COMPUTERGRAM INTERNATIONAL: MARCH 15 2000
+ NSI Sued for $1.7bn in Latest Round of Bode Campaign
By Kevin Murphy
Network Solutions Inc is being sued for $1.7bn in a class
action lawsuit by a Washington DC-based firm of lawyers, in the
latest stage of a campaign stretching back to 1997. William H
Bode of Bode & Beckman, has been pursuing class actions against
the former domain name monopoly under various laws since 1997,
alleging the firm abused its monopoly power. The latest suit
demands that NSI refund over $800m in domain name registration
fees (every name it's ever registered, minus reasonable costs)
and asks for an additional $900m in antitrust damages.
NSI, which was acquired last week by VeriSign Inc for $21bn,
was given the sole rights to register .com, .net and .org
domain names by the US government via the National Science
Foundation in 1995. Bode says that under the terms of NSI's
Cooperative Agreement, which set up its contract with the
government, NSI is required to "observe all internet protocols
and policies" including reserving .com for commercial
organizations, .org for non-commercial operations, and .net for
network operators.
But, due to a number of high profile "cybersquatting" cases,
most companies tend to register their names and slogans under
all three domains. And NSI encourages it - it gets three
payments of $70 for the initial registration rather than one,
with three lots of $35 for annual renewals after the first two
years.
This, says Bode, leaves NSI wide open for antitrust complaints.
Under a January ruling by the US Court of Appeals for the 2nd
Circuit in New York, on a separate case against NSI, the
company was "entitled to implied antitrust immunity". But Bode
looks to the wording of the ruling, which continues hangs the
immunity on the fact that NSI's conduct was "expressly directed
by the government and the terms of Cooperative Agreement." By
selling .org and .net to company that really should only have
.com, says Bode, NSI is breaching the agreement.
In addition, the lawsuit alleges that NSI's $70 fee constitutes
an "unlawful tax" under the US Constitution, as well as
constituting "unlawful taking" and violate the Administrative
Procedures Act and the User Fee Statute. Bode told
ComputerWire: "[NSI's status under the law] is unprecedented in
100 years of US history. This is a fundamental miscarriage of
administrative justice." Drawing on the analogy of domain name
as telephone number (which is how it is seen under the First
Amendment, after the 2nd Circuit ruling), Bode said: "To get a
telephone number, the company can charge you, but there is
administrative procedure on reasonableness in place. Any you
don't have to pay renewal fees."
NSI's monopoly was broke up by the Internet Corporation for
Assigned Names and Numbers (ICANN), under the authority of the
US government, last summer. There are now around 30 competitors
in the market, although NSI still operates the registry and
accounts for just over half of all domains registered in the
.com, .org, .net space.
How successful Bode will be is hard to tell. Successive
unsuccessful suits against NSI over the last three years have
seen the man shell out $200,000 out of his own pocket, as well
as run up $1.8m in lawyers' fees.
NSI confirmed yesterday it has been notified of the suit, but
could not comment before its lawyers had had chance to read
through it. The company has 60 days to respond to the court.
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Michael Sondow I.C.I.I.U. http://www.iciiu.org
Tel. (718)846-7482 Fax: (603)754-8927
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