Justices Side with Network Solutions

Shares of Network Solutions Inc. were moving higher Tuesday after the U.S. Supreme Court rejected an appeal arguing its registration fees amounted to an unauthorized tax.

A group of nine companies had sued Network Solutions (NSOL) and the National Science Foundation, which had a cooperative agreement with Network Solutions allowing the company to register domains. The group also charged Network Solutions had violated federal antitrust laws.

The companies’ argument had already been rejected by a federal appeals court.

From 1993 to 1995, Network Solutions was reimbursed by the National Science Foundation for the cost of registering domains. However, as more individuals and companies began to register the names, the NSF allowed Network Solutions to begin directly charging users.

The fee was initially $100 for two years, with $30 going to a fund administered by the government. After the government stopped collecting the fee, the charge was reduced to $70. In 1998, Congress gave the government the right to charge and collect the fees.

The appeals court said Congress had the right to ratify a tax already in place as long as the tax wasn’t illegal.