Opinion ID: 784889
Heading Depth: 5
Heading Rank: 1

Heading: Implications of the ICANN Agreement

Text: 187 Although ICANN is a not-for-profit corporation, ICANN is not an ordinary private actor and the ICANN Agreement is not an ordinary contract between private parties. See supra I.A.2, I.A.3. The Agreement acts very much like a franchise agreement between a private corporation and a quasi-governmental entity, authorizing registrars to provide registration services to the public in exchange for, inter alia, the obligation to maintain and make publicly available at its expense the WHOIS database, which ultimately benefits the Internet community and the public generally. Although the Agreement expressly disavows any third-party beneficiary rights, it nonetheless embodies important public policies and imposes obligations on registrars for the direct benefit of third-parties and the furtherance of policy goals. 188 i. ICANN is not simply a private entity and the ICANN Agreement is more than a simple contract between private parties. 189 Register.com argued below and on appeal that the ICANN Agreement is merely an agreement between private parties, and that granting it any additional consideration would run directly counter to the entire purpose behind privatizing the DNS — getting the U.S. government out of the business of regulating the DNS. [Red 53-54] 47 The DNS requires centralized coordination, management and policy-making in order to function efficiently, which is now provided primarily through ICANN. See generally White Paper, 63 Fed.Reg. 31741. 190 We agree with Register.com that the U.S. government undertook the process of privatizing the DNS in order to get out of the business of regulating the DNS and to shift significant policy-making responsibilities from the U.S. government to a private organization, ICANN. See id. While the U.S. government may no longer be orchestrating DNS policy directly, 48 ICANN certainly is and must continue to do so. Privatization of the DNS entails a change in who makes policy decisions. Public policy remains an essential component of DNS management and is integral to ICANN's agreements with both registrars and registries and to ICANN's very purpose for existing. 49 Based on (1) the flurry of oversight activities engaged in by Congress, DOC, and other government agencies, (2) the continued force of government contracts with ICANN (and other relevant entities such as NSI), (3) the structure and very purpose of ICANN, (4) the fact that ICANN performs various regulatory functions previously performed by (or on behalf of) the U.S. government, (5) the fact that the ICANN Agreement (i) is not a product of private negotiations between ICANN and Register.com, but rather was subject to public comment and approval by DOC and NSI as part of a package of agreements concerning DNS management and (ii) is imposed uniformly on registrars seeking ICANN accreditation, and (6) the entire background of the privatization process, we find Register.com's waving of the privatization flag unconvincing. 191 Accordingly, we reject the district court's conclusion that the ICANN Agreement simply represents a private bargain between private parties; instead, for the purposes of analyzing Register.com's claims and Verio's defenses, we view ICANN as a quasi-governmental entity 50 and the ICANN Agreement as the equivalent of a franchise agreement. 192 ii. Although the third-party beneficiary provision precludes Verio from enforcing the ICANN Agreement, equitable principles bar Register.com's attempt to impose unauthorized conditions. 193 The third-party beneficiary provision of the ICANN Agreement expressly states that the ICANN Agreement shall not be construed to create any obligation by either ICANN or Registrar to any non-party to this Agreement, including any SLD holder. ICANN Agreement, at § II.S.2. Register.com and Verio debate the scope of this provision. On one hand, Verio argues that it only precludes third-parties from exercising affirmative rights under the ICANN Agreement and that the provision does not preclude third-parties from relying on the Agreement as a defense. On the other hand, Register.com argues that the third-party beneficiary provision precludes third-parties from relying on the Agreement in any fashion. 194 There can be little doubt that the ICANN Agreement as a whole confers significant benefits on the public, and that the WHOIS information provisions in particular primarily and directly benefit third-parties, such as trademark owners and downstream service providers ( i.e., competitors of Register.com) rather than ICANN or Register.com. 51 See supra I.B.3. While some courts have recognized third-party beneficiary rights despite express disclaimers in analogous situations, 52 we need not and therefore do not go so far. 53 Rather, we note that because of the demonstrated public policy interests at stake and Register.com's indisputable obligations to ICANN as a registrar, the equities in this case weigh against legitimizing Register.com's improper restrictions by enjoining Verio's use of public information. 195 Moreover, the interference of the court by injunction being founded on pure equitable principles, a man who comes to the court must be able to show that his own conduct in the transaction has been consistent with equity. T.B. Harms & Francis, Day & Hunter v. Stern, 231 F. 645, 649 (2d Cir.1916). Register.com cannot show that it has exhibited such conduct regarding these use restrictions it has attempted to impose on public information; Register.com is contractually obligated to a quasi-governmental entity to allow most of the uses which it seeks to enjoin. The injunction sought by Register.com would prohibit Verio's use of information that Register neither owns, nor can rightfully regulate. 196 In the interests of equity, and because Register.com did not sufficiently demonstrate either the possibility of irreparable harm or the likelihood of success on the merits of its contract claim, we conclude that the grant of an injunction on this claim was an abuse of discretion. 197 None of the forgoing analysis conflicts with the third-party beneficiary disclaimer as written, because we are not construing the ICANN Agreement in a manner that creates an obligation owed by Register.com to Verio in a contractual sense. ICANN Agreement, at § II.S.2. Rather, we are simply holding that when a plaintiff seeks the extraordinary remedy of a preliminary injunction, relief may be unavailable when, as here, (1) there is an insufficient showing of irreparable harm; (2) a contract may not even have been formed; and (3) the plaintiff is not in a position to obtain equitable relief. See, e.g., Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993, 89 L.Ed. 1381 (1945)(denying injunctive relief when plaintiff's claim of rights to an invention were false)(The guiding doctrine in this case is the equitable maxim that he who comes into equity must come with clean hands ... [which] is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief). 198 For these reasons, we reverse the district court's judgment with respect to this claim and vacate the fourth paragraph of the district court's preliminary injunction insofar as it restricts Verio from using WHOIS information obtained from Register.com for telephone and direct mail marketing. 199 We leave intact the portion of the injunction that enjoins Verio from transmitting unsolicited commercial electronic mail for two reasons. First, Verio appears to have conceded the point and agreed to be bound by that restriction. [Appellee's Br. at 12 n.13 (Verio has discontinued all marketing uses of e-mail addresses derived solely from WHOIS data and now [only] uses e-mail to contact customers and potential customers when specifically requested by the customer ...); 126 F.Supp.2d at 244 (Verio told Register.com that it had ceased accessing the WHOIS database for the purpose of marketing through e-mail; Verio ceased e-mail solicitation.).] Second, on appeal, Verio challenges the marketing restrictions not authorized by the ICANN Agreement but does not directly challenge the e-mail marketing restriction. [Appellee's Br. at 1-2, 4, 10-11, 12 n.13, 13-14, 19, 25, 31; Appellee's Reply Br. at 1, 2, 7, 9, 11; see also Appellee's Br. at 18-19 (... Verio relied on the terms of the [ICANN Agreement] in implementing its marketing program using WHOIS data. Register's public assent to those terms estops it from enforcing contradictory use restrictions.); id. at 31 (conceding that Register.com is entitled to limit Verio's use of WHOIS data in conformance with ICANN Agreement); but cf. id. at 22-25 (generally challenging restrictions on the use of data based on intellectual property principles); Appellee's Reply Br. at 15-19 (same).]