From YNOT – The Internet Corporation for Assigned Names and Numbers and dot-xxx overseer ICM Registry have asked a California federal court to dismiss an antitrust lawsuit on the grounds they are not subject to the provisions of federal and state law the lawsuit claims they violated.
In addition, ICM claims the lawsuit, filed in November by Luxembourg-based adult internet giant Manwin Licensing International and California-based studio Digital Playground, lacks basis in fact.
“ICANN cannot, as a matter of law, be liable under the antitrust laws with respect to the conduct alleged in the complaint because ICANN does not engage in ‘trade or commerce,’” notes ICANN’s response, filed late Friday in the U.S. District Court for the Central District of California. “ICANN cannot be found to have monopolized the alleged relevant product markets, as ICANN is not alleged to — and cannot — compete or participate in either market…. Courts have consistently declined to extend the antitrust laws to noncommercial conduct undertaken by non-profit organizations.”
ICM’s response, filed on the same day in the same court, claims Manwin and Digital Playground will be unable to prove ICM and ICANN engaged in conspiracy, “monopolistic conduct, price gouging, and anti-competitive and unfair practices [that] broadly [harm] competition, businesses and consumers” during the approval of dot-xxx, as alleged in the lawsuit.
“…[T]he Complaint here is nothing more than a transparent and ironic attempt to use the antitrust laws to eliminate a new internet platform for adult content — .XXX — that plaintiff Manwin perceives as posing unwelcome competition to its dominant .com adult-entertainment empire,” ICM’s response states. “[P]resumably because they cannot show any damages from the challenged conduct, Manwin and Digital Playground instead seek sweeping and unsupportable injunctive relief enjoining the .XXX TLD altogether, voiding the ICM-ICANN contract and/or imposing price and other restrictions on the offering of registry services.”
As part of its response, ICM filed personal declarations by both ICM Chief Executive Officer Stuart Lawley and Greg Dumas, who has served as ICM’s marketing director since mid-2010. Dumas’ statement represents the first formal, public revelation of the long-time adult industry insider’s status as a full-time employee of the dot-xxx registry, which before now has referred to him repeatedly as a “consultant.”
Lawley’s and Dumas’ declarations are notable in that both attempt to portray Manwin and its founder and managing partner Fabian Thylmann as the same sort of predatory business creature Manwin calls ICM and ICANN in the lawsuit. According to Lawley and Dumas, Manwin embarked on its legal challenge to dot-xxx after Manwin’s attempt to wring special concessions from ICM failed.
“On July 9, 2010, while ICM was in the midst of trying to secure ICANN’s approval of the .XXX [sponsored Top Level Domain], Manwin’s managing partner, Fabian Thylmann contacted me via private electronic message,” Lawley stated in his declaration. “Thylmann was seemingly interested in investing in ICM’s potential .XXX registry business. In response, I informed Thylmann that ICM was, and has always been, a closely held entity with a small group of investors and was not seeking new investors at that time.”
Both declarations indicate that during the Venus trade show in late October of the same year, ICM representatives Dumas and Claudio Menegatti — “both ICM consultants,” according to Lawley’s declaration — met with Thylmann, who allegedly threatened legal action should ICANN approve dot-xxx.
“The Manwin representative informed Menegatti and me that Manwin saw the introduction of the .XXX sTLD as a threat to Manwin’s dominance over the adult Internet industry,” Dumas stated in his declaration. “At that time, Thylmann said that he would do whatever he could to stop .XXX. Specifically, Thylmann said that if ICANN approved the .XXX sTLD, Manwin would file a lawsuit against ICM to disrupt its ability to conduct business.”
By September 2011, Thylmann’s attitude had changed, Lawley’s declaration indicates.
“Thylmann again approached ICM, ostensibly interested in doing business with us,” Lawley stated in his declaration. “He also said that he was planning to start his own adult industry trade group, consisting of the two or three ‘powerhouses’ of the industry (including Manwin), using organizations such as the Motion Picture Association of America and the Recording Industry Association of America as models…. He said that such a group was necessary because the Free Speech Coalition (a trade group representing certain segments of the adult industry) was not in a position to provide any real value for its members.
“After making these statements, Thylmann then set forth a list of ‘nonnegotiable’ demands to be met by ICM in order for Manwin to consider conducting business with ICM,” the declaration continues. “Thylmann stated that he would ‘tie up ICM in litigation’ if ICM did not meet all of his demands.”
According to both Lawley and Dumas, by October the demands included:
• Allocation of several thousand dot-xxx domain names to Manwin free of charge.
• ICM’s commitment to circumvent its policy development body, the International Foundation for Online Responsibility, particularly with regard to the operation of tube sites within dot-xxx.
• Across-the-board discounts on dot-xxx domain registrations.
• Allocation of so-called “premium” domains, including Tube.xxx, to be operated by Manwin under a revenue-sharing agreement with ICM.
“Thylmann further stated that in order to explain Manwin’s change of heart regarding .XXX, ICM had to agree to concessions that would put a positive ‘spin’ on Manwin’s involvement, namely, that it would appear that Manwin accomplished some positive impact for the adult industry when news of the deal was announced,” Lawley’s declaration notes.
Dumas’ declaration lays out an identical timeline using almost identical words.
In mid-January, Manwin announced that it had signed an agreement to acquire Digital Playground. Manwin claims to receive 60 million daily visitors to its network of websites.
During the keynote address he delivered Jan. 17 at Internext, Thylmann openly challenged ICM representatives in the audience to engage him in public, but apparently ICM did not rise to the bait. Thylmann also seemed dedicated to increasing transparency about his operation and laying rumors and innuendo to rest when he spoke about Manwin’s history and corporate culture, as well as his plans for the future. After the address, observers, evidently impressed, called Thylmann confident and direct but “approachable” and “human.”
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