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9 May 2000
Another case goes Network Solutions' way
David Mcguire, Newsbytes

Internet registration giant Network Solutions Inc. won the latest in a string of legal victories today when a California District Court judge ruled that the company could not be held liable for the fraudulent transfer of a .com domain name from one party to another.

Dating back to 1994, the original case was brought by an Internet user named Gary Kremen who had registered sex.com with Network Solutions. Kremen sued Network Solutions when another Internet user spoofed his identity in order to transfer control over sex.com.

In rejecting Kremen's claim, the court agreed with Network Solutions' long-running contention that domain names are not assets or goods but rather are services provided by the company.

"We provide a service," Network Solutions spokesperson Brian O'Shaughnessy said today. "This is not a property, per se."

Kremen had argued in essence that he "owned" sex.com and that Network Solutions had a fiduciary responsibly to protect it on his behalf.

Today's decision was the second verdict in as many months that supported Network Solutions' claim that domain names are not goods or assets subject to garnishment or other fiduciary claims.

In the case decided in April, sporting-gear manufacturer Umbro International Inc. had sought to force Network Solutions to garnish nearly 40 domain names registered by the alleged Canadian cyber-squatter who had registered Umbro.com.

After winning an injunction in a South Carolina court that forced the Canadian cyber-squatter in question to relinquish Umbro.com in 1997, Umbro sought to recoup the legal fees it incurred in the case by forcing Network Solutions Inc. to garnish - and sell to the highest bidder - other names owned by the Canadian company.

But in a 5-2 decision handed down late Friday, the court ruled Network Solutions' provision and maintenance of domain names is a "service" provided by the company and cannot be legally equated to wages or other tangible assets that are subject to garnishment under Virginia law.

Network Solutions has dodged a barrage of legal bullets this year.

In January, less than 24 hours after announcing that the European Union had officially ended its six-month investigation of the Internet registration giant, Network Solutions discovered that the Justice Department had ended its year-and-a-half long antitrust investigation of the company.

The EU and DOJ announcements capped a banner month of January for Network Solutions.

Earlier in the month, the US Supreme Court upheld a lower court ruling that absolved Internet registrar Network Solutions of any wrong-doing in its collection of a $15-per-year, per-domain name fee on behalf of the National Science Foundation (NSF).

Also in January, a federal appeals court upheld a lower court ruling that found Network Solutions not liable for violating US antitrust laws.

As the only provider of names in .com, .org and .net, Network Solutions amassed a huge fortune in the latter half of the 1990s, prompting many questions about the firm's monopolistic control over the ".com" domain.

Based largely on those concerns, the US Commerce Department appointed the not-for-profit Internet Corporation for Assigned Names and Numbers (ICANN) to introduce competition into the domain-name registration industry.

While ICANN and Network Solutions sparred over the disposition of the .com registry for many months, the two entities made peace toward the end of last year, signing several agreements under the blessing of the Commerce Department.

 

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