Company argued site at Michaels.ca infringed its marks.
A Canadian appeals court has confirmed that crafts store chain Michaels (NASDAQ:MIK) should be awarded the domain name Michaels.ca.
The loser: a guy whose last name is Michaels.
David Michaels registered the domain name in 2001. In 2009 he started using the domain name to sell stuff online, and that’s where the trouble began.
It seems that the retailer was miffed at what it saw as the defendant trying to capitalize on confused internet users. Here’s what Michaels.ca looked like on May 2014, one month after the crafts retailer filed the suit:
You can compare that to Michaels.com.
For his part, Mr. Michaels explains that the confusion began when Michaels Arts & Crafts rebranded as just Michaels and adopted a logo very similar to his signature.
Mr. Michaels says that the retailer contacted him in 2012 and demanded he transfer the domain name. The company said it would pay $10,000 and not go forward with any claims if he transferred the domain.
According to Mr. Michaels, he then retained a lawyer to get the retailer’s U.S. marks canceled. After retaining the lawyer, he says that the retailer offered him $100,000 to drop everything and transfer the domain. He declined because the site received more than one million visitors per year.
But he says he entered into a verbal agreement with the retailer in 2012 that if he didn’t offer custom framing, the retailer wouldn’t sue him.
Michaels Stores sued Mr. Michaels’ company in Canadian court in April 2014. It’s not clear what triggered the suit at that time, but archived screenshots show that Mr. Michaels adopted the new logo (which he claimed is similar to his signature) that probably confused many people looking for the crafts store. The Michaels.ca store also featured crafts.
Mr. Michaels failed to submit a defense in time and the judge granted a motion for default judgment. The court ordered the domain name transferred (pdf).
Mr. Michaels then appealed to the Federal Court of Appeal. Last week the Court of Appeal affirmed the lower court’s decision, ordering the domain name transferred to the retailer (pdf).
Steve says
Ouch, should have taken the $100k. Or called Zak.
Jamie Dąbrowiecki says
He was offered $10K apparently.
John Kenney says
Ouch is right. Geez, some bad choices made there.
Anonymous says
Not the sharpest knife in the drawer.
Robin Jilderda says
“Should have called Saul”
John says
Greed is never good. For him zero is better than $100 000
davidtmichaels says
Actually, it is negative $57600 now. Including the appeal and costs that that the court ordered that I pay the respondents. costs.
I need to pay $15,000 in costs before I can appeal the decision to the Supreme Court. Donations are welcome:
PayPal.me/DavidMichaels
Guido says
This is the kind of thing that pisses off real domainers who are trying to treat this endeavor as a real entrepreneurial business.
Day after day we see ridiculous UDRPs on generics and hope it doesn’t happen to us. We’re careful about using negative keywords and try to avoid *any* type of action that could be considered cybersquatting by the letter of trademark laws. We’ve live with the clueless press about “scumbag domain squatters taking all the .coms”. It’s a fact of life but still infuriating.
Now you come along and not only blatantly infringe on a well-known trademark, you act indignant and defiant when they call you on it.
Bottom line is that those offers were far, far more than you should have expected ($100K!!). With the ammunition you gave them it’s hard to believe they didn’t take you down with the far lower cost of a straight UDRP immediately. You loaded the gun for them, pointed it your head and even then they said “maybe we shouldn’t pull the trigger yet, here’s another way out”.
It’s obvious you really do think you’re in the right based on the silliness of even entertaining a fundme campaign. You justifiably lost, don’t embarrass yourself anymore. Imho, learn from it and move on.
davidtmichaels says
Section 20(1.1) of the Canadian Trade-Marks Act says that there is no trademark infringement when a name is used as a trade name:
Exception — bona fide use
20(1.1) The registration of a trade-mark does not prevent a person from making, in a manner that is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark,
(a) any bona fide use of his or her personal name as a trade-name;
http://laws.justice.gc.ca/eng/acts/T-13/page-6.html#docCont
And Cricut cutting machines and scrapbooking software have been offered on michaels.ca since 2008:
http://www.screenshots.com/michaels.ca/2009-09-19
The Federal Court of Appeal said the affirmative defences didn’t apply because I didn’t file my Statement of Defence and Counterclaim on time.
Nick says
You made some very bad decisions, but I still hope you win at the supreme court for the reason that trademarks should not be allowed for extremely common names.
davidtmichaels says
The $10K was a second offer attached to a draft Statement of Claim on January 11, 2012: Accept $10,000 or we will sue you.
Ryan says
Why didn’t you take the $100k offer then, .ca is not what is used to be, ask Adam Dicker, oh wait better not
davidtmichaels says
The deal breaker for the $100K was that they refused to let me keep my vanity email addresses that I have used since 2001.
I should have started off with selling Hudson Bay and Home Depot products. You can’t make money if customers want to use a 40% off store coupon on every purchase.
Andrea Paladini says
IMHO your use was clearly “provocative”, your “hiding” behind a disclaimer is not a good strategy or business plan …
You should have accepted the 100k and run …
LOL@ the “vanity email” thing … that was really a bad choice …
davidtmichaels says
I gave out more than 10,000 business cards, with [email protected] on them, since 2001.
thelegendaryjp says
The real issue here was use, name was lost because a risky and perhaps infringing use, period. Michaels used the traffic for “their” use. The law has spoken and it was a bad choice of use. Just because your name is similar or the same as a trade name does not give you the right to confuse.
davidtmichaels says
The Supreme Court of Canada said it was fine, as long as you post disclaimers, which I did: The Hurlbut Co. v. The Hurlburt Shoe Co., [1925] SCR 141
Steve says
Should have filed a response and call Zak.
Steve says
Maybe you can appeal. Call Zak http://www.muscovitch.com
davidtmichaels says
Even Zak can’t help me now. This is Supreme Court stuff.
JZ says
geez dude, you should of went out of your way to make the logo as different from theirs as possible…
Donny says
I would repeal it, win it back and then make a male porn site out of it. This way the companies visitors will not get confused.
davidtmichaels says
That would be an example of “Depreciation of goodwill.” That would of made anyone lose.
22 (1) No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.
John Berryhill says
David, might I suggest to you that you are not particularly good at understanding what statutes actually mean?
karl says
Vanity emails was your excuse??? you deserved to get zero after I read that tidbit! idioto!!
davidtmichaels says
I gave out more than 10,000 business cards, with [email protected] on them, since 2001.
thelegendaryjp says
Your problem is this, you gave them grounds, good grounds to take it. Now spending further funds, likely 5 figures+ to get it back IF you win is actually a financial loss since the name is worth $XXX-$XXXX to anyone else. Your retail use which you may have made money on is gone for good even if the name is recovered…
Its a loss, move on imo. When a domain crowd isn;t giving you positive support that speaks volumes.
davidtmichaels says
It would be really good for all domainers and retailers that this decision gets set aside somehow.
Donations are welcome: PayPal.me/DavidMichaels
Michaels Stores Procurement Company’s lawyers called me a “cybersquatter” in their appeal factum. Really! Michaels.ca is the oldest .ca domain that I own. I didn’t even think about buying more .ca domains for myself until 2008.
I have to transfer the michaels.ca domain now. I need to fight to overturn the judgment, while I still can.
The implications of the judgment are far reaching. It will impact both domain owners and retailers.
If you have more than 10 domains, they will probably label you as a cyber-squatter and sue you in Federal Court after they get a trademark registration. That is what happened to me. RDNH.
So now the Federal Court may order a retailer, Sears for example, to assign all of its stores to Canada Goose, which is now owned by Bain Capital, if Canada Goose proves a claim of trademark infringement on the sale of winter coats with a fur hood and an arm badge, under section 53.2 of the TMA.
The rule of law under the Ontario Property and Civil Rights Act and John Locke is gone. It appears that the Federal court of Canada may now apply the utilitarian views of Jeremy Bentham, instead of John Locke’s views, regarding property disputes:
A statutory basis for the order requiring delivery up of the domain name can also be found in subsection 20(2) of the Federal Courts Act (R.S.C. 1985, c. F-7), which gives the Court jurisdiction to order any appropriate remedy known to common law or equity: Merck v. Apotex, 2006 FCA 323 at para 123:
[123] Section 20 [as am. by S.C. 1990, c. 37, s. 34] falls under the section of the FCA entitled “Jurisdiction of Federal Court” and is concerned with the Court’s jurisdiction to hear and decide intellectual property matters. Nothing therein suggests that it is intended to limit a judge’s creativity in fashioning appropriate remedies.
When I suggested that trademark owner of the word STRATUS might not like the content on davidstratus.com, or may just want the domain name for themselves; Justice Stratus gave an animated response to defend himself. To my surprise, he said that if a federal court thought he should lose his domain name, the court would have the jurisdiction to order the transfer.
I knew that I lost when the Justices told my lawyer that:
1. The Notice of Appeal didn’t properly claim that the motions judge erred in finding of infringement.
The asserted trademarks are invalid because the trademark was obtained by fraud (misrepresentation of use in Canada buy a Delaware Business Trust since 1984) and it was an assignment in gross because it was transfer registered by a holding company.
2. He failed to file a Notice of Constitutional Question with the Attorney General of each Province in regards to the challenge of the court’s jurisdiction over property. So the court felt that they had free reign.
I spent $57600 in the appeal, including the respondents costs.
I need to pay $15,000 in costs before I can appeal the decision to the Supreme Court. Donations are welcome:
PayPal.me/DavidMichaels
Ryan says
You had a huge advantage in the liberal Canadian court system, as any of us here know, no point taunting a large corporation. You played on a slippery slope with the housewares items on your website, fair enough you put the disclaimers up, they clearly felt they could out litigate you, and they did.
As you know in Canada loser pays the legal fees, so I am sorry you got stuck with such a large legal bill, and still lost the domain.
As for keeping the vanity of your domains email, they were compensating you $100,000, they simply wanted nothing to do with you, and wanted to move on.
In this case it reminds me of the Nissan story, I mean who has more of a right to your surname than yourself, first come, first serve, I would donate to you, if you didn’t taunt them with them website, really to bad.
davidtmichaels says
On January 20, 2012, their corporate counsel said that they were fine with my website, as long as I agreed to not sell custom framing.
michaels.ca featured Cricut machines, scrapbooking software, books, purses, electronics, etc….
I told her that you need a store to sell custom frames. I orally agreed to not sell custom frames and their corporate counsel orally agreed to not sue me.
I should have recorded the call and got it in writing, to prove the breach of contract. Alternatively, I should have sued them before they got popular in Canada.
Joseph Peterson says
$100k would have ranked Michaels.ca as the 5th highest-selling .CA domain ever reported. No vanity email address is worth $100k.
Looks to me like the owner was gambling double or nothing. Apparently that site didn’t amount to much financially or personally if he was willing to give it up for $100k.
If the owner had wanted to maintain the business itself along with the brand, some people would feel some sympathy. If this were a longstanding business … or if it were a real brick-and-mortar store … or if it were in a different area, the defense would be more credible.
But the business use is quite recent. It overlaps with the better known Michaels. And the logo is so similar to theirs that it’s like a poke in the eye.
John Berryhill says
“But the business use is quite recent. It overlaps with the better known Michaels. And the logo is so similar to theirs that it’s like a poke in the eye.”
That’s what it looks like from here as well.
The claim that a trademark does not interfere with bona fide use of a trade NAME is correct.
If your name is Joe Ford, you can form a company with the name Ford in it. What you can’t do, of course, is use “FORD” as a mark for selling cars.
That use on the screenshot of the page is a trademark use. It is not mere use of a trade name as a trade name, and it is a colorable imitation of their script mark and page placement. It seems clear that Mr. Michaels was attempting to play close to the line, without knowing where the line really is.
davidtmichaels says
Or MSPCI moved the line by updating their logo, so that it looks like my signature, twice before they filed suit against me. Their lawyers knew what my signature looks like from matters that they dealt with in 2006, 2010 and 2012.
Customers were more likely confused by high frequency Michaels Arts & Craft banner ads targeted at michaels.ca in my 728×90 adsense spot, below my webpage header, since at least 2011.
Andrew Allemann says
Didn’t you use two logos on Michaels.ca — one that was just script, and then a subsequent one that was your signature?
John Berryhill says
It’s completely immaterial that it’s your signature. Who cares if it is your signature? That has nothing to do with your point about trade name usage. If you were simply using your own name as a trade name, then you wouldn’t be putting a graphical representation of “Michaels” in script – whether from your hand or otherwise – on the upper left corner of your site in order to make it look somewhat like theirs.
You don’t seem to understand that your actions went well beyond the narrow exception on which you want to hang your hat here.
That’s like me being on trial for shooting someone to death and arguing, “But I legally purchased and own the gun, so I have a right to use it!” Yes, I certainly have a right to purchase, own and shoot a gun. What I don’t have is a right to kill people with it.
thelegendaryjp says
@DavidMichaels, can I ask you a question?
Let’s say my birth name was John Nike, situation the same as yours, date of registration vs their use etc. All things equal…
Do you think I have the right to sell basketball shoes or athletic wear? Let’s take your stance and just say shoes in general or sports stuff.
It is a no brainer the visitors to your domain michaels.ca were due to the retailer. You knew that those visitors were looking for a certain page when they visited. That lead you to put up the page you did, coincidence? I will not even argue this point with you, we are all pretty smart here.
You made a few missteps and it cost you. I am sorry to see this happen but you are discussing this with a very pro domainer group and not winning. In fact I am shocked at how honest people are being.
Good Luck either way but the cost just makes zero sense to me, like I said you had a near worthless name which could have been worth a fair sum to an end user and now you are more than backwards into it.
davidtmichaels says
The Michaels Arts & Craft Stores retailer didn’t get popular in Canada until sometime between 2010 to 2014. They opened their first store in Canada in late 1993 or 1994.
In 2008, Marissa Mayer was on Charlie Rose show. She said that if your site doesn’t convert, but has lots of traffic, experiment with what might convert.
In the nissan.com case (9th Cir., USA) the court said that Mr. Nissan couldn’t advertise cars on nissan.com, but he could do anything else, because Nissan is famous for cars. Nissan is a rare last name, so it is not merely a surname.
The USPTO says that:
Attached evidence… the surname significance of MICHAELS. … shows the applied-for mark appearing 28,982 times as a surname in the LEXISNEXIS® surname database, which is a weekly updated directory of cell phone and other phone numbers (such as voice over IP) from various data providers.
USPTO Refusal – Section 2(e)(4) – Primarily Merely a Surname
Registration is refused because the applied-for mark is primarily merely a surname. Trademark Act Section 2(e)(4), 15 U.S.C. §1052(e)(4); see TMEP §1211. The primary significance of the mark to the purchasing public determines whether a term is primarily merely a surname. In re Kahan & Weisz Jewelry Mfg. Corp., 508 F.2d 831, 832, 184 USPQ 421, 422 (C.C.P.A. 1975); In re Binion, 93 USPQ2d 1531, 1537 (TTAB 2009); see TMEP §§1211, 1211.01.
The following five factors are used to determine whether a mark is primarily merely a surname:
(1) Whether the surname is rare;
(2) Whether anyone connected with applicant uses the term as a surname;
(3) Whether the term has any recognized meaning other than as a surname;
(4) Whether the term has the structure and pronunciation of a surname; and
(5) Whether the term is sufficiently stylized to remove its primary significance from that of a surname.
See In re Binion, 93 USPQ2d 1531, 1537 (TTAB 2009); In re Benthin Mgmt. GmbH, 37 USPQ2d 1332, 1333-34 (TTAB 1995); TMEP §1211.01.
Normally, you can’t register a surname as a trademark in Canada. An applicant needs to show that they have been using it for a long time in Canada and they have the same trademark registered in their home country.
Paragraph 12(1)(a) of the Canadian Trade-marks Act provides that a trademark is registrable if it is not a word that is primarily merely the name or the surname of an individual who is living or who has died within the preceding thirty years.
The statute generally follows the historical principle of common law that all people should be able to identify their goods by their names or surnames, providing the name or surname was used honestly and not with the intent of passing off the goods as those of another person with the same or a similar name. https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr03636.html#iv.5
Section 20(1.1) of the Canadian Trade-marks Act says there is no infringement if you are using your actual own name
Non-distinctiveness of the MICHAELS word mark:
– I had already been using Michaels as a trade name since April 1990 in my cellphone and accessory business,
– There are 650+ other businesses in Canada called Michaels something, including the clothing retailer J Michaels Inc.
– The Principle is confirmed in: The Hurlbut Co. v. The Hurlburt Shoe Co., [1925] SCR 141 (if used with a disclaimer once confusion is discovered)
Joseph Peterson says
@David Michaels,
Since you’re prompt to reply with legal arguments here, may I ask how or why you missed the deadline for responding in court?
After all, you’d interacted with their lawyers before. At some point, you must have realized legal action was a possible scenario. Especially since you retained a lawyer earlier.
Hard to imagine any large company promising not to sue. What benefit would they derive from shackling themselves?
davidtmichaels says
I got hit with a CDRP over sesamesnaps.ca right after being served with MSPCI’s claim. I suspect that MSPCI’s lawyers were behind it.
Then my ex-wife kept me in court for the next 4 months over bogus support claims. At then end, her motion was dismissed.
Maybe I spent too much time trying to address every single allegation in their multifaceted claim and write the counterclaims to cancel their 8 trademarks. I got one cancelled after the motion in a section 45 request. I should have immediately filed section 45 requests for all of their trademarks in Canada.
MSPCI thought that I was a licenced trademark lawyer. They were afraid that I would cancel their USPTO registrations because they are an assignment in gross (not owned by the operating company.)
August says
@David Michaels I sincerely think you played a bad game. Even if youre sincere and honest, most people will have a hard time believing your motive or reasoning, and this includes judges too.
If you won your appeal, that would be such a miracle.
Ryan says
I think he can win the appeal in the Canadian Courts, in a UDRP case maybe not, but he can get his name back if he spends the money, and follows the right steps.
Andrew Allemann says
I don’t know about the CIRA UDRP, but this case would not have been won based on UDRP rules. The registrant has rights or legitimate interests in the name, and originally registered it in good faith. The apparent bad faith use happened later.
thelegendaryjp says
David, I am not saying your points are not valid or true, clearly they are when kept on context.
The issue I take with them are this…
Is your name popular, yes or course, does it get 1 million visits a year because of that fact alone, not a chance in hell.
Does Nissan apply to your case in terms of how you ended up using it, no.
Did you use your name as a business beforehand for cellular etc, sure, did you sell crafts, no.
So while you are making true statements they are not a defence. Your honour I sold ice cream on Michaels.ca 10,000 years before Michaels sold crafts on theirs therefore I deserve to sell crafts now when I want…
Your Honour my name is very popular don’t you know so I can sell crafts too or a similar business…
It’s a real show of one grasping at straws, none of your attempts to justify hold water once you crossed a line. If you never crossed that line and instead sold cellular phones, had no cross logo confusion, did not try to capitalize so blatantly on their target traffic or offer “crafts” I would be the first one to cry out for you.
But alas you did, sorry to hear it but you cannot step back over the line.
Dotrader says
This is clearly a case of reverse domain name hijacking. I don’t understand why domainers are taking the complainant’s side.
karl says
well im sorry for you in the end cause u r a fellow domainer but its a live and learn issue we all can keep in mind .
let it go move on and you will prosper even bigger in time.
thelegendaryjp says
David, only because you mentioned sesamesnaps.ca above I had a look…David my man…we need to have a coffee 🙂
https://cira.ca/sites/default/files/attachments/cdrp/00264-sesamesnaps.ca_.pdf
C.S. Watch says
You could have sold cat sweaters or giant undies or some other product that appealed to the same market. Instead you had to sidle up to their mark and siphon their sales.
Now every fat-legged American corporation can cite this in a Cease and Desist. How many legit mom-n-pop shops in Canada are going to be needlessly frightened into closing because of you? Hoser.
Perfectname.com says
Normally I would side with the domainer but not in this case. He knew people going to Michaels.ca were not looking for him. Should have taken $100K plus be happy with all money he made infringing to that point. Time to move on.
Bob E. says
I think your case is an example of the problem with having some legal skills and some time versus a lot of legal skills and a lot of time.