ECJ endorses AG opinion on preventing sham licensees applying for '.eu' domain names

In Pie Optiek v Bureau Gevers (Case C-376/11, July 19 2012), following a reference for a preliminary ruling by the Belgian Court of Appeal, the Court of Justice of the European Union (ECJ) has endorsed the opinion of Advocate General Trstenjak (May 3 2012) concerning the registration of '.eu' domain names by licensees of prior rights.

The dispute involved Pie Optiek SPRL, an online vendor of optical goods based in Belgium, and Bureau Gevers, a Belgian IP consultancy, who had been appointed by a US competitor of Pie Optiek (pursuant to a purported licence of the US competitor’s trademark) to register an '.eu' domain name on behalf of the US competitor during a sunrise period during which only trademark owners or their licensees with a presence in the European Union could register '.eu' domain names.

The two questions referred to the ECJ were:

"1) Must Article 12(2) of [Regulation 874/2004] be interpreted as meaning that, in a situation where a prior right is a trademark right, the words ‘licensees of prior rights’ may refer to a person who has been authorised by the trademark owner solely to register, in his own name but on behalf of the licensor, a domain identical to or similar to the mark, but without being authorised to put the trademark to other uses or to use the sign as a trademark, eg, to market goods?

2) If the answer to the first question is yes, must Article 21(1)(a) of the regulation be interpreted as meaning that 'rights or legitimate interest' exist even if the ‘licensee of prior rights’ has obtained registration of the '.eu' domain in his own name but on behalf of the owner of the trademark where the latter is not eligible?"

The ECJ examined the first question, but not the second.

In line with the earlier opinion, the ECJ held that the term 'licensee of prior rights' does not refer to a person, authorised by a trademark owner solely to register, in his name but on behalf of the owner, a domain name identical or similar to the mark, without being authorised to use that mark commercially.

The ECJ’s analysis can be summarised as follows:

• Regulation 874/2004 does not define the word 'licensee' and does not refer to any definition in the law of the member states. Therefore, it must be given independent and uniform interpretation throughout the European Union taking into account the objective of that law.
• Regulation 874/2004 implements Regulation 733/2002 and implementing legislation must be interpreted in a manner consistent with the basic regulation.
• The objective of Regulation 733/2002 (as stated in the recitals) is to provide a “clearly identified link” with the European Union, its legal framework and marketplace, and enable undertakings within the European Union to register in a specific domain which will make this link obvious. In light of that objective, the operative provisions of the regulations provide that only those who have a presence in the European Union are eligible to register '.eu' domain names and only holders of prior EU rights are eligible to register such domains.
• Regulation 874/2004 expands the definition of “holders of prior rights” to include ‘licensees of prior rights’. Such licensees must also satisfy the 'presence in the European Union' test and have the prior right available to them.
• Where the relevant prior right is a trademark, it is common practice to make the trademark available to the licensee by way of a licence, but a true licence should grant the commercial use of the mark in line with its function as a badge of origin.
• The purported ‘licence agreement’ between Bureau Gevers and the US competitor imposed a 'reasonable efforts' obligation on Bureau Gevers to file an application and obtain a registration of the '.eu' domain name. The licence did not grant Bureau Gevers the right to use the mark commercially in line with its function as a badge of origin. Consequently, the agreement was not a true trademark licence but akin to a contract for services, and Bureau Gevers could not be considered as a licensee in the manner envisaged by Regulation 874/2004.

This decision highlights the importance of bearing in mind the underlying objectives of EU legislation (typically set out in the recitals) when considering what might be the court’s interpretation of a term which is not defined in the operative provisions. The relevance for the future with specific regard to '.eu' domain names is limited, because the sunrise period has been over for a long time; however, it might be relevant to practitioners or applicants considering possible means of circumventing rules in relation to future generic top-level domains.

Ellie Forrest-Charde and Chris McLeod, Squire Sanders (UK) LLP, London