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Last week an Ontario court issued a landmark judgment involving the domain name Canadian.biz. Effectively, it overruled a domain name dispute resolution decision that had called for the transfer of the domain from the original registrant to Molson Breweries. The court's decision does much more than just reverse a plainly wrong initial outcome -- it provides one of the clearest examples of the absurdity of a domain name policy that grants trademark holders (such as, in this case, Molson) rights that extend far beyond those traditionally associated with trademark law. Following years of debate, the Internet Corporation for Assigned Names and Numbers decided in the fall of 2000 to establish seven new generic top-level domains, including dot-biz and dot-info. When it became clear that most of those new domains were to be allocated in either a random or first-come, first-served basis, trademark interests expressed concern that the new domains would provide fertile ground for a fresh round of cybersquatting. Their fear was that speculators would snap up domain names matching their trademarks and then demand sizable payments in return for transferring the domain names.

To alleviate those concerns, several approaches were adopted. For dot-biz domains, the Start-Up Trademark Opposition Policy, or STOP, was instituted. It allowed trademark holders to register an intellectual property claim in a particular trademark before Neulevel, the dot-biz registrar, began allowing registrations. The premise was simple: By registering an IP claim, trademark holders were entitled to later seek the transfer of the domain name if it was registered in bad faith.

Douglas Black, a University of Toronto graduate, registered Canadian.biz with plans to use the domain for an on-line business. Molson Breweries holds a controversial trademark in the word Canadian in association with beer and when Mr. Black refused to surrender the domain name, the brewery launched a STOP action, having previously registered an IP claim.

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The STOP decision, which reads much like the dispute resolution cases involving dot-com domains, was decided by Robert Merhige, a retired U.S. judge who began practising law in Virginia in 1942. He determined that Molson indeed had a trademark in the word Canadian and that Mr. Black has no such rights in the name. He did not find Mr. Black's contention that he intended to create a business site persuasive, ruling that this was a case of bad faith and the domain name should be transferred to Molson.

It is important to note that this decision is actually fairly typical. In recent months, panelists have ordered the transfer of such generic-sounding domains as airport.biz, brands.biz, huge.biz, monopoly.biz, paint.biz, parents.biz, switchboard.biz, and taxman.biz. In fact, the Canadian.biz case is not even the only dot-biz case with a Canadian connection. Ottawa.biz was recently transferred to Kalmar Industries USA Inc., a Texas company that owns a trademark in the word Ottawa in connection with truck tractors. In its case, Kalmar Industries argued the fact that Ottawa is also the capital of Canada was irrelevant and the presiding panelist agreed.

What makes the Canadian.biz case unique is that Mr. Black decided to challenge the decision in a Canadian court. Once there, the silliness of these decisions was left behind, while the judge was left to wonder how Molson, which had no stated plans for the domain, could assert that it was solely deserving of owning the Canadian.biz domain when thousands of businesses use the word Canadian in their names.

In a direct challenge to domain name dispute resolution policy, the judge concluded that "simply because a domain name is identical or similar to a trademark name should not result in the transfer of the domain name to the trademark owner. In my view, unless there is some evidence that the use of the domain name infringes on the use of the trademark name, a person other than the owner of the trademark should be able to continue to use the domain name."

Trademarks are important rights that enable holders to establish brand awareness and loyalty while protecting consumers from marketplace confusion. What they typically do not do, however, is grant trademark holders a complete monopoly over the use of a word.

In working through the panelist's bad-faith analysis in the Canadian.biz case, the judge noted that if it were correct, the only person who could register Canadian.biz without bad faith would be Molson, an approach that would in fact grant the company a complete monopoly over the word Canadian for all domain name purposes.

While the judge ended that outcome in this case, the extension of monopolistic rights in words to trademark holders is precisely what has happened in hundreds of domain name cases. Trademark holders now commonly argue that any domain name that includes their mark is likely to cause confusion in the minds of consumers (never mind that few people seek out Web sites by guessing the domain), was registered in bad faith (never mind that domains such as vivendiuniversalsucks.com were to be used as criticism sites yet were still regarded as bad-faith registrations), and should therefore be transferred.

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In further stretching the boundaries of trademark law, recent domain name decisions have even suggested that registrants have a positive obligation to search for possible overlapping trademark registrations or even past domain name dispute resolution cases involving the trademark holder.

It is ironic that while global e-commerce legislation has been focused on ensuring equality between on-line and off-line rules, domain name dispute resolution policy has granted trademark holders far more rights on-line than off-line and in the process effectively created a new super-trademark. Perhaps this decision will begin to put a stop to policies that left traditional trademark norms behind long ago. Michael Geist is a law professor at the University of Ottawa Law School and director of e-commerce law at the law firm Goodmans LLP. His Web site is http://www.lawbytes.com. mgeist@uottawa.ca

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