Purchase of keywords held to constitute trademark use

In Finance Sélection v Capdevielle (October 1 2010), the Court of Appeal of Paris has confirmed that the purchase of keywords does constitute trademark use in the course of trade. However, the reservation of domain names with the mere intention of preventing competitors from registering them cannot be considered trademark use.
Linxea SARL was a French company operating in the insurance sector. David Capdevielle, who established Linxea, was the owner of the French composite trademark LINXEA, registered for, among other things, insurance services.
In 2007 Finance Sélection, a French company also operating in the insurance sector, registered 24 domain names incorporating the trademark LINXEA and purchased the keywords ‘linxea’ and ‘linxeavie’. As a result, Linxea and Capdevielle initiated legal proceedings against Finance Sélection.
The Paris Court of First Instance held that the reservation of the domain names incorporating Linxea's company name and trade name constituted an act of unfair competition, since the only purpose was to hinder Linxea in the reservation of new domain names and in the further development of its internet activities, in particular because the domain names were never used to point to active websites. In addition, by purchasing the keywords ‘linxea’ and ‘linxeavie’ (which have no meaning in French), Finance Sélection tried to divert Linxea's customers for its own benefit. However, the court held that there was no trademark infringement. The absence of use of the domain names excluded any likelihood of confusion, and their mere reservation did not constitute trademark use. Furthermore, the use of a trademarked term as a keyword did not constitute trademark use.
On appeal, the Court of Appeal of Paris partially annulled this decision, stating that the purchase of the keywords ‘linxea’ and ‘linxeavie’ was trademark use in the course of trade, since it was made within the context of a commercial activity. The purpose of the purchase of the keywords was to re-direct Linxea's customers to Finance Sélection's own website offering insurance services. The Court of Appeal, however, agreed with the Court of First Instance that the mere reservation of domain names was not trademark use since there were no goods or services offered for sale. The Court of Appeal also confirmed the Court of First Instance's ruling that the reservation of the domain names and the purchase of keywords constituted acts of unfair competition. The transfer order made by the Court of First Instance was thus unchanged.
Brand owners confronted with domain name registrations incorporating their trademarks that are not being actively used would thus be advised to think twice about bringing court action in France, unless there are potential causes of action other than trademark infringement (eg, unfair competition). Registration and non-use of domain names by cybersquatters who are not active competitors is thus problematic, and recuperation using one of the alternative dispute resolution procedures available in France may be a more suitable course of action than court proceedings.
David Taylor, Laura Morelli and Jane Seager, Hogan Lovells, Paris

Get unlimited access to all WTR content