A federal judge brought the high stakes dispute over the website sex.com to a dramatic close by ordering the former operator of the domain name to pay $65 million in damages for fraudulently taking control of the site.
In a ruling issued Tuesday in U.S. District Court in San Jose, California, Judge James Ware maintained a warrant for the arrest of Stephen Michael Cohen, the former owner of the porn site sex.com. Ware found Cohen guilty of fraud and forgery for wresting control of the coveted domain from its original owner back in 1995.
"There is clear and convincing evidence that the defendants were guilty of oppression, fraud and malice," Ware wrote. He ordered Cohen to both return the profits made from his illegal operation of sex.com and pay damages to the site's original owner, San Francisco entrepreneur Gary Kremen.
The ruling, the latest mound of legal paperwork in a dispute that has dragged on for three years, follows a bench trial in the case in March. Ware had previously found Cohen guilty of appropriating the sex.com site through a forged letter to domain name registrars, but had not determined how much to order in damages.
Tuesday's ruling orders Cohen and the network of offshore corporations he controls, including SandMan International, Ynata Ltd and Ocean Fund International, to jointly pay a $40 million judgment plus $25 million in punitive damages.
Lawyers for Kremen said the ruling called for the largest award for damages in domain name history. It was also a total victory for the plaintiff. Ware dismissed all the defenses offered by Cohen's attorney in response to Kremen's latest charges, saying they were without merit.
"The substantial size of this damage award sends a message that the Internet is not a lawless wasteland," said Kremen's attorney, James Wagstaffe of Kerr & Wagstaffe.
Whether they'll get the money, however, is another question. Kremen's lawyers noted that it was exceptionally difficult to uncover the amounts of money Cohen had earned from the domain, since he placed vast sums of money in offshore accounts in Liechtenstein, Luxembourg, and the British Virgin Islands and has invoked the Fifth Amendment when asked about the funds.
Cohen did not comply with a November ruling by Ware, ordering him to put $25 million under court supervision while he determined an appropriate award of damages.
The defendant also did not appear for the March bench trial. His attorney claimed he was under house arrest in Tijuana pending investigation into unspecified charges by Mexican officials.
