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REGISTER.COM, INC. v. VERIO

December 8, 2000

REGISTER.COM, INC., PLAINTIFF,
V.
VERIO, INC., DEFENDANT.



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

  Order

Introduction

Plaintiff Register.com, a registrar of Internet domain names, moves for a preliminary injunction against the defendant, Verio, Inc. ("Verio"), a provider of Internet services. Register.com relies on claims under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); the Computer Fraud and Abuse Act of 1986, 18 U.S.C. § 1030, as amended; as well as trespass to chattels and breach of contract under the common law of the State of New York. In essence Register.com seeks an injunction barring Verio from using automated software processes to access and collect the registrant contact information contained in its WHOIS database and from using any of that information, however accessed, for mass marketing purposes.

I. Findings of Fact

The Parties

Plaintiff Register.com is one of over fifty domain name registrars for customers who wish to register a name in the .com, .net, and .org top-level domains. As a registrar it contracts with these second-level domain ("SLD") name holders and a registry, collecting registration data about the SLD holder and submitting zone file information for entry in the registry database. In addition to its domain name registration services, Register.com offers to its customers, both directly and through its more than 450 co-branded and private label partners, a variety of other related services, such as (i) web site creation tools; (ii) web site hosting; (iii) electronic mail; (iv) domain name hosting; (v) domain name forwarding, and (vi) real-time domain name management. Register .com has invested over $15 million dollars in equipment, software, service fees, and human resources in designing, developing, and maintaining its website and the computer systems necessary to host Register.com's Internet-based services. (See Gardos Decl. ¶ 6). It has also spent in excess of $25 million on advertising and brand promotion in the year 2000 alone, including through print, radio, and television media. (See Mornell Decl. ¶ 31).

In order to give its customers control over their receipt of commercial solicitations, Register.com provides them with the opportunity to "opt-in" during the domain name registration process to receiving sales and marketing communications from Register.com or its co-brand or private label partners. Customers who do not opt-in to such communications are not solicited by Register.com or its co-brands. Significantly, Register.com's co-brand and private label partners have contracted with Register.com for the right to have their services featured on the www.register.com website. (See Mornell Decl. ¶ 18).

Defendant Verio is one of the largest operators of web sites for businesses and a leading provider of comprehensive Internet services. Although not a registrar of domain names, Verio directly competes with Register.com and its partners to provide registration services and a variety of other Internet services including website hosting and development. Verio recently made a multimillion dollar investment in its computer system and facilities for its expanded force of telephone sales associates in its efforts to "provide recent domain name registration customers with the services they need, at the time they need them." (Eden Decl. ¶ 31).

The WHOIS database

To become an accredited domain name registrar for the .com, .net, and .org domains, all registrars, including Register.com are required to enter into a registrar Accreditation Agreement ("Agreement") with the Internet Corporation for Assigned Names and Numbers ("ICANN").*fn1 Under that Agreement, Register.com, as well as all other registrars, is required to provide an online, interactive WHOIS database. This database contains the names and contact information — postal address, telephone number, electronic mail address and in some cases facsimile number — for customers who register domain names through the registrar. The Agreement also requires Register.com to make the database freely accessible to the public via its web page and through an independent access port called port 43. These query-based channels of access to the WHOIS database allow the user to collect registrant contact information for one domain name at a time by entering the domain name into the provided search engine.*fn2

The primary purpose of the WHOIS database is to provide necessary information in the event of domain name disputes, such as those arising from cybersquatting or trademark infringement. (See Rony Decl. ¶ 18, Ex. B to McPherson Decl. at 13). The parties also agree that the WHOIS data may be used for market research.

Specifically, section II.F.5 of Register.com's Accreditation Agreement with ICANN requires that:

In providing query-based public access to registration data as required by Sections II.F.1 and II.F.4, Registrar shall not impose terms and conditions on use of the data provided except as permitted by ICANN-adopted policy. Unless and until ICANN adopts a different policy, Registrar shall permit use of data it provides in response to queries for any lawful purposes except to: (a) allow, enable, or otherwise support the transmission of mass unsolicited, commercial advertising or solicitations via e-mail (spam); or (b) enable high volume, automated, electronic processes that apply to Registrar (or its systems).

(Ex. E to McPherson Decl.) (emphasis added).

Originally Register.com's terms and conditions for users of its WHOIS database were substantially the same. In April 2000, however, Register.com implemented the following more restrictive terms of use governing its WHOIS database:

By submitting a WHOIS query, you agree that you will use this data only for lawful purposes and that, under no circumstances will you use this data to: (1) allow, enable, or otherwise support the transmission of mass unsolicited, commercial advertising or solicitations via direct mail, electronic mail, or by telephone; or (2) enable high volume, automated, electronic processes that apply to Register.com (or its systems). The compilation, repackaging, dissemination or other use of this data is expressly prohibited without the prior written consent of Register.com. Register.com reserves the right to modify these terms at any time. By submitting this query, you agree to abide by these terms.

(Ex. 27 to Pl.'s Sept. 8, 2000 Motion) (emphasis added).*fn3

Verio's Project Henhouse

In late 1999, to better target their marketing and sales efforts toward customers in need of web hosting services and to reach those customers more quickly, Verio developed an automated software program or "robot."*fn4 With its search robot, Verio accessed the WHOIS database maintained by the accredited registrars, including Register.com, and collected the contact information of customers who had recently registered a domain name. Then, despite the marketing prohibitions in Register.com's terms of use, Verio utilized this data in a marketing initiative known as Project Henhouse and began to contact and solicit Register.com's customers, within the first several days after their registration, by e-mail, regular mail, and telephone.

Verio's Search Robots

In general, the process worked as follows: First, each day Verio downloaded, in compressed format, a list of all currently registered domain names, of all registrars, ending in .com, .net, and .org. That list or database is maintained by Network Solutions, Inc. ("NSI") and is published on 13 different "root zone" servers. The registry list is updated twice daily and provides the domain name, the sponsoring registrar, and the nameservers for all registered names. Using a computer program, Verio then compared the newly downloaded NSI registry with the NSI registry it downloaded a day earlier in order to isolate the domain names that had been registered in the last day and the names that had been removed. After downloading the list of new domain names, only then was a search robot used to query the NSI database to extract the name of the accredited registrar of each new name.*fn5 That search robot then automatically made successive queries to the various registrars' WHOIS databases, via the port 43 access channels, to harvest the relevant contact information for each new domain name registered. (See Eden Depo. at 26-30; Eden Decl. ¶¶ 36-38). Once retrieved, the WHOIS data was deposited into an information database maintained by Verio. The resulting database of sales leads was then provided to Verio's telemarketing staff.

Marketing History

Register.com continued to get complaints about e-mail and telephone solicitations by Verio from its customers and co-brand partners through January. In March 2000 Gaviser again contacted Eden to complain that Register.com was still receiving numerous complaints, including that a number of telephone messages similar to the following were left with Register.com customers: "This is [name of telemarketer] calling from Verio regarding the registration of [customer's domain name]. Please contact me at your earliest convenience." (Ex. 44 to Pl.'s Sept. 8, 2000 Motion).

On May 5, 2000 Register.com's lawyers wrote to Verio's General Counsel requesting that Verio immediately cease and desist from this marketing conduct. Register.com complained generally that the use of its mark as well as the timing of the solicitations was harming its good will and specifically warned Verio that it was violating the terms of use it had agreed to in submitting its WHOIS queries by sending "mass unsolicited, commercial advertising or solicitations via e-mail (spam)." (Ex. E to McPherson Decl.).

On May 9, 2000 Verio, through an Associate Counsel, communicated that it had stopped using the Register.com mark or any other similar mark or phrase which would lead to confusion and had ceased accessing the WHOIS database for the purpose of marketing through e-mail. (See Ex. 7 to Pl.'s Sept. 8, 2000 Motion). In an effort to confirm settlement of the dispute, Register.com's lawyers sent Verio a terms letter for it to sign and acknowledge. In that letter Register.com specifically required Verio to cease use of the WHOIS database for not just e-mail marketing, but also direct mail and telemarketing. Verio refused to sign and although it ceased e-mail solicitation, it continued to use the WHOIS contact information for telemarketing purposes into July 2000. (See Ex. 14 to Pl.'s Sept. 8, 2000 Motion, Ayers Depo. at 56).

Accordingly, Register.com commenced this lawsuit and moved for a temporary restraining order and preliminary injunction on August 3, 2000. On August 4, 2000, Verio sought expedited discovery and agreed on August 9, 2000 to enter into a stipulated temporary restraining order with Register.com which prevents it from accessing Register.com's WHOIS database by using a search robot and prevents Verio from using any data obtained from Register.com to solicit Register.com's customers. Prior to the Court's September 15, 2000 hearing, the Court asked ICANN to submit an amicus curiae brief outlining its position with respect to the parties' dispute. The Court granted the parties' request to respond to ICANN's brief, which responses were received on September 28, 2000.

II. Discussion

This dispute centers on both Verio's end use of the WHOIS data and its use of the automated search robot. While Register.com acknowledges its obligation to provide public access to its customers' contact information, it has developed "terms of use" which prohibit third parties, such as Verio, from using the contact information for any mass marketing purpose — whether by e-mail, regular mail or telephone. Register.com also argues that the use of automated software to access the WHOIS database violates its terms of use and harms its computer systems.

Verio admits both the use of the WHOIS data for marketing purposes and the use of the search robot. Verio also concedes that its end use of the information violates the marketing restriction imposed by Register.com, but argues that this restriction should not be enforced because — at a minimum — direct mail and telephone marketing are permissible uses under the terms of the Accreditation Agreement Register.com signed with ICAAN.*fn6 Verio argues that by imposing these impermissible anti-marketing restrictions Register.com is in breach of that Agreement. Verio also argues that the use of the robot is not prohibited by Register.com's terms of use and claims that Register.com has not proven that the robot causes any harm, let alone irreparable harm, to Register.com's computer systems.

III. Standard For Injunctive Relief

In order to obtain a preliminary injunction, a plaintiff must demonstrate both (1) that it will suffer irreparable harm if the motion is not granted and (2) either (a) a likelihood that it will succeed on the merits of the action or (b) a sufficiently serious question going to the merits of the litigation and the balance of hardships tipping decidedly in plaintiff's favor. ...


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