The curious case of blackjack.com – and domain names as personal property.

Blackjack.com was and probably still is, a valuable domain name. Cary Pinkowski bought it in 2000 for USD465, 000, set up a company called Hanger Holdings (“HH”) and brought in two other men as investors to run an online gambling business.

In 2003 HH agreed to transfer the website, the domain name, customer data and the trade mark to Perlake Corporation SA for USD250, 000 on the basis that Perlake would also pay a percentage of the revenue it earned as commission

To cut a long story short, the gambling business didn’t succeed and Perlake (a Uruguayan company) went into liquidation. Perlake didn’t provide financial records to HH as it was obliged to and the Judge found the 2003 agreement was terminated in August 2015 following service of a letter notifying Perlake it was in breach of the agreement and the breaches were irremediable.

HH has been trying to get the domain name back since 2015 and in January 2021 the High Court agreed that the domain name was intangible personal property and that HH had acquired an equitable interest in the domain name after the agreement’s termination in 2015 and was entitled to have it transferred back:

Hanger Holdings v Perlake Corporation SA and another

This was a significant judgement because it’s the first time in English law that a domain name has been considered personal property. There were some complications as you would expect. The sole director and shareholder in Perlake, Simon Croft (who was the second defendant in the proceedings) had transferred the domain name to himself as part of a loan agreement, the validity of which was questioned.  That wasn’t considered enough to deprive HH of its equitable interest.

The judgement itself makes interesting reading not just for lawyers, but also for those who become involved in domain name disputes.

A few observations:

1/ This case needed experts on Uruguayan law and experts on digital forensics into the creation of loan agreement i.e. what did the meta data in the agreement say about when the loan agreement was created.

2/ It wasn’t until HH’s solicitors served the domain name Registrar that they started to make progress. The Registrar then passed the proceedings onto Mr Croft (whose name was hidden on the Register). So always serve the Registrar.

3/ Whilst it should go without saying, it doesn’t really help your case if you say things in your witness statement that you contradict in your oral evidence, as Mr Croft did. It meant the judge didn’t really believe anything he said.

4/ Domain names are not like phone numbers as Mr Croft’s barrister tried to argue.  Phone numbers don’t get freely traded. Domain names do.

5/ There are Uruguayan lawyers called Hughes & Hughes.

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Mark

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