In 1994, Gary Kremen, through his company Online Classifieds, Inc., registered the domain name sex.com with Network Solutions, Inc. (NSI), then the sole domain name registrar. He did not immediately develop an active website but retained the registration. In 1995, Stephen Michael Cohen, a convicted fraudster, sent NSI a forged letter—purporting to be from Online Classifieds—requesting transfer of sex.com to Cohen. NSI, without verifying the authorization or contacting Kremen, transferred the domain to Cohen. Cohen then built a lucrative business using the domain, allegedly generating tens of millions of dollars. Kremen obtained a substantial default judgment against Cohen, who fled; Kremen also sued NSI for conversion and negligence. The district court granted summary judgment to NSI, holding that a domain name was not property subject to conversion and that, under California law, conversion generally does not apply to pure intangibles absent merger with a document. Kremen appealed.
Is an internet domain name property under California law such that it is subject to the tort of conversion, and can a registrar be liable for conversion by wrongfully transferring a domain name based on a forged authorization?
Under California law, conversion is the wrongful exercise of dominion over another's property. Its elements are: (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's wrongful act or disposition of the plaintiff's property rights; and (3) resulting damages. Conversion is a strict-liability tort; good faith or innocence is not a defense. An intangible interest qualifies as property for conversion if it is: (a) capable of precise definition; (b) capable of exclusive possession or control; and (c) the putative owner has a legitimate claim to exclusivity. California law does not require a strict "merger" of the intangible interest into a document to sustain a conversion claim.
A domain name is property under California law and is subject to the tort of conversion. NSI's transfer of sex.com to Cohen based on a forged letter constituted a wrongful disposition of Kremen's property interest sufficient to support a conversion claim. The Ninth Circuit reversed the district court's summary judgment for NSI and remanded for further proceedings.
The court first determined that a domain name fits within California's conception of property. It is precisely definable (a unique alphanumeric string within the DNS), capable of exclusive control (only the registrant can direct the domain's routing and use), and the registrant has a legitimate claim to exclusivity (others cannot lawfully appropriate or use the identical name). The court rejected the argument that domain names are merely contractual rights or services provided by a registrar, emphasizing the registrant's control and the market value of the asset independent of any particular service term. The court also refused to adhere to a rigid "merger doctrine," explaining that California's conversion jurisprudence has evolved to protect certain intangible interests and that nothing in principle prevents recognizing conversion of a domain name. Applying conversion's elements, the court concluded Kremen owned a property interest in sex.com by virtue of his registration. NSI's transfer in reliance on a forged letter wrongfully deprived him of that interest; conversion does not require bad faith, and NSI's asserted good-faith compliance with internal procedures was no defense. The registrar's updating of the registry record—though an intangible database entry—was sufficient dominion over the property to constitute a wrongful disposition. The court rejected analogies to telephone numbers and to purely contractual service entitlements, noting that domain names are uniquely assignable, tradable, and exclusively controllable resources with recognized market value. Because recognizing liability for mishandled transfers would not unduly burden registrars—who can adopt reasonable verification protocols—the tort framework appropriately assigns the loss to the party that enabled the wrongful transfer. The court therefore reversed the grant of summary judgment and remanded for proceedings consistent with its holding.
Kremen is a seminal case recognizing that valuable digital identifiers can be "property" protected by common-law torts. It broadens the scope of conversion to encompass certain intangibles without requiring merger into a document, aligning traditional doctrines with modern assets. The decision places registrars and analogous intermediaries on notice that they may face strict-liability exposure for mishandled transfers, incentivizing robust verification procedures. For students, the case illustrates: (1) how courts derive property tests for new asset classes; (2) the strict-liability nature of conversion; and (3) the dynamic interplay between tort and property concepts in technology contexts.
Kremen v. Cohen marks a pivotal step in adapting common-law property and tort doctrines to digital assets. By treating a domain name as property and permitting a conversion claim for its wrongful transfer, the Ninth Circuit affirmed that law can—and should—protect valuable, exclusively controlled intangibles central to modern commerce.