Verisign’s false advertising case about .xyz top level domain name is scheduled for jury trial next week.
[Update: the judge has granted summary judgment to XYZ.]
.Com registry Verisign is scheduled to present its case against .XYZ next week in U.S. District Court in Alexandria, Virginia.
Verisign filed a false advertising suit against .XYZ and its founder Daniel Negari in December. At the center of Verisign’s argument is that .XYZ gave away free .xyz domain names and then used these “inflated” registrations to show .XYZ’s success, and thereby harm .com.
It’s no secret that Network Solutions gave away hundreds of thousands of .xyz domain names to its customers on an opt-out basis. Verisign alleges that this was part of a round trip transaction in which .XYZ paid the registrar for advertising at the same time the registrar was paying .XYZ for registration fees. Verisign will argue that .XYZ had a concurrent $3 million advertising deal with the company while it was giving away the domain names.
Verisign’s list of exhibits for the trial includes documents related to the Network Solutions transaction.
(.XYZ was fuming after Verisign filed its exhibit list without redaction. The list included documents filed as confidential or “attorneys eyes only”. .XYZ says that release of the unredacted exhibit list caused immediate fallout for the company (pdf).)
A transcript recently made public shows that, at least as of July, Verisign’s lawyers also suspected .XYZ of doing similar round=trip deals with GMO in Japan and Xin Net in China. The exhibit list shows communications regarding GMO, but I don’t see any documents about Xin Net. It’s not clear if Verisign was able to uncover any round-trip deals with either of these registrars, and Verisign’s recent court filings refer only to the Network Solutions deal. GMO and Xin Net have certainly offered low prices on a number of new TLDs.
The jury trial begins on Monday.
So two companies did a standard barter/cashless transaction and that is somehow being called “false advertising?” There’s something missing here. I received one of the free .xyz names from Network Solutions to match a .com I own and they sent me like three e-mails about it. I assume all of us got these emails. The idea that .xyz was trying to “hide” the fact that the names were free when 400,000 registrants received e-mails about the free names is ludicrous. Again — there’s something missing here. Not going to spend the hours going through court documents.
No, that’s the crux of Verisign’s argument, at least how it has described it in court filings so far. It says that, because .XYZ suggested it got all these registrations that were actually placed in users accounts, that this elevated .xyz. .XYZ and Negari made statements about this success and how .xyz was going to be the next .com, and this allegedly hurt .com.
How it will prove harm to .com is beyond me. So far what I’ve seen in the court filings are arguments that it hurt .net, not really .com.
In some jurisdictions barter transactions can amount to tax fraud, so specifics of the cases (US registry x US registrar or US registry x JP registrar) need to be assessed in the trial.
it’s not a tax case, so they don’t need to get into that at trial. If anything, this could be an issue for non-party Web.com, since it’s a public company.
@Tom Joad,
“Ludicrous” is the right word. But if you read Daniel Negari’s statements and read between the lines of his evasive answers, that ludicrous notion seems to have been his strategy.
It seems to me that an argument could be made (and probably will) that the “freemium” .xyz registration with purchase of the .com bolstered the registration numbers of .com. After all, the campaign was a GWP (Gift With Purchase) of a .com. So, it could be reasoned that, this campaign helped .com sales – not .xyz sales.
At the end of the day, this is simply about getting Daniel to spend money on lawyers as opposed to marketing. Verisign has very deep pockets (more than a billion $ in the bank, if I recall) and can afford to keep Daniel in court until he’s out of money.
Unfortunately, it’s a common tactic in David vs. Goliath legal battles.
In this case the .xyz domains were given to people after they bought the .com domains, not when they bought them.
But I don’t disagree with the rest of your statement.
The Court just issued an order removing the case from the trial docket, stating that the Defendant (XYZ) is entitled to Summary Judgment, and that a memorandum opinion will issue shortly.