2011 ONCA 548 (August 5, 2011)
Overview
The Ontario Court of Appeal has determined that domain names can constitute a form of personal property in Canada. This case is of particular importance as it will facilitate the ability of a domain name registrant with a place of business in Ontario to have a domain name dispute heard by an Ontario court. However, this potential procedural advantage is contingent on the ability to establish a sufficient connection between the registrant and Ontario.
Abstract
The Ontario Court of Appeal held that domain names can be considered "intangible personal property," and the registrant of a domain name located in Ontario may successfully bring a proceeding in an Ontario court. In particular, the Court held that service of a Statement of Claim outside of Ontario by the owner of a domain name registrant based in Toronto was valid in accordance with Rule 17.02(a) of the Ontario Rules of Civil Procedure.
Case summary
Facts. The dispute between the parties arose from the purchase of the domain name renner.com by Tucows.Com ("Tucows"), a Nova Scotia corporation with a principal place of business in Toronto. As a result of this purchase, Tucows became both the registrar and registrant of the renner.com domain name. Lojas Renner SA ("Renner") is a Brazilian retail store and is the registered owner of the trademark RENNER in Brazil and a number of other countries.
Renner turned to the Internet Corporation for Assigned Names and Numbers ("ICANN") domain name dispute resolution process in an attempt to seek an order removing Tucows as the registered owner of the renner.com domain name and having that domain name transferred to Renner. As part of this process, Renner selected the World Intellectual Property Organization ("WIPO") as its dispute resolution provider. Renner's complaint to the WIPO administrative panel was three-fold:
- the domain name renner.com is identical to Renner's trademark RENNER;
- Tucows had no rights or legitimate interest in respect of the domain name;
- the domain name was registered and is being used in bad faith.
Tucows, however, did not respond to the substantive merits of this complaint and instead commenced an action in the Ontario Superior Court of Justice, which sought the following declarations:
- Tucows had rights or legitimate interests in the domain name;
- the domain name had never been used in bad faith by Tucows;
- Renner was not entitled to transfer of the domain name.
Tucows did not seek leave when serving Renner with its Statement of Claim. As a result, Renner brought a motion pursuant to Rule 17.06(1) of the Ontario Rules of Civil Procedure to set aside Tucow's Statement of Claim and permanently stay Tucow's action for want of jurisdiction, or to dismiss it.
Tucows responded that it was entitled to serve the Statement of Claim without leave, relying on Rule 17.02(a), which permits service outside Ontario without a court order in respect of "real or personal property in Ontario." In such a case, a presumption of a real and substantial connection with Ontario is seen to exist.
The Motions Judge set aside the service of the Statement of Claim and stayed the action on the grounds that there was no real and substantial connection between Renner and Ontario, and further held that a domain name is not "personal property" within the meaning of Rule 17.02(a). In particular, the Motions Judge held that domain names by their nature are intangible and are therefore not "located in Ontario." As such, there was no presumption of a real or substantial connection to Ontario, and Tucows had failed to establish this was the case.
Analysis. The sole issue in the case before the Ontario Court of Appeal was whether service of Tucow's Statement of Claim on Renner outside the jurisdiction of Ontario was valid or should be validated.
To establish the validity of the service, the Court of Appeal had to address the issue of whether the domain name was "real or personal property in Ontario." The Court of Appeal concluded that a domain name is considered "intangible personal property" in relation to Rule 17.02(a). In coming to this decision the Court of Appeal considered several characteristics in relation to domain names, including the exclusivity of the right, definability, and the degree of permanence or stability. The possession of each of these attributes resulted in domain names satisfying the definition of personal property.
Having established that the domain name was personal property, the Court of Appeal proceeded to assess if there was a sufficient connection to Ontario. Renner alleged that the "intangible" nature of the domain name as personal property precluded any finding that would establish that the property was "in Ontario." In rejecting this argument, the Court of Appeal stated that merely because personal property may be considered intangible does not mean there is no other location that may be associated with a domain name that can be used by the Court to assess jurisdiction.
In making this determination, the Court of Appeal relied on the real and substantial connection test outlined in Society of Composers, Authors and Music Publishers of Canada v. Canadian Association of Internet Providers. The test provides that when analyzing the location of an Internet communication, connecting factors would include the location of the registrant or situs of the content provider. In this instance, the Toronto location of Tucows was used to establish a sufficient connection to Ontario.
As a result, the Court of Appeal allowed the appeal and set aside the order of the Motions Judge, validating service of the Statement of Claim on Renner and further ordering that the Ontario Court had jurisdiction over the dispute between the parties.
Conclusion
This decision provides clear authority that domain names are to be considered personal property. In particular, the concept that a domain name may constitute intangible personal property has several relevant implications. This case establishes a potential procedural advantage to a domain name registrant with an Ontario place of business that may follow from the ability to bring a domain name proceeding in an Ontario court. The Court's holding may also support an argument for domain name holders in Ontario to circumvent the dispute resolution process provided by ICANN in exchange for the potential advantage of having the dispute heard in the Ontario courts.
In addition, this case broadens the definition of personal property. It provides for a flexible interpretation that allows for the value in a domain name to be recognized and preserved. A flexible definition of personal property as applied to domain names may have an effect on domain name property interests in other areas of law, such as bankruptcy and insolvency, as well as the registration of security interests in corporate law.
Cameron P. Weir, Ottawa
The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.