The Ontario Court of Appeal has ruled that an Internet domain name is “intangible personal property”. The finding could have an impact on insurance coverage issues for “cyber property” claims in Ontario.
In Tucows.Com Co. v. Lojas Renner S.A., Renner (a Brazilian company) claimed entitlement to the domain name “renner.com”, which Tucows (based in Toronto) had registered in 2006. Accordingly, Renner submitted a “domain name dispute” to the World Intellectual Property Organization (“WIPO”), pursuant to the Uniform Domain Name Dispute Resolution Policy (“UDRP”). Subject to some exceptions, the UDRP requires the domain name holder to submit to mandatory administrative proceedings before an approved dispute resolution service provider such as WIPO. Renner sought to wrest the domain name from Tucows through the process.
Tucows did not respond to the substantive merits of the complaint. On June 10, 2009, Tucows commenced an action in the Ontario Superior Court of Justice by issuing a Statement of Claim for a series of declarations with respect to the disputed domain name. Essentially, Tucows denied Renner’s complaints.
Tucows served Renner with the Statement of Claim outside Ontario. Rule 17.02(a) of the Rules of Civil Procedure permits service outside Ontario without a court order in respect of real or personal property in Ontario. In such cases, a rebuttable presumption arises that a real and substantial connection to Ontario exists on the ground that the case falls within a connection specified in rule 17.02 (such as personal property).
Renner then brought a motion under Rule 17.06. It sought to set aside service of Tucows’s Statement of Claim on it and to permanently stay Tucows’s action for want of jurisdiction or to dismiss it.
The motions judge set aside the service of Tucows’s Statement of Claim and stayed the action. She held that a domain name was not “personal property” within the meaning of Rule 17.02(a), and that, being intangible, it was also not “located in Ontario”. She found that there was no real and substantial connection between the defendant Renner and Ontario.
The Court of Appeal disagreed and allowed Tucows’s appeal.
After providing a succinct analysis of the nature of a domain name, the Court of Appeal found that a domain name is an intangible or ideational thing consisting of two parts, one being numerical and the other being a distinctive readable address, which enables an Internet user to access a Web page. The Court found that such “thing” had the necessary and legally accepted attributes of “property”. Among other features, the Court noted the authorities stating that property is a collection of rights over things that can be enforced against others.
The Court found that the bundle of rights associated with the domain name renner.com, which Tucows had (as purchaser and registrant), satisfied the attributes of property in that Tucows could enforce those rights against all others. Moreover, Tucows had the ability to exclude others from the enjoyment of, interference with or appropriation of a specific legal right of the domain name, which was a necessary incident of “property”.
The Court of Appeal also disagreed with the motions judge, who held that renner.com was not located in Ontario because it was intangible. The Court held that the domain name renner.com, as a business asset of Tucows (located in Toronto) and a form of intangible property, had its maximum contacts with Ontario. The evidence was clear that the location of the registrant of the domain name (Tucows), and the location of the registrar and the servers as intermediaries were all connected to Ontario.
Accordingly, the Court of Appeal concluded that for purposes of Rule 17.02(a), the domain name renner.com was “intangible personal property” located in Ontario.
Insurers should take note of Tucows for a number of reasons: First, if there was any doubt, the decision affirms that a cyber “thing”, such as a domain name, can be “property” if it contains some of the attributes of “property” (i.e., a collection of rights over things that can be enforced against others, etc.).
Second, certain insurance policies covering first party or liability claims for “property losses” might conceivably cover “cyber property” losses too, thereby increasing the risk to the insurer.
Third, persons who have foreseeable risks of damaging third-party cyber property might believe that their insurance policies would provide adequate coverage for these losses. For example, the standard Commercial General Liability policy provides third party liability coverage for “property damage”. However, the policy defines “property damage” to mean physical injury to tangible property or loss of use of “tangible” property that isn’t injured. Barring any other terms, provisions or exclusions in such CGL policy, an insurer might have a reasonable argument to deny coverage for a cyber property damage claim where the property in question is “intangible” (like a domain name). This might cause problems if the insured was lead to believe that such losses were covered under the policy.
Finally, Tucows highlights the jurisdictional issues that often plague claims involving a cyber component. The CGL policy covers claims for injury or damage caused by an “occurrence”, which must take place in the “coverage territory”. The policy defines “coverage territory” to mean a variety of different domestic and international zones. Tucows demonstrates how cyber losses add an interesting element to questions of location.