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4 Jan 2003
Court Punts Sex.com Domain Case
Joanna Glasner, Wired

A dispute over the transfer of the domain name Sex.com may be heading to California's highest court.

In a decision published Friday, a panel of federal appellate judges asked the California Supreme Court to weigh in on the question of whether traditional property conversion laws should apply to Internet domain names.

"Although we are quite capable of resolving the issue presented, we should not reach out to grab the question in the first instance simply because the case involves a novel and 'sexy' issue," states the majority opinion (PDF) submitted by judges Margaret McKeown and James Fitzgerald.

The judges said the state's highest court should consider the type of property rights to extend to domain owners in civil cases.

The decision stems from a four-year-old legal battle between Sex.com owner Gary Kremen and Internet domain registry Network Solutions, now owned by VeriSign. Kremen claimed in a lawsuit that Network Solutions should be held accountable for an erroneous transfer that put the valuable Sex.com domain in the hands of a con artist.

Kathryn Karcher, an attorney for VeriSign's law firm, Gray Cary Ware & Friedenrich, declined to comment on the ruling. VeriSign officials could not be reached for comment.

Kremen said he wasn't looking forward to the prospect of more legal bills if the case winds up in the California Supreme Court but was pleased with Friday's decision.

"They clearly think this is a really important issue for Californians, and I think they're just trying to highlight that to make sure they get it absolutely right," he said.

But as Alex Kozinski, the lone dissenting judge in the case pointed out, there's no guarantee the state's high court will take the case. In his dissent, Kozinski noted that the state's high court has turned down a third of such requests submitted by the federal appeals court, a record he attributed to the California judges' already formidable caseload.

Kozinski wrote that the Ninth Circuit should have granted Kremen a victory in the case, based on his legal analysis of domain names and property law.

"Domain names, like corporate stock, are clear and discrete property rights. One who alters title to a registered domain name is fairly on notice that he may be affecting someone else's property," Kozinski wrote.

Kozinski also rejected the argument that domain registration records, which are kept in a computer database, should be treated differently from printed records.

The dispute between Kremen and Network Solutions stems from an unauthorized transfer of the Sex.com domain registration record from Kremen to a notorious con artist named Stephen Michael Cohen.

Kremen registered the domain in 1994, but Cohen gained control of it by forging a letter to Network Solutions instructing the company to transfer the site to him, according to court documents.

Kremen alleged that Network Solutions failed to inform him before transferring the site.

If the California Supreme Court does not take the Sex.com case, it's expected that the federal appeals court will render a final decision, said Kremen's attorney, James Wagstaffe.

Attorneys said it typically takes the California Supreme Court about three months to decide whether to hear a case. A ruling could take more than a year.

Meanwhile, Wagstaffe said he's encouraged by the latest turn of events, particularly the court's acknowledgement that domain names are a form of property.

"We're buoyed by this because this is a case where I represent David, who is fighting the Goliath of the Internet," Wagstaffe said. "Goliath is not dead, but I think he's wounded."

 

 

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