Nick Patience on Thu, 23 Jul 1998 09:41:57 +0200 (MET DST)

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The antitrust case against Network Solutions Inc (NSI) and the
National Science Foundation (NSF) brought by pgMedia Inc has reached
an inflection point and the plaintiff in the case, New York based
domain name registry pgMedia, which trades under the
brand, is bullish about its prospects of victory. The two areas of
focus of the latest hearing, held in the Southern District of New York
in Manhattan late Monday were antitrust and the first amendment.
in March 1997 pgMedia asked NSI to add some 300 new generic top-
level domains (gTLDs) to the root, which NSI refused to do, saying
that the Internet Assigned Numbers Authority (IANA) was the only
entity that could grant such a request. IANA is a private organization
working under a government contract. pgMedia said NSI was infringing
its first amendment rights as well as denying access to essential
facilities, which is an antitrust violation, so it sued to get access
to the root, as well as suing for damages.

It emerged later in 1997 that NSI had written to IANA about adding the
new gTLDs and IANA had in fact told NSI that it - IANA - did not in
fact have the authority to dictate what gTLDs get added to the root.
And in two letters in June and August from the NSF to NSI, the NSF
directed NSI not to add any more gTLDs to the root and said that that
the directive was part of the five-year cooperative agreement to
manage the DNS root servers signed between the NSI and NSF in 1993 and
due to expire September 30 this year. So in September 1997, pgMedia
added NSF's name to its suit.

At Monday's hearing, lawyers for pgMedia were seeking a partial
summary judgement following a preliminary injunction request filed in
May. They were not seeking any relief yesterday, either monetary or in
terms of getting access to the root, it was merely a case of sorting
out the antitrust immunity (or lack of) and the First Amendment issue.

pgMedia's lawyer, Glenn Manishin - who has actually represented NSI in
the past - contended that in order for Judge Robert Patterson to find
against pgMedia, it must rule that NSF had the authority to direct
NSI and that such a directive immunizes NSI from antitrust laws.
If NSI can prove that as a government contractor it has immunity from
antitrust laws, or the judge rules that the NSF's directive for it to
not add new gTLDs does not constitute a violation of the First
Amendment as a "prior restraint of protected expression," then the
case is over. It will also stop if the judge finds for NSF on another
motion, that of its request for a stay, based on the "anticipation of
its becoming moot". Or in other words, that as the cooperative
agreement between the NSF and NSI will end for good on September 30,
at which time control of the DNS will switch to a yet-to-be-formed
non-profit entity, it will no longer be relevant. However, it should
be noted that that part of the case was not brought up by lawyers for
NSI or the NSF yesterday and so seems they are highly unlikely to
succeed with that route.

However, if Judge Patterson finds that NSI has no immunity from
prosecution or that pgMedia's First Amendment right have been
violated, then the case will continue. The lead attorney for NSI
William Dallas of the New York law firm of Sullivan & Cromwell, said
Manishin's presentation to the court had an "Alice in Wonderland,"
quality to it, because, in his opinion, the real question is "who's in
charge?" and "it's not pgMedia, it's NSF." He said, by way of
explanation that as far as he was aware, oversight is defined as
supervision and supervision means oversight plus direction, so the NSF
is not only the one in charge and it is perfectly within its rights to
direct NSI on whether or not to add new gTLDs.

The main plank of NSI's argument is the so-called "federal
instrumentality doctrine," which protects not only federal agencies
from antitrust litigation, but also the agencies of federal government
working for them. NSI also suggested to Judge Patterson that the
status quo should be maintained at present, while the government
policy (most recently stated in June white paper) is "played out."
Otherwise, Dallas said the judge "you would become the internet czar,"
having to decide what gTLDs get added and so on. Dallas summed up his
position as the "federal instrumentality doctrine," and the NSF's
directives, which gives it the authority to manage the DNS root. The
lawyer for the NSF, Assistant US attorney Steven Haber succeeded in
confusing almost everyone, including himself, as far as we could tell
and he gave the distinct impression of wanting to be somewhere else.
Indeed Haber said that the NSF's position was that the IANA should
have consulted with NSI all along and it was only when IANA failed to
do so that the NSF stepped in.

Manishin responded at the end of the session that lasted just over two
hours by noting that the Southern District "has never implemented
federal instrumentality" - something NSI says is simply not true - and
that the court (i.e. Judge Patterson) is no less capable of running
the DNS that the IANA or anybody else - during Haber's presentation in
which he characterized the IANA and Jon Postel as being one and the
same thing, Patterson looked surprised: "one man has this much power?"
he asked.

As his final shot Manishin produced a letter from the NSF's advanced
networking infrastructure and research division director George Strawn
to Jim Fleming of Unir Corp and an apparent supporter of pgMedia, who
we have not yet been able to track down. Fleming is an ex-Bell
Laboratories scientist who is currently working on technology such as
IPv8. The letter contained the line the "NSF does not control root
name server," although we have not seen a copy of the letter and
Manishin's move was the first the lawyers for NSI and NSF had heard
about the letter, which could prove to be a very significant document.

pgMedia president Paul Garrin was optimistic yesterday: "I think the
immunity is gone," he said referring to NSI's antitrust immunity. If
that's what Judge Patterson rules, then pgMedia is free to pursue
damages, which could be anything up to $50m by most calculations.

Estimates for a ruling are anything between two weeks and two

(c) ComputerWire Inc, 1998.

Nick Patience
Internet Editor, ComputerWire Inc
928 Broadway, Suite 800, New York NY 10010
Ph: 212 677 0409 x18          Fx: 212 677 0463

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