On August 8, 2011, the Ontario Court of Appeal (the “CA”) released its decision in Tucows.Com Co. v. Lojas Renner S.A., 2011 ONCA 548, ruling that a domain name owned by an Ontario corporation is personal property in Ontario and may be the subject matter of an action served on a defendant outside Ontario.
Tucows.com Co. (“Tucows”), a technology corporation with its principal office located in Toronto, purchased the domain name <renner.com> along with over 30,000 other surname domain names from Mailbank Inc. in 2006 and it is the registrant of these domains names with the Internet Corporation for Assigned Names and Numbers. As the owner and registrant, Tucows derives revenue from these domain names by allowing subscribers to use the domain names for personal email services.
Lojas Renner S.A. (“Renner”), a subsidiary of JC Penny, is a Brazilian company operating a series of retail department stores in Brazil and is the registered owner in Brazil and other countries of the trademark RENNER.
Renner initiated a complaint before the World Intellectual Property Organization (“WIPO”) pursuant to its Uniform Dispute Resolution Policy (“UDRP”) and related Rules. Instead of responding to the complaint, Tucows commenced an action in the Ontario Superior Court for declarations it had rights and legitimate interests in respect of the domain name, the domain name was not registered or used in bad faith by Tucows, and Renner was not entitled to the transfer of the domain name. Tucows served Renner with the statement of claim outside Ontario.
Pursuant to the UDRP Rules, an administrative panel may, at its discretion, suspend or terminate a complaint, where some other legal proceedings are commenced in respect of the domain name that is the subject of the complaint. In this case, the WIPO Administrative Panel granted Tucows’ request to terminate the complaint, noting that the issues before it were “not straightforward” and “almost indistinguishable” from those set out in the action. The WIPO Administrative Panel also noted that the “parties could afford the cost of litigating.”
In light of the termination of its complaint, Renner brought a motion pursuant to Rule 17.06 of the Rules of Civil Procedure1 of Ontario (the “Rules”) to set aside service of Tucows’ statement of claim and to permanently stay Tucows’ action for want of jurisdiction. Tucows argued that it was entitled to serve the statement of claim outside of Ontario without leave pursuant to Rule 17.02(a), which permits service outside Ontario without a court order in respect of real or personal property in Ontario. The motions judge set aside the service of the statement of claim, finding that the domain name was not personal property and that, being intangible, it was not located in Toronto. On Appeal the decision of the motions judge was overturned and the motion by Renner was dismissed.
In its analysis, the CA distinguished an earlier decision of the Ontario Superior Court, Easthaven Ltd. v. Nutrisystem.com Inc.2 which had concluded that because a domain name lacks a physical existence it was not property in Ontario and the mere fact the domain name was registered through a corporation that happened to carry on business in Ontario (the domain name Registrar) did not give it a physical presence. After distinguishing this case, the CA examined international jurisprudence and academic papers, citing Kremen v. Cohen3 to conclude that a domain name is intangible property because it satisfies a three-part test for the existence of a property right: (i) it is an interest capable of precise definition, (ii) it is capable of exclusive possession or control, and (iii) it is capable of giving rise to a legitimate claim for exclusivity.
Next the CA considered whether a domain name was personal property for the purpose of Rule 17.02(a). As the term “personal property” is not defined in the Rules, the CA examined Canadian as well as other jurisprudence relating to common law attributes of property. It found that property must have a bundle of rights that allows for an element of exclusivity, and must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability. The CA concluded that a domain name had all of these elements and was therefore personal property pursuant to the Rules.
Finally, the CA examined whether the domain name is property in Ontario, by applying the “connecting factors” test, in which the location of intangible property is determined by where it has the strongest contacts. As the domain name is part of the intangible property of Tucows’ business (located in Ontario), the CA found that the domain name had its maximum contacts with Ontario.
In addition, the CA held that the Superior Court may assume jurisdiction of a dispute that is or was also the subject of a UDRP complaint. The CA observed that the UDRP provides, “an alternative, and not a substitute for court litigation, which remains open to the parties.” The CA explicitly rejected the finding of the motions judge that Tucows had undermined the UDRP administrative process by commencing the action.
Accordingly, in dismissing the motion by Renner the CA held that the service of the statement of claim outside Ontario was valid and Ontario had jurisdiction over the dispute.
The CA made it clear that the UDRP administrative process is not the sole forum for domain name ownership disputes. The CA’s apparent willingness to adjudicate such disputes, and its clarification of the legal nature of domain names, may potentially give rise to an increase in litigation of this kind. It is yet to be seen whether other domain name registrants will follow in Tucows’ footsteps in response to the initiation of a UDRP complaint. However, potential claimants should take note of the possibility that a domain name registrant may seek declaratory relief in the courts, at any time prior to or during a UDRP administrative proceeding. Moreover, this decision should alert all parties to the possibility of suing and being sued in a foreign jurisdiction, in respect of a domain name.