erio, a competitor of an Internet domain name registration Web site, Register.com, deployed software robots to ferret out data on Register's customers. Then it used the information to peddle Verio's Internet services to those customers.
Register sued Verio, and now the federal tech trespassing case, Register.com v. Verio, 00-5747, has tumbled into the Second Circuit U.S. Court of Appeals.
Depending on the outcome, the suit could have broad implications for future Internet-related IP litigation, according to attorneys for both companies.
"This picks up where Ebay left off," said Verio attorney Michael Jacobs, referring to a 1999 California federal case, Ebay v. Bidder's Edge. Jacobs, a partner in Morrison & Foerster's San Francisco office, is acting as Verio's co-counsel, along with James Hough in MoFo's New York office.
Verio Inc., a wholly owned subsidiary of Japan's NTT Communications, is located in Englewood, Colo., and provides Web hosting and other related Internet services.
Register.com, based in New York, sued last year after Verio dispatched unsolicited e-mail, direct mail and phone calls to Register's clients, who Verio's computers had retrieved from Register's public "whois" database of domain name registrants.
"We had concerns about customers' complaints and misleading advertising [on Verio's part]," said Jack Levy, Register.com's general counsel.
According to the lawsuit, Verio's marketing tactic, which the company dubbed "Project Henhouse," violates trespassing laws and the terms of use posted on Register.com's Web site.
Lawyers for Verio, however, claim the company gathered the information lawfully. They point to an agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) under which companies like Register.com must make information about businesses that set up domain names available to the public.
Verio claims that Register.com was upset because it wanted to pitch similar business services to the same customers contacted by Verio.
Jacobs also claims Register.com violated ICANN rules - the same group that blasted Verio in a lower court amicus brief for violating ICANN edicts - that require Register.com to provide unfettered access to its "WHOIS" database.
Register.com alleges that Verio violated its "terms of use" rules that prohibit using the "WHOIS" database for marketing purposes.
In December, New York U.S. District Judge Barbara Jones, who asked ICANN to file an amicus brief, granted an injunction that barred Verio from trolling Register.com's database.
Verio appealed to the Second Circuit, which heard oral arguments in May. The companies and their lawyers are now waiting for the appellate court's decision.
Companies like Verio are concerned that Jones' ruling will allow sites to convert "terms of use" disclaimers - ground rules listed on a Web site that Internet surfers implicitly agree to when they visit - into overreaching contracts, said Jacobs.
For example, a business could impose "terms of use" restrictions that ban visitors from using a site's concepts to create rival businesses, he argued.
The Register.com v. Verio spat has echoes of the legal battle between online auction site Ebay Inc. and Bidder's Edge Inc., which settled in March, said one attorney.
"Both suits raise similar issues," said John "Jay" Monahan Jr., Ebay's in-house counsel.
In its suit, Ebay claimed that Bidder's Edge illegally used computer robots to scour Ebay servers for information about auctions and then posted the data on its site. In May 2000 a federal judge ruled that Bidder's Edge illegally harvested auction data from Ebay.
The tentative ruling in that case reinforced legal protections provided to businesses under the federal Computer Fraud and Abuse Act, said Monahan.
The suit was settled in March before a higher court could weigh in.
As part of the settlement, Ebay was paid an undisclosed amount and Bidder's Edge agreed not to access and re-post Ebay's auction information.
Although the Ebay dispute was resolved out of court, legal questions remain about what constitutes trespassing on the Internet, Jacobs said.
Jacobs argues that if companies such as Ebay and Register.com are successful, they could stifle competition by completely barring rivals from a site.
Monahan disagrees.
"As long as you are not excluding people for illegal reasons," terms of use restrictions are fair, said Monahan. He likened the rules to "No Shirt, No Shoes, No Service" signs in department stores.
The real problem, said Monahan, stems from the use of computer robots by companies like Bidder's Edge and Verio, which can scour Web sites at lightning speeds.
The massive searches slow down servers and jeopardize a business's ability to help its regular customers.
The fact that the companies are making money by raiding rival sites "just adds insult to injury," said Monahan.
