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Emily D. Swoboda

Kentucky Domain Case Attorneys Gear Up for Courtroom Showdown

11 December 2008

As lawyers in the Kentucky domain name seizure case prepare for battle tomorrow in an appeals courtroom, it has become clear that the future of global intellectual property rights could truly be at stake.

"Forfeiture of foreign-owned and registered domain names based on a claim of violation of local law has tremendously far-reaching implications, given the wide variations in criminal activity throughout the United States, and other countries," Lawrence G. Walters, attorney for in the case, told IGamingNews today via e-mail. "The retaliatory impact that could be initiated by other countries against American domain names is of deep concern as well."

In mid-September, Judge Thomas D. Wingate of the Franklin County Circuit Court ordered the seizure and forfeiture of 141 domain names belonging to online gambling sites. The case, brought by the Commonwealth of Kentucky's Justice and Public Safety Cabinet, sought to "block access to Kentucky citizens or relinquish control of their domain names."

At the behest of some of the defendants' attorneys, the Kentucky Court of Appeals on Nov. 14 took control of the case. In October, the Interactive Media Entertainment and Gambling Association, an Internet trade organization representing its members in this case, and the Interactive Gaming Council, a Canada-based online gaming trade organization, jointly filed a petition asking the Appeals Court to stay a hearing scheduled for Dec. 3.

At a short hearing set for tomorrow, appeals court judges Michelle M. Keller of the Sixth District, Michael Caperton of the Third District and Jeff S. Taylor of the Second District will hear arguments from the attorneys on both sides of the case. Attorneys for the defense are hoping the panel will agree with their argument that the Commonwealth has no jurisdiction to seize property located outside the boundaries of Kentucky.

"The property at issue in this case is not located in Kentucky, and that's a critical issue when you're trying to exercise jurisdiction over property," Jeff A. Ifrah, attorney for the Interactive Gaming Council, told IGN via telephone.

Mr. Ifrah added that there has never been a case brought under in rem jurisdiction, or a lawsuit against an item of property that has attempted to seize property outside of the location of the suit.

"The state courts just don't have that level of jurisdiction, and we think that's for good reason," he said. "There's a logic to requiring that. In order to seize property, the property must be located within the territory or the boundaries of the state. And that logic is that the owners of the property have a right to know exactly the risks that are imposed regarding who may come and challenge their rights to that property. And it's limited to the location in which they choose to house that property."

Jurisdictional issues aside, Mr. Ifrah believes the Commonwealth's case has had fundamental flaws from the beginning with a clear and overall lack of due process.

"I think we all know that the way a lawsuit gets off the ground is not when you or I read it in the newspaper and realize we better get to court and defend ourselves," Mr. Ifrah said. "A person has a right to know when they are being sued. Judge Wingate proceeded without notice having been served, which was actually required under his own order. And they just failed to comply with Judge Wingate's own service of process."

A decision from the appeals court is not likely for several weeks, but should the court uphold Judge Wingate's decision, intellectual property like domain names or Web sites, no matter its location, will be subject to seizure from any court.

"(This) would lead to some absurd results where Kentucky residents themselves would be at risk of having property seized by an out of court judge, or a Web site that is located in Kentucky could be seized by an out-of-state, out-of-court judge," Mr. Ifrah said. "And we are very concerned about the consequences of that type of broad ruling."

Mr. Walters added that all parties have prepared as best they can.

"We all recognize the precedent-setting nature of this case, and all parties have devoted the necessary level of attention and preparation given the potential impact this case could have on the Internet gaming industry and on Internet law in general," Mr. Walters said. "Fortunately, the parties to this case have raised substantial issues relating to jurisdiction, constitutional violations and applicability of the gambling statutes involved, so we believe that ultimately our position should prevail. For now, we are all focused on evaluating the judges' reactions to the presentations and any questions posed by the court."

Kentucky Domain Case Attorneys Gear Up for Courtroom Showdown is republished from
Emily D. Swoboda
Emily D. Swoboda