When the state of Kentucky went to court to try to seize the domain names of 141 Internet gambling sites, it was a shot across the bow of Internet companies around the world. If the state’s lawsuit – the first of its kind anywhere – was successful in bringing about the forfeiture of the domain names, the consequences would be severe for both Internet commerce and civil liberties.

At an initial court hearing attended only by the state’s lawyers, without notice to the owners of the domain names, the judge concluded that the websites were violating Kentucky’s gambling laws. The judge ordered the domains to be seized and their ownership transferred to the state.

When it got word of what happened, the Interactive Gaming Council – the organization that represented the owners of 61 of the domain names at issue in the case – turned to Jeff Ifrah for help. As a host of other organizations – including trade associations and civil liberties groups – mobilized to join in fighting the judge’s order, Jeff became lead counsel, coordinating the legal challenge to the seizures.

Not surprisingly, the judge turned down their request that he reverse his own order. Convinced the order was unlawful, Jeff led the defense team in taking the case to the Kentucky Court of Appeals. There, Jeff persuaded the Court of Appeals to rule that the judge exceeded his jurisdiction. The Court of Appeals ordered that the seizures be blocked.

The state appealed that ruling to the Kentucky Supreme Court, where Jeff continued to fight the forfeiture. The appeal raised significant legal issues never before decided by the court, including whether a domain name can be considered property that is subject to seizure under Kentucky law and whether a domain name can be considered a gambling device under the law.

In the end, the Supreme Court sidestepped these important questions. Instead, it ruled that the case was not properly before it because of a legal technicality. But the end of the appeal was not the end of the case. Litigation continues with Kentucky state officials. While the final outcome of the case remains to be seen, its significance will be felt throughout the Internet gaming industry.

(Commonwealth of Kentucky ex rel. J. Michael Brown, Secretary, Justice and Public Safety Cabinet v. 141 Internet Domain Names – Civil Action No.: 08-CI-1409 (Commonwealth of Kentucky, Franklin Circuit Court, Division II))