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Patent troll hits registrars with $60m shakedown

Kevin Murphy, January 25, 2016, Domain Registrars

A patent troll that claims it invented email reminders has launched a shakedown campaign against registrars that could be worth as much as $62 million.

WhitServe LLC, which beat Go Daddy in a patent lawsuit last year, is now demanding licenses from registrars that could add as much as $0.50 to the cost of a domain name.

According to registrar sources, registrars on both sides of the Atlantic have this month been hit by demands for hundreds of thousands or millions of dollars in patent licensing fees.

The legal nastygrams present thinly veiled threats of litigation if the recipients decline to negotiate a license.

WhitServe is a Connecticut-based IP licensing firm with connections to NetDocket, which provides software for tracking patent license annuities.

It owns US patents 5,895,468 and 6,182,078, both of which date back to the late 1990s and cover “automating delivery of professional services”.

Basically, the company reckons it invented email reminders, such as those registrars send to registrants in the weeks leading up to their domain registration expiring.

Three years ago, GoDaddy, defending itself against WhitServe’s 2011 patent infringement lawsuit, compared the “inventions” to the concept putting “Don’t forget to pick up milk” notes on the fridge: utterly obvious and non-patentable.

In December 2012, GoDaddy implied WhitServe used its patent expertise and exploited a naive 1990s USPTO to obtain “over-broad” patents.

It was trying “to monopolize the entire concept of automatic Internet reminders across all industries, including domain name registrars”, according to a GoDaddy legal filing.

But the market-leading registrar somehow managed to lose the case, opting to settle last August after its last defense fell apart, for an undisclosed sum.

Now, WhitServe is using that victory to shake loose change out of the pockets of the rest of the market.

It’s told registrars that GoDaddy and Endurance International (owner of Domain.com, BigRock and others) are both currently licensing its patents.

The deal it is offering would see registrars pay $0.50 for every domain they have under management, a number that seems to be based on .com registry numbers reported by Verisign.

The fee would be reduced to $0.30 per name for each name over one million, and $0.20 for each name over five million, I gather. That’s still more than registrars pay in ICANN fees.

If WhitServe were to target every .com registrar (which I do not believe it has, yet) its demands could amount to as much as $62 million industry-wide, given that .com is approaching 125 million names right now.

It’s not clear whether these fees are expected to be one-time payments or recurring annual fees.

It’s a trickier predicament for registrars than the usual patent shakedown, because registrars are legally obliged under their contracts with ICANN to send email reminders in a variety of circumstances.

The Expired Registration Recovery Policy requires them to email renewal reminders to customers at least twice before their registrations expire.

There’s also the Whois Data Reminder Policy, which obliges registrars to have their customers check the accuracy of their Whois once a year.

These are not services registrars are simply able to turn off to avoid these patent litigation threats.

Whether registrars will take this lying down or attempt to fight it remains to be seen.