Domain Names Seized Without Due Process

Can a Nevada court reassign your website without your knowing it?

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Steven Cherry: Hi, this is Steven Cherry for IEEE Spectrum’s “Techwise Conversations.”

One of the bedrocks of American jurisprudence—in fact, it’s protected quite directly by the U.S. Constitution and goes back to the Magna Carta—is the idea that no individual shall be deprived of life, liberty, or property, without due process of law. That’s the language of the Fifth Amendment, and it’s echoed in the 14th as well.

And yet, courts sometimes seem to think that modern technologies require new remedies that appear to circumvent the due process of law. According to my guest today, a federal court in Nevada has allowed a private company to seize about 600 domain names in the last few months—without due process. The crime that requires these extreme remedies isn’t murder or treason or even terrorism, it’s the counterfeiting of luxury goods, such as handbags and perfumes.

Venkat Balasubramani is lawyer and cofounder of the firm Focal Law, which focuses on media and technology. He serves on the board of the Washington State ACLU and has frequently taken on cases on behalf of the ACLU.

He first wrote about the problems he sees with the actions of the Nevada court on Eric Goldman’s Technology & Marketing Law Blog, to which he’s a regular contributor. He joins us by phone from Seattle. Venkat, welcome to the podcast.

Venkat Balasubramani: Thanks for having me.

Steven Cherry: Venkat, let’s start by explaining just what’s going on. The plaintiff is Chanel, known for its perfumes, but it makes other goods under its brand name as well. Chanel believes it’s found hundreds of websites selling counterfeit merchandise. How has it been going after them?

Venkat Balasubramani: So Chanel went into federal court in Nevada and obtained an order from a judge essentially ordering the domain name registrars to turn over control of these domain names to Chanel. And what that means is that when people go to the website, they’re going to be presented with a copy of the lawsuit and be informed that the website is allegedly selling counterfeit items and it’s been shut down. And its similar to what the U.S. government has done against alleged file-sharing sites or movie-streaming sites, where they just seize the site and when you go to the site—or they seize the domain name—and when you go to the site, you get a notice that says, “This domain name has been seized by ICE for alleged violations of criminal copyright or other statutes.” And typically, the government has done that several times in the past, and I think was always on questionable grounds, but this is one of the first times that a private entity was able to accomplish that.

Steven Cherry: All right, let’s just try and picture this for our listeners. First of all, domain names are basically like—ours here is, and that’s associated with a numerical address that our computer routers understand. So let’s say I’m your classic merchandise brand-name counterfeiter, maybe I’m in Bulgaria or the Isle of Man, and I have a website where I sell my Chanel handbags and perfumes. The court is ordering that that registrar give up that domain name and pass it on to another registrar, and it’s a specific registrar, right?

Venkat Balasubramani: That’s right. So the court is ordering the registrar to essentially transfer the domain name to Go Daddy, which is a registrar, and Go Daddy, I think, is based in Arizona, although I think they have offices elsewhere.

Steven Cherry: Yeah, and people might remember them from their Super Bowl commercials a couple years ago.

Venkat Balasubramani: Exactly. So that’s one part of it, and the second part of it is that it seems from the court’s orders that Chanel is allowed to access the back end control of the domain name account and change where the domain name points to.

Steven Cherry: So in addition to moving the domain name to Go Daddy, the actual website changes, right? I had previously been posting my great prices for Chanel handbags and perfumes, and now it points to a website that just contains the court documents?

Venkat Balasubramani: That’s right. It basically—if you go to the website, it says, “The owner of this domain name has been sued by Chanel for counterfeiting and trademark infringement,” and then you can access the copy of the lawsuit pleadings or the complaints at the website.

Steven Cherry: So this business of taking the domain name and passing it along to another registrar, this seems a little bit like the authorities seizing a car because they allege that a drug dealer used it in his drug dealings.

Venkat Balasubramani: That’s right, and I think the big question that it raises is that rarely if ever—and I might even say never—is somebody allowed to seize property without the other side being able to come in and contest the violation. And here what happened was Chanel went into court and filed declarations, and without the other side even answering, the court ordered the domain names to be turned over and seized.

Steven Cherry: I gather that one of the due process issues is that Chanel has this sort of open case with the court, and it gets to add new websites whenever it wants?

Venkat Balasubramani: That’s another one, exactly, and there was no clear indication in the court filing that the various domain names were somehow related or at all operated by the same person. So in that way it’s similar to these file-sharing lawsuits where people sue hundreds of defendants in a faraway court, and the courts have said, “Wait a minute, there’s not necessarily any connection between all these end users and the District of Columbia or the state of Illinois, and you can’t just sue people in some far-flung jurisdiction. And you also can’t just file a lawsuit and just add and remove defendants that aren’t connected with the lawsuit, with the underlying nucleus of facts.” So I didn’t get a clear sense from Chanel’s filings that all the domain names were connected and all operated by the same set of actors or the same actor.

Steven Cherry: The court’s also requiring that sites like Facebook and Google remove the domain names from search results pages. That seems a little weird. In fact, it seems doubly weird because if the domain names resolve at a website owned by Go Daddy that contains court documents and not Chanel prices, why does it matter if they show up in search results?

Venkat Balasubramani: I think that raises another good point as well. I—part of the problem with that also again is that Facebook and Google aren’t parties to this lawsuit, and so typically a court doesn’t order an unrelated third party to take action without that party being able to come into court and contest it. You know, I think the problem from Chanel’s standpoint that it was trying to get at was that it wants its websites to come up high in search listings or at least doesn’t want these other websites that sell knockoffs to show up in search listings, so it’s trying to address that and included something in the court order that said something like, “Google, Facebook, you have to delist these sites.”

Steven Cherry: You raise what I think is an interesting question. I mean, the problem that the Nevada court is trying to address is a real one, right? Brand names are sometimes counterfeited, and that rips off both the consumer and the manufacturer. What should Chanel and the court be doing instead of what they’re doing?

Venkat Balasubramani: It is a real problem; I don’t think anyone denies that. You know, I think there are copyright infringers or counterfeiters—you know, multitudes of IP infringements going on. The big problem, I think, from my perspective is that people should always be cognizant of the due-process implications. Here, the court of Chanel was very aggressive and without any sort of due process, allowing somebody to see these domain names just really sets a bad precedent. One solution for Chanel, I think, is obviously to go after the infringers, and there are difficulties in doing that. So if you go after somebody who sells counterfeit products and you extract a damages award from them, that obviously might deter other people from doing so in the future. And so the long-term solution of going after the bad actors is probably the more effective one and one that might not raise as many due-process concerns as would happen in this case.

Steven Cherry: The U.S. Congress is considering legislation—the Stop Online Piracy Act, or SOPA—that would authorize a lot of what this Nevada court is already doing. Would SOPA’s passage make all of this activity constitutional?

Venkat Balasubramani: It would legitimize it in the sense that if Congress puts its stamp of approval on something, it would at least make clear that from Congress’s perspective, this is authorized. Obviously, a court can go back and impose a due-process requirement and say even if a statute authorizes certain action, if it doesn’t satisfy due process, then the court may not uphold it. So I think the relationship between this and SOPA is somewhat complicated, and it would unquestionably legitimize this type of conduct and make it easier for plaintiffs to achieve these sorts of remedies, but I think the point I was trying to make is that there’s a lot of discussion about SOPA and what the problems are, but plaintiffs are achieving a lot of these remedies anyway. And courts—at least this court—seem open to granting these remedies.

Steven Cherry: Very good. Well, thanks, and we’ll, I guess, keep track of SOPA and these cases in the Nevada court, and maybe you could help us out there.

Venkat Balasubramani: Sure. Thank you—thanks for having me.

Steven Cherry: We’ve been speaking with Venkat Balasubramani, of the Seattle law firm Focal Law, about how concerns about counterfeit brand-name goods may be drowning out our constitutional right to due process in one Nevada courtroom. For IEEE Spectrum’s “Techwise Conversations,” I’m Steven Cherry.

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This interview was recorded 7 December 2011.
Audio engineer: Francesco Ferorelli
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