08 November 2008

Seizure of Intellectual Property

There have been two stories recently involving governments seizing intellectual property.

In one, the US government was seeking to take ownership of the trademark rights over certain symbols or logos used by motorcycle gangs.

The problem with this, for me, is that it's an abuse of trademark rights, albeit a familiar one. The purpose of trademark law is to protect consumers from being deceived about goods or services they are buying. There is no welfare justification in preventing me from painting a Nike whoosh on my own T-shirt, unless I attempt to sell the T-shirt to a mug who thinks it is made by Nike.

Therefore having trademarks would not allow the government to do anything useful (i.e. stopping gang members from wearing their gang colours) without abusing the trademark rights.

The second case is the State of Kentucky seeking to seize internet domain names used by gambling operators, as "gambling devices". Now the question of whether a domain name is a device is very debatable, but aside form that, the rights to a domain name are assets, and can be seized by government if the law permits.

That does seem rather odd, but it really isn't. The reason it seems odd is that a domain name is essentially an entry in a directory, and it seems odd that a directory entry can be controlled in that way. But, to get all Aristotelian for a bit, while it is essentially an entry in a directory, there is also accidentally something associated with it that is an owned, tradable right - the right to specify which IP address the name in the directory will be listed against. Since the domain name owner could, voluntarily, sell or hand over his rights to the domain name to the government, then, given appropriate legal power, the government can perfectly well take it.

If the domain name system were not accidentally based on tradable rights - if names were allocated arbitrarily and finally by a central domain authority, then there would be no basis for the State of Kentucky to order the domain authority to change the use of that domain name. The system could work that way, but as a matter of fact it doesn't (at least, not for .com domains), and the State can order a body subject to its law to hand over the contractual rights to it, as it could order it to hand over physical property or assign other assignable contractual rights.

Whee - I was wrong again.

My argument would apply if the State proceeded against the owners of the domain names themselves. It appears, looking at the details, that they went directly to the internet registries, and demanded ownership of the domains, without reference to who actually owned them or used them.

My original rationalisation of the process was that the State was effectively forcing the owner of the domain name rights to transfer the rights to the State, under some law that gave them power to do so. To simply announce that the rights now belong to it, without asserting jurisdiction over, or even identifying, the owners, is something else.

With regard to actual devices physically present in the State of Kentucky, it is reasonable that the State might have the power to seize them irrespective of who owned or operated them. But without establishing jurisdiction over the owners of the domain names, it's more difficult. It comes down to my point that the domain name itself (an entry in a register) is not the same thing as the contractual right to control that entry. Only the second is actually property, and therefore only the second can actually be seized. Even if, by a stretch, the domain name itself is classed as some kind of abstract "device" used in gambling, the rights are something else.

Courts generally try to be sensible, even when the formulation of the laws are downright weird. The 44-page PDF of the courts opinion contains justification for considering the domain names as property, and justification for proceeding against them without reference to who actually owns or controls them. It then goes very badly astray (emphasis mine):
As the evidence in the record stands, the Defendants 141 Domain Names transport the virtual premises of an Internet gambling casino inside the houses of Kentucky residents, and are not providing information or advertising only.
The reason for that conclusion is indeed the confusion between the domain name as a name, the domain name as an entry in a directory, and a domain name as a contractual right to control the entry in the directory.

The court reasonably concludes that the right to control the domain name's entry is property. It then observes the name all over every page of the casino website, and concludes that "the presence of ... the internet domain names ... is continuous and systematic". However, only the name itself has a continuous presence; the directory entry is only referenced once, by the name resolver in the user's operating system when they first go to the site. That might be enough to justify seizing the trademark, as in the Mongols case, but not the directory entry.

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