The owner of domain name sex.com won a landmark case comparing domain names to property ruling that domain name registrar Network Solutions (currently known as Versign) may be held liable for wrongfully transferring the domain to a con man based on a forged letter.

The Ninth Circuit Court of Appeals said courts should treat domain names, despite their virtual nature, exactly as they treat ?a plot of land.? The court contented that if Internet names are property then domain name registrars should be responsible for safeguarding them. ?Exposing Network Solutions to liability when it gives away a registrant?s domain name on the basis of a forged letter is no different from holding a corporation liable when it gives away someone?s shares under the same circumstances,? wrote Judge Alex Kozinski.

Early Internet entrepreneur, Gary Kremen, who first registered sex.com in 1994, had the domain stolen by ex-con Stephen Cohen in 1995 after Cohen was released from prison for impersonating a bankruptcy lawyer. Cohen forged a letter said to be from Kremen?s company authorizing Network Solutions to transfer the domain to Cohen. Network Solutions did so without verifying the authenticity of the letter. Cohen went on to make $millions from a porn empire that was focused on the sex.com name.

Kremen sued and in 2001 a judge ordered Cohen to pay Kremen $65 million in damages. Cohen fled to Europe leaving Kremen little except a large home in Rancho Santa Fee. Kremen sued Network Solutions, but a federal judge in San Jose, California, rejected his claim saying that domain names are a form of intangible property not eligible for damages. Kremen appealed arguing theat Network Solutions should be held liable for damages despite the fact that he didn?t actually pay anything to register the domain in 1994, when web addresses were free.

The court agreed with Kremen that the company should be held liable under the Tort of Conversion, a statute under which damages can be assessed for contributing to the loss of property. ?Negligent or not, it was Network Solutions that gave away Kremen?s property? It would not be unfair to hold Network Solutions responsible.? Koziniski wrote.

The case now goes back to the San Jose federal district court who could assess damages against Network Solutions predicted to be in the tens of millions of dollars.