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LEGAL NEWS FLASH FROM THE PAST::: Sex.com Court Ruling: It Wasn't Stolen !

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samdean

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There are lots of nasty and nefarious things you can do to a website -- crack it, hijack it, black it out -- but one thing you can't do, no matter how evil your intention, is steal its domain name.
Even if you take it without asking and never give it back.
That's the upshot of the latest ruling in the long-simmering legal dispute over the ownership of the sex.com domain name.
On Monday, U.S. District Court Judge James Ware dismissed a theft claim -- technically called a "conversion" claim -- against the convicted felon accused of hijacking sex.com, ruling that Web domains aren't property, and therefore can't be stolen.
If there was a crime committed four years ago when Steven Cohen obtained sex.com by allegedly forging a bogus letter to Network Solutions authorizing the transfer of sex.com from its original owner, it wasn't theft, the judge found. Although sex.com's a solid enough piece of virtual real estate to support Cohen's now multi-million porn empire, legally, it's not real estate at all.
"There is simply no evidence establishing that a domain name, including sex.com," meets the definition of property "as required by the law of conversion," the judge wrote in his ruling, citing his own words from a May decision in a separate suit brought by sex.com's original owner, Gary Kremen, against domain registrar Network Solutions.
In the May decision, the judge sided with lawyers for Network Solutions, who argued that a domain name was not property, but rather a designation for a service -- akin to a phone number.
The judge acknowledged that it's not totally clear whether property law should or shouldn't apply to Web domains, but emphasized that the job of clarifying the law rests with the legislature, not the courts. Legal experts seconded his opinion.
Judge Ware's latest ruling doesn't mean the case against sex.com's alleged hijacker is dead.
The judge granted a request by sex.com's original owner, San Francisco entrepreneur Gary Kremen, to file an amended complaint charging Cohen with violating California's unfair competition code.
"Basically, the unfair competition code says, 'If you steal a product and sell it, you're competing unfairly with people who have to buy it and sell it,'" said Kremen's lawyer, Charles Carreon.
Should Kremen prevail in his unfair competition claim, the law would grant him rights to all of the money -- perhaps hundreds of millions of dollars -- that Cohen has made at sex.com over the last four years.
Kremen has another shot to win with a second claim against Cohen based on a sort of catch-all fraud statute in the California code.
"There was still allegedly a fraud perpetrated," said Rob Phillips, an intellectual property lawyer in the Silicon Valley office of Howrey Simon Arnold & White, in an interview before the latest ruling. "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 THE END OF IT WAS THIS:::::::::: :o

Sex.com -- Domain Names, Not Property
Neither sex.com’s announcement of a final settlement with VeriSign over the domain name nor the Appeals Court ruling last July establishes domain names as property.

Berkeley, CA (PRWEB) May 7, 2004-–The sex.com legal battle has created confusion as to whether a domain name is an intangible property, according to a report issued today by DomainMart.

On April 20, 2004, sex.com announced a settlement of their legal battle with VeriSign over the domain name sex.com. And last July, the US 9th Circuit Court of Appeals ruled that Gary Kremen had property rights to the stolen domain name sex.com and that Network Solutions (then owned by VeriSign) was liable and subject to the tort of conversion for transferring ownership without proper authorization.

“Contrary to common belief, neither the settlement nor the ruling, makes domain names intangible property,” says Alex Tajirian, President and CEO of DomainMart. “Legal classification of property falls under the jurisdiction of individual states. Property rights are established through either a state’s Supreme Court decision under the common law or through a statute approved by state legislators. A Federal Court decision is a possible interpretation of a state high court’s future decision,” adds Tajirian.

Although the terms of sex.com’s settlement were not disclosed, unofficial reports suggest that it was in excess of US$15 million.
Due to lax controls over transfer of domain-name ownership, Tajirian recommends that domain-name buyers and sellers use an escrow service to ensure proper and timely transfer of title and sale proceeds.

Battle Background:
Gary Kremen registered sex.com in 1994 through the registrar Network Solutions. At the time, Kremen was doing business as Online Classifieds, Inc.

After a period of a year, during which sex.com web site was inactive, a man named Stephen Cohen decided to steal the potentially lucrative domain name. All he had to do was send a letter written on Online Classified letterhead to Network Solutions requesting transference of ownership.

According to reports, Cohen then launched an Internet pornography Web site based on sex.com, but by the time Kremen was aware of the theft, Network Solutions refused to change the registration back without a court order.

Kremen ultimately sued Cohen and Network Solutions, which was allegedly responsible for negligence since the registrar had not attempted to verify the forged letter that had served as the basis for the domain-name conversion. However, it now appears that Cohen simply picked up the phone, asked for and was granted the sex.com domain name immediately. This was at a time when the wait for domain-name-ownership transfers was over four weeks. Network Solutions made no attempt to verify Stephen Cohen’s entitlement to sex.com – of which there was none.

In September 2002, the U.S. Court of Appeals for the 9th Circuit approved a $65 million award in Kremen v. Cohen. But by that time Cohen had skipped off to Tijuana, Mexico, and would not comply with the judgment's orders.

During the same ruling, the claim against Network Solutions was rejected based on the fact that a private company (in this case the sole registrar for domain names) is immune from civil suit in cases where it negligently handled a domain name.

On April 20, 2004, sex.com announced a final settlement with VeriSign.
 
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Yep, old news (Aug. 25, 2000) -> http://www.wired.com/news/politics/0,1283,38398,00.html

The most recent ruling (in 2003) says different -> http://www.whoisfinder.com/news/200307/sex-domain-sue-verisign.html

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.

Two years ago Cohen was ordered to pay 5 million in damages to Kremen, however Kremen has seen little of this money. Cohen skipped the US shortly after this ruling.

The most recent alleged theft we've seen here on NP is that of VY.com. If it was indeed stolen, perhaps its time for the thief to start planning his own escape route out of the USA. :hehe:
 
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In a way, I wish the sex.com case wasn't settled. I wonder what would've
happened if it continued on until its conclusion at the Court level/s?

Unfortunately we'll never know...unless something like this happens and goes
farther than what the sex.com case went thru. Who knows...
 
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biix
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