In the latest twist in the soap opera that is the Sex.com domain name lawsuit, the US 9th Circuit Court of Appeals is trying to ascertain whether registrar VeriSign can be held responsible for the fraudulent transfer of the Sex.com domain.

Although Stephen Cohen, currently believed to be on the run in Mexico, was found guilty of fraudulently obtaining ownership of the Sex.com name and was slapped with a $65m damages suit, Gary Kremen, the entrepreneur and legitimate owner of the domain, has yet to see a cent.

The same court also ruled that Kremen could not sue VeriSign for its involvement in the transfer because a domain name is not tangible property.

Kremen, who testified yesterday, hopes that the appellate court will overturn that judgement.

The outcome of the case could set a precedent for the liability of registrars for domain names, and may have implications on how domains are treated under property law.

During the hearing on Tuesday, a panel of three judges questioned VeriSign's lack of responsibility in the incident, likening the registry database, which links owner information and IP addresses to a domain name, to a stock certificate.

But VeriSign's lawyers argued that the domain name server database was not representative of ownership rights and that the company should not be held liable.

VeriSign said that reversing the decision on its liability would prompt a slew of lawsuits from people who bear grudges against the domain name system.

On the other hand, Kremen's lawyer argued that VeriSign broke its contract with his client by not applying reasonable security measures.

Back in 1997, VeriSign, then known as Network Solutions, transferred ownership of the Sex.com domain to Cohen on receipt of a forged letter.

VeriSign now confirms such transfers by phone or email, and Kremen argued that this should have been the case six years ago.

A ruling is expected on the matter in the next few months.

Following the hearing, Kremen indicated that he will reinstate the $50,000 bounty he had initially placed on Cohen's head.

Kremen has been seeking information on Cohen's whereabouts since he fled to Mexico following the initial ruling.