Canadian Internet Law Update - 2013

This paper summarizes selected developments in Canadian Internet law during 2013. This paper is an overview of significant developments rather than an exhaustive review. Reference to current legislation, regulatory policies and guidelines, and case law is essential for anyone addressing these issues in practice.

A. TRADEMARKS AND THE INTERNET

1. Infringing Domain Name

   Trans-High Corporation v. Hightimes Smokeshop and Gifts Inc., 2013 FC 1190, involved a dispute over the defendant's use of the HIGHTIMES trademark and trade name and related domain name, which the plaintiff claimed was an infringement of the plaintiff's well-known HIGH TIMES trademark used in association with the High Times Magazine and other goods and a website operated using the domain name hightimes.com. The defendant operated a retail shop named "High Times Smoke Shop & Gifts" and a website using the domain name hightimesniagarafalls.com. The court held that the defendant had infringed the plaintiff's trademark, and awarded damages, an injunction and costs. The injunction included an order that the defendant transfer to the plaintiff registered ownership and control over thehightimesniagarafalls.com domain name and all other domain names registered by the defendant containing the words "high times" or any confusingly similar mark.

2. Canadian Domain Name Arbitrations

   (a) Overview

   Certain disputes involving alleged bad faith registration of .ca domain names may be resolved by arbitration pursuant to the Domain Name Dispute Resolution Policy (known as the CDRP) mandated by the Canadian Internet Registration Authority (CIRA). The CDRP's mandatory administrative dispute resolution process is binding on .ca domain name registrants because it is incorporated by reference into .ca domain name registration agreements. The CDRP is modeled on the Uniform Domain-Name Dispute-Resolution Policy that applies to .com, .org, .net and other domain names.

   To invoke the CDRP, a complainant must satisfy the CIRA Canadian presence requirements for registrants in respect of the disputed domain name or be the owner of a trade-mark registered in the Canadian Intellectual Property Office that is the basis of the complaint. To succeed in a CDRP proceeding, a complainant must: (a) prove that the disputed domain name is confusingly similar to a mark in which the complainant had rights prior to the date of registration of the disputed domain name and continues to have such rights; (b) prove that the registrant registered the disputed domain name in bad faith; and (c) provide "some evidence" that the registrant has no legitimate interest in the disputed domain name. Even if a complainant proves (a) and (b) and provides some evidence of (c), the registrant will succeed in the proceeding if the registrant proves that the registrant has a legitimate interest in the disputed domain name. The CDRP provides non-exhaustive lists of circumstances that demonstrate bad faith registration of a disputed domain name and legitimate interest in a disputed domain name.

   (b) Decisions

   There were 30 CDRP decisions, involving 44 domain names, issued in 2013. A complete list is available at www.cira.ca. Complaints continue to be upheld more frequently than they are dismissed. During 2013, 23 complaints were successful and 7 complaints were dismissed.

   The 2013 CDRP decisions illustrate the following principles:

   The addition of a generic or descriptive word or a geographic indicator to a domain name does not distinguish the domain name from a trademark and might serve to reinforce the confusing similarity between the domain name and the trademark. (Intertek Testing Services NA Ltd. v. Intertek Oil and Gas and/or Canada Oil & Gas Recruitment Agency, CIRA No. 244, November 15, 2013; Carey International Inc. v. Simonetti, CIRA No. 241, October 3, 2013; Americana International Ltd. v. Bench Clothing Store Inc., CIRA No. 238, September 17, 2013; Vanguard Trademark Holdings USA, LLC v. Danier, CIRA No. 234, July 11, 2013; Oakley Inc. v. Ieyzhen, CIRA No. 233, July 9, 2013; General Motors LLC v. DS1 Design, CIRA No. 231, May 29, 2013; Swarovski Aktiengesellschaft v. Unknown, CIRA No. 227, May 1, 2013; L'Oreal SA & L'Oreal Canada Inc. v. Silva, CIRA No. 226, May 1, 2013.) There continues to be inconsistency regarding the appropriate test for determining whether the registrant is a competitor of the complainant, as required by CDRP section 3.5(c). Most decisions take the view that that business competition is necessary, and that merely competing for Internet traffic is not sufficient. (Intertek Testing Services NA Ltd. v. Intertek Oil and Gas and/or Canada Oil & Gas Recruitment Agency, CIRA No. 244, November 15, 2013; StudentUniverse.ccom Inc. v. Winer, CIRA No. 243, November 12, 2013; Electronic Products Recycling Association v. Rivard, CIRA No. 242, November 11, 2013; Design First Kitchen & Bath Interiors Inc. v. Stone Beach Design Inc., CIRA No. 235, July 31, 2013; The Calgary Exhibition & Stampede Limited v. Squires, CIRA No. 229, May 10, 2013.) The CDRP does not prohibit a second complaint regarding the same domain name involving the same parties, unless the second complaint is brought to harass the registrant. (American Girl, LLC v. Page, CIRA No. 239, September 30, 2013.) For the purpose of determining whether a complainant engaged in reverse domain name hijacking under CDRP section 4.6, "colour of right" means that the complainant had an honest belief that the facts advanced by the complainant were true and could entitle the complainant to the relief sought. (Design First Kitchen & Bath Interiors Inc. v. Stone Beach Design Inc., CIRA No. 235, July 31, 2013; Visionary Motorsports Ltd. v. MC Motorsports Canada Ltd., CIRA No. 230, May 27, 2013.) Mere assertions that a registrant does not have a legitimate interest in a domain name do not satisfy the CDRP requirement that a complainant provide "some evidence" that the registrant does not have a legitimate interest in a domain name. (American Girl, LLC v. Page, CIRA No. 216, January 9, 2013; Vanguard Trademark Holdings USA, LLC v. Danier, CIRA No. 234, July 11, 2013.) The registration of a domain name for the benefit of an undisclosed beneficial owner is a violation of CIRA's Registration Agreement, and holding a registration in calculated violation of CIRA's Registrant Agreement constitutes bad faith on the part of the registrant and the beneficial owner of a domain name. (ArcelorMittal SA v. NETNIC Corporation Protective Registration Services, CIRA No. 221, January 29, 2013.) Threatening to kill the complainant's lawyer is a relevant consideration is determining the registrant's bad faith. (Intertek Testing Services NA Ltd. v. Intertek Oil and Gas and/or Canada Oil & Gas Recruitment Agency, CIRA No. 244, November 15, 2013.) B. COPYRIGHT AND THE INTERNET

1. Damages for Internet Copyright Infringement

   Twentieth Century Fox Film Corp. v. Hernandez, December 3, 2013, Toronto T-1618-13 2013 (FC), involved claims for infringement of copyright in the popular television programs The Simpsons and Family Guy. The defendant created unauthorized copies of the programs and made them available for downloading, copying and streaming from various websites. The plaintiff applied for default judgment against the defendant Hernandez. The court held that the defendant's infringement was in bad faith and for commercial purposes, and resulted in revenue to the defendant on the false pretence that the defendant's activities were lawful. The court held that statutory damages would be insufficient to achieve the goal of punishment and deterrence, reasoning that the defendant's repeated, unauthorized, blatant, high-handed and intentional misconduct, and callous disregard for the plaintiff's copyright, was deserving of punitive damages. The court awarded $10,000,000 statutory damages, $500,000 punitive and exemplary damages, interest and substantial indemnity costs. The court also issued a wide injunction restraining the defendant against further infringement of The Simpsons and Family Guy television programs or any other present or future works in which the plaintiff owns copyright.

   C. CONTRACTS AND THE INTERNET

1. Consumer Contract Made by Email/Online Process

   Ghaed v. Telus Communications Co., 2013 BCSC 1675, involved a dispute over the enforceability of a fixed-term contract for the provision of telecommunication services. The plaintiff, a retired psychiatrist, employed several people to assist him in the management of his business. The plaintiff's office manager had discussions with the defendant's sales representative about a new telecommunication services bundle. The defendant emailed a copy of a proposed services contract to the plaintiff's business email address. The contract was for a 36-month term, and required the plaintiff to pay a termination fee if the contract was terminated early. The contract required the plaintiff to sign the contract with an electronic signature. Documentary evidence established that someone with authority to use the plaintiff's business email address viewed and accepted the contract by clicking an "I Accept" button, which caused an electronic signature to be added to the electronic version of the contract. The online process then allowed the person who accepted the contract to save or print the contract in .PDF format. The contract was then automatically emailed back to the defendant, who then began providing the services. The plaintiff used the services from July 2010 to October 2011, and then terminated the services. The defendant informed the plaintiff of the termination fee and sent a copy of the contract to the plaintiff. The plaintiff refused to pay the termination fee. The plaintiff's lawyer tried to settle the dispute, but the settlement was not concluded. The plaintiff then sued the defendant for declarations and for damages for the defendant's alleged breach of the Business Practices and Consumer Protection Act...