January 26, 2001 BY OVERNIGHT AND ELECTRONIC MAIL Internet Corporation for Assigned Names
and Numbers
Ladies and Gentlemen: We write on behalf of Register.com, Inc. ("register.com") to respond to Verio, Inc.'s "Petition for Termination of Registrar Accreditation Agreement," dated December 21, 2000 (the "Letter"). Verio's Letter raises issues concerning the terms of use governing both query-based and bulk access to register.com's WHOIS data, i.e., data concerning active second level domain name registrations sponsored by register.com in the registry for the .com, .net, and .org top level domains. As the scope and proper interpretation of the provisions of the Registrar Accreditation Agreement concerning both query-based and bulk access to WHOIS data appear to be a matter of dispute, register.com welcomes the opportunity to work with the Internet community, as well as the Internet Corporation for Assigned Names and Numbers ("ICANN") to resolve these issues, which are discussed at length below. Unfortunately, in the course of bringing its concerns to the attention of ICANN, Verio makes numerous spurious allegations that are extraneous to the issues raised. In doing so, Verio has distorted the facts which first led to register.com's decision to bring a lawsuit against Verio, and later led to the comprehensive and well-reasoned Order issued by the Honorable Barbara S. Jones of the Southern District of New York. (A copy of the Order is attached to the Letter as Exhibit A.) The Order (i) held that Verio's "Project Hen House" direct marketing campaign violated the Lanham Act, as well as the Computer Fraud and Abuse Act, and constituted both breach of contract and trespass to chattels; and (ii) enjoined Verio from, among other things, misleading customers into believing that Verio's services are sponsored by, or have the endorsement or approval of, register.com. In view of Verio's unfounded allegations and distortions, before addressing the substantive policy issues raised by the Letter, register.com is constrained to set the factual record straight concerning the most egregious of Verio's misstatements.1 Register.com is equally constrained to point out that it is aware of no such procedure as a "Petition for Termination of Registrar Accreditation Agreement" within the ICANN process. Similarly, register.com is aware of no mechanism within the ICANN process by which Verio may seek punitive sanctions against register.com. Of course, even if there were such a procedure, register.com's conduct as challenged by Verio is not the type of conduct that would give rise to deaccreditation under Section II.N of the Registrar Accreditation Agreement, nor are register.com's actions the type which would give rise to a right to seek punitive sanctions.2 Even if ICANN does not agree with register.com's actions in all respects, it should be recognized that register.com has at all times relevant hereto acted in good faith, and furthermore has, at considerable expense and effort, served the Internet community well by uncovering and addressing Verio's clearly improper and undesirable conduct. In the latest of a number of attempts to change the color of its spots, Verio seeks to cast itself in the role of the victim, rather than the villain. To this end, Verio argues that register.com's alleged denial of Verio's undocumented request for a bulk WHOIS license "forced" Verio to resort to using software robots to "obtain that to which it was rightfully entitled." (Letter at 10). Verio's internal documents, which only became available for public scrutiny over Verio's vehement objections,3 demonstrate that well before its alleged request for a bulk WHOIS license from register.com, Verio had cast in motion a series of events that belie any such claim. By 1999, Verio had established a corporate policy of aggressive growth by any means. As part of that policy, Verio implemented an operation using software robots to perform daily thousands of covert, automated, successive queries to the computer systems of ICANN-accredited registrars, including register.com, for the purpose of procuring the names, postal addresses, telephone numbers, and electronic mail addresses of the registrars' customers. After obtaining such data from register.com, Verio used it to flood register.com's customers with unsolicited e-mail, direct mail, and telephone calls which, through the misleading nature of their content, implied that Verio was associated with or endorsed by register.com. These uninvited solicitations occurred within 24-72 hours after register.com's customers transacted business with register.com, aggravating the confusion as to affiliation or endorsement. Verio's code name for this undertaking "Project Hen House" as well as its characterization of itself as a "fox," are quite revealing, as they accurately portray Verio as a predator breaking into ICANN-accredited registrars' chicken coops to steal their prized hens. Internal memoranda from Verio's files urging its employees to deny awareness of Project Hen House or the source of the data provided to its direct marketing staff are equally revealing of Verio's knowledge of the tortious character of its conduct. While Verio produced numerous documents evidencing the development and implementation of Project Hen House, as well as Verio's intent to keep it a secret for as long as possible, Verio did not produce a single document that would substantiate its outlandish, after-the-fact assertion that this complex operation was planned and undertaken as a last resort because Verio was allegedly denied access to register.com's and other registrars' bulk WHOIS data. With the avowed goal of making Verio the "8000 pound gorilla" of internet services, in or about September, 1999, Eric Eden, Verio's Director of Sales and Channel Operations, formulated an elaborate plan to appropriate sales leads from domain name registrars. (Ex. 1). Eden determined that the most valuable leads were individuals who had registered a domain name within the prior 24-72 hours. As noted, Verio aptly named Eden's plan "Project Hen House" (Ayers Dep. 79), with Verio the "fox" using its computer robots to raid WHOIS data bases (the "hen houses") of accredited registrars. The technical aspects of Project Hen House are described by Judge Jones at page 7 of the Court's decision (Letter, Ex. A at 7), and will not be repeated here. Suffice it to say that there is no dispute that Verio's robotic queries were designed to run continuously, harvesting the contact information for the tens of thousands of new domain names registered each day. (Eden Dep. 26). The resulting database of sales leads was then served up continuously to hundreds of direct marketers in order to maximize the number of outgoing telephone calls and e-mails. (Exs. 2, 3). The key to the success of Project Hen House from Verio's perspective was obtaining a large volume of fresh marketing leads, within 24-72 hours of domain name registration, and blanketing those leads with unsolicited telemarketing calls and spam. Given the "boiler room" climate of Project Hen House, Verio's managers knew misleading sales pitches were inevitable. (See Ex. 4 ("H[en] H[ouse] leads are virtually unlimited so nuances of quality of call pale behind sheer volume, i.e., 'talk to as many people in a day as you can.' . . . Our mission here is kindred to MCI in the early days: get as many reps as possible talking to as many prospects as fast as possible.") (emphasis added); Exs. 5, 6; Ayers Dep. 123-124, 127). Various training sheets and telemarketing scripts Verio distributed to telemarketers were designed explicitly to cause recent domain name registrants to believe Verio was calling on behalf of their registrars regarding problems with the recent registrations. One such script was employed to leave voice mail messages when the sales lead did not answer the phone. This script read:
(Ex. 7 (emphasis added)). This script is notable in that it instructs the telemarketer to deceptively say twice (once at the beginning and once at the end) that he or she is calling about the registration of the lead's domain name instead of revealing the true object of the call, which is to try and sell web hosting and related services to a competitor's customer. Project Hen House also generated mass amounts of unsolicited e-mail to Hen House leads. The "fox" database interface allowed Verio's telemarketers to send a variety of pre-written form e-mails with as few as three mouse clicks. (Ex. 8 at 2; Ayers Dep. 111). The telemarketer had a menu of form e-mails to choose from, and the Fox system automatically "personalized" the e-mail by filling in the telemarketer's signature line, then sending the e-mail. (Id.). One such form e-mail, regularly sent to leads who have not responded to repeated attempts to contact them, began with "We at Verio have been trying to touch base with you since the registration of your new domain name, but have not been able to reach you." (Ex. 9; Ayers Dep. 109-110). The text of this e-mail was similarly designed to mislead the recipient into believing that Verio was contacting the customer on behalf of the registrar, not an unrelated third part y. Concealment of Project Hen House was a critical element of its usefulness to Verio. To this end, Verio's Vice President Ayers told his employees: "If you get questions such as 'How do you guys get this information?' Plead ignorance. All persistent inquiries should be directed to your respective supervisor. If you don't know what Hen House is . . . you're safe." (Ex. 10). Ayers also gave the following instructions to his sales staff in responding to consumers' questions about how Verio had obtained their information (Ayers Dep. 99):
By January 2000, register.com began receiving complaints that Verio was sending unsolicited electronic mail messages to register.com's customers in an attempt to market Verio's services. On several occasions Register.com representatives protested this conduct, but were met with repeated denials by Verio. In one such instance, Verio blamed its actions on an alleged "system problem" which "has been identified" and "shouldn't happen again" (Ex. 11), hardly a candid response in light of Project Hen House. Faced with Verio's systematic assault on its customers, as well as Verio's denials that it was intentionally contacting register.com's customers, register.com felt it had no choice but to file the lawsuit. Unfortunately, register.com did not have the option of working through ICANN to resolve its concerns regarding Verio's actions, as Verio remains outside the jurisdiction of ICANN regulation and oversight by contracting its domain name registration services out to a third-party registrar rather than become an accredited registrar itself. As noted above, register.com's motion for a preliminary injunction was granted in all respects. Because the Court's comprehensive opinion speaks for itself, we comment only on one aspect of the litigated dispute, namely, Section II.S.2 of the Registrar Accreditation Agreement. In its various submissions, Verio urged the Court to ignore Section II.S.2 of the Registrar Accreditation Agreement, which states that its terms were not intended to benefit third parties. Fortunately, following the position advocated by register.com, and supported by ICANN in its amicus curiae submission (see ICANN Br. at 8-9), the Court squarely rejected Verio's troubling third-party-beneficiary theory. If Verio had succeeded in this effort to circumvent the ICANN process, ICANN's jurisdiction over important policy issues would have been thwarted, and the result would undoubtedly have been an unwarranted and undesirable proliferation of litigation over the terms and interpretation of that Agreement. The fact that Verio has only now come before ICANN to raise issues that it could have raised before ICANN at any time since the genesis of Project Hen House, and in doing so has claimed that the issues presented implicate "the larger issue [of] whether ICANN can be entrusted to discipline one of the more vocal and powerful participants in [the domain name governance] system" (Letter at 2), is emblematic of Verio's thinly disguised posturing. On September 28, 2000, Verio requested a bulk WHOIS license from register.com. Prior to that date, Verio had never requested or applied for a bulk access license for register.com's WHOIS database.4 The reason for Verio's disinterest in a bulk license prior to September 28, 2000 is readily apparent. First, bulk licenses provide the WHOIS data only on a weekly basis, which is far too infrequent for Project Hen House, pursuant to which Verio sought to contact all "fox leads" within 24-72 hours following registration of a domain name. Furthermore, Verios own internal documents note that it is less costly to misappropriate the data than to license it. (Ex. 12). Given the timing, it seems apparent that Verio's bulk WHOIS license request was little more than an effort to posture with respect to its then-pending preliminary injunction motion. Similarly, it seems apparent that the Letter was motivated, at least in part, by Verio's public relations goals in the face of the December 8th Order. Based on the tenor of the Letter, as well as Verio's pious proclamation that it "intends to fully comply with terms" of the preliminary injunction (Letter at 2, n. 1), one might think that Verio got the message from both ICANN, which condemned Project Hen House as violative of both the zone file agreement and Section II.F.5 of the Registrar Accreditation Agreement in its amicus curiae submission (ICANN Br. at 9-10), and Judge Jones, who enjoined Project Hen House as applied to register.com, that Project Hen House should be shut down. Apparently, this is not the case. The continued use of Project Hen House is precisely what Verio seeks in its pending appeal, and Verio has not made any affirmative representation that it has ceased Project Hen House as applied to accredited registrars other than register.com. Thus, ICANN should assume that Verio's use of computer robots to misappropriate WHOIS data continues as before, in violation of both the zone file agreement and Section II.F.5 of the Registrar Accreditation Agreement. In view of this conduct, ICANN may wish to consider taking the opportunity in responding to Verio's Letter to restate its position on this issue in clear terms, since Verio seems not to have understood the first time. Having put Verio's unfounded allegations and distortions of the factual record in context, we now address the policy issues raised by the Letter. II. Issues Relating to the Proper Interpretation of the Registrar Accreditation Agreement As by ICANN in its amicus curiae submission:
(ICANN Br. at 8) (citing Registrar Accreditation Agreement §§ II.P and II.N). Following this guidance from ICANN, in responding to the substantive points raised by the Letter register.com will address both what it believes to be the proper interpretation of the provisions at issue, as well as the policy considerations that should guide ICANN's vetting of these matters. Register.com's Registrar Accreditation Agreement, which is the same agreement all accredited registrars for .com, .net, and .org domains are required to sign, mandates that register.com make available to the public a free, query-based "interactive web page and a port 43 Whois service" providing access to up-to-date (i.e., updated at least daily) data concerning all active SLD registrations sponsored by Registrar in the registry for the .com, .net, and .org TLDs." (Ex. 13, § II.F.1). This data includes the name, postal address, telephone number, electronic mail address, and, in some cases, facsimile number of every person or entity maintaining active domain name registrations through register.com. (Id.). Section II.F.5, which governs query-based access to register.com's WHOIS data, states, in relevant part, that:
(Ex. 13, § II.F.5). Section II.F.6 governs the terms and conditions of third-party bulk access to certain register.com WHOIS data. That section states that register.com shall make its WHOIS data available at least one time per week for download by third parties who have entered into a bulk access agreement with register.com. (Ex. 13, § II.F.6(a)). Section II.F.6 states that register.com may charge $10,000 for such bulk access, and that:
(Ex. 13, § II.F.6(b)-(c)). That section
further states that register.com may allow its customers to elect
not to have their personal data available for bulk access Realizing the sensitive nature of its WHOIS data and the potential for its abuse, in an effort to protect the privacy of its customers, register.com only provides query-based public access to its WHOIS data on a domain name by domain name basis, and has conditioned that access on certain terms of use. (Ex. 14). Presently, those terms of use specify, among other things, that:
(Ex. 14). In its amicus curiae submission, ICANN disagreed with certain aspects of register.com's WHOIS terms of use. Specifically, ICANN stated that:
(ICANN Br. at 10-11) (footnotes omitted). Since receiving ICANN's submission, register.com has been carefully reviewing its WHOIS terms of use, and looks forward to receiving guidance from ICANN on how best to strike a balance between register.com's concern over its customers' privacy and ICANN's interpretation of the language of Section II.F.5. In the interest of promoting a debate on this topic, register.com submits that it believes that the primary purpose of query-based public access to WHOIS data is not to provide direct marketers with a direct marketing list, but rather is to provide a mechanism for (i) those wishing to complain about or take legal action concerning a particular domain name or web site to identify the registrar, registrant, site operator, and/or Internet service provider associated with that domain name; (ii) trademark owners to conduct "knock-out" searches to avoid possible trademark usage conflicts and to plan business strategies; and (iii) those wishing to make an offer to license or purchase a domain name. In light of the foregoing, register.com suggests that the disjunctive term "or" in Section II.F.5 should be read to encompass two distinct types of activity: (i) the transmission of mass unsolicited commercial advertising, and (ii) solicitations via email. Register.com believes that any other reading of Section II.F.5 would eviscerate that disjunctive term, thereby enabling query-based searchers to use the WHOIS data they access to direct market. To the extent the Registrar Accreditation Agreement contemplates that WHOIS data will be made available for marketing purposes, register.com believes that it is only pursuant to a bulk license. Register.com is concerned that any contrary position clearly would make Sections II.F.6 and II.H meaningless, as it would allow companies such as Verio to harvest proprietary data on a daily basis with neither the payment nor opt-out provisions mandated by Section II.F.6, effectively reading out of the Registrar Accreditation Agreement the protections of the bulk license provision. As ICANN recognized in its amicus curiae submission, those protections are in place to "provide an appropriate vehicle for those seeking access to Whois data without the harmful effects that zone-file-enabled Whois queries can cause."5 (ICANN Br. at 6). Should ICANN disagree with register.com's reading of Section II.F.5 as currently written, register.com respectfully requests that ICANN consider amending to the language of Section II.F.5 to authorize restrictions of the type currently imposed by register.com. Register.com stands ready to work within the consensus process to achieve this goal, and further stands ready to provide ICANN with any assistance it may require in connection with establishing a dialogue on this issue. Verio alleges that "Register.com has refused altogether to make Whois data available through the bulk access provisions of the Accreditation Agreement, or, in purporting to make such data available, has attempted to impose restrictions on use and other requirements that go beyond those allowed by the Accreditation Agreement." (Letter at 1). This is not accurate. In light of its past discussions with ICANN on this topic, register.com has been carefully reviewing its bulk WHOIS licensing practices, and has settled on bulk WHOIS license terms and conditions that register.com believes are well within the language of Section II.F.6 of the Registrar Accreditation Agreement. A copy of register.com's current Bulk WHOIS License Agreement is attached hereto as Exhibit 15. Register.com has recently licensed its bulk WHOIS data to one licensee on these terms, and has made its bulk WHOIS data available to seven other potential licensees on identical terms. In its Letter, Verio tries to make much of the fact that register.com uses an opt-in, rather than an opt-out option, with regard to its bulk WHOIS data. Register.com believes that its actions are well within the four corners of ICANN policy. When notifying its customers of their right to be excluded from its bulk WHOIS data file, register.com has offered those customers the right to opt in to having their personal information made available as part of register.com's bulk WHOIS data file. Customers who did not opt in to receiving such communications were removed from that file. Register.com believes that this practice is perfectly consistent with Section II.F.6. That Section specifies, in relevant part, that register.com may enable individuals to "elect not to have Personal Data concerning their registrations available for bulk access for marketing purposes." In so doing, register.com is allowing its customers to avoid becoming inundated with unwanted direct marketing solicitations. Verio's assertion that register.com's opt-in policy leads to a scenario whereby customers may "elect not to be included in [register.com's] bulk Whois database but still must agree to receive solicitations from Register.com and its Affiliates" is a mischaracterization. All register.com customers, including those that do not elect to be included in register.com's bulk WHOIS data file, receive communications from register.com from time to time. If at any time such customers wish to cease receiving communications from register.com, all they have to do is so indicate.
As noted above, it was not until September 28, 2000 that Verio first requested a bulk WHOIS data license from register.com. Upon receiving Verio's request, in light of Verio's past actions, register.com was understandably reluctant to provide Verio with a bulk WHOIS license. First, register.com is very concerned that, if provided with a bulk WHOIS license, Verio would bombard the customers listed in that data with misleading communications (including spam) likely to cause those customers to believe that Verio and/or Verio's services are sponsored by, or have the endorsement or approval of register.com. While Verio has made overtures to address register.com's concerns about its spamming, Verio has not made any effort to address register.com's concerns about Verio's confusing and misleading communications.6 Register.com's concerns are well founded. As noted above, in order to further its financial interests, Verio concealed Project Hen House from register.com as long as possible, even to the point of making outrageous denials in response to Ms. Gaviser's inquiries. Indeed, Verio is appealing the December 8th Order, and in this connection has issued several press releases denying that it has done anything wrong. In addition, as also noted above, we believe Verio is continuing to misappropriate the WHOIS data of other ICANN-accredited registrars, notwithstanding the preliminary injunction that now protects register.com. Throughout the Letter, Verio attempts to cast register.com's actions as anti-competitive. This is an ironic allegation from a six billion dollar multinational company which is using software robots to covertly misappropriate WHOIS data from ICANN-accredited registrars, in part to avoid paying for access to the data. (See Ex. 12). Equally ironic and unfounded is Verio's assertion that the terms of use which govern query-based access to register.com's WHOIS data, when taken in connection with register.com's opt-in policy, provide register.com with some type of "unfair advantage" in marketing services to register.com's customers. Verio completely overlooks the robust competition that ICANN has successfully fostered. Indeed, there are now nearly seventy-five competing ICANN-accredited registrars. Faced with a choice of transacting business with any one of these registrars, register.com's customers have clearly expressed a preference to use register.com's services. By contrast, register.com's customers are unlikely to know anything about Verio. (See Ayers Dep. 93, 131 (admitting that Verio's brand recognition among "fox" leads is very low)). In sum, Verio doesn't want competition, it wants a free ride on the goodwill built up at great expense by register.com, as well as the other ICANN-accredited registrars. This is the only "unfair advantage" at work here. Register.com welcomes the opportunity to work within the ICANN process to resolve the issues raised by Verio's Letter. To that end, should ICANN have any questions with regard to any of the matters set forth herein, or wish to establish a dialogue with regard to those matters, register.com stands ready to interact with ICANN in whatever manner ICANN deems most appropriate.
cc: Michael Jacobs, Esq. Notes: 1 Register.com vehemently disagrees that the Letter raises what Verio characterizes as "the larger issue [of] whether ICANN can be entrusted to discipline one of the more vocal and powerful participants in [the domain name governance] system." (Letter at 2). 2 That Verio has even requested such sanctions is ironic, in that Verio's misdeeds, as determined by the Judge Jones, have earned it enormous financial dividends. In September, 2000 approximately one year after Verio's "Project Hen House" was launched, Verio was purchased at a valuation of $6 billion, or 18 times the value of its revenues at that time. At that multiple, a Project Hen House sales boost of $500,000, for example, would have been worth more than $8 million to Verio. 3 Even after Verio submitted its Letter to ICANN, which purportedly relied on the "extensive record developed in the lawsuit" (Letter at 3), Verio unsuccessfully sought in the Court proceeding to deny register.com a right to cite in this response Verio's internal memoranda documenting its wrongful conduct. 4 At his deposition, Eric Eden claimed he had made an oral request to Lauren Gaviser, the Director of Strategic Initiatives at register.com, for a bulk license, but was rebuffed. This assertion is vehemently denied by Ms. Gaviser. 5 As ICANN points out, zone-file-enabled WHOIS queries are violative of the terms of the approved form of the zone file access agreement. (See ICANN Br. at 6). We believe that requiring register.com, a non-party to that agreement, to seek to enforce its terms against third parties in order to protect register.com's rights, would be an untenable result. 6 Verio's statement that it submitted a proposed draft bulk WHOIS license agreement mostly copied from the form agreement used by "Accredited Registrar Mellbourne IT" is a red herring. Melbourne IT is a business partner of Verio. Comments concerning the layout, construction and functionality of this site should be sent to webmaster@icann.org. (c) 2001 The Internet Corporation for Assigned Names and Numbers All rights reserved. |
