Virginia Court Says Domain Names Are Not Property

from the so-can-they-be-seized? dept

There's an interesting blog post by Venkat Balasubramani about a little noticed ruling in Virginia from last year concerning a bankruptcy proceeding, which came to the conclusion that domain names are not property, but rather a contractual right. The ruling is somewhat specific to the bankruptcy context, but basically says that phone numbers and domain names are not really property:
Although the Fourth Circuit has not specifically addressed this issue, it is well-settled that the contours of the property interests assumed by the trustee are determined by state law.... Accordingly, Appellant cites the Virginia Supreme Court's relatively recent decision in Network Solutions, Inc. v. Umbro International, Inc. for the proposition that a judgment debtor has no property right in its telephone numbers and web address. In Network Solutions, the Virginia Supreme Court held that a web address and telephone number could not be garnished by a judgment creditor because the debtor lacked a property interest in them... (stating that "a domain name registrant acquires the contractual right to use a unique domain name for a specified period of time" and that a domain name is not personal property, but rather "the product of a contract for services").

In the absence of controlling Fourth Circuit precedent, this Court refers to Network Solutions to define a debtor's property interest in its web address and telephone numbers in Virginia. Although ACG argues that Network Solutions is distinguishable because it relates to a garnishment proceeding rather than a bankruptcy, the garnishment context does not change the Network Solutions court's holding that the use of a domain name is a "contractual right" that does "not exist separate and apart from [the provider]'s services that make the domain names operational Internet addresses." ... While telephone numbers and web addresses are important branding tools and certainly have value to those who use them, that subjective value does not equate to ownership under Virginia law. The Virginia Supreme Court confirmed in Network Solutions that neither telephone numbers nor domain names were wgarnishable personal property because "neither one exists separate from its respective service that created it." ... Therefore, because Virginia does not recognize an ownership interest in telephone numbers and web addresses, neither were property of Alexandria International's estate and neither were subject to sale by the trustee (nor would they be subject to sale in any future proceeding).
Venkat looks at what this means from a bankruptcy context and concludes probably not that much... But I'm wondering what it means when it comes to domain name seizures done by Homeland Security and its ICE division. Those were all based on laws concerning the ability to seize property supposedly used in the commission of a crime. Yet... if domains aren't property, can they be seized in this manner? While this ruling only applies to the state of Virginia, since .coms are registered via VeriSign, and VeriSign is based in Virginia, an argument can be made that all .coms are not "property" under this ruling. That, potentially, leads to a whole host of other problems, so I wouldn't jump to the conclusion that this is automatically a good thing. But it conceivably leads to another way for cites that are seized by the US government to fight back.


Reader Comments (rss)

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  1.  
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    arcan, Feb 4th, 2014 @ 7:57am

    the cite on the last line should be site.

     

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  2. This comment has been flagged by the community. Click here to show it
     
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    out_of_the_blue, Feb 4th, 2014 @ 8:09am

    OBVIOUS DECISION. News only to Mike who thinks links to infringing content are "free speech".

    Did any of you ever notice that you signed a contract to get a domain name? And that it has NO physical existence? Far less than a postal box. -- And for people who disparage the whole notion of "intellectual property" to suddenly take this as a shock? Sheesh! What a HOOT!

    Where Mike daily proves the value of an economics degree. (39 of 195)

    04:09:26[f-82-8]

     

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    out_of_the_blue, Feb 4th, 2014 @ 8:13am

    Re: OBVIOUS DECISION. News only to Mike who thinks links to infringing content are "free speech".

    ^^^ Clarification: I take this as domains then being FAR less than property, so instantly seizable without what you pirates mis-term "due process". -- Mike seems to think may be good (for pirates, implied), but I bet makes it even easier (for Customs and DOJ, other gov't entities) to "seize" domain names: they're NOT property.

     

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  4.  
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    Ninja (profile), Feb 4th, 2014 @ 8:16am

    Wouldn't this make it even harder for site owners to recover their "seized" assets? I mean, wouldn't it mean that the contract ToS or something was violated (ie: law enforcement said u are a bad guy) and make it even easier to law enforcement to "seize" the domain without a warrant (read: transfer the domain to themselves)?

     

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  5.  
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    Anonymous Coward, Feb 4th, 2014 @ 8:29am

    That could mean, domain name providers are still the owners of the domains, and we are just "licensing them". In that case, I expect the domain seizures to become even worse, we are able to use the argument that if let's say Godaddy owns TPB.com domain, then the authorities can't seize TPB.com unless they have something against Godaddy (not TPB) - at least until they pass a law making domain providers liable, like they tried with SOPA.

     

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  6.  
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    Anonymous Coward, Feb 4th, 2014 @ 8:30am

    The value and property right is in the contract, the exclusive right to use the domain name.
    The Seizure now becomes government interference in contract.

     

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    identicon
    Anonymous Coward, Feb 4th, 2014 @ 8:31am

    Re: Re: OBVIOUS DECISION. News only to Mike who thinks links to infringing content are "free speech".

    I've got a news flash for you, blue. Intellectual property is a misnomer and isn't actually property either.

     

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  8.  
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    Baldaur Regis (profile), Feb 4th, 2014 @ 8:35am

    The Virginia Supreme Court confirmed in Network Solutions that neither telephone numbers nor domain names were garnishable personal property because "neither one exists separate from its respective service that created it."
    This may have been true in the days of Ma Bell, when phone numbers were assigned, but with number portability (i.e., your number is transferable to different carriers) and with domain names since the beginning, the respective services are not creating or assigning the numbers/names so much as they are registering them.

     

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  9.  
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    Anonymous Coward, Feb 4th, 2014 @ 8:41am

    Re:

    I wouldn't think so. A contract is between two parties. Another party cannot take over that contract from one of them without both of the original parties agreeing to it. So it isn't an asset either according to this ruling. Unless the registrar and the holder both agree to allow someone else to take it over the contract is still binding on both of them. What I expect they will argue is that the domains in these high profile cases were registered for the purpose of committing illegal activity and therefore were part of the conspiracy to commit the illegal activity thus rendering the contract unenforceable in the same way that a person who is cheated by a drug dealer can't sue that dealer to get his money back.

     

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  10.  
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    Lonyo, Feb 4th, 2014 @ 8:50am

    Re: Re:

    But surely that means you can still go to court and it would have to be proven that you registered the domain for the purpose of committing illegal activity.

    And then you have some recourse because you can sue the domain name provider for breach of contract rather than having to try and deal with the government, and if the courts agree and say the domain provider is at fault for giving up the domain, you can then use that to appeal to the government who took the domain.

     

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  11.  
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    DannyB (profile), Feb 4th, 2014 @ 8:51am

    I bet the following 'non-owners' will be glad to hear this!

    Google.com
    Microsoft.com
    Apple.com
    GE.com
    Netflix.com
    Amazon.com
    . . . and millions of others . . .

     

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  12.  
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    Anonymous Coward, Feb 4th, 2014 @ 8:53am

    Re: Re:

    "An illegal agreement, under the common law of contract, is one that the courts will not enforce because the purpose of the agreement is to achieve an illegal end. The illegal end must result from performance of the contract itself. The classic example of such an agreement is a contract for murder."

    "A famous example in the United States is Bovard v. American Horse Enterprises (1988),[1] in which the California Court of Appeal for the Third District refused to enforce a contract for payment of promissory notes used for the purchase of a company that manufactured drug paraphernalia. However, the items sold in this contract were not actually illegal, but the court refused to enforce the contract for public policy concerns."

    http://en.wikipedia.org/wiki/Illegal_agreement

     

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  13.  
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    DannyB (profile), Feb 4th, 2014 @ 8:55am

    The quantum nature of domain names

    They're property when the government wants to seize them under law that requires them to be property.

    They are non property when it is otherwise convenient for them not to be property.

    This is like how you 'own' or 'license' music / movies depending on which is most convenient for the 1% and least convenient for you.

    It's either property or non-property.
    It's either owned or licensed.
    But don't try to measure it because that will affect it.

    It's a particle. It's a wave. But don't try to measure it because that would affect it.

    I hope that clears up any prior lack of confusion.

     

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  14.  
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    Sacramento, Feb 4th, 2014 @ 8:56am

    Wait

    "a domain name registrant acquires the contractual right to use a unique domain name for a specified period of time"

    Contractual from whom? This implies that registrar owns AND licenses proprietary names such as techdirt or google.
    Since they don't own, they can't enter into contracts granting rights to use in the first place. It is rather contract to service usage of these names instead.

    Or, am I missing something here?

     

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  15.  
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    Anonymous Coward, Feb 4th, 2014 @ 9:02am

    you can bet that as soon as it is going to suit the government and/or law enforcement, there will be a 'different way of interpreting this, just like every other law! if it's going to benefit or be of use to ordinary people, whether they have done something wrong or not, or even if they have only been accused of doing wrong, it will become a non-starter. change the order round, just as has happened before, and that's a different story!

     

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  16.  
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    Anonymous Coward, Feb 4th, 2014 @ 9:03am

    Re: Re: Re:

    No take for example the MegaUpload case. The government would probably contend that Dotcom registered the domain name for the explicit purpose of creating the site that they contend is used for illegal activity. Since the entire goal in their eyes, was to profit from illegal activity any contracts associated with that process are unenforceable. If he was convicted and tried to sue the registrar for breach of contract for giving up the domain name, the registrar would simply say that because he registered it for the sole purpose of committing a crime for which he was convicted, the contract was unenforceable and the court would likely agree. Besides that I haven't checked but I would be willing to bet that the registrars have some clause in somewhere their registration policy that absolves them from liability as part of the contract with regards to the domain being used for illegal activity just for these sorts of situations.

     

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  17.  
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    Baldaur Regis (profile), Feb 4th, 2014 @ 9:03am

    Re: The quantum nature of domain names

    So...if you put Schrodinger's cat and a domain name in a box, you can never know if the cat pooped on the domain name?

     

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  18.  
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    Anonymous Coward, Feb 4th, 2014 @ 9:20am

    Re: Wait

    "Contractual from whom?"

    It all starts with ICANN who authorizes and grants contract to companies to manange name servers for top level domains (.com, .net, .org, etc) as well as setting the rules all the way down the line.

    Technically, then the domain name itself, which is actually a service, is from the company that manages the name servers for the TLD who has a contract between them and the specific registrar that has a contract with the registrant to resell access to that service. Sometimes there is even another level in between where a company isn't an ICANN accredited registrar is reselling access through another registrar that is ICANN accredited.

     

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  19.  
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    Anonymous Coward, Feb 4th, 2014 @ 9:26am

    Re:


    This may have been true in the days of Ma Bell, when phone numbers were assigned, but with number portability (i.e., your number is transferable to different carriers) and with domain names since the beginning, the respective services are not creating or assigning the numbers/names so much as they are registering them.


    Yes and no. While you can Transfer your .com from Godaddy to Name Cheap, or NameSilo, or any other register, you can not transfer your name out of Verisign

    They are the Sole Master Register of all .com names, As such it is not "property" but a contractual obligation between you and really ICANN, through your selected provider be it GoDaddy or NameSilo,

    Then ICANN contracts with Verisign to provide the infrastructure

     

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  20.  
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    Anonymous Coward, Feb 4th, 2014 @ 11:11am

    Re:

    ICANN actually manages domain names. Registrars like GoDaddy have to agree to the RAA. link. So while the US government can hold GoDaddy to local rules, the customer should still be able to transfer the domain to another registrar without issue as ICANN should be distanced from local legal policies. This was always my big issue with the ICE seizures, as you stated MegaUpload is a New Zealand company and shouldn't be held to US law, and it creates a conflict of interest for ICANN imho.

     

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  21.  
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    Anonymous Coward, Feb 4th, 2014 @ 11:32am

    Re: Re:

    Not exactly. Domain names are really just a service. And that service is provided by the manager of the TLD that runs the nameservers and whois servers for the TLD. Sure ICANN sets the all the rules and grants authority to the company that manages the TLD but the service actually begins with them and then is resold through the registrar.

     

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  22.  
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    Anonymous Coward, Feb 4th, 2014 @ 12:19pm

    Re: Re: Re:

    So basically since com. is run by Verisign, ICANN can basically throw up their hands and say it's not our issue because Verisign is a US entity.
    So much for the stakeholders policy...
    I wonder if Mark Jeftovic from easyDNS would be willing to run the A root server? I'll be willing to chip in a few bucks.

     

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  23.  
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    Anonymous Coward, Feb 4th, 2014 @ 12:42pm

    Re: Re: Re: Re:

    That's not what I meant. And ICANN does play a significant role here. ICANN, which was created specifically to be a neutral governing body for how the Internet works, sets all the rules, processes and standards for domain names and IP addresses. Companies like Verisign don't get entrusted to manage the TLD and registrars do not get accreditation to provide domain names without ICANN approval. Domain transfers, for instance have to follow the rules set forth by ICANN. However, from the contract for a service perspective, the service that is a domain name is actually provided by the records on TLD mananger's whois and name servers. Sure ICANN has contracted Verisign to provide those services for the .com TLD but each domain under that is a service provided by Verisign. Verisign, according to the rules set forth by ICANN provides access to only accredited registrars to update those records on their servers. Those registrars then provide access through them for registrants to manage those records through them. That is how it works.

    Here is another way to look at it. Imagine it as a property owner that contracts a management company to manage renting apartments in an apartment building where some of the renters sublet the apartments they rent to other people. Next imagine that this property is in a city that not only has a law that says that apartment rentals can work this way but have to work this way and follow very specific guidelines (ie. Property owners and apartment managers have to get a permit from the city to rent property.) ICANN is like the city. The property owner is like Verisign and the management company is like a registrar. The individual renters who sublet don't need a permit from the city but they can resell through an apartment manager who allows them to.

     

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  24.  
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    Anonymous Coward, Feb 4th, 2014 @ 12:51pm

    Re: Re: Re: Re:

    However, you are correct that the US government can compel Verisign to change the records on their servers to redirect somewhere else (which is all a domain seizure really is) with a court order only because Verisign is a US company subject to US law. This is why you don't see ICE clamoring to seize the current TPB site as it is currently on the .se domain which is run by a company that is not subject to US law.

     

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  25.  
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    Anonymous Coward, Feb 4th, 2014 @ 12:57pm

    Re: Re: Re: Re:

    As for running your own root servers either get approval from ICANN to do so or setup your own completely different network where you get to make the rules and convince a substantial amount of people to switch to it for that approach to work. :)

    And if you are worried about ICE, it's much easier than that. Get a domain on a TLD that is not managed by a US company or one that can be compelled by their government to do whatever the US requests of them.

     

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  26.  
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    John Fenderson (profile), Feb 4th, 2014 @ 1:10pm

    Re: Re: Re: Re: Re:

    Or just use your IP address and skip domain names entirely.

     

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  27.  
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    stone, Feb 4th, 2014 @ 1:21pm

    How about revisiting idea of .p2p TLD?

     

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  28.  
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    Anonymous Coward, Feb 4th, 2014 @ 1:29pm

    Re: Re: Re: Re: Re:

    Not just ICE, I just feel that there really shouldn't be government restrictions on generalized TLDs such as .com, .org, .net, etc... Imagine if Verisign gets purchased by China Telecom, I'm sure the US would scream bloody murder with the roles reversed. Hell, I remember people screaming about Root F being moved to Beijing even when there was no evidence of tampering. IMHO, if the US wants to create it's own Great Firewall, they are more than welcome but they should not own a general TLD on which most nations rely on for business.
    As far as changing Root A server from a US based company, if enough people complain and a willing party is available, I'm sure they would put it up to vote before bowing down to a move by the ITU.

     

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  29.  
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    Anonymous Coward, Feb 4th, 2014 @ 1:33pm

    Re: Re: Re: Re: Re: Re:

    That doesn't work so well on the promotional end. People relate to names a lot better than they relate to numbers. It also doesn't work so well for those people on shared hosting that really don't have a need for a dedicated IP either.

     

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  30.  
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    John Fenderson (profile), Feb 4th, 2014 @ 1:37pm

    Re: Re: Re: Re: Re: Re: Re:

    I know. I was joking, but in hindsight it was far too subtle.

     

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  31.  
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    Anonymous Coward, Feb 4th, 2014 @ 1:43pm

    Re: Re: Re: Re: Re: Re: Re: Re:

    It's just that I hear that said repeatedly like this is still 1996 when getting a dedicated IP address for a single website wasn't a big deal and name based hosting wasn't very prevalent yet some people (and I don't mean you because I know you know) for some reason think that is still a viable answer.

     

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  32.  
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    Anonymous Coward, Feb 4th, 2014 @ 3:26pm

    It all boils down to what terms are agreed to in each contract.

     

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  33.  
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    PaulT (profile), Feb 5th, 2014 @ 2:44am

    Re: Re: Re: OBVIOUS DECISION. News only to Mike who thinks links to infringing content are "free speech".

    Yet, he';ll scream and whine whenever someone uses his "property" of a forum handle to mock him, to the point where he's come up with a nonsensical series of numbers at the end of every post to "prove" it's him. He'll scream bloody murder about that, but supports the removal of a site from the internet if someone accuses them of something since their domain is "less than property"? Yet another illogical set of ideas from man idiot, based on nothing but lies...

     

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  34.  
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    btrussell (profile), Feb 5th, 2014 @ 6:26pm

    Re:

    It should be "cities."

    Oh wait, it isn't 2020, yet.

     

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