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Manwin, Digital Playground File Suit Against ICM, ICANN

Manwin, Digital Playground File Suit Against ICM, ICANN
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Nov 16, 2011 4:30 PM PST    Text size: 

LOS ANGELES — Manwin has teamed up with Digital Playground to wage an antitrust suit against .XXX operator ICM Registry and ICANN.

The suit, filed this morning at U.S. District Court in Los Angeles, claims violations of Sections 1 and 2 of the Sherman Antitrust Act, as well as violations of two California statutes relative to unfair competition and practices.

The suit also names 10 John does as defendants.

"[Manwin] and Digital Playground seek redress for monopolistic conduct, price gouging and anticompetitive and unfair practices, broadly harming competition, businesses and consumers, and arising out of the establishment of .XXX ... ," the suit said.

The suit goes on to say that .XXX "defensive registrations" are causing confusion and dilution of adult websites' values, and that the costs and disadvantages of them outweigh any benefit of the sTLD.

"In fact, ICM promoted .XXX in large measure first to create and then exploit the need for such defensive registration," said the suit, noting that during the .XXX Sunrise period almost 80,000 domains were purchased with an average $150 registration fee.

The two adult studio plaintiffs also contend that ICANN, which oversees the Internet, provided "no competitive process for the award of the .XXX registry contract."

"The .XXX registry contract itself  places no restrictions upon (and in fact enhances) ICM's abilities to exploit that  monopoly position to the disadvantage and harm of competition, consumers and businesses," the suit said.

The studios said that ICM has reacted to the circumstances with the anti-competitive behavior "expected of a monopolist" by making defensive registrations unreasonably expensive and difficult and has required that registrants of names in .XXX waive legal rights and claims against ICM as a condition of registering.

The suit also charges that ICM Registry has reserved to itself some of the most popular or desirable domain names, which it has sold at prices substantially above those in a competitive market.

"[ICM Registry CEO] Stuart Lawley has announced that he expects to  be able (and intends) to prevent the establishment of any other (potentially competing) adult-content TLDs, including through a contractual promise by ICANN not to approve such TLDs," the suit said. "Lawley has also announced that he projects  that ICM will earn annual profits of $200 million from operating the .XXX TLD — profits to be earned by charging prices well above those in a competitive market.

"Indeed, ICM is charging $60 annually for .XXX registrations, more than 10 times the annual registration charges in other relevant TLDs."

Fabian Thylmann, managing partner of Manwin, in a statement said that the suit is a "monumental case impacting the entire business community and the Internet ecosystem.”

"It uncovers a pernicious monopoly at the very heart of the Internet," he said. "Ending anticompetitive practices by ICM and ICANN will not only protect our business, but help other companies compelled to pay a fee to keep their names unassociated with a .XXX designation.”

Diane Duke, the executive director of the adult industry trade group Free Speech Coalition, told XBIZ that the suit is on target.

"Manwin and Digital Playground bring home the points that FSC has stressed all along," she said. "Through .XXX, ICM is engaging in unfair, monopolistic business practices that not only harms adult businesses but also end users and the Internet as a whole. 

"I applaud Manwin and Digital Playground for their insight and leadership," she said.

The suit seeks an injunction and attorneys fees, as well as other relief.

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