DOT-CA Domain Name Disputes: Top 12 Changes to the CDRP
By Eric Macramalla, Partner, Gowling Lafleur Henderson LLP
In 2002, the Canadian Internet Registration Authority (CIRA) launched the CIRA Domain Name Dispute Resolution Policy (CDRP). The CDRP addresses instances of bad faith registration of dot-ca domain names by way of a relatively quick, out-of-court arbitration at a low cost. CIRA, the Registry for dot-ca domain names, is the not-for-profit corporation that governs the dot-ca domain space.
CIRA is now undertaking a public consultation to solicit input on the CDRP from stakeholders, including lawyers, government, academics, businesses, trade-mark holders, Registrars and Registrants. The purpose of the consultation is to obtain feedback from interested parties on the effectiveness of the CDRP with a view to determining whether changes, if any, should be made to the CDRP. The consultation closed on September 17, 2010.
There are about 1.5 million dot-ca domain names registered. Since the inception of the CDRP, 149 decisions have issued, or on average a little over 1 decision a month. At its peak, there were 30 CDRP decisions in 2008, or a little over 2 per month. Between 2005 and 2009, there were a total of 121 decisions, or an average of 2 a month.
Given the number of unauthorized domain name registrations practitioners see on a regular basis, one would expect more cases. If certain changes were made to the CDRP, we would likely see an increase in filing. As it stands now, there are many cases that go unfiled, even in the most obvious cases, as the CDRP has narrow restrictions both substantively and with respect to eligibility to file a case. As well, the CDRP needs to provide better defences for domain name owners and their generic and descriptive registrations.
Here are my top 12 suggested changes to the CDRP:
1. Eligibility of Complainant, CDRP, Paragraph 1.4
The CDRP provides that a non-Canadian party is only eligible to file a domain name complaint (“Complaint”) if it is the owner of a Canadian trade-mark registration that is confusing with a disputed domain name. This provision is narrow and not in keeping with the fundamental trade-mark principle that recognizes the enforceability of common law trade-mark rights (or unregistered trade-mark rights).
This principle of common law trade-mark rights is fundamental to Canada’s use-based trade-mark regime and has deep roots at law. It is a well-established principle that use creates the right to a trade-mark, whether in Canada or a country of the Union - irrespective of whether one has a trade-mark registration or not. A trade-mark registration merely serves to confirm the title which has already been established by use. In Parto v. Tood (1888), 17 S.C.R. 196 at 200 S.C.C, the Court summarized this theory of confirmation of title by registration: “It is not the registration that makes the party proprietor of a trade-mark; he must be proprietor before he can register”.
Therefore, a party can acquire trade-mark rights by virtue of the use of the mark in the Canadian marketplace. This type of trade-mark is referred to as a common law trade-mark. To a certain extent, a Canadian trade-mark registration is the crystallization of those rights.
Further, the statutory definition of a “trade-mark” at Section 2 of the Canadian Trade-marks Act is not restricted to a trade-mark registration. Rather, it provides that a trade-mark is a mark that is used for the purpose of distinguishing the wares or services of a trader from those of others, and that includes registered and common law marks.
As well, common law trade-mark rights are enforceable. An owner of a common law trade-mark may enforce its rights through the common law action of passing off or its statutory equivalent, Section 7 of the Canadian Trade-marks Act.
For this reason, the CDRP allows Canadians that do not have a trade-mark registration to instead rely exclusively on their common law trade-mark rights when filing a Complaint. However, a non-Canadian is not eligible to file a Complaint if it does not own a trade-mark registration that is confusing with the disputed domain name – even if it is the owner of longstanding common law trade-mark rights.
This is a concern, as it denies non-Canadians with enforceable trade-mark rights in Canada (but no registration) from taking advantage of the CDRP.
There are no quick fixes for a non-Canadian that does not own a trade-mark registration. Assuming no unusual obstacles, securing a Canadian trade-mark registration can take between 1 to 2 years. This means that after learning of an unauthorized domain name registration, a non-Canadian would not have access to the CDRP for at least 1 to 2 years.
This restriction on eligibility is not entirely consistent with the other parts of the CDRP. Paragraph 1.4 does not impose a temporal requirement that the trade-mark registration being relied upon by a non-Canadian predate the domain name registration date. If a non-Canadian owns a registration, it is eligible to file a Complaint – irrespective of when the application matured to registration. However, Paragraph 3.1(a) provides that a brand owner must establish trade-mark rights that precede the domain name registration date. In cases where a non-Canadian’s trade-mark matured to registration prior to the domain name registration date, prior rights are presumed or prior trade-mark rights need not be shown. However, if the non-Canadian’s trade-mark matured to registration after the domain name registration date, the non-Canadian must establish trade-mark rights that predate the domain name registration. At this point, the non-Canadian is permitted to rely on its common law trade-mark rights to get in behind the domain name registration date.
This is where the inconsistency comes in. While a non-Canadian is ineligible to file a Complaint based exclusively on common law trade-mark rights, the CDRP still permits a non-Canadian that does own a trade-mark registration to rely on its common law trade-mark rights to establish rights that precede the registration date of the domain name. Allowing a non-Canadian party to rely on common law trade-mark rights only part of the time is difficult to reconcile at a fundamental level - both when considering the CDRP and Canada’s use-based trade-mark regime.
The Uniform Dispute Resolution Policy (UDRP) allows Complainants to rely on common trade-mark rights. This has proven to be an effective way to fight cybersquatting, as Complainants are not denied eligibility on the basis that they do not own a trade-mark registration.
Common law trade-mark rights are established by providing evidence of revenue figures and promotional expenses associated with the use of the trade-mark in Canada, together with samples of promotional materials bearing the mark. Assessing trade-mark rights is the responsibility of the Panel and should therefore be left to the Panel to consider.
Therefore, it is recommended that CIRA consider amending the CDRP to provide that a non-Canadian be eligible to file a Complaint even if it is not the owner of a Canadian trade-mark registration so long as it is the owner of common law trade-mark rights. As it has in many cases to date, the Panel would exercise its expertise in assessing the strength of the non-Canadian’s trade-mark rights and the sustainability of the Complainant’s claim.
Further, given the porous nature of the U.S/Canadian border, and the nature of Internet commerce generally, CIRA may wish to consider allowing complainants to rely on foreign trade-mark rights. It is quite common for Registrants to target brands that attract significant public attention or enjoy great success internationally, but which have not yet been launched in Canada.
Allowing Complainants to rely on foreign rights would assist in addressing these cases of cybersquatting. After all, the goal should be for the CDRP to be an effective and practical tool in the fight against cybersquatting. A misappropriation is a misappropriation is a misappropriation – irrespective of jurisdiction.
Please note that references are made to the UDRP throughout this article as the CDRP was modelled after the UDRP, although there are differences between the two.
2. General Registration Rules - Broaden Eligibility to Register a .CA Domain Name
As per Paragraph 2(q), CIRA Policies, Rules, and Procedures - Canadian Presence Requirements For Registrants, a non-Canadian only qualifies to register a .CA domain name if it is the owner of a corresponding Canadian trade-mark registration. Further, that same non-Canadian may only apply for a .CA domain name that consists of, or includes, the exact word component of its registered trade-mark.
The implications of Paragraph 2(q) are significant for non-Canadians who actively do business in Canada:
- Without a Canadian trade-mark registration, a non-Canadian is not permitted to register its trade-mark as a .CA domain name – even if it has a pending Canadian trade-mark application or common law rights.
- Even if a non-Canadian owns a registered trade-mark, it is still not permitted to register a domain name that is comprised of a well known short form of its mark.
- Even if a non-Canadian owns a registered trade-mark, it is still not permitted to register a domain name a domain name that confusing with its mark, or engage in defensive domain name registrations such as registering intentional misspellings of its mark.
In stark contrast, any Canadian may register any domain name at any time.
By way of example, a U.S.-based entity which owns a Canadian trade-mark registration for NEW YORK YANKEES is permitted to register newyorkyankees.ca and ilovethenewyorkyankees.ca, but may not register yankees.ca, even if it has acquired Canadian common law trade-mark rights in the mark YANKEES. Further, if it wanted to register intentional misspellings of its mark as a defensive measure to thwart the ubiquitous practice of typosquatting, it could not. As well, if the U.S.-based entity did not own a trade-mark registration for NEW YORK YANKEES, it would not be eligible to register any .CA domain names to begin with.
This is problematic and ties in to the previous section. Non-Canadians invest significant sums of money (thousands of dollars - if not hundreds of thousands) when launching brands and doing business in Canada. They also spend thousands in clearing trade-marks and filing applications in Canada. However, despite these significant investments into Canada, until those applications have matured to registration, they are ineligible to register their marks as a $15.00 .CA domain name. This inability to register marks they are using, intend to use or which may have garnered public attention render non-Canadian brand owners prime targets of cybersquatters.
There are certain Registrants that actually monitor the Trade-marks Register, and focus on newly filed trade-mark applications by non-Canadians. They then turn around and register those brands as .CA domain names knowing full well that they may be able to sell the domain names to the brand owners down the line. Brand owners that file proposed use applications in Canada, and subsequently lose their domain names to cybersquatters may have no choice but to pay a cybersquatter since under the CDRP, a complainant will fail in a Complaint if it cannot establish prior trade-mark rights. As well, to begin with, a non-Canadian brand owner would not be eligible to file a Complaint as it would not own a registered trade-mark.
Canada, and other countries of the Union, such as the U.S., recognize the importance of allowing parties to file trade-mark applications before they start using their marks (these are referred to as proposed use or intent to use trade-mark applications). Parties want to lock down their marks before they start using given the significant invested costs associated with branding; if they file after they start using, then they run the risk of interlopers. Canada allows non-Canadians to file trade-mark applications prior to use commencing as this is recognized as a vital part of branding strategies; CIRA should consider doing the same when it comes to domain names.
CIRA may wish to consider adopting an approach more closely aligned with eligibility requirements of .US domain names. In particular, CIRA’s registration rules could be amended to allow non-Canadians without a trade-mark registration to nonetheless be eligible to register .CA domain name if they have a bona fide presence in Canada (i.e., conduct business in Canada).
At the very least, it is submitted that a non-Canadian qualify to register a .CA domain name if it is the owner of a pending Canadian trade-mark application, thereby loosening the more onerous requirement of a trade-mark registration.
Therefore, it is recommended that CIRA consider amending the CPR to allow for a non-Canadian to register a .CA domain name if it is the owner of a pending trade-mark application in Canada, or otherwise has a bona fide presence in Canada. This suggested amendment would decrease the number of disputes as the domain names would be owned by the entitled parties. While CIRA has indicated this consultation is not intended to address the CPR issue, this suggested change to the CPR is aligned with the overall purpose of the consultation and it is recommended that CIRA reconsider it.
3. Define “Nominee”
Paragraph 4.3 of the CDRP provides that where a complainant does not satisfy the Canadian Presence Requirements (“CPR”), it may transfer the disputed domain to a “nominee” of the Complainant that satisfies the CPR.
The term “nominee” is not defined under the CDRP. The Registration Rules prevent a party from holding a domain name in trust for a party that would not otherwise qualify to hold the domain name. This presumably is the starting point; however, the term remains nebulous.
Therefore, the CDRP should include a definition of the term “nominee”.
This is an opportune time to raise an inconsistency with the CDRP and the Registration Rules: in certain cases, a non-Canadian may enforce its rights as against a domain name that is confusing (Paragraph 1.4 of the CDRP) with its registered trade-mark, but if successful, it would not qualify to hold the domain name (Paragraph 2(f) of the CPR). So there are circumstances where a Complainant can succeed in a CDRP proceeding but not be able to then own the domain name it was awarded in the proceedings.
This inconsistency of being able to enforce rights against a domain name one does not qualify to hold is difficult to reconcile. It would be cured if CIRA permitted non-Canadians to hold domain names that are confusing with their trade-marks and/or adopt the bona fide presence requirement.
4. Reduce CDRP Filing Fee; Eliminate Mandatory 3 Member Panel
The cost of initiating proceedings for many is cost-prohibitive. For this reason, at the CDRP’s peak, we only see about 2 CDRP decisions a month. Given the number of unauthorized domain name registrations practitioners see on a regular basis, one would expect more cases.
The cost of a filing a Complaint differs according to the number of Panelists selected. For a 3 member Panel, the Complainant’s filing fee is $4000.00. If there is no response, and the Complainant converts the Panel to a single member, the cost drops to about $2500.00. The Panel may only be converted to 1 member if there is no Response; if there is a Response than a 3 member Panel is mandatory.
The fee to file a UDRP Complaint for one Panel is $1500. Should the Respondent elect for a 3 member Panel, the filing fee rises to $4000.00 – although the parties split the cost.
Brand owners generally find the $4000.00 fee high and as result, many Complaints have not been filed in straightforward cases. Cybersquatters know this and use the filing fee as leverage when seeking to extract a settlement offer from brand owners for domain names. As a result, it is generally agreed upon that .CA domain names are attractive targets for cybersquatters.
The filing fee could be reduced if CIRA eliminated the mandatory requirement for a 3 member Panel. Instead, it could give the Complainant the choice of electing for a 1 member Panel at $1750 ($1000 for the Provider; $750 for the Panelist) or a 3 member Panel at $3000 ($1000 for the Provider; $1000 for Chair of Panel; $500 for two other Panelists).
If the Complainant elects for a single member, and the Respondent converts the Panel to 3, then both parties can split the increased filing fee.
If CIRA is reluctant to eliminate the mandatory 3 member Panel, then CIRA may wish to work with the Providers to lower the fees in keeping with the above breakdown. Anecdotal evidence suggests that certain Panelists are open to the reduction.
5. Allow for Entirely Paperless Submissions
As with the new WIPO UDRP initiative, CIRA may wish to encourage online paperless submissions. This would increase efficiencies and lower costs for all parties involved.
6. Maintain Searchable Database of CDRP Decisions
Further, there is no way to search CDRP decisions on CIRA’s website or elsewhere. For example, one cannot determine which cases have addressed the issue of a former employee registering a disputed domain name.
A number of CDRP decisions available on CIRA’s website have been scanned as a single image. As a result, these decisions do not appear when searches are conducted through a search engine, such as Google.
Having the ability to search and review the case law is of paramount importance, both from pedagogical and advocacy standpoints. Case law serves to educate, while also assisting Panels in making their decisions.
Until such time as all decisions are scanned as searchable documents, it will be difficult to accomplish this most important goal.
Therefore, it is recommended that CIRA consider having all decisions rescanned so they are not a unitary image, and further that it consider creating and maintaining a searchable database of decisions.
7. Eliminate Requirement of Prior Rights
Paragraph 3.1 of the CDRP provides that a complainant must establish rights that precede the domain name registration date. This requirement isn’t and a complainant should still be able to proceed even if its trade-mark rights are subsequent to the domain name registration date (to clarify, a complainant must still show trade-mark rights).
It is quite common for cybersquatters to register domain names that are (i) the subject of attention in the press but not used in Canada, (ii) being used in other jurisdictions, and/or (iii) the subject of proposed use applications.
In all these cases, while the brand owners are clearly the target of the domain name registrations, they would fail under the CDRP because they cannot establish prior rights. This type of result appears to undermine the efficacy and purpose the CDRP.
The UDRP does not have this same temporal requirement with respect to timing of rights. Rather, the issue of timing is considered as part of bad faith. The UDRP recognizes that to immediately disqualify a party because it cannot establish prior trade-mark rights is to possibly allow a Registrant to maintain a registration to which it is not entitled.
Timing is clearly an important factor in considering bad faith and legitimate interest; however, confidence should be had in the Panel to make the right call.
Therefore, it is recommended that CIRA consider eliminating the requirement that a Complainant establish trade-mark rights that precede the domain name registration date.
8. Bad Faith Factors Should Be Non-Exhaustive
As per Paragraph 3.7, the CDRP provides an exhaustive list of three factors that constitute evidence of bad faith; no additional grounds of bad faith may be considered by Panelists. CIRA may wish to consider amending the CDRP to make the list of bad faith factors non-exhaustive. In fact, as noted below, Panelists from almost the very first decision have expanded the scope of bad faith under the CDRP.
The UDRP provides that the four bad faith factors at Paragraph 4(b) are not exhaustive (i.e., “without limitation”).
Domain name disputes are summary proceedings that do not provide an opportunity for discovery or cross examination. Therefore, much of the evidence provided can be circumstantial and as a result Panelists must look carefully to the surrounding circumstances when making their decisions. For this reason, since the inception of the CDRP, Panelists have held that additional factors may constitute evidence of bad faith, including engaging in typosquatting, pointing a domain name to adult content, constructive or actual knowledge of a complainant’s rights, the prolonged inactivity of a website and false contact information. These findings made by CDRP Panelists are consistent with the findings drawn by UDRP Panelists.
Therefore, it is recommended that CIRA consider amending the CDRP such that the bad faith factors are not exhaustive.
9. Pattern of Abuse – Eliminate Need to Show Complainant Prevented from Registering Disputed Domain Name
As per Paragraph 3.7(b) of the CDRP, to establish that a Registrant has engaged in a pattern of unauthorized domain name registrations, a Complainant must show that a Registrant registered the disputed domain name in order to prevent the Complainant from registering its trade-mark as a domain name.
This same requirement appears in the UDRP at Paragraph 4(b)(ii): “you have registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that you have engaged in a pattern of such conduct”.
It is common for a brand owner to object to a domain name which it would not itself have registered, but which is still causing it harm. For example, a Registrant may acquire domain names that are intentional misspellings of a mark (pepiscola.ca), or which are comprised of a third party mark together with non-distinctive elements (e.g., ciraregistry.ca).
In these cases, the brand owner would not have registered these domain names; nevertheless, their registration and use may cause harm to brand owner’s business and the goodwill subsisting in its marks. However, on a strict reading of the CDRP, the brand owner would not be in a position to rely on 3.7(b), as it was not prevented from registering the domain names.
For this reason, it has become a well-established principle under the UDRP that the prevention requirement need not be shown.
Therefore, CIRA may wish to consider amending Paragraph 3.7(b) such that a Complainant is not required to show that it was prevented from registering the disputed domain name.
10. Addition of Bad Faith Factor: Using Domain Name for Commercial Gain
Under the CDRP, bad faith can be established in one of three ways: (i) the domain name owner acquired the domain name to sell it for a profit, (ii) the domain name owner has engaged in a pattern of abusive registrations, or (iii) the domain name owner acquired the domain name with a view to disrupting a competitor.
Conspicuous by its absence in the CDRP is a provision mirroring Paragraph 4(b)(iv) of the UDRP, which provides that bad faith exists where a domain name owner has intentionally attempted to attract, for commercial gain, Internet users to its website, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship, affiliation, or endorsement of the registrant’s website.
The monetization of unauthorized domain name registrations by pointing them to pay-per-click websites has become the most popular type of cybersquatting. This is precisely the type of unauthorized domain name use that the UDRP addresses at Paragraph 4(b)(iv).
However, this type of activity is not captured by the CDRP, which amounts to a substantial omission.
As a result of this omission, CDRP Panelists have on their own addressed the matter. The CDRP jurisprudence has evolved such that it has become a well-established principle that the bad faith factor “disrupting a competitor” includes use of a domain name that is likely to cause confusion among Internet users as to affiliation or sponsorship - which mirrors Paragraph 4(b)(iv) of the UDRP. The intention of “disrupting a competitor” was to capture cases where the opposing parties were competitors in the traditional sense, and not to capture cases of a classic monetization or pay-per-click scenario(in the latter case, the parties are not competitors in the conventional sense).
Therefore, monetizing unauthorized domain name registrations now qualifies as bad faith as per Paragraph 3.7(c) – disrupting a competitor.
For the sake of clarity and completeness, it is recommended that CIRA consider amending the CDRP to expressly provide that bad faith exists where a domain name owner has intentionally attempted to attract, for commercial gain, Internet users to its website, by creating a likelihood of confusion with the Complainant’s mark as to the source, sponsorship, affiliation, or endorsement of the Registrant’s website.
11. Expand Legitimate Interest
The generally agreed upon interpretation of Paragraphs 3.6(b) and (c) of the CDRP is that a Registrant will only be in a position to legitimize a clearly descriptive or generic domain name if it has used it as a trade-mark or perhaps used generally. This is far too narrow and does not provide an adequate defence for a generic or descriptive domain name registration.
A Registrant should be able to defend a generic or descriptive domain name registration, such as mattress.ca, even if he or she is not using it. There is absolutely nothing unlawful in registering, buying and selling generic domain names as a business. The CDRP should be amended to widen the scope of protection for generic and clearly descriptive domain names.
12. Amend Challenge Period from 60 Days to 15 Days
Paragraph 4.5 of the CDRP provides that a Registrant has 60 days to challenge a decision. This 60 day wait period is very long, and lasts just about as long as the actual proceedings. Paragraph 4(k) of the UDRP provides for a 10 day wait period, which seems more reasonable.
If a Registrant wishes to challenge a decision, it would file a Notice of Action or Statement of Claim. This can be done rather quickly, particularly in the case of a Notice of Action. Taking into account finding a lawyer (assuming one was not retained at the outset), 15 days seems to be a reasonable challenge period. By maintaining the disproportionally long 60 day wait period, the efficiency and timeliness of the CDRP is undermined. To date, no .CA Decision has been challenged by a Registrant.
Therefore, it is recommended that CIRA consider amending the challenge period from 60 days to 15 days.