In the lawsuit, filed last week in the US, GoDaddy alleged that VeriSign engaged in false and deceptive practices, interfered with customer relationships and misappropriated trade secrets.
GoDaddy also accused VeriSign, which maintains the central registry of .com, .org, and .net Web site names, of consumer fraud.
VeriSign spokeswoman Cheryl Regan said the company does not comment on ongoing litigation.
In a statement, GoDaddy said the lawsuit had been triggered by letters that VeriSign had sent to GoDaddy's customers marked "Domain Name Expiration Notices". The letters encouraged customers to send $29 to renew each domain name, or risk losing those names, GoDaddy said.
However, GoDaddy said, the "reply by" dates on those notices didn't correlate with actual domain name expiration dates. By signing and returning the form, GoDaddy's customers inadvertently transferred their business to VeriSign - and at a higher price, GoDaddy said.
Other companies and consumer groups have sued VeriSign for similar practices. The company is also facing several class-action lawsuits by shareholders who accuse it of misleading them about its business and financial condition.