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Domain Names are Intangible Personal Property

Domain names were initially seen as having two lives: providing “addresses for computers that [are] easy to remember … without the need to resort to the underlying IP numeric address” and identifying a business or its goods or services. To these purely functional tasks must be added a commercial value created by putting domain names to work attracting Internet users, holding them for investment and selling them in the secondary market. In its Committee Report to the ACPA, Congress used a powerful property metaphor when it described cybersquatting as a “land grab,” H.R. Rep. 106-412, at 6 (1999). Real estate is one kind of property and trademarks another. Grabbers of either property injure holders and deceive the public by pretending to be who they are not. To the extent that illicitly acquired domain names have any value in the virtual marketplace it must be by reflection of their sameness or confusing similarity to appropriated trademarks. It is merely a chimera of value. Chimeras cannot be sold on the open market.

In contrast, licitly acquired domain names are inherently valuable, a point acknowledged in the statutory and arbitral defenses to claims of infringement. Although there was initial uncertainty about the status of domain names, U.S. and other common law courts have concluded that they are a form of property. See, for example a U.K case, OBG Ltd. v. Allan [2008] 1 A.C. 1 (H.L.) in which Lord Hoffman for the majority observed at para. 101, “I have no difficulty with the proposition that a domain name may be intangible property, like a copyright or trademark.” In this respect, domain names are independent of the contractual arrangements of their acquisition. The march toward recognizing domain names as property is bad news for domain names illicitly acquired and good news for the licitly.

The value of licitly acquired domain names is that which a willing third party is prepared to offer. The legal thread begins with a pre-ACPA decision in the 4th Circuit in which the court rejected the view that domain names were property. The District Court for the Eastern District of Virginia in Dorer v. Arel,60 F. Supp.2d 588 (E.D. Va. 1999) sought an answer through analogy with trademarks: “Significantly, trademark law does not suggest that the trademark owner ‘owns’ the words used in the mark, but that the owner may enjoin others from using the words in commerce so as to avoid confusion or dilution of the value and significance of the mark.” The Court listed “several reasons to doubt that domain names should be treated as personal property subject to judgment liens.” This reasoning was subsequently followed by the Virginia Supreme Court in Network Solutions, Inc. v. Umbro Int’l, Inc. reversing the trial court judgment that held that the “judgment debtor’s Internet domain name registrations are valuable intangible property subject to garnishment,” 259 Va. 759, 770 (Va. 2000). The Virginia Supreme Court held that since a domain name registration agreement was a “contract for services” and the domain name was not property it could not be subject to garnishment.

In contrast to the 4th Circuit and Virginia Supreme Court the 9th Circuit Court of Appeals in Kremen v. Cohen, 337 F.3d 1024 (9th Cir. 2003) held that domain names are personal property and “subject to the same laws as other types of intangible property.” It defined property broadly as including “every intangible benefit and prerogative susceptible of possession or disposition.” The Court held that “[l]ike a share of corporate stock or a plot of land, a domain name is a well-defined interest. Someone who registers a domain name decides where on the Internet those who invoke that particular name – whether by typing it into their web browsers, by following a hyperlink, or by other means – are sent.

Kremen was followed by Office Depot, Inc. v. Zuccarini, 2007 WL 2688460 (N.D. Cal. 2007), aff’d 596 F.3d 696 (9th Cir. 2010) and Bosh v. Zavala, 08-CV-04851-FMC-MANx) (C.D. Cal. September 24, 2009). In Office Depot, the district court held that the ACPA “strongly suggests an intent on the part of the United States Congress to treat domain names as property existing in both the location of the registry, and the location of the registrar”. In Bosh the court awarded plaintiff damages under the ACPA on default and in a subsequent garnishment proceeding the court entered an amended order granting judgment “requiring turnover of domain name holdings of judgment debtor” consisting of 800 domain names. The decision recognizes what is apparent in the marketplace, that domain names can be sold to offset a monetary judgment.

The most recent case on domain names as personal property is Tucows.Com Co. V. Lojas Renner S.A., 2011 ONCA 548 (Court of Appeal for Ontario). The question arose in a procedural context as to whether the court had jurisdiction “to settle controversies with regard to rights or claims against personal property” (para. 68). The court concluded that “[i]t seems to me … that for purposes of jurisdiction, a domain name is part of the intangible property of Tucows’s business.” Renner’s pursuit of <renner.com> commenced with a UDRP proceeding that was immediately terminated upon Tucows commencing the declaratory judgment action in Ontario. Tucows uses “renner” in its vanity email service.

Mr. Levine is the author of a treatise on trademarks, domain names, and cybersquatting, Domain Name Arbitration, A Practical Guide to Asserting and Defending Claims of Cybersquatting under the Uniform Domain Name Dispute Resolution Policy. (2015, 558 pages). Learn more about the book at Legal Corner Press. Available from Amazon and Barnes & Noble. Ongoing Supplement here.

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