Court Denies Registrars’ Injunction Request in Domain Name Waitlisting Controversy

On November 10, Judge John Walters of the U.S. District Court for the Central District of California rejected a request by several domain name registration companies to block ICANN -- the Internet Corporation for Assigned Names and Numbers -- from authorizing the rollout of a controversial domain name “waitlisting” service. In his memorandum denying the registrars’ motion for a preliminary injunction, Judge Walter held that the registrars had failed to prove either irreparable harm stemming from the new service’s launch or a likelihood that the registrars’ suit would succeed on its merits. Judge Walter also declined to find that the public interest would favor issuance of a preliminary injunction at this time. Notably, Judge Walter rejected the registrars’ contention that ICANN must achieve consensus among all players before moving forward with any change in policy. At issue in the case is a new service proposed by Verisign, the current registry for the .com and .net Internet domains. In 2001, Verisign proposed to launch a Wait List Service (WLS) for .com and .net Internet names. The WLS proposal would allow consumers wishing to register a domain name that had already been registered to place their name on a waiting list (only one waiting list entry would be created for each currently-registered domain name). Should the desired domain name become open for registration, the consumer on the waiting list would be given first opportunity to register the name.

Verisign’s proposal created significant controversy in the domain names community, particularly among those companies (registrars) offering domain name registration services of their own. At present, over 170 companies and organizations are Accredited Registrars, authorized by ICANN to offer domain name registration services for the Internet’s various Top-Level Domains. Because competition in the domain name registration market is tight, some registrars have begun to experiment in the “secondary” domain names market. In cases where consumers wish to register a domain name that has already been registered to someone else, these companies offer to aggressively attempt to register the name on a client’s behalf at the moment the name’s current registration lapses. The WLS service, should it be implemented, would substantially affect these registrars’ “secondary” registration activities, since it would close out such aggressive registration activity by limiting the ability to register a lapsed name to the single consumer whose name appears on the waiting list.

Because they believe the WLS service unfairly undercuts their product offerings, three domain name registrars -- Dotster, Inc., Go Daddy Software, Inc., and eNom, Incorporated -- filed suit against ICANN to block the implementation of WLS. As the organization responsible not only for accrediting registrars, but also for general coordination of the Internet’s domain name system, ICANN maintains contracts with Verisign for the operation of the .com and .net Internet domains. In 2002, ICANN’s Board of Directors authorized amendments to the .com and .net contracts to provide for WLS.

In the complaint, Dotster and the other plaintiffs contended that ICANN’s actions authorizing WLS breached its commitments to registrars to engage in consensus-based policymaking, and requested a preliminary injunction against any further rollout of WLS.

Judge Walter rejected this argument, stating that “there is nothing in [the Registrar Accreditation Agreement] that creates an independent obligation or requires the implementation of a consensus policy any time domain allocation is affected.” In a footnote, the Court continued, “The Court rejects Plaintiffs [sic] suggestion that ICANN is required to obtain registrar consensus before it can enter into any agreement with a third party that might affect domain name allocation. If the Court adopted this interpretation, the registrars would effectively have the power to veto any contract that affected their economic interests.”

Judge Walter also rejected Dotster’s claim that irreparable harm would result from the launching of WLS, stating that the great majority of Dotster’s costs could be recoverable through a monetary award. The Court also refused to find that the public interest would favor issuing a preliminary injunction.