Unstoppable Domains asks court not to let .wallet owner intervene

Unstoppable argues it’s too late and that the registrant (maybe) isn’t impacted by the injunction.

Unstoppable Domains has asked a court not to let the owner of the .wallet Handshake domain intervene in a lawsuit filed against Gateway Registry and its owner.

Unstoppable filed the lawsuit against Gateway Registry, its owner James Stevens, and John Does after Gateway began offering second level .wallet domain name registrations in the Handshake blockchain system. There is also a .wallet extension in Unstoppable’s competing system.

Gateway Registry and James Stevens decided not to defend the lawsuit and closed their service.

Scott Florcsk, the registrant of .wallet in Handshake, filed last week to intervene in the lawsuit. Florcsk argued that, even though he wasn’t named in the lawsuit, the injunction Unstoppable is asking for could prevent him from selling .wallet addresses with a different technology provider.

In response to the request to intervene, Unstoppable states:

Under the terms of the order sought by Plaintiff, Florcsk would not be implicated by that injunction as long as he does not act “in concert with” Defendants.

So it seems that Unstoppable is saying that the injunction would not impact Florcsk and suggests that if he were to work with another registry provider, he would not violate the injunction.

But later, when arguing that Florcsk should have come to the table earlier after the lawsuit was filed, Unstoppable argues:

Neither Florcsk nor his counsel contacted Plaintiff after the motion was filed, despite that motion clearly seeking to enjoin not just against Gateway and Stevens, but also “partners,” “related companies,” and “all persons in active concert or participation with any of them,” from “promoting, registering, selling, or offering for sale any .WALLET domain names.”

I’m not a lawyer, but this seems to suggest that Unstoppable intended for the injunction to impact Florcsk. It seems contradictory.

Even more confusingly, Unstoppable’s filing also states:

So long as Florcsk does not act in concert with Defendants with respect to the enjoined activities, it is unclear how he will not be subject to that injunction.

I assume “not” was added on accident; otherwise, this makes no sense.

Unstoppable also argues that Florcsk waited until the eleventh hour to file his motion to intervene. It makes it out as if he was sitting on the sidelines, which seems like a mischaracterization based on the record.

Florcsk said he emailed Unstoppable’s lawyers after Unstoppable sent a pre-lawsuit cease & desist letter to Gateway. He indeed sent an email to Unstoppable’s lawyer. But Unstoppable’s lawyer argues that, because the email was unsigned, “Plaintiff was unaware that it was sent by Scott Florcsk until reviewing his declaration submitted with his motion.”

Indeed, the email is unsigned and doesn’t include Scott’s name. But it’s clearly sent from someone purporting to be the registrant of .wallet, and Unstoppable’s lawyer apparently didn’t respond to it to open dialogue. So, arguing that Florcsk didn’t engage in the matter until the filing to intervene is questionable.

Based on my observation, here’s what happened:

1. Unstoppable’s lawyers sent a cease & desist to Gateway. Gateway showed it to Florsck
2. Florsck sent the unsigned email to Unstoppable’s lawyers (and claims he never heard back)
3. Unstoppable sued Gateway, its owners, and John Does
4. Gateway, its founder, and Florsck talked to an attorney who told them how much it would cost to defend. It was too much money to put up a fight
5. Florsck put out a call to the Handshake community to help him fight the lawsuit
6. Someone put up either the money or legal resources to fight back, and Florsck filed to intervene shortly thereafter

Most of this happened over 5-6 weeks, which isn’t much time.

Unstoppable says that delaying the injunction would severely prejudice the company:

Florcsk’s untimely motion to intervene and delay entry of default judgment and a permanent injunction will severely prejudice Plaintiff. Defendants Gateway and Stevens have made the deliberate decision not to engage in this litigation and defend on the merits. Florcsk should not now be allowed to step in and delay resolution on Plaintiff’s claims against those Defendants, which would allow the irreparable harm to Plaintiff associated with the domain names Defendants already placed into the market to continue.

Even assuming that Unstoppable is in the right here, and no one else should be able to run a competing .wallet domain, it’s not clear to me how a delay hurts Unstoppable and why an injunction is even necessary at this point. Gateway shut down and is no longer registering .wallet addresses. I don’t think an injunction against Gateway would remove those addresses from the blockchain.

Again, I’m not a lawyer, but this is how I see it looking from the outside. I’ll be curious what the judge decides.