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Go Daddy Gets Sued

The Go Daddy Group, the Internet domain registrar that plans to go public, is being sued for patent infringement by Web.com (WWWW - Get Report), which provides services to business Web sites.

Web.com sued Go Daddy on Monday in U.S. District Court in Atlanta, seeking both unspecified monetary damages and an injunction. A spokeswoman for Go Daddy, one of the best known Internet brands thanks to its racy Super Bowl TV commercials, declined to comment.

At issue in the suit is a patent that enables customers to manage or change their Web sites remotely through a control panel which Web.com received in 2004, when the company was called Interland. The company changed its name to Web.com in March.

"The patent at issue in this claim, and the technology it represents, constitutes valuable assets for the company, and an investment for which the company's shareholders expect to receive a return," Atlanta-based Web.com says in a 26-page complaint. "Web.com has been damaged and will be irreparably injured by Go Daddy's infringement and active inducement of infringement, for which Web.com has no adequate remedy at law.''

The Web.com suit is yet another challenge facing Scottsdale, Ariz.-based Go Daddy as it prepares to sell shares to the public.

Complicating matters further for Go Daddy is the recent flop of the IPO for Vonage (VG), another well-known Web brand. Shares of Vonage have tumbled 48% since going public on May 24. Go Daddy like the Internet phone service provider also is unprofitable.

In fact, Go Daddy hasn't had a profitable year since it was founded in 1997. Last year, it had a net loss of $11.6 million. The company has "budgeted for increases in all operating expense categories in 2006, including significantly increased costs related to becoming a public reporting company," according to a May 12 filing with the Securities and Exchange Commission.

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