Designer Skin LLC v. S & L Vitamins, Inc., et al.
Name.Space, Inc. v. Network Solutions, Inc., et al.
202 F. 3d 573 (2d Cir., Jan. 21, 2000)
Plaintiff Name.Space, Inc. and its predecessor-in-interest PGMedia, Inc. (collectively "Name.Space") operated a domain name registry in competition with defendant Network Solutions, Inc. ("NSI") which, at the time this action was commenced, operated the exclusive domain name registry for the generic top level domains ("gTLDs") ".com", ".org", ".net" and ".edu". In its effort to compete, Name.Space 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 Name.Space are not taken to the site they seek to access.
This problem arises because the Internet's "root servers" have not been programmed to recognize Name.Space'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 -- ".com", ".edu", ".gov", ".int", ".mil", ".net" and ".org" -- and 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.
Because neither the "A root server" nor any of the Internet's other root servers recognize Name.Space's gTLDs, Internet users can not access these sites from anywhere on the Internet, as they can with internet domain name addresses possessing a recognized gTLD. To rectify this problem, Name.Space asked NSI to modify the "A Root Server" so that it would recognize Name.Space's new gTLDs.
NSI asked the National Science Foundation ("NSF"), an instrumentality of the Federal Government, how it should respond to this request. 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 permit it to recognize Name.Space'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 to the Department of Commerce ("DOC"). DOC and NSI then entered into Amendment 11 to the Cooperative Agreement, which required NSI to obtain approval from the DOC before taking the steps necessary to reprogram the A Root Server so that it could recognize new gTLDs such as those registered by Name.Space. A policy statement issued by the Federal Government reiterated its unwillingness to add any new gTLDs until it had fully resolved the issue of their expansion.
Name.Space brought suit, charging defendant NSI with violation of the Sherman Antitrust Act because of NSI's refusal to reprogram the "A Root Server" to permit it to recognize Name.Space's gTLDs. This, plaintiff argued, permitted NSI to perpetuate its monopoly in domain name registration. Name.Space also asserted that Amendment 11 to the Cooperative Agreement, which required NSI to obtain permission from the DOC before it altered the A 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 District Court rejected both of these claims, and awarded the defendants summary judgment, dismissing the complaint. The Second Circuit affirmed this holding, but on grounds different from those relied upon by the District Court to support its decision. The Second Circuit held that NSI's refusal to add additional gTLD's to the A Root Server was immune from challenge under the Sherman Act because it "was compelled by the explicit terms of NSI's agreement with a government agency and by the government's policies regarding the proper administration of the DNS." In reaching this result, the court found that NSI possessed a "conduct-based immunity" -- "'[p]rivate parties, to the extent they are acting at the direction or with the consent of federal agencies, also fall outside the pale of the Sherman Act,' where the complained of acts were specifically directed by the federal government."
The Second Circuit was unwilling, however, as the district court had done, to extend this immunity to all acts taken by NSI in accordance with its Cooperative Agreement with the NSF, on the ground that this contractual relationship granted NSI "federal instrumentality" immunity. Said the Second Circuit:
The Second Circuit also rejected Name.Space's First Amendment claim, but again on grounds that differed from those relied upon by the District Court. The District Court held that "Internet alphanumeric addresses are not speech but are 'rather like telephone numbers...[it is] more analogous to source identification than to a communicative message." The Second Circuit disagreed, holding that some Internet alphanumeric addresses may be communicative speech protected by the First Amendment. The emphasis is properly on the word "may", because the court left for another day the determination of whether such protections did in fact apply. First Amendment protections did not apply, held the Second Circuit, to the existing three character gTLD's at issue. Said the court "the existing gTLD's are not protected speech, but only because the current DNS and Amendment No. 11 limit them to three-letter after-thoughts such as .com and .net, which are lacking in expressive content."
The Second Circuit accordingly affirmed the rejection of Name.Space's claims that Amendment No. 11 to the Cooperative Agreement violated its First Amendment rights. Name.Space argued that Amendment No. 11 improperly compelled speech by obligating plaintiff to use one of the designated gTLD's in its domain names. The court rejected this claim, because it found the three character gTLDs did not constitute speech.
The Second Circuit also rejected plaintiff's claim that Amendment No 11 represented an impermissible prior restraint on speech -- Name.Space was free to "engage in any expressive speech of its choice by simply adding a period and a three-letter suffix to the speech in question." This added requirement was at most an inconsequential interference with speech that did not rise to the level of a prior restraint. Finding that Amendment No. 11 was "a reasonable time, place and manner restriction" on speech, the Second Circuit affirmed its validity.