Sex.com Ruling: It Wasn't Stolen

Domains aren't property, a judge rules in the long, sordid case of sex.com. Therefore, the guy who managed to grab it from its first owner doesn't have to give it back. By Craig Bicknell.

There are lots of nasty and nefarious things you can do to a website -- crack it, hijack it, black it out -- but one thing you can't do, no matter how evil your intention, is steal its domain name.

Even if you take it without asking and never give it back.

That's the upshot of the latest ruling in the long-simmering legal dispute over the ownership of the sex.com domain name.

On Monday, U.S. District Court Judge James Ware dismissed a theft claim -- technically called a "conversion" claim -- against the convicted felon accused of hijacking sex.com, ruling that Web domains aren't property, and therefore can't be stolen.

If there was a crime committed four years ago when Steven Cohen obtained sex.com by allegedly forging a bogus letter to Network Solutions authorizing the transfer of sex.com from its original owner, it wasn't theft, the judge found. Although sex.com's a solid enough piece of virtual real estate to support Cohen's now multi-million porn empire, legally, it's not real estate at all.

"There is simply no evidence establishing that a domain name, including sex.com," meets the definition of property "as required by the law of conversion," the judge wrote in his ruling, citing his own words from a May decision in a separate suit brought by sex.com's original owner, Gary Kremen, against domain registrar Network Solutions.

In the May decision, the judge sided with lawyers for Network Solutions, who argued that a domain name was not property, but rather a designation for a service -- akin to a phone number.

The judge acknowledged that it's not totally clear whether property law should or shouldn't apply to Web domains, but emphasized that the job of clarifying the law rests with the legislature, not the courts. Legal experts seconded his opinion.

Judge Ware's latest ruling doesn't mean the case against sex.com's alleged hijacker is dead.

The judge granted a request by sex.com's original owner, San Francisco entrepreneur Gary Kremen, to file an amended complaint charging Cohen with violating California's unfair competition code.

"Basically, the unfair competition code says, 'If you steal a product and sell it, you're competing unfairly with people who have to buy it and sell it,'" said Kremen's lawyer, Charles Carreon.

Should Kremen prevail in his unfair competition claim, the law would grant him rights to all of the money -- perhaps hundreds of millions of dollars -- that Cohen has made at sex.com over the last four years.

Kremen has another shot to win with a second claim against Cohen based on a sort of catch-all fraud statute in the California code.

"There was still allegedly a fraud perpetrated," said Rob Phillips, an intellectual property lawyer in the Silicon Valley office of Howrey Simon Arnold & White, in an interview before the latest ruling. "If Kremen can prove that it was a forgery, than he could get a court order declaring the transfer was fraudulent and ordering NSI to transfer it back. Then the jury could award compensatory damages."

Cohen did not return calls seeking comment.

Kremen has until September 8 to file the amended complaint. The case is scheduled to go to trial sometime next spring.