Namecheap sues Enom and Tucows, demands transfer of 4 million domains

Namecheap says Tucows is dragging its feet on transferring domains registered through Namecheap when it was an Enom reseller.

Domain name registrar Namecheap is big, but until this year it didn’t show up on charts that rank registrars by domains. That’s because Namecheap acted as an Enom reseller, so it added to Enom’s numbers rather than its own.

Starting this year, Namecheap began registering new .com domain names on its own registrar accreditations and it generally ranks as the fifth largest registrar each month when it comes to new .com registrations.

Namecheap wants to transfer four million domains that Verisign offers (e.g. .Com, .net) that were registered at Namecheap while it was an Enom reseller from Enom’s accreditations to its own accreditations. In a lawsuit filed in Seattle this week (pdf), Namecheap alleges that Tucows, which acquired Enom earlier this year, is thwarting the effort.

The issue seems to revolve around if this transfer qualifies for a “Bulk Transfer After Partial Portfolio Acquisition”, or BTAPPA. This type of transfer was set up to transfer a bunch of domains between registrars in bulk.

One reason to use BTAPPA is when a registrar acquires another one, so that it can transfer the domains to a single accreditation.

Does that apply in this case?

In its suit, Namecheap says that Verisign has already approved the transfer of these domains through BTAPPA. 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.

Enom’s margin on Namecheap’s domain registrations is surely quite low, but the agreement allows Enom to retain 100% of expired domain revenue and all parking revenue during registrations and during the expiration cycle, according to the suit. Namecheap positions this as a reason that Enom/Tucows might want to slow the transfer.

Namecheap says 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.” It says Tucows rejected this option.

I have reached out to both Namecheap and Tucows for comments and will update this story if either makes a statement.