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25 Feb 2003
California’s High Court to Remain Mum in Sex.com Controversy
Kerr Wagstaffe

The California Supreme Court refused today to weigh in on the legal question of whether the domain name “sex.com” is property, rebuffing domain registration giant VeriSign, Inc.’s requests that it step in to resolve the controversy.

The federal 9th Circuit Court of Appeals in San Francisco invited the state high court last month to decide the issue of whether domain names are property and are subject to state laws against theft. The state court declined to intervene, leaving the question to the federal appellate court.

The issue arose in the legal battle between VeriSign, formerly Network Solutions, Inc. (NSI), and San Francisco businessman Gary Kremen. Kremen’s multi-million dollar case against NSI hinges on whether NSI is accountable for taking the lucrative sex.com domain name from Kremen. NSI handed over the domain to Stephen Cohen in 1995 based on a forged letter to NSI headquarters. NSI failed to verify the authenticity of the letter before signing over Kremen’s domain to Cohen, who proceeded to build a porn empire with the sex.com domain at its center.

Kremen won a $65 million judgment against Cohen in April 2001 for compensatory and punitive damages. Cohen fled the country and has remained a fugitive.

In the pending case against the domain registrar, Kremen asserts NSI is liable for using inadequate safeguards to protect his property. NSI denies that domain names are property, and claims it cannot be held responsible for giving customers’ registered names away.

NSI fought to have the case reviewed by the California Supreme Court, and claimed in court filings that the Internet is so tenuous that an appellate court victory for sex.com “would cripple the Internet and jeopardize the national economic benefit for e-commerce” and will have “enormous ramifications for a large sector of similar service providers, including cable television service and telephone service providers.”

Kremen’s attorney, Jim Wagstaffe of San Francisco, said his client was relieved that the California Supreme Court had declined to hear the case. “We believe this is a very simple issue,” Wagstaffe said. “Now the 9th Circuit can make the law consistent with the reasonable expectations of millions of domain name owners throughout the world, and clarify that domain names are indeed property.”

 

 

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