More on Manwin vs Dot XXX

From Ynot.com  by Sue Denim

YNOT – Manwin Licensing International and adult studio Digital Playground have slapped ICM Registry and the Internet Corporation for Assigned Names and Numbers with a federal lawsuit alleging conspiracy, “monopolistic conduct, price gouging, and anti-competitive and unfair practices [that] broadly [harm] competition, businesses and consumers.”

Filed Wednesday in the U.S. District Court for the Central District of California in Los Angeles, the lawsuit asserts that in establishing the dot-xxx domain space, ICM, ICANN and 10 John Does willfully violated the federal Sherman Antitrust Act as well as California’s Cartwright Act and sections of the state’s Business and Professional Code. Specifically, the plaintiffs claim ICM and ICANN conspired to “acquire and perpetuate a monopoly, unreasonably restrain trade, and harm competition, businesses and consumers…” for the purpose of enriching both ICM and ICANN through ill-gotten gains.

ICANN awarded the dot-xxx registry contract to Palm Beach Gardens, Fla.-based ICM in March, following nearly a decade of controversy. During that period, ICANN’s board of directors at first gave dot-xxx provisional approval, then denied ICM’s application and declared dot-xxx dead, only to reverse its decision following a change in board leadership, independent arbitration in ICM’s favor, and ICM’s threats of further legal action if dot-xxx were not approved.

“ICM willfully acquired [its] monopoly through … predatory acts and practices, including but not limited to … misleading acts and litigation tactics … which pressured and coerced ICANN into permitting ICM to acquire and perpetuate [a] monopoly,” according to documents filed with the court. “[ICM Registry Chief Executive Officer] Stuart Lawley has announced that he expects to be able (and intends) to prevent the establishment of any other (potentially competing) adult-content [Top Level Domains], including through a contractual promise by ICANN not to approve such TLDs. Lawley has also announced that he projects that ICM will earn annual profits of $200 million from operating the dot-xxx TLD — profits to be earned by charging prices well above those in a competitive market.”

Since the dot-xxx contract approval, businesses inside and outside the adult entertainment industry have decried the expense of registering dot-xxx domains, especially those registered defensively. So-called defensive registrations typically are intended to protect intellectual property including trademarks, although the domain never will house a website. Dot-xxx is particularly fertile for defensive registrations from mainstream entities that do not wish to see their brands associated with hardcore pornography.

The lawsuit also claims tangential harm to consumers, as businesses forced to pay what the plaintiffs characterize as outrageous registration fees will pass those expenses along to consumers.

“This is a monumental case impacting the entire business community and the internet ecosystem,” Manwin Managing Partner Fabian Thylmann said. “It uncovers a pernicious monopoly at the very heart of the internet. Ending anticompetitive practices by ICM and ICANN will not only protect our business, but [also] help other companies compelled to pay a fee to keep their names unassociated with a dot-xxx designation.”

ICM, of course, sees the entire situation in a different light. One ICM spokesperson implied the lawsuit is an elaborate smokescreen.

“Perhaps Manwin filed this lawsuit because they are worried that ICM Registry is creating opportunities for others in the adult industry to have a fair chance to build great brands and businesses in the new dot-xxx space,” ICM spokesman Greg Dumas said, drawing attention to marketing materials in which Manwin claims to embody “the largest network of adult websites in the world.” “As we have proved time and again, ICM Registry has taken extensive measures to ensure [dot-xxx] is launched in the most lawful and responsible possible way. ICM Registry will vigorously defend their position against any meritless claims such as this one.

“We interpret this lawsuit as Manwin’s attempt to flex their muscles and may be a part of a much bigger strategy,” Dumas continued. “It’s also important to know that we had been previously engaged in negotiations with Manwin on domain names and other things that they had requested.”

In addition to costs and attorney fees, the suit seeks a permanent injunction against dot-xxx, forced rebidding of the contract to manage dot-xxx, or the imposition of “reasonable price constraints and service requirements” on registrations.