Court File and Parties

COURT FILE NO.: CV-12-468450 DATE: 20170606 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tucows.com Co., Plaintiff AND: Marker Volkl (International) GmbH, Defendant

BEFORE: Penny J.

COUNSEL: Iain MacKinnon, for the Moving Defendant Eric S. Baum, for the Responding Plaintiff

HEARD: June 2, 2017

Endorsement

[1] This is the defendant’s motion under Rule 21.01 for an order striking out the plaintiff’s claim on the basis that the claim discloses no reasonable cause of action. It is said by the defendant that the motion raises “an important question of law that has never been directly addressed by a court in Canada.”

[2] The question raised is whether a domain name registrant (Tocows) who is ordered to transfer a domain name as a result of a successful complaint (by Marker Volkl) under the Uniform Domain Name Dispute Resolution Policy, can then seek declarations from the Ontario Superior Court of Justice about the very issues that constituted the grounds for the successful complaint under the UDRP.

[3] Tucows owns domain names and sells the use of those names and advertising associated with those names. One of the services Tucows offers is a “vanity” email business under which it offers email services through a substantial portfolio of domain names that correspond to surnames, including the name “Marker.”

[4] Tucows is a member of ICANN and is also a registrant of the domain name Marker.com. As such, Tucows is required to submit to the mandatory dispute resolution process under the UDRP to resolve any domain name disputes that may be brought by third parties, such as Marker, who assert trademark rights.

[5] Marker was founded in 1952. It is one of the market leaders for ski bindings and other ski equipment. Marker has been using the trademark Marker in association with ski bindings for over 65 years. Marker has trademark rights associated with the use of the word “Marker.”

[6] Marker instituted a complaint against Tucows under the UDRP. Para. 4 of the UDRP provides a test for dealing with so-called “abusive” domain name registration and empowers an adjudicator to order the transfer of the domain name to another entity. Under this rule, Marker alleged that:

(i) Tucow’s domain name was identical or confusingly similar to a trademark or service mark in which Marker had rights;

(ii) the domain name holder had no rights or legitimate interests in respect of the domain name; and

(iii) the domain name had been registered and was being used in bad faith.

[7] The mandatory administrative proceeding under the UDRP does not prevent either party to a complaint from submitting the dispute to a court of competent jurisdiction for independent resolution, either before the mandatory administrative proceeding is commenced or after it is concluded.

[8] Relying on this provision, before filing its response to Marker’s UDRP complaint, Tucows commenced a proceeding in the Superior Court of Justice for a declaration that Tucows was the sole and exclusive owner of the domain name, that Marker had no rights to the domain name and that Marker was not entitled to the transfer of the domain name in the UDRP complaint. Tucows then asked that the UDRP complaint process be terminated or suspended pending the Court action.

[9] The adjudicator assigned to the complaint, Mr. Perkins, declined to suspend the UDRP complaint process. He held that “a failure by the Panel to address the merits of the case before it would serve to frustrate the intended effect of the Policy to which the respondent, as domain name registrant, has submitted.”

[10] Mr. Perkins went on to render his decision in favour of Marker. He found that:

(i) the domain name was identical and confusingly similar to the “Marker” trademark in which Marker had rights;

(ii) Tucows had no rights or legitimate interest in the domain name; and

(iii) the domain name was registered and being used by Tucows in bad faith.

He ordered that Tucows transfer the domain name “Marker” to Marker.

[11] Tucows’s first action for declaratory relief had been administratively dismissed for want of prosecution. As a result, Tucows then commenced a second action for the same declaratory relief in the Superior Court. As a result of this second court action, ICANN has not, in accordance with the UDRP Rules, implemented the decision to transfer the domain name to Marker.

[12] It is common ground that the test on a rule 21.01 motion to strike out a claim is whether it is plain and obvious that the statement of claim discloses no reasonable cause of action. Failure to establish a reasonable cause of action occurs in one of two ways. First, the pleading may be found to be legally insufficient if the allegations do not give rise to a recognized cause of action. Second, a cause of action may not be established if the pleading fails to plead the necessary elements of an otherwise recognized cause of action.

[13] The novelty of a cause of action does not, of itself, constitute grounds to strike it out. Matters of law that have not been fully settled in the jurisprudence should not be disposed of on a motion to strike. The fact that a pleading may reveal an arguable, difficult or important point of law cannot justify striking out the statement of claim, Follard v. Her Majesty the Queen in Right of Ontario, [2003] O.J. No. 1048 (ONCA), paras 10-11; Hunt v. Carey Canada Inc., para 52.

[14] Although the court has inherent jurisdiction to grant declaratory relief, the issue posed must be justiciable and not hypothetical. Recourse cannot be made to the courts for a declaration unless it serves some utility, Nickerson v. Nickerson, [1991] O.J. No. 1188 (Gen Div) at pp 1-2.

[15] Counsel for Marker argues that the declarations sought by Tucows do not arise from Canadian common or statutory law but relate exclusively to the “abusive” domain name test set out in the UDRP. The Superior Court has no jurisdiction to apply or enforce the UDRP. Accordingly, Marker argues that the declarations sought are neither justiciable nor do they have any utility. For this reason, it argues, Tucows’s claim should be struck out so that enforcement of the decision of Mr. Perkins can proceed in accordance with the UDRP Rules.

[16] As support for this position, Marker relies on a line of cases from the U.K. in which the U.K. courts, applying similar or the same rules, have struck out claims such as the one Tucows has advanced in this case. In effect, these decision stand for the proposition that the Rules of the UDRP do not create any cause of action. A claim for declaratory relief in connection with the test for an “abusive” registration of a domain name under the UDRP does not disclose a reasonable cause of action and is therefore liable to being struck out, Toth v. Emirates & Anor, [2012] EWHC 517 (Ch); Yoyo.email Ltd. v. Royal Bank of Scotland Group Plc & Ors, [2015] EWHC 3509 (Ch); Ross v. Playboy Enterprises International, Inc., [2016] EWHC 1379 (IPEC).

[17] Against this, Tucows points to two contrary decisions from Ontario. In Tucows.com Co. v. Lojas Renner S.A., 2011 ONCA 548, 106 O.R. (3d) 561 (lv ref’d), the Court of Appeal overturned the decision of the motions judge on questions of jurisdiction and convenient forum. In doing so the Court held that because the UDRP rules contemplate the possibility of litigation before domestic courts, the assumption of jurisdiction by Ontario courts would not undermine the administrative process. The Court also found that Tucows’s statement of claim [essentially identical to the statement of claim in this case] “asserts facts which, if proven, would entitle Tucows to a declaratory judgment” [emphasis added]. The Court rejected the reasoning in an earlier iteration of the U.K. line of cases cited above (a case called Patel v. Allos Therapeutics Inc., 2008 WL 2442985 (Ch.D.)).

[18] In Black v. Molson Canada, this Court granted declaratory relief which was contrary to the findings of the adjudicator under the then existing domain name dispute resolution process in circumstances analogous to the circumstances of this case, see also Tucows.com Co. v. Holley Performance Products, [2012] O.J. No. 947.

[19] Counsel for Marker argues strenuously that the statements from the Court of Appeal in the Renner case are obiter, as the questions before the Court were jurisdiction and convenient form. The issues raised on this motion were not before, and were not argued before, the Court of Appeal. He also argues that the Black decision was made without reference to any of the issues raised on this motion and, in light of the English line of cases cited by Marker and referred to above, was wrongly decided.

[20] There is much to be said for the position advanced by Marker on this motion. It may well be that Marker’s position is the correct one and will ultimately prevail. Given the high threshold for a motion under Rule 21.01, however, and the clear statements of high authority that unsettled matters of law should not be resolved on a motion to strike, I think these matters should be resolved on a full evidentiary record (on motion for summary judgment, for example, if there are no material facts in dispute, or at trial) and not on a Rule 21.01 motion to strike. It is clear that there are two different approaches that have been taken and which are in conflict. The jurisprudence is not settled. As the defendant itself asserts, the specific issue now being raised has not been the subject of any decision in a Canadian court.

[21] It is for this reason that the defendant’s motion is dismissed.

[22] Having regard to the novel issues involved, however, I order the costs of this motion, fixed in the amount of $5,000, payable in the cause.

Penny J. Date: June 6, 2017