ICANN files motion to dismiss Donuts’ .Web lawsuit

ICANN says Donuts can’t sue and asks for court to dismiss case.

ICANN has filed a motion to dismiss (pdf) a lawsuit brought by a Donuts’-owned company over the results of an auction for .Web.

Donuts was one of seven applicants for the .web top level domain name. Another applicant, Nu Dot Co, won an ICANN auction of last resort for $135 million, and will therefore be awarded the domain name.

However, Nu Dot Co had a deal with Verisign (NYSE: VRSN) in which Verisign bankrolled the auction and Nu Dot Co agreed to transfer rights in the name to Verisign after the auction.

Donuts believes Nu Dot Co was required to file changes to its application as a result of this deal and an alleged executive departure, and that Verisign essentially sidestepped the application process by striking a deal with Nu Dot Co.

One reason Donuts is upset is because Verisign (through Nu Dot Co) insisted on having an ICANN auction rather than a private auction. Losers get nothing in an ICANN auction; they split the proceeds in a private auction.

So Donuts sued and asked for $22.5 million, which would approximate its share of proceeds had the auction been private.

ICANN’s motion to dismiss states that Donuts fails to plausibly allege the elements of any of its five causes of action, which included breach of contract and negligence.

It also claims Donuts can’t sue because it agreed not to sue when it submitted its application. Additionally, ICANN says that Donuts needs to name Nu DotCo LLC in its suit.

After learning of ICANN’s plan to file a motion to dismiss, Donuts filed a separate action with the court yesterday asking for limited discovery.