Judge Rules Unstoppable Domains’ Covenant Nullifies Florcsk’s Claims
On Monday, January 6, 2025, the United States District Court for the District of Delaware granted Unstoppable Domains Inc.’s motion to dismiss a complaint filed by Scott Florcsk regarding the .WALLET domain name. The court ruled that Unstoppable’s “Covenant Not to Sue,” issued on March 28, 2024, rendered Florcsk’s claims moot, depriving the court of subject matter jurisdiction over the case.
Florcsk, the sole owner of Wallet Inc., had filed an amended complaint against Unstoppable Domains, consisting of three counts. The first count sought a declaratory judgment concerning the .WALLET top-level domain (TLD) on the Handshake blockchain. Specifically, Florcsk claimed that his use, marketing, and sale of the MALLET domain name did not infringe on Unstoppable’s claimed .WALLET trademark under state or federal law.
Unstoppable’s covenant promised to refrain from making any infringement claims against Florcsk regarding the WALLET marks. The court determined that this covenant met the requirements of the voluntary cessation doctrine, as established in prior Supreme Court cases. It was noted that the covenant was unconditional and irrevocable, extending protection to Florcsk’s distributors and customers and covering all current, past, and future designs.
In its rationale, the court emphasized that a case becomes moot when the issues are no longer live or when the parties lack a substantial interest in the outcome. Unstoppable’s argument, supported by the covenant, indicated that the company had effectively eliminated the controversy surrounding the .WALLET domain, thus nullifying Florcsk’s claims.
Florcsk contended that the covenant only applied to the .WALLET TLD and did not address potential future claims regarding other domain names he might own. However, the court found this argument flawed, stating that the declaratory judgment sought in Count I was explicitly limited to the .WALLET domain. The court pointed out that Florcsk did not request a declaration of non-infringement for any other domain name, reinforcing the conclusion that the covenant aligned with the scope of his claims.
The court’s decision to grant the motion to dismiss was based on Federal Rule of Civil Procedure 12(b)(1), which allows for dismissal due to lack of subject matter jurisdiction. The ruling means that the court will not proceed with any further examination of Florcsk’s claims concerning the .WALLET domain.
The opinion was authored by Chief Judge Colm F. Connolly, who presided over the case. Following this ruling, the court indicated that an order consistent with the memorandum opinion would be issued.
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