A six-year battle between Sex.com owner Gary Kremen and VeriSign ( Network Solutions) over the theft of his domain by Stephen Cohen has ended. The two sides have settled their litigation, after the U.S. Ninth Circuit Court of Appeals held VeriSign responsible to tort for the Sex.com theft, which Cohen effected using a forged letter to the registrar.
The appellate court had ruled that VeriSign, known at the time as Network Solutions, was responsible to what is known as the "tort of conversion" when it failed to return Sex.com, despite Kremen's complaints and proof that Stephen Cohen had stolen the domain by way of a forged letter to the registrar in 1995.
The two sides settled the dispute April 19.
Kremen told AVN.com the settlement included his agreement to remove a cartoon disparaging VeriSign from the Sex.com Website as well as information and commentary on the entire series of battles over the Sex.com theft. He would not discuss any monetary terms involved in the settlement.
VeriSign had not offered any statement about the decision when this story went to press.
Kremen has long since won a still-unpaid $65 million damage verdict against Cohen, who has since been reported to be involved with a Middle East-based peer-to-peer network, Earthstation 5
The U.S. Supreme Court refused to overturn the settlement in June 2003.
The American Internet Registrants Association applauded the settlement news. "The decision of the Ninth Circuit was a great victory for Internet domain name registrants, and Mr. Kremen’s perseverance in securing that decision was truly commendable,” said general counsel William Bode in a statement after the ruling. “Hundreds of domain name registrants lost their valuable property due to the negligence of domain name registrars. The court’s decision proclaimed that those afflicted registrants have a remedy under law to recover their damages – providing much needed protection to Internet entrepreneurs. This ultimately will enhance Internet commerce.”
"After years of litigation, the Sex.com legal battle set the key precedent requiring domain name registrars to be accountable for their mishandling of such an important public resource as the Internet domain name system," said Internet law attorney Robin Gross about the events. "Now, registrars must use the same level of care as any other business and will be responsible for abusive practices," she added.
Kremen said he was ecstatic over the settlement. "We can put the case behind us and find peace," he said, "knowing that the Ninth Circuit's opinion in the Sex.com case will have an influential role in holding Internet registrars responsible for mishandling their customer's domain name properties."
Kremen had not only accused Cohen of stealing Sex.com, he also charged that Network Solutions had had regular contact with Cohen during the dispute over the theft but had failed to disclose that to Kremen and his legal team. A ruling last summer from a three-judge panel of the Ninth Circuit Court said as much while holding that VeriSign could be held liable for the Sex.com theft even if the registrar was not directly to blame for it.
"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."
"It took these guys a little bit of time to realize what trouble they were in," Kremen said. "You can imagine firms not understanding what's going on in getting into trouble. Now, you know, registrars make mistakes and they can be held liable. All these domain name hijackings, now (the registrars can) have a liability. In my case they should have watched it and they didn't.
"I'm very happy," he continued. "I had great support within the industry, and I'm happy for that support."
Attorneys representing VeriSign/Network Solutions in the Kremen dispute were unavailable for comment to AVN.com before this story went to press.
