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New Lawsuit Hits VeriSign and ICANN

A group of eight Internet domain name registrars has filed suit against the Internet Corporation for Assigned Names and Numbers (ICANN) and VeriSign in a bid to stop VeriSign's proposed waitlisting service (WLS) from going live.

The registrars claim that under VeriSign's system, people will have to pay four times the cost of actually registering a domain name just to be on the waitlist. The lawsuit called the WLS "anti-consumer, anti-competitive and unnecessary."

The latest action comes after another group of registrars calling itself "The Domain Justice Coalition" sued ICANN to stop the launch of VeriSign's waitlist service when it was proposed in July 2003. That suit was reportedly settled.

It also adds another layer to litigation awaiting both VeriSign and ICANN over overlapping issues regarding the waitlisting service.

On Thursday, VeriSign filed an antitrust lawsuit against ICANN, charging that ICANN broke its contract with VeriSign when it prohibited and delayed the registrar from providing Internet services such as its SiteFinder and its WLS.

Derek Newman, a principal of the Seattle-based law firm of Newman and Newman and lead attorney representing the registrars in their suit against ICANN and VeriSign, said while other actions are about antitrust, his group's action is about consumer protection. "The WLS constitutes a scam against consumers. They're being cheated, and our clients are going out of business," he told internetnews.com.

In the current waitlisting system, people typically pay only if they get the domain name they've waited for. The registrars complain that the new system will favor well-funded speculators who can pay the steep fees for waitlisting choice domain names, and argue that the lack of competition by fewer players will stifle innovation.

Many of the complainants generate most of their revenue from back-order services that help people compete for domain names when they expire. The registrars say the current system of back-orders is working well: For a fee, the registrar will keep track of when the desired domain name will expire and try to immediately register it for the customer.

Registrars compete with a combination of pricing and software to automatically ping the VeriSign registry to see whether the desired name has been released. Registrars also buy desirable names that are not backordered with an eye to reselling them.

But under VeriSign's proposed WLS, Newman said, people will pay year after year for names they have little hope of getting, and will have to pay four times the cost of actually registering a domain name just to be on the waitlist.

He said statistics show that the most desirable names, dictionary words and two-, three- or four-letter words, expire only 5 percent of the time. Therefore, any person's chance of not getting a desirable name is 95 percent.

Because VeriSign doesn't make the odds clear, it's ripping off consumers, Newman said.

VeriSign was not immediately available to comment on the suit.

Another unfair advantage, according to the lawsuit, is that VeriSign can analyze the data from its top level domain registration service and see which expiring names generate the most traffic, then reserve them for itself.

The plaintiffs are: !$! Bid It, Win It, Registersite.com, Name.com, R.Lee Chambers Company LLC, Fiducia, Spot Domain, !$6.25 DOMAINS! Network, and AusRegistry Group PTY.

Newman called the timing of the lawsuit, one day after VeriSign sued ICANN, coincidental. The group he represents sent a demand letter to ICANN a week and a half earlier, but got no response.

VeriSign has already begun marketing the WLS service and has information posted on its Web site.

Next week, ICANN will hold one of its tri-annual meetings, and it's expected to discuss VeriSign's WLS proposal.

"ICANN is supposed to be open and transparent," Newman said. "If we didn't file the lawsuit, the WLS may be implemented at the board meeting."

Although ICANN originally ordered VeriSign to halt its WLS, the board has been negotiating with the registrar about the program. A vote on the program is expected at its meeting, beginning on February 29.



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