'Crafty' domain name and mark owner chastised in AG opinion

European Union
Advocate General Trstenjak has issued her opinion in Internetportal und Marketing GmbH v Schlicht (Case C-569/08, February 10 2010).  
 
Article 11 of Commission Regulation 874/2004 on the implementation of the '.eu' regime provides as follows:
 
"As far as the registration of complete names is concerned, where such names comprise a space between the textual or word elements, identicality shall be deemed to exist between such complete names and the same names written with a hyphen between the word elements or combined in one word in the domain name applied for.

Where the name for which prior rights are claimed contains special characters, spaces or punctuations, these shall be eliminated entirely from the corresponding domain name, replaced with hyphens, or, if possible, rewritten.
 
Special character and punctuations, as referred to in the second paragraph, shall include the following:
 
~ @ # $ % ^ & * ( ) + = { } [ ] \ /:; ‘, .?"
 
In the present case, Internetportal und Marketing GmbH (IMG) sought to register a sizeable number of '.eu' domain names. To be eligible to apply to register '.eu' domain names during the first phase of registration, IMG registered 33 German generic terms as Swedish trademarks. Each of these incorporated an ampersand (&) before and after each letter, or between individual letters. One such registration was for the word mark &R&E&I&F&E&N& for goods in Class 9 of the Nice Classification (safety belts). IMG never intended to use that trademark for safety belts on the assumption that, after registration of that mark as a '.eu' domain name, application of the ‘transcription rules’ would cause the ‘&’ characters to be eliminated, thus leaving behind the German word ‘Reifen’ (‘tyres’) - which, as a generic term, should never be protected under trademark law.

During the first phase of registration, the domain 'reifen.eu' was thus registered in IMG's name on the basis of its Swedish trademark &R&E&I&F&E&N&. IMG applied to register no fewer than 180 domain names consisting of generic terms, proposing to use the domain 'reifen.eu' to operate an internet portal for trading in tyres. However, by the time this dispute was referred to the ECJ for a preliminary ruling, IMG had not yet taken any noteworthy preparatory steps for its construction.

When it registered the domain in question, IMG was unaware of the existence of Richard Schlicht, proprietor of the Benelux word mark REIFEN for goods in Class 3 (including "bleaching preparations") and services in Class 35 ("services which facilitate the marketing of such cleaning agents"). Schlicht subsequently secured Community trademark protection.

Before the Czech Arbitration Court (provider of alternative dispute resolution for the ‘.eu’ domain), Schlicht successfully challenged IMG's domain name registration. The court, applying its own case law, considered that the character ‘&’ contained within a mark should not be eliminated but rewritten. In its view, IMG had sought to manipulate the system and was acting in bad faith.
 
Following an outbreak of litigation in Austria, IMG brought a special appeal on a point of law before the Oberster Gerichtshof, which stayed the 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 registration and coinciding with a German language generic term deviates from the domain in so far as the trademark contains special characters which were eliminated from the domain name, even though 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) of Regulation… 874/2004 to be interpreted as meaning that a legitimate interest exists only in the cases mentioned in Article 21(2)(a) to (c)?

If that question is answered in the negative:

3. Does a legitimate interest within the meaning of Article 21(1)(a) of Regulation… 874/2004 exist if the domain holder intends to use the domain - coinciding with a German language generic term - for a thematic internet portal?

If questions 1 and 3 are answered in the affirmative:

4. Is Article 21(3) of Regulation… 874/2004 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) of Regulation… 874/2004?
 
If that question is answered in the negative:

5. Does bad faith within the meaning of Article 21(1)(b) of Regulation… 874/2004 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?’
 
The advocate general stated that Article 21(1)(a) should be interpreted as meaning that the proprietor of a national trademark has a right within the meaning of that provision as long as that mark has not been cancelled, on grounds of bad faith or other grounds, by the competent authorities or courts in accordance with national law. That right existed even if the mark which provides the basis for the domain registration differed from the domain name following the elimination of the special characters contained in the mark. It was for the national court to determine whether those special characters could have been rewritten.
 
Further, the advocate general stated as follows:
 
"For the purposes of determining whether conduct can be categorized as being in bad faith within the meaning of Article 21(1)(b) of Regulation 874/2004, read in conjunction with Article 21(3) thereof, the situations specified in which are not exhaustive, the national court is required to take into account all the relevant factors specific to the case before it, including:
  • the circumstances in which the trademark was acquired, in particular the intention not to use it on the market for which protection was sought;
  • the fact that the trademark is a German language generic name; and
  • the possibly abusive use of the ‘&’ character in order to influence the application of the transcription rules under Article 11 of Regulation 874/2004,
in so far as the sole purpose of the registration is to be able to request registration of the domain name corresponding to the trademark in the first phase of domain name registration..."
 
Finally, the advocate general noted that even though it was difficult to deny that IMG had a right within the meaning of Article 21(1)(a), a combination of factors could nevertheless demonstrate its bad faith. IMG's conduct prevented other interested parties from obtaining a '.eu' domain name in accordance with the 'first come, first served' rule. The advocate general concluded that:
 
"[t]o accept that such conduct is a ‘stroke of genius’ would mean that the race will no longer go to the fastest but to the craftiest - whoever finds the best shortcut - which would be contrary to the very spirit of Regulation 874/2004."
 
The opinion shows that, in order to obtain a '.eu' domain name, being 'crafty' is not sufficient.
 
Jeremy Phillips, IP consultant to Olswang LLP, London

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