Network Solutions, Inc. v. Umbro Intern.

• Decision Date: 21 April 2000
• Docket Number: Record No. 991168.
• Citation: 259 Va. 759,529 S.E.2d 80
• Parties: NETWORK SOLUTIONS, INC. v. UMBRO INTERNATIONAL, INC., et al.
• Court: Virginia Supreme Court

529 S.E.2d 80

259 Va. 759

NETWORK SOLUTIONS, INC. v. UMBRO INTERNATIONAL, INC., et al.

Record No. 991168.

Supreme Court of Virginia.

April 21, 2000.

Philip L. Sbarbaro, Washington, DC (Kevin C. Golden, Herndon; Timothy B. Hyland, Fairfax; Joseph E. Ulrich, Lexington; Hanson & Molloy, Washington, DC; Leffler, Hyland & Thompson, Fairfax, on briefs), for appellant. David J. Stewart (Christopher B. Roblyer, Atlanta, GA; James Casey, Washington, DC; Alston & Bird, on brief), for appellees.

No brief or argument for appellee 3263851 Canada, Inc.

Present: CARRICO, C.J., LACY, HASSELL, KEENAN, KOONTZ, and KINSER, JJ., and COMPTON, Senior Justice.

KINSER, Justice.

I. INTRODUCTION

In this case of first impression, we address the issue whether a contractual right to use an Internet domain name can be garnished. In doing so, we "apply traditional legal principles to [a] new avenue[ ] of commerce," Intermatic Inc. v. Toeppen, 947 F.Supp. 1227, 1229 (N.D.Ill.1996), and conclude that such a contractual right is "the product of a contract for services," Dorer v. Arel, 60 F.Supp.2d 558, 561 (E.D.Va.1999), and hence is not subject to garnishment. Accordingly, we will reverse the judgment of the circuit court holding that the domain name registrations at issue in this appeal are garnishable.

II. FACTS AND PROCEEDINGS

In 1997, appellee Umbro International, Inc. (Umbro), obtained a default judgment and permanent injunction in the United States District Court for the District of South Carolina against 3263851 Canada, Inc., a Canadian corporation (the judgment debtor), and also against a Canadian citizen who owns the judgment debtor. Umbro Int'l, Inc. v. 3263851 Canada, Inc., No. 6:XX-XXXX-XX, slip op. at 5, 8 (D.S.C. Dec. 31, 1997). That proceeding involved the judgment debtor's registration of the Internet domain name¹ "umbro.com." In its order, the district court permanently enjoined the judgment debtor from further use of the domain name "umbro.com" and awarded judgment to Umbro in the amount of $23,489.98 for attorneys' fees and expenses. Id. at 8.

Umbro subsequently obtained a Certification of Judgment for Registration in Another District from the district court in South Carolina. Umbro then filed that document in the United States District Court for the Eastern District of Virginia, which, in turn, issued an Exemplification Certificate. See 28 U.S.C. § 1963. Using that Certificate and a copy of the district court's judgment, Umbro obtained a writ of fieri facias from the Circuit Court of Fairfax County and instituted a garnishment proceeding that is the subject of this appeal.

In the garnishment summons, Umbro named Network Solutions, Inc. (NSI), as the garnishee and sought to garnish 38 Internet domain names that the judgment debtor had registered with NSI. Accordingly, Umbro asked NSI to place those domain names on hold and to deposit control of them into the registry of the circuit court so that the domain names could be advertised and sold to the highest bidder.

NSI answered the garnishment summons, stating that it held no money or other garnishable property belonging to the judgment debtor. Instead, NSI characterized what Umbro sought to garnish as "standardized, executory service contracts" or "domain name registration agreements." NSI also asserted that 8 of the 38 domain names listed in the garnishment summons either were not then, or never had been, subject to a domain name registration agreement between NSI and the judgment debtor.²

Umbro subsequently filed a motion for NSI to show cause why it had not deposited control of the judgment debtor's domain names into the registry of the circuit court. NSI opposed that motion and the garnishment on the grounds that the writ of fieri facias does not attach to the judgment debtor's contractual rights that are dependent on unperformed conditions, that the judgment debtor's domain name registration agreements with NSI are contracts for services and thus not subject to garnishment, that domain name services do not have a readily ascertainable value, and that the domain name services are not similar to patents and other forms of intellectual property.

In opposing the garnishment, NSI submitted an affidavit from its director of business affairs, who stated that domain names cannot function on the Internet in the absence of certain services being provided by a domain name registrar such as NSI. He further stated that NSI performs these domain name registration services pursuant to a standard domain name registration agreement.

After a hearing on Umbro's show cause motion, the circuit court determined that the judgment debtor's Internet domain name registrations are "valuable intangible property subject to garnishment." In a letter opinion, the court concluded that the judgment debtor has a possessory interest in the domain names registered with NSI. The court further found that there are no unperformed conditions with regard to the judgment debtor's contractual rights to use the domain names, that NSI is not being forced to perform services for entities with whom it does not desire to do business, and that the domain names are a "new form of intellectual property."

Accordingly, the court ordered NSI to deposit control "over all of the [j]udgment [d]ebtor's Internet domain name registrations into the [r]egistry" of the court for sale by the sheriff's office. Because of the intangible nature of the domain names, the court directed the sheriff's office to sell the domain names in whatever manner it "deem[ed] appropriate" after consultation with Umbro, and to notify NSI as to the name of the successful bidder for each domain name. According to the court's order, NSI then had to "transfer the domain name registration" to the successful bidder "as soon as commercially practicable following NSI's receipt of a properly completed registration application for the domain name from the winning bidder." This appeal followed.

Before analyzing NSI's assignments of error, we will discuss the Internet, the nature of domain names, and our statutory garnishment proceedings.

III. THE INTERNET AND DOMAIN NAMES

The Internet, which began as a United States military computer network called ARPANET, is now a "vast and expanding," Intermatic, 947 F.Supp. at 1230, worldwide network of interconnected computers, Reno v. American Civil Liberties Union, 521 U.S. 844, 849-50, 117 S.Ct. 2329, 138 L.Ed.2d 874 (1997). Anyone connected to the Internet can access an exponentially expanding wealth of information through an array of communication methods such as electronic mail, electronic mailing list services known as listservs, chat rooms, newsgroups, and the World Wide Web (the Web). Id. at 851, 117 S.Ct. 2329. The Web is probably the most widely known and utilized method of communication on the Internet. Id. at 852, 117 S.Ct. 2329. In simple terms, the Web consists of information or documents presented on "pages"³ of graphics, text and/or sound. Lockheed Martin Corp. v. Network Solutions, Inc., 985 F.Supp. 949, 951 (C.D.Cal. 1997), aff'd, 194 F.3d 980 (9th Cir.1999); Intermatic, 947 F.Supp. at 1231. Pages may "contain `links'<sup>4</sup> to other pages either within the same set of data files (`Web site') or within data files located on other computer networks." Lockheed Martin, 985 F.Supp. at 951. See also Robert L. Tucker, Information Superhighway Robbery: The Tortious Misuse of Links, Frames, Metatags, and Domain Names, 4 Va. J.L. & Tech. 8, ¶ 6 (Fall 1999) .

Each method of communicating on the Internet depends on the use of a unique domain name, also known as a "fully qualified domain name," Intermatic, 947 F.Supp. at 1230, to locate a specific computer or network, Lockheed Martin, 985 F.Supp. at 951. Domain names have been compared to trademarks, addresses, or telephone numbers, but domain names, addresses, and telephone numbers, unlike some trademarks, are unique. MTV Networks, A Division of Viacom Int'l, Inc. v. Curry, 867 F.Supp. 202, 204 n. 2 (S.D.N.Y. 1994); Adam Chase, A Primer on Recent Domain Name Disputes, 3 Va. J.L. & Tech. 3, ¶ 2 (Spring 1998) .

Each "host" computer that is "more-or-less permanently" connected to the Internet is assigned its own "Internet Protocol" (IP) number or address, which specifies the location of the computer. Tucker, supra, ¶ 12. See also Intermatic, 947 F.Supp. at 1230

. The IP number is comprised of four groups of numbers, with each group separated by a decimal point called a "dot." Tucker, supra, ¶¶ 12-13. See also Lockheed Martin, 985 F.Supp. at 952; Panavision Int'l, L.P. v. Toeppen, 945 F.Supp. 1296, 1299 (C.D.Cal. 1996),

aff'd,

141 F.3d 1316 (9th Cir.1998). For example, the IP number for this Court is 208.210.219.101.

Because Internet users can more readily remember a name as opposed to a lengthy sequence of numbers composing an IP number, each individual computer or network also has an alphanumeric name called a "domain name." Lockheed Martin, 985 F.Supp. at 952; Panavision, 945 F.Supp. at 1299; Chase, supra, ¶ 2; Tucker, supra, ¶ 12. Reading from right to left, each portion of a domain name identifies a more specific area on the Internet, and as with IP numbers, is separated by a "dot." For example, in this Court's domain name, courts.state.va.us, "us" is the top-level domain,⁵ and is a country code or identifier which signifies that the domain name is registered in the United States. See Sally M. Abel, Trademark Issues in Cyberspace: The Brave New Frontier, 5 Mich. Telecomm. & Tech. L.Rev. 91, 93 n.4 (1999); Kenneth Sutherlin Dueker, Trademark Law Lost in Cyberspace: Trademark Protection for Internet Addresses, 9 Harv. J.L. & Tech. 483, 492 n.50, 494-95 n.59 (1996); Stuart D. Levi, The Domain Name System & Trademarks, 563 PLI/Pat 449, 453 (1999). "[V]a," the second-level domain,⁶ indicates a sub-network used in the Commonwealth of Virginia; "state," the third-level domain, describes a sub-network used by the state government of Virginia; and "cou...