Tuesday, January 21, 2014

Ontario Superior Court of Justice Offers A Way Around Bad Faith Requirement in CDRP…Kind Of

On December 30, 2013, the Ontario Superior Court of Justice granted an Order forcing the transfer of a domain name back to the original owner. The Plaintiff Corporation, a Toronto area mold removal service, was created by Mr. Sullivan (the Defendant) and Mr. Dalrymple. Sullivan registered the domain name “mold.ca” for the business. 

photo by mikeleeorg
Sullivan and Dalrymple’s business relationship soured. Despite the fact that the website was clearly the property of the Corporation, Sullivan was the named registrant of the domain name and asserted ownership over it. He then sold it to a third-party. 

The Plaintiff undertook CIRA domain name dispute resolution proceedings but was unable to obtain the transfer of the domain because it was unable to prove bad faith on the part of the new owner.

To be successful in a complaint under the CDRP, one must prove that:
  1. The Registrant’s dot-ca domain name is Confusingly Similar to a Mark in which the Complainant had Rights prior to the date of registration of the domain name and continues to have such Rights;
  2. The Registrant has no legitimate interest in the domain name; and 
  3. The Registrant has registered the domain name in bad faith.
 The CDRP further defines Bad Faith at Section 3.5 of the Policy. 

At Common Law, an action for the conversion of property does not require a plaintiff to prove bad faith on the part of the person holding the property. The Superior Court therefore granted the summary motion to have “mold.ca” returned to the Plaintiff. 

Bad faith may sometimes be difficult to prove rendering the CDRP useless to a trademark holder in those instances. At first glance, this seems like a quick and cost effective alternative to a trademark infringement and/or passing off action. 

While this decision is instructive, I am hesitant to hail it as ground breaking. This case was not decided on the basis of ownership of a trademark; the domain name registration itself was found to be personal property owned by the Plaintiff Corporation. Conversion would offer no aid in the case where a cyber-squatter registers domain names that are either identical to or confusingly similar with a trademark. Once again, here we have an actual registration that changed hands in contravention of the Plaintiff’s property rights as established by Ontario law. 

Domain name disputes usually turn around the bad faith and opportunistic registration of one or more domain names by a person with no interest in using those domain names for a bona fide purpose. Instead, the person seeks to contact a business or other entity, usually the owner of a trademark identical or similar to the domain name, to whom the registration may be “of value” in an attempt to obtain a price significantly higher than the cost of registration. 

For example, Fender Guitars Inc. owns the domain name “fender.com”. Suppose that they do not own “fenderguitars.com” (in reality they do and it redirects to their main site) and John decides to register it. John has no intention of using the domain for anything. In fact, all he wants to do is contact Fender and offer them the domain name for a premium. 

In this example, Fender does not, nor did it ever have a registration for fenderguitars.com. It therefore would not be able to prove any rights of ownership without proving its trademark rights. All of a sudden, our simple summary motion for the conversion of personal property has morphed into a full blown action for trademark infringement/passing off. 

Again, this does not mean that the decision was of no real value. It simply means that it is not as revelatory as one may expect. The tort of conversion is old law. All the Court did here was apply it to domain names. While this case certainly stands for the proposition that domain names are personal property and will be treated as such in matters of contract and tort, because of the facts of the case and the relationship of the parties, this by no means establishes an equal and equivalent alternative to CDRP proceedings or trademark infringement actions.

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