Two recent decisions in very different forums demonstrate that a domain name is a business asset that can be recovered from former business associates on multiple legal grounds. Depending on the facts and the client's goals, the forum for resolving such disputes can be a strategic choice.
Canivate Growing Systems v. Brazier (2020 BCSC 232)
This dispute was submitted to the BC Supreme Court for resolution.
On the facts of this case, the domain name was registered in the name of an individual founder of the plaintiff corporation shortly before it was incorporated in 2017. However, the domain name was never assigned to the new corporation. After falling out with the other two founders, the individual defendant resigned and commenced litigation against the plaintiff corporation. He retained control over the domain name, the email addresses associated with the domain name and the website. After locking out the plaintiff corporation, he eventually disabled the website entirely.
After issuing injunctive relief, the BC Supreme Court went on to issue summary judgment finding the individual defendant liable for the tort of passing off and the tort of conversion. Liability for passing off arose from disablement of the web site which led to a misrepresentation that the business had been discontinued. The court decided that any use of the mark “inconsistent with Canivate’s trademark is an impermissible passing off”. With respect to the tort of conversion, the court found that “a modern conception of conversion must include wrongful interference with intangible goods, such as electronic data, websites and email”.
In the result, the individual defendant was ordered to transfer the domain name to the plaintiff corporation and to pay the plaintiff corporation $40,000 in general damages and $41,000 in special damages.
MAP Asset Management Corporation v. Andrej Kaleososki (DCA-2211-CIRA)
This dispute was submitted to arbitration under the authority of the Canadian Internet Registration Authority.
On the facts of this case, the domain names were registered in the name of the individual registrant during the course of his employment as an IT specialist for the corporate complainant. There was no dispute that the domain name registrations were made and paid for by the corporate complainant, on its instructions and for its benefit. Indeed, the domain names were still being used for the benefit of the corporate complainant, but it did not have administrative control.
The individual registrant alleged that there was existing litigation between himself and the principal of the corporate complainant, including a dispute respecting ownership of the corporate complainant. It was his position that the arbitration was not the appropriate venue to resolve this dispute. While the individual respondent provided evidence concerning his involvement and participation in the business of the corporate complainant, he effectively admitted that the domain names “rightfully belonged” to the corporate complainant.
The arbitration panel noted that its purpose is to provide a forum by which the bad faith registration of domain names can be addressed relatively inexpensively and quickly. The forum is not intended to address other types of differences between trademark owners and registrants. Based on the undisputed facts, the arbitration panel determined that by “taking control” of the domain names away from the corporate complainant, the individual registrant had misappropriated the domain names and that this demonstrated bad faith.
In the result, the arbitration panel ordered the domain names transferred to the corporate complainant.
Unfortunately, domain name disputes remain common for the simple reason that many business owners do not understand the technology or appreciate the significance of their administrative choices. For an explanation of how a business can avoid such disputes, we recommend reviewing our earlier article entitled “Web Sites: The Intellectual Property Issues”.