Muddied by court order — .Spa launch

Ownership fight and a battle over premium domains have thrown doubt into .spa’s launch this stretch.

A ruling by a Hong Kong court has muddied the planned launch of the .spa top level domain in sunrise this stretch.

The court responded to a lawsuit and request for injunction stemming from an ownership dispute.

Joel Disini of DotPH has been involved in a long-running dispute over his ownership in .spa and other domain names applied for by an entity called Namesphere. DotPH invested in Namesphere, which was created to invest in fresh top level domains. Despite initiating its investment in 2012, Disini states his firm didn’t receive its shares until February of this year.

In the case of .spa, Disini states that he and Edmon Chung of dotAsia, who created Namesphere, agreed that $60,000 of DotPH’s initial $300,000 investment in Namesphere was earmarked for a 30% stake in .spa. In a court filing, Chung disputes that DotPH has direct ownership in .spa.

Namesphere later struck a deal with Asia Spa and Wellness Promotion Council Limited to run the domain.

Disini states DotPH’s direct ownership in .spa isn’t being recognized. He filed for an injunction ahead of the planned .spa launch since he’s concerned that premium .spa domains might be sold below their value. He argued:

For example, an unscrupulous registry operator can effectively dissipate the value of the TLD by (1) selling premium sub-domains to connected persons at an undervalue via private sales, (2) not classifying valuable sub-domains as premium and selling them at undervalue to connected persons (by e.g. special auction during the landrush phase) or (3) engaging in collusion with an auctioneer responsible for auctioning off sub-domains to engineer sales to desired persons instead of the general public. It can be very difficult for an outsider to investigate or verify allegations of such misconduct. On top of that, even putting aside such misconduct, selling premium sub-domains at undervalue (e.g. due to failure to set appropriate minimum or reserve price; oversight in supervising auctions, etc) must also be a matter of real concern.

DotPH’s request for an injunction didn’t necessarily request the launch to be delayed. It wanted protections to prevent the sale of domains below value and requested that half of the revenue be put into escrow.

The defendants disagree (pdf) with many of Disini’s allegations.

The High Court of the Hong Kong Special Administrative Region Court of First Instance officially stamped an order today that is dated April 1, prohibiting the registry from selling, leasing or otherwise disposing of any .spa domains.

Lawyers for DotPH sent a letter to registrars urging them to refrain from selling the domains. They also sent letters to ICANN and Afilias (Donuts), the back end provider for the domain.

But Disini tells Reglike that Asia Spa and Wellness Promotion Council Limited sent a fax (pdf) to DotPH’s lawyers on April 14, saying it would proceed with the launch since on April 20 and that the registrants’ contracts are with the registrars and not the registry.

It also sent an email to registrars, stating that if it entered into is Registry-Registrar Accreditation agreement prior to April 1, it believes the agreement is still valid for offering domains.

It seems that the registry might be using language in the order that excepts fulfillment of the registry’s existing contractual obligations and who the agreements are between. Disini disagrees with the registry’s assertions and argues the registry can delay the launch at any time.

Disini provided an unsigned draft amended order that focuses on making sure there’s no self-dealing of premium domains between the registry and parties to the lawsuit.

Of course, the issue of delaying the launch or protecting premium domains is predicated on there being significant value in .spa premium domain names.

Court action continues in the case.

I reached out to Edmon Chung this morning and will update this story if he responds.