If you are owed money (i.e. a creditor), you may consider collecting by taking the website of the party who owes you money (the debtor). If you are a debtor, you may be trying to prevent a creditor from taking your website. A recent Minnesota case explains the law and process for creditors garnishing websites from creditors.
In the case of Sprinkler Warehouse, Inc. v. Systematic Rain, Inc. d/b/a GPLAWN.com, et al., — N.W.2d —, (Minn. Ct. App. 2015), the Minnesota Court of Appeals recently held that “[u]nder Minn. Stat. § 571.73, subd. 3 (2014) domain names and the copyright-protected material contained in websites are subject to garnishment.” Before getting into the specifics of the case, understanding garnishment in general is helpful.
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What is Garnishment?
Garnishment is a court order directing that money be paid to satisfy a debt. Garnishment in Minnesota occurs usually after there has been a judgment entered against a party.
What Can be Garnished Under Minnesota Law?
The following types of property are attachable by garnishment:
(1) all other nonexempt indebtedness, money, or other property due or belonging to the debtor and owing by the garnishee or in the possession of under the control of the garnishee at the time of the service of the garnishment summons, whether or not the same has become payable…
(2) 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 to form or in the hands of an executor, administrator, personal representative, receiver, or trustee.
Minnesota Statutes section 571.73. This includes a debtor’s wages and bank accounts.
How Does Garnishment Work?
If the non-paying debtor refuses to pay his or her judgment, then the creditor (or prevailing party) can garnish the debtor’s property, which is usually their wages from their employer or their bank account(s). In order to do this, the creditor must first serve the debtor with a Garnishment Exemption Notice and Notice of Intent to Garnish upon the debtor at least 10 days before attempting to garnish wages or bank accounts. Then, the creditor sends the debtor’s employer or bank with a Garnishment Summons and Disclosure Form. The creditor must also mail to the debtor the Garnishment Summons and Disclosure Form.
What Happened in the Sprinkler Warehouse Case?
Prior to the Sprinkler Warehouse case, Minnesota law had never considered whether a website was “indebtedness, money or other property” subject to garnishment under Minn. Stat. § 571.73. The facts of Sprinkler Warehouse are as follows, in 2012, Sprinkler Warehouse initiated a lawsuit against Systematic Rain claiming that Systematic had infringed on copyrighted material. A default judgment was ultimately entered against Systematic Rain and a $156,000 judgment was docketed in Scott County. Sprinkler Warehouse served a garnishment summons on Systematic Rain’s CEO. The CEO responded that he did not have any property subject to garnishment. Sprinkler Warehouse objected and claimed that Systematic Rain’s website and domain were under the CEO’s control and able to be garnished. The District Court ruled it was not property. The Minnesota Court of Appeals disagreed and reversed.
The Court of Appeals analyzed separately whether domain names and websites are subject to Minnesota’s garnishment laws. The court reasoned that domain names are property because they are assets with measurable value, well-defined interests, the rights to use domain names are valued, bought, and sold, and domain name registrants “have a legitimate claim to exclusivity.”
The court then reasoned that they are property subject to garnishment because the garnishment statute is “clear and unambiguous” and that the statute applies to “all” nonexempt property, whether intangible or tangible, of any “kind.”
The court followed a similar analysis when decided if websites were property and whether they were subject to garnishment, finding in the affirmative for both, but made the distinction that only copyright-protected material in a website is property.
Minnesota Website and Domain Name Garnishment
In conclusion, creditors may garnish websites and domain names by following the process outlined in this case and related statutes. Typically, this is done by an attorney due to the legal technicalities.