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ISLAND ONLINE, INC. v. NETWORK SOLUTIONS

November 6, 2000

ISLAND ONLINE, INC., PLAINTIFF,
V.
NETWORK SOLUTIONS, INC. AND THE NATIONAL SCIENCE FOUNDATION, DEFENDANTS.



The opinion of the court was delivered by: Trager, District Judge.

  MEMORANDUM AND ORDER

In October of 1999, plaintiff Island Online ("IOL") brought this suit, styled as a § 1983 action, against defendants Network Solutions, Inc. ("NSI") and the National Science Foundation ("the NSF") for damages, declaratory judgment and injunctive relief arising out of NSI's refusal to register three Internet domain names desired by IOL. IOL contends that NSI's policy of filtering out certain obscene domain names, coupled with NSI's affiliation with the NSF, a government entity, constitutes a violation of IOL's First and Fifth Amendment rights under the United States Constitution and IOL's rights to freedom of speech and due process of law guaranteed by Article 1, § 8 and Article 1, § 6 of the New York State Constitution respectively. NSI now moves for dismissal of IOL's complaint and/or summary judgment, and the NSF has moved for dismissal, or, in the alternative, for a more definite statement.*fn1 Both defendants argue that, even accepting all of IOL's allegations as fact, IOL has no standing to bring suit, and NSI is not a state actor and, consequently, cannot be liable for alleged violations of IOL's constitutional rights. IOL opposes summary judgment and has made a cross-motion to amend its complaint to assert a cause of action under Bivens and to add individual employees of NSI and the NSF as defendants. NSI and the NSF oppose the motion to amend, maintaining that any amendment would be futile.

Background

(1)

The Internet and the Cooperative Agreement

The "Internet" is a worldwide system of computer networks and individual computers that are interconnected by communications facilities. See Decl. George Strawn ¶ 4 [hereinafter "Strawn Decl."]. The antecedents of the Internet were systems for two relatively small groups of research-oriented governmental, academic and corporate entities — ARPANET and NSFNET. See id. ¶ 5. ARPANET received its principal support from the Department of Defense and related agencies, while NSFNET's support came from numerous sources, including the NSF and other federal agencies, academic institutions and corporate sponsors. See id.

Under a system first implemented on the ARPANET, each entity connected to the Internet is assigned one or more unique numeric "addresses" which permit other connected entities to send it communications. See id. ¶ 11. These addresses, known as "IP addresses," are similar in function to telephone numbers and are written as a series of no more than 12 digits separated by periods (e.g."204.146.46.8"). See id. During the early days of the Internet, IP addresses were maintained and assigned by one individual, Dr. Jon Postel at the University of Southern California's Information Sciences Institute, who performed this task as part of the ARPANET experiment. See id. ¶ 12. Later, Dr. Postel's project came to be known as the Internet Assigned Numbers Authority ("IANA"). See id. The IANA oversaw the allocation of IP addresses until November 1998, when the Internet Corporation for Assigned Names and Numbers ("ICANN"), a private, non-profit corporation, was formed and designated as the governing body responsible for IP address space allocation, as well as other Internet-maintenance responsibilities. See id.

Because IP addresses could be difficult to remember, network users informally assigned alphabetic names to their own computers, and these names were tracked and associated with their corresponding IP numbers in a file maintained by Dr. Postel and downloaded to the host computers at all Internet sites. See id. ¶ 13. In 1987, this practice evolved into what is known as the Domain Name System ("DNS") for associating names with IP numbers on the Internet. See id. ¶ 14. The DNS makes it possible for users to address messages to other users and to Internet-attached computers by name rather than number. See id. ¶ 15.

The sequences of alphanumeric characters that make up domain names are segmented by periods (e.g., "ibm.com" or "nsf. gov"). See id. ¶ 16. The segments are hierarchically related to one another. See id. The far right segment is called the top level domain ("TLD"), the next is called the second level domain ("SLD"), and so on. See id. In the above examples, ".com" and ".gov" are TLDs; "ibm" and "nsf" are SLDs. See id. Each domain name must be unique; it is impossible for more than one entity to register for any given domain name. See id. ¶ 21.

Whereas TLDs are generic, SLD names are typically expressive of the content and interfaces that one would expect to find on the particular site designated by the domain name. See Pl. Island Online, Inc.'s Opp. Mem.*fn2 at 3 [hereinafter Pl.'s Opp. Mem.]. They are marketing tools designed to appeal to the public at large and a key marketing strategy for many new businesses. See id. Many businesses now even trademark their "dot.com" names and use those names to express a message to consumers and to the public. See id. The TLD ".com" in particular is intended for use by private, commercial businesses such as IOL. See id. at 2.

Since the need for DNS name resolution (conversion of domain names into IP numbers) is constant, it is necessary to maintain and update the DNS database continuously. See Strawn Decl. ¶ 22. The new domain name information is obtained and disseminated through a process called DNS registration. See id. An Internet user who wishes to register a domain name first obtains an IP address to be associated with the desired domain name from an Internet Service Provider or from an IP address registry. See id. If the desired domain name has not already been registered in the TLD of the user's choice, it can generally be registered on a first-come, first-served basis. See id.

The TLD zone files are replicated at 13 different locations (including NSI) known as the "root server system," but the master root server is maintained by NSI in Herndon, Virginia, pursuant to the Cooperative Agreement detailed below. See id. ¶¶ 24-25. The other 12 root servers obtain the daily updated domain name information by copying from the master root server. See id. ¶ 25. These other root server operators have no contractual or other legal relationship with the master root server. See id. Rather, they have a purely voluntary association with it because of their common interests in a universally resolvable DNS. See id.

On January 1, 1993, NSI and the NSF, an agency of the United States Government, entered into Cooperative Agreement No. NCR-9218742 (the "Cooperative Agreement" or "Agreement"). See id. ¶ 26. Pursuant to the terms of that Agreement, NSI undertook the task of registering SLD names within the generic TLDs of ".com," ".org," ".net," ".edu" and ".gov." See id. ¶ 27. The NSF's role was not to regulate the administration of the Internet but to provide support for domain name registration. See id. ¶ 28. The NSF engaged in general oversight of NSI's performance of its responsibilities under the Agreement but not NSI's day-to-day managerial activities. See id. Specifically, the Agreement includes the following provisions:

[NSI] has primary responsibility for ensuring the quality, timeliness and effective management of the registration services provided under this [A]greement. To the extent that NSF does not reserve specific responsibility for accomplishing the purposes of this Agreement, by either special condition or general condition of this Agreement, all such responsibilities remain with [NSI]. . . .
NSF has responsibility for registration services support, support planning, oversight, monitoring, and evaluation. NSF will make approvals required under the General Conditions and, where necessary and appropriate, NSF will contact and negotiate with Federal agencies and other national and International [sic] members of the Internet community to further the efforts of this project.

App. Exs. Supp. Mot. Dismiss by Def. Network Solutions, Inc., Ex. G at 7. In September, 1998, responsibility for the Agreement was transferred to the National Telecommunications & Information Administration ("NTIA") of the Department of Commerce. See Strawn Decl. ¶ 30. NTIA is now the federal agency that oversees the administration of the Cooperative Agreement, which was due to expire on September 30, 2000. See id. ¶¶ 29-30.

On April 21, 1999, ICANN introduced this competition by naming five entities which would compete with NSI in the registration of domain names. See id. ¶ 33. As of March 16, 2000, NSI was already only one of approximately 35 competitive SLD name registrars (soon to be over 100). See Decl. David M. Graves Supp. Mot. by Network Solutions, Inc. ¶ 17 [hereinafter Graves Decl.].

(2)

NSI's Registration Process and the Obscenity Policy

NSI is a profit-making Delaware corporation with its principal place of business in Virginia. See id. ¶ 2. NSI's board of directors and executive officers do not include, nor have they ever included any members of the NSF or any other governmental agency. See id. ¶ 3. Nor does the NSF have the right to appoint, approve or confirm any of the directors or officers of NSI. See id.

In 1992, NSI responded to a solicitation issued by the NSF for one or more privately-owned and operated "Network Information Service Managers." See id. ¶ 4. As a result, the company won a competitively-awarded Cooperative Agreement to provide, among other things, SLD name registration services in the Internet TLDs of .com, .org, .net, .edu and .gov.*fn3 See id. In connection with these domain name registration services, NSI enters into private, commercial contracts with registrants of domain names. See id. ¶ 6.

During the initial period of performance under the Cooperative Agreement, NSI received funding from the U.S. government. Beginning September 14, 1995, however, the government funding was replaced with fees, charged to the customers for the provision of registration services, and NSI does not now receive any funding or subsidies for its domain name registration from the federal government. See id. ¶ 8. NSI presently charges registrants an initial two-year registration fee of $70 and a subsequent one-year registration fee of $35. See id. ¶ 7. No portion of this fee is presently shared with the NSF or any other agent of the federal government, see id., nor has any federal or state government ever acted as either a registry or a registrar of domain names in the .com, .org, .net and .edu TLDs. See id. ¶ 18.

As a registrar, NSI accepts applications for new SLD names and generally registers them on a first-come, first-served basis. See id. ¶ 19. If a domain name registration agreement should expire for any reason, such as the registrant's failure to pay for the registration or failure to re-register under the terms of the agreement, NSI deletes the domain name and cancels the contract, at which point the next applicant who creates and applies for the name becomes the new domain name registrant. See id. ¶ 19. Currently, new SLD names are registered with NSI at a rate of over 500,000 a month, a new one every five seconds, and NSI has registered eight million SLD names to date. See id. ¶ 20.

While the registration of domain names is done automatically, NSI restricts the registration of domain names that contain six of the seven obscenities similarly prohibited for broadcast by the FCC and major television networks. See id. ¶ 31. This practice is implemented through an automaticallytriggered filter in the domain name registration process. See id. ¶ 34. The filer blocks the registration of SLD names containing the exact letter strings contained in the restricted words. See id.

NSI implemented this policy as a corporate business decision in the summer of 1996. See id. ¶ 32. Although NSI offered no further explanation of what specific "corporate business" considerations led them to adopt the policy, NSI's vice-president, General Counsel for the NSF and the NSF's program official responsible for oversight of the Cooperative Agreement with NSI all declare that the NSF had no involvement with the formulation and implementation of NSI's obscenity policy beyond knowing of its existence. See id. ¶ 32, Decl. of Lawrence Rudolph ¶ 3, Decl. of Donald Mitchell ¶¶ 3-4.

Because NSI's policy was not adopted until mid-1996, approximately 42 domain names had been previously registered which contained the restricted words. See Graves Decl. ¶ 35. NSI did not cancel or otherwise breach the registration contracts with those domain name registrants but rather allowed them to continue. See id. However, as these registrations expired or were canceled by the registrants, NSI has declined to register them to a new registrant. See id. There are approximately 23 such SLD names remaining in the master database which were registered by NSI. See id. In addition, because NSI's policy has not always been error-free, at times, prospective registrants have been able to obtain an otherwise "filtered" domain name despite the "filter." See id. ¶ 37. When NSI has been made aware of these violations of its practice within a reasonable time after the registration, the offending registrations have been deleted. See id. At the present time, a significant number of the registrars that appeared in the wake of ICANN's introduction of competing registrars on April 21, 1999 do permit registration of the character strings restricted by NSI. See id. ¶ 36.

(3)

NSI's Rejection of IOL's Domain Names

IOL, a New York corporation headquartered in Richmond County in the Borough of Staten Island, is in the business of providing adult content to consumers on websites on the Internet. Pl's Opp. Mem. at 1-2. Like most Internet companies, IOL uses the development of websites and the registration of domain names to increase its outreach to the public. See id. at 2.

On or around April 3, 1999, IOL attempted to register the following domain names: "fuckme.com," "fuckyou.com," and "cocksuckers.com." See id. at 3. At this time, NSI was still the sole registrar of SLD names for non-governmental individuals and businesses such as IOL. See Decl. of Nicole Watts ¶ 5. Before April, 1999, there had been 15 prior attempts by unrelated third parties to register the domain name "fuckme.com," 15 prior attempts by unrelated third parties to register the domain name "fuckyou.com" and 14 prior attempts by unrelated third parties to register the domain name "cocksuckers.com." See Graves Decl. ¶¶ 40-43. Pursuant to NSI's policy of registering domain names on a first-come, first-served basis, the domain names would have been registered to any of these earlier applicants prior to plaintiff's applications if NSI had not exercised the obscenity policy that is the subject of this litigation. See id. ¶ 44.

In order to register a domain name, Nicole Watts, the Chief Operating Officer of IOL, would follow the same procedure each time: she would log on to the NSI Internet website located at www.networksolutions.com, type in the domain name she sought to register as prompted by the instructions and, if that domain name was not already registered to another entity, execute the on-line "Network Solutions Domain Name Registration Agreement" and send this agreement via e-mail to NSI. See id. ¶ 6. On or around April 5, 1999, Watts sent checks on behalf of IOL to NSI via Federal Express in payment for each of the domain names she had sought to register. See id. ¶ 9. On or around April 8, 1999, each of the checks dated April 5, 1999 was debited from IOL's checking account. See id. ¶ 12.

On or around April 14, 1999, NSI notified IOL via e-mail correspondences that NSI had declined to register each of the three domain names that are the subject of this litigation. See id. ΒΆ 13. Each e-mail offered the ...


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