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An injunction preventing a Web hosting company from accessing a registration service for Internet domains to gain data for mass-marketing has been upheld by the 2nd U.S. Circuit Court of Appeals. A two-judge panel upheld the preliminary injunction granted by Southern District Judge Barbara S. Jones in favor of Register.com, Inc., one of 50 companies that act as vehicles for the registration of names in the .com, .net and .org domains. Register.com, which also offers Web site creation tools, Web site hosting, e-mail and other Internet-based services, charged that competitor Verio Inc. was violating the terms of use for the so-called WHOIS database, which registrars are required to maintain and update under the terms of their agreement with ICANN, the Internet Corporation for Assigned Names and Numbers. The ICANN agreement states that registrars like Register.com cannot impose restrictions on the use of the data. However, one exception to that rule requires the registrar to permit use of the WHOIS data “for any lawful purposes except to support the transmission of mass unsolicited, commercial advertising or solicitations via e-mail (spam).” The ICANN agreement also states that it does not create any obligation by ICANN or the registrar to third parties, but that third-parties can enforce the obligations of the registrar through a grievance procedure overseen by ICANN. Register.com learned that Verio was using an automated software “robot” to make regular series of WHOIS queries. Once the robot learned of new registrants, Verio would target them through e-mail, direct marketing and telemarketing. When Register.com told Verio to stop, Verio only partially complied by ceasing the e-mail solicitations, but continuing to market via direct mail and telephone. The company sued and Jones prevented Verio from using the “Register.com” trademark in connection with the promotion of its own services. The judge also stopped Verio from using its robot to access the WHOIS database, and barred the company from using any data it had already obtained from the robot’s incursions in its e-mail, direct mail and telephone marketing efforts. The appeal in Register.com v. Verio Inc., 00-9596, was heard by 2nd Circuit Judges Pierre Leval, and Fred I. Parker, with Southern District Judge John F. Keenan sitting by designation. DRAFT OPINION Before his untimely death in August, Parker differed from his two colleagues in the majority, and circulated a 48-page draft opinion that was a prelude to a dissent in the case. Leval said the majority was persuaded by the arguments advanced by Register.com and by ICANN, which intervened in the district court as an amicus curiae. “It is true Register incurred a contractual obligation to ICANN not to prevent the use of its WHOIS data for direct mail and telemarketing solicitation,” Leval said. “But ICANN deliberately included in the same contract that persons aggrieved by Register’s violation of such a term should seek satisfaction within the framework of ICANN’s grievance policy, and should not be heard in courts of law to plead entitlement to enforce Register’s promise to ICANN.” Parker had indicated in his draft that Register.com’s restriction violated public policy, embodied in the notion that WHOIS information should be “free as air.” But Leval said the statement was a “rhetorical oversimplification” because the “the public policy as set forth in the ICANN Agreement expressly contemplated that the WHOIS data not be available for use in mass e-mail solicitation.” Verio, he said, declined to pursue the grievance procedure, and “ICANN included the ‘No Third-Party Beneficiary’ provision precisely so that it would retain control of enforcement of policy,” in the rapidly changing world of the Internet, “rather than yielding it to the courts.” While Verio had assented to the terms of the contract, it had argued that it did not receive legally enforceable notice of the conditions Register.com wanted to impose. “Verio’s argument might well be persuasive if its queries addressed to Register’s computers had been sporadic and infrequent,” Leval said. “But Verio was daily submitting numerous queries, each of which resulted in its receiving notice of the terms Register exacted.” Leval noted that contract offers on the Internet can be accepted when the offeree clicks an “I agree” icon, and clicking the icon is often, although not always, essential to the formation of a contract. “While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally altered the principles of contract,” he said. William F. Patry and Paul Fakler of Baker Botts, and Kenneth A. Plevan and Scott D. Brown of Skadden, Arps, Slate, Meagher & Flom represented Register.com. Michael A. Jacobs, James E. Hough and Mark David McPherson of Morrison & Foerster represented Verio, Inc.

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