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.

CIRA Changes Domain Name Dispute Resolution Policy For .CA

For well over a decade now, Canadians have become accustomed to seeing “.ca” all over the web.  The Canadian web suffix is one of the fastest growing top level domains (TLDs) in the world.  For many domain registrants, .ca serves as a branding tool to designate a site or product as being “made in Canada”.  While the web may not have national boarders (at least not the type patrolled by customs agents), the argument can be made that a .ca designation serves as a key identifier and one Canadians (and those seeking Canadian content) use often to distinguish sites registered in Canada from the rest of the internet’s vast repertoire.

Photo by Svilen Milev

.ca is a “country code top-level domain” (ccTLD) and like any TLD must be overseen by a governing body. The Canadian Internet Registration Authority (CIRA) is the organization responsible for managing the .ca domain.  Established in 1998, CIRA took over the management of the .ca domain in 2000.  Until that time, it was overseen by a volunteer organization based out of UBC (lead by John Demco, former Computing Facilities Manager at the UBC Department of Computer Science).  According to CIRA, since it’s founding, over 1.6 million .ca domain names have been registered. 

Among the many tasks CIRA carries out, probably the most important is the implementation of its Domain Name Dispute Resolution Policy (CDRP).  This policy (an off-shoot of ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP)) is CIRA’s adjudication process by which trademark owners and businesses may enforce their marks against registrants who they believe are in violation of their rights. Businesses can also use this forum to combat cyber squatting- the practice of buying up domain names only to sell them to businesses who wish to register them at a higher price. 

The changes to the CDRP include:

“Rights” and “Use”: CIRA has seen fit to do away with these definitions in the policy.  On their web site CIRA explains that these definitions are more than anything a hindrance and create “overly technical and complex requirements in terms of what rights qualify for protection”.

Codification of “confusingly similar” analysis: CIRA has opted to standardize the test utilized by its panellists when determining whether a domain name is confusingly similar with a complainants mark. They’ve opted to use the “narrow resemblance” test over the traditional , broader confusion analysis of trademark law.  This test focuses on how much the domain name in question resembles the complainants mark in “appearance, sound and suggested idea” (see CIRA web site for more detail on the test).  

Changes to Bad Faith: If a complainant wishes their action to succeed, they must show, as per paragraph 4.1 of the CDRP, that the domain name was registered in bad faith (the act defines bad faith in paragraph 3.5).  The bad faith factors listed in the policy are now non-exhaustive- meaning that complainants may attempt to show bad faith on the part of the registrant in a manner not specifically contemplated by the policy.  CIRA has also added "use for commercial gain" to the list of factors mentioned in the CDRP.

Electronic filing: CIRA is now allowing parties to file all documents electronically in addition to hard copy filing.  If one wishes to file documents in hard copy, five copies must be made and faxed where one electronic copy is sufficient.  Wouldn’t it be nice if courts would follow suit...we can dream.

A more exhaustive list of modifications made to the CDRP can be found at the above link to CIRA’s web site.

Speculation on the changes has already crept into the blogosphere.  Professor Michael Geist, while praising some of the changes as being efficacious and appropriate to the Canadian context, had at least one criticism against the modification of the bad faith factors to become non-exhaustive:

“The exhaustive list was intended to guard against the ICANN experience where dispute panellists ventured well beyond clear cases of cybersquatting by creating their own categories of bad faith. Under the new CIRA policy, the bad faith list is now non-exhaustive, opening the door to more domain name dispute claims and increasing the risk of inconsistent decisions.”

Only time will tell if CIRA’s new moves will have the effect of streamlining the domain dispute resolution process.  The standardization of the confusion test should militate in favour of that reality while the opening of the bad faith factors may (according to Geist) hinder it. Whatever, the outcome, no one can rightly accuse CIRA of inaction.