9th Cir. Dumps Antitrust Suit Against ICANN

(CN) - An Internet registry specializing in "expressive" top-level domains cannot proceed with antitrust claims against a goverment-linked domain assigner, the Ninth Circuit ruled.

Name.space, which specializes in so-called "expressive" top-level domains (TLD), like .art and .food, challenged the Internet Corp. for Assigned Names and Numbers' (ICANN) round of applications for TLDs to be included in the organization's "root-zone file," in California in 2012.

ICANN, under contract with the U.S. Department of Commerce, creates and assigns TLDs, including .com and .net.

Domains include sponsored TLDs like .gov and .edu, restricted to users who meet specified criteria; country-code TLDs, including .uk or .fr, controlled by sovereign nations; and generic TLDs (gTLD), such as .com and .net, which are open to all users.

Name.space claimed that it applied to ICANN for 114 gTLDs in 2000, for a $50,000 fee. ICANN allegedly approved only seven new gTLDs, none of which were awarded to Name.space.

ICANN again accepted applications for gTLDs in 2012, but the $185,000 application fee was allegedly "too high" for Name.space, which did not apply.

ICANN had not announced which new gTLDs would be included on the root by time Name.space filed its lawsuit.

The actions, Name.space claimed, were a conspiracy between ICANN, its board members and industry insiders.

The company alleged antitrust violations under the Sherman and Lanham Acts, California's Cartwright Act the state's business and professions code. The lawsuit also included common-law trademark, unfair competition and tortious interference claims.

In 2013, a district court granted ICANN's motion to dismiss, holding that the trademark and unfair competition claims did not present "a justiciable case or controversy," and that the other claims failed to state a claim upon which relief could be granted.

Name.space elected not to amend, and final judgment was entered in favor of ICANN.

On appeal, the Ninth Circuit this past Friday affirmed the lower court's decision.

Circuit Judge Andrew Hurwitz, writing for the three-judge panel, said the appeals court could not infer an anticompetitive agreement when the allegations "just as easily suggest rational, legal business behavior."

"As is common, the complaint includes no direct allegation of an agreement among the alleged co-conspirators," Hurwitz wrote.

He added: "The 2012 rules and procedures were facially neutral, and there are no allegations that the selection process was rigged."

The panel was unmoved on the sum of the claims.

"We are unpersuaded by Name.space's argument that the acceptance of the applications and fees alone constitutes infringement," the 20-page ruling said. "The cases it cites all deal with situations in which the defendant clearly intended to violate plaintiff's trademarks in the near future."

The district court also properly dismissed Name.space's tortious interference and unfair business practices claims, Hurwitz said.

"Name.space does not allege any facts plausibly suggesting that ICANN accepted applications in the 2012 round with the intent to breach or disrupt any existing contracts or prospective economic relationships," Hurwitz wrote. "Name.space, moreover, does not allege any specific resultant disruption to contractual or economic relationships."

On the unfair business practices claim, the judge added: "Because Name.space failed to state an antitrust violation, trademark claim, or other unlawful act, the district court properly dismissed this claim."

Name.space's business model contemplates the so-called "simultaneous operation of a significant number of TLDs," which also include .magic, .music, .now, and .sucks.

"We are pleased that the Ninth Circuit agreed with the dismissal of the claims against ICANN in this matter," said John Jeffrey, ICANN's general counsel and secretary. "The rules and procedures governing the new gTLD Program were created through a global, inclusive, open and multi-stakeholder process, following a bottom-up policy development process leading to consensus-based policy recommendations."

Name.space did not immediately respond to a request for comment.

The Obama administration announced in 2014 that ICANN would separate from its overseers in the House Subcommittee on Courts, Intellectual Property, and the Internet and the Department of Commerce by September.

In May, industry stakeholders testified that the California nonprofit was not yet ready to do so without congressional oversight.

ICANN previously created .amazon as a generic TLD, drawing the Seattle-based e-retailer's ire.

Paul Misener, Amazon.com vice president for global public policy, testified that the company went through a three-year process to buy the domain, but that the Brazilian and Peruvian governments pressured ICANN to deny the application.

The U.S. government abstained from the issue, he said, and ICANN denied Amazon's application.

With the U.S. government severing its control over ICANN, Amazon worries that ICANN will be subject to control by other governments, Misener said.

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