Kentucky is just the beginning

This is a guest post written by Richard Douglas. He is the CTO of Secure Hosting Ltd., a company specializing in offshore servers with offices in Nassau, Bahamas and Kingston, Jamaica. Secure Hosting has been providing offshore web hosting services to clients since 2001.

What’s next?

The recent news about the Kentucky 141 is just the beginning. It is expected that there will be more court challenges to more domains in the coming months.

Remember that a court order from a US court can only be enforced in the USA. Most foreign countries simply ignore US court orders. It is very difficult and expensive to ‘domesticate’ a US court order in a foreign country, and they are normally never successful unless the action involves criminal activity such as drug dealing, money laundering etc.

Threats to domains

Domain owners are threated with lawsuits and invasion of privacy (think email and web server logs) every day. By using a registrar and web hosting outside the USA, you can make these threats go away.

Some types of threats to domain owners are:

1. Threat of civil lawsuit from a US attorney
2. Attempts to enforce a US court order
3. Legal threats to find the identity of the domain owner or web site operator

If you are using a US based registrar and hosting your web sites in the US or using a US parking/landing page company, then you’re in a mess of trouble. You’ll need to hire some attorneys and get ready for a lengthy and expensive battle to protect your assets.

In many cases, the courts will accept the weakest of arguments to allow a court action to go forward.

Generally, the US registrar and hosting companies will give in immediately and hang their domainer clients out in the wind once they receive a threat from an attorney or receive a notice from a US court. They simply do not want to deal with the hassle of being in the middle of any court action involving their client.

If you are hosted offshore using a registrar outside the USA, then none of these threats get very far. US court orders are not enforceable in foreign countries. US attorneys will say that they will take their court order and ‘domesticate’ it in the foreign court, or that they will hire local attorneys and sue you in a local court. These are lengthy and costly processes that typically get nowhere.

We’ve never seen a US court order domesticated and enforced in the Bahamas, nor a US civil action enforced in the Bahamas. And those phone calls and faxes trying to find out who owns a domain or operates a web site fall on deaf ears. As you might imagine, foreign courts are not as efficient or as sophisticated as US courts. ;-)

How to protect yourself

It is fairly easy to protect your domains and web site content. Most of the ‘big guys’ are already doing it. Sure, it takes a little work and might cost a little more, but it is worth it to protect your domains in the long run.

1. Chose a domain registrar and hosting company with a head office and staff outside the USA – i.e. no ties to the USA whatsoever. The Caribbean, Europe and Asia are all good places to look for a reliable company to work with.

2. Ask questions and do your homework. Many registrars and hosting companies may be headquartered outside the USA, but they host web sites (or their entire business) inside the USA. Perhaps they even have an office and staff inside the USA. This makes them subject to US law and you are wasting your time doing business with them to protect yourself because they will be forced to company with any US court order presented to them.

3. If you are using a parking/landing page solution, ask the company if they have an offshore parking/landing page solution. Some companies are already offering this, and I’d expect many more to start offering it soon.

Conclusion

Using a registrar and hosting company outside the USA is not going give you any protection if you are involved in copyright infringement, intellectual property theft or spamming. Most companies around the world will turn down your business or shut you down for doing these types of illegal activities.

But if you are a typical domain owner, by following these simple steps you can sleep better at night knowing that you won’t wake up one morning to find that your domains – and your entire livelihood in many cases – has been transferred to Kentucky or the next threat to come along.

Comments

  1. MHB says

    Richard

    I have to agree with you completely

    Anyway you look at it, there is no disadvantage to using a non-US based registrar and you have done a great job in discussing all the advantages.

    Unfortunately, the US seems to be the only country that constantly attempts to regulate the internet content and conduct.

    All our domains are in process of being transferred to an offshore registrar as we speak, and I will sleep better when there out

  2. Johnny says

    Yes…… I too would like to know what is your recommendation.

    The only one that comes to mind is Fabulous…. but, how much does Australia comply with U.S. court orders?

    What others are there?

    Also, what parking service has offshore parking? I never have heard of this.

  3. dncartoons.com says

    If allowed to stand what Kentucky has done could wreck the internet. Lets say Canada wants to protect its lobster industry, so it passes a law saying, “you can’t sell lobster online to our consumers” If you do we will go after your domain. Far fetched but the slippery slope has started. 5 years ago we never thought anyone would lose generic domains in UDRP…but that has all changed…

  4. Jeff Libert says

    Since the .Com registry is HQ in Virginia, USA I fail to see how this will protect a company unless – in addition to hosting offshore and using an offshore registry – the company also deploys their website to a ccTLD.

    It’s also nice in theory until the Fed intervenes. The banking system is so intertwined – and likely to grow more “connected” due to the current banking system problems – that U.S. and other national governments can make life difficult for non-cooperating banks.

    The same is true for credit card companies.

    Online gaming has taken a hit and while I agree there’s steps that can be taken to “make it more difficult” for governing agencies to intervene it appears that governing agencies have already done a pretty good job of it.

    Next up: U.S. travel restrictions on travel to the Bahamas due to Bahamian government failure to intervene in online gaming “crisis”. Bahamian government cracks down on online gaming. . . OR . . Bahamian government thumbs nose at U.S. travelers? :p

    Interesting times.

  5. says

    @Jeff,

    This argument about Verisign is weak and without any facts to back it up.

    People like to repeat it over and over again, minus any facts.

    Does Visa stop foreign banks from processing internet gambling transactions by non-US companies, done outside the USA? Nope.

    Did Verisign step in and have the domains on the Kentucky 141 list that are indeed registered and hosted outside the USA transferred to Kentucky? Nope.

    This is all about jurisdiction – where the activity is taking place and whether the laws in that jurisdiction apply.

    -Richard

  6. says

    Following some investigation on the subject, my ponderings……

    ICANN is dominantly US based registry .
    http://www.icann.org/cgi/contact/

    ICANN also control all the registrars like GoDaddy Enom as well as any off-shore registrars that sell .com .net .org .info (with US affiliations or not)…

    So…

    This makes owning any TLD in the .com .net .org sphere a very dodgy prospect, as the root certificate holders are still governed by US laws (However archaic).

    Other tld’s like .co.uk, & .eu, are still be subject to laws within those territories.

    For the past few years ICANN has been cracking down hard trying to force it’s registrars to obtain updated WHOIS info for their domain owning clients.

    http://www.icann.org/en/registrars/wdrp.htm

    This blatant invasion of privacy is typical of US based government interests trying to control the Internet.

    My conclusion…

    Off-shore services ain’t gonna help .com owners, the buck still stops on US soil regardless.

  7. MHB says

    Doug

    ICANN is not a registrar. They are the group that regulates registrars.

    That having been said, ICANN, Verisign have not been named in the Kentucky action.

    Kentucky has no bearing on a foreign company just like a US based registrar is not going to turn a domain over based on a court in Angola.

    If you do not follow a court order the court can place sanctions for non-compliance but if the company is not US based, the court is powerless.

    Richards point should be noted. Everywhere else in the world online gambling is legal and thriving.

    Many online gambling companies are publicly traded on the London exchange.

    The key is jurisdiction.

  8. vic says

    This subject came up eight years ago in the adult website/domain industry. When I looked into it I took the first step by moving my domains to a non-US registry, now I have 90% of my domains through Cheapies.com (Canadian co).

    I agree with these suggestions, although nothing is full proof, setting as many hurdles between your business and the US legal system is a smart consideration.

  9. vic says

    @Richard

    re:”Does Visa stop foreign banks from processing internet gambling transactions by non-US companies, done outside the USA? Nope.”

    Your are correct .. the key fact in that statement being that the transactions come from OUTSIDE the US.
    I specialize in setting high-risk merchant accounts so I’m pretty well versed in this area. Both V and MC will allow transactions from anywhere else in the world but NOT from the US – even if the gambling company is a non-US corp, hosted offshore etc etc. No bank (domestic or foreign) can allow US transactions in a normal gambling coded account.

  10. says

    We are sitting tight with monker. They know and will defend their asset base from these cybersqwatters.

    This also points out something Rick Shwartz has said. They will be coming after our cyber assets fast and hard! We need to band together to protect our cyber assets . Anyone second that ?

  11. says

    @Jeff Schneider

    I think that a lot of people looking that this Kentucky issue think it is just about some good ole boys and their gambling domains.

    Unfortunately, this month it is a challenge to gambling domains, next month it is geodomain city.com domains and then next year it is Rick’s domain portfolio!!

    The goal in writing this post is to get people to think about the long term effects of this Kentucky action. It’s not over and there are many more – larger – challenges to come.

    What happens when (go ahead and pick a company and domain name here) IBM decides that they should own PC.COM because they invented the thing and sell them too so they go off and get a US court order granted to them on weak argument. Then they present the court order to ‘CSC Corporate Domains’ who is the US based registrar on record for PC.COM and the domain is handed over to IBM without a hearing or any chance for the owner of PC.COM to defend themselves.

    The owner of the domain is effectively out of business while they fight to get their domain back.

    *THAT* is the issue with the Kentucky situation that is scaring the pants of many domain owners out there.

    – Richard

  12. says

    There are many powerful players that own domain names. Everyone is running around as if its “The Season Of The Witch.”

    Relax take a chill pill ,fear is only scary when you believe it. Yes the financial markets are in turmoil, I know I was the former Marketing Analyst for the Rockefeller Foundation, along with being a stock broker it seems like forever.

    Yes we need The ICA , but just relax and whatever you do stay put for now, with all the transfers going on things could get lost EASY. The storm clouds will eventually pass. We ,as in all of us, are in this thing together. There is safety in numbers. Stay tuned , but please don’t flip out, because its all small stuff.

  13. Jeff Libert says

    Sorry to disagree but I believe these are “in rem” (against the thing) actions and “the place” where .Com domains – the “thing” or “rem” – “exist” is, ultimately, in Virginia/VeriSign. A U.S. court may not be able to reach overseas assets but in the proper case they can proceed against assets found in the U.S. I really have to disagree that using an overseas registrar is some form of ultimate protection for .Com domains. It just isn’t, when “the thing, itself, is here”. If there’s a basis for going against the thing, such as violating U.S. law, long distance nose thumbing or saying “YOU have to come to US” just won’t fly.

    It’s also worth noting that as a U.S. citizen one does have certain rights, here in the U.S., and a whole host of options that may not be found when one is doing business as a foreign national.

    There’s all sorts of tradeoffs involved in these decisions. One should make a point of speaking with competent counsel in both the offshore nation and the “local nation” before making such choices. Problems can arise elsewhere, too, not just in the U.S., that involve litigation and courts and trademark claims and tax claims and . .

  14. says

    I hate to say it, but something like this has to happen to set a precedence and help form the necessary laws.

    The internet is the new frontier. This exact thing happened during the original frontier. Physical land disputes, virtual land disputes. Same thing.

    That said, I hope this Kentucky bologna heightens in the mainstream and gets destroyed.

  15. says

    That’s a wise point Richard, and might we add that it’s incidents like these that have led to a surge in enquiries for our ICANN Accreditation Consultancy services from Domainers.

    Traditionally, the industry has only associated an ICANN Accreditation with companies involved in the business of selling domain names. This is probably why most Domainers don’t have much information on getting/maintaining a Registrar and effectively there are a Lot of misconceptions about the same.

    The fact is that the average cost of maintaining an ICANN Accreditation comes to only US$ 6,000 and you get a pretty much unbeatable level of portfolio security and control.

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