- Network Solutions - the Internet's
biggest domain name registrar and the owner of the .com domain -
has heralded the end of the Internet in court filings to the
Californian Supreme Court.
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- It warns that if a forthcoming
decision by the court goes the wrong way it "would cripple
the Internet and jeopardize the national economic benefit for
e-commerce". It would also "threaten all Internet
registrars' survival".
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- The astonishing revelations feature
in a 14-page submission sent to the Supreme Court on 23 January
and regard the on-going legal dispute with Gary Kremen, owner of
the domain Sex.com.
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- What is this decision that threatens
to wipe out the Internet in one fell swoop? It is whether Network
Solutions (NSI) can be held accountable for wrongly handing over
ownership of the extremely lucrative Sex.com domain to a Michael
Cohen after he sent a faked fax to the company's headquarters - in
1995.
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- The fax claimed Mr Kremen had been
fired from the company listed as the owner of the domain and that
that owner, Online Classifieds (OCI), was handing over ownership
of the domain to a Michael Cohen. It was signed by a Sharon
Dimmick, the apparent president of OCI, and gave final
authorisation of the move to, er, Michael Cohen.
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- Unfortunately, NSI didn't attempt to
check whether this information was true, didn't contact Mr Kremen
and duly signed over the domain rights to Mr Cohen. After a
five-year court battle, Mr Kremen won back the domain in April
2001 and was rewarded $65 million in compensation from Mr Cohen.
Mr Cohen promptly moved his assets offshore, left the country and
remains at large.
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- The issue of whether NSI can be held
accountable remains outstanding however. If it loses, it faces a
$100 million claim. Not underestimating its own importance, this
claim would put the entire Internet at risk, the NSI says.
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- Simply a legal tangent
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- However the court filing in which
this doomsday scenario is played out is merely an adjunct to the
main legal process of whether NSI is responsible. On 16 January
this year, the Ninth US Circuit of Appeals asked the Supreme Court
to intervene and decide on the technical point: "Is an
Internet domain name within the scope of property subject to the
tort of conversion?"
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- Put simply: Can anyone actually ever
"own" a domain name? Incredibly, the NSI feels confident
enough to tell the Court of Appeals in its submission that its
question is "inaccurate" due to its "shorthanding"
of the domain name question. It clearly doesn't understand the
domain name system as well as NSI does.
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- Instead, it suggests the question be
restated to ask whether the law of tort (civil wrong or injury in
which compensation can be claimed) can be applied not to a domain
name but to "Internet domain name registration
services". How the Ninth US Circuit of Appeals managed to
miss this distinction is anyone's guess.
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- If this improvement on the basic
question is made, NSI is happy for the Supreme Court to consider
the question.
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- On the other hand however, Gary
Kremen has asked the court to refuse to consider either the Court
of Appeals question or the NSI's amended question. Mr Kremen
argues that the basis for such a referral to the Supreme Court -
namely, that the question is unsettled in law and of intense
public importance - does not apply in this case.
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- He argues that the question has
already been answered in law many times (and list legal cases to
back this up), and that due to a change in domain name contracts
years ago, any resulting legal decision is unlikely to apply
directly to anyone else ever again (a point acknowledged by NSI).
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- Kremen also argues that answering
the question would not end or even resolve the overall legal
action against NSI, since he is also suing it for breach of
contract, third party beneficiary and bailment.
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- Instead, it will only "result
in unavoidable and highly prejudicial delay in litigation that has
already gone on for almost five years". Mr Kremen has not
been able to extract the $65 million compensation he was awarded
from Mr Cohen, which he admits has put him in an unenviable
financial position. The NSI "remains the primary source for
compensating Kremen's losses", his submission states.
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- Legal argument
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- Considering the NSI believes the
decision may force the end of the Internet and have "enormous
ramifications for a large sector of similar service providers,
including cable television service and telephone service
providers", it is a shame its legal arguments aren't
stronger.
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- Kremen argues that to dismiss
Internet domains as intangible properties which cannot be treated
with normal property laws would ignore the law regarding shares,
bonds, recorded performances and e-tickets and also make their
theft an unpunishable crime.
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- He argues that the computer database
which lists all domain names (the DNS) is a document equally as
valid as a printed document despite it being held electronically.
Otherwise, he points out, merely hitting a print button for the
list would cause a major shift in law.
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- In response, the NSI relies upon its
own definition of domains (after all, it was the company that
first issued them) as being impossible to own. All someone who
registers a domain gets in return for their money is "the
right to continued registration services for a period of
time" - a point that is becoming more difficult to justify
legally as the Internet becomes subject to wider laws.
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- Instead, "one 'owns' the domain
name registration in the same way that a person 'owns' a telephone
number", NSI says, perhaps overlooking the fact that domain
names are sold and exist freely on top of a system of
"telephone numbers" - IP addresses.
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- As for legal argument, the NSI turns
instead to examples regarding goodwill, industry secrets and
leasehold contracts, and indirect legal decisions ("If Payne
had ruled that all intangible personal property interests could be
converted, then Goldschmidt could not have reached this
result" [our emphasis], argues one point).
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- And the result?
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- The decision on whether to make a
decision will most likely take a year. If the Supreme Court does
decide to take it on, it could be expected to take a further four
years for the case to be finally decided - a mere 10 years after
it was first brought.
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- But while you would think that this
decision has far-reaching implications, both Kremen and NSI say
that this is unlikely to happen since the NSI changed it contracts
years ago (while it was still the sole seller of Internet domain
names) to write itself even further out of legal liability for any
domains it sells or looks after.
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- Ironically, however, NSI warns that
such a decision could spark calls for legal changes in the domain
name system. "Cases like this one will surely encourage
attacks on the validity of any contractual liability limitation
NSI or other registrars may have," it warns in the
submission.
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- This could happen in such terrible
cases as those "affecting public interest" or
"those regarding gross negligence or willful wrongs by common
carriers".
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- God forbid that the people that are
paid to effect the transfer of an individual's property are sued
because they knowingly fail to do so. If this became the case, the
NSI explains, "the cost of [registering domain names],
currently ranging from $7 to $25 annually, would become
unacceptably high".
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- Presumably, it is at this point that
the Internet falls apart. Or, if you were to look at it from a
different angle, it is at this point that the Internet finally
becomes a global, autonomous entity of its own making,
uncontrollable by parties with huge and irreconcilable conflicts
of interest.
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- But that's for the Supreme Court to
decide.
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