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Friday, August 17, 2012

Court rules Manwin can sue ICANN and ICM Registry for antitrust violations

A California court ruled that ICANN is subject to US antitrust laws and therefore the lawsuit filed by Manwin over the .xxx sTLD can proceed. Although the judge dismissed two attempted conspiracy claims against ICANN and .xxx registry operator ICM Registry, he found sufficient cause to allow to proceed three others alleging violations of the Sherman Anti-Trust Act.

The judge's ruling came in response to separate motions to dismiss filed by ICM and ICANN in January.

The Honorable Philip S. Gutierrez also granted Manwin until September 9 to file a second amended complaint that provides more compelling arguments to support one of the dismissed claims.

Manwin has asked the court to void the contract between ICM Registry and ICANN and require a competitive rebidding process that would impose price and service restrictions on the winning registry.

ICANN sought to be excused from the litigation, asserting that as a non-profit organization operated for the good of the internet community it is not subject to anti-trust claims. Gutierrez dismissed that argument, saying non-profit status does not grant immunity from laws regulating interstate and international commerce:

"The identity of a defendant as a nonprofit or charitable organization does not immunize that organization from antitrust liability. To the contrary, nonprofit organizations that act in trade or commerce may be subject to the Sherman Act. Rather than focusing on the legal character of an organization, an antitrust inquiry focuses on whether the transactions at issue are commercial in nature."
"In any circumstance, [t]he exchange of money for services [...] is a quintessential commercial transaction"

The judge also found sufficient evidence to support Manwin's claim that ICM engaged in predatory behavior as part of a premeditated campaign to coerce ICANN into approving .xxx.

Judge Gutierrez wrote:

"At the very least, the misrepresentation of support from adult entertainment companies, the generation of fake comments in support of .XXX, the submission of misleadingly edited videos and photos, the non-disclosure that certain celebrity adult entertainment supporters of .XXX were paid by ICM, and the creation of a supposedly independent sponsoring entity [the International Foundation for Online Responsibility — ed.] that was in fact controlled by ICM, are sufficient allegations to establish improper, anticompetitive conduct"