Property in Domain Names: Registration Doesn’t Always Mean Ownership
I recently argued a summary judgment motion on an interesting and somewhat novel issue relating to domain names: can someone other than the registrant of a domain name be its lawful owner - own title in it – where there is no evidence that the domain name was registered in bad faith or that it infringes someone else’s trade-mark? In Mold.ca Inc. v. Moldservices.ca Inc., the Ontario Superior Court answered this affirmatively – in our client's favour. The decision has received much attention in the media.
These were the facts of the case. Mr. Dalrymple and Mr. Sullivan co-founded a mold inspection and removal business, with Dalrymple being responsible for start-up costs and managing the business and Sullivan being responsible for information technology (e.g. websites) and chiefly responsible for operations. Sullivan purchased a number of domain names for the business, using the company credit card for the purchases but putting his own name down on the registration form. When he left the company a year later, Sullivan felt entitled to the domain names and so he took the registrations and passwords with him. By the time Dalrymple discovered this, Sullivan had transferred the registrations to a third party, Mr. Romelus. CIRA dispute resolution proceedings to have them transferred to Dalrymple’s company were unsuccessful because there was no evidence that the domain names had been registered in bad faith (by Sullivan, a then employee of the company) or were being used illegitimately by their current registrant (Romelus). By the time the company retained us to commence a lawsuit to recover the domain names, Romelus had transferred the registrations back to Sullivan who was using them for a competing mold business.
Justice Corbett agreed with our submissions that this was a “simple matter of property law”. That was consistent with the Ontario Court of Appeal’s 2011 decision in Tucows v. Renner where it was held, for the first time in Canada, that domain names are personal property, at least for the purposes of serving a claim in respect of a domain name. But a lot of us were left wondering, after Tucows, whether domain names could be considered personal property in other contexts – for instance, can they be stolen, can they be seized for the payment of debts, liquidated in bankruptcy proceedings, etc. – and can title in a domain name exist independently of a registration? The decision in the Mold.ca case says that domain names are, indeed, like any other form of personal property that can be “owned”, like a car, a computer or a photocopier.
While the company in this case was ultimately able to recover the domain names, one of the takeaways is the importance for small businesses to manage their intangible assets, like domain names, trade-marks and copyright. Relationships between the principals or founders of a small business often break down. So it’s important that, from the outset, all key intangible assets are secured by the company in the company’s name and not in the name of some individual who may not always be there.