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 Technology News | August 2006 
The Battle for the Sex.com Domain Name
 Kieren Mccarthy - The Guardian
| | The decade-long tussle over the world's most seductive Internet address is a retelling of the Trojan War story for the digital age. |
"I never stole it. He stole it!" cries Stephen Michael Cohen, pointing wildly at the man who had been chasing him for over a decade. "It was you guys who went into court and explained that there was some cockamamie list and therefore he was the owner. The name sex.com has always been mine."
The cockamamie list referred to is the Internet's most valuable document: a list of the owners of all the Internet domain names ending with ".com."
And the owner of the dotcom mentioned - the infamous sex.com - is the man responsible for making all those millions of domains into property in the eyes of the law. On Jan. 19, Gary Kremen made the most of his extraordinary legal victory by selling that property for a record US$12 million.
But the tale of sex.com is about much more than property and money. It is a modern retelling of an ancient tale - a Trojan war for the digital age, except with Helen, the most beautiful woman in the world, replaced by the world's most seductive Internet address. It reveals what men will do - and are capable of doing - when confronted with their most basic desires of sex and power.
The battle began on Oct. 18, 1995, when Gary Kremen noticed that sex.com no longer listed him as its owner, despite him having registered the domain some 18 months earlier. Even at this time, the Internet had barely penetrated the public's consciousness - the dotcom boom was another four years away - but both Kremen and Cohen had realized that a huge market would soon appear in this entirely electronic and virtual world, and sex.com would be one of its prime pieces of real estate.
Despite having similar backgrounds as white, middle-class American Jews, the two men could not be more different. Kremen was a star pupil, gaining a degree in computer science before going to Stanford to sharpen his business brain. He has started a series of successful business before selling up and moving on, and his experience and understanding of the Internet makes him a prized consultant.
Stephen Cohen, on the other hand, was an appalling pupil, barely scraping through high school despite an extraordinary intellect. With no qualifications and poor literacy, he turned to a life of crime, using his wits and almost unnatural gift for persuasion to pull off a long series of increasingly complex scams.
After 20 years as a professional con man, he has become expert in company law, bankruptcy law, offshore bank accounting and countless other areas that proved useful in a lifelong quest for cash.
Back in 1995, while Kremen busied himself with building from scratch what is now the Internet's biggest online dating service, Match.com, Cohen applied his skills to figuring out how to get control of sex.com. Eventually, through a clever and complex mixture of charm, computer hacking and forgery, he managed to persuade the company in charge of all dotcoms, Network Solutions, to put the domain in his name.
It was the start of a vicious decade-long fight between Kremen and Cohen that witnessed sordid affairs and spectacular break-ups, ruinous lawsuits, the theft of court documents, a nationwide manhunt, a gunfight, illegal offshore accounts, international stock scams, multimillion-dollar court judgments, a trashed mansion in one of the world's most exclusive neighborhoods, and at the center of it all, two men regularly in touch by phone - goading, commiserating, mocking and joking with each other.
No strategy was too devious and no approach too risky in the struggle to own sex.com. From the very first day that Kremen finally sued Cohen - July 9, 1998 - it was a high-stakes game with a worldly fortune guaranteed to the victor and the promise of ruination to the loser. Each knew his entire life depended on winning, and each knew that only one of them was ever going to win.
The trouble is that Stephen Cohen refuses to accept he has been beaten. He lost the sex.com domain in court back in November 2000, but has yet to pay one cent of the US$65 million he was subsequently ordered to give Gary Kremen.
To stop the courts getting at him, Cohen moved all his money between October 2000 and April 2001 to hidden offshore accounts and then moved himself to Mexico. Worried about Kremen's determination to get him, he then moved to Monte Carlo, living the high-life for a few years before returning to Tijuana some time in 2004. Despite Cohen's constant pretense to be in other parts of the world, Kremen discovered his nemesis was back and started plotting to get him dragged into the US.
But before his plan came to fruition, fate intervened. Cohen's stepdaughter was arrested trying to smuggle 92kg of marijuana across the border in her car, insured in Cohen's name. The Mexican police started taking an interest in the con man.
Four months later, on Oct. 27 last year, he was arrested and transported across the border to sit in the same jail as his daughter. Two months later he sat in a San Jose jail facing Kremen and Kremen's lawyers, refusing to give any details about where his money was. Including interest, he now owes Kremen US$82 million, and Kremen wants it.
The judge told Cohen that he will stay in jail until he hands over bank details, but eight months later Cohen's absolute refusal to be beaten means he is still there under lock and key, having not given a single usable piece of information.
Cohen can certainly afford the massive fine, despite his endless protestations. A court appointed receiver back in 2001 estimated he had made at least US$40 million profit from sex.com alone between September 1995 and November 2000, but accepted that he had been stymied by Cohen stealing his own bank records while they were being copied for the court to review. Kremen's team of specialist financial investigators have since traced huge transfers of funds which suggest Cohen is sitting on several hundred million dollars.
When Kremen did go after Cohen, Cohen used his huge income from sex.com to frustrate the legal fight. But then the dotcom boom hit and Kremen cashed in, most profitably with a US$3 million windfall thanks to an early investment in content management company Interwoven. Even so it took Kremen another 14 months to get sex.com back.
From there it was another three years and a few more million in legal fees to finally get Network Solutions, the company that had wrongly given Cohen control of sex.com (and then refused to hand it back), to sit down at the settlement table with Kremen. They paid him an estimated US$20 million not to go to trial.
But Kremen had already won his main victory - recognition by the US legal system on July 25, 2003, that domain names were in fact property and an individual has rights over it, establishing a fundamental pillar within Internet law.
Before Kremen risked everything he had to get sex.com back (and then used the majority of the money from running it as a sex search engine to continue his legal fights), domain names were legally viewed as only being rented out for an annual fee by the company in charge; the domain owner had no legal rights over the domain itself.
It was an insane legal inconsistency, considering the market value (even then) of companies such as Amazon and eBay that work exclusively through their Internet addresses.
But Kremen isn't finished yet. While Cohen remains in jail, with his next court appearance due in four months, Kremen is tying up loose ends. He lives in the San Diego mansion that he managed to prise from Cohen after Cohen tried to push it through a fake bankruptcy in September 2001. Earlier this year he also managed to get control of Cohen's shrimp farm in Mexico.
But one thing that he doesn't have yet is a large series of Internet addresses owned by Cohen that the court ordered five years ago should be handed over to him.
While the domain name system enables words to identify individual Web sites, every single connection to the Internet must have its own individual Internet Protocol (IP) address, in the form of a series of numbers (e.g. 102.86.126.65). These act as a directory for the computers themselves. Domain names are associated with individual IP addresses, but the IP address itself forms the connection to the Internet.
However, despite being ordered to hand over Cohen's IP "address block," the company in charge of them, the American Registry for Internet Numbers (Arin) has refused to do so. So Kremen is suing it, and Arin is fighting back. The parallels to the sex.com fight are startling.
"It's an insiders' club," Kremen says. "They really have no defense. They said they would hand over the addresses if I signed this contract that basically allows them to do whatever they like."
"They won't allow a market or any transfers of IP addresses. It is a monopoly, it is not transparent and these addresses are valuable," he says.
Asked if he intends to do the same to the IP address as he did to the domain name and make it legal property - able to be bought, sold, traded and stolen - Kremen is unequivocal: "Yes."
Coming from a man who spent 10 years chasing down one of the world's most successful con men and beat the most powerful company on the Internet into submission, that threat is something that Arin is going to have to take very seriously. |
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