Wednesday, April 21, 2004
Suit Over ‘Sex.Com’ Internet Domain Name Is Over, Company Says
By a MetNews Staff Writer
San Francisco-based Sex.Com said yesterday it had settled its six-year legal battle with Internet domain name registrar VeriSign—formerly Network Solutions. Inc.—over claims that VeriSign improperly cancelled the plaintiff’s valuable domain name.
The announcement comes nine months after the Ninth U.S. Circuit Court of Appeals overruled a district judge and held that VeriSign could be held liable under California law for conversion of a domain name by a party that fraudulently persuaded the registrar to cancel the true owner’s registration.
The Ninth Circuit held that California does not strictly follow the Restatement of Torts’ requirement that an intangible property right “be merged with a document or other tangible medium” in order for the tort of conversion to apply.
The court cited cases allowing actions for conversion of music recordings, radio shows, customer lists, regulatory filings, and confidential information, among other types of property.
Gary Kremen, who registered “sex.com” in 1994 and won a long legal battle to get it back after VeriSign cancelled it, pronounced himself “ecstatic” with the settlement. Terms were not disclosed.
“It was already damaging that VeriSign had taken my domain name away from me without my permission, and refused to give it back when shown proof that it was stolen,” Kremen said in a statement.
He added that his company, which provides a web portal for sellers of erotica, was happy to “put the case behind us and find peace in knowing that the Ninth Circuit’s opinion in the Sex.Com case will have an influential role in holding Internet registrars responsible for mishandling their customers’ domain name properties.”
Kremen originally registered the name on behalf of Online Classifieds, Inc., but made little use of it prior to October 1995, when Stephen Michael Cohen—described by Judge Alex Kozinski as a convicted felon and a “a man of...boundless resource and bounded integrity” in the Ninth Circuit opinion—asked that the name be re-registered to a Nevada company he controlled.
In support of his request, Cohen supplied a letter on what purported to be the stationery of Online Classifieds, bearing the signature “Sharon Dimmick,” authorizing the cancellation of the original registration and the re-registration of the name to Cohen.
Dimmick, purportedly the president of Online Classifieds, was actually Kremen’s housemate.
Cohen then used the name to build a multimillion-dollar on-line pornography business. About eight months after the re-registration, Kremen asked for the name back, claiming that the letter was a forgery.
Network Solutions, then the exclusive registrar of “.com” domain names, said it would not change the registration back without a court order. Kremen sued Cohen, several Cohen-controlled entities, and Network Solutions for damages and injunctive relief.
Cohen claimed that Dimmick had sold him the name for $1,000. “This story might have worked a little better if Cohen hadn’t misspelled her signature,” Kozinski explained in a footnote.
Kremen eventually obtained control of the name, along with a judgment against Cohen and his companies for $65 million, including $25 million in punitive damages.
U.S. District Judge James Ware of the Northern District of California rejected Cohen’s claim that he had legitimately purchased the name from Online Classifieds for $1,000. But collecting has been difficult, and Kremen claims Cohen has been hiding assets offshore.
Cohen, meanwhile, moved to Mexico, where he claimed to be under house arrest, and did not comply with orders in aid of the judgment. A warrant was issued for his arrest, and his appeal from the judgment was dismissed under the fugitive disentitlement doctrine.
The U.S. Supreme Court denied Cohen’s certiorari petition last summer.
VeriSign/Network Solutions’ appellate attorney, Kathryn E. Karcher of Gray Cary in San Diego, did not return a MetNews phone call seeking comment on the settlement announcement.
Copyright 2004, Metropolitan News Company