Opinion ID: 1208697
Heading Depth: 3
Heading Rank: 2

Heading: Expiring Domain Names Market

Text: 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. 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, 76 S.Ct. 994, 100 L.Ed. 1264 (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. 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 sufficiently 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 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. 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.