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Afilias wins $10m judgment in Architelos “trade secrets” case

Kevin Murphy, August 25, 2015, Domain Services

Afilias has won a $10 million verdict against domain security startup Architelos, over claims its flagship NameSentry abuse monitoring service was created using stolen trade secrets.

A jury in Virginia today handed Afilias $5 million for “misappropriation of trade secrets”, $2.5 million for “conversion” and another $2.5 million for “civil conspiracy”.

The jury found (pdf) in favor of Architelos on claims of business conspiracy and tortious interference with contractual relations, however.

Ten million dollars is a hell of a lot of cash for Architelos, which reportedly said in court that it has only made $300,000 from NameSentry.

If that’s true, I seriously doubt the four-year-old, three-person company has even made $10 million in revenue to date, never mind having enough cash in the bank to cover the judgment.

“We’re disappointed in the jury’s verdict and we plan to address it in some post-trial motions,” CEO Alexa Raad told DI.

The lawsuit was filed in January, but it has not been widely reported on and I only found out about its existence today.

The original complaint (pdf) alleged that three Architelos employees/contractors, including CTO Michael Young, were previously employees or contractors of Afilias and worked on the company’s own abuse tools.

It claimed that these employees took trade secrets with them when they joined Architelos, and used them to build NameSentry, which enables TLD registries to monitor and remediate abuse in their zones.

Architelos denied the claims, saying in its March answer (pdf) that Afilias was simply trying to disrupt its business by casting doubt over the ownership of its IP.

That doubt has certainly been cast, though the jury verdict says nothing about transferring Architelos’ patents to Afilias.

The $5 million portion of the verdict deals with Afilias’ claim that Architelos misappropriated trade secrets — ie that Young and others took work they did for Afilias and used it to build a product that could compete with something Afilias had been building.

The other two counts that went against Architelos basically cover the same actions by Architelos employees.

The company may be able to get the amount of the judgment lowered in post-trial, or even get the jury verdict overturned, so it’s not necessarily curtains yet. But Architelos certainly has a mountain to climb.

Afilias wants to buy your failed gTLD

Afilias is on an overt campaign to snap up struggling new gTLDs at bargain basement prices.

“In the neighborhood of a dozen” gTLD operators responded seriously to Afilias’ booth at last month’s ICANN meeting in Buenos Aries, (pictured), Afilias chief marketing officer Roland LaPlante told DI in an interview today.

The company could potentially buy up tens of gTLDs over the coming year, LaPlante said.

“If all of these 500 strings with less than 5,000 names in them start looking for a new owner, it’s going to be a pretty active marketplace,” he said.

Afilias

“There are entrants in the market who either have found the market is not as they expected, or results are not what they need, or for whatever other reason they’re coming to the conclusion this isn’t the business they should be in and they’re looking for options,” LaPlante said.

“There’s been a cold splash of water in the face for a lot of people who didn’t expect it, they’re struggling with relatively low revenues compared to what they might have expected,” he said. “They’re likely to be looking for options.”

Afilias would be happy to take these contracts off their current owners’ hands, for the right price.

“Frankly, we’re not going to be paying huge prices for them,” LaPlante.

“We’ve run into a number of folks who still have fairly inflated opinions of what their string is worth,” he said. “Some of these strings are attractive, but they’re going to need a lot more time to mature.”

Afilias believes that the economies of scale it already has in place would enable it to turn a profit at a much lower registration volume, perhaps under 50,000 names, and that it has the patience and financial strength to wait for its acquisitions to hit those volumes.

“We’re very conservative in our volume estimates,” LaPlante said.

Afilias currently has 26 new gTLDs as back-end and 13 as contracted registry operator.

The company is basically looking for acquisitions where the seller’s looming alternative might be the Emergency Back-End Registry Operator, and where the fees associated with an auction might be a bit too rich.

While LaPlante jokingly compared the proposition to the “We Buy Any Car” business model, he admitted that some registries are less attractive than others.

gTLDs with a lot of restrictions or monitoring would be treated with much more caution — Afilias was not interested in .hiv, which failed to sell at auction recently, for example — and would be skeptical about registries that have given away large numbers of free domains.

“We’d like to pick up strings that have good potential for a profitable amount of volume,” he said.

Afilias quietly sold .meet to Google earlier this year, but LaPlante denied that Afilias is in the business of flipping gTLDs. While he could not get into details, he said the .meet deal was a “special case”.

As we discovered last week, at least eight new gTLDs have changed ownership since signing their registry contracts. A few others have been acquired pre-contracting.

Afilias promises cash for LGBT cause with .lgbt sales

Afilias has promised to donate a slice of .lgbt registration fees to a LGBT organization for the next few months.

The company, which acts as registry for .lgbt, said it will give $20 to the It Gets Better Project for every name registered through October 11.

It Gets Better is a US-based non-profit devoted to supporting LGBT people through their often rough teenage years.

Afilias said the promotion is meant to celebrate the recent legalization of same-sex marriage in the US and Ireland.

The October 11 end date was picked because that is National Coming Out Day in the US.

.lgbt names currently retail for roughly $45 to $60 a year.

XYZ buys .security and .protection from Symantec

XYZ.com has added .security and .protection to its portfolio of new gTLDs under a private deal with security software maker Symantec.

Symantec originally applied for both as closed generics, but changed its plans when ICANN changed its tune about exclusive access gTLDs.

The company won .security in an auction against Donuts and Defender Security late last year; .protection was uncontested. It lost auctions for .cloud and .antivirus.

Symantec’s .symantec and .norton, both dot-brands, are currently in pre-delegation testing.

XYZ already owns .college, .rent and of course .xyz.

In other news, Afilias has acquired .promo, which was in PDT with applicant Play.Promo Oy, in a private auction.

UPDATE: A couple of hours after this post was published, XYZ announced it has also acquired .theatre, which will compete with Donuts’ .theater, from KBE gTLD Holding Inc.

Afilias cancels $100m London IPO

Kevin Murphy, January 6, 2015, Domain Registries

Afilias has cancelled its planned London Stock Exchange IPO due to “market conditions”.

It seems to be a cancellation, rather than a postponement, according to a company spokesperson.

“The final decision to cancel the IPO was based on market conditions at the time,” she told DI today.

No additional information was available, but I suspect the company was not able to drum up sufficient interest, at its target price, from institutional investors in the two-week period between its IPO filing and its due date.

Afilias said on October 28 that it planned to raise approximately $100 million selling shares on London’s Alternative Investment Market.

The flotation was expected to take place November 12, but that date came and went with no action.

AIM is currently the home of rival TLD registries CentralNic and Minds + Machines, neither of which saw any particular share price problems during that two-week window.

Afilias had revenue of $77.6 million in 2013, making an operating profit of $30.4 million and $45 million in operating cash flow, largely from selling .info and .mobi domain names.

The company is the back-end provider for almost 50 live 2012-round new gTLDs and has a couple hundred more deals with applicants whose strings have not yet been delegated.

Hotly contested gTLDs up for auction tomorrow

Kevin Murphy, December 16, 2014, Domain Registries

ICANN’s fifth set of last-resort new gTLD auctions is set for tomorrow and it’s another small batch.

Just two contention sets — .baby and .mls — are set to be resolved, with ICANN stashing the winning bids into its special fund.

.baby is hotly contested with no fewer than six applicants — five portfolio applicants and one big brand.

Will Johnson & Johnson get what was once a single-registrant “closed generic”, or will Donuts, Google, Radix, Famous Four or Minds & Machines prevail?

Meanwhile, .mls (for “multiple listing service”, a type of real estate listings aggregation service popular in North America) is a two-horse race between Afilias and the Canadian Real Estate Association.

I’m tempted to call this one for CREA. The organization is so desperate for the .mls gTLD that it filed two applications, one “community” and one vanilla.

The community application was withdrawn earlier this year when CREA scored 11 out of 16 points on its Community Priority Evaluation, failing to pass the 14-point threshold.

The organization even filed a Legal Rights Objection against Afilias in attempt to kill off the competition, which also failed.

Having fought off these challenges, Afilias is either going to get the gTLD or walk away empty-handed. The last resort auction does not compensate unsuccessful bidders for their investments.

Private auction settles controversial plural gTLD fight

Kevin Murphy, December 8, 2014, Domain Registries

A private auction has been used to settle a new gTLD contention set containing two different strings for the first time.

Afilias has won the right to run .pet after Google withdrew its application for .pet and Donuts withdrew its bid for .pets.

The two strings, one the plural of the other, had been placed into indirect contention by ICANN after a String Confusion Objection panel controversially ruled in August 2013 that .pet and .pets were too confusingly similar to be allowed to coexist.

This means that Donuts has been forced to withdraw an uncontested application.

Notably, it was Google that filed, fought and won the SCO complaint, and it didn’t even wind up with the TLD it wanted.

The final settlement of the contention set reflects ICANN’s inconsistent policy on plurals. Several plural/singular combinations — such as .career(s) and .photo(s) — already coexist in the DNS.

Afilias set for $100m London IPO

Kevin Murphy, October 21, 2014, Domain Registries

London’s Alternative Investment Market is fast becoming the stock market of choice for new gTLD registries, with .info mainstay Afilias today announcing an upcoming IPO.

The Ireland-based company hopes to raise $100 million by selling off about 30% of the company, giving it a growth war-chest and giving its investors a shot at getting some of their money back.

Afilias earmarked part of the expected windfall for new gTLD auctions, as well as acquisitions of new gTLD “assets” and operational registries and expansion of its registrar business.

Executive chairman Jonathan Robinson said in a statement:

The Placing will bring significant benefits – by providing further capital to fund our organic and acquisitive growth plans, and raising our corporate profile with existing and new customers.

In addition to .info, .mobi and .pro, Afilias is associated with 254 new gTLD applications either as applicant or back-end provider. As registry, it already has about a dozen 2012-round gTLDs in the root.

The company’s revenue for 2013 was $77.6 million, up from $74.5 million in 2012. Earnings before deductions were $38.6 million in 2013, up from $32.1 million in 2012.

Fellow gTLD registries CentralNic and Minds + Machines are also listed on AIM.

Afilias loses Chinese .info as seven more new gTLD auctions conclude

Kevin Murphy, September 24, 2014, Domain Registries

Today news has reached us via various channels that seven new gTLD contention sets have been settled, all is seems via private auction.

Notably, Afilias has lost the opportunity to run the Chinese-script version of its 14-year-old .info TLD to Beijing Tele-info Network Technology Co, the only other applicant.

The Beijing company’s application says the string .信息 means: “knowledge or message in the form suitable for communications, storage, or processing, which is closely related to notions of form, meaning, pattern, perception, representation, and entropy.”

Afilias said it means “info”.

Separately, in a press release today, Minds + Machines said that it has won the auctions for two gTLDs — .law and .vip — and lost the auctions for several more.

In .law it beat NU DOT CO, Donuts, Radix, Merchant Law Group and Famous Four Media. In .vip it beat Google, VIP Registry, Donuts, I-Registry and Vipspace Enterprises.

From the auctions M+M said it lost we can infer that .design and .realestate contention sets are also now settled, but we haven’t seen any withdrawals yet so we don’t know the winners.

M+M said it netted $6.2 million cash by winning .law and .vip and losing .design, .flowers, .group, .realestate and .video.

From today’s new withdrawals we can see that Uniregistry won .auto against Fegistry, Donuts and Dot Auto, while Donuts won .memorial against Afilias and dotCOOL.

UPDATE: Thanks to Jim in the comments for the reminder that the “Chinese .info” auction happened back in June. The TLD fetched $600,000 at an ICANN last-resort auction.

DotGreen is back from the dead

Kevin Murphy, September 16, 2014, Domain Registries

DotGreen Community, a popular but unsuccessful applicant for the .green gTLD, has been resurrected to manage the marketing for the successful applicant, Afilias.

It appears that Afilias, which won .green at auction against two other applicants in late February, is essentially outsourcing the marketing of .green to DotGreen.

DotGreen withdrew its bid last October, citing the high cost of the looming auction.

DotGreen’s plan for the TLD, had it won, was to distribute some of its profits to worthy environmental causes, and that plan seems to have been brought back from the dead too.

According to a press release:

DotGreen brings additional partnerships with EarthShare, a federation comprised of the world’s leading environmental and conservation charities; and The DotGreen Foundation, a California Non-profit, 501 (c)3 Public Charity. These organizations will work together to distribute a percentage of the proceeds collected from the sales of the .green domain names to programs that work towards the advancement of sustainability worldwide.

It appears to be a unique, first-of-its-kind relationship in the new gTLD space.

Afilias remains the contracted party and will continue to run the technical infrastructure of the registry, but the heavy-lifting of actually marketing the names falls on DotGreen.

Given that DotGreen spent quite a lot of time in the run-up to the new gTLD application process building relationships with environmental groups, this could be an incredibly shrewd move by Afilias.

Afilias has not yet revealed its sunrise or general availability launch dates for .green, which was delegated in June.