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Registrars File Lawsuit Against ICANN and VeriSign

Newman & Newman, the law firm representing an ad hoc coalition of ICANN-accredited domain name registrars, has filed a lawsuit [PDF] today against ICANN and VeriSign to Stop 'Anti-Consumer, Anti-Competitive' Wait List Service Implementation. The registrars filing this lawsuit include:

- Domain name registeres REGISTERSITE.COM, an Assumed Name of ABR PRODUCTS INC.,
- NAME.COM, LLC, R. LEE CHAMBERS COMPANY LLC which does business as DOMAINSTOBESEEN.COM,
- FIDUCIA LLC, SPOT DOMAIN, LLC,
- !$6.25 DOMAINS! NETWORK, INC., which does business as ESITE CORPORATION,
- AUSREGISTRY GROUP PTY LTD.,
- ! $ ! BID IT WIN IT, INC. (collectively "Plaintiffs")

The complaint attacks ICANN and VeriSign based on 1) Unfair Trade Practices Act Violations; 2) Violation of California Business & Professions Code; 3) Unlawful Tying Arrangement; 4) Attempted Monopolization; 5) Violation of Racketeer Influenced and Corrupt Organizations Act; 6) Intentional Interference with Prospective Economic Advantage; 7) Breach of Contract; and 8) Declaratory Relief. The following is an excerpt from the complaint filed:

Defendant ICANN has, or has threatened to, enable Defendant Verisign to implement what they call the Wait Listing Service (the "WLS"). Defendants purport to offer consumers a "guaranteed" right to register an already registered domain name if the current registrant lets it expire. However, under most circumstances the guarantee is meaningless because the desirable domain names will never become available. Defendants have withheld any information about the likelihood (or lack thereof) that the WLS will provide any value to consumers. Such information, if provided, would reveal that most consumers purchasing WLS subscriptions would have a negligible chance of ever registering the domain names that they expect will become available.

Moreover, Defendant ICANN has, or has threatened to, enable Defendant Verisign and third party domain name registrars to intimidate current registrants into buying unnecessary "insurance" to "protect" their domain names. Current registrants, who are dependent on defendants to preserve their rights and investments in their domain names, will have little choice but to purchase such insurance.

For example, if the WLS were implemented, Verisign could sell consumers the "right" to be first in line to register knowing that the Microsoft Corporation will not permit their rights to the domain name to become available. Verisign can then sell the Microsoft Corporation insurance to protect its valuable domain name from ever becoming available to the WLS consumer. The WLS thereby allows Verisign and ICANN to generate fees by playing their unknowing customers against each other for merely maintaining the status quo.

Simply put, the defendants are planning to implement (i) a scheme to dupe consumers into buying domain names the consumers will never be able to register, and (ii) an unlawful and fraudulent protection racket, all in violation of state and federal consumer protection, unfair competition, and racketeering laws. Several of the plaintiffs base their entire businesses on registering expired domain names. Consequently, those plaintiffs will literally go out of business if the defendants implement the WLS.

This lawsuit seeks to enjoin the defendants' proposed unfair and unlawful WLS activities, and in the event the defendants launch the WLS, the plaintiffs seek to recover the damages they will suffer as a result thereof.

In a related website called 'fightwls.com', a link to a document called "Why the WLS Proposal Would Harm Consumers” [PDF], offers this solution:

"ICANN should not be authorized to offer any official sanction or implementation of the wls until the Commerce Department and other expert u.s. government agencies thoroughly review the wls proposal, seek input from interested stakeholders, and affirmatively determine that the wls proposal would not harm consumers or competition in accordance with u.s. antitrust laws. While icann is a quasi-governmental body independent of the u.s. Government, it exists at the consent of the Commerce Department, which has periodically renewed its Memorandum of Understanding with icann to ensure that the domain name awarding process is administered properly. Furthermore, in light of the fact that icann is quasi-governmental and not a governmental body, there are significant questions about the appropriateness of VeriSignís lobbying of icann to modify its registry agreement in order to allow for the wls. While the Commerce Department has said that any VeriSign wls offering would require its approval, it is unclear, given the historical record of Commerce Department review of icann proposals, that such an approval would be preceded by a thorough, scrutinizing analysis. Accordingly, there should be no implementation of the wls for at least six to twelve months to allow for a thorough and independent review of the issues involved. Such an examination would require a full audit of the wls proposal by the appropriate agencies of the u.s. Government in order to determine whether its potential harm to consumers and competition can be reconciled with sound competition and Internet policy."

For other related discussions on this issue see CircleID's Special Coverage: "Wait Listing Service Controversy”.

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