Commercial law collides with cyberspace: The trouble with perfection - insecurity interests in the new corporate asset

Washington and Lee Law Review, Winter 2002 by Nguyen, Xuan-Thao N

Because NSI has received everything required to give the judgment debtor the exclusive right to use the domain names it registered, the contractual right, a valuable asset, is the intangible personal property in which the judgment debtor has a possessory interest .... Mhis right exists separate and apart from NSI's various services that make domain names operational Internet addresses. These services. . . are mere conditions subsequent that do not affect the garnishment analysis.211

there. If the Umbro court furthered its analysis, it would have noted that although patents, copyrights, and trademarks are not subject to levy and sale under execution, they still are classified as intangible property that can be used as collateral to secure payment or obligation in commercial financing. Consequently, domain names - like patents, copyrights, and trademarks - are not subject to levy and sale under execution, but, nevertheless, are a form of intangible property for the purpose of a secured transaction. Because the Umbro court's concern was primarily with the use of domain names in garnishment proceedings, its decision is "superficially appealing" to the issue of correct classification of domain names.216

Recognizing the shortcomings in the Umbro decision, a federal district court in the Northern District of California in Kremen v. Cohen217 declined to adopt the majority's reasoning in Umbro.218 The Kremen court observed that the Umbro decision fails to adequately analyze the issue ofthe correct classification of domain names.219 The Kremen court, instead, found merit in the dissenting position that the right to use domain names "exists separate and apart from NSI's various services that make domain names operational Internet addresses. These services are ... mere conditions subsequent. "220

merged in or identified with a document or other tangible object.223 As intangible property, a domain name cannot serve as a basis for a conversion claim under California law.224 Only intangibles represented by documents, such as bonds, notes, bills of exchange, stock certificates, and warehouse receipts, are subject to conversion claims under California law,225 California law does not recognize conversion of other intangibles, such as goodwill of a business, trade secrets, a newspaper route, or a customer list.226 Because the defendant effectuated the transfer of the plaintiffs domain name through the use of a forged document, the court ordered NSI to restore registration of the "sex.com" domain name to the plaintiff.227

of ownership by use.232 Simply put, trademark registrations and applications are not chattel and, thus, are not subject to conversion tort.233

3. Domain Names and the Relevant Federal Statute

Congress recently passed the Anticybersquatting Consumer Protection Act (ACPA)236 which authorizes in rem civil actions against a domain name in the judicial district in which the domain name registrar or registry is located.237 Furthermore, a domain name's "sites" for jurisdictional purposes is where "documents sufficient to establish control and authority regarding the disposition of the registration and use of the domain are deposited with the court.238