2004 BCSC 1102 Law Society of British Columbia v. Canada Domain Name Exchange Corporation

Before: The Honourable Mr. Justice Sigurdson

Oral Reasons for Judgment

July 14, 2004

Counsel for the Plaintiff:

M. Ghikas
J. Mullard

Appearing on his own behalf, the president of the Corporate Defendant:

Kevin J.S. Wright

Place of Hearing:

Vancouver, B.C.

[1] THE COURT: The plaintiff, the Law Society of British Columbia, seeks a permanent injunction to restrain the defendant, Canada Domain Name Exchange Corporation ("CDNEC"), from using or transferring domain names registered in the defendant's name: <lawsocietyofbc.ca> and <lsbc.ca>. The Law Society also seeks general damages for harm to its reputation and goodwill, as well as punitive damages.

[2] This is a trial under Rule 18A. Both parties acknowledge that the case is suitable for determination under Rule 18A.

[3] The plaintiff's claim in terms of a cause of action is for the common law tort of passing off, under s. 7 of the Trade-marks Act, R.S.C. 1985, c. T-13, and an independent claim for an injunction to prevent the defendant from capitalizing on the official mark of the "Law Society of British Columbia" granted pursuant to s. 9(1)(n)(iii) of the Act.

[4] The basic facts are not particularly in dispute. If the intention of the defendant is relevant, it is in question. Portions of the affidavit of Mr. Hoskins of the Law Society are disputed or challenged as to admissibility. I will discuss them as they arise.

FACTS

[5] The Plaintiff, which has operated under the name of "The Law Society of British Columbia" for over 130 years, has since May 1998 operated and maintained internet websites under the domain names <lawsociety.bc.ca> and <lsbc.org>. The latter is what is referred to as a pointer and both resolve to the same website.

[6] On March 6, 2002, the Registrar of Trade-marks gave public notice under s. 9(1)(n)(iii) of the Act of the adoption and use of the mark "Law Society of British Columbia" as an official mark for use by a public authority.

[7] The defendant, Canada Domain Name Exchange Corporation, which operated a website under <cdne.ca>, conducts the business of facilitating the sale or lease of domain names, many of which it has registered and wishes to sell or lease to lawyers. For example, for mining law specialists, the defendant has registered names including <mininglaw.ca>, <mininglawyer.ca>, or <mininglawyers.ca>.

[8] In November 2000, the defendants secured from the domain name registry, the Canadian Internet Registration Authority, also known as CIRA, the names <lawsocietyofbc.ca> and <lsbc.ca>.

[9] The Law Society learned that the defendant was using these domain names on the internet and was directing people through this domain name, <lawsocietyofbc.ca>, to a website which contained adult content called <AL4A> (Adult Links for Adults). Later, it is alleged that the traffic to the domain name <lawsocietyofbc.ca> was diverted to a minor political party.

[10] After voluntarily ceasing for a time after being requested by the plaintiff to stop, the defendant suggested that it intended to continue use of the domain names in question. This Court granted an interim injunction on February 15, 2002 and Mr. Justice Williamson granted an interlocutory injunction on April 26, 2002 restraining the defendant from using or transferring the domain names in question. That interlocutory injunction remains in place and there was no suggestion that it has been breached.

[11] The defendant disputes that the plaintiff has any goodwill in the name "Law Society" per se, but concedes that there is goodwill held by the plaintiff in the marks "The Law Society of British Columbia" and "Law Society of British Columbia". The defendant submits that it has not been proven that there has been a misrepresentation, or that there was a misrepresentation that the plaintiff is associated with any website to which internet users may have been diverted, or that anyone was confused or would likely be confused whether there was such an association. The defendant says that there is no evidence, as it says is required, of such confusion. It also says that the plaintiff has suffered no damage, nor is the plaintiff likely to suffer any, which it also says is required to establish passing off at common law.

[12] The test for passing-off was described in Greystone Capital Management Inc. v. Greystone Properties Ltd. (1999), 87 C.P.R. (3d) 43, 46 B.L.R. (2d) 45 (S.C.), where Madam Justice Stromberg-Stein referred to an allegation of passing off in the business association or business connection sense (as opposed to leading the public to believe the defendant's product or business was that of the plaintiff). She summarized the leading authority, correctly in my view, this way (at 50-51):

The tort of passing-off concerns misrepresentations by one party which damage the reputation or goodwill of another party. It is necessary to establish three components to succeed in a passing-off action, either at common law or pursuant to statute. Those components were set out in Ciba-Geigy Canada Ltd. v. Apotex Inc. (1992), 44 C.P.R. (3d) 289 (S.C.C.):

1. The existence of reputation or goodwill at the relevant time. This includes consideration of whether the plaintiff was recognized by the trade name and whether the trade name was distinctive within the relevant field of activity.

2. A misrepresentation leading the relevant public to believe there is a business association or connection between the parties. This includes consideration of whether the defendants' use of the trade name is likely to deceive the relevant public. Any misrepresentation need not be deliberate and proof of intent is not necessary. Evidence of likelihood of confusion, leading to the possibility of lost business opportunity, is relevant. However, the establishment of actual confusion is not required.

3. Damage or potential damage flowing to the plaintiff as a result of any misrepresentation due to loss of control over its reputation is presumed.

[emphasis added]

[13] In British Columbia Automobile Association v. Office and Professional Employees' International Union, Local 378 (2001), 85 B.C.L.R. (3d) 302, 2001 BCSC 156 ("BCAA") at ¶55, I referred to the decision of Hardinge J. in National Hockey League v. Pepsi-Cola Canada Ltd. (1992), 42 C.P.R. (3d) 390 at 401 (B.C.S.C.), aff'd (1995) 59 C.P.R. (3d) 216 (B.C.C.A.), to note that the tort of passing off could occur not only where competitors lead the public to believe the defendant's product or business is that of the plaintiff, but as well:

...[where] a defendant has promoted his product or business in such a way as to create the false impression that his product or business is in some way approved, authorized or endorsed by the plaintiff or that there is some business connection between the defendant and the plaintiff. By these means a defendant may hope to "cash in" on the goodwill of the plaintiff.

[emphasis added]

[14] The BCAA case involved questions of breach of copyright, trademark infringement, and passing off in the context of domain names, meta tags and the actual websites. In BCAA, in the domain name in question, the name or trademark was part of a more complete description, such as bcaabacktowork.com. The first union site was held to be a passing off but the subsequent site was not. Here, the issue is different. The issue is whether the use of the domain name itself, which may be found by persons looking for the Law Society of British Columbia website, which diverts an internet user to a different site, such as an adult site or a political site, amounts to a passing off at common law.

[15] In British Telecom plc. v. One in a Million Ltd., [1998] 4 All E.R. 476, [1997] E.W.J. No. 1599 (Q.L.)(High Ct. Just.), it was held that the registration of a distinctive internet domain name could amount to passing off.

[16] Let me go through the elements of the tort of passing off to see if they have been established and whether the plaintiff is entitled to a permanent injunction. I will then discuss the issue of damages.

(a) Goodwill

[17] The plaintiff must establish the existence of goodwill. It was described in Commissioners of Inland Revenue v. Muller & Co.'s Margarine, Ltd., [1901] A.C. 217, [1900-03] All E.R. 413, at 223-24 (H.L.) as "the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in customs". The goodwill of a governing professional body may be a little different than a commercial business but Mr. Wright, appearing on behalf of the defendant, concedes, quite correctly in my view that "Law Society of British Columbia" has goodwill, as does "The Law Society of British Columbia". I observe that Mr. Wright makes that concession when the entire name of the Province is used. I think that concession is obviously correct given the lengthy history of the Law Society: in operation for over 130 years; established to protect the public interest in 1869; incorporated in 1874 as the Incorporated Law Society of British Columbia, which society has the responsibility under the Legal Profession Act, S.B.C. 1998, c. 9, to protect the public interest in the administration of justice.

[18] While conceding that the Law Society of British Columbia, the plaintiff, has significant goodwill in its name, the defendant does not concede that there is any goodwill in the name "Law Society" given the different uses of those words by different organizations in Canada, for example.

[19] The plaintiff may be well known as the Law Society of British Columbia, the defendant concedes, but the reference to <lawsocietyofbc.ca>, the domain name that the defendant was using, is a reference Mr. Wright says to "Law Society of Barristers Categories" (presumably a reference to domain names lawyers might wish to acquire) he says, not "Law Society of British Columbia".

[20] I will deal with that issue below, but suffice to say that I am satisfied on the evidence that there is substantial goodwill in existence at the relevant time that the plaintiff was recognized by the trade name "Law Society of British Columbia" or "Law Society of B.C.". That "B.C." is a well known short form for British Columbia is a trite observation. The plaintiff has substantial goodwill in the name "Law Society of B.C." It does not diminish the goodwill the plaintiff has in the name "Law Society of B.C." that there are other Law Societies in different provinces with somewhat similar names, such as the Law Society of Alberta, or that there are other law society websites or domain names that use the phrase "law society" with the initials representing their province or the name of their province.

(b) Misrepresentation

[21] I now turn to the second aspect and that is the question of whether the plaintiff has proven that the defendant made a misrepresentation. The question is whether there is a misrepresentation in the circumstances by the defendant's registration and use of the domains <lsbc.ca> and <lawsocietyofbc.ca> to redirect traffic to a different website for its commercial benefit.

[22] Guessing is a common way internet users find and access websites. They guess at the domain name or the website name and type that into the internet browser. To look for the plaintiff's website, an obvious guess would be to type its name, without spaces: "lawsocietyofbc".

[23] In British Telecom, supra, at 497, it is acknowledged, as it was in BCAA, supra, that the registration of a domain name may, in appropriate circumstances, amount to a passing off. There, the appellants were dealers in domain names. The Court of Appeal said this:

The placing on a register of a distinctive name such as marksandspencer makes a representation to persons who consult the register that the registrant is connected or associated with the name registered and thus the owner of the goodwill in the name. Such persons would not know of One In A Million Ltd. and would believe that they were connected or associated with the owner of the good will in the domain name they had registered. Further, registration of the domain name including the words Marks & Spencer is an erosion of the exclusive goodwill in the name which damages or is likely to damage Marks & Spencer plc.

[24] I find, hardly surprisingly, that the use of the name "lawsocietyofbc" in a domain name, without additional words or qualified by other words, is a representation that the site and the location to which it is directed is associated with the plaintiff. That is a misrepresentation.

[25] Mr. Wright argues that there is no passing off because there must be evidence of a misrepresentation leading to confusion. He says that the user would know that the Law Society is not connected with an adult website or a political site and that in any event there is no proof that the defendant intended to misrepresent and harness the goodwill of the Law Society of British Columbia given the defendant's evidence that "lawsocietyofbc" stands for "Law Society of Barristers Categories" and that "lsbc" stands for "Love Sites by Categories".

[26] In passing off, proof of intent is not necessary and any misrepresentation need not be deliberate. Evidence of likelihood of confusion leading to the possibility of lost business opportunity is relevant, but actual confusion is not required. Perhaps in some cases it is necessary to show that there is confusion to demonstrate that there is a misrepresentation, but here it is obvious to me that there is a misrepresentation that the domain name is, in fact, the plaintiff, if not in some way connected or associated with the Law Society of British Columbia.

[27] The defendant's main argument is premised on the alleged failure of the plaintiff to demonstrate confusion between its website and the sites to which intended users were directed, i.e. the adult site or the political site. The defendant has argued this case as if it were a question of trademark opposition and infringement rather than what it is, a passing off common law action.

[28] With respect to the differences between the confusion test for infringement and registration of a trade mark and passing off (at common law or under the Act), Gill & Jolliffe, eds., Fox on Canadian Law of Trade-Marks and Unfair Competition, looseleaf, 4th ed. (Toronto: Carswell, 2002), says this at ¶9.1:

The defences available in trade-mark infringement, depreciation of goodwill and passing-off actions are very similar in application. … However, the mere invalidity of the registered trade-mark does not necessarily defeat a concurrent passing off action at common law, nor an action under s. 7 of the Act.

[emphasis added]

[29] Evidence of actual confusion could bolster the fact that there is a misrepresentation but it is not needed here where the misrepresentation is so obvious and that it exists is just a matter of common sense. The use of a domain name that is so similar to the name that the plaintiff is known by and has substantial goodwill in (without additional words) would lead a person surfing the web and going to <lawsocietyofbc.ca> to believe, I conclude, that they were going to the plaintiff's web site or one that was affiliated with the plaintiff.

[30] As I noted in BCAA, supra, at ¶73:

If someone uses a person's trade-mark as the domain name, such as Marks & Spencers.com or McDonalds.com, without any other words or letters, that is likely to confuse members of the public who type in the domain name looking for the website of Marks & Spencers or McDonalds and then come to something else. They will think the website has some connection with the site they were seeking.

[31] Here the use of such a similar name and a name by which the plaintiff is specifically and commonly known would misrepresent that the domain name was associated with the plaintiff.

[32] I disagree with Mr. Wright that names like the Law Courts Education Society of British Columbia or the Legal Services Society of British Columbia, have the same similarities, as the defendant suggests. The additional words in the names those entities are known by make all the difference.

[33] I find that the second element has been established.

[34] Were it necessary to determine the defendant's intention, which it is not, I find, upon a consideration of the objective evidence in this case that the defendant intended to make the misrepresentation. I find that the defendant's assertion that "lawsocietyofbc" means "Law Society of Barristers Categories", presumably a reference to the various legally related domain names that the defendant wished to sell or lease, is objectively simply not tenable. I can make that assessment upon the objective evidence. "Law Society of Barristers Categories" for example was never a registered domain name (the defendant's explanation is that it is too long). It appears to be a contrived name to answer the obvious inference that "lawsocietyofbc" means "Law Society of British Columbia". The argument that "lsbc" is not connected with "Law Society of B.C." but means "Love Sites by Category", also a domain name that was not registered, indicates that Mr. Wright's suggested meaning is ludicrous.

[35] Leaving aside the defendant's actual intention in using <lawsocietyofbc.ca>, the element of a misrepresentation has clearly been made out on the evidence.

(c) Damage

[36] The third element that the plaintiff must establish is damage or potential damage.

[37] As noted by Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120, 44 C.P.R. (3d) 289, potential damage due to a loss of control over its reputation when there is a misrepresentation is presumed. Although the plaintiff has not shown any actual damage, and much of the argument was addressed to the fact that had the plaintiff suffered any real damage it could have taken steps to prove it, the nature of the defendant's business plan and its actual use of the domain name in question clearly demonstrates the potential for harm that justifies the making of a permanent injunction.

[38] The defendant says that initially its domain name was a portal to names that it was selling. The defendant clearly had commercial purposes in using the domain names in question.

[39] As I understood Mr. Wright, his idea was to build up and record traffic generated by the domain names. His approach was that web users would find adult sites by connecting through the portals <lawsocietyofbc.ca> and <lsbc.ca>. Saving that link or connection to their "favourites" feature on their computers, in connection with the legal names, say <mininglaw.ca>, would create apparent traffic and therefore greater value for the domain name.

[40] Although I might have misunderstood the details of his submission Mr. Wright said in his written submission that: "The purpose of linking lawsocietyofbc to (AL4A.com) as a domain name was to increase traffic to other sites which will generally mean income for CDNE".

[41] Apart from that plan which the evidence shows was in operation, it appears to me self-evident that use of "lawsocietyofbc" as the domain name effectively or potentially causes the plaintiff to lose control over its goodwill. This is particularly so when a professional body with the stature of the plaintiff, the governing body for lawyers, is suggested to be connected to an adult site or a site of a political party.

[42] The defendant suggested that the plaintiff's evidence that users on February 13, 2002 trying <lawsocietyofbc.ca> were diverted to the BC Marijuana party is not correct. Mr. Wright says that after the domain names were suspended in January 2002, they were inadvertently linked to Transitional Media's website. I find that in February 2002, the use of <lawsocietyofbc.ca> would take a user to the B.C. Marijuana Party, but the real import of the evidence at best from the defendant's perspective is that it shows that mistakes occur and that there is potential damage when the plaintiff loses control of its name when it is used by the defendant as a domain name.

[43] The plaintiff sought to introduce hearsay evidence by Mr. Hoskin's evidence that people were diverted from their search for the Law Society site. That evidence was not shown to be admissible and I rule that it is inadmissible.

[44] Nevertheless, in relation to the question of damages, potential damage flowing to the plaintiff as a result of any misrepresentation due to loss of control over its reputation and goodwill is presumed.

[45] The plaintiff has made out all the elements of passing off, including past damage (which is presumed in the circumstances) and the potential for further damage which has clearly been shown on the evidence. The plaintiff is entitled to a permanent injunction.

[46] I should note that, notwithstanding Mr. Wright's assertion that the sites were not for sale, i.e. <lawsocietyofbc.ca> and the other site, <lsbc.ca>, that does not provide an answer to the question of whether the use by the defendant of the domain name <lawsocietyofbc.ca> is a passing off. I recognize that the other domain name in question, <lsbc.ca>, may not in and of itself alone amount to a passing off, but its purpose is to direct parties surfing the web to the other domain name which clearly is a passing off and it is appropriate that the injunction go to restraining use of that name as well.

[47] I grant the injunction in the form sought by the plaintiff.

[48] I now turn to the question of damages. Although the Law Society says that there has been actual confusion by people trying to locate its website, that was not shown to be the case. Nor has it been shown that the subsequent diversion to the political site was intentional, even though I find that it took place.

[49] The plaintiff refers to Saskatoon Star Phoenix Group Inc. v. Noton, [2001] 9 W.W.R. 63, 2001 SKQB 153, where the defendant created a website to look like the plaintiff's, but substituted its own advertising on the banner. Laing J. noted at ¶15 that Draper v. Trist, [1939] 3 All E.R. 513, made the point that the law presumes damage to the plaintiff (in the case of passing off), but rejected the argument that the plaintiff was limited to nominal damages unless it can prove actual monetary loss. Laing J. also referred at ¶16 to Canwest Telephone Co. Inc. v. Canwest Commercial Phone Centre Ltd. (1986), 8 C.P.R (3d) 360 (B.C.S.C.), where MacKinnon J. noted that:

Damages should be assessed by considering the particular circumstances of each case, and to then award a sum that would be considered proper and reasonable.

[50] The Law Society became aware of the defendant's use of the domain names in late November or December 2001 and an interim injunction was granted by Tysoe J. on February 15, 2002. The defendant website in Saskatoon Star Phoenix, supra, appears to have been in operation for about five months. Similarly, the plaintiff in Saskatoon Star Phoenix could not show direct monetary loss in the form of lost revenue by cancelled subscriptions or lost advertising revenue. There, Laing J. described the damages as minimal, found that the injunction was obeyed and the advertising content substituted on the defendant website was not offensive, and concluded that a general damage award of $5,000 was appropriate.

[51] Here, no actual damage has been proven. The plaintiff says that it is self-evident that the association of the Law Society with "pornography or other inappropriate subjects" has already caused damage to the Law Society's reputation and goodwill, compromising its ability to carry out its statutory mandate. Given that no actual damage has been proven and the length of time that the domain names were apparently used by the defendant, the fact that the injunction was obeyed, but also taking into account the inappropriateness of connecting the plaintiff's name to the two websites, I award general damages of $4,000.

[52] The plaintiff suggests that this an appropriate case for punitive damages, given that although the defendant agreed to suspend the domain names, it said it would reconnect them if the Law Society did not pay to mediate the matter, and the domains were reconnected, it argues, without notice to the Law Society.

[53] On balance, I have concluded this is not an appropriate case for punitive damages. The defendant's president who appeared on this matter is not legally trained. However, he started a business where he was selling domain names. Throughout this litigation Mr. Wright has done his own legal research, he told me. I assume that now he has a better understanding of his legal position. I think that the situation is not unlike that in Saskatoon Star Phoenix, supra, where Laing J. said that it "may be appropriate in the future if … the defendant or others persist in the activity" (¶20). I do not think that punitive damages are appropriate at the present time, but they likely will be if the defendant persists in the conduct giving rise to this permanent injunction.

[54] The plaintiff is entitled to costs on Scale 3.

“J.S. Sigurdson, J.”
The Honourable Mr. Justice J.S. Sigurdson