Canadian Domain Laws – What Domainers in Canada Need to Know

This has been a banner year for Canadian domains.  The year has seen record sale after record sale being recorded with the four highest ever .ca sales closing.  Jobs.ca sold for $600,000, and Emplois.ca, CV.ca, Banks.ca, GMX.ca, and Interview.ca all closed for solid five figures.  An active secondary market has launched, and even Godaddy has opened a Canadian office and is offering .ca domains.  There have even been blogs launched dedicated solely to the .ca market.

Despite this, very little has been written about Canadian domain laws.  To get a better understanding of the legal situation facing Canadian domainers, I contacted Canada’s leading domain lawyer, Zak Muscovitch, and asked him a few questions.  Zak was the successful lawyer in the famous CheapTickets.ca case, which was the first domain dispute under the CDRP where a domain owner won, and which was fought all the way up to the federal court of Canada.  Zak has also worked on more domain disputes than any other lawyer in Canada.

Fortunately, Zak agreed to answer my questions.  Here is what he had to say:

1. Please provide a brief biography so that my readers know who you are.

I am a domain name lawyer located in Toronto, Canada. I have been practicing domain name law since 1999. I have acted for domainers all over the world in countless domain name disputes and have assisted many domainers with domain name sale and monetization deals.

2.  How did you get interested in domain law?

I applied to 50 intellectual property law firms for my first job in law and got hired doing personal injury.  I was lamenting this while having a beer and reading the newspaper in a local pub when I came across an article about a local artist who was being sued by two of Canada’s largest corporations, Bell and Torstar, over his registration of Toronto2.com. The companies were the owners of Toronto.com. The article said that the defendants needed a lawyer. I offered to take on the defense, pro bono. We won. You can read about the case here.  I still have a gorgeous painting that I received in appreciation for my services and the defendants and I are now lifelong friends.

3.  What is the law regarding registering trademark domains in Canada?

The best concise summary of the law in Canada was provided by Justice Blenus Wright in another precedent setting domain name case that I won, Black v. Molson. Douglas Black was a PhD student at the University of Toronto who had registered Canadian.biz.  He was taken to the National Arbitration Forum by Molson, the huge Canadian brewery. They claimed that Black was not entitled to the domain name since they had a trademark for “Canadian”.  The NAF Panelist, Robert R. Merhige, Jr. (1919 – 2005), was a distinguished jurist appointed by Lyndon Johnston and was even a World War II fighter pilot.  Unfortunately, his decision in this case was wrong, and Molson won, believe it or not, at the NAF.  I called up Douglas Black and told him that he had to appeal, and that I would take on the case for him.  Justice Wright, in his written opinion  said:

“Simply because a domain name is identical or similar to a trademark name should not result in the transfer of the domain name to the trademark owner.  In my view, unless there is some evidence that the use of the domain name infringes on the use of the trademark name, a person other than the owner of the trademark should be able to continue to use the domain name.”

That, in a nutshell, is the law in Canada, thanks to Justice Wright.

4.  How does the Canadian dispute resolution process work?

It’s very similar to how ICANN UDRP’s work for .com’s, etc.  Basically, the Complainant needs a trademark and must show that the registrant has no legitimate interest in the domain and registered the domain name in bad faith.  All contested cases are ruled on by three-member panels paid for by the Complainant.  The Complaint and Response are submitted by email and a written decision comes out several weeks later.  You can read the Canadian Domain Name Dispute Resolution Policy here.  There are some major flaws with the process but there is no review of the current Policy planned by CIRA at this time.

5.  How common are CDRP proceedings?

Not very common. There have only been 107 CDRP decisions to date (to August 2008). I acted for the Respondent in the very first CDRP case where a Respondent won.  It was called Cheap Tickets v. Emall. It eventually wound its way all the way up to the Federal Court of Appeal of Canada where we won again. You can read the final decision on the case.

6.  What are the practical differences between the CDRP and the UDRP?

This is a very complex area that would need a more thorough and complex answer.  One glaring example is that under the UDRP, “preparations to use a domain name for a web site” is considered a “use”.  In Canada, under the CDRP, there is no express provision that considers “use” to include “preparations to use”.  This is an important distinction because it means that you must erect a web site immediately upon registration, or risk being found to have “no legitimate interest” in the domain name because you haven’t used it. This flaw became apparent in the recent CanadaVisa.ca case (which I won nevertheless).

7.  Are there any other relevant laws that Canadian domainers need to be aware of?

There are lots of laws that could affect Canadian domainers, including both American and Canadian laws. One law that domainers should pay attention to is the US law, the Digital Millenium Copyright Act.  It has “Notice and Takedown provisions” that apply to US-hosted web sites. You can read about it here.  That’s why I always recommend that my Canadian clients to try to use a Canadian web site hosting service with Canadian-located servers, and even use a Canadian domain name registrar.

A Canadian domain name registrar comes in handy because of the governing law clauses in their registration agreements. They also come in handy when an ICANN UDRP is commenced, because the Complainant must agree to submit to the jurisdiction of either the location of the domain registrant, or his registrar, in the event of an appeal.  If both are in Canada, then any subsequent legal proceeding should generally be in Canada. This is to the Canadian registrant’s advantage.

8.  If you were in charge, what changes would you make to the CDRP to make it fairer to both trademark holders and domainers?

There are a number of things I would do. The first thing I would do is immediately hold consultations on revising the CDRP. I would also ensure that the panelists reflected a broader mindset and background.

9.  What future developments do you see in this area of law?

I think .ca domainers will have to get together to protect their interests more at CIRA and in the courts. Otherwise, it’s the trademark owners and their lawyers who will continue writing the rules of the game.

10.  How does Canadian tax law treat income from domaining?

That’s a question for a tax advisor, so I won’t comment on it other than to say that income is income.

Thanks again Zak for taking your valuable time to help Canadian domainers understand domain law in Canada!

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