Appellate Court of the American state Minnesota made a decision to consider domain name and website to be property. This happened when the court was reviewing the appeal of Sprinkler Warehouse Inc. against Systematic Rain Inc. Sprinkler Warehouse accuses Systematic Rain of illegally using copyrighted materials that belonged to Sprinkler on their website.
The trial court granted the plaintiff’s complaint and ordered Systematic to pay $156 thousand to Sprinkler. However, it declined another claim: to transfer domain name and company’s website registered in the name of James Palm, the CEO of Systematic, to Sprinkler. This was the reason for the appeal. After its consideration, the Appellate Court decided that the domain name and the website could be subject to garnishment order. The decision was explained that domain name and website are property which means that the right to use them is transferable. The additional argument is that domain names are subjects to laws that protect intellectual property.
It should be noted, however, that the Appellate Court hasn’t fully satisfied Sprinkler’s claims. The company wanted the domain and the website to be transferred to it. The Court decided though that the domain and website will be transferred to a receiver who will auction them off and the plaintiff will receive the proceeds. Reasons behind this decision are not quite clear, but, probably the Court decided that Sprinkler might use the domain and website as some kind of «hostages» in order to further pressure on Systematic.
Anyway, the decision of Appellate Court creates an alarming precedent for the whole domain industry, practically equaling domains to movable and immovable property. It is primarily bad because the sale, registration and renewal of the domains could be subject to applicable taxes. Court decision in Minnesota haven’t come to force yet and can be appealed in higher courts.
Sergey Kopylov, head of the legal department at Coordination Center for TLD RU/РФ, explained how these problems are solved in Russia: «In the Russian legislation the domain name is «a designation with specific characters intended to make addresses of Internet Sites to enable access to information published on the Internet»; (Article 2 of the Federal law «On Information, Information Technologies, and Information Protection»). Registration of the domain name is carried out for a specific period of time and upon its completion it is canceled if the administrator haven’t renewed the registration. Respectively the rules that consider domain names as property are quite controversial and are hardly even possible in Russia. Another thing is legal restrictions and enforcement of decisions related to the domain name. In Russian Federation this practice is considered to be established. The right holders in case of a win in domain disputes do not have any difficulties in the transfer of the disputed domain. This right is protected by the decision of higher courts, the explanation of the intellectual property Court and rules of domain name registration of the Coordination Center for TLD RU/РФ.»
