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http://www.out-law.com/page-8895
Network Solutions faces front running law suit
OUT-LAW News, 27/02/2008
One of the internet’s biggest sellers of domain names is being sued for allegedly forcing consumers to buy addresses from it to the exclusion of other providers. The US class action law suit also claims that addressing authority ICANN is facilitating the alleged abuse.
Network Solutions is being accused in the suit of ‘front running’, the practice of locking an address as soon as someone asks if it is free. The person then has to buy the address from whoever has locked it, potentially at an inflated price.
It has long been suspected that front running is practised by companies exploiting ‘whois’ searches, whereby someone checks to see if a domain is free.
Network Solutions recently implemented controversial policies that it claimed were designed to protect consumers against front running. Critics have complained that the policies themselves amount to front running.
When some of the domain name searching tools on Network Solutions’ web site are used, the searched-for domains are registered to the company immediately. It says that this is to ensure that no unscrupulous firm registers the address, and the address is then available for any Network Solutions customer to register it.
“By implementing this we are not front-running, we are just holding it for four days,” Network Solutions spokeswoman Susan Wade recently told OUT-LAW Radio.
“We are not monetising it, we have no intention of keeping it or selling it in the secondary market, we are just holding it and if you want to come back to our store front and buy it you can, after that we are letting it go,” she said.
US law firm Kabateck Brown Kellner has begun a class action suit against the company, though, claiming that it has earned millions of dollars by locking in customers who made a query by forcing them into buying domain names from it and not a competitor.
“Imagine if you asked a car dealer if they had a black convertible and were then forced to buy the car from them. Would you get a good deal?” said Brian Kabateck, lead counsel in the class action and managing partner or the firm. “Each time someone asks Network Solutions about a domain name, the firm creates a monopoly for itself, forcing consumers to pay the price they demand.”
A statement from Kabateck Brown Kellner said that “ICANN is aware that Network Solutions is abusing this policy and yet continues to facilitate its actions”.
Though front running has long been rumoured to be taking place, a recent ICANN investigation found no evidence of it. A committee of the organisation analysed 120 submitted examples of the practice and found that many were down to people’s misunderstanding of how domain registration works.
A report earlier this month by ICANN’s Security and Stability Advisory Committee (SSAC) said: “If the claims reviewed by SSAC are representative of all claims, acts frequently interpreted as domain front running often prove to be side effects of domain name tasting and other secondary market activities.”
