Consultation on CIRA Draft ADR Policy: Report and Analysis

January 1, 2000

Consultation on CIRA Draft ADR Policy: Report and Analysis, Canadian Internet Registration Authority, 2000 (17 pp.) (2000)

Professor Michael Geist*

University of Ottawa, Faculty of Law

Report Outline

Part I: Background to CIRA ADR Consultation Report

A. Introduction

B. Background to the CIRA Consultative Process

C. Overview of Parties Submitting Responses

D. Issues Raised in the Consultation Document

Part II: Summary of Responses

A. Canadian Presence Requirement Issues

i) Canadian Presence and Individuals

ii) Canadian Presence and Corporations

iii) Canadian Presence Requirements and Loss of Registration

iv) Complaints of Canadian Trade-mark Holders Who Do Not Meet The Canadian Presence Requirement

B. Scope of ADR Policy Issues

i) Scope of ADR

ii) Similar Domain Name Disputes

iii) Bona Fide Use Defence

iv) Requirement for Bad Faith and Definition of Bad Faith

C. ADR Provider Issues

i) Providers And Panellists

ii) Supplemental Rules Between Providers

iii) Single ADR Provider

Part III: Recommendations and Analysis

A. Ensure equality of access to .ca domain names and ADR

B. Create certainty and simplicity of process

C. Protect Canadian interests through the application of Canadian law and ADR, not through Canadian Presence requirements

D. Cybersquatting is not the main problem

E. Increase competition and efficiency

Conclusion

PART I: BACKGROUND TO CIRA ADR CONSULTATION REPORT

A. Introduction

On April 17, 2000, the Canadian Internet Registration Authority (CIRA) released the Consultation on Alternative Dispute Resolution (ADR) in English and French. The consultation document was sent by email to all members of the CIRA mailing list and comments were invited by May 15th, 2000. CIRA requested that Professor Michael Geist of the University of Ottawa, Faculty of Law summarize and analyze the responses to the consultation document.

This report provides that summary and analysis. It has three sections: i) a background section; ii) a summary of responses to the eleven issues raised in the consultation document; and iii) an analysis section. The eleven issues raised by the consultation document are set out at the end of part one. They can be conveniently grouped into three broad categories: Canadian Presence Requirements (issues 2,3,4,5); Scope of ADR Policy (issues 1,7,8,9); and Rules for ADR providers (issues 6,10,11).

Overall, the responses to the CIRA ADR Consultation demonstrate that Canadian Internet user priorities have changed dramatically over the past two years. When the Canadian Domain Name Consultative Committee (CDNCC) polled users in 1998 as part of the process of drafting the Framework for the administration of the .ca domain name system, cybersquatting and Canadian Presence Requirements (CPR) were dominant concerns. In contrast, the responses to the CIRA ADR consultation tend to emphasize the importance of certainty and simplicity in domain name rules, the application of Canadian ADR and law rather than physical presence to protect Canadian priorities in the .ca domain, and fairness to small business and innovative users. Cybersquatting was of limited concern to most users according to the recent consultation, demonstrating that public attitudes towards .ca domain name governance have evolved at Internet speed.

B. Background to the CIRA ADR Consultative Process

Since its creation in 1987, the assignment and registration of domain names using the .ca country code Top Level Domain (ccTLD) has been administered by the .CA Committee. This voluntary committee, headed by Mr. John Demco of the University of British Columbia (UBC), assigned domain names pursuant to relatively restrictive criteria.

The criteria for obtaining a .ca domain limits registrations to Canadians and only permits one registration per person or corporation in each official language. Dot-ca domain names must refer to the registrant’s legal name, incorporated name or Canadian trade-mark. To obtain a federal .ca domain [rather than a provincial (on.ca) or municipal (toronto.on.ca) domain] the registrant must provide documentary proof of federal incorporation, trade-mark registration, or physical presence in more than one province or territory. The process of obtaining a .ca domain name is relatively slow and cumbersome, particularly when compared to .com registrations.

Most experts believe that the criteria and process for registering .ca domain names has severely retarded the growth of the .ca domain as there are fewer than 100,000 .ca registrations, compared to nearly ten million .com registrations.[1] Even when compared to other country code registrations, Canada fares very poorly with at least eleven countries claiming more registrations than Canada.[2] While the restrictive criteria may have been effective in combating cybersquatting,[3] it has also made .ca unattractive to many Canadian businesses and put .ca domain names out of reach for most businesses that serve Canadians over the Internet.

At a meeting of the Canadian Internet community in Halifax in June 1997, the Canadian Domain Name Consultative Committee (CDNCC) was formed with the intent of reforming the .ca registration process by moving it toward a more commercial style of operation. The CDNCC consisted of representatives from the .CA Committee, the Internet Society of Canada, the Canadian Association of Internet Service Providers, and the Government of Canada.

The CDNCC released an initial Framework for the operation of the Canadian Internet Registration Authority (CIRA) and the .ca domain on January 25th, 1998. Comments on the initial Framework document were requested by March 1st, 1998. The final Framework for the administration of the .CA domain name system was released on September 15th, 1998. The key policy directives in the Framework document included the assignment of domain names on a first come, first served basis, and the creation of an efficient ADR process to resolve conflicts arising from .ca domain name disputes.

CIRA was incorporated as a not for profit organization in December 1998 and held its inaugural Board of Directors meeting in February of 1999. In December of 1999 CANARIE Inc. was contracted by CIRA to complete negotiations for the transfer of the .ca database from UBC, develop transition and operations plans, and begin registration operations. In May of 2000 a transition agreement was reached between CIRA and UBC. CIRA forecasts that it will begin registering .ca domain names in the Fall 2000.

C. Overview of Parties Submitting Responses

The CIRA ADR consultation document invited responses on the proposed substantive and procedural policies of .ca domain name ADR. Respondents were guided by eleven specific questions arising from those proposed policies.

The consultation process generated 42 responses that commented on one or more of the issues raised by the CIRA ADR consultation document. Most of the responses self identified the interest or entity that they represented.

Of the 18 responses that self-identified as incorporated businesses, five operated primarily over the Internet and three others were specifically engaged in providing domain name services.

Four responses came from associations representing either IP or Internet user interests.

Three responses came from lawyers in their personal capacity.

One response was received from a branch of the Ontario government.

Sixteen responses were received from private individuals who did not indicate any affiliation. One of the individual responses requested confidentiality.

Attached as Appendix A is a list of the respondents with their classification and affiliation.

Although the number of responses received may appear to be rather low, the quality of responses was actually quite good. Of the 57 responses received, only 15 were completely non-responsive and thus not calculated within this report. Of the 42 responsive submissions, a diversity of opinion was included with detailed submissions from leading groups representing intellectual property interests (Intellectual Property Institute of Canada, International Trademark Association), small business (Canadian Federation of Independent Business), and individual Internet users (International Congress of Independent Internet Users). Moreover, responses were received from several leading Canadian Internet companies with a direct interest in the Canadian domain name system (Tucows, Internic.ca, Domainpeople) and many practitioners and individual Canadians with interest and experience with these issues.

D. Issues Raised in the Consultation Document:

The eleven specific questions raised in the consultation document were as follows:

4.1 Should CIRA restrict or expand the scope of its ADR Policy relative to the list: registered trade marks, unregistered trade-marks, personal names and the “Canadian Presence Requirement”? [3.1]

4.2 Should CIRA modify the definition of its Canadian Presence Requirement for an individual from its current form, which requires individuals to be Canadian citizens residing in Canada or permanent Canadian residents? [3.2.1 (i)]

4.3 Should CIRA modify the definition of its Canadian Presence Requirement for non-individuals from the proposal in this document requiring that a registrant be [3.2.1 (i)]:

· A company, or other legal entity, incorporated or registered in Canada and having offices in Canada as demonstrated by providing the postal address for the office leased or owned by the company and a phone number registered to the company; or

· A company that has an office in Canada, as demonstrated by providing the postal address of the office leased or owned by the company, a phone number registered to the company and at least one full time paid employee?

4.4 Should CIRA structure its ADR policy in such a manner that not meeting or no longer meeting the Canadian Presence Requirement will be a sufficient cause to remove a domain name from a registrant?[3.2.1 (iii)]

4.5 Should CIRA’s ADR Policy allow complaints from complainants that do not meet CIRA’s Canadian Presence Requirement, even if they hold a registered trade-mark in Canada? [3.2.1 (iv)]

4.6 Should CIRA only consider Canadian providers and panellists? [3.2.2]

4.7 Should CIRA structure its ADR policy to only consider complaints that involve a domain name that is the same as a name in which the complainant has rights, as opposed to also including complaints about domain names that are confusingly similar? [3.3.2]

4.8 Should CIRA structure its ADR policy similarly to the ICANN policy and allow bona fide use of a domain name as a sufficient condition for the panellist to find against the complainant? [3.3.2]

4.9 Should CIRA require that “bad faith” be proved by the complainant, and if so should it adopt a definition of bad faith that is similar to the one found in the ICANN policy? [3.3.2]

4.10 Should CIRA allow differing “supplemental rules” between providers? [3.4.1]

4.11 Should CIRA consider dealing with a single provider, if there is little interest by organizations to become Providers? [3.4.2]

PART II: SUMMARY OF RESPONSES

The summary of responses to the eleven issues raised in the consultation document are divided into three broad categories: A) Canadian Presence Requirements (issues 2,3,4,5); B) Scope of ADR Policy (issues 1,7,8,9); and C) Rules for ADR providers (issues 6,10,11).

A) Canadian Presence Requirement Issues

i) Canadian Presence Requirements and Individuals

Of the 12 responses that dealt with CPR and individuals registrants, five supported the application of CPR, though few supporting responses provided detailed reasoning or analysis. Nevertheless, this is a surprisingly high level of support given that most responses opposed the strict application of CPR to corporations. Five responses supported a less stringent CPR test for individuals, one response suggested no restrictions at all and one was ambiguous.

Two responses pointed out that the concept of physical presence was at odds with the borderless nature of the Internet and with the nature of legal rights in Canada. Legal rights are not necessarily tied to a physical presence. A Canadian trade-mark holder has enforceable legal rights regardless of their residency or citizenship. A key advantage of the Internet is that it allows companies of all sizes to compete worldwide without the burden of a global physical presence.

Moreover, two respondents were of the view that restricting access to .ca would actually reduce the value of the .ca resource and turn it into an Internet backwater. They argued that the value of .ca to all Canadians would be best realized by having .ca signify that the domain name holder submits to Canadian laws and jurisdiction, regardless of whether the holder is Canadian or foreign.

“We think that the Canadian Presence Requirement (CPR) is at odds with the nature of how people might wish to associate with Canada in cyberspace, and therefore at odds with the idea of a market-oriented .ca domain. People may possess rights in Canada that are honoured by Canadian law and treaty, but who have no physical association with this country at all. They may have every reason to be associated with Canada, or to claim rights in Canada, including rights in the ADR. They [should] not be excluded from Canadian courts or the ADR, absent compelling purposes, for which there are none in this case…The legal and constitutional systems of Canada, its image, its substance: any of these might be a reason why someone would want to associate with Canada by having a domain name ending in .ca. .CA is a resource for Canadians, all right, but not in the way that the Framework conceives it. Canadian domain name affiliation is not something that needs to be doled out like physical residency or citizenship, but as a resource for attracting business to Canadian jurisdiction.”

Tucows

Submission 5

Three respondents voiced serious concerns that the definition of residency be clear and simple, while two others raised the issue within the context of adopting the income tax definition for residency. Concerns were also raised over the loss of domain names due to temporary gaps in residency.

ii) Canadian Presence Requirements and Corporations

The issue of CPR for corporations garnered 28 responses, the largest number of comments. The comments fall into three broad categories.

The first category, for which there was only one unequivocal supporting comment, favoured a strict application of the CPR for corporations.

The second category, for which there were three supporting comments, favoured completely unrestricted access to .ca domain names.

The third category, representing the vast majority of responses with 21 supporting comments, favoured a more liberal test for granting .ca registrations that maintains the requirement for registrants to have some connection to Canada. The suggested tests for determining whether a corporation would be entitled to a .ca domain name varied, consisting of one or more of the following: federal or provincial incorporation, trade-mark rights in Canada, business name registration in a Canadian province, business licence from a Canadian province, Canadian tax return filing, Canadian physical presence, or contractual agreement to submit to Canadian jurisdiction. The consensus was that if a corporation had rights that were enforceable in Canada or conducted business with Canadians and was willing to submit to Canadian ADR, courts, and law, then the corporation should be entitled to register a .ca domain name.

Three of the responses were ambiguous.

The responses suggested that there was some confusion over the purpose of CPR, which is indicative of how quickly conceptions of the Internet have evolved. The Framework document put CPR forward as a measure necessary to ensure that the economic benefits created by the use of the .ca domain were enjoyed primarily by Canadians. Eight responses came to the conclusion that benefits arising from the .ca domain had little to do with the physical location of the owner.

Responses opposing strict application of CPR for corporate registrants generally based their position on one or more of the following four criticisms: i) that CPR discriminates against small businesses; ii) that CPR discriminates against new and innovative business formations that utilize the Internet to maximize efficiencies; iii) that CPR disenfranchises non-Canadian corporations that have legally recognized rights in Canada; and iv) that CPR might violate Canada’s trade obligations under the North American Free Trade Agreement.

The single most common criticism of CPR was that the requirements discriminate against small businesses and non-profit entities with 15 responses unequivocally adopting that position. Many feared that small businesses, such as sole proprietorships or independent contractors, would not meet the proposed CPR employee criteria. The inclusion of owned or leased premises and a business phone listing as potential CPR criteria was equally worrisome to small business and viewed as a potential source of uncertainty.

“Innovation and entrepreneurship are important to this country. Yes, it is important to stop internet squatters, but it is equally as important that we not squash the right of micro business people to put their businesses together one step at a time, starting with a name and an internet address, and working out from there until they no longer need to fund their new entities through other employment.”

Jennifer Noble, Songhouse

Submission 33

Responses opposing CPR on the basis that it discriminates against innovative business formations pointed to the irony of requiring online businesses to maintain unnecessary offline infrastructure to obtain a .ca domain. They suggested that part of the appeal of the Internet is the ability to operate with a virtual presence. These responses suggested that the application of Canadian law to .ca registrants would be sufficient to protect most Canadian interests.

As many corporations without a Canadian presence have intellectual property rights that are enforceable in Canada, concern was expressed that non-Canadian entities would be left out of the ADR process.

“Internic.ca firmly believes that the .ca domain name should be a resource for Canadians. However, it should not only be a resource for companies in Canada who wish a .ca domain name, but also must be a resource that International companies can use to effect trade with Canadians. The .ca domain must be allowed to be a resource for the Canadian consumer who wishes to transact with companies that hold rights in Canada but may not have a physical presence here.”

Internic.ca

Submission 17

The clear message from the responses was that CPR for corporate registrants put too much emphasis on combating cybersquatting at the expense of small and innovative businesses.

iii) Canadian Presence Requirements and Loss of Registration

Of the ten submissions that commented specifically on this issue, seven opposed the loss of .ca registration if an individual or corporation ceased to meet CPR. According to the submissions, many .ca owners invest considerable time and money developing an Internet brand and should not be subject to expropriation of their investment. Respondents stated that it would be unfair to strip a domain from a Canadian resident who moves out of the country for work or health reasons or from a Canadian corporation that is purchased by a foreign entity and loses its Canadian status.

Other concerns raised by respondents included the administrative complexity of monitoring and policing CPR compliance and the possibility of reverse domain name hijacking based on CPR breach. Respondents feared that loss of registration would create marketplace uncertainty that would discourage investment in .ca domains.

iv) Complaints of Canadian Trade-mark Holders Who Do Not Meet The Canadian Presence Requirement

Of the ten responses that commented on this issue, seven supported access to CIRA ADR for Canadian trade-mark holders who do not meet CPR. Two opposed access to CIRA ADR if CPR was not met by the complainant and one response was ambiguous.

“INTA understands the desire of CIRA to restrict access to the Canadian domain name registry. However, a requirement that a person or company have a physical presence in Canada to qualify for a domain name is counter to commercial reality and may bring about adverse unintended consequences. For example, many Canadian trademark registrations are owned by persons and companies having no residence or office in Canada. Nevertheless these persons and companies are the source of billions of dollars of trade throughout Canada and their trademark rights are fully enforceable under Canadian law. INTA believes that it would be appropriate to include with the concept of those having a Canadian presence those who are owners of Canadian trademark registrations or who have applied to register a trademark in Canada. Otherwise, legitimate owners of trademark rights in Canada may be unable to secure .ca domain names matching their company names and trademarks, allowing domain name pirates and cybersquatters who at least ostensibly have a physical presence in Canada to secure those domain names, to the detriment of both the trademark owner and the Canadian public.”

Mike Heltzer, International Trademark Association

Submission 3

Two responses suggested that CPR should be amended such that owning a Canadian trade-mark qualifies as a Canadian Presence. Another suggestion was that a non-CPR compliant Canadian trade-mark holder could have an offending domain name stripped from the current owner without having the domain awarded to them.

B) Scope Of ADR Policy Issues

i) Scope Of ADR

There were 12 comments specifically on the scope of ADR. Ten responses agreed that the CIRA ADR policy should include complaints related to registered trade-marks. There was much less support for a policy dealing with unregistered trade-marks, trade names or personal names.[4] The prevailing opinion was that an ADR policy that recognized rights beyond registered trade-marks would create uncertainty and would be difficult to administer.

Many submissions raised concerns about reverse domain name hijacking.

“As a Canadian businessman with ownership in a number of Internet companies and domains, how will the CIRA ADR and Canadian legal system protect me from trademark registrants who knowingly seek out to register trademarks that incorporate previously secured ca domain addresses?”

David J. Jakob, XIST Information Services & Technology Inc.

Submission 35

Submissions opposing ADR for unregistered trade-marks based their opposition on one of two grounds:

a) that an unregistered trade-marks policy would be cumbersome and encourage speculative complaints;

“CIRA should not consider ‘unregistered trade-marks’. This terminology is too broad and vague in legal terms. It would open CIRA up to a miasma of potential abuse in terms of potential claimants, who claimed they had ‘rights’, which could not be supported by any legal criteria. In other words, there could be claimants who were either being mischievous or vexatious or simply lack any real merit in legal terms. CIRA could be bogged down by procedural gridlock. The optics would be terrible, the negative publicity more so, and the fallout in terms of legal challenge to CIRA’s regulatory authority would be immediate and daunting.”

Paul Peerless

Submission 10

b) that recognizing unregistered trade-mark rights would reward individuals who had not made the effort to register their mark and actively protect their rights. Trade names at the provincial level do not provide any legal rights. Recognition of trade names in ADR policy would provide rights that otherwise do not legally exist.

There was also little support for inclusion of personal names in the ADR process. All submissions that dealt specifically with personal names noted the practical difficulties inherent in defining what constitutes a personal name and dealing with the fact that thousands of potential domain registrants may share an identical name.

“The .ca domain ADR Policy should consider only personal names with

trademark attributes. Otherwise, there must be something more or else there

will be disputes over joesmith.ca without any means to assign priority. That

‘something more’ may be that the domain name is identical or similar to the