Websites on the Internet offer powerful marketing opportunities for businesses and organizations, but websites, and the domain names that identify them, also present opportunities for others to take unfair advantage of the goodwill that businesses and organizations have worked hard to establish. Businesses and organizations must be on the alert for cybersquatters and prepared to take appropriate legal action.

Every domain name is associated with an Internet Protocol (IP) number. By typing in a domain name someone browsing on the Internet is connected, via the IP number, to the associated website. Thus, domain names act as addresses, but they can also be identifiers, in much the same way that trade-marks are identifiers. In fact trade-marks are often used as part of a domain name. There are similarities, but there are also fundamental differences between domain names and trade-marks, and it is these differences that cybersquatters have sought to exploit.

Trade-marks are subject to the specific laws of each country in which they are used. In Canada and the United States, trade-marks may be registered or unregistered. Use, however, is key to acquiring and maintaining rights in a trade-mark in these countries. Once a person uses a trade-mark in association with certain goods or services, that person can prevent others from using confusingly similar marks with the same type of wares or services.

Because domain names are used to identify websites on the Internet, they are international in scope. In many cases, they are assigned on a first come, first served basis. Persons seeking to register a domain name need not prove that they have used the domain name in any way or that they have any particular connection to or trade-mark rights in the name they seek to register.

Domain names can be generic top level domain ("gTLD") names, such as those ending with .com, .net, .org, .name, .biz and .info or country code top level domains ("ccTLD") names such as those ending with .ca (for Canada) and .us (for United States) - (see .us article on p.4 of this newsletter).

Various organizations act as registrars, controlling the registration of gTLDs and ccTLDs. Registering a domain name with one gTLD or ccTLD does not result in or facilitate registration of the same domain name with any other gTLD or ccTLD. For example, XYZ Co. may have registered xyz.com, but that does not give XYZ Co. an automatic right to xyz.biz or xyz.ca. Each gTLD and ccTLD name requires a separate registration. The number of registrations that a company or organization seeks often depends on the degree of protection that company or organization requires or is willing to pay for.

The traditional type of cybersquatter is the person who registers a domain name that includes another person’s trade-mark for the sole purpose of selling it to the trade-mark owner for a profit. If the cybersquatter does nothing else, this may not be a real concern for the trade-mark owner.

Of greater concern to the average business or organization are those cybersquatters who register a well-known or a competitor’s trade-mark or a variation of it as a domain name and then use the particular website located by the domain name to advertise their own services or products or alternatively, redirect traffic to their own website. For example, XYZ Co., which sells widgets under its trade-mark XYZ, could discover that someone, possibly a competitor, has registered xyz.com or xxz.com as a domain name. A potential customer, hoping to be connected to XYZ Co.’s website so that he can purchase XYZ widgets, types in "xyz.com", or by making a typo types in "xxz.com" and finds himself looking at a competitor’s website, or possibly, a completely unrelated website. Occasionally, websites promoting pornography or online gaming use well-known trade-marks or variations of them to direct traffic to their websites.

There are three basic approaches to dealing with cybersquatters: (1) using the dispute resolution procedures set up by the domain name providers; (2) court proceedings; or (3) negotiating to purchase the domain name from the cybersquatter. We will discuss the first two here.

The Internet Corporation for Assigned Names and Numbers ("ICANN"), a non-profit organization that is responsible for overseeing administration of the most popular gTLDs, has set up a dispute resolution system, known as the Uniform Domain Name Dispute Resolution Policy ("UDRP"), which currently applies to all .com, .net and .org registrations. The UDRP will, in time, also apply to .biz and .info registrations. Every person obtaining a domain name registration with one of these gTLDs must agree to abide by the UDRP.

The UDRP provides trade-mark holders with a relatively cost efficient way to seek redress against cybersquatters. Any person whose trade-mark or other rights are affected by a domain name registration may initiate a UDRP proceeding by filing a complaint with an ICANN accredited UDRP dispute resolution provider. The dispute resolution provider reviews the complaint and then invites submissions from the registrant. An administrative panel, which may be one or three persons, then reviews the submissions of both parties. If the panel agrees that the complaint is valid, it may either cancel or transfer the domain name.

To be successful, a complainant must prove:

1. the domain name at issue is identical or confusingly similar to a trade-mark in which the complainant has rights;
2. the person who registered the domain name, the respondent, has no rights or legitimate interest in the mark; and
3. the name has been registered and is being used in bad faith by the respondent.

Bad faith is often the most difficult element to prove. The UDRP includes a list of factors that demonstrate bad faith:

1. the respondent acquired the domain name primarily to sell it;
2. the domain name was acquired to prevent the owner of the trade-mark from using the mark in a domain name;
3. the domain name was registered primarily for the purpose of disrupting the business of a competitor; and/or

4. the domain name is being used to attract users to the respondent's website by creating a likelihood of confusion with the complainant's mark.

The list is not exhaustive. Other evidence that may be relevant includes, for example, other names the respondent has registered and the content of the respondent's website.

The UDRP applies to gTLDs. The entities in charge of the various ccTLDs, including Canada's .ca, often have their own dispute resolution procedures. The Canadian Internet Registration Authority ("CIRA") is in the process of finalizing its dispute resolution procedure ("CDRP"). The CDRP is expected to be in place sometime during 2002. The CDRP will be similar to the UDRP, with some differences to address perceived problems with the UDRP.

An alternative to the dispute resolution procedure is a court action. With .ca domain names, a court action is the only choice until CIRA’s dispute resolution policy is in place.

A court action in Canada currently must be framed using traditional trade-mark infringement and passing off concepts. Both these actions have their own unique characteristics. However, a key element of both is confusion: proof that the offending domain name causes confusion regarding the source of the associated goods or services in the mind of the consumer (or Internet user).

Where a person registers and uses a competitor’s trade-mark as a domain name, the potential for confusion is readily apparent. However, where there has not been actual use in a trade-mark sense, for example, where the cybersquatter registers a domain name but does not do anything with it, there may not be a cause of action or a remedy under traditional trade-mark law. Nevertheless, courts are often prepared to stretch traditional trade-mark law concepts to find remedies where there has been a perceived wrong. For example, in one British case involving the registration of various well-known trade-marks as domain names, the court held that the cybersquatter was seeking to extract money from those with trade-mark rights by threatening to sell or use the domain names. The Court found, that the cybersquatter was committing fraud and granted an injunction against it.

An advantage of a court action is that more flexible remedies are possible, including an injunction where there is reason to immediately prevent use of the offending domain name.

Where an injunction is not required, however, dispute resolution proceedings such as the UDRP are quicker (two or three months rather than two or three years). Such proceedings are also not restrained by issues regarding jurisdiction. Jurisdiction is a broader topic than space affords, but suffice it to say that whether a court can grant a remedy may depend on whether the complainant and offending party are resident or somehow connected within the territory one which the court exerts control.

The United States has enacted the Anticybersquatting Consumer Protection Act ("ACPA") to specifically combat the problem of cybersquatting. The major advantage of this Act is that it allows a person with trade-mark rights to proceed against the offending domain name, as opposed to its owner, thereby eliminating the problem of the court not having jurisdiction over the person owning the offending domain name.

There are different tools available to "evict" a cybersquatter and to protect your trade-mark rights. If the domain name registered by the cybersquatter utilizes a gTLD or a ccTLD that is subject to the UDRP or an equivalent dispute resolution policy, that policy may be used relatively expeditiously and inexpensively and without jurisdictional concerns. If the top level domain of the domain name is not subject to the UDRP or an equivalent policy, or if the circumstances do not fall within the scope of an applicable dispute resolution policy, or if an immediate injunction is needed to stop the cybersquatting, court action may be the only alternative.

Section 9(1)(n)(iii) of the Canadian Trade-marks Act (the "Act") provides that a "public authority" may request that the Registrar give public notice of adoption and use by that public authority of a badge, crest, emblem or mark as an "official mark" in association with wares, services or both. No specifics of the particular wares or services need be provided. Once such notice has been published in the Trade-marks Journal, no other party may adopt, use or register a trade-mark that consists of or so nearly resembles as to be mistaken for, that official mark, in association with any wares or services, as applicable. Similar provisions apply to universities and "Her Majesty's Forces". A "public authority" is not defined in the Act but under the tests developed by the Courts, governmental and many charitable and benevolent organizations qualify.

Official marks are given special treatment. Unlike regular trade-marks, there is no examination or Opposition procedure for official marks. There is also no formal process to challenge a Notice issued by the Registrar of the adoption and use of an official mark by a public authority. Until recently, official marks were thought to be almost invulnerable from attack.

What Constitutes "Use" of an Official Mark?

Several recent cases have looked at the issue of what constitutes "use" of an official mark. This is important because the Applicant for an official mark must have actually already adopted and used the mark in association with wares or services (or both) at the time the Notice is published by the Registrar in order for the public authority to enforce its rights under the official mark.

In two recent cases, the Federal Court of Canada looked at the issue of whether or not use of an official mark by a licensee of a public authority accrues to the benefit of that public authority. In the earlier case (Canada Post Corp. v. Post Office [2001] 2.C. 63 (FCTD)), the Court held that use by licensees did not accrue to the benefit of the public authority. In the more recent case, (Magnotta Winery Corporation, et al v. Vintners Quality Alliance [2001] FCT 1421), the Court came to the opposite conclusion, without referring to the earlier Canada Post case. Until there is an appellate level decision on this issue, it is not clear whether, in order to take advantage of the official mark provisions in the Act, a public authority must itself adopt and use the mark in Canada or whether it can rely solely on adoption and use by its licensees.

The Federal Court decided this past summer in FileNET Corporation v. The Registrar of Trade-marks (et al) (2001) 13.P.R. (4th) 385 ("FileNET") that adoption and use of an official mark in the context of the Act did not require use in a trade-mark sense. The Judge in FileNET quoted favorably a passage from the book "Trade-marks Law of Canada" by A.D.Morrow: "It is arguable that whenever a public authority employs a mark, this will meet the requirements of adoption and use for the purpose of this Section" (emphasis added). In the FileNET case, internal use of the mark and its appearance on a website of the public authority, as well as use by that public authority in news releases and in a sub-domain were sufficient to qualify as adoption and use in the context of the Act, even where the service in question was not provided by the public authority until after publication of the Section Notice. The FileNET case is currently on appeal to the Federal Court of Appeal.

In a decision of the same Judge in the same Court (Piscitelli v. Ontario (Liquor Control Board), (2001) 14.P.R., (4th) 181 (F.C.T.D.)) it was decided that the descriptive use of the mark MILLENNIUM in advertising of the public authority did not constitute adoption and use as an official mark. The Judge reiterated that a public authority must meet the legal onus of proving adoption and use once a challenging party meets the "relatively low" evidentiary burden to substantiate an allegation of non-adoption and use.

These decisions add to the growing body of law interpreting the official mark provisions of the Act and give further guidance to practitioners acting both for and against public authorities.