U.S. Court Declares Domain Names Not Protected

On May 5, 2000, a U.S. district court declared that domain names are not property. If domain names aren't property, then those who falsify registration documents in order to get them re-registered in their own names aren't thieves.

by Alexis Gutzman [May 5, 2000]

On May 5, 2000, a U.S. district court declared that domain names are not property. What does that mean to you? For one thing, they can't be stolen. According to Judge James Ware of the U.S. District Court of the Southern District of California, domain names are a designation for a service, like a telephone number. If they can't be stolen, then those who falsify registration documents in order to get them re-registered in their own names aren't thieves.

Sex.com Owner Found Out the Hard Way
This news came as some surprise to Gary Kremen, the former owner of Sex.com. I say former owner because two years ago Stephen Cohen, an ex-convict, submitted falsified papers to Network Solutions to get Sex.com transferred to himself. When Kremen sued both Cohen and Network Solutions to get the domain back, he learned that nothing had been stolen from him; the judge dismissed the suit. The fact that Sex.com earns millions a month was irrelevant to the argument. If no property had been stolen, then there's no property law issue.

(Kremen can still sue Cohen for committing a fraud against him, by the way, so I'm not suggesting Cohen will get away with this.)

Judge Ware, in his ruling, made clear that he thought it was up to Congress to define domain names as property, and until that time, they had no such protection. You'd think that Al Gore, back when he was a senator inventing the Internet, would have thought to define domain names as property.

Transfer Domain Registrations Now
What does all this mean? It means that if you have a domain name registered in the U.S., either with Network Solutions or with one of the other official domain name registrars, you should consider transferring the registration to a non-U.S.-based domain registrar. You can find a complete list of authorized registrars at the Internet Corporation of Assigned Names and Numbers (ICANN) with countries of operation.

While I can't say which other countries have specified whether domain names are property or a "designation for a service" in any other country (and to my knowledge it hasn't been litigated anywhere else), it is clear that the U.S. does not consider domain names property and authorized agents "owners." In this case, the devil you know is clearly worse than the devil you don't know.

I participate in a few discussion lists about ecommerce, and I repeatedly see messages from Web site owners asking where they can get the best deals in domain registration. I suggest that all domain owners and prospective domain owners reconsider the domain as a commodity item where price is the only consideration. Here's my list of factors that domain owners should consider, when comparing registrars:

1. Country of operation:
You may wish to use a registrar not in the U.S. until Congress acts to define domain names as property. The lawyer I consulted in researching this column informed me that, even if I live in the U.S. and the person who commits fraud to re-register my domain name lives in the U.S., I can sue him in the courts of the country in which my registrar operates, if the laws there are more favorable to me.

2.Service accessibility:
Can you get through to speak to a person if you have a question? Perhaps the most remarkable thing about the domain non-theft that took place with Sex.com is that Cohen was able to get his fraudulent paperwork processed. Anyone who's ever tried to fax any kind of transfer papers to Network Solutions knows how difficult it is.

3.Terms of the contract:
As a result of this decision, Network Solutions changed its Service Agreement to reflect the fact that they are providing a service, rather than a product. However, at the same time they also broadened the language of their service agreement to include the following: "You agree that we may terminate our service(s), including our domain name registration services, in the event that you use such service(s) for any improper purpose, as determined in our sole discretion." What does that mean? I don't know and I sure don't want to find out with my own valuable domain name what, in their sole discretion, is "any improper use." Do they mean that if I use my domain name to host content they don't like, such as anecdotes about poor service at Network Solutions, I may lose my domain?

Be sure that any contract you agree to is one you can live with. No lawyer would tell you to sign a contract with such vague language. They also have a clause in their contract that tells you that you don't have to receive notification of any changes in their contract, but that if they make any - simply by posting the new service agreement to their site - they're automatically binding on you after 30 days. Would it be so difficult for them to send e-mail to authorized agents when the contract changed? They could probably even charge a fee to authorized agents for being kept in the loop.

The smart registrar will have a pro-business service agreement that gives businesses assurances of continued support, rather than veiled threats to make their lives a living hell of litigation as lawyers fight to sort out what was meant by vague statements in a contract.

4. Dispute policy:
Make sure that the dispute policy gives you plenty of notice and time to respond if someone else does lay claim to your domain. The burden of proof should always be on the person to whom the domain name is transferred. The fact that Cohen could get the domain from Kremen without the dispute-resolution process catching it is an indictment of the process that Network Solutions had in place at the time.

5. Price:
Most of the other domain registrars charge less than Network Solutions (at $35/year). Price should factor in, but if you have to pay a lawyer $225/hour to review the service agreement, the actual cost of the domain will begin to look less important.

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