The High Court of California yesterday refused to be dragged into the ongoing legal battle between the owner of Sex.com, Gary Kremen, and domain registration giant Verisign.
It had been asked by the federal Ninth Circuit Court of Appeals to consider the legal issue of whether a domain can legally be deemed as property. It refused to do so and so the issue will now be considered by the appeal court.
The High Court decision - made surprisingly quickly considering it was asked just a month ago - is a huge boost for Mr Kremen, who had argued against the High Court taking on the decision. Mr Kremen is suing Verisign for giving away his lucrative Sex.com domain nearly eight years ago to con-man Stephen Michael Cohen without checking or making any attempt to contact him.
Mr Kremen spent five years chasing Mr Cohen through the courts until finally being awarded the domain back in April 2001 with $65 million in compensation. Mr Cohen promptly moved his assets offshore, left the country and remains at large.
The case against VeriSign has already stretched on five years and if the High Court had accepted the issue, it would have been extended by another four years, putting Mr Kremen into yet further financial trouble.
Kremen’s attorney, Jim Wagstaffe of San Francisco, said in a statement that his client was relieved by the decision, adding: “Now the Ninth 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.”
The speed with which the High Court made its decision will almost certainly be viewed as a rebuff to VeriSign, which in its court filing not only argued that the Ninth Court had misunderstood the legal issues but also extravagantly claimed that deciding against it "would cripple the Internet and jeopardize the national economic benefit for e-commerce".
VeriSign stands to lose $100 million if the appeal court decides in favour of Kremen. It is doubly concerned however that the case will be used as a foundation for thousands of similar cases in which the registrar and owner of the .com top-level domain has acted negligently.