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Case Shows Weakness of Generic Domain Names

Note: No Allegations have been proven in Court
Toronto2
Cynthia Rowden
The Lawyer's Weekly
INTELLECTUAL PROPERTY

March 31, 2001

Want to buy a domain name? Recent reports of millions being spent for names such as loans.com and business.com have fueled an enormous interest in generic domain names that describe either the type of business or the geographic source of the goods and services.

However, a recent Federal Court decision demonstrates the weakness of such names, and the dificulty of preventing the use or registration of very similar, or virtually identical domain names, often for competitive enterprises.

In Toronto.com v. Sinclair and Cole dba. Friendship Enterprises, Jan. 27, 2000 (Fed.Ct. No. T-1163-99), the Federal Court refused an application for an interlocutory injunction by a partnership of The Toronto Star and Bell Actimedia, the owner of the domain name toronto.com, who sought to enjoin the use of Toronto2.com, and the website operating at that address.

While only an interlocutory decision, and as yet the reasons of the court have not been released, the case is perhapos a percursor to what owners of generic domain names might expect if they attempt to enforce their rights against others with similar domain names.

The interest in generic domain names flies in the face of decades, if not centuries, of jurisprudence, legislation, and legal advice about what makes a good trademark. Generally the best and strongest marks are not descriptive, but instead, fanciful words that have no reference to the goods, the services or their place of origin.

Character of wares

The Canadian Trade-marks Act, like similar legislation in most countries, specifically prevents the registration of marks that refer to a character or quality of the wares or to their place of origin or that are the common name for the goods. The theory is that it would give traders gaining rights in such words an unfair competitive advantage if they could take out of the trade vocabulary words commonly used to describe the goods or to name the goods.

Accordingly the word SHOE is not available for shoes, and the word BOOK can not be registered for books. Not so in e-commerce. As with so many other aspects of life, the Internet has rewritten the rules. The Internet Authority for Assigned Names and Numbers (ICANN), which now regulates the registration of .com, .org and .net domain names, exercises virtually no control over what can and cannot be registered. Instead, the system operates on a first-come, first-served basis. Whoever is prepared to pay the modest registration fee ($70 U.S.) can have the registration.

Originally, much of the jurisprudence in this area (primarily originating in the U.S.), focussed on disputes between those who registered famous marks and names and then tried to extort funds from the rightful owners. Recent caselaw, legislation in the U.S. and the introduction of a dispute resolution policy to deal with bad faith domain name registrations have gone a long way to solve such problems.

Hot commodities

However, while the cyberpirates were fighting with the owners of the trademarks and famous names, other Internet entrepreneurs were buying up the rights in nouns, laudatory terms, and geographic place names, and these have now become hot commodities.

Presumably companies believe that customers wanting a loan will type in loans.com. Whether or not that's true, there is, nevertheless, a strong market for these names, with many sites listing names for sale at astronomical amounts.

Since these words are often ones that could never have been registered as trademarks, the question is whether these domain names will turn out to be valuable, or function well to distinguish any particular business. Since the domain name rules permit another domain name to be registered as long as it is not identical to an existing name, there is nothing to stop others, competitors or otherwise, from registering very close domain names.

In the recent case, the plaintiffs had registered the domain name "toronto.com" and had also filed a trademark application, which had received a first refusal letter from the Trade-marks Office. They operated a website with information about events and activities in the city.
The defendants registered the domain named "Toronto2.com", for a business about Internet activity in the city. The plaintiffs also alleged copyright infringement arising from linking and framing by the Defendants website to the plaintiffs, although by the date of the hearing, such activities had ceased.

The judgement, by Justice Elizabeth Heneghan, was issued without reasons - and the reasons still haven't been released, so it is difficult to speculate on the most important factors in the case. Interlocutory injunctions are notoriously difficult to attain, since the Federal Cour requires a finding of irreparable harm, which is a very high onus that plaintiffs find difficult to meet. However, the defendants have helpfully recorded all the developments of the case, except for the fact that an appeal has been launched, on their website, and it is possible to see some of the arguments the court heard or considered.

Geographic names

For example, the defendants referred to caselaw on the weakness of geographic names as trade marks, and suggested that without evidence of secondary meaning, such names should not be the subject of exclusive rights.

In fact, they cited David Vaver, a well known intellectual property academic, who specifically used the example of "Toronto" as a word that is clearly descriptive. There was also evidence of over a thousand domain names including the word :Toronto" and several informational websites that used the word "Toronto" in the domain name.

In the absence of written reasons, it is impossible to know whether the case was decided on issues relating to irreparable harm, the balance of convenience, or the tests relating to the strength of the case. However, the decision is illustrative of the difficulties that those registering a generic domain name will experience, should they attempt to create a barrier around their website.

The registration of domains such as toronto.com may not prevent the use of similar domain names, such as Toronto2.com, or 4toronto.com.
It will only be with significant investments in publicity that such domain owners can create any strong brand awareness.

While the rules for domain name registration differ greatly from trademark registration, since the domain name doesn't merely act as an Internet address, but instead is the way businesses distinguish themselves on the Net, e-commerce companies should be aware of the limitations of creating strong rights in generic domain names.

In the long run, following the long established trademark registration rules may lead to stronger and more enforceable rights.

______________
Cynthia Rowden
is a partner in the Toronto intellectual property
firm of Bereskin & Parr,
and practises in the area of trade mark
and copyright, with an increasing emphasis
on intellectual property in e-commerce.



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