Domain Names and Websites as Collateral: Managing Uncertainty in Secured Financing Transactions

Abstract

It is no secret that the growth of online commerce has surged in the 21st Century. Accompanying that growth has been an increased level of awareness that Internet-related “cyberassets” have become critically important in the field of secured financing. There is no reason to believe that this trend will change any time soon. Indeed, interest in these assets as collateral in commercial financing transactions appears to be getting stronger each year. One of the problems financers face, however, is that while the pace of cyberasset-based financing accelerates, the law governing those transactions seems to fall further behind. This paper attempts to identify and clarify some of the most fundamental legal doctrines that are likely to be most important to lenders operating in this field. It begins with a discussion of how these assets are classified for the purpose of creditors asserting claims to them — are they even “personal property” at all and subject to creditor’s claims and within the scope of Article 9? If they are property subject to Article 9, what unique attributes and characteristics of these assets are important for creditors to understand in creating a security interest in them, perfecting that interest, and enforcing the interest upon the debtor’s default?