Sex.Com Trial Goes to High Court

[charles]

Further on the subject of domains as property ...

Starting at the end, yes I did win the Sex.Com case, but it was not easy, with NSI and Steve Cohen both arguing that domain names were not property.

I'm devoted to legally defining domain names as property because the owner of property has the largest "basket of rights" available under our system of law.

Property is protected under the 14th Amendment of the US Constitution, and only "liberty" is equally protected. Rights of contract (while very valuable) may be abridged by the government without causing "constitutional injury." Thus, defining an asset as property obtains protection from arbitrary or otherwise unconstitutional treatment by the government.

Additionally, specific legal remedies apply to personal property which are very helpful in recovering hijacked domain names. The law of conversion provides the remedy of "trover," the right to recover the specific property from the wrongful taker or anyone to whom they have conveyed it. This is an important remedy that is available to recover portable personal property. Since domain names are quite portable, being able to invoke conversion law to obtain a judicially-ordered recovery is a right you would not want to give up.

If we do not define domains as property, what is the alternative? To make the use of domain ownership solely a matter of contract. Contractual rights simply aren't as suitable to domain name disputes, where the ability to recover the domain name is crucial.

Property can be used as collateral for a loan. Why is that? Because it can be repossessed! You can get a car loan because the car itself is security for your performance. So unless domains are property, and recoverable through security agreements, they will never provide the basis for leverage. And leverage is good.

While your fears of excessive government regulation cannot be lightly brushed aside, and I do not do so, I think the advantages of defining domains as property outweigh the downsides.

Thanks for talking
Chas

[FineE]

I must agree with the position taken Charles, and the benefits of domains as property, and thank you for taking up this fight.

[charles]

Originally posted by FineE
I must agree with the position taken Charles, and the benefits of domains as property, and thank you for taking up this fight.

My position on property comes from what a law school friend told me nearly twenty years ago -- there's a simple rule to apply to all Property law issues -- "OWN IT!"

Over the years, I have found that I come out better in virtually any deal if I can reduce my interest to something that a court will call "property." Recently trade secrets have proven to be very valuable property, for example, as have patents.

I must emphasize that domain names are personal property, not real estate, despite the common usage (to which I have contributed) of calling domains "cyber-real estate" and "online storefronts." Domains are much better analogized to portable property, like a bond that bears continuing income. Trespass law is more applicable to real property, and I am not so fond of applying trespass law to cyberlaw issues, although I was one of the first to identify the importance of the Thrifty-Tel v. Bezenek case, applying the law of "trespass to chattels" to an attempt to hack into a long-distance computer by using random passwords. It has been fun to see that case law develop legs :)

Law is, in large part, the process of analogizing. The key is to find the closest analogy to existing legal doctrines, and apply them to the new situation. In the Sex.Com case, I decided early on that the best analogy for domains was personal property law.

As far as keeping up the fight, that is something that some of us are born to do. The scales shift and the battleground changes, but there is always a place to apply ourselves to the fight for fair dealing.

Thanks for the response!
Chas

[izopod]

First off, I would like to thank you for taking the time to respond. I highly respect your legal expertise as well as your knowlege in this field. By no means would I attempt to argue the legal aspects to which you espouse as that would be futile. However I do have continued concerns....

My first concern would be of a jurisdictional one. The US courts hypothetically could side with your argument and give domain names the "property" status for legal purposes. The question is, what value does that ruling have in a high court in the UK. You may gain an "edge" legally here in the US, but lose footing to a company outside the auspices of the United States. I would hate to pay for the "legal protections" that come with owning "property" only to find out that another country doesn't recognize my domain as property. Normally countries come together and sign treaties as to how they will treat legal matters so that their is some uniformity when it comes to applying law. I'm not sure such a treaty would offered up to the global community...but you never know...

The second concern is the fact that as it stands now we "rent" these names. Is there any such law that would allow users to break a contract and take over ownership of a particular "property"? My guess is there is not unless the contract to which was signed was done so under false pretenses (which would only let you out of a contract). Then you would have to "individually" assert your rights. That is one common theme to property law (just going off past research) is one must make claim to and then show proof of this. What documents would be created to show this new "ownership"???

The third concern is the "baggage" that would come with all this. The internet is still an experiment for all practical purposes. The last thing it would need is more regulation. You cannot change it's (domain names) legal status and NOT incur more regulatory control. In situations like this I would do a cost/benefit analysis to see if such action is warranted.

To me the negatives outweigh the positives 9 to 1. The reason for that is because we already have a lot of the things you are trying to seek for your clients. Especially since a lot of the protections you seek we already have (i.e trademarking, name-protection services, etc, etc).

We can sell our "property" at will, no middleman is needed. We can protect our rights to a domain name by trademarking them (if you want to). We can use our domain names for collateral....Not in this country but over in Korea you can borrow against your domain names, at least that was back in 2000. With the economic downturn, I am not sure of this anymore, but I do know they were doing it. Nonetheless, I don't see people able to borrow money against there domains as domain names are more of a commodity. Today, Whatever.com may have a market value of $2, but tomorrow it could be $.50. You'd be hard pressed to convince someone to lend you money based on current circumstances, unless of course you owned Sex.com Also lenders like "good" appraisals. You won't find (2) appraisers that will independently come up with an approximate value being the same.

In final. I for one like the freedoms we enjoy with domain names at present. Certainly that has some value. At the present someone can't impose a lien on my domain names. With the added "legal status" that would and could change. In short, what you are trying to gain one way may come back to haunt you in another.

For instance, you could make the case in court that domain names have property-like qualities. The judge rules in your favor to change the legal status of domain names. A week later someone decides to turn this case around on you based on the fact that the status of domain names have changed. They could now sue based on "property laws", whereas a week before they couldn't. I know I am reaching out a bit here, but if you open a door that is shut, you open yourself to new risks. Not sure if a case could be made for "zoning" these properties, especially porn sites if the legal status changed. Not saying this would happen, but one would have to prepare for such a counter-claim.

I hope I made my case. If anything I hope my comments gave you a different perspective on this issue.

My sincere thanks for this open discussion!!!! I've enjoyed it!!

I leave you with an izopodian philosophical viewpoint: Ownership is a good thing if you know what you have.

Gregory W. Krajewski
izopod

[charles]

Originally posted by izopod
... as it stands now we "rent" these names. Is there any such law that would allow users to break a contract and take over ownership of a particular "property"?

You say "rent" because no registrar is presently offering registration "forever." Hard goods and real estate can be sold "in perpetuity."

Personal property, particularly intangibles, have a more "evanescent value". Copyrights expire seventy years after the death of the author. Doesn't make them any less personal property. The copyright owner (and after death for seventy years, the estate) owns the copyright. The copyright holder has the right to publish, reproduce and create derivative works for the statutory term. It's a piece of property that burns out eventually. Patents of course have an even shorter term. They are still property. Of course! It's just got a life-span that you figure into the value.

Similarly, domains have a life span, but it differs from a copyright, because it is renewable, potentially in perpetuity. By ruling that a domain name is property, the court makes the rule of "I'm first in line" the most important rule. If I'm the first to register, I get what? The right to use it until the registration is expired, AND the sole right to renew within the time periods specified. That is what property law professors call a "bundle of rights." To protect the "perpetual" aspect, you must renew, but as long as you do, you can maintain perpetual possession of the name.

Property right bundles can be seen as a matrix of rights. There is the dimension of time and there is the dimension of extent. The time period of a domain is potentially perpetual -- for as long as the WWW exists. The extent of a domain is all the traffic that it can magnetize via links and eyeballs.

As to your other ideas, you have valid concerns about overly-intrusive regulation. However, since only property is protected from unconstitutional seizure by the government, we must consider property ownership to be the ultimate bulwark against excessive regulation. For example, the Eighth Amendment protects property against "uncompensated taking." This constitutional right prevents the government from taking your house away to build a freeway without paying you. Why could this be helpful in the domain name field?

Well, remember the old ".XXX" proposal? Some lawmakers wanted to confine all porn to a separate domain, to make it easier for NetNanny and the other filters to do their job. But it didn't happen. Why? I think because all of the existing adult sites would've said, "NO, you can't take our property that way. We have built up business goodwill (which is property), and trademark recognition, and traffic (which is sacred!) and the Eighth Amendment says you can't evict us from our property." Of course, a hundred First Amendment lawyers would say, "No, that's not the best argument -- the best argument is you can't regulate speech that way." That's when I pop up and say, "Whatever -- let's have ALL the RIGHTS we can get, both Property and Free Speech-- we don't have to choose because both apply."

Hope that was clear :)

[izopod]

Originally posted by charles

Hope that was clear

Clear as mud!! Thanks charles for the discussion and insight. I thoroughly enjoyed the chance to present my case!! I'll let the courts handle it from here. Good luck with your future endeavors!

Kindest Regards,

Gregory W. Krajewski
"izopod"

[charles]

I'll let the courts handle it from here.

I hope you're not suggesting that leaves the matter in competent hands!

Regards,
Charles