Defendants in In re A2P SMS Antitrust Litigation are asking the U.S. District Court for the Southern District of New York to dismiss antitrust claims alleging that mobile phone companies conspired with wireless providers to control the price of application-to-person messaging.

Club Texting, Inc., iSpeedbuy LLC and Textpower, Inc. filed an antitrust class action against AT&T Mobility LLC, Verizon Wireless LLC, Sprint Nextel Corp., T-Mobile USA, Inc., U.S. Cellular Corporation and other “aggregator defendants” who work with businesses to send text messages providing such things as flight information, coupons, sporting results, or emergency alerts to large groups of customers through their wireless networks.     

According to the plaintiffs, instead of allowing businesses to send bulk text messages using low cost 10-digit numbers, the defendants agreed to only allow the use of more expensive five- or six-digit numbers called common short codes. 

The mobile service defendants argue that the complaint should be dismissed because it “describes nothing more than legitimate, independent business conduct couched in conclusory assertions of conspiracy.”

The motions to dismiss also argue that plaintiffs lack standing because messaging services were not directly purchased from all nine companies, and that plaintiffs’ claims are barred by the four-year statute of limitations because the alleged agreement barring the use of 10-digit numbers occurred in 2003.

U.S. Cellular filed a separate motion to dismiss, arguing that it does not conduct business in New York, so the Court does not have personal jurisdiction.

In addition to the motions to dismiss, Air2Web Inc., Ericsson Inc., Sybase Inc., SoundBite Communications Inc., Syniverse Technologies LLC, Vibes Media LLC and 3Cinteractive LLC, asked the Court to stay the case to permit the dispute to be arbitrated pursuant to an agreement to arbitrate.

The court’s final decision in this case could have a major impact. According to a 2011 Juniper Research study, application to person messaging is a rapidly expanding market that will generate over $70 billion in revenue by 2016.

The Internet Corporation for Assigned Names and Numbers (ICANN) and ICM Registry, the sole operator of the .XXX domain name registry, are going to have to continue litigating antitrust claims brought by adult filmmaker Digital Playground Inc. and Manwin Licensing International SARL.

Judge Phillip S. Gutierrez of the U.S. District Court for the Northern District of California is permitting plaintiffs in Manwin Licensing International S.A.R.L., et al. v. ICM Registry, LLC, et al. to proceed with their antitrust claims after granting in part and denying in part defendants’ motion to dismiss the complaint.

Plaintiffs allege that ICANN – the nonprofit organization responsible for management of Internet domain names – awarded ICM registry contracts without competition, and that ICM charges above-market .XXX prices, imposes other anticompetitive .XXX sales restrictions and has used its ICANN contract to block other adult-oriented top-level domains from operating.

ICANN had argued that it does not engage in commercial activity since it is a nonprofit organization.  The court disagreed, finding that ICM’s payment of money to ICANN for a grant of sole authority to operate .XXX domain names was “‘quintessential’ commercial activity and it falls within the broad scope of the Sherman Act.”  The Court also found that plaintiffs had adequately pled other elements of a Sherman Act claim, including a relevant market, antitrust injury and anticompetitive and predatory conduct.

The court did, however, dismiss two causes of action, conspiracy to attempt to monopolize and attempted monopolization.  Judge Gutierrez found the complaint failed to include all the product substitutions when defining the affirmative registration market that was allegedly the subject of the attempted monopolization.  

For instance, ICM and ICANN agreed to limit new adult domains, but they did not conspire to limit the adult entertainment industry across all domains. Judge Gutierrez even used Manwin-owned YouPorn.com to show that adult websites still have the option of using other top-level domains.

Plaintiffs have until September 9 to file an amended complaint.