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Verisign, Inc. is the designated administrator (domain name registry) that is responsible for managing domain names and setting policy for the .net and .com top-level domains. VeriSign operates each registry pursuant to a 2001 contract with the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit oversight body that coordinates the DNS on behalf of the U.S. Department of Commerce. This means that VeriSign manages the definitive databases of registered .com and .net domain names.

The 2001 Agreements imposed on VeriSign a price cap of $6 per year for registration, renewal, or extension of any domain name. Each of the 2001 Agreements contained a renewal provision that allowed ICANN to place the contract up for competitive bidding upon its expiration.

When the 2001 .net Agreement expired in 2005, there was a competitive bidding process that resulted in the selection of VeriSign’s bid. VeriSign entered into a new agreement with ICANN (the “2005 .net Agreement”). Before the 2001 .com Agreement was due to expire in 2007, however, VeriSign and ICANN agreed to extend it with a new contract (the “2006 .com Agreement”). Both the 2006 .com Agreement and the 2005 .net Agreement provide for automatic renewal upon expiration unless a court or arbitrator issues a final order finding VeriSign to be in breach of the Agreement, and VeriSign fails to cure the breach.

The 2006 .com Agreement also increases the maximum price VeriSign can charge for domain name registrations. The previous contract’s $6 cap was maintained until December 31, 2006, but the new contract provides that cap may be increased seven percent per year in four of the following six years. The 2005 .net Agreement does not contain an express price increase provision. Its price cap of $4.25 per domain name registration expired on December 31, 2006, leaving no cap in its place.