Sprinkler Warehouse, Inc. v. Systematic Rain, Inc., d/b/a GPLAWN.com

STATE OF MINNESOTA

IN SUPREME COURT

A14-1121

Court of Appeals Dietzen, J.
Took no part, Hudson, Chutich, JJ.

Sprinkler Warehouse, Inc.,

Respondent,

vs. Filed: March 23, 2016
Office of Appellate Courts
Systematic Rain, Inc., d/b/a GPLAWN.com, et al.,

Appellants.

_______________________

Clarence J. Kuhn, Kuhn Law Firm, PLLC, Edina, Minnesota, for respondent.

Bryan R. Battina, William K. Forbes, Trepanier MacGillis Battina, PA, Minneapolis,
Minnesota, for appellants.
_______________________

SYLLABUS

A domain name constitutes intangible personal property within the meaning of

Minn. Stat. § 571.73, subd. 3(3) (2014) and is therefore subject to attachment by

garnishment.

Affirmed.

1

OPINION

DIETZEN, Justice.

Sprinkler Warehouse, Inc. (Sprinkler) obtained a money judgment against

Systematic Rain, Inc. (Systematic) in California, and docketed the judgment in Scott

County, Minnesota. Sprinkler served a garnishment summons on Systematic and sought

to attach Systematic’s domain name, GPLAWN.COM, and the content of the associated

website. After a hearing, the district court determined that the domain name and the

associated website are not property subject to garnishment under Minn. Stat. § 571.73,

subd. 3 (2014). The court of appeals reversed, concluding that the domain name and

website are attachable under the statute. We granted review on the question of whether a

domain name is property subject to attachment by garnishment under the statute.1

Because we conclude that a domain name is intangible personal property subject to

garnishment under Minn. Stat. § 571.73, subd. 3, we affirm and remand to the district

court for further proceedings.

I.

Prior to its dissolution in April 2014, Systematic was a Minnesota corporation

located in Shakopee and engaged in the business of lawn care contracting and sprinkler

parts sales. James R. Palm (Palm) was the chief executive officer of Systematic.

Systematic operated a website under the domain name GPLAWN.COM, which is

1
Systematic did not petition for review of the court of appeals’ conclusions with
respect to websites, and thus questions regarding the status of the website are not before
us.

2

registered to Palm. Through the website, customers could browse Systematic’s products

and then make purchases online or by directly contacting Systematic.

Sprinkler is located in Houston, Texas, and operates an online sprinkler parts

distribution business. Sprinkler brought an action against Systematic for copyright

infringement in 2012. In its complaint, Sprinkler alleged that Systematic infringed upon

copyright-protected material on Sprinkler’s website. In October 2012, a federal district

court in California entered a default judgment of $156,000 against Systematic. On

February 12, 2013, the judgment against Systematic was filed and docketed in Scott

County District Court.

Thereafter, Sprinkler pursued collection efforts to satisfy the judgment. In January

2014, both Systematic and Palm were served with a garnishment summons that required

disclosure of money or property they had that could be used to satisfy the judgment

against Systematic. Palm submitted a garnishment disclosure form declaring he did not

owe Systematic any money and did not possess any of its property. With respect to the

domain name GPLAWN.COM, which was registered to Palm and used by Systematic in

its business, Systematic took the position that neither the domain name nor the

corresponding website was “property” subject to attachment by garnishment.

Sprinkler filed a notice of objection to Palm’s and Systematic’s claim that domain

names and website content are not subject to garnishment. At the hearing, Sprinkler

argued that Palm was the owner of Systematic, and that Systematic was the owner of the

website entitled “GPLAWN.COM.” According to Sprinkler, Palm should have disclosed

the existence of GPLAWN.COM because the domain name and its corresponding

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website constitute property of Systematic that are subject to garnishment under Minn.

Stat. § 571.73 (2014). After the hearing, the district court issued an order concluding that

neither a domain name nor its related website constitute property under the garnishment

statute.

The court of appeals reversed, concluding that a domain name and its associated

website are property subject to garnishment under Minn. Stat. § 571.73, subd. 3. See

Sprinkler Warehouse, Inc. v. Systematic Rain, Inc., 859 N.W.2d 527, 532-35 (Minn. App.

2015). We granted review.

II.

Systematic argues that domain names are not subject to garnishment under Minn.

Stat. § 571.73 because the contractual right to use the alphanumeric designation that

comprises a domain name cannot exist apart from the contract for services performed by

a domain name registrar. According to Systematic, a domain name is a contract for

services and not a form of property.

Statutory interpretation is a question of law that we review de novo. In re Welfare

of J.J.P., 831 N.W.2d 260, 264 (Minn. 2013). The goal of all statutory interpretation is to

ascertain and effectuate the intent of the Legislature. Minn. Stat. § 645.16 (2014). When

interpreting a statute, we give words and phrases their plain and ordinary meaning. Staab

v. Diocese of St. Cloud, 813 N.W.2d 68, 72 (Minn. 2012). We read the statute as a whole

and give effect to all its provisions. Id. If the statutory language is free from ambiguity,

we must apply the plain meaning of the statute and not explore the spirit or purpose of the

law. Premier Bank v. Becker Dev., LLC, 785 N.W.2d 753, 759 (Minn. 2010). But if the

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statutory language is not free from ambiguity we may look beyond the language of the

statute to ascertain the Legislature’s intent. Id.

Systematic concedes that the domain name was used by Systematic in its business

and was registered to Palm, and that the sole issue before the court is whether a domain

name is attachable by garnishment under Minn. Stat. § 571.73, subd. 3. Thus, there is no

question as to the ownership or possession of GPLAWN.COM before this court.2

To answer the question presented, we will describe domain names, interpret the

meaning of “property” in Minn. Stat. § 571.73, and then determine whether a domain

name constitutes “property” under the statute.

A.

Generally, a domain name allows an Internet user to navigate to a specific location

on the Internet, which corresponds to a unique, numeric Internet protocol (IP) address.

Internet Corporation for Assigned Names and Numbers (ICANN), Beginner’s Guide to

Domain Names 3-4 (2010), https://www.icann.org/en/system/files/files/domain-names-

beginners-guide-06dec10-en.pdf.3 An IP address contains the actual information that a

computer uses to locate specific websites, and each IP address then corresponds to a

2
The district court expressed doubt as to whether Sprinkler served the correct party
to garnish the domain name on the ground that Palm did not own, possess, or control the
domain name. Because this issue was not argued or raised below, it is not necessary for
us to reach it, and we decline to do so.
3
ICANN is the nonprofit organization responsible for coordinating the maintenance
of databases related to domain names and IP addresses, thereby providing for the
Internet’s stable operation. ICANN also accredits domain name registrars. For further
information, see What Does ICANN Do?, ICANN (last visited on Jan. 4, 2016)
https://www.icann.org/resources/pages/what-2012-02-25-en.

5

specific server that stores the information to be displayed on a website. Id. The

translation from domain name to IP address is accomplished via the Domain Name

System (DNS). Id. Thus, when an Internet user enters a domain name into an Internet

browser, the information is used to locate an IP address, to which the user’s computer

then connects, allowing access to the website associated with the IP address.4 A domain

name can remain unchanged even if a website’s content is moved to a different host

server because the DNS can be instructed to point the existing domain name to a new IP

address. Id. This is in some ways analogous to a business moving its physical location:

its name stays the same, even though its street address might change.

In effect, a domain name is the publicly useable address of a computer network

connection. A website’s full address is called its “uniform resource locator” (URL).

URLs are composed of (1) a transfer protocol (commonly “http://”), and (2) a domain

name. The “top level” of a domain name is made up of those characters that follow its

last “dot,” including .gov, .com, .edu, .org, etc. Id. The “second level” precedes the “top

level” in a domain’s web address, and acts as a website’s individual identifier. Id. For

example, the top level of “google.com” is “.com,” and the second level is “google.”

When the top level and second level are combined together, a domain name is unique and

exclusionary. Id. The uniqueness of domain names allows for predictability in the use of

4
The DNS thus provides relatively easy-to-remember alphanumeric addresses for
accessing otherwise unwieldy numeric addresses. For example, one can remember
“www.icann.org” more readily than its corresponding IP address, “192.0.34.163.”

6

the Internet because a single, complete domain name directs a person to a single IP

address.

To obtain the right to use a domain name one must register it with an ICANN-

accredited registrar. Id. at 5. The registration process involves a contract between the

registrar and the individual (or other entity) that “sets forth the terms under which []

registration is accepted and will be maintained.” Id. at 6. The party registering a domain

name pays for services that include, at a minimum, linking the newly registered domain

to its corresponding IP address. Id. Additional services such as e-mail and website

hosting can be purchased as well. Id. at 7.

Because ownership of a domain name is subject to the terms of a contract, and

because the registration is for a fixed term, the right to use a given domain name can end

involuntarily. For example, if a registrant violates its contractual obligations, the

registration can be terminated. Id. at 8-9. Also, renewal of a domain name is not

automatic, and failure to renew may result in a termination of rights. See id. at 9-10. A

registrant may freely transfer a domain name between registrars so long as more than 60

days have passed since it was registered or previously transferred (though other

restrictions in ICANN’s Inter-Registrar Transfer Policy may also apply). Id. at 10.

Additionally, registrars are allowed to develop their own transfer procedures and

deadlines so long as they are clear, concise, and meet certain ICANN contractual

requirements. Id. at 11.

A website’s domain name is the primary means by which consumers can access a

website’s content, and there is a premium placed on names that are distinctive and/or

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easier to remember. Generally, domain names are available on a first-come, first-served

basis. Id. at 6. But if a desired domain name is already registered, a party may be able to

purchase the rights to it from the existing registrant. Id. at 4. Some registrars and other

companies actively facilitate the resale of domain names. Id. This secondary market for

domain names has become quite profitable, with single domain names selling for millions

of dollars.5

B.

Minnesota Statutes § 571.73 sets forth the circumstances under which property is

attachable by garnishment. Subdivision 3(3), which applies to personal property,

provides that a garnishment summons attaches

all other nonexempt intangible or tangible personal property of the debtor
in the possession or under the control of the garnishee at the time of service
of the garnishment summons, including property of any kind due from or in
the hands of an executor, administrator, personal representative, receiver, or
trustee, and all written evidences of indebtedness whether or not negotiable
or not yet underdue or overdue . . . .

Minn. Stat. § 571.73, subd. 3(3).

Subdivision 3(3) has two important limitations. First, it does not apply to personal

property that is exempt under Minn. Stat. §§ 550.37 and 571.922 (2014). Neither of the

statutory exemptions applies to the domain name in this case; therefore, if the domain

name is property at all, it is nonexempt property under the statute. Second, subdivision

3(3) applies only to property that is “in the possession or under the control of the

5
See Alyson Shontell, Million-Dollar URLs: The Most Expensive Domain Names of
All Time, Business Insider (Jul. 22, 2014, 4:08PM),
http://www.businessinsider.com/most-expensive-domain-names-2014-7?op=1.

8

garnishee at the time of service of the garnishment summons.” Minn. Stat. § 571.73,

subd. 3(3). There is no dispute for the purpose of this appeal that the domain name meets

this condition as well.

The crux of the dispute therefore turns on the plain and ordinary meaning of the

phrase “intangible or tangible personal property” in the statute. Generally, personal

property means any movable or intangible thing that is subject to ownership, not

classified as real property, and capable of being possessed or owned. See Webster’s

Third New International Dictionary of the English Language 1687 (2002); Black’s Law

Dictionary 1412 (10th ed. 2014). Intangible personal property refers to property that has

no physical existence, and whose value lies chiefly in what it represents. See Webster’s

Third New International Dictionary of the English Language 1173 (2002); Black’s Law

Dictionary 1411 (10th ed. 2014). Examples include corporate stocks, bonds, money in an

account, and the goodwill of a business.

Notably, Minn. Stat. § 571.73, subd. 4, sets forth specific exceptions to the types

of property that are subject to attachment by garnishment.6 When a statute designates

6
Those exceptions are:

(1) any indebtedness, money, or other property due to the debtor, unless at
the time of the garnishment summons the same is due absolutely or does
not depend upon any contingency;
(2) any judgment in favor of the debtor against the garnishee, if the
garnishee or the garnishee’s property is liable on an execution levy upon
the judgment;
(3) any debt owed by the garnishee to the debtor for which any negotiable
instrument has been issued or endorsed by the garnishee;
(Footnote continued on next page.)

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exceptions to the statute, those exceptions are construed to exclude all other exceptions.

See Minn. Stat. § 645.19 (2014). None of the exceptions in subdivision 4 applies to a

domain name.

We have previously concluded that the meaning of nonexempt personal property

in a predecessor statute7 included a certificate of indebtedness given by the United States

for personal services;8 shares of corporate stock not yet delivered to a shareholder;9 state

railroad bonds10 and bearer bonds;11 and the interest of a creditor in property conveyed to

(Footnote continued from previous page.)
(4) any indebtedness, money, or other property due to the debtor where the
debtor is a bank, savings bank, trust company, credit union, savings
association, or industrial loan and thrift companies with deposit liabilities;
(5) any indebtedness, money, or other property due to the debtor with a
cumulative value of less than $10; and
(6) any disposable earnings, indebtedness, money, or property that is
exempt under Minnesota or federal law.
Minn. Stat. § 571.73, subd. 4.
7
See Minn. Gen. Stat., ch. 60, § 147 (1858) (stating “all other property in this
territory” may be attached); Minn. Gen. Stat., ch. 66, § 150 (1866) (stating “service of the
summons upon the garnishee shall attach and bind all the property, money or effects in
his hands, or under his control” and “any and all indebtedness owing by him to the
defendant”); Minn. Gen. Stat., ch. 66, § 167 (1878) (same); Minn. Gen. Stat., ch. 66,
§ 5309 (1894) (same).
8
Leighton v. Heagerty, 21 Minn. 42, 46 (1874).
9
Wackerbarth v. Weisman, 207 Minn. 507, 510-11, 292 N.W. 214, 215-16 (1940);
Puget Sound Nat’l Bank of Everett v. Mather, 60 Minn. 362, 363-64, 62 N.W. 396, 397
(1895).
10
Banning v. Sibley, 3 Minn. 389, 404-05 (Gil. 282, 298-99) (1859).
11
First Trust Co. of St. Paul v. Matheson, 187 Minn. 468, 246 N.W. 1 (1932).

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trustees, the proceeds of which were to be distributed to creditors.12 Moreover, under the

statute, intellectual property may be sold and applied against judgment debts. See P.H. &

F.M. Roots Co. v. Decker, 111 Minn. 458, 461-63, 127 N.W. 417, 418-19 (1910).

Having described the plain and ordinary meaning of “intangible personal

property” and our relevant case law on the topic, we return to the question of whether a

domain name falls within the scope of the statute. We conclude that a domain name is

intangible personal property within the meaning of Minn. Stat. § 571.73, subd. 3(3) and is

therefore subject to attachment by garnishment. Three reasons support our conclusion.

First, a domain name logically falls within the plain meaning of “intangible personal

property.” A domain name has no physical presence beyond being representative of the

physical location on a server at which a user can access a website’s content and obtain its

information. In effect, the domain name is the key that allows Internet users to access a

website. Moreover, a domain name is similar to other types of intangible personal

property that we have previously concluded fall within the scope of the statute. For

example, a corporate share of voting stock is representative of the right to vote on

corporate matters as expressed on the share of stock, and it may be redeemed for money.

A domain name registrant enjoys the right to possess, control, and use the domain name,

as well as dispose of it as he or she would with other types of property. Specifically, a

registrant may use the domain name, or transfer or sell it to another party. Further, all

combinations of top-level and second-level domain names are unique, and thus a domain

12
Nat’l Sur. Co. v. Hurley, 130 Minn. 392, 395-97, 153 N.W. 740, 741-42 (1915).

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name registrant has the right to exclude others from using that name. For example, there

can be only one “mncourts.gov.” In short, regardless of their roots in contractual rights,

domain names share many of the characteristics traditionally associated with property.

Second, the scope of the statute is very broad, extending to “all other” intangible

personal property not subject to the exemptions in subdivision 3 and the exceptions in

subdivision 4. As previously stated, none of the exemptions or exceptions apply in this

case. To be sure, there is an outer boundary to the scope of the statute, inherent in the

meaning of the phrase “intangible personal property.” We need not determine the exact

location of that boundary in this case, but we conclude that domain names fall within it.

Third, we observe that a majority of courts that have considered the question have

concluded a domain name is personal property. For example, in Kremen v. Cohen, the

Ninth Circuit applied a three-part test to determine whether a property right exists in

domain names under California law. 337 F.3d 1024, 1030 (9th Cir. 2002) (citing G.S.

Rasmussen & Assocs., Inc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 903 (9th Cir.

1992)). Specifically, there must be a property interest capable of precise definition; the

property interest must be capable of being exclusively possessed or controlled; and the

putative owner must have established a legitimate claim to exclusivity. Id. Domain

names, that court decided, satisfy each of these criteria. Id.

Systematic relies upon Network Solutions, Inc. v. Umbro Int’l, Inc., 529 S.E.2d 80

(Va. 2000), to support its position that a domain name is a contract for services and

therefore is not personal property within the meaning of Minn. Stat. § 571.73, subd. 3.

This argument lacks merit. Network Solutions did not decide the question of whether a

12

domain name constitutes intangible personal property. The only question presented in

Network Solutions was whether the right to use a registered Internet domain name may be

garnished under Virginia law. Id. at 81. The Supreme Court of Virginia concluded that it

may not, reasoning that the right to use a domain name is a “contract for services,” and

thus cannot be said to be “a liability on any person other than the judgment debtor.” Id.

at 86-88 (citing Va. Code § 8.01-511 (1950)). Because the statute in question stated that

a garnishment summons may be issued with respect to “a liability on any person other

than the judgment debtor,” Va. Code. § 8.01-511, that court’s analysis focused on

whether a domain name could be considered a “liability,” not on whether it constituted a

form of intangible personal property. Network Solutions, 529 S.E.2d at 86. In fact,

Network Solutions conceded during oral argument in that case that “the right to use a

domain name is a form of intangible personal property.” Id. at 86.

C.

For the foregoing reasons, we conclude that an Internet domain name constitutes

intangible personal property within the meaning of Minn. Stat. § 571.73, subd. 3(3), and

is therefore subject to attachment by garnishment.

Affirmed.

HUDSON, J., took no part in the consideration or decision of this case.

CHUTICH, J., not having been a member of this court at the time of submission,

took no part in the consideration or decision of this case.

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