Court Rules Domain Names Are Property

In a ruling with major implications for domain registrants, a federal court
in Virginia has ruled that domain names are property and are subject
to different legal protection than previously thought.

The ruling stems from a trademark infringement suit filed against a
Canadian corporation, 3263851 Canada, Inc., by Umbro International, a manufacturer of soccer equipment. In the suit,
Umbro claimed the defendant infringed upon its trademark when it registered
umbro.com in 1997. When the defendant failed to show up in court, the judge
issued a default judgment, turning over umbro.com to the company and
awarding it $25,000 in attorney’s fees.

In subsequent litigation, Alston & Bird, the firm
representing Umbro International, instituted a garnishment proceeding
against Network Solutions Inc. to force the judicial sale of the domain names.

“The registrant had no
tangible US assets that we could levy on, but they did have a number of
other domains that they had registered through NSI, so we asked the court
to garnish those so we could seize them and sell them to the highest bidder,” said Alston & Bird attorney Chris Roblyer.

Roblyer said the Virginia court agreed and on Feb. 3rd granted Alston
& Bird rights to 27 domains owned by the defendant.

The law firm said
the ruling gives trademark lawyers a new sword to combat domain name piracy. But Bret Fausett, a trademark attorney with Fausett, Gaeta & Lund,
said it’s actually good news for domain name owners.

“Typically we thought registrants had a two-year license to a domain name,
but the court is suggesting they have a property interest. As a result, if
the registry takes a name away from you without a legal basis, than you can
sue them for civil damages. And that’s a powerful thing,” Fausett said.

Network Solutions officials were not available for comment, but the company
has filed an appeal of the court’s decision. According to Fausett, NSI has
good reason to be concerned about the ruling, especially because of its
impact on NSI’s domain dispute resolution policy.

“When NSI licenses something, they have all sorts of rights. But if there
are property interests here, that little click-wrap agreement may not be as
effective.”

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