VeriSign faces legal battle over marketing tactics

Domain name registrar VeriSign Inc. was slapped with a lawsuit on Monday in a Maryland court for its marketing tactics, and more might be coming.

In its suit, Baltimore-based

Inc. accused VeriSign of two counts of false advertising and interference with contractual relations and economic opportunity.

The conflict surrounds a recent marketing campaign. BulkRegister claims the Mountain View, Calif.-based company sent thousands of “”domain name expiration”” notices to its customers. According to a copy of the notice, recipients need to send US$29 per domain name and “”Reply by: May 15, 2002.”” According to U.S. law, mail solicitations must be clearly marked as such.

“”This is a solicitation, there’s nothing on the document that says it’s a solicitation, and customers’ names are being transferred as a result of filling out this thing,”” says Tom D’Alleva, BulkRegister vice-president of marketing.

A VeriSign spokesperson said it does not comment on ongoing litigation.

On top of the lawsuit, BulkRegister is also pursuing a number of injunctions, including preventing VeriSign from continuing its campaign in the interim or registering Bulkregister customers. The injunctions were granted late Tuesday.

The tactics haven’t been reserved to American businesses, according to Ross Rader, director of research and innovation at Tucows Inc., a Toronto-based Internet channel management company. He says he has a stack of 200 of the notices in a file sent to him by customers contacted by VeriSign which are causing a great deal of confusion.

“”It’s always a case of, ‘I thought I registered my domain name with you guys. I thought I paid you guys until 2003. Why does my domain name expire in a couple of weeks and who’s this VeriSign company?'”” Rader said, estimating tens of thousands have been sent to his customers.

While Rader said his company is not considering legal action at this time, it has not been ruled out.

“”They’re always been very measured in their words and we’ve approached them on similar issues in the past: ‘It’s all about fair competition, it’s all about protecting the interests of the customers.’ And it’s certainly the case none of the customers that I’ve talked to have seen it that way.””

Should the parties find themselves in a Canadian court, David Young says Tucows won’t have the American solicitation laws to lean on.

“”I think the laws come right out of the U.S. Postal Service,”” said the head of the e-commerce practice group at the Toronto office of law firm Lang Michener. “”The U.S. has some very specific laws, mostly because they’ve had over the years a lot of pretty aggressive marketing techniques.””

Not that companies would be without recourse: Young said there are misleading advertising laws under the Competition Act and provincial business practices statutes “”which would apply if a misleading representation were made in connection with any form of mail or other solicitation,”” he said.

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