A federal judge yesterday overturned part of a fee that NetworkSolutions Inc. of Herndon charges to people and companies thatregister Internet addresses, a ruling that could result in $50million in refunds.
U.S. District Judge Thomas F. Hogan held that a $30 feeassessed on Internet address holders was an illegal tax because itwas devised by the National Science Foundation and Network Solutionsinstead of by Congress.
In his opinion, Hogan wrote that "unless Congress acts toratify the collection of the {fee}, plaintiffs may be entitled to arefund of the taxes that they have paid." But he deferred a decisionon whether to order refunds.The $30 has gone into a government "IntellectualInfrastructure Fund" for the Internet and is part of a $100 feecharged by Network Solutions to those who want to register Internetdomain names -- addresses that end with such designations as .com,.org, .net and .edu.Hogan ruled that Network Solutions did not violate the law incharging the other part of the fee, saying the company is merelybeing compensated for the service of providing domain names tocustomers.Network Solutions shares jumped $3.75, to $43, on news of theruling."This decision amounts to business as usual for NetworkSolutions by affirming that our position as the exclusive registrarof domain names . . . is legally constituted and that NSI can chargea market rate for providing its services," Network Solutions chiefexecutive Gabe Battista said in a statement.The removal of the $30 fee will have no impact on NetworkSolutions' revenue or earnings, Battista said.A trade group called the Association of Internet Registrantsof America brought the lawsuit in October 1997. Washington lawyerWilliam H. Bode, who represented the plaintiffs, told Bloomberg Newsthat the fund declared illegal by Hogan contains about $50 million.Owners of domain names also may get refunds for a $15 portionof an annual fee they pay to renew their claim to addresses.
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