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Easthaven
Ltd. v. Nutrisystem.com Inc.
Easthaven,
Ltd., Plaintiff and Nutrisystem.com Inc. and Tucows Inc., Defendants
Ontario Superior
Court of Justice
Nordheimer
J.
Heard: August 3, 2001
Judgment: August 15, 2001[FN*]
Docket:
00-CV-202854
Counsel: Zak
Muscovitch, for Plaintiff
Jonathan Stainsby, Andrea
Rush, for Defendant, Nutrisystem.com Inc.
Subject: Intellectual Property;
Civil Practice and Procedure; International; Property; Torts
Practice --- Judgments and orders --
Res judicata and issue estoppel -- Res judicata -- Finality of judgment or
order -- Interlocutory judgments or orders
Plaintiff was incorporated under
laws of Barbados and acquired domain name "sweetsuccess.com" for
purpose of developing interactive web site featuring sports related content --
Defendant U.S. corporation N Inc. was registered owner of "Sweet
Success" trademarks used in connection with weight loss products and
programs since 1987 on Internet and elsewhere -- N Inc. commenced action in
Pennsylvania against plaintiff and brought motion for preliminary injunction
preventing use of domain name -- Plaintiff brought motion to dismiss action on
basis of lack of personal jurisdiction and forum non conveniens -- Prior to
granting plaintiff opportunity to reply to N Inc.'s submissions, court
dismissed plaintiff's motion and granted N Inc.'s motion for preliminary
injunction -- Plaintiff commenced action in Ontario against N Inc. for damages and other relief -- N Inc. brought
motion to stay or dismiss action on basis of res judicata, abuse of process and
forum non conveniens -- Motion granted -- Finding by Pennsylvania court that
N Inc. was entitled to preliminary injunction did not constitute decision as
conclusive disposition of merits of case, especially as injunction was obtained
on unopposed basis -- As no reasons were given in support of decision, no
evidence existed that there was any conclusive determination of matters in
issue other than appropriateness of granting interim relief -- Doctrine of res
judicata did not apply.
Practice --- Disposition without
trial -- Stay or dismissal of action -- Grounds -- Action frivolous, vexatious
or abuse of process -- General
Plaintiff was incorporated under
laws of Barbados and acquired domain name "sweetsuccess.com" for
purpose of developing interactive web site featuring sports related content --
Defendant U.S. corporation N Inc. was registered owner of "Sweet
Success" trademarks used in connection with weight loss products and
programs since 1987 on Internet and elsewhere -- N Inc. commenced action in
Pennsylvania against plaintiff and brought motion for preliminary injunction
preventing use of domain name -- Plaintiff brought motion to dismiss action on
basis of lack of personal jurisdiction and forum non conveniens -- Prior to
granting plaintiff opportunity to reply to N Inc.'s submissions, court dismissed plaintiff's motion
and granted N Inc.'s motion for preliminary injunction -- Plaintiff commenced
action in Ontario against N Inc. for damages and other relief -- N Inc.
brought motion to stay or dismiss action on basis of res judicata, abuse of
process, and forum non conveniens -- Motion granted -- Action could not be
characterized as abuse of process -- Pennsylvania was site of N Inc.'s
operations but had no connection to plaintiff -- Mere fact that plaintiff
chose different jurisdiction to litigate issue was not basis for finding in
circumstances that action was manifestly unfair to party to litigation and
would otherwise bring administration of justice into disrepute.
Intellectual property --- Trade
marks -- Registrability -- Internet domain names -- Miscellaneous issues
Plaintiff was incorporated under
laws of Barbados and acquired domain name "sweetsuccess.com" for
purpose of developing interactive web site featuring sports related content --
Domain name was registered by T Inc. which operated domain name registration
service out of Toronto -- Defendant U.S. corporation N Inc. was registered
owner of "Sweet Success" trademarks used in connection with weight
loss products and programs since 1987 on Internet and elsewhere -- N Inc.
commenced action in Pennsylvania against plaintiff and brought motion for preliminary injunction preventing use of
domain name -- Plaintiff brought motion to dismiss action on basis of lack of
personal jurisdiction and forum non conveniens -- Prior to granting plaintiff
opportunity to reply to N Inc.'s submissions, court dismissed plaintiff's
motion and granted N Inc.'s motion for preliminary injunction -- Plaintiff
commenced action in Ontario against N Inc. for damages and other relief -- N
Inc. brought motion to stay or dismiss action on basis of res judicata, abuse
of process and forum non conveniens -- Motion granted -- Mere fact that
domain name was registered through corporation, which happened to carry on
business in Toronto, did not give domain name physical existence in Ontario --
Court lacked general or specific jurisdiction -- As action against T Inc. was
discontinued by plaintiff, no real and substantial connection existed between
remaining parties or events giving rise to claim and Ontario.
Conflict of laws --- Property -- Law
governing property -- Intangible property
Plaintiff was incorporated under
laws of Barbados and acquired domain name "sweetsuccess.com" for
purpose of developing interactive web site featuring sports related content --
Domain name was registered by T Inc. which operated domain name registration
service out of Toronto -- Defendant U.S. corporation N Inc. was registered
owner of "Sweet Success" trademarks used in connection with weight loss products and programs since
1987 on Internet and elsewhere -- N Inc. commenced action in Pennsylvania
against plaintiff and brought motion for preliminary injunction preventing use
of domain name -- Plaintiff brought motion to dismiss action on basis of lack
of personal jurisdiction and forum non conveniens -- Prior to granting
plaintiff opportunity to reply to N Inc.'s submissions, court dismissed
plaintiff's motion and granted N Inc.'s motion for preliminary injunction --
Plaintiff commenced action in Ontario against N Inc. for damages and other
relief -- N Inc. brought motion to stay or dismiss action on basis of res
judicata, abuse of process and forum non conveniens -- Motion granted -- Mere
fact that domain name was registered through corporation, which happened to
carry on business in Toronto, did not give domain name physical existence in
Ontario -- Court lacked general or specific jurisdiction -- As action against
T Inc. was discontinued by plaintiff, no real and substantial connection
existed between remaining parties or events giving rise to claim and Ontario.
Conflict of laws --- Torts -- Choice
of law -- Forum conveniens -- What constituting substantial connection
Plaintiff was incorporated under
laws of Barbados and acquired domain name "sweetsuccess.com" for
purpose of developing interactive web site featuring sports related content -- Domain name was
registered by T Inc. which operated domain name registration service out of
Toronto -- Defendant U.S. corporation N Inc. was registered owner of
"Sweet Success" trademarks used in connection with weight loss
products and programs since 1987 on Internet and elsewhere -- N Inc. commenced
action in Pennsylvania against plaintiff and brought motion for preliminary
injunction preventing use of domain name -- Plaintiff brought motion to
dismiss action on basis of lack of personal jurisdiction and forum non
conveniens -- Prior to granting plaintiff opportunity to reply to N Inc.'s
submissions, court dismissed plaintiff's motion and granted N Inc.'s motion for
preliminary injunction -- Plaintiff commenced action in Ontario against N Inc.
for damages and other relief -- N Inc. brought motion to stay or dismiss
action on basis of res judicata, abuse of process and forum non conveniens --
Motion granted -- Mere fact that domain name was registered through
corporation which happened to carry on business in Toronto did not give domain
name physical existence in Ontario -- Court lacked general or specific
jurisdiction -- As action against T Inc. was discontinued by plaintiff, no
real and substantial connection existed between remaining parties or events
giving rise to claim and Ontario.
Cases considered by Nordheimer J.:
Canam Enterprises Inc. v. Coles
(2000), 51 O.R. (3d) 481, 194 D.L.R. (4th) 648, 139 O.A.C. 1, 5 C.P.C. (5th)
218 (Ont. C.A.) --
followed
Compo Co. v. Blue Crest Music Inc.
(1979), [1980] 1 S.C.R. 357, 45 C.P.R. (2d) 1, 105 D.L.R. (3d) 249, (sub
nom.
Blue Crest Music Inc. v. Compo Co.)
29 N.R. 296 (S.C.C.) -- followed
Cybersell, Inc. v. Cybersell, Inc.
(1997), 130 F.3d 414, 44 U.S.P.Q.2d 1928 (U.S.
C.A. 9th Cir.) -- considered
Eastern Power Ltd. v. Azienda Comunale Energia & Ambiente
(1999), 178 D.L.R. (4th) 409, (sub
nom.
Eastern Power Ltd. v. Azienda Communale Energia & Ambiente)
125 O.A.C. 54, 50 B.L.R. (2d) 33, 39 C.P.C. (4th) 160 (Ont. C.A.) -- followed
McIlkenny v. Chief Constable of the West Midlands
(1981), (sub
nom.
Hunter v. Chief Constable of West Midlands)
[1982] A.C. 529, [1981] 3 All E.R. 727 (U.K.
H.L.) -- followed
Morguard Investments Ltd. v. De Savoye
(1990), 46 C.P.C. (2d) 1, 15 R.P.R. (2d) 1, 76 D.L.R. (4th) 256, 122 N.R. 81,
[1991] 2 W.W.R. 217, 52 B.C.L.R. (2d) 160,
[1990] 3 S.C.R. 1077 (S.C.C.) -- considered
Panavision Intl., L.P. v. Toeppen
(1998), 141 F.3d 1316, 46 U.S.P.Q.2d 1511 (U.S. 9th Cir. Cal.) --
followed
Pro-C Ltd. v. Computer City Inc.,
2000 CarswellOnt 2696, 7 C.P.R. (4th) 193 (Ont.
S.C.J.) -- referred to
Rules considered:
Rules of Civil Procedure, R.R.O.
1990, Reg. 194
R. 21.01(3)(a) -- pursuant to
Words and phrases considered:
DOMAIN NAME
A domain name lacks a physical existence.
The mere fact that it is registered through a corporation that happens to carry
on business in Toronto does not give the domain name a physical existence in Ontario. A domain
name is still simply a unique identifier for
a particular Internet site located on a particular computer.
MOTION by defendant to stay or
dismiss claim for damages regarding ownership of Internet domain name.
Nordheimer J.:
1 The
defendant, Nutrisystem.com Inc., moves to dismiss the claim against it on the
basis of res judicata or, in the alternative, to dismiss or stay the
action on the grounds that it is an abuse of process or, in the further
alternative, to stay the action on the basis of forum non conveniens.
Background
2 The
plaintiff is a corporation incorporated under the laws of Barbardos and has its
head office in Bridgetown, Barbados. The plaintiff owns the domain name "sweetsuccess.com".
The plaintiff asserts that it acquired the domain name in July 2000 for the
purpose of developing an interactive Internet web site featuring sports related
content.
3 The
defendant, Nutrisystem.com Inc., is a corporation incorporated under the laws of the State of Delaware and has its
principal place of business in Horsham, Pennsylvania, U.S.A. Nutrisystem.com
Inc. is engaged in the marketing, sales and distribution of weight loss
programs including on the Internet. Nutrisystem.com Inc. owns certain
"Sweet Success"® trademarks which it has used in connection with
weight loss products since 1987. These trademarks have been extensively
advertised and promoted in the United States and in Canada.
4 The
defendant, Tucows Inc., is a corporation incorporated under the laws of the
State of Delaware and has its head office in Toronto, Ontario. Tucows is
a domain name registration service provider and was, at all material times, the
registrar of the domain name "sweetsuccess.com".
5 On August 29, 2000,
Nutrisystem.com Inc. made an inquiry by e-mail to the plaintiff's agent,
Comnetwork, concerning the availability of the domain name. The response
received, first by a responding e-mail and then by a telephone call from
Comnetwork to Nutrisystem.com Inc., was that the domain name was available for
sale at a purchase price of U.S.$146,250.
6 In
response to that advice, Nutrisystem.com Inc. commenced an action in the United
States District Court for the Eastern District of Pennsylvania. In that action,
Nutrisystem.com Inc. sought relief regarding its registered trademarks and to gain control over the domain
name. In support of the relief that it sought, Nutrisystem.com Inc. relied, in
part, on the Cyberpiracy Act which is a federal statute in the United
States.
7 The
complaint in the Pennsylvania action was served on Easthaven and on its
agent, Comnetwork. Easthaven was granted permission for its Ontario lawyer to
appear in the Pennsylvania action.
8 On or
about October 10, 2000, Nutrisystem.com Inc. commenced proceedings as
required by the Uniform Domain Name Dispute Resolution Policy
("UDRP") and the rules promulgated by the Internet Corporation for
Assigned Names and Numbers ("ICANN"). The ICANN proceeding involved
the dispute between Nutrisystem.com Inc. and Easthaven over the domain name. It
should be noted that clause 4(k) of the UDRP expressly permits a party to
commence court proceedings regarding the same complaint that is the subject of
the ICANN proceeding provided that any such court proceedings are commenced
either before the ICANN proceeding is commenced or after the ICANN proceeding
is concluded.
9 On October 11, 2000,
Nutrisystem.com Inc. filed a motion for a preliminary injunction in the Pennsylvania action. In
response, Easthaven brought a motion in
writing seeking to dismiss the action for lack of personal jurisdiction and on
the basis of forum non conveniens. Nutrisystem.com Inc. filed responding
material to Easthaven's motion. It appears that, prior to Easthaven's lawyers
receiving the responding material filed by Nutrisystem.com Inc. and having any
opportunity to reply, the Pennsylvania court issued its decision
dismissing the motion of Easthaven. In his decision, Senior Judge Fullham said,
in part:
I agree with plaintiff that the e-mail and telephone call directed
to the plaintiff in Pennsylvania by Easthaven's agent, Comnetwork, which included
an offer to sell the 'sweetsuccess.com' domain name, are sufficient to confer
specific jurisdiction upon this Court pursuant to Pennsylvania's long-arm
statute. Defendants' conduct was expressly aimed at this jurisdiction.
10 Subsequent
to the release of the decision on its motion, Easthaven ceased to participate
in the Pennsylvania action, other than to write to Senior Judge Fullham and
complain about the fact that his decision was released before Easthaven had the
opportunity to reply to the responding material of Nutrisystem.com Inc. On December 11, 2000, Senior
Judge Fullham issued the preliminary injunction sought by Nutrisystem.com Inc.
That preliminary injunction, among other things, restrained Easthaven and
Comnetwork from taking any action to prevent
the transfer of the domain name to Nutrisystem.com Inc.
11 Nutrisystem.com
Inc. sent Senior Judge Fullham's order to Tucows. Tucows responded by
transferring the domain name to Nutrisystem.com Inc. on December 20, 2000. This
action was then commenced on December 21, 2000. In this action, Easthaven
seeks damages against Nutrisystem.com Inc., a declaration that the domain name
belongs to Easthaven, an order requiring Tucows to transfer the domain name to
Easthaven and for other relief. As a consequence of the commenced of this
action, Tucows placed the domain name on "Registrar hold" which has
the effect of preventing the domain name from being used. Once the domain name
was put on "Registrar hold" by Tucows, Easthaven discontinued this
action against Tucows.
12 On December 27, 2000,
Nutrisystem.com Inc. sought a finding of contempt against Easthaven in the Pennsylvania action.
While Senior Judge Fullham observed that it "may well be that the
defendants have violated the spirit of the injunctive order", he could not
find any violation of the actual terms of the order and he therefore dismissed
the motion by Nutrisystem.com Inc.
13 Two
other facts should be noted. One is that Easthaven did not take any steps to
seek a reconsideration of the order dismissing its motion regarding the jurisdiction of the Pennsylvania court nor
did it appeal that order. The other is that on or about November 28, 2000 the
arbitration panel in the ICANN proceeding issued its decision in which it found
against Nutrisystem.com Inc. The arbitrators concluded that Nutrisystem.com
Inc. had failed to establish that Easthaven had registered or used the domain
name in bad faith and therefore declined to order that the domain name be
transferred to Nutrisystem.com Inc..
Analysis
14 I
now turn to the issues raised by this motion. The first issue is whether the
dispute between Easthaven and Nutrisystem.com Inc. is res judicata by
virtue of the determinations made in the Pennsylvania action. The
requirements for a finding of res judicata have recently been reiterated
by the Court of Appeal in Canam Enterprises Inc. v. Coles
(2000), 51 O.R. (3d) 481 (Ont. C.A.) where
Finlayson J.A. said, at p. 487:
The principle of res judicata applies where a judgment
rendered by a court of competent jurisdiction provides a conclusive disposition
of the merits of the case and acts as an absolute bar to any subsequent proceedings
involving the same claim, demand or cause of action. Issue estoppel is one
aspect of res judicata. The oft-cited
requirements of issue estoppel are attributed to Lord Guest in Carl-Zeiss-Stiftung
v. Rayner & Keeler Ltd. (No. 2),
[1967] 1 A.C. 853 at p. 935, [1966]
2 All E.R. 536 (H.L.): (1) that the same question
has been previously decided; (2) that the judicial decision which is said to
create the estoppel was final; and (3) that the parties to the judicial
decision or their privies were the same persons as the parties to the proceedings
in which the estoppel is raised or their privies.
15 In
my view, the finding by the Pennsylvania court that Nutrisystem.com
Inc. was entitled to a preliminary injunction does not constitute that decision
as a "conclusive disposition of the merits of the case" especially
where the injunction was obtained on an unopposed basis. There are no reasons
from the Pennsylvania court in support of the decision and there is, therefore,
no evidence that there was any conclusive determination of the matters in issue
other than the conclusion that, at the point in time of the order, it was
appropriate to grant interim relief to Nutrisystem.com Inc. I do not see,
therefore, that the principle of res judicata can be applied in the
circumstances of this case.
16 The
second issue is whether the action should be dismissed or stayed as an abuse of
process. The principle of abuse of process was also reviewed by the Court of Appeal in Canam
Enterprises Inc. v. Coles, supra.
Again, I quote Mr. Justice Finlayson at p. 490:
Abuse of process is a discretionary principle that is not limited
by any set number of categories. It is an intangible principle that is used to
bar proceedings that are inconsistent with the objectives of public policy.
17 The
scope of the principle of abuse of process is also explained in McIlkenny v.
Chief Constable of the West Midlands
(1981), [1982] A.C. 529 (U.K. H.L.) where Lord
Diplock said, at p. 536:
My Lords, this is a case about abuse of the process of the High
Court. It concerns the inherent power which any court of justice must possess
to prevent misuse of its procedure in a way which, although not inconsistent
with the literal application of its procedural rules, would nonetheless be
manifestly unfair to a party to litigation before it, or would otherwise bring
the administration of justice into disrepute among right-thinking people. The
circumstances in which abuse of process can arise are very varied; those which
give rise to the instant appeal must surely be unique. It would, in my view, be
most unwise if this House were to use this occasion to say anything that might
be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word
discretion) to exercise this salutary power.
18 Again,
I have difficulty in characterizing this action as an abuse of process given
the circumstances in which it arises. Nutrisystem.com Inc. commenced
proceedings in Pennsylvania. That was understandable given that Pennsylvania is its base
of operations. Pennsylvania has, however, no connection to Easthaven. I
must say that I have considerable difficulty in understanding the basis upon
which the Pennsylvania court determined that it had personal
jurisdiction over Easthaven. The concept that a court can obtain personal jurisdiction
over a defendant based on the fact that the defendant's agent sent a single
e-mail into that jurisdiction and then placed a single telephone call into the
jurisdiction is one that results in an assumption of jurisdiction over parties
that is remarkable in its reach.
19 Easthaven
has chosen a different jurisdiction in which to commence its proceeding.
Without commenting on whether Ontario is a proper or appropriate jurisdiction
(a subject to which I will turn shortly), it seems to me that Easthaven had
every bit as much right to choose Ontario for its proceeding as Nutrisystem.com
Inc. did to chose Pennsylvania. Certainly, the mere fact that Easthaven chose a
different jurisdiction to litigate the issue is not one which I would find in these circumstances to "be
manifestly unfair to a party to litigation before it, or would otherwise bring
the administration of justice into disrepute among right-thinking people".
I therefore conclude that this action is not an abuse of process.
20 Finally
there is the issue of forum non conveniens. Nutrisystem.com Inc. submits
that the onus is on Easthaven to establish that Ontario is clearly
a more appropriate forum for the resolution of this dispute than is Pennsylvania. Easthaven
contends that the onus is on Nutrisystem.com Inc. to displace its choice of Ontario as the
forum. I do not consider that it is necessary for me to resolve the question of
onus, given the view that I take as to the proper resolution of the issue, as I
will set out below.
21 I do
believe that it is first necessary to determine whether Ontario is an
appropriate forum before one determines whether it is the more convenient forum
or, put another way, whether there is another forum that is clearly more
convenient. In order to determine if Ontario is an
appropriate forum, it is necessary to determine if there is a real and
substantial connection between Ontario and the subject matter of the
litigation, that is, the ownership of the domain name.
22 The
requirement that there be a real and substantial connection between the subject
matter of an action and the right of a court to assume jurisdiction over it, is
referred to in the decision of the Supreme Court of Canada in Morguard
Investments Ltd. v. De Savoye,
[1990] 3 S.C.R. 1077 (S.C.C.). In the course of
his decision for the court, Mr. Justice La Forest said at p.
1103:
These concerns, however, must be weighed against fairness to the
defendant. I noted earlier that the taking of jurisdiction by a court in one
province and its recognition in another must be viewed as correlatives, and I
added that recognition in other provinces should be dependent on the fact that
the court giving judgment 'properly' or 'appropriately' exercised jurisdiction.
It may meet the demands of order and fairness to recognize a judgment given in
a jurisdiction that had the greatest or at least significant contacts with the
subject-matter of the action. But it hardly accords with principles of order
and fairness to permit a person to sue another in any jurisdiction, without
regard to the contacts that jurisdiction may have to the defendant or the
subject-matter of the suit;...
23 Easthaven
argues that Ontario has a real and substantial connection to the subject matter of
the action because the registrar for the domain name is Tucows and Tucows has its head office in Toronto. Easthaven
builds on that fact to its assertion that a domain name is property; that
property is located where registration of it takes place and, therefore, the
situs of the domain name is Ontario. Nutrisystem.com Inc., on the other
hand, asserts that a domain name is not property but is simply a bundle of
rights like a copyright. It relies in this regard on the decision of the
Supreme Court of Canada in Compo Co. v. Blue Crest Music Inc.
(1979), [1980] 1 S.C.R. 357 (S.C.C.) where Estey
J. said, at pp. 372-373:
Mr. Hughes for the respondent in answer to a question from the
Bench put it very well when he said that copyright law is neither tort law nor
property law in classification, but is statutory law. It neither cuts across
existing rights in property or conduct nor falls between rights and obligations
heretofore existing in the common law. Copyright legislation simply creates
rights and obligations upon the terms and in the circumstances set out in the
statute. This creature of statute has been known to the law of England at least
since the days of Queen Anne when the first copyright statute was passed. It
does not assist the interpretive analysis to import tort concepts. The
legislation speaks for itself and the actions of the appellant must be measured
according to the terms of the statute.
24 I
am inclined to agree with Nutrisystem.com Inc. on this point. It does seem to
me to be difficult to characterize a domain name as property. When I say property,
I refer to either real or personal property. I appreciate that a domain name,
like a copyright or a trademark, could be properly characterized as intangible
property. I adopt, in this regard, the definitions of property and intangible
property from Black's Law Dictionary, 7th edition, as follows:
property -- the right to possess, use, and enjoy a determinate
thing (either a tract of land or a chattel)
intangible property -- property that lacks a physical existence.
25 The
definition of intangible property aptly demonstrates the problem which is
central to the issue here. A domain name lacks a physical existence. The mere
fact that it is registered through a corporation that happens to carry on
business in Toronto does not give the domain name a physical existence in
Ontario. A domain name is still simply a unique identifier for a particular
internet site located on a particular computer. That computer may be located
anywhere in the world and be unrelated to where the domain name is registered.
The fact is that the internet is an entity without conventional geographic
boundaries. As Whitten J. observed in Pro-C Ltd. v. Computer City Inc. ,
[2000] O.J. No. 2823 (Ont. S.C.J.) at para. 1:
The Internet, in reality a network of networks, has created a
whole new territory independent of conventional geography. The conceptual
location of this electronic interactivity available to us through our computers
is oft referred to as 'cyberspace' [note omitted]. Unlike a 'real"
territory with fixed borders, the Internet is constantly growing and at a
phenomenal rate.
26 The
question of how one determines jurisdictional issues when dealing with the
internet or cyberspace is one which has only recently arisen and there is,
consequently, little authority dealing with the issue. Indeed, I was not
provided with any authorities by the parties on the issue -- a fact that is
perhaps not surprising given that there appear to be few authorities which have
expressly dealt with the issue. This point was made by the U.S. Court of
Appeals, Ninth Circuit, in Panavision Intl., L.P. v. Toeppen,
141 F.3d 1316 (U.S. 9th Cir. Cal., 1998) where
Judge Thompson said, at p. 1320:
Applying principles of personal jurisdiction to conduct in
cyberspace is relatively new. 'With this global revolution looming on the
horizon, the development of the law concerning the permissible scope of
personal jurisdiction based on Internet use is in its infant stages. The cases
are scant.' Zippo Mfg. Co. v. Zippo Dot
Com, Inc.,
952 F. Supp. 1119, 1123 (W.D. Pa. 1997).
27 The
decision in Panavision is helpful, however, because it does expressly
address this issue albeit in the context of American procedure and legal
concepts. The court in Panavision observed that personal jurisdiction
could be founded on either general jurisdiction or specific jurisdiction. The
court held that general jurisdiction could be found in such a case only if the
person was domiciled in the jurisdiction of his activities there were
"substantial" or "continuous and systematic". In terms of
specific jurisdiction, the court adopted a three-part test as follows, at p.
1320:
(1) The nonresident defendant must do some act or consummate some
transaction with the forum or perform some act by which he purposefully avails
himself of the privilege of conducting activities in the forum, thereby
invoking the benefits and protections of its laws; (2) the claim must be one
which arises out of or results from the defendant's forum-related activities;
and (3) exercise of jurisdiction must be reasonable.
28 The
court then referred to its earlier decision in Cybersell, Inc. v. Cybersell,
Inc.,
130 F.3d 414 (U.S. C.A. 9th Cir., 1997) and made
the following observation, at p. 1321:
In reaching this conclusion in Cybersell, we carefully
reviewed cases from other circuits regarding how personal jurisdiction should
be exercised in cyberspace. We concluded that no court had ever held that an
Internet advertisement alone is sufficient to subject a party to jurisdiction
in another state. Id. at 418. In each case where personal jurisdiction was
exercised, there had been 'something more' to 'indicate that the defendant
purposefully (albeit electronically) directed his activity in a substantial way
to the forum state'.
29 I
find the analysis of the U.S. Court of Appeals in Panavision to be
helpful in my consideration of whether I should conclude that Ontario does have
jurisdiction in the circumstances of this case. I can easily conclude that
there is no general jurisdiction in this court over the defendant.
Nutrisystem.com Inc. is not domiciled in Ontario nor is there any evidence that
it has engaged in activities here that were substantial or continuous and
systematic.
30 In
terms of whether I could find a basis for jurisdiction under the concept of
specific jurisdiction, I note that none of the three factors set out above are established by the facts of this
case. First, Nutrisystem.com Inc. has not done any act nor consummated any
transaction within Ontario. Second, there being no activities by
Nutrisystem.com Inc. in Ontario, it follows that the claim cannot arise from
such activities. Third, it seems to me in the circumstances of this case it
would be unreasonable for this court to exercise jurisdiction over a
Pennsylvania corporation at the behest of a Babados corporation. Finally, the
sole cogent connection to Ontario is the presence of Tucows as a defendant in
the action but even that basis has since been removed as a consequence of the
plaintiff's decision to discontinue the action against Tucows. If Tucows had
remained in the action, a different conclusion might have resulted although I
will say that it does not seem that Tucows is a necessary party to any
proceeding since it appears that Tucows is prepared to abide by any court
order, regardless of the jurisdiction from which it emanates, that finally
determines the issue of the ownership of the domain name.
31 I
have concluded, therefore, that there is no real and substantial connection
between the remaining parties, or the events giving rise to this claim, and
Ontario. Consequently Ontario has no jurisdiction over the subject matter of
this action and the action should be stayed on that basis pursuant to rule
21.01(3)(a) of the Rules of Civil Procedure.
32 For
the sake of completeness, I will briefly address the issue of forum non conveniens
on the assumption that Ontario could exercise jurisdiction over the subject
matter of the action. The factors to be considered in determining the issue of forum
non conveniens are set out in Eastern Power Ltd. v. Azienda Comunale
Energia & Ambiente
(1999), 178 D.L.R. (4th) 409 (Ont. C.A.)where Mr.
Justice MacPherson listed them as follows:
(i) the location where the contract in dispute was signed;
(ii) the applicable law of the contract;
(iii) the location in which the majority of witnesses reside;
(iv) the location of key witnesses;
(v) the location where the bulk of the evidence will come from;
(vi) the jurisdiction in which the factual matters arose;
(vii) the residence or place of business of the parties, and;
(viii) loss of juridical advantage.
33 None
of these factors either establish Ontario as the convenient forum nor do they
weigh in favour of having the action determined here. While the plaintiff
relies on the fact that its contract with Tucows is subject to the laws of
Ontario, the dispute here is not about that contract. While there is no
evidence before me as to the witnesses that would be called in this action,
since neither Easthaven nor Nutrisystem.com Inc. has any connection to Ontario
it is a reasonable assumption that none of their witnesses are here nor is any
of their evidence. While it could be said that Ontario is the jurisdiction
where the factual matters arose, on the assumption that the fact of the domain
name being registered through Tucows in favour of Easthaven is a central
factual matter, that, by itself, is insufficient to make Ontario the convenient
forum. As I have already noted, neither Easthaven or Nutrisystem.com Inc. have
their place of business here. Finally, there is no loss of juridical advantage
to which Easthaven can point if the action is not determined in Ontario whereas
there may be a loss of juridical advantage to Nutrisystem.com Inc. if the
action is tried here given its reliance on the Cyberpiracy Act of the
United States.
34 Considering
all of these factors, and recognizing the fact that a court in Pennsylvania has already assumed
jurisdiction over this matter, I conclude that, as between Ontario and
Pennsylvania, Pennsylvania would clearly be the more convenient forum for the
determination of the issues raised in this action.
35 Consequently,
I grant an order staying this proceeding. Nutrisystem.com Inc. is entitled to
its costs of the proceeding, including this motion, payable forthwith by
Easthaven. I am prepared to fix the costs of the proceeding on receipt of
proper submissions from the parties in that regard unless the parties can agree
on the amount. Nutrisystem.com Inc. will file its submissions within 10 days of
the date of these reasons and Easthaven will file its responding submissions
within 10 days thereafter. No reply submissions are to be filed without leave.
Motion granted.
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