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Advisory Concerning Smiley Litigation

Marina del Rey, California, USA (12 October 2001) Yesterday, in a preliminary ruling, a state-court judge in Los Angeles County, California determined that one aspect of the initial name allocation system implemented by NeuLevel, Inc., was in violation of the State of California's lottery law. NeuLevel is the Virginia-based registry operator for the new "dot biz" top level domain (TLD) that was recently authorized by the Internet Corporation for Assigned Names and Numbers (ICANN).

ICANN notes that the judge did not find the contract that ICANN entered into with NeuLevel was unlawful. The judge, however, did determine that NeuLevel's decision to charge a $2.00 fee for processing certain ".biz" applications might be in violation of California's lottery law. Although this preliminary ruling takes a different approach than earlier California decisions upholding processing fees, there is no question that all organizations must conduct their businesses according to the applicable laws of the jurisdictions where they operate.

As a global public interest organization, ICANN is particularly concerned that the judge's ruling applied California law to domain-name applications having no relation to California – that is, to applications submitted to registrars not doing business in California by persons living outside of California (including persons residing outside of the United States) under domain-name agreements governed by laws of another jurisdiction.

ICANN believes the judge's ruling in this regard is contrary to well-established legal principles and violates the rights of non-Californians and non-US. citizens. ICANN also believes that the ruling, if upheld on appeal, would be harmful to the evolution of the global Internet.

The launch of the ".biz" TLD is one of several TLD roll-outs that are occurring in connection with ICANN's "proof of concept" phase to add new TLDs to the Internet, as required by its Memorandum of Understanding with the US Department of Commerce. ICANN is assessing the effect of the court's ruling in connection with its ongoing evaluation of the process of the initial roll-out of new TLDs.

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Domain Name System
Internationalized Domain Name ,IDN,"IDNs are domain names that include characters used in the local representation of languages that are not written with the twenty-six letters of the basic Latin alphabet ""a-z"". An IDN can contain Latin letters with diacritical marks, as required by many European languages, or may consist of characters from non-Latin scripts such as Arabic or Chinese. Many languages also use other types of digits than the European ""0-9"". The basic Latin alphabet together with the European-Arabic digits are, for the purpose of domain names, termed ""ASCII characters"" (ASCII = American Standard Code for Information Interchange). These are also included in the broader range of ""Unicode characters"" that provides the basis for IDNs. The ""hostname rule"" requires that all domain names of the type under consideration here are stored in the DNS using only the ASCII characters listed above, with the one further addition of the hyphen ""-"". The Unicode form of an IDN therefore requires special encoding before it is entered into the DNS. The following terminology is used when distinguishing between these forms: A domain name consists of a series of ""labels"" (separated by ""dots""). The ASCII form of an IDN label is termed an ""A-label"". All operations defined in the DNS protocol use A-labels exclusively. The Unicode form, which a user expects to be displayed, is termed a ""U-label"". The difference may be illustrated with the Hindi word for ""test"" — परीका — appearing here as a U-label would (in the Devanagari script). A special form of ""ASCII compatible encoding"" (abbreviated ACE) is applied to this to produce the corresponding A-label: xn--11b5bs1di. A domain name that only includes ASCII letters, digits, and hyphens is termed an ""LDH label"". Although the definitions of A-labels and LDH-labels overlap, a name consisting exclusively of LDH labels, such as"""" is not an IDN."