Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Va.: Domain name company’s Lanham Act claims deleted, (Nov 23, 2015)

By Greg Hammond, J.D.

A new competitor in the Internet domain name registrations market did not violate the Lanham Act by making false statements concerning “.com” availability or its revenue, registration numbers, or marketing budget. In granting the competitor’s motion for summary judgment, the federal district court in Alexandria, Virginia, concluded that the alleged statements were opinions, puffery, or statements of fact that were verifiably true (Verisign, Inc. v. XYZ.COM, LLC, November 20, 2015, Hilton, C.).

Verisign, Inc. is purportedly the industry leader in the business of Internet domain name registrations, with more than 120 million registrations in the “.com” and “.net” space. XYZ.COM, LLC is a new competitor that offers registrations in the “.xyz” space. Verisign filed suit against XYZ, alleging that XYZ made a number of false statements in violation of the Lanham Act, including statements concerning “.com” availability, as well as XYZ’s revenue, registration numbers, and marketing budget. XYZ moved for summary judgment.

Statements of fact, opinion, puffery. The court granted the motion for summary judgment, finding first that statements concerning “.com” availability in a National Public Radio interview consisted of statements of fact, opinion, and puffery. In particular, the statement that “all the good real estate is taken,” was deemed an opinion, because whether a domain name is “good” is subjective to the registrant. In addition, statements of fact concerning “.com” availability were not shown to be false. The court noted that Verisign’s own data demonstrates that “.com” domain names are largely unavailable, because out of 3 billion domain name requests, only 3 million—or one percent—are actually registered. The remaining 99 percent are therefore unavailable, according to the court.

Statements concerning XYZ’s revenue, number of registrations, and marketing budget were also deemed statements of fact that are verifiably true.

Materiality, causal connection. The court additionally found that Verisign failed to demonstrate any alleged misrepresentation was material, because the statements were true. Even assuming the statements were false, the court found that there was no evidence to show that consumers were influenced by the statements. Lastly, there was no causal connection between the alleged false statements and damages to plaintiff because Verisign’s own data demonstrated that “.com” registrations actually increased after XYZ’s statements, demonstrating a lack of harm.

The case number is 1:14-cv-01749.

Attorneys: Nicholas Martin DePalma (Venable LLP) for Verisign, Inc. Timothy J. Battle (Law Office of Timothy J. Battle) for XYZ.com LLC.

Companies: Verisign, Inc.; XYZ.COM, LLC

Cases: Advertising VirginiaNews