The International Corporation for Assigned Names and Numbers ("ICANN"), a non-profit corporation formed under California law that is the governing body that administers the Domain Name System ("DNS"), must face antitrust scrutiny for its approval of the .XXX Top Level Domain ("TLD").
Before 1998, the U.S. federal government operated the DNS. In 1998, however, ICANN was formed to "privatize" the Internet, so that the DNS would be operated by a separate legal entity rather than a government.
As part of its ongoing responsibilities, ICANN determines what TLD's to approve, and chooses registries for existing or newly-approved TLD's.
As we have previously discussed, ICANN opened a Pandora's Box recently by accepting applications for thousands of new TLD's.
In 2011, one of the new TLD's that ICANN approved (with controversy) was the new .XXX domain.
ICANN claimed that one of the reasons for creating .XXX was to offer a clearly-defined TLD for adult entertainment and pornographic websites that could be more easily identified and filtered out by schools, libraries, churches and businesses.
Opponents argued, among other things, that it was a toothless exercise, since nothing prevented adult entertainment and pornographic websites to continue to register new domain names and corresponding websites ending with the more popular .COM, .NET, .ORG TLD's.
Therefore, opponents argued, it was nothing more than a money grab by ICANN and the chosen Registry for the .XXX (named "ICM"), to force individuals and businesses to expend money to purchase "defensive domain name" registrations.
Recently, Manwin Licensing International S.A.R.L. and Digital Playground, players in the adult entertainment and adult film industry related to the incredibly popular YouPorn.com website, recently filed suit against ICANN and ICM, the Registry that operates the .XXX TLD, for antitrust violations under the federal Sherman Act.
Their argument was that ICANN and ICM had unlawfully price fixed and restrained trade by creating the .XXX domain name, with the goal of forcing businesses to unnecessarily spend millions of dollars to register domain names that it otherwise didn't want or need.
ICANN shot back by moving to dismiss the Antitrust Complaint against it, arguing that ICANN, as a not-for-profit organization authorized by federal law to govern the Internet, is not a market participant, and is therefore legally incapable of conspiring to set prices or monopolize markets.
ICANN vigorously argued that its decision to create a new TLD such as .XXX is not an action that "could even conceivably result in a finding that [it] had restrained trade or monopolized a market."
However, despite its aggressive motion practice right out of the box, the U.S. District Court sitting in the Central District of California where the case was filed, ruled that ICANN CAN be accused of manipulating a market, for the purposes of receiving antitrust scrutiny under the Sherman Act.
Specifically, the Court found that "defensive registrations" are a legally defined market for antitrust purposes, and allowed that portion of the suit to proceed. Further, the Court dismissed ICANN's argument that it was totally immune from facing antitrust scrutiny:
"The Court finds the transactions between ICANN and ICM ... are commercial transactions. ICANN established the .XXX TLD. ICANN granted ICM the sole authority to operate the .XXX TLD. In return, ICM agreed to pay ICANN money. This is “quintessential” commercial activity and it falls within the broad scope of the Sherman Act. Even aside from collecting fees from ICM under the contract, ICANN’s activities would subject it to the antitrust laws."
Wednesday, August 15, 2012
Monday, July 9, 2012
In the American frontier of the 19th Century, outlaws found virtually unbounded opportunities to rob pioneers of their treasured few possessions, while the few understaffed lawmen faced difficulty detecting, arresting, holding, and convicting wrongdoers. In the early 21st Century, the Internet represents a similarly lawless frontier. A virtually infinite supply of domain names and websites has generated a gold rush mentality, as millions have sought to cash in by speculating on the virtual real estate that the Internet seems to offer.
The Internet’s frontier mentality has also attracted its share of brigands. Those seeking to rob web users of their hard-earned money are the same types of predators who mastered the arts of deceit, theft and counterfeiting on the bygone frontier. While their methods may be far more sophisticated, their fundamental approach is the same as old-fashioned con men.
Without any form of meaningful regulation, a dramatic new expansion of the Internet frontier is occurring, and is threatening to undermine any semblance of law and order that has been struggling to develop over the Internet. The Internet Corporation for Assigned Names and Numbers, (“ICANN”) recently announced that it has received applications for more than 1,900 new domain name extensions, including: .BID, .BUY, .DEAL, .DESIGN, .DISCOUNT, .FASHION, .FREE, .GIFT, .HOT, .JEWELRY, .LOL, .LUXURY, .ONLINE, .SALE, .SHOP, .STORE, .VIP, .WATCHES, .WEB, .WTF, and .WOW. Hundreds of these applications will likely be approved, and tens of millions of new domain names may be in use with these new extensions by the end of next year.
“ICANN’s program may open up new opportunities, but it also presents a whole new frontier of potential—and likely—abuse by those seeking to profit from the name, reputation, and content of others,” said Scott Bain, Chief Litigation Counsel for the Software and Information Industry Association, quoted by the Washington Post.
But everyday e-commerce web users are already facing a never-ending barrage of spurious websites selling counterfeit products online. It is absolutely clear that in the absence of appropriate and effective legal structures requiring stricter verification and identification of domain name ownership and control, a dramatic and unprecedented expansion could be catastrophic for brand owners and consumers alike.
Faced with the bruising public defeat of the Stop Online Piracy Act (“SOPA”) in January 2012, brand owners have undertaken aggressive actions to address online counterfeiting, including filing mega-lawsuits in federal court using existing laws and technology. However, the online counterfeiting threat persists, and by some accounts has increased markedly.
ICANN president Rod Beckstrom said in a recent press conference that the group has added new provisions to protect intellectual property, including the option for rapid takedown when brand holders feel their IP may be threatened. ICANN also reserves the right to take a domain name back if it there is significant abuse.
But ICANN should not be entitled to create a perpetually lawless frontier without applying consistent and binding legal regulations about the already-rampant intellectual property abuse occurring on the Internet.
Without strict disclosure and domain name ownership laws in place, ICANN runs the risk of establishing the Internet as perpetual “wild west,” without any lawmen on their way to bring law and order to the troubled frontier.
Congress should act now to intervene and hold additional public hearings on how ICANN’s proposed domain name expansion program will affect consumers and brand owners, in the absence of laws addressing intellectual property abuse and consumer fraud already perpetrated online.
Sunday, July 8, 2012
The group which essentially governs the Internet, known as the Internet Corporation for Assigned Names and Numbers ("ICANN"), recently released a list of thousands of applications for new generic top-level domains ("gTLD's"). Once approved, these new extensions would add to the already growing list of domain extensions that include popular .COM, .NET and ,ORG, and somewhat less popular .BIZ, .INFO, and .US. The applications include obvious brand protection extensions like .GOOGLE and .TIFFANY, as well as thousands of generic applicants like .SHOP and .STORE. Demand Media alone submitted more than 130 applications, including .AIRFORCE, .ARMY, .NAVY and .NINJA(huh?). The primary problem from a brand protection standpoint is that the Internet domain name system is already glutted with a virtually infinite number of available combinations to promote mischief and erode brand reputation online. To demonstrate the point, here is a list of just some of the applied-for Top Level Domains in the ICANN new gTLD Program 2012:
Concerned about the implications for online brand protection yet?
Concerned about the implications for online brand protection yet?