Opinion ID: 784889
Heading Depth: 3
Heading Rank: 2

Heading: The dispute between Register.com and Verio

Text: 107 The district court made extensive findings of fact that, for the most part, are not disputed. Accordingly, we borrow substantially from that section of the district court opinion. See Register.com. Inc. v. Verio, Inc., 126 F.Supp.2d 238, 241-45 (S.D.N.Y.2000).
108
109 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 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. 110 Register.com provides its customers 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, thus giving its customers some degree of control over their receipt of commercial solicitations. Customers who do not opt-in to such communications are not solicited by Register.com or its co-brands. 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. 111 Id. at 241. 112
113 To register a domain name, a person need only visit Register.com's home page at www.register.com. 27 There, an end-user is presented with, among others things such as advertisements, an invitation to check on the availability of a domain name by entering a query into an empty text box. [JA 1058 (first page with check it invitation)] Notably, there are no terms or conditions posted in proximity to this invitation or the text box. [JA 1058] Upon entering a query and clicking on check it, the query is submitted to Register.com's and other registrars' databases, and the visitor receives a search results page that indicates whether the domain name is already taken. If a domain name is taken, the end-user may find out the name and contact information for the entity that has registered the domain name by clicking on a hyperlink. [Oral Arg. Tr. at 23, lines 6-8; JA 1141 (WHOIS results page)] 114 The process by which end-users interact with Register.com's computer systems is important. When an end-user accepts Register.com's invitation to submit a query, the end-user's computer sends a query to Register.com's servers, Register.com's computer systems process the query and send a response to the end-user's computer, and the end-user's computer (generally) displays the response as a web page in his or her browser. 28 In all cases, information possessed by Register.com (or another registrar) is sent to the end-user requesting the information; as soon as the end-user receives the response from Register.com, the end-user also possesses the information. With respect to WHOIS information for domain names registered by Register.com, the information is sent along with Register.com's terms of use. The parties do not dispute that the terms of use appear only upon receipt of the WHOIS query results. [Red 30 (Terms of use appear at the very top of every WHOIS record provided by register.com.); Reply 7 (Register.com's use restrictions appear only after a party has submitted a WHOIS inquiry.)] 115 For example, if an end-user submits a WHOIS query regarding register.com, the end-user is informed that the domain name is registered to Register.com, Inc. and is sent Register.com's contact information. At the top of the page are Register.com's terms and conditions. Originally, Register.com's terms and conditions were substantially the same as permitted by section II.F.5 of the ICANN Agreement (quoted supra ). In April 2000, however, Register.com implemented the following more restrictive terms of use for its WHOIS database: 116 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. 117 Register.com has imposed the same mass marketing prohibition on the use of the bulk license data. In its amicus submission to the district court dated September 22, 2000, ICANN stated that: 118 To the extent that Register.com is using this legend to restrict otherwise lawful use of the data for mass unsolicited, commercial advertising or solicitations by direct mail or telephone (and not just by electronic mail), it is ICANN's position that Registrar.com [(sic)] has failed to comply with the promise it made in Section II.F.5 of the Registrar Accreditation Agreement. 119 ICANN Amicus Br. at 10-11 (footnotes omitted). 29 [JA-2885]
120
121 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. 122 126 F.Supp.2d at 241. 123
124 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 125 robot. 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. 30 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. 126 Id. at 243 (footnote omitted and footnote added). 127
128 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 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. 31 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. 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. 129 Id.
130 Beginning in January, 2000, Register.com learned that Verio was e-mailing its customers to solicit business. Register.com complained to Verio, advised Verio that an e-mail sent by Verio to a Register.com customer had misled the customer into thinking that Verio had an affiliation with or sponsorship from Register.com, 32 and Verio replied that the email resulted from a system problem, which Verio promised to correct. 131 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, Register.com again contacted Verio 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). 132 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 [and] the timing of the solicitations [were] 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). 133 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. 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. 134 Id. at 243-44.
135 Register.com filed its complaint on August 3, 2000. In the complaint, Register.com alleged Lanham Act violations, Computer Fraud and Abuse Act (CFAA) violations, unfair competition in violation of New York statutory law, and trespass to chattels, breach of contract, tortious interference with contract, and tortious interference with potential business relations in violation of New York common law. Register.com moved for a temporary restraining order and preliminary injunction. 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 preventing it from accessing Register.com's WHOIS database by using a search robot and from using any data obtained from Register.com to solicit Register.com's customers. 136 After extensive briefing and a hearing, the district court granted Register.com's motion for a preliminary injunction in a memorandum and order dated December 11, 2000, concluding that Register.com had demonstrated likelihood of success and irreparable harm with respect to its breach of contract, CFAA, trespass to chattels, and Lanham Act claims. 137 The court enjoined Verio from the following actions: 138 1. Using or causing to be used the Register.com mark or the first step on the web mark or any other designation similar thereto, on or in connection with the advertising, marketing, or promotion of Verio and/or any of Verio's services; 139 2. Representing, or committing any act which is calculated to or is likely to cause third parties to believe that Verio and/or Verio's services are sponsored by, or have the endorsement or approval of Register.com; 140 3. Accessing Register.com's computers and computer networks in any manner, including, but not limited to, by software programs performing multiple, automated, successive queries, provided that nothing in this Order shall prohibit Verio from accessing Register.com's WHOIS database in accordance with the terms and conditions thereof; and 141 4. Using any data currently in Verio's possession, custody or control, that using its best efforts, Verio can identify as having been obtained from Register.com's computers and computer networks to enable the transmission of unsolicited commercial electronic mail, telephone calls, or direct mail to the individuals listed in said data, provided that nothing in this Order shall prohibit Verio from (i) communicating with any of its existing customers, (ii) responding to communications received from any Register.com customer initially contacted before August 4, 2000, or (iii) communicating with any Register.com customer whose contact information is obtained by Verio from any source other than Register.com's computers and computer networks. 142 Id. at 255. 143 This appeal followed.