Judge Tells VeriSign U CAN'T

When it comes to ICANN, let's just say "You Can't." Or rather, you can't dispute its authority.

In the latest phase of a long-simmering dispute between VeriSign (Nasdaq: VRSN) and the Internet Corporation for Assigned Names and Numbers (ICANN), a federal judge threw out the domain name registrar's antitrust lawsuit challenging the influence of the Internet's main oversight body.

Last September, Rex Moore reported that the manager of the Internet's leading top-level domains -- .com and .net -- had developed a new service to reroute misspelled domain names to its own website laden with advertising. The SiteFinder service would no longer have a "404" error message display when you typed in the wrong address but would instead take you to a VeriSign site. Additionally, e-mail that contained erroneous website addresses or unregistered domain names would also be hijacked to the SiteFinder site.

"Dot-com" and "dot-net" are known as top-level domains. The "Fool" in "Fool.com," for example, is known as a second-level domain. These are managed by registrars, such as Register.com (Nasdaq: RCOM), businesses that are paid annually for the use of the name. Registries such as VeriSign, on the other hand, are directories of Web addresses and are paid by registrars to maintain those lists.

The uproar that it created caused ICANN, the de facto regulator of the domain-name system, to suspend the SiteFinder service, saying that it created too much instability on the Internet. VeriSign sued ICANN in federal court, saying that it overstepped its authority as a technical review body and improperly delayed the company's ability to offer new services. The federal judge said VeriSign could not prove its antitrust claims and threw out the suit.

This is the second time VeriSign had its lawsuit dismissed. In May, the federal judge said the company had not proved its arguments but allowed VeriSign time to amend its lawsuit, which it did. The judge ruled that it still had not proven its case and dismissed it once more, prohibiting the company from raising the issue again.

But the company still has more bites at the apple. It said it will now pursue the matter in state courts and is targeting California as the first battleground. Still, industry watchers think the wind has been taken out of VeriSign's sails. Without the antitrust claim, it devolves merely into a contract dispute without the full implications and ramifications of challenging the scope and structure of the regulatory body's authority.

For now, VeriSign has found that ICANN still can.

Motley Fool contributor Rich Duprey also likes to challenge authority. He does not own any of the stocks mentioned in this article.