The United States Court of Appeals for the Ninth Circuit has denied the appeal of the Donuts registry and upheld the ruling of the lower court, according to Domain Name Wire. The ruling concerns the conflict which arose after the auction to determine who would get to run the new .web top level domain. It is important to remember that from the very beginning, this domain was seen as one of the most promising ones at this stage of the new top-level domains program implemented by ICANN. There were numerous contestants wishing to get the domain, and an auction was set up to decide its fate. It was expected that it would be a private auction amongst the applicants, where the losers would split the proceeds and receive compensation. However, a completely unknown company named Nu Dot Co, one of the applicants for the domain name, unexpectedly argued against such option. As a result, ICANN held an auction of last resort in which the applicants did not receive any compensation, and all the proceeds went to ICANN. Nu Dot Co won the auction and paid a record $135 million to run the .web domain.
It was soon revealed that Nu Dot Co was financed by Verisign which will in fact run the domain. It caused a storm of protest, ICANN and Verisign were accused of making a back-door deal, and the auction losers demanded ICANN either reconsider the results or pay compensation. In particular, the Donuts company calculated that had the auction been private, Donuts would have received a payoff of about $22.5 million for losing, given the .web domain price of $135 million. Donuts demanded either this sum in compensation, or annulment of the auction results. However, ICANN dismissed all the complaints. Donuts decided to file a lawsuit. It should be noted that the application for new top level domains included a clause that the applicants would not sue ICANN. The Donuts lawyers argued that this agreement not to sue was invalid, but they failed to prove it. Now, their suit has been dismissed by the Appeals Court. In theory, Donuts can still challenge this decision in the Supreme Court of the United States, but experts doubt that they would succeed.
