ICANN, Verisign Settle Search Dispute

NEW YORK – The Internet's key oversight agency said Monday it had tentatively agreed to settle a longstanding legal dispute with VeriSign Inc., a company that exerts significant control over how people find Web sites and send e-mail.

VeriSign's accord with the Internet Corporation for Assigned Names and Numbers could pave the way for the revival — after an outside review — of a controversial search service the company created in late 2003 for guiding Internet users who mistype Web addresses.

After VeriSign launched the service, called Site Finder (search), for ".com" and ".net" names, critics complained that it interfered with spam filters and other key Internet tools while giving VeriSign an unfair competitive advantage in search.

With Site Finder, Web surfers who entered addresses that don't exist got, instead of an error message, suggestions on where they might have wanted to go.

VeriSign considered that a benefit for users, but because VeriSign sometimes got money for directing traffic to those sites, critics termed the service an abuse of power.

VeriSign controls the computers with master lists of domain name suffixes, such as ".com." It also runs the core directories for the two most popular suffixes, ".com" and ".net."

As a result, Internet computers intersect with VeriSign's millions of times daily to find out how to route e-mail and other traffic.

Under pressure from ICANN, VeriSign agreed to suspend Site Finder shortly after it was introduced. The company sued ICANN months later, arguing that the agency's actions, including the decision on Site Finder, impeded VeriSign's efforts to offer new, moneymaking services.

ICANN later countersued.

The proposed settlement, which ICANN's board unanimously agreed Monday to send to the Internet community for public comment, revises the definition of "registry service" so that Site Finder is clearly covered and thus requires prior ICANN approval.

It also establishes a formal review process for new services, such as Site Finder, in which ICANN would have 90 days to address any security, stability and competitive concerns.

VeriSign has in the past complained that ICANN takes too long to make decisions and is often inconsistent when it does.

Any settlement needs final approval from the board of both ICANN and VeriSign along with the Commerce Department (search), which in 1998 gave ICANN its authority to oversee domain names and other Internet addressing policies.

The settlement terms would be included in a revised contract agreement for the ".com" suffix. Earlier this year, VeriSign won a contract extension for ".net," so similar terms already were included there.

As part of the deal, the ".com" contract scheduled to expire in 2007 would be extended to 2012.

Although the settlement does not call for any monetary damages, ICANN chief executive Paul Twomey (search) said the agency would receive contributions from VeriSign to cover legal and other fees, starting with an initial payment of $1.25 million. He said legal costs reached several million dollars.

VeriSign, however, termed the payments a surcharge and said it would merely be passing on to ICANN a 37-cents-per-name fee imposed on resellers on domain names.

Mark McLaughlin, general manager of VeriSign's naming and directory services unit, said the company got "business clarity on what new services could be introduced and how it could be introduced."

The company said it was reluctant to make major investments without knowing it could quickly offer new services to recoup costs.

For ICANN and the Internet community (search), Twomey said, "this is a framework and an agreement that will ensure no more ... unilateral controversial introduction of registry services."

Michael D. Gallagher, assistant secretary for communications and information at the Commerce Department, termed the proposed deal "a positive step towards the smooth future management of the domain."

McLaughlin said VeriSign has not yet made any decisions on if and when it would seek ICANN's approval for Site Finder.

"The market has moved substantially in the two-plus years since we had the service in the market," he said. "We have to go back and look at the viability of it."

VeriSign was silent on what other services it was considering, but just this month, it acquired two companies involved with aggregating and sorting online news and Web journals and with notifying users about them.

VeriSign shares rose 37 cents, or 1.65 percent, to close at $22.85 on the Nasdaq.