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A federal court judge ruled that the lucrative domain name Sex.com had been fraudulently taken from its original owner and ordered its return Monday along with accounting of the defendant’s assets. The two-year battle playing out in San Jose, Calif.’s federal courthouse has grabbed attention simply because of the titillating facts surrounding the case — which revolves around an ex-convict turned pornography entrepreneur who allegedly impersonated an attorney, forged signatures and kept hidden overseas bank accounts. But it has also raised a high-stakes legal question about whether domain names, many of which are valued in the millions of dollars, are considered property. U.S. District Court Judge James Ware sided with the plaintiffs, finding that the defendant, ex-convict Stephen Cohen, gained control of Sex.com by submitting a fraudulent letter to Network Solutions Inc., which then transferred ownership from the plaintiff to the defendant. Ware ordered the site returned to plaintiff Gary Kremen and further enjoined the defendant from transferring assets into overseas accounts in an effort to put them out of reach of the court. According to court documents, Cohen has business interests in Mexico and the British Virgin Islands. Ware said he would have the order signed by noon Monday and added that he wouldn’t “hesitate to hold [Cohen] in contempt of court.” The plaintiff has asked for $25 million in declaratory relief. Ware did not make a ruling on the declaratory relief but has frozen $25 million of Cohen’s U.S. assets. “Mr. Cohen’s claim to Sex.com is based on a bogus document,” Ware said. “The consequence is to give the domain name back to its original owner.” During arguments, the plaintiff’s attorneys, James Wagstaffe, of San Francisco’s Kerr & Wagstaffe, with associate Pamela Urueta, argued there was no disputing that Cohen had forged the letter that illegally transferred the account. Urueta also tore into the defendant’s claim that his business, The French Connection, has had a trademark associated with Sex.com since 1979. The defendant’s attorney, Robert Dorband, of Duboth & Roth, argued that it was unclear who laid claim to Sex.com because Kremen initially registered it under a business name, and said Cohen and his associates paid the plaintiff’s company $1,000 for the site in 1995. Ware chided Dorband, who is based in Portland, Ore., as the attorney tried to explain the letter. The judge called the letter a “fraud” that included a forged and misspelled signature. “Why would someone sign their name on a letter that’s misspelled?” Ware asked. “Don’t I need to undo the wrong that was sanctioned by the fraudulent letter?” Kremen, who was in court Monday with his attorneys, lauded the victory and the judge’s quick action. “He is ordering the return of offshore assets,” Wagstaffe said. Despite Monday’s ruling, Kremen and his attorneys say they could appeal an earlier ruling in the case that dismissed Network Solutions as a defendant. In the ruling, Ware concluded that Kremen was not robbed of property because Sex.com is not tangible property, therefore property laws do not apply to domain names. Wagstaffe called it a case of first impression and said it is possible the plaintiff will challenge Ware’s initial ruling when the entire case has concluded. According to documents filed in Kremen v. Cohen, CV98 20718, in May 1994, Kremen, then a graduate student at Stanford University, registered the domain Sex.com under the business name Online Classified Inc., along with a slew of other generic domain names including Auto.com. Kremen mailed the registration form to Network Solutions Inc. Kremen never developed the site, but instead launched Match.com, a dating service Web site. According to the complaint, Cohen, who was released from prison in February 1995 after serving a 46-month term for bankruptcy fraud and impersonating an attorney, became interested in operating Sex.com. Cohen forged a letter in October 1995 from the president of Online Classifieds, granting Cohen the right to register Sex.com. Cohen then forwarded the letter to Network Solutions, which allowed Cohen to register Sex.com. Cohen, through his business holdings, began to operate Sex.com as a portal that provides access to other pornography sites. The site is estimated to bring in as much as $100 million annually. Kremen’s attorneys also have submitted video footage of Cohen impersonating the plaintiff’s attorneys and picking up documents that the plaintiff’s attorneys had requested from a financial institution where Cohen has accounts. Kremen said that now that he has regained control of Sex.com, he is considering operating a site that offers sexual advice and is “woman friendly.”

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