New gTLDs not an illegal conspiracy, court rules

ICANN has beaten off a lawsuit from alternate root provider name.space for a second time, with a US appeals court ruling that the new gTLD program was not an illegal conspiracy.
name.space sued ICANN in 2012, claiming that the program broke competition laws and that “conflicted” ICANN directors conspired with the industry in an “attack” on its business model.
The company runs an alternate DNS root containing hundreds of TLDs that hardly anyone knows about, cares about, or has access to.
Almost 200 of the strings in its system had matching applications in the 2012 new gTLD round; many have since been delegated.
The company’s complaint asked for an injunction against all 189 matching TLDs.
But a court ruled against it in 2013, saying that name.space had failed to make a case for breaches of antitrust law.
Last week, an appeals court upheld that ruling, saying that the company had basically failed to cross the legal threshold from simply making wild allegations to showing evidence of an illegal conspiracy.
“We cannot… infer an anticompetitive agreement when factual allegations ‘just as easily suggest rational, legal business behavior.’,” the court ruled, citing precedent.
“Here, ICANN’s decision-making was fully consistent with its agreement with the DOC [US Department of Commerce] to operate the DNS and the Root,” it wrote. “In transferring control to ICANN, the DOC specifically required it to coordinate the introduction of new TLDs onto the Root. This is exactly what ICANN did in the 2012 Application Round”.
“The 2012 rules and procedures were facially neutral, and there are no allegations that the selection process was rigged,” the panel ruled.
The court further ruled that ICANN is not a competitor in the markets for domain names as registry, registrar or defensive registration services, therefore it could not be subject to antitrust claims for those markets.
A few other claims against ICANN were also dismissed.
In short, it’s a pretty decisive victory for ICANN. General counsel John Jeffrey said in a statement that ICANN is “pleased” to have won.
All the major documents in the case, including the latest opinion, can be downloaded here.
While the lawsuit has been making its way through the courts, the .space gTLD has actually been delegated and the domain name.space is owned by its new registry, Radix.
There’s some salt in the wounds.

.web lawsuit thrown out of court, “too generic” to be a trademark

A California lawsuit that threatened to scupper all seven applications for the .web new gTLD has been thrown out.
The judge in Image Online Design v ICANN yesterday granted ICANN’s motion to dismiss the case, saying that IOD had no claim for breach of contract and, significantly, that “.web” is too generic to be a trademark.
Here’s the money quote:

This court agrees with ICANN that the mark .WEB used in relation to Internet registry services is generic and cannot enjoy trademark protection.

IOD applied for .web during ICANN’s proof-of-concept new gTLD round in 2000, but was not approved.
It sued ICANN last October, claiming breach of contract and trademark infringement and interference with its business.
The company has been running .web in an alternate DNS root, where hardly anyone uses it, since the 1990s.
Unfortunately for IOD, when it applied in 2000 it signed a document releasing ICANN from all legal liability in relation to the application, so the judge yesterday ruled that it could not sue for breach of contract.
The court also upheld the longstanding position of the US courts that top-level domains cannot be trademarks.
The US Patent & Trademark Office is of the view that TLDs do not indicate the source of goods or services; only the second-level domain does.
IOD had argued in court that, with the imminent introduction of dot-brands, the USPTO expects to modify its position. The judge in this case, Dean Pregerson, agreed in part, stating:

For instance, if ICANN were to introduce the TLD .APPLE, the user would arguably expect that that TLD is administered by Apple Inc. In such a case, the TLD might be considered a source indicator. If Sony tried to administer the TLD .APPLE, Apple Inc. would likely argue and possibly prevail on a trademark infringement claim.
This said, it appears to the court that today only the most famous of marks could have a source indicating function as a TLD. Some marks, such as .WEB, might remain generic even if they were famous, since .WEB in connection with registry services for the World Wide Web appears to refer to the service offered, rather than to only a particular producer’s registry service.
…
the mark .WEB is not protectable under traditional trademark analysis because it “seems to represent a genus of a type of website” and thus answers the question “What are you?” rather than “Who vouches for you?”

IOD’s other claims were also thrown out. Read the court’s order here.
The ruling means that a similar lawsuit filed by fellow 2000-round new gTLD applicant Name.Space, which is looking for an injunction against 189 gTLD applications, may be on shaky ground too.

Company files for injunction against 189 new gTLDs

Alternate root player Name.Space has sued ICANN for trademark infringement and anti-competitive behavior, saying “insiders” have conspired to keep it out of the new gTLD program.
If successful, the suit would prevent dozens of new gTLD applicants from having their applications approved.
The lawsuit, filed in California this week, follows a warning the company fired at ICANN this March.
While only ICANN is named as a defendant, the suit alleges that the new gTLD program was crafted by and is dominated by “ICANN insiders” and “industry titans”.
It wants an injunction preventing ICANN delegating any of the 189 gTLD strings that it claims it has rights to.
It also fingers several current and former ICANN directors, including current and former chairs Steve Crocker and Peter Dengate Thrush, over their alleged conflicts of interest.
Name.Space has been operating 482 diverse TLDs — such as .news, .sucks, and .mail — in a lightly used alternate root system since 1996.
Most people can’t access these zones and are unaware that they exist.
The company applied to have 118 of these strings added to the root in ICANN’s “proof of concept” gTLD expansion in 2000, when the application fee was $50,000, but was unsuccessful.
Now, the company claims the new gTLD program is “an attack on name.space’s business model and a mean by which to create and maintain market power in the TLD markets”.
The complaint (pdf) states:

Rather than adopting a procedure to account for the pending 2000 Application and facilitate the expansion of TLD providers in the DNS, ICANN has adopted a procedure so complex and expensive that it once again effectively prohibited newcomers from competing. It instead has permitted participation solely by ICANN insiders and industry titans.

If it had applied for all 118 again in this year’s round, it would have cost almost $22 million (though it would have qualified for an $83,000 discount on a single bid).
Name.Space is asking for damages and an injunction preventing ICANN from approving 189 gTLDs that match those it currently operates in its alternate root.
The full list of affected applications is attached to the complaint.

Company claims ownership of 482 new gTLDs

A small New York company has warned new gTLD applicants that it owns 482 top-level domain strings and that ICANN has “no authority” to award them to anybody else.
Name.Space claims it has ownership rights to potentially valuable gTLDs including several likely to be applied for by others, such as .shop, .nyc, .sex, .hotel and .green.
It’s been operating hundreds of “gTLDs” in a lightly-used alternate DNS root system since 1996.
Now the company has filed for trademark protection for several of these strings and has said that it will apply for several through the ICANN new gTLD program.
But Name.Space, which says it has just “tens of thousands” of domain registrations in its alternate root, is also claiming that it already owns all 482 strings in the ICANN root too.
“What we did is put them on notice that they cannot give any of these 482 names to anyone else,” CEO Alex Mashinsky told DomainIncite. “These names predate ICANN. They don’t have authority under US law to issue these gTLDs to third parties.”
“We’re putting out there the 482 names to make sure other people don’t risk their money applying for things ICANN cannot legally give them,” he added.
I could not find a comprehensive list of all 482 strings, but Name.Space publishes a subset here. Read the company’s full list here (pdf).
It’s a slightly ridiculous position. Anyone can set up an alternative DNS root, fill it with dictionary words and start selling names – the question is whether anyone actually uses it.
However, putting that aside, Name.Space may have a legitimate quarrel with ICANN anyway.
It applied for a whopping 118 gTLDs in ICANN’s initial “test-bed” round in 2000, which produced the likes of .biz, .info, .name and .museum.
While ICANN did not select any of Name.Space’s proposed names for delegation, it did not “reject” its application outright either.
This is going to cause problems. Name.Space is not the only unsuccessful 2000 applicant that remains pissed off 12 years later that ICANN has not closed the book on its application.
Image Online Design, an alternate root provider and 2000 applicant, has a claim to .web that is likely to emerge as an issue for other applicants after the May 2 reveal date.
These unsuccessful candidates are unhappy that they’ve been repeatedly told that their old applications were not rejected, and with the privileges ICANN has given them in the current Applicant Guidebook.
ICANN will give any unsuccessful bidder from the 2000 round an $86,000 discount on its application fees, provided they apply for the same string they applied for the first time.
However, like any other applicant this time around, they also have to sign away their rights to sue.
And the $86,000 discount is only redeemable against one gTLD application, not 118.
“We applied for 118 and we would like to get the whole 118,” said Mashinsky.
ICANN is not going to give Name.Space what it wants, of course, so it’s not clear how this is going to play out.
The company could file Legal Rights Objections against applications for strings it thinks it owns, or it could take matters further.
While the company is not yet making legal threats, any applicants for gTLDs on Name.Space’s list should be aware that they do have an additional risk factor to take into account.
“We hope we can resolve all of this amicably,” said Mashinsky. “We’re not trying to throw a monkey wrench into the process.”