Court of Appeal crafts clarifying domain decision

In a recent decision, Michaels v. Michaels Stores Procurement Co (2016 FCA 88), the Federal Court of Appeal provided a clear statement that the Federal Courts have jurisdiction to order the transfer of domain names.

It seems generally settled that a domain name can be considered “personal property”. The rights held by the owner of a domain name are definable, identifiable by third parties, capable of assumption by third parties, have a degree of permanency, and can be enforced against others. As such, domain names satisfy the definition of “property” found in Canadian and other common law jurisprudence.¹

The jurisdiction of the Federal Courts to order the transfer of this property, however, has been the subject of some controversy. While a number of decisions have ordered the transfer of domain names,² in the 2015 decision Decommodification LLC v. Burn BC Arts Cooperative, Justice Hughes stated that, in his view, the Federal Court had no jurisdiction to order the transfer of domain names. ³

This issue was explicitly addressed by the Federal Court of Appeal in Michaels v. Michaels Stores Procurement Co. The appeal was from a default judgement granted against the appellants in respect of various acts of trademark infringement, passing-off, depreciation of goodwill, and contraventions of the Competition Act.

On the appeal, various alleged procedural errors were raised against the default judgment, but the central point in dispute was the jurisdiction of the Court to order the transfer of a domain name. Specifically, the appellants argued that as a matter of personal property, domains were under the purview of the Provinces and were not within the control of the Federal Courts. They put much weight on the holding of Justice Hughes in Decommodification that the Federal Court is without jurisdiction to order the transfer of domain names. Reference was also made to other “Internet related” trademark findings such as findings of non-infringement (and/or passing off) in the use of meta-tags and Adwords.⁴

Ultimately, the Federal Court of Appeal held that “the jurisdiction to order delivery up of the domain names…is firmly rooted in statute,” particularly given the broad wording of:

• Section 53.2 of the Trade-marks Act, which states “if a court is satisfied... that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances”; and
• Subsection 20(2) of the Federal Courts Act, which gives the Court jurisdiction to order any appropriate remedy known to common law or equity.

The Court of Appeal further found that the domain name was the “mechanism by which the respondent’s mark was infringed” and that it was the “instrument of confusion in the marketplace.” As such, it was appropriate and within the discretion of the motions Judge to order the transfer of the offending domain names.

This decision provides welcome clarity to jurisdictional issues surrounding trademark related domain name disputes and should provide a useful precedent for trademark enforcement proceedings in the online sphere.