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Architelos files bankruptcy after Afilias lawsuit

Kevin Murphy, March 21, 2016, Domain Services

Afilias has managed to bury domain security software provider Architelos, which filed for bankrupcty today.
Architelos filed Chapter 7, which basically means the company will close and its assets will be liquidated to pay off creditors.
Its only major creditor is Afilias, which won a patent lawsuit against it last August.
The jury in the case set damages at $10 million, finding that Architelos had misappropriated Afilias trade secrets, but the trial judge recently indicated her intention of reducing the award to $2 million.
Even that was a bit too rich for the company, which floated the idea of operating NameSentry on a revenue share with Afilias until its debt was paid.
Clearly, that’s no longer going to happen.
Architelos was founded by Alexa Raad in 2011, to exploit the new gTLD opportunity as a consulting and software tools provider.
It made seven figures in its first year, mainly through gTLD application consulting fees, but saw modest adoption of its subsequent security offering, NameSentry.
The flagship service only made $300,000 in revenue, according to court documents. After the August verdict, Architelos’ sales pipeline dried up.
The software and the US patents covering them are the company’s key assets, though Afilias is expected to be awarded at least partial ownership rights of the patents.
The company had about 10 employees at its peak, but has been operating on a skeleton crew of two or three for the last few months.
Architelos said in a blog post that NameSentry customers will be able to continue to use the service in the short term, but what happens to it in future depends on how the bankruptcy court appointed trustee does with it.
Afilias also has an outstanding lawsuit against Architelos and Raad in Canada.

Afilias $10 million court win slashed by judge

Kevin Murphy, January 18, 2016, Domain Services

A US judge has dramatically reduced a $10 million ruling Afilias won against Architelos in a trade secrets case.
Architelos, which a jury decided had misappropriated trade secrets from Afilias in order to build its patented NameSentry domain security service, may even be thrown a lifeline enabling it to continue business.
A little over a week ago, the judge ordered (pdf) that the $10 million judgment originally imposed by the jury should be reduced to $2 million.
That won’t be finalized, however, until she’s ruled on an outstanding injunction demanded by Afilias.
The judge said in court that the original jury award had been based on inflated Architelos revenue projections.
The company has made only around $300,000 from NameSentry subscriptions since launch, and its sales pipeline dried up following the jury’s verdict in August.
The service enables TLD registries to track and remediate domain abuse. It was built in part by former Afilias employees.
Afilias has a similar in-house system, not available on the open market, used by clients of its registry back-end business.
Even a reduced $2 million judgment is a bit too rich for Architelos, which is desperately trying to avoid bankruptcy, according to court documents.
But the judge seems to be considering an injunction that would enable Architelos to continue to exist.
It may even be permitted to sell NameSentry, as long as it gives almost a third of the product’s revenue to Afilias for up to five years or until the $2 million is paid off.
The injunction might also grant joint ownership of the disputed patents to the two companies, allowing them to jointly profit from the technology.
This has all yet to be finalized, however, and Afilias can always appeal whatever injunction the judge comes up with.
It emerged in court earlier this month that Architelos offered to give full ownership of its patent, along with NameSentry itself, to Afilias in order to settle the suit, but that Afilias refused.
Afilias is also suing Architelos over the same matters in Canada, but that case is progressing much more slowly.

Afilias seeks to freeze Architelos patent after $10m lawsuit win

Kevin Murphy, December 22, 2015, Domain Registries

Afilias seems bent on burying domain security software maker Architelos, after winning a $10 million lawsuit against it.
The registry on Friday filed a court motion to freeze the patent at the heart of the lawsuit, which Afilias says — and a jury agreed — was based on trade secrets misappropriated by former Afilias employees.
Afilias said it wants to make sure Architelos does not attempt to sell the so-called ‘801 patent, which covers domain abuse-monitoring software.
Its motion asks for a court order “prohibiting Architelos from taking any action that would dilute… or diminish Architelos’ rights or ownership interests” in the patent.
It notes that Architelos has stated that it does not have the means to pay the $10 million damages awarded by a jury in August, which might give it a reason to try to sell the patent.
Afilias said Architelos had “raised the prospect of bankruptcy” during post-trial negotiations.
The motion seems to have been filed now because the judge in the case is taking an unusually long time to render her final judgment.
Despite the case being heard on a so-called “rocket docket” in Virginia, the two companies haven’t heard a peep out of the court since late October.
According to Afilias’ motion, the judge has indicated that Afilias will wind up at least partially owning the ‘801 patent, but that the jury’s $10 million verdict may be “tweaked”.
Judging by a transcript of the August jury trial, the judge herself was not particularly impressed with Afilias’ case and did not expect the jury to crucify Architelos so badly.
Out of the jury’s earshot, she encouraged Afilias to attempt to settle the case and said “if the jury verdict comes in against what I think is the clear weight of the evidence, I will most likely adjust it.”
She also said: “I would have trouble believing that any reasonable jury would find even if they were to award damages to the plaintiff that there’s any significant amount here.”
She clearly misread the jury, which a few days later handed Afilias every penny of the $10 million it had asked for.
That’s much more money than Architelos is believed to have made in revenue since it launched four years ago.
Afilias’ latest motion is set to be heard in court in early January.

Architelos: shadiest new gTLD is only 10% shady

Kevin Murphy, September 4, 2015, Domain Registries

Disputing the recent Blue Coat report into “shady” new gTLDs, domain security firm Architelos says that the shadiest namespace is just under 10% shady.
That’s a far cry from Blue Coat’s claim earlier this week that nine new gTLDs are 95% to 100% abusive.
Architelos shared with DI a few data points from its NameSentry service today.
NameSentry uses a metric the company calls NQI, for Namespace Quality Index, to rank TLDs by their abuse levels. NQI is basically a normalized count of abusive domains per million registered names.
According to Architelos CEO Alexa Raad, the new gTLD with the highest NQI at the end of June was .work.
Today’s NameSentry data shows that .work has a tad under 6,900 abusive domains — almost all domains found in spam, garnished with just one suspected malware site — which works out to just under 10% of the total number of domains in its zone file.
That number is pretty high — one in 10 is not a figure you want haunting your registry — but it’s a far cry from the 98.2% that Blue Coat published earlier this week.
Looking at the numbers for .science, which has over 324,000 names in its zone and 15,671 dodgy domains in NameSentry, you get a shadiness factor of 4.8%. Again, that’s a light year away from the 99.35% number published by Blue Coat.
Raad also shared data showing that hundreds of .work and .science domains are delisted from abuse feeds every day, suggesting that the registries are engaged in long games of whack-a-mole with spammers.
Blue Coat based its numbers on a sampling of 75 million attempted domain visits by its customers — whether or not they were valid domains.
Architelos, on the other hand, takes raw data feeds from numerous sources (such as SpamHaus and SURBL) and validates that the domains do actually appear in the TLD’s zone. There’s no requirement for the domain to have been visited by a customer.
In my view, that makes the NameSentry numbers a more realistic measurement of how dirty some of these new gTLDs are.

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.

Most new gTLDs use NameSentry after Famous Four signs with Architelos

Kevin Murphy, December 18, 2014, Domain Services

Architelos yesterday announced that Famous Four Media has signed up to use its NameSentry security service across its portfolio of new gTLDs.
The company said that it now has 60% of launched new gTLDs on the platform, which gives registries a way to view potentially abusive domain names and automate remediation. That’s over 250 TLDs.
Famous Four only has five delegated gTLDs currently, but it has another 30 active applications. The bulk of NameSentry’s TLD base comes from early adopter Donuts, which has 157. Rightside, with its 33 new gTLDs, is also a customer.
Architelos said that .build, .ceo, .lat, .luxury, and .ooo have also recently signed up to the service.

Cowley, one foot out of the industry, joins Architelos

Kevin Murphy, October 21, 2014, Gossip

Former Nominet CEO Lesley Cowley has become a consultant for Architelos, as part of a raft of domain and non-domain industry positions she’s taken on.
Primarily, Cowley has become chair of the UK’s Driver and Vehicle Licensing Agency — a public-sector role with a vague conceptual relationship with domain names (ie, managing lots of unique identifiers).
At Architelos, a provider of registry management software and services, she will be a “executive coach and consultant”, Cowley wrote in a blog post.
She will also remain a volunteer with ICANN, where she’s the former chair and current councilor of the ccNSO.
Cowley has also been named a non-executive director of aql, a data center in Leeds, UK.
She announced her resignation in May, after 12 years as Nominet CEO. Her replacement has not yet been named.

Architelos goes flat-rate with NameSentry pricing

Kevin Murphy, May 7, 2014, Domain Services

Architelos has introduced flat-rate pricing for its flagship NameSentry abuse detection and mitigation service.
Now, TLD registries will be able to pay $389 a month for the Basic service and $689 for the Enterprise version, regardless of the size of their zones.
Previously, pricing ranged from $249 to $3,999 per month, depending on zone size.
NameSentry scans and collates various malware, spam and phishing URL lists in order to alert registries when domains in their TLDs are being used for different types of online abuse.
The primary difference between the Basic and Enterprise versions is the ability to automate remediation workflow.
NameSentry customers include Donuts and Rightside. Architelos reckons it has 44% of the new gTLD market using the service.

Architelos offers entry-level NameSentry

Kevin Murphy, November 24, 2013, Domain Services

New gTLD software provider Architelos has released a cheaper version of its flagship NameSentry security compliance tool.
NameSentry Lite strips out the automated workflow and mitigation components found in the original, leaving the core threat reports and statistics intact.
It’s designed for smaller TLDs that don’t expect to see a lot of malware or phishing in their zones and it’s priced starting at $139 a month for a TLD with under 5,000 domains under management.
That’s about $100 cheaper than the standard NameSentry, which is geared more towards mitigation and has monthly charges ranging from $249 to $3,999, depending on zone size.
Boutique gTLDs and large portfolio registries such as DotKiwi and Donuts are early customers of the more-expensive version.

Report names and shames most-abused TLDs

Kevin Murphy, July 11, 2013, Domain Services

Newish gTLDs .tel and .xxx are among the most secure top-level domains, while .cn and .pw are the most risky.
That’s according to new gTLD services provider Architelos, which today published a report analyzing the prevalence of abuse in each TLD.
Assigning an “abuse per million domains” score to each TLD, the company found .tel the safest with 0 and .cn the riskiest, with a score of 30,406.
Recently relaunched .pw, which has had serious problems with spammers, came in just behind .cn, with a score of 30,151.
Generally, the results seem to confirm that the more tightly controlled the registration process and the more expensive the domain, the less likely it is to see abuse.
Norway’s .no and ICM Registry’s .xxx scored 17 and 27, for example.
Surprisingly, the free ccTLD for Tokelau, .tk, which is now the second-largest TLD in the world, had only 224 abusive domains per million under management, according to the report..
Today’s report ranked TLDs with over 100,000 names under management. Over 90% of the abusive domains used to calculate the scores were related to spam, rather than anything more nefarious.
The data was compiled from Architelos’ NameSentry service, which aggregates abusive URLs from numerous third-party sources and tallies up the number of times each TLD appears.
The methodology is very similar to the one DI PRO uses in TLD Health Check, but Architelos uses more data sources. NameSentry is also designed to automate the remediation workflow for registries.