Domain Name Registration, Passing Off and Trademark Infringement

Registering and using a domain name that is similar to a competitor’s for the sole purpose of redirecting traffic to one’s website is a dirty practice. But like many other internet offenses, it does not always fit within traditional causes of action, including trademark infringement or its common law cousin, passing off. Dentec Safety Specialists Inc. v. Degil Saftety Products Inc., 2012 ONSC 4721, is the latest Canadian authority to consider when the use of a domain name exclusively for “redirect” purposes will constitute passing off. It almost certainly becomes the leading authority, among very few, on “the tort of domain name passing off” in Canada.

In Dentec, the plaintiff and defendant were direct competitors, selling industrial safety products. For over five years, the plaintiff had operated a website at www.dentecsafety.com and had displayed this URL on its advertising materials. The defendant, meanwhile, advertised and sold its own products on a website at www.degilsafety.com. In February 2009, the defendant registered the domain name <dentecsafety.ca> (i.e. the plaintiff’s domain name with a .ca instead of a .com) and set it up so that internet users who typed it into a browser would be directed to the defendant’s website without notice.

The defendant maintained that he was lawfully entitled to engage in this “common practice” and did so for five months before being sued by the plaintiff for passing off. Shortly thereafter, the defendant surrendered the <dentecsafety.ca> domain name, making an injunction (or a proceeding under the Uniform Dispute Resolution Policy to cancel or transfer the domain name) moot. The plaintiff proceeded with the action and was successful in obtaining judgment for $10,000, as sought.

The facts in Dentec might have easily satisfied the traditional tripartite test for passing off as set out by the Supreme Court in Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120, namely: (1) the plaintiff had acquired goodwill in its name; (2) the defendant clearly made a misrepresentation that was likely to cause confusion; and (3) the misrepresentation was harmful to the plaintiff. But Justice Kenneth Campbell took the opportunity to fashion a distinct set of “principles” to consider in the domain name context. The two core “principles” he identified are well-established, namely:

• The likelihood of confusion should be measured from the perspective of the "ordinary average customer"; and
• In assessing the likelihood of confusion, the court should consider all of the circumstances of the case which may include the similarity between the domain names and the plaintiff’s and defendant’s products, the “strength” of the plaintiff’s name in the market place and the nature of the products and the trade.

To these, Justice Campbell added the following “principles” that appear unique, at least in Canada, to the domain name context:

• The greatest likelihood of confusion will exist where the defendant registers a secondary level domain name exactly matching the plaintiff’s domain name, such that, in appropriate cases, using the plaintiff’s exact business name “may itself amount to passing off”;
• Passing off in the domain name context can arise from “initial interest confusion”, which occurs when internet users seeking the plaintiff’s website may be misled by a similar domain name to the defendant’s website, even if, upon arriving there, they discover their error;
• If the defendant intended to redirect internet traffic by using a similar domain name to the plaintiff’s, the court should be more inclined to find a likelihood of confusion.

This principled approach may make it easier to prove the elements of passing off, in the domain name context, than a rigid application of the traditional tripartite test might.  For instance, it seems to minimize the importance of proving goodwill (a major hurdle in the traditional test) at least where the defendant intended to redirect traffic to its website by using the plaintiff’s exact trade name in a domain name. Further, passing off by “initial interest confusion” will make it possible for plaintiffs to prove passing off in the domain name context, even where the plaintiff and defendant are in completely different industries, where visiting their websites would dispel any likelihood of confusion.  It was unclear, until now, whether Canadian courts would import the concept of “initial interest confusion” which originates in U.S. trademark law.

The court in Dentec followed jurisprudence from the Federal Court in rejecting the notion that damages from passing off are presumed once a likelihood of confusion has been established. However, the court required next to no evidence to find that the plaintiff had indeed suffered damages. The court found it “likely that considerable internet traffic was redirected to Degil through the dentecsafety.ca domain name [and that] many potential Dentec customers made their necessary industrial safety product purchases from Degil” without direct evidence that a single customer had ever typed “dentecsafety.ca” or of a single lost sale to the plaintiff (the plaintiff’s website was not e-commerce enabled).

Further proof, if we needed it, that courts will always find ways to punish what offends their sense of justice, regardless of the technology used.

This blog post was originally published in the November 23, 2012 issue of Lawyers Weekly with a posting in Advocate Daily.