Company files motion to compel Network Solutions’ parent company to provide a witness.
Verisign has filed a motion (pdf) in a Florida court to compel Web.com, parent company of Network Solutions, to provide a witness to testify about how the registrar accounted for free .xyz domain names.
Network Solutions gave away perhaps hundreds of thousands of .xyz domain names last year. They weren’t just offered for free; They were placed in customer accounts on an opt-out basis.
Verisign is suing .XYZ for false advertising. Among its arguments is that .XYZ used these free domains as evidence that there was high demand for its .com alternative.
Verisign has already deposed one Web.com employee on the matter, but he was not able to answer questions about how the registrar accounted for the registrations.
In the motion to compel, Verisign wrote:
XYZ has made public statements asserting that XYZ has received the full wholesale price for every .xyz domain name sold and has achieved $5-$6M in revenue in .xyz’s first 6 months of its general availability. Based upon information obtained in discovery, Verisign believes that Defendants made such statements knowing that they were false. Web.com’s pricing and method of accounting for the transaction will help show that the understanding between the parties was that Verisign (sic) was not earning revenue as a result of these “free” giveaways, but was actually paying Web.com to purchase .xyz domain names so it would falsely appear that users were voluntarily purchasing such domain names on their own. Consequently, this information is critical to prove Defendant’s statements were false and were knowingly made with the intention to deceive customers.
I’m not sure all of the details behind the the .XYZ/Network Solutions deal. That said, I haven’t personally seen an article that quotes Negari saying he received the “full wholesale price” or the revenue number. It’s no secret that .xyz has offered a number of promotional prices below the general wholesale price for .xyz. I’ve seen reporters make their own conclusions, though. If you have an example in which this is stated, please let me know.
It’s also interesting to see the sticky situation this lawsuit is putting Verisign in. It wants .xyz to shut up about the lack of availability of .com domains and to stop saying it’s doing so well. But Verisign is also upsetting its top customers, such as Web.com, in the process.