Florcsk v. Unstoppable Domains Inc.

Filing 69

MEMORANDUM OPINION. Signed by Judge Colm F. Connolly on 1/6/2025. (mws)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
SCOTT FLORCSK,

Plaintiff,

v.

Civil Action No. 22-1230-CFC

UNSTOPPABLE DOMAINS INC.,
Defendant.

David E. Moore, Bindu A. Palapura, Andrew L. Brown, POTTER ANDERSON &
CORROON, LLP, Wilmington, Delaware; Eugene Rome, Sridavi Ganesan,
ROME LLP, Los Angeles, California
Counsel for Plaintiff

Michael J. Flynn, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington,
Delaware; Margaret Caruso, QUINN EMANUEL URQlJHART & SULLIVAN,
LLP, Redwood Shores, California; Luke Nikas, QUINN EMANUEL
URQUHART & SULLIVAN, LLP, New York, New York; Adam B. Wolfson,
QUINN EMANUEL URQUHART & SULLIVAN, LLP, Los Angeles, California
Counsel for Defendant

MEMORANDUM OPINION

January 6, 2025
Wilmington, Delaware

COLM~OLLY
CHIEF JUDGE
Plaintiff Scott Florcsk filed a three-count Amended Complaint (D.I. 14)
against Defendant Unstoppable Domains Inc. I granted Unstoppable's motion to
dismiss Counts II and III pursuant to Federal Rule of Civil Procedure 12(b)(6) on
Febrnary 8, 2024. D.I. 38. Now pending before me is Unstoppable's motion to
dismiss Count I. D.l. 50. Unstoppable brings this motion pursuant to
Rule 12(b)(1 ). It argues that a "Covenant Not to Sue" it issued on March 28, 2024
renders Count I moot and deprives me of subject matter jurisdiction.
I.
Count I is set forth in paragraphs 90 through 100 of the Amended
Complaint. Florcsk, the sole owner of Wallet Inc., seeks in Count I a two-part
declaratory judgment relating to the .WALLET top-level domain (TLD) on the
Handshake blockchain that Wallet Inc. made available for users to register secondlevel domains (SLDs). Specifically, Florcsk alleges in Count I that:
99. Plaintiff seeks a declaratory judgment from this
Court that Plaintiff's use, marketing, sale, and/or offering
for sale of Plaintiff's .WALLET domain name on
Handshake's blockchain has not and does not infringe
Defendant's claimed .WALLET mark under state or
federal law because Defendant does not own a .WALLET
or a WALLET trademark.

100. Plaintiff further seeks a declaratory judgment from
this Court that even if Defendant is somehow able to
secure a trademark with the USPTO for "WALLET" or
".WALLET", Plaintiff's use, marketing, sale, and/or
offering for sale of Plaintiff's .WALLET domain name on
Handshake's block.chain has not and does not infringe on
Unstoppable's claimed .WALLET or WALLET marks
under state or federal law because Plaintiff's .WALLET
domain existing in a distinct digital ecosystem cannot be
confused with Defendant's .WALLET domain.
D.I.14ifif 99,100.
The covenant Unstoppable issued and made effective on March 28, 2024
reads:
Unstoppable, for and on behalf of itself, its parents,
subsidiaries, divisions, related companies, affiliated
companies, licensees, independent contract
manufacturers, assigns, and/or other related business
entities, as well as any of their predecessors, successors,
directors, officers, employees, agents, distributors,
attorneys, representatives, and employees of such
entities, hereby unconditionally and irrevocably
covenants to refrain from making any claim(s) or
demand(s), or from commencing, causing, or permitting
to be prosecuted any action in law or equity, against
Florcsk, or any of his companies, or their parents,
subsidiaries, divisions, related companies, affiliated
companies, licensees, independent contract
manufacturers, assigns, and/or other related business
entities, as well as any of their predecessors, successors,
directors, officers, employees, agents, distributors
(including registrars and registries), attorneys,
representatives, and employees of such entities and all
customers (including registrants) of each of the foregoing
(whether direct or indirect) (collectively, the "Florcsk
Entities"), on account of any possible cause of action
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based on or involving infringement of, dilution of, or
unfair competition concerning the WALLET Marks,
under state or federal law in the United States based on
any current/and or previous use, and any colorable
imitations thereof, in connection with goods or services
relating to blockchain domain names and functionality,
regardless of whether those goods and services are made,
distributed, offered for sale, advertised, sold, or otherwise
used in commerce before or after the Effective Date of
this Covenant.
This covenant does not foreclose actions or motions
against any of the Florcsk Entities for costs, attorneys'
fees, or sanctions if any of the Florcsk Entities pursue
any declaratory relief action against Unstoppable
following the Effective Date of this Covenant.
D.I. 52-5 at 3.
II.
Rule 12(b)(l) permits a party to assert by motion the defense of"lack of
subject-matter jurisdiction." A court lacks subject matter jurisdiction if the parties'
controversy has become moot. Goodmann v. Peoples Bank, 209 F. App 'x 111, 113
(3 d Cir. 2006). Mootness doctrine is rooted in Article III, Section 2 of the United
States Constitution, which limits the judicial power of federal co mis to ongoing
"Cases" or "Controversies." New Jersey Tpk. Auth. v. Jersey Cent. Power & Light,
772 F.2d 25, 30-31 (3d Cir. 1985) (citing North Carolina v. Rice, 404 U.S. 244,
246 (1971)); Lewis v. Continental Bank, Corp., 494 U.S. 472, 477-78 (1990). The
"case-or-controversy requirement subsists through all stages of federal judicial
proceedings." Lewis, 494 U.S. at 477.
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"A case becomes moot-and therefore no longer a 'Case' or 'Controversy'
for purposes of A1ticle III-'when the issues presented are no longer live or the
patties lack a cognizable interest in the outcome."' Already, LLC v. Nike, Inc., 568
U.S. 85, 91 (2013) (citation and some internal quotation marks omitted). But "a
defendant cannot automatically moot a case simply by ending its unlawful conduct
once sued." Id. (citing City ofMesquite v. Aladdin's Castle, Inc., 455 U.S. 283,
289 (1982)). Instead, when a defendant claims that its voluntary compliance moots
a case, it bears the "formidable burden of showing that it is absolutely clear the
allegedly wrongful behavior could not reasonably be expected to recur." Friends
ofthe Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167,
190 (2000). The Supreme Comt has referred to this "formidable burden" as the
"voluntary cessation doctrine." Already, 568 U.S. at 93.
III.
Unstoppable argues, and I agree, that its covenant moots Count I. Like the
covenant held by the Supreme Court to moot the trademark infringement claim
alleged by the plaintiff in Already, Unstoppable's covenant "suffices to meet the
burden imposed by the voluntary cessation test." Id. Unstoppable's covenant is
"unconditional and irrevocable." Id. It reaches beyond Florcsk to "protect [his]
distributors and customers." Id. "And it covers not just current or previous
designs, but any colorable imitations" ofFlorcsk's .WALLET domain names. Id.
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Florcsk concedes that Unstoppable's covenant "encompasses past, present,
and future sales by Plaintiff or his registries and registrars of .WALLET SLDs."
D.I. 56 at 15. He argues, however, that the covenant does not moot Count I
because it "is only applicable to the at-issue TLD"-i.e., .WALLET-and does not
protect him from what he calls in his briefing "a real likelihood that Unstoppable
will sue [him] again for trademark infringement over another of his TLDs in the
future." D.I. 56 at 17.
The fatal flaw of this argument is that the scope of the declaratory judgment
requested in Count I is limited to .WALLET. See Synopsys, Inc v. Risk Based Sec.,
Inc., 70 F.4th 759, 765 (4th Cir. 2023) ("In assessing whether a particular covenant

not to sue renders [a] declaratory judgment action moot, the Court looks to the
claims and relief sought in the complaint as compared to the scope of the covenant
not to sue." (citation omitted)). Florcsk insists that his "declaratory judgment
claim for non-infringement is, by its very nature, not limited in application to one
specific TLD." D.I. 56 at 7. But the language of the claim (see paragraphs 99 and
100 of the Amended Complaint quoted above) is clear, and it expressly limits the
scope of the requested declaratory relief to the .WALLET domain name. Florcsk
did not seek in Count I a declaration ofnoninfringement for any domain name
other than .WALLET. Indeed, he does not mention in Count I any other domain
name or suggest anywhere in Count I that he owns any other domain name.
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As the scope ofUnstoppable's covenant matches the scope of the
declaratory judgment sought in Count I, the covenant renders that claim moot; and,
there being no current case or controversy between the parties with respect to
Florcsk's .WALLET domain name, I lack jurisdiction over Count I.
IV.
Because I lack jurisdiction over Count I, I will grant Unstoppable's motion
to dismiss.
The Court will issue an Order consistent with this Memorandum Opinion.

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