Judge orders sex.com returned to owner

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SAN FRANCISCO, California (Reuters) -- A judge ordered a major sex change on the Internet on Monday, ending a hot-blooded struggle over arguably the most valuable piece of real estate in cyberspace -- the rights to the name "sex.com."

U.S. District Judge James Ware ordered Stephen Cohen, who has turned the sex.com Web site into a multimillion pornography business, to turn the address over to San Francisco entrepreneur Gary Kremen -- who had the foresight to register the address in 1994, at the dawn of the Internet age.

"I'm just a small guy and this is a huge guy who has built an empire based on fraud and deceit," an overjoyed Kremen told reporters outside the San Jose, California, courthouse after Ware's decision. "I'm like a little guy, so I feel pretty good about it."

Cohen did not return calls seeking comment in the case, and his lawyers declined to speak to reporters at the courthouse.

The judge's order marked an important step in resolving the issues of Internet claim-jumping and the real value of cyber real estate.

According to Kremen's lawyers, Cohen took control of the sex.com address in 1995 by presenting forged transfer of ownership documentation to Network Solutions Inc., which oversees the allocation of Web site addresses.

Using a company registered in the British Virgin Islands, Cohen proceeded to turn sex.com into what Kremen's lawyers call a "multimillion dollar sex empire" -- a one-stop shop for the nastiest, raunchiest pornography the Internet has to offer.

Lawyers say the site gets as many as 25 million hits each day, and could be worth as much as $100 million.

Cohen has consistently declined to comment on the case, but it is clear that he made quite a bit of money. Court documents show him acknowledging receiving a $17 million salary as well as $100 million in stock options.

With other single-word Web site addresses such as business.com selling for millions, and studies showing that sex is a major draw for people on the Internet, the sex.com site was seen as potentially one of the most valuable on the World Wide Web.

Cohen, who had served time in jail on a bankruptcy fraud conviction, said he obtained the sex.com Web address lawfully, paying $1,000 to a company called Online Classifieds which held the site registration.

Kremen, who says he and Online Classifieds are one and the same, disputed that and said Cohen forged the letter which purported to back up the deal.

"Judge Ware courageously stood up to an Internet domain name thief," Kremen's lawyer Jim Wagstaffe said after Ware turned the domain name back to his client.

Pam Urueta, another lawyer who worked for Kremen on the case, said Ware's decision marked an important legal step in recognizing the rights of domain name holders.

While many previous high-profile domain name disputes involving celebrities and corporations have turned on the issue of trademark protection, the sex.com case was a more simple test of whether the protections extended to physical property can also be applied to intangible assets such as Internet domain names.

"There is a very significant legal issue of how you reconcile the traditional issues of fraud, property rights and invalid transfers with the 21st century concepts of Internet domain names and Web sites," Urueta said. "What the court ruling did is say that ownership of a domain name is a valuable right which can and should be protected."

Ware had earlier dismissed Kremen's claim against Network Solutions, and shaved down his primary charge against Cohen to one of fraud. Urueta said it was possible that Cohen would lodge an appeal of Ware's decision.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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