Domain Name Disputes

Battle Royal(e): Use of Trademarks Beyond Sales Representative Agreement Constitutes Infringement and Passing Off; SCC Dismisses Appeal

By In Branding, Case Law, Domain Name Disputes, Domain Names, Litigation, Protection & Enforcement

On May 6, 2021, the Supreme Court of Canada (SCC) dismissed an application for leave to appeal in the case of Dong, et al. v. Royal Pacific Real Estate Group Ltd., et al., 2020 BCCA 323 (39550). The lower courts in the Province of British Columbia, both at the trial level and on appeal, had held that the appellant’s use of certain licensed trademarks owned by the respondent, outside of the precise terms of the parties’ Sales Representative Agreement, constituted infringement and passing off; as a result of the SCC’s dismissal, the BC Court of Appeal decision now stands.

This case serves as a good reminder for licensees to carefully review trademark license provisions in sales representative, product distribution and similar agreements for their specific terms relating to permitted use of relevant trademarks – and to consider the risks of using  such trademarks outside the  activities specifically permitted in such agreements.

The respondent in this case is a well-known, Vancouver-based real estate company “Royal Pacific Group” (consisting of Royal Pacific Real Estate Group Ltd. and Royal Pacific Realty (Kingsway) Ltd.), owner of the registered trademark ROYAL PACIFIC Logo and the unregistered trademarks ROYAL PACIFIC and ROYAL PACIFIC REALTY (collectively, the “Trademarks”). In 2012, Royal Pacific Group entered into a Sales Representative Agreement (the “SRA”) with the appellant, Mr. Steven Dong (the “Mr. Dong”), pursuant to which Mr. Dong was licensed to act as a real estate representative for Royal Pacific Group.

However, in 2013, Royal Pacific Group discovered that Mr. Dong had, without the knowledge or consent of Royal Pacific Group, launched a separate referral platform for real estate professionals under the name “Bliip Box”. The website for this service used the domain name royalpacific.co and displayed the Trademarks. Mr. Dong was also sending emails to third parties containing the Trademarks and the following language: “Royal Pacific Realty is one of BC’s largest brokerages and now we are looking to endorse local businesses on our Bliip Box.”

Shortly after this discovery, Royal Pacific Group sent a cease and desist letter to Mr. Dong, demanding that he take down the website and cease using the domain name royalpacific.co.  When there was no immediate compliance, Royal Pacific Group also sent notice of termination of the SRA. However, Mr. Dong continued to operate the website at royalpacific.co as well as a related Facebook page (royalreferrals) that also displayed the Trademarks.

The BC Supreme Court (2018 BCSC 1272) held that Mr. Dong was liable for infringement and passing off, as the SRA did not grant Mr. Dong rights to use the Trademarks in connection with his Bliip Box business, which was outside the scope of his activities as a sales representative. Moreover, the judge rejected Mr. Dong’s arguments that Royal Pacific Group had provided consent or acquiesced to such use. According to the trial judge (at para. 100):

Mr. Dong has failed to appreciate the difference between his using the Trade-mark in connection with his duties as a sales representative of [Royal Pacific Group] and using it in a manner that represents that there is an association between the Royal Pacific Group and the Bliip Box technology or other businesses that Mr. Dong was pursuing.

The trial judge further noted (at para. 120-120) that, in the context of the Vancouver real estate industry, in which Royal Pacific Group has a well-recognized name and reputation:

[U]se of the domain name royalpacific.co for the website together with numerous references to aspects of [Royal Pacific Group’s] business and the fact that the webpage was offering real estate related products would have caused confusion in the mind of an “ordinary hurried consumer”, who could have confused the owner of the website with the Royal Pacific Group.

The BC Court of Appeal upheld the lower court’s decision, further dismissing a counterclaim brought by Mr. Dong that Royal Pacific Group had wrongfully denied him the right to use the Trademarks and had terminated the SRA for an unlawful purpose.  By dismissing Mr. Dong’s appeal, the SCC has tacitly agreed with the decision of the BC Court of Appeal.  The lesson arising out of this decision is that parties to agreements such as sales representative agreements, which contain provisions relating to and restricting use of trademarks, need to carefully consider whether any proposed activities will be offside the license provisions relating to such trademarks.

.CA Domain Names Held To Be Personal Property

By In Case Law, Domain Name Disputes, Domain Names

A recent Ontario Superior Court of Justice decision (Court File No. CV-13-480391) has held that .CA domain names are personal property and as such are subject to the rules that govern any other type of personal property, including those against wrongful conversion.  Perhaps more importantly, the case appears to stand for the proposition that title in .CA domain names exists independently of the registration of those domain names.

17 .CA domain names were in issue,  including mold.ca and mould.ca.  All were registered by Mr. Sullivan in his own name for the benefit of a company that he co-founded with Mr. Dalrymple, called Mold.Ca Inc.  (Mold.Ca Inc.)  The business of Mold.Ca Inc., not surprisingly, involves  mold inspection and removal services in the Greater Toronto area.  Sullivan purchased the domain names using the company’s credit card but listed himself as the Registrant of all of the domain names, rather than Mold.Ca Inc., unbeknownst to Dalrymple. 

Sullivan parted ways with Dalrymple and Mold.Ca Inc. a year later, while Mold.Ca Inc. continued to carry on its business, as before.  Unbeknownst to Dalrymple, Sullivan retained the domain name registrations and the passwords for the domain name registrations and then subsequently transferred the domain name registrations to a third party (Romelus).   Once Dalrymple found out about the above events, he commenced a Canadian Internet Registration Authority (CIRA) Dispute Resolution Proceeding (CDRP) against Romelus.  The CDRP proceeding were unsuccessful because there was no evidence that the domain names had been registered by Romelus in bad faith (they hadn’t been), nor was there evidence that they were being used for other than legitimate purposes by Romelus.

Following the failed CDRP proceeding, Romelus transferred the domain names back to Sullivan and Sullivan began using them in a competing business to that of Mold.Ca Inc.  Undaunted by its loss in the CDRP, this turn of events led to Mold.Ca Inc. to commence proceedings in the Ontario Superior Court of Justice.  Finding in favour of Mold.Ca Inc., the Court held that “the issue is a simple matter of property law”, whereby title to the domain names belongs to the company, which had been wrongly converted by Sullivan.  The Court therefore ordered that all of the domain names, including all administrative information and passwords, be transferred to Mold.Ca Inc.

Putting The Accent On .CA Domains

By In Domain Name Disputes, Domain Names

The Canadian Internet Registration Authority (CIRA) has released the results of its first consultation on its proposed implementation of .CA domains with French accent characters (known as the Latin Supplement -1 Unicode characters), such as é à ü and ç.  

Under its initial implementation plan, CIRA proposed a sunrise period during which owners of .CA domain owners could register as many French accented variants of their existing ASCII (non- accented Latin-based script characters, namely the letters a-z) domains as they opted for.  For example, the owner of grace.ca could also register grâce.ca during the sunrise period, before that accented variant of grace.ca (and all other French accent variants) would be opened up for registration to anyone else who otherwise qualifies to own a .CA domain.

As a result of comments received during the first consultation period, many citing concerns about increased costs to .CA domain owners, phishing and the potential for consumer confusion, CIRA is now proposing to do away with any sort of sunrise and landrush periods and instead is proposing that only the owner of a .CA domain name with ASCII characters would have the right to register any or all French accented versions of that .CA domain. In addition, under the new proposal, once a French accented .CA domain name variant has been registered, it cannot be transferred without also transferring the ASCII .CA domain name and all other registered French accented .CA domain name variants.  CIRA refers to this concept as “character bundling”.   In addition, CIRA is also considering the feasibility of some additional French accent characters that are commonly used.

CIRA is seeking input and comments on its revised implementation plan, during a second consultation period, running from January 24 to February 24, 2012.

Survey On Preparation For New gTLDs

By In Branding, Domain Name Disputes, Domain Names, Protection & Enforcement

A survey is now being conducted by World Trademark Review (WTR), seeking input from marketing and trademark professionals as to their views on how industry is preparing for the impact of the new generic top level domains (gTLD) that ICANN (the Internet Corporation for Assigned Names and Numbers) appears to be pushing forward with.    The survey is supported by a number of domain name and brand protection service providers, trademark owner associations and professional marketing associations.

As previously reported on this blog, ICANN proposes to expand beyond the current gTLDs, of which there are 21, including .com, .org and .net.  Under the proposed expansion, any company will be permitted to set up its own domain registry under any term –  for example .cars, .honda, .mapleleafs, .canucks and pretty much anything else will be possible.  This development obviously has huge implications for all brand owners.

WTR’s survey is intended to provide a sense of how well prepared brand owners are for this coming change.

.CA Dispute Resolution Consultation Now Open

By In Domain Name Disputes, Domain Names

The Canadian Internet Registration Authority (CIRA) has initiated a consultation on the CIRA Domain Name Dispute Resolution Policy (CDRP).  The CDRP has been in place since 2002 and is intended to be a quick, relatively low cost arbitration forum for disputes over .CA domain names.  The stated purpose of the consultation is to solicit feedback from interested parties as to the effectiveness of the CDRP and whether it continues to meet the needs of its stakeholders. 

The consultation consists of a number of questions about the process itself, the tests that a complainant must meet, the remedies provided and the like.  Interestingly, the consultation notes that over the 8 years the CDRP has been in place, there have only been 149 decisions rendered, with the high water mark occurring in 2008, when there were 30 decisions.

The consultation is open from June 9 to September 17, 2010.

Municipality’s rights in name not retroactive under CDRP: westkelowna.ca

By In Domain Name Disputes, Domain Names

In District of West Kelowna v. Baremetal.com Inc. the District of West Kelowna (the “Municipality”) lost a Canadian Internet Registration Authority (CIRA) Dispute Resolution Policy (CDRP) proceeding involving the domain name westkelowna.ca, to an alleged cybersquatter.

On April 2, 2007, Baremetal.com Inc. (the “Registrant”), apparently operated by a businessman living in the Municipality, registered the domain name westkelowna.ca. Subsequently, on January 29, 2009, in response to an opinion poll, the Municipality legally changed its name from “Westside District Municipality” to the “District of West Kelowna”. The Municipality contacted the Registrant to request a transfer of the domain name, but the Registrant refused. As a result, the Municipality filed a complaint under the CDRP in an attempt to gain control of the domain name.

To succeed in a CDRP proceeding, Section 4.1 of the CDRP Policy provides that the Complainant must prove that:

(a) the disputed domain name is confusingly similar to a mark in which the Complainant had rights prior to the date of registration of the disputed domain name,

(b) the Registrant has registered the domain in bad faith,

and the Complainant must provide some evidence that:

(c) the Registrant has no legitimate interest in the domain name.

Even if the Complainant proves (a) and (b) and provides some evidence of (c), the Registrant will succeed in the proceeding if the Registrant proves, on a balance of probabilities, that the Registrant has a legitimate interest in the domain name.

In this case, the Complainant Municipality didn’t even make it out of the gate, as the Panel found that the Municipality did not have prior rights in the mark “West Kelowna”. Under CIRA’s Municipal Name Registration Policy, a municipality’s name is generally reserved for the use of that municipality; however, the Panel found that unless a municipal name is specifically listed in the Canadian Geographical Names Database (CGNDB) at the time of the domain name reservation, the name is not reserved for the use of the municipality. The Municipality also failed to provide sufficient evidence that it had rights in the mark due to use of the mark prior to the registration of the domain name.

As a result, the complaint was dismissed. The Panel did, however, refuse the Registrant’s request for costs, finding that the Municipality had not made the complaint in bad faith.