Domain Name Disputes May Be Litigated in Provincial Courts

A recent decision of the Ontario Court of Appeal¹ has confirmed that proceedings related to the ownership and transfer of domain names may be brought in the provincial courts, or under the relevant domain name dispute resolution policies.

Background

The case involved a dispute between Tucows.Com Co. and Lojas Renner S.A. over the domain renner.com.

Tucows is a Canadian company with its principal offices in Toronto. In 2006, it purchased the domain renner.com, along with over 30,000 other surname domain names. Tucows uses these surname domain names to offer personalized email services.

Renner is a Brazilian company that operates retail department stores, and a subsidiary of JC Penney. It owns the registered trademark RENNER in Brazil and other countries.

Renner commenced proceedings under the Uniform Domain Name Dispute Resolution Policy (UDRP) to compel the transfer of the renner.com domain. It alleged that Tucows was using the domain in bad faith. Tucows did not defend the administrative proceeding, rather asked that the proceeding be suspended so that the issues could be resolved in the Ontario provincial courts. That request was granted. In making its decision, the panel concluded that: the facts were similar to other UDRP decisions on the same issue; the parties could afford the cost of litigation; there was no great urgency to having the dispute resolved; the issues were not straightforward; and a court would be in a better position to decide the critical issue of whether the domain was registered and used in bad faith.

Tucows then sued Renner in the Ontario court. In its claim, it asked for declarations that Tucows has rights and legitimate interests in the domain; that the registration of renner.com was not in bad faith; and that Renner is not entitled to the transfer of the domain. Because Renner was located in Brazil, Tucows relied on Rule 17.02(a), which allows for service outside the province of a claim that relates to real or personal property in Ontario.

Renner moved to dismiss the action on the basis that the Ontario courts lacked jurisdiction to determine the issues. In considering the motion, the Court was required to determine whether the dispute should have remained with the administrative panel; whether domain names are property; and whether that property is resident in Ontario.

UDRP Rules are an Alternative to Litigation

Ontario Courts are unlimited and unrestricted in determining civil law matters unless the cause of action is specifically excluded by statute or an arbitration agreement between the parties. The UDRP rules do not preclude litigation as an option to resolve a domain name dispute. The Court referred to United States decisions which concluded that the UDRP proceedings were never intended to replace formal litigation, but merely to provide an additional forum for dispute resolution. The Court has jurisdiction to hear the claim.

It is expected that courts would reach the same conclusion if asked to consider a .ca domain name dispute. The CIRA Domain Name Dispute Resolution Policy for .ca domains also allows the parties to submit the dispute to a judicial proceeding, arbitration or mediation.

While a proceeding under the UDRP or CIRA policy can be relatively fast and inexpensive, there are advantages to an action. In a dispute resolution policy, there is no positive obligation to produce relevant documents, no discovery, no cross-examination on materials filed and no oral hearing. Also, the powers of the panel are limited to the transfer of the domain, whereas a court can award transfer of the domain, plus damages, declaratory and injunctive relief and legal costs.

A Domain is Property

Since the Court had jurisdiction over the cause of action, the next issue was whether the domain was personal property. After a detailed review of the law relating to property rights, the Court concluded that property can be described as a bundle of rights that someone can own; it includes something intangible that has been conceived by the mind, and can be enforced against others. A domain name fit this description, and was found to be personal property.

The Property was Located in Ontario

On the facts of the case, the domain name was also considered to be property in Ontario. Just because a domain is intangible does not mean that it cannot be located in a specific place. Because Tucows had maximum contacts in Ontario, the domain was considered to be located there. Renner's motion to set aside the claim was dismissed.

Conclusion

The merits of the case are yet to be determined, however this decision provides clear guidance as to the manner in which domain name disputes may be initiated in Canada.

Notes

1. Tucows.Com Co. v. Lojas Renner S.A. 2011 ONCA 548