Will Cripple the Net?

Joanna Posner

VeriSign, formerly Network Solutions, Inc. (NSI), claims the Internet is so unstable that an appellate court victory by Sex.Com in its lawsuit against the registrar “would cripple the Internet and jeopardize the national economic benefit for e-commerce,” according to court filings.

The federal 9th Circuit Court of Appeals in San Francisco requested the California Supreme Court to weigh in last month on the issue of whether a domain name is property that can be stolen, or “converted.” NSI is fighting to have the case reviewed by the California Supreme Court.

NSI’s January 23, 2003 submission to the Supreme Court is dense with assumptions that a court decision acknowledging the property rights of domain names registrants will devastate business mediums, having “enormous ramifications for a large sector of similar service providers, including cable television service and telephone service providers.” “NSI has dug a hole so deep and they can’t dig themselves out of it,” says Gary Kremen, founder and chief executive officer of Sex.Com. “Now they are trying to exploit the entire Internet domain to get themselves out of this mess. It is absurd.”

The multi-million dollar case hinges on whether NSI will be held accountable for unilaterally taking the lucrative Sex.Com domain name from Kremen. In 1995, NSI handed over the popular domain name to Stephen Cohen after he sent a forged letter to NSI headquarters. NSI failed to verify the authenticity of the letter and signed over the domain rights to Cohen, who proceeded to build a porn empire. After Kremen won a $65 million judgment against Cohen for compensatory and punitive damages, Cohen fled the country and has remained a fugitive.

Kremen asserts NSI is liable for using inadequate safeguards to protect his property. NSI claims that domain names aren’t property and they cannot be held responsible for giving its customers’ registered names away.

"NSI insists that requiring of it a duty to care for the domain name registrations of customers would threaten the survival of all registrars, raise fees to unacceptable levels and somehow disable the Internet worldwide,” said Ellen Rony, Plaintiff's domain name expert witness in the Sex.Com litigation. “Such hyperbole miscasts the issue at bar. Kremen asks to hold NSI accountable for its misdeeds in facilitating the re-registration of Sex.Com to an unauthorized third party and violating its own published policies. Kremen merely seeks the remedial rights that California affords owners of property."

Kremen’s attorney, Jim Wagstaffe of San Francisco, said the brief was the latest volley in NSI’s efforts to evade responsibility for the Sex.Com fiasco. “NSI is telling its customers that their domain names aren’t really theirs to keep,” Wagstaffe said. “NSI wants to reap 21st century profits, but not to be subject to 21st century law.”

“The Internet was designed and intended to survive a nuclear inferno,” observed Eric C. Grimm, an attorney with Ann Arbor, Michigan-based Internet specialty firm CyberBrief, PLC. “So VeriSign’s argument that the Internet is not robust enough to survive one lawsuit simply does not pass the giggle test.”

“When VeriSign couches its ‘Internet will break,’ argument in the passive voice,” said Grimm, “it is important to ask who will do the alleged ‘breaking.” The implicit threat is that VeriSign is holding the Domain Name System (“DNS”) hostage and threatening to break it unless VeriSign is allowed to re-write all the rules, that everyone else must play by, in VeriSign’s favor. The only real threats to the stability of the DNS are: the instability that customers worldwide already are suffering because VeriSign cannot be trusted to do its job competently and has no incentive to improve until it is held accountable for the mischief it causes; and – if VeriSign is actually making the threat it seems to be making – the prospect that VeriSign might actually try to sabotage the DNS and retaliate against any court that holds it accountable for its incompetence and mischief.”

“NSI’s assertion that an adverse ruling will ‘cripple the Internet’ is not only disingenuous, it is erroneous,” says Greg Geelan, General Counsel at, a resource site for Webmasters. “In fact, it will have the opposite effect. Acknowledging property rights in registered domain names will benefit e-commerce. If individuals have some degree of confidence that their websites cannot be hijacked through NSI’s incompetence without compensation, they will have greater incentive to invest thousands of dollars building and maintaining online businesses, which will benefit our national economy.”

“If a quasi-federal organization like Network Solutions/VeriSign isn’t held accountable for incompetence like this one, I can’t wait to see what the Department of Homeland Security gets away with,” said Gram Ponante, Managing Editor of

In recent court filings, NSI contends “The decision will affect all kinds of electronic intangible interests in cyberspace…and indeed every kind of intangible property interest (such as leaseholds, other contract rights, and business goodwill).”

Editor’s note: The / VeriSign case holds great importance for every domain name owner, as one of the core questions is whether or not your domain name is legally your property. Stay tuned for our ongoing coverage, and let us know what YOU think about all of this by clicking the link below: ~ Stephen