The lawsuit, filed in Los Angeles Superior Court, alleges that NeuLevel, the operator of .biz, is running an illegal lottery by charging consumers for the chance to obtain the .biz name they seek.
NeuLevel, a joint venture with Melbourne IT, will randomise registrations for the same name before choosing only one. There is no guarantee applicants will get the name once .biz names go live on the Internet in October.
The suit names as co-defendants the Internet Corporation for Assigned Names and Numbers (ICANN), which manages the Internet's domain name system. It also names several registrars--companies that have been licensed to sell .biz and other Internet domains to the public--including some of the biggest, such as VeriSign and Register.com.
NeuLevel is charging registrars US$2 for each registration they submit. The registrars are passing that cost along with a surcharge on to customers who seek a chance at getting the .biz name they want.
ICANN selected .biz as one of seven new global top-level domains (TLDs) in November that would be added to the Internet's domain name system. They are the first such names to be introduced to the Internet since the 1980s when the most popular generic TLDs, .com, .net and .org were created.
Unhappy bidders
The two plaintiffs in the case so far are David Smiley, who wanted to register two .biz names, and Skyscraper Productions, a Los Angeles company that operates a driving school along with other businesses and also was interested in registering a .biz name.
They argue that NeuLevel's "lottery enterprise" is not only illegal but also unfair because it allows those with much financial resources to increase their odds of getting their name by buying multiple chances, according to Derek Newman, a US-based lawyer handling the case.
"It is illegal because it violates lottery laws...(around the country) and unfair because it is misleading that they don't disclose" information about the odds of winning a desired domain name, Newman said.
Newman said his clients plan to seek an injunction to stop the process from going forward.
None of the parties involved in the case would comment on the lawsuit.
Newman, who made a name for himself as the lawyer who represented a company that sought to broadcast Oklahoma City bomber Timothy McVeigh's June execution on the Internet, has some high-profile help on his side. He is working with Edward Masry, the California lawyer made famous by the hit movie "Erin Brockovich."
