Adding a definitive chapter to one of the seamiest and steamiest disputes in Internet legal history, a federal judge ordered the domain name sex.com be returned to the man who registered it six years ago.
In a Monday decision, Judge James Ware of U.S. District Court in San Jose ordered Stephen Michael Cohen -- the man who has claimed title to the porn site sex.com for the last five years -- to return the coveted domain name to its original owner, San Francisco entrepreneur Gary Kremen.
Ware ruled that Cohen's claim to sex.com is null and void because the domain was transferred to his hands only through a forged letter drafted in the name of his former housemate. The judge ordered Cohen and Ocean Fund International, the registered owner of the sex.com domain name, "to cooperate in effectuating the return of the sex.com domain to the plaintiff."
The judge also ordered Cohen and the fund to provide "a full accounting" of the financial operations of the sex.com site, including a listing of all money made from the operation since 1995.
The ruling is the latest twist in a lengthy legal battle initiated by Kremen, who sued Cohen for fraud in 1998, claiming Cohen sent a bogus letter to Network Solutions authorizing the transfer of sex.com from its original owner.
Both Kremen and his attorneys touted Monday's ruling as a victory.
"It shows that eventually the little guy can win at a great cost" said Kremen, who said he spent more than $500,000 pursuing the lawsuit for the last two-and-half years.
Kremen said he has no immediate plans for what to do with the sex.com domain once it falls into his hands. Whatever he does, however, will be more toned down than the current incarnation of sex.com, which features hardcore pornographic images on multiple pop-up windows.
"I plan to do something not as disgusting and sick-o as this guy," said Kremen, referring to Cohen, whose site he described as having "no value."
No value in the aesthetic sense, that is. Financially speaking, Cohen's operation of sex.com appears to have been rather profitable.
In his Monday ruling, Ware ordered Cohen and the Ocean Fund, which is listed in the domain name registration database as located in the British Virgin Islands, to provide $25 million to be held by the court pending final judgment and assessment of damages.
The judge also ordered them to keep any additional revenue made from inside the United States and to refrain from selling or transferring any assets.
Ware justified the strict financial conditions by noting that "the evidence demonstrates that defendants, including Mr. Cohen in particular, appear to improperly have thwarted plaintiff's efforts to obtain discovery of financial information."
The judge said the defendants appeared to have tried to conceal profits from the operation of the website and to have transferred assets for the purpose of "avoiding ultimate financial responsibility at the conclusion of this litigation."
Whether this is the conclusion of the lengthy parade of litigation remains to be seen.
Kremen said he wouldn't be surprised if the case gets appealed. Cohen and his attorneys could not be reached for comment or to confirm whether an appeal is in the works.
Rob Phillip, an attorney with Howrey, Simon, Arnold & White, said the case is noteworthy because it is one of the first that involves a forged transfer of a domain name. However, the reasoning used in Monday's ruling -- that a fraudulent transfer should be declared null and void -- is a pretty common and long-standing legal argument, he said.
Even so, Kremen's attorneys were wholeheartedly pleased with the latest ruling. The victory came on the heels of a disappointing ruling for them in August, in which Judge Ware had dismissed a theft claim against Cohen for snagging sex.com, ruling that a domain name isn't a form of tangible property.
Although a domain may not be tangible property, Monday's ruling recognized that it certainly is worth something, said Pamela Urueta, an attorney with Kerr & Wagstaffe in San Francisco, who represented Kremen.
"It's significant because the court's ruling makes clear that although a domain name does not fit into traditional notions of tangible property, ownership of a domain name is a valuable right that can and should be protected," she said.
