FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

COALITION FOR ICANN 

TRANSPARENCY, INC., a Delaware

corporation, No. 07-16151

Plaintiff-Appellant, D.C. No.  v. CV-05-04826-RMW

VERISIGN, INC., a Delaware OPINION

corporation,

Defendant-Appellee. 

Appeal from the United States District Court

for the Northern District of California

Ronald M. Whyte, District Judge, Presiding

Argued and Submitted

December 8, 2008—San Francisco, California

Filed June 5, 2009

Before: Mary M. Schroeder, A. Wallace Tashima and

William A. Fletcher, Circuit Judges.

Opinion by Judge Schroeder

6741
COUNSEL

Bret A. Fausett, Los Angeles, California, for the plaintiffappellant. 

Ronald L. Johnston, Los Angeles, California, for defendantappellee. 

Dennis M. Hart, Washington, DC, for amicus curiae Internet

Commerce Association. 

OPINION

SCHROEDER, Circuit Judge: 

This appeal is about whether the plaintiff, Coalition for

ICANN Transparency, Inc., using antitrust statutes drafted in

the late 19th century, has successfully stated claims in connection with the administration of the Internet domain name

system, so essential to the operation of our sophisticated 21st

century communications network. The district court ruled that

the plaintiff failed. With the benefit of extensive briefing, collegial discussions and amicus participation on appeal from

other players in the domain name system, we hold that the

plaintiff has stated claims under both Sections 1 and 2 of the

Sherman Act, 15 U.S.C. §§ 1-2. We reverse and remand for

further proceedings. 

I. Overview 

Plaintiff Coalition for ICANN Transparency (“CFIT”) is an

organization composed of participants in the Internet domain

name system (“DNS”), including website owners. The heart

of the IT industry is located in the Silicon Valley, which lies

within the Northern District of California. CFIT filed its complaint in 2005 in the Northern District against defendant VeriCFIT v. VERISIGN, INC. 6745
Sign, the corporation that acts as the sole operator of the

“.com” and “.net” domain name registries. 

VeriSign operates each registry pursuant to a contract with

the Internet Corporation for Assigned Names and Numbers

(“ICANN”), a non-profit oversight body that coordinates the

DNS on behalf of the United States Department of Commerce. Pursuant to these contracts, VeriSign receives a certain

price for registering each domain name. It is not disputed that

there can only be one operator for each domain name registry

at any one time. Therefore, the only viable competition can

take place in connection with obtaining a new contract after

expiration of the old one. The .com agreement entered into by

ICANN and VeriSign in 2006, after no competitive bidding,

provides that the price of domain names can increase by seven

percent over four of the six succeeding years. The .net agreement, which was entered into as a result of competitive bidding, contained price caps that were set to expire on

December 31, 2006, leaving no limitation on the price that

could be charged for .net names. Each contract has a presumptive renewal provision. 

CFIT’s complaint endeavored to state claims against VeriSign under Section 1 of the Sherman Act and under California’s counterpart, the Cartwright Act, for conspiracy in

restraint of trade in connection with the terms of the .com and

.net contracts’ pricing and renewal provisions. In essence,

CFIT sought to show that the prices were artificially high and

that the renewal provisions wrongfully restrained competition

for successor contracts. 

The complaint also endeavored to state claims under Section 2 of the Sherman Act, alleging that VeriSign’s conduct

in obtaining the anti-competitive provisions constituted

monopolization or attempted monopolization of the .com and

.net registration markets. In addition, the complaint sought an

injunction against VeriSign’s proposed service for registration

6746 CFIT v. VERISIGN, INC.
of expiring domain names, on the ground it constituted an

attempted monopolization of that allegedly separate market. 

The district court, after some discovery and several opportunities for CFIT to amend the complaint, dismissed the

action with prejudice for failure to state claims under state or

federal law in connection with either the .com or the .net contract. It held that CFIT had not sufficiently alleged that either

the terms of the contracts or VeriSign’s conduct in obtaining

the contracts amounted to antitrust violations. The court also

held that CFIT failed sufficiently to allege that a market for

expiring domain names existed separate and apart from the

market for newly registered domain names. 

In this appeal, CFIT contends that the district court failed

to appreciate the seriousness of the allegations of anticompetitive conduct and that, in rejecting the existence of a

separate market for expiring domain names, the district court

improperly relied on already outdated authority from earlier

in this young century. We now agree with CFIT, at least with

respect to the claims challenging the terms and award of the

.com contract and asserting the existence of a separate market

for expiring domain names. We therefore reverse. 

II. The Players 

Plaintiff CFIT is a non-profit corporation composed of

DNS stakeholders, including domain name registrars and

owners of domain names (registrants). CFIT alleges that its

members, including both registrars and registrants, have an

interest in ensuring that conditions in the domain name registration market remain fair and competitive. 

ICANN is a nonprofit corporation that was created in 1998,

in response to a policy directive of the Department of Commerce, to administer the domain name system on the Department’s behalf. ICANN is charged by the Department of

Commerce with selecting and entering into agreements with

CFIT v. VERISIGN, INC. 6747
registry operators such as VeriSign. ICANN was named as a

defendant in CFIT’s original complaint and in its First

Amended Complaint, but CFIT dropped ICANN as a defendant in the Second Amended Complaint, from which this

appeal arises. It seeks to maintain claims only against VeriSign. 

Defendant VeriSign is a corporation that, through its contractual relationship with ICANN, acts as the sole operator of

the .com and .net domain name registries. This means that

VeriSign manages the definitive databases of registered .com

and .net domain names. VeriSign has held this position since

2001, prior to which its predecessor-in-interest, Network

Solutions, Inc. (“NSI”), managed the databases. 

III. Nature and Terms of the Agreements 

VeriSign has been the sole operator of the .com and .net

registries since 2001, when it entered into two separate agreements with ICANN (the “2001 .com Agreement” and the

“2001 .net Agreement,” respectively). Those agreements

supercede ICANN’s previous agreements with NSI. The 2001

Agreements imposed on VeriSign a price cap of $6 per year

for registration, renewal, or extension of any domain name.

Each of the 2001 Agreements contained a renewal provision

that allowed ICANN to place the contract up for competitive

bidding upon its expiration. 

When the 2001 .net Agreement expired in 2005, there was

a competitive bidding process that resulted in the selection of

VeriSign’s bid. VeriSign entered into a new agreement with

ICANN (the “2005 .net Agreement”). Before the 2001 .com

Agreement was due to expire in 2007, however, VeriSign and

ICANN agreed to extend it with a new contract (the “2006

.com Agreement”). Both the 2006 .com Agreement and the

2005 .net Agreement provide for automatic renewal upon

expiration unless a court or arbitrator issues a final order finding VeriSign to be in breach of the Agreement, and VeriSign

6748 CFIT v. VERISIGN, INC.
fails to cure the breach. The 2006 .com Agreement also

increases the maximum price VeriSign can charge for domain

name registrations. The previous contract’s $6 cap was maintained until December 31, 2006, but the new contract provides

that cap may be increased seven percent per year in four of

the following six years. The 2005 .net Agreement does not

contain an express price increase provision. Its price cap of

$4.25 per domain name expired on December 31, 2006, leaving no cap in its place. 

IV. CFIT’s Claims 

CFIT’s complaint included claims under Sections 1 and 2

of the Sherman Act, 15 U.S.C. §§ 1 & 2. CFIT sought to state

a Section 1 claim, for conspiracy in restraint of trade, in connection with the pricing and renewal provisions of both the

2005 .net Agreement and the 2006 .com Agreement. CFIT

claimed that VeriSign and ICANN conspired to restrain trade

by setting prices for VeriSign’s registry services that were

substantially above the prices that would result from a competitive market. Moreover, CFIT alleged that VeriSign and

ICANN violated Section 1 by imposing a presumptive

renewal provision in both the 2006 .com and 2005 .net Agreements, all but ensuring VeriSign’s continued market dominance by reducing or eliminating competition for successor

contracts. 

CFIT’s first claim under Section 2 was for monopolization

and attempted monopolization of the .com and .net markets.

CFIT alleged that VeriSign engaged in improper and predatory conduct, including financial pressure, vexatious litigation, and negative press coverage, in order to induce ICANN

to enter into agreements with terms that unlawfully favored

VeriSign. CFIT claimed that VeriSign eventually settled its

allegedly vexatious suit against ICANN by offering to pay

ICANN a multi-million dollar fee in exchange for favorable

terms in the 2006 .com and 2005 .net Agreements, thus doing

away with any competition for the next contract. 

CFIT v. VERISIGN, INC. 6749
CFIT’s second claim under Section 2 concerned the existence of a separate market for expiring domain names. Expiring domain names are names that have fallen back, or are

about to fall back into the registry database as a result of nonrenewal by their current owners. CFIT alleged that expiring

domain names are sufficiently distinct from other types of

domain names as to constitute a separate market for antitrust

purposes. 

CFIT further alleged that VeriSign planned to “leverage”

its monopoly in the .com and .net markets into the market for

expiring names. According to CFIT’s complaint, pursuant to

a term in the 2006 .com Agreement permitting VeriSign to

launch new registry-related services, VeriSign planned to

launch a Central Listing Service (“CLS”) to replace the current system for registration of expiring domain names. CFIT

alleged that VeriSign’s proposed CLS system will allow it to

leverage its existing monopoly in the .com and .net registration markets to achieve a monopoly of the market for expiring

domain names. 

V. Legal Analysis 

A. CFIT’s Claims Under Section 1 of the Sherman Act

[1] Section 1 of the Sherman Act prohibits “contract[s],

combination[s] in the form of trust or otherwise, or conspirac-

[ies], in restraint of trade or commerce.” 15 U.S.C. § 1. To

state a claim under Section 1, a plaintiff must allege facts that,

if true, will prove: (1) the existence of a conspiracy, (2) intention on the part of the co-conspirators to restrain trade, and (3)

actual injury to competition. Kendall v. Visa U.S.A., Inc., 518

F.3d 1042, 1047 (9th Cir. 2008) (citing Les Shockley Racing

Inc. v. Nat’l Hot Rod Ass’n, 884 F.2d 504, 507 (9th Cir.

1989)). 

CFIT sought to state a Section 1 claim in connection with

the pricing and renewal provisions of the 2006 .com Agree6750 CFIT v. VERISIGN, INC.
ment and the 2005 .net Agreement. CFIT alleged that ICANN

and VeriSign conspired to set artificially high prices for VeriSign’s services and to ensure that VeriSign would receive

successor contracts with ICANN without having to go

through a competitive bidding process. We conclude that

CFIT adequately alleged a Section 1 violation with respect to

the 2006 .com Agreement. 

1. Renewal

CFIT challenged the renewal term in both the .com and .net

contracts providing that VeriSign will receive automatic

renewal upon expiration of each contract unless a court or

arbitrator issues a final order finding VeriSign to be in breach

of the Agreement, and VeriSign fails to cure the breach. CFIT

alleged the renewal term unlawfully restrains competition

because the provision that would trigger a competitive re-bid

for the contract is “illusory,” and that “at the time they executed the Agreement[s], both ICANN and VeriSign understood that [the provision] never would be triggered.” CFIT

alleged that the threat of losing each contract in a competitive

re-bid is essential to protect competition in that it “benefits

consumers by keeping prices in check, . . . by maintaining

solid and reliable performance of the registry, and by preventing the registry from undertaking abusive practices that would

financially benefit the registry at the expense of the end-user’s

experience.” The district court found that CFIT’s complaint

was insufficient to state a challenge to the renewal provision,

concluding that CFIT’s allegation regarding the illusory

nature of the re-bid provision was “conclusory and speculative,” and insufficient to allege a violation of antitrust law. 

[2] We have expressly held, however, that concerted action

between co-conspirators to eliminate competitive bidding for

a contract is an actionable harm to competition. Harkins

Amusement Enters., Inc. v. Gen. Cinema Corp., 850 F.2d 477,

487 (9th Cir. 1988). In Harkins, the defendants were distributors and exhibitors of films who “rigged” a bidding process in

CFIT v. VERISIGN, INC. 6751
order to ensure that the exhibitors would obtain licenses to

display films released by the distributors, thus excluding from

competition the plaintiff, a rival film exhibitor. Id. at 487-88.

We found a Section 1 violation for injury to competition even

though the only entity harmed, in the particular circumstances

of that case, was the plaintiff. Id. at 488. The allegation in this

case regarding the elimination of competitive bidding at the

expiration of each successive registry agreement means that

any other potential registry operator is excluded from competition, making the alleged harm to competition in this case

even more severe than that at issue in Harkins. 

[3] CFIT’s complaint is not limited to alleging that the

renewal provision harms individual competitors in the DNS.

Rather, CFIT alleged that competition itself has been eliminated as a result of VeriSign and ICANN’s conspiratorial conduct. This is precisely the type of allegation required to state

an injury to competition. Austin v. McNamara, 979 F.2d 728,

738 (9th Cir. 1992) (to state injury to competition, plaintiff

must allege conduct that “actually causes injury to competition, beyond the impact on the claimant”). CFIT has also

alleged that consumers are harmed by this anti-competitive

restraint, in the form of higher prices for registration of

domain names, and potentially lower-quality services. In

combination with the allegations regarding the existence of

the conspiracy between VeriSign and ICANN as well as the

intent to restrain competition, these allegations of harm to

competition are sufficient to state a claim under Section 1.

Kendall, 518 F.3d at 1047. 

[4] Because restraint of trade claims under Section 1 do

require the showing of a conspiracy whose members intended

to restrain trade, see id., we conclude that CFIT’s allegations

regarding the renewal provision in the contracts is made out

only with respect to the .com contract. CFIT has adequately

pled the existence of a conspiracy between VeriSign and

ICANN, and that VeriSign had the intent to restrain trade

when it entered into the .com contract. However, the .net con6752 CFIT v. VERISIGN, INC.
tract was reached after a competitive bidding process. CFIT

has not adequately alleged that conspiratorial conduct to

restrain trade was involved in the making of the .net agreement. CFIT’s allegations concerning ICANN and VeriSign’s

adoption of the presumptive renewal provision are therefore

sufficient to make out a Section 1 claim for restraint of trade

with respect to the 2006 .com Agreement alone. 

2. Pricing

CFIT further alleged in its complaint that the sevenpercent-per-year increase in the allowable fee under the 2006

.com Agreement exceeds the rate competitive market conditions would produce. CFIT’s complaint stated that if the .com

Agreement had been put out for competitive bidding, “the

costs of domain name registrations would have fallen to at

least as low as $3.00 per domain name, with at least the same

level and quality of services provided by VeriSign.” Counsel

for CFIT stated at oral argument before the district court that

potential competitors of VeriSign had stated publicly that, if

awarded the .com contract, they could and would offer registry services at or below $3 per domain name. 

The district court held that CFIT had not stated a cognizable claim regarding the pricing provisions in the 2006 .com

Agreement, finding that an increase in the price of services,

standing alone, did not give rise to antitrust liability. The district court relied primarily on Alaska Airlines, Inc. v. United

Airlines, Inc., 948 F.2d 536 (9th Cir. 1991), in which this

court held that a high price alone is not an antitrust violation.

We stated in Alaska Airlines that while “setting a high price

may be a use of monopoly power, . . . it is not in itself anticompetitive.” Id. at 549 (quoting Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 294 (2d Cir. 1979)).

[5] The district court’s reliance on Alaska Airlines was misplaced, however, because the pricing claims at issue in that

case were monopolization claims arising solely under Section

CFIT v. VERISIGN, INC. 6753
2 of the Sherman Act. See id. at 541 n.8. In this case, by contrast, CFIT’s allegation is that the pricing provision in VeriSign and ICANN’s 2006 .com Agreement unlawfully

restrains trade, in violation of Section 1. Alaska Airlines itself

distinguishes between the proper inquiries the court should

undertake in the Section 1 and Section 2 contexts: “While

concerted conduct is subject to sanction [under Section 1] if

it merely restrains trade, unilateral conduct is subject to sanction [under Section 2] only if it either actually monopolizes or

threatens monopolization.” Id. at 541 (citing Copperweld

Corp. v. Indep. Tube Corp., 467 U.S. 752, 767-69 (1984)). In

other words, an entity cannot be held liable for antitrust violations if it simply unilaterally increases its prices, absent a

showing that it either conspired with another entity in order

to restrain trade, or acted in a market in which it holds or is

attempting to hold a monopoly. See Copperweld, 467 U.S. at

768-69 (“Congress treated concerted behavior more strictly

than unilateral behavior . . . . [because] [c]oncerted activity

inherently is fraught with anticompetitive risk.”). 

[6] In this case, CFIT’s allegation is not that VeriSign took

unilateral action to increase the price of its services, but that

VeriSign and ICANN undertook concerted action to restrain

trade by imposing prices higher than market rate and under

conditions hostile to competition. Applying the correct

inquiry for Section 1 violations, we conclude that CFIT has

adequately alleged that the pricing provision in VeriSign and

ICANN’s 2006 .com Agreement unlawfully restrains trade.

CFIT has alleged the existence of a conspiracy, and that VeriSign and ICANN had the intent to impose terms for pricing

and price increases that restrained trade. CFIT’s allegations

concerning the prices alternative registry operators would

offer, were they able to compete with VeriSign for successor

contracts, are adequate to state a claim of actual injury to

competition, in that potential competitors are allegedly unable

to bid for operation of the .com registry, and that consumers

are allegedly unable to benefit from the positive effects of that

competition. Harm to consumers in the form of higher prices

6754 CFIT v. VERISIGN, INC.
resulting from competitive restraints has long been held to

constitute an actual injury to competition in the Section 1 context, see Am. Ad Mgmt., Inc. v. GTE Corp., 92 F.3d 781, 791

(9th Cir. 1996) (“[I]t is difficult to image a more typical

example of anti-competitive effect than higher prices . . . .”),

and CFIT’s complaint adequately alleges that such injury has

occurred and is still occurring. CFIT’s complaint is therefore

sufficient to state a claim under Section 1 in connection with

the pricing provisions of the 2006 .com Agreement. 

[7] CFIT also attempted to allege a Section 1 violation in

connection with the pricing terms in the 2005 .net Agreement.

The .net contract imposed an initial price cap of $4.25 per

domain name registration, but provided that this cap would

expire on December 31, 2006, leaving no price limitation in

place. Although this claim involved terms comparable to

those in the .com contract, CFIT has not made out a Section

1 violation for the .net pricing agreement. The .net contract

was reached as a result of competitive bidding, not conspiratorial action. CFIT’s assertion that some terms of the agreement changed after VeriSign’s bid was accepted, without

allegations of materiality, does not suffice to state a claim for

existence of a conspiracy and the intent to restrain trade. See

id.

B. CFIT’s Claims Under Section 2 of the Sherman Act

CFIT also asserted claims under Section 2 of the Sherman

Act, alleging first that VeriSign’s predatory conduct in obtaining the anti-competitive provisions described above constituted monopolization or attempted monopolization of the

.com and .net registration markets. CFIT’s second Section 2

claim alleged the existence of a separate market for expiring

domain names, and attempted monopolization of that market.

With respect to the latter claim, the district court held that

CFIT failed to state a claim because it failed to allege that

expiring names are sufficiently distinct from other types of

names. With respect to the former, the district court held that

CFIT v. VERISIGN, INC. 6755
CFIT also failed to state a claim for predatory conduct. The

district court, apparently construing CFIT’s claim as pertaining solely to VeriSign’s initiation of litigation against

ICANN, held that CFIT failed to state a claim because it

alleged only that VeriSign’s allegedly vexatious litigation

against ICANN was “oppressive and costly,” not that it was

“baseless.” In making this determination, the court relied on

the doctrine that litigation activity is immune from antitrust

liability unless it is “a mere sham.” See Prof’l Real Estate

Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49,

56 (1993) (quoting E.R.R. Presidents Conf. v. Noerr Motor

Freight, Inc., 365 U.S. 127, 144 (1961)); see also United

Mine Workers v. Pennington, 381 U.S. 657, 670 (1965). 

1. Predatory Conduct 

CFIT alleged that the 2006 .com Agreement and the 2005

.net Agreement were reached through improper conduct by

VeriSign, including financial pressure and vexatious litigation

against ICANN. CFIT alleged that in order to get ICANN to

agree to the terms VeriSign desired, VeriSign paid lobbyists

to support its position, “stacked” ICANN’s public meetings

with VeriSign supporters, hired purportedly independent

organizations and individuals to advocate VeriSign’s position,

paid bloggers to attack ICANN’s reputation, planted news

stories critical of ICANN in mainstream media, threatened

ICANN with litigation, arbitration, and government investigation, and indeed eventually brought suit against ICANN in

federal and state court. VeriSign’s suit against ICANN was

settled, allegedly as a result of VeriSign’s offer to pay

ICANN a fee of between $6 and $12 million in exchange for

the favorable terms in the agreements. VeriSign and ICANN’s

Settlement Agreement expressly provided that VeriSign “will

not participate in, contribute monies for, encourage or provide

other support for any activities by or for third parties that seek

to undermine ICANN’s role [as ‘the appropriate technical

coordination body for the DNS’], and it will immediately

cease any such ongoing activities.” Settlement Agreement

6756 CFIT v. VERISIGN, INC.
between ICANN and VeriSign, http://www.icann.org/en/tlds/

agreements/verisign/ICANN-VRSN-settlement-agreement2005.pdf, at 1. 

In concluding that CFIT failed to state a claim for predatory

conduct, the district court erroneously construed the allegation

in the complaint as pertaining solely to VeriSign’s litigation

against ICANN, rather than to the predatory and harassing

activities that accompanied that litigation. The district court’s

reliance on the Noerr-Pennington immunity doctrine therefore

was misplaced, because Noerr-Pennington immunizes only

litigation activity, not other forms of threats or harassment. 

[8] We have long held that Section 2 claims may be premised upon predatory conduct that is aimed at achieving or

maintaining a monopoly in a given market. We have

explained that a claim for monopolization of trade has two

elements: “the possession of monopoly power in the relevant

market and . . . . the acquisition or perpetuation of this power

by illegitimate ‘predatory’ practices.” Alaska Airlines, 948

F.3d at 541-42 (citing Aspen Skiing Co. v. Aspen Highlands

Skiing Co., 472 U.S. 585, 596 n.19 (1985); Catlin v. Wash.

Energy Co., 791 F.2d 1343, 1348 (9th Cir. 1986)). Similarly,

to state a claim for attempted monopolization, the plaintiff

must allege facts that, if true, will prove: “(1) that the defendant has engaged in predatory or anticompetitive conduct with

(2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power.” Cascade Health Solutions v. PeaceHealth, 515 F.3d 883, 893 (9th Cir. 2008)

(quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447,

456 (1993)). 

[9] CFIT has alleged that VeriSign’s predatory litigation

activity was aimed at coercing ICANN to perpetuate VeriSign’s role as exclusive regulator of the .com domain name

market by awarding VeriSign the 2006 .com Agreement without any competitive bidding, and by agreeing to the terms that

favored VeriSign. These allegations meet the requirements

CFIT v. VERISIGN, INC. 6757
articulated in Cascade Health Solutions for stating an

attempted monopolization claim. 515 F.3d at 893. 

[10] Moreover, the Supreme Court has held that an entity

may be prosecuted for a Section 2 violation on the basis of

improper coercion of a standards-setting body. In Allied Tube

& Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 495-97

(1988), the Court imposed Section 2 liability on the defendant, a manufacturer of steel electrical conduits. This liability

was for predatory actions undertaken to coerce the National

Fire Protection Association (“NFPA”), a body that published

product standards and building codes, to publish standards

barring the use of plastic conduits, a rival product which the

plaintiff manufactured. The activities undertaken by the

defendant in Allied Tube included such conduct as packing

NFPA meetings with paid supporters of the defendant who

would advocate for the banning of plastic pipes. Id. at 496.

The Court noted that even such “unethical and deceptive practices” are protected from antitrust liability where they are

either directly aimed at or “ ‘incidental’ to a valid effort to

influence government action.” Id. at 499 (citing Noerr, 365

U.S. at 140-41). However, the Court explained that predatory

activities aimed at private standards-setting bodies, like

NFPA, do not enjoy such categorical protection from liability.

The Court pointed to the “procompetitive advantages” of private standards-setting organizations whose decisions are insulated from “being biased by members with interests in stifling

product competition.” Id. at 501. In concluding that the defendant’s predatory activities subjected it to liability, the Court

emphasized the fact that the NFPA, the body the defendant

sought to coerce, was a private organization without any

accountability to the public. Id. at 502. 

[11] CFIT has essentially alleged that ICANN is a private

standards-setting body akin to the NFPA. ICANN administers

the DNS and is responsible for entering into agreements with

registry operators like VeriSign. According to the complaint,

ICANN’s mission includes a commitment to promoting com6758 CFIT v. VERISIGN, INC.
petition for the contracts. CFIT’s allegations further state that

ICANN, like the NFPA, is a private body with no public

accountability. These allegations are consistent with the view

held by commentators on the subject, who have, indeed, identified Allied Tube as providing the strongest argument in favor

of imposing antitrust liability on those who seek to coerce

ICANN. See Michael Froomkin & Mark A. Lemley, ICANN

and Antitrust, 1 U. Ill. L. Rev. 1, 72-73 (2003) (noting that

“given ICANN’s private status, VeriSign will face antitrust

liability for persuading a private company in a position of

power to grant it control over a market,” and naming Allied

Tube as the “closest analogue”). We hold, therefore, that pursuant to The Supreme Court’s holding in Allied Tube, CFIT

has adequately alleged that VeriSign’s improper coercion of

ICANN and attempts to control ICANN’s operations in its

own favor violated Section 2. 

[12] CFIT also attempted to state a claim of predatory conduct in the .net registration market. The complaint’s allegations did not reflect any assertion that VeriSign’s predatory

activities had any bearing on the competitive bidding process

that resulted in the 2005 .net Agreement. Accordingly, we

hold that CFIT’s claim of predatory conduct is made out with

respect to the 2006 .com Agreement only.

2. Expiring Domain Names Market 

The issue presented with respect to the claim of attempted

monopolization of expiring domain names is whether the

existence of a separate market was adequately pled. CFIT

alleged that expiring domain names are more valuable than

other names because, in all likelihood, they have already been

advertised by the previous owner and already have web traffic. CFIT alleged that expiring domain names are in higher

demand and command higher prices due to their unique features. In other words, expiring names differ from, and are

more valuable than, names not previously used. 

CFIT v. VERISIGN, INC. 6759
[13] A relevant market, for antitrust purposes, “can be

broadly characterized in terms of the ‘cross-elasticity of

demand’ for or ‘reasonable interchangeability’ of a given set

of products or services.” M.A.P. Oil Co., Inc. v. Texaco Inc.,

691 F.2d 1303, 1306 (9th Cir. 1982) (quoting United States

v. E.I. duPont de Nemours & Co., 351 U.S. 377, 395 (1956)).

We consider whether “the product and its substitutes are reasonably interchangeable by consumers for the same purpose,”

as well as “industry or public recognition of the submarket as

a separate economic entity, the product’s peculiar characteristics and uses, unique production facilities, distinct customers,

distinct prices, sensitivity to price changes, and specialized

vendors.” Id. (citations omitted). 

The district court relied on two out-of-circuit, district court

cases to conclude that the complaint failed adequately to

allege that the market for expiring domain names is separate

from the market for other types of domain names. See Weber

v. Nat’l Football League, 112 F. Supp. 2d 667 (N.D. Ohio

2000); Smith v. Network Solutions, Inc., 135 F. Supp. 2d 1159

(N.D. Ala. 2001). In Weber, the plaintiff brought a Section 2

claim against two professional football teams, the New York

Jets and the Miami Dolphins, who sought to prevent the plaintiff from registering the domain names “jets.com” and “dolphins.com.” 112 F. Supp. 2d at 673. The plaintiff alleged that

the market “should be defined by the demand for the domain

names ‘jets.com’ and ‘dolphins.com.’ ” Id. The court rejected

the plaintiff’s claim that the relevant market for antitrust purposes should be circumscribed to the market for a particular

name, holding instead that the market should be “defined very

broadly, in terms of domain names in general.” Id. at 673-74.

[14] Weber is similar to this case only insofar as it also

involved antitrust claims defining a market for domain names.

We agree with that court that a market should not be defined

in terms of a single domain name. CFIT’s complaint, however, does not define the relevant market so narrowly. Rather,

it alleges that expiring domain names, as a group, are suffi6760 CFIT v. VERISIGN, INC.
ciently distinguishable from other domain names so as to constitute a separate market. Weber did not deal with an alleged

market for expiring domain names. 

The second case, Smith v. Network Solutions, did address

the question of whether a separate market for expiring domain

names was adequately alleged. In Smith, the court considered

a claim that the defendant, VeriSign’s predecessor-in-interest,

maintained an unlawful monopoly by failing expeditiously to

release newly expired domain names for re-registration. 135

F. Supp. 2d at 1166-67. The plaintiff alleged that the particular expiring domain names it wished to acquire constituted a

separate market for antitrust purposes. Id. at 1168. The court

rejected this proposed market definition, finding no appreciable difference between those particular expiring names and

other types of names. 

The court broadly observed that “there is no inherent difference in character, for purposes of interchangeability and

cross-elasticity of demand, between domain names that are

‘expired’ . . . and those that are not.” Id. at 1169. It did so,

however, because it viewed the proposed market of some particular expiring domain names as too small. Thus, the decision in Smith, like Weber, was premised upon the court’s

reluctance to approve an overly narrow market definition consisting of one or a few domain names. See Smith, 135 F. Supp.

2d at 1169 (“Taken to its logical conclusion, Plaintiff’s argument implies that each individual domain name is a relevant

market unto itself for antitrust purposes, subject the entity

‘controlling’ the name at a particular time . . . to a charge of

monopolization.”). 

CFIT’s claims are not so narrowly drawn. Its complaint

relates to all expiring domain names, not just those a particular plaintiff wishes to acquire. Moreover, to the extent that the

Smith court may have viewed expiring domain names as interchangeable with other names, it may well be that expiring

domain names did not have a significant enough presence in

CFIT v. VERISIGN, INC. 6761
2001 for the court to consider a possible claim that, in the

aggregate, they amounted to a separate market. According to

the complaint, that is no longer the case. Moreover, amicus in

this case, the Internet Commerce Association (“ICA”), points

out that when Smith and Weber were decided, “the present

expired domain name market barely existed,” and that today’s

conditions were “unanticipated only a few years ago.” 

[15] Here CFIT’s complaint alleges that every word in the

English language is already registered as a domain name, and

that desirable domain names can be difficult to come by. On

appeal, our understanding of the distinct role and value of

expiring domain names has also been significantly aided by

the explanation provided by the ICA. As cogently explained

by ICA, expiring domain names often carry with them a history of established web traffic and advertising support; when

such names do expire, they “still maintain much of [their]

prior inbound traffic,” making them more valuable than

domain names that have never before been registered. The

district court, of course, did not have the benefit of briefing

by amicus. With the benefit of this aid to our understanding,

we are not prepared to affirm the district court’s ruling that no

separate market exists. We therefore reverse and remand for

further proceedings. 

C. Claims Concerning the .Net Market 

[16] Although we conclude that CFIT has adequately stated

claims under Sections 1 and 2 with regard to VeriSign’s activities in the .com registration market, we cannot reach the same

conclusion for the allegations about the .net market. All of the

specific allegations of the complaint concerning predatory

conduct leading to the pricing and renewal provisions of a

contract relate to the 2006 .com Agreement. The complaint,

in its present form, contains no allegation that predatory or

conspiratorial conduct was involved in the process of reaching

the 2005 .net Agreement. CFIT may have viable claims with

respect to the .net market, but the district court will be in a

6762 CFIT v. VERISIGN, INC.
better position to determine whether it does if CFIT is given

an opportunity to amend its conclusory allegations to allege

more specific conduct or anti-competitive effect. We therefore

remand the .net claims so that CFIT may be afforded that

opportunity. 

VI. Conclusion 

We REVERSE the district court’s grant of VeriSign’s

motion to dismiss CFIT’s complaint for failure to state a

claim, and REMAND to the district court for further proceedings consistent with this opinion.

CFIT v. VERISIGN, INC. 6763