Panel Revives Case Over Domain Name Registry

Michael Zurakov, the lead plaintiff in the suit, which has yet to be certified as a class, claims it took him several months to stop his Web address ' Laborzionist.org ' from redirecting to the “Coming Soon” page.

In that time, he alleges, Register.com used his Web address without his permission to direct others to the company's own site and to sell advertisements.

In a suit before Supreme Court Justice Karla Moskowitz, Zurakov alleged that Register.com had breached its contract because he had purchased the exclusive right to Laborzionist.org.

Justice Moskowitz disagreed in July 2001 and granted Register.com's motion to dismiss, saying Zurakov had simply paid Register.com to “register” his site, or make a record of it, since the word “register” was not otherwise defined in the contract. She noted that the word “control” did not appear in the contract.

But a unanimous panel of the Appellate Division, First Department, partially reversed the judge's ruling, saying Zurakov's claim for breach of implied covenant of good faith and for deceptive practices under General Business Law '349 could go forward.

“There is no question that the instant contract does not in express terms grant plaintiff control over the domain name or the exclusive right to use the name,” Justice Betty Weinberg Ellerin wrote for the court. “However, the benefit to plaintiff of his contract with defendant would be rendered illusory if the effect of registering the domain name in his name were merely to have the domain name placed next to his name in some official record … and not to grant him exclusive control of it.”

Justice Ellerin noted that the “exclusiveness” of a registered domain name is “already a familiar concept of law,” citing the U.S. Court of Appeals for the Second Circuit's holding in Name.Space v. Network Solutions, 202 F3d 573 (2000), and the First Circuit's holding in Sallen v. Corinthians Licenciamentos LTDA, 273 F3d 14 (2001).

The judge also reinstated a claim for deceptive business practices, saying the record was inconclusive as to whether a reasonable consumer would turn to Register.com's Web site, which contained a disclaimer about the “Coming Soon” page, rather than rely solely on the domain-name registration contract.

Shortly after Zurakov filed his suit two years ago, Register.com changed its domain-name contract to include a disclaimer about the “Coming Soon” page and an option to avoid it, says Zurakov's attorney, John Blim of Blim & Edelson in Chicago.

Blim said he would immediately move to certify a class, which he estimated to comprise three million plaintiffs. He declined to estimate the amount of damages the class would seek.

“They've taken from each of their customers some portion of what those people paid their money for,” he says. “It's a little like a pizza man who delivers you a pizza but takes a bite out if it.”

Scott D. Brown of Skadden, Arps, Slate, Meagher & Flom, who represents Register.com, could not be reached for comment. Justices Eugene Nardelli, Angela M. Mazzarelli, Joseph P. Sullivan and George D. Marlowe concurred with Justice Ellerin's opinion.

A recent decision by a Manhattan appeals court, Zurakov v. Register.com Inc. (Docket No. 2301, N.Y. Sup.Ct., App. Div., (4/22/03)), could clear the way for a class action lawsuit against the Internet's second-largest domain-name registration company for its past advertising practices.

The suit, filed in state Supreme Court in Manhattan, alleges that Register.com, which registers domain names for a $35 fee, misused the Internet addresses of new customers by redirecting those links to a “Coming Soon” Web page until the customers developed Web sites of their own.

The “Coming Soon” page contained advertisements for Register.com and other companies.

Michael Zurakov, the lead plaintiff in the suit, which has yet to be certified as a class, claims it took him several months to stop his Web address ' Laborzionist.org ' from redirecting to the “Coming Soon” page.

In that time, he alleges, Register.com used his Web address without his permission to direct others to the company's own site and to sell advertisements.

In a suit before Supreme Court Justice Karla Moskowitz, Zurakov alleged that Register.com had breached its contract because he had purchased the exclusive right to Laborzionist.org.

Justice Moskowitz disagreed in July 2001 and granted Register.com's motion to dismiss, saying Zurakov had simply paid Register.com to “register” his site, or make a record of it, since the word “register” was not otherwise defined in the contract. She noted that the word “control” did not appear in the contract.

But a unanimous panel of the Appellate Division, First Department, partially reversed the judge's ruling, saying Zurakov's claim for breach of implied covenant of good faith and for deceptive practices under General Business Law '349 could go forward.

“There is no question that the instant contract does not in express terms grant plaintiff control over the domain name or the exclusive right to use the name,” Justice Betty Weinberg Ellerin wrote for the court. “However, the benefit to plaintiff of his contract with defendant would be rendered illusory if the effect of registering the domain name in his name were merely to have the domain name placed next to his name in some official record … and not to grant him exclusive control of it.”

Justice Ellerin noted that the “exclusiveness” of a registered domain name is “already a familiar concept of law,” citing the U.S. Court of Appeals for the Second Circuit's holding in Name.Space v. Network Solutions , 202 F3d 573 (2000), and the First Circuit's holding in Sallen v. Corinthians Licenciamentos LTDA , 273 F3d 14 (2001).

The judge also reinstated a claim for deceptive business practices, saying the record was inconclusive as to whether a reasonable consumer would turn to Register.com's Web site, which contained a disclaimer about the “Coming Soon” page, rather than rely solely on the domain-name registration contract.

Shortly after Zurakov filed his suit two years ago, Register.com changed its domain-name contract to include a disclaimer about the “Coming Soon” page and an option to avoid it, says Zurakov's attorney, John Blim of Blim & Edelson in Chicago.

Blim said he would immediately move to certify a class, which he estimated to comprise three million plaintiffs. He declined to estimate the amount of damages the class would seek.

“They've taken from each of their customers some portion of what those people paid their money for,” he says. “It's a little like a pizza man who delivers you a pizza but takes a bite out if it.”

Scott D. Brown of Skadden, Arps, Slate, Meagher & Flom, who represents Register.com, could not be reached for comment. Justices Eugene Nardelli, Angela M. Mazzarelli, Joseph P. Sullivan and George D. Marlowe concurred with Justice Ellerin's opinion.