On August 13, 2002, Judge Alex Kozinski took the bench in the Ninth Circuit courtroom in downtown San Francisco to hear oral arguments in Kremen vs. Cohen. Kozinski is a maverick, which was apparent to everyone when Reagan appointed him to the Ninth Circuit bench in 1985. Widely admired for his brusque rhetoric, he had graduated from UCLA Law School a mere ten years earlier, thus becoming the youngest appointee to the U.S. appellate bench. Born of Rumanian immigrants in Los Feliz, a Latino suburb northeast of LA, he was known for writing clever, biting opinions, and suffering fools with very poor grace.
Perhaps foreshadowing the outcome of the case now before him, about ten years earlier Kozinski had authored the blunt opinion that gave Cohen a pyrrhic victory in his appeal from the San Diego bankruptcy fraud convictions. Kozinski’s opinion reversed one of the three convictions and remanded him for resentencing by Judge Judith Miller. The same Judge Miller who Cohen had called a “cunt,” something she probably hadn’t forgotten when he stood before her again a couple of years later. Despite Cohen’s appellate victory, Judge Miller sentenced him to the same term of years as she had at the conclusion of trial. For some reason, Cohen thought his first encounter with Kozinski boded well for the outcome of the Sex.Com case.
Cohen had taken up the habit of calling me occasionally to incite my animosity toward Gary and to share his plans for causing Gary pain and expense. Sometimes, when he was very proud of his cleverness, he would disclose his litigation plans, and in such a mood he told me about his lawyer’s theme for the appellate argument. It didn’t sound like a good theme, and I was sure he’d never use it, so I was surprised when Cohen’s lawyer stepped up to the podium in the beautiful Ninth Circuit chamber and spoke his opening line.
The atmosphere was hushed and decorous for what those involved knew was a momentous hearing. Several reporters, and bigwigs like Phil Sbarbaro of NSI, were in attendance. The appearance of the courtroom was truly splendid, the most dazzling I have ever seen. The stonemasons and cabinet-makers of the FDR era had outdone themselves creating a temple of justice. Everywhere the eye wandered it settled on sculpted marble and fine woods carved with complex designs. The lights were concealed behind stained glass. The three judges, with Kozinski in the middle, sat in high-backed leather swivel chairs, black-robed and charged with power, surveying the lawyers and the gallery from their exalted position.
Mike Mayock, who had argued Cohen’s criminal appeal years before, addressed his opening line directly to Kozinski. To my immense surprise, he said just what Cohen had told me he would say: “Judge Ware was sucker-punched.”
Kozinski’s brow immediately furrowed, and a cloud gathered over his head. While Mayock was drawing his breath, Kozinski checked his advance with an abrupt response: “Wait a minute. You can’t come here and call the District Judge a sucker.”
Mayock tried to dig his way out of the hole Kozinski had put him in. He hadn’t called Judge Ware a sucker, he pleaded.
Kozinski kept him on the hook. Yes he had called the judge a sucker.
When a judge speaks to a lawyer that way in open court, it’s like being hit in the forehead with a fencepost. His brain stalls. If he’s lucky, he does the right thing from pure instinct. Mayock wasn’t lucky. His instincts failed him, probably because there was no right thing to do. A sucker punch hits the sucker before he has a chance to defend himself, and it was obvious to everyone in the opulent chamber that Mayock had been suckered by a master. Kozinski finished him off with a dose of disdain, demonstrating utter disinterest in his argument, allowing him to drown in disgrace. Cohen told me that Mike had a heart attack a short time later. Unlike past occasions when Cohen had reported that he or his lawyer had suffered a heart attack, this time I think it was true.
Jim Wagstaffe was up next, arguing for affirmance of Judge Ware’s verdict against Cohen, and a reversal of the summary judgment for NSI. The atmosphere in the court relaxed as Wagstaffe efficiently recounted the story of how Cohen had stolen Sex.Com, laundered the proceeds through offshore banks, and was living in Mexico, a fugitive from Judge Ware’s arrest warrant. Machiavelli said that victory makes everything all right, and it certainly was true of Gary’s case against Cohen. Gary had gone from fighting an uphill battle to coasting downhill, and the nods from Kozinski and his fellow judges made it clear that Wagstaffe had little to worry about from Cohen’s appeal.
Wagstaffe moved on to the appeal against NSI. Judge Ware had concluded that domains were a form of intellectual property too evanescent to form the basis for a conversion claim, because they weren’t “merged with a document.” Thus, Gary’s search for a “document of title” had expanded. In the trial court, I had pointed to the registration documents Gary filed to obtain Sex.Com, and the falsified documents Cohen submitted, combining Gary’s name with Cohen’s email address to “spoof” NSI. They had looked like “documents of title” to me, but Judge Ware had not even considered them. Wagstaffe took my argument further, pointing to the entire Whois database as the fundamental document that makes all domains a form of personal property.
Through Gary’s growing influence, he had gotten a variety of cutting-edge legal organizations to support his fight, like the Electronic Freedom Foundation, that had never been interested in the cause before. Kozinski and his fellow judges had received numerous amicus briefs attacking NSI’s arrogant position, but more than scholarly legal opinion was in the air.
A wind of change was blowing through the courtroom, as the barometer of public opinion came into harmony with the facts of Internet life. What had been esoteric in June 1999 when I joined the case, and remained obscure in May 2000 when Judge Ware dismissed NSI, had since become common knowledge. Computer printers were on every desktop, ready to turn online documents into hardcopy. In truth, printing itself was irrelevant, as electronic documents had become ubiquitous. Our society had moved beyond reading its email to drowning in spam. The very word “document,” was losing meaning as people Googled for facts they once would have looked for in books, newspapers, libraries or archives. Taxes were filed online, paper airline tickets were an anachronism, and even the federal courts were requiring lawyers to learn the new “e-filing” system. By fall, 2002, Internet domain names were being registered at a rate that was accelerating exponentially, generating millions of dollars in registration revenue. Meanwhile, NSI was still trying to hide behind the lack of a “document.”
The danger of Internet fraud had also ceased to be theoretical. Newbie websurfers everywhere were falling prey to Nigerian inheritance scams, offshore casinos, and phishing scams that forged whole financial websites to extract precious personal data. Identity theft had become the fastest-growing crime in the nation, aided by insecure databases and loose verification procedures. Forgery and false impersonation were becoming the signature crimes of the computer era, and the courts were beginning to see more cases like Gary’s, where con artists directed their deceptions not to the owner of property, but to those in charge of their property -- the banks, the credit reporting agencies, and of course, the domain name registries.
The domain name business had also changed. NSI had lost its monopoly on domain registrations, and with it the mystique of being a government contractor performing a unique function. Nor was it any longer a wet-from-the-womb dot-com brimming with electronic cash. It was a mere small-cap subsidiary of a big company called VeriSign, for which domain registrations were a drop in its revenue bucket. New companies like Godaddy and eNom had made mincemeat of NSI’s registration business by cutting prices and providing a decent level of customer service. NSI’s argument that it would be too burdensome and costly to impose oversight obligations on registrars had been shown to be ridiculous.
Kozinski received Wagstaffe’s arguments welcomingly, asking questions that brought out the strongest points in Gary’s favor. When Dave Dolkas stood up to argue NSI’s defense of Judge Ware’s decision, Kozinski’s mood changed. When Dave said there was no document of title, Kozinski’s response wasn’t polite. What about the Whois database? NSI had total control over that record. It was printable. It recorded the names of domain name registrants, and all of their information. Why wasn’t it a document? Wasn’t it NSI’s property? Wouldn’t NSI have a claim if someone injured that property? Dave seemed puzzled. Maybe, he ventured, it would be trespass? Kozinski seemed appalled by the response. Dave’s habitual thinking patterns had apparently reached the limit of their utility.
Kozinski’s questioning then moved Dave further into unfriendly territory -- the topic of the forged letter. Ellen Rony’s analysis finally received its due. Citing what Ellen had called “red flags” that should have raised questions, Kozinski rejected Dave’s argument that NSI couldn’t have discerned fraud from the face of the letter. He pointedly asked if it wasn’t strange that a company called “Online Classifieds” would lack an Internet connection, as the forged letter asserted. As the pace of Kozinski’s attack on NSI’s position moved to a brutal conclusion, Phil Sbarbaro, his bald spot jerking and his pin-striped suit a jumble of conflicting lines, began shifting uncomfortably in his seat. By the time Dave sat down, NSI’s position had been utterly rejected by the enfant terrible of the Ninth Circuit. Phil sprang from his seat and darted from the courtroom, pushing through the massive red leather doors without reverence for the dignity of the court. Although I called to him as he blew past, “Hey, Phil,” he was not interested in exchanging pleasantries with an old enemy, and ignored me completely.
After the hearing, I congratulated Wagstaffe on his argument, and maneuvered my way around Idell. I was standing by the ornate elevator, wrapped in an old-fashioned cage, when Gary came out.
Gary swung his bulk a little side to side and tossed me a question, “Whaddja think?”
I answered politely, “I think it was good for you.”
Tara, who had appeared at my elbow, leaned forward to interject “I think it was great for Charles!” Like giving a vial of nitroglycerine a sharp rap, her remark had an instantaneous effect.
Gary’s eyes exploded into bulging orbs of rage as his reply flew forth from his goatee-encircled mouth: “Well, you really fucked up Wells Fargo! Idell has the proof!”
Ah yes, the bittersweet pleasure of hedging your bets. Gary’s victory over NSI was tainted by the painful thought that he had just lost leverage against me. I had been vindicated by Kozinski’s endorsement of my reasoning. The court could now lift the stay of my lawsuit, and he would no longer be able to accuse me of malpractice for not filing a stupid negligence claim against NSI. Negligence! How absurd. For after all, what could NSI have negligently damaged but Gary’s property? As I had always said, Sex.Com was either property, or it was nothing.
Jim DeSimone was delighted to hear about Kozinski’s performance, whom he reminded me was UCLA alumnus. I took a few calls from clueless reporters who didn’t know how to read a docket sheet and still thought I was Gary’s lawyer. Cohen called, but when I told him about Mayock’s terrible performance, he still expressed optimism, and looked forward to reading the opinion. Cohen didn’t have long to wait, but the panel’s unanimous opinion couldn’t have been worse for him. If there had been a baby in the bathwater that Mayock had presented to the panel, they ignored it entirely, because all of his arguments were sent unceremoniously down the drain with a one-line opinion published in early October 2002. “In light of Cohen’s status as a fugitive from justice and his egregious abuse of the litigation process, we exercise our discretion to dismiss his appeal.” In response to this news, Gary told Wired magazine, “It shows sometimes justice prevails.”
I was hoping that I, too, would receive a little justice from the Ninth Circuit, in the form of an opinion vindicating my position on the property character of domain names, but the distance from the cup to the lip once again proved elastic. When Kozinski’s opinion came out, it was not unanimous, and it was not what I had hoped. The other two silent judges apparently got the memo that NSI was supposed to win the case, and tried to derail Kozinski’s common-sense efforts to treat NSI like any other civil defendant. In an opinion that didn’t attempt to conceal his outrage, Kozinski revealed that his two fellow robe-wearers had decided that the issue he saw as an utter no-brainer -- that domains were property under California law -- was actually a great big open issue that required them to solicit an opinion from the California Supreme Court. He was livid, because these judicial nincompoops had actually forced him, the panel leader, to “certify a question” to which the answer was utterly clear. Kozinski thus loaded the certification with an extended rant that listed all of the reasons why the California Supreme Court couldn’t be bothered with such a ridiculous request, like its backlog of death penalty appeals, and implied that the matter would now take another three years to resolve simply because his fellow-panelists refused to interpret well-settled California law.
Kozinski and I got the last laugh, though. The California Supreme Court followed Kozinski’s advice, refused to certify the question, and kicked the case back to the Ninth Circuit within a couple of months. Kozinski swiftly issued a new, unanimous opinion, that established that Internet domains are property in the State of California, and throughout the Ninth Circuit, from Alaska to Arizona.