----------------------------------------x
                                        :
PGMEDIA, INC.,                          :
d/b/a NAME.SPACE,                       :
                                        :
                        Plaintiff,      :
                                        :        97 CIV. 1976 (RPP)
                v.                      :
                                        :
NETWORK SOLUTIONS, INC. and             :
NATIONAL SCIENCE FOUNDATION,            :
                                        :
                        Defendants.     :
                                        :
----------------------------------------x

Of Counsel:                             Attorneys for Plaintiff
                                        pgMedia, Inc. d/b/a Name.Space                              
                              
PAUL, WEISS, RIFKIND, WHARTON           BLUMENFELD & COHEN
GARRISON
                                        1615 M Street, N.W.
1285 Avenue of the Americas              Suite 700
New York, New York  10019                Washington, D.C.  20036
212-373-3000 (phone)                     202-955-6300 (phone)
212-373-2628 (fax)                       202-955-6460 (fax)

----------------------------------------x
                                        :
PGMEDIA, INC.,                          :
d/b/a NAME.SPACE,                       :
                                        :
                        Plaintiff,      :
                                        :        97 CIV. 1976 (RPP)
                v.                      :
                                        :
NETWORK SOLUTIONS, INC. and             :
NATIONAL SCIENCE FOUNDATION,            :
                                        :
                        Defendants.     :
                                        :
----------------------------------------x

PLAINTIFF PGMEDIA’S MEMORANDUM OF LAW

Pursuant to this Court’s December 15, 1998 Order ("Order"), Plaintiff pgMedia, Inc.,

d/b/a Name.Space ("pgMedia"), by its attorneys, respectfully submits this memorandum in

response to the Court’s request for briefs on this issue of mootness and the propriety of a stay of proceedings.

On December 4, 1998, the United States Department of Commerce ("Department") requested that this Court stay proceedings currently pending among defendants National Science Foundation ("NSF") and Network Solutions, Inc. ("NSI") and pgMedia involving alleged antitrust and First Amendment violations regarding the Internet Domain Name System

("DNS"). The Department argues that recent developments in the governance of DNS require

this Court to defer legal conclusion on this case. The first of these developments is the incorporation of the Internet Corporation for Assigned Names and Numbers ("ICANN"), a non-profit organization created to design and test mechanisms for privatization of the management of domain names, on November 21, 1998. The second development is the adoption of a Memorandum of Understanding between the Department and ICANN on November 25, 1998 for the assignment of duties to these parties during the privatization process.

This Court issued an Order on December 15, 1998, requiring all parties to brief the questions: (1) whether this case should be dismissed for mootness; and (2) whether the Court should stay this case and, if so, for what duration. As addressed below, the changed factual circumstances — as to which the parties have stipulated — in no way alters the Court’s obligation to decide the important questions of law presented in this litigation.

None of the material facts of this case has changed since the litigation was initiated almost two years ago. The mere establishment of a non-profit corporation having the vague responsibility of "lessening the burdens of government and promoting the global public interest in the operational stability of the Internet" neither ends the controversy between pgMedia and defendants nor alleviates the continuing, irreparable harm suffered by pgMedia as a result of defendants’ monopolistic control over DNS and denial of pgMedia’s access to Internet top-level domains ("TLDs").

Settled doctrine governing federal jurisdiction under Article III of the Constitution requires courts to hear matters in which a "case or controversy" exists between parties in interest. Here, NSI and the Department continue to exercise sole control over the essential facilities of DNS in violation of federal and state antitrust laws as well as the First Amendment. The ICANN process may, at some indeterminate future date, lead to changes in DNS administration, but as yet absolutely nothing material has occurred. Nothing in ICANN’s Articles of Incorporation or the Department’s Memorandum of Understanding ("MOU") moots or to any degree changes pgMedia’s claim that defendants have unlawfully prevented competitor domain name registrars access to the "root zone" file essential to Internet registration. Further, nothing in these documents indicates that defendants’ unlawful behavior has ceased, making a stay of proceedings improper as a matter of law. The government’s present request for a stay is as meritless as its request prior to the June 1998 oral argument in this case, in which the government argued that the Department’s so-called "privatization" of the Internet would be completed by October 1998. It was not, and this Court has no assurance that ICANN will ever be in a position to offer pgMedia the DNS access it has fruitlessly sought since 1997. Therefore, this Court retains the authority and the obligation to render a decision on the merits of this case.

I. THIS CASE IS NOT MOOT BECAUSE A CASE OR CONTROVERSY

No proceeding is moot where a case or controversy persists between interested parties. DeFunis v. Odegaard, 416 U.S. 312, 316 (1974). "The inability of the federal judiciary ‘to review moot cases derives from the requirement of Art. III of the Constitution under which the exercise of judicial power depends upon the existence of a case or controversy.’" Id. (citation omitted). Thus, it is settled that a case is moot only when interim developments have completely and irreversibly brought an end to allegedly unlawful conduct and its effects so that "neither party has a legally cognizable interest in the final determination of the underlying questions of fact and law." County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979).

This case involves claims brought against NSI under federal and state antitrust law as well against NSF under the First Amendment. pgMedia’s claims under the antitrust laws persist, despite recent developments, because NSI continues unlawfully to monopolize DNS and to preclude competitor entry to domain name registration. The government’s establishment of ICANN cannot extinguish pgMedia’s claims against NSI because, even with the creation of ICANN, NSI still continues to monopolize DNS and to physically control the Internet’s "root zone" server. As ICANN’s Articles patently demonstrate, the opening up of Internet domain name registration to competition is not assured. For example, ICANN is charged with "performing and overseeing functions related to the coordination of Internet Protocol (‘IP’) address space," not with demanding that NSI and NSF permit competitors access to the root server. Examination of the Department’s MOU also provides little encouragement: ICANN will "provide expertise and advice" on private DNS management and will "collaborate on the design, development and testing" of registration procedures. The MOU and ICANN’s Articles and Bylaws are replete with similar descriptions of ICANN’s "duties" with regard to privatizing DNS, none of which indicate that defendants’ stranglehold on DNS will ever end. At most, these documents create a procedure for the consideration of permitting pgMedia and other registrars to compete with NSI. New procedures do not, however, amount to a change of circumstances such that pgMedia’s claims against NSI have expired. The operative facts of NSI’s continued unlawful monopolistic activity remain the same — as do the facts underlying NSI’s claim for implied "federal instrumentality" antitrust immunity.

Further, pgMedia continues to suffer a severe restriction of protected Internet speech due to the continuing governmental exclusion of pgMedia from DNS registration. Indeed, the Cooperative Agreement, as amended, now explicitly states that "while NSI continues to operate the primary root server, it shall request written direction from an authorized USG [U.S. Government] official before making or rejecting any modifications, additions or deletions to the root zone file." Stipulation ¶ 3 and Exhibit B. This transparent prior restraint of pgMedia’s Internet speech is likely to continue indefinitely. Article V(C)(9) of the MOU states that the Department will "consider the possible expansion of the number of gTLDs [generic top-level domains]." Stipulation ¶ 7 (emphasis added). This statement provides no assurance that pgMedia will receive, at any point, relief from the government’s restraint of its speech at any time in the future. Without such assurances, there is no less a constitutional "case or controversy" under the First Amendment than there was when the pending motions were argued to the Court in June 1998.

Indeed, this Court can only speculate about the results that ICANN can bring about. In fact, the arrival of ICANN on the scene of domain name registration changes circumstances very little from those of a year ago when the Department of Commerce first proposed privatizing the Internet Domain Name Registry. This Court did not at that time determine that the matter was moot, and has no cause to do so now.

Even if defendants were to cease their unlawful activities immediately, liability would not disappear. The law is settled that "voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot." United States v. W.T. Grant Co., 345 U.S. 629, 632 (1953). Where the harm alleged is likely to occur again, courts are bound to decide the pending case on the merits even though no unlawful activity is being perpetrated at the time of decision. Roe v. Wade, 410 U.S. 113, 125 (1973). In the context of federal antitrust law, the Supreme Court has held that "[a] case might become moot if subsequent events made it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur." United States v. Phosphate Export Ass’n, 393 U.S. 199, 203 (1968)(holding, inter alia, that government regulations making it ‘uneconomical’ for defendants to continue their alleged price fixing scheme did not make the case moot). Moreover, even if present circumstances "may have reduced the practical importance of this case," the "possibility of resurgence" of defendant’s unlawful conduct requires legal conclusion of this case. St. Paul Fire & Marine Ins. Co., 438 U.S. 531, 537-38 (1978)(emphasis added).

Thus, even if ICANN, a corporation that at this time still has no members, is somehow successful in opening up DNS to competition, pgMedia has no guarantee that DNS competition is secure or that ICANN will not disband shortly thereafter. Therefore, the reasonable possibility that pgMedia will enjoy only momentary relief from defendants’ monopolizing DNS and restricting Internet speech requires the Court to find that this case is not moot and decide it on the merits.

II. THE COURT SHOULD NOT STAY PROCEEDINGS BECAUSE PLAINTIFF

BE ABATED

Defendant’s present request for a stay is merely a repetition of the government’s earlier motion for stay of these proceedings. NSF urged this Court at that time, as presumably the Department does now, to stay this case "in anticipation that it will shortly become moot." This argument is no more powerful now than it was six months ago because DNS remains no closer to privatization and competition than it was then. NSF had attempted to persuade this Court that "the Government has made plain its intent to transfer to a private, not-for-profit entity the management of the DNS — including the authority to add any new TLDs." NSF Opposition at 10-11. In addition, NSF told the Court that the government "‘hopes that the private sector can get the new corporation up and running by October 1 of [1998].’" Id. at 11 (citation omitted). On these grounds, NSF argued almost six months ago that "Plaintiff’s cause of action against NSF . . . will thus shortly become moot." Id.

Contrary to defendant’s promises, nothing has occurred to suspend the unlawful activity currently under investigation by this Court. ICANN was created only two months prior to this filing. ICANN does not control the root zone file, is not authorized to open new TLDs, and has not even begun to consider whether new TLDs should be created. Beyond the mere existence of ICANN, the government cannot demonstrate any reasonable basis for believing that the exclusion of pgMedia from the DNS will soon end. In the meantime, pgMedia continues to suffer irreparable harm. pgMedia is precluded from engaging in the registration of domain names and suffers significant financial loss as a result. In addition, pgMedia cannot exercise its right to speak on the Internet in violation of the First Amendment.

In sum, the legal claims before this Court survive. The recent events that the government has brought to the Court’s attention provide no grounds for it to decide that it must not, or need not, provide legal conclusion to this case. The situation as presented in pgMedia’s complaint and in subsequent briefs of the parties has not changed materially. pgMedia’s claims of antitrust injury and restriction of protected speech against NSI and the government still require redress and will not likely be alleviated soon. Therefore, this Court has no grounds upon which to stay this case and should proceed with determining the liability of defendants according to the claims pending against them.

For all the foregoing reasons, this Court should not dismiss or defer legal decision in this case.

Respectfully submitted,

BLUMENFELD & COHEN

Of Counsel:                             Attorneys for Plaintiff
                                        pgMedia, Inc. d/b/a Name.Space                             
                              
PAUL, WEISS, RIFKIND, WHARTON           BLUMENFELD & COHEN
GARRISON
                                        1615 M Street, N.W.
1285 Avenue of the Americas              Suite 700
New York, New York  10019                Washington, D.C.  20036
212-373-3000 (phone)                     202-955-6300 (phone)
212-373-2628 (fax)                       202-955-6460 (fax)