Why Domain Names Should Be Viewed as Property Rights

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The concept of property has been characterized by a number of conflicting philosophies and postulates before it attained a certain degree of harmonization among legal experts. However, it was Hohfeld and Honore that first articulated the ‘bundle of rights’ theory, which is widely accepted as one of the strongest definitions of property. The term ‘property’ is a multidimensional concept that incorporates a bundle of rights, immunities, privileges and powers that define the established situation of an individual, institution or government to a resource.

This includes the right to possess, to receive income from, to alienate, to exclude, to dispose or to recover title from whoever has illicitly obtained ownership of the resource. Property includes virtually every type of valuable rights and interests. Therefore, it can be argued that while the process/system of registering a domain name can be viewed as a contract for service, the value accrued and revenue derived from a domain name via legitimate contract rights means that it can be viewed as property. Consequently, domain names are being increasingly recognized as intangible property, subject to seizure or applicable as a source of in rem jurisdiction.

For example, in Commonwealth of Kentucky v. 141 Internet Domain Names, the court opined that since property is largely rationalized as a bundle of rights which is comprised of the right to ownership, controlling interests, the right to prohibit, the right to earn revenue, the right to transfer inter vivos and causa mortis, domain names should be recognized as a kind of property.

In another case, Kremen v. Network Solutions, Inc., the court held that a three-prong test should be adopted to establish whether domain names are property. There must be (1) an interest capable of precise definition, (2) it must be capable of exclusive control, and (3) the putative owner must have established a legitimate claim to exclusivity. The court found that domain names satisfied all the outlined criteria, and as such should be classified as property.

Referencing legal approaches to domain names in the United States, Britain, and India, the court ruled in Tucows Co. v. Lojas Renner S.A. that domain names could be viewed as personal property. The ruling appeared to be an extension of jurisprudence that regards other types of intellectual property, such as patents, as property. The court also cited academic theory from Hohfeld by acknowledging that property is not a thing but rather a bundle of rights held by persons over physical things, particularly the right to exclude others.

The Anti-Cybersquatting Consumer Protection Act (ACPA) makes allowances for trademark owners to bring proceedings where the domain name registrar or registry is situated in the USA. This is particular useful when the registrant is anonymous or cannot be located. Taking into consideration that in rem proceedings are commonly restricted to tangible property, one could argue that the ACPA is applying property rights to intangible items. A supporting viewpoint was tendered in Cable News Network v. cnnnews.com whereby the court ruled that domain names are properties that are located where they are created (where the registrar is domiciled).

So why is it important for domain names to be categorized as property? For one, it permits owners to exploit its commercial value, especially with regards to acquiring financing. Additionally, property rights in a domain name provide legitimacy that enables domain name holders to robustly challenge the claims of trademark owners in court actions. The ability to develop a domain name to attract millions of visitors and potentially generate millions of dollars in revenue is where its value lies. To date, there is insufficient case law to establish a strong precedent for legal proceedings that address domain names as property rights. That being said, court decisions and legal opinions in the US, UK and EU on the status of domain names are seemingly converging towards property rights and away from contracts of service.

 

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