Domain Name Theft and Where is the Literature?

Are domain names property?  The answer may help determine if there is a remedy when a domain name is stolen by someone hacking a registrar and stealing it.  Daniel Goncalves is charged in New Jersey with stealing the domain P2P.com from Albert Angel and others.  The case represents the first criminal prosecution for this type of activity.  The more astounding impression of this case is the effort necessary by Angel and others to track down Goncalves.  Police in Florida and New Jersey investigated the case and declined to prosecute.  Angel and his co-owners hired investigators and pursued the case on their own, even having to file FOIA requests to get evidence collected by the two police departments.  Even then it took over two years for New Jersey to decide to go forward with a criminal prosecution.

The case is relatively complicated in the facts of the investigation that led to the charges.  These are amply detailed in Domain Name News.  The short version of the allegations is that Goncalves hacked into Angel's AOL email account, retrieved details of Angel's Godaddy account and transfered the domain to himself under an assumed name and used a fake PayPal transaction to cover the deed.  He then sold the name on eBay to Los Angeles Clippers forward Mark Madsen for $111,000.  Madsen holds the domain still and is a named defendant, along with Godaddy, Goncalves, and others in a civil suit. 

The case represents the tremendous amount of effort necessary to hold domain thieves responsible for their actions.  Domain registrars normally have a safe harbor defense for what appear to be legitimate transactions.  A Godaddy spokesperson is quoted as saying Angel should have been more careful with the registration information.  There are some questions, however, as to Godaddy's prior knowledge of other potentially illegal transactions by Goncalves.  If anything, the case illustrates the lack of definitive law that applies to this situation.  The facts in this case all took place in the United States which made it easier to pursue, if $500,000 and two years worth of time is considered easy.  For some, that kind of effort can be worth more than the overall value of the site.

The lack of legal analysis in framing these cases is shown by searching for articles on LegalTrac.  Only one article shows up for a search on domain name theft, Cyberspace litigation: chasing the information highway bandits. byClyde H. Wilson Jr. and M. Susan Wilson in the October 2000 issue of Trial.  Changing the search to cybersquatting and domain name adds just one article to the list.  Changing the search to domain name hijacking brings up two additional articles that are surveys of recent cases for the years 2004 and 1999 respectively.  Google Scholar doesn't help much, as the same searches bring up more documents related to identity theft and other "unrelated" issues.  What would be obvious searches brings up little direct results.  The established law seems more intent on protecting trademarks in domain names than anything else, leaving theft to be covered by general  tort/conversion case principles. 

Going back to the first question, California treats domain names as property, as noted by a federal court interpreting California law.  This is the sex.com domain case litigated in Kremen v, Cohen, 337 F.3d 1024.  (Note that this case is similar in a civil context to the New Jersey case, with only four references in LegalTrac, none from academic journals).  The California courts are free to rule otherwise as the California Supreme Court declined to advise the federal courts through certified questions.  However, other states have not confronted the situation.  There is a need to develop law, statutory or otherwise, that protects legitimate domain name holders when the value of domain names increases.  There is also an opportunity to develop general scholarship in this field.  As the Goncalves case will illustrate, working the facts towards criminal liability in addition to a tort action should make for some interesting legal analysis. [MG]