Judge Rules in Registerfly Case, ICANN Continues Tough Line

Michael Hayes
NEWARK, N.J. — A U.S. District judge has shed some light on the ongoing Registerfly controversy by awarding control of the troubled domain registrar to the recently ousted executive who helmed the company up until Feb. 12.

In response, ICANN has reissued its warning to Registerfly, demanding that the company cure its alleged breaches or risk losing its accreditation.

A ruling by U.S. District Judge Peter Sheridan effectively ended a battle of dueling CEOs, with ousted chief Kevin Medina back in power and John Naruszewicz out.

The battle began Feb. 12 when Naruszewicz secured a preliminary injunction preventing Medina from accessing company funds. Naruszewicz claimed that Medina had used corporate money to pay for a life of luxury — including a $10,000-per-month Miami Beach penthouse and a $9,000 escort — at the expense of the company and its customers.

Medina denied those allegations and went to court to get his company back.

Naruszewicz said he does not plan to appeal the ruling.

“We lost and it's all over,” he said. “The company will implode in days and 1 million domain names are going to be lost. It's a damned shame.”

Eugenie Temmler, Medina’s attorney, said his client is confident Registerfly will be able to weather the storm.

For nearly a year, Registerfly customers complained that they had been over-billed for their domains and blocked from transferring them.

Medina now faces two problems: A shortage of cash and the possibility of ICANN stepping in.

In a statement issued just after the verdict, ICANN said the court’s decision resolves only the dispute over Registerfly’s ownership, but that the ruling does nothing to alter Registerfly’s obligation to cure the alleged breaches of the Registrar Accreditation Agreement.

ICANN had previously demanded that Registerfly turnover the data concerning the company’s estimated 2 million domain names to prevent customers from losing access to them should the company go under.

After some stonewalling under the Naruszewicz regime, ICANN was able to confirm yesterday that it had managed to obtain most of the data requested. ICANN is working to confirm the accuracy of the data.

However, a significant percentage of the data may not contain sufficient information for ICANN to protect the property of Registerfly customers. Some of the data does not connect a customer with a domain because it was registered using Registerfly’s Protectfly privacy service.

ICANN said it has directed additional questions to Registerfly to get the necessary information for those domains.

“If a name is hidden through a service of this kind, it is possible that no one aside from the provider of the privacy service can identify the customer, therefore data escrow may be insufficient for ICANN to protect that data,” an ICANN spokesman said. “In making a choice to use a proxy/privacy service, customers should be aware of balancing privacy against access to data.”