Sometimes a comment is so good that it deserves to be turned into a post. That is the case with a comment left by John Berryhill on November 26, 2013 on TheDomains.com in response to the post entitled, “Federal Judge Rules Domain Names Are Not Property Under Virgina Law”
Things get lost in comments sometimes and in my opinion Mr. Berryhill touched upon something that is far bigger than a Virginia property ruling.
It is something every domain investor should read and bookmark.
Here is the comment:
It is an article of religious faith among some domainers that the world would magically be a better place if domain names were, for all purposes, property.Okay, let’s have a show of hands:
How many of you want:
1. To pay sales and transfer taxes on this “property” when it is bought and sold?
2. To have them be considered marital assets during a divorce?
3. To have them subject to liens?
If the states of Arizona, Florida, or Virginia got wind of the notion that GoDaddy, Moniker and Netsol have been selling goods all these years without paying the applicable sales tax on them, then rest assured, they are going under.
I’ve been at this for coming up on 20 years, have seen a lot of domain disputes of all shapes and sizes, and have NEVER found myself wringing my hands and saying, “Gee, I wish these things were property”. Even the sex.com case could have reached the correct result on an alternative legal theory. But it became a big issue there because the plaintiff got married to a conversion theory. In other words, it was only important because of the way the case was framed from the get-go. Have hi-jacked domain situations been rectified in other jurisdictions without introducing a property shibboleth? Yes indeed they have.
“at what point will all of these competing rulings result in a case going before the SCOTUS?”
It’s hard to imagine a situation which would compel that. Every domain registration contract – and that’s what you have, a contract with a registrar – specifies the jurisdiction in which that contract is made. Do states differ on matters of contract interpretation? Sure. Does it require a Supreme Court ruling to sort out? No.
When you register a domain name with GoDaddy, you have a contract that is, by its own terms, going to be construed in accordance with Arizona law. When you have a contract with Moniker, it is going to be construed in accordance with Florida law. There is no US Supreme Court, present or future, which is going to say “From now on, we’re going to invent a federal rule which is going to govern how a contract with express jurisdictional terms is going to be interpreted and applied in any of the 50 states, DC, Puerto Rico, Guam, US Virgin Islands, Northern Marianas, and American Samoa”. Not. Gonna. Happen.
It would require an act of federal legislation – from a Congress that passed something like 49 bills so far – for the extraordinary purpose of solving a “problem” that doesn’t exist except as an article of religious faith among domainers.
As to the question above, a contract to receive a service is as transferable and subject to claims of rights as is anything else. Have you ever bought or sold an airline ticket? There are no “goods” at the other end of that contract. I have a coupon from USAirways that will entitle the bearer to have his or her carcass hauled for 1000 miles. I’ll sell it to you if you like, but the act of hauling your carcass is not “property”, nor is the right to receive said carcass-hauling a form of “property”.
The comment got even more interesting in the last couple of days as I found out that domain name sales are subject to sales tax in New Zealand for those that live inside the country.
According to Tim Johnson CEO of .kiwi “The sale price of a premium name, is subject to a tax of 15% that needs to be paid to our Government as a sales tax, actually we call it GST”