Jun 20, 2000 : Advisory Concerning Afternic Litigation

Overview

On June 8, 2000, the Internet Corporationfor Assigned Names and Numbers (ICANN) was named in a lawsuitby Afternic.com, Inc., a New York company that operates a domain-nameauction site. In the lawsuit, which is pending in White Plains,New York, Afternic claims that ICANN treated Afternic unfairlyin handling its application for accreditation by ICANN as a domain-nameregistrar. ICANN believes that it has handled Afternic's applicationin an appropriate manner, according to ICANN policies and legalrequirements, and consistently with the manner in which otherapplications have been handled.

History of Afternic Application

In August 1999, ICANN adopted a dispute-resolutionpolicy to address the practice of registering another company'sor person's name with the intent to demand a ransom from thecompany or person (cybersquatting). In November 1999, the U.S.Congress passed the Anticybersquatting Consumer Protection Actoutlawing such abusive practices.

In investigating Afternic's applicationfor accreditation, ICANN discovered that Afternic's web sitepresented many offers to sell domain names based on other company'snames, some with remarks reflecting the abusive nature of theoffers. One company name, for example, was offered with the remarkthat it would be an "Excellent domain for a reseller, owner,or competitor of" the company (this example was offeredat a starting bid of $125,000). Although ICANN alerted Afternicto the situation, Afternic denied any responsibility for theseoffers on its web site. Several months later, Afternic's siteis still offering the example name mentioned above, though thestarting bid has now been reduced to $50. Currently, Afternic'ssite is offering many other domains incorporating well-knownbusiness, celebrity, and government agency names, such as:

• mircosotf.com (with the remark "thisis a common miss spelt version of one of the most active siteson the web").
• TheOlympics2000.com (Section 220506 oftitle 36 of the United States Code prohibits use of the word"Olympic" to falsely suggest authorization by the Internationalor United States Olympic Committees; Section 3002(a) of the AnticybersquattingConsumer Protection Act prohibits bad-faith registration of domainnames covered by Section 220506).
• FBICrimeLab.com
• MichaelJackson.ws
• iBMW.com (with the remark "sell itto BMW for use as their premiere webcar!")

Background on Accreditation Process

Since April of 1999, ICANN has accreditedover 100 registrars as a way of introducing competition to thedomain-name registration business. Under an agreement ICANN hasentered with Network Solutions (which operates the central databasefor domain names ending with .com, .net, and .org), registrarsaccredited by ICANN have the ability to put names directly intothe database. In accord with this privileged position, accreditedregistrars agree to abide by policies developed through the ICANNprocess in consultation with the Internet community. As a partof the application process, prospective registrars submit anapplication to ICANN, which investigates the applicant as partof its responsibility for management of the domain name system.It was during this review that ICANN became concerned about thelevel of cybersquatting activity taking place on the Afternicsite.

ICANN communicated the concerns to Afternicand offered to work with them to find an acceptable solution.After some discussions, Afternic's owners submitted a substituteapplication in the name of a different company that would beoperated separately, but later decided that such an approachwas unacceptable to them and filed the lawsuit.

Status

On Friday, June 9, the New York federal court denied Afternic'srequest that ICANN be ordered immediately to accredit Afternic.The court set a trial date for late July but also allowed ICANNto make a formal request to dismiss the case or transfer thecase to Los Angeles, where ICANN is located and where Afternicsubmitted its application. The Court has scheduled a hearingon that request for Thursday, June 22, 2000.