Pie in the eye: Non-EU companies suffer .EU domain name blow

Pie's legal team were prepared
for every eventuality

Back in March of this year, this Kat confessed that he had failed to spot that there was even a hearing before the Court of Justice of the European Union (CJEU) in a reference for a preliminary ruling from the Brussels Cour d'appel in Case C-376/22 Pie Optiek v Bureau Gevers, European Registry for Internet Domains and that he didn't have a clue what this reference was all about.  Then, like a fairy godmother descending from the skies with her magic wand, the wonderful Séverine Dusollier came to the rescue.

Séverine explained that Bureau Gevers had acted on behalf of a US company in registering its own name for some .eu domain names during the .eu sunrise period (this was a trick used by some non-EU companies to register a .eu domain name under their name or trade mark, since such registration was legally reserved only to EU companies). Another company wanted to invalidate the registration of lensworld.eu since it held a right in the same name, "lensworld". Its main argument was that only EU citizens and companies could register such domain names. The Belgian court of first instance held the registrations valid, considering that Bureau Gevers was a licensee of the US company for that trade mark (licensees based in the European Union being entitled to register .eu domains during the sunrise period). The question whether the notion of "licensee" in the .eu domain name regulation includes a licence given for the sole purpose of registering the trade mark as a domain name -- like some of the best questions -- ended up being referred for a preliminary ruling by the CJEU. These were the questions referred:

"Must Article 12(2) of Commission Regulation ... 874/2004 ... laying down public policy rules concerning the implementation and functions of the .eu Top Level Domain and the principles governing registration be interpreted as meaning that, in a situation where the prior right concerned is a trade mark right, the words 'licensees of prior rights' may refer to a person who has been authorised by the proprietor of the trade mark solely to register, in his own name but on behalf of the licensor, a domain name identical or similar to the trade mark, but without being authorised to put the trade mark to other uses or to use the sign as a trade mark - for example, for the purpose of marketing of goods or services under the trade mark? 

If that question is answered in the affirmative, must Article 21(1)(a) of Commission Regulation ... 874/2004 ... laying down public policy rules concerning the implementation and functions of the .eu Top Level Domain and the principles governing registration be interpreted as meaning that 'rights or legitimate interest' exist even if the 'licensee of prior rights' has obtained registration of the .eu domain name in his own name but on behalf of the proprietor of the trade mark where the latter is not eligible in accordance with Article 4(2)(b) of Regulation ... 733/2002 ... on the implementation of the .eu Top Level Domain?"

At the beginning of May, Advocate General Verica Trstenjak indicated that she was not impressed with this cunning ploy to secure the sunrise domain for a non-European company.  According to the Curia press release,

" ... despite being described as a ‘Licence Agreement’, the agreement entered into by Walsh Optical and Bureau Gevers is not a licence but a contract for the provision of services, as Bureau Gevers was to obtain registration of the domain name ‘lensworld.eu’ for the benefit of Walsh Optical alone – albeit in its own name – in return for payment. It was thus merely required to perform a service. The essential elements of a licence (the licensee’s right to use the trade mark – in this case ‘Lensworld’ – itself on a commercial basis and to defend it vis-à-vis third parties) were absent, however. Bureau Gevers cannot, therefore, be regarded as a licensee eligible to benefit from the sunrise period. 

...  only undertakings and organisations which are themselves established in the EU may request a .eu domain name. The .eu Top Level Domain is intended to provide a clearly identified link with the EU, the associated legal framework, and the European market place. It should enable undertakings, organisations and natural persons within the EU to register in a specific domain which will make this link obvious. 

Against that background, a non-resident undertaking cannot be allowed to circumvent the rules on eligibility by obtaining registration of a .eu domain name by means of a legal construction such as the commissioning of a third party organisation that is established in the European Union and thus an eligible party. 

Since the agreement entered into by Walsh Optical and Bureau Gevers must, in legal terms, be categorised not as a licence agreement but as a contract for the provision of services, and consequently Bureau Gevers was not an eligible party during the sunrise period, EURid must, on its own initiative, revoke the domain name ‘lensworld.eu’ allocated to Bureau Gevers".

This morning the CJEU ruled as follows:. . . . .

39   It follows from this that, in principle, only holders of prior rights having their registered office, central administration, principal place of business, or residence in the European Union are eligible to have one or more domain names registered under the .eu Top Level Domain during that period.

40    It also follows from this that, in so far as the third subparagraph of Article 12(2) of Regulation No 874/2004 widens the circle of eligible persons during the first part of phased registration to include licensees of prior rights, those licensees must satisfy the test of presence in the European Union and, at the same time, the prior right concerned must, at least partly and/or temporarily, be available to them instead of to the holder.

41    It would be contrary to the objectives of Regulations No 733/2002 and No 874/2004 for a holder of a prior right to whom that right is available in its entirety but who does not satisfy the test of presence in the European Union to be allowed to obtain for his own benefit a .eu domain name through a person who satisfies that presence test but to whom that right is not – even partly or temporarily – available. 

The Court went on at paras 42-50 to expound on the purpose, function and operation of the trade mark as made "clear" (ha!) under European law, as well as the scope of a trade mark proprietor's rights in support of their reasoning and the meaning of the terms "licensee" and "licence"

42      These findings are corroborated by acts of European Union law and by the case-law of the Court which, while not explicitly defining the terms ‘licensee’ and ‘licence’ in relation to trade marks, provide guidance as to the scope of those terms.

43      In the first place, Article 8(1) of Directive 89/104 provides that a trade mark may be licensed for some or all of the goods or services for which it is registered. Thus, the European Union legislature envisaged that such a licence might, inter alia, be granted for the use of a trade mark in the marketing of goods or services by the licensee.

44      Under Article 8(2) of Directive 89/104, the proprietor of that trade mark may invoke the rights conferred by that mark against a licensee who contravenes any provision in his licensing contract. It follows from that provision that such clauses can cover, in addition to the duration of that contract, the form in which the trade mark may be used, the scope of the goods or services for which the licence is granted, the territory in which the trade mark may be affixed, or the quality of the goods manufactured or of the services provided by the licensee under that mark. 

45      In that regard, Article 5(1) and (2) of Directive 89/104 states that that proprietor has exclusive rights by virtue of which he is entitled to prevent all third parties not having his consent from using in the course of trade, that is to say, from putting to some commercial use (see, to that effect, Case C‑96/09 P Anheuser-Busch v Budějovický Budvar [2011] ECR I‑0000, paragraph 144), any sign which is identical or similar in relation to certain goods and services and under certain conditions. 

46      The Court has already held that that exclusive right was conferred in order to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfil its function, and that the exercise of that right must therefore be reserved to cases in which a third party’s use of the sign affects, or is liable to affect, the functions of the trade mark. Those functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services, but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising (see Case C‑487/07 L’Oréal and Others [2009] ECR I‑5185, paragraph 58, and Joined Cases C‑236/08 to C‑238/08 Google France and Google [2010] ECR I‑2417, paragraphs 75 and 77). 

47      Consequently, it must be concluded that, by granting a licence, the proprietor of a trade mark confers on the licensee, within the limits set by the clauses of the licensing contract, the right to use that mark for the purposes falling within the area of the exclusive rights conferred by that mark, that is to say, the commercial use of that mark in a manner consistent with its functions, in particular the essential function of guaranteeing to consumers the origin of the goods or services concerned. 

48      In the second place, the Court has had occasion, in Case C‑533/07 Falco Privatstiftung and Rabitsch [2009] ECR I‑3327, to examine the differences between a contract for services and a licence agreement in intellectual property law. It held, in paragraphs 29 and 30 of its judgment in that case, that, whereas the concept of service implies, at the least, that the party who provides the service carries out a particular activity in return for remuneration, it cannot be inferred from a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration that such an activity is involved. 

49      It follows from this that a contract, such as the Agreement at issue in the main proceedings, by which the contractual partner, described as ‘licensee’, undertakes, in return for remuneration, to use reasonable efforts to file an application and obtain a registration for a .eu domain name, is more akin to a contract for services than to a licence agreement. 

50      That is all the more so if such a contract does not confer on that licensee any right to use the trade mark corresponding to that domain name commercially in a manner consistent with its functions, but the licensee acknowledges that the domain name which it registers in accordance with its obligations will remain exclusively owned by the licensor and confirms that it will not use that domain name in any matter inconsistent with the terms of the contract.

And in the final death blow the Court said:

53   In light of the foregoing considerations, the answer to the first question is that the third subparagraph of Article 12(2) of Regulation No 874/2004 must be interpreted as meaning that, in a situation where the prior right concerned is a trade mark right, the words ‘licensees of prior rights’ do not refer to a person who has been authorised by the proprietor of the trade mark concerned solely to register, in his own name but on behalf of that proprietor, a domain name identical or similar to that trade mark, but without that person being authorised to use the trade mark commercially in a manner consistent with its functions.

So non-EU companies - .EU domain names are not for you. The AmeriKat cannot get too excited about this decision which seems pretty predictable given the purpose of the .EU domain names in identifying trading of EU companies within the internal market place. What is interesting (or is it?) are the statements as to what does and does not constitute a trade mark licence and what only be construed as a licence for services as opposed to a licence for use (wholly, partially, temporarily) of a trade mark.