The ownership of perhaps the most valuable domain name on the Internet, sex.com, could be decided within two weeks.
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 sued both Cohen and Network Solutions. In May, U.S. District Court Judge William Ware granted a summary judgment in favor of NSI, based on the ruling that domains are not property, and are therefore not subject to property law.
In light of that ruling, Cohen and his lawyers have effectively said "me too." If sex.com is not property to Network Solutions, then it's not property to Cohen. But Kremen's lawyers say a domain can be property to one entity and not another.
"Sex.com may not be property as to NSI, but it is as to Cohen," said Charles Carreon, Kremen's attorney. "He runs across the country suing people, saying, 'I own that.' He has filed at least nine lawsuits around the country based on saying he owns sex.com. So don't let him say it's not property."
Cohen's lawyers did not return phone calls requesting comment.
The points were argued in court on Monday, and lawyers expect a decision within two weeks.
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.
Some legal experts say that although cyberspace is new territory, it should be regarded as property, based on the amount of resources put into creating value for domain names.
"Domain names are a funny kind of property, but I have no doubt that they should be considered property," said Mitchell Zimmerman, an Internet trademark and copyright lawyer at Fenwick and West in Palo Alto. "I find it alarming to think that nobody has protectable property interest in domain names."
Kremen's lawyers believe they can prove that in Cohen's case, sex.com is indeed property.
"The law is clear that although something is not a conversion claim to one party, it could be to related parties," said Pamela Urueta, an attorney with Kerr & Wagstaff in San Francisco. Urueta and attorney Jim Wagstaff are in the process of reviewing an appeal of the NSI case.
The sordid story is basically this: Kremen says he registered sex.com in early 1994 with Internic, the domain-name registration body that is now controlled by Network Solutions. He alleges that the most lucrative piece of Net real estate anyone could ever own was stolen by a seven-time felon.
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.
Meanwhile, Cohen also requested on Monday that he be allowed to dismiss a counter-suit he filed against Kremen for $50 million. But if the libel suit is dismissed, Kremen wants to be sure it's dismissed forever.
"Usually a party can dismiss its claim at any time in a lawsuit and the judge will go along with it. But they usually won't dismiss without prejudice," Zimmerman said.
If the judge dismisses the suit with prejudice, that would mean Cohen and his lawyers can't come back a year from now and file the same claims against Kremen.
But Cohen and his lawyers want to be free to do that, according to Carreon. Rather than have the claims dismissed with prejudice, Cohen and his attorneys asked to change their minds again and push forward with the claims.
"I think the judge got a little annoyed," Carreon said. Ware's decision on the counter-suit is also expected within two weeks.
Even if sex.com is declared not to be property to Cohen, experts say Kremen may still have a case against him based on the alleged forgery.
"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."
And Kremen has no intentions of laying down for Cohen.
"It will not be over after this decision," Kremen said. "This is a decision on an important subset of claims. If we lose that we still have other claims," including an appeal on the Network Solutions decision.
"I'm going to spend the money to right the wrong which in my belief is due to NSI's negligence," he said. "This is a direct result of Network Solution's lack of security. When there are problems they say it's your fault -- it's ridiculous."