Registrar challenges dot-ca authority’s right to deny licence renewal

A registrar accused by the Canadian Internet Registration Authority (CIRA) of “domain slamming” continues to sell dot-ca domains despite an original decision to not renew its licence in August.

Brandon Gray Internet Services is a Markham, Ont.-based registrar that has been operating since 2004. It has 25 Canadian resellers and between 4,000 and 6,000 customers. CIRA first informed Brandon Gray that it would not have its licence to sell dot-ca domains renewed Aug. 6, according to court documents. But Brandon Gray is still selling dot-ca addresses.

Since learning it could lose its licence to sell Canadian domains, the registrar has filed a request for an injunction. It claims that CIRA had no legal basis to refuse a licence, and by doing so will make it impossible for the firm to continue business and cause it “severe financial harm,” according to the firm’s statement of claim. Brandon Gray has also filed a lawsuit against CIRA seeking damages in excess of $10 million.

Related Story: Alleged ‘domain slammers’ lose dot-ca licence, sue CIRA $10 million

Until a judge makes a decision on the injunction, CIRA has agreed to extend Brandon Gray’s certification, says Jennifer Austin, senior manager of communications for the not-for-profit group.

Both the DROC and Brandon Gray continue to offer dot-ca registrations and renewals, confirms David Burroughs, a senior executive with DROC. But he declined to give further comment.

The Domain Registry of Canada (DROC) is one reseller of Brandon Gray. It also shares the same address in Markham, Ont. and same phone system and extension list. Many dot-ca domain holders have filed complaints about receiving solicitations from DROC, according to an affidavit filed in court by CIRA.

In a previous e-mail interview with ITBusiness.ca, Burroughs said that Brandon Gray and DROC are separate companies, and share some customer service operations.

Domain slamming or “domain name slamming” describes a practice where companies will send domain name holders misleading advertisements, claiming they must make a payment to retain ownership of their domain name or similar variants. (Related Story: Toronto ‘domain name slammers’ fined for fraud by FTC)

The case is unprecedented, says domain name lawyer Zak Muscovitch. No registrar has legally challenged CIRA over its ability to grant or decline licences in the past. But CIRA’s quasi-governmental status as a not-for-profit extension of Industry Canada means it has an extra onus in demonstrating fairness compared to a private business.

“Aside from the merits of the issue here, the case will likely bring to the fore a closer examination of whether CIRA has a duty to act fairly and what powers it can exercise in its discretion,” he says. “It raises an important and serious question about what CIRA’s role is.”

If a judge does grant Brandon Gray an injunction and allows it to keep its licence temporarily, CIRA’s reputation would be harmed, according to CIRA’s affidavit written by channel manager Kelly Campbell.

“CIRA will not be able to adequately apply its Registrar Agreement and the obligations in it, forcing CIRA to do business with an entity that it no longer trusts and negatively impacts on CIRA’s reputation,” she writes. “An injunction would further hinder CIRA’s obligation to protect Registrants, its primary goal.”

The authority would have to continue accepting registrations processed by DROC and Brandon Gray’s other resellers, Campbell continues. “Which may have been prompted by practices by Brandon Gray’s resellers which are of concern to CIRA.”

Delivering an injunction decision became even more critical after Oct. 12, Campbell writes. That’s when CIRA adopted a new registry platform that gives more responsibility to registrars and less to CIRA. Now domain transfers can be processed without authorization from CIRA.

Though CIRA characterizes DROC’s solicitations as misleading, the letters contain large and prominent statements declaring they are not invoices. In all capital letters, the advertisement states “you are under no obligation to make any payments on account of this offer unless you accept this offer.” (Read an example)

“It can’t be any clearer than that,” Burroughs previously told ITBusiness.ca. Other registrars are just upset they are losing customers.
“We feel we are offering one of the best deals around… many other registrars just cannot compete so they lose customers,” he writes. “In fact we receive daily praise for our solicitations, as the recipients thank us for informing and educating them on their rights and obligations regarding domain names and Web sites.”
Part of the reason CIRA has not yet pulled Brandon Gray’s licence could be that they aren’t sure they’d win should Brandon Gray seek an emergency injunction, Muscovitch says.

“If what they’d been doing is so objectively dishonest or so clearly in breach of a CIRA policy or any other public interest principle, then it would have been incumbent upon CIRA to shut them down and disable them,” he says. “But the fact that CIRA has allowed them to continue on through this interim period probably suggests that their behaviour isn’t so egregious or so in breach of any rule that they can come to an immediate decision.”

The next court date for the case is set for Feb. 14.

Brian Jackson is a Senior Writer at ITBusiness.ca. Follow him on Twitter, read his blog, and check out the IT Business Facebook Page.

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