Trademark Rights and Domain Name Disputes: Reminders from Parsons

Author: Marsha Simone Cadogan | MSCPTL | 5 min read

A recently decided Federal Court case (Parsons Inc. v Khan) brings to mind how important it is for businesses to monitor their trademarks in digital platforms, especially as it relates to 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 are used to identify a website and usually provide specific information to website users. They work along with a system’s Internet Protocol number, allowing internet users to seamlessly connect to the internet system. In early 2020, there were over 336 million registered domain names globally (Business Wire, May 28, 2020), compared to 36 million twenty years ago. 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 comes even more similarities. Trademarks are useful in differentiating one product or service from another, can be used to build consumer loyalty and brand values, and can be worthwhile 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 a part of the domain name, the relationship is even more connected, and as Parsons indicate, more vulnerable in digital platforms.

Trademark owners usually seek redress for cyber squatting either through alternative dispute resolution (ADR), through non-litigation means (such as cease and desist letters) or through 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 a operating business in Canada. The website contained several wordings from a business (AECON Group Inc.) that the well-known construction and engineering multinational firm Parsons Corporation collaborates with. 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 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 their wares in such a manner as to cause confusion between its products and services and that 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 Your Trademark Strategy

Whether the business operates in online platforms or not, Parsons has practical implications to business owners, especially to owners of trademark rights. Parsons reminds us that a well-grounded trademark strategy should include domain name monitoring practices for the business operations. Should cyber squatting arise, the options open 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)? This is by far not the conclusion of the whole matter. Actual grounds of infringement may be applicable, especially if the trademark is being used to relate to website content.

The affected rights holder can also seek redress through alternative dispute resolution procedures. Disputes involving the bad faith use of domain names bearing the .ca domain names (a country-code TLD with Canadian Presence), can be arbitrated through the Canadian Internet Registration Authority (CIRA) Dispute Resolution Policy. The CIRA handles arbitration related to bad faith use of domain names and offers some assistance to registrants whose website content is also the subject of the dispute. However, the CIRA will only take down a website on 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 with interest in pursuing 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 4000 domain name disputes were resolved through the UNDRP in 2020 compared to a little over 3200 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 misuses. Cyber squatting was effectively dealt with in Parsons. The decision also brings to consideration which businesses may fall outside the purview of the court’s application. For example, an early stage start up or a business without goodwill cannot make a claim under s.7b of the Trademarks Act and will likely have to apply an infringement or unfair competition lens to the case (as applicable). 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 advise. Always seek advise from a qualified legal professional in regards to these matters.