ICANN says it “does not engage in trade or commerce” and therefore US antitrust laws do not apply to its approval of the .xxx top-level domain, according to court documents.
The organization and .xxx operator ICM Registry yesterday submitted their coordinated responses to the antitrust lawsuit filed by YouPorn owner Manwin Licensing.
ICANN claims it cannot be held liable under antitrust law and ICM has accused Manwin of filing a nuisance lawsuit because it missed its opportunity to secure some premium .xxx domain names.
Manwin sued in November, alleging ICANN and ICM illegally colluded to deliver “monopolistic conduct, price gouging, and anti-competitive and unfair practices”.
The company, which runs the largest porn sites on the internet, claims ICANN should have opened the .xxx contract to competitive bidding and that ICM’s sunrise policies amounted to “extortion”.
It wants a California District Court to shut down .xxx entirely.
But ICANN has now argued that Manwin’s antitrust claims cannot possibly apply to it because it is a charitable, public-interest organization:
ICANN cannot, as a matter of law, be liable under the antitrust laws with respect to the conduct alleged in the Complaint because ICANN does not engage in “trade or commerce.”
[ICANN] does not sell Internet domain names, it does not register Internet domain names, and it certainly is not an Internet pornographer. ICANN does not make or sell anything, it does not participate in any market, and its Bylaws expressly forbid it from participating in any of the markets referenced in the Complaint.
Its motion to dismiss (pdf) goes on to say that the introduction of .xxx is actually pro-competition, and that Manwin only sued because it is scared of losing market share.
Plaintiffs claim to be upset with the manner in which ICM is operating the new .XXX registry, but since Plaintiffs already operate (by their own admission) some of the most successful pornographic websites on the Internet, websites that will continue to operate irrespective of anything ICM might do, what the Plaintiffs are really complaining of is the potential competition that their websites may face from the operation of .XXX.
ICM Registry makes similar arguments in its motion to dismiss (pdf):
what Plaintiffs are really complaining about is the fact that they lost the opportunity to purchase the least expensive defensive registry options offered by ICM because they missed the deadline
But ICM also says that the lawsuit falls foul California’s laws against so-called SLAPPs (“strategic lawsuits against public participation”), basically nuisance suits designed to suppress speech.
Manwin managing partner Fabian Thylmann offered to invest in ICM in July 2010, but Lawley declined, according to an ICM exhibit (pdf).
By October 2010 these offers had turned to legal threats, according to Dumas’ declaration:
Manwin saw the introduction of the .XXX sTLD as a threat to Manwin’s dominance over the adult Internet industry. At that time, Thylmann said that he would do whatever he could to stop .XXX. Specifically, Thylmann said that if ICANN approved the .XXX sTLD, Manwin would file a lawsuit against ICM to disrupt its ability to conduct business
Shortly after ICANN’s December 2010 meeting in Cartagena concluded with an ambiguous resolution on .xxx’s future, Thylmann rebuffed Dumas’ overtures about the .xxx Founders Program.
He predicted in an email to Dumas that ICANN’s Governmental Advisory Committee would force ICANN to reject .xxx, adding “the .xxx domain is useless even if it comes to market”, according to an ICM exhibit.
In September 2011, when the .xxx launch was already well underway, Manwin demanded thousands of free premium .xxx domains and a veto over some registry policies, according to Dumas:
Manwin demanded that ICM: allocate a minimum of several thousand .XXX domain names to Manwin free of charge; commit to prevent IFFOR from making any policies that ban or restrict the operation of user-generated content “tube” sites on .XXX domains; grant across-the-board discounts on all .XXX domain registrations; and allow Manwin to operate certain ‘premium’ or high value domain names, such as “tube.xxx,” through a revenue sharing arrangement between Manwin and ICM.
ICM says that these demands were accompanied by legal threats.
The lawsuit and Manwin’s boycott of companies using .xxx domains has harmed ICM’s business, according to the company’s court filings.
The case continues.
Twentieth Century Fox has withdrawn its cybersquatting complaint about the domain name foxstudios.xxx after the domain was transferred into its control.
As I reported on Tuesday, the UDRP case was a no-brainer. Fox Studios is Fox’s production subsidiary, and the owner of foxstudios.xxx had offered the domain for sale on eBay for a ludicrous $1.9 million.
This would have been more than enough to show bad faith.
The Whois record for the domain shows it is now owned by Fox, with an email address corresponding to an outside law firm. From here, it still resolves to a for-sale page, however.
Three more .xxx UDRP complaints have been filed this week, all by Turkish companies, bringing the total since December 29 to eight.
Manwin, the porn company currently suing ICANN and ICM Registry over the .xxx launch, has acquired co-plaintiff Digital Playground.
“To me this deal is no different than the acquisition of Pixar by Disney,” Digital Playground CEO Ali Joone said, according to Xbiz.
Terms of the deal were not disclosed.
The company is one of the biggest porn producers on the internet, owning YouPorn as well as managing Playboy’s web presence under license.
Manwin claims that ICM’s launch amounted to “extortion”, and that it gave away its lack of respect for the porn industry by selling premium names to domainers including Frank Schilling and Mike Berkens.
ICM’s response to the lawsuit is due later this week.
Those readers following @domainincite on Twitter may have noticed I spent a lot of time on Friday Googling for .xxx web sites, to get an idea how the new namespace is being used.
All in the name of research, of course.
I also found what I believe may be the first .xxx site set up for phishing.
The domain name signin.xxx, registered to an individual in Ohio, looks extremely suspicious, especially when you consider the subdomains the registrant has created.
Here’s a screenshot of the URL www.hotmail.com.signin.xxx:
I have no evidence that the site has been used in a phishing attack, or that the registrant intends to use it in one. However, it seems pretty clear that he’s noticed the potential for abuse.
The page’s footer offers to sell the domain for a seven-figure sum.
The Coalition Against Domain Name Abuse has asked ICANN to make one-time trademark blocks, much like those offered by .xxx operator ICM Registry, mandatory in most new top-level domains.
In a letter to ICANN bosses (pdf) sent last week, CADNA president Josh Bourne wrote:
ICANN should consider including a requirement in the Applicant Guidebook that all new gTLD registries that choose to sell second-level domains to registrants adopt a low-cost, one-time block for trademark owners to protect their marks in perpetuity.
ICANN should require registries to give brand owners the option to buy low-cost blocks on their trademarks before any registration period (Sunrise or Landrush) opens. This can be offered at a lower cost than sunrise registrations have been priced at in the past – this precedent has been set with the blocks offered in .XXX, where the blocks are made in perpetuity for a single, nonrecurring fee.
The recommendation is one of several. CADNA also reckons ICANN needs to name the date for its second round of new gTLD applications, and that “.brand” applicants should get discounts for multiple gTLD applications.
The letter comes as opposition to the new gTLD program in the US becomes deafening and ICANN’s board of directors have reportedly scheduled an impromptu meeting next week to determine whether the January 12 launch is still a good idea.
CADNA is no longer opposed to the program itself. Fairwinds Partners, the company that runs the lobbyist, recently restyled itself as a new gTLD consultancy.
But there’s a virtually zero chance the letter will come to anything, unless ICANN were to decide to open up the Applicant Guidebook for public comments again.
I also doubt the call for a mandatory ICM-style “block” service would be well-received by anyone other than ICANN’s intellectual property constituency.
The problem with such systems is that trademarks do not grant exclusive rights to strings, despite what some organizations would like to think.
It’s quite possible for ABC the taxi company to live alongside ABC television in the trademark world. Is it a good idea to allow the TV station to perpetually block abc.taxi from registration?
Some would say yes. The Better Business Bureau and Meetup.com, to name two examples, both recently went before Congress to bemoan the fact that they could not block bbb.xxx and meetup.xxx – both of which have meaning in the adult entertainment context and were reserved as premium names – using ICM’s Sunrise B.
With that all said, there’s nothing stopping new gTLD applicants from voluntarily offering .xxx-style blocking services, or indeed any form of novel IP rights protection mechanisms.
Some applicants may have even looked at the recent .xxx sunrise with envious eyes – with something like 80,000 defensive registrations at about $160 a pop, ICM made over $12 million in revenue and profit well into seven figures.