MESSAGE
| DATE | 2003-07-28 |
| FROM | From: "Inker, Evan"
|
| SUBJECT | Subject: [hangout] Owner of Stolen 'Sex.com' Can Sue VeriSign-Court
|
Owner of Stolen 'Sex.com' Can Sue VeriSign-Court
Fri July 25, 2003 05:12 PM ET
http://www.reuters.com/newsArticle.jhtml?type=internetNews&storyID=3162772
By Elinor Mills Abreu
SAN FRANCISCO (Reuters) - The owner of "sex.com," once considered one of the
Internet's hottest addresses, can seek payment from the company that
improperly transferred the domain to a "con man" who later fled to Mexico
when ordered to pay $65 million, a court ruled on Friday.
The Ninth Circuit Court of Appeals in San Francisco ruled that
"computer-geek-turned-entrepreneur" Gary Kremen can hold VeriSign Inc.'s
VRSN.O
Network Solutions unit liable for handing the sex.com Web address over to a
"con man."
The decision has widespread implications for companies that register
domains, which until now have not been held responsible when Web sites are
switched from their rightful owners, a lawyer for the plaintiff said.
"This is a landmark Internet decision," said James Wagstaffe, Kremen's
attorney. "It is the first time a court has applied traditional property
protections to a domain name."
In April 2001, Stephen Cohen -- who lawyers said turned the sex.com domain
into a multimillion-dollar porn empire -- was ordered to pay $65 million in
compensation for lost profits and $25 million in punitive damages to Kremen
in the largest judgment ever in a domain name theft case.
Kremen had registered the domain in 1994, but lost it the following year and
did not recover it until 2000, long after the dot-com boom and bust.
But Kremen has been able to get only a fraction of the money because after
the trial Cohen sent his assets out of the country and fled to Tijuana,
Mexico, Wagstaffe said.
Kremen sued Network Solutions, the main registry of ".com" addresses which
is now a part of VeriSign, charging that the company mishandled his domain
name.
He argued he had a property right in the domain and that Network Solutions
should be held liable for mistakenly giving it away.
The U.S. Court of Appeals for the 9th Circuit agreed with him and reversed a
federal district court order in favor of Network Solutions, sending the case
back to the lower court.
FORGED LETTER
Having recently been released from jail where he was sent after a conviction
for impersonating a bankruptcy lawyer, Cohen used a forged letter to trick
Network Solutions into transferring the domain to him, according to the
appeals court.
The letter claimed that Kremen's business, Online Classifieds, did not have
an Internet connection and included a forged signature.
Despite the fact that Network Solutions made no effort to contact Kremen,
the lower court exempted the company from liability. The court concluded
that although domain names are a form of property, they are intangible and
thus not subject to the law governing wrongful taking of another's property.
The appeals court rejected that narrow interpretation, although it affirmed
rulings in favor of Network Solutions on two other claims related to breach
of contract.
"There is nothing unfair about holding a company responsible for giving away
someone else's property even if it was not at fault," the appeals opinion
said.
"Cohen is obviously the guilty party here, and the one who should in all
fairness pay for his theft. But he's skipped the country, and his money is
stashed in some offshore bank account," the written opinion said. "It would
not be unfair to hold Network Solutions responsible and force it to try to
recoup its losses by chasing down Cohen."
The case took a bizarre turn in 2001 after the district judge declared Cohen
a fugitive from justice, signed an arrest warrant and sent the U.S. Marshals
after him. Kremen then put a "wanted" poster on his sex.com site with a mug
shot of Cohen and offered a $50,000 reward.
Cohen's lawyers asked the district court to vacate the arrest warrant,
claiming that Cohen was under house arrest in Mexico and that his life would
be threatened by gunfights between lawmen and bounty
hunters. The court denied the motion.
The lawyer who represented VeriSign declined to comment and a spokeswoman
for VeriSign's Network Solutions unit said the company does not comment on
ongoing litigation.
Kremen, who lives in San Francisco and operates sex.com as a porn portal,
did not immediately return a call seeking comment.
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