Civil Action No. 3:12-cv-00367-F (O)

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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

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JEFF BARON,

Appellant,

CHAPTER 11 TRUSTEE DANIEL J. SHERMAN

Appellee

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Appeal from the United States Bankruptcy Court

For the Northern District of Texas, Dallas Division

Bankruptcy Petition No. 09-34784-sgj11

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LETTER BRIEF IN RESPONSE TO MAY 16 2012 ORDER

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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

(214) 347-4031 - Facsimile

Email: legal@schepps.net

COUNSEL FOR APPELLANT

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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 Honor’s 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 owner’s 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

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