## Facts

- In 1994, Gary Kremen registered the domain name **sex.com** through Network Solutions, Inc. (NSI), listing Online Classifieds, Inc. as registrant and himself as contact.
- At the time, NSI was the primary registrar for .com domain names under a cooperative agreement with the National Science Foundation, and registration was free.
- In 1995, Stephen Michael Cohen sent NSI a forged letter purporting to authorize transfer of **sex.com** from Online Classifieds to Cohen and falsely asserting Kremen had been dismissed and the domain abandoned.
- NSI did not contact Kremen and transferred **sex.com** to Cohen based on the forged authorization.
- Cohen used **sex.com** to generate substantial revenues; Kremen obtained a judgment against Cohen but could not collect because Cohen moved assets and fled.
- Kremen sued NSI, asserting conversion and related contract-based theories; the district court granted summary judgment for NSI, concluding a domain name was not property subject to conversion under California law.

## Issues

1. Whether an internet domain name is a property interest under California law sufficient to satisfy the “ownership or right to possession” element of conversion.
2. Whether California conversion law can apply to purely intangible property interests without requiring “merger” into a physical document.
3. Whether a domain registrar that transfers a domain name based on a forged authorization can be liable for conversion, notwithstanding claimed good faith.
4. Whether Kremen’s contract-based theories against NSI (implied contract, third-party beneficiary, and “conversion by bailee”) stated viable claims.

## Decision

- The Ninth Circuit reversed summary judgment for NSI on the conversion claim and remanded for further proceedings.
- The court held that a domain name is property under California law and can be the subject of conversion.
- The court held that conversion may extend to certain intangible property interests and is not categorically limited to tangibles or document-merged intangibles.
- The court held NSI could be liable for conversion because it wrongfully transferred the domain to Cohen without proper authorization; conversion is strict liability and good faith is not a defense.
- The court affirmed summary judgment for NSI on Kremen’s contract-based claims, including implied contract and third-party beneficiary theories, and treated “conversion by bailee” as not a separate cause of action from conversion.

## Legal Principles

- Conversion under California law requires: (1) ownership or right to possession of property, (2) wrongful disposition of the property right, and (3) damages.
- Conversion is a strict-liability tort; good faith, lack of knowledge, or innocent motive generally does not defeat liability.
- An intangible interest qualifies as “property” for conversion when: (1) it is capable of precise definition, (2) it is capable of exclusive control, and (3) the claimant has a legitimate claim to exclusivity.
- An internet domain name can satisfy these criteria because it is uniquely defined, controlled exclusively by the registrant through the registry, and registration signals exclusivity against others.
- California conversion law is not confined to interests “merged” into a physical document when the interest otherwise functions as a definable, exclusively controlled property right.

## Conclusion

The Ninth Circuit recognized an internet domain name as a property interest under California law and held that a registrar’s unauthorized transfer of a domain name can constitute conversion, a strict-liability tort, while rejecting related contract-based theories against the registrar.


Kremen v. Cohen, 337 F.3d 1024 (9th Cir. 2003)