Owners Of YouPorn.com & DigitalPlayground.com Sues ICM & ICANN Over .XXX For Anti-Trust

Manwin the company which owns some high traffic adult sites including YouPorn.com, and PornHub.com and operates Playboy.com under license of Playboy, along with another large adult operator, and DigitalPlayground.com just filed a  Federal Lawsuit against ICM the company that operates the .XXX Registry and ICANN over the .XXX Top Level Domain (“TLD”).

The 44 page suit was filed in the United State District Court for the Central District of California alleging “monopolistic conduct, price gouging, and anti-competitive and unfair practices, broadly harming competition, businesses, and consumers, arising out of the establishment of .XXX, a new Top-Level Domain Name (“TLD”) intended for adult-oriented content.”

The suit seems to challenge the authority of ICANN and the way the .XXX TLD was approved.  The suit seems a precursor to the type of lawsuit a newly formed trade group CRIDO has threaten to file against ICANN to stop the new gTLD process.

The plaintiff’s are asking for the court to grant a “preliminary and permanent injunctive relief by enjoining the .XXX TLD altogether; requiring that the .XXX registry contract be openly rebid to introduce competition for .XXX registry services; and/or Imposing reasonable price constraints and service requirements on permanent blocking services and other defensive registrations in the .XXX TLD.”

If this lawsuit was successful it would undoubtedly derail the whole new gTLD process.

Personally I don’t see much merit in the case, once again too late.

It could be noted that either of the plaintiffs could have applied to  ICANN back in the day if they wanted to operate the extension.

The adult company’s on one hand are suing for “anti-competitive and unfair practices” yet they seem to want to close off the adult space and limit competition.

The entire gTLD process all about some company controlling the right of the dot and this suit might serve as a wake up call to companies in other industries to get there application in to own the vertical while they have a chance to do so.

The lawsuit strangely lays out a great case and a lot of reasons to own a .XXX domain saying in part

“There is a serious danger that ICM will establish and monopolize such a distinct market. As consumers seeking adult content become more aware of the .XXX TLD, registering and displaying websites in other generic TLDs may not easily be substituted for registration in the .XXX TLD.  That is because of the unique association of the “XXX” name with adult content.  Furthermore, as explained below, contractual provisions and other forces make it unlikely that other potential TLDs with names that could similarly connote adult content, such as .sex or .porn, will be established.”

ICM Registry issued a statement earlier today in reaction to the suit which they learned would be filed today and you can read that here

Here in part, is the lawsuit (you can read the full suit here (pdf))

“The creation of the .XXX TLD is forcing owners of trademarks and domain names in other TLDs to purchase from ICM expensive “defensive registrations” (or the right to block or prevent the use by others) of those same names in .XXX.  Such defensive registrations are necessary to preclude others from registering and using the owners’ names in .XXX, and prevents the confusion or dilution in value of those names that would otherwise result.”

“For example, YouPorn.com needs to block anyone else from establishing a website using the confusingly similar name YouPorn.xxx.  Otherwise, consumers seeking YouPorn.com may instead reach YouPorn.xxx, causing YouPorn.com to lose business and harming its reputation.”

“The significant costs and disadvantages of such defensive registrations, and their detrimental effect on competition, outweigh any alleged benefit of the .XXX TLD.  Indeed, the .XXX TLD has been strenuously criticized for extorting defensive registrations.  For these and other reasons, governmental bodies, the adult entertainment industry, and other interested constituencies largely opposed the formation of .XXX, which primarily serves to enrich ICM and its affiliates.”

“There is no reasonable substitute for defensive registration in .XXX. For example, by blocking use of a domain name in a TLD other than .XXX, the name holder does not prevent the harm suffered if a non-owner registers that name in the .XXX TLD. ”

“The .XXX TLD thus constitutes a separate antitrust market for defensive registrations.

“Also, ICM is actively attempting to establish and monopolize, and has a dangerous probability of establishing and monopolizing, an additional separate market for affirmative registrations in TLDs with names that uniquely connote (or that are otherwise predominately intended for) adult content. For example, the letters “.XXX” connote adult content, as could other hypothetical TLD names such as “.sex” or “.porn.”  However, .XXX is currently the only adult- oriented TLD, giving ICM a present monopoly in such TLDs.”

“ICANN has a monopoly over the DNS and over the approval of TLDs and their registries.  There was no competitive process for the award of the .XXX registry contract. ICANN awarded ICM that contract without soliciting or accepting competing bids, and without any market considerations whatsoever, thus awarding ICM monopoly control and free rein to impose anti-competitive prices and practices within the distinct .XXX TLD. The .XXX registry contract itself places no restrictions upon (and in fact enhances) ICM’s abilities to exploit that monopoly position to the disadvantage and harm of competition, consumers and businesses.”

“ICM has reacted to these circumstances with the anti-competitive behavior expected of a monopolist. It has, for example, improperly exploited the newly created market for .XXX defensive registrations by making such registrations unreasonably expensive and difficult, and by placing onerous burdens on parties seeking to protect their intellectual property rights. It has required that registrants of names in .XXX waive legal rights and claims against ICM as a condition of registering. It has reserved to itself some of the most popular or desirable domain names, which it has sold at prices substantially above those in a competitive market.”

“On March 18 and 19, 2011, ICANN approved ICM’s application for the .XXX TLD. On March 31, 2011, ICANN and ICM signed a registry contract under which ICM agreed to provide registry services for the .XXX TLD.

“ICANN approved the .XXX TLD and the ICM registry contract despite ongoing, extensive, strenuous, and legitimate objections to both. These objections came from the public at large, from members of the GAC, from the adult entertainment industry, from the business community, and from others.”

“Before approving the .XXX TLD, ICANN failed to conduct proper economic studies about the competitive effects of or economic needs for new TLDs, including the .XXX TLD, despite the conclusion of ICANN’s Board and the U.S. Department of Justice that such studies were required by ICANN’s bylaws, its contractual commitments, and legitimate competition concerns. ICANN did perform some perfunctory studies that never properly or fully addressed the important economic and competition issues posed by the .XXX TLD.””

“ICANN approved .XXX and the ICM registry contract, despite these legitimate and strenuously voiced concerns, in violation of its by-laws and contractual obligations, and despite the lack of complete and requisite economic studies, only because: (a) ICANN was intimidated and coerced by ICM’s improper conduct (described above) which threatened ICANN, imposed significant economic expense on ICANN, and promised to continue such tactics if ICANN did not consent to .XXX; and (b) ICM promised ICANN significant financial ayments, likely to amount to millions of dollars, under the .XXX registry contract. Reflecting that ICANN’s approvals were in part a reaction to improper ICM pressure, ICANN insisted upon and obtained a release from ICM – barring ICM from further litigation threats – as a condition to signing the .XXX registry contract.”

“ICANN did not solicit, approve, or consider any adult-content TLDs other than .XXX. ICANN entertained no competitive bids for the .XXX registry contract. ICANN had no process for separating approval of the .XXX TLD from approval of ICM as the .XXX registry.  After it approved the .XXX TLD, ICANN did not offer any parties but ICM an opportunity to become the .XXX registry. ICANN’s approval of the .XXX TLD was thus also approval of ICM as the .XXX registry. The negotiation of the .XXX registry contract was a closed process. The lack of competitive bidding eliminated any market restraints that would have prevented ICM from engaging in monopolistic and anti-competitive pricing and practices in the sale of .XXX registry services. ICANN could have required competing bids for the rights to act as the .XXX registry, just as it has required competing bids for the right to act as the registry of other TLDs.”

“The ICM/ICANN contract contains no price caps or other restrictions of any kind on what ICM can charge for .XXX registry services. ICM has complete price discretion and no fetters on its ability to charge monopolistic prices considerably higher than those which would exist in a competitive market. Such higher prices raise costs for registrants and harm consumers through higher prices and/or fewer choices.”

“The ICM/ICANN contract leaves ICM with broad discretion to fashion and limit in a non-competitive, unreasonable manner the nature, quality and scope of .XXX registry services it offers registrars and registrants. Such restrictions raise costs and limit innovation, thus harming registrants and consumers.

“The ICM/ICANN contract contains a provision which ICM contends will preclude ICANN from approving any arguably competing TLD designated for adult content, such as “.sex” or “.porn.”  This restriction limits future competition, enabling ICM to bar the threatened entry of new market competitors.

“”ICM has a complete monopoly in the market for the sale of .XXX TLD blocking or defensive registration services through registrars. No other company or entity can or does provide such services.”

 

“ICM currently has a complete monopoly in TLDs that have a name connoting adult content. There are currently no other TLDs beside .XXX with names that connote adult content. No other company or entity besides ICM currently can or does provide, through registrars, affirmative registrations in TLDs that connote adult content. This control makes it more likely that ICM will extend its monopoly on blocking or defensive registrations into a distinct monopoly for affirmative registrations in TLDs connoting or predominately intended for adult content.”

“Plaintiffs are informed and believe that by so conspiring and agreeing, ICM and ICANN have engaged in anti-competitive processes, acquired and perpetuated a monopoly, unreasonably restrained trade, and harmed competition in the above-defined geographic and product market, to the detriment of businesses and consumers and in violation of Section 1 of the Sherman Antitrust Act

“Plaintiffs are informed and believed that ICANN and ICM knew and intended that the result of their anti-competitive and illegal actions would be to acquire and perpetuate a monopoly, unreasonably restrain trade, and harm competition, businesses, and consumers”

Comments

  1. Ron says

    I am glad someone is bring action against these parties, I feel this will allow more attention to the issues at hand in regards to these new tlds, lots of in depth analysis, and more study into these upcoming tlds, SOME early investors might not be happy to see this. Doubt they will stop them, but at least it will show them they are fair game as well.

  2. yes says

    it seems like the complaint is mixing issues. they begin with trademark and then shift to antitrust.

    the fundamental issue with the way we let icann run dns, which has remained unsettled since the mid-1990′s, is that everyone in their dns ecosystem can sell the use of trademarks via direct match domain names, relatively free from infringment liability, despite the fact they have abolutley no rights to license these marks.

    a simple entry in a text file and suddenly the trademark owner is beholden to the parties running the domain name system. the mark owner literally has to license the use of its own mark from some domain registry. it is surreal. but we all just go along with it.

    imagine icann runs a system of roadside billboards. the delegate management to registries and registrars operate as the sales team.

    it’s as if we say it’s ok for icann to sell to anyone the right to display the trademark of their choice on one of icann’s billboards. how can icann use these trademarks to sell billboards? further, the seller, an “icann accredited” seller (=registrar), cannot be liable if the buyer is not the trademark holder. if the transaction leads to infringing use of icann’s billboard system, there’s no recourse against icann, the registry or the registrar. they are all immune.

    when trademark holders complain, icann responds by saying ok, we’ll stop selling to just any buyer. so long as you, trademark holder, purchase the use of our billboards yourself. if you don’t, we’ll have no choice but to pretend you don’t exist. we’re computer nerds, but we can’t be bothered to cross-check against trademark databases. in fact, you’ll need to show some proof that you are in fact registered to use the mark. (if you’re just a domainer, don’t worry, we never double check.)

    sure this is a monopoly. but what difference does that make? it’s an extortionist scam. and an insult to the trademark system.

    no one should be allowed to do this.

  3. Larry says

    Tough case, bad plaintiff, but hints at the power of a well formed new gTLD, particularly generics. GeoTLDs will need local gov approval/partner, and brands are brands, TM law will sort that, but concerned just replacing one advantage with another during sunrise with generics..

  4. says

    They also filed an Independent Review Panel complaint with ICANN at:

    http://www.icann.org/en/irp/manwin-v-icann.htm

    The PDF of the lawsuit complaint is also posted at ICANN’s website, see:

    http://www.icann.org/en/general/litigation.htm
    http://www.icann.org/en/general/litigation-manwin.htm

    which is a bit “cleaner” than the PDF of the Xbiz one (the ICANN PDF is probably the “original”, whereas the Xbiz one is 5x bigger, probably an OCR of a scan of a printout).

    It’s a well-written complaint, and the law firm representing Manwin is also home to Steve Metalitz (of the ICANN Intellectual Property constituency), who certainly knows his way around ICANN issues (although he’s not named as one of the lawyers representing the complainant).

    “The enemy of my enemy is my friend.”

  5. rk says

    I don’t really care about ICM (either way) but I am always glad to see ICANN (Ops ICANN’T) getting sued.

    Let’s be honest here, the organization is corropt to the core.

    It’s leadership sucks.

    All they want to do is make more money for themselves.

    PS: Do you all remember how ICANN created dot-COM monopoly by letting veriisign raise fees in a no-bid contract.

    It is about time that ICANN’T get replaced by an honest organization that does not cut shaddy deals with other companies to raise prices for all the registrants.
    World needs an organization that lowers the dot-com registration fees (should be like $2/domain) and works for the registrants.

    ICANN’T works for other companies, not domain registrants.
    The irony is that domain registrants fund ICAAN’T operations.

    ICANN = DISGRACE = SHOULD BE BANNED

    Thanks!

  6. John Berryhill says

    “but we can’t be bothered to cross-check against trademark databases”

    Which would do what?

    Some guy running a marina decides he wants to post information about tides at “tide.newtld”.

    He goes to register the domain name and is told, “No, you can’t do that because it is a brand of laundry detergent.” That is utterly ridiculous.

    So explain how this is supposed to work. You might also include how it is that outside IT providers, attorneys, or even the trademark owners themselves are going to be able to register domain names, if there is an automated system preventing registration of domain names.

  7. Curious J says

    On the flipside Mr. Berryhill, .xxx wants to charge tm holders to block the use of their brand by others by way of defensive registrations. So in a situation where corporations A B and C all have a tm interest in a word, why should B and C be prevented from constructive use of the domain simply because company A wants to block it?

  8. Michael H. Berkens says

    Curious

    All domain extensions when they roll out require that they allow TM holders to get their exact match domain names in the Sunrise period ahead of anyone else.

    The block ICM was offering was for the BENEFIT of companies like Disney that had no interest in operating a .XXX domain, but wanted to exercise their right to own the domain ahead of the general public and charged a one time fee to block the domain.

    Now while they were required to have a sunrise and offer TM their matching domain, they did not have to offer block for a one time fee. They could have just allowed like all other sunrise periods the TM holder to register the domain and then pay each year the normal renewal fee which for .XXX is $100 a year at most registrars.

    So the TM holder had a choice of registering their .XXX allowing it to resolve or not and pay $100 a year to renew it.

    In ten years it would have cost the TM holder $1,000 in renewal fees plus the cost of the Sunrise which was $200 or so.

    If the TM holder elected to do the block all they had to do is pay the one time fee which was also around $200 and NOT have to pay the renewal fee.

    So ICM would have made MORE money had they not offered a blocking option.

  9. cancel says

    maybe the blocking is not on _registration_ but on _resolution_? the latest version of bind allows blacklisting. bind is the most popular dns server.

    to put it another way, a name can be in a zone (registered), but if the server refuses to serve the record for it, registration makes little difference.

    as for cross-checking… a list of domain names can be screened against trademark database data for exact matches. many different uses for the information this yields are possible. how you might use the information depends what you’re trying to achieve. but sticking to this narrow context…

    asking trademark owners to come forward and show that they have registered a mark that is an exact match of a domain name (sunrise period)- how is that different than screening against trademark database data?

    who is the authority on whether a mark is registered in a certain jurisdiction, to whom and under what classes? the registrant? or the intellectual property office?

    if it’s utterly ridiculous to tell someone they cannot register a domain name because it is a brand of detergent, then isn’t it also utterly ridiculous to tell someone they can be the exclusive registrant of a domain name that may be an exact match of several different brands simply because they were the first or only brand owner (or domainer… recall .info or .eu) to come forward and agree to pay the registry?

  10. cancel says

    there are certain industries pushing for legislation to allow for blacklisting domains, mainly to alleviate copyright infringement originating outside the united states. the legislation does not need cooperation from the icann system (registries or registrars) to achieve its objectives. it targets those who provide caches.

    copyright infringment may be the driver behind such drafts, but is such proposed legislation restricted to only one form of intellectual property? is the idea of using blacklisting (post-registration) to alleviate trademark infringement utterly absurd?

    like the .xxx lawsuit this type of sweeping legislation is probably not going very far. but can/should we just ignore the issues raised?

  11. John Berryhill says

    “On the flipside Mr. Berryhill, .xxx wants to charge tm holders to block the use of their brand by others by way of defensive registrations. So in a situation where corporations A B and C all have a tm interest in a word, why should B and C be prevented from constructive use of the domain simply because company A wants to block it?”

    If you look at the ICM launch plan, you will note that TM claimants who wanted to USE a domain name were given priority over those who wanted to block it.

    “then isn’t it also utterly ridiculous to tell someone they can be the exclusive registrant of a domain name that may be an exact match of several different brands simply because they were the first or only brand owner (or domainer… recall .info or .eu) to come forward and agree to pay the registry?”

    …which is one of the silly things about sunrise procedures. However, ICANN requires them.

    This is an addressing system for a computer network. The notion that it needs to be compatible in some “correct” way with the trademark system will eventually drive one insane.

    Personally, I think the idea that anyone needs to “protect” against something like chevrolet.xxx is silly. Chevrolet is a brand of automobile. What sort of person is going to type in chevrolet.xxx and expect either to find automobiles, or be looking for authorized General Motors pornography? It’s pretty silly all around if you ask me.

  12. cancel says

    the tm system is not perfect. neither is the domain name system. if trying to make the two compatible leads to insanity, well, then that is this author’s excuse for the crazy comments. working on such an idea, even just as as a proof of concept, does twist the mind in uncomfortable ways. of course it can never be wholly “correct” but maybe it can be “good enough”. as always, your insights are helpful.

  13. Ben Elza says

    while people from all over the world are protesting against greedy companies and businesses, Manwin shows no respect to the society and still insist to be the only one who has the right to own money and life. Shame on you Manwin.

  14. cancel says

    just to clarify, since another post i made didn’t seem to go through, when i refer to “blocking” i am alluding to something like sopa, not the icann root or any icann-approved registry.

    i hope that concerned readers are aware of this distinction. the sopa scheme requires no cooperation from icann, registries or registrars. they are going after those who run recursive servers and provide caches. for most users, that usually means your isp or some outfit like opendns.
    could i.p. owners block trademarks being used as exact match domain names, at the cache level? that was the question i was posing.

  15. John Berryhill says

    “could i.p. owners block trademarks being used as exact match domain names, at the cache level?”

    Sure, with cache poisoning and without DNSSEC. Of course, with DNSSEC, some of this stuff looks like an attack on the system.

  16. cancel says

    which is why running your own cache and/or authoritative server, for yourself, is not as silly as the “experts” will continually proclaim.

    as another writer pointed out, there’s no need for dnssec if the name is on a blacklist. you could care less if it’s an “authentic” record for that name. you’ve already decided, by placing it on a blacklist, that you don’t want the records for that name. if dnssec doesn’t autheticate blacklisted names, who cares?

    dnssec is a joke. want to prevent cache poisoning? don’t use someone else’s cache. or don’t use a cache at all.

    no one will care about any of this… until caches start blocking names that the user knows about and it becomes obvious what’s going on.

  17. TM Holder says

    You are all missing the main point. Even if you owned the .com of your website, in Sunrise AD you needed to get into an auction, if any other party with any other extension ,also filed for the name.

    But, the most unethical part was that if you owned one of the top 400 or so destination websites, or keyword rich websites, ICM has “Reserved by ICM Registry for Premium Generic Domain Names Program” So you will need to pay an exorbitant cost to acquire your domain name.

    Also as many top websites have discovered ICM has presold their website name to another company through the “Founders Plan”

    All in all this is the most unfair to current TM holders of any extension, so I not surprised to see a lawsuit.

  18. Ben Elza says

    “But, the most unethical part was that if you owned one of the top 400 or so destination websites, or keyword rich websites, ICM has “Reserved by ICM Registry for Premium Generic Domain Names Program” So you will need to pay an exorbitant cost to acquire your domain name”

    1. This is BUSINESS, if they need to have something they need to pay for it! why would ICM give their products for free!
    2.If these businesses do own keyword rich websites, why are they so greedy that they do not want to pay for ICM’s products and at the same time they do not want other entrepreneurs to have a chance to start a business , this is the so unethical part!
    3. Owning a domain name in .com or any other extention does not give the owner the right to be the solo owner of every other extention.
    4.The irony is that these guys, like Manwin, are not only greedy but they are also bullies! They do not want to pay for a product, they do not want someone else to buy the product and they want to “kill the messanger”!

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