A recent Ontario Superior Court of Justice decision has determined that ".ca" domain names are personal property. This decision clarifies that ".ca" domain names may be characterized as personal property independently of any registration in any public office, such as the registration of a domain name as a trade-mark under the Trade-marks Act (Canada)1. It also implies that ".ca" domain names, being personal property, may be subject to a security interest created by a general security agreement ("GSA").
In Moldservices2, a co-founder of a company called Mold.ca Inc. (the "Company") registered domain names associated with the Company under his own name. The Company and others subsequently applied for summary judgment to determine ownership of the domain names in question. In reaching its conclusion that the domain names were owned by the Company as the associated registrations were made for the benefit of the Company, the Ontario Superior Court of Justice (the "Court") noted that the domain names were wrongfully converted by one of the co-founders for use by a competing company.
The Court's decision has implications for lenders taking a GSA from a company with associated domain name registrations. Although a company may not be the registered owner of a domain name, it may be the beneficial owner of domain names used for its benefit. A GSA granted by a company may therefore include any domain name registrations beneficially owned by the company in addition to those for which it is the registered owner.
While this decision provides an opportunity for a company to hold a potential beneficial interest in domain names, lenders should also consider preparing a specific security agreement for domain names of significant value. In addition, lenders should ensure that the appropriate registrations of domain names as trade-marks and appropriate notations for security agreements with the Registrar of Trade Marks are made under the Trade-marks Act (Canada) in order to maximize the potential realization value of the associated domain name.
Footnotes
1 Trade-marks Act (Canada), RSC 1985, c T-13, as amended.
2 Mold.ca et al v Moldservices.ca Inc et al, Ontario Superior Court of Justice, Court File No. CV-13-480391, summary judgment granted on January 10, 2014.[Moldservices].
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