Too late, 35.com is sold, and Chinese law wouldn’t let registrar pay Facebook: Court filing
Chinese firm asks court not to issue contempt sanctions in long-running dispute.
A Chinese firm that once owned domain registrar 35.com has told a court that it shouldn’t apply contempt sanctions to it in a cybersquatting dispute with Facebook parent Meta Platforms (NASDAQ: META).
Leascend Technology Co., formerly known as Xiamen 35.com Technology Co., responded to Meta’s request to hold the firm in contempt and impose contempt sanctions.
The backstory: Meta sued OnlineNic for cybersquatting and argued that OnlineNic was an alter ego of 35.com, a Chinese domain registrar. OnlineNic stopped fighting the lawsuit and stated it was shutting down, although it continues to operate today.
Meta is owed regarding $5.5 million.
In December, Meta petitioned the court following learning that 35.com’s (aka 35.cn) board authorized the sale of the registrar business and accreditation to another firm for approximately $6.6 million. Meta thought the sale was designed to prevent Meta from getting its hands on the assets.
The judge ordered the sale of the 35.com domain registrar to be halted ahead of the board vote to approve the sale. The court demanded that the firm place $5.5 million in escrow ahead of completing the sale.
Still, in a court filing (pdf) on Friday, Leascend argued that the effective date of the sale was when the auction for the assets took place on December 5. Even though the transaction hadn’t been formally completed, it could not be stopped.
It also stated it tried to transfer the $5.5 million into escrow, but Chinese banking regulations prevented it from completing the transfer.
Leascend stated Chinese laws prevented the transfer for a future settlement. Still:
While Plaintiffs requested an Order to have funds preserved for a future judgment, now that the Court issued a judgment, Leascend (or Plaintiffs) can apply to a local court in China and then a financial institution for payment of the judgment directly (since a party in China can typically apply to the local court in China for recognition of a final foreign judgment, as opposed to an interim order, which is not recognized by the local court or therefore financial institution), pending appeal rights.
The firm is asking for additional time to send the money.
It also states that the court shouldn’t issue an order to freeze the 35.com domain name as Meta requested pending receipt of the $5.5 million in escrow:
To address Plaintiffs’ first specific request, seizure of the 35.com domain name asset from 35.CN does not make sense where the domain name registration business, counting the domain name 35.com, was sold prior to the Court’s Order under the Chinese bidding rules, i.e., Leascend does not own or control that domain name.
