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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

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PGMedia, Inc. d/b/a Name.Space TM, v. Network Solutions, Inc., et al.

51 F. Supp. 2d 389 (S.D.N.Y., Mar. 17, 1999) aff'd. on other grds. 202 F.3d 573 (2d Cir., Jan. 21, 2000)

Plaintiff PGMedia Inc., d/b/a TM ("PGMedia"), operates 13 domain name servers as part of its effort to operate a domain name registry in competition with that operated by defendant Network Solutions, Inc. ("NSI"). NSI is the exclusive domain name registry for the generic top level domains ("gTLDs") ".com", ".org", ".net" and ".edu". In its effort to compete, PGMedia accepted domain name registrations for approximately 530 new generic top level domains, including ".forpresident", ".formayor" and ".computers". Plaintiff's new gTLDs are not, however, universally resolvable by those using the Internet. As a result, many users who access the domain names registered by PGMedia are not taken to the site they seek to access.

This problem arises because, as explained below, the Internet's "root servers" have not been programmed to recognize PGMedia's gTLDs. Under current Internet protocols, web sites are assigned a unique Internet Protocol ("IP") number. This IP number can be linked by the web site owner to an alphanumeric name containing a word or phrase that is much easier to remember than a string of numbers. Each of these alphanumeric domain names includes a Top Level Domain ("TDL"). There are at present seven generic TLDs including ".com", ".edu", ".gov", ".int", ".mil", ".net" and ".org". In addition there are approximately 240 country code TLDs.

A web site owner links an alphanumeric domain to his particular IP number by registering the domain name with the appropriate registry. Once registered, this "linking" information is stored on the "A root server" (a computer connected to the Internet) from which this information is subsequently downloaded and stored on the 12 other root servers serving the Internet.

When a user accesses an alphanumeric domain name on his browser, his computer sends out an inquiry to ascertain the IP Number associated with that alphanumeric domain name. If a corresponding IP number is found on the root servers, the user is taken to the appropriate web site. (This process is known as DNS name resolution). If the IP number is not found, no connection is made.

NSI is the exclusive domain name registry for the gTLDs .com, .org, .net and .edu. Each alphanumeric domain name containing these gTLDs can be resolved to its assigned IP Number on the "A root server," which is also operated by NSI, as well as the remaining root servers serving the Internet.

PGMedia's complaint was that neither the "A root server" nor any of the Internet's other root servers recognize its new gTLDs. As a result, Internet users could not access these sites in the same manner as other internet domain name addresses. PGMedia sought to have NSI modify the "A Root Server" so that it would recognize PGMedia's new gTLDs.

NSI sought guidance from the National Science Foundation ("NSF"). NSF is a governmental organization involved in the operation of the Internet. Prior to the commencement of this lawsuit, NSF had entered into a Cooperative Agreement with NSI pursuant to which, among other things, NSI was given the authority to register domain names under the aforementioned gTLDs and to operate the "A Root Server."

NSF instructed NSI not to reprogram the A Root Server so as to recognize PGMedia's new gTLDs. NSF stated that various governmental agencies were studying whether the number of gTLDs should be expanded, and that no action should be taken until those agencies had resolved this issue.

Subsequently, NSF transferred responsibility for administering the Cooperative Agreement with NSI to the Department of Commerce ("DOC"). DOC and NSI then entered into Amendment 11 to the Cooperative Agreement, which required NSI to seek and obtain approval from the DOC before taking the steps necessary to amend the A Root Server so that it could recognize new gTLDs such as those registered by PGMedia. A policy statement issued by the Government reiterated its unwillingness to add any new gTLDs until it had fully resolved the issue of their expansion.

PGMedia brought suit, charging defendant NSI with violations of the Sherman Antitrust Act because of NSI's refusal to alter the "A Root Server" to permit it to recognize PGMedia's gTLDs. This, plaintiff argued, permitted NSI to perpetuate its monopoly in domain name registration, by denying plaintiff access to "an essential facility which cannot be duplicated despite the feasibility of doing so." PGMedia also asserted that Amendment 11 to the Cooperative Agreement, which required NSI to obtain permission from the DOC before it altered the Root Server so as to be able to recognize additional gTLDs, was a prior restraint on protected free speech in violation of the First Amendment.

The court rejected both claims. NSI's actions under the Cooperative Agreement were held immune from antitrust liability because they were performed pursuant to a contract with a federal instrumentality. Said the court:

The gravamen of the federal instrumentality immunity, as applied to non-Government entities, is that a party to whom an agency of the Federal Government delegates or contracts to perform a function or provide a service is entitled to the same protections against antitrust liability as the Government agency itself. ... Because NSF and DOC would have had antitrust immunity had they run the DNS and the A root server themselves, NSI is immune for its actions taken pursuant to a valid Cooperative Agreement.

The court found support for its decision in Thomas v. Network Solutions, Inc., 2 F.Supp. 2d 22 (D.D.C. 1998)("Because NSI is acting in compliance with a government cooperative agreement, therefore, it is entitled to immunity from suit under the Sherman Act.") and Beverly v. Network Solutions Inc., 1998 U.S. Dist. Lexis 8888 (N.D. Cal., June 12, 1998).

The court also rejected plaintiff's claim that NSI's actions violated the First Amendment on the ground that plaintiff did not engage in speech protected by the First Amendment. Said the court:

PGM's motion is denied and the Government's cross motion is granted, because the speech plaintiff asserts is infringed under Amendment 11 is not speech at all. ... Internet alphanumeric addresses are not speech but are 'rather like telephone numbers.' ... (it is) 'more analogous to source identification then to a communicative message.'

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