Emir Aly Crowne (né Mohammed) (University of Windsor – Faculty of Law) has posted a case comment on the recent Ontario Court of Appeal decision in Tucows.Com Co. v. Lojas Renner S.A., 2011 ONCA 548 entitled ”Greener Pastures for Tucows (via SSRN), Journal of Intellectual Property Law & Practice (Oxford), October 12, 2011. See also my previous post here.
Professor Crowne argues that it is debatable that domain names can or should be considered property.
I find this argument intriguing; particularly, since domain names are a form of intangibles that may be part of a bundle of rights that are enforceable, either in personam or in rem, depending on the characteristics of the intellectual property itself.
Crowne criticizes the earlier Ontario Superior of Justice decision in South Simcoe Railway Heritage Corporation v Wakeford, 2011 ONSC 1234, 18 April 2011, that domain names possess proprietary rights, on similar footing:
I argued that this was a hasty approach that ignored the Supreme Court of Canada’s guidance in R. v Stewart  1 S.C.R. 963 discussing theft of confidential information under the Criminal Code (as it stood at the time):
. . . that property must be capable of being taken or converted in a manner that results in the deprivation of the victim. Tangible things present no difficulty in this regard, as it is easy to conceive how they can be both taken and converted. On the other hand, pure intangibles, as they have no physical existence, can obviously only be converted, not taken. The ‘taking’ of an intangible could only occur where such intangible is embodied in a tangible object, for example a cheque, a share certificate or a list containing information. However, that would not result in the taking of the intangible per se, but rather of the physical object evidencing it.
The analogy using the criminal law definition of property is tenuous. The issue in Tucows was a jurisdictional question at first instance. Both the court below and the Court of Appeal did not need to engage in the merits or substantive question of title and ownership to the domain names. Rather, the Court of Appeal held that for jurisdictional purposes, the situs of a domain name is where the server is located.
Professor Crowne adds,
Even by the Ontario Court of Appeal’s own definition of ‘property’, it is debatable whether a domain name can be considered a form of property. Consider the requirement that property have some degree of permanence or stability.
By tying the requirement of the property to the location of Tucows and its servers, the property rights in the domain name are far from permanent or stable. One need only copy the data on to a remote server and suddenly the permanence or stability of the right diminishes (or is destroyed completely). Even intangible forms of property like copyright, patents, and trade marks enjoy some measure of permanence or stability because they are territorially limited rights. A valid IP right in Canada cannot be enforced against persons in foreign jurisdictions without something ‘more’ (ie a corresponding territorial right in that foreign jurisdiction). Then there is the potential duplication ad infinitum of the alleged property rights in domain names if those servers are backed-up in a dozen or so jurisdictions, are property rights created in all of those jurisdictions, each with seemingly valid competing claims of jurisdiction.
Without a thorough analysis of the issue by the Supreme Court of Canada, everything becomes a property right—including email addresses, telephone numbers, and commonplace, descriptive domain names (like steamtrain.com in South Simcoe Railway)—and all of the attendant privileges, rights, and burdens that accompany that designation. Without something more, like parallel trade mark rights, domain names are merely contractual rights to use a given address for a limited period of time.
By its nature and characterization, intellectual property is territorial (see Howell, “Intellectual Property, Private International Law, and Issues of Territoriality” (1996), C.I.P. Rev. 209 (Canadian laws are limited within national territory)).
While Canada is a signatory to various international conventions (e.g. Paris Convention, Berne Convention), the enforceability of other forms of intellectual property, such as patents and registered trademarks remains strictly territorial and subject to the jurisdiction of the grant. As Weiler J.A. in Tucows notes,
“…Simply because a domain name is intangible property does not mean that it cannot have a location that allows a court to ground jurisdiction: see e.g. SRU Biosystems, in which Morin J. held at para. 32 that the plaintiffs had made out “a very arguable case” that the Canadian patent application filed by the defendants was personal property in Ontario. (at para. 67)
With respect copyright, if it is registered in Canada (albeit not required), it has a Canadian situs and the Copyright Act governs the proprietary rights of the owner of the copyright, such as its assignability, title to or ownership of the work. The country of origin or first publication of a work may also be considered the situs for resolving these issues. (Castel & Walker, Canadian Conflict of Laws (6th ed.), Chap. 24 “Movables”, para. 24.1.d, p. 24-2).
While data is easily transferable among different servers, the domain names are registered in only one location.
Finally, a “real and substantial connection” does not mean the only “real and substantial connection”; it is possible for two or more jurisdictions to assert jurisdiction over the subject-matter of litigation, resulting in parallel proceedings and deterimined by the lex fori and the lis pendens doctrine. This does not invalidate the assertion of jurisdiction by a Canadian court. The physical location of the servers is a rational basis for establishing jurisdiction, if the Canadian court otherwise has exercised properly restrained jurisdiction: see, Van Breda v. Village Resorts Limited, 2010 ONCA 84 and previous posts: Supreme Court of Canada grants leave in Van Breda v. Village Resorts Limited appeal and Hope Springs Eternal: SCC to hear 3 Conflict of Laws Appeals).