One asset that can be overlooked when a business relationship breaks down is the domain names operated for the benefit of the Company. This is the situation that a company in Ontario, Mold.ca.Inc., found themselves in when their IT guy, Mr. Sullivan, departed the company. Unbeknownst to Mold.ca.Inc., Mr. Sullivan had registered all of the company’s domain names in his own name. Following his departure he transferred those domains to another individual, Mr. Romelus. Mr. Romelus refused to transfer them to Mold.ca.Inc. and when one party refuses to transfer domain names it can be very difficult to get them back.
When Mold.ca.Inc. discovered that they were not the owner of the domains they initiated arbitration proceedings with the Canadian Internet Registration Authority (“CIRA”) to obtain a transfer of ownership. However, CIRA was unable to determine that Mr. Romelus had registered the names in bad faith, which is one of the requirements of CIRA’s Dispute Resolution Policy. Therefore the arbitration proceedings failed and Mr. Romelus was able to retain the domains.
In the period following this decision Mr. Sullivan again became the registered owner of the domain names as they were transferred back to him by Mr. Romelus. Mr. Sullivan subsequently started using the domain names in a competing business.
Unperturbed, Mold.ca.Inc. applied to the Superior Court of Ontario. In this application they argued that the domain names were the “property” of the company and the transfer to Mr. Romelus was not authorized by the Company on Mr. Sullivan’s departure. They sought and were granted an order that the domains were property and Mold.ca.Inc. were the rightful owners of the domain names. Mr. Sullivan was ordered to transfer and convey the domain names back to Mold.ca.Inc., including all administrative passwords and rights of access to the domains.
This decision is important because it rules that domain names come within the definition of “property”. It also highlights the importance of companies having internal policies in place surrounding the ownership of domain names and the related passwords and accounts. Business relationships breakdown and having domains registered in individual’s names is not appropriate when this happens. We have been successful in assisting clients in obtaining the return of domain names in similar scenarios, but it does involve lengthy proceedings which could be avoided upfront.
We are happy to assist our clients in protecting their intellectual property. Please contact Barbeau, Evans & Goldstein with any queries you may have.