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$100 Million Lawsuit Filed Against VeriSign

Popular Enterprises LLC, the parent company of Netster.com, has filed a $100 million dollar lawsuit against VeriSign, Inc.

The Complaint alleges antitrust violations, unfair competition and violations of the Deceptive and Unfair Trade Practices Act based upon VeriSign’s release of the Site Finder product.

According to Popular Enterprises, the “Sitefinder” service allows VeriSign to monopolize unregistered “.com” and “.net” domains, and to profit by redirecting all Internet traffic for these sites to pay-for-placement sites controlled by VeriSign. If they are allowed to operate Sitefinder, VeriSign will now profit from Internet traffic directed to all unregistered domain names, including thousands of domain names that VeriSign has refused to allow the public to register.

The suit requests injunctive relief to prevent VeriSign from operating Sitefinder, and to otherwise cease what Popular Enterprises believes to be its monopolistic practices.

The suit alleges that Sitefinder improperly interferes with other competing search systems, including Netster’s own “SmartBrowse.” Typically users are shown a generic “cannot be found” page when users try to access an unregistered domain. The SmartBrowse system identifies this error and prompts the user with other potentially related Internet sites and search options. Many Internet search companies, including Microsoft and AOL, offer a similar search function to their subscribers. However, the Popular Enterprises Complaint alleges that VeriSign’s latest release effectively “hijacks” all Internet traffic and redirects them to VeriSign’s own site. Existing businesses are left unable to use their technology, as the Sitefinder service bypasses these applications.

President of Popular Enterprises, William Marquez, said, “Rather than compete fairly in the search business, VeriSign has used its monopoly to hijack Internet traffic. Imagine the uproar if the D.O.T. suddenly decided to direct all the traffic off the Interstates only to exits with D.O.T. sponsored hotels and restaurants.” Marquez went on to add that VeriSign is causing his business harm by intentionally redirecting users of Netster and other search companies that have established their own user base. Marquez also believes that the current actions by VeriSign far exceed the scope of authority VeriSign was granted by the National Science Foundation.

The suit also alleges that using its control of domain name registration, VeriSign has refused to allow the registration of certain names that it has deemed obscene or otherwise undesirable to release into the public domain. However, Verisign has also refused registration for other common domain names such as 1.com, 2.com, etc. It is believed that the total number of potential domain names VeriSign has refused and/or will refuse to register ranges in the hundreds of thousands. Ironically, by using Sitefinder, Marquez said VeriSign will now capitalize on the very domain names it has refused to register by redirecting and monetizing all Internet traffic to these sites.

Many search-related companies have invested substantial funds into developing applications that are distributed to their subscribers. Marquez noted that substantial decreases in search revenue has been felt, and that VeriSign is using its control over the Internet to manipulate business from those who have spent years attracting loyal users. Marquez noted, “This suit stands for all companies that have spent time and money attracting business.”

Popular Enterprises has been in the search business for a number of years, and has developed its trademarked “Netster” name into a top 500 website and is listed as the 10th largest search portal in the country by Jupiter Media Metrix. More information about the lawsuit can be found here.

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