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If It Walks Like A Duck And Quacks Like A Duck It's Probably A…?

It is time to revisit the old question regarding whether or not a domain name is actually 'property' and what this means to domain name registrants, registrations, ISPs and ICANN itself. What type of rights does a domain name confer? What responsibilities will the act of registering domain names suddenly bestow?

Some thought this question was answered with the enactment of the Anti-cybersquatting Consumer Protection Act in 1999. Indeed, the in rem provisions of the ACPA gave credence to the argument that a domain name is in fact 'property,' at least sufficient to give a court jurisdiction over a matter. That seemed to satisfy many participants in the debate, as cybersquatting complaints are the more common disputes over domain names. The Ninth Circuit, however, in the long running Kremen v. Cohen case has taken the very cautious position of certifying a question to the California Supreme Court asking whether the state is willing to consider a domain name as property for purposes of conversion.

In May 1994, Gary Kremen registered the domain name "sex.com" with Network Solutions, identifying Online Classified, Inc. as the registering organization. Mr. Kremen did not commercially exploit the domain name, nor did he set up an active Web site using the domain name.

Mr. Kremen discovered one day that his domain name had been transferred to another individual, Mr. Stephen Cohen. Mr. Kremen alleged that Mr. Cohen created a memo on false letterhead from a non-existent executive at Mr. Kremen's company transferring the rights to "sex.com" to Mr. Cohen. Network Solutions (NSI) transferred the domain name pursuant to receiving a copy of the memo from Mr. Cohen. Mr. Kremen contacted NSI in an attempt to get the domain name transferred back to him, but was denied. NSI has a policy that domain disputes are matters between the disputing parties alone. Mr. Kremen filed suit against Mr. Cohen and numerous other defendants, including NSI for its deletion of the domain name.

Mr. Kremen alleged the following causes of action against NSI: breach of contract; breach of intended third-party beneficiary contract; breach of fiduciary duty; negligent misrepresentation; conspiracy to convert property; and conversion of bailee. NSI moved for summary judgment and on May 5, 2000, summary judgment was granted for NSI. The court's justification for granting summary judgment on each count is quite interesting, however the discussion surrounding Cohen's conversion and conspiracy to convert property claim proves to be the most interesting and controversial. Mr. Kremen argued that his property, "sex.com," was converted by Mr. Cohen through a wrongful act. The court noted that under California law conversion of intangibles represented by documents is recognized.

NSI, however, contended that a domain name was not the type of intangible property that could serve as the basis for such a claim. The court agreed finding that the domain name had to be 'merged in or identified with' a document or other tangible object to be protected under the traditional precepts governing the tort of conversion.

The court went on to state that the decision to recognize a domain name as convertible property should be left to the legislatures, not the courts. To emphasize this decision, the court provided three reasons for why the court should not be the body to make the decision. First, domain registrars would be exposed to liability every time a third-party fraudulently obtained a domain name. This threat of litigation would stymie the registration system. Second, recognition of a domain name as convertible property would destroy any sense that the tort of conversion required some type of tangible property. Finally, the court believed there were better methods to regulate the "vagaries" of domain names.

In response to the district court, Kremen appealed the decision to the Ninth Circuit. The Ninth Circuit, on January 3, 2003, issued a question for certification to the California Supreme Court. The question of law to be answered is:

Whether an Internet domain name is within the scope of property that is subject to the tort of conversion?

(a) For the tort of conversion to apply to intangible property, does the intangible property need to be 'merged in or identified with' a tangible object or a document?

(b) If so, does the tort of conversion apply to domain names, i.e., is a domain name merged with a document or other tangible medium?

We await the California Supreme Court's response.

What does this mean, however, for the holder of a domain name? Are we about to find out that domain names are 'federal' property? In other words, will only the federal government recognize domain names as property and, if so, will it only be for purposes of jurisdiction? What happens if the California Supreme Court says, yes�domain names are property for purposes of the tort of conversion and are automatically considered merged with a tangible medium, or, better yet, do not need to be merged with a tangible object or document? Both Kremen and Network Solutions agree that a domain name is property, the question is what type of property a domain name is and what rights and responsibilities does that domain name confer.

Network Solutions argues that a domain name cannot possibly be subject to the tort of conversion as the domain name is simply akin to a telephone number or address. Kremen, on the other hand, argues that because the domain name is merged with and identified with a document — the DNS database — it is property and likens the DNS database to a warehouse receipt.

If a domain name is akin to a telephone number or address, why would the hijacking of a domain name not render a website completely unobtainable. It may re-route the use to a new site based on the use of a domain name in connection with a new site, but it is not the change of the domain name that does this, it is the change of Internet protocol number associated with the domain name. If I type in the Internet protocol number associated with Kremen's website, regardless of the domain name itself, I will reach Kremen's website. Rather than acting as an address itself, the domain name is more of a sign. In other words, I can illegally take the sign and place it on a new property. People looking for that business based on the sign will be re-directed. People who know the location of the original property by address, however, will not be re-directed.

If a domain name is akin to a piece of property represented by a warehouse receipt, on the other hand, where the warehouse receipt is the DNS database, there should be some property the warehouse receipt represents specifically. Kremen argues the warehouse receipt, or the DNS database, represents the specific property of the domain name itself, residing in the DNS database. This too, however, is partially problematic. The analogy would be more accurate to say the DNS database is the warehouse, the registration is the warehouse receipt and the domain name is the property. As with fraudulent warehouse receipts, however, the question becomes one of who perpetrated the fraud?

These are the two scenarios the California Supreme Court must do battle with. It is not so easy, however, to say of course a domain name is property for purposes of the tort of conversion. Conversion is an unauthorized act that deprives an owner of his or her property. If a domain name is property for purposes of the tort of conversion, will domain names also be property for purposes of trespass? Could a domain name hijacker be guilty of trespass de bonis asportatis, or trespass for goods carried away? More importantly, could a registrar that fails to prevent an unlawful transfer of a domain name be guilty of joint trespass?

On the other hand, should registrars be completely free to allow domain name hijackings to occur and bear no responsibility whatsoever? Does it make more sense to call a domain name 'property' for purposes of common law claims and allow the courts to figure it out, or does it make more sense to leave it to the legislature? If domain names are not property in the states, what does this do to the in rem provisions of the ACPA? Will claims against registrars over hijacked domain names be more likely to occur in the state rather than federal courts if domain names are indeed property for purposes of the tort of conversion?

The Ninth Circuit states that it is quite capable of resolving the issue presented, as it well is, but does not want to take a first stab at deciding the issue. Rather, the Ninth Circuit wants to know how the state courts would handle this question as it uniquely relates to a cause of action that would otherwise be heard in the states barring federal jurisdiction. The California Supreme Court has more on its hands than a simple matter of interpreting state doctrine. The California Supreme Court may be turning over yet another layer in the on-going debate over what is property in a digital age.

By Stacey H. King, Attorney & Professor
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