Ownership Rights in Domain Names
In the Internet age, domain names are valuable intangible assets. And in the event of a business break-up or dispute, who owns a business’ domain name can be a hotly-contested issue.
A 2020 decision from the Supreme Court of British Columbia – Canivate Growing Systems Ltd. v. Brazier (“Canivate”) – addresses this issue in detail and harkens back to the Ontario Superior Court of Justice’s decision in Mold.ca Inc. et al. v Sullivan et. al.(“Mold.ca”), where Shift Law acted for the successful plaintiff. In both the Mold.ca and Canivate cases, it was held that a business owns its domain name, regardless of whether the domain was registered by a partner, director, or employee in their personal capacity, so long as the business is unaware that it was not the actual registrant.
These cases demonstrate that determining ownership of domain names can be complex. While the determining factor is not necessarily who registered the domain, businesses are well-advised to ensure they are the registrants for any domains they use, so as to prevent any potential disputes.
Mold.ca Inc. et al. v Sullivan et. al.
At issue in the 2013 Mold.ca decision was the ownership of various domain names related to a Toronto-area mold inspection and removal business. The plaintiffs were three corporations incorporated and capitalized by Mr. Dalrymple for the purpose of operating the business. One of the personal defendants, Mr. Sullivan, was at one time involved in the business – although, the relationship eventually fractured. The undisputed facts were that Mr. Sullivan had purchased the domain names at issue, ostensibly for the business’ purposes and with Mr. Dalrymple’s money. However, Mr. Sullivan registered the domains in his own personal name – without notice to Mr. Dalrymple and without his consent. When Mr. Sullivan ceased to be involved with the business, he sought to retain ownership in the domain names for his own purpose. Mr. Sullivan even went so far as to transfer the registrations to one of the other defendants, Mr. Romelus. The plaintiffs’ argued the domain names belonged to the business and had been wrongfully converted by Mr. Sullivan. The Ontario Superior Court of Justice agreed, based primarily on the fact that Mr. Sullivan had deliberately registered the domains in his own name without informing Mr. Dalrymple. Thus, the Court concluded the plaintiffs were the rightful owners of the domain names and ordered them returned to the plaintiffs.Canivate Growing Systems Ltd. v. Brazier
The facts in the Canivate case were similar to those in the Mold.ca case. The plaintiff, Canivate, was a corporation founded for the purpose of modifying existing greenhouse technology for use in the cannabis industry. The defendant, Mr. Brazier, had been involved in the early development of the technology and was both a shareholder and officer of the plaintiff Canivate. Prior to the incorporation of Canivate, Mr. Brazier registered the domain name canivate.com under his own name. However, when Canivate’s business began it assumed use of the domain, for both website and email purposes. At no time did Mr. Brazier inform Canivate’s other officers or directors that he personally, and not Canivate, was the owner of the domain. Rather, Mr. Brazier allowed Canivate to believe it was the owner of the domain. When a dispute arose between Mr. Brazier and Canivate, Mr. Brazier stripped Canivate’s employees of administrative access to the canivate.com website, and de-activated employee email addresses ending in @canivate.com, such that emails to Canivate employees were returned to their senders as undeliverable. Canivate brought an action against Mr. Brazier, for inter alia, passing off with respect to the trademark CANIVATE. Ultimately, Canivate’s claim for passing off was successful. The Court easily found that Canivate had a protectable reputation in its name, and that Mr. Brazier’s appropriation of the domain amounted to a misrepresentation. In this regard, the Court noted at paragraph 42 of its decision: … the placing of the name canivate.com on a register of domain names is a representation to persons who consult the register that the registrant is connected to the company, and there is the potential for likely confusion. The Court also found that Mr. Brazier’s actions had harmed Canivate. First, when Mr. Brazier de-activated the company’s website and email addresses, Canivate was actively soliciting potential investors. The Court found that Mr. Brazier’s actions had impacted Canivate’s ability to secure investment funding. Second, the Court found that as a result of Mr. Brazier’s actions, Canivate was forced to secure alternative domain names and initiate a re-branding campaign. Therefore, the Court held Mr. Brazier liable for passing off and ordered he transfer ownership of the domain to the plaintiff. Interestingly, Mr. Brazier’s actions constituted passing off despite the fact that he had personally registered the domain before the plaintiff was even incorporated. In this regard, the Court explained that while Mr. Brazier may have been the owner of the domain at one time, he forfeited ownership when he consented to the plaintiff’s use of CANIVATE as a trademark and when he allowed Canivate to use the domain, without informing the company he had registered the domain in his own name.Takeaways
The Mold.ca and Canivate decisions stand as a clear reminder of two realities.- First, domain names are valuable intangible assets and a business should ensure it is the registrant for all domain names used by the business.
- Second, even if a business is not the registrant of a domain name it uses, it may nonetheless own the domain – but only in specific circumstances.
