The Ontario Court of Appeal issued a landmark decision in Tucows.Com Co. v. Lojas Renner S.A. (2011 ONCA 548), finding for the first time that internet domain names constitute personal property. The Court ruled in favour of Tucows, a Canadian company, holding that it could bring a claim in Ontario for declaratory relief against a Brazilian company on the basis that a domain name registered to Tucows constituted intangible personal property located in Ontario.
In 2006 renner.com was among 30,000 domain names purchased by Tucows and registered with the Internet Corporation for Assigned Names and Numbers (ICANN). Three years later Renner, a Brazilian subsidiary of US retailer J.C. Penney, filed a complaint with the World Intellectual Property Organization (WIPO) pursuant to ICANN’s Uniform Name Dispute Resolution Policy (UDRP). Renner alleged that Tucows was using the domain name in bad faith, and sought to have it de-registered. Tucows failed to respond to the substantive elements of the claim, instead opting to commence an action in Ontario Superior Court of Justice (OSCJ) seeking declaratory relief. Among its requests, Tucows asked the OSCJ to confirm that it had rights or legitimate interests in respect of the domain name.
Renner responded to Tucows’ statement of claim by bringing a motion under Rule 17.06 of Ontario’s Rules of Civil Procedure to have the statement of claim set aside on the basis that it was improperly served outside of Ontario. Rule 17.02(a) allows parties to serve originating processes outside of Ontario if they pertain to personal property in Ontario. The motions judge sided with Renner, holding that the domain name did not constitute “personal property,” and further, that it could not be “located in Ontario” because it was intangible. She also concluded that Tuscow’s claim for relief was improper because it did not disclose a cause of action, and that the acceptance of jurisdiction by the OSCJ would undermine WIPO’s administrative process.
The Court of Appeal disagreed with the motions judge on all counts. It relied on the previous findings of lower courts to conclude that a claim for declaratory relief may constitute a “good arguable case” or action. It also held that the OSCJ’s decision to take jurisdiction would not unduly interfere with the administrative process. Unlike the rules governing arbitration procedures, the UDRP Rules are “an alternative, and not a substitute,” for litigation. Finally, and most significantly, the Court determined that the domain name renner.com constituted personal property.
In reaching its decision the Court engaged in a comprehensive analysis of international jurisprudence and academic sources, finding that “the dominant view… appears to be that domain names are a new type of personal property.” It also canvassed Canadian jurisprudence defining property generally, and concluded that the “bundle of rights” associated with a domain name were sufficient to render it personal property. The Court also confirmed that, despite being an intangible asset, the domain name was in fact located in Ontario. As an intangible asset of Tuscow’s business, which was based primarily in Toronto, it had its strongest contacts in Ontario.
Consequently, Tuscows’ claim will be permitted to proceed. It remains to be seen whether this decision will pave the way for increased litigation by Canadian parties seeking to protect the rights associated with their domain names.