Common sense prevails in '.eu' domain name case

European Union
The Court of Justice of the European Union (ECJ) has issued its decision in Internetportal und Marketing GmbH v Schlicht (Case C-569/08, June 3 2010), a reference for a preliminary ruling from Austria's Oberster Gerichtshof.

Austrian company Internetportal und Marketing GmbH (IMG) ran websites and sold products via the Internet. To be eligible to apply to register domain names during the first part of phased registration provided for in Commission Regulation 874/2004 on the implementation of the '.eu' regime, IMG applied to the Swedish trademark registry for registration of a total of 33 generic terms as trademarks, each incorporating the special character ‘&’ before and after each letter. For example, IMG registered the word mark &R&E&I&F&E&N& for safety belts in Class 9 of the Nice Classification (‘Reifen’ meaning ‘tyres’ in German).
 
It seems that IMG never actually planned to use that trademark for safety belts, but it did succeed in registering the domain name ‘reifen.eu’ during the first part of phased registration on the basis of its Swedish mark &R&E&I&F&E&N& by eliminating from it the special character ‘&’, in pursuance of one of the transcription rules set out in Article 11 of Regulation 874/2004. IMG's objective was to run 'reifen.eu' as an internet portal for trading in tyres. IMG played tricks like this in respect of 180 domain names, all consisting of generic terms.

Richard Schlicht was the proprietor of the Benelux word mark REIFEN for "bleaching preparations and other substances for laundry use; cleaning preparations, in particular, cleaning preparations containing nanoparticles for cleaning window surfaces" and "services which facilitate the marketing of such cleaning agents". He tried to register the word mark REIFEN as Community trademark for the same goods and services, planning to market, on a pan-European basis, cleaning products for surfaces akin to window glass. Schlicht's mark was based on the first three letters of the German words ‘Reinigung’ ('cleaning') and ‘Fenster’ ('window').

Schlicht challenged IMG's registration of ‘reifen.eu’ before the Arbitration Court, which upheld his complaint, withdrew the domain name from IMG and transferred it to Schlicht. The court took the view that the character ‘&’ contained within a trademark was not to be eliminated, but had to be rewritten. IMG had clearly sought to circumvent the transcription rule laid down in the second paragraph of Article 11 of the regulation and had thus acted in bad faith. IMG challenged this decision by proceedings under Article 22(13) of the regulation. That action was dismissed as unfounded at first instance. On appeal, IMG sought revision of the decision before the referring court, which stayed proceedings and referred the following questions to the ECJ for a preliminary ruling:
 
"1. Is Article 21(1)(a) of Regulation... 874/2004 to be interpreted as meaning that a right within the meaning of that provision exists:

(a) if, without any intention to use it for goods or services, a trademark is acquired only for the purpose of being able to register in the first phase of phased registration a domain corresponding to a German language generic term?

(b) if the trademark underlying the domain [name] registration and coinciding with a German language generic term deviates from the domain insofar as the trademark contains special characters which were eliminated from the domain name, although the special characters were capable of being rewritten and their elimination has the effect that the domain differs from the trademark in a way which excludes any likelihood of confusion?

2. Is Article 21(1)(a)... to be interpreted as meaning that a legitimate interest exists only in the cases mentioned in Article 21(2)(a) to (c)?

3. [If that question is answered in the negative], does a legitimate interest within the meaning of Article 21(1)(a)... also exist if the domain holder intends to use the domain - coinciding with a German language generic term - for a thematic internet portal?

4. [If Questions 1 and 3 are answered in the affirmative], is Article 21(3)... to be interpreted as meaning that only the circumstances mentioned in points (a) to (e) of that provision are capable of establishing bad faith within the meaning of Article 21(1)(b)...?

5. [If the answer to that question is in the negative], does bad faith within the meaning of Article 21(1)(b)... also exist if a domain was registered in the first phase of phased registration on the basis of a trademark, coinciding with a German language generic term, which the domain holder acquired only for the purpose of being able to register the domain in the first phase of phased registration and thereby to pre-empt other interested parties, including the holders of rights to the mark?"
 
On February 10 2010 Advocate General Trstenjak stated that a combination of factors demonstrated IMG's bad faith (for further details please see "'Crafty' domain name and mark owner chastised in AG opinion").
 
On June 3 the ECJ ruled as follows:
 
"1. Article 21(3)... and the principles governing registration must be interpreted as meaning that bad faith can be established by circumstances other than those listed in Article 21(3)(a) to (e)...

2. In order to assess whether there is conduct in bad faith within the meaning of Article 21(1)(b)..., read in conjunction with Article 21(3)..., the national court must take into consideration all the relevant factors specific to the particular case and, in particular, the conditions under which registration of the trademark was obtained and those under which the '.eu' top level domain name was registered."

With regard to the conditions under which registration of the trademark was obtained, the ECJ held that the national court should take into consideration, in particular:
  • the intention not to use the trademark in the market for which protection was sought;
  • the presentation of the mark;
  • the fact that IMG had registered a large number of other marks corresponding to generic terms; and
  • the fact that IMG had registered the mark shortly before the beginning of phased registration of '.eu' top-level domain names.
With regard to the conditions under which the '.eu' domain name was registered, the ECJ stated that the national court should take into consideration, in particular:
  • the abusive use of special characters or punctuation marks for the purposes of applying the transcription rules laid down in the regulation;
  • registration during the first part of the phased registration on the basis of a mark acquired in circumstances such as those in the main proceedings; and
  • the fact that IMG had applied for registration of a large number of domain names corresponding to generic terms.
This looks like a good result, not only for Schlicht, but for common sense. IMG's ruse was cunning and complied with the letter of the law, but vague and amorphous concepts such as 'bad faith' are invoked precisely because there are businesses that conduct themselves like IMG. The ECJ has done well to turn this case around in only 18 months from receiving the reference - could this be because it had so little of its own case law to consider before reaching its decision?
 
Jeremy Phillips, IP consultant to Olswang LLP, London

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