Advisory Concerning Afternic Litigation
On June 8, 2000, the Internet Corporation for Assigned Names and Numbers (ICANN) was named in a lawsuit by Afternic.com, Inc., a New York company that operates a domain-name auction site. In the lawsuit, which is pending in White Plains, New York, Afternic claims that ICANN treated Afternic unfairly in handling its application for accreditation by ICANN as a domain-name registrar. ICANN believes that it has handled Afternic's application in an appropriate manner, according to ICANN policies and legal requirements, and consistently with the manner in which other applications have been handled.
History of Afternic Application
In August 1999, ICANN adopted a dispute-resolution policy to address the practice of registering another company's or person's name with the intent to demand a ransom from the company or person (cybersquatting). In November 1999, the U.S. Congress passed the Anticybersquatting Consumer Protection Act outlawing such abusive practices.
In investigating Afternic's application for accreditation, ICANN discovered that Afternic's web site presented many offers to sell domain names based on other company's names, some with remarks reflecting the abusive nature of the offers. One company name, for example, was offered with the remark that it would be an "Excellent domain for a reseller, owner, or competitor of" the company (this example was offered at a starting bid of $125,000). Although ICANN alerted Afternic to the situation, Afternic denied any responsibility for these offers on its web site. Several months later, Afternic's site is still offering the example name mentioned above, though the starting bid has now been reduced to $50. Currently, Afternic's site is offering many other domains incorporating well-known business, celebrity, and government agency names, such as:
- mircosotf.com (with the remark "this is a common miss spelt version of one of the most active sites on the web").
- TheOlympics2000.com (Section 220506 of title 36 of the United States Code prohibits use of the word "Olympic" to falsely suggest authorization by the International or United States Olympic Committees; Section 3002(a) of the Anticybersquatting Consumer Protection Act prohibits bad-faith registration of domain names covered by Section 220506).
- iBMW.com (with the remark "sell it to BMW for use as their premiere webcar!")
Background on Accreditation Process
Since April of 1999, ICANN has accredited over 100 registrars as a way of introducing competition to the domain-name registration business. Under an agreement ICANN has entered with Network Solutions (which operates the central database for domain names ending with .com, .net, and .org), registrars accredited by ICANN have the ability to put names directly into the database. In accord with this privileged position, accredited registrars agree to abide by policies developed through the ICANN process in consultation with the Internet community. As a part of the application process, prospective registrars submit an application to ICANN, which investigates the applicant as part of its responsibility for management of the domain name system. It was during this review that ICANN became concerned about the level of cybersquatting activity taking place on the Afternic site.
ICANN communicated the concerns to Afternic and offered to work with them to find an acceptable solution. After some discussions, Afternic's owners submitted a substitute application in the name of a different company that would be operated separately, but later decided that such an approach was unacceptable to them and filed the lawsuit.
On Friday, June 9, the New York federal court denied Afternic's request that ICANN be ordered immediately to accredit Afternic. The court set a trial date for late July but also allowed ICANN to make a formal request to dismiss the case or transfer the case to Los Angeles, where ICANN is located and where Afternic submitted its application. The Court has scheduled a hearing on that request for Thursday, June 22, 2000.