This is an invitation for anyone to register their interest in possible Class Action to be taken against Internet NZ over their handling of the .nz 2LD management, a matter of which I believe may now ‘have legs’, legally speaking. The situation follows a decision from them two years ago to create a category of names called ‘conflicted’ and evidence recently released that 6,406 unique strings are held in this category, thus denying (and disadvantaging) probably more than 5,000 entities what they probably all believe should by natural justice be theirs. It also follows Internet NZ’s Board clearly stated intention following a two-year review that the problem that they have created will remain ad infinitum. I give a brief background then lay out the grounds for Class Action and the issues involved. I then invite feedback.
With the recent review and announcement that the Internet NZ Board acknowledges a huge problem with the .nz 2LD namespace, I believe that there is now sufficient evidence that the actions of Internet NZ are actionable in a New Zealand court of law. Essentially they created a problem – there was none before. They were warned of the problem in advance – and didn’t address the issues constructively, despite having the means to do this. That’s at least negligence if not outright immorality. They proceeded with their actions based on a longstanding policy that they applied (I believe, and I tend to think that a judge will find) incorrectly. They had a clear conflict of interest – even the Law Society noted this at the time – yet proceeded with it. That’s exposure. They have had two years to deal with the problem and haven’t. That’s incompetence, arrogance and more. The additional multi-million dollar windfall that Internet NZ has received has not been passed on to the public with reduced fees. That’s greed. Now, having completed their two-year review they have stated clearly that the problem will remain. That’s unacceptable. It’s totally WRONG and an invitation to sue.
This is a discussion and summary of potential Class Action against Internet NZ on behalf of the owners of (according to their own figures as best as I can calculate) 6,406 unique domain strings currently in the ‘conflicted’ .nz namespace. Class Action could also include the Registrants in ALL ‘conflicted’ names. Who knows how many Registrants did deals with a pistol to their heads in order to secure what should have by rights and by Internet NZ’s own policies, inherited from Domainz and previously Waikato University?
Internet NZ manages the .nz namespace. Two years ago they opened up the Second Level Domain (2LD) of .nz for new registrations following their standard process of public consultations. At that time I, and other concerned companies and individuals identified that the proposed manner in which the 2LD introduction was to be handled was highly problematic. I specifically noted that many Registrants (particularly companies that had invested heavily in their IP) could potentially be disadvantaged.
Having introduced the 2LD; having created a category of domains they called “conflicted”; having completed two years of trading and their promised two-year review, the Board has identified a total of 6,404 unique domain strings still in the ‘conflicted’ category, thus confirming our fears that a huge problem now exists in the .nz domain space.
I have detailed blog posts that cover this all, first my comments at the time of introduction of the concept; secondly my analysis at the time of public submissions (including my submission) that named the proposal as a con job and more recently a damning analysis of the situation two years after introduction of the 2LD.
Sadly, if Internet NZ had listened to those of us who made submissions and if they had acted reasonably, rather than just ramming the 2LD through in a pig-headed manner, none of this would have happened. They COULD have introduced the 2LD and kept all happy, that’s IF they did things right. They didn’t and should now be held to account.
Internet NZ changed the rules in 2014. We all can acknowledge that they had every right to do so and (while I pinged them at the time and still believe that the entire introduction of the 2LD was rammed through by a small group of influential and noisy people as far as I know from the outside looking in) they did follow the procedure they had set for themselves and advertised.
They have however done two things that I believe have exposed themselves legally:
- They failed to address valid concerns over potential loss of IP rights that were raised at the time constructively in the process breaking their own widely acknowledged policy; and
- They have more recently failed to address the core issue at the time of review.
Both of these acts have created a problem that is costing over 5,000 entities lost opportunity, AND very likely direct costs.
A third cause (a little harder to prove) may exist in that as I blogged about previously, an a priori assumption had been made by the decision-makers that Internet NZ would not entertain any possibility of prioritisation of rights thus requiring that a ‘conflicted’ category would be needed. Submissions at the time along the lines that Internet NZ should consider managing priorities of rights appear to have been water off a duck’s back, i.e. a waste of time. There is clear evidence of this pre-determination for a certain course of action in their own materials – essentially, “We’re going to do this but NOT that, now tell us what you think.”
There may be other causes as well, and the evidence of conflict of interest that the Law Society noted at the time will no doubt come out in court but to my mind there is enough here to at least seriously consider the possibility of Class Action. Hence this post describing the problem and inviting feedback.
To my mind, the Key Issue is that Internet NZ determined at the time that the .nz 2LD space was a new option and therefore ‘just’ optional. They had predetermined that their longstanding and widely accepted policy of “first-come-first-served” should apply would apply to the new 2LD, as if it had the same status as (for example) .gen.nz, or potentially .xyz.nz.
This was wrong.
That in only two years there are now 112,674 .nz 2LD domains registered (against 485,937 .co.nz names – a ratio of 1:4) is proof of that.
The easiest way to understand this failure in Internet NZ’s application of policy is to put the entire question the other way . . . if an entity wanted to secure the .nz domain variant of their highly valuable IP, then they would have needed to register at least nine names (just the unmoderated names are: .co.nz, .net.nz, .org.nz, .gen.nz, .geek.nz, .kiwi.nz, .maori.nz, .school.nz, .ac.nz*) before anyone else did and to have kept them live at the point of 2LD cutoff!
Get it? Internet NZ screwed up, not listening to people who had valid concerns, or certainly not seriously.
It is my belief, and this is what a judge would be asked to rule on in any legal action, that Internet NZ misapplied their accepted ‘first-come-first-served’ policy. The court case would centre around the fact that they should have applied the policy retrospectively in the interests of fairness in order to comply with their own rules, values and policy.- whoever registered ANY domain should have first rights to the 2LD variant AS IF IT WAS AVAILABLE AT THAT TIME.
Contrary to Mission
Internet NZ’s mission is to manage the .nz domain space for the good of the Internet users of New Zealand. Introducing a problem at huge cost to certain entities has, as early submitters detailed, NOT done the best for the people Internet NZ is purportedly out to serve. I’ve previously called the entire exercise a con job for good reason. Some top organisations agreed – it all had the smell of chasing money for the industry AND of course Internet NZ. This claim looks to have been well proven now, two years later.
While there are sure to be many other issues that legal teams can or could bring to the table, the way I look at it, Internet NZ has hoist themselves by their own petard in justifying their chosen course of action by their longstanding policy of ‘first-come-first-served, for if their assessment that the .nz 2LD is simply another space similar to the others is found to be wrong in court, then they lose out big-time. Egg on face. Costs and consequences all over the place.
They should roll back ownership retrospectively and simply apply their own policy correctly.
The primary objective of Class Action to my mind should be to remove the category of ‘conflicted’ totally, once and for all. A judge could order that Internet NZ be required to immediately issue Registrants the ability to register the 2LD domains in ‘conflicted’ status according to their own policy (i.e. in priority of date of first registration) and the matter would be resolved immediately and permanently.
Secondly there should be some form of recompense – costs of course but compensation to the many who have incurred either direct or consequential losses. If negotiated this could be minor, or even offset against future earnings with reduced or gratis registrations. If enforced, and if a court saw poor conduct on Internet NZ’s part, they could award substantial even punitive damages.
Thirdly Internet NZ should return some form of value to the 2LD .nz Registrants and/or the rest. Internet NZ has introduced a multi-million dollar revenue stream with no known or obvious advantage to the public, yet, even though Internet NZ says that there is, I can’t see it. The money-grab typical of big-business, maximising opportunity has now been proven. Internet NZ should NOT be profiting excessively from this action.
Personally I don’t care if Internet NZ sits down with their lawyers and voluntarily do it before any hearing, or whether a judge rules that Internet NZ was wrong in their application of the ‘first-come-first-served’ policy totally regardless of the historical situation.
Knowing others though, and how integrity dissolves when reputations are threatened, Internet NZ will find it very hard to change their tune and is very likely to defend no matter what, especially if the same people are involved.
In any court action in the Western jurisdictions there are two sides. Action may not be successful.
Internet NZ can probably defend in the sense that they had the authority to act and completed due process, both in implementation and in review and rectification. That however is not an excuse or a defence that they failed to apply their own policy correctly.
They could refer to overseas jurisdictions and precedent, trying to justify their conduct on overseas events. In this regard their defence teams would need to find that all or the majority of others did the same AND that it was successful. Good luck on that one because if they DIDN’T follow overseas precedent then . . . oops!
I think that if it be found by a judge that it would have been reasonable to apply the well-accepted policy to the 2LD introduction then there isn’t any sound defence.
Laying the Blame
While there is a presentation of corporate governance (the Board, and all that) the buck really only stops with one man in this matter – Chairman of the Board, David Farrar. He was the Chairman before during and after the implementation; he is still the Chairman and oversaw the critical Board Meeting that handled the promised two-year review.
Thinking that the Chairman was just passive in it all is naive. David is no spring chicken and knows the industry well. He is active in the Internet space and has been involved in a leadership capacity for a long time.
David, it is my opinion that you personally at least knew of and supported the events that created this current mess. I also suspect that you were one of the key drivers, not only of the decision to introduce the 2LD proposal, but also to refuse to seriously consider applying the ‘first-come-first-served’ policy naturally and retrospectively, which would have avoided all this trouble – and that you supported this approach from the outset.
I lay the blame squarely upon you and moving forward declare your role/position in any legal case compromised.
I recommend that initially Internet NZ should be served with an Interim Injunction preventing ANY changes to the .nz 2LD namespace until a substantive hearing has been held.
Then Class Action should be undertaken to resolve all the matters. Remember that the Law Society themselves noted that Internet NZ had an obvious conflict of interest, yet they still proceeded. They have had two years and a review and have made it VERY clear that nothing meaningful will be happening. We gave them a chance and they’ve blown it now. This is very serious stuff.
Note carefully also that some high-powered top-level entities submitted serious concerns prior to implementation. Note also that as I have recently blogged, it will be the high-value names that have the most to lose in this ludicrous ‘conflicted’ status. Think also carefully about why a retrospective issuance under Internet NZ’s own policy of ‘first-come-first-served’ might NOT have worked – or would not work even now to resolve the problem simply and ethically. There is no good reason that I can think of.
While I will talk to anyone at any time, I doubt Internet NZ would want to discuss anything with me. If it does proceed to court (or even if Internet NZ’s legal team see that there is a potential exposure) then I think that David Farrar should stand down as Chairman – certainly until the matter was resolved. It all happened on his watch, didn’t it?
Personally I think the Board should seek to commence an independent inquiry into their own handling of the matter. They represent their members and it would only take one member to complain and lay a complaint to put the Board on notice. Should they take no action in the face of a complaint from a member, a threat of legal action, and they cover-up the matter or strong-arm others it will not look good for them in court and show that there is fire under the smoke. Getting third parties involved who are not under the thumb of, or don’t gain benefit from Internet NZ’s actions and decisions is critical in the interests of justice being seen to be done.
Legal opinions should be offered and discussed and registrations of interest should be sought. I do that here. Please use my tipline and/or call me or leave a comment if you have an interest or opinion.
- Internet NZ is responsible for the health and well-being of the .nz namespace and apart from this blot, their performance is generally recognised as one of the best, globally. From a legislative environment and operationally I concur. I have crossed swords with them (specifically the DNC Debbie Monaghan in times past) when they did the same thing as they did with this problem – change the rules on me to my disadvantage – but the 2LD thing is a separate single issue for me from the past. “I never hold grudges but I never forget,” would be the best way to describe my take.
- I personally would be prepared to initiate or coordinate Class Action if required but this is not my preference. I seek to be more of a commentator and facilitator than an activist. I am not a lawyer and others can and I believe probably should coordinate this form of action.
- As always, I welcome any Right of Reply. Internet NZ and/or any of their minions are welcome to share here and/or respond as they see fit.
- I have prepared a private claim, being lodged in the Waitakere District Court Disputes Tribunal relating to my own situation and dennis.nz. The claim is against Internet NZ in which I am claiming for two years lost opportunity through not having access to register this domain. While my case is a little different to my proposal for Class Action to resolve the entire .nz 2LD problem. I am simply seeking costs through perceived losses. It is similar though in the sense that it is built upon the logic contained in this post: For years I believed that the ‘first-come-first-served’ policy meant that I had secured my desired protection over my personal name in the .nz space. Internet NZ introduced changes contrary to their own long-standing policy of ‘first-come-first-served’ and that unilaterally permitted 112,000 others to establish their .nz web presence, a distinct disadvantage to me through no fault of my own. This has cost me, thus my private claim. I will update this blog in due course with progress.
- Finally, one thing that niggles away at me is why . . . why the key people at Internet NZ under David Farrar’s leadership didn’t think this through properly and do the right thing in the first instance. There was certainly a clear agenda and intent – to introduce the 2LD in the way they did, come hell or high water. That I can understand, as it represents many millions to the industry and of course to Internet NZ. But David and his team’s insistence on applying first-come-first-served policy in the way that they did with a totally unnecessary category of ‘conflicted’ beggars my belief.It’s not that they weren’t warned. They were. Were they so pig-headed and arrogant that they couldn’t see what I and others were trying to say, or was there another reason, something that has yet to come out of the woodwork? I don’t know.I can certainly understand why they insist on leaving status quo now, for to change to applying the policy retrospectively would be an admission of liability and error but to knowingly create a problem as supposedly the experts in the industry makes me scratch my head.
Perhaps their logic can be explained to a judge?
* I’m not sure at the time of writing whether unmoderated name Registrants also had the power to veto a ‘conflicted’ domain. If so, then the problem is potentially infinitely worse as it would then have been technically impossible for ANYONE to have secured their 2LD IP!