
problems, our coalition's attention was drawn to the Internet 
Corporation for Assigned Names and Numbers due to the 
commanding role it plays in the formation and implementation of 
domain name policy. More importantly, we learned of the even 
more influential and unchecked role ICANN has in the general 
direction of Internet regulation and policy.
    4 years later, both the CADNA member companies and I are 
much getter educated in regards to the problems that Internet 
users around the world currently face, as well as the 
precarious power that ICANN wields, which could potentially 
help to resolve or further perpetuate these problems. CADNA has 
grown to a coalition to over 20 companies based both here in 
the U.S. and abroad. We have members representing a broad range 
of commercial industries, including financial services, retail, 
hospitality, pharmaceutical and others. I am proud to say that 
we are a leading voice on domain name policy, ICANN issues, and 
on ICANN's proposed gTLD program.
    Despite the prevalence of the Internet in daily lives of 
most Americans, knowledge of Internet governance is decidedly 
scant. Very few people understand how the Internet operates or 
who has control over the domain name system. It is in this 
opaque context that ICANN operates, remaining free to develop 
policies without scrutiny from the general public or even for 
most members of the government.
    Let me state up front that CADNA agrees with the ICANN 
model. We support the bottom-up, multi-stakeholder concept of 
ICANN governance. The problem is not ICANN itself. The problem 
is that ICANN has been captured by a constituency that stands 
to profit from its actions. When conceived in 1998, the bottom-
up concept failed to develop checks against capture. At that 
time, nobody anticipated that any one constituency would 
develop strong economic interest in ICANN's actions and stand 
to gain so much financially from ICANN-developed policy. Few 
could foresee how bad actors would eventually place familiar 
brand names in domain names to confuse and engage their 
targets, just as Ms. Stark referred to earlier. The reality 
that has unfolded over the past 13 years shows that ICANN's 
original mission of bottom-up policy development in the 
interests of the entire Internet community has fallen short. At 
present, there is the ICANN community and there is the Internet 
community, and unfortunately, the interests of the two 
communities are not aligned.
    Instead of representing the true community of Internet 
users, ICANN's community is predominantly comprised of 
companies with vested interest in selling domain names. What 
better way to sell domain names than through a mass 
introduction of new gTLD's? Brand owners will have no choice 
but to pay for the acquisition and maintenance of each 
defensive registration across as many of an anticipated 400 new 
gTLD's as possible to prevent infringement of their 
intellectual property. To this day, while the strongly biased 
ICANN community demands it, ICANN has not presented any 
convincing economic justification for the new gTLD program 
showing actual demand for this mass rollout to the public. In 
fact, many small business owners and nonprofit organizations, 
with the exception of ICANN, are deeply concerned about the 
negative impact new gTLD's will have on their business and cost 
of defensive registrations.
    Before ICANN goes through with its plan to roll out an 
estimated 400 new gTLD's in the coming months, the United 
States Government should leverage the upcoming renewal of the 
IANA contract to require an audit of ICANN. CADNA has long 
proposed the formation of a Federal commission composed of 
Internet experts, private sector representatives, academic 
representatives, government officials, and foreign government 
observers to fully audit ICANN before renewing the IANA 
contract.
    CADNA urges you and your Committee to consider the 
implications of a flawed ICANN. The experiment is not lost. It 
just needs to be reviewed and adjusted, if necessary, just like 
any other new model created by private industry or government. 
ICANN cannot self-correct and needs external correction to make 
it accountable and aligned with what is good for the Internet 
and its 1.8 billion global users. While ICANN's gTLD initiative 
is what brings us together today, the underlying and most 
important subject of the hearing is ICANN as an institution and 
whether or not it serves the public interest. ICANN is a 
California-incorporated 501(c)(3). Before it is too late and 
other questionable policies are pursued, consider the leverage 
of the IANA contract renewal and bring ICANN into the 21st 
century.
    Thank you for this opportunity to testify before you today.
    [The prepared statement of Mr. Bourne follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    


                               __________
    Mr. Griffin. Thank you, Mr. Bourne.
    Mr. Pritz, I want to start with you. I want to get to the 
fundamental reason for why you are doing what you are doing. 
Can you just sort of tell us why are you creating the new 
gTLD's and is it because of a consumer need, there is a real 
demonstrated consumer need? And if so, how will consumers 
benefit from this expansion?
    Mr. Pritz. Certainly. Thanks for the question.
    First, I want to parse the definition of ICANN. The new 
gTLD program is from the large ICANN, the ICANN community that 
is comprised of all the people participating in this multi-
stakeholder model. So this process involves ICANN staff taking 
and synthesizing the results of the community input into a 
program and implementation plan.
    So where does this come from? It comes from the very birth 
of ICANN. In 1998 in a hearing, it was discussed that one of 
the primary purposes of this new corporation that was to 
provide Internet governance was to provide increased 
competition and opportunities for innovation. It was specified 
right at that time we could do that in two ways. ICANN could do 
that in two ways.
    One was by introducing competition into the registrar 
marketplace. At the time ICANN was formed, there was one 
registrar, NSI, and they charged $75 or $80 for a domain name. 
That was a fairly straightforward introduction of competition. 
ICANN created a registrar marketplace where there are now 930-
some odd registrars, and as you know, the price of a domain 
name is $8 or $10.
    The other very specific instance that was discussed at that 
hearing was: how should the introduction of new top-level 
domains be introduced. It was perceived then, as now, that new 
TLDs will provide opportunity for innovation and more choice 
for consumers. At that time, it was specifically left for this 
new corporation to decide that.
    So ICANN has actually spent 10 years--the big ICANN--
looking at that problem. There have been two trial rounds of 
new gTLD introduction in 2000 and 2003, and there were 
significant lessons learned there. And then the GNSO, which is 
ICANN's primary policymaking organization, convened this 19-
month intensive policymaking process where they considered this 
question, and they almost unanimously resolved that new gTLD's 
would provide innovation and choice. These are the experts that 
we all rely on in the Internet multi-stakeholder model that are 
knowledgeable of that model and will understand the benefits.
    Mr. Griffin. I am limited on time, so let me get a little 
follow-up here.
    So assuming there is a consumer benefit--just assume that 
for the sake of argument--do you see these changes giving 
opportunity to rogue sites or for more rogue sites and 
parasitic sites to spring up? Do you concede that?
    Mr. Pritz. I think that new registrants will continue to 
register names, and whether they are all in dot com, dot net, 
and dot org now or whether they will register them in a broader 
base of sites, I think that the introduction of new consumer 
protection mechanisms and new rights protection mechanisms in 
the new gTLD's will actually make them a safer environment. It 
gives us more tools for fighting them, and it provides more 
safeguards for trademark owners than exist now. So we are 
moving into a safer environment.
    I just want to point out, for example, the example Ms. 
Stark gave of the rogue site regarding Fox--you know, that 
example ended in dot com. Most of the abuse occurs in dot com 
because there is a concentration of names there, and that is 
where abuse pays off. That is where defensive registrations 
occur.
    Mr. Griffin. I am growing short on time, so I will ask this 
last question. But could you comment on some of the safeguards 
that will be implemented or that you foresee being implemented 
that would help mitigate the opportunity for rogue sites, 
parasitic sites to increase as a result of these changes?
    Mr. Pritz. Yes. Well, as far as rogue sites go, there are 
three avenues. You know, this is a very, very important 
question and is not necessarily purely related to new gTLD's. 
But there are essentially three avenues for enforcement.
    One is ICANN's contracts with registries and registrars 
that can be enforced. So there are provisions for investigation 
of false Whois and other provisions. So there is ICANN's 
contractual duties.
    There are the obligations of law enforcement. When there is 
cybersquatting, that is illegal, and ICANN works closely with 
various law enforcement agencies in order to bring 
opportunities for more enforcement to them.
    And third is competition authorities. So ICANN can refer to 
issues where there is infringement that unfairly creates 
barriers to competition to those authorities.
    Finally, if you remember the question, Chairman, ICANN 
works actively with registries and registrars to identify and 
work in partnership to take down rogue websites. In fact, the 
latest version of the contract that we are proposing with 
VeriSign for dot net allows them to suspend certain rules in 
the contract to act affirmatively to take down those sites, but 
understand that when we do act in that way, that has to be done 
very, very carefully because that power could be abused too.
    Mr. Goodlatte [presiding]. Thank you.
    The Chair now recognizes the gentleman from North Carolina, 
Mr. Watt.
    Mr. Watt. Thank you, Mr. Chairman.
    Is there anybody on this panel who thinks that these new 
gTLD's is a bad idea?
    [No response.]
    Mr. Watt. So I am just trying to be clear on where people 
stand on this. I heard concerns being expressed about the steps 
toward implementation. Is there anybody here who thinks this 
should not be done?
    Ms. Stark. Can I comment to that?
    Mr. Watt. Well, I don't want you to comment. Either you 
think that it should be or it shouldn't be. Your testimony 
seems to be the clearest that you had some problems with the 
implementation of it, but I never did hear you say you thought 
this was a bad idea.
    Ms. Stark. I don't think anybody in this community thinks 
it is an outright bad idea. What----
    Mr. Watt. Okay, all right. You know, these are not trick 
questions. I am just trying to get through my own thought 
process here.
    Then what is the compelling good idea/reason that this has 
to be done as far as you are concerned, Ms. Stark? Just give me 
one compelling good reason to do it.
    Ms. Stark. To have it?
    Mr. Watt. Yes.
    Ms. Stark. I think that the idea of opening up spaces for 
expression in what Steve DelBianco talked about, non-Latin 
languages is----
    Mr. Watt. Okay. Then you think other languages. And that 
can't be done in the dot com, dot net lingo just as well?
    Ms. Stark. Not today, not the way the system is currently--
--
    Mr. Watt. Well, not the way it is done today, but you know, 
what is the difference? You all keep talking about innovation. 
Changing somebody's name is not innovation. Allowing somebody 
to use a different name is not innovation. That is not adding 
anything new to life that I can tell.
    Mr. DelBianco, Mr. Metalitz, help me here.
    Mr. DelBianco. Ranking Member, you are right. Just adding a 
new label to an existing page or content doesn't really truly 
create innovation. However, 56 percent of the planet cannot 
even type in the domain name in their own language.
    Mr. Watt. But that is not a function of whether you call 
something ``steve'' or whether you call it ``net,'' is it? You 
can put the ``steve'' in front of the ``net,'' ``dot net'' or 
you can put it ``dot net dot steve dot watt dot steven,'' you 
know. You still haven't created anything new, have you?
    Mr. DelBianco. You haven't there, but 56 of the planet 
can't use our alphabet when they read and write. So there is no 
capability to do Greek letters, Japanese or Chinese letters.
    Mr. Watt. Tell me how this is going to make that better as 
opposed to what we have right now..
    Mr. DelBianco. It will enable for the first time that an 
Arabic user could actually type an entire email address in all 
Arabic or a website name. He can't do that at all today.
    Mr. Watt. Why can't the current system evolve to do that 
without new gTLD's?
    Mr. DelBianco. This is that evolution.
    Mr. Watt. Okay. Go ahead.
    Mr. Metalitz. The current system is, to some extent, 
evolving to do that because in the country code top-level 
domains, operated one per country, including in countries that 
use these scripts, they are already moving into the 
internationalized domain names world where they can type it all 
in in their own script. But again, that is only one domain per 
country. It is dot cn in China. There would be dot eg in Egypt, 
for example. They now have their equivalents in their own 
scripts, and that means that the next billion people that are 
coming onto the Internet--some of them simply are so 
uncomfortable using the Latin alphabet that they are not going 
to be able to participate. That is the theory.
    ICANN is already addressing this at the country code level, 
and I think the area where there is the best argument for new 
gTLD's is in this area.
    Mr. Watt. I am taking a lot of time here. Would you all 
please, each one of you, write to me after this hearing what 
you think the most powerful, persuasive reason is that we need 
to do this so that I will at least understand that part of it?
    What stops now--well, I see people do it in front of the 
names of the dot net and the dot com, a bunch of stuff that I 
don't like. It seems to me that this is going to proliferate it 
behind the dot--offensive names, ``nazi this,'' ``nigger 
this.'' You know, it ain't only ``steve'' that we are talking 
about. What is it that stops that from happening now, Mr. 
Pritz? And what is built into this new system that will stop it 
from happening behind the dot as opposed to in front of the 
dot?
    Mr. Pritz. So there are a variety of protections in the new 
process whereby almost anyone can object to a proposed name. So 
the purpose of the new TLD is published and that TLD can be 
objected to. Governments can object to new TLD's. Also there 
will always be that abuse. The purpose for the program, though, 
is really to provide increased opportunities for these new 
TLD's to represent communities to tie to communities, dot 
navajo to tie to small businesses, to hook up----
    Mr. Watt. You are answering my last question, Mr. Pritz. I 
didn't ask that question. That was the last question. That was 
the question before. I am asking you a new question. That is a 
new question I ask now. I gave you the opportunity to write me 
and tell me the answer to the last question I asked. I am 
trying to ask a new question now. Did you understand the 
question I asked?
    Mr. Pritz. Yes, I did.
    Mr. Watt. All right. Answer that question because I am out 
of time already.
    Mr. Pritz. So there can be that, but there are also 
significant benefits to the program that outweigh the costs.
    Mr. Watt. All right. I give up, Mr. Chairman. I am out of 
time.
    Mr. Goodlatte. You asked a good question and I think there 
will be some follow-up here.
    Before we get into some more of that, I want to go down the 
line. I will start with you, Mr. Bourne. There are obviously 
benefits to doing this, at least to a limited expansion of top-
level domains. I am not sure about the unlimited nature of it. 
But let me just ask each one of you, right now, if they move 
into this as quickly as launching it in June, will they be able 
to manage and enforce their policy with respect to unlimited 
numbers of TLD's, and will they be able to adequately police 
the registries that will manage these TLD's? Mr. Bourne?
    Mr. Bourne. I don't think so. I don't believe so.
    There have been a great deal of issues with compliance to 
date as is. The issue with the scale of the rollout is really 
what concerns me the most. I have talked to businesses and I 
personally have considered what innovation might be possible in 
a new TLD space. For the most part, I am not that moved by 
those opportunities. It will take many, many years for new 
TLD's to potentially organize communities mainly because there 
is such a strong bias toward dot com today. The nature of a 
massive rollout can have only one intended purpose, which is to 
create chaos and create massive opt-in and buy-in from 
companies in particular.
    Mr. Goodlatte. Okay. We have to go down the line here. So, 
Mr. DelBianco?
    Mr. DelBianco. Mr. Chairman, in your opening statement, you 
used the analogy of a backbone. Backbone is what you called it, 
a DNS. And adding hundreds of new top-level domains is like 
adding, well, hundreds of new vertebrae to a backbone. And the 
question will be does the nervous system extend into those new 
vertebrae because the nervous system of ICANN is the 
monitoring, supervision, and compliance measures that you asked 
about. Will it work? Well, you don't want to necessarily add 
500 new vertebrae at once. They are going to have to do it in 
small batches, and as soon as they go into the root, as soon as 
those websites begin to light up, that is where monitoring and 
compliance is going to be so essential. It will be up to us in 
the community, government representatives, including U.S. 
Government through NTIA, to really ride herd on ICANN and beef 
up that compliance function. It is up to us to make sure we 
don't blow this because if we mess it up, ICANN probably gets 
replaced by something from the United Nations.
    Mr. Goodlatte. Mr. Metalitz?
    Mr. Metalitz. Mr. Chairman, I think the answer to your 
question is no. ICANN is not capable of doing this today and 
certainly would not be capable of doing it if there is a 
massive rollout as they plan, up to 500 or 1,000 new gTLD's. To 
use the nervous system analogy, I think if this were to occur, 
we would have a high risk of a nervous breakdown.
    Mr. Goodlatte. Mr. Palage?
    Mr. Palage. Serious concerns about the scalability of 
resources, but have them positively encouraged by some recent 
hires and investment in this area by ICANN.
    Mr. Goodlatte. Investments that could handle the rollout of 
multiple numbers of top-level domains compared to the number we 
have today?
    Mr. Palage. Considering it is going to be an 18- to 24-
month process, that does provide ICANN scalability. So if they 
continue to hire based upon current recent hiring levels going 
forward, potentially. But again, I do have serious concerns 
right now but have been encouraged by some positive steps they 
have taken.
    Mr. Goodlatte. Ms. Stark?
    Ms. Stark. I think we are very concerned. Compliance issues 
have been one of the toughest that we faced so far in the space 
of only 21 gTLD's that took over a dozen years to implement and 
launch. You are talking about exponentially increasing that 
space, exponentially increasing the number of registrar and 
registry agreements that would require compliance, and given 
the track record, we don't have a lot of confidence that it 
would be successful.
    Mr. Goodlatte. Mr. Pritz?
    Mr. Pritz. The answer is yes. ICANN has a very strong----
    Mr. Goodlatte. How many? In the next, say, 24 months, how 
many of these new gTLD's will we see?
    Mr. Pritz. We will see maybe 200.
    Mr. Goodlatte. You think you can do 10 times the number 
that you administer now. It has taken decades to get to the 
point where you have good competency where you are now, and 
some criticize what you are doing now. But leave that as it may 
be, you can scale up a multiple of 10 times in 24 months.
    Mr. Pritz. Right. So 10 times sounds like a lot, but 200 is 
a pretty small factory. We also provide support for 250 ccTLD's 
through our IANA function. In the last 18 months, ICANN has 
terminated 50 registrars. We have sent out non-renewal or 
breach notices. We have sent out over 7,000 compliance notices. 
We have in place manpower plans and staffing plans for scaling 
the compliance function. ICANN recently hired a new director of 
compliance, Maguy Serad, with 20 years experience in 
compliance, and we have also added additional staff in that 
area.
    Mr. Goodlatte. So let me ask you about this. So considering 
these large number of domains will be defensive, will you 
commit today that if this proposal proceeds, ICANN will create 
a block list of globally recognized trademarks to be 
administered by ICANN's new trademark clearinghouse for future 
gTLD's that will protect nonprofits like the Red Cross or the 
Olympics, universities, or other brand holders?
    Mr. Pritz. So, first, we don't necessarily ascribe to the 
assumption that there will be large numbers of defensive 
registrations. First, there are new protections in this new 
version of----
    Mr. Goodlatte. Why not make the commitment?
    Mr. Pritz. That was one of the recommendations of the 
implementation recommendation team. WIPO has been working on a 
list of globally protected marks for 10 years.
    Mr. Goodlatte. I have heard that ICANN is already excluding 
some of their own technical marks on a block list for new 
gTLD's. If it is good enough for ICANN and for technical marks, 
it should be simple enough to include all brand holders.
    Mr. Pritz. So all brand owners is a vast number.
    Mr. Goodlatte. It sure is. But you just told me that you 
are ready to implement the rollout of 200 new gTLD's.
    Mr. Pritz. Right.
    Mr. Goodlatte. But now when I ask you about a block list to 
protect all the legitimate businesses and nonprofits and other 
entities that want protection from this sudden explosion in the 
number of these top-level domains, you tell me, well, to do it 
for all of them, that is a lot. So I will go back to my first 
question. Are you ready?
    Mr. Pritz. Yes, we are.
    Mr. Goodlatte. You are ready but you are not ready to 
protect the people who may be victimized by this.
    Mr. Pritz. No. We are ready.
    Mr. Goodlatte. All right. Are you worried that most of the 
new gTLD's that will be created will end up being unprofitable 
if these defensive registrations are taken out of the picture?
    Mr. Pritz. No, I don't think the business models for new 
gTLD's will rely on defensive registrations. I think it is 
demonstrable that there will not be defensive registrations in 
these new TLD's. Defensive registrations occur primarily in com 
because that is where the abuse is and that is where the action 
is. There have been other new TLD's introduced. They are small. 
There are no defensive registrations there.
    Mr. Goodlatte. Look, according to your draft 2012 budget, 
your new application fees could net over $92 million on top of 
your current $70 million operating budget with costs of 
administering this new program around $35 million. What are 
your plans for the rest of the money, and why don't those plans 
include a block of not only your technical marks, but everybody 
else's legitimate brands?
    Mr. Pritz. ICANN's policy is that the fees for evaluating 
new TLD's be done on a cost recovery basis, and that is what it 
is. That fee has been very carefully calculated to cover the 
costs of evaluation. Because of all the issues we are talking 
about here today----
    Mr. Goodlatte. I thought your own budget contemplated the 
cost of administering this new program at around $35 million, 
and you could have fees of $92 million. So what happens to the 
other $57 million?
    Mr. Pritz. So of the $185,000, $100,000 of it goes directly 
to the evaluation. We are doing a very comprehensive evaluation 
because of the concerns we have heard here today. Every new TLD 
application is evaluated six different ways, six different 
tests, three against the applicant to test their financial and 
technical wherewithal, to do background checks to try to 
prevent the sort of abusive behavior we are talking about. We 
also test the TLD string, it is called, at the end to ensure 
that it doesn't break the Internet or doesn't tend to cause 
user confusion.
    Mr. Goodlatte. Let me ask you about one other area of 
expenditures because it looks to a lot of us like you are 
getting a lot of money here. We would like to see some 
commitment to using some of those resources to protecting 
intellectual property rights. You seem to be intending to 
protect your own intellectual property rights. Why not protect 
others since you are creating a major problem for them? So what 
are you going to use the money for? Do you know how much money 
ICANN has disbursed in bonuses since 2007?
    Mr. Pritz. No, I don't, but I know----
    Mr. Goodlatte. Can you get that for us?
    Mr. Pritz. Yes. I know it is posted----
    Mr. Goodlatte. Would you submit that to the Committee?
    Mr. Pritz. It is already posted and I will get it for you.
    Mr. Goodlatte. And do you know what the largest bonus 
awarded was?
    Mr. Pritz. No, I don't.
    Mr. Goodlatte. What the average was?
    Mr. Pritz. No.
    Mr. Goodlatte. Are any ICANN employees' or contractors' 
bonuses tied to the gTLD proposal or to completing it by June?
    Mr. Pritz. My bonus is tied. I can talk about me. My bonus 
is tied to moving the program forward. It has never been tied 
to a successful launch of the program.
    Mr. Goodlatte. What is the difference between a successful 
launch and moving the program forward?
    Mr. Pritz. Oh, that we will listen to community input, we 
will publish a next version of the Applicant Guidebook. There 
have been six versions of that. We will furnish the board with 
the right amount of documentation in order to consider the 
issues that are raised by the community.
    Mr. Goodlatte. But no member of ICANN bonus is tied to 
actually launching this.
    Mr. Pritz. Yes. I don't know. I know my bonus is not and I 
am the manager of the program.
    Mr. Goodlatte. We would be very interested in knowing 
whether people have a financial interest in moving this forward 
and particularly in moving it forward hastily by June. So if 
you would provide that information to the Committee, that would 
be very helpful to not only us but a lot of other people who 
are interested in what is going on here.
    My time has expired. We will now recognize the Ranking 
Member of the full Committee, Mr. Conyers.
    Mr. Conyers. Thank you, Chairman Goodlatte.
    First on a public consumer note, I have had a number of the 
ladies here in the Judiciary Committee tell me that it is 
freezing in here. I don't know if this is part of the deficit 
plan that the opposition has in mind of balancing the budget, 
but all I can tell you, Bob, is that when I was Chairman, I had 
the room warmer than you do now. [Laughter.]
    Mr. Goodlatte. I thought this topic would heat the room up. 
Maybe we just over-compensated, but we will check on that. I 
thank the Ranking Member for calling that to our attention.
    Mr. Conyers. Now, my fear, members of the panel, is that we 
may be talking about a done deal. We are acting like there is 
something that can interfere or make this thing better, but I 
have got the notion, Mr. Pritz, that there is going to be a 
vote in June and I think a lot of people already know what the 
outcome is going to be, don't you?
    Mr. Pritz. Honestly, I have never gained in trying to 
predict what our board of directors is going to do.
    Mr. Conyers. Well, the chairman of the board of directors 
thinks that it is. Chairman Peter Dengate Thrush was quoted as 
saying: You notice we have set up a special meeting early in 
the week because we want to have a party. We want to have a 
resolution to celebrate. End quote.
    Mr. Pritz. First, I want to point out that Peter Dengate 
Thrush is an intellectual property attorney and has paid 
particular attention to the issues that are raised here.
    Second, while there has been talk in this Committee about 
this being a sudden event or quickly considered, I want to tell 
you that this has been the result of a very well managed, 
deliberate process to develop not just the policy for 
introducing new TLD's, but the manner in which they are 
introduced. And several times during the process, we have 
stopped. So when intellectual property interests came to ICANN, 
after we published the first version of the Applicant Guidebook 
and said we want more property rights protection in that 
guidebook, we tolled the process, convened----
    Mr. Conyers. All well and good, but the chairman of the 
board just told us all publicly--this isn't a private 
communication I am quoting. He said publicly it's a done deal, 
and you are giving me a lot of additional assurances, but I 
think the chairman of the board might know, as well or better 
than you, what the board is going to do.
    Mr. Pritz. Certainly they have targeted approval of this 
process for this meeting in Singapore. And ICANN is a very 
transparent and open place, and when the board has thoughts, 
they signal those to the community and identify those to the 
community and make those statements public.
    Mr. Conyers. Well, Thrush has already made it public. Not 
only has he predicted that it is going to carry, but he wants 
it done early enough to celebrate.
    I hope I get a copy of what you all send the Ranking 
Member, Mel Watt, because I want to read it as well.
    But I think I am going to have to communicate with the 
board chairman to ask if he can assure this Committee that we 
won't be going through with this early meeting to have a 
resolution to celebrate because I think it ought to be held up. 
And you know better than the rest of us, Chairman Goodlatte, we 
may need another hearing on this matter. I think this is not 
cause to celebrate. This is going to change the shape of this 
medium as we know it, and I would like to personally request of 
him to delay this early meeting and the consideration of this 
resolution as we have a lot of work to do. I am more troubled 
about this circumstance that caused us to come here than I was 
in the beginning.
    And if I could get an additional minute, Mr. Chairman.
    Mr. Goodlatte. Without objection.
    Mr. Conyers. I would like to ask Attorney Stark and Mr. 
DelBianco to just briefly comment on my proposal.
    Ms. Stark. Congressman Conyers, we would very much 
appreciate--additional time basically is all we are asking for. 
We are not wholesale against the expansion of the gTLD space, 
but we do believe that there are very complex issues that have 
not yet been resolved and that will impose tremendous 
implications for the public and costs on brand owners and the 
public as well. And as a result, we feel like this has such 
enormity, the scale of it, the magnitude of the change, the 
implications for the public, that it behooves everybody to take 
the time necessary to make sure that we do our best to get it 
right. And we just don't feel that the current version of the 
draft Applicant Guidebook and registry agreement do that, that 
there are still some very, very fundamental issues that remain 
open for discussion and need to be resolved.
    Mr. DelBianco. Chairman Conyers, there is one positive 
aspect of having Peter Dengate Thrush schedule a party because 
he really wants a lot of the right guests to show up at his 
party, and if he throws a party and there are no governments in 
the room celebrating, there is no law enforcement there 
toasting an effective plan, there is no businesses, banking and 
financial institutions there, he is going to wake up with one 
heck of a hangover after that party. So the key for this is the 
pressure is on him and the pressure is on ICANN to get those 
guests to the party.
    And how do they do it? They need to mind the GAC. If they 
pay attention to what the GAC has asked for--Governmental 
Advisory Committee--and deliver those safeguards, those 
responsible ways of delivering integrity, then we will all show 
up at that party and we can focus on launching TLD's in a 
responsible way. I feel like pressure on making the party the 
right party is more important than the U.S. Government 
unilaterally asking for a delay since, as I said earlier, that 
plays into the hands of 200 nations who don't even show up at 
ICANN and might want to follow China's lead saying their party 
is at the UN.
    Mr. Conyers. Joshua Bourne, could you comment?
    Mr. Bourne. I will. What I would caution the Subcommittee 
is to not just ask for a delay and further study on this TLD 
policy, instead to consider where it came from and whether that 
organization is functioning as it should and whether this 
policy, maybe if it is curtailed some or some additional 
trademark protections are put in place--will this be followed 
by another policy and another policy and the same kind of 
charter changes that have occurred in earlier introduced new 
TLD's to keep them afloat will follow new charter changes in 
the future when these new TLD orphans could end up destitute. 
We just do not see the demand in the user community for 
hundreds of new generic top-level domains today. The demand is 
within the ICANN community.
    ICANN was captured. ICANN was a private enterprise that was 
set up to control scarce resources, making it ripe for capture. 
ICANN was set up in a way to try to make it more independent by 
allowing it to raise its operating budget as a function of how 
many domains get registered or renewed. That has aligned its 
interest with anybody who can help them grow that operating 
budget and do their job. ICANN is probably under tremendous 
pressure from various commercial interests in the domain name 
business who absolutely want this to move forward as quickly as 
possible. Our numbers show that anywhere between $500 million 
and $1 billion will be spent by companies to protect their IP. 
For what benefit?
    So I go back to my original proposal which is band aids in 
a way would be to--sure, more intellectual property protection 
is useful and critical but they are just band aids. If we fix 
ICANN, ICANN will be accountable, predictable, have a long-term 
point of view, have an interest in protecting the public 
interest. And I think there is only one opportunity left really 
to do that, which is to work with NTIA on their renewal of the 
IANA contract and ensure that that leads to potential 
fundamental changes to how ICANN is structured and how it----
    Mr. Goodlatte. The time of the gentleman has expired.
    The gentleman from North Carolina is recognized for 5 
minutes.
    Mr. Coble. Thank you, Mr. Chairman.
    Good to have you all with us this morning.
    Mr. Bourne, I have several constituents who have invested 
to protect their trademark and corporate brands on the 
Internet. They expressed concerns that the new gTLD's will 
amount to another added cost to protecting their market brand. 
What do you say in response to that?
    Mr. Bourne. Congressman Coble, they are right to be 
concerned. If I understand that question correctly, the math 
that we have conducted showed that even a small trademark owner 
acting conservatively might spend a half a million dollars 
which they will have to respend every 2 years to own this 
duplicative, superfluous domain name portfolio. When you drill 
down on the numbers that lead to that half a million dollars a 
year for a small portfolio, we conclude only 3,600 defensive 
registrations per TLD. Just 5 years ago--or 4 years ago--excuse 
me--when dot asia launched, there were 15,000 approved 
trademark applications during their sunrise period. So 
predicting one-quarter of the level of participation, a small 
brand owner might have to own another half million dollars 
worth of domain names.
    Mr. Coble. I thank you.
    Mr. Chairman, I think you touched on this in your line of 
questioning too.
    Mr. Pritz, let me ask you this. What protections, if any, 
are provided to ensure that ICANN will not approve new global 
top-level domains that will gravate problems we are already 
experiencing with online parasites and therefore simply become 
new havens for counterfeit, infringing, and possibly criminal 
activity?
    Mr. Pritz. There are several ways. One is in the 
application process for the new TLD's. There are new trademark 
protections put into those new TLD's and new consumer 
protections. So, for example, we convened a team of experts in 
Internet security and stability, and they gave nine concrete 
recommendations for mitigation of malicious conduct in new 
TLD's. All of those are incorporated into the Applicant 
Guidebook. There are measures such as background checks of 
applicants and the removal of records that might be used for 
malicious conduct purposes. So that will help create a safer 
environment. Plus, we have provided tools to trademark holders 
that I could explain some detail that will allow them to avoid 
these negative impacts.
    Mr. Coble. I thank the panel for your contribution.
    Mr. Chairman, I yield back.
    Mr. Goodlatte. I thank the gentleman.
    The gentlewoman from California, Ms. Lofgren, is recognized 
for 5 minutes.
    Ms. Lofgren. Thank you, Mr. Chairman.
    Before asking my questions, I have been reflecting on how 
we got here and the discussions that we had in the 1990's when 
we actually supported the effort to establish ICANN. If you 
will recall, the Internet belonged to us because we invented 
it, but as it became commercially viable, the question was 
could the Department of Commerce and the U.S. Government 
control it, and we decided--and I am sure you will recall, Mr. 
Chairman, since we all participated in this Committee in the 
discussion and the decision-making--that it would be better to 
have a nonprofit that had multiple stakeholders and that that 
would be more viable in the international community. And 
although ICANN has not been without its missteps over the 
years, it actually has worked better than I thought. We sort of 
boldly asserted that this was going to work and it has.
    Now, I am agnostic about whether these domain names are 
rolled out in June and how many, but I do think it is important 
to have this discussion in that broader context which is that 
China has a different agenda here about the Internet than we do 
and we need to make these decisions mindful that the freedom of 
the Internet is really what this is about.
    I am interested. Mr. Pritz, you mentioned you thought there 
would be 200 new gTLD's. Do you have an estimate of how many of 
those 200 would be in an alphabet other than what we use in 
English?
    Mr. Pritz. No. My estimate----
    Ms. Lofgren. Do you have a guess?
    Mr. Pritz. 20 percent.
    Ms. Lofgren. Yes. I mean, to have the country level control 
of these domains means that China is going to decide what their 
citizens have access to, and so it is enormously important that 
we maintain ICANN and that we have private sector involvement 
if we are going to have a free Internet without breaking it and 
without allowing regimes with an agenda that is quite different 
than a free agenda to actually control this whole thing. And I 
think we are much closer to that challenge than we have 
acknowledged here.
    The trademark issue, I think, has merit and I think ICANN 
has addressed it. Maybe they need to do more. I don't know. But 
I do think that if we are going to suggest that the United 
States has the ability to establish the trademarks for the rest 
of the world instead of WIPO, we are actually inviting China to 
rally poor nations to take over the control of the Internet.
    And I understand everybody is coming from a point of view 
and that is legitimate and that is why you are here as 
witnesses. But let's put this in a perspective because a world 
where China dominates the control of the Internet is not a 
world that trademark owners will value in terms of protection 
of intellectual property.
    So I guess that is not a lot of questions, but I am just 
concerned that we are on dangerous ground here.
    Maybe this is a question I can ask you, Mr. DelBianco. You 
suggested that the Government Advisory Committee really needs 
to be dealt with in a very positive way. I think that is 
correct, but understanding that the agenda really isn't about 
the actual agenda, it is an agenda that really is for a 
takeover. How do you put the GAC agenda in the broader 
political context that we are talking about here?
    Mr. DelBianco. Thank you, Congresswoman Lofgren and Mr. 
Chairman. I think you are exactly naming the point of the 
problem. When you think about it, there are well over 300 
nations who participate at the United Nations. There are 250 
different country code top-level domains, so the countries that 
have already jumped into the Internet at least with a Latin 
script. But inside of the GAC, we only have about 100 member 
countries, and of those 100, only about 60 show up at the 
typical ICANN meeting, and of those 60, well, roughly six do 
most of the talking. So we don't have broad participation in 
the GAC yet. The GAC is certainly very firm in what it now 
wants and I support most of what they have asked for. But we 
need to broaden that participation.
    And one more thing: make it a higher-level, more senior-
level person from each of those governments. I mean, if they 
are sending a very high-level diplomat to New York and take 
their seat at the UN, we need a high-level economic and 
business development and technology person representing that 
government at the GAC.
    Ms. Lofgren. If I could ask Mr. Pritz. Do you believe that 
your analysis on the domain name expansion that you have 
discussed here will be effective in maintaining the private 
sector ICANN model as compared to the UN government-controlled 
model as we look down the road a year or 2?
    Mr. Pritz. Yes, I do because ICANN has been responsive to 
the broad Internet community, including governments, and it is 
those governments that would work to create a model where it is 
a government-controlled model. So, for example, China looked to 
ICANN to create internationalized domain names. The threat 
there was that China was going to establish an alternate root 
system.
    Ms. Lofgren. And that is still a threat. We could break the 
Internet if we----
    Mr. Pritz. That is right and that is why it is important to 
be responsive to governments, and that is why it is important 
to have the GAC have a very effective role within ICANN and 
ICANN listen to all the governments across that. And so ICANN 
was responsive to the needs of the international community by 
creating IDN's just as ICANN is trying to be responsive to the 
broad community in closing this 7-year period of discussion on 
all the issues. Essentially there are now new issues. And the 
ICANN community that trusts this model has said every issue has 
been discussed. There have been no new issues raised in recent 
months. And so the confidence of governments and the rest of 
the Internet community in the ICANN model is based on their 
trusting that ICANN has listened and that ICANN can bring this 
process to a close after 7 years of careful listening to all 
interests, including the people at this table.
    Ms. Lofgren. Thank you, Mr. Chairman.
    Mr. Goodlatte. I thank the gentlewoman.
    The gentleman from California, Mr. Issa, is recognized.
    Mr. Issa. Thank you, Mr. Chairman.
    Mr. Pritz, I look at the movement from IPv4 to IPv6, sort 
of go back to the numbers. We went from having 4.5 billion real 
URL's to having--I love to say this because I can't say it any 
other way than the way they say it--5 times 10 to the 28th 
combinations of numbers for each human being on the planet. We 
are not short of addresses. Right?
    Mr. Pritz. Right.
    Mr. Issa. And effectively an IPv6 address costs nothing to 
deliver to an individual. It is a fraction of a fraction of a 
fraction of a fraction of a penny to resolve. So the cost of 
the Internet operation on a per-event or on a per-location 
basis is a rounding error of zero. Would you agree to that?
    Mr. Pritz. Yes, for IP addresses.
    Mr. Issa. For IP addresses. So there is plenty of 
abundance.
    Our real discussion here today is a plain name resolution 
question of uniqueness and price. A lot of people, as I have 
been listening--and I apologize. I have a hearing next door, so 
I have been running back and forth.
    A lot of people are concentrating on the other side of the 
issue, you know, how many do I have to buy, who is going to be 
camping on, will there be confusion. There is a lot of that. I 
mean, to be honest, no matter what the number is, when I type 
in my name on Google, I am more likely to get somebody who 
truly dislikes my politics and has gone to great lengths to 
disparage me than I am to get my puff piece, as hard as I try. 
[Laughter.]
    So the whole resolution process--there is no question. 
There are problems.
    But let's go through another question that wasn't asked 
here today. Why is it that I got to pay GoDaddy from $10 to 
$10,000 for a name and not from a tenth of a cent to 10 cents 
for a name? Why is it we are not driving the infinite possible 
down to the predictable consumer price that would normally 
occur in a free market?
    Mr. Pritz. So I think that for domain names, through the 
introduction of competition like the creation of GoDaddy, has 
driven down the price of domain names from $80 to $6, which is 
a stunning bargain, right, when you think about it.
    Mr. Issa. I can send a letter across the country for 47 
cents. Everything is a relative stunning bargain.
    Mr. Pritz. Right.
    Mr. Issa. $6, if I have to buy 6,000 different variations 
of a name, is no longer a deal. 6 cents, if I have to buy 
10,000, may be more de minimis to a corporation.
    My question to you because it was a question that wasn't 
asked is how is it from an ICANN standpoint that I am being--we 
have got protection issues, and I know that is a big part of 
this. And if it hadn't been asked so often, I wouldn't go to a 
new line of questioning.
    My question is, first of all, why in the world are there so 
many reserved names? If I want a good name from GoDaddy--and I 
am using them because I happen to have a lot of mine with them, 
and I use Zone in it to move things around. But at the end of 
the day, I have got a whole bunch of them and they are one of 
them that I buy from. But the good names that I might want have 
already been pre-grabbed and marketed in an upward way higher.
    Why is it in a way that they are not being driven down? 
Real competition would imply that those names are being driven 
down to a penny to a user and prohibited from being camped on 
in order to resell. Why is it that is not the number one issue 
of ICANN, to stop camping on for profit either through, 
obviously, diversion, but the other part of it, simply making 
me buy and pay $6,000 or $8,000 or $10,000 for a name simply 
because you thought I would need it and you camped on it? Why 
is it that is not the number one issue at ICANN in an infinite 
universe in which the incremental cost of that name is a 
rounding error of zero? Because the name is just as cheap as 
the IPv6 address is before you, quote, mark it up.
    Mr. Pritz. A couple of reasons. One is it is ICANN's 
mission, right, to encourage competition, and one of the 
benefits of competition is to drive down costs and prices. If 
there are more top-level domains, that camping will be less 
effective. Domainers, those that invest in those names, are 
against new gTLD's because they are going to lose the value of 
their beach front property.
    A second reason is that we don't want to drive the capital 
out of those markets by creating domain names for a penny. All 
the security and intellectual property protections and 
protections against consumers and the work of registrars and 
registries in enforcing their agreement and protecting 
registrants and having an infrastructure that always resolves 
the name 100 percent of the time--that is what costs money. The 
resolution of the IP addresses doesn't cost money.
    Mr. Issa. My time has expired. If I could have an 
additional 30 seconds, Mr. Chairman.
    Mr. Goodlatte. Without objection, the gentleman is 
recognized for an additional minute.
    Mr. Issa. Thank you, sir.
    Mr. Bourne, looking at the other side of that coin, why is 
it that if I own [email protected] because I was early enough to grab 
my initials--I don't own issa.com. The International Sanitary 
Supply Association got there first. [Laughter.]
    Mr. Issa. And that was before people started comparing me 
to organizations like that. [Laughter.]
    So why is it, though, that if I wanted a dei@dei equivalent 
for a penny times every possible registrant--why is it that as 
a, quote, user--let's assume the registered trade name is that. 
Let's say Viper, for example, viper.com, which is an asset of 
my former company. I don't own it. Why is it they shouldn't be 
able to, for a penny apiece, buy thousands of them? Because 
before they are sold to, quote, the new user, essentially a 
registered trademark owner, in order to protect them--why is it 
I am looking at $187,000 to protect all the different ways 
right now? And I know that dot com--that is the one that 
everybody wants. So they want vipers.com and 1viper.com. They 
want all the things that are close enough. And there is no 
question that is where the action is. But why is it that from a 
consumer standpoint the trademark owner shouldn't broadly be 
able to get that with certain limitations? Mr. Bourne or anyone 
else that wants to answer.
    Mr. Bourne. Well, they ultimately could, but I believe 
that----
    Mr. Issa. For a penny.
    Mr. Bourne. Pardon me?
    Mr. Issa. For a penny.
    Mr. Bourne. It is possible, but domains are driven by 
supply and demand. So the reason why the prices are higher for 
dot coms or that name that you wanted is because it is more in 
demand. I have seen, because my company monitors these things, 
the single word, dictionary term, commercially relevant dot 
infos not being renewed, being returned to the available names 
pool, and the bidding in the aftermarket is between $50 and 
$100. The similar term in dot com might be worth $50,000, 
$100,000.
    So I think I understand the point that you are making which 
is that if there isn't a volume of these things, then the 
prices will go down. However, based on how the market interacts 
with names, demand is the highest for terms in extensions that 
are the most valuable and oftentimes because of----
    Mr. Issa. So dot xxx is clearly going to be where the 
action is after dot com you are saying?
    Mr. Bourne. I don't think so actually. I think that needs 
to still play out. I mean, the reality for brand owners is 
that--just imagine a group of Disney executives sitting around 
wondering whether to register disney.xxx, and there are 
hundreds of other characters and brand names.
    Mr. Issa. The characters would be different on that site.
    Mr. Bourne. It would be a problem if it was owned by a 
third party. So they are going to register all of those more 
than likely or protect them through whatever sunrise mechanism 
is available to them. To the companies in that industry, they 
may or may not choose to be there.
    For the most part, I think that brand owners view all of 
these as defensive registrations, and the public, for people 
that register domain names, aren't interested.
    Mr. Issa. Thank you. I yield back. Or wait a second. Yes, 
sir?
    Mr. DelBianco. Congressman Issa, viper.com has value 
because some people in this planet--they still guess. They 
heard about you on the radio. They saw you on one of your puff 
pieces, and they go to viper and they type in viper.com as a 
default. The new gTLD program will probably change this guess/
assumption behavior that people do. For all they know, viper 
could be viper.auto because it is an auto security system or 
viper.cars or viper.security. And after a while, folks will 
stop guessing because it is a fruitless endeavor. They will 
jump into Google's search engine and they will search for 
viper. They will take a look at the different links that come 
up, and they are going to try to suggest which is the right one 
because is viper.com, the right one for you, or maybe 
viper.auto? Over time, those TLD's like dot auto have got to 
build the integrity to make that the preferred destination. 
That is the only way you will see those prices begin to come 
down.
    Mr. Issa. Thank you. Thank you, Mr. Chairman.
    Mr. Goodlatte. In the meantime, you are buying all of them.
    Mr. Issa. In the meantime, I am buying all of them, 
including all of those stopissa.com types. [Laughter.]
    Mr. Goodlatte. The Chair is pleased to recognize the 
gentlewoman from California, Ms. Waters, for 5 minutes.
    Ms. Waters. Thank you very much, Mr. Chairman and Members. 
This has been a very interesting discussion and debate. I wish 
you could say that it has been very enlightening, but I think 
that I, along with perhaps some others on this Committee, still 
have a lot of questions.
    I want to go to Mr. Metalitz who raised some very 
significant questions in his testimony, particularly as it 
relates to, I believe, the phase II study that indicated that 
some additional thought and direction should be given to this 
whole thing. What are you saying about this effort, Mr. 
Metalitz? What are you saying about ICANN? And what are you 
suggesting should or should not be done?
    Mr. Metalitz. Well, Ms. Waters, I think what the economists 
were suggesting in the phase II study was that you should be 
differentiating between new top-level domains that are simply 
trying to create a new dot com--we have a dot com. We don't 
need another dot com on the one hand, and on the other hand, 
there may be new top-level domains that really would add value 
to the public and particularly globally.
    Ms. Waters. Such as?
    Mr. Metalitz. Well, we mentioned before the ones that are 
in the non-Latin script so that people in these countries that 
don't use our alphabet would be able to participate more fully 
in the Internet.
    So the phase II study said you should be taking these 
differences into account in how you set the scope of this 
rollout and the pace of this rollout, and that advice was 
actually echoing what a lot of governments were saying. It is 
echoing what a lot of the business community was saying. We are 
not opposed to new gTLD's, but let's use some common sense and 
try to figure out where they are likely to do the most good.
    Ms. Waters. You sound as if in your testimony you are 
saying that ICANN has been ignoring this kind of advice, 
resisting----
    Mr. Metalitz. Yes.
    Ms. Waters [continuing]. And moving forward in its own way.
    Mr. Metalitz. The ICANN staff concluded that this advice 
was fine for the future. They are not going to use it in this 
round of new gTLD's. So basically it has had no effect.
    Ms. Waters. May I ask will ICANN's plan maintain their 
dominance in domain name registry?
    Mr. Metalitz. I am sorry.
    Ms. Waters. Will they maintain their dominance in domain 
name registry?
    Mr. Metalitz. Will ICANN maintain the dominance?
    Ms. Waters. Yes.
    Mr. Metalitz. Well, I think people have mentioned before 
this threat of perhaps an alternative root, but basically the 
ICANN unique root is the main game in town. I mean, that is 
where people go to find these sites on the Internet. So really 
these decisions that ICANN makes are extremely consequential 
for the public both in terms of the ability to participate 
globally and also in terms of preventing consumer confusion. 
That is a huge risk when we go from a very small handful of 
gTLD's to a very large number, potentially hundreds or 
thousands or more.
    Ms. Waters. What problems would be created on the ICANN 
plan to open up the floodgates for unlimited domain name 
registrations? What kind of problems do you see? Ms. Stark?
    Ms. Stark. Congresswoman Waters, thank you. I think that is 
a really important question. And one of the things that we 
think is critical is this whole concept that we have been 
talking about at length at this hearing which is the defensive 
registrations that brand owners will have to engage in. I mean, 
I think Mr. Pritz has said, well, when you look at the 
defensive registrations, you are seeing that primarily in dot 
com and not so much in dot biz or dot info or some of these 
other existing gTLD's. But that is looking back with 20/20 
hindsight, and we won't have that advantage when these new 
gTLD's are rolled out to know which of those spaces are going 
to be phenomenonally successful, which will be moderately 
successful, which will have no relevance to either our company 
or our markets. So our history has proven that we don't have 
any choice but to engage in extensive defensive registrations 
from the outset in order to protect the irretrievable dilution 
of our brand and to ensure the integrity of the online 
experience for our customers and fans. So it is only later, 
once the market has played out, that you are maybe able to 
scale back those efforts, but initially they are going to be 
astronomical. And those costs are already significant in a 
world of 21 gTLD's. They become absolutely staggering in a 
world of hundreds.
    You know, at one point ICANN--I think Mr. Pritz revised 
that number today to 200, but at one point had said there could 
be as many as 400 of these, and that might even be a 
conservative number. Well, conservatively a large corporation 
is looking to register maybe 300 defensive names in those 400 
spaces. In the sunrise period, that cost is maybe about $100 a 
name. That is $12 million for an individual company. And that 
is just the cost of defensive registrations. That is not about 
the personnel to manage and monitor that portfolio, to monitor 
the new gTLD spaces for abuses, and then of course, the cost to 
actually go and enforce and do something about things like 
myfox2detroit.
    Ms. Waters. So you are basically also telling me that small 
businesses or startup companies will be at a great 
disadvantage.
    Ms. Stark. They will because many of those companies aren't 
going to have the luxury of even deciding whether they have 
enough resources to devote purely to defensive registrations 
that spur no innovation, that don't create productive jobs, and 
that literally sit dormant simply because they can't afford to 
have their brand name quashed in the new space.
    Ms. Waters. Thank you very much, Mr. Chairman. My time is 
up, but I am hopeful that somehow there will be some discussion 
about money. ICANN is a nonprofit. I am looking at the salaries 
of the CEO and wondering with these new gTLD's and the costs 
who is going to benefit and where will all of this new money 
end up. This article, which you are probably very much aware 
of--you released salaries. Beckstrom over $2 million 
guaranteed. CFO, $270K, per lawyer, 230. Does that continue to 
rise with all of the new systems, gTLD's? You can answer that. 
He is going to let me continue.
    Mr. Pritz. I would be happy to answer that.
    ICANN salaries, first of all, are set in accordance with 
IRS regulations. It is a not-for-profit organization. ICANN 
salaries are set with the advice of competent firms that give 
advice on salary setting so that ICANN can be competitive in 
recruiting excellent talent, and we position ourselves to be 
about at the two-thirds level. If you think about how salaries 
are reported, salary ranges are reported and set. For officers, 
non-conflicted board members set ICANN salaries.
    So ICANN's CEO compensation is set, first, based on the 
compensation of the past CEO and, second, with the idea that we 
need an excellent person in this position. This is an 
environment where we are processing billions of transactions 
and facilitating trillions of dollars in economic commerce. It 
is a very important job, as we have indicated here today. The 
salary of the CEO is generally, I think, less than that of 
trade association CEO's or some big hospital administration, so 
entities that are also not-for-profits.
    Ms. Waters. Thank you very much, Mr. Chairman. I yield 
back.
    Mr. Goodlatte. A very good question, Ms. Waters.
    The Chair recognizes the gentleman from Pennsylvania, Mr. 
Marino, for 5 minutes.
    Mr. Marino. Thank you, Mr. Chairman.
    I apologize for being late. I am jockeying three hearings 
this morning, and I hope I am not asking a question that has 
already been asked.
    But given my law enforcement background, I want to talk a 
little bit about security, fraud, crime in general. The 
question is simple. We will start at this end of the table.
    What role does ICANN play in promoting cyber security and 
how do you see gTLD expansion impacting efforts to address 
fraud, crime, and security?
    Mr. Bourne. Thank you, Congressman Marino. My sense is they 
play very little role in that. In fact, they will be the first 
to tell you that they have zero accountability and 
responsibility for what ends up on a website. It is not within 
their mandate, and they will be the first to tell you that.
    The community, those who are like-minded and interested in 
consumer protection, will try to duke it out and try to eke out 
some kind of a solution that will limit the downside. However, 
it was the University of Chicago who late last year found that 
77 percent of Whois records are defective somehow, and that is 
an important point that I will just follow up on right now.
    There is enormous counter-party risk each and every time 
somebody gets on the Internet. It prevents wholesome people 
from buying goods from websites that could be perfectly law-
abiding. It is small business owners. People are nervous about 
who they are dealing with online because there is no phone book 
that they can depend on.
    Several years ago, ICANN had the opportunity to address 
that counter-party risk, to address that defect in the Whois 
database, and at the end of a very long process, decided to do 
nothing. And I believe the reason is because the ICANN 
community is so dominated by the registrars and the companies 
that have those relationships with the registrants that they 
obfuscated the process realizing that any solution would be on 
their shoulders lessening their bottom line. However, you see a 
policy like this one fast-tracked, it should be clear it is 
because of that revenue orientation.
    Thank you.
    Mr. Marino. Go ahead. Bear in mind I have 5 minutes. That 
is all right.
    Mr. DelBianco. Make it very quick. Three things.
    We need to make sure we implement a system where names get 
suspended quickly if that name is where fraud and abuse is 
happening. So, for instance, there is a plan called Uniform 
Rapid Suspension. It is not particularly rapid, but we are 
working on that and the GAC is insisting on it.
    Second would be that if a TLD, if dot steve really did 
tolerate a lot of abuse and fraud and didn't respond to law 
enforcement, there is a mechanism in there to take that TLD 
away from that operator and suspend it.
    And the third is something called Whois. It is not entirely 
related to the new TLD program, but ICANN has got to increase 
the compliance of accuracy in Whois and stop allowing bad 
actors to hide behind things like a proxy or privacy 
registration.
    Mr. Marino. Thank you.
    Mr. Metalitz. I think there is no question that the new 
gTLD rollout will increase the opportunities for fraud and 
abuse of the kind you are talking about.
    Mr. Marino. You bet.
    Mr. Metalitz. The question is whether ICANN has built in 
enough protections. I think they have made some progress. I 
think it isn't adequate to this point. And the Uniform Rapid 
Suspension is a good example. That is targeted at one 
particular kind of abuse. It is basically targeted at 
cybersquatting which is very important, but it really doesn't 
deal at all with many of the other types of misconduct that is 
going to be taking place, facilitated by these new top-level 
domain spaces.
    And finally, in the last version of the Applicant 
Guidebook, there is a mention that ICANN would encourage and 
give an extra point in the evaluation to top-level domains that 
had another type of rapid takedown or suspension systems 
regarding malicious or abusive behaviors. The door is open a 
crack, I think, to press ICANN to do more in this area.
    Mr. Marino. Thank you. Anyone else care to comment on that? 
Sir?
    Mr. Pritz. Certainly. Thank you, Congressman.
    Certainly when ICANN managed this process and looked at 
this very question, we decided, in ICANN style, to convene a 
set of experts in Internet security and cybersquatting who 
developed a set of protections that are implemented in the 
Applicant Guidebook particularly to address this problem. Will 
it eliminate the problem? No. Will there be a safer 
environment? Yes.
    With Whois, we are requiring a thicker version of Whois in 
every registry. So registrants need to provide more information 
to be easier to find. So that was an improvement. ICANN is also 
undertaking several initiatives in the Whois program.
    And finally, there are trademark protections implemented 
that I have described. One is the rapid takedown. Another is 
new remedies directly against registries that facilitate 
infringing behavior.
    So I think it is those three things.
    Mr. Palage. While I appreciate ICANN's effort to create the 
ultimate black box, I think the answer to your question is we 
don't know. For every new, innovative business model, there is 
probably a new, innovative business model for criminals to 
defraud. And I think this goes back to a point that many people 
have made here today. There is a need in the public-private 
partnership which ICANN is, for the private sector to work with 
governments through the GAC and through law enforcement to 
proactively address those concerns when they happen. And I 
think that is probably one of the most important things, is the 
flexibility for the unknown.
    Mr. Marino. And this is a rhetorical question. We will 
think about this some other day. Who and how do we pay for 
this?
    I yield my time.
    Mr. Goodlatte. I thank the gentleman.
    The gentlewoman from Texas, Ms. Jackson Lee, is recognized 
for 5 minutes.
    Ms. Jackson Lee. Mr. Chairman, I thank you and I thank Mr. 
Watt for this hearing.
    And I would just like to inquire, Mr. Chairman--Mr. 
Chairman, I am inquiring. A question to you. As I have listened 
in the time that I was here--I had a previous hearing--I think 
there are enough questions being raised that I would be 
interested in another hearing being held, more information 
coming forward. So I make that request whether it be a full or 
whether it be your Subcommittee. I think this is an important 
question to be able to address.
    Mr. Goodlatte. Well, it is an important question, and we 
are closely monitoring what is taking place. And the 
possibility of another hearing certainly is there. I wouldn't 
want to say at this point in time what or when we might do.
    But go ahead and ask your questions now, and if you have 
additional questions, we certainly can submit them in writing 
to the witnesses.
    Ms. Jackson Lee. I will do so. I always think a full airing 
of the answers is important. But I thank you for that 
thoughtful answer and hopefully we will have that opportunity.
    I think the idea of structuring the domain names that 
business will have to engage in and the expansion that has been 
proposed by ICANN--I can understand that it is a useful tool 
for allowing more businesses to use websites with new domain 
name extensions. But if I have to express my concerns on the 
record, it is that the expansion of the so-called generic top-
level domain names does not occur too quickly and at the 
expense of doing harm to the owners of intellectual property, 
job creation, and consumer protection and competition.
    I am going to look forward to holding some meetings to 
understand and vet this a little bit more extensively because I 
have always said that job creation is crucial to, I think, the 
purpose and the mission of this Committee.
    So my first question to you, Mr. Pritz--and I think you are 
going to answer Ms. Waters' question on salaries. I would like 
it to be a little bit more extensive. Maybe you can put it in 
writing. I am not asking for an answer, but to respond back in 
writing to the Committee that we all have access to 
understanding those salaries in light of where we are today in 
the economy.
    Now, we have held a hearing with the U.S. Office of the 
Intellectual Property Enforcement Coordinator about rogue 
websites and massive job-killing problems with counterfeiting 
in intellectual property and theft. And the businesses know 
that my interest has always been to promote American genius, 
and sometimes that is stolen. And the coordination of law 
enforcement is an important aspect.
    What means is ICANN and its licensees who grant domain 
names taking to work with law enforcement to combat this 
thievery of the intellectual property and genius of America?
    Mr. Pritz. We work very closely with law enforcement 
agencies across the world. We have regular meetings with 
representatives from the FBI. We hold three ICANN meetings 
every year. At every meeting, we have a session that is 
coordinated by law enforcement to discuss domain abuses and 
ways to remedy those, and we have teams of people that 
cooperate with law enforcement to do that. And we worked also 
with law enforcement in crafting this version of the----
    Ms. Jackson Lee. Do we need to give you more resources, or 
do you need a different structure to help you block what is an 
ongoing effort by those who seek to steal intellectual property 
from the United States?
    Mr. Pritz. So I will answer that by saying ICANN makes 
significant investment and will use, to a certain extent, the 
increased revenue from this program to increase its activities 
cooperating with law enforcement and work with them on rapid 
takedown mechanisms. We have also worked with registries to 
allow them to work to take down names that are infringing in a 
hurry.
    Ms. Jackson Lee. But you are concerned with this issue. Is 
that right?
    Mr. Pritz. Yes, we are very----
    Ms. Jackson Lee. And you are concerned with the impact on 
smaller businesses and single entrepreneurs. You consider them 
an important component to this process of intellectual 
property.
    Mr. Pritz. Yes, and we consider this new gTLD program to 
have the greatest beneficial effect on small businesses. One of 
the positive aspects of it will be that this program can bring 
those small businesses closer to its customers and will also 
allow for the creation of new businesses and jobs in that way.
    Ms. Jackson Lee. Let me quickly go to each person. Just 
give me a quick--it could slow down. Ms. Stark, could we slow 
this process down to get in the concerns that you are 
expressing heard. Yes or no?
    Ms. Stark. I think that it is important to take the real 
time necessary to put into place the effective rights 
protection mechanisms so that we can truly reach the goal that 
we all have which is to ensure the integrity of that consumer 
experience.
    Ms. Jackson Lee. Mr. Palage?
    Mr. Palage. I would not oppose a delay. However, if this 
new gTLD process launches on June 20th, I want to make sure 
everybody on that plane has a parachute.
    Ms. Jackson Lee. Mr. Metalitz?
    Mr. Metalitz. I am not really sure that the timing of this 
is the crucial question. I think if we stretch out the process 
but it remains on this path of an unlimited opening of new 
gTLD's, hundreds at a time without any differentiation----
    Ms. Jackson Lee. You need restraints.
    Mr. DelBianco?
    Mr. DelBianco. Don't slow it down. Raise the bar and mind 
the GAC.
    Ms. Jackson Lee. Joshua Bourne? Mr. Bourne?
    Mr. Bourne. I believe that the ICANN community is so 
heavily biased in one direction that what you get will be fully 
predictable today or tomorrow unless ICANN is truly looked at 
under a microscope and potentially some adjustments are made to 
how they form policy.
    Ms. Jackson Lee. I thank you.
    I thank you, Mr. Chairman. I think the key question is how 
do we create jobs and encourage businesses and answer Mr. 
Bourne's question and get the product that is going to be 
helpful to everyone in this room. And I think we can do that, 
and I hope that we are going to be engaged as this Committee, 
in terms of the oversight, as we move forward.
    With that, Mr. Chairman, I yield back.
    Mr. Goodlatte. I thank the gentlewoman.
    I have a couple of oversight questions I am going to ask 
myself. I had the opportunity to ask Mr. Pritz at length about 
blocks, and I did not ask some of the other folks and I would 
particularly like to ask Ms. Stark. Would you be supportive of 
a globally recognized trademarks block list administered by 
ICANN's new trademark clearinghouse for the gTLD program? And 
do you think this block list would be easy to administer, more 
difficult? Do you think that the fact that ICANN already does 
it for technical marks from registration by new TLD's now would 
indicate that this is something that could be a success? What 
is your opinion on this?
    Ms. Stark. Mr. Chairman, I think that is a wonderful point, 
and I really appreciate you raising it.
    I do think that the block list is something that was 
originally recommended by the implementation recommendation 
team as one of the protections that would go the farthest and 
be the most helpful in protecting from the outset intellectual 
property abuses in this new expanded space.
    I think that the fact that we already have within the 
system this idea of a trademark clearinghouse shows that it 
should be something that ought to be able to be administered by 
ICANN and could be effective. The trademark clearinghouse in 
some ways is an offshoot or a watered-down version of the idea 
of a block list. So I absolutely think it is administrable and 
I absolutely think that it could be very beneficial to mark 
owners.
    Mr. Goodlatte. Mr. Palage?
    Mr. Palage. 10 years ago, I served as the chair of ICANN's 
working group B which was entrusted with addressing protection 
of famous trademarks, and we addressed the issue of a block 
list back in 1999. The difficulties then, which still exist 
today, is devising that list. I do think it is something that 
we continue to need to move forward with and that WIPO perhaps 
provides the best path forward on providing something that 
works on a global basis. But in the short----
    Mr. Goodlatte. So Mr. Issa and I and others who are 
interested in this would be out of luck. Is that what you are 
telling me?
    Mr. Palage. That is the problem of coordinating a global 
resource. It is not easy.
    But I do think the point that you have made earlier about 
ICANN including its names on a protected list--ICANN did have a 
reserved name working group in which I participated, and in 
that I basically called for the removal of that list so that 
ICANN should have to rely upon the very same trademark 
protections that it is asking the private sector to rely upon. 
So until that list by WIPO is created, I think ICANN's list 
should be removed and they should have to sleep in the same bed 
they are asking businesses to sleep in.
    Mr. Goodlatte. Mr. Metalitz?
    Mr. Metalitz. Yes, I would just say, as Ms. Stark pointed 
out, this was recommended by the team of experts that ICANN 
asked the intellectual property constituency to bring into 
existence. And then the proposal simply died on the vine. We 
asked ICANN for some research assistance, in terms of 
developing some objective criteria. Never got it.
    I don't think this is an insurmountable problem. It is a 
difficult problem to figure out who gets on the block list and 
what the criteria are, but I think if we put good minds to work 
on it, we could quickly come up with something.
    Mr. Goodlatte. Thank you.
    Ms. Stark, can you estimate the potential costs to your one 
company for defensive registrations? What ends up happening if 
a domain goes into litigation?
    Ms. Stark. Well, the litigation costs would be 
extraordinary. But yes, if there were, say, 400 new generic 
top-level domain names that were launched, we have done our own 
benchmarking within our company with all the divisions, and we 
would probably be looking at a list that is a minimum of 300 to 
400 names that we would have to defensively register in each of 
those new spaces. If you anticipate a sunrise registration cost 
in each of those domains as being an average of $100 apiece, 
you are talking about a minimum of a $12 million investment.
    Mr. Goodlatte. Over what period of time?
    Ms. Stark. Initially as they roll out each of those 400----
    Mr. Goodlatte. And are there ongoing costs as well?
    Ms. Stark. There would be tremendous ongoing costs. We 
would have to hire personnel to monitor that portfolio to 
determine renewal of that portfolio. We will have to still look 
at all those gTLD spaces for the abuses that take place such as 
the one I gave in my example in my testimony of myfox2detroit, 
and then, of course, all the resources that are taken to 
enforce against those misuses, including litigation against 
phishing and scam operations and other fraudulent behavior, as 
well as----
    Mr. Goodlatte. What does a small business do? It is already 
trying to combat rogue websites and so on that are posing as 
being them. Mr. Palage?
    Mr. Palage. As a small business operator, what I try to do 
is work closely with my clients so that they know how to get in 
contact with me. So I think, as I said----
    Mr. Goodlatte. Great, but what if you are looking for new 
clients? Or what if somebody has head of you and they are just 
trying to find you on the Internet?
    Mr. Palage. This goes back to, I think, the point Mr. 
DelBianco raised of the search engines, Google and Bing. I am 
very fortunate. When you type in ``Mike Palage,'' the first two 
pages on Google and the majority links on Bing will point 
people to me.
    Mr. Goodlatte. ``Goodlatte'' is the same way. But these are 
names that are a little more unusual then ``Smith'' or 
``Jones'' or various businesses that have more common names or 
more easily confused names.
    Mr. Palage. So again, as a small business, I did not get my 
initial desired dot com name and I have looked again at some of 
the other alternative strings, particularly since those are a 
number of the clients that I work with. So I think the future 
is going to be about empowering these new TLD operators to 
distinguish themselves because if all we are doing is 
duplicating the name space, then ICANN has failed. We need to 
sit there and create--there has to be real choice and real 
differentiation and empowerment in these new gTLD's, not a mere 
duplication.
    Mr. Goodlatte. Ms. Stark, you wanted to add something?
    Ms. Stark. I do. Thank you, Mr. Chairman.
    I think the real challenge and risk for small business 
owners is that they spend all this time and resource coming up 
with a name that they think can represent them in the 
marketplace that they are working to establish the good will 
behind and get consumers to recognize, and that in this new 
unlimited gTLD space, especially if we have a plethora of 
undifferentiated gTLD's such as Mr. Palage is mentioning, all 
that could be for naught overnight.
    I mean, the power of it being diluted to the point of it 
not being meaningful anymore in the marketplace is really a 
powerful concern. And so I think that is one of the real 
extreme challenges for any small business owner as they are 
going forward. They already are trying to put their marketing 
resources into good search engine optimization practices, into 
actual formal marketing, and to have to divert those resources 
into defensive registrations that are really not productive is 
really tragic.
    Mr. Goodlatte. Mr. Palage, do you think that ICANN's 
Government Advisory Committee should have greater authority, 
perhaps even veto authority over new programs or proposals that 
go beyond ICANN's core mission?
    Mr. Palage. As I said in both my written and oral 
testimony, I think they need to be on equal footing. It is a 
private-public partnership, and GAC consensus should be treated 
the same way that a super majority vote out of the GNSO Council 
should have. So what I am basically proposing is if there is 
GAC consensus, it would take two-thirds of the ICANN board to 
reject that recommendation, the same as with the GNSO right now 
under the existing ICANN bylaws.
    Mr. Goodlatte. Mr. DelBianco, what do you think about that?
    Mr. DelBianco. I agree with Mr. Palage's idea of a super 
majority.
    Let's also make sure that the GAC is a little clearer with 
us than they have been in the past when they truly object to 
something. I think you were out of the room at the time, Mr. 
Chairman, but when the GAC registered its opinion on dot xxx, 
all it said to the ICANN community was the words there was ``no 
active support.'' That left all of us in the ICANN community 
wondering whether that meant go, stop, we don't care, leave it 
up to you. So we would like the GAC to be as clear as they can 
when they do want to exercise, as you call it, a veto.
    Mr. Goodlatte. ``No active support''? That was the 
language?
    Mr. DelBianco. Yes.
    Mr. Goodlatte. I don't think that would indicate ``go.'' It 
might indicate other things, but it doesn't indicate ``go.''
    Mr. DelBianco. Right, but we didn't think it really 
indicated absolutely, unequivocally ``no.''
    Mr. Goodlatte. Right, got you.
    Does the gentleman from North Carolina or the gentleman 
from Michigan have any additional questions?
    Mr. Watt. Mr. Chairman, I just want to reiterate the first 
question. You know, I keep hearing all of these objections and 
yet nobody on this panel--Ms. Stark says it is going to cost 
her $12 million. Yet, she thinks this is a good idea 
apparently. I am having trouble finding the compelling good 
reasons for doing this. So I wanted to just go back and reask 
each one of you to give me your most compelling, good reason 
for doing this. Period. Maybe it is the way this hearing is 
structured that we have gotten all of the negative comments 
about it.
    I understand that we got to protect ourselves from China 
insisting that the UN do it, but it seems to me that this is a 
false proxy for doing that because as soon as we get more name 
domains, gTLD's, whatever they are called, out there, then 
there is going to be some other reason that China wants the UN 
to do this.
    I don't see how this adds to innovation. I still don't 
understand that. It adds to people changing names, but I don't 
know how that adds to any intellectual innovation that I can 
see. Now, maybe I am just missing something here, but please be 
serious about your written response. This is not a trick 
question. I am just trying to understand. I understand what Ms. 
Lofgren said about the dangers of not proliferating names, but 
that just seems to me to be a proxy for some other concerns 
that are out there that maybe I just am missing something here.
    I yield back.
    Mr. Goodlatte. I think the gentleman's point is well 
founded. If you do this wrong, you could create a greater risk 
of China or someone else moving forward with an international 
governmental takeover of the Internet, which we have resisted 
and I have resisted with Ms. Lofgren. You could create a 
greater risk than going slow or doing less.
    The gentleman from Michigan?
    Mr. Conyers. Yes, sir. Could I yield to Mr. Palage who 
wanted to make a comment?
    Mr. Palage. Yes, thank you. The one word I would use is 
``empowerment'' for where TLD's can make a positive difference. 
So I am concerned about the unlimited rollout, but in a 
controlled, responsible manner, you can have----
    Mr. Watt. Write it to me.
    Mr. Palage. I will.
    Mr. Goodlatte. Well, thank you all.
    Mr. Conyers. Just one second.
    Mr. Watt. He was answering my question.
    Mr. Goodlatte. The Chairman emeritus is maintaining the 
floor.
    Mr. Conyers. I just was thinking that this concern about 
China, if we don't do something. Am I being too pessimistic to 
think that China is going to do something regardless. I mean, 
if you think they are waiting to see the outcome of this before 
they start organizing developing countries, you got another 
thought coming.
    Could someone comment? All right. I will recognize you 
again and then we will go to my friend.
    Mr. Palage. I was in Beijing in January working with a 
number of Chinese businesses that are considering moving 
forward with gTLD initiatives and will be returning to China 
next month.
    Mr. Conyers. So what do you draw out of that?
    Mr. Palage. I think the statement is what happens if we 
don't do anything. I think there are some people that may take 
the initiative to move forward. So this is about moving forward 
in a responsible manner so that, going back to Mr. DelBianco, 
everyone is at the party. So when we have the party, we want to 
make sure that all the important people are there.
    Mr. Conyers. Well, Mr. Palage, what I think is that China 
is going to move forward whether there is a party or not, and 
whatever we do here--I mean, I just don't get the sense that 
this largest country in the world is waiting to see what the 
Subcommittee in Judiciary does and how well we persuade you. I 
don't think they are operating at that kind of minute level. 
They could maybe care less.
    Mr. DelBianco. Mr. Chairman, I might suggest to you that 
China doesn't really care about the new TLD's. Prior to the 
launch of the new TLD's, they had already created their Chinese 
versions of com and org. They only worked in China, but they 
worked anyway.
    China's main concern is the fact that we are having this 
hearing in this city in this room before this Committee because 
that is a screaming billboard to them that says that the U.S. 
Government is exercising sort of a legacy control and oversight 
over the domain name system and critical Internet resources. 
That is what bothers them. The don't believe that this 
Government should have anything like the oversight role that we 
have and that we should have, since we actually created the 
Internet, launched ICANN, wrote the Affirmation of Commitments.
    I invite China to sign the Affirmation of Commitments and 
join us in committing and helping ICANN to be successful. They 
are probably not going to do that. But let's do all we can to 
deny them of 130 other votes at the UN by serving the interests 
of hundreds of countries who maybe aren't participating in 
ICANN yet, but other countries who know that the Internet is 
going to be a large part of the economic growth and prosperity 
of their citizens.
    Mr. Conyers. And the last word to Mr. Bourne.
    Mr. Bourne. I would just echo what Mr. DelBianco just said 
in the sense that they are going to do what they want to do 
regardless.
    I think that a greater concern is to do this wrong and 
fail, as Mr. Palage pointed out. And I think it is possible to 
avoid that through exercising caution but also enabling a 
process to reconsider the decisions that were made 13 years ago 
and potentially put ICANN on a path to be truly independent 
rather than possessed by certain commercial interests that 
drive that process.
    Mr. Conyers. Thank you, Mr. Chairman.
    Mr. Goodlatte. I think you wanted to say something.
    Mr. Pritz. Yes, thank you. I agree with everything Steve 
DelBianco said about China, but certainly that is not the 
reason for moving forward, to avoid what some other country is 
going to do. The reason for moving forward is to realize the 
benefits of this program. It is impossible to predict 
innovation. We could discuss for a long time the examples of 
Google and MySpace and Facebook and all the unanticipated 
benefits and unanticipated good for Internet users that have 
sprung from the Internet. And this initiative, as developed by 
the broad Internet community, not the ICANN staff, has 
identified this and worked on this for 7 years as the way to 
bring the most benefit to users.
    Mr. Conyers. Then you are for more hearings in the 
Committee?
    Mr. Pritz. Well, no. I am for more hearings to review this 
process to see how it works, to make midcourse corrections, but 
the process has been reviewed for 7 years. Every issue that has 
been raised has been discussed.
    Mr. Conyers. Well, not here.
    Mr. Pritz. No, certainly not here. That is what the ICANN 
multi-stakeholder model is about. Right? It has been discussed 
for 7 years----
    Mr. Conyers. Look, we trust you infinitely, but do you mind 
if we make our own inquiry?
    Mr. Pritz. Of course, not.
    Mr. Conyers. Well, then can you get this June 20th date 
postponed? Because this is all immaterial as far as the 
chairman of your board is concerned.
    Mr. Goodlatte. Let me just say that I don't know how much 
attention China is paying to what we are doing here today, but 
I do hope that the executive branch of our own Government is 
paying attention to what we are doing here today because they 
have the critical role that our Government has in representing 
our collective interests with regard to ICANN's move forward.
    I am just going to close with the advice, Mr. Pritz, that 
no one wants to hold back the development of the Internet, but 
it just seems to me that there is an unleashing here of 
something that ought to be done in a more orderly process with 
a little more attention paid to the input coming in from 
governmental entities because I think that the end result is 
going to be very critical to the future of ICANN. And all of us 
here want ICANN to succeed and to not have some kind of 
international governmental entity where some of the roles of 
some interests around the world are not really in terms of 
seeing the explosive growth of the Internet and the freedom 
that the Internet brings with it taking place, but rather to 
serve the interests of particular governmental leaders and 
governmental entities.
    So we would caution you, I think, that doing this too 
quickly, doing this without consideration for how the Internet 
is going to impact a lot of individuals, large and small, and 
entities, large and small, that operate on the Internet is 
absolutely critical and there should be nothing magical about 
June for moving forward on this.
    So I thank all of the witnesses for their testimony today. 
This has been the lively hearing I thought it would be.
    Without objection, all Members will have 5 legislative days 
to submit to the Chair additional written questions for the 
witnesses which we will forward and ask the witnesses to 
respond to as promptly as they can so that their answers may be 
made a part of the record.
    Without objection, all Members will have 5 legislative days 
to submit any additional materials for inclusion in the record.
    With that, again I thank the witnesses and this hearing is 
adjourned.
    [Whereupon, at 12:43 p.m., the Subcommittee was adjourned.]



























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