The Court of Justice of the European Union (ECJ) has ruled in a case that tackles the question of whether it is acceptable for a company with no EU presence to licence its EU trademark rights to an EU-based company purely for the purpose of registering an ‘.eu’ domain name. While a useful decision, one commentator expects that it will have limited impact.

‘.eu’ is the top-level domain (TLD) for the European Union and, as reported previously on WTR, Pie Optiek sprl, an online vendor of spectacles, opticals  and contact lenses, challenged a 2005 registration by the European Registry for Internet Domains of the domain 'lensworld.eu' in the name of a Belgian IP consultancy, Bureau Gevers, on behalf of a US company (Walsh Optical), which operates in the same market as Pie Optiek.

The application was made during a statutory sunrise period which enabled holders of prior rights recognised or established by national and/or Community law or their licensees to register an '.eu' domain early – with Pie Optiek and Walsh Optical each holding prior rights in the term ‘lensworld’. Walsh Optical traded from 'lensworld.com' and, at the time of making the application, did not satisfy the condition for establishment in the European Union. It therefore signed a licence agreement with Bureau Gevers, which enabled the latter to register the domain in its own name (but on behalf of Walsh Optical) and purported to license the LENSWORLD mark to Bureau Gevers for the purposes of undertaking such activity. Pie Optiek contested the registration arguing that Bureau Gevers was not a true licensee of prior rights: arguing that the licence gave Bureau Gevers only a right to register the domain, but not to use the LENSWORLD mark.

The Belgian court sought ECJ clarification on the question of whether Article 12(2) of Regulation 874/2004 must be interpreted as “meaning that, in a situation where the prior right concerned is a trademark right, the words 'licensees of prior rights' may refer to a person who has been authorised by the proprietor of the trademark solely to register, in his own name but on behalf of the licensor, a domain name identical or similar to the trademark, but without being authorised to put the trademark to other uses or to use the sign as a trademark – for example, for the purpose of marketing of goods or services under the trademark?”

Without responding to a second question referred by the Belgian court, this week the ECJ ruled: “The third subparagraph of Article 12(2) of [Regulation 874/2004] laying down public policy rules concerning the implementation and functions of the ‘.eu’ top-level domain and the principles governing registration must be interpreted as meaning that, in a situation where the prior right concerned is a trademark right, the words ‘licensees of prior rights’ do not refer to a person who has been authorised by the proprietor of the trademark concerned solely to register, in his own name but on behalf of that proprietor, a domain name identical or similar to that trademark, but without that person being authorised to use the trademark commercially in a manner consistent with its functions.”

While the decision had been awaited by many in the domain industry, Hogan Lovells’ David Taylor told WTR that the decision may not have a big impact for brand owners as it applies to a very specific set of facts and the ECJ’s interpretation of a particular contract – meaning that it may not be possible to extrapolate many principles of general application.

He expands: “Clearly any US based brand owners who authorised an agent to register a domain name matching their trademark during the sunrise period on the basis of a trademark licence which did not grant the agent the right to commercially exploit such mark (but merely to register the domain name) should be concerned, especially if there are other EU-based entities holding matching trademarks who also applied for the same domain name during the sunrise period. However, for the time being it is not clear how exactly domain names registered in such circumstances will be at risk. The '.eu' registry could potentially decide to cancel such registrations upon its own initiative, although before doing so it would presumably need to ask all ‘licensee’ registrants to demonstrate that their licence agreements were genuine, and reviewing all such agreements would be a significant undertaking.”

Alternatively, domain names registered under such licences may be at risk of being challenged by other sunrise period applicants as in the case in hand. At present, however, Taylor adds: “A matching trademark is no longer necessary to register an '.eu' domain name today, only a presence within the EU, and so it does seem unlikely that this case will have any relevance for '.eu' registrations going forward.”

That said, the decision could be of great interest to one group: new gTLD registry operators, who will have to consider their own sunrise rules as the online expansion rolls out.