Domain names can be subject to freezing orders, UK government minister says

Home Office minister Mike Penning said provisions within the Proceeds of Crime Act could apply to domain names that are protected by intellectual property (IP) rights.

"The Proceeds of Crime Act 2002 permits an application for a restraint order to be made to 'freeze' the property of an alleged offender and has the effect of freezing realisable property that may be liable to a later confiscation order," Penning said. "The Act defines realisable property as any free property held by the defendant including any intangible or incorporeal property. The intellectual property rights in a domain name could fall within this definition and so a restraint order would be available."

"A company is a separate legal entity to its shareholders and directors and so a restraint order against realisable property held by a company would only be available where the alleged offender was that company. The terms of the restraint order prevent the alleged offender from dealing with their realisable property. Whilst property is under restraint, the judge may, depending on the circumstances of the case, exempt property which is required for legitimate business purposes to enable a person to carry on any trade, profession or occupation, for example, to enable continued use of a domain name," he said.

Penning's comments came in a parliamentary answer provided to questions asked by Labour MP Rosie Cooper.

IP expert David Woods of Pinsent Masons, the law firm behind Out-Law.com, said it was not surprising for Penning to confirm that freezing orders can be applied to domain names since the Proceeds of Crime Act allows the police to prevent alleged criminals from making continued use of "the tools of their alleged crime" when they are under investigation. However, he said that there are other issues regarding how domain names would be maintained during police investigations that businesses would welcome clarity on.

"Freezing orders are tools that IP rights holders might be able to work with police to obtain to prevent businesses using websites to sell fake goods or to infringe their copyright," Woods said. "The City of London Police Intellectual Property Crime Unit (PIPCU) is a dedicated team which works with rights holders to clamp down on illegal IP infringement, and so rights holders will welcome the minister's confirmation that freezing orders can be applied in a domain names context."

"However, it is not clear, if domain names are 'frozen' in the middle of police investigations, what would happen regarding the renewal of registration of 'frozen' web addresses where renewal falls due during that time. Businesses investigated but cleared of wrongdoing may find that the domain names they registered are made available to others by domain name registrars where they have not been renewed," he said.

"In those circumstances businesses could face a battle to regain control of domain names through the domain name dispute resolution process, particularly where new registrations have not been made in bad faith and if the original registrants lack any goodwill in their operation of the domain name. If businesses are unable to win back domain names they lost as a result of police action then the police or other authorities involved in that decision could face legal action over the loss of an important business asset," Woods said.