What’s in a name, asks Bodog founder Calvin Ayre
Is a seized domain worth the paper it’s written on?
The strange and underreported case of 1st Technology v. Bodog continued its legal sojourn this week with another response by 1st Technology to the gambling giant's continued claims of ownership to its one-time domains, such as Bodog.com.
The case, in which 1st Technology has managed to wrest at least temporary control over internet domains previously owned and operated by Bodog, has drawn little attention from outside the gambling industry, even though the litigation involves thorny and unsettled issues of trademark law.
The case began simply enough in Nevada last year, with an assertion of patent infringement against the Antigua-based company by software developer 1st Technology, which claimed that Bodog had violated US patent number 5,564,001, entitled Method for Interactively Transmitting Multimedia Information Over a Network which Requires a Reduced Bandwidth.
Although 1st Technology allegedly produced a licensing agreement with Bodog, the claim was utterly ignored by the press – who cares about another patent troll? – and dismissed by Bodog, either out of concerns that defending the lawsuit would lead to possible arrests by American authorities on outstanding silent warrants, or on the mistaken belief that Bodog had no American assets, and was for all intents and purposes judgment-proof.
Either way, Bodog representatives never appeared in court to defend the company, and a default judgment of $46.5m was entered against it in late February.
Judgment-proof, you say?
Armed with its default judgment against Bodog, 1st Technology then filed a writ of execution in the state of Washington to enforce it.
Why Washington? Washington is the headquarters of domain registrar Enom, which just happened to be the registrar for Bodog.com, Bodogcasino.com and a number of other related websites owned and operated by Bodog – the only identifiable American assets of this longtime Department of Justice nemesis.
Bodog owner Calvin Ayre has thumbed his nose at American authorities for years, carefully sequestering assets beyond the reach of the United States government and happily avoiding jurisdictions that might extradite him to the United States, but his websites were still registered with an American registrar.
The Internet Corporation for the Assignment of Names and Numbers (ICANN), a nonprofit regulatory body that sets internet technical standards and oversees registries and registrars, has considerable authority in determining the policies that govern internet domains, and has long maintained that internet domains are leased, rather than actually owned. At the same time, ICANN generally goes out of its way to protect intellectual property rights holders.
The idea, however, that a domain is nothing more than a periodic tenancy in cyberspace has troubling implications for trademark holders, whose rights in the physical world are maintained by registration and use – rights that have none of the explicit time limits that saddle copyright holders, and in theory can exist in perpetuity.
Nobody re-registers a trademark every two years. Intellectual property holders are thus in an endless race to register domains in the ever-expanding cyber-sphere of new Top Level Domains (TLDs), such as .asia or .cat, before the squatters move in.
Whether a trademark is a true property right, such as might be enforced against piece of personal property, or a somewhat lesser right appurtenant to the operation of a business, American courts have ignored ICANN's position and held that domains, which are bought and sold freely, entail property rights suitable to such a fungible entity.
Fair enough. But can a court really force the transfer of a trademark from an entity operating a business utilizing that trademark to one that is not? Can a trademark, or a domain based thereon, be severed and transferred from the very business from which it grew? More importantly, how can a mark devoid of the history and usage to which it has previously been attached have any value at all?
A Bodog by any other name
1st Technology thinks it can force a transfer, and so far the Washington state court has agreed.
1st Technology bases its claim on the landmark Sex.com case, Kremen v. Cohen, which first established property rights in domains. Of course, as anyone familiar with the Sex.com drama knows, the facts of that case involved a fraudulent transfer of a generic, though valuable, domain name.
Whether or not that same 9th Circuit Court of Appeals - or the US Supreme Court, for that matter - would view the forcible transfer of a domain based on an already registered trademark is another question entirely. Trademarks are intimately associated with a certain business style and established good will – not exactly the kind of business asset that transfers from one business to another easily.
The universal reach of the internet provides unique difficulties as well. 1st Technology claims that Bodog’s trademarks are unenforceable in the US because they are based on illegal activity, which could well be true but which ignores the fact that Bodog could well have enforceable trademark claims in jurisdictions around the world, and that taking over the company's websites might breach Bodog trademark rights elsewhere.
Bodog has been operating for the time being from the site BodogLife.com, registered with Network Solutions, based in Virginia - a jurisdiction that seems to be a little more sympathetic to Bodog's claims in an admittedly unsettled area of law. That won’t reverse the tide in this case, but it might make it easier to defend future domains that might be at risk.
Ultimately, the victory for 1st Technology could be pyrrhic. Bodog's customers have already switched to its new site, and 1st Technology's suggestion that an unrelated business might be run off the site seems wistful. Legalization of internet gambling in America is really the company's only hope that Bodog will find it worthwhile to maintain significant assets in the US.
1st Technology has quite a wait in front of it to satisfy this judgment, if ever, in full.
PDFs of the filings can be found here.®
Burke Hansen, attorney at large, heads a San Francisco law office