In a suit for trademark infringement in federal court in South Carolina, plaintiff won a default judgment against a Canadian defendant who registered the domain name “umbro.com” and tried to sell it to the plaintiff for $100,000 and a lifetime supply of UMBRO products. The South Carolina court entered an injunction directing the defendant to relinquish all rights in the domain name and to pay $24,000 in attorney’s fees and expenses. Plaintiff then instituted a garnishment proceeding in a Virginia state court, requesting that NSI deposit defendant’s other domain names with the court for judicial sale. As garnishee, NSI objected to the procedure, arguing that domain names are not subject to garnishment. The Virginia court disagreed, finding that defendant had a possessory interest in the domain names, and that their intangible nature did not preclude them from satisfying a valid judgment through a garnishment proceeding. The court ordered that the domain names be delivered to the court where they would be sold by the sheriff to the highest bidder. NSI appealed.
Reversing the circuit court’s decision, the Supreme Court of Virginia initially noted that although the right to use domain names could be considered a form of intangible property, a domain-name registration was simply a contract for services between the registrar and registrant. Consequently, because a service contract did not qualify as “a liability” to the judgment debtor (registrant) as that term is used in Va. Code § 8.01-511, domain name registrations were not subject to garnishment. The majority expressed concern over extending the statutory language to encompass domain-name registrations, stating “[i]f we allow the garnishment of NSI’s services in this case because those services create a contractual right to use a domain name, we believe that practically any service would be garnishable.” According to the dissent, however, NSI’s granting of an exclusive right to use the domain name, in which the registrant has a possessory interest, constituted a “liability” within the meaning of § 8.01-511, and should have been subject to garnishment.