Determining ownership and control of IPv4 addresses.

• Author: Shantz, Benjamin

Introduction

The creation of the Internet ushered in an era of unprecedented legal challenges as jurists and legislators struggled to keep up with rapidly evolving technology. (1) Chief among these issues is whether certain types of intangible data, specifically Internet Protocol addresses (2) (IP addresses), can be owned and treated as intangible property. The world has nearly exhausted its supply of unique IPv4 addresses and the property rights of individuals utilizing IPv4 addresses are poorly defined. This area of law has not been subject to robust examination by the US court system. A few recent bankruptcy cases have tangentially reached the issue of whether IP addresses may be owned by private corporations instead of the Regional Internet Registries (RIRs) that administer and maintain the vast amounts of IP numbers. (3) The apparent tension is between those RIRs that wish to maintain their exclusive property rights in all IP addresses, and large companies, universities, and other institutions that were assigned IP addresses with very few, if any, contractual limitations and wish to exercise their own property rights in these IP addresses. This Note will seek to explore the modern issues associated with IP address ownership, evaluate the relative merit of all stakeholders' property claims vis-a-vis IP addresses, and recommend possible solutions from other areas of property law, while keeping one eye on future developments and market continuity.

This Note will begin by recounting a concise history of the development of IP addresses, taking time to specifically flag changes in concepts of address ownership and providing basic information on subjects such as RIRs, the Internet Corporation for Assigned Names and Numbers (ICANN). Part I will outline the differences between legacy and non-legacy IP addresses, while noting how those differences potentially affect the property rights bound up in the respective categories. Part I will also explore how different stakeholders view property rights in IP addresses. IPv4 address administration is currently organized as a multi-stakeholder model, and as such, this Note is organized by the views of each major stakeholder in IPv4 technology: the American Registry for Internet Numbers' (ARIN) view, the US Government's view, and the free market view. Part II will discuss the major cases that have shaped the current state of property rights in IP addresses and similar devices such as domain names. Part III will compare the views of the major stakeholders in IP addresses. Part IV will survey the major theories of property law that underlie the current views on IP address property rights. It will explore how different social values--such as transparency, openness, and fairness--impact whether property rights ought to be recognized in IPv4 addresses. Finally, part V will identify and evaluate potential solutions to this complex legal issue. The most likely of the solutions is a judicial recognition of the existing extra-judicial status quo struck between ARIN and IPv4 address traders.

1. A Brief History of IP Addresses

   As with any property issue, a precise definition of the issue is paramount. IP addresses at their basic level are a system of standardized communication protocols that allow computers to send and receive data and route that information to its proper destination. (4) The current version of IP addresses was developed after three prior versions failed in 1981. (5) These addresses were known as IPv4 addresses. IPv4 addresses are binary numbers that are typically represented in dotted decimal notation (i.e. 123.45.789.101). (6) Because of this construction there is a finite number of unique IPv4 addresses, a little over four billion, that can be assigned at a given time. (7) It is important to note at this juncture that IP addresses do not refer to Domain Name Registrations, which are distinct from IP addresses, but will provide a useful basis for comparison later in this Note.

   These addresses have served as the primary vehicle for the expansion of the Internet. (8) For the past two decades, many scholars and network administrators have warned that the world is rapidly approaching the exhaustion of IPv4 addresses, and as such, an alternative needs to be developed. (9) A group of researchers at the Internet Engineering Task Force (IETF) came up with IPv6 addresses as a solution to the growing scarcity of IPv4 addresses. (10) While these addresses will provide the addressing destinations necessary to facilitate further expansion of the Internet, the transition to IPv6 has been slow and uneven. (11) The developing world has been much slower to adopt the technological requirements necessary for the IPv6 transition, meaning that IPv4 addresses are still the primary type of Internet routing numbers. (12)

   1. Two Types of IPv4 Addresses: Legacy and Non-Legacy

      Long before IPv6 Addresses take the place of IPv4 Addresses, the Internet community will face very real and costly challenges regarding the fate of the IPv4 addresses that were assigned to companies, schools, private individuals, and governments. IPv4 Addresses are treated as two distinct categories of numbers based upon how they were originally distributed: legacy IP addresses and non-legacy IP addresses.

      Prior to the formation of the RIRs, legacy IPv4 addresses were assigned by Internet Assigned Numbers Authority (IANA); in the early days of the Internet, these were assigned informally by a single person: John Postel. (13) For the most part, "these numbers were assigned without contract or use limitations" because they were assigned prior to the formalization of Internet architecture. (14) In many cases, the U.S. government merely processed early applications for government contractors and assigned addresses as requested. (15) IANA directly distributed these early addresses to all sorts of organizations. Unlike non-legacy addresses, legacy address-holders did not enter into any binding legal agreement delineating the address-holder's rights in those addresses. (16) This is the defining characteristic of legacy addresses. Legacy addresses constitute approximately 45% of all IPv4 addresses in use. (17) The sheer number of legacy addresses and the fact that the majority of them were assigned in the very early stages of the development of the modern Internet means that significant portions of legacy addresses (organized in large groups called blocks) sit unused and are easily exploited by hackers, spammers, and illegal pomographers. (18) There are strong public policy implications (19) weighing in favor of developing and maintaining a more secure framework for administering and tracking legacy addresses.

      Non-legacy IPv4 addresses, as the name suggests, were assigned after the formation of RIRs, and are thus subject to contractual limitations on their transferability and usage. (20) Non-legacy IP addresses present fundamentally different legal challenges compared to their legacy counterparts. (21) As a result of this framework and the relative youth of the Internet, RIRs had a substantial role in establishing early-Internet governance norms surrounding IPv4 addresses. (22) What has emerged is a restrictive environment surrounding the third-party transferability, assignment, and usage of both legacy and non-legacy IPv4 addresses. (23)

   2. Regional Internet Registries

      To some RIRs are restricting the flow of commerce on the Internet and generally causing problems for the free market. The reality, as is often the case, is much more complex. RIRs, such as ARIN which services North America's IP addresses, play an important role in the policing and maintenance of billions of addresses. (24) This Note will focus on ARIN due to its immediate applicability to the US legal system and the representative nature of ARIN's policies compared to most RIRs. (25)

      ARIN is a nonprofit, trade/membership organization based in Washington, D.C. that "provides services related to the technical coordination and management of Internet number resources." (26) ARIN is governed by an executive board which is elected by ARIN's membership. The services that ARIN provides fall into one of four categories: registration, organization, policy development, and technical services. (27) ARIN routinely holds public meetings for the purposes of engaging in policy discussions and educating about new ARIN services, among other things. Membership is not required to use ARIN's Internet number resources. (28)

      ARIN (along with the other RIRs) maintains that it alone is able to exercise assignment and control rights in IPv4 addresses (and IPv6 for that matter). (29) This puts ARIN directly at odds with legacy address holders who possess large blocks of unused IP addresses. (30) At best, these legacy addresses represent potentially valuable resources, and at worst, potential liabilities that are costly to maintain. (31) Interestingly, ARIN has demonstrated a willingness "to modify its contractual arrangements to strengthen recipients' property rights in order to keep market participants from abandoning its contractual governance regime." (32) ARIN's position is essentially that it is the only organization sufficiently equipped with the expertise and resources to administer IP addresses to the Internet community. (33) ARIN's position is at odds with the views of some IP address stakeholders. (34) ARIN has found itself in the middle of various legal disputes recently, arguing against companies who claim to have property rights in legacy IPv4 addresses. (35)

   3. IPv4 Scarcity

      Private legacy address holders wish to exercise ownership and control of IP addresses assigned decades ago, while ARIN wishes to retain exclusive ownership and control over these addresses. Recall that at the outset of IPv4 adoption, there were over four billion unique addresses. For some time, scholars have been warning that we are rapidly approaching the end of our unique IPv4 address...