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Sex.com epic battle finally ends

VeriSign settles six-year legal fight

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The epic battle for Sex.com, in which one man chased down one of the greatest living con-men and the world’s biggest Internet company, has finally come to a close with an undisclosed sum paid to the domain’s owner, businessman Gary Kremen.

The company that owns and runs all .com and .net domains, VeriSign, reached agreement with Kremen’s lawyers at the end of March but waited until after Mr Kremen had given a speech the American Bar Association’s annual IP Law conference inWashington on 2 April to pay over the full sum - believed to be between $10m and $20m.

The deal comes nearly six years after Kremen first named Network Solutions (later part of VeriSign) in a lawsuit on 9 July 1998, claiming that it was part responsible for handing the domain over in October 1995 to Stephen Michael Cohen, a notorious con-man.

In that time, Network Solutions/VeriSign has been excused from proceedings (8 May 2000), then hauled back into court (13 August 2002), appealed all the way up to the Supreme Court (16 January 2003) and finally found guilty of improperly transferring the domain by the Appeals Court - on 25 July 2003.

Since 2003, Kremen’s laywer - James Wagstaffe - has been building a case against the company that at one time possessed complete control over global Internet domains and remains the most powerful company on the Internet. What he found in the subsequent discovery hearings proved so damaging to VeriSign that its CEO and Board became personally involved in the case and pushed for settlement.

"I've had enough"

Under pressure from his lawyers, Kremen opted to settle. “I had a headache. I’ve been doing this for a very, very, very long time and I’d had enough,” he told us. With the settlement, VeriSign has avoided having to publicly accept blame for wrongly handing over the domain - a situation that could have bankrupted the company since it has been responsible for thousands of disputed domain changes.

The financial terms of the deal have also been kept quiet but are at least half the $40m that the US courts originally awarded Kremen when he won his case against Stephen Cohen. Cohen had run a hugely successful porn site on the domain for nine years before finally being stripped of its possession. When the judgement came down against him, on 4 April 2001, he fled the country and moved his millions to offshore bank accounts. He is currently living in the South of France.

Kremen has spent nearly a decade chasing his property and for many years believed that it had been handed over on the basis of a blatantly forged letter sent by Cohen to Network Solutions in which he pretended to represent Kremen and authorised handing the domain over to himself.

Now the truth has emerged that Cohen in fact never used the letter to get hold of the domain and it may even have been a concoction of Network Solutions in order to undermine Kremen’s case against both Cohen and Network Solutions.

Cohen had in fact tried several times to get hold of the Sex.com domain through phonecalls and emails to Network Solutions staff before finally succeeding in persuading an employee - with whom it is suspected he had a sexual relationship, and who later became head of the investigation team into the domain’s unauthorised transfer - to change Kremen’s ownership details to Cohen’s over the phone.

Paper trail

A paper trail uncovered by Kremen's lawyers is alleged to have conclusively proved that VeriSign knowingly misled Kremen in order to avoid setting a precedent and out of corporate arrogance.

The case has set a legal precedent that owners of Internet domain names possess an intangible property right which is subject to the tort of conversion - essentially that a domain name can be held to be property under the law.

However, VeriSign has retained its envious legal record of never losing a legal battle, avoided having to admit blame for wrongly handing over the domain, and kept the financial details secret to aid it in possible future legal battles.

Gary Kremen meanwhile has been freed from crippling legal costs, having won a David vs Goliath battle through the US court system that has cost him millions and put his life on hold for a decade.

He is currently building up the Sex.com site, and will not be poor, but after an estimated $5m legal bill and settlement awards to pay off, will ironically be the one person who has gained the least financially from the Internet’s Holy Grail. ®

Related links

Court documents in sex.com case (from EFF)
Court decision in Sex.com (Kremen v NSI) case

Related stories

VeriSign misses Sex.com trial deadline
Sex.com owner can sue VeriSign
Sex.com, Sex.com, you're my Sex.com
Sex.com conman continues ludicrous legal fight
Is this the end of the domain transfer nightmare?
Sex.com could cost VeriSign $100m, says suit
Manhunt starts for Sex.com snatcher
Sex.com owner wins $65m damages
VeriSign sued again for domain cock-up

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