.XYZ asks Verisign to pay $1.6 million in fees from lawsuit

The .XYZ domain name registry has asked a court (pdf) to force Verisign to pay $1.6 million in fees and expenses related to the lawsuit Verisign filed against it.

Verisign, the $10 billion (market cap) company that runs .com, sued XYZ for false advertising claims.

The judge overseeing the case eventually granted XYZ’s motion for summary judgment.

But that was after XYZ paid $1.6 million in fees and expenses to defend itself, a massive sum for the startup. XYZ claims the ongoing costs of the suit could have put it out of business had the case continued. In fact, it believes this might have been Verisign’s goal.

XYZ argues that this case is exceptional. It alleges Verisign filed the lawsuit to send a message to all new top level domain name competitors, filed onerous subpoenas on non-parties, and purposefully disclosed confidential XYZ information by releasing a detailed and unredacted exhibit list for the lawsuit.

The lawsuit details how Domain Name Wire and Domain Incite wrote about the exhibit list, and the immediate fallout that occurred:

One customer who works with both XYZ and Verisign was especially upset that Verisign might know what he had been discussing with XYZ. (Id.) In under an hour, that customer sent eight messages demanding that XYZ give him all the emails provided to Verisign so he could evaluate the extent of the harm, “just give me the f—ing emails.” (Id.)

Even worse, the CEO of a major company refused to communicate electronically with XYZ because he knew his emails were not private.

Verisign filed another lawsuit against XYZ while the false advertising case was going on. The judge, in that case, dismissed a conspiracy count for failure to state a claim. XYZ noted, “Verisign is reckless in filing meritless lawsuits to harass its competition.”

XYZ says it spent $1.3 million in fees at $300,000 on non-taxable expenses defending the case.