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2 Aug 2000
Judge to Rule on Sex.com
Wired

The sizzling Sex.com saga may come to a boil this week as a judge is expected to decide who owns the valuable domain name.

For the past two years, the owner of the domain name has been ex-convict Stephen Cohen. Some say Sex.com is worth $250 million, and rakes in millions of dollars every month.

But the original owner of the site, Gary Kremen, says Cohen stole the domain by forging a phony transfer letter to domain registrar Network Solutions.

Kremen has sued both Cohen and Network Solutions, and the decision in the Kremen v. Cohen case could be decided this week in U.S. District Court in San Jose, California.

In May, Judge James Ware granted a summary judgement in favor of NSI, based on the ruling that domains are not property, and are therefore not subject to property law.

"The court leaves it to the Legislature to fashion an appropriate statutory scheme to protect dormant domain names unprotected by trademark law," Ware wrote in his ruling. Kremen said he will appeal.

"It's ridiculous," Kremen said. "If you follow the logic here, it's open season for stealing domains. If I go hijack your domain and use it for a year, you have absolutely no recourse."

At the heart of the property dispute is whether domains are more akin to a plot of land (property) or to a phone number, which is considered a designation for a service and not property in and of itself.

Network Solutions argues that it's like a phone company, and that domain names are like phone numbers. "A domain name is not property, it's a service," said Phil Sbarbaro, Network Solution's litigation attorney.

But experts say Kremen may have better luck in his case against Cohen, whether or not sex.com is considered property.

"There was still allegedly a fraud perpetrated," said Rob Phillips, an intellectual property lawyer in the Silicon Valley office of Howrey Simon Arnold & White. "If Kremen can prove that it was a forgery, than he could get a court order declaring the transfer was fraudulent and ordering NSI to transfer it back. Then the jury could award compensatory damages."

Kremen claims he registered Sex.com in early 1994 with Internic, the domain-name registration body that is now controlled by Network Solutions. Kremen alleges that the most lucrative piece of Net real estate anyone could ever own was stolen by a twice-convicted felon with a cleverly forged letter to Network Solutions.

Cohen allegedly pulled off of the domain heist with a forged letter, dated October 15, 1995, to Network Solutions. According to Kremen, Cohen duped Network Solutions with a fake memo on phony letterhead from a bogus executive at Kremen's company, Online Classifieds. Wired News obtained a copy of the letter from a law firm involved in a separate lawsuit with Cohen.

Armed with the letter, Cohen convinced Network Solutions to transfer the rights to Sex.com to his company, Sporting Houses Management. The transfer was completed on or about October 17, 1995.

Kremen had no idea what was going on. But on October 18, he noticed that Sex.com was no longer his. "I woke up one morning, and it was gone," he says.

In an early interview, before Kremen raised his allegations, Cohen claimed that he had been using the Sex.com name since 1979, as part of The French Connection, an electronic bulletin board he founded for "swingers, nudist camps, and alternative lifestyles." BBSs were the primary source of digital porn before the Web. Back then, he said, Sex.com stood for "Sex Communications."

Kremen dismisses the assertion as patently absurd. "There was no 'dot com' in 1979."

Since the alleged sex.com heist, Kremen has continued to start and sell new businesses, including online dating service Match.com and most recently selling his Web-tracking firm, NetAngels, to Firefly Networks. Firefly was subsequently purchased by Microsoft.

Kremen figures he can't lose.

"The case is simple," Kremen says. "It's about an international con man, who was twice in jail, forging a letter to Internic and taking away a domain name -- and Networks Solutions doing nothing about it."

 

 

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