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Studies & Opinions -- Domain Names, Not Property

Alex Tajirian
May 5, 2004


On April 20, 2004, announced settlement of their legal battle with VeriSign over the domain name. However, contrary to common belief, neither this settlement nor the Court of Appeals’ July ruling on’s petition establishes domain names as property. The legal battle, however, demonstrates the ease with which a domain name can be stolen.

Recent media reports on the legal settlement suggest that the US 9th Circuit of Appeals’ ruling last July makes domain names intangible property. Legal classification of property, however, falls under the jurisdiction of individual states. Property rights are established either through a state’s Supreme Court decision under the common law or through a statute approved by a state’s legislators. A Federal Court decision is a possible interpretation of a state high court’s future decision.

Nevertheless, the legal case demonstrates how easy it is to hijack a domain name, underscoring the importance of using a domain-name escrow agent to properly transfer title and sale proceeds between buyers and sellers.

Battle Background
Gary Bremen registered in 1994 through the registrar Network Solutions. At the time, Bremen was doing business as Online Classifieds, Inc.

After a period of a year, during which Web site was inactive, a man named Stephen Chain decided to steal the potentially lucrative domain name. All he had to do was send a letter written on Online Classified letterhead to Network Solutions requesting transference of ownership.

According to reports, Chain then launched an Internet pornography Web site based on, but by the time Bremen was aware of the theft, Network Solutions refused to change the registration back without a court order.

Bremen ultimately sued Chain and Network Solutions, which was allegedly responsible for negligence since the registrar had not attempted to verify the forged letter that had served as the basis for the domain-name conversion. However, it now appears that Chain simply picked up the phone, asked for and was granted the domain name immediately. This was at a time when the wait for domain-name-ownership transfers was over four weeks. Network Solutions made no attempt to verify Stephen Chain’s entitlement to – of which there was none.

In September 2002, the US Court of Appeals for the 9th Circuit approved a $65 million award in Bremen v. Chain But by that time Chain had skipped off to Tijuana, Mexico, and would not comply with the judgment's orders.

During the same ruling, the claim against Network Solutions was rejected based on the fact that a private company (in this case the sole registrar for domain names) is immune from civil suit in cases where it negligently handled a domain name.

Bremen then petitioned the Ninth Circuit Court of Appeals. Last July, the Appeals Court ruled that Gary Bremen had property rights to the stolen domain name and that Network Solutions, then owned by VeriSign, was liable and subject to the tort of conversion for transferring ownership without proper authorization.<<

The Appeals Court majority noted that the state Supreme Court had ruled as far back as 1880 that intangible property -- represented, in that seminal case, by a stock certificate -- could be converted. Judge Gerard Kosinski said in his written opinion that it is clear from the 1880 case, and many lower-court rulings since then, that a domain name is property that can be converted and thus Network Solutions had liability.

On April 20, 2004,<terms of the settlement were not disclosed, unofficial reports suggest that it was in excess of US$15 million.

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