Lawsuit marches on, creating legal headaches for many of Verisign’s competitors.
Why did Verisign sue .XYZ for disparaging .com and allegedly falsely inflating the company’s success?
It’s pretty clear that Verisign thinks new top level domain names pose a threat to .Com, otherwise it wouldn’t have bothered. This goes beyond .XYZ.
The lawsuit is surely costing Verisign and .XYZ a lot of money, something that the former has plenty of thanks to its monopoly on selling .com domain names. This week I reviewed the dockets related to the case, which now include over 200 items. Lawsuit filings show that Verisign is also pestering many other new TLD companies with the suit, including asking Donuts and domain system overlord ICANN to hand over documents.
Here is what’s going on:
Verisign is asking for a lot of information a competitor surely doesn’t want to divulge.
As part of its discovery in the case, Verisign is asking for a bunch of competitive information. It wants .XYZ’s marketing plans, agreements with registrars, financials, etc. It wants copies of documents between .XYZ and registry provider (and Verisign competitor) CentralNic dating back to January 2012, including revenue share payment agreements.
Verisign is even asking for communications with “domain name commentators such as Rick Schwartz, Andrew Allemann and NPR”.
Understandably, there was a big fight over who at Verisign could view these documents. Verisign is effectively asking .XYZ to hand over all of the details of its business.
Verisign has subpoenaed a dozen non-parties.
In addition to asking .XYZ to hand over its business plans and related communications, court filings show that Verisign has subpoenaed a dozen other companies. These include Verisign’s other competitors, such as Donuts.
Donuts fought the subpoena in Washington court. It claimed that Verisign was just trying to get confidential documents from its competitors.
The court granted parts of Donuts’ motion to quash. Verisign has appealed, saying discovery has uncovered that .XYZ’s Daniel Negari was communicating with Donuts CEO Paul Stahura about the lawsuit.
Verisign says that Stahura was providing “secret advice to Negari” about the litigation. It claims Stahura encouraged Negari to use discovery in the case to delve into Verisign’s pricing practices and business relationships. In other words: Verisign claims Stahura suggested that Negari take the same tactic Verisign allegedly is. (A court document shows that .XYZ subpoenaed GoDaddy about its relationship with Verisign.)
Verisign also subpoenaed Web.com (about its giveaway deal for .xyz domains), XYZ’s accountant, Key Brand Entertainment (which sold .theatre domain to XYZ), and ICANN.
According to court documents, Verisign subpoenaed ICANN on March 31. Verisign says ICANN didn’t comply.
Verisign wants ICANN to release documents about Web.com’s .xyz promotion, as well as any communication between .XYZ and ICANN about the availability of .com domain names.
It seems that Verisign thinks Negari has been working with ICANN to spread the idea that all the good .com domains are taken. It claims:
ICANN itself made statements regarding .the availability of .COM domain names which are similar—surprisingly similar—to those made by Defendant Negari. For example, in January 2014 ICANN told industry analysts that: “In the .com today, you cannot find any string—and I mean any string—that has five characters or less in it.
It compares this to a statement made by Nigari:
The only thing that is left is something with a dash, or maybe three dashes and a couple of numbers in it.
Suggesting these are “surprisingly similar” is amusing. They are fairly common statements about the lack of availability of .com domain names.
Perhaps more amusingly, Verisign suggests there’s some secret special relationship between XYZ and ICANN.
ICANN has a close relationship with Negari because it selected his company to operate the .XYZ registry and then used him as an exemplar for ICANN’s new TLD program on social media. On October 12, 2013, ICANN tweeted: “A young entrepreneur explains his goals for launching a new gTLD, .xyz.” …ICANN then linked the tweet to a video of Negari. Clearly, ICANN developed a particular interest in the success of the .XYZ registry. ICANN’s unique promotion of the success of one gTLD—.xyz—in a program with over one thousand new gTLDs is striking and suggests that ICANN and Defendant Negari were in unusually close coordination.
Does Verisign not realize that the opportunity to record a video like this was made to all new top level domain name companies? And ICANN didn’t “select” Negari. He was the only one to apply for the domain.
So what’s the strategy?
Verisign is arguing that new TLDs, and statements about the unavailability of .com domains, pose a threat to its business. It seems to be laying down the hammer, running up legal costs for XYZ as well as many other new top level domain name companies. In fact, court documents show that Verisign has also filed a lawsuit against .XYZ in state court in Virginia. (I have not been able to obtain a copy of the lawsuit yet.)
It appears Verisign has a goal of slowing down the competition that new TLDs bring, and it continues a pattern of activity the company has undertaken in recent years (such as FUD around Name Collisions).
It’s possible the case will head to trial in the near future.