United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, JUDGE
procedural history in this case is needlessly complicated.
Plaintiff Domain Protection, LLC filed a Motion for
Preliminary Injunction (Dkt. #54), seeking to stop Defendant
Sea Wasp, LLC from locking its access to domain names in its
possession. The corresponding response and reply were timely
filed but a sur-reply was not. Sea Wasp subsequently filed
two motions seeking leave to file a sur-reply (Dkt. #79; Dkt.
#83) and one to file additional briefing (Dkt. #120). Domain
Protection opposes these efforts, and moves to strike one of
the motions for leave (Dkt. #81).
the Court does not appreciate Sea Wasp's failure to
timely file its briefs, in the interest of justice, the Court
will consider Sea Wasp's late-filed briefs nevertheless.
After all, the motion is being decided without a hearing,
where Sea Wasp may have raised these arguments. See
Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 628 (5th
Cir. 1996) (quoting Commerce Park at DFW Freeport v.
Mardian Constr. Co., 729 F.2d 334, 342 (5th Cir. 1984))
(“If no factual dispute is involved, however, no oral
hearing is required; under such circumstances the parties
need only be given ‘ample opportunity to present their
respective views of the legal issues involved.'”).
The Court has thus considered all pleadings filed in
connection with the motion for preliminary injunction, which
will be granted.
internet is “an electronic communications network that
connects computer networks and organized computer facilities
around the world.” Internet, Merriam-Webster,
visited July 11, 2019). To access a website, users must
connect their home computer to the one hosting the site. This
is done by typing the website's “Internet Protocol
Address” (the “IP Address”)-a string of
numbers that identifies the computer where the website is
housed-into Internet Explorer or another web browser. See
IP Address, Tech Terms Computer Dictionary,
https://techterms.com/definition/ipaddress (last visited July
11, 2019) (listing “188.8.131.52” as an example).
Because an IP address may be difficult to remember, website
owners typically obtain an alpha-numeric “domain
name” that users can type reach to their website and
that might be easier to remember, such as
“google.com.” Put simply, an “IP address,
” is comparable to a nine-digit phone number and a
“domain name” is comparable to the name saved on
a cell phone for that number.
can secure the rights to use a particular domain name in one
of two ways. It can register a brand-new domain name with a
“registrar, ” the party responsible for
maintaining the registration of domain names. Or, it can
purchase an existing domain name from the party who has
registered that name-also known as the
“registrant” or “registered name
holder.” Registered name holders can earn money from
the domain names in their possession by selling them or
directing them to placeholder sites where ads are placed and
Protection is the registered name holder for over 50, 000
domain names (the “Domain Names”) while Sea Wasp
is the registrar over those names. This suit concerns whether
Sea Wasp is encroaching on Domain Protection's
proprietary interest in the Domain Names by placing an
executive lock on them, which prevents Domain Protection from
selling the Domain Names or updating their registration
information. Sea Wasp insists that Domain Protection lacks
any proprietary interest in the Domain Names in light of a
dispute over their ownership.
summary on how Domain Protection came into possession of the
domain names may be helpful at this point. In 2014, three
parties filed suit in the Northern District of Texas against
Jeffrey Baron and one of his companies for misappropriating
their domain names. The court found Baron to be a vexatious
litigator and, on this basis, appointed a receiver over his
assets while the dispute was pending (Dkt. #54, Exhibit 15).
The court also appointed a receiver (the
“Receiver”) over assets belonging to Novo Point,
LLC (“Novo Point”) and Quantec, LLC
(“Quantec”) (collectively, the
“LLCs'”), two limited liability companies
with ties to Baron (Dkt. #54, Exhibit 13). The LLCs'
assets included the Domain Names. They were handed over to
the Receiver as a result.
argued that the court lacked jurisdiction to enter the
receivership order, and the Fifth Circuit agreed. This
prompted the district court to unwind the receivership (the
“Unwind Order”) (Dkt. #54, Exhibit 17). Assets
held in Baron's name would be returned to him. But it was
not apparent whom to return the LLCs' assets to in light
of a dispute over who could properly act for them. Without
resolving the dispute, the court directed the Receiver to
return the Domain Names to Lisa Katz, the Local Operations
Manager for the LLCs. Katz was entrusted to manage the
LLCS' assets, including the Domain Names, until the
dispute over control of the LLCs was resolved (Dkt. #54,
Exhibit 14 at pp. 4-5 n.2; Dkt. #54, Exhibit 17).
Mike Robertson and David McNair (the “Baron
Affiliates”) tried to induce the registrar over the
Domain Names, fabulous.com (“Fabulous”), into
giving them control of the Domain Names anyway. But the
Receiver intervened, instructing Fabulous to handover the
Domain Names to Katz, pursuant to the Unwind Order (Dkt. #54,
Exhibit 17). Katz then assumed control over the Domain Names.
The LLCs had racked up substantial debt while they were under
receivership and that “creditors threatened to place
the LLCs in bankruptcy for liquidation.” (Dkt. #54,
Exhibit 31 at p. 2). To prevent this, Katz assigned the
Domain Names to Domain Protection, a company where she is
also manager, which was to liquidate the Domain Names as
needed to pay off the LLCs' debts (Dkt. #54, Exhibit 31
at p. 2). But, around this time, Baron had filed suits in
Texas and Australia challenging Katz's possession of the
LLCs' assets. This prompted Fabulous to place an
“executive lock” on the Domain Names while these
actions were pending, which prevented Domain Protection from
liquidating the Domain Names while the suits were ongoing.
suit was successful (Dkt. #54, Exhibit 9; Dkt. #54, Exhibit
12). In August 2017, after the suits had been dismissed,
Domain Protection asked Fabulous to restore its access to the
Domain Names. Sea Wasp purchased Fabulous around that time.
While the Parties dispute what immediately followed, they
agree that, “[a]t least between January 28, 2018 to
February 11, 2018, there was not an ‘Executive
Lock' on the [D]omain [N]ames.” (Dkt. #42 at p. 1).
Domain Protection began managing the affairs over the Domain
Names shortly after. It started by replacing Bidtellect as
the advertisement revenue management company for the Domain
Names on receipt a “concerning” letter from
Bidtellect (Dkt. #54 at p. 10). Bidtellect was apparently
exasperated with the series of disputes over the Domain Names
and proposed certain non-negotiable terms to continue their
contractual relationship. Domain Protection responded by
terminating its contract with Bidtellect, contracting with a
new advertisement revenue management company, and updating
the registration information for the Domain Names
accordingly. This meant that, when a user typed a
Domain Protection domain name in a web browser, the user
would be directed to a placeholder website hosted by the new
advertisement revenue management company.
February 2018, two or three weeks after the lock was removed,
Baron filed another suit (the “Underlying
Dispute”) challenging Katz's authority to transfer
the Domain Names. See In re Payne, No. 16-04110
(Bankr. E.D. Tex. 2018). Domain Protection believes that
Baron filed this suit simply to lock the Domain Names
indefinitely, citing correspondence from Baron's
attorneys (see Dkt. #54, Exhibit 28). Sure enough,
Sea Wasp responded by reverting the changes Domain Protection
had made to the Domain Names' registration information
and turning the executive lock back on. Domain Protection
notes that Robertson, one of the Baron Affiliates who tried
to take control of the Domain Names in violation of the
Unwind Order, is now a principal or “key person”
at Sea Wasp (Dkt. #54, Exhibit 31 at pp. 3-4).
Protection has brought claims against Sea Wasp for respective
violations of the Texas Theft Liability Act and the Stored
Communications Act, interference with contract, civil
conspiracy, and conversion. Domain Protection alleges that,
by turning the lock back on, Sea Wasp is encroaching on its
proprietary interests in the Domain Names since it cannot
transfer them or update their registration information. Sea
Wasp, however, insists that it can and must place a lock on
the Domain Names while a dispute is pending, citing its
obligations as a registrar accredited with the Internet
Corporation for Assigned Names and Numbers
(“ICANN”). ICANN-registrars must comply with the
Registrar Accreditation Agreement (the “Accreditation
Agreement”), which instructs them to maintain the
status quo once a dispute arises (Dkt. #54, Exhibit 2 at p.
5). According to Sea Wasp, this means that it cannot allow
Domain Protection to transfer the Domain Names while a
dispute is pending. Domain Protection counters that
ICANN's dispute resolution policy requires registrars to
transfer domain names on “written or appropriate
electronic instruction from [the registrar] to
take such action”-even after a dispute
has started (Dkt. #54, Exhibit 2 at p. 5) (emphasis in
Protection now seeks a preliminary injunction, contending
that it will suffer “irreparable harm” if it
cannot sell or monetize the Domain Names. Domain Protection
has $2, 000 in its account, cannot afford to pay renewal
costs for all of the Domain Names, and cannot receive emails
since the Domain Names are directed to a site hosted by
Bidtellect-the advertising manager whose contract Domain
Protection had terminated.
seeking a preliminary injunction must establish the following
elements: (1) a substantial likelihood of success on the
merits; (2) a substantial threat that plaintiffs will suffer
irreparable harm if the injunction is not granted; (3) that
the threatened injury outweighs any damage that the
injunction might cause the defendant; and (4) that the
injunction will not disserve the public interest. Nichols
v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008).
“A preliminary injunction is an extraordinary remedy
and should only be granted if the plaintiffs have clearly
carried the burden of persuasion on all four
requirements.” Id. Nevertheless, a movant
“is not required to prove its case in full at a
preliminary injunction hearing.” Fed. Sav. &
Loan Ins. Corp. v. Dixon, 835 F.2d 554, 558 (5th Cir.
1985) (quoting Univ. of Tex. v. Comenisch, 451 U.S.
390, 395 (1981)). The decision whether to grant a preliminary
injunction lies within the sound discretion of the district
court. Weinberger v. Romero-Barcelo, 456 U.S. 305,
The Status Quo
Wasp argues that the Court should deny Domain
Protection's request for a preliminary injunction because
it seeks to modify the status quo. As an initial matter, a
party may seek a preliminary injunction that alters the
status quo-though such requests are disfavored and require a
stronger showing from the plaintiff. See Justin Indus.,
Inc. v. Choctaw Secs., L.P., 920 F.2d 262, 268 n.7 (5th
Cir. 1990) (explaining that plaintiffs seeking such relief
must “show a clear entitlement to the relief under
the facts and the law”).
Protection is not seeking to alter the status quo,
regardless. The Fifth Circuit has long held that, for
purposes of a preliminary injunction, the status quo refers
to the “last uncontested status of the parties.”
Yeargin Const. Co. v. Parsons & Whittemore Ala. Mach.
& Servs. Corp., 609 F.2d 829, 831 (5th Cir. 1980)
(citing Wash. Capitols Basketball Club, Inc. v.
Barry, 419 F.2d 472, 476 (9th Cir. 1969)). The Fifth
Circuit's decision in Lake Charles Diesel, Inc. v.
Gen. Motors Corp. is illustrative. 328 F.3d 192, 193-95
(5th Cir. 2003). There, the defendant purported to terminate
a contract for the sale of automotive repair parts, prompting
the plaintiff to sue and move for a preliminary injunction.
The Fifth Circuit found that the plaintiff's attempt to
nullify the purported contract termination did not amount to
a change in the status quo. Id. at 196. The Fifth
Circuit reasoned that, by nullifying the contract
termination, the district court was merely maintaining the
status quo-the continuation of the contract. Id.
That is, the Fifth Circuit recognized the last uncontested
status of the parties' relations leading up to the suit
as the status quo. See id.
Protection seeks to maintain the last uncontested status
leading up to the dispute here. The Parties agree that: (1)
the Domain Names were subject to an executive lock while the
suits in Texas and Australia were pending; (2) the executive
lock was removed for a (short) period after these suits were
dismissed, which allowed Domain Protection to make certain
changes to the Domain Names' registration information;
(3) Sea Wasp reversed the changes and placed the lock back on
after the Bankruptcy Court action was initiated; and (4)
Domain Protection responded by filing this suit and motion.
The last uncontested status, then, is the period in which no
lock had been placed on the Domain Names. Because Domain
Protection is not attempting to modify the “status quo,
” the Court will not apply the stricter standard
applicable to motions for preliminary injunction seeking to