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Case Title

Manwin Licensing International S a r l et al v. ICM Registry LLC et al

Docket Number

2:11-cv-09514

Court

California Central District Court

Document Title

No. 1 COMPLAINT against Defendants Does 1-10, ICM Registry LLC, ...

Date Filed

11/16/2011
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Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 1 of 49 Page ID #:15

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20;1 r_ ° (cid:9)6 (cid:9)f,!; 10: 1 3

CLERK U.S.
CENT"
LOS

'R !CT C C (cid:9)T

. OF C1:1.1F.
uL.LLS

THOMAS P. LAMBERT (SBN 50952),
tpl msk.corn
JE T PIERRE NOGUES (SBN 84445),
jpnmsk.com
KEVIN E. GAUT (SBN 117352),
k (cid:9)msk.corn
HELL SILBERBERG & KNUPP LLP
11377 West Olympic Boulevard
Los Angeles, California 90064-1683
Telephone: (310) 312-2000
Facsimile: (310) 312-3100

Attorneys for Plaintiffs
Manwin Licensing International
and Digital Playground, Inc.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

MANWIN LICENSINO
INTERNATIONAL S.A.R.L., a
Luxemburg limited liability company
(s.a.r.1.), and DIGITAL
PLAYGROUND, INC., a California
corporation,

Plaintiffs,

v.

ICM REGISTRY, LLC, d/b/a .XXX, a
Delaware limited liability corporation;
INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS,
a California nonprofit public benefit
corporation; and Does 1-10,

Defendants.

°•Case (cid:9)11-9514 -1 s6
y),

COMPLAINT FOR:

(1) VIOLATIONS OF SECTION 1
OF THE SHERMAN ANTITRUST
ACT [15 U.S.C. § 1];

(2) VIOLATIONS OF SECTION 2
OF THE SHERMAN ANTITRUST
ACT [15 U.S.C. § 2];

(3) VIOLATIONS OF THE
CARTWRIGHT ACT [CAL. BUS. &
PROF. CODE §§ 16720, 16722, AND
16726];


(4) UNFAIR CO
MPEN (cid:9). [CAL

RO
CO


BUS. & PF. DETITIO §§ 17200 ,
17203]

DEMAND FOR JURY TRIAL

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Mitchell 28
Silberberg &
Knupp LLP

268925.1

COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 2 of 49 Page ID #:16

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Mitchell 28
Silberberg &
Knupp LLP

4268925.1

Plaintiffs Manwin Licensing International S.a.r.l. ("Manwin") and Digital

Playground, Inc. aver as follows:

I. NATURE OF THE ACTION

1. Manwin owns and licenses the trademarks and domain names used for

many of the most popular adult-oriented websites, including YouPorn.com , the

single most popular free adult video website on the Internet, as well as xTube.com ,

Pornhub.com, and Brazzers.com , to cite only a few examples. Manwin also

manages online content under the "Playboy" trademark and runs Playboy TV

worldwide, both under license from Playboy Enterprises, Inc. This Complaint

refers to Manwin as "YouPorn." YouPorn and other Manwin licensed companies

operate "tube" sites that offer free user-generated and searchable adult content.

2.

In this lawsuit, YouPorn and Digital Playground seek redress for

monopolistic conduct, price gouging, and anti-competitive and unfair practices,

broadly harming competition, businesses, and consumers, and arising out of the

establishment of .XXX, a new Top-Level Domain Name ("TLD") intended for

adult-oriented content. (Other TLDs are, for example, .com and .org.) The

business practices at issue have enormous and worldwide consequences for the

Internet, an essential engine in all domestic and international commerce.

3.

Defendant the Internet Corporation for Assigned Names and Numbers

("ICANN") controls and is responsible for the entire worldwide Internet Domain

Name System ("DNS"). The DNS makes the Internet work by assigning unique

"domain names" to web sites, and by coordinating master computer servers which

ensure that all Internet users typing a domain name into their browsers reach the

same "host" computer and website. ICANN also determines whether to permit

new TLDs in the DNS. ICANN recently approved the .XXX TLD, and contracted

with defendant ICM Registry, LLC ("ICM") to make ICM the sole "registry" or

operator of that TLD. As explained more fully below, that approval and that

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 3 of 49 Page ID #:17

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Silberberg &
Knupp LLP

4268925.1

contract were rife with unfair, inappropriate, and anticompetitive conduct. For

example, YouPorn is informed and believes as follows:

(a)

The creation of the .XXX TLD is forcing owners of trademarks and

domain names in other TLDs to purchase from ICM expensive "defensive

registrations" (or the right to block or prevent the use by others) of those same

names in .XXX. Such defensive registrations are necessary to preclude others

from registering and using the owners' names in .XXX, and prevents the confusion

or dilution in value of those names that would otherwise result. For example,

YouPorn.com needs to block anyone else from establishing a website using the

confusingly similar name YouPorn.xxx. Otherwise, consumers seeking

YouPorn.com may instead reach YouPorn.xxx, causing YouPom.com to lose

business and harming its reputation.

(b)

The significant costs and disadvantages of such defensive

registrations, and their detrimental effect on competition, outweigh any alleged

benefit of the .XXX TLD. Indeed, the .XXX TLD has been strenuously criticized

for extorting defensive registrations. For these and other reasons governmental

bodies, the adult entertainment industry, and other interested constituencies largely

opposed the formation of .XXX, which primarily serves to enrich ICM and its

affiliates.

(c)

In fact, ICM promoted .XXX in large measure first to create and then

exploit the need for just such defensive registrations. ICM has sold, during an

initial two-month pre-operation "Sunrise" period, almost 80,000 special .XXX

registrations at average fees to ICM of more than $150 per registration. These

registrations are apparently largely for defensive purposes. They do not include

hundreds of millions of additional dollars in annual fees that ICM has announced it

expects to earn from later defensive and also later "affirmative" .XXX

registrations. (Name holders "affirmatively" register names for use in operating an

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CART'VVRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 4 of 49 Page ID #:18

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Mitchell 28
Silberberg &
Knupp LLP

4268925.1

active .XXX website displaying new content, rather than for "defensively"

preventing someone else from exploiting the name in XXX.)

(d)

There is no reasonable substitute for defensive registration in .XXX.

For example, by blocking use of a domain name in a TLD other than .XXX, the

name holder does not prevent the harm suffered if a non-owner registers that name

in the XXX TLD. The .XXX TLD thus constitutes a separate antitrust market for

defensive registrations. Also, ICM is actively attempting to establish and

monopolize, and has a dangerous probability of establishing and monopolizing, an

additional separate market for affirmative registrations in TLDs with names that

uniquely connote (or that are otherwise predominately intended for) adult content.

For example , the letters ".XXX" connote adult content, as could other hypothetical

TLD names such as ".sex" or ".porn." However, .XXX is currently the only adult-

oriented TLD, giving ICM a present monopoly in such TLDs.

(e)

'CM initially attempted to coerce ICANN to approve the .XXX TLD

and to approve ICM's anti-competitive .XXX registry services. That coercion took

the form of misleading predatory conduct and aggressive litigation tactics,

described more fully below. Eventually, ICANN agreed to approve the .XXX

TLD, and to approve ICM as the XXX registry, not only in response to those

improper and coercive tactics but also because ICM promised to pay ICANN what

is expected to be millions of dollars in fees.

(f)

ICANN has a monopoly over the DNS and over the approval of TLDs

and their registries. There was no competitive process for the award of the .XXX

registry contract. ICANN awarded ICM that contract without soliciting or

accepting competing bids, and without any market considerations whatsoever, thus

awarding ICM monopoly control and free rein to impose anti-competitive prices

and practices within the distinct .XXX TLD. The .XXX registry contract itself

places no restrictions upon (and in fact enhances) ICM's abilities to exploit that

monopoly position to the disadvantage and harm of competition, consumers and

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 5 of 49 Page ID #:19

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Silberberg &
Knupp LLP

4268925.1

businesses. For example, the contract imposes no price restrictions of any kind on

ICM (despite such price restrictions in the contracts between ICANN and the

registries for other TLDs which host adult-content as well as other websites). It

also grants ICM a 10-year contract term which "shall" be perpetually renewed,

absent narrow exceptions, thus ensuring that ICM will continue to be forever

insulated from competition.

(g)

ICM has reacted to these circumstances with the anti-competitive

behavior expected of a monopolist. It has, for example, improperly exploited the

newly created market for .XXX defensive registrations by making such

registrations unreasonably expensive and difficult, and by placing onerous burdens

on parties seeking to protect their intellectual property rights. It has required that

registrants of names in .XXX waive legal rights and claims against ICM as a

condition of registering. It has reserved to itself some of the most popular or

desirable domain names, which it has sold at prices substantially above those in a

competitive market. Its Chairman Stuart Lawley has announced that he expects to

be able (and intends) to prevent the establishment of any other (potentially

competing) adult-content TLDs, including through a contractual promise by

ICANN not to approve such TLDs. Lawley has also announced that he projects

that ICM will earn annual profits of $200 million from operating the .XXX TLD —

profits to be earned by charging prices well above those in a competitive market.

Indeed, ICM is charging $60 annually for .XXX registrations, more than ten times

the annual registration charges in other relevant TLDs. As Lawley admitted in a

March 18, 2011 USA Today article in responding to complaints about such prices:

"This was always going to be a very lucrative arrangement."

(h) These activities have not only restrained trade among businesses by

making .XXX TLD services more expensive and of lower quality, but will

detrimentally affect consumers. For example, businesses forced to pay excessive

fees for .XXX defensive registrations will pass those expenses on to consumers,

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 6 of 49 Page ID #:20

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Mitchell 28
Silberberg &
Knepp LLP

4268925.1

either by charging consumers more or by offering consumers fewer or less costly

(and less appealing) services.

(i) Through their actions, ICANN and ICM have knowingly conspired to

eliminate competitive bidding and competition in the markets for certain .XXX

TLD registry services, with the intent to injure competition and consumers.

II. THE PARTIES

4.

Plaintiff Manwin Licensing International S.a.r.l. is and at all relevant

times was a business entity organized as a "Societe a responsabilite limitee" under

the laws of Luxembourg, and having its principal place of business in the City of

Luxembourg, Luxembourg. Manwin owns and licenses one of the largest

portfolios of premium adult-oriented website domain names and trademarks.

These include "YouPorn.com ," the domain name for the website which is the

world's most popular source for free adult-oriented streaming videos. Indeed,

YouPorn.com is consistently one of the top 100 most visited sites on the entire

Internet. Domain names and trademarks owned by Manwin also include

Pornhub.com, xTube.com, Brazzers.com , and numerous other of the world's most

popular adult entertainment websites. In addition, under license from Playboy

Enterprises, Inc., Manwin operates and manages all "Playboy" online content and

runs Playboy Television worldwide, using the "Playboy Premium Entertainment"

label. This Complaint refers to Manwin as "YouPorn."

5.

Plaintiff Digital Playground, Inc. ("Digital Playground") is and at all

relevant times was a corporation organized and existing under the laws of

California, and having its principal place of business in Van Nuys, California,

within the Central District of California. Digital Playground is a world leader in

adult-oriented filmmaking and interactive formats, boasting one of the world's

largest high definition libraries of original adult content. Digital Playground

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 7 of 49 Page ID #:21

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Mitchell 28
Silberberg &
Knupp LLP

4268925.1

operates and makes this content available through its websites, including

digitalplayground.com .

6.

Defendant ICANN is a:California non-profit public benefit

corporation, with its principal place of business in Marina Del Rey, California,

within the Central District of California. ICANN was created in 1998, in response

to a policy directive of the United States Department of Commerce, to administer

the Domain Name System. ICANN is charged by the Department of Commerce

with, among other things, selecting and entering into agreements with TLD registry

operators.

7.

Defendant ICM Registry, LLC ("ICM") is a Delaware limited liability

corporation, with its principal place of business in Palm Beach Gardens, Florida,

and doing business in the Central District of California. ICM currently acts under

contract with ICANN as the registry for the .XXX TLD.

8.

Plaintiffs are unaware of the true names or capacities of the

Defendants sued under the fictitious names DOES 1 through 10, inclusive.

Plaintiffs are informed and believe that DOES 1 through 10, and each of them,

either participated in performing the acts averred in this Complaint or were acting

as the agent, principal, alter ego, employee, or representative of those who

participated in the acts averred in this Complaint. Accordingly, Defendants

DOES 1 through 10 are each liable for all of the acts averred in this Complaint.

Plaintiffs will amend this Complaint to state the true names of Defendants DOES 1

through 10 when their identity is discovered.

III. JURISDICTION AND VENUE

9.

This is a case asserting claims under the Sherman Act, 15 U.S.C. §§ 1

and 2, et seq. This Court thus has subject matter jurisdiction pursuant to 28 U.S.C.

§ 1331 because this is a case arising "arising under ... laws of the United States."

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 8 of 49 Page ID #:22

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10.

This Court also has supplemental jurisdiction pursuant to 28 U.S.C.

§ 1367 over Plaintiffs' claims that arise under the laws of the State of California.

11. Defendant ICANN is subject to personal jurisdiction in the State of

California, including because it is a public benefit corporation organized under the

laws of the State of California, because it has its principal place of business in

Marina del Rey, California, and because its acts and omissions and the events

which are the subject of this Complaint took place in substantial part and caused

impacts in the State of California.

12. Defendant ICM is subject to personal jurisdiction in the State of

California, including because its acts and omissions and the events which are the

subject of this Complaint took place in substantial part and caused impacts in the

State of California.

13. Venue is proper in this judicial district pursuant to 28 U.S.C.

§ 1391(b) and 15 U.S.C. § 22 in that: (a) Defendants may be found and transact

business in this judicial district and are subject to personal jurisdiction in this

judicial district; and (b) a substantial part of the acts, omissions and events giving

rise to the claims asserted in this complaint occurred in this judicial district.

IV. FACTUAL BACKGROUND

A.

The DNS System

14. The Internet is an international network of interconnected servers and

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computers.

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Silberberg &
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4268925.1

15. The World Wide Web is a collection of files, or "websites," hosted on

computers and servers and made available to consumers via the Internet,

containing text, graphics, audio, and video.

16. Consumers typically access the World Wide Web using a software

application known as a browser (e.g., Microsoft Internet Explorer, Google Chrome

or Apple Safari).

8
COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



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17. Each computer or host server connected to the Internet has a unique

identity, established by its Internet Protocol address ("IP address"). An IP address

consists of four numbers between 0 and 255, separated by periods (e.g.,

123.45.67.89). The unique IP address ensures that users are directed to the

computer or host server for the particular website they intend to visit.

18. Because the string of numbers contained in IP addresses is difficult to

remember, the Domain Name System ("DNS") was introduced to allow individual

users to identify a computer using an easier-to-remember alphanumeric "domain

name" such as "YouPorn.com ." The unique domain name is incorporated into a

Uniform Resource Locator ("URL"). Internet users connect to a website by typing

the URL into (or linking to the URL through) their browser. The DNS ensures that

each unique alphanumeric "domain name" and URL corresponds to a specific

numerical IP address.

19. When an Internet user enters a domain name and URL into a browser,

the URL is sent to a DNS server. The server looks up the IP address assigned to

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that domain name. The browser then links to the server having that IP address and

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Mitchell 28
Silberberg &
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4268925.1

which hosts the desired website.

B.

Top Level Domains

20. Within each domain name, the alphanumeric field to the far right is

the Top Level Domain ("TLD"). The field to the left of the period preceding the

TLD is the Second Level Domain ("SLD"). The field (if any) to the left of the

period preceding the SLD is the Third Level Domain, and so on. For example, in

the domain name "YouPorn.com ," the TLD is ".com," and the SLD is "YouPorn."

(That name has no Third Level Domain.) Accordingly, TLDs are the highest

subdivisions of Internet domain names.

21. Most TLDs with three or more characters are referred to as "generic"

TLDs ("gTLDs"). Common gTLDs include .com, .org, and .biz. gTLDs can

either be "sponsored" or "unsponsored." A sponsored TLD ("sTLD") is a

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 10 of 49 Page ID #:24

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specialized TLD that has a sponsor, usually an organization representing by

consensus the narrower industry, interest group, or community most affected by or

interested in the particular TLD. The sponsor makes policy decisions for the

sTLD. An example of an sTLD is .museum, the sTLD sponsored by and for the

use of museums, museum associations and museum professionals.'

22. There are currently twenty-two gTLDs, fourteen of which are sTLDs.

23. A particular assigned organization is responsible for operating each

TLD. These operating responsibilities include overseeing the sale and allocation

of domain names in the TLD and maintaining a database directory or "zone file,"

also commonly known as a "registry," ensuring that each Second Level Domain

name within the TLD is assigned and "resolves" to a unique numerical IP Address.

The organization responsible for operating a particular TLD is referred to as a

"registry operator" or "registry." Registries in turn authorize separate companies

called "registrars" to directly sell the TLD domain names to the ultimate

businesses or consumers owning and using those names in the TLD. The ultimate

owners or users are called "registrants." Registrars like GoDaddy.com and

Network Solutions are approved by many TLDs to sell Second Level Domain

Names in those TLDs. Registrants buy domain names through such registrars

which then register those names with the TLD registry. Registrants pay fees to

registrars, which themselves then pay fees to the registries (usually on an annual or

other periodic basis), to register domain names within particular TLDs. The

registries for the TLDs in turn pay fees to ICANN, periodically (e.g. quarterly) on

a per-registration or per-renewal basis.

C.

ICANN's Internet Role

24. Before ICANN's formation in 1998, overall management of the

Domain Name System was carried out under contractual arrangements between the

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Silberberg &
Knupp LLP

4268925.1

1 See http://about.museum/background/

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



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Silberberg &
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4268925.1

United States Government, which developed and initially controlled the Internet,

and other parties.

25.

In 1998, the U.S. Department of Commerce ("DOC") and ICANN

entered into the first of a series of agreements that assigned to ICANN overall

authority to manage the DNS. Under those agreements, ICANN's duties include

determining what new TLDs to approve, choosing registries for existing or newly

approved TLDs, and contracting with the registries to operate the TLDs. ICANN

also has some responsibility over the root server system. The root server system is

the physical system of related computers which store the authoritative master list

of all TLDs and which thus permit users of the Internet to reach the intended

websites and email addresses.

26. According to its Articles of Incorporation, ICANN was established

"for the benefit of the Internet industry as a whole." ICANN's Articles of

Incorporation state its purposes as follows: "the Corporation shall . . . pursue the

charitable and public purposes of lessening the burdens of government and

promoting the global public interest in the operational stability of the Internet by

(i) coordinating the assignment of Internet technical parameters as needed to

maintain universal connectivity on the Internet; (ii) performing and overseeing

functions related to the coordination of the Internet Protocol (IP') address space;

(iii) performing and overseeing functions related to the coordination of the Internet

domain name system (`DNS'), including the development of policies for

determining the circumstances under which new top-level domains are added to the

DNS root system; (iv) overseeing operation of the authoritative Internet DNS root

server system; and (v) engaging in any other related lawful activity in furtherance

of items (i) through (iv)."

27.

Pursuant to its Bylaws, ICANN receives input from several Advisory

Committees. One of those committees is the Governmental Advisory Committee

("GAC"). Membership in the GAC is open to all national governments. In

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COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



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addition, other multinational inter-governmental or economic organizations may

under certain circumstances participate in the GAC. ICANN's Bylaws provide

that "the advice of the Governmental Advisory Committee on public policy matters

shall be duly taken into account, both in the formulation and adoption of policies."

28.

In 2009, in one of its agreements with the DOC, ICANN reaffirmed

its commitments to the DOC that: "ICANN will ensure that as it contemplates

expanding the top-level domain space, the various issues that are involved

(including competition, consumer protection, security, stability and resiliency,

malicious abuse issues, sovereignty concerns, and rights protection) will be

adequately addressed prior to implementation." In other bylaws and agreements

with the DOC, ICANN also confirms that its activities in approving TLDs and

registries will appropriately consider the need for market competition and the

protection of rights in names and other intellectual property.

29.

In order to fulfill its commitments under its agreements with the DOC

and to comply with its Articles of Incorporation and Bylaws, the ICANN Board in

2006 instructed ICANN to conduct economic studies regarding TLD competition

issues. These issues included the question whether individual TLDs compete with

one another or function as self-contained markets. The U.S. Department of Justice

reiterated the need for such studies in 2008.

20 (cid:9)D. History Of The .XXX TLD

21 (cid:9) 1. (cid:9)ICM Fails To Obtain .XXX Approval In 2000.

22 (cid:9)30. In about 2000, ICM first applied to ICANN for approval of a new

23 .XXX TLD, intended primarily for adult content. ICANN rejected the application,

24 finding among other things that "ICM Registry's application for an .xxx TLD does

25 not appear to meet unmet needs. Adult content is readily available on the

26 Internet." ICANN also "not[ed] the opposition of at least some segments of the

27 adult online content industry to a .xxx TLD." That opposition was based in part on

28 concerns that a .XXX TLD could lead to "ghettoization" of adult content solely

Mitchell
Silberberg &
Knupp LLP (cid:9)

4268925.1

12
COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 13 of 49 Page ID #:27

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within a single TLD, and thus to enhanced risks that such materials could be easily

and improperly censored.

2. (cid:9)ICM Fails to Obtain .XXX Approval In 2004.

31.

In 2004, ICM applied again to have ICANN approve the .XXX TLD,

this time as a sponsored TLD. Under its rules, ICANN would not approve

sponsored TLDs unless they "address[ed] the needs and interests of a clearly

defined industry (the Sponsored TLD Community), which can benefit from the

establishment of a TLD operating in a policy formulation environment in which

the community would participate." The ICANN rules also required that the

"Sponsored TLD Community" be "precisely defined"; that the Community have

"differentiated" needs that would benefit from a separate sTLD; that the sTLD

applicant propose a "sponsoring organization" that would produce sTLD polices

benefitting and that would represent the Sponsored Community; and that the

proposed sTLD enjoy "broad-based support" from the Sponsored Community.

32. As part of its application, ICM proposed the International Foundation

for Online Responsibility ("IFFOR") as the required sponsoring organization for

the .XXX TLD. IFFOR supposedly was an independent organization representing

the "responsible" adult entertainment community. However, Plaintiffs are

informed and believe that ICM and its Chairman Stuart Lawley in fact created

IFFOR for the sole purpose of the .XXX TLD application, and that they dominated

and manipulated IFFOR as expedient for the attempted approval of the .XXX

TLD. Plaintiffs are informed and believe that IFFOR does not represent the

responsible (or any significant) adult entertainment community.

33. On or about August 27, 2004, ICANN rejected ICM's 2004

application for a .XXX TLD in part because ICM had failed to demonstrate a

defined sponsorship community which broadly supported and would benefit from

.XXX.

27
Mitchell 28
Silberberg &
Knupp LLP

4268925.1

13
COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRIAL



Case 2:11-cv-09514-PSG-JCG Document 1 Filed 11/16/11 Page 14 of 49 Page ID #:28

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3. (cid:9)ICM's. Misleading And Predatory Campaign To Obtain

.XXX Approval.

34.

Plaintiffs state the averments in paragraphs 35-45 below on

information and belief.

35.

Leading to and after the rejection of its 2004 application, ICM

embarked on a predatory campaign of misrepresentations and other misconduct in

an effort to persuade ICANN that ICM and the .XXX TLD met the sponsorship

criteria. More specifically:

(a) Anticipating ultimate ICANN approval of its proposed .XXX TLD,

ICM permitted members of the adult entertainment industry to preregister in .XXX

names that such members already used for other websites. Members desired such

pre-registration in order to prevent their names from being misappropriated by

others in the .XXX TLD. While desiring to thus protect their names, many such

members also opposed .XXX, and ICM promised them that it would not "count"

their registrations as support for the .XXX proposal. Despite that promise, ICM

represented to ICANN that the pre-registrants supported .XXX.

(b). ICM continued to claim support from several major adult

entertainment industry companies, when in fact those companies subsequently

opposed the .XXX application or took neutral positions.

(c)

ICM attempted to obtain support for .XXX from the Free Speech

Coalition ("FSC"), an adult entertainment industry umbrella group, by offering

various inducements, including cash and Board memberships on IFFOR, and by

attempting to "stack" FSC meetings with supporters.

(d)

ICM generated fake comments in support of its application by posting

a link that purported to lead to additional information about the .XXX proposal, but

which in fact automatically generated emails to ICANN supporting IOM's .XXX

27
Mitchell 28
S ilberberg &
Knupp LLP

4268925.1

application.

14
COMPLAINT FOR VIOLATIONS OF THE SHERMAN ANTITRUST ACT, THE CARTWRIGHT ACT,
AND UNFAIR COMPETITION; DEMAND FOR JURY TRI

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