Company will have to pay $1,000 a day, but it will be an uphill battle for Meta to collect.
A federal judge has imposed contempt sanctions against Chinese company Leascend Technology (formerly 35.CN) in a long-running cybersquatting lawsuit brought by Meta Platforms (NASDAQ: META).
The lawsuit was filed in U.S. Federal District Court in October 2019. It was so long ago that the original plaintiffs were Facebook and Instagram, before the parent company changed its name to Meta Platforms.
Meta alleged that U.S.-based domain name registrar OnlineNic and its Whois privacy service were cybersquatting on its trademarks.
OnlineNic’s response was a bit odd, and in 2021, it said it was shutting down rather than continuing to fight the lawsuit. Despite its claim, the registrar continues to operate today.
Meta argued that OnlineNic was an alter ego of Chinese domain registrar 35.com, and went after it to satisfy its judgment of over $5 million, including legal fees. The court agreed.
U.S. District Judge Susan Illston held Leascend in civil contempt for violating a December 2024 order requiring it to deposit $5.5 million into a U.S.-based escrow account as security to satisfy a judgment in the case. The order also prohibited Leascend from selling or transferring its domain registrar business until the funds were escrowed.
Despite the order, Leascend went ahead with the sale of its wholly owned registrar subsidiary, Xiamen 35.com Information Co., Ltd., without depositing any funds. It stated that it attempted to make the payment, but Chinese money transfer laws prevented it from doing so.
It then appealed the case to the U.S. Court of Appeals for the Ninth Circuit. It also told its shareholders that it doesn’t intend to pay. In a notice to shareholders, it stated:
Given that the Company is legally registered and existing in China and has never directly conducted domain name registration business in the United States, the Company believes that the U.S. district court has no jurisdiction over the Company. . . . At present, since there is no bilateral mutual legal assistance treaty signed between the US and China, the judgment has not been reviewed and recognized by the Chinese court, therefore, the possibility of direct enforcement in China is low.
In a decision (pdf) yesterday, the court ordered several contempt remedies:
- A daily fine of $1,000 until Leascend purges the contempt, either by paying the judgment or escrowing the $5.5 million.
- Deactivation of Leascend’s website, leasdgrp.com, by Verisign until the contempt is purged. There is no deactivation of 35.com, which is now owned by another entity.
- Payment of Meta’s attorneys’ fees and costs related to enforcing the court’s contempt order.
The judge gave Leascend 14 days before the fine and website deactivation begin.
Leascend must also post a $7,500 appeal bond, which is well below the $210,000 Meta requested.
Source: https://domainnamewire.com/
