It was revealed last week that the domain Bodog.com was seized by federal prosecutors in Maryland. The seizure was conducted along with an indictment of four executives of Bodog (none are in custody and are likely in Canada). The United States ICE – Department of Homeland Security issued the warrant, and the attached affidavit stated that a member of the ICE – Homeland Security team was able to make gambling bets in Maryland via Bodog.com and profit from those bets by receiving checks for their winnings in Maryland. http://www.apcw.org/legal-documents/BodogWebsiteSeizureWarrant.pdf
The seizure of the website in Maryland was deemed appropriate because Verisign, Inc., the company which owns and operates the .com TLD registry, has its registry services headquarters in Maryland (although its main headquarters are in California). Thus, even though Bodog.com (the company) is located outside the U.S., and its executives are also located outside the U.S., there was jurisdiction over the Bodog.com domain because courts have established that the place where the domain “lives” is considered to be the location of the registry provider. See, e.g., Harrods Ltd. v. Sixty Internet Domain Names, 302 F. 3d 214, 225 (4th Cir. 2002) (Court held that jurisdiction over Harrods related domains was proper in Virginia because “[b]y registering these Domain Names in Virginia, Harrods BA exposed those Names to the jurisdiction of the courts in Virginia (state or federal) at least for the limited purpose of determining who properly owns the Domain Names themselves.”).
The concept of asserting jurisdiction over a property or asset (in rem – i.e., the thing itself) is not controversial and is done frequently where it is necessary to attach or seize an asset which is located in the United States such as a bank account, car, house, etc… in the place where the asset is located. In these cases there is no controversy over where the asset is located because it is a physical thing. In the case of the internet and domain names, courts have solved the question of “where is a domain located?” by looking to the location of the registry provider or registrar to determine the appropriate jurisdiction for that domain. Jurisdiction for a .com domain can always be found in Maryland (because that is where Verisign is located) and a domain registered with GoDaddy can always be found in Scottsdale, Arizona where it has its headquarters.
The same way that countries outside the United States have created corporate tax havens to attract companies, which then led to a rash of incorporations by American companies in places like the Cayman Islands, Bahamas and Panama (as examples) to take advantage of the beneficial tax laws and regulations. In the same vein, one could easily imagine a future where owners of individual domains and/or a new gTLD registry choose their registry or registrar services based on the location of the domain or registry and the jurisdictional-host country’s commitment to privacy, strong laws protecting against takedowns and seizures of domains.
Here is an example, I am starting a new company in Europe and want to sell widgets to customers the United States. What registry should I choose for my company domain? .com, .info, .net, or one of the 100 or so new registries which will be released onto the market in 2013? If I choose a .com domain I will, regardless of the registrar I choose, be subject to having the domain seized in the United States (in either California or Maryland) because Verisign is the registry provider and is based in the U.S. Would companies make decisions about the “location” of their website based on these types of factors? It seems possible, even likely. The recent uproar over the SOPA and PIPA bills was largely due to the loose take down provisions which could have been used to seize a domain or stop a websites operations on little more than a hunch and an email to the registrar.
The new gTLD’s that will be brought to the market sometime in 2013 provide an opportunity for companies and individuals in an expanded internet to “forum shop” for the most protective jurisdiction for their property – i.e., choose to register domains with registrars and registry providers that are located in countries which are protective of individual rights. One of the reasons that an estimated 80% of the registrations in the .xxx gTLD registry are defensive registrations is that many companies in the adult entertainment industry decided that being part of a registry which was heavily regulated was not in their interest. (CITE) This could be a factor for more mainstream companies in the future as well.
At this point the concept of “forum shopping” based on the location of the registry/registrar has probably had limited appeal only to businesses like Bodog which are engaged in activities which are simply illegal in the U.S., and therefore investing in developing a domain name in a U.S. based registry presented a risk which they sought to mitigate later on by moving their websites into the .eu domain space. But as the internet becomes the more singular marketplace for global consumption and trade, it is not difficult to imagine that companies could be enticed in the future to try and evade unfavorable jurisdictions which could subject their domain names to seizure or a shut-down, as the options for registering domains become more abundant and the market gets more competitive.