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Court Denies Preliminary Restriction of WLS

In a strongly worded ruling, a U.S. Federal Court Judge has ruled in ICANN’s favor and denied plaintiffs’ motion for preliminary injunction.

Dotster and two other ICANN accredited registrars had asked the court for an order prohibiting ICANN from finalizing approval of VeriSign’s proposed new “Wait Listing Service” (WLS). Plaintiffs alleged that WLS is “anti-competitive” and that ICANN breached its obligations under the registrar accreditation agreement (RAA) when ICANN gave preliminary approval to WLS last year. The court disagreed, ruling [PDF] as follows:

“...because all registrars will be able to offer WLS, registrars will have to compete against each other in other ways - such as offering additional services, competitive pricing, and/or improved customer service -that will increase the options available to and the value received by consumers. It would appear that because all of the approximately 170 registrars would be able to offer WLS to consumers, as opposed to the approximately 50 that currently offer their own wait-listing services now, the options available to consumers of Internet domain names could greatly increase. Accordingly, it appears that the implementation of WLS has the potential to benefit registries, registrars who do not currently offer wait-listing services, and, most importantly, the public. Therefore, the Court finds that the public interest supports denying Plaintiffs request for a preliminary injunction.”

Plaintiffs had alleged that ICANN would be in breach of various provisions of the RAA if it permitted the implementation of WLS without complying with the Consensus Policies requirement of Subsection 4.1 of the RAA. The court however agreed with ICANN’s interpretation of the RAA, as follows:

“The Court finds that Subsection 4.1 only applies in situations where ICANN seeks to compel registrar action without amending the RAA. There is nothing in this provision that imposes any obligation upon ICANN to act only by consensus where its actions do not seek to compel registrar action. Registrars may elect to offer WLS to their customers but they will be under no obligation to do so. Because implementation of WLS will not impose any obligation on the registrars or in any manner amend their RAAs with ICANN, it is unlikely that Plaintiffs will be able to prove that the consensus policy provision of Subsection 4.1 of the RAA is applicable and, therefore, that ICANN breached the RAA by not following that provision.

“Because Subsection 4.1 is the only section of the RAA that sets forth a Consensus Policy requirement, the Court rejects Plaintiffs’ argument that Subsection 4.24 imposes an independent obligation on ICANN to develop a consensus policy anytime the allocation of domain names is affected. The Court finds that the plain language of Subsection 4.2 merely enumerates or describes a variety of topics for which ICANN may compel registrar action through the adoption of new or revised specifications and policies. However, there is nothing in this provision that creates an independent obligation or requires the implementation of a consensus policy any time domain allocation is affected.

“The Court also rejects Plaintiffs’ argument that ICANN breached Subsection 2.3 of the RAA. The plain language of Subsection 2.3 makes it clear that the obligations imposed on ICANN under that section do not apply to matters falling outside the RAA. Because the implementation of WLS does not affect a right or obligation of Plaintiffs under the RAA or otherwise require an amendment to the RAA, its implementation falls outside the scope of the RAA. It is unlikely that Plaintiffs will be able to prove that the provisions of Subsection 2.3 are applicable and, therefore, that ICANN breached those provisions of the RAA. Accordingly, even if Plaintiffs could demonstrate the requisite showing of irreparable harm, they have failed to demonstrate either probable success on, or serious questions going to, the merits of their claims and, thus, their request for a preliminary injunction should be denied under any formulation of the standard for issuance of a preliminary injunction.”

In an important footnote, the court wrote:

“The Court rejects Plaintiffs suggestion that ICANN is required to obtain registrar consensus before it can enter into any agreement with a third party that might affect domain name allocation. If the Court adopted this interpretation, the registrars would effectively have the power to veto any contract that affected their economic interests.”

Judge Walter’s opinion also stated that “Plaintiffs have failed to demonstrate either the possibility of irreparable injury or that the balance of hardships tips sharply in their favor.” Further, the court found that “Plaintiffs have failed to demonstrate either a likelihood of success on, or serious questions going to the merits of their claims.”

Additional background on WLS and the Dotster lawsuit:

- ICANN’s litigation documents page
- Recommendation of ICANN’s Reconsideration Committee in response to Request 02-5 submitted by Dotster (20 May 2003)
- CircleID WLS Special Coverage

By Mary Hewitt, Director of Communications

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