Domain Names As Contractual Rights In Virginia

Federal Court in Virginia court says domain names are not property, but contractual rights (Venkat Balasubramani, 14 Jan 2014) – Following the sex.com case from the Ninth Circuit , it is taken for granted that domain names are property that can be converted, sold, transferred, or subject to a creditor’s collection efforts. Interestingly, a federal district court in Virginia took a contrary view. The case arose out of a bankruptcy of Alexandria Surveys International. Two competing Alexandria surveying companies were trying to buy the assets of ASI and ended up with conflicting claims. The first company, Alexandria Surveys, LLC, acquired the telephone number and web address from Cox Communications, the provider, under the theory that these were executory contracts that could be taken over. However, the estate was reopened at the request of a second company (Alexandria Consulting Group) and in the second go around ACG purchased a bunch of assets from the trustee, including the web address and telephone number. The bankruptcy court ordered the ASL to turn over the web address and telephone number (and servers) to ACG. ASL objected, arguing that the web address and telephone numbers were not “property of the bankruptcy estate.” The district court agrees with ASL on appeal. The court largely relies on the Virginia Supreme Court’s decision in Network Solutions v. Umbro : “a domain name registrant acquires the contractual right to use a unique domain name for a specified period of time . . . ‘a domain name is not personal property but rather’ the product of a contract for services.” ACG tried to distinguish Umbro on the basis that it involved a garnishment proceeding, but the court says that the key part of the holding-that a domain name is a “contractual right”-applies regardless. The court says that because ASI did not have a property interest in the website and phone number at most it had a contractual interest and since the trustee did not assume it, there was nothing to be sold to ACG.

Provided by MIRLN.

Image courtesy of FreeDigitalPhotos.net/jscreationzs.

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