A service of Stephen W. Workman P.C

The Uncertain Status of Domain Names

Have you heard the news? That domain you hold, you know, the one you spent thousands of dollars to buy (or, better yet, have developed into a seven figure website business) . . . well, guess what? Your legal rights in that domain may be questionable, at best. And if your domain is dormant, or you have only recently begun using it in commerce, your rights in that domain are further lessened, or even non-existent.

Network Solutions, Inc. has been orchestrating efforts over the past several years to minimize its liability for fouling up domain registrations. The courts, which have been reluctant to approve legal theories that would saddle Network Solutions with liability, have been treating domain names as nothing more than an "indication of address" without cognizable legal status. The dangerous consequence of NSI's efforts to avoid liability, by trivializing the nature and importance of a domain name, has been to leave aggrieved domain registrants, whose domains have been hijacked or mistakenly released by NSI, with uncertain or no legal recourse.

You might have legal protection for your domain under the trademark laws if you have been using the domain in commerce and if the domain has acquired a certain status of visibility. But because the point at which theses protections attach is often hard to gauge, domain name owners have been attempting to persuade the courts to equate domains with recognized forms of personal property. Unfortunately, the courts, following Network Solutions' lead, have not acquiesced. For instance, according to the recent decision by Judge Ware of the federal bench, domains are not the type of property that can be the subject of a claim for conversion (lawyer speak for "theft"). Judge Ware's ruling comes in the context of the continuing saga over the "sex.com" domain. You may recall that the prior owner of this domain, Gary Kremen, brought suit against the current owner, Stephen Cohen, and against Network Solutions on grounds that Cohen had allegedly forged the transfer authorization and the domain had been, in effect, hijacked. In granting Network Solutions' motion to throw the case against it out of court, Judge Ware reasoned that the law of conversion does not apply to intangible rights unless evidenced by a document (hmmm, I guess those e-mails and receipts you get from NSI don't count as documents). Although the court's ruling was limited to NSI, his reasoning doesn't appear to leave room for any different result when applied to the alleged hijacker, Cohen.

The court's conclusion, in my view, required the performance of some fancy contortion work. For instance, it required the court to disregard contrary admissions made by NSI in prior litigation about the legal nature of a domain name, and also required the court to ignore Congress' apparent intent to treat domain names as having certain attributes of "property" under law. In a prior unrelated proceeding, NSI acknowledged that the right to use a domain is a contractual right. I hate to break the news to the court, but contractual rights are "property" - - why? Because they can be bought, sold and assigned (hmmm . . . just like a domain name). Also, and not insignificantly, the court failed to explain how domain names do not rise to the level of protectable property when Congress has created an in rem action, by which a trademark litigant can requisition a domain name (the "Anticybersquatting Consumer Protection Act"). In rem is a jurisdictional tool where the "thing" itself, rather than an abstract right, is the subject of litigation. If a domain name can properly be the subject of an in rem action, how does it follow that it cannot be converted?

We also know that, currently in the United States, domain names are not - - in and of themselves - - a species of intellectual property. Although a Virginia trial court characterized domain names as such, that court's ruling was reversed on appeal. No other court has afforded intellectual property rights to a domain unless it had acquired trademark status. This leaves owners of dormant, recently activated and "merely descriptive" domain names at risk of never acquiring the protections and privileges of intellectual property law.

Neither have the courts granted traditional property law principles to contracts involving domain names. To date, courts have considered the contract between domain name registrant and NSI to be a contract for services, not for a tangible or even intangible thing. So, despite the fact that domains have intrinsic monetary value, are bought and sold in the marketplace, and are properly characterized as business assets - - according to the courts, they are not considered to fall within any recognized legal category of property.

As you may have guessed, I take a rather different view. Domain names are, to my mind, akin to real estate. They are specified and unique plots of space in, well, cyberspace. And although cyberspace may be infinitely divisible, domains are unique plots, nonetheless. And it is precisely because of their unique nature that domains have value. To suggest domains names are not deserving of the protections of property law is to deny the very existence of the World Wide Web and e-commerce, which is built around them.

But courts have not even contemplated, let alone adopted, the real estate analogy. And so domain name registrants are left to speculate as to their rights. I find this very disturbing. Law, as given effect in the courts, is supposed to promote several things. Among them is the principle that human (and business) affairs should be predictable. Another is justice. I cannot see either principle being advanced by the current state of the law. And until the courts are prepared to address this issue - - the legal status to be afforded to domain names - - in a more rational and realistic fashion, your investments in your Internet operations are at substantial risk should your domain be released or hijacked.

Given the present state of affairs, you would do well to take every precaution available to bolster your legal claims in your domain. That means attaching recognized intellectual property rights to your domain (i.e., trademark rights - - to the extent possible), and working to bolster your contractual rights and expectations with the domain name registrars. Oh, and write a letter to your Congressman - - each of them has a website, residing on a domain, somewhere out in cyberspace.

Steven W. Workman is an intellectual property, media and e-commerce attorney, with offices in Boca Raton, Florida, Chicago and Los Angeles.