On March 15, 2016, the Federal Court of Appeal (the “Court”) delivered from the Bench its decision in Michaels v Michaels Stores Procurement Company, Inc., in which it upheld a default judgment against David Michaels and Michaels Inc., (the “Appellants”). The decision reaffirmed that the adoption and use of an internet domain name can constitute trademark infringement in Canada if the use of the domain name creates confusion in the marketplace.
Michaels Stores Procurement Company, Inc. and Michaels of Canada, ULC (the “Respondents”) were the owners of the trademark, “MICHAELS”, and brought a claim against the Appellants for use of their trademark in the domain name “michaels.ca”. The lower court rendered a default judgment against the Appellants stating that, in using said trademark in a domain name, the Appellants had “established actual confusion on the part of Michaels Stores of Canada, ULC and its suppliers”, which amounted to trademark infringement. As a result, the Appellants were ordered to deliver the domain name to the Respondents.
On appeal, the Court found that the allegations of trademark infringement had been made out as pled in the Respondents’ claim, as had allegations of passing off, depreciation of goodwill and the communication of false and misleading statements.
Finally, the Court also found that the order to deliver the domain name was not overly broad. It did not preclude the personal Appellant, David Michaels from using his name on the internet or for trade purposes, so long as the word “Michaels” was not used in a confusing way.
While the decision does not extend so far as to conclude that all use of a trademark as a domain name would amount to trademark infringement, it recognizes that confusion may result from the use of a domain name, and that if it does, such use is actionable. The decision will be of interest to charities and not-for-profits which use domain names, and serves as a warning that registered trademarks must not be used as domain names in a way that may confuse the public, since otherwise, it may result in trademark infringement.