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VeriSign settles CFIT lawsuit for free

VeriSign has settled its five-year-old antitrust lawsuit with the Coalition For ICANN Transparency. What’s more, it’s done so without having to sign a big check.

The company has just released a statement to the markets:

Under the terms of the Agreement, no payment will be made and the parties immediately will file a dismissal with prejudice of all claims in the litigation. Further, the parties executed mutual releases from all claims now and in the future related to the litigation.

CFIT voluntarily agreed to dismiss its claims in their entirety with prejudice in view of recent developments in the case, including the Amended Opinion of the United States Court of Appeals for the Ninth Circuit, the subsequent orders of the United States District Court for the Northern District of California, San Jose Division dismissing the claims regarding .Net and for disgorgement, and VeriSign’s motion for summary judgment.

On the face of it, this looks like a huge win for VeriSign, which has been facing questions about the CFIT suit from analysts on pretty much every earnings call since it was filed.

The original complaint alleged that VeriSign and ICANN broke competition law with their .com and .net registry agreements, which allow the company to raise prices every year.

Had CFIT won, it would have put a serious cramp on VeriSign’s business.

In February, a California judge dismissed the case, saying that CFIT’s membership did not having standing to sue. CFIT was given leave to amend its complaint, however, but that does not seem to have been enough to save its case.

According to a Securities and Exchange Commission filing, CFIT’s members were: iRegistry, Name Administration, Linkz Internet Services, World Association for Domain Name Developers, Targeted Traffic Domains, Bret Fausett, Howard Neu and Frank Schilling.

VeriSign scores big win in .com pricing lawsuit

Kevin Murphy, February 14, 2011, Domain Registries

VeriSign has successfully had an antitrust lawsuit, which claims the company has been raising .com domain name prices anti-competitively, dismissed by a California court.

While it’s encouraging news if you’re a VeriSign shareholder, the Coalition for ICANN Transparency, which filed the suit, will be allowed to amend and re-file its complaint.

The basis for the dismissal (pdf) goes to the central irony of CFIT – the fact that, despite its noble name, it’s not itself a particularly transparent organization.

CFIT was set up in 2005 in order to sue ICANN and VeriSign over their deal that gave VeriSign the right to raise the price of .com and .net domains, and to keep its registry contracts on favorable terms.

While it was cagey about who was backing the organization, those of us who attended the ICANN meeting in Vancouver that year knew from the off it was primarily a front for Momentous.ca, owner of Pool.com and other domainer services.

In dismissing the case last Friday, Judge Ronald Whyte decided that CFIT’s membership is vague enough to raise a question over its standing to sue on antitrust grounds. He wrote:

By failing to identify its purported members, CFIT has made it impossible to determine whether the members are participants in the alleged relevant markets, or whether they have suffered antitrust injury. Because the [Third Amended Complaint] identifies no members of CFIT, it must be dismissed.

While CFIT had disclosed some time ago Pool.com’s involvement, it recently tried to add uber-domainer Frank Schilling’s Name Administration Inc and iRegistry Corp to the list of its financial supporters.

But Whyte was not convinced that the two companies were CFIT “members” with standing to sue.

Whyte decided that CFIT’s complaint, “fatally fails to allege facts showing that iRegistry or Name Administration were financial supporters or members at the time the complaint was filed”.

He also denied CFIT’s demand for a jury trial.

CFIT wants VeriSign to return all the excess profits it has made on .com registrations since it started raising its prices above $6.

If CFIT were to win, it would severely curtail VeriSign’s ability to grow its registry business, and could lead to billions being wiped off its accounts.

The organization has been given leave to file a fourth amended complaint, so it’s not over yet.

VeriSign antitrust case heading to District Court

Kevin Murphy, August 28, 2010, Domain Registries

The Coalition For ICANN Transparency will have its day in court, after VeriSign this week asked for a “speedy resolution” to the five-year-old antitrust case.

In a filing (pdf) with the Northern California District Court on Wednesday and in an accompanying SEC document, the company said it want it wants the case heard on its merits.

According to CFIT lawyer Bret Fausett, VeriSign had the option to refer the case to the Supreme Court after losing a motion to dismiss on appeal last month.

VeriSign had until October 9 to make its mind up, but evidently did not need that long.

This is the meat of the motion:

On July 9, 2010, the United States Court of Appeals for the Ninth Circuit issued an amended opinion in this case and remanded the case to this Court “for further proceedings consistent with this opinion.” The Ninth Circuit spread the mandate on July 19. VeriSign, Inc. respectfully requests that the Court schedule a case management conference at its earliest convenience to discuss plans for a speedy resolution to the case.

The case is important because if VeriSign loses it could lead to the company losing its lucrative monopoly on the .com and .net registries.

While it wants a speedy resolution, analysts are not so hopeful. JP Morgan believes: “All together, the motions in the trial, discovery, trial, and potential appeal could take years to complete.”

The analyst also notes that pretrial discovery will likely lead to a definitive answer to the question: who the hell is CFIT anyway?

VeriSign may settle CFIT lawsuit

Kevin Murphy, August 4, 2010, Domain Registries

VeriSign’s chief executive has not ruled out settling its potentially damaging lawsuit with the Coalition For ICANN Transparency out of court.

During the company’s second quarter earnings call earlier this week, Mark McLaughlin was asked whether there was a way the lawsuit could be made to go away, settling investor nerves.

His response: “It is an option that could be pursued.”

CFIT, backed by Momentous.ca, claims that VeriSign’s .com and .net no-bid contracts with ICANN, including the price increases they allow, are anti-competitive.

If VeriSign loses the case, it could face the loss of its .com and .net monopolies, which makes me think it will certainly seek to settle the case before that becomes a risk.

VeriSign currently has to decide whether to request a review at the Supreme Court, or go to the District Court for trial. It has until October 7 to make its call.

Also during Monday’s earnings call, McLaughlin addressed the growth opportunities VeriSign is looking at, following its renewed focus on the domain name business.

Asked whether the introduction of new TLDs would affect .com and .net growth, McLaughlin said:

I think it’s positive… just related to .com and .net, with the introduction of new TLDs there’s an expectation it just brings more people to the market and we generally do better when more people show up to the market. And the second thing, we intend to participate in some of those ourselves, so we see growth opportunities for us.

He also confirmed again that VeriSign will seek to launch non-ASCII internationalized versions of its existing TLD base, which includes .com, .net, tv and .name.

As Andrew Allemann noted yesterday, he also declared the pay-per-click-based speculative registration market essentially “dead”.

VeriSign antitrust claims will be heard in court

VeriSign has suffered another legal setback in its antitrust court battle with the Coalition For ICANN Transparency, after an appeals court ruled that CFIT has a case to be heard.

CFIT reckons VeriSign’s deal with ICANN to run the .com registry, which has a presumptive right of renewal and allows annual price increases, breaks US competition law.

Its complaint had been thrown out of court, but was restored on appeal last year. Today, VeriSign’s request for a rehearing was rejected, meaning the case is cleared for trial.

CFIT counsel Bret Fausett tweeted this evening that it will head either back to the District Court, or to the Supreme Court.

The news couldn’t come at a worse time for VeriSign.

The company has spent the last couple of years getting out of most of its non-domain markets, epitomized by the recent sale of its SSL unit to Symantec, so it is ultra-exposed to risk and uncertainty in its highly lucrative .com business.

For that reason, I doubt this case will ever see trial. We’re looking at a settlement, most likely. VeriSign’s probably going to have to break out the check-book.

CFIT is basically a front operation for Momentous.ca, owner of aftermarket player Pool.com.

Remember CFIT? Buy its domain for $250

Kevin Murphy, April 29, 2010, Domain Sales

Remember CFIT? The Coalition For ICANN Transparency is an ironically opaque organization created and backed by Momentous.ca, owner of Pool.com.

It emerged in 2005 to sue ICANN and VeriSign on antitrust grounds, around the same time as they were negotiating .com price increases.

I’d almost forgotten CFIT existed, until CEO Mark McLaughlin mentioned it on VeriSign’s Q1 earnings conference call last night.

The antitrust lawsuit is still pending, after CFIT won an appeal last June. Tenacious organization indeed.

Its domain name did not have the same longevity, however.

CFIT.info now belongs to a domainer, who appears to have picked it up last December. I offered him twenty bucks for it today and he countered with a $250 offer, which is a bit rich for me.

Whatever PageRank it accrued from all its press coverage appears to have dried up, and its parking page is not especially inspiring.

Any takers?