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If you registered a lucrative domain name in the early days of the Net, lost it due to fraud for several years, and then a judge ruled it should be re-registered to you, you’d be satisfied, right? Not if you’re Gary Kremen, an entrepreneur who had a similar experience after registering the domain “Sex.com” in 1994 with the Web registrar Network Solutions. Lawsuit winners like Kremen typically hug their lawyers and go home happy, but last month’s decision was complicated by an unresolved issue: San Jose, Calif., federal judge James Ware had determined earlier in the case that property laws do not apply to domain names. Historically, property has been defined as something tangible, and therefore, a generic domain name like Sex.com, the judge reasoned, cannot be covered by property laws. Kremen may appeal the decision because he and his attorneys fear it could result in domains not being treated as tangible assets in contracts, not reported to the police if stolen or even left in wills to heirs. The judge ruled last month that Stephen Michael Cohen, a felon who had been imprisoned for bankruptcy fraud and impersonating an attorney, had fraudulently misappropriated the Sex.com domain in 1995 by sending a forged letter to Network Solutions. The Web registrar then transferred the name to Cohen, who reportedly raked in millions of dollars annually by operating the site as a pornography portal. Kremen, founder of the online dating service Match.com, sued to reclaim the name, demanding up to $25 million in damages. The judge hasn’t yet ruled on the damage claim but froze $25 million of Cohen’s assets. Today, the domain is once again registered to Kremen, who said he is thinking about redeveloping Sex.com as a “woman-friendly” advice site. “(He) clearly sees the importance of establishing exactly what a domain name is,” says Pamela Urueta of Kerr & Wagstaffe in San Francisco, one of the law firms representing Kremen. Not only could a successful appeal shape the development of Internet law, others in the case said it could help transform Sex.com’s image to that of a serious Net player. The problem for the judge is a familiar one in Internet law: trying to make old statutes fit the new realities of cyberspace. Kremen originally sued Network Solutions for a kind of theft known as the tort of conversion, claiming that the domain names register wrongfully assigned the property rights to Sex.com to Cohen. But a domain name, Network Solutions argued, is a form of intangible property that cannot be the basis of a conversion claim. The judge gave three reasons for agreeing that Cohen — and not Network Solutions — should be a defendant in the case. First, he found it unjust to blame the registrar for Cohen’s fraud. Second, Judge Ware said the law would slide down a “slippery slope” if “undocumented intangibles” like domain names were suddenly considered property. Third, he left it up to legislators to deal with domain names, refusing to superimpose “the archaic principles governing the tort of conversion onto the nebulous realm of the Internet.” Legal experts displayed mixed reactions to the judge’s earlier ruling. Pamela Samuelson, a Net law authority at University of California at Berkeley’s Boalt Hall School of Law, believes that Judge Ware’s decision is appropriate. “The sex.com name is so commercially valuable that the notion it’s not property seems kind of crazy,” she says. “But I’d be reluctant to say there’s a property right in generic domain names under existing law. Courts are usually careful to avoid judicially legislating something this important.” David H. Dolkas, a Network Solutions attorney with Gray Cary Ware & Friedenrich in Palo Alto, Calif., also agrees that the original ruling is correct. “Net registrants are neutral, like Switzerland, and property laws just cannot be made to fit what they do,” he says. “In the precise definitions of the law, it’s a round peg-square hole problem.” Nevertheless, Kremen’s attorney, Charles H. Carreon, points out a recent California case that might give evidence for an appeal. In Thrifty-Tel vs. Bezenek, an appeals court found that a long-distance telephone company had been harmed after hackers bombarded its system trying to learn access codes, because it had a property right in the efficient functioning of its computer network. “Efficient functioning” is an intangible property right and so are domain names, Carreon says. “ Thrifty-Tel brings conversion law up-to-date. In the realm of cybertorts, we’ve gone back to the future.” Copyright � 2000 The Industry Standard

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