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Concomitantly to the launch of the .eu on the 7^th of December 2005, license contracts blossomed here and there with non-European companies in order to register .eu domain names during the so-called “Sunrise Period”, especially between US companies and European law firms. The juridical set-up is as follows: a USA company willing to reach the European market through a .eu but which did not have any link with the European Community such as headquarters or a principal place of business, had license contracts signed with a trademark attorney located within the Community. The license enabled the trademark attorney to register a .eu domain name on his own name but on the behalf of the trademark holder which did not fulfill the requirements set-up by the article 4, §2b Regulation (EC) n°733/2002 of the European Parliament and of the Council of 22 April 2002[1]. These juridical set-ups emerged during the Sunrise period[2] before the .eu was made available for registration to the general public.

The underlying nature of these contracts appeared doubtful to a Belgian contact lenses company, which decided to raise a preliminary ruling before the CJEU. Through these schemes companies seem to circumvent the requirements laid down by the Regulation.

The Pie Optiek Case

The Belgian company Pie Optiek runs a business of contact lenses and glasses that are sold through an online service. Its core business is done through the website www.lensworld.be. The latter was willing to register a .eu domain name during the Sunrise Period, which started to run from the 7^th of December 2005 for a four months period. The said company applied for a Benelux trademark on the sign “Lensworld” before applying for the domain name lensworld.eu. EURid denied the registration of the domain name because Bureau Gevers had already registered it. With the prior registration made by Bureau Gevers the question of the essence of trademark license comes via the backdoor. Another US company, namely Walsh Optical, signed a license agreement with Bureau Gevers. As the US company did not have its headquarters in Belgium, it uses the juridical set-up described above. As a result, Bureau Gevers registered the domain name lensworld.eu before the Belgian company. The question was whether Bureau Gevers can be deemed as a “holder of prior rights” in the light of the EC regulation n°874/2004? Pie Optiek sought relief before the Belgium Courts, its claim was twofold:

– Pie Optiek wanted to obtain acknowledgement that the registration was speculative and abusive and;

– to obtain the transfer of the disputed domain name lensworld.eu.

The advocate general, Mrs Trstenjak in her conclusions released on the 3^rd of May, dwells on the necessity to have an establishment within the Community in order to qualify as a registrant for a .eu.

The preliminary ruling which was raised before the CJEU was whether the aforementioned juridical set-up can be deemed as a genuine license contract. Needless to say, the decision of the CJEU was awaited by companies who had entered into these legal arrangements. The arrangement proved to be a genuine threat to non-European companies as the CJEU followed the conclusion of the Advocate General in its decision on July 19, 2012. The CJEU insisted on the utmost importance of having a tie with the EU to qualify as a “holder of prior rights”. The artificial nature of the juridical set-up contravenes the spirit of the Regulation. To quote the CJEU:

” it would be contrary to the objectives of Regulations No 733/2002 and No 874/2004 for a holder of 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”.

This decision could have a domino effect on .eu registrations that were done through this juridical set-up. It highlights that the establishment of a company within the EU is of utmost importance in EU law.

For a few years until now, the registration of china’s .cn top level domain (TLD) has been accessible with limited access to foreign individuals and companies. The aim was to fight cybersquatting.

However, the Chinese government has decided to reopen .cn registrations to foreign companies and individuals. The China Internet Network Information Centre (CNNIC) has set requirements which came into effect on Monday, September 3, 2012 that foreign companies and individuals have to follow in order to register .cn domain names.

Foreign companies are now able to register .cn domain names in their own name as long as they respect the requirements issued by CNNIC. Registrants have to provide a copy of their business license and the contact ID of the person responsible in the company. A signed letter of Commitment is no longer required.

When it comes to individuals, there is one simple condition: providing a copy of an official document containing the name such as a passport, ID card.

It seems that fighting cybersquatting is not the primary goal of the Chinese authorities anymore !

We can expect an increase of cybersquatting in the .cn

Within the new gTLDs framework, Icann had set a 60 days period for public comments on issued applications, that is to say until August 12. Facing the large number of applications (1927), the numerous comments already issued (more than 5000) and the insisting request for an extension of the public comments period, Icann announced a 45 days extension (that is to say, until September 26, 2012).

Public comments are of high importance insofar as they are then forwarded to the evaluation panels to review and consider as part of application’s evaluation. Comments can be done regarding one of the following criteria:

–          String Confusion Objection

–          Legal Rights Objection

–          Limited Public Interest Objection (morality or public order)

–          Community Objection

These comments will not be considered as formal objections and will not by themselves block an application from being evaluated.

Public comments: a dual interest

If the first effect of a public comment is to make publicly known the opinion of a company or of an organization concerning specific applications, and thus to attempt to influence the evaluation panel decision, there is a second effect that appears through the Independent Objector.

The latter, appointed by Icann, is responsible for filing – at his sole discretion – formal objections to applications that would undermine public order or community interests. His role is on the other side limited to the applications that have been the subject of a public comment.

With more than 1900 applications for TLDs covering many fields, the Internet business and SEO ranking of companies will be impacted in the coming years.

Posting a public comment before September 26 is thus the best option in order to make known one’s objection to certain applications.

On the 23^rd of March 2012, the General Court upheld the rejection of the application of the community trademark ‘BEATLE’. Even though this trademark was aiming at protecting electric mobility aids for disabled persons, the OHIM rejected the application of the company Handicare Holding BV (now You-Q BV) on the 31^st of May 2010. Actually, Apple Corps, the record company of the famous band from Liverpool, opposed the application relying on its several earlier trademarks ‘THE BEATLES’ and ‘BEATLES’, including community, national, figurative and word trademarks.

The European jurisdiction first notes that the trademarks ‘THE BEATLES’ and ‘BEATLES’ have a very substantial reputation, particularly regarding the sound records and video records fields. If the decision then puts forward that the signs are visually, phonetically and conceptually similar, it acknowledges that the goods targeted are different.

Even without any risk of confusion, a link between the two signs is not inconceivable. The decision states that the trademarks ‘THE BEATLES’ and ‘BEATLES’ have such a reputation that a similar trademark would take unfair advantage of the positive images of freedom and youth which the relevant public may associate to other goods. The Court here applies Article 8(5) of the Regulation on the Community trademark concerning the protection of a trademark that has a reputation when goods are different. The ruling is moreover in the wake of the Community case law[1] which requires: “first, that the earlier mark cited in opposition has a reputation; secondly, that the marks at issue are identical or similar; and, thirdly, that there is a risk that the use without due cause of the trade mark applied for would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.”

The Court of cassation puts an end to the French case law hesitations by stating, in 3 decisions, that eBay is an editor.

Web host or editor? Indeed, two qualifications are possible regarding the eBay kind of commercial websites. This duality comes from the law on confidence in the digital economy (known as the French acronym LCEN), June 24^th 2004, which establishes a liability exemption regime for web hosts. Thus, the commercial website which is not aware of the illegal nature of the products which are bought and sold on its platform can’t be held liable: it is deemed as being a web host. On the contrary, the editor, which is totally aware that the traded goods are counterfeits, is considered as being fully accountable.

If the Court of Justice of the European Union recognized that eBay is a web host on the 2^nd of July 2011, the French case law was for its part more hesitant. For instance, the Paris Tribunal de Grande Instance held that eBay could benefit from the web host status on the 13^rd of March 2012, while the Reims Court of appeal stated that the website was liable in a 20^th July 2010 case.

Those three decisions clarify that context by asserting that “the eBay companies did not only operate a simple web host activity but they, irrespective of any option chosen by the clients, took an active role likely to confer them the knowledge or the supervision of the data they stocked and to deprive them from the liability exemption regime”. As eBay cannot hide behind that editor favorable status anymore, it will now be totally liable for trademark infringements perpetrated with its editor support.

It is therefore recommended to set up a systematic trademarks watch on eBay which is offered by our IP law firm thanks to its DrefusIPweb® platform.

If one has to give a bird eye’s view of last ICANN meeting it should keep in mind that it was change which leads the way. We cannot but welcome the nomination of the new CEO, Fadi Chehadé, former engineer for the Bell Labs, IBM and Vocado LLC recently, who will occupy his new position on the 1^st of October 2012 just two weeks before the Toronto meeting of the ICANN (from the 14 to the 19 of October). The challenge is high for the new CEO who will at the same time have to cope with the launch of the new gTLD’s and governance problems which permeates the ICANN.

The stakes which were dealt during the meeting can be epitomized as follows:

-The batching vanishes away:

While the Prague meeting was beginning, the batching system and its digital archery was suspended by the ICANN. Highly criticized before its implementation and at its early beginnings, 10 days before the close of the system the candidates faced a real vacuum. For your information, only 20% of the applicants shoot in the target and entered a timestamp. Alternatives were on the table and the final decision was to put an end to the batching system. A real earthquake to say the least, nonetheless, two paths are now on the table:

1. The simultaneous treatment of all of the candidatures within a period of 15 months,
2. A treatment of the candidatures in three batches, 5 months for each batches.

Another question lies in the backdoor, those of the release of the candidatures once evaluated:

-the publication can be done in batches, each time a batch is done the release can be completed. However, this system can be unfair, as first applicants will benefit from their early publication;

-the publication of all candidatures evaluated simultaneously, this solution can be deemed to be fair but can postpone the timeframe.

–A delay to be foreseen for the intervention of the GAC:

The GAC announced that it will not make Early Warnings before the next ICANN meeting in Toronto in October 2012. Moreover, the GAC will not give any advice on contentious applications before the Asia-Pacific meeting which will be hold in April 2013!

–Trademark Clearinghouse on the rails for October 2012:

The Trademark Clearinghouse, the repository for rights owners run by Deloitte and IBM will open its gates in October 2012 as announced. Tests are to be conducted as early as July 2012 for a suitable implementation next Fall.

–The URS (Uniform Rapid Suspension System): cost to be reevaluated and service providers still lacking:

At the inception the creation of the URS was suppose to meet several ends among them flexibility, low-costs and protection of registrant with a legitimate interest. However, the target of the low-costs comprised between 300 and 500$ sounds quite tricky and impossible to reach in practice. During the ICANN meeting in Prague, a conference tackled the issue of the costs which are likely to be reevaluated. The idea came up that if needed, subventions can help to administer the service. The URS is a post-delegation procedure which can be used by third parties once the new gLTD’s will be attributed but which cannot lead to a cancellation or a transfer of the domain name, the domain name is just blocked. The service providers are scarce given the low-cost of the procedure which does not help to provide a sufficient background to issue tailored decisions.

–Objection mechanisms: service providers in the starting-blocks:

The ICC has jurisdiction over the Limited Public Interest Objections and the Community Objection, the WIPO over the Legal Rights Objection, for which Nathalie Dreyfus has been appointed as a Panelist, and the ICDR for the String Confusion, all the service providers are ready. It is already possible to file an objection since June 13, 2012 where new gTLD’s candidatures were released. All the objectors must note that they have nearly seven months, without cap, to file an objection. Nonetheless, the decisions of the service providers will be issued only two weeks after the release of the Initial Evaluation which is due to take place in December 2012/January 2013.

A rainy sky overhangs the new gTLD’s launch. Notwithstanding, several paths remain to speed up the process, lobbying occurs as one of these. The newly created New TLD Applicant Group (NATG) is a group which emerged during the ICANN meeting, and which deserves to be glanced at.

With the launch of the digital archery on the 8^th of June[1], the question is raised whether the mountain brought forth a mouse! The batching system run for not less than ten days and a member of the GAC already raised concerns about the whole system. The batching system is a catalyst of issues. The senior advisor to the Government of Canada within the GAC, Heather Dryden[2], in a letter sent on the 17^th of June to the ICANN pinpointed that the batching system may have a significant impact on the timeframe of the commissioning of new gTLD’s. Heather Dryden put it bluntly and highlighted the imperious necessity to “fully consult with the community before taking decisions of this magnitude”[3]. According to the Canadian advisor, the loopholes of the system outperform the advantages. The GAC is in favor of a simultaneous treatment of all the candidatures for three main reasons: efficacy, consistency and length.

The GAC will try to push in favor of this unique assessment and try to make its voice heard during the ICANN Prague meeting which will take place at the end of the week from the 24th to the 29^th of June. A genuine frond could be foreseen in the next few days.  Could the timeframes be kept?

[3] The letter dated June 17, 2012 can be download thanks to the following link: http://www.icann.org/en/news/correspondence/dryden-to-crocker-17jun12-en

Arbitrary, flawed, unfair, are just some of the buzzwords that popped up during the launch of the batching system for new gTLD’s. The uncertainty as to the batch or bundle in which one candidate can finds himself is high and is causing deep concern. Last Friday, (ndlr: the 8^th of June) and more amazingly before the reveal day, the ICANN decided to launch its batching system. As we already underlined in a recent article [1] this system was deemed to be fair and to represent geographical aspirations. A genuine bubble grew up within the juridical community which expressed strong grievances against this system. Some authors casted doubts on the efficiency and the relevance of such a system. Some people even pointed out that the system is technically flawed and would represent the second glitch of the ICANN after the so-called glitch of the TAS system.

• Why is this system only a second best?

In fact, before engaging in a mouse-clicking frenzy, one has to bear in mind that queuing for such a system is like queuing for a lottery. This system is an oddity in the landscape of the new gTLD’s. As far as the geographical injection is concerned, it is deplorable, it is more or less like affirmative action: one can say that an affirmative action in favor of one individual is still a negative action taken at the expense of someone else. The scheme is simple, you must foresee a certain time and date in the future, then linger wherever you want and come back on the foreseen date and time, keeping your mouse ready to shoot at the target. The nearer you shoot, the closer the date of your assessment by the ICANN will be. Being in the first batch is of utmost importance as you will have a higher chance of boosting the launch of your gTLD’s and of being within the “happy few” candidates to run the gTLD’s at the beginning of 2013, if timescales remained unchanged. Companies like pool.com urge candidates to use their premium services. The latter proposed to help candidates to reach the target of being in the expected batch. Needless to say that such companies are not philanthropic by nature and are driven by economic ambitions. The emergence of such companies is highly regrettable for applicants. Finally, if several applications relate to the very same extension, they will be reallocated to the first batch in which the gTLD’s occurs. In this case, it is fate which leads the way!

• Is there any plan B?

Before the batching system, dubbed the digital archery, was introduced, grievances reached the ICANN with alternative proposals which were not chosen by the Californian institution. The proposal to assess all the applications at the same time came under consideration. The reality is that the ICANN introduced the batching system in order to alleviate the problem of treatment of the number of applications. That can sound a little bit harsh, but no third way seems foreseeable today as the system is already up and running.

Gambling can become an addiction which is hard to overcome, but in the case of the batching system, the addiction seems easy to push away. As soon as the system comes to an end, the candidates will feel such a relief that the ICANN will be under to pressure to set up another mechanism for the next round of gTLD’s, if there is any!

The WIPO just released [1] a list of about one hundred experts who will fulfill the task to be experts for Legal Rights Objection. LRO is enshrined within the Trademark Rights Protection Phase for new gTLD’s for seven months as from the “reveal day” (namely the 13^th of June 2012). The WIPO is the exclusive provider of the LRO. LRO derives its strength from ICANN Applicant Guidebook. Once the applicant applies for new gTLD’s, he is bound to stick to the rules set up by the ICANN. LRO is a way for trademark owners to file a complaint against a new gTLD’s application which appears to constitute in particular an infringement to its trademark. The out of court nature of this procedure is a sharp characteristic that the LRO share with the other formal opposition mechanisms put into place and which start as from the reveal day. This comprehensive mechanism can be used by two entities namely trademark owners and Intergovernmental Organizations (IGO’s). If a trademark, an acronym or an IGO’s right is infringed, LRO is the objection option which is the most suitable. In terms of timing, LRO will be used before ICANN’s approval of new gTLD’s.

The fees of such an opposition are quite innovative. In order to file an opposition against one gTLD’s the tax will be of 10 000 $ excluding attorney fees. The difference with a UDRP proceedings lies in the fact that the successful party obtain the refund of 8000 $, 2000$ remaining for the Center.

We welcome the announcement of Nathalie Dreyfus as an Expert for the LRO and hope that the mechanism set up by the ICANN under the WIPO umbrella will be as protective as possible of trademarks rights. Given the background of the WIPO as an unbiased and skilled institution, we cannot but hope that LRO will be a frank success.

In the whole context of the gTLD’s conundrum, one of the commitments of the ICANN was to set up relevant mechanisms to protect trademark owners from infringements and cybersquatters. That is why the Trademark Clearinghouse which is supposed to be a worldwide trademark database was created. TMCH is supposed to be a tool for the Sunrise period. Lately, the ICANN released that it picked out Deloitte and IBM as service providers for the Trademark Clearinghouse. One tricky question remained unanswered which revolves around the price of the service offered by the TMCH. The ICANN announced[1] that the cost to beneficiate from the safe haven of the TMCH is of less than 150$. Our observations are as follows:

-This price, which seems low at first sight, is to be reconsidered for owners of huge trademark portfolios. Actually, trademark owners must pay 150$ for each trademark they want to integrate in the TMCH. There is no denying that the process can become costly and heavy for trademark owners. It is of utmost importance for a company to make an audit of the trademarks portfolio in order to assess the trademarks which are worth to declare.

-The mechanism of the TMCH has many loopholes. Among them the most salient being the fact that it only detects domain name registrations matching identically with the trademark which was declared before it. Given the sneakiness of cybersquatters who are prone today to register typosquats and trademarks plus generic or geographic names, many domain names will slip through the net without any pain;

-Even if a trademark owner receives a notification pointing out that its trademark was registered as a domain name, there is no mechanism to prevent cybersquatters or third parties to register it.

The Dreyfus lawfirm can advice you at any time on the best strategy to adopt pertaining to the declaration of trademark before the TMCH.