"John, concerning
#1 allow me to say that in a recent case involving dividing assets between a married couple that was divorcing, there was a first definition of domains as tangible assets that can be tagged with a property value."
...which is why a blanket property/not-property statement has no value, because it is usually the situation in law that we are concerned about whether something is *treated as* "property" in a particular context, and relating to one of the bundle of different kinds of rights one can call a "property interest" of any kind.
A family law court might determine one thing, while a bankruptcy court might determine quite another. For example, the VA state supreme court has determined that a domain name is not an asset subject to a creditor's claim in bankruptcy, for the purposes of VA state bankruptcy law. Now, as between a family law court and a bankruptcy law court, the question is which one is closer to making a determination that is more relevant to a commercial transaction context....
We are talking here about Uniform Commercial Code section 2 issues, and the question is really about whether one can obtain "good title" of a domain name if there had been prior fraud or illegality. It's a great academic question. But in dealing with hi-jacking situations, what is appropriate, effective, or practical will depend on the registrars involved, the amount of time/effort/money one is willing to risk on making an effort to get the domain name back, the circumstances of the hi-jacking, etc.
The registrars have a tremendous amount of discretion in how they deal with these situations, and working with them can be more practical than answering what amount to religious questions about domain names.
The simple answer to the question of "For all intents and purposes, have domain names been held to be property?" is "No."
As long as that answer is no, then one cannot say as a reliable proposition that any legal principle applying to property transactions will be equally valid as applied to domain names.
That's all I was trying to say in response to the confidence expressed above in connection with the notion that it is self-evident that a thief cannot pass good title. In the ongoing sex.com litigation, it is still a contended issue whether a domain name is property for the purposes of the tort of conversion.
That said....
"is the 3rd party legally required to return the domain"
Might the 3rd party be compelled to return the domain? Maybe, in the first case of its kind.
Under existing established law, is the 3rd party legally required to return the domain? Nope.
Is it usually easier to sort this out, when possible, with the registrars? Yes, which is why you don't see the overall question being answered any too often in court.
wow 
