ICA Brief Is Decisive Factor in CFIT’s Successful Win Appeal Against VeriSign on .Com Pricing

A judge for the U.S. Ninth Circuit Court of Appeals overturned a lower court’s decision on Friday after hearing the appeal from plaintiff Coalition for ICANN Transparency (CFIT) and considering an amicus (friend of the court) brief submitted by the Internet Commerce Association (ICA. The district court had ruled against plaintiff in the original proceeding, finding that CFIT had failed to state a valid antitrust claim against VeriSign in relation to its role as registry for .COM domain names.

In overturning the lower court’s decision, the appellate court concluded that CFIT’s claims under the Sherman Act — the US antitrust statute — should have survived VeriSign’s motion to dismiss. The case confronts VeriSign with claims of conspiracy in restraint of trade in connection with the terms of the .COM contract pricing and renewal provisions, and will now proceed at the district court.

The Appeals Court opinion cited the ICA’s amicus brief as the decsive factor in their decision to reverse the lower court’s decision and remand the case for further proceedings, stating:

Moreover, amicus in this case, the Internet Commerce Association (“ICA”), points out that when Smith and Weber were decided, “the present
expired domain name market barely existed,” and that today’s conditions were “unanticipated only a few years ago.”

Here CFIT’s complaint alleges that every word in the English language is already registered as a domain name, and that desirable domain names can be difficult to come by. On appeal, our understanding of the distinct role and value of
expiring domain names has also been significantly aided by the explanation provided by the ICA. As cogently explained by ICA, expiring domain names often carry with them a history of established web traffic and advertising support; when such names do expire, they “still maintain much of [their]prior inbound traffic,” making them more valuable than domain names that have never before been registered. The district court, of course, did not have the benefit of briefing
by amicus. With the benefit of this aid to our understanding,we are not prepared to affirm the district court’s ruling that no separate market exists. We therefore reverse and remand for further proceedings.

It has been estimated that the difference in .com registration pricing between what ICANN agreed to in its settlement with VeriSign and what would have resulted from a competitive rebid for the registry contract is greater than    $1 billion over the five-year term of the new contract. Given the stakes, VeriSign can be expected to fight on vigorously. ICA will be appealing to the domain name industry to provide sufficient support to assist us in providing backing to CFIT as this matter continues through the costly litigation process.

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