Kentucky judge refuses to dismiss gambling domain name seizure
Posted in: Domain Names at 18/10/2008 11:32
A Franklin County Circuit Court judge refused to dismiss a lawsuit that sought to block access to more than 140 online casinos in Kentucky. However the judge will hear arguments on 17 November before deciding whether the Kentucky state government will be allowed to take control of 141 gambling-related domain names for some of the most popular gambling websites.
The decision by Judge Thomas Wingate gives the affected domains 30 days to institute geoblocking to be removed from the forfeiture portion of the case before the final hearing of arguments on 17 November.
"Opposing groups and lawyers argue any judicial interference of the Internet will create havoc. This doomsday argument does not ruffle the court," Wingate wrote in his decision. "The Internet, with all its benefits and advantages to modern day commerce and life, is still not above the law, whether on an international or municipal level."
The decision, if allowed to stand, will have a significant effect on all manner of communications online in the United States.
The decision was roundly condemned by many, with Jeremiah Johnston, the Internet Commerce Association president, concerned with the ramifications the ruling could have on internet commerce. He fears that if the decision was broadly adopted "Internet commerce and speech would be at risk on a global basis. For example, U.S. companies conducting legal business activities in this nation could be subject to seizure orders for their domain names issued by foreign courts for lack of compliance with local law and regulation merely because their websites can be viewed abroad. Even more worrisome, the courts of totalitarian regimes could issue seizures orders against domain names used to spread truth and advocate freedom to their repressed populations."
However the state of Kentucky is not concerned with issues of free speech. "If all these sites block access (to Kentucky residents), they'll be free from forfeiture. Otherwise, there will be a forfeiture hearing (on Nov. 17)," said Jennifer Brislin, communications director for the Justice and Public Safety Cabinet, which filed the lawsuit on behalf of the government reports Casino City Times.
In the decision, the court found that domain names are property and therefore subject to the court's in rem jurisdiction or to possible civil forfeiture. The ruling also noted that for any domain name that is limited to "maintaining a website and providing advertisement for third-party gambling websites" and "information only" should have the seizure rescinded. This applies to one of the domain names, goldenpalace.com.
The decision that the state of Kentucky had the right to seize the domain names did not come as a surprise to those following the case said the Casino City Times.
"A state court will almost always try to find jurisdiction," explained Buffalo State business law professor Joe Kelly to the Times.
The online gambling sites have four options available to them, Kelly added. They can comply with Wingate's ruling, appeal Wingate's ruling, proceed with the forfeiture hearing or try and challenge Kentucky in federal court on interstate commerce issues.
"This (interstate commerce) really should be brought up in a federal court," Kelly said. "They stand a much better chance arguing this in a federal court than I think in a state court."
The full text of the statement from Jeremiah Johnston, President of the Internet Commerce Association, is below.
"The Internet Commerce Association is extremely disappointed in the decision issued by the Court this afternoon. This is a dangerous decision not just for domain name investors and developers but for all who value commerce and free speech on the Internet. The Court has incorrectly held that domain names are a form of property subject to in rem jurisdiction anywhere on the face of the Earth where their associated websites may be viewed on a computer screen. Even worse, it has endorsed the seizure of domain names absent notice and hearing, violating basic principles of due process. If the logic of this decision was broadly adopted then Internet commerce and speech would be at risk on a global basis. For example, U.S. companies conducting legal business activities in this nation could be subject to seizure orders for their domain names issued by foreign courts for lack of compliance with local law and regulation merely because their websites can be viewed abroad. Even more worrisome, the courts of totalitarian regimes could issue seizures orders against domain names used to spread truth and advocate freedom to their repressed populations. The remedy proposed by the court - geographic blocking so that none of the subject websites can be viewed from within Kentucky - is infeasible for individual domain names which could be subject to different laws and regulation in thousands of jurisdictions worldwide.
"The ICA does appreciate that Judge Wingate has indicated that he will continue to let us participate in this case as friends of the court. Given the high stakes for freedom, commerce, and the rights of domain name owners, the ICA plans to remain actively engaged in this critically important litigation."
The court ruling is available from www.gpwa.org/news/Kentucky.vs.141.Internet.Domains.pdf.