Canada: What's In A Name - The Supreme Court Of Canada Confirms That Domain Names Are Personal Property

Last Updated: July 7 2012
Article by Brett G. Harrison and Laura Stefan

Is a domain name registered in Ontario considered personal property?  The Ontario Court of Appeal answered this question in the affirmative,1 confirming, among other things, that domain names are personal property in Ontario.  The Supreme Court of Canada recently denied leave to appeal, leaving this case as the last word of authority in Ontario.

One practical implication of the decision is that it made it possible for domain name owners in Ontario to commence legal proceedings against foreign parties in the Ontario courts without seeking leave of court.  Another important take-away is that an Ontario domain name owner can start litigation in Ontario even if administrative proceedings disputing essentially the same issues are pending elsewhere in the world. 

Both of these findings expand the dispute resolution options available to domain name owners in Ontario.  The decision of the Court of Appeal is recommended reading for the owners of domain names in the province.  

The Facts

Tucows, a corporation headquartered in Toronto, purchased the domain name (renner.com) from Mailbank Inc. together with 30,000 other domain names.  Tucows then registered the domain name with the international not-for-profit Internet Corporation for Assigned Names and Numbers ("ICANN").  Renner, a Brazilian retailer, was the registered owner of the trademark "Renner" in Brazil and other countries. 

ICANN has a private Uniform Domain Name Dispute Resolution Policy ("UDRP") and related rules (the "UDRP Rules"). Under the UDRP Rules, a trademark holder who believes that a domain name registration infringes on its trademark may initiate an administrative dispute resolution process and select its own dispute resolution provider from a list approved by ICANN.

Renner selected the World Intellectual Property Organization ("WIPO") Arbitration and Mediation Center from the list and filed a complaint against Tucows.  Renner's complaint alleged that:

  1. The domain name was identical to Renner's trademark "Renner";
  2. Tucows had no rights or legitimate interests in respect of the domain name; and
  3. The domain name was registered and was being used in bad faith.

Tucows did not respond to the WIPO proceedings, but chose instead to commence an action in the Ontario Superior Court of Justice (the "Superior Court") for a declaration that it was the legitimate owner of the domain name (renner.com).  Moreover, Tucows asked WIPO to exercise its jurisdiction to terminate the WIPO proceedings so that the issues could be solved by the Superior Court. WIPO did so on the basis that the issues in the Superior Court were "seemingly identical" to those in the dispute before it.

Renner responded with a motion pursuant to r. 17.06(1) of the Rules of Civil Procedure2 to set aside service of Tucows' statement of claim and stay Tucows' action in the Superior Court for lack of jurisdiction. 

The Court of Appeal Decision

Renner first argued that Tucows' issuance of the statement of claim was an attempt to undermine the UDRP administrative process.  In rejecting this argument, the Court of Appeal noted that the UDRP Rules are a fast and inexpensive alternative, not a substitute, for court litigation.  For this reason, when the Superior Court accepted jurisdiction over the dispute, it did not undermine the UDRP administrative process. 

Tucows relied on r. 17.02(a) of the Rules to argue that its service of the statement of claim without leave was valid.3  The Court of Appeal dismissed all the arguments advanced by Renner to invalidate Tucows' service without leave, as follows:

First, Renner argued that a claim for declaratory relief was not a "proceeding" within the meaning of r. 17.02(a).  Relying on the Uniform Law Conference of Canada's Model Court Jurisdiction and Proceedings Transfer Act, the Court of Appeal held, however, that r. 17 did not exclude an action for a declaration.  Tucows' claim therefore satisfied the formal requirement of a "proceeding" in r. 17.02(a).

Second, Renner argued that a domain name was not personal property pursuant to r. 17.02(a). To address this argument, the Court of Appeal reviewed both domestic and international jurisprudence and academic commentary to determine whether domain names are property. The Court of Appeal concluded that Tucows had a bundle of rights in the domain name (renner.com) that constituted a new type of intangible property within the meaning of r. 17.02(a) because:

  • Tucows derived income as the holder of the rights over the domain name (renner.com);
  • As the registered owner of the domain name, Tucows had the exclusive right to direct traffic to the domain name's corresponding website, and to exclude anyone else from using the same name; and
  • Tucows had owned the domain name since 2006, which implied a degree of permanency. 

As a last resort, Renner argued that the intangible nature of a domain name made it impossible for it to be located in Ontario.  The Court of Appeal applied the "connecting factors" test4 and concluded that the domain name (renner.com), as a business asset of Tucows and a form of intangible property, had its maximum contacts with Ontario, so, for all present intents and purposes, the domain name was located in Ontario.  On this basis, the Court of Appeal found that  Tucows' service of the statement of claim without leave was valid. 

Implications for Owners of Domain Names

In this decision the Court of Appeal opened the door to the possibility of litigating over domain names in a foreign jurisdiction, where at least one of the parties does not live or carry business.  To unwary parties, it can come as a surprise where one gets sued in respect of a domain name. 

In addition, the Lojas Renner decision clarified that a domain name registrant may seek relief in the courts at any time prior or during a UDRP administrative proceeding.  It is now possible to circumvent the ICANN arbitration process when there are procedural advantages to litigating in Ontario.

Footnotes

1Tucows.Com Co. v. Lojas Renner S.A 2011 ONCA 548 [Lojas Renner]. Lojas Renner ("Renner") applied for leave to appeal the decision to the Supreme Court of Canada on October 24, 2011, but the application for leave was ultimately denied on May 25, 2012.

2RRO 1990, Reg 194 [the "Rules"].

3R. 17.02(a) provides as follows:,

A party to a proceeding may, without a court order, be served outside Ontario with an originating process or notice of a reference where the proceeding against the party consists of a claim or claims,

(a) in respect of real or personal property in Ontario;

4The Supreme Court of Canada held in Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, [2004] 2 S.C.R. 427, that "in terms of the Internet, relevant connecting factors would include the situs of the content provider, the host server, the intermediaries and the end user. The weight to be given to any particular factor will vary with the circumstances and the nature of the dispute".

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2012 McMillan LLP

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Authors
Brett G. Harrison
Laura Stefan
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