One of the biggest porn companies in the world has filed an antitrust lawsuit against ICANN and ICM Registry over the introduction of the .xxx top-level domain.
Luxembourg-based Manwin Licensing and California-based Digital Playground allege “monopolistic conduct, price gouging, and anti-competitive and unfair practices”.
Manwin runs YouPorn, Brazzers and, under license, several Playboy-branded web sites, while Digital Playground is among the largest porn production companies in the world.
Together they are demanding an injunction on .xxx altogether, for ICANN to be forced to impose price constraints on ICM, and to open up the .xxx contract for competitive rebidding.
The complaint, apparently filed in California today, essentially alleges that everything ICM has done to date, from its application with ICANN to its sunrise period policies, is wrong and bad.
It claims ICM’s sunrise period amounted to extortion and that ICANN willfully created a monopoly by agreeing to a registry contract with presumptive renewal but no price caps.
ICM, the complaint says, reacted to the approval of .xxx earlier this year “with the anti-competitive behavior expected of a monopolist”.
It has, for example, improperly exploited the newly created market for .XXX defensive registrations by making such registrations unreasonably expensive and difficult, and by placing onerous burdens on parties seeking to protect their intellectual property rights.
Manwin claims that the recently ended sunrise period, which saw over 80,000 defensive registrations, was priced too high given that ICM handed out free domain blocks to thousands of celebrities.
It also claims that ICM should have enabled companies to defensively block typos of their trademarks, and that porn companies without trademarks should have been able to block their brands.
It takes ICANN to task for not operating a competitive bidding process for .xxx, and claims ICM used “misleading predatory conduct and aggressive litigation tactics” to push through its approval.
I’m not a lawyer, but often antitrust cases swing on the way the court decides to define the relevant “market”.
Manwin claims .xxx is the market, whereas it could be argued that because porn sites are free to use .com or almost any other TLD, that the domain industry as a whole is the market.
The complaint states:
The market for blocking services or defensive registrations in the .XXX TLD is a distinct and separate market in part because there is no reasonable substitute for such registrations. For example, blocking or preventing others’ use of names in a non-.XXX TLD is not such a substitute. Blocking use of a name in a non-.XXX TLD does not prevent use of the name in the .XXX TLD.
ICM has a complete monopoly in the market for the sale of .XXX TLD blocking or defensive registration services through registrars.
I’m not sure if my legal thinking holds water, but this sounds rather like arguing that BMW has a monopoly on making BMWs or Coca-Cola has a monopoly on Cherry Coke.
But Manwin says that .xxx is the only porn gTLD and ICANN has basically ruled out the creation of any future porn-centric TLDs with clauses in ICM’s registry contract.
It also notes that .sex and .porn would be unlikely to be approved in the next round of new gTLDs due to the restrictions on controversial strings imposed by the Governmental Advisory Committee.
ICM president Stuart Lawley said in a statement:
The claims are baseless and without merit and will be defended vigorously. They also show an apparent lack of understanding of the ICANN process and the rigorous battle we went through with ICANN over eight years in full public scrutiny to gain approval.
The .xxx story really is the gift that keeps on giving.
ICM Registry president Stuart Lawley has stepped down as chairman of IFFOR, the sponsoring organization for .xxx, after ongoing criticism over potential conflicts of interest.
He will be replaced by Clyde Beattie, a former chair of .ca manager CIRA, who was already on IFFOR’s governing board of directors.
IFFOR, the International Foundation For Online Responsibility, was set up by ICM to act as the “sponsoring organization” required by ICANN’s 2004 new gTLD process.
The organization is supposed to be independent, consisting of a policy-creation committee overseen by a three-person board of directors.
However, it has come in for frequent criticism from the porn industry, notably the Free Speech Coalition, over the perception that it is basically an ICM puppet.
While the Policy Council has five out of nine members drawn from the porn industry, the FSC has often accused Lawley of having a “veto” on IFFOR’s decisions, which he has denied.
“Even though the bylaws ensured separation, the optics weren’t ideal,” said Lawley.
However, while Beattie takes over his role, Lawley’s empty seat on the IFFOR board will be filled by ICM general counsel Sheri Falco.
ICM still has a vote, in other words, but not the chair.
The third board member is Sebastien Bachollet, CEO of BBS Consulting. Bachollet also sits on ICANN’s board of directors as a representative of At-Large community.
The landrush phase for ICM Registry’s .xxx domain is scheduled to begin today, following the oversubscribed sunrise period that closed last week.
Given the inherently defensive nature of sunrise periods – most of the almost 80,000 applications were for non-resolving domains – landrush is the first big test of public demand for working .xxx names.
I expect healthy interest from domainers, despite the relatively high price of landrush registrations.
High-profile investors including Frank Schilling and Mike Berkens have already invested seven figures in .xxx via its Founders Program, which may set the tone for the rest of the community.
The landrush period runs until November 25. Contested domains will go to auction in December. General availability is currently scheduled to begin December 7.
Domain Name Wire has compiled a handy guide to the best-priced landrush registrars.
ICM Registry has apparently delayed the results of its just-closed .xxx sunrise period until December to give it a chance to clear its backlog of unverified applications.
Corporation Services Company, a major brand-protection registrar, is reporting tonight that ICM and its validation firm, IProta, does not expect to finish validating trademark claims until November 28.
That’s a week later than ICM had planned to kick off the auction phase of the sunrise period, during which contested domains will be awarded to the highest bidder.
“The results of the applications that were submitted during the Sunrise phase will therefore not be available until the first week of December,” CSC said on its blog.
ICM announced yesterday that it has received almost 80,000 sunrise applications from trademark owners and porn companies seeking .xxx domains to match their .coms.
Almost half of those applications were filed during the last week of sunrise. Each trademark claim needs to be individually validated against government databases by IProta.
The plan, according to ICM’s web site, was to start auctioning contested sunrise domains November 21 and to take .xxx into general availability December 6.
Landrush kicks off next Tuesday, running for 17 days. Landrush auctions are scheduled to commence December 12, according to ICM’s web site.
ICM Registry, which has evidently seen a last-minute rush of defensive registration applications this week, has extended its sunrise period until Monday.
It had been due to end at 4pm UTC today.
The company just issued this statement:
Due to unprecedented demand in the last week and following several requests from major registrars for more processing time for their backlogs, ICM Registry has extended the Sunrise A and Sunrise B registration periods for an additional three days to conclude Monday, October 31, 2011 at 16:00 UTC (Noon ET). This extension provides prospective registrants valuable time to secure their domains and protect their brands.
Sunrise A is for people in the porn business, B is the “block” for companies outside the “biz” that want to make sure their brands do not become associated with porn.
Guess which has been most popular. (It’s B.)
ICM originally said it expected 10,000 sunrise registrations, but it blew through that estimate weeks ago. The last published count was 42,000, on Monday, with “thousands” coming in daily,
If it hits 70,000 by Monday I will not be surprised.