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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.

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.

YouPorn’s .xxx settlement talks extended

YouPorn owner Manwin, .xxx manager ICM Registry and ICANN have asked a California court for a few more weeks to settle Manwin’s antitrust lawsuit.

According to a court filing yesterday, the three want to extend ICANN and ICM’s window to respond to Manwin’s complaint extended from April 17. The submission reads:

The parties’ settlement discussions have not yet finished. In order to complete those discussions, the parties stipulate to extend, by an additional about three weeks until May 8, 2012, the deadline for Defendants to respond to Plaintiffs’ First Amended Complaint.

By May 8 the world is going to know whether ICM and/or Manwin have applied to ICANN for other adult-oriented gTLDs (.sex, .porn, etc), which could change the picture considerably.

Manwin sued ICANN and ICM in November, alleging that they colluded on .xxx to deliver “monopolistic conduct, price gouging, and anti-competitive and unfair practices”.

ICM and ICANN have denied the allegations.

ICM and YouPorn in antitrust settlement talks

Kevin Murphy, February 14, 2012, Domain Registries

It’s Valentine’s Day, so perhaps it’s appropriate that ICM Registry has just revealed that it’s in talks to settle the .xxx antitrust lawsuit filed by one of the world’s biggest porn networks.

ICM and Manwin Licensing may soon resolve the case, which Manwin filed in November over the “extortion” it saw in the launch of the .xxx top-level domain, according to court documents.

In a joint filing, Manwin and ICM, along with ICANN and Digital Playground – the fellow plaintiff that Manwin has since acquired – said:

in recent days, Plaintiffs and ICM have engaged in discussions aimed at resolving the disputes that are the subject of this litigation.

The parties believe that additional time would potentially allow the parties to resolve all or some portion of their disputes.

The filing stipulates that Manwin has until this Friday to file an amended complaint and that ICANN and ICM should have 60 days after that to file their responses to the complaint.

That’s assuming that the suit isn’t completely settled in the meantime, of course.

The ICANN and ICM motions to dismiss filed in January have been taken off-calendar until Manwin amends its complaint.

I understand that ICANN also has secured a 60-day extension to its deadline to respond to the separate Manwin Independent Review Panel proceeding.

Manwin, which runs Brazzers, YouPorn and the Playboy-branded web sites, claimed in its complaint that the approval of .xxx in the absence of a competitive tender and its subsequent launch policies and pricing violated US antitrust laws.

ICANN and ICM claimed in their responses last month that the company was just scared of a little competition.

YouPorn owner acquires fellow .xxx plaintiff

Kevin Murphy, January 18, 2012, Domain Registries

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.

While Digital Playground was named as a plaintiff on the .xxx lawsuit, Manwin was clearly the lead. Manwin has also launched a solo Independent Review Process arbitration case against ICANN.

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.