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10|17|2008 03:45 pm EDT

Are Domain Names Considered Property or Not?

by Adam Strong in Categories: Legal Issues

I was up late last night cruising through the 44 page docket from the case involving the 141 gambling domain names seized by the state of Kentucky.  This is a landmark case in my opinion and I wanted to read some of the fine print.  It’s pretty clear that this case will be setting some major precedent regarding jurisdiction and domain name use, but there was something else that caught my eye in the document. The groups involved in the case made several points in their efforts to have the case dismissed, but a discussion on domain names being considered property is the one that made me look twice.

The court discusses the issue of domains as property on about page 12 of the docket.

“The Opposing Groups and Lawyers . . . collectively assert that domain names are akin to a telephone number or a business or residential address only; that domain names are but a combination of letters and numbers, which serves as a mnemonic aid, nothing more. They argue that domains are not property, but are rights in a service contract.”

The docket continues for 3 pages discussing this argument and the court reaches the final conclusion

“the Defendants 141 Domain Names are property, and therefore subject to this Court’s in rem jurisdiction or to possible civil forfeiture”

It’s no surprise that the court ruled that domains are property.  What is surprising is who was among this “Opposing Groups and Lawyers”.  According to page 4 of the docket Network Solutions (NSI) and the Internet Commerce Association (ICA) were lumped in to this group.   The ICA, a group consisting of mostly domainers and domain companies, and NSI, a domain name registrar have joined with other gambling industry groups such as PPA, IGC, and IMEGA to present arguments in this case.  Recognizing these entities are not actually plaintiffs defendants, the court grouped them all together and classified them as “Opposing Groups and Lawyers” and did provide for their views to be considered. These views are expressed in this case as “domains are not property”.

It isn’t 100% clear that every member of the “Opposing Groups and Lawyers” view things this way but the phrase “collectively assert” certainly makes it sound like all of the groups had agreed on this argument.

Does the ICA and NSI think domains aren’t property now ?  That argument can be made but it doesn’t seem like one that would come from either group.  In a previous incarnation of the ICA website, the organization states that one of ICA’s issues is that “Domains be recognized as private property and domain owners have the rights of private property owners”.  This exact text was not to be found on the latest version of the ICA site, so it is possible they have completely changed their views on this issue.

Is NSI now claiming domains aren’t property as well ?  In the very case that is referenced in the Kentucky docket, Network Solutions all but concedes that domains are property.  In page 10 of the Sex.com case the court points out that Network Solutions recognizes and acknowledges domains are property

The preliminary question, then, is whether registrants have property rights in their domain names. Network Solutions all but concedes that they do.This is no surprise, given its positions in prior litigation. See Network Solutions, Inc. v. Umbro Int’l, Inc., 529 S.E.2d 80, 86 (Va. 2000) (“[Network Solutions] acknowledged during oral argument before this Court that the right to use a domain name is a form of intangible personal property.”); Network Solutions, Inc. v. Clue Computing, Inc., 946 F. Supp. 858, 860 (D. Colo. 1996) (same).

There’s nothing to point to other than convenience or a missed opportunity as a reason NSI and ICA are linked to this poor argument.  Whether they conveniently switched their stances isn’t clear, but they also didn’t stop the argument from being made. Both NSI and ICA should know that the courts have previously recognized domains as property.  The gambling groups can be excused from ignorance on this matter as it may not be their strong suit, but one would think that this is where the ICA and NSI cold have helped the collective effort.

Joining with this group to argue a point that has been clarified and/or not preventing the argument from being presented could be considered negligent.  Arguing against something that you are on record for supporting also seems foolish. Hopefully, at a minimum they both can clarify why this was argued or why the change of stance was taken here.

ICA and NSI should still be commended for their efforts to fight a case that has the potential to change domain ownership responsibilities as we know it. Few outside of the gambling companies and those involved in the domain space realize the importance of this case and how it has the potential to impact their business.  Let’s hope they can make a stronger case.

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25 Comments

Michael Collins

October 17, 2008 @ 5:00 pm EDT

The issue of whether Internet Commerce Association believes domain names to be property or even whether ICA members would like them to be property is undecided. The membership is split on this issue. There has been controversy surrounding it as you know if you remember ICA’s history. Our brief to the Court was carefully worded to state that statute and case law are not clear on the property issue, which is just a matter of fact. There have been court rulings that support both sides of this argument. The property rights issue was a part of our brief, but it was not the main strength of our multi-prong attack on the seizure.

Michael Castello

October 17, 2008 @ 11:34 pm EDT

Domain names ARE property IMO. This is personal and we need to view this as a civil right. As property it becomes tangible and attaches to us more as a

David

October 18, 2008 @ 3:48 am EDT

I could be wrong, but this decision means only Kentucky considers domain names as “property”. Try enforcing that decision outside that state.

Note that none of the registrars, much more the registrants, reside in Kentucky. Only eNom has complied with the order way before the judge decided such, and it’s up to the other registrars (except maybe Go Daddy after issuing that so-called jurisdiction certificate) whether to comply with it or not.

Michael Collins

October 18, 2008 @ 8:18 am EDT

Michael,
Thank you for your input. I did not mean to suggest that ICA has closed discussion on this topic. There are some other members who would like to see us advance the “domains are property” cause. As a laymen, it seems to me that it is possible that this case could be overturned on other grounds such as jurisdiction and that the property argument might still be stregthened by this ruling.

I welcome more participation in ICA and more discussion of this topic.

David,
Decisions like this are most important to other in-state Courts and cases. However, judges will look outside their own state for precedent setting rulings. Judge Wingate cites several cases from outside of Kentucky in his decision about property rights. See page 13. http://www.internetcommerce.org/ica-files/KY_Decision.pdf

Brooks

October 18, 2008 @ 11:00 am EDT

I hate to say it, but there are a lot of uneasy signs occurring in the domain business. This is but one of them. To be honest I have to ask myself why so many of the more knowledgeable people in the business are selling their domains? There are many potential undercurrents, any one of them, that could change the landscape dramatically in the business. I have a very good friend who is a graduate of a very prestigious law school and works for a major firm who says without any mental reservation whatsoever that “you could wake up one day with something worthless or much less than it is today due to potential rulings, laws, or changes in the address system…guaranteed”.

Michael Castello

October 18, 2008 @ 2:01 pm EDT

Brooks, that’s life. Nothing is guaranteed. The country and world economy are going through a dynamic power shift that will chance the virtual and economic landscape as we know it. I have been waiting for this for 15 years. There will be bumps along the way but in the end our properties will be worth more and produce more as the public comes to understand the internet’s place in our futures. It is more efficient and more easily maintained through these turbulent times.

Michael, I was not singling you out. I believe the outcome of the Kentucky ruling will become a federal matter. Local courts should not manage these issues.

Patricia Kaehler (DomainBELL)

October 18, 2008 @ 3:43 pm EDT

I don’t believe domains are PROPERTY.
Simply because they can never be paid for in FULL.
There will never be an end to the renewal fee…
I feel that if you can’t pay something OFF
– you can’t OWN it as PROPERTY.

I wish it could be considered property.
But… given the circumstances I stated above
— in my opinion — Domain Names are NOT Property.

~DomainBELL (Patricia)

UFO.ORG

October 18, 2008 @ 4:02 pm EDT

The only way you can stop people from a particular state in the US visiting your sites is to have a self deselect option. IP server addresses are not state specific.

I believe in law that where the server resides is where the legality rests. Hence a server outside the state should be ok should it not? The state in question seems to be interferring with other consumer rights outside its own state, is that not illegal?

Also, the actual viewing of the site(s) are not illegal but the actual transactions which are? hence only at time of credit card payment do they need to deny that state as a payment address as per the credit card?

I really am surprised however that in the US given the cross border telecom’s that federal law does not over ride individual state law.

This case will set a precedent for all sorts of state specific legislation that affects content on the web, if you owned sex.com a state could take it off you quite easily unless you really knew all the states inside out.

David

October 18, 2008 @ 6:35 pm EDT

Decisions like this are most important to other in-state Courts and cases. However, judges will look outside their own state for precedent setting rulings. Judge Wingate cites several cases from outside of Kentucky in his decision about property rights. See page 13. http://www.internetcommerce.org/ica-files/KY_Decision.pdf

I read you, Michael. A Virginia court judge could always decide that domain names are “property” if one files a suit for a .com, although there’s a couple indicating domain names are “creatures of contract”.

One thing I’m rather unclear of, though, is the judge declared domain names as property based on a set of rights. Does this decision mean he’s declared them as such [b]for any circumstance[/b], or just for this specific dispute of gambling devices or whatever?

Unfortunately, the registrars involved here could choose to comply out of their own free will, although I’m not sure either how those outside the U.S. will obey this one. Unless the Kentucky state will try to enforce it in Virginia, perhaps?

David

October 18, 2008 @ 7:52 pm EDT

Oops, just adding in that those in other countries might also comply if any legal treaties exist.

Adam Strong

October 18, 2008 @ 9:00 pm EDT

Michael. Thanks for explaining the ICA stance (or in this case lack of a stance). I do not remember the history or “controversy” you mention that surrounds the issue. That’s too bad. Maybe you can explain.

“There have been court rulings that support both sides of this argument.” What rulings cite that domains are not to be considered property? I’d like some more information on this if you or anyone else has this. Thanks ! Adam

jp

October 18, 2008 @ 10:04 pm EDT

I think domains are some kind of property. Of course I’d rather them be regarded as whatever benefits me the most, but in practicality, the way I run my domaining business, thats what they really are. I think to a certain extent its more about what you do with them.

Just because you can’t pay them off doesn’t make them property in my opinion. Can you really pay off your house? There is always property tax, if you don’t pay that your house will be gone before you know it. Furthermore, you only “pay off your house” because the government where you live decides to let you keep your house. Things change over time, hopefully the government won’t change its mind. They are free to do so whenever they want because frankly they have much bigger guns than the rest of us.

Speaking of property tax, how long before we have to pay property tax on our domains? Will we have to pay property tax in each country, city, state, and ZIP that our domains are considered property in? This obviously won’t work out in the long run for domainers or tax collectors.

Realisitcally, and this is thinking outside the box, IMHO I think a new category may need to be created to consider domains a member of. Perhaps we can call them “Virtual Property” with a whole new set of rules, different than “real property” or “intellectual property”, or a trademark, or whatever. Time to change all the laws, the tax forms and so on… I’m not sure why this relatively new invention “domains” need to fit into a pre-existing category such as “real property” or “intellectual property”.

UFO.ORG

October 18, 2008 @ 11:14 pm EDT

Anything is property if it has rights and is assignable.

Consider patents, trademarks, copyrights etc… all intellectual “property”.

Domains are pretty much classed as intellectual property.

Michael Collins

October 19, 2008 @ 11:40 am EDT

Adam,

From our amicus brief:

“The courts have generally recognized that an Internet domain name encompasses some of the attributes of personal property, trademark, and contract rights, but have split on the critical issue of whether this

Richard

October 20, 2008 @ 6:46 am EDT

California regards domains as Property.
Virginia regards domains as a Service Contract.

NSI’s Agreement has been rewritten (a few times) since the Sex.com case to establish that your agreement with them (if they are your registrar) is a Service Contract and not a Property right.

Ricardo

October 20, 2008 @ 1:23 pm EDT

I don’t know if it has been mentioned but if this type of action is enforceable, what is stopping the state of Utah from taking the Kentucky gambling domain away from the present owner?

http://www.twinspires.com/content/contact

UFO.ORG

October 20, 2008 @ 4:06 pm EDT

I think its important to remember that ICANN talks of presumptive renewal with domains, and as such perpetual indicates rights.

Also ICANN has mentioned that where a domain is taken the owner should not lose financially, if that domainer has paid large sums for the domain or any amount over straight out reg that acknowledges “rights”.

The fact that a valuable secondary market exists indicates rights.

However, domains don’t have the obligations of other intellectual properties. In fact the owners have not contributed anything that society should award them rights for (content yes, domain no).

I think domains are property, but a weak form, the legal system is probably loath to allowing domains higher status as that would open other “instruments” to the claims of property.

Stephen Douglas

October 22, 2008 @ 9:36 am EDT

I’m not going to comment about this case on its merits. But I want to make a statement that I think the older readers will relate to.

Like Michael Castello’s subtle warning here, for the last 15 years I’ve been warning my friends, until they were gagging me everytime I spoke, that in the near future our freedoms were going to be removed by laws created in order to enforce political and financial agendas, and to displace power from the people and give them to the few. Forget the “morality” bullsh*t argument the lawmakers make when they passed such “laws”, look behind the real intent of why the law is created.

I try to start every analysis of a situation with a “root” issue. Start with that issue, and watch “slippery slope” sub-issues become another “root” issue, still connected with the original root issue.

In the Kentucky case regarding these 141 gambling-poker domains, the root issue is first “FREEDOM”.

Second issue is “FREEDOM OF EXPRESSION” and “FREEDOM OF SPEECH”

Third issue is “FREEDOM TO THE PURSUIT OF HAPPINESS”

From that point, the sub-issues begin to materialize, depending on the “hidden intent” behind the lawmakers. Laws against porn, laws against drug use, laws based on enforcing a certain vision of “morality”, then laws to inhibit USA citizens from exercising their basic…. here it comes, back to the ROOT ISSUE: Freedoms.

Way down on this slippery slope is this Kentucky based case where an idiot politician creates a huge juggernaut of potential loss of rights for “freedom of speech” > “internet communications. This isn’t one freakish case out of the blue, it isn’t that freaky at all. It started because none of us except a few, almost 2 decades ago, saw that “freedom” in America was turning into a convenient catchphrase. Ultimately that catchphrase “freedom” ended up being tossed around by the current President in fascist-style nationalistic speeches to endorse a preemptive war that enriches his cronies and his family everyday.

What I’m saying isn’t some lame conspiracy nutjob warning. It is exactly where we’ve come in the last 50 years or more, starting with McCarthyism in the 1950’s, the Drug War in the 70’s, and then government spying on its citizens without due process in the 90’s forward.

For this Kentucky judge to rule HE has power to allow a STATE in the USA to stop his constituent’s freedom of speech and expression by controlling domain names owned by people not within his jurisdiction is more ominous than just how it will affect the domain industry.

Some of my Republican “hard on crime” friends, who argued that we’d always be protected as Americans by “checks and balances” in our government back in the 90’s, are now looking at me like I am some sort of fortune-teller with a crystal ball. They’re freaked out.

All it took was to look beyond the facade of why many laws are enacted. I’ve been watching it come in many forms for the last 15 years.

And the new “spy on Americans” laws, meant to stop “terrorism”, are laughingly being with glee by law enforcement to push beyond those borders into easier “gonna getchya for something” techniques .

Now, circle this argument around to the 141 domains “shockingly” being locked down by a judge in some backwoods state that LOVES to —– gamble on horse-racing, the State of Kentucky’s pride.

Back in the Sixties, Janis Joplin sang a few words in a verse “freedom is just another word for nothing left to lose” and ironically, the lyrics also include “Kentucky coal mines…” Look it up.

I’m an old schooler, and I bet you that all the other old schoolers will agree with me that never before have we seen this country so far from the dream of being “The Land of the Free”.

This is only the beginning. Question is now, what are we going to do, and how are we going to do it?

David

October 24, 2008 @ 12:32 am EDT

Now that I practically got the answers I sought, I’d say this thread is rather “moot”. Moot in the sense that it’s not really a question of whether domain names are considered property or not, given that various decisions already state such, but what kind of property and what rights are assigned to all parties concerned.

This Kentucky decision practically says domain names are property for the purpose of seizure under their gambling law. Yet, other states’ courts define them as so-called property for their respective cases, and Michael Collins’ bits from their amicus briefs give further answers to this.

Adam

October 24, 2008 @ 1:23 am EDT

The original question has not been answered concretely by the courts as has been pointed out Dave. I think that’s the point that leaves this discussion open and not at all moot. When this issue is cause for ICA membership to disagree, I think it says a great deal about the importance and the reason this discussion continues.

David

October 24, 2008 @ 7:05 am EDT

If people are looking for some kind of “all in one” or “all encompassing” decision, Adam, then I doubt we’ll ever get that. Michael Collins’s comment already gave the Umbro case I mentioned before, and various courts have adopted a similar stance.

Given the .com and .net Registry is in Virginia, and their Supreme Court’s ruling on Umbro, their decision practically takes “precedence” over others on this specific thing. Although the Kentucky court ruled this case as such, it’s up to the other registrars if they want to comply with it or not.

That’s why I said good luck to Kentucky on how to enforce that order. I won’t be surprised if the other registrars finally obey it, although they can always comply with another court order for such filed either in their respective jurisdictions or in Virginia.

Besides, people dispute other people’s rights every other day. What’s really a question is what to do if/when that happens, and how far one’s willing to go.

BTW, MB posted an update at his blog:

http://www.thedomains.com/2008/10/23/gaming-group-asks-appeals-court-to-throw-out-kentucky-domain-seziure-order/

Michael Collins

October 24, 2008 @ 9:17 am EDT

Adam,

I agree this is a healthy discussion. It is good to see differences of opinion welcomed here. I am happy to praticipate, but I refrain from taking a side until the members have established a clearer preference. I think that the problem is that though there are many times that having property rights would benefit domainers. There are also cases like this one in KY where the registrants are arguing that domains are not property.

What everyone does agree about is that registrants have rights, whether those rights rise to property rights or not, and ICA should help protect those rights. Our hands are not tied while this discussion goes forward.

Gray Chynoweth

October 31, 2008 @ 3:59 pm EDT

Michael,

I think you raise an interesting point. So much so, in fact, that I wrote my own blog post about it this past summer on the Dynamic Discourse – http://dynamicnetworkservices.com/journal/DomainNameOwnership. In my post I make pretty clear that I agree with the Virginia Supreme Court’s conclusion regarding the matter. A domain name registrant has rights in his or her (or its) domain registration contract, but nothing more. The courts really shouldn’t be treating domain names as pieces of virtual dirt. However, its easy to understand why courts have come to the alternative conclusion.

First, even thoroughly prepared trial lawyers and judges, and as a lawyer I feel confident saying this, may not really understand the technology behind domain name disputes they are litigating. Given that they might not understand the technology, it is easy to imagine why they might get confused when determining which theory of rights is appropriate to apply in the case they are confronted with.

Second, disputes over domain names are really rooted (pardon the pun) in what is almost uniformly referred to as the ‘cybersquatting’ phenomenon. Given this lexicographical choice, the argument regarding the nature of the right at issue was largely over before it began. The term ‘cybersquatting’ assumes without examination or debate that a domain name is something which can be ‘squatted’ upon, or in other words, that a domain name is akin to tangible property (e.g., a house or a plot of land). As such, hidden or missed from the very beginning was that a domain name should not be analogized to a house or a piece of dirt, but rather a telephone number.

In any event, thanks Michael for getting this discussion going in this forum. As a side note, I am currently writing an article on the subject for the Duke Law and Technology Review and will post a link to it back here when it gets published.

David

November 1, 2008 @ 10:35 am EDT

First, even thoroughly prepared trial lawyers and judges, and as a lawyer I feel confident saying this, may not really understand the technology behind domain name disputes they are litigating.

Heh, some domain lawyers I know will attest to that.

anne

November 13, 2008 @ 4:30 am EDT

l feel that domain names are property but the problem is determining what kind of property rights to accord them. intellectual or virtual.

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