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Verisign sues .xyz and Negari for “false advertising”

Kevin Murphy, February 24, 2015, Domain Registries

Handbags at dawn!

Verisign, the $7.5 billion .com domain gorilla, has sued upstart XYZ.com and CEO Daniel Negari for disparaging .com and allegedly misrepresenting how well .xyz is doing.

It’s the biggest legacy gTLD versus the biggest (allegedly) new gTLD.

The lawsuit focuses on some registrars’ habit of giving .xyz names to registrants of .com and other domains without their consent, enabling XYZ.com and Negari to use inflated numbers as a marketing tool.

The Lanham Act false advertising lawsuit was filed in Virginia last December, but I don’t believe it’s been reported before now.

Verisign’s beef is first with this video, which is published on the front page of xyz.com:

Verisign said that the claim that it’s “impossible” to find a .com domain (which isn’t quite what the ad says) is false.

The complaint goes on to say that interviews Negari did with NPR and VentureBeat last year have been twisted to characterize .xyz as “the next .com”, whereas neither outlet made such an endorsement. It states:

XYZ’s promotional statements, when viewed together and in context, reflect a strategy to create a deceptive message to the public that companies and individuals cannot get the .COM domain names they want from Verisign, and that XYZ is quickly becoming the preferred alternative.

As regular readers will be aware, .xyz’s zone file, which had almost 785,000 names in it yesterday, has been massively inflated by a campaign last year by Network Solutions to push free .xyz domains into customers’ accounts without their consent.

It turns out Verisign became the unwilling recipient of gtld-servers.xyz, due to it owning the equivalent .com.

According to Verisign, Negari has used these inflated numbers to falsely make it look like .xyz is a viable and thriving alternative to .com. The company claims:

Verisign is being injured as a result of XYZ and Negari’s false and/or misleading statements of fact including because XYZ and Negari’s statements undermine the equity and good will Verisign has developed in the .COM registry.

XYZ and Negari should be ordered to disgorge their profits and other ill-gotten gains received as a result of this deception on the consuming public.

The complaint makes reference to typosquatting lawsuits Negari’s old company, Cyber2Media, settled with Facebook and Goodwill Industries a few years ago, presumably just in order to frame Negari as a bad guy.

Verisign wants not only for XYZ to pay up, but also for the court to force the company to disclose its robo-registration numbers whenever it makes a claim about how successful .xyz is.

XYZ denies everything. Answering Verisign’s complaint in January, it also makes nine affirmative defenses citing among other things its first amendment rights and Verisign’s “unclean hands”.

While many of Verisign’s allegations appear to be factually true, I of course cannot comment on whether its legal case holds water.

But I do think the lawsuit makes the company looks rather petty — a former monopolist running to the courts on trivial grounds as soon as it sees a little competition.

I also wonder how the company is going to demonstrate harm, given that by its own admission .com continues to sell millions of new domains every quarter.

But the lesson here is for all new gTLD registries — if you’re going to compare yourselves to .com, you might want to get your facts straight first if you want to keep your legal fees down.

And perhaps that’s the point.

Read the complaint here and the answer here, both in PDF format.

New gTLD registries increasingly attacking .com

Kevin Murphy, August 18, 2014, Domain Registries

Is .com “silly” and “meaningless”?

That’s what some new gTLD registries would have you believe.

In separate blog posts over the last week, Donuts and ARI Registry Services have gone on the offensive, dismissing .com as an irrelevant relic of a bygone age.

ARI CEO Adrian Kinderis branded .com as “meaningless and unintuitive” in a post slamming the Board of Racing Victoria, an Australian horse-racing organization, for the purchase of racing.com for (he claimed) $500,000.

New gTLDs with more semantic relevance to horse racing or geographic regions will make this purchase look “silly” in future, he said.

Take for instance .racing which is set to launch soon. It would offer a more creative and relevant domain name such as horses.racing, victorian.racing or vichorses.racing.

He also said that most Australians are conditioned to visit .com.au (for which ARI provides the registry back-end), which will lead to traffic leakage from racing.com to racing.com.au.

The problem is that racing.com does not have an intrinsic connection with Victorian horse racing that would lend itself to intuitive navigation and recall.

Donuts had a similar message in a blog post last week.

Donuts vice president Mason Cole said on that company’s blog that .com is “diluted and meaningless” when compared to more vertically oriented TLDs such as Donuts’ .photography and .bike.

It adds nothing to an identity. Except perhaps to say, “I’m on the Internet somewhere.” .COM is “1999” — not “today,” and definitely not the future. New .COM registrations are extraordinarily long and much less meaningful when compared to a new registration in a new gTLD. And with its recent price decreases on new registrations (which apparently is necessary to match their low quality), .COM now means “low quality and cheap.”

It will be interesting to see whether this kind of messaging will be carried over from lightly trafficked corporate blogs into more mainstream new gTLD marketing by registries.

What do you think? Do Donuts and ARI have a point? Is .com meaningless? Will it fall out of fashion? Is going negative on legacy gTLDs a wise strategy for new gTLD companies?

Reported mass exodus from .com explained

Kevin Murphy, August 15, 2014, Domain Registries

Did Verisign suffer from a massive 2,600% increase in the number of deleted .com domain names this April?

Not quite, although the bizarre spike in deletes may have highlighted an area where the company was previously out of compliance with its ICANN Registry Agreements.

April’s .com registry report, filed with ICANN and published last week, shows 2.4 million domains were deleted, compared to just 108,000 in March and 90,000 in April 2013.

The spike looks surprising, and you may be tempted to think it is in some way related to the arrival of new gTLDs.

But look again. Could .com, a registry with over 116 million domains under management, really only see roughly 100,000 deletes every month? Clearly that number is far too low.

So what’s going on? I asked Verisign.

The company said that it has implemented “voluntary” changes to its reporting of deleted domains, based on the standard new gTLD Registry Agreement, which specifies what must be reported by new gTLD registries.

It said:

Prior to the April 2014 monthly reports, and per the ICANN gTLD registry reporting guidelines, Verisign reported on only deleted domains outside of any grace period.

There are five “grace periods” permitted by ICANN contracts: the Add Grace Period, Renew/Extend Grace Period, Auto-Renew Grace Period, Transfer Grace Period, and Redemption Grace Period.

The familiar Add Grace Period allows registrars to cancel registrations within a week of registration if the registrant made a typo, for example, and asked for a refund.

The Redemption Grace Period covers domains that have expired and do not resolve, but can still be restored for 30 days at the request of the registrant.

According to Verisign, before April, domains that were deleted outside of any of the five grace periods were reported as “deleted-domains-nograce”.

From April, the company is reporting domains only as “deleted-domains-nograce” if they delete outside of the Add Grace Period.

According to my reading of the .com contract, that’s what Verisign should have been doing all along.

The contract, which Verisign and ICANN signed in late 2012, defines “deleted-domains-nograce” only as “domains deleted outside the add grace period”. There’s no mention of other grace periods.

The same definition can be found in the 2006 contract.

It appears to me that Verisign may have been under-reporting its deletes for quite some time.

Verisign said in response that it does not believe it has a compliance issue. A spokesperson said: “[We] voluntarily updated our reporting of deleting domain names so that our reporting is aligned with ICANN’s reporting clarifications for the new gTLDs.”

ICANN reveals gTLD objections appeals process

Kevin Murphy, February 12, 2014, Domain Policy

Two new gTLD applicants would get the opportunity to formally appeal String Confusion Objection decisions that went against them, under plans laid out by ICANN today.

DERCars and United TLD (Rightside), which lost SCOs for their .cars and .cam applications respectively, would be the only parties able to appeal “inconsistent” objection rulings.

DERCars was told that its .cars was too similar to Google’s .car, forcing the two bids into a contention set. But Google lost similar SCO cases against two other .cars applicants.

Likewise, Rightside’s .cam application was killed off by a Verisign SCO that stated .cam and .com were too similar, despite two other .cam applicants prevailing in virtually identical cases.

Now ICANN plans to give both losing applicants the right to appeal these decisions to a three-person panel of “Last Resort” operated by the International Centre for Dispute Resolution.

ICDR was the body overseeing the original SCO process too.

Notably, ICANN’s new plan would not give Verisign and Google the right to appeal the two .cars/.cam cases they lost.

Only the applicant for the application that was objected to in the underlying SCO and lost (“Losing Applicant”) would have the option of whether to have the Expert Determination from that SCO reviewed.

There seems to be a presumption by ICANN already that what you might call the “minority” decision — ie, the one decision that disagreed with the other two — was the inconsistent one.

I wonder if that’s fair on Verisign.

Verisign lost two .cam SCO cases but won one, and only the one it won is open for appeal. But the two cases it lost were both decided by the same ICDR panelist, Murray Lorne Smith, on the same grounds. The decisions on .cam were really more 50-50 than they look.

According to the ICANN plan, there are two ways an appeal could go: the panel could decide that the original ruling should be reversed, or not. The standard of the review is:

Could the Expert Panel have reasonably come to the decision reached on the underlying SCO through an appropriate application of the standard of review as set forth in the Applicant Guidebook and procedural rules?

The appeals panelists would basically be asked to decide whether the original panelists are competent or not.

If the rulings were not reversed, the inconsistency would remain in place, making the contention sets for .car, .cars and .cam stay rather confusing.

ICANN said it would pay the appeals panel’s costs.

The plan (pdf) is now open for public comment.

Famous Four says that Demand Media’s .cam should be rejected

Kevin Murphy, September 6, 2013, Domain Policy

Demand Media’s application for .cam should be rejected because it lost a String Confusion Objection filed by .com registry Verisign, according to rival applicant Famous Four Media.

“The process in the applicant guidebook is now clear: AC Webconnecting and dot Agency Limited proceed to resolve the contention set, and United TLD’s application cannot proceed,” chief legal officer Peter Young told DI.

dot Agency is Famous Four’s applicant for .cam, which along with AC Webconnecting survived identical challenges filed by Verisign. United TLD is the applicant subsidiary of Demand Media.

Serious questions were raised about the SCO process after two International Centre for Dispute Resolution panelists reached opposition conclusions in the three .cam/.com cases last month.

Demand Media subsequently called for an ICANN investigation into the process, with vice president Statton Hammock writing:

String confusion objections are meant to be applicant agnostic and have nothing to do with the registration or use of the new gTLD.

However, Famous Four thinks it has found a gotcha in a letter (pdf) written by a lawyer representing Demand which opposed consolidation of the three .cam cases, which stated:

Consolidation has the potential to prejudice the Applicants if all Applicants’ arguments are evaluated collectively, without regard to each Applicant’s unique plan for the .cam gTLD and their arguments articulating why such plans would not cause confusion.

In other words, Demand argued that the proposed usage of the TLD should be taken into account before the ICDR panel ruled against it, and now it saying usage should not have been taken into account.

Famous Four’s Young said:

Whether or not one ascribes to the view that usage should not be taken into account, and we believe that it should (otherwise we would not have argued it), the fact is that United TLD were very explicit prior to the publication that usage should indeed be taken into account.

The SCO debate expanded yesterday when the GNSO Council spent some time discussing .cam and other SCO discrepancies during its regular monthly meeting.

Concerns are such that the Council intends to inform the ICANN board of directors and its New gTLD Program Committee that it is looking into the issue.

The NGPC, has “Update on String Similarity” on its agenda for a meeting on Tuesday, which will no doubt try to figure out what, if anything, needs to be done.