Namecheap alleges Tucows thwarted effort to transfer domains

Mon, 4th December 2017, 01:24

Earlier this year we wrote a piece about Canadian based Tucows announcing an agreement to acquire wholesale domain name registrar eNom from Rightside Group. Tucows paid $83.5 million for the acquisition of eNom, the 14.5 million domains under its management, and a additional 28,000 active resellers. Tucows now had a total network of over 40,000 resellers globally and 29 million domains under management making it the second largest domain registrar in the world. All sounded good until you considered that 7 million of those domains were registered through Enom on the reseller account of Namecheap. Although the timing may have been coincidental, NameCheap announced pretty much simultaneously that it had stopped reselling domain names through Enom and domains coming up for renewal would be automatically transferred from Enom to NameCheap.

In a lawsuit filed in Seattle (pdf) at the end of August, Namecheap alleged that Tucows was thwarting its effort to transfer domains registered through Namecheap when it was an Enom reseller.

According to the court filing, the issue seems to revolve around whether this transfer qualifies for a “Bulk Transfer After Partial Portfolio Acquisition”, or BTAPPA. This type of transfer was setup to transfer a bunch of domains between registrars in bulk when one registrar acquires another.

Namecheap says that Verisign has already approved the transfer of these domains through BTAPPA and that an transfer agreement was in place prior to the sale of eNom. But Tucows, according to the suit, says it doesn’t qualify:

Tucows has refused to complete the bulk transfer of the VeriSign Domains to Namecheap using the BTAPPA service based on the unmeritorious argument that doing so would violate ICANN/VeriSign rules, regulations and processes….

Namecheap also claims that Tucows is concerned that the mass transfer of domains “would wreak such havoc and confusion” because of the volume and because .com is a thin Whois in which registrant data stays with the registrar, not the registry.

Namecheap reasoned that Enom/Tucows might want to slow the transfer stating that even if eNom’s margin on Namecheap’s domain registrations were quite low and the agreement allowed Enom to retain 100% of expired domain revenue and all parking revenue during registrations and during the expiration cycle.

Namecheap also said it offered to make a cash payment to Tucows and execute a separate purchase agreement so that the deal would be considered a partial acquisition “and thereby obviate any further basis for disagreement about whether the VeriSign Domains transfer qualifies for the BTAPPA service.” Tucows rejected this option according to the suit.

In October Namecheap voluntarily dismissed this case without prejudice, meaning that it could refile the claims at a later time. Domain name registrar Namecheap is big, but until this year it didn’t show up on charts ranking registrars by domains because Namecheap acted as an Enom reseller. Once Namecheap began registering new .com domain names on its own registrar accreditation, it has been generally ranked as the fifth largest registrar each month when it comes to new .com registrations.

ICANN published the latest official .com transactions report from Verisign on December 1st 2017 but this only includes data by registrar until August 2017. The top registrars in terms of new .com registrations for August showed no changes in ranking from July.

  1. GoDaddy* 922,658
  2. Tucows** 193,081
  3. PublicDomainRegistry 135,332
  4. HiChina 128,586
  5. Namecheap 121,858

That is likely to change as on the latest list of Registrars with the Highest Net Growth, Namecheap ranks number two, surpassed only by GoDaddy. (editor's note.. GoDaddy is ranked far and away number one, a league of its own. But that is a whole different story).

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