ICM Countersues Manwin; Seeks $120 Million
by Sue Denim
YNOT – Claiming conspiracy to restrain trade, unfair competition and tortious interference with potential business relationships in violation of several U.S. federal laws, .xxx operator ICM Registry on Friday filed a $120-million counterclaim against adult conglomerate Manwin Licensing International. The two entities remain locked in a legal battle Manwin initiated in November 2011, shortly before the .xxx domain space launched.
The counterclaim was filed on the same day ICM and the Internet Corporation for Assigned Names and Numbers filed responses to Manwin’s second amended complaint in the original lawsuit. In addition to $120 million, which represents triple the actual damages ICM claims to have suffered, the company also seeks punitive damages, attorneys’ fees and injunctive relief.
In its initial complaint, Manwin claimed ICM and ICANN conspired to create a monopoly on adult-centric top-level internet domains. Manwin also alleged ICM bullied ICANN into a harmful-to-consumers contract that ICANN eventually willingly signed when the terms became financially beneficial. Although both ICM and ICANN challenged the original suit, a California federal judge found sufficient reason to allow three of the five original causes to proceed.
The causes allowed to stand by the Honorable Philip S. Gutierrez of the U.S. District Court for the Central District of California allege predatory pricing and behavior, elimination of competition for dot-xxx registry management and exclusion of potentially competing top-level domains in the future.
Manwin’s lawsuit asks the court to void the registry contract between ICM and ICANN and require a competitive rebidding process that would impose price and service restrictions on the winning registry.
In its counterclaim, ICM contends Manwin’s suit has less to do with business practices than with Manwin venting its spleen because it was stymied in attempts to employ predatory tactics of its own.
“At its core, this case does not involve a monopoly over defensive or affirmative .xxx domain name registrations, but instead involves control over the platforms on and through which the online adult entertainment industry advertises and disseminates its content,” ICM claims in the countersuit.
ICM’s countersuit paints Manwin as a petulant corporate child throwing an enormous tantrum. According to documents filed with the court, Manwin attempted to extort concessions from ICM that, had they been granted, would have provided Manwin with an unfair advantage over its competitors. When ICM declined to play Manwin’s game, the corporate giant threatened to ruin ICM, the lawsuit states, by improperly wielding its financial influence like a club in order to dissuade other adult entertainment companies from purchasing .xxx domains.
In fact, Manwin did put the industry on notice that none of its subsidiaries would do any sort of business with anyone who operated properties in the .xxx domain space.
At the time, YNOT.com reported
[Manwin Managing Partner Fabian] Thylmann indicated that by refusing to accept advertising or content from dot-xxx websites on tube sites owned or operated by Manwin, his company can significantly affect the profitability of destinations within the dot-xxx space. In addition, Manwin will not allow its original content — produced by popular studios including Twistys and Brazzers — to be used on dot-xxx properties.
“This will prevent ICM or dot-xxx from exploiting the 60 million daily visitors to Manwin’s network sites,” Thylmann noted — thereby presumably reducing the value of the domain space as a whole. “By permanently blocking the dot-xxx domain, Manwin hopes to send a clear message that it does not support ICM or dot-xxx.”
Some of the accusations in ICM’s countersuit are strikingly similar to those Manwin leveled against ICM in its original filing. Court documents state Manwin has collected a virtual monopoly over high-traffic adult tube sites and has used the considerable financial power inherent in high-traffic relationships “to prevent the emergence of other tube sites through improper means in order to protect its dominance in the relevant market or markets.” In addition, according to ICM’s countersuit, Manwin has coerced or otherwise influenced other entities to boycot .xxx and any domains installed therein.
“Manwin has conspired … to maintain Manwin’s monopoly or market power … by harassing, oppressing, boycotting and interfering with ICM Registry’s commercialization of .xxx,” the suit alleges. “If not enjoined, there is a high likelihood that Manwin’s monopolization over the relevant markets will continue to the exclusion of existing and potential competitors, giving Manwin unfettered discretion to fix prices, refuse to deal and restrain trade.
“Manwin has acted in concert with at least Digital Playground, and their related companies, affiliates, brands, and network of webmasters to boycott the .xxx [Top Level Domain], and have engaged in predatory anti-competitive acts … in violation of the Cartwright Act.”
In addition, “Manwin has engaged in libel and trade defamation, including without limitation a libelous press release about this very lawsuit in which Manwin’s (false) allegations were reported as facts, intended to interfere with ICM’s existing and prospective business relationships.”
As a result, ICM claims existing and potential business relationships were irreparably damaged or severed and .xxx’s nascent reputation as a reliable, profitable domain space was tarnished.