On the 16th of May 2022, the Council of State (Conseil d’Etat) handed down a decision in its 7th and 2nd chambers following the appeal lodged by the company ‘Culturespaces’ regarding the interim order issued on December 13th, 2021, by the Nîmes Administrative Court.
Culturespaces operated under a public service delegation, for the touristic and cultural exploitation of several sites in the city of Nîmes: the Nîmes arenas, the Maison Carrée and the Magne Tower. In order to do this, Culturespaces registered domain names for these sites belonging to the city of Nîmes.
At the end of the public service concession agreement, the company refused to return the intangible assets to the city of Nîmes. The city then referred the matter to the interim proceedings judge who ruled in favour of Culturespaces.
The Council of State ruled that the intangible assets, notably the domain names and social network content, were necessary for the operation of the public service and that they were assets likely to be qualified as assets returned from the concession.
The Council of State therefore ordered Culturespaces to return all the intangible assets necessary for the operation of the public service to the municipality of Nîmes.
This agreement will set out AFNIC‘s work priorities for the years to come. One of the main aims is the development of the <.fr>.
The growth of the <.fr> will be achieved through concrete actions such as helping companies in their digital transition. In fact, AFNIC has implemented a support system to enable SMEs and VSEs to develop their presence online.
In this Convention, AFNIC has committed to investing 2% of its turnover in order to apply tariff cuts as well as to simplify registration interfaces and to organise a faster and more efficient data management system.
AFNIC has also committed to investing 10% of its turnover in innovation to consolidate its social and environmental responsibility and is committed to achieve carbon neutrality for the <.fr>.
AFNIC and the French State wish to continue the work that has already been started with the aim of developing and strengthening the <.fr>.
The Palestinian territory is the subject of much controversy, however, trademark rights are not as insignificant as they might seem.
There are several reasons why the Palestinian market should be considered in a Middle East brand protection strategy. In fact, despite the separation of the Israeli and Palestinian legal systems, it is almost impossible to separate the two markets into two jurisdictions.
How to protect your trademark rights in Palestine?
There are a number of elements that illustrate the obvious geographical and commercial links that confirm that, in order to ensure full protection of trademark rights in the Middle East, it is essential to register trademarks not only in Israel, but also in Palestine. For Palestine, it is necessary to register trademarks in both the West Bank and Gaza, which have separate trademark jurisdictions. Naturally, Israeli and Palestinian jurisdictions require separate registration in each territory in order to fully protect and enforce trademark rights. However, obtaining protection in Israel is far from providing full protection if the mark has not been registered in Palestine. The opposite is also true.
So, what are the reasons for registering trademarks in both Israel and Palestine?
This is due to the geographical situation between Israel and Palestine. The economic reality is clear: 80% of Palestine’s foreign trade is with Israel.
This necessarily has an impact on the circulation of goods and services in the region. It is therefore advisable to register trademarks in both Israel and Palestine if you want to protect your trademark in the Middl East.
Thus, given the obvious geographical and commercial links between the two states, it seems crucial to have valid registrations in three different jurisdictions, namely Israel, the West Bank and the Gaza Strip, in order to obtain trademark rights in the region and ensure full protection.
Off-Chain NFTs are the most common NFTs, as they are cheaper, but the legal protection behind them is much weaker and the risks associated with ownership of the NFT much greater.
For some time now, companies have been launching NFT collections, a move that follows on from their social media presence, in order to establish a full online presence beyond the traditional website operation. However, establishing a Web3 presence is not as clear-cut as it sounds, and brands may take legal risks especially, not knowing what they are actually offering for sale on the blockchain. Thus, legal advice by trademark attorneys and lawyers specialised in NFTs should not be considered secondary, as it helps to avoid unpleasant surprises as to what is being offered for sale, once the NFT is presented on a platform.
What are NFTs ?
NFTs, or Non-Fungible Tokens, are tokens with a unique identifier and metadata operating on a blockchain. There are two types of NFT, the main difference being the nature of their smart contract.
On-chain NFTs are tokens written entirely on the blockchain: both the metadata and the accompanying smart contract exist on the blockchain. It is said that NFTs live and breathe on the blockchain.
On the other side, off-chain NFTs are not stored on the blockchain. Several options then exist to store the NFT off-chain, such as storage on a cloud (Google Cloud, iCloud, etc.), or storage on a centralized hardware server. Cloud storage is the simplest and cheapest, while physical servers are expensive to purchase, operate and maintain. The most common storage method, by far, is IPFS storage. IPFS is a more secure method of data storage, using a distributed and decentralised peer-to-peer storage network. The NFT thus includes, for an artwork for example, information about the title of the work, the original author, etc., as well as a URL link to a location on the IPFS system where the artwork is usually stored.
The hidden legal risks behind the use of Off-Chain NFTs?
There is an obvious reason behind the preferential use of Off-Chain NFTs over On-Chain NFTs. In fact, a file bigger than a few bytes cannot be kept on the blockchain itself since storing even a small image file would cost tens of thousands of dollars in gas. Thus, 95% of NFTs in circulation are Off-Chains NFTs, which are not integrated on the blockchain: only their Smart Contract is. In this contract, the location of the asset will refer to an address external to the blockchain, but this location of the asset in an external server is not without consequences.
There are truly legal risks attached to such use, which are not obvious to the general public. It is therefore necessary to seek the advice of a legal expert, trademark attorney or lawyers specialised in NFTs to understand the consequences of creating an Off-Chain NFT.
Firstly, the Cloud remains a fairly hackable object, and centralised off-chain servers can be subject to technical malfunction quite easily. Thus, if there is a disruption to the Off-Chain storage network, the link provided by the Smart Contract written into the blockchain is useless. Off-Chain NFTs therefore leave the door open for the asset to disappear temporarily. In the same sense, storage on a Cloud is also host-dependent, and it is not possible to have full control over what is stored. In the same way, the asset can die, if for example, a brand that hosts the asset outside the Blockchain on a hosting outside the chain, stops paying for that hosting.
We can see that the promise of NFTs of the object’s perennitý over time and its in principle unfalsifiable and non-fungible nature which make it rare, as it is part of a very secure technology is compromised. In fact, if the digital asset is not encrypted on the blockchain it can easily be replaced by another file or worse disappear, which is impossible if the digital object lives completely on the Blockchain.
Finally, from a legal point of view, as long as the NFT is physically hosted on IFPS or on a traditional cloud, the owner of the NFT in reality only owns the address where the asset is located and not the asset itself. More simply, since only the address is mined on the blockchain, it is the only object that really belongs to the NFT buyer. The buyer can then only claim ownership of the GPS coordinates of the asset’s location.
In conclusion, a brand wishing to extend its presence to Web 3 should seek legal advice from a trademark attorney or an attorney specialised in NFTs on the intrinsic quality of both the NFT and the Smart Contract they issue, and take all precautions to protect the assets they own, to avoid these objects disappearing or worse, being modified, due to a lack of precaution.
What are the legal issues involved in using Smart Contracts to issue NFTs?
Smart contracts are contracts stored in a blockchain that are automatically executed when predetermined terms and conditions are met. They are used to automatically execute an agreement so that all participants are certain of the outcome, without the intervention of an intermediary or loss of time. In particular, they are used to generate NFTs on the blockchain, or point to locations where NFTs are stored.
In the context of NFTs, these Smart Contracts contain the metadata of these assets, such as its unique characteristics, the location where the digital copy is stored (On-Chain or Off-Chain), the description of the NFT, and much more. But one point should be kept in mind. In fact, although this technology could represent a real progress in many areas, from a strictly legal point of view, smart contracts are not contracts. They are simply supports for the classic contract, and represent its terms of execution. So the programmer who drafts a smart contract will need legal know-how to support him in drafting certain clauses and inserting mandatory clauses, as well as clauses granting trademark rights in the event of future transfer of the trademark. Simply put, a smart contract will have no legal value if and only if it is not accompanied by a classic contract concluded in due form.
It will therefore be important for a brand to establish whether it is feasible to move towards On-Chain NFTs, which although more expensive, offer the owner full protection on the Blockchain with the certificate and the object itself permanently engraved on the chain and the guarantee of a much more substantial title. The right to claim ownership must cover the asset in question to the fullest extent possible, and a brand that establishes an Off-Chain NFT without seeking legal advice may find itself facing problems as to the actual ownership of the NFT held.
In any case, the advice of a trademark attorney or an attorney specialised in NFTs on the drafting of the smart contract and their valuable assistance even before launching an NFT collection should not be overlooked to avoid unpleasant surprises.
Just like the Internet at the end of the last century, NFT domain names have seemed to gain popularity among the general public as many people are considering investing in various blockchains. As a new tech tool, the fees that accompany the registration of a domain name on certain platforms can pose a major obstacle for any project to register a Web3.0 domain name. A sudden drop in Ethereum ‘Gas’ fees on the first weekend of July illustrated the public’s enthusiasm for Web 3.0.
What is the place of domain names in Web 3.0?
Transactions on blockchains are now seen as a potential solution to the middlemen of common real-world transactions, who take a commission for every money transfer. NFT marketplaces such as Opensea have recently become more popular for places to trade and sell NFT domain names.
Transactions on Web 3.0 still have a cost. In fact, miners are being paid for their role in validating transactions that circulate within the blockchain. This validation process requires solving complex mathematical problems, and the miner who solves it first is rewarded with a remuneration based on the transaction fees (called Gas fee) paid by the users responsible for the transaction. Thus, before an NFT domain name can be used, first it must be transferred to the blockchain and it is during this transfer that the transaction fee must be paid to the blockchain operator.
A long-standing problem with the Ethereum ecosystem, and its main obstacle to attracting the general public, is often attributed to extremely high transaction fees. Notably, in January 2021, Ethereum’s Gas fees jumped due to the enthusiasm around NFTs and decentralised finance. For example, between January 2021 and May 2022, the average Gas cost required by Ethereum was around $40 per transaction, with a peak of $196 recorded on May 1st, 2022. As a result, many users had chosen to abandon Ethereum in favour of blockchains with significantly lower fees such as Solana or Avalanche.
What about the latest notable events on the Ethereum blockchain?
In the first week of July, an unexpected phenomenon was observed on the Ethereum platform: the dashboard of the Ethereum Name Service, the decentralised autonomous organisation that runs the service, showed an increase of almost 200% in .eth domain name registrations between the 2nd and 3rd of July. The following week, the ENS platform recorded more than 100,000 registrations. This astonishing increase illustrates the growing interest of the general public in Web 3.0 registrations. The ENS platform had already been gaining popularity since April, when holders of certain categories of domain names started to form clubs. One example is the formation of the 10K club for owners of ENS domains consisting of numbers between 0 and 9999. As a result, in May, a record was reached with 365,652 new Ethereum domain name registrations, and the 122,000 new registrations in June brought in some $6.6 million.
Alongside this surge in domain name registrations, the second largest sale on the ENS platform was recorded on July 3rd, for the domain name “000.eth” which sold for ETH 300 (around $320,000 at the time of sale). These events had a strong impact as they rocketed Ethereum to the top of the seven-day NFT sales chart on news tracking site Dapp Radar. In addition, social media interactions related to ENS also spiked. According to the crypto-currency social tracking platform, Lunar Crush, engagements with the keyword increased by 108.4% in seven days.
So, what is the explanation for the surge in domain name registrations on the platform?
Just like on Web2.0, owners of “.eth” domain names have to pay a fee on a regular basis, and in addition to this fee, they also pay a Gas fee. So, naturally, when the latter fall, the number of new registrations increases. Experts have claimed that the explosion in demand for ENS domain names is mainly due to the drastic drop in Gas fees seen over the weekend of July 2nd and 3rd, whose value wavered between from $1.67 to $1.97,the lowest levels in over a year.
The question then arises as to the explanation behind this sudden drop in transaction fees on the Ethereum network. The answer is mainly related to the equally large drop in daily transactions. In fact, according to Cointelegraph, daily NFT sales also reached their lowest level in over a year on Saturday. Globally, the NFT ecosystem recorded its worst performance during the month of June 2022, with an overall number of daily sales around 20,000 for an estimated value of $13.8 million.
Any events to watch for regarding the Ethereum blockchain?
The Merge is the name given to a highly anticipated event on the Ethereum blockchain. In fact, on September 19th, the Proof of Work (PoW) model will be replaced by the Proof of Stake, (PoS) which will then become the only way to verify transactions on the Ethereum protocol. The Merge will be one of the most important steps in the history of blockchain technology, because once it is operational, this new process will reduce the energy consumption of node validation operations by 99%, going against one of the main criticisms it has received for being environmentally unfriendly.
In fact, these two main consensus protocols dominate blockchains and ensure synchronisation between all nodes in the network. With Proof-of-Work, miners have to solve a complex mathematical problem requiring significant computing power in order to confirm a transaction. In contrast, Proof-of-Stake is a much less expensive consensus, requiring no energy expenditure and no special hardware. Validating a block simply involves nodes pledging a large amount of cryptocurrency. The larger the amount, the more likely a node will be chosen to update a blockchain’s registry.
Ultimately, this change in the process of validating transactions on the platform could have a significant positive effect on Gas fees. If Gas fees continue to fall, it is likely that the general public will be more inclined to develop a Web 3.0 business and register domain names on blockchains, particularly to extend the protection of various brands.
To find out more about branding processes in Web3 and the issues surrounding this mechanism click here !
As the world becomes progressively dependent on technology, the increasing intertwinement of intellectual property and compliance is evident in the business setting. In the face of unprecedented yet inevitable legal transformations, it is crucial to identify the risks and solutions associated with compliance in both the virtual and real intellectual property world.
How are intellectual propertyand compliance related?
Compliance describes the practice of acting in accordance with a set of laws, regulations, global standards and specific internal policies. As regulatory compliance protects and directs a business’s resources and reputation, intellectual property has become an integral part of the assets worthy of protection. A 11.7% increase in trademark filings at the which is a strong testament to the growing significance of intellectual property. Furthermore, with the digitalisation of business models and assets, these codes of conduct should encompass intellectual property protection as external threats such as counterfeiting and cyber-attacks become ever-more rampant. It was estimated that the value of counterfeiting goods amounted to 2.5% of world trade in 2019, along with a 22% surge in domain name disputes in 2021. According to the European Union’s Cybersecurity Agency (Enisa), the number of cyber-attacks against critical sectors and institutions in Europe has doubled (304 incidents recorded) since the beginning of the pandemic.
The interconnection between the two fields had not always been apparent. Initially, the interactions between intellectual property and compliance departments were rather limited. It was common practice to operate each department separately and to focus on matters concerning their own subject. This isolation was later broken by the Vinci case, which led the way to radical changes in the co-working of the two sectors.
The Vinci case concerned the domain name ‘vinci.group’ for the French concessions and construction company Vinci and another fraudulent domain name which was registered. Although Vinci’s monitoring services detected this fraudulent domain name, due to it being inactive for over three weeks, they did not pursue any actions against it. Once it became active, it was associated with a fake website leading Vinci’s customers to believe it was legitimate. Using a fake email address, the fraudsters sent press releases alerting the customers that the performance and revision of the previous year’s account releases were subject to inaccuracy and fraud. As a result, Vinci’s share price fell by 18%.
This highlights how a company’s reputation and financial well-being can be damaged due to the fraudulent use of a domain name. Since then, market regulators have set up guidelines to mitigate domain name risks to avoid similar situations. The Vinci case illustrates the importance of compliance and intellectual property departments working hand in hand – the ultimate goal being efficient risk management. Such a joint effort facilitates the implementation of preventive
measures and timely retaliation to suspected intellectual property infringements.
As such, companies, regardless of their sectors of expertise, should put in place a compliance program for the identification, protection and maintenance of their intellectual property rights. Such a program should be fully comprehensive, taking into consideration all potential risks, especially those concerning intellectual property. As intellectual property takes on increasing importance, it constitutes substantially heightened risks related to other crimes as well. For instance, money laundering is a common consequence of a primary domain name offence. Criminals camouflage their illicit proceeds through the violation of intellectual property ownership by exploiting its commercially viable and flexible nature. While intangible assets have to be appraised to be accounted for as company capital, the assessments of their economic value are often arbitrary. This creates a loophole which enables infringers to transfer to façade companies abroad to round trip dirty money back to its source masqueraded as legitimate earnings. In this sense, the prevention of the primary intellectual property infringement could likely limit the manifestation of any further illegal activity.
Who is at risk?
Banks, particularly online banking, and insurance firms are most likely to be exposed to such risks. As a matter of fact, any industry that engages in e-commerce can be at risk on Web 2.0 and 3.0. As for counterfeiting, the luxury industry falls victim to intellectual property infringement. Recently, the EUI jointly published a report on intellectual property crime & threat assessment, in which a study estimated that 5.8% of all EU imports in 2019 were pirated and counterfeited goods. These luxury fashion brand counterfeits were worth around EUR 119 billion.
Apart from major corporates, everybody is exposed to such risks as well. The degree of exposure depends on different factors, such as the nature of underlying activities, the size of the organisation, the geographical location and the jurisdictions applied. In a nutshell, companies should direct their efforts towards properly comprehending their intellectual propertyrisks and include them in their compliance setup. It is vital for companies’ intellectual property departments to take the lead and show the compliance departments the risks related to intellectual property, specifically those on the internet.
Impact of Web 3.0 on Intellectual Property and Compliance
Over the past few years, the Web 3.0 decentralisation revolution has emerged from obscurity and gained growing acceptance even in the most conservative of practices. One notable example is the enforcement of contracts. Powered by blockchain technology, a smart contract automatically implements itself once the predetermined conditions come to fruition. The irreversible and autonomous nature of smart contracts could translate to vast applications in the realms of intellectual property. Rather than documenting intellectual property registries in the traditional database, the entire life cycle of an intellectual property right could be recorded effectively in a distributed, immutable ledger. It displays clear, authoritative evidence of the use of intellectual property rights and creatorship, which often comes in handy whenever disputes or revocation proceedings arise. These ledgers also allow for provenance authentication, with which consumers and businesses alike could verify genuine products and distinguish them from counterfeits.
However, as with many new technologies, these benefits do come with risks. The resilience of a smart contract heavily depends upon the coding prowess of its developer and whether due diligence was carried out for these protocols. In 2021, one of the most high-profile heists was pulled off when hackers stole $613 million from Poly Network by exploiting a vulnerability in their smart contracts. As blockchains keep transactions out of reach of governments and courts, the distribution of unauthorized, copyrighted materials to encrypted servers could go untraced and unpunished. Even if these illegalities come to light, an injunction would hardly be enforceable since these programs exist on thousands of machines dispersed everywhere around the world.
Despite the rapidly increasing reliance on Web 3.0 technologies, legislations have yet to stipulate a solid legal framework which provides legal certainty in commercial activities. With traditional intermediaries obliterated, there has to be sufficient legal supervision to ensure the compliance of agreements as in conventional contracts. For this reason, a solid technical team is needed in order to work with the legal department to draft a comprehensive compliance plan. An intellectual property compliance program could effectively prevent commitments to activities which undermine or conflict the company’s intellectual property interests. The construction of a compliance framework around Web 3.0 could be complex, yet also immensely valuable.
Additionally, a three-step process is recommended for the protection and enforcement of intellectual property rights for companies; (I) develop audits (II) carry out prior rights searches and (III) put in place a solid monitoringsystem. This includes the monitoring of blockchain domain names and virtual lands in the metaverse and marketplaces.
Though Web 3.0 could appear challenging and intimidating, one major advantage of blockchain is the traceability of all transactions. Take blockchain domain names as an example. Though it is hard to find the holder of a fraudulent domain name, it is not impossible. Fraudulent domain names can be tracked down through the same blockchain, and a ‘cease and desist’ letter can be sent to try to arrange a transfer, withdrawal or purchase of the blockchain domain.
Web 3.0: a challenge or an opportunity?
It’s both. Web 3.0 offers powerful functionalities relevant to intellectual property rights, for example, the traceability of artistic owners through blockchain technology. Decentralisation is definitely the future of law in terms of ownership rights over virtual assets and personal data, and its protection. Regulation is still needed in order to provide similar protection as in the real world. Web 3.0 should be seen as a double-edged sword where users cannot seek its benefits without being ready to meet its risks and challenges.
Hence, I recommend a three-step strategy to avoid situations like the one encountered in the Vinci case.
First, to conduct prior research among domain names to get an idea of the current situation: identify the legitimate domain names and the fraudulent domain names.
Second, to conduct an audit. The audit allows us to set up the right strategy tailored to the company’s needs. We can then assess the risks and map them out for companies. We also help to put in place a crisis management policy to tackle fake news.
Third, to set up a daily monitoring on domain names and worldwide. This is important because it helps us to identify immediately relevant domain names, analyse them, and assess the level of risk to plan out the right actions.
Finally, I advise a collaboration between intellectual property and compliance departments to tackle the risks. For example, by identifying the key people to contact and having a process in place to secure proofs of a fraud or infringement.
We can also take immediate actions. How do we do so? We start with a technical IP/IT study of the situation. We then set up the right strategy. For example, a request of disclosure of registrant data, blocking a domain, taking down a website and removing e-mail servers. If the domain name is of interest to the company, we initiate action to obtain the amicable transfer of the domain name or we file ADR complaints such as UDRP.
At Dreyfus.io, our experts help with any possible infringements and disputes related to your copyrights, trademarks and NFT projects. Our team would be happy to assist you and answer your questions.
(WIPO, Arbitration and Mediation Center, Case No. D2022-0770, 11 May 2022, BH Vigny, BH Hotels, BH Balzac v. Paulo Ferreira, MBI Holdings)
In the decision held on May 11th, 2022, companies BH Vigny, BH Hotels, BH Balzac, all belonging to the same group, saw their UDRP complaint get rejected for lack of precision on an ongoing legal procedure.
The dispute involved five different domain names, namely <amarantebeaumanoir.com>, <amarantecannes.com>, <amarantechampselysees.com>, <hotelbalzac.com> and <hoteldevigny.com>, each of which referred to a French luxury hotel. The domain names were registered by Respondent, MBI Holdings. The evidence in the case shows that the director of MBI Holdings was also the director of two other entities: JJW Luxury Hotels and Amarante.
The domain names were registered while JJW Luxury Hotels and Amarante still owned the hotels in question. JJW Luxury Hotels owned the Hotel Balzac and the Hotel de Vigny, while Amarante managed the Amarante Champs-Elysées, Amarante Beau Manoir and Amarante Cannes.
The case is complex as it takes place in the context of a takeover between JJW Luxury Hotels and Amarante and Complainants. Several hotels in France had been acquired by the Complainants, including the above-mentioned hotels. Shortly before the UDRP complaint was filed, the three Complainants, members of the same group, had initiated not only a business transfer agreement, but also a trademark assignment agreement with the Respondent. According to the Complainants, the effect of this agreement was to grant full ownership of the trademarks and domain names associated with the aforementioned hotels.
However, Respondent argued that, contrary to the Complainants’ assertion, the transfer of the businesses and associated trademarks had not yet become permanent. In fact, a dispute was pending before the French court. Similarly, it appeared that certain contractual provisions provided for the retention of certain company funds in an escrow account. These provisions therefore suggested that the transfer of assets were not complete, final or irreversible.
Paragraph 4(a) of the UDRP requires three elements to be met in order to claim the transfer of a disputed domain name: similarity of the domain name to a prior right of the Complainant, evidence of the absence of a right or legitimate interest of the domain name’s current holder, and evidence of bad faith registration and use of the domain name by the current holder.
The first element is in default, according to the Expert, who however moderates his statement. The question of ownership of rights is raised, as the Respondent claims that the rights to trademarks and domain names have not yet been validly transferred. The Expert asserts that the evidence provided by the Complainants is not sufficient in order to determine whether the transfer of ownership is actually effective. In fact, Complainants did not provide any information on the ongoing legal proceedings, nor did he mention them in his complaint.
Understandably, the second requirement of paragraph 4(a) is not specifically discussed by the Expert, as it is essentially linked to the first. If Complainants are not able to demonstrate that the transfer of rights has taken place, they cannot prove that the Respondent, who previously held the rights, no longer does so.
Finally, the third requirement also poses a challenge for the Expert. In light of the context, it seems unlikely that the domain names were registered in bad faith, as the Respondent appeared to demonstrate a legitimate registration and use of the five domain names. Again, the lack of evidence does not allow the Panel to conclude that the bad faith test is met.
In summary, the texts are applied strictly and it is quite easy to understand the Expert’s position in this case. The solution could undoubtedly have been quite different if Complainants had communicated about the ongoing legal proceedings and submitted evidence that would have demonstrated the Respondent’s bad faith. According to the Expert, this case is not a classic case of cybersquatting, but rather a concurrent dispute to legal proceedings already underway.
Social media platforms allow their users to create unique usernames which become part of their virtual identity, allowing them to share content and network with other platform users. These accounts become an integral part of our virtual life so many would say they are, in fact, one’s intangible property.
A. Can we know for sure who has right to ownership?
There are different types of social media accounts – personal and business – and although, in most cases they are easily distinguishable, sometimes the lines are blurred especially when employees of companies take on marketing roles.
Personal accounts are straightforward, as long as you read the fine print. You go on vacation, snap a photo and update your status on how your well-deserved vacation is going by uploading it to Instagram or Facebook, a platform you may use to connect with your friends and family. You are the only one who has access to your unique log in details such as username and password, hence a private account.
‘Business’ accounts run by a company’s employees are more complicated, regarding ownership and access to, what would otherwise be, private information. So, who owns business social media accounts accessed and controlled by employees? There are various factors which contribute to making that decision. Ideally, you want to ensure that other platform users recognise the username and associate it with the business, not the employee, like a trademark. The subject of content is still a grey area – is it the intellectual property of the employee or the company itself?
B. The hardships of distinguishing ownership in Hayley Paige v JLM Couture
The former question was the focal topic of discussion in the U.S. case of Hayley Paige Gutman v JLM Couture, where the parties disputed ownership rights of the hybrid Instagram account. Referring to the account as ‘hybrid’ due to the nature of the arguments presented by the parties.
This case was filed as a result of an alleged misuse of the account after Gutman advertised third party products without the approval of her employer, JLM Couture. The defendant, Gutman, argued that due to the style of the posts on her Instagram handle @misshayleypaige, the account was of a private and personal nature, created in personal capacity, even though she has used the account to promote her bridal collection designed for her parent company, JLM Couture.
The appellant, JLM Couture, counter proposed the account being a business account due to the significant percentage (95%) of the content consisting of marketing for the brand, Hayley Paige. The decision favoured the arguments of JLM Couture, stating that Gutman was under a contractual obligation to give her employer access to the account in question since she has signed a contract allowing the company to reserve the right of ownership over any marketing platform and contents published under the name of Hayley Paige or any derivative thereof in relation to her branding. Eventually, multiple negotiations and a restraining order (against Gutman) later, it was agreed that Gutman’s social media account was primarily used for marketing purposes, regardless of the odd personal content here and there, and JLM Couture had the contractual right to access it.
The economic value of a business social media account is often greater than a personal one, especially those which have a large following. Companies rely on these social media platform followings to grow the image and reputation of their establishment. Often, when there are blurred lines regarding the ownership of social media accounts, employees can easily damage a company’s imagine. For instance, in the case of PhoneDog v Kravitz, after the termination of Kravitz’s employment, he used the Twitter account originally created to advertise the services of PhoneDog during his employment, to advertise the services of its competitor. The appellant sued for misappropriation of the account and disclosure of trade secrets. The parties settled and Kravitz continued to use the Twitter account, but the appellant endured financial loss and, without a doubt, a loss of clientele.
A business’ right to ownership of social media accounts used for marketing purposes should be made clear, not only to avoid legal disputes such as those mentioned above but also to protect the integrity and image of the company. Employment contracts should contain social media clauses stating that any content produced and published on the social media account under the management of the business belongs exclusively to the business. So, a business social media account constitutes virtual property so why should you risk losing it?
This Final Report contains certain statements, recommendations, and implementation guidelines, which are defined as “Outputs”. It includes statements about existing policy, recommendations for new policy, and various guidelines on how best to implement it. It addresses some 40 topics that cover all aspects of new gTLD deployment, such as how the deployment should proceed, under what criteria, etc.
On March 24, 2021, this Final Report was transmitted to the ICANN Board of Directors, which must now review the Outputs to determine whether the recommendations are in the best interests of ICANN and its community.
To accomplish this, the Committee requested an “Operational Design Phase (ODP)“, launched in late 2021 and expected to last ten months. It should be transparent to the public and regular reports should be issued . This timeframe could be extended if unforeseen circumstances were to arise.
Therefore, it is very likely that the next round of new gTLDs will be postponed to 2023. All the more so as some of the recommendations raise questions, particularly with regard to the absence of reinforced protection measures against abuse of the Domain Name System (DNS).
WIPO, Arbitration and Mediation Center, Case No. D2022-0593, April 15th 2022, Photomaton v. Domains By Proxy, LLC / Ehren Schaiberger
In the decision made on April 15th, 2022, Photomaton had its UDRP complaint rejected, that concerned a domain name of which it was previously a holder of.
This case is likely to attract a lot of attention as it illustrates the importance of regular monitoring of domain names and other industrial property rights that are subject to renewal.
The case is concerned with the domain name <photomaton.com>, which, according to the evidence, was held by the company Photomaton from the 16th of January 2015 until January 2020. The situation may seem far-fetched, but it appears that the Complainant did not renew the domain name on time. The Respondent, Mega Domains, is a domainer who registers and puts domain names up for sale. At the time of this case, it held more than 10,000 domain names.
Respondent became the owner of the <photomaton.com> domain name when it expired via a so-called “Drop Catching” system. The logic suggests that the registration was done properly and that the Respondent had nothing to worry about, however the rules of the UDRP procedure are a little more complex.
What about a domainer who registers a domain name with a third party’s trademark that is not registered in the country where the domainer is located?
Complainant argued that it was the owner of French, EU and international trademark “PHOTOMATON” as well as the domain names <photomaton.fr> and <photomaton.be>. Paragraph 4(a) of the UDRP provides that a combination of three elements are required to be met in order to claim the transfer of a disputed domain name: the existence of Complainant’s prior right that is confusingly similar to the domain name, evidence of absence of a right or legitimate interest of the domain name’s current holder and evidence of registration and use in bad faith of the domain name by the current holder.
Obviously, the first condition left no room for doubt for the Expert: the name was identical to the “PHOTOMATON” trademarks held by Complainant, as the gTLD “.com” was not considered in this comparison.
The second condition, on the other hand, was subject to more detailed consideration. Complainant argued that it had not given permission to Respondent to register and use the domain name in question and that Respondent was not known by the domain name or any of its derivatives, nor did it own any trademarks relating to the domain name. The Respondent argued that the term “Photomaton” was a descriptive term that he could register and resell at his convenience.
The Expert, far from stopping at a biased parallel between the English term “photo booth” and the term “photomaton”, affirmed by referring to an INPI decision, stating that the term “photomaton” was not considered descriptive in both English and French. In support of his argument, he added that even if the term had become restrictive, the domain name must be used genuinely, or at least clearly intended for such use, in relation to the dictionary definition and not for the purpose of trading in the trademark rights of others. This was not the case here, as Respondent had offered the domain name for sale on the ‘Dan’ platform for 37,000 US dollars, a price set on the basis of the notoriety of the term.
The third condition was the most controversial and the one that led the Complaint to fail. Complainant claimed that its trademark was an invented word, deemed distinctive by INPI case law, and it is very famous, at least in France, where it has been used for over 100 years. It was therefore unlikely that Respondent had registered the disputed domain name without knowing the Complainant’s trademark. However, Complainant had not provided any evidence of the use of its brand or its scope in the United States, where Respondent was located.
Meanwhile, Respondent claimed that it did not know Complainant at the time of registration of the disputed domain name. Respondent added that his business consisted of the registration and resale of domain names that he considered descriptive. Respondent also provided evidence of the registration of numerous names containing the word “photo” or ending in “on”.
The Panel reflecting on the facts, concluded that it was clear that Complainant did not abandon its trademark, even if it did not renew the domain name, therefore a subsequent purchaser could not use it in a way that would conflict with its trademark right. The complexity of the case lies in the fact that Respondent argued that more than 100,000 domain names expire every day and that to avoid potential disputes, the latter used keywords that are likely to be rejected for registration, which included many trademarks. However, Respondent claimed to be using the databases of the US Trademark Office, where the mark “PHOTOMATON” was not registered. The Panel responded by stating that by offering the brand for sale on a worldwide scale, based solely on a US database, did not seem adequate in light of the database provided by WIPO.
The Panel concluded that the Complainant’s name was not registered as a trademark highlighting two points: firstly, a Google search made at the time of the registration of the domain name by Respondent did not clearly show Complainant’s trademark, but the geographical points where the photo booths were installed. Secondly, the Expert considered that Respondent had nonetheless undertaken numerous endeavours to ensure that the disputed domain name was not the subject of a trademark right. The Panel noted that failure to use a worldwide trademark database might not be excused in the future.
This is an unforeseen decision, which demonstrates the extent to which management of a domain name portfolio remains a major issue for companies of all sizes. So far, the <photomaton.com> domain name is still for sale on the Dan.com website for 37,000 US dollars.
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