Network Solutions Inc. this week was slapped with a class-action lawsuit
totalling about $1.7 billion by plaintiffs who argue that the firm’s
practice of charging fees for domain names is unconstitutional.
Eight plaintiffs were named in the suit filed Tuesday in U.S. District Court
in San Francisco. The plaintiffs seek $800 million in domain-name
registration reimbursements as well as $900 million in damages.
The charges stem from an deal inked in 1995 between the leading registrar
and the National Science Foundation in which Network Solutions (NSOL) was allowed to collect $70 for each new domain registration along with a $35 annual renewal fee.
The new suit is more specific than the charge the registrar beat last year,
in which the constitutionality of registration fees was challenged. In this
charge, the plaintiff are upset over a perceived failure to observe the
Internet protocols that restrict domains “.com,” “.net” and “.org” to,
respectively, commercial companies, ISPs, and nonprofits. The suit further
charges that the current fee system resembles monopolistic plays by the
registrar.
Network Solutions spokesperson Christina Ackley said the firm was not commenting on the lawsuit, which comes one week after NSI was purchased by security software maker VeriSign (VRSN)
for $21 billion.
Calls to VeriSign were not returned Wednesday afternoon.
Shares of Network Solutions fell nearly 8.5 percent to 209 per share at midday trading. VeriSign also dipped about 7.3 percent to 201-3/4.