Verisign, Inc. v. Xyz.com LLC

Decision Date08 February 2017
Docket NumberNo. 15-2526,15-2526
Citation848 F.3d 292,121 U.S.P.Q.2d 1586
Parties VERISIGN, INC., Plaintiff–Appellant, v. XYZ.COM LLC; Daniel Negari, Defendants–Appellees.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: Lisa Schiavo Blatt, ARNOLD & PORTER LLP, Washington, D.C., for Appellant. Derek Alan Newman, NEWMAN DU WORS LLP, Seattle, Washington, for Appellees. ON BRIEF: Ronald L. Johnston, Los Angeles, California, Robert N. Weiner, Robert A. DeRise, Elisabeth S. Theodore, ARNOLD & PORTER LLP, Washington, D.C., for Appellant.

Before WYNN, FLOYD, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Harris wrote the opinion, in which Judge Wynn and Judge Floyd joined.

PAMELA HARRIS, Circuit Judge:

Plaintiff Verisign, Inc. is in the business of selling internet domain names and operates the popular .com and .net top-level domains. In 2014, a competitor arrived on the scene: Defendant XYZ.COM, LLC ("XYZ") launched ".xyz," a new top-level domain, and began registering domain names ending in . xyz. As part of its marketing push, XYZ, along with its CEO Daniel Negari, made a series of statements touting the popularity of the .xyz domain and warning of a scarcity of desirable .com domain names. Verisign sued XYZ and Negari, alleging that those statements violated the Lanham Act's false advertising provisions.

The district court granted summary judgment to XYZ, holding that Verisign could not establish the elements of a Lanham Act claim. We agree. As to XYZ's self-promoting statements, most of which concern its registration numbers, we hold that Verisign failed to produce the required evidence that it suffered an actual injury as a direct result of XYZ's conduct. Nor can Verisign establish, we hold, that XYZ's statements about the availability of suitable .com domain names were false or misleading statements of fact, as required for Lanham Act liability. Accordingly, we affirm the district court's grant of summary judgment.

I.
A.

We begin with a brief overview of the domain name industry. A domain name is the string of characters in an Internet address. In the domain name "uscourts.gov," for instance, the ".gov" element of the name is referred to as a top-level domain. Verisign is the exclusive operator of both the .com and . net top-level domains. It operates the .com registry, selling domain names to registrars who in turn sell those names to end users. Over 100 million .com domain names have been registered. Among these 100 million registered domain names are 96 percent of all dictionary words—from apple.com to zebra.com.

The worldwide domain name system is overseen by the nonprofit Internet Corporation for Assigned Names and Numbers ("ICANN"). In the early 2000s, ICANN began to consider the introduction of new top-level domains, in order to enhance competition and consumer choice. In 2012, ICANN began to accept applications for new top-level domains, and by July 2015 it had approved nearly 700 of 1,930 applications. XYZ, founded by Negari, was among the hundreds of applicants granted the right to operate a new top-level domain. XYZ launched ".xyz" in 2014.

At the heart of this case are certain promotional efforts undertaken by XYZ to market its new .xyz domain. According to Verisign, a number of XYZ's activities crossed the line into false or misleading advertising, violating the Lanham Act and injuring Verisign's own business operations. The statements of which Verisign complains can be divided into two rough categories, which we describe in turn.

First is a series of affirmative statements about .xyz, promoting .xyz's popularity and touting its high registration numbers. For instance, Negari wrote a post on XYZ's blog—titled ".xyz, the most used new gTLD [generic top-level domain]—Boooooooom!"—stating that ".xyz has received the most registrations of all new gTLDs with 447,544 domains registered." J.A. 358. An XYZ employee later told a domain-name reseller that XYZ had over 600,000 registrations. And XYZ also promoted its registration numbers in emails to individual registrars.

By August 2015, XYZ had secured over one million .xyz registrations. Verisign does not contest that figure, nor the literal truth of the registration numbers advanced by XYZ. Indeed, it is not disputed that those numbers match statistics maintained in the "zone file," a database tracking domain names registered in domain extensions. Rather, the crux of Verisign's claim is that XYZ's registration numbers are false or misleading because they include not only registrations bought and paid for by consumers—indicating actual consumer demand—but also 375,000 .xyz registrations given away for free just after XYZ's 2014 launch, through an agreement between XYZ and Web.com.1 By including those registrations in its numbers, Verisign contends, XYZ misrepresented actual consumer demand for its product.

Negari also promoted the popularity of the .xyz domain in media interviews. During one such interview, Negari, along with other domain operators, spoke with National Public Radio ("NPR") as part of a story on the expansion of the top-level domain market. Introducing Negari, the NPR reporter said, "You could try to become the next .com , the next, all-purpose ending, the thing that you can stick on the back of any business name." J.A. 593 (emphasis added). The statement of which Verisign complains appeared after the interview, on the XYZ corporate blog: In a post titled ".xyz—the Next .com," J.A. 596, XYZ promotes Negari's NPR interview and states that "NPR's [reporter] described .xyz as the next .com ," id. (emphasis added)—diverging, Verisign argues, from the actual formulation ("You could try to become the next .com") used by NPR. The post ends with a link to the full NPR interview. Id.

In addition to promoting the XYZ domain with false statements, Verisign alleges, XYZ falsely disparaged Verisign's competing .com domain. Here, Verisign points to a series of statements by XYZ and Negari calling into question the availability of suitable .com domain names. First, during his interview with NPR, Negari, referring to the .com domain, said, "All of the good real estate is taken. The only thing that's left is something with a dash or maybe three dashes and a couple numbers in it." J.A. 593. A few months later, a Negari blog post on XYZ's website included this line: "Did you know that 99% of all registrar searches today result in a ‘domain taken’ page?" J.A. 628. (Negari echoed that claim in a subsequent radio interview, saying that "nine out of ten .com searches show up as unavailable." J.A. 666.) Finally, XYZ posted a 35–second advertisement to video-sharing website YouTube, comparing a new Audi with a .xyz license plate to a dilapidated Honda with a .com plate, and saying, "With over 120 million .coms registered today, it's impossible to find the domain name that you want." J.A. 527. All of those statements, Verisign claims, are false or misleading.

B.

In December 2014, Verisign filed suit against XYZ and Negari, claiming that its new competitor had violated the Lanham Act's false advertising provisions. 15 U.S.C. § 1125(a)(1)(B). As is customary in Lanham Act suits, Verisign undertook a consumer survey to support its claims. Verisign's survey tested consumer reaction to XYZ's self-promoting statements about its registration numbers and, according to Verisign, demonstrated that consumers understood XYZ's references to "registrations" to signify actual consumer "purchases," rather than .xyz registrations given away for free.

After extensive discovery, XYZ moved for summary judgment, and the district court granted its motion. In an accompanying opinion, the court comprehensively rejected Verisign's claim, finding that Verisign failed to establish a violation of the Lanham Act on multiple grounds, any one of which would have been sufficient justification for an award of summary judgment to XYZ.

First, on the threshold question of falsity, the district court held that Verisign could not show that any of the statements complained of was false or misleading. As to XYZ's promotion of its registration numbers, the court found, those numbers were "verifiably true," J.A. 838—based on accurate statistics from the "zone file," J.A. 839—and "nothing in the record supports the notion" that XYZ's statements were "false," J.A. 838. The court also concluded that XYZ's blog-post promotion of Negari's NPR interview—including "the next .com" statement—was not false. J.A. 837.

Similarly, the district court held, Verisign could not establish that XYZ's statements regarding .com availability were false or misleading. Statements like "all of the good real estate is taken" and "it's impossible to find the domain name that you want," the district court explained, reflect subjective opinion or "puffery," neither of which is actionable under the Lanham Act. J.A. 833. And while Negari's assertion that 99 percent of registrar searches result in a "domain taken" message is a verifiable statement of fact, the district court concluded, Verisign had not shown that statement to be false; on the contrary, Verisign's own data demonstrated that .com names "are largely unavailable." J.A. 837.

Because Verisign had "fail[ed] to meet the first element" of a Lanham Act claim, J.A. 839—a false or misleading statement —the district court could have awarded summary judgment without further analysis. Instead, it went on to identify other, independent defects in Verisign's case. Under the Lanham Act, even a false statement is not actionable unless it is "material," or likely to influence a consumer decision. Here, the district court held, Verisign had presented "no evidence to show that consumers were influenced by the statements" in question, having chosen not to test materiality in its consumer survey. J.A. 840. Nor, the district court held, could Verisign show that any of XYZ's statements actually deceived consumers, as required under the Lanham Act, pointing again to shortcomings...

To continue reading

Request your trial
52 cases
  • In re Epipen (Epinephrine Injection, USP) Mktg., Sales Practices & Antitrust Litig.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • December 17, 2020
    ...conduct to specific harm sustained by Mylan sufficient to create a triable issue of causation. See, e.g. , Verisign, Inc. v. XYZ.COM LLC , 848 F.3d 292, 299 (4th Cir. 2017) (holding that plaintiff "failed to establish yet another Lanham Act element—that it suffered an injury flowing directl......
  • Vonrosenberg v. Lawrence, Civil Action No. 2:13-587-RMG
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • September 19, 2019
    ...deception wrought by the defendant's advertising’ that assures Article III standing in Lanham Act cases." Verisign, Inc. v. XYZ.COM LLC , 848 F.3d 292, 299–300 (4th Cir. 2017). Yet, the section cited by Defendants is specifically regarding actions "[t]o recover damages under the Lanham Act,......
  • Church Ekklasia Sozo, Inc. v. CVS Health Corp.
    • United States
    • United States District Courts. 4th Circuit. Western District of North Carolina
    • February 25, 2022
    ...of Am., 789 F.3d 495, 501 (4th Cir. 2015)). “Failure to establish any one of these five elements is fatal to a plaintiff's claim.” Verisign, 848 F.3d at 299 (internal quotations citation omitted). Plaintiffs lack standing to pursue their Lanham Act claims under the two-part test established......
  • Loftus v. Bobzien
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • February 8, 2017
    ...Appellees' Response Br. 48.Therefore, the district court did not err in dismissing Loftus' state law claim under section 15.2–1512.2.11 848 F.3d 292 2. Loftus also contends Fairfax County Ordinance § 3–1–19 gives her a right similar to that for which she argues under section 15.2–1512.2. Th......
  • Request a trial to view additional results
1 firm's commentaries
  • Kattison Avenue | Issue 8 - Spring 2022
    • United States
    • JD Supra United States
    • May 13, 2022
    ...Bakeries USA, Inc. v. Sycamore, 29 F.4th 630, 644–45 (10th Cir. 2022) (emphasis in original).(2) Id.(3) Verisign, Inc. v. XYZ.COM LLC, 848 F.3d 292, 302 (4th Cir. 2017) (“[I]n order to be ‘false’ in any way cognizable under the Lanham Act, a statement must also be one of fact.”).(4) Bimbo B......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT