GoDaddy Faces Scrutiny Over Domain Auction Reversals

A recent legal order is putting GoDaddy under the microscope regarding its handling of domain auction reversals. A federal judge has mandated (PDF) that GoDaddy disclose information concerning previous instances where domains were reclaimed after being won at auction. This comes as part of an ongoing lawsuit initiated by two companies who allege their purchased domains were taken back after they had already begun developing business plans around them.

The Case: calor.com and butane.com

Crisby Studio AB secured the auction for calor.com, while Prime Loyalty LLC acquired butane.com. Both domains previously belonged to U.K. energy firm Calor Gas Ltd and were ultimately returned to the original owner. The plaintiffs argue that GoDaddy’s actions disrupted their business preparations and caused financial harm.

Key Discoveries Ordered by the Judge

The judge addressed several discovery disputes, leading to the following rulings:

• Auction Reversal Examples: GoDaddy must provide examples of other domain auction reversals attributed to an “unexpected error” within the past 18 months. The initial request for five years was narrowed.
• Related Lawsuits & Proceedings: Information regarding lawsuits, arbitrations, or administrative proceedings involving post-auction reversals or cancellations within the last two years must be disclosed.
• Business Plans (Limited): GoDaddy’s request for details about Prime Loyalty’s business plans for butane.com was denied, as the plaintiffs are not seeking damages for lost profits.
• Auction Error Details: Crucially, GoDaddy must disclose when and how it first discovered the alleged “unexpected error,” who was involved, and what corrective actions were taken. While attorney-client privilege is protected for direct communications, the underlying facts are not. The judge specifically stated that GoDaddy must also disclose whether they believe 123-Reg contributed to the problem, excluding any legal advice.

Implications for Domain Investors

This case highlights the potential risks associated with domain auctions and the importance of clear terms and conditions. The judge’s order to disclose information about past errors could reveal a pattern of issues within GoDaddy’s auction system. For domain investors, this underscores the need for due diligence and a thorough understanding of the registrar’s policies regarding auction reversals. You can find more information about domain name disputes and best practices at the ICANN website.

Community Discussion

The article sparked discussion in the domain community, with one commenter suggesting a collective effort to share experiences with GoDaddy clawbacks. Andrew Allemann clarified that the focus is on reversals due to “unexpected errors,” not simply domain renewals.

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