England and Wales’ High Court Rules A Domain Name Is “Intangible Personal Property”

In a case decided this month, the England and Wales High Court ruled a domain name may be “intangible personal property” for the first time. The case involved Perlake, a Uruguayan company now in liquidation, the domain name blackjack.com and a failure to pay commission derived from the business using the domain name. There were also issues about the legitimacy of a loan agreement and business dealings with those involved.

The domain name was registered in December 1996. In 1999 or early 2000 it was purchased by Cary Pinkowski for US$465,000. Hangar Holdings (HH), the claimant, was registered in the Cayman Islands on 21 March 2000 to serve as a vehicle for the business of online gambling under the domain name.

In April 2003 HH entered into a written agreement with Perlake. Upon the payment of sums specified in the 2003 Agreement, HH was to transfer the Business to Perlake together with the Website, the Domain Name, customer data and the trademark. HH was to be paid US$250,000 and in addition to receive a percentage of revenue generated by the Business by way of commission. The 2003 Agreement is governed by English law. Payment was finalised in 2005. However HH claims Perlake never paid HH any commission.

One of the terms of the 2003 Agreement provided that HH was entitled to terminate the agreement if Perlake committed a material breach with a proviso that if the breach was capable of remedy, HH was obliged to give written notice specifying the breach and requiring it to be remedied; if Perlake failed to effect a remedy within 30 days of the notice the 2003 Agreement would terminate. Thereupon HH would be entitled to all rights in the Domain Name and the trademark.

In the judgement, Judge Hacon (Sitting as a Deputy High Court Judge) found an earlier judgement involving Tucows.com Co v Lojas Renner “entirely persuasive” and agreed “that a domain name is intangible personal property.” The case in the Court of Appeal of Ontario “ruled on an action brought by the plaintiff for a declaration that it had not registered or used a domain name in bad faith and that the Brazilian defendant was not entitled to the transfer of the domain name. Weiler JA set out a detailed review of judicial and academic consideration in several jurisdictions (including England, mentioning OBG) as to whether a domain name constitutes property, at [41]-[66]). She reached the firm conclusion that it does.”

The full judgement, which addresses additional issues, is available from: https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2021/81.html. Additional legal commentary is available on the Society for Computers and Law website here and 8 New Square’s website here.

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