07/22/98 - PG MEDIA BRINGS NSI/NSF ANTITRUST CASE TO A HEAD


Date 07/22/98	Section: The Internet Battle

PG MEDIA BRINGS NSI/NSF ANTITRUST CASE TO A HEAD

The antitrust case against Network Solutions Inc (NSI) and the National Science Foundation (NSF) brought by PG Media Inc has reached an inflection point and the plaintiff in the case, New York based domain name registry PG Media, which trades under the name.space 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 PG Media 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. PG Media 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, PG Media added NSF's name to its suit.

At Monday's hearing, lawyers for PG Media 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.

PG Media's lawyer, Gary Manishin - who has actually represented NSI in the past - contended that in order for Judge Robert Patterson to find against PG Media, 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 PG Media'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 Williams & Cohen, 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 PG Media, 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 PG Media, 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.

PG Media 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 PG Media 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 months.