How to Levy on a Domain Name

How to Levy on a Domain Name

On Behalf of | Sep 13, 2016 | Business

It’s always nice to see the law catching up with technology. In Office Depot v. Zuccarini (9th Circuit 2010) 593 F.3d 696, the court ruled that a creditor may levy against (seize) a domain name in the jurisdiction where the domain name registry is located. This decision is important to judgment creditors because it reaffirms that domain names are, in fact, property that is subject to the claims of creditors. In addition, and this one is a big one, it allows creditors to proceed against domain names where the registry is located.Therefore, a creditor may proceed against domain names in one proceeding and levy against domain names located abroad where the registry is located in the United States. In a nutshell, this ruling makes it much easier for creditors to levy against this type of intellectual property.

In Office Depot, the office supply store obtained a judgment against John Zuccarini, a frequent cybersquatter. Cybersquatting is registering, trafficking in, or using an Internet domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. Office Depot then assigned the judgment to DS Holdings. DS went after 190 domain names that were registered in Zuccarini’s name. DS originally tried unsuccessfully to have the domain names transferred directly to it. Next it sought to have a receiver appointed over the domain names. The district court granted DS’s request to have the receiver appointed, and Zuccarini appealed. Zuccarini’s appeal focused on whether it was proper to appoint the receiver in the Northern District of California, since the domain names were not necessarily “located” there.

Finding no applicable federal rules, the court looked to California law. California law provides that a writ of execution may be issued in the county where the levy is to be made. With this in mind, the court addressed two questions:  (1) is a domain name property that is subject to execution? and (2) if so, where are the domain names located for purposes of execution?

With respect to the first question, the Court concluded that under California law domain names are intangible property subject to a writ of execution. With respect to the second question, the Court acknowledged that attaching a situs to intangible property is a legal fiction, and the determination must be made in a context-specific manner. Fairness was relevant to the Court’s determination of the appropriate situs, and the Court was understandably not receptive to Zuccarini’s policy arguments that allowing a court to issue an order directed to the registry would mean that every .com and .net domain name could be levied through courts in the Northern District of California.

This case clears up any lingering doubt that may have existed that over domain names and whether they are within a creditor’s reach by making it clear that a court which has jurisdiction over the registry can issue an order allowing the creditor to get at the domain names. The case also implicitly affirms that getting a receiver appointed to sell the domain names is the appropriate route for the creditor.

One of the more interesting aspects of the case is that the ruling makes clear that regardless of whether a domain name is registered through a foreign registrar, a court having jurisdiction over the registry can issue an order directing transfer of the domain names to a receiver.

For more information on how to levy against a domain name, contact experienced collections attorney Ronald P. Slates today.