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ICANN responds to smut portal antitrust lawsuit

'We do not make or sell anything,' says $75m non-profit

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ICANN and .xxx manager ICM Registry want a California judge to throw out an antitrust lawsuit, saying plaintiff Manwin Licensing is just miffed that it missed out on the juiciest domain names.

Manwin, which runs major online porn networks including YouPorn and Brazzers, sued ICANN and ICM in November claiming that they had illegally colluded to create the "monopolistic and anti-competitive" .xxx top-level domain.

But in its recently filed motion to dismiss, ICM claims that it's a nuisance lawsuit, and wants it kicked out of court under California's so-called anti-SLAPP (strategic lawsuit against public participation) statutes, which are designed to protect free speech.

In its exhibits, ICM also provides evidence that Manwin offered to invest in it in 2010 and later made demands for thousands of free premium .xxx domain names under the threat of litigation.

ICM marketing director Greg Dumas said in a declaration filed with the court that Manwin managing partner Fabian Thylmann saw .xxx as a threat.

"Manwin saw the introduction of the .XXX sTLD as a threat to Manwin’s dominance over the adult internet industry," Dumas wrote. "Thylmann said that he would do whatever he could to stop .XXX.

Specifically, Thylmann said that if ICANN approved the .XXX sTLD, Manwin would file a lawsuit against ICM to disrupt its ability to conduct business."

Dumas goes on to claim that Manwin demanded the address "tube.xxx" and thousands of others.

These demands were not met. Manwin later sued and organised an embargo of ICM's customers, promising not to do business with any porn site using a .xxx address.

In ICANN's separately filed motion to dismiss, the domain name industry overseer said that it is illogical to claim that increasing the number of available domains is "anti-competitive."

"Since Plaintiffs already operate (by their own admission) some of the most successful pornographic websites on the Internet, websites that will continue to operate irrespective of anything ICM might do, what the plaintiffs are really complaining of is the potential competition that their websites may face from the operation of .XXX," ICANN's motion states.

ICANN also claims that because it is a not-for-profit, public-benefit corporation, it cannot be held liable under US antitrust laws in this case.

"ICANN cannot, as a matter of law, be liable under the antitrust laws with respect to the conduct alleged in the Complaint because ICANN does not engage in 'trade or commerce'," ICANN said.

"[ICANN] does not sell Internet domain names, it does not register Internet domain names, and it certainly is not an Internet pornographer. ICANN does not make or sell anything," the motion adds.

ICANN approved the .xxx suffix in March last year, after years of controversy. It had previously attempted to reject ICM's application on two occasions, but an independent review concluded that it had broken its own rules by treating ICM unfairly.

The organisation now receives $2 from ICM for every .xxx domain name registered, the highest fee it commands from any registry.

While it is a non-profit, ICANN expects to have approximately $75m in revenue from ongoing sources – mainly fees and donations – in fiscal 2013. It also anticipates a further $70m in fees from new top-level domain applicants, which may turn out to be a very low-ball estimate.

ICM started selling .xxx domains to the general public in early December. Prior to that, it held a massively oversubscribed trademark protection period, which saw thousands of companies pay $300 or more to permanently opt-out of the space.

Manwin claims that the processes used to sell these registrations was monopolistic and unfair and amounted to "extortion". It has asked the California court to shut down .xxx entirely. ®

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