The domain registrar through which Stephen Cohen hijacked Sex.com from Gary Kremen in 1995 could be held liable for the theft even if the registrar wasn't directly to blame. That's the ruling from a three-judge panel of the 9th U.S. Circuit Court of Appeals today.
"Network Solutions made no effort to contact Kremen before giving away his domain name," wrote Judge Alex Kozinski for the panel, "despite receiving a facially suspect letter from a third party. A jury would be justified in finding it was unreasonably careless."
Now known as VeriSign, the registrar can still appeal to the full 9th Circuit Court, but it was not known yet whether they planned to do so. If they do not appeal, or if they lose on such an appeal, the case would go back to the lower federal court for trial, as remanded by the three-judge panel.
Kozinski and Judges M. Margaret McKeown and James M. Fitzgerald ruled against Kremen's breach of contract claims, however, with Kozinski saying that because Kremen hadn't had to pay for the registration at the time, he wasn't formally bound to remain the registrant if and when registration would require paid fees.
But Kremen told AVN.com that part of the ruling didn't bother him, saying the "conversion" issue - or, as Kozinski wrote, "holding a company responsible for giving away someone else's property even if it was not at (direct) fault" - was the critical one above all.
"It was a weird contract situation," Kremen said, "because, as you know, everyone pays now. I was just in this weird timing when they were giving (domain names) for free."
But he also said this ruling would help "most everyone" in the adult Internet.
"People are having more and more disputes over who owns the Websites," he said. "Now, the fact that you can talk about stealing a Website is real. Before there was nothing you could really do."
Kremen's attorney, Charles Carreon, agreed that the conversion issue was the most critical. "The real lesson, the take-home lesson is, NSI is not invulnerable, and when faced with a determined litigant with merits on his side, eventually the law will ripen to accept those claims," he said by telephone from his Oregon offices.
Carreon said the Kremen case has made a large difference in making people aware that Internet hijacking by forgery has proliferated heavily. But VeriSign/Network Solutions had so often prevailed in other comparable cases, he said, that the impression came forth that the company was all but unvulnerable.
That, he said, has begun to change. "Every time somebody steals one of these domain names, they violate a half a dozen state statutes and commit the crime of identity theft and forgery's a crime in every state in the union," Carreon said. "And yet NSI laughed at it time and time again, and the reason, as I've been fond of saying for years is you can play ostrich if you have a bulletproof butt. What's happened now is the bulletproof shield has been at least punctured. The question now is whether the next layer of shielding will be shredded as well."
That layer, of course, is the contract issue, Carreon said.
Kremen had little enough to stand on in terms of strict contract definition, he said, because he had paid nothing for the Sex.com domain, since at the time he bought it NSI had been offering registration for free. But puncturing that layer will also require people buying domain name registration actually reading the buy and registration agreement, something most people don't do and companies like NSI/VeriSign know well enough, Carreon said.
