Choosing a business name that has a suitable domain name was becoming increasingly difficult. There was some relief in 2013 when the Internet Corporation of Assigned Names and Numbers (“ICANN”) announced a series of new top-level domains (TLD’s). TLD’s are the extensions that specify a website type and location; .com or .ca for example.
2014 saw another 1400 TLD’s become available; from .venture, .inc, .ltd and .llp to .enterprises, .law and .lawyer. While the new domain name expansion will help businesses find a suitable domain name, there will be growth in name and domain name disputes along with other hurdles for business owners.
It is important to tread cautiously and know the domain name dispute rules to ensure you do not find yourself on the wrong end of a domain name dispute. Contrary to popular belief “cybersquatting” where someone buys and holds domains of an existing business and trademark with the sole intention of selling them for a profit can be unlawful.
For example, The Anti-cybersquatting Consumer Protection Act (ACPA) was enacted in 1999 in the United States. The ACPA specifically addresses the issue of “cybersquatting” and provides legal recourse to trademark owners against individuals or entities who, with a bad faith intent, register, traffic in, or use a domain name that is identical or confusingly similar to a distinctive or famous trademark. The ACPA allows trademark owners to seek legal remedies including injunctions, damages, and the transfer or cancellation of domain names that infringe upon their trademarks. The ACPA has been an important tool used by big brands in the fight against the misuse of trademarks in domain names.
Not just as a result of the ACPA but even in Canada, where someone registers a domain name that is confusingly similar to a trademark of an existing business, the trademark holder may have legal remedies. This is particularly the case where it is clear that, (i) the domain holder only registered or acquired the domain to fool people into thinking that the registrant is associated with that business, an act called passing off; or (ii) the domain holder bought the domain for the purpose of selling it to a person who has a legitimate business interest in the name.
What a Gongshow
One example is the Canadian hockey apparel company Gongshow Gear and the disputed domain www.gongshow.com. The domain had lawfully belonged, for more than 10 years, to a blogger whose last name was Gong. In November 2012, the domain was sold in a closed auction, however Gongshow Gear was not invited to bid. Instead, the new purchaser of the domain, an individual located in Dubai, tried to flip the domain and sell it to Gongshow Gear for $18,000.
Instead of paying for the domain, Gongshow filed a complaint with ICANN, the international body that regulates website addresses and won the domain without paying a cent. To do so, Gongshow Gear had to prove three main items under the ICANN rules at the time:
- That the domain was confusingly similar to Gongshow’s trademark;
- That the current owner of the name does not have a legitimate interest in it (i.e. he or she is cybersquatting); and
- The owner is using the domain in bad faith.
Gongshow, who had been building their brand in Canada and around the world for the previous 11 years was successful on each point.
While there may be separate causes of action that parties may be able to bring in various courts around the world, often the most effective route is an arbitration proceeding, which may be available depending on the type of TLD domain (for example, a .com or a .ca domain). For a .com domain, dispute resolution may be available under the Uniform Domain-Name Dispute Resolution Policy (UDRP) an arm of ICANN. The Canadian Internet Registration Authority (“CIRA”) has its own Domain Name Dispute Resolution Policy for .ca domains. Both ICANN and CIRA use a private dispute resolution setting where disputes are usually carried out in writing and resolved by one or more arbitrators.
Who Registered and Owns your Domain Name?
It is also important to ensure you know who is registering the domain name and who has ownership of it. Only as recently as 2011 did the Ontario Courts confirm that domain names are property in the eyes of the law (Tucows v. Renner). As property, domain names can be owned by any legal entity. An interesting issue arises under most hosting providers terms of use as to who owns or who can claim ownership of the domain name.
With many start-ups, the domain name is registered in the personal name of one of the co-founders. This can cause a number of problems, particularly where there is a co-founder dispute and the registrant of the domain leaves the business.
Take the Ontario dispute in Mold.ca Inc. v. Moldservices.ca argued by my friend John Simpson. In that case, two co-founders ran a mold inspection and removal business, with co-founder 1 being responsible for start-up costs and managing the business and co-founder 2 being responsible for operations, including the registration of the website. Co-founder 2 purchased a number of domain names for the business, using the company credit card, but putting his own name down as the registrant.
When co-founder 2 left the business about a year later, he took the registrations and passwords with him. Unfortunately for co-founder 1, the CIRA dispute resolution proceedings, to have the domain names transferred from co-founder 2, to the company were unsuccessful on the grounds there was no evidence the domain names had been registered in bad faith by co-founder 2, or that they were being used illegitimately.
While the domains were ultimately recovered by the operating company in (expensive) court proceedings, the lesson learnt is to consider if the operating company should be the entity that actually owns (and registers) the domains and website, and not an individual associated with the business, who one day may part ways. If the company is not the registrant, careful thought should be given to who owns it, and what rights the company has to use the domain name.
John Wires
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