VeriSign suit accuses ICANN of hindering Internet innovation

A lawsuit that VeriSign filed late February against the Internet’s primary technical coordination body raises important issues about how new services are introduced into the Internet.

Last month, VeriSign filed a lawsuit in the U.S. District Court for the Central District of California against the Internet Corporation for Assigned Names and Numbers (ICANN). VeriSign is the registry for the .com and .net domains, which are overseen by ICANN.

VeriSign’s lawsuit alleges that ICANN has overstepped its contractual authority and improperly attempted to regulate VeriSign’s business. VeriSign says ICANN has thwarted its attempts to introduce new products, including a controversial navigation service called SiteFinder for Web users who enter a nonexistent .com or .net address.

“ICANN has improperly attempted to become the de facto regulator of the domain name system and in doing so stifled the introduction of new services that benefit Internet users and promote the growth of the Internet,” VeriSign said in a statement.

VeriSign is seeking monetary damages and has asked the court to clarify ICANN’s authority to restrict the services VeriSign can offer.

The VeriSign/ICANN flap could have broader implications for the Internet industry. VeriSign administers key portions of the Internet’s infrastructure including the .com and .net registries as well as telephony databases and Web site security services. ICANN is the Internet’s primary regulatory body.

The lawsuit may have a ripple effect on the ISP industry. Several major ISPs, including AOL and Deutsche Telekom, are ICANN-accredited domain name resellers and are subject to ICANN’s regulation.

Other ISPs monitor the activities of ICANN, which is responsible for managing and coordinating the Internet’s DNS. Through a contract with the U.S. Commerce Department, ICANN oversees the distribution of unique IP address and corresponding domain names.

“For any company that is regulated by ICANN or who depends on services regulated by ICANN, I can see [this lawsuit] having some impact because the outcome of the litigation will decide how tightly ICANN can hold the reins with companies with which it has contractual relations,” says Bret Fausett, an ICANN expert and a partner with Hancock Rothert & Bunshoft in Los Angeles, Calif., a law firm that works with ICANN-regulated companies. 

Many Internet businesses will be watching the progress of VeriSign’s lawsuit against ICANN. The Association for Competitive Technology, a lobbying group whose 3,000 corporate members include Microsoft, Orbitz and eBay, expressed hope that the lawsuit would be a catalyst for reform at ICANN.

“ICANN has become a black hole,” ACT said in a statement after VeriSign filed its lawsuit. “Proposals for innovation go in and nothing comes out. Services that could benefit millions of Internet users such as internationalized domain names, wait listing and consolidation of domain name renewals have been bogged down for over two years within the ICANN bureaucracy.”

ACT says it hopes the lawsuit leads to a “stronger, more open ICANN for the thousands of small technology businesses that rely on the Internet as critical infrastructure.”

The VeriSign lawsuit is likely to play out in the courts for months. In the meantime, VeriSign is gearing up to submit its bid in 2005 to ICANN to retain operation of the .net registry.

Fausett says he was surprised that VeriSign chose to sue ICANN, which is one of its biggest customers. The .com and .net domains are among VeriSign’s “biggest assets,” Fausett says. “If I’m ICANN, I’m going to be looking for any reason to counter claim for rescission or termination of the contract with VeriSign.”