David v. Goliath battle continues in appeals court.
Verisign has filed its opening brief (pdf) with the U.S. Court of Appeals, Fourth Circuit, in its dispute with new top level domain name company XYZ.
Verisign argues that the district judge misapplied the standards for summary judgment and misinterpreted statements of fact.
At the heart of Verisign’s overall false advertising case against .XYZ is a deal XYZ did with domain name registrar Network Solutions.
XYZ entered into a barter transaction with Network Solutions in which the registrar gave away hundreds of thousands of .xyz domain names. XYZ then purchased an equivalent amount of advertising from the registrar.
According to Verisign, XYZ used the registration of these free domain names as evidence of demand to show that .xyz was a popular top level domain name. Verisign calls the Network Solutions transaction “a scam”.
Verisign also alleges that XYZ harmed .com (and apparently .net) by saying that all of the good .com domain names are taken.
XYZ pointed to a statistic that 99% of .com registration searches fail; Verisign said this number is inflated because it includes registrars pinging the registry to try to catch dropping domain names.
According to Verisign, “Substantial evidence showed that XYZ’s advertising campaign eroded
goodwill in Verisign’s .com domain and caused substantial lost profits by diverting
.net sales to .xyz.”
Verisign also says that it spent money on corrective advertising. The actual number is redacted in its brief. (Verisign certainly has made a marketing push that .com domains are still available, although this began before .xyz came onto the market. I’ll be curious to learn what it counts as corrective advertising, and how it can prove that .net sales dropped because of .xyz.)
The district judge certainly left a couple of softballs for Verisign to pick through. For example, he said it was a fact that NPR called .xyz the next .com. The NPR report actually said it “could try to become the next .COM”.
XYZ’s response is due April 4.