Appeared on March 4, 2012 in the Toronto Star as Bodog.com case sends warning to all Canadian websites

Imagine a scenario in which a country enacts a law that bans the sale of asbestos and includes the power to seize the assets of any company selling the product anywhere in the world. The country tests the law by obtaining a court order to seize key assets of a Canadian company, whose operations with hundreds of employees takes a major hit. The Canadian government is outraged, promising to support the company in its efforts to restore its operations.

Last week, this scenario became reality, though the product was not asbestos and the Canadian government has yet to respond. The case involves Bodog.com, a Canadian-owned online sports gaming site and the country doing the seizing was the United States. Supporting online gaming operations will undoubtedly make governments somewhat squeamish, but the broader implications of last week’s seizure touch on millions of websites and Internet companies who now find themselves subject to U.S. jurisdiction.

Bodog.com and its owner, Canadian Calvin Ayre, was one of the world’s largest sports gambling operations, employing hundreds of people in Canada and Costa Rica. Last November, its free gaming site, Bodog.net, signed a three-year sponsorship deal with the Canadian Football League.

The U.S. has been particularly aggressive about trying to shut down online gambling operations (Las Vegas and Atlantic City are apparently less of a problem), though typically those operations have some U.S. connection. In the Bodog.com case, U.S. officials targeted a site with limited connections to the country as the site had licensed out the bodog.com domain name in 2006 and stopped accepting U.S. bettors late last year.

The legal issues surrounding its operations will be played out in court, but the manner in which the bodog.com name was seized could have a lasting impact on Internet governance.

The domain name was registered in Canada with Vancouver-based DomainClip. In past years, registering a domain name with a non-U.S. registrar and avoiding U.S. servers was viewed as sufficient to fall outside U.S. jurisdiction. This is because a court order requiring the domain name registrar to transfer ownership of the domain (or redirect the site) was only enforceable in the jurisdiction in which it was issued.

No longer.

In the Bodog.com case, State of Maryland prosecutors were able to obtain a warrant ordering Verisign, the company that manages the dot-com domain name registry, to redirect the website to a warning page advising that it has been seized by the U.S. Department of Homeland Security.

The message from the case is clear: all dot-com, dot-net, and dot-org domain names are subject to U.S. jurisdiction regardless of where they operate or where they were registered. This grants the U.S. a form of “super-jurisdiction” over Internet activities since most other countries are limited to jurisdiction with a real and substantial connection. For the U.S., the location of the domain name registry is good enough.

The aggressive assertion of Internet jurisdiction was one of the key concerns with the Stop Online Piracy Act (SOPA), the controversial bill that died following a massive online protest in January. It simply defined any domain name with a registrar or registry in the U.S. as domestic for U.S. law purposes. The bodog.com case suggests that the provision was not changing the law as much as restating it, since U.S. prosecutors and courts follow much the same approach.

In an era when governments are becoming increasingly active in regulating online activities, the Bodog.com case provides a warning that by using popular dot-com domain names, companies and registrants are effectively opting-in to U.S. law and courts as part of the package.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.