Property Rights In Domain Names
As the economy increases its reliance on the internet, courts are having to more frequently make decisions related to the internet's operations.
Recently, the Ontario Court of Appeal had to consider a case where there was a dispute to rights to a domain name 'renner.com'. As frequently happens in internet cases, there was a large diversity of geographies.
The plaintiff company was incorporated in Nova Scotia but had its principal office in Toronto. The defendant company was located in Brazil. The plaintiff was also the domain name 'registrar' -- the person who actually keeps track of the domain name. As can be appreciated, the domain name registrar could easily have been in yet a third location.
In this case, the Brazilian company had started an arbitration process known as the UDRP (Uniform domain name dispute resolution policy). Under that process, it had applied to have a registration that the Plaintiff held for the domain to be cancelled.
The Plaintiff did not like the UDRP process and brought an action in the courts of Ontario to stop the arbitration process. Clearly, a court action in Ontario would favour the Toronto-based company over the Brazilian one.
Ontario courts can take jurisdiction in a case if it relates to "personal property located in Ontario". The issue to be decided was: is a domain name 'personal property'? And when is it 'located in Ontario'?
The Court of Appeal engaged in a lengthy analysis and concluded that a domain name is like a trade-mark or a copyright. Even though it is intangible, there is a legal right to do something and to stop other people from doing that. The court concluded that it was personal property.
On the location issue, the court used a "contacts" test. How many contacts did the personal property have to Ontario?
In answering this question, it noted that the plaintiff used the property for its business in Ontario. In addition, the domain name was registered in Ontario. The conclusion was that there was a 'real and substantial connection' to Ontario.
The court concluded that the Ontario company could sue in Ontario. The Brazilian company would be put to the expense and difficulty of having to find and instruct lawyers and conduct a defence over thousands of kilometres.
There are a few lessons that can be learned from this case. The first is that those who wish to be able to sue on domain names in Canada should likely do as much as they can to establish contacts with Canada. Rather than using foreign-based registrars for example, it is probably a good idea to ensure that the domain name registrar that is being used is located in Canada.
Another important lesson is to ensure that in any agreements, a clear choice of laws is being used. That choice must be relevant to the facts of the situation. Unfortunately at times many parties will insist on a home jurisdiction which is foreign to you. In such a case, it might be better having nothing at all.
Finally, this case points out to the value of intangible assets and the costs of not properly policing those assets. In this case, a Brazilian company finds itself put to a large cost to defend a lawsuit in another country. One wonders what registrations of its intangible property it should have considered which could have prevented this?
(C) Copyright 2011, Marcel D. Mongeon