California Supremes To Decide If Domains Are Property

Richard W.M. Jones writes "Are domain names property like plots of land? The California Supreme Court has been asked to rule in the case of sex.com which was transferred using a forged letter to Network Solutions. Wired news also has the story."

Comments

Conversion in California Law, and who pays

[billstewart]

Alex Kozinski's a pretty good judge, and he writes good rants - if you haven't read the case, it's a fun read. One oddity here is that the appeals court has three judges, and two of them thought that they should refer it to the California Supreme Court, because the remaining critical issue depends on California law, not Federal, and Kozinski disagreed - but because he's head judge, he has to write the opinion sending it to the California Supremes, as well as writing his dissenting opinion.

Common law on conversion originally only applied to tangible property - not just real estate, but horses and cooking pots and later cars and computers - but not to intangibles. As Werdna says, in most states that's changed. Kozinski argues, and IANAL but it looked convincing to me, that California law has really settled the issue solidly that conversion can apply to intangibles, or at least to intangibles that have some connection to tangibles like paper, so there's no issue here.

The big deal for Verisign is that conversion is a tort, and since they lost, they have to pay up, and since Cohen, who actually ripped off the domain name, has skipped out of the country and hidden or spent most of the money, they may have to pay the whole $65 million to Kremen and try to get it back from Cohen if they can. They already lost the part about giving back the domain name, but that didn't bother them so much.

The amount of money actually is a bit surprising - this case started in 1995, before the Boom, before business.com sold for $150K in 1997, and before Altavista.com sold for $3M in 1998. The plaintiff Kremen had registered the name, but hadn't actually used it for anything yet and didn't know it was gone for about 8 months. Meanwhile, Cohen, who had ripped it off, had figured out how to turn it into a highly profitable business, and after several years of litigation, he'd made a big enough pile of money on it that the court awarded the plaintiff $65M as well as giving him the name back (that was either ~$20M in actual damages and ~$40M in punitive damages, or maybe the other way around.) He and Verisign appealed, in Cohen's case partly because he said the judgement was way out of line for an asset was only worth so much because he'd built it up himself, and in September 2002, the court handed him his ass for even trying to appeal because he'd fled and hidden the money, and they told Verisign to give Kremen the name back, but the conversion issue is still not decided, so Verisign doesn't know how much of it they'll have to pay.