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Verisign’s silly .xyz lawsuit thrown out

Kevin Murphy, October 28, 2015, 11:05:41 (UTC), Domain Registries

Verisign has had its false advertising lawsuit against the .xyz gTLD registry thrown out of court.

XYZ.com this week won a summary judgement, ahead of a trial that was due to start next Monday.

“By granting XYZ a victory on summary judgement, the court found that XYZ won the case as a matter of law because there were no triable issues for a jury,” the company said in a statement.

The judge’s ruling does not go into details about the court’s rationale. XYZ’s motion to dismiss has also not been published.

So it’s difficult to know for sure exactly why the case has been thrown out.

Verisign sued in December, claiming XYZ and CEO Daniel Negari had lied in advertising and media interviews by saying there are no good .com domain names left.

Many of its claims centered on this video:

XYZ said its ads were merely hyperbolic “puffery” rather than lies.

Verisign also claimed that XYZ had massively inflated its purported registration numbers by making a shady $3 million reciprocal domains-for-advertising deal with Network Solutions.

XYZ general counsel Grant Carpenter said in a statement: “These tactics appear to be part of a coordinated anti-competitive scheme by Verisign to stunt competition and maintain its competitive advantage in the industry.”

While Verisign has lost the case, it could be seen to have succeeded in some respects.

XYZ had to pay legal fees in “the seven-figure range”, as well as disclose hundreds of internal company documents — including emails between Negari and me — during the discovery phase.

Through discovery, Verisign has obtained unprecedented insight into how its newest large competitor conducts its business.

While I’ve always thought the lawsuit was silly, I’m now a little disappointed that more details about the XYZ-NetSol deal are now unlikely to emerge in court.

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Comments (9)

  1. Like you, I’m disappointed that further details about the .XYZ / NetSol registrar stuffing scheme are likely to be buried.

    My opinion about the lawsuit has always been mixed. It
    would have been nice to see some accountability for the bogus numbers. That was the serious charge, in my view.

    On the other hand, I agree with .XYZ when it admits its claim that all good .COMs are taken was nothing but “hyperbolic ‘puffery'”. That prong of Verisign’s allegations always seemed weak to me, precisely because .XYZ couldn’t be taken seriously in the first place.

    But now I’m disappointed for another reason. Some people apparently see .XYZ as heroic. I’m told that Daniel Negari was nobly honoring his NDA, that NetSol was “very open” about everything, and that after being a bit surprised for just “a week” everybody in the domain industry except me came to see what .XYZ did as 100% cool.

    I guess the romantic idea of David vs. Goliath has erased people’s memory.

    Because I persist in seeing ethical problems with the .XYZ registrar stuffing and the way Daniel Negari used those bogus numbers to induce customers to buy his wares, I’m told that I’m part of the “clueless minority”.

    Even after I cited a number of articles by you, Kevin, it made no difference. Anyone who objects to anything .XYZ has done is apparently part of the same “clueless minority”!

    History is being re-written. It’s disappointing that people have such short memories.

  2. BT says:

    Joe, have you ever worked as a paid blogger for Verisign in the past?

  3. BT says:

    You should be.

  4. @BT,

    Why not .CLUB? They suffered more from the .XYZ scam than anybody else, since .CLUB would have ranked first among nTLDs but for the faked .XYZ numbers.

    Actually, every nTLD has been tainted as a result of the .XYZ robo-regsitrations. The nTLD program lost credibility, 1 bad apple spoiling the bunch; so every single registry has a legitimate complaint here.

    Look, when Daniel Negari pulled this stunt last year, I criticized it immediately and vehemently, along with Kevin Murphy, Michael Berkens, Rick Schwartz, Konstantinos Zournas, Theo Develegas, even Ron Jackson at DNJournal. Lots more people besides …

    None of us like being cheated and lied to. None of us like seeing new domainers taken advantage of. None of us like being judged by the public because our colleagues cheat and lie. So we speak out. Simple.

    Elsewhere I’ve said a few favorable things about .XYZ, although I’m not much of a fan of that TLD compared to other among the new crop. And in my remarks above I actually sided with .XYZ against Verisign regarding a major component of their lawsuit.

    I’ve written critically about shill bidders at Flippa and been called a conspiracy theorist for doing so. Recently I criticized NetFleet; so I must be in league with their competitors, right? I’ve criticized NameJet. And DomainNameSales. And Sedo. I put Adam Dicker under a spotlight.

    During a given day, I write about multiple topics ā€“ often critically. People will blame me from all sorts of angles, and they’re free to disagree. But everything I say is my own opinion.

    Suggesting that I’d say something I don’t already fully believe in exchange for money is like calling a woman a whore. From my perspective anyway. You can’t imagine the risks I’ve taken in life in order to speak freely.

  5. @Joseph Peterson

    I appreciate your nuanced and non-polarized focuses on things. Seriously.

    I wanted to ask you a question –

    If a TLD gave registrations away for the first (approximately) million names or so, would that make it something with a shady launch?

    Would your answer remain consistent if I told you that the first (approximately) million .COM domains were given away before Internic started charging for them?

    Certainly it is not an apples to apples comparison given that there is now an abundance of options now available, and people know what domain names are nowadays, but the distinction is worthy.

  6. Frank Carson says:

    An “abundance of options” is not what makes this apples to oranges… it was the arrogant grand standing and use of false market numbers by .xyz to achieve undeserved reporting, consumer coverage, and deceptive market positioning to convince end users of value association and market acceptance that flatly did not ever exist. Let us call it as it is please. Anyone that has paid a premium for this domain should have the legal option for a refund.

    For Network Solutions, it was bad joke #450 surrounding a company that can barely handle phone calls for basic domain transfers.

    Near everything to do with new launches over the past 24 months have been at the expense of private investors. Critical information regarding non acceptance by ad agencies, major associations, legal watch dogs, and more not reported by a very insular domain industry. Major security issues related to contextual auto link creation causing vulnerabilities suppressed. Penetration surveys stifled because they show less than 1% of active consumers being aware new extensions even exist. Even less have future intention to use them. Major server companies outright refusing to serve or host some of the more popular extensions – because they intend to bring their own biased dog into the fight. Thousands upon thousands of form, server, text entry and authentication programs that don’t even INTEND to allow recognition of many of the new extensions. There is zero uniformity with massive market and usage compartmentalization.

    As new tld managers grow desperate, some extensions are already reverting to major price cuts. This appeals to one type of buyer – global spammers. Subsequently anti spam heuristics get updated to reflect likelihood of non-relativity and threat, and investors in .work, .review, and many others suddenly are wondering why their email response rates are gone. Instant spam box for many of the top anti-spam programs, which is partly what decimated the value of .info.

    This was a wild west gold rush, complete with some of the worst elements in the domain industry competing to get their piece at the known expense of others. Soon many investors in the domain industry will wake up, and realize that for the most part – the only one being mass marketed to by this cluster of cowboy name extensions is them.

    It is important to remember that the .com is more than just an extension. It is a universally and worldwide recognized mark that indicates an online presence that triggers specific expectations. Many of the new extensions when combined with popular keywords do not even look or read contextually sound when written or included in articles. In many cases, all it does is look like broken sentences, misplaced periods, or editing issues for unfinished trains of thought. The absurdity is that the industry hasn’t caught on to this yet, probably because tens of millions of names are being bought optimistically for future resale, and very few in comparison have been put to use yet for practical application.

    When our dysfunctional Congress can even agree that steps are needed as ICANN is out of control and failing in major managerial responsibilities and decision making processes – the industry should take note.

    Anti Kool-Aid Remedy: Call 50 random business owners outside of the domain industry and conduct your own survey to see how many have heard of .us, .biz, .tv, and .co. Apply as needed to the current market scenario.

  7. @Jothan Frakes,

    I see nothing wrong with giving away free domains, provided

    (A) Registrants actually opt-in to receive them;

    (B) The CEO of the registry doesn’t go around pointing to registration volume as a sign of market demand, success, and “utilization” (Negari’s word) for cases in which domains were stuffed into people’s accounts without waiting for their knowledge or consent.

    My own position in this regard has been pretty consistent over time.

    .BERLIN gave domains away for free last year; and, while I expected that strategy to backfire (as it did), I saw nothing ethically wrong with the practice at all. They were transparent about the freebies, and I don’t recall seeing the registry pointing to the number of free registrations as evidence of market demand or a reason for people to buy them. They didn’t say (as Negari did) that the full wholesale price was paid.

    Crucially, registrants actually chose to register the .BERLIN domains. That isn’t true of .XYZ.

    Many registries have sold nTLD domains for drastically reduced prices ā€“ $1 or less. Again, I see nothing wrong with that. Quite the contrary, as I’ve purchased over 1000 nTLD domains at those discounted levels myself.

    The reasons I’ve condemned .XYZ and Daniel Negari specificially are (A) and (B) above. Giving away domains for free is 100% fine by me.

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