BeachOne of the illusory advantages of conducting business offshore (in a location outside of the United States) is to protect the business from the reach of the U.S. judicial and alternative dispute resolution systems.  Contrary to belief, if you operate an offshore website that attracts U.S. visitors through, for example, online sales of products or services, you are not sheltered from the long arm of the United States courts.

Recent court cases have determined that U.S. courts can claim jurisdiction over a web site regardless of the geographical location of the registrant and even the domain name registrar.  In Atlas Copco v., for example, a trademark holder sued various domain names under the Anticybersquatting Consumer Protection Act of 1999.  Although the defendant domain name owners appeared to be located outside of the United States, the court held that it had jurisdiction over the property, that is, the domain names themselves, because the registry, VeriSign, was located in Virginia.  VeriSign incidentally controls all <.com> and <.net> domain names.  The court’s jurisdiction over property is referred to as in rem jurisdiction as opposed to in personam jurisdiction, which is jurisdiction over the person or individual. The court issued a judgment and ordered transfer of the domain names.

In Com. ex rel. Brown v. Interactive Media Entertainment and Gaming Association, Inc., the state of Kentucky filed an action to seize 141 domain names being used for gambling sites, an illegal activity in Kentucky.  Although most of the sites were located offshore and served gamblers both inside and outside of Kentucky, the state court ordered a forfeiture hearing.  The domain name representatives appealed to the Supreme Court of Kentucky where they lost for lack of standing.  Although the status of the domain names is uncertain, the case demonstrates how the lower courts will exercise in rem jurisdiction over domain names and seize them if their owners are violating state laws.

Thus, while moving your domain name offshore may protect the registrant from personal jurisdiction, it will not prevent the courts from exercising in rem jurisdiction over the domain names itself.  It is clear that the long arm of the law can reach across oceans.

–Deborah A. Logan, Esq.