Judge Dismisses Suit Against ICANN

A federal judge dismissed an antitrust claim Tuesday filed by VeriSign against the government’s ruling body, the Internet Corporation for Assigned Names and Numbers – or ICANN.

Both parties emphasized that Judge A. Howard Matz ruled on only one out of seven claims: the antitrust complaint. He didn’t throw out the complaint, but asked VeriSign for more detail so that he could rule on its legitimacy.

“The judge said that if VeriSign could not plead an antitrust claim, then there was no reason for him to rule on any of the other legal theories,” said Jeffrey LeVee, a partner with Jones Day, the law firm representing ICANN. If the antitrust claim isn’t allowed, the U.S. District Court for the Central District of California would not have jurisdiction, and the case would be sent to state court.

“VeriSign has issues, and we do think those issues ought to be resolved somewhere,” LeVee said. “But they do not make an antitrust claim in our view. The relationship between ICANN and VeriSign is not one that could lend itself to an antitrust theory.”

VeriSign spokesperson Brian O’Shaughnessy said the ruling today was merely a procedural issue. “I’m relatively nonplussed by the occurrence today,” he said. “It’s a fairly arcane court procedure. But our lawyers will provide the court with as much detail and specificity as they require.” He said he couldn’t comment on what details VeriSign would provide to prove the antitrust portion of its case.

VeriSign manages the .com and .net top-level domains under a contract with ICANN. But when it attempted to add a couple of potentially lucrative services, Waitlisting and SiteFinder, ICANN put a stop to them.

VeriSign’s proposed Waitlisting Service (WLS) would put the company in charge of taking reservations for domain names whose owners let their registrations lapse — and in command of a fee for the service. When someone misspelled a domain name or URL entered in the browser address bar, SiteFinder redirected the browser to its own site, where the user was given a choice of likely URLs — along with ads sold by VeriSign.

In February, after ICANN responded to complaints from registrars and ISPs by telling VeriSign to shut down SiteFinder, VeriSign filed an antitrust suit, saying ICANN had broken the contract and that, as a technical body, it had no authority over how VeriSign ran its business. A few days later, a group of domain registrars sued both VeriSign and ICANN over the WLS, saying it was “”anti-consumer, anti-competitive and unnecessary.” Registrars make money by operating their own waitlisting services.

On March 8, ICANN approved VeriSign’s WLS, but asked the U.S. Department of Commerce, which created ICANN, to give final approval. A technical report on how SiteFinder influences domain name service is still in progress.

Five of VeriSign’s other six claims relate to breach of contract, LeVee said, and one asks for declaratory relief. Judge Matz has not considered those. “A federal judge has to be comfortable that there’s a legal basis for jurisdiction in his court,” LeVee said, “and he’s obviously not comfortable.

VeriSign has until June 7 to amend its filings and convince the judge of its antitrust claims. If Judge Matz dismisses the case, VeriSign can appeal to the Ninth Circuit Court of Appeals. “VeriSign believes that, ultimately, the court will see the merit of the case,” O’Shaughnessy said.

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