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Author: Marsha Simone Cadogan | MSCPTL | 5 min read
A recent Federal Court case (Parsons Inc. v Khan) underscores the importance of businesses monitoring their trademarks on digital platforms, especially in light of cyber squatting. This note draws on the decision in Parsons to discuss the increasingly important relationship between domain names and trademark rights, and what this means for businesses.
An explainer on domain names and trademark rights – Connections
Domain names identify a website and usually provide specific information to website users. They work alongside a system’s Internet Protocol (IP) address, allowing internet users to seamlessly connect to the system. Trademarks and domain names have one crucial denominator in common – they are both identifiers of source, each conveying commercially relevant information about a business to the concerned public. From this common connection, even more similarities emerge. Trademarks are useful for differentiating one product or service from another, can build consumer loyalty and brand values, and can be valuable assets in a business’s intellectual property portfolio. Domain names connect businesses’ product and service offerings with consumers. Done right, this raises brand awareness among consumers and helps to sustain the brand in its target markets. Domain names, then, can be enablers in building trademark values. When the trademark is the business’s domain name or forms part of it, the relationship is even closer and, as Parsons indicates, more vulnerable on digital platforms.
Trademark owners usually seek redress for cybersquatting either through alternative dispute resolution (ADR), non-litigation means (such as cease-and-desist letters), or the courts.
Parsons: Passing off and Domain Name Disputes
In Parsons, a dodgy business claiming to offer construction, engineering and other services registered the domain name parsonsconstruction.ca as an operating business in Canada. The website contained several phrases from a business (AECON Group Inc.) with which the well-known construction and engineering multinational firm Parsons Corporation collaborates. The latter is a registered trademark in several countries, and the subject of a pending trademark application in Canada. Parsons Corporation’s domain name is parsonscompany.com. Service offerings between the two businesses were also similar. The impugned business also misrepresented itself as the multinational company Parsons, having advised a prospective employee to submit a passport and personal identification information for a job position. The prospective employee believed the business to be that of Parsons Corporation. Parsons Corporation argued that these actions were damaging to its goodwill among Canadian consumers.
In his ruling on the tort of passing off, Justice Fothergill held that the respondent had directed the public’s attention to its wares in a manner that caused confusion between its products and services and those of Parsons Corporation. These actions were contrary to s.7(b) of the Trademarks Act. The ruling enjoined the respondent from (among other things) using the name Parsons in any form, including as a domain name, business name, trade name, or in any search engine optimization application. The respondent was given 30 days to hand over all ownership, access and control of the domain name to Parsons Corporation. Damages and costs were also awarded against the respondent.
Domain Name Vigilance as part of Trademark Strategy
Whether the business operates on online platforms or not, Parsons has practical implications for business owners, especially those with trademark rights. Parsons reminds us that a well-grounded trademark strategy should include domain name monitoring practices for business operations. Should cyber squatting arise, the options available to the right holders for redress should be carefully canvassed. Parsons Corporations is a well-known business in its sector, a requirement to bring a claim of passing off. What happens if the tort of passing off is not open to the rights holder because the business has no goodwill (this point will be applicable to start-ups)?
The affected rights holder can also seek redress through alternative dispute resolution procedures. Disputes involving the bad-faith use of .ca domain names (a country-code TLD with Canadian Presence) can be arbitrated under the Canadian Internet Registration Authority (CIRA) Dispute Resolution Policy. The CIRA handles arbitration related to the bad-faith use of domain names and provides assistance to registrants whose website content is also the subject of the dispute. However, the CIRA will only take down a website at the direction of a court order or judgment.
A trademark owner may choose to use the Uniform Domain Name Dispute Resolution Policy (UNDRP), adopted by ICANN and provided by the World Intellectual Property Organization (WIPO) Arbitration and Mediation Center, to obtain redress against the offending registrant. Claimants seeking to pursue dispute resolution through the UNDRP must meet three criteria. The offending domain name must be identical or confusingly similar to the right holder’s trademark or service mark. Second, the offending domain name registrant should have no legitimate interest in the domain name. Finally, the domain name must have been registered and used in bad faith. Over 4,000 domain name disputes were resolved through the UNDRP in 2020, compared to just over 3,200 in 2019.
The availability of legal recourse cannot substitute for a proactive domain name protection strategy – one that pays keen attention to preventing or mitigating cyber squatting.
The Point
As more businesses move online and others to more digitally streamlined ways of operating, right-holders will likely need to exercise vigilance in protecting their domain names against misuse. Cyber squatting was effectively dealt with in Parsons. The decision also considers which businesses may fall outside the court’s purview. For example, an early-stage start-up or a business without goodwill cannot make a claim under s.7b of the Trademarks Act. Once even a slight thought is given to Parsons, it also brings to focus the different avenues through which these disputes can be resolved.
The foregoing is for general information purposes only and is not meant to be legal advice.regards to these matters.