UPDATE:  There is a brief account of the oral argument on the pokerlistings.com Web site.

That’s the interesting issue that a Kentucky appeals court will consider on Friday in an interlocutory appeal from the ruling of a Kentucky trial court. In Commonwealth v. 141 Internet Domain Names, Case No. 08-CI-1409 (Ky Cir. Ct., Oct. 16, 2008), a Kentucky trial court ruled that Kentucky courts of general jurisdiction have subject matter and in rem jurisdiction over civil forfeiture proceedings seeking seizure of domain names through which illegal gambling was conducted in Kentucky. The court upheld its prior ex parte order finding probable cause to allow the Commonwealth of Kentucky to proceed with the seizure of 141 domain names alleged to connect users to illicit gambling Web sites. The ex parte order also directed the service of a seizure order on the registrars of the respective domain names. When the trial court scheduled the forfeiture proceeding for December 3, the appellate court granted the stay sought by the vicsbingo.com domain name and the Interactive Gaming Council (see their petition for writ of prohibition), stayed the trial court proceedings and scheduled this Friday’s oral argument.

In ruling that the seizure could proceed, the Kentucky trial court reasoned that domain names are property that is present in Kentucky, and as such, can be the subject of an in rem proceeding there. The court further held that its ex parte seizure order did not offend due process because shutting down illicit gaming is an important government interest and the domain names could be removed from the reach of the government if advance notice were given. The court did rule that gaming Web site owners could avoid forfeiture, however, by installing geographic blocks preventing Kentucky residents from accessing their Web sites.

By the way, the domain name owners themselves are not parties to the action; some but not all of the domain names are represented by counsel. Network Solutions is participating, without submitting to the jurisdiction of the court. The intervenors/amici include the Interactive Gaming Council, the Interactive Media Entertainment & Gaming Association, the Poker Players Alliance and the Internet Commerce Association.

The Electronic Frontier Foundation, the Center for Democracy and Technology and the American Civil Liberties Union have also weighed in as amici on the side of the domain name owners. (Case document are available on the EFF Web site.) In their joint brief, the amici claim that the trial court’s order implicates the First Amendment and the Commerce Clause and further:

If allowed to stand, the Court’s flawed Order would needlessly create uncertainty about the basic rules governing the operation of the Internet as well as the authority of courts both inside and outside of the United States to affect behavior in other jurisdictions. Moreover, if carried to its logical conclusion, the trial court’s Order could well impose literally billions of dollars of additional costs on individuals and businesses through the world that have no significant contacts with Kentucky."

One of the key issues in the case is whether the accessibility of a domain name is sufficient to establish jurisdiction. The trial court held that it had jurisdiction over the domain names because they are "property" under Kentucky law and because the domain names and their operators are "present in Kentucky" because they "transport the premises of an Internet gambling casino inside the houses of Kentucky residents." The court rejected the analogy to the federal Anticybersquatting Consumer Protection Act which limits in rem jurisdiction over domain names to a jurisdiction in which the domain name registrar or other domain name authority is located, or where "documents sufficient to establish control or authority regarding the disposition" of the domain name are located.

With respect to the argument presented to the trial court that state court proceedings allowing forfeiture of domain names would create havoc on the Internet, the trial court commented:

"This doomsday argument does not ruffle the court. The Internet, will all its benefits and advantages to modern day commerce and life, is still not above the law, whether on an international or municipal level. The challenge here is to reign in illegal activity and abuse of the Internet within the framework of our nation’s and Commonwealth’s existing common law norms and principles, until expressed guidelines from state and federal legislative bodies say otherwise."