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Instagram paid Chinese cyberquatter $100,000 for, Facebook lawsuit reveals

Kevin Murphy, January 20, 2016, 13:29:18 (UTC), Domain Sales

Facebook has sued a Chinese cybersquatter for trying to renege on a five-year-old deal that saw it buy the domain for $100,000.
The lawsuit, filed in California last week, claims that a family of known cybersquatters, based in Guangdong, is trying to have the purchase invalidated by a Chinese court.
The company, which acquired Instagram for $1 billion in 2012, wants the court to rule that the domain deal was legal, preventing the cybersquatters retaking control of the domain.
Photo-sharing app Instagram launched in October 2010 using the domain
At that time, was owned by a US-based domain investor, but it was bought by Zhou Weiming about a month later.
Zhou, Facebook says, was the now-dead father of three of the people it is suing, and the husband of the fourth.
When Zhou purchased the domain, Instagram had become wildly popular, well on the way to hitting the million-user mark in December 2010.
Instagram had applied for the US trademark on its name in September 2010, less than a month before its launch.
The company made the decision to pay $100,000 for the domain in January 2011.
The Whois information for changed from Zhou Weiming to Zhou Murong, apparently his daughter, around about the same time, though the registrant email address did not change.
The purchase was processed by Sedo, according to a copy of the deal filed as evidence (pdf).
Now, Murong’s mother and sisters are suing her and Instagram in China, claiming she did not have the authority to sell the domain, according to Facebook’s complaint.
Facebook claims the Chinese suit is a “sham” and that the whole Zhou family is acting in concert.
The company wants the California court to declare that the sale was valid, and that registrar MarkMonitor should not be forced to transfer the domain back to the Zhous.
Facebook in 2014 won a 22-domain UDRP case against Murong Zhou, related to typos of its Instagram trademark.
Read the full California complaint as a PDF here.

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Comments (6)

  1. JZ says:

    geez, how greedy can they get? are they not happy enough with the 100k? losers..

  2. Acro says:

    There’s no business like family business. 😀
    So the Zhou is a squatter and the previous seller isn’t?
    There seems to be a fine line separating the two.

  3. Perhaps they want $1,000,000, let’s see how far they can go.

  4. While this may turn out to be only a case of greed, it looks rather convoluted to me. Let’s not judge 4 people in China as “losers” prematurely.
    The original registrant of the domains – cybersquatter or not – is dead, correct? So the other 4 people might simply have inherited his portfolio. I don’t know if that’s correct, but that’s 1 reading of this story.
    Domains are often mis-managed after a registrant’s passing. And bitter family squabbles often arise thanks to inheritance, when the decedent’s estate is handled in a way not all heirs agree with.
    It is certainly possible that the daughter, Murong, acted without the consent of the rest of the family. Maybe she had registrar access but not the authority to sell. Theoretically, proceeds from the $100k sale may not have been shared. That’s only blind speculation on my part, probably untrue; but such cases are not uncommon.
    Naturally, Instagram wants the previous sale to be honored. Presumably, they were acting in good faith by dealing with the daughter. But what if the daughter really did not have the right to sell this property? Perhaps Instagram, eager to procure the domain, didn’t ask the right questions. As a result, the company might now deservedly be embroiled in an inheritance dispute.
    What I’m saying here may not be true. I’m just playing the devil’s advocate. The point is, 4 members of a family are involved in some infighting. None of them registered or purchased the domain in question; but they may have rights to it (as heirs) that weren’t honored.
    “Benefit of the doubt” … “Let the courts decide” … and all that. Interesting article, Kevin.

    • Kevin Murphy says:

      Whatever the family back-story is, the dead dad bought the name after the trademark was applied for and after Instagram was already successful.
      I doubt there are many UDRP panelists that would not hand Instagram a clear win.

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