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ICM files $120m lawsuit over Manwin’s .xxx “boycott”

Kevin Murphy, October 1, 2012, Domain Registries

ICM Registry has counter-sued YouPorn owner Manwin Licensing, looking for at least $120 million in damages, saying the porn giant is using its market power to sideline the .xxx domain.

The company claims that Manwin’s antitrust lawsuit, filed last October, is merely one of several attacks against its business.

The counter-suit alleges that Manwin, after trying and failing to invest in ICM, illegally restrained trade by forcing its business partners not to do business with ICM.

The suit (pdf) reads:

Manwin has utilized its dominance in the adult entertainment industry to encourage the wholesale boycott of the .XXX TLD in the industry in order to destroy any competition tat may arise from the commercialization of .XXX and has secured agreement, either express or implied, by those within the industry that they will not do business with .XXX.

Manwin, for example, “coerced .XXX spokesmodels to end relationships with ICM” and “conditioned contracts with third parties on their non-involvement with the .XXX TLD”, according to ICM.

The counterclaims were filed in a California court on Friday, as the latest stage of the two companies’ ongoing legal battle.

The registry is looking for $40 million in damages for Sherman Act violations, trebled.

Manwin claims ICM and ICANN broke US competition law by setting up the .xxx “monopoly”, which both ICANN and ICM deny.

ICM hires Fausett to help with YouPorn antitrust case

Kevin Murphy, August 29, 2012, Domain Registries

ICM Registry has hired new lawyers to help it fend off the antitrust lawsuit filed against it by YouPorn owner Manwin Licensing.

Gordon & Rees senior partner Richard Sybert is taking over as lead counsel in the case, which relates to the launch of .xxx last year.

Notably, the new team includes long-time ICANN legal expert Bret Fausett of Internet.Pro, who represented the Coalition For ICANN Transparency in its antitrust case against ICANN and Verisign.

That’s a bit of a coup for ICM. Manwin’s recent legal arguments have relied heavily on the antitrust precedents Fausett helped set in the CFIT case.

Gordon & Rees replaces Wilmer Cutler Pickering Hale and Dorr as ICM’s outside counsel, due to the recent departure of Wilmerhale’s ICANN guru and ICM defender, Becky Burr.

Burr joined Neustar as its chief privacy officer in May.

Manwin sued ICM and ICANN last October, arguing that the launch of .xxx was little more than a shake-down.

Earlier this month, a California District Court judge ruled that ICANN is not immune from competition law and that the litigation can proceed.

The case will turn in part on the question of whether there’s a market for “defensive registrations” under competition law and whether ICANN and ICM illegally exploited it.

Court rules YouPorn can sue ICANN for alleged .xxx antitrust violations

Kevin Murphy, August 14, 2012, Domain Policy

A California court today ruled that ICANN is subject to US antitrust laws and therefore the lawsuit filed by YouPorn.com owner Manwin Licensing over the .xxx gTLD can proceed.

In a mixed ruling, the Central District of California District Court granted some parts of ICM Registry and ICANN’s motions to dismiss the case and rejected others.

Here’s what it had to say on the subject of antitrust law, which ICANN argued back in January did not apply to it because it “does not engage in trade or commerce”:

The Court finds the transactions between ICANN and ICM described in the First Amended Complaint are commercial transactions.

ICANN established the .XXX TLD. ICANN granted ICM the sole authority to operate the .XXX TLD. In return, ICM agreed to pay ICANN money.

This is “quintessential” commercial activity and it falls within the broad scope of the Sherman Act. Even aside from collecting fees from ICM under the contract, ICANN’s activities would subject it to the antitrust laws.

That’s a pretty definitive knock-back for ICANN’s ballsy opening manoeuvre.

The court is allowing Manwin’s claims against ICANN to proceed. Manwin has until September 9 to amend and re-file its complaint.

As you may recall, Manwin sued ICANN and ICM last November, alleging that they conspired to break competition law by, among other things, forcing companies to defensively register .xxx domains.

ICM and ICANN filed separate motions to dismiss the case on seven grounds, but according to today’s ruling only two of these requests were successful.

What strikes me as particularly interesting on a first read are the definitions of the relevant domain name markets.

Under the Sherman Act, antitrust allegations have to be based on a defined “market”. Manwin’s complaint was based on the markets for “defensive registrations” and “affirmative registrations”.

The court ruled today that the company failed make the case that “affirmative registrations” is a market — because Manwin is happily running hundreds of porn sites in .com:

The Court finds Plaintiffs have failed to adequately plead the affirmative registration market. Plaintiffs have not alleged why other currently operating TLDs are not reasonable substitutes to the .XXX TLD for hosting adult entertainment websites. To the contrary, Plaintiffs allege that Manwin’s own website YouPorn.com is the most popular free adult video website on the internet.

However, the court found that “defensive registrations” is a market for the purposes of this case.

I am not a lawyer, but my sense is that this (pdf) is important stuff.

Lawyers: do feel free to chip in in the comments or via email.

Christian group opposes .sex, .porn, .adult

Morality In Media, one of the groups that fought the approval of .xxx for years, has launched a letter-writing campaign against the proposed .sex, .porn and .adult top-level domains.

ICANN has received a couple dozen comments of objection to the three gTLDs over the last couple of days, apparently due to this call-to-arms.

Expect more. MIM was one of the main religion-based objectors to .xxx, responsible for crapflooding ICANN with thousands of comments in the years before the gTLD was approved.

Now that .xxx has turned out to be less successful than ICM Registry hoped, MIM feels its key belief on the subject — that porn gTLDs lead to more porn — has been vindicated.

MIM president Patrick Trueman wrote in one of his comments:

During the years of this fight against the .xxx domain, we said many times that the establishment of a .xxx domain would increase, not decrease the spread of pornography on the Internet, causing even more harm to children, families and communities, and make ICANN complicit in that harm.

That prediction has been fulfilled because the porn sites on the .com domain have not vacated the .com and moved to .xxx. Rather, as we have seen, the .xxx has just added thousand of additional porn sites on the Internet and .com porn sites stayed put. ICANN bears responsibility for this. The .xxx was not needed.

For some reason, the complaints are only leveled at the three ICM Registry subsidiaries that are applying for porn-themed gTLDs, and not the other .sex applicant.

Uniregistry’s application for .sexy has not been targeted.

And MIM has apparently not read the applications it is complaining about; its call to action complains about non-porn companies having to pay “protection money” to defensively register in .sex.

However, the three ICM bids explicitly contemplate an extensive grandfathering program under which all current defensive registrations in .xxx would be reserved in .sex, .porn and .adult.

YouPorn says ICANN not immune from .xxx antitrust

Kevin Murphy, June 9, 2012, Domain Policy

YouPorn owner Manwin Licensing has rejected ICANN’s claim to be immune from antitrust liability.

The company has told a California court that its lawsuit against ICANN and .xxx operator ICM Registry is little different from the landmark case Coalition For ICANN Transparency v Verisign.

Manwin sued ICANN and ICM last November, claiming the two illegally colluded to create a monopoly that, among other things, extorted defensive registration money from porn companies.

But ICANN has said in its attempts to have the case dismissed that the antitrust claims could not apply to it as, for one reason, it “does not engage in trade or commerce”.

Manwin’s oppositions to ICANN’s and ICM’s motions to dismiss rely heavily on the fact that the court allowed CFIT v Verisign, which challenged Verisign’s 2006 .com registry agreement, to go ahead.

Essentially, ICANN is trying to wriggle out of the suit on legal grounds at an early stage, but Manwin reckons there’s precedent for it to have to answer to antitrust claims.

You can read Manwin’s latest court filings here and here.

The case continues.