SAN JOSE, California -- The dispute over the domain name sex.com took a new twist Monday when a federal judge decided to add a special court adviser to the case.
Following a hearing in U.S. District Court here, Judge James Ware told the gathering of sex.com attorneys that he would seek expert advice in bringing the case to a conclusion.
"You're in an area of developing law," Ware said. "It does appear to me that this is a case that cries out for the need of a special master."
Courts turn to special masters -- typically experts in a given field of law -- to help resolve technical or unusually complex issues that arise in particular cases. Although Ware has not named the adviser yet, attorneys in the case said they expect an appointment to be made by the end of the week.
If complexity is the condition for a special adviser, then the sex.com dispute has no trouble qualifying. The case -- which touches on everything from offshore wire transfers to domain name registration procedure to pornographic advertising -- is plotted like a potboiler.
What's more, it appears there are yet more chapters to be written.
Here's what's happened so far.
The sordid tale begins in 1995, when Stephen Michael Cohen, a convicted felon with a penchant for offshore investing, porn and Internet empire-building, decided he wanted the domain name sex.com. Trouble was, sex.com already had an owner, San Francisco entrepreneur Gary Kremen, who had registered the domain about a year earlier.
Cohen managed to get the domain registered in his name by sending phony documents to domain name registrar Network Solutions, claiming that he was the rightful owner. Then he built the domain into a multi-million-dollar-a-year enterprise. A couple years later, Kremen filed a lawsuit seeking to get the domain back under his control.
Kremen won a key ruling in November, when Ware ordered the name transferred back to him, finding that Cohen had unlawfully garnered control of sex.com. Ware also ordered Cohen to set aside $25 million while the court determined how much of his earnings he would have to pay to Kremen.
Cohen is now appealing the ruling in federal appeals court.
Those events led to Monday, when attorneys for Kremen and Cohen found themselves back in Ware's courtroom. The issues before the court included a request for a bond posting, a motion by Cohen's lawyer to remove himself as counsel for the corporations Cohen controls, and a fresh batch of complaints from Kremen's attorneys about how sex.com's former owner isn't cooperating.
Ware abruptly turned down a motion from Cohen's attorney, Robert Dorband, to make Kremen post a bond while the appeal process proceeds. He also rejected a request from Dorband to step down as the attorney representing corporations run by Cohen.
Kremen's attorneys took Monday's hearing as an opportunity to press the court to make Cohen and the several corporate entities he controls do a better job of accounting for their past earnings.
"I have a simple question: Where is the money?" asked Kremen's attorney James Wagstaffe, who claims that Cohen is squirreling away sex.com wealth through a complex scheme involving transfers to offshore accounts.
Dorband insisted that his client simply doesn't have the money the court wants him to cough up.
"We're not hiding anything," he said. "The defendants do not have $25 million to deposit into the court."
Another matter raised at Monday's hearing was the finding that sex.com is apparently one of a number of valuable domain names under Cohen's control.
Wagstaffe said Cohen is listed as a contact for 90 different domains, mostly tied to online porn. They include sex.com's sister site, sex.net. If Cohen can't put up the cash the court wants, Kremen's attorneys proposed the possibility of tapping into the other sites.
Dorband objected strongly.
"Within a few weeks or months, we're going to have a trial," he said. "There has been no hearing to determine if these properties and domain names have anything to do with sex.com."
Even if they are linked to sex.com, it's unlikely that the other domains have anything close to its profit-making power.
In Monday's hearing, attorneys made it clear that sex.com is, among other things, a remarkable cash machine.
On a typical day, sex.com generates in the neighborhood of $17,000, mostly through ad revenue, lawyers said. Multiply that by 365 days, and you're talking more than $6 million a year.
However, the attorneys did not address how much of that goes to pay the legal bills.
