Subscribe to RSS Feed

01|06|2009 11:28 pm EDT

Verizon May Be Unable To Collect $33 Million Judgment Experts Say

by Adam Strong in Categories: Legal Issues

In our previous post about the news that Verizon had won a default judgment against domain registrar OnlineNic, we pointed out an important fact in the case. The registrar OnlineNic is a owned by a Chinese company.  The company is listed on the ICANN list of registrars as a US based registrar and reportedly has a presence in San Francisco, but questions are being raised whether Verizon will be able to collect on this judgment.

Internet News took a closer look at the Verizon vs OnlineNic case and asked legal experts whether Verizon will be able to enforce this judgment given the jurisdictional issues.

Martin Reynolds, a distinguished analyst at research firm Gartner, is doubtful that Verizon can collect its money. “You can only enforce U.S. laws that accept it, and generally that means you can only collect in the U.S.,”

Scott Christie, a partner at law firm McCarter & English and a former Federal prosecutor specializing in IT cases, said that U.S. firms seeking to collect on judgments handed down by U.S. courts from companies based abroad have little recourse.

“Even if they win a default judgment because the defendant did not turn up in court, it may be more expensive than it’s worth to levy against their assets if they don’t have clearly identifiable assets in the United States,” Christie told InternetNews.com.

Looks like Verizon may have won a big bag of nothing.  This could easily explain why OnlineNic didn’t even bother to challenge the suit.

As Internet News points out,  there is speculation that Verizon may take matters even further and push for ICANN to revoke OnlineNic’s accreditation. Verizon likely has no grounds to push for that either since the case was a civil matter.  If OnlineNic had been charged in a criminal case, there might be room to make this move.  ICANN had revoked EstDomains accreditation last year because, among other things, the company president had been convicted of credit card fraud, forgery and money laundering.

Tags: , , , , , , , , , ,

8 Comments

John Berryhill

January 7, 2009 @ 10:58 am EDT

Adam,

The key line there is “if they don’t have clearly identifiable assets in the United States”. Onlinenic certainly does have a clearly identifiable asset in the United States – the registrar accreditation.

The distinction you draw between the Estdomains situation and this one is not relevant. Verizon can certainly seek to levy against the registrar accreditation in satisfaction of the judgment. In fact, that’s been done before:

A few years ago, registrar Dodora defaulted in a breach of contract case. The plaintiff then levied against the registrar accreditation of Dodora, and worked out a contract for DirectI to take over the ongoing operations of Dodora. At that point, Dodora woke up and sued DirectI in Massachusetts to attempt to get its registrar accreditation back, claiming that DirectI had improperly taken control of its operations. DirectI won that case:

http://www.hostsearch.com/news/directi_hosting_news_3244.asp

While the Estdomains situation involved colorful behavior by the principal of the registrar, it is by no means the only situation in which a registrar can lose its accreditation. Verizon can easily seek control of Onlinenic’s accreditation and then sell it off to any of a number of other registrars who would be happy to take over Onlinenic’s tenth largest position.

Adam Strong

January 7, 2009 @ 1:02 pm EDT

thanks for weighing in John. I appreciate the insight. What about domain names that OnlineNic owns ? Since the registrar accreditation could be taken and thus control over the domains, does this also mean essentially that any and all names OnlineNic owns could be seized by seizing the accreditation? Also, if it is possible for them to seek this control how would VZ make this move ? This is getting interesting!

RegFeeDomains.com

January 7, 2009 @ 2:31 pm EDT

John, you are correct about seizing control of the registrar.

However, the market value of OnlineNic might be between $ 20K and $ 500K (just a guess) which is a drop in the bucket compared to the court judgement of $ 33 million.

Moreover, the legal fees to fight this case could have approach $ 500K (over many years).

John, you would know better than me.

If I had any domains in OnlineNic which I don’t, I would be moving them today.

John Berryhill

January 7, 2009 @ 10:38 pm EDT

“What about domain names that OnlineNic owns ?”

Do you mean “owns” or “manages”?

1. Domains that OnlineNic owns – As was demonstrated in the Bodog.com situation, domains can be seized in satisfaction of a civil judgment.

But I’m guessing you meant:

2. Domains that OnlineNic manages – That would be the point of (a) getting an order to seize the registrar accreditation, and (b) cutting a deal with an existing registrar to transfer management in order to extract the value. As with Dodora, Estdomains, and Registerfly, the entire lot can be transferred to another registrar. This happens outside of the context of litigation, such as when Enom bought Bulkregister, and Tucows bought ItsYourDomain.com, among other registrar purchases.

“Moreover, the legal fees to fight this case could have approach $ 500K (over many years).”

There’s nothing to “fight”. Onlinenic won’t show up.

Adam Strong

January 7, 2009 @ 11:10 pm EDT

Thanks for replying John. I did mean owns in the sense that they own the Verizon names that were in question to begin with here. I’m sure they own many more than those. I appreciate you clearing the potential to confuse ownership with managing for others who might not see it as clearly.

Regfeenames – I think your math is definitely off on the value of taking over a registrar with over 1 million domains under management. It’s not likely worth $33m but it is worth more than $500k

John Berryhill

January 8, 2009 @ 2:26 am EDT

“I did mean owns in the sense that they own the Verizon names that were in question to begin with here.”

You might consider digging a bit into what became of all of the names owned by John Zuccarini which were never ordered transferred. Interesting story, and I’m not sure if anyone has told it yet.

ICANN, but You Can't

July 27, 2011 @ 12:59 am EDT

ICANN is a joke and co-conspirator in internet crime in allowing any geek with enough dough to become registrars and squatters. Their Om (more like Pot) Budsman told me there was NO evidence of cybersquatting when I pointed out DIRECTNIC sniped then offered to sell a personal name domain back to a famous California artist. Now I see they’re being sued by Verizon for 28+ Million for squatting. The lawyas said to pony up $50k for a federal cybersquatting suit that wouldn’t win any money since it’s (the artist) isn’t a valuable brand.
The big Corporations have the bucks to pay their lawyas to do what the little guy gets extorted for.
ICANN: FAIL

dnnews

July 27, 2011 @ 10:59 am EDT

@ICANN but you…

You did not that the post you commented on was from 2009, right?

RSS feed for comments on this post · TrackBack URI

Leave a Reply