A Kentucky Judge has upheld his earlier order allowing the Commonwealth of Kentucky to seize 141 gambling related domain names because they allow residents of Kentucky to access gambling sites. The State argued that each of the domain names fell within the meaning of a “gambling device” under state law KRS 528.010(4) and were thus subject to forfeiture under KRS 528.100. There is no suggestion that any of the domain names are owned or operated by companies in Kentucky and few if any are likely to be based in the United States.
The most controversial aspect of this decision is the Court’s conclusion that it has in rem jurisdiction over the domain names. In order to reach this conclusion the Court had to find, among other things, that a domain name is property, that the domain names have a presence in Kentucky, and that they were in fact “gambling devices”.
To meet this last requirement the Court had to look beyond the literal meaning of the statute, which is restricted to the actual machines and devices that allow you to play games of chance, and draw on the spirit of the law. The Court’s reasoning on this point is not very persuasive. The Court calls the domain names the “virtual keys for entering and creating virtual casinos from the desktop of a resident of Kentucky” and argues that the domain names are “designed to attract players”. While that may be true, the provisions do not seem to be aimed at advertising and access but rather target the devices that are used to play games of chance. It might be reasonable for the Court to infer an online equivalent to these mechanical devices but such an equivalent would be the client or server software that makes the game tick, not the domain name entry point.
Of more general significance is the finding that the domain names, and by consequence their associated websites, have a presence in Kentucky. The Court reached this conclusion on the simple basis that residents in Kentucky were able to access the site and engage in gambling. This is not a case where these sites were specifically advertising to or targeted at residents of Kentucky. The sites simply treated visitors from Kentucky the same way they would treat visitors from anywhere else.
A granting of jurisdiction on this basis alone fails to take into account the unique jurisdictional challenges that arise on the Internet. Nearly all websites are accessible from every jurisdiction in the world save for countries that exercise censorship. This places an unreasonable burden on website operators. Some more substantial connecting factor should be required before taking such an extreme step of seizing a domain name and effectively cutting off access to the world.
An argument raised in a later portion of the decision may hold the key to understanding why the judge was willing to find presence arising merely from accessibility. During its investigation, the State found some gambling websites that used geographic filtering technology to identify users from Kentucky and to block them. The judge found the absence of this technology on the sites accessible through the domain names at issue to be tantamount to targeting the residents of Kentucky.
This is an interesting argument which was also raised in the copyright infringement cease and desist letter sent to the Canadian based International Music Score Library Project last year. I think that in many cases this still puts too high a burden on website operators as they're essentially left to block everyone and then to slowly enable access as they investigate all of each jurisdiction's possible laws and deem them safe – which would impede the growth of the Internet and would lead to a more geographically segregated Internet. In any event, as the use of this type of filtering technology becomes more prevalent, at least within certain industries, the strength of the argument mandating its use will increase.
Finally, in concluding that domain names are a form of property the Court has raised the philosophical debate of whether a domain name is better characterized as a form of property or merely as “rights in a service contract” more analogous to a telephone number or a street address. In Canada, in Easthaven Ltd. v. Nutrisystem.com Inc., the Ontario Supreme Court considered whether a domain name was property. There the Court concluded that a domain name could be considered as intangible property but not as real or personal property.
The decision in Commonwealth of Kentucky v. 141 Domain Names also raises several other legal issues including the subject matter jurisdiction of the court, whether poker is ‘gambling’ under the statute, whether seizing domain names through ICANN amounts to possession, due process issues, and issues of standing.