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27 November 2000
Court hearing today in steamy battle over who has domain rights
Howard Mintz, San Jose Mercury News

In the great galaxy of Web addresses in cyberspace, is prime real estate, an easy place to find for click-happy pleasure seekers looking for the simplest way to locate prurience. But alas, even the path to a virtual Sodom and Gomorrah can be paved with potholes.

Not surprisingly, is coveted. And in the ordinarily boring world of domain-name disputes, the quest for the right to has become a juicy, bitter and somewhat seamy affair, all of which has been unfolding the past two years in San Jose federal court.

A federal judge today is set to consider the latest plot twist in this online legal soap opera between an Internet porn purveyor and convicted felon who, at least for now, has, and a San Francisco entrepreneur who claims the desirable Web site was stolen from him. is coveted by these two men for a lot more than its look and feel. By all accounts, it's worth a bundle.

In a series of suits and counter-suits, Gary Kremen alleges that his cyberspace nemesis, Stephen Cohen, is a Web pirate who committed fraud five years ago to steal the legal rights to Cohen, for his part, asserts rightful ownership to a Web portal that generates tens of millions of dollars a year by directing online users into the type of material that almost certainly led to the invention of the Web filter.

U.S. District Judge James Ware has set today's hearing to review crucial legal arguments in the case, including a request by Kremen's lawyers to freeze $25 million in assets to guarantee that Cohen doesn't hide his money in a variety of offshore accounts should he lose the case. In addition to some of the more sordid elements of the court fight, Ware already has been forced to address cutting-edge questions of whether to apply traditional property rights law to a domain name like

But as the two sides square off in court again, the only thing that appears certain is that they will not settle their differences peacefully.

"I own this turf," Kremen said last week.

Reached at the Tijuana offices of Sandman International, an Internet company he manages, Cohen declined comment, saying he did not want to air the dispute in the press. But in an interview last year with one publication, Cohen made it clear he understands the stakes.

"Let me make it real simple for you,'' Cohen told Wired magazine. "Our audience is not America. It's the whole world. There's only one word in the whole world that everyone understands -- sex. You type the word 'sex,' you come to"

Based on court papers filed by both sides, the origins of the dispute date back to the Web's early days, when Kremen in 1994 apparently registered with Network Solutions, the central gatekeeper of Web addresses. Kremen, who was dabbling in a number of Internet ventures, including the dating service, did nothing specific to launch a Web site, and remained dormant until Cohen got it clicking.

The details of how Cohen got hold of are murky and form the core of the court fight.

In early 1995, Cohen was released from federal prison in Lompoc after serving several years on a bankruptcy fraud conviction. Out to start a new business, he attempted to register with Network Solutions only to find that a business called Online Classifieds Inc. had staked a claim to that particular piece of choice cyberturf.

Kremen maintains that he and Online Classifieds were one and the same. Cohen disputes this, but one thing is undisputed -- Cohen secured the rights to by sending a letter to Network Solutions purporting to be from an Online Classifieds officer. The letter suggested the rights to had been sold for a paltry $1,000.

According to Kremen, Cohen forged the letter and committed outright fraud. ``The controlling issue in this case is simple,'' Kremen's court papers assert. ``Who owns -- Gary Kremen or Stephen Michael Cohen? As will be demonstrated . . . the transfer of the name to Cohen -- based as it was on an indisputably forged document -- was invalid.''

In court papers, Cohen denies forging the letter to Network Solutions and insists his company simply believed it was cutting a deal with Online Classifieds. Cohen also maintains in court papers that his rights to evolve from an online bulletin board system he ran from 1979 until 1995 called "The French Connection".

"The mark has been associated with defendants' provision of adult entertainment services since 1979," Cohen argued in court papers filed last month.

Thus far, Judge Ware has dealt Kremen's case a number of key setbacks, including dismissing claims against Network Solutions. The judge, in a ruling earlier this year that has attracted attention in legal circles, also curtailed Kremen's lawsuit when he ruled that Kremen could not assert that he was robbed of actual property because is not considered tangible property. In short, the judge concluded that traditional property rights do not apply to a simple domain name.

However, Ware has left enough of Kremen's case intact to keep its central claim, fraud, alive. And in recent months, Kremen has intensified his fraud allegations against Cohen, accusing him of hiding his profits from in a variety of offshore bank accounts around the world.

In court papers, Cohen has acknowledged receiving a salary of as much as $17 million a year in his various roles with his offshore companies, primarily British Virgin Islands-based Ynata Ltd. Court papers also say Cohen has accumulated as much as $100 million in stock options.

But in depositions this fall, Cohen repeatedly refused to answer questions from Kremen's lawyers about his finances, asserting his Fifth Amendment rights. Kremen was seeking the information to support his request for the judge to freeze Cohen's assets while the lawsuit is pending.

Cohen may not be talking about that subject, but his business is apparently doing quite well. For $25, Web users can venture into his vision of for up to three months, linking to a universe of X-rated Web sites. In an industry that Web experts say now brings in as much as $1 billion a year, Cohen has transformed the Web portal into one of the Internet's porn Yellow Pages.

But Kremen, for his part, said he is prepared to continue paying hefty legal fees fighting to get for his own business use and prove he was wronged. While the 37-year-old Kremen provides no specifics on what he would do with, he makes it clear it would not be quite as graphic as Cohen's business model, in part because he argues its current come-hither approach would never attract enough investors to go public.

"I don't think he's using it in a way that makes the most money," Kremen says of his rival, Cohen.

"I sure wouldn't do what he's doing with it. It's very untasteful."



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