An Australian company, Aozhong Information Technology Development Group, (transliteration of the company name) instructed Heilongjiang Public Information Industry Limited (HPIIL) to register the domain name www.china1949.com. HPIIL successfully applied for registration of the domain name.
As Aozhong is a foreign company, payment of the registration fee had to be made in US dollars. However HPIIL did not have the capacity to deal with foreign currency. As a result, it instructed a third party company, Zhejiang Jinhua Tianwang Computer Limited (Jinhua), to arrange payment of the domain name registration fee. Aozhong was not consulted for the appointment of this “sub-agent”.
Unfortunately, Jinhua failed to pay the domain name registration fee on time. It was subsequently found that Jinhua’s business registration was revoked and its owner had disappeared. As a result the domain name registration of www.china1949.com was cancelled and shortly afterwards was registered by a third party. As Aozhong could not recover the above domain name, Aozhong sued HPIIL for breach of contract in the Harbin People’s Intermediate Court.
The Court held HPIIL was in breach of the contract between HPIIL and Aozhong as it failed to pay the registration fee in time, resulting in the loss of the domain name www.china1949.com.
The main issue in question was the appropriate level of damages. Aozhong claimed significant compensation on the basis that it had lost the chance of registering a unique domain name. The Court however was reluctant to award substantial damages because Aozhong had not operated the domain name for a long time, the amount of advertising expense it incurred in promoting the website was limited and only limited goodwill was built up for the domain prior to the cancellation of the domain name. The Court was therefore only prepared to order HPIIL to refund the service fee of RMB5950, compensate Aozhong for the interest lost on that amount and pay damages of RMB15,000. Aozhong is appealing the decision.
Important - The information in this article is provided subject to the disclaimer. The law may have changed since first publication and the reader is cautioned accordingly.