Domain Name Seizures and the Limits of Civil Forfeiture

Post to Twitter

I was quoted this morning in Sara Jerome’s story for The Hill on the weekend seizures of domain names the government believes are selling black market, counterfeit, or copyright infringing goods.

The seizures take place in the context of an on-going investigation where prosecutors make purchases from the sites and then determine that the goods violate trademarks or copyrights or both.

Several reports, including from CNET, The Washington Post and Techdirt, wonder how it is the government can seize a domain name without a trial and, indeed, without even giving notice to the registered owners.

The short answer is the federal civil forfeiture law, which has been the subject of increasing criticism unrelated to Internet issues.  (See http://law.jrank.org/pages/1231/Forfeiture-Constitutional-challenges.html for a good synopsis of recent challenges, most of which fail.)

The purpose of forfeiture laws is to help prosecutors fit the punishment to the crime, especially when restitution of the victims or of the cost of prosecution is otherwise unlikely to have a deterrent effect, largely because the criminal has no assets to attach.  In the war on drugs, for example, prosecutors can now seize pretty much any property used in the commission of the crime, including a seller’s vehicle or boat.  (See U.S. v. 1990 Toyota 4 Runner for an example and explanation of the limits of federal forfeiture law.)

Forfeiture laws have been increasingly used to fund large-scale enforcement operations, and many local and federal police now develop budgets for these activities based on assumptions about the value of seized property.  This has led to criticism that the police are increasingly only enforcing the law when doing so is “profitable.”  But police point out that in an age of regular budget cuts, forfeiture laws are all they have in the way of leverage.

Sometimes the forfeiture proceedings happen after the trial, but as with the domain names, prosecutors also have the option to seize property before any indictment and well before any trial or conviction.  Like a search warrant, a warrant to seize property requires only that a judge find probable cause that the items to be seized fit the requirements of forfeiture—in general, that they were used in the commission of a crime.

The important difference between a seizure and a finding of guilt—the difference that allows the government to operate with such a free hand—is that the seizure is only temporary.  A forfeiture, as here, isn’t permanent until there is a final conviction.

The pre-trial seizure is premised on the idea that during the investigation and trial, prosecutors need to secure the items so that the defendant doesn’t destroy or hide it.

If the defendant is acquitted, the seized items are returned.  Or, if the items turn out not to be subject to forfeiture (e.g., they were not used in the commission of any crimes the defendant is ultimately convicted for), they are again returned.  Even before trial, owners can sue to quash the seizure order on the grounds that there was insufficient (that is, less than probable) cause to seize it in the first place.

All of that process takes time and money, however, and many legal scholars believe in practice that forfeiture reverses the presumption of innocence, forcing the property owner to prove the property is “innocent” in some way.

In current (and expanding) usage, forfeiture may also work to short-circuit due process of the property owner.  (Or owners—indeed, seized property may be jointly owned, and the victim of the crime may be one of the owners, as when the family car is seized when the husband uses it to liaison with a prostitute.)

That’s clearly a concern with the seizure of domain names.  This “property” is essential for the enterprise being investigated to do business of any kind.  So seizing the domain names before indictment and trial effectively shuts down the enterprise indefinitely. (Reports are that most if not all of the enterprises involved in this weekend’s raid, however, have returned under new domain names.)

If prosecutors drag their heels on prosecution, the defendant gets “punished” anyway.  So even if the defendant is never charged or is ultimately acquitted, there’s nothing in the forfeiture statute that requires the government to make them whole for the losses suffered during the period when their property was held by the prosecution.  The loss of the use of a car or boat, for example, may require the defendant to rent another while waiting for the wheels of justice to turn.

For a domain name, even a short seizure effectively erases any value the asset has.  Even if ultimately returned, it’s now worthless.

Clearly the prosecutors here understand that a pre-trial seizure is effectively a conviction.  Consider the following quote from Immigration and Customs Enforcement Director John Morton, who said at a press conference today, “Counterfeiters are prowling in the back alleys of the Internet, masquerading, duping and stealing.”  Or consider the wording of the announcement placed on seized domain names (see http://news.cnet.com/8301-1023_3-20023918-93.html), implying at the least that the sites were guilty of illegal acts.

There’s no requirement for the government to explain the seizures are only temporary measures designed to safeguard property that may be evidence of crime or may be an asset used to commit it.  Nor do they have to acknowledge that none of the owners of the domain names seized has been charged or convicted of any crime yet.  But the farther prosecutors push the forfeiture statute, the bigger the risk that courts or Congress will someday step in to pull them back.

8 Comments »