VeriSign Antitrust Claim Against ICANN Dismissed

With two courtroom opponents offering different interpretations of a recent ruling, VeriSign's (Nasdaq: VRSN) claims of antitrust and breach of contract against the Internet Corporation for Assigned Names and Numbers (ICANN), the network's oversight body, came under the spotlight this week.

Earlier this week, A U.S. judge dismissed the antitrust claim from VeriSign, the registry that administers the .com and .net top-level domains (TLDs) under the authority of its agreement with ICANN. However, the dispute between the two will continue as the courts consider other issues, mainly the claim of contract violation.

The court case centers on ICANN's action regarding two VeriSign services. The first, known as SiteFinder, was a "wildcard" service that delivered a VeriSign site instead of the traditional error message for a mistyped or nonexistent Internet address. The service caused an uproar last fall when the redirection fouled some systems and services. VeriSign was also criticized for initiating the service without first getting input from the Internet community. ICANN ordered a suspension of the service, and VeriSign has since sued, claiming breach of contract.

The second main issue of the dispute is VeriSign's waitlisting service (WLS), which would allow domain-name registrants to go directly to the source and pay registrars for the right to claim a particular domain if it expires. While the service represents the formalization of waiting lists already used by many registrars, it was also ordered to a halt by ICANN for the same reasons and because it threatens to increase VeriSign's monopoly advantages in the domain-name game.

ICANN Case: Procedural Routine

VeriSign spokesperson Brian O'Shaughnessy told TechNewsWorld that the dismissal of the antitrust claim involved only one of seven claims from VeriSign in the case.

"It is the antitrust claim, which has a high level of burden of proof," O'Shaughnessy said. "The court simply asked us to supply more detail, more specificity to support our claim. The judge didn't make an interpretation on the merit of our claim."

Characterizing this week's ruling as "a functional, procedural issue," O'Shaughnessy said VeriSign will be providing the supporting material to refile its antitrust complaint over the next several weeks.

Pivotal Ruling for VeriSign

ICANN general counsel John Jeffrey, however, said the judge in fact picked up on the vagueness of VeriSign's antitrust claim and was concerned it might not be appropriate.

"VeriSign has painted it as a no-winners-no-losers thing," Jeffrey told TechNewsWorld. "That isn't the way we see it. He granted our motion to dismiss without prejudice, which means they can refile on or before June 7th."

Jeffrey said the likely next steps are for VeriSign to refile the claim, another motion to dismiss from ICANN and another review from the judge. The ICANN attorney added that the organization is hopeful it also will be successful in quashing VeriSign's breach-of-contract claims.

"The SiteFinder letter was within the rights under the contract," Jeffrey said, adding that there is still a great deal of potential litigation on the claims to come, as well as definition from the court on what is or is not a registry service.

Needed But Dreaded

Gartner (NYSE: IT) analyst Lydia Leong told TechNewsWorld that VeriSign's WLS service is needed to make the existing domain waiting lists more regular and efficient.

However, Leong highlighted VeriSign's unique position among domain-name administrators and said other registrars and services will be impacted, though they are limited to watching the matter unfold.

"The issue at hand is this is much, much better for VeriSign than for any other registrar because of their registry control," Leong said. "There isn't really any backlash possible because VeriSign's monopoly forces other registrars to be their customers. Every other registrar is completely dependent on VeriSign for their business."