Network Solutions, the world's leading registrar of domain names, today announced that the U.S. District Court for Northern District of California granted Network Solutions' motion for summary judgment as to all the claims asserted against it in the matter involving the domain name, sex.com.
The Court's decision is a major step forward in both recognizing the limited responsibilities of domain name registrars and clearly defining the legal status of domain name registrations.
The plaintiff, Gary Kremen, registered the domain name sex.com with NSI on May 9, 1994. Kremen alleged that on December 15,1995, the sex.com domain name was fraudulently transferred to the defendant Michael Cohen. Kremen filed suit against numerous defendants, including Cohen and NSI. The plaintiff Kremen alleged the following causes of action against NSI: 1) breach of contract, 2) breach of intended third-party beneficiary contract, 3) breach of fiduciary duty, 4) negligent misrepresentation, 5) conspiracy to convert property and 6) conversion by bailee. Network Solutions then moved for, and on May 5, 2000 the Court granted, summary judgment as to all of these claims, thus dismissing all of Kremen's charges against Network Solutions.
In ruling in NSI's favor on each of the claims, the Court drew on broad policy concerns in rejecting the conversion claim, reasoning that if such claims were recognized, then domain name registrars such as NSI would be exposed to liability every time a third party fraudulently obtained the transfer of a domain name. Judge James Ware explained, "The Court finds it inherently unjust to place NSI in this untenable position by virtue of innocently performing a purely ministerial function. Furthermore, the threat of litigation threatens to stifle the registration system by requiring further regulations by NSI and potential increases in fees."
"The Court's decision is a clear win for Network Solutions and domain name Registrars. By succinctly denying the conversion claim by the plaintiff, the Court has clarified the rights and responsibilities between the Registrar and registrant," said Jim Rutt, NSI's CEO. "Furthermore, the Court's ruling sharply defines the role of the Registrar as a service provider, bound only to the terms of its service agreement.