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Canada’s Federal Court of Appeal Confirms the Court’s Jurisdiction to Order Transfer of Domain Names

April 13, 2016

By Catherine Lovrics

Canada’s Federal Court of Appeal has confirmed that the Court has jurisdiction to order transfer (or delivery up) of a domain name involved in trademark infringement.  The Federal Court of Appeal’s decision provides comfort to trademark owners who prefer to bring a lawsuit, rather than a complaint under the Canadian Internet Registration Authority’s Domain Name Dispute Resolution Policy (CDRP). A lawsuit may be preferred over a CDRP due to the availability of broader remedies. For example, a trademark owner cannot obtain an injunction and damages through the CDRP. This decision is important as it came on the heels of a recent Federal Court decision that found that, while the Court can enjoin a domain name from being used in violation of a trademark owner’s rights, the Court does not have jurisdiction to order transfer of domain names.   

In David Michaels and Michaels Inc. v. Michaels Stores 2016 FCA 88, David Michaels appealed a default judgment ordering that the domain name be transferred to Michaels Stores. The Federal Court found that David Michaels had infringed the MICHAELS trademark owned by Michaels Stores based on “considerable evidence before the Court that established actual confusion on the part of customers of Michaels Stores.” On appeal, David Michaels argued that the Federal Court order was without jurisdiction or overly-broad.  The Federal Court of Appeal found that the Federal Court has jurisdiction to order delivery up of domain names (i.e. transfer) in view of the Trade-marks Act, which permits “any order (a Court) considers appropriate in the circumstances” and the Federal Courts Act, which gives the Court jurisdiction to order any appropriate remedy known to the common law or equity. The Court of Appeal noted that the domain name was the “mechanism” by which the respondent’s mark was infringed, and was the “instrument” of confusion in the marketplace. Accordingly, there was no palpable and overriding error in the Judge’s exercise of discretion to require delivery up of the domain name. The Federal Court of Appeal also found the decision was not overly-broad, noting that the order does not restrict the personal appellant, David Michaels, from using his own name on the internet or in trade. The order only prevents the appellants from using the word MICHAELS and similar marks in a confusing way.

As mentioned, the decision followed a recent Federal Court decision that found that the Court does not have jurisdiction to order transfer of domain names. In Decommodification LLC v. Burn BC Arts Cooperative, 2015 FC 42, the plaintiffs who hold the well-known BURNING MAN event in Nevada, and own the marks BURNING MAN and DECOMPRESSION, sought transfer of certain domain names in addition to other remedies. The defendant organized a similar event in Canada, and promoted it using the words “BURNING MAN”, “BURN BC”, “DECOMPRESSION”, leaving the impression that the defendant’s event is authorized by or associated with the plaintiffs and their event. In that decision, the Federal Court held that the “Court can enjoin the continued use of certain domain names and restrain their transfer to others but, in my view, has no jurisdiction to require their transfer to the Plaintiffs.” 

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