Ontario Superior Court of Justice

Court File No.: CV-24-00732761-0000
Date: 2025-02-04

Parties

Between:
KNNX Corp., Plaintiff
– and –
Umesh Kushwaha, Defendant
– and –
GoDaddy.com LLC, Respondent

Applicant Counsel: Andrew McCoomb and Simon Gollish, for the Plaintiff
Respondent Counsel: Michael Osborne, for GoDaddy.com LLC

Heard: April 2, 2025

Reasons for Judgement
Papageorgiou J.

Overview

[1] The moving party, KNNX Corp., formerly DLT Global Inc. (KNNX/DLT), seeks an extension of the Order of Justice Koehnen, dated November 28, 2024. The Order provided interim interlocutory and mandatory orders dealing with, among other things, the Respondents' ability to transfer, access, and use the internet domain "ditlabs.io" (the Domain).

[2] The defendant, Mr. Kushwaha, is a former executive of DLT India, whose employment was terminated in June 2023. Mr. Kushwaha remains a nominal shareholder (specifically a nominee, subject to the instructions of KNNX/DLT) and suspended director of DLT India (pursuant to Indian law). Mr. Kushwaha currently resides in India. Prior to the acquisition, there was a contractual relationship between KNNX and DLT India whereby DLT India agreed to work exclusively for KNNX/DLT, with KNNX/DLT assuming all the costs of DLT India’s operations and owning all of its intellectual property.

[3] The defendant GoDaddy.com LLC (GoDaddy) is a corporation headquartered in Tempe, Arizona. GoDaddy provides domain registry and web hosting services to customers around the world. GoDaddy is, and was at all relevant times, the registrar for the Domain.

[4] Mr. Kushwaha registered the Domain at GoDaddy on November 29, 2016. Mr. Kushwaha has renewed the Domain multiple times on behalf of DLT India. GoDaddy remains the registrar for the Domain.

[5] On December 23, 2022, KNNX/DLT acquired DLT India through a share purchase agreement with Mr. Kushwaha and Ambuj Srivastava, brother of his close associate Neeraj Srivastava (the SPA).

[6] The Domain was set to expire on November 29, 2024. Because Mr. Kushwaha's GoDaddy account was the one linked to the registration, KNNX/DLT had no ability to renew the Domain's registration itself.

[7] In November 2024, as KNNX/DLT had been unsuccessful in having GoDaddy take any action to transfer or preserve the Domain for KNNX/DLT's benefit and given that the Domain was set to expire on November 29, 2024, KNNX/DLT brought an ex parte motion before this court. GoDaddy was provided with notice of the motion. Counsel for GoDaddy contacted counsel for KNNX/DLT and the parties were able to negotiate wording of a draft order.

[8] The original motion was brought ex parte because of concerns that Mr. Kushwaha, if given notice, would have taken prejudicial actions interfering with the plaintiff’s interests.

[9] Koehnen J. ordered that KNNX/DLT issue and serve a Statement of Claim on Mr. Kushwaha. It has done so and Mr. Kushwaha is aware of the action but it has not been able to effect service on him in accordance with the Hague Convention as he lives in India.

[10] On January 8, 2025, the parties appeared at Civil Practice Court. Mr. Kushwaha said he wanted to obtain Canadian counsel. So far, the plaintiff has received no notification that he has.

[11] In the present motion, KNNX/DLT seeks interim relief including, inter alia:

• that the Respondent, GoDaddy.com LLC, continue to "lock" the domain "ditlabs.io", until a final determination of the action, or a further order of this Court.
• that Umesh Kushwaha continue to be enjoined from transferring or permitting any transfer of the Domain until a final determination of the action, or a further order of this Court; GoDaddy.com has consented to this.
• that Umesh Kushwaha continue to be restrained from accessing, modifying, or interfering with the settings of the Domain, including, but not limited to, the DNS Service configuration of the Domain until a final determination of the action, or a further order of this Court.

Decision

[12] For the reasons that follow, I grant the Order.

Analysis

[13] The plaintiff sought a Mareva injunction in this case instead of a standard RJR injunction restraining conduct. It did so out of an abundance of caution because the Domain name is a tangible piece of property that can be transferred and modified easily. At the time it brought the proceeding, it did not know whether Mr. Kushwaha would take the position that the Domain name belongs to him. The plaintiff’s position is that it belongs to them. To date, however, Mr. Kushwaha has not taken a position. In my view, the plaintiff could have simply moved for the usual injunction.

[14] Issues typically present in a Mareva situation are engaged here—namely the risk to dissipation or destruction of assets. In this case, the Domain is an intellectual property asset that could also be used to pass off an unrelated company as KNNX/DLT, among other things.

[15] The test for obtaining a Mareva injunction in Ontario consists of four main factors: (a) the presence of a strong prima facie case (typically rooted in fraud or other intentional misconduct); (b) proof of irreparable harm if the injunction relief is not granted; (c) the balance of convenience favours the granting of the Mareva injunction; and proof of a serious risk that the responding party will remove property or dissipate assets before the granting of a potential judgment: OPFFA v. Paul Atkinson et al, 2019 ONSC 3877 at para 6.

Strong Prima Facie Case

[16] There is a strong prima facie case that KNNX/DLT is the only party with legal rights and interests in the registration of the Domain.

[17] Mr. Kushwaha registered the Domain in his role as an employee and director of DLT India. He acted on behalf of and on the instructions of DLT India in registering the Domain. Mr. Kushwaha was reimbursed for expenses incurred in registering the Domain as would be expected where an employee and director incurs expenses on behalf of his employer. In addition to the initial registration fee, Mr. Kushwaha sent requests for and received payments on a recurring basis for renewing the Domain. As well as noted above, pursuant to the contractual relationship before the purchase of DLT India, the parties had a contractual relationship whereby KNNX/DLT owned all intellectual property owned by DLT India.

[18] In Longinradius Inc. v. Gupta, 2024 BCSC 1256 at para 25, the Supreme Court of British Columbia made an interim interlocutory injunction restricting a former employee from interfering with his employer's use of a Domain, which he had registered during the course of his employment, pending the outcome of an action regarding the parties' rightful legal interests in the domain. In this case, the injunction was the usual RJR injunction.

[19] Further, the website hosted on the Domain is "www.ditlabs.io". "DLT" refers to Distributed Ledger Technology and "Labs", core components of KNNX/DLT's operations and activities, as well as its goodwill with customers and the general public.

[20] Finally, at the time of this motion, users visiting www.ditlabs.io are redirected to KNNX.com, which was implemented as part of the name change from DLT Global Inc. to KNNX Corp.

[21] KNNX/DLT has commenced an Action to determine this issue and regain control of the Domain as KNNX/DLT's intellectual property asset, but without an extension of the Order, maintaining the status quo, the Action may be frustrated, potentially rendering it ineffective to the point of being meaningless.

Irreparable Harm

[22] If the injunction is not extended, Mr. Kushwaha, as the individual account that registered the Domain, could transfer the Domain to a third party, including a person or entity favourable to Mr. Kushwaha, or a direct competitor to KNNX/DLT. Alternatively, if the Order is not extended pending the outcome of the Action, the Domain could become available to any third party or be renewed by Mr. Kushwaha.

[23] Either outcome will result in irreparable harm to KNNX/DLT as of the result of a loss of critical intellectual property prior to the courts having the opportunity to adjudicate the underlying dispute.

[24] In Car-Wal Garage Doors Inc. v. On Track Door Systems Canada Inc., 2018 ONSC 6078 at para 58, this Court held that the defendant's use of a domain name similar to the one used by the plaintiff would result in irreparable harm "since it will be impossible to tell how many potential clients were inadvertently redirected" to the similarly named webpage. This Court has also held that injury to a business' goodwill and passing off may constitute irreparable harm. In both examples above, whether the domain were to be acquired by a third party or used by Mr. Kushwaha (e.g. for the similarly entity in India), there is significant risk of irreparable harm to KNNX/DLT: GS International Holdings Ltd. v. Smart Vision Direct Inc, 2019 ONSC 6338 at para 52; LivingArt Kitchens Inc. v. Merenich, 2024 ONSC 3088 at para 81.

[25] Furthermore, if Mr. Kushwaha reconfigures the Domain's current DNS Services settings, as was done with the "twin" domain, "ditlabs.com" and the gambling site that was set up, KNNX/DLT will suffer the loss of goodwill and other potential losses, such as emails sent to addresses with the "dltlabs.io" domain being forwarded to a different server, possibly controlled by Mr. Kushwaha or others.

Balance of Convenience

[26] If the current injunction is not extended and the status quo is not preserved, KNNX/DLT will suffer serious irreparable harm. However, if the injunction is granted neither of the Respondents will be prejudiced and, in any event, KNNX/DLT has given an undertaking to be responsible for any damages caused to Mr. Kushwaha or GoDaddy by issuance of the Order sought.

[27] Noting the history between the parties and Mr. Kushwaha's previous conduct, there is evidence that the respondent Mr. Kushwaha may well attempt to irreversibly harm KNNX/DLT if the status quo is not maintained. The use of the 'twin' domain to host a gambling website, the circumstances of Mr. Kushwaha's termination from DLT India, the unilateral incorporation of "DLT Global Technologies Private Limited", and the potential mischief that could be created with the Domain raise serious risks.

[28] The Respondent GoDaddy will also not be prejudiced. The Respondent GoDaddy has been added to ensure the Domain is frozen, rather than relying solely on the respondent Mr. Kushwaha adhering to an Ontario court order while residing and otherwise operating in India. Further, GoDaddy has expressly requested that KNNX/DLT seek direction from the Court. As noted, GoDaddy has consented to the form of the Order provided.

[29] Finally, KNNX/DLT has given an undertaking to be responsible for any damages caused to GoDaddy by issuance of the Order sought. As noted in Longinradius, cited above, which has a number of similar facts, the Court summarized its view of the balance of convenience as follows:

The Court has to assess which of the parties would suffer the greater harm from the granting of the injunction pending trial. The Court is to consider the adequacy of damages, the preservation of contested property, which of the parties acted to affect the status quo, the strength of the plaintiff's case, the public interest and such other factors arising in the particular case: Canivate Growing Systems Ltd. v. Brazier, 2019 BCSC 899 at para 69.

[30] In the present matter, for all the reasons previously discussed, it is clear that KNNX/DLT would suffer the greater harm if the order is not granted. There is a serious risk that the Respondent Mr. Kushwaha will take action prior to trial. As set out above, noting the history between the parties, there is a serious risk that Mr. Kushwaha will take actions that interfere with the intellectual property and business interests of KNNX/DLT and its subsidiary, DLT India, prior to the hearing of the forthcoming action regarding the parties' rightful legal interests in the Domain. The initiation of proceedings that are, ultimately, aimed at regaining control of the Domain dramatically has increased the risk that Mr. Kushwaha will use his continued control of the Domain to the detriment of KNNX/DLT.

Papageorgiou J.
Released: April 2, 2025