RealTime IT News

Appeals Court Supports Sex.com

A U.S. Court of Appeals for the 9th Circuit Friday gave credence to a landmark $65 million lawsuit over the sex.com domain.

In a unanimous ruling, the Federal Court of Appeals for the 9th Circuit said appeals by defendant, Stephen Michael Cohen were an "egregious abuse of the litigation process." The court also said that since Cohen is a fugitive, he is not entitled to appeal the judgments rendered against him, including the award of $20 million in punitive damages.

The decision represents the likely end of the numerous court battles between plaintiff sex.com founder and CEO Gary Kremen of San Francisco and Cohen, who is living in Tijuana, Mexico, over the rights to the lucrative domain name.

The court separately affirmed Kremen's judgment against Montano Properties, LLC, a company created by Cohen to shelter his assets from the judgment in Kremen's favor. The court rejected the company's argument that its due process rights had been violated.

"It's a pretty resounding ruling," said Kremen's attorney James Wagstaffe. "This decision sends a message that fugitives can't continue to use our legal system."

The five-year battle over one of the most valuable addresses on the Web is significant based on the rampant domain name claim-jumping done during the Internet's early days.

Kremen registered the sex.com Web address in 1994 and regained control after the court's decision in November 2000. He now runs it as a "portal" with a search engine for adult content.

Kremen's separate appeal regarding the liability of Network Solutions, Inc. (now VeriSign ) remains under submission at the court.

The lawyers said their appeal is based on its claim that Network Solutions did not make even a rudimentary attempt to verify a forged third-party letter that Cohen presented. Further, they contend that NSI even went as far as to walk Cohen through the domain name registration process using both phone, fax and e-mail, and, therefore, they say NSI should be held responsible for the damage caused by negligently transferring The sex.com domain.