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.

Chanel gets TRO against 700 sites alleged to be selling counterfeited products infringing Chanel's Marks

A Federal Court judge sitting in the State of Nevada sided with Chanel when it asked to have approximately 700 domain names seized.  The sites allegedly contained counterfeit luxury goods including those of the plaintiff Chanel.  

Not only did the judge order the seizure of these domains, ha also ordered major social media sites like Google+ and Facebook and Twitter as well as search engines such as Google, Bing and Yahoo to de-index the targeted sites from their databases.

It seems that most of the investigatory work was done in house, though according to Ars-Technica, Brandon Tanori, a Nevada based private investigator, was called in to investigate a few of the sites in question.

Chanel is the owner of some 22 registered trademarks covierng a number of incarnations of is logo and company name. examples of some of the site names include: cheapchanelreplica.com, replicachanelhandbag.net, and replicachanelshoes.com.

While the case has not yet gone to trial, Judge Kent Dawson granted the TRO (Temporary restraining order) requested by Chanel.  The TRO orders the domain name registrars currently in possession of the domain names in question to transfer those domains to an American registrar, GoDaddy.com who has been tasked with holding the domain names in trust for the court until conclusion of the pending action.

As mentioned above, the TRO also ordered search engines and social media sites to de-index the sites in question from their data-bases. The order makes no mention of the plaintiffs obligation to re-reimburse these 3rd party sites for the operational costs associated with the de-indexation.

While some have criticized the decision and evidence considered as being “one sided”, it should be noted that this judgement was rendered ex parte (meaning without all the parties present).  Normally, the rules of fundamental justice require that a party have the opportunity to appear and make it’s arguments known (the principle of Audi Alterem Partem).  The complaining party must at least serve notice of the action on the defendants.  

Given the nature of the case and the fact that the defendants are located around the world and that the information they provided to their respective registries may be false, the judge allowed for service by posting of a website: http://servingnotice.com/sdv/index.html.  Here, defendants can access PDF versions of all the court proceedings taken up to this point. This is a rather interesting new take on service by publication which many jurisdictions often use as an alternative when “personal” or “substitute” service are impossible. Service by publication usually requires leave of the court.

As pointed out by Ars Technica’s Nate Anderson (link above), decisions like this one may challenge the significance of the hotly debated Stop Online Piracy Act (SOPA). After all, the scope of the injunction in this case is incredibly broad.  

The judge is essentially commanding a host of large third parties to engage in a fair bit of work to enforce the court’s order. While the plaintiff was required to post a $20,000 bond, this sum is not slated to cover third party costs but represent a security on the damages that may be awarded the defendant should the court find them successful in arguing a wrongful injunction or restraint. If decisions like this one are to become the norm, one questions the need for strong legislation like SOPA.  

With respect, I tend to disagree in part with this view in so far as SOPA contains a number of other powerful measures such as restraining third party payment providers like PayPal or Moneybookers, and online advertising firms from supporting a given site or sites.  While the above mentioned point is well taken, it seems a little bit early to discount the eventual impact that SOPA and it’s sister the Protect IP Act will have on the legal landscape of the US, and by extentiton, the Internet as a whole.

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.  

Hugo Boss shuts down Vietnamese domain name deemed confusing and in bad faith

On March 29^th, 2011, Hugo Boss filed a complaint with the World Intellectual Property Organization (WIPO)’s Arbitration and Mediation Center against a Vietnamese Domain name owner named Luong Dinh Dung.  The disputed domain, www.highboss.com, was originally registered on March 17^th, 2009 and was found to have incorporated images intended to confuse and mislead visitors of the site.

Photo by Renjith Krishnan

Prior to the complaint, the Vietnam Intellectual Property Research Institute (VIPRI) conducted an assessment of the site concluding that the “HIGH BOSS” logo was confusingly similar to the “HUGO BOSS” registered trademark which has full legal recognition in Vietnam. 

The administrative panel’s reasons for turning over ownership of the domain to Hugo Boss were threefold.

First, they found that the domain was confusingly similar to Hugo Boss’s registered trademark. The Panel noted that the swapping of the word “High” for Hugo (effectively changing two letters) was of no consequence and that on that basis alone the domain should be turned over.

Second, they found that the respondent had no legitimate interest in the domain.  A respondent can refute such a claim by showing:

-        -  That prior to the commencement of the complaint, that they were or were preparing to use the domain in connection with a “bona fide offering of goods or services”.

-         - That the respondent themselves are “commonly known” by the domain.

-        -  That the respondent is “making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trade mark or service mark at issue.”

-The owner of the infringing domain didn’t even muster an effort to prove any of these elements. 

Finally, the Panel found that the owner of the domain registered it in bad faith.  In addition to giving merit to the VIPRI’s report, the Panel cited an e-mail written by the owner of the infringing domain which they found to be false and dishonest.  The finding of bad faith was primarily based on the negative inference the Panel drew from this less than truthful statement. 

They ordered that the domain be transferred to the complainant, Hugo Boss, who clearly shut the site down (currently the message “Bad Request (Invalid Hostname)” comes up if you try to access the domain). A clear cut win for Hugo Boss and lovers of fashion everywhere.

The Arrival Of The .XXX Domain: ICANN Approves

The long awaited arrival of the .xxx suffix is upon us.  Later this year for the first time, registrants will be able to register websites with this controversial web suffix.  

.xxx is a "sponsored top level domain" (sTLD) which means that unlike "generic top level domains" (gTLD) like .com, .net or .org, it requires sponsorship by an organization representing a specific community or industry.  Existing examples include “.museum” (sponsored by the Museum Domain Management Association) or “.travel” (Tralliance Corporation).  .xxx is sponsored by the International Foundation for Online Responsibility.

photo by mikeleeorg

The Internet Corporation for Assigned Names and Numbers (ICANN) extended preliminary approval to .xxx in 2005.  Even before then it had been met with heavy opposition from both right wing and religious groups and- quite surprisingly- the pornography industry. The latter felt that .xxx may lead to the facilitation of censorship by search engines.  They also feared that the hype and noise about the domain may elicit an unwanted legislative response from American Congress or other governments. 

The Governmental Advisory Committee (GAC) has also made its opposition known.  In one of its submissions to ICANN regarding the approval process, the GAC hinted that this decision “might lead to steps taken by some governments to prohibit access to this TLD”.  This however did not stop ICANN from finally approving the application by ICM Registry LLC (the registry that operates the .xxx domain).

This presents a puzzling picture.  The oposers of .xxx are not just the conservative/religious “usual suspects”. The pornography industry itself is, in large part, against the move.  Why then is ICANN going ahead with the domain if it is opposed by the very community it is intended for?

Well, it seems that ICANN is under the impression that the application complies with all of the policy concerns outlined in the GAC communiqué such as     “taking appropriate action to restrict access to illegal and offensive content” and to “ensure the protection of intellectual property and trademark rights, personal names, country names...” The ICANN Board gives reasons for its decisions here. 

ICANN also doesn’t hesitate to point out its vast discretionary power vested by the California Corporations Code.  Section 309 of the aforementioned law states that a director of a corporation is obliged to act:

 “in good faith, in a manner such director believes to be in the best interests of the corporation and its shareholders and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.”

The ICANN Board believes that its actions are consistent with this standard and until challenged, this remains the presumption.  This law however, presents a rather high threshold in that proving bad faith on the part of the Board represents no small task. 

Otherwise, it would have to be shown that ICANN’s decision was counter to what a “normal person” would do in the same circumstances. There are loud voices on both sides of the fence on this issue. That fact alone shows that the “best interest” in this case is hotly and contentiously debated and would render any decision made by ICANN (excluding one made in bad faith) consistent with this law.

As for the divergence of opinion within the adult entertainment industry itself, ICANN chose to hide behind the 2005 decision of the Independent Review Panel (IRP) stating that it will not revisit the decision already rendered.  I suppose this can be chalked up to the “discretionary power” of ICANN. Still, it is a rather unconvincing response considering the circumstances. 

Finally, what of businesses and trademark owners outside the adult entertainment industry who wish to prevent their marks from being registered with a .xxx suffix?  ICM Registry will implement a pre-launch protection mechanism called “Sunrise B”.  In the month of September, for a period of approximately 30 days, businesses and trademark owners will be able to pre-emptively opt-out (for a fee- between $200-$300 USD) thereby protecting their trademark form being registered with a .xxx suffix.

ICANN admits that a decision like this one comports both positive and negative impacts.  It is quite sure however, that the good will outweigh the bad in this case.  They say that the negative impact will concern people opposed to the .xxx domain in the first place.  ICANN’s position is that unanimity in the community is unrealistic and waiting for such unanimity would present a barrier to progress- not an altogether unconvincing argument.

It will be interesting to see how this situation plays out.  Will the Sunrise B program be an effective deterrent to what would otherwise be an impending flood of trademark litigation? Will governments go so far as to enact legislation restricting or prohibiting access to the .xxx domain? One thing is certain. The internet is about to undergo an image change that may render its appearance far less wholesome; even if adult content is already as pervasive as ever without .xxx.