Defendant awarded maximum costs allowable under CDRP

A recent decision of a panel under the Canadian Internet Registration Authority Domain Name Dispute and Resolution Policy (CDRP) has highlighted the importance of good faith on behalf of a complainant and how a lack of good faith can justify a finding of reverse hijacking.

The complainant, Design First Kitchen & Bath Interiors Inc, had been using the trademark DESIGN FIRST since its founding in 1986. In November 2012 the Canadian Intellectual Property Office issued registrations to the complainant for both the word mark DESIGN FIRST and a design version. The registrations covered various interior design services and residential construction services. Over the years, the complainant registered various domain names which included the trademark DESIGN FIRST. In September 2011 the complainant registered the domain name 'design-1st.ca'.

In 2001 Stone Beach Design Inc registered the domain name 'design1st.ca' and 'designfirst.ca'. Around the time those domain names were registered, Stone Beach Design changed its name to Design First Creation and Development Inc. In 2005 it further changed its name to Design 1st Inc ('the registrant'). The registrant is engaged in offering design, engineering and manufacturing of various products, which do not compete with those of the complainant.

In November 2012 the complainant wrote to the registrant and expressed concern over the use of the domain name 'designfirst.ca' and requested that the registrant transfer the registration for the domain name to it, in exchange for a payment of $500. The registrant, through its legal counsel, rejected the offer. In May 2013 the complainant commenced a proceeding under the CDRP seeking transfer of the disputed domain name to it. The registrant defended the proceeding and requested that the panel make a finding that the complainant had commenced the proceeding without colour of right and requested that a finding of reverse domain name hijacking be made against the complainant.

In order to be successful under the CDRP, a complainant must establish that:

1. the domain name at issue is similar to a trademark in which it has rights which pre-date the registration date of the domain name;
2. the registrant registered the domain name in bad faith; and
3. the registrant does not have a legitimate interest in the domain name.

The panel had no trouble determining that the disputed domain name was confusingly similar to the trademark DESIGN FIRST. 

However, the panel found that the complainant had failed to demonstrate that the domain name was registered in bad faith. The complainant argued that:

• the registrant had registered the disputed domain name for the purpose of commercial gain;
• there was a likelihood confusion; and
• this conduct was intentional, thus justifying a finding of bad faith. 

The panel disagreed, noting that commercial gain as a motive for a website is not per se unacceptable. The panel also found that the registrant was not a competitor of the complainant, since it was using the disputed domain name to advertise to its own client base, for its own services, which were not the same as, or similar to, those of the complainant.

Regarding legitimate interest, Paragraph 4.1(c) of the CDRP requires a complainant to provide “some evidence” that a registrant has no legitimate interest in the domain name which is the subject of the complaint.  Paragraph 3.4 of the CDRP provides a non-exhaustive list of circumstances that demonstrate that a registrant has a legitimate interest. In this case, the panel concluded that the complainant had failed to convince at this first stage and found that the registrant did have a legitimate interest in the disputed domain name. The complaint was therefore dismissed. 

The panel was still required to rule on the registrant’s request for a finding of reserve domain name hijacking.  Paragraph 4.6 of the CDRP provides that, if a registrant is successful in a CDRP proceeding, and the registrant is able to prove, on a balance of probabilities, that the complaint was commenced by the complainant for the purpose of attempting, unfairly and without colour of right, to cancel, or obtain a transfer of any domain name registration which is the subject of the proceeding, a panel may order the complainant to pay to the registrant an amount up to $5,000 to defray the costs incurred by the registrant to defend the proceeding.

In this case, the registrant argued that the complainant acting “unfairly” and “without colour of right” in the proceeding. Specifically, the registrant pointed to the complainant’s registration of the domain name 'design-1st.ca' and argued that the complainant would have had to assert its own good faith and legitimate interest in that domain name at the time it was registered. Such positions would run directly contrary to the core arguments made by the complainant and would undermine arguments that the complainant had raised as to the distinction between 'design first' and 'design 1st'. Further, the complainant effectively admitted in its reply that the 'design-1st.ca' registration was made to trench on the rights of the registrant. 

The panel noted that the phrase “without colour of right” is not defined in the CDRP, but felt it has direct ties to acting in good faith. The panel concluded that, on an objective view of the facts, it was difficult to give the complainant the benefit of the doubt that it had acted with an honest, yet mistaken belief. Given the different fields of activity of the complainant and the registrant, the panel concluded that it was impossible that the complainant could have formed an honest belief that there as actual confusion based on the registration and use of the disputed domain name. Further, the panel noted that the complainant abided with the registrant’s use of the disputed domain name with a non-competitive website for over 10 years before taking action, and only did so after trademark registrations were secured. The panel concluded that the complainant has commenced the proceeding to unfairly, and without colour of right, obtain transfer of the registration for the disputed domain name. 

The panel awarded the registrant the maximum costs allowable under the CDRP, namely $5,000.

Antonio Turco, Blake Cassels & Graydon LLP, Toronto