BETWEEN

1. The defendants admit no allegations contained in the Statement of Claim.

2. The defendants deny the allegations contained in paragraphs 1, 4, 7, 11, 13, 16, 17, 18, 19, 20, 21, 22, 23, 24, and 25.

3. The defendants have no knowledge of the allegations contained in paragraphs 2, 3, 5, 6, 8, 9, 10, 14, and 15.

Trade-mark and Passing Off
4. The defendants are individuals who designed and developed an Internet World Wide Web site (the "web site" or their "web site") under the name "Friendship Enterprises". Friendship Enterprises is a name under which the defendants developed their web site on a not-for-profit basis.

5. Although a preliminary model of the web site was on-line commencing from in or about May, 1999, the web site was in development and construction and was not intended to be open to the public until June 29, 1999. Proceedings were commenced by the plaintiff on or about June 24, 1999.

6. The defendants specifically deny that they were at any material time engaged in the business of providing an on-line guide and directory to the City of Toronto. In fact, the defendants at all material times, were engaged only in the development of a web site intended to provide a multifaceted community forum and marketplace for the people of the City of Toronto on a not-for-profit basis.

7. In particular, the defendants' web site is characterized by a cooperative and voluntary effort by members of the community of the City of Toronto. Its goal is the establishment of an electronic gathering place and marketplace for the widest possible sale and on-line distribution of consumer goods and services directly to members of the Toronto2 community. Any revenues from the Toronto2 web site are to be reinvested into lowering the price for goods and services to Toronto2 community members and to continue to provide other services, such as interactive communications tools, web sites and email, free of charge.

8. The defendants specifically deny that their web site is in any material way similar to the plaintiff's web site. The plaintiff's web site is predominantly profit-oriented in nature, and is predominantly in the nature of an information guide and directory to goods and services available from conventional store-front commercial enterprises and public tourist attractions in the City of Toronto. The defendants admit that a small fraction of their site contains a directory of links to attractions in the City of Toronto, but state that this is lawful and in no way constitutes passing off of the defendants' web site for that of the plaintiff.

9. The web site is located at the Internet address of http://www.toronto2.com (their "web site address") and is called Toronto2 (the "web site name"). For good and valid
consideration, the web site address was duly assigned to the defendants in the name of "Friendship Enterprises" by Network Solutions Inc. on or about February 28, 1999.
Network Solutions Inc. is an international body entrusted with administering the allocation of Internet addresses to the public.

10. As a result of the registration of the defendants' web site address with Network Solutions Inc. as aforesaid, the defendants are entitled to its title and associated rights without unjust interference by the plaintiff.

11. The defendants specifically deny that the plaintiff is the owner of the trade-mark "TORONTO.COM" (the "mark" or the "plaintiff's mark") but admit that the plaintiff's
web site address is "http://www.toronto.com".

12. For greater certainty, the plaintiff's web site actually goes by the name of "toronto.com" in lower case letters, whereas the defendant's web site goes by the name of "Toronto2", beginning in upper case letters and without the suffix.

13. The web site address and web site name were selected by the defendants with the intention of describing their web site as a 'second' or 'parallel' City of Toronto in
cyberspace, and deny any intention whatsoever of selecting their name or web site address in order to deceive the public into believing that Toronto2 was the web site
toronto.com.

14. The suffix or word ".com" is wholly generic and non-distinguishing as it is a suffix available to all persons who hold an internet web site address by virtue of its registration with Network Solutions Inc.. Furthermore, the suffix or word ".com" is clearly descriptive as it indicates or means a commercial entity, as opposed to governmental (.gov) or educational (.edu), for example. As such, it cannot be monopolized by anyone, the plaintiff in particular.

15. The word "toronto" is a word clearly descriptive of the geographic origins of the goods and services offered by the plaintiff, and as such cannot be monopolized by anyone, the plaintiff in particular.

16. "toronto.com" taken as a whole, is also clearly descriptive of the origin of the plaintiff's goods and services.

17. Numerous web sites on the Internet contain the word "Toronto" and end with the suffix ".com" and as such the plaintiff's mark does not distinguish it from other similar marks or names.

18. Accordingly, the mark "TORONTO.COM" or "toronto.com" is not a trade-mark as understood by either the Trade Marks Act, R.S.C. 1985, c. T-13, as amended, nor is it a trade-mark as understood by the common law, absent the establishment of a secondary meaning to the mark.

19. The plaintiff has not pleaded the establishment of a secondary meaning to its mark, nor does one exist in fact.

20. The defendants deny that the plaintiff is the owner of the trade-mark "TORONTO.COM ALL YOU NEED TO KNOW ABOUT T.O." for all the same aforesaid reasons that it is not the owner of the trade-mark "TORONTO.COM".

21. Furthermore, the defendants state that mark "TORONTO.COM ALL YOU NEED TO KNOW ABOUT T.O." is deceptively misdescriptive of the character and quality of the plaintiff's wares and services as the plaintiff's web site certainly does not contain all the information that one needs to know about the City of Toronto.

22. In the alternative, the defendants take no position on the ownership of the trade-mark "TORONTO.COM ALL YOU NEED TO KNOW ABOUT T.O." and plead that they in no way infringed this mark as the defendant's name is clearly distinctive from this mark.

23. The defendants deny that the plaintiff has acquired a valuable reputation, goodwill or has become well known, in association with its mark in Canada. If the plaintiff has
established a valuable reputation, goodwill or has become well known in association with its mark at all, it is confined to the vicinity of in and about the City of Toronto, and not in the remainder of Canada.

24. The defendants deny that the their web site or their web site address in any way conveys or misrepresents to the public that the defendants' web site is affiliated with or is owned by the plaintiff.

25. There are no material similarities in content or get-up between the plaintiff's web site and that of the defendants. The only similarity between the respective web sites relates to the legitimate concurrent use of the words "Toronto" and ".com" by both the plaintiff and the defendants.

26. The defendants deny that any confusion exists or is likely to exist between the plaintiff's and the defendants' respective web sites and puts the plaintiff to the strict proof thereof.

27. In the alternative, if any confusion or inconvenience occurs or is likely to occur as a result of the contemporaneous use by both the plaintiff and defendants of the words 'Toronto" and ".com", this is occasioned by the fact that the plaintiff chose to adopt a name, which under the circumstances, it could not acquire a monopoly over.

28. The defendants deny that they adopted their web site address or their web site name, with the intention of passing off their web site as that of the plaintiff and to unlawfully profit from the goodwill acquired by the plaintiff in association with its mark.

29. In the alternative, the defendants deny that the plaintiff has sustained any significant damages or harm as a result of the conduct of the defendants as aforesaid.

30. If the further alternative, the defendants state that the plaintiff's damages are excessive, remote, and not recoverable at law, and that the plaintiff has failed to mitigate its losses, if any.

Copyright
31. The defendants deny that they have infringed the copyright of the plaintiff in any way understood by the Copyright Act R.S.C. 1985, c. C-42, as amended, or by the common law and put the plaintiff to the strict proof thereof.

32. The defendants specifically deny that they have reproduced portions of the plaintiff's web site or authorized the reproduction of portions of the plaintiff's web site and put the plaintiff to the strict proof thereof.

33. The defendants deny that the plaintiff's web site contained a copyright notice which forbid the defendant to link or frame the plaintiff's web site, and puts the plaintiff to the strict proof thereof.

34. In the alternative, the defendants state that the plaintiff's copyright notice was not displayed in a place readily or reasonably visible to the defendants and that therefore the defendants could not have reasonably had notice of the plaintiff's copyright notice.

35. The defendants admit that they created six (6) plain text 'links' and 'frames' (the "frames and links") to the plaintiff's web site but state that this conduct does not constitute copyright infringement as known to law. In fact, the practice of linking or framing to another web site is a lawful, commonplace and a practice fundamental to the nature of the Internet.

36. In the alternative, the defendants deny that the plaintiff is the copyright holder of the material that the defendants linked or framed to and put the plaintiff to the strict proof thereof.

37. In the further alternative, the defendants deny that copyright, as understood by the Copyright Act R.S.C. 1985, c. C-42, as amended, or by the common law, subsists in the plaintiff's web page or in web pages linked to the plaintiff's web page and put the plaintiff to the strict proof thereof.

38. In the further alternative, the defendants state that upon receiving notice of the plaintiff's objection to the links and frames, the defendants immediately removed the links and frames.

39. In the further alternative, the defendants deny that the plaintiff has sustained any significant damages or harm as a result of the conduct of the defendants as aforesaid.

40. In the further alternative, the defendants state that the plaintiff's damages are excessive, remote, not recoverable at law and that the plaintiff has failed to mitigate its losses.

41. The defendants deny that they have made a profit, unlawful profit or have been unjustly enriched by virtue of their activities as aforesaid.

42. The defendants deny that any significant, serious or irreparable harm has been suffered by the plaintiff as a result of the defendants' web site, nor will it be caused in the future, and put the plaintiff to the strict proof thereof.

43. The defendants deny that the plaintiff is entitled to an interlocutory injunction.

44. The defendants deny that the plaintiff is entitled to the delivering up of all things or materials exhibiting the words Toronto2.com or confusingly similar things and materials, including the defendants' registered web address itself.

45. The defendants deny that the plaintiff is entitled to a Declaration as to the ownership of the trade-mark "TORONTO.COM" or "TORONTO.COM ALL YOU NEED TO KNOW ABOUT T.O.".

46. The defendants deny that the plaintiff is entitled to an accounting of the defendant's profits, which profits are denied.

47. The plaintiff's action is frivolous and vexatious and the defendants request that it be dismissed with costs.

September 14, 1999

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