It’s no secret that domain names have value on the secondary market, with desirable domain names fetching upwards of $1 million. A recent Court of Appeal of Ontario decision (Tucows.com Co. v. Lojas Renner S.A., 2011 ONCA 548) has clarified that, at least for some purposes, domain names can be considered personal property.

The question arose from a dispute over the domain name renner.com between Tucows, a domain name registrar incorporated in Nova Scotia with headquarters in Toronto, and Renner, a Brazilian department store chain. Tucows had purchased renner.com as part of a bulk purchase of over 30,000 domain names from another company. Seeking to pre-empt a complaint by Renner under the UDRP, Tucows sought a ruling from the Ontario courts that it had a legitimate interest in the domain, that the domain name was not registered or being used in bad faith, and most importantly, that Renner was not entitled to a transfer of the domain.  In responding to a motion from Renner to permanently stay Tucows’ action for want of jurisdiction, Tucows relied on rule 17.02(a) of Ontario’s Rules of Civil Procedure, which states that a party outside of Ontario can be served without leave of the court provided that the claim is in respect of personal property inside of Ontario.

The court found that while Canadian jurisprudence was unhelpful in deciding the issue, the “dominant view emerging from international jurisprudence and academic commentary appears to be that domain names are a new type of intangible property”. As the Rules of Civil Procedure did not offer a definition of “personal property”, it was the common law conception of what constitutes property which was relevant for the purposes of interpreting rule 17.02(a).  Citing the SCC’s decision in Saulnier, the court held that possession and control over a domain name gave an individual rights sufficiently similar to the rights considered to define a property interest at common law.

Furthermore, the domain named constituted personal property in Ontario, the second necessary element of rule 17.02(a). Rule 17.02(a) gave the court the power to settle disputes in relation to tangible or intangible property. The court analogized the situation to the question in copyright law of where a communication took place and found the factors from those cases to be useful in deciding where a domain name should be considered to exist. Citing SOCAN v. CAIP, the court agreed that “[i]n terms of the Internet, relevant connecting factors would include the situs of the content provider, the host server, the intermediaries and the end user”.

Ultimately, Renner’s motion to stay the action was dismissed. As the decision did not rely on anything specific to the Rules of Civil Procedure beyond the lack of a definition of “personal property”, it’s likely that we’ll see the decision, or at least the line of reasoning from the decision, being used to support claims that domain names should be considered personal property in other contexts as well. Given the high market value attributed to some domain names, bankruptcy cases are a likely candidate.

The situation in this case is unique in that Tucows is both the registrar and registrant of the domain name. Hence, arguments over the effects of any licensing terms in the contractual agreement between the registrar and registrant, as have been seen in some US cases which deal with similar issue, were irrelevant.