Civil Action No. 3:12-cv-00367-F (O)
____________________________________________________________________________
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
____________________________________________________________________________
JEFF BARON,
Appellant,
v.
CHAPTER 11 TRUSTEE DANIEL J. SHERMAN
Appellee
____________________________________________________________________________
Appeal from the United States Bankruptcy Court
For the Northern District of Texas, Dallas Division
Bankruptcy Petition No. 09-34784-sgj11
____________________________________________________________________________
LETTER BRIEF IN RESPONSE TO MAY 16 2012 ORDER
____________________________________________________________________________
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
Drawer 670804
Dallas, Texas 75367
(972) 200-0000 - Telephone
(214) 347-4031 - Facsimile
Email: legal@schepps.net
COUNSEL FOR APPELLANT
Case 3:12-cv-00367-F Document 19 Filed 05/25/12 Page 1 of 6 PageID 1547
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GARY N. SCHEPPS
ATTORNEY & COUNSELOR
DRAWER 670804
DALLAS, TEXAS 75367
TELEPHONE
FACSIMILE
972-200-0000
972-200-0535
May 25, 2012
VIA EMAIL
(and PACER)
Hon. Judge W. Royal Furgeson, Jr.
United States District Judge
1100 Commerce Street, Room 1359
Dallas, Texas 75242-1001
Re: Civil Action No. 3:12-cv-00367-F (O)
Your Honor,
This briefing addresses the issues relevant to the instant appeal. Accordingly, the
scope of this briefing is limited to the record on appeal before the Court. The facts and
issues relevant from the perspective of the Vogel receivership are not addressed here, and no
attempt is made to respond or present a countervailing argument to the issues beyond the
limited matters at issue in this
appeal.
Accordingly, the contents of this brief are as follows:
ISSUES ADDRESSED ......................................................................................2
ARGUMENT......................................................................................................2
QUESTION 1. HOW ONDOVA LIMITED COMPANY OWNS
THE DOMAIN NAME SERVERS.COM?................................................2
QUESTION 2. WHAT IT MEANS TO REGISTRAR A DOMAIN
NAME AND WHAT IT MEANS TO OWN IT?.......................................4
CERTIFICATE OF SERVICE............................................................................5
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ISSUES ADDRESSED
QUESTION 1. How Ondova Limited Company owns the domain name
servers.com?
QUESTION 2. What it means to registrar a domain name and what it means
to own it?
ARGUMENT
QUESTION 1. How Ondova Limited Company owns the domain name
servers.com?
ANSWER: The Court has requested that a theory be briefed to support a certain
outcome– Ondova owning the domain name servers.com. That theory, while not endorsed
by Appellants, responsive to the Court’s briefing directive is as follows: If the bankruptcy
code’s ‘ipso facto’ clause negation provision, that is expressly limited in application to rights
lost by entities which themselves invoke bankruptcy protection, could be amended by the
Court and revised to also encompass entities in which a bankrupt debtor held stock; and the
Court were to proclaim a new law that overrules the substantive state law contract rights of
non-bankruptcy entities when a debtor in bankruptcy holds stock in those entities, the Court
could then declare void the substantive rights of Baron vesting under state law. The Court
could then institute a second law that the assets of entities ordered into receivership by the
Bankruptcy Court are ‘transmuted’ into assets of the bankruptcy estate so that the domain
name servers.com would be owned by Ondova.
FURTHER BRIEFING: The Ondova Bankruptcy Judge entered an order placing
Servers, Inc. into receivership because it found Servers, Inc. was in default of its obligations
regarding the domain name Servers.com. R. 255. Accordingly, because of Servers, Inc.’s
default and the imposition of a receiver, as a matter of Texas and Nevada state law, pursuant
to the agreement between the parties the domain name servers.com reverted to Baron and
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Emke and they became 50/50 owners of the domain name. The Ondova bankruptcy estate
retains its 50% ownership interest in Servers, Inc., however, as a matter of Texas and Nevada
state law, Servers, Inc. no longer owners “servers.com”. Notably, the Emke settlement
transferred most of the rights to “servers.com” to a new entity (Servers, Inc., a Nevada
corporation). R. 246-9. Your Honors receiver, Peter Vogel, and his firm Gardere,
should be able to provide insight on this as Gardere at some point represented Emke in
his suit against Baron and Ondova (a litigation which was active when Vogel was
appointed by Your Honor, without a conflicts affidavit as mandated by law, as special master
over the Ondova/Netsphere lawsuit).
Ondova and Emke owned the new corporation’s stock 50/50. Id. No one disputes
Ondova’s right to ownership of the Servers, Inc. stock. However, the Emke settlement
expressly reserved an interest in the domain name for Emke and Baron personally. Id.
Pursuant to the agreement, Baron and Emke reserved a security and reverter interest in the
domain name, reverting ownership on the condition that the corporation was ever placed into
receivership. Id. Specifically the Emke settlement agreement provides:
“In the event of insolvency, receivership and/or other default of
the jointly owned company, the domain name <servers.com> shall
revert to Jeff Baron and Mike Emke, to be owned jointly and equally.
To this degree, these two principals shall maintain a first lien and
security interest in the domain name superior to any other investor,
equity holder or creditor.” R. 247.
As stated above, on October 18, 2011, the Ondova Bankruptcy Court Judge entered an order
placing Servers, Inc. into receivership because it found Servers, Inc. was in default of its
obligations regarding the domain name Servers.com. R. 255. Accordingly, because of
Servers, Inc.’s default and the imposition of a receiver over the company, as a matter of
Texas and Nevada state law, pursuant to the agreement between the parties, the domain name
servers.com reverted to Baron and Emke and they became 50/50 owners of the domain
name. The Ondova bankruptcy estate retains its 50% ownership interest in Servers, Inc.,
however, as a matter of Texas and Nevada state law, Servers, Inc. no longer owns
“servers.com”.
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QUESTION 2. What it means to registrar a domain name and what it means to
own it?
ANSWER:
(1) To register a domain name is to list an identity as the holder of a domain name for
administrative purposes within the private DNS system. Registration is the technical means
set up for administration of the global domain name structure and the DNS system is the
technical structure for administering domain names.
(2) To own a domain name is to hold title to that name and to be vested with the power
under law to control a bundle of rights relating to that name, including to ultimately direct the use,
management, and enjoyment of the domain name, and including the right to convey those rights to
others. In other words, owning title of a domain name is having legal rights in and to the property
that are recognized at law as being superior to the legal interest in the property of all others.
FURTHER BRIEFING: There is no inherent correlation between ownership of title
of a domain name and the registration of a domain name. Title relates to the right to
control and alienation of the property whereas registration relates to the technical
administration of the property within the domain name management system as
currently implemented. Just as holding a dog’s leash is irrelevant to ownership of a dog, so
is holding registration of a domain name. There should be nothing astounding about this
principle. For example, a book can be copyright in the name of the author, X. X can then
freely transfer his or her ownership of the copyright to Y. The book can recite “copyright
2012 by X”, while the copyright owner is actually Y. Thus, most domain investment portfolios
typically have a third party or subsidiary hold the DM (domain name) registrations to maintain
the privacy of domain portfolio ownership. This Court has had prior experience with this
concept in the case of Dauben. Dauben, Inc. provided a privacy service. That is, the company
held a portfolio of names as registrant without acquiring an ownership interest in the domain
names themselves. Similarly, Ondova provided the same service to its customers, holding
domain names as registrant on behalf of the domain name owners to protect the owners privacy.
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Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
Drawer 670804
Dallas, Texas 75367
(972) 200-0000 - Telephone
(972) 200-0535 - Facsimile
Email: legal@schepps.net
COUNSEL FOR APPELLANT
CERTIFICATE OF SERVICE
This is to certify that this brief was served this day on all parties who receive notification through
the Court’s electronic filing system.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT
Case 3:12-cv-00367-F Document 19 Filed 05/25/12 Page 6 of 6 PageID 1552

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