Gary Kremen, rightful owner of the Sex.com domain name, has won the right to sue the registrar duped into transferring the lucrative domain to a convicted felon, Stephen Cohen.
Judge Alex Kozinski, of the 9th US Circuit Court of Appeals, ruled on Friday that courts should treat domain names exactly as they would "a plot of land" or other types of property. If domain names are property, the three judges sitting in the case ruled, then registrars are responsible for protecting them.
The Appeal Court instructed the US District Court in San Jose to look again at Kremen's lawsuit against VeriSign-subsidiary Network Solutions (NSI). A retrial is expected to begin later this year.
VeriSign acquired NSI after the legal case was filed.
The ruling on Friday is the latest in a string of judgements in the closely watched case, which traces its roots back to NSI's transfer of ownership for Sex.com from Kremen to Cohen 1995. This unauthorised transfer was obtained using forged letters. The case against NSI is that it switched domain name registry records without bothering to check the veracity of these documents.
Plaintiff Gary Kremen and Internet activists have praised the Appeal Court's ruling in the case, which sets an important legal precedent.
"NSI and other domain name registries are a critical part of the architecture that keeps the Internet running," said Electronic Frontier Foundation Staff Attorney Jason Schultz. "The court's Sex.com decision provides Internet domain registrants with protection from inappropriate domain name seizures."
Two years ago Cohen was ordered to pay $65 million in damages to Kremen, however Kremen has seen little of this money. Cohen skipped the US shortly after this ruling. Most of the vast sum of wealth he made off the back of the Sex.com empire he built up remain in hard to trace off shore accounts.