Kremen v. Cohen

United States Court of Appeals for the Ninth Circuit · 2003 · Property

PropertyTortsConversionDomain namesContractsThird-party beneficiaryconversiondomain name

Facts

Gary Kremen registered the domain name sex.com with Network Solutions in 1994 to his business, Online Classifieds. After leaving prison, Stephen Cohen sent Network Solutions a forged letter purporting to authorize transfer of the domain name, and Network Solutions transferred sex.com to him without contacting Kremen. Cohen then profited from the site, while Kremen later recovered the domain name but had difficulty collecting his judgment against Cohen. Kremen then sued Network Solutions for mishandling the transfer.

Issue

Whether, under California law, a registrant's domain name is property subject to the tort of conversion when a registrar transfers it away on the basis of a forged letter. Also, whether Kremen could recover against Network Solutions on implied contract, third-party beneficiary, or separate 'conversion by bailee' theories.

Rule

Under California law, conversion requires ownership or a right to possession of property, wrongful disposition of the property right, and damages. Domain names satisfy the requirements for property because they are precisely defined interests, capable of exclusive control, and subject to a legitimate claim of exclusivity. California does not impose the Restatement's strict rule that an intangible must be represented by a document before it can be converted; at most, only some connection to a document or tangible object is required.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Maya Ortiz operates a small online design studio in San Diego. She registered the domain name blueharbor.net through Harbor Key Registry, and the registry later transferred the name to a stranger after receiving an obviously irregular fax with mismatched signatures, without contacting Maya.

Under California law as articulated by the majority opinion, which is the strongest argument that Maya can maintain a conversion claim against Harbor Key Registry?

Explanation. The majority held that, under California law, domain names qualify as property because they are capable of precise definition, exclusive control, and a legitimate claim to exclusivity. It further held that such an intangible property interest may be the subject of conversion. The registrant need not show prior profitability or a separate contract recognizing the property right, and California does not confine conversion to tangible chattels.