Journal of Information, Law and Technology
Like Alice in Wonderland: Applying EC Competition
Principles in the Case of Domain Names
Jonathan Galloway
Doctoral Candidate, University of Glasgow
jonathan_galloway@hotmail.com
and
Konstantinos Komaitis
Doctoral Candidate, University of Strathclyde
k.komaitis@strath.ac.uk
This is a refereed article published on: 30 January 2006.
Citation: Galloway and Komaitis, ' Assessing the Justification for Rights
Management Systems’, 2005 (2) The Journal of Information, Law and Technology
(JILT).< http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/2005_2/galloway-komaitis/>
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Abstract
There are many areas where the application of competition and intellectual property
(IP) laws overlap, often leading to attempts to achieve the correct balance in applying
what can be conflicting sets of laws with competing policy goals. Licensing of IP
rights has traditionally been the key area where the competing goals of the two sets of
laws are evident, with the resulting efforts to find the correct balance often
controversial (we will only discuss such efforts within the European Community by
the Community courts and the European Commission). Indeed any role for
competition law in such overlapping areas necessarily involves limitations being
imposed on the use of IP rights, something to which right holders naturally object to 1.
We are, however, going to discuss the potential for an EC competition law role in
disputes between trademark owners and domain name registrants. While the
Community courts have always recognised that the existence of intellectual property
rights cannot of themselves fall foul of the prohibitions within Articles 81 and 82 of
the EC Treaty2, they have also consistently held that the use of such rights are indeed
capable of infringing the Community competition rules3. Currently trademark owners,
relying on their IP rights, can pursue two distinct routes when seeking the transfer of
domain name registrations from the existing registrant to themselves, thus far neither
route has envisaged a role for competition law in settling the disputes. We will
consider whether there could be a role for competition law in deciding such disputes,
and offer some thoughts on whether competition law should have a role. The
Community courts have been dealing with IP right licensing issues under both Article
81 and Article 82 EC Treaty for many years, with the most recent IMS Health4 case
perhaps offering greater clarity; it does, however, remain a controversial area in spite
of established case law and a relative abundance of academic comment5. Generally,
the main difficulty in applying competition law principles to conflicts between
trademarks and domain names is that the nature of domain names is rather
controversial and remains ambiguous. To be more precise, trademark owners contend
that domain names are an extension of their marks in the online environment to which
they should have uncontested rights; yet for many academics and critics, domain
names should be considered as a distinct right from trademarks. Common practice,
however, has thus far established that domain names do indeed constitute an
extension of trademarks, and this is reflected within the rules of the Uniform Domain
Name Dispute Resolution Policy (UDRP); a procedure that is responsible for
resolving the disputes between trademark owners and domain name registrants.
This article will initially reflect on the nature of the disputes between trademark
owners and domain name registrants and outline the traditional notion of trademark
infringement before considering the applicability of EC competition law, specifically
Article 82. The first hurdle in applying EC competition law, primarily Articles 81 and
82 of the EC Treaty, to any situation is establishing whether the entity that is subject
to a competition analysis qualifies as an ‘undertaking’. We will then consider the
applicability of the substantive EC competition law rules, and attempt to outline the
difficulties in applying Art 82 in particular. We begin by briefly considering whether
the trademark owner’s attempt to seize a domain name registration affects trade
between Member States before exploring potential relevant market definitions in this
context by examining previous Community court rulings of relevance. Relying on the
possibility of establishing relevant market dominance of the trademark owner, we will
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then consider whether attempting to seize a domain name registration could amount to
an abuse of that position. To conclude, we provide an assessment of the capability of
EC competition law to apply to such disputes and offer some thoughts on the
suitability of its application in this context.
Keywords: Domain name system, intellectual property rights, trademark, US
Department of Commerce (DoC), World Intellectual Property Organisation (WIPO),
Uniform Domain Name Dispute Resolution Policy (UDRP).
1. Introduction: Nature of Disputes and Current Means of Resolution
The cornerstone behind the functionality of the Internet is the Domain Name System
(DNS) and subsequently domain names.
Domain names exist in a technologically advanced and complex market structure, the
market also happens to have a rigid and heavily controlled structure, which imposes
sets of rules for domain name registration and usage. Domain names are unique
addresses assigned to particular computers that are connected to the Internet, they
represent difficult to remember number identifiers and allow computers to send
packets of information to the correct location.6 Every domain name has a top-level
domain name (the suffix at the end of the domain name) that will consist of either a
generic top-level domain name (gTLD)7, eg. .com, or by country code domain name
(ccTLD), e.g. .uk.8 Notwithstanding the existence of ccTLDs, domain names currently
provide little information about the nature or location of the domain name registrant.
Although the registrants responsible for country code registries may impose various
residency restrictions9, domain name s are available in the generic top-level domains
regardless of physical location, and many national registries do not have any
residency restrictions10. While there was a time when the four principal gTLDs were
indicative of the nature of the domain name’s owner (.com for example was used by
commercial enterprises)11, the expansion of users and an open registration system
have reduced the value of the suffix as an indicator of the nature of the user.12
At the heart of the domain name structure is the Internet Corporation for Assigned
Names and Numbers (otherwise known as ICANN) that has responsibility for
allocating domain names and managing the top-level domain name system throughout
the Internet. The registration of top-level domain names is only possible by
registering with one of the ICANN accredited registrars. Due to this centralised
system it is currently impossible to have two identical domain names. Therefore,
whilst it is possible to have two separate domain name registrations of apple.com and
apple.net for example, there cannot be two registrations of apple.com. A further core
characteristic within this structure is that domain names are registered on a first-come,
first-served basis13.
When the Internet and the domain name system emerged, trademark owners sought to
register the domain name that represented their marks. Many then realised that their
trademarked names had already been registered as domain names by cybersquatters,
who tried to gain profit from those registrations by offering to sell the domain names
to the trademark owners. Trademark proprietors were naturally aggrieved by this
tactic and started pressuring various authorities, including the US Department of
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Commerce (DoC) and the World Intellectual Property Organisation (WIPO), to adopt
policies that would protect and safeguard their intellectual property rights.
The current situation, however, is not the same; most – if not all – of the trademark
owners have secured a domain name registration in one of the gTLDs available – if
not all. Unsurprisingly, they all prefer registration in the .com suffix, due to its
popularity and familiarity amongst the Internet community and Internet users. Thus
far this attitude is logical; the issue becomes complicated once trademark owners
realise that another registration exists, which bares a second level domain name
identical or confusingly similar in another gTLD. In such situations the trademark
owners often seek to secure the domain name by transfer, even though it might
represent goods or services unconnected to the ones that the trademark represents. It
can be safely argued, therefore, that we have reached the extreme, where trademark
owners demand transfer or cancellation of those domain names that happen to be
similar or quite similar, even in those cases where the registrant has a lawful and
legitimate interest and use of the domain name.
The focus of this article is upon these attempts by trademark owners to take over a
domain name registration, which has an identical or similar second-level domain
name to their trademark14, by ‘evicting’ domain name registrants with legitimate
interests. There are two mechanisms for forcing a domain name transfer; firstly a
trademark owner can follow the traditional route within national courts, whilst the
second and most popular mechanism is via one of the four- accredited by ICANN –
arbitration centres and the subsequent application of the Uniform Domain Name
Dispute Resolution Policy (UDRP).
The traditional route within the court system has yielded some success in recent years
for trademark owners raising actions. Those actions have mainly arisen in the US
courts, therefore the examples used will be from the US regime. Case law suggests
that an owner of a trademarked term would have a valid cause of action against
another who has registered an identical or confusingly similar term as a domain
name15. Although the US courts tend to assert that a defendant has intended to deceive
the general public if they have used the plaintiff’s mark as a second-level domain
name16, this cannot be used as a conclusive argument that any actual trademark
infringement has occurred. There are cases where courts will allow trademarked
phrases to be used in their entirety by another as a domain name. For example, one
who registers the name www.horowitz.com, may not automatically have to relinquish
ownership of this name if another party, who has established a foundation for using
this name as a trademark (for instance the Horowitz-Magaram company, which sells
ethnic food), argues that the registrant has infringed its mark. In a strict sense,
however, the court system does not offer a mechanism facilitating the immediate
transfer of a contested domain name, because trademark law does not automatically
grant the owner of a trademarked term the exclusive entitlement to use the term as his
or her domain name17. If there was an “automatic relinquishment” policy, it would
imply that trademark law supports the monopolisation of the use of a protected term18.
Instead, courts have shown the willingness to grant the rights to a particular term to
another user if the latter proves that the registration took place in good faith and can
show a legitimate reason for the use of the disputed mark as a domain name; this
willingness is of course on the basis that the defendant has registered the domain
name first and there is no finding of trademark dilution or infringement19.
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The Horowitz scenario described above became a reality in December of 1999 in
HQM, Ltd. v. Hatfield.20 In HQM, the defendant was an individual whose last name
was “Hatfield”, and a claim was filed for registering www.hatfield.com with NSI.21
The plaintiffs claimed four different causes of action, including both federal
trademark infringement and dilution22. Similar to the Horowitz example the court
considered neither the infringement nor dilution arguments sufficient to order the
transfer of the domain name to the plaintiff. The court went further and held that
relinquishment of the domain name should not take place, because the defendant was
involved in activities that the court characterised as “innocent”, which at the same
time did not “constitute commercial use”23.
Whilst courts have been willing to acknowledge the differences between trademarks
and domain names, the second mechanism open to trademark owners seeking the
transfer of a domain name appears to be producing different results. The Uniform
Domain Name Dispute Resolution Policy (UDRP) by which the ICANN accredited
arbitration centres resolve such disputes, regards domain names as an extension of
trademarks, and arguably places far too much emphasis on protection of IP rights.
As of today, over 11000 UDRP proceedings, involving more than 13000 domain
names have been initiated24. In spite of the important interests, not least in terms of
property rights, involved in these cases, there are significant doubts over the
independence of the Arbitration panellists, arising both as a result of their association
with intellectual property interests and as a result of their record and reasoning thus
far. These doubts have been expressed by various scholars and academics concerned
by the way the Policy is currently functioning25. Indeed, from examining the case law
it can be argued that the UDRP panellists significantly deviate from prudent
application of trademark principles, with many rulings lacking analytical rigor and
doctrinal understanding. One of the most worrying and controversial issues of the
Policy is the application of national trademark laws in the international context of the
domain name system. Panels tend to apply laws that they are familiar with and decide
the disputes based on traditional principles of intellectual property. Yet under the
UDRP, infringement is not strictly the test by which Arbitration Panels should resolve
disputes. In spite of the pervading wisdom that domain names are in fact online
extensions of trademarks, a trademark owner can force the transfer of a domain name
registration upon the basis of a three-fold criterion stated in paragraph 4(a) of the
UDRP Rules: i) that the domain name registered by the Respondent is identical or
confusingly similar to a trademark or service mark in which the Complainant has
rights; ii) that the Respondent has no rights or legitimate interests in respect of the
domain name; and iii) that the domain name has been registered and is being used in
bad faith. Nevertheless, the criterion has often been misapplied and has been given
wider interpretations than it was originally intended to. In one case for instance the
Panel determined and established the bad faith element by arguing that “the
Respondent is contributing no added value to the Internet and thus [sic] the broad
community of Internet users will be better served by transferring the domain name to
a party with a legitimate use for it”.26
The complainant (i.e. trademark owner) is the only party that can initiate the dispute
before any of the arbitration centres; the respondent (i.e. domain name registrant)
needs to answer to this complaint as part of his contractual agreement with his
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registrar. The decisions, which are rendered within 45 days, are enforced by ICANN,
which has the physical control over the “A” authoritative root file (which is the only
existing file that stores all the domain name registrations). However, the only situation
where the decision will not be enforced by ICANN will be if the losing party initiates
a court proceeding within ten working days after the UDRP decision has been
rendered; in this case the decision is court-enforceable. Arbitration panels have ruled
that the existence of a domain name registration that is identical or confusingly
similar to a registered trademark is the determinative factor to establish transfer of the
domain name to the trademark owner. The case law that follows is only an indication
of how UDRP panels have approached the conflict between trademarks and domain
names.
In DeRisk IT Ltd v DeRisk IT, Inc.27 the panel ordered the transfer of the contested
domain names “derisk-ti.com”, “derisk-it.net” and “derisk-it.org”, even though the
Complainant, unlike the Respondent, did not produce evidence of a trademark
registration. Both parties were involved in computing consulting business and were
incorporated in different geographical spheres, with the Complainant being based in
the UK and the Respondent in the US. According to the UDRP Rules all three
elements of paragraph 4(a) should apply in order for the transfer of the domain name
to occur. The Panel first considered the identical nature of the domain names and
concluded that even though the Complainant did not have a valid trademark
registration, the domain names were identical to his trading name and thus the first
element was satisfied.28 Moreover, the Panel stated that, although having an existing
trademark registration, the Respondent is not well known by the domain name and
thus he does not have any rights or legitimate interest in the domain names in dispute.
Finally, the Panel asserted that the Respondent was aware of the Complainants
business and he registered the domain name in an attempt to intentionally attract, for
commercial gain, Internet users by creating a likelihood of confusion as to the
affiliation between the websites.29
2. Trademark Infringement: Should it be used in the Domain Name Context?
In order to fully understand why there is a right of action against a domain name
registrant for their domain name registration, an analysis of traditional trademark
infringement is inevitable. The reason behind this is that the criterion for deciding the
disputes is loosely based on the application of traditional trademark infringement,
without, as it will be established, necessarily qualifying and meeting the test of
infringement. That is why application of competition law principles might be more
appropriate in these disputes.
Taking the UK as an example, the exclusive rights conferred by a national registered
trademark – and an international registration under the Madrid Protocol – are set out
in Sections 9 and 10 of the 1994 UK Trademarks Act. The sections have been
criticised for failing to properly implement the scope of the Trade Marks Directive30,
which states “[t]he registered mark shall confer…exclusive rights therein”. The
proprietor shall be entitled to prevent…”, which means that the infringing acts
defined in the Directive are only indicative of a possible range of infringing acts,
whilst the Act narrows infringement only to those defined in Section 10.31
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The Act allows a substantial expansion of the rights of proprietors compared to those
allowed under the old law. Use is now defined as including any sort of use, even if it
does not follow the traditional graphic representation approach;32 oral use of a mark
may therefore constitute infringement. This contradicts the position under the 1938
Act, where use was narrowly defined. It was restricted only to use of a printed or
other visual representation of a mark and use of a mark in relation to goods was
defined as referring to the use of the mark upon or in physical or other relation to the
goods.33
Within the 1994 Act the concept of trademark infringement is more rationalised. One
can argue that the sections on infringement mirror the relevant section dealing with
the relative grounds for refusal. The concept is the same; what is different is that in
this case the trademark owner is protected after the registration of the mark and can
use all the privileges conferred to him by his property right.
Additionally, the 1994 Act expands the protection afforded to registration for
trademarks that have acquired a reputation. Rights are conferred in relation to the use
of the registered mark, whether the mark is similar or not, but the use of the mark is
without due cause and takes unfair advantage of or is detrimental to the distinctive
character or the repute of the trademark.
Finally, Section 10 (4) follows the permissive provisions of Article 5(3) of the
Directive in identifying various activities, which constitute use of a sign for the
purposes of infringement. The definition is not exhaustive. Nevertheless, it introduces
a degree of clarity, absent from the uncertain definition of use in section 68 of the
1938 Act and it is clear that, despite the relatively wide language of the provision, the
courts will be concerned to construe “use” with the purpose of a trademark.34
Meanwhile, all the provisions in section 10 of the Act relating to infringement can
only be activated as long as the requirement of “use in trade”35 is met. “Trade” is
defined in Section 10 3 (1) of the Act as including any business or profession and, the
same way as in the former Act, will include leasing, hire, purchase and the like.36
Moreover, activities in the course of trade include communications, for example by
way of orders and invoices, with suppliers and trade customers.37
The central question at this point is whether the offending use in the course of trade of
a sign must be use of that sign as a trademark or service mark, in other words as an
indicator of origin, in order to infringe.38 To this issue, a number of matters indicate
that the use must indeed be use in a trademark or a service mark sense.
First, the function of a trademark as expressed in the 10th recital to the Trademark
Directive is mainly to guarantee the trademark as a source locator.39 Second, section 9
of the Act provides that the proprietor of a mark has exclusive rights, which are
infringed by the use of the trademark without his consent. This appears to be based
upon the first sentence of Article 5 (1) of the Directive and suggests that registration
gives exclusivity to the registered owner in respect of the use of his mark as a
trademark or in a trademark sense. Third, in the case of SabelBV v. Puma AG.40, the
European Court of Justice found that likelihood of confusion is a key element in order
to establish infringement under section 10 (2). It is hard to find another way of
explaining confusion as to origin unless the offending use is use “as a trademark”.
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Finally, it may be argued that the whole purpose of the Directive it to settle the debate
and determine what approach should be adopted when the mark is used other than in a
trademark sense.
On the Internet, however, the concept of infringement takes on new dimensions. First
of all, trademark infringement – at least in its traditional sense – cannot occur on the
Internet. Even the UDRP itself does not mention the term infringement when it
establishes that a domain name’s registration and use in bad faith should lead to
transfer of the domain name. We support this attitude; even if it can be taken for
granted that domain names are the extension of trademarks in the online world, there
remain various differences that cannot be overlooked.
First of all, in order to determine infringement one should look at the degree of
confusion caused. Yet, according to trademark law confusion is addressed within the
restricted and limited national borders of a country. Therefore, how will we be able to
establish confusion of a national trademark within the international and unrestricted
boundaries of the Internet? Simply applying traditional principles of trademark
infringement is not plausible, since the sphere within which they were initially created
to apply (national boundaries) and the one in which they are applying (the Internet)
are not the same. At the same time, why should a national trademark registration
prevail over an international domain name registration? Why is it generally accepted
that a domain name registration can infringe a trademark registration and not vice
versa?
The fact is that infringement cannot actually be constituted in either scenario. As has
already been mentioned, when trying to establish infringement one will have to look
at the confusion caused not only when it comes to the mark itself, but also to the
goods or services that the mark is representing. Apart from the blatant cases of
cybersquatting, in which infringement is not really established, all the other case law
that has determined infringement has only done so on the basis of how identical or
confusingly similar the domain name is to the trademarked term; notwithstanding the
collision of national principles (trademark registration) with international notions
(domain names registration), there cannot be a general principle of trademark
infringement applicable to the Internet, because under normal circumstances a domain
name registrant does not enjoy the same rights as a trademark proprietor.
Therefore, as intellectual property laws themselves try to achieve a balance between
under-and-over-protection of their rights on the Internet, it is suggested that the
application of traditional trademark infringement principles creates an imbalance in
the sphere where domain names and trademarks interrelate.
Is it possible for competition law to redress this imbalance?
3. The Example of Gripe Sites
An indicative example of how trademark proprietors can abuse a dominant position
(assuming in this example that the IP owner holds such a position) in order to ‘evict’
domain names registrants is exemplified with ‘gripe’ domain names.
Free speech is handled – to a certain extent – under the UDRP Policy. To be more
precise, under paragraph 4, legitimate interest is defined as including “[a] legitimate
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non-commercial or fair use of the domain name without intent for commercial gain, to
misleadingly divert customers or to tarnish the trademark or service mark at issue”.41
This positive defence is an amalgam of incompatible notions. In Europe, under the
trademarks Directive 89/104 EC for instance, commercial use is the crucial element in
determining infringement. Therefore, in Europe at least, a purely non-commercial use
cannot raise claims of infringement. Using the non-commercial use defence would
apply to any “[l]egitimate non-commercial or fair use of the domain name, without
intent for commercial gain”, but out of nowhere, ICANN added the restricting clause
“[t]o misleadingly divert consumers or to tarnish the trademark or service mark at
issue”. This adaptation of the tarnishment concept as a limit on non-commercial uses
of domain names is rather unsuitable as it undermines the concept of free speech and
provides a more suitable argument for trademark owners to establish infringement. In
particular, the language of the policy can easily be interpreted as indicating that
trademark owners have the ability to prevent individuals from registering domain
names as ‘gripe’ sites.
Many commentators have remarked on the natural effect of this language promoting
anti-competitive practices in favour of trademark owners. ICANN was amply
concerned about the appearance of promoting free speech and supporting the interests
of the trademark constituency, hence it incorporated a footnote in its Second Staff
Report stating: “[I]n view of the comments, one detail of the policy’s language should
be emphasised. Several commentators indicated that the concept of ‘tarnishment’ in
paragraph 4 (c) (iii) might be misunderstood by those not familiar with United States
law or might otherwise be applied inappropriately to non-commercial uses of parody
names and the like”.42
However, almost five years since that statement was posted on ICANN’s website, the
only visible publicity has been ICANN’s concerns. Indeed, some panellists have
decided that parody or gripe domain names violate the UDRP as they are ‘confusingly
similar’ to the referred mark, because some users, somewhere in the world, may not
understand why the word “sucks” or its equivalent is there or what it stands for. 43 The
following example manifests how trademark owners can use their dominance in an
abusive way to get transfer of the domain name with the support of the panels.
In Dixons-online.com44, an individual – Mr. Abu Abdullah – used the website to run a
consumer complaints service about the company, for which no charge was made. The
panel found that “[t]here was no evidence to conclude the respondent is offering
goods or services for any kind of commercial gain”.45
Despite this observation, the panel concluded that the use of the domain name was
illegitimate because: “[M]r Abdullah is using the domain name primarily for the
purpose of disrupting the business of a competitor. While it may be that the
respondent is not using its domain name for commercial gain, it has been held in
several panel decisions that ‘competitor’ has a wider meaning and is not confined to
those who are selling or providing competing products. In this wider context it means,
‘[o]ne who acts in opposition to another and the context does not demand any
restricted meaning such as commercial or business competitor’. In the present case,
the Respondent is competing with the Complainant for the attention of Internet users,
which he hopes to attract to his site. Given also its purpose of acting as a complaint
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site, this seems like an evidence of the Respondent’s intention to both acquire and use
the disputed domain name in bad faith. While the interests of free speech and
consumer protection may be advanced to justify the Respondent’s acquisition and use
of the disputed domain name, this is a .com domain name and clearly has the potential
to disrupt the complainant’s business.”46
Given the confusion over the intended effect of paragraph 4 of the UDRP, and the
clear potential for panels to apply a generous interpretation in favour of trademark
owners as in the above example, it is tempting to consider whether the trademark
owner’s efforts to disable or take over a domain name registration for a gripe site
could be in breach of competition law. There are obvious difficulties with such an
approach, many of which are discussed in detail below, yet from the policy objective
standpoint of protecting the competitive process for the benefit of consumers, surely
there is a clear argument to suggest that the eviction of the gripe site operator could
distort the competitive process and be injurious to the consumer welfare. While the
trademark owner vs. domain name registrant dispute in this scenario is not between
competitors per se, by focusing upon the impact upon consumer welfare in the
relevant marker, it is possible that the trademark owner’s conduct could be regarded
as abusive and (assuming dominance on the relevant market) contrary to Article 82.
Indeed there is also increasing authority47 indicating that in exceptional circumstances
the conduct of IP right holders can be abusive (assuming that they were found to have
a dominant position); this in particular happens where the right holder claims the IP
rights protect particular activities even though it may be harmful to consumers (either
directly, or indirectly by harming competition), yet the right holder is actually trying
to use the IP right to gain an extra competitive advantage other than that to which they
are entitled. Hence, if IP right holders are dominant in their marketplace, and attempt
to misuse their IP rights to gain an extra competitive advantage, i.e. to evict a gripe
site operator by relying upon their IP rights, where such rights do not ordinarily offer
such protection, that right holder can potentially be regarded as engaging in anticompetitive activities. Competition law involvement in this area may indirectly push
the interests of the consumer (i.e. internet user) more firmly when adjudicating in
trademark owner/domain name registrant disputes. The difficulty remains, however,
in assessing whether a traditional competition law analysis is capable of adapting in
order to function in trademark owner/domain name registrant disputes. The chapters
that follow will assess this issue below.
4. Applying the Substantive Provisions
Prima facie, there are three potential applications of EC competition law to such
disputes. Firstly, Article 81 may be applicable to the UDRP as applied by the ICANN
accredited Arbitration centres; secondly, by applying the ECJ ruling in SABAM 48, the
agreements between ICANN and the four accredited dispute resolution centres with
regard to the UDRP may infringe the Article 82 prohibition, and finally, Article 82
may again be applicable but with regard to the attempts by trademark owners to seize
a domain name registration. We will focus on the latter application of Article 82 and
will not examine the UDRP and the agreements between ICANN and its accredited
dispute resolution centres within this article.
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Assessing the potential application of Article 82 to the disputes between trademark
owners and domain name registrants involves considering whether trademark owners
qualify as ‘undertakings’, and whether the attempt by a trademark owner to seize a
domain name registration affects trade between Member States. Yet the central
questions relate to the relevant market and whether dominance of the trademark
owner can be established, and of course whether the conduct involved could amount
to an abuse of a dominant position. Only after considering these key questions can we
determine the applicability of Article 82 and assess the potential for an EC
competition law role in these disputes.
4.1 Qualifying as an ‘Undertaking’
The preliminary barrier in the application of EC competition law is determining
whether the entity accused of infringing the competition rules can be characterised as
an undertaking. In the disputes at hand, the first question is therefore whether
trademark owners can generally be characterised as undertakings or whether that
determination must be made on a case by case basis. While trademark owners
primarily derive their status and rights from national legislation, we believe the
example of the Community trademark enables general propositions to be laid down on
whether owners of such IP rights qualify as undertakings. Under Regulation 40/94:
‘A Community trade mark may consist of any signs capable of being
represented graphically…provided that such signs are capable of
distinguishing the goods or services of one undertaking from those of other
undertakings.’49
Thus trademarks are by nature associated to the goods or services of a particular
undertaking. Furthermore, a failure to distinguish the goods or services of one
undertaking from those of another provides grounds for refusing registration of a
Community trademark50. Considering the nature of a trademark and the rulings of
Court of Justice regarding what constitutes an undertaking, in Höfner and Elser51 and
Wouters52, we can therefore state as a general proposition that trademark owners can
be regarded as undertakings since entities not engaged in any economic activity would
appear unable to register a trademark, at least under Community law.
4.2 Effect on Inter-State Trade
The requirement that the conduct at the centre of any EC competition law analysis
‘may affect trade between Member States’ serves as a jurisdictional test for
Community competition law. The test is included in both Article 82 and Article 81,
and is interpreted to similar effect. Perhaps the most important case on this point is
Société Technique Minière53 where the Court of Justice ruled that the correct test was
whether there was a “direct or indirect, actual or potential” influence on the pattern of
trade between Member States. While the case dealt with the test in the Article 81
context, it is also of use for an Article 82 assessment. The Commercial Solvents case54
is also of assistance as it was in the context of Article 82, and the Court of Justice held
that there would have an effect on trade between Member States if the conduct was
responsible for altering the structure of competition in the common market55. The
attempt to seize a domain name by a trademark owner would, if successful, clearly
have the effect of evicting the domain name registrant from the relevant market, and
in the process probably change the sphere of economic activity in which the domain
11
name operates (i.e. if the trademark owner were to take over the domain name, the
facility would probably be utilised for operating in different markets from that in
which the original registrant operated). This would appear certain to alter the relevant
market structures in existence, and following Commercial Solvents and STM would
therefore affect inter-state trade.
4.3 Dominance and Defining the Relevant Market
In spite of their protection from normal competitive forces, IP rights cannot be
regarded as pre-determining a finding of dominance of the IP rightholder, the Court of
Justice has recognised this in many cases, not least in Magill where it stated ‘So far as
dominant position is concerned, it is to be remembered at the outset that mere
ownership of an intellectual property right cannot confer such a position’56. We
therefore have to determine the circumstances under which a trademark owner may
hold a dominant position, the question of dominance is the acid test of whether Article
82 can be applied to these disputes. As dominance ‘relates to a position of economic
strength enjoyed by an undertaking which enables it to prevent effective competition
being maintained on the relevant market by affording it the power to behave to an
appreciable extent independently of its competitors, customers and ultimately of its
consumers’57, before examining the concept of dominance, it is necessary to
determine the relevant market, both in terms of the relevant product and geographic
markets58.
While we are unable to define a relevant market applicable to all the disputes between
trademark owners and domain name registrants, as the determination necessitates
assessment of case specific details, we can examine relevant case law of the
Community Courts and attempt to lay down some general propositions regarding the
relevant market in this context. Perhaps the first pertinent judgement is by the Court
of Justice in Consten and Grundig59 where the Court was considering exclusive
distribution and licensing agreements under Article 81 EC Treaty, which required the
relevant market to be determined in order to ascertain whether the agreements in
question prevented, restricted or distorted competition within the meaning of Art 81.
The case is useful as it considers the definition of the relevant market in the context of
IP rights afforded by a trademark. The applicants, supported by the German
government argued before the Court that as the Commission’s decision relied upon
the market for Grundig products (i.e. under the GINT trademark), the finding of
infringement was ‘based upon a false concept of competition and the rules on
prohibition contained in Article [82(1)], since this concept applies particularly to
competition between similar products of different makes’60. Consten and Grundig’s
argument was entirely logical; ‘The definition of the relevant market in both its
product and its geographic dimensions often has a decisive influence on the
assessment of a competition case’61, and clearly if the relevant product market in that
case had included products in competition with those under the GINT brand, the
effect of the agreements in question upon competition in that market would have been
substantially less due to the wider market definition, and would have thus required the
Court to annul the Commission’s decision. The Court, however, rejected this
argument and ultimately upheld the Commission’s decision. Unfortunately, the Court
did not explicitly endorse the narrow market definition and although it is arguably
implicit from the ruling, this is clearly insufficient support for an Article 82 analysis
to conclude that downstream markets for goods and services supplied under
12
trademarks are the relevant markets for the trademark owner/domain name registrant
disputes.
One of the most prominent cases involving both EC competition law and IP rights is
the controversial ECJ ruling in Magill62. The case is widely regarded as setting out a
criteria under which a refusal to license third parties by IP rightholders may be
regarded as an abuse of a dominant position; the CFI, followed by the ECJ upheld the
Commission’s decision that it was an abuse of a dominant position for copyright
owners of television listings to refuse to make their listings information available for
independent operators in the derivative weekly television guides market. The
approach to defining the relevant market adopted by the Commission, and endorsed
by the Community courts, is particularly useful for the better understanding of the
disputes in question. While the Commission could have argued that the companies
involved, BBC, ITP (rightholder of the ITV and Channel 4 programme listings) and
RTE, held a position of collective dominance in the television schedules market 63 and
assessed the question of abuse from there, it instead relied upon a finding that the
separate broadcasters created three distinct scheduling markets, within which the
copyright owner held a monopoly over the programme listings. Furthermore this
narrow market definition was endorsed in each of the three CFI judgments in the
case64, and most importantly by the Court of Justice65. The recent IMS Health66 case
also involved circumstances whereby the product protected by IP rights was held to
constitute a distinct market and was the relevant market for competition law purposes,
the IP rightholder was also regarded as being dominant on that market67.
4.3.1 The Trademark Market
Applying these cases to the disputes concerning trademark owners and domain name
registrants, it is clear that the traditional definition of a relevant market would identify
the products supplied under the trademark as the relevant products. Furthermore
Consten and Grundig and Magill highlight that the trademarked products could
constitute a distinct market of themselves, a possibility reinforced by examining the
Commission’s practice of adopting narrow market definitions, often upheld by the
Community courts. The CFI ruling in Hilti68 confirmed the Commission Decision that
nail guns, cartridge strips and nails each formed distinct markets from the overall
market for powder actuated fastening (PAF) systems for the construction industry, the
ruling was also upheld on appeal to the ECJ69, and was controversial as the narrow
market definition facilitated a finding of dominance and later, of abuse. Many of the
arguments advanced by the defendants in Hilti were also repeated in Tetra Pak II70
where the Commission finding that aseptic and non-aseptic cartons formed distinct
markets, furthermore that carton machinery was distinct from the cartons such that
four distinct markets were in fact in existence, was upheld by both the Court of First
Instance and the Court of Justice.
A determination that the trademarked products form a distinct market could only be
made, however, if the identified relevant product was found, taking demand and
supply-side substitutability into account, not to be substitutable with any other
products. In this context, a difficulty arises should the trademark owner supply more
than one product under that mark; which product should competition law regard as the
relevant product for the purposes of assessing the trademark owner’s conduct? We
suggest that in such circumstances the relevant product should be the principal
13
product supplied under the trademark. Beyond the relevant product market, it is of
course necessary to consider the relevant geographic market to gain a full and
accurate reflection of all competitive forces operating within the relevant market in
order to then gauge market power and assess dominance. The relevant geographic
market is determined by assessing the area in which the objective conditions of
competition are the same for all undertakings71, and while the factors in this
assessment do not form an exhaustive list, they undoubtedly include examining: trade
patterns; the area within which goods and services delivery is possible; and basically
any further technical or practical impediments to the principles of free movement of
goods and services with regard to the particular goods or services involved. As the
ownership of an intellectual property right confers legally protected exclusivity within
the jurisdiction of registration, the IP right is perhaps suggestive that the jurisdiction
of registration is the relevant geographic market, especially if the relevant product
market consists solely of goods and services supplied under that trademark. Variable
factors will, however, be decisive and practical and/or technical impediments
preventing the undertaking (trademark owner) from competing on a national market
will narrow the geographic market72, while multiple registrations of the trademark (or
a Community trademark), or even an ability to compete relatively unhindered across
Member States will widen the geographic market.
Irrespective of how narrow or broad the relevant market definition is in individual
cases, each case would have to consider whether the contested domain name fell
within the relevant market with regard to the trademarked products (the “trademark
market”) or whether that domain name operates within a distinct market.
4.3.2 The Domain Name Market
There is an immediate difficulty in assessing which market the domain name falls into
as the disputes often arise irrespective of the nature of the economic activity or
otherwise that the domain name registrant is engaged in via the domain name, i.e. the
domain name registrant can be involved in economic activity wholly unrelated to that
of the trademark owner, and the relevant product in the trademark market. Even if the
nature of the activity engaged by both the trademark owner and domain name
registrant is related, it does not necessarily involve an attempt by the registrant to
benefit from the trademark. Clearly some cases have involved domain name
registrants offering goods and services in the same sphere of economic activity as
trademarked products, and the registrant has intentionally registered a second-level
domain identical or similar to the trademark in order to benefit from the registered
trademark. A very good example of such a case was Advance Magazine Publishers
Inc. v. Lisa Whaley73, where, amongst other domain names, the respondent registered
“gqgirls.com” in order to promote clothes. Her argument that the initials GQ
represented “Genuine Quality” did not manage to convince the panel, as it was
obvious from the facts that she was trying to gain advantage from the trademark of the
famous fashion magazine.
Any potential role in such cases for competition law would involve licensing issues as
the application of the trademark owner’s IP rights may be unquestionable.
Furthermore in such cases any anticompetitive determination in favour of the domain
name registrant (i.e. a finding that the trademark owner abused a dominant position)
would only be possible should the criteria for IP rights licensing set out in IMS Health
14
be satisfied. This article is focusing upon disputes where both the trademark owner
and domain name registrant have legitimate interests in their respective rights, and
related cases where domain name registrants seek to benefit from another
undertaking’s trademark is therefore not dealt with in any detail. For that reason, the
criteria laid down in Magill and clarified in IMS Health with regard to IP rights
licensing, and the related essential facility case law is to be distinguished here, as the
domain name registrants we are concerned with engage in independent activity,
distinct from goods and services protected by a trademark.
Another difficulty arises as domain name registrants do not necessarily engage in
economic activity; unlike trademark owners, they cannot be said to be de facto
undertakings. Thus, the question arises as to how to define the relevant market in
circumstances where the domain name is not operating within an identifiable market
with traditional notions of demand and supply present. A domain name registered for
purely personal purposes would pose such difficulties. It may be that competition law
could focus upon the potential of the domain name to operate in an identifiable
market, or it may be that competition law is simply unable to adapt to circumstances
whereby a market is not easily discerned, as may be the case with personal domain
names. The premise underlying the remainder of the article is that the domain name
operates within an identifiable market; whether that is part of or ancillary to the
trademark market is still to be discussed.
4.3.3 Related Markets?
Returning to whether a domain name generally operates in a market distinct from the
trademark market; a second level domain that is identical or similar to the trademark
should arguably ensure that, at the very least, the domain name operates in an
ancillary market to the trademark market. As the internet has now become an
established medium for purchasing goods and services, a domain name identical or
similar to a registered trademark must be regarded as a potential facility through
which the trademarked goods and services could be provided, even if an existing
registrant used the facility provided by a domain name to engage in unrelated
activities to that of the trademark owner. Demand-side substitutability would surely
suggest that a domain name identical or similar to a trademark operates in a market
related to the trademark market, perhaps even the fact that the trademark owner is
trying to seize the domain name by ‘evicting’ the current registrant suggests it
operates in a related market, especially should the trademark owner’s intention be to
offer trademarked goods and services through the contested domain name.
4.3.4 The Same Market?
While the potential for a domain name to function as a trademark undoubtedly
provides a connection with the trademark market (to which its second-level domain is
identical or similar), the question remains as to whether the facility offered by the
domain name is a part of the trademark market outlined above. This question will be
far easier to answer in cases where the domain name operates in a sphere of activity
separate from that of the trademark market74 as the relevant product will differ
between the two markets. Yet, even when the domain name registrant and trademark
owner engage in activities in the same economic sphere, the differing characteristics
between the traditional supply of trademarked goods and services and those provided
15
via a domain name merit consideration of whether the domain name will always
operate in a distinct market from the trademark market.
From a demand-side perspective, as the internet has only relatively recently facilitated
online markets for goods and services, consumer demand in the online market has, in
all probability, been generated by consumers transferring from the trademark market.
Could this be an argument suggesting the two possible markets are indeed one? It is
however, also arguable that the domain name market was an innovation and as such,
while it may have attracted consumers from elsewhere initially, those consumers will
not necessarily regard the two options (traditional purchase/use of goods and services
in the trademark market and online purchase/use in the domain name market) as
substitutable. To take the example of Tesco, even though the supermarket chain itself
offers goods and services under its trademark in city and town centre stores as well as
‘out-of-town’ stores, as well as an online service, those two methods of providing
goods and services could probably form distinct albeit related markets (indeed the
former option is likely to split into several distinct markets75). It is arguable that the
ability to shop online and have goods delivered to the consumers’ homes satisfies a
consumer need not met by the option of travelling to a supermarket store and
physically purchasing and taking delivery of the goods at the store. A whole range of
consumers, such as the elderly, many workers or even non-car owners, are able to
benefit from the online service, and may not be able or easily able to travel to the
supermarket stores.
There may even be a question over the supply-side substitutability given that the two
possible markets have vastly differing staffing requirements and the domain name
market requires registration of a domain name, as well as maintenance of the website
under the domain name. A final element in the supply-side substitutability is perhaps
that as specific rules apply as to how and according to what criteria domain names are
registered, the differing legal requirements between the trademark market and the
purported domain name market increases the difficulty for companies seeking to
transfer activities from one to the other and strengthens the factors indicating two
markets are in existence. Note that just as the trademark market could become fairly
narrow, so could a potential domain name market due to differences between generic
top-level domains (gTLDs) and country code top-level domains context (ccTLDs).
ccTLDs involve different registrars, differing rules (perhaps with residency
requirements) and probably serve limited geographic areas unlike gTLDs, there may
also be language considerations in ccTLDs to the effect that they serve a distinct
consumer demand not satisfied by the gTLDs. The differences between the gTLDs
and ccTLDs highlights one final point regarding whether domain names are part of
the trademark market, the matter of geographic market. By nature, trademarks and IP
rights are national, even with multiple registrations or the Community trademark,
traditional protection of IP rights relies upon domestic court processes. Goods and
services supplied under protection of IP rights will thus often have geographic
markets defined along jurisdictional lines. Domain names, on the other hand,
especially gTLDs, have global operation, with the result that a distinct domain name
market would potentially have a worldwide geographic market. Although there may
be legal and practical impediments limiting the potential global market, the
infrastructure in place to facilitate global operations may sufficiently distinguish
domain names from the trademark market such that there is a distinct domain name
market.
16
Taken together, all the distinguishing features accumulate to present a convincing
argument that the facility offered by the domain name must operate in a distinct
market from the trademark market. Whether the domain name operates in a market by
itself, or in a wider market encompassing all domain names that compete for the
online provision of substitutable goods and services is immaterial (note that
competition is not necessarily limited to similar domain names as online product
markets are facilitated by search engines), the important factor is that in such disputes
the domain name operates in a distinct yet related market to that of the trademark
market.
4.3.5 Determination of Dominance
While the determination of dominance may be more difficult and uncertain in the
context of trademarks than with copyrights or patents, the case-law discussed earlier
is clearly applicable with regard to trademarks, and Consten and Grundig certainly
acknowledges the possibility of a distinct product market for the trademarked goods
and services, moreover Hilti, Tetra Pak II, Magill, and perhaps now Microsoft76 and
many others77 all highlight the tendency in Community law to adopt narrow market
definitions78, Community competition law generally is also recognised as taking just
as much interest in intra-brand competition, as with inter-brand competition79. All of
which indicates that a narrow market definition is more likely than not to be adopted
in EC competition cases, and under such circumstances a trademark owner may well
hold sufficient market power for a finding of dominance. Nonetheless it is impossible
to lay down even general propositions on the likelihood of a finding of dominance in
the disputes at hand as trademarked goods do not lend themselves to excluding
substitutes in the same way as copyrighted and patented goods do. The factual
circumstances of each dispute will therefore ultimately determine whether or not
individual trademark owners hold sufficient economic strength on the relevant market
for a finding of dominance, we will consider the remaining elements in determining
the applicability of Article 82, although clearly in cases where a finding of dominance
is not possible, this would be unnecessary.
4.4 Abuse
In order to determine the applicability of EC competition law, specifically Article 82
EC Treaty, to the trademark owner/domain name registrant disputes we have
considered at length whether the tests laid out by Article 82 can be satisfied in this
context; assuming a case has reached this stage (i.e. that the trademark owner
qualifies as an undertaking, that the conduct in question affects trade between
Member States, and crucially that the trademark owner holds a dominant position) we
can now consider the legality of the conduct in question and attempt to answer the
following:
Could attempting to seize a domain name registration from an existing registrant, by
relying on a registered trademark before an ICANN accredited dispute resolution
centre, amount to an abuse of a dominant position?
As with other elements of Article 82, the existing case law on the concept of ‘abuse’
has not considered its application in the context of the disputes discussed, we must
17
therefore assess the concept in analogous circumstances. We believe the disputes may
constitute a type of exclusionary conduct contrary to Article 82.
Clearly the conduct involved is not suggestive of exploitative behaviour, which may
be contrary to Article 82, yet attempting to take over a domain name registration by
‘evicting’ the current registrant may be an example of exclusionary conduct, which
can also be contrary to Article 82.. The Court of Justice’s ruling in Continental Can80
lays down a rationale under which this type of exclusionary conduct should be
regarded as abusive and contrary to Article 82. The Court held that Article 82 could
also be applied to protect against indirect harm to consumers, even though the
examples of abusive conduct provided in Article 82 primarily relate to exploitative
behaviour. The Court stated that: ‘…[Article 82] is not only aimed at practices which
may cause damage to consumers directly, but also at those which are detrimental to
them through their impact on an effective competition structure…’81, furthermore that
‘…any structural measure may influence market conditions, if it increases the size
and the economic power of the undertaking…’82. In assessing whether a trademark
owner trying to seize a domain name could constitute an abuse, a difficulty may arise;
if the trademark owner and domain name registrant cannot be regarded as competitors
in any traditional sense, yet the acceptance by the Court of Justice in Continental Can
of the inclusion of ‘potential competition’83, coupled with the ruling that in
determining whether conduct amounts to an abuse ‘…one has to go back to the spirit,
general scheme and wording of Article [82], as well as the system and objectives of
the Treaty’84, and moreover ‘…[The] policy [underlying Article 82] is based on
Article 3[1(g)] of the Treaty according to which the Community’s activity shall
include the institution of a system ensuring that competition in the common market is
not distorted…’85, it is difficult from a competition law perspective to rationalise why
the conduct in question should not constitute an abuse in appropriate circumstances.
In addition, by considering the concept of super-dominance86 and the ‘special
responsibility’87 of dominant firms in this context, as IP rights by their nature distort
competition on the common market, which is accepted and entirely justifiable, there is
an argument that the IP rightholder may have a special responsibility not to distort
competition anymore than is legitimate, i.e. the IP rightholder, when making use of
the rights in a fashion that distorts competition, should only do so to the extent that
such use is objectively justifiable and proportional88 to the need to protect the legally
afforded IP rights. If such an argument could be sustained, clearly there is a greater
potential for a finding of infringement against trademark owners in the context of the
current disputes.
In addition to the exclusionary nature of the conduct in question, the attempt by the
trademark owner to forcibly enter an ancillary market may amount to an abuse in
itself. While EC competition law does not explicitly recognise monopoly leveraging
arguments with quite the same fervour as US antitrust, the principle that an abuse can
take place in one market by relying on a dominant position held in another underlies
much of the case law on tying agreements under Article 82. The Commission gave
specific consideration to the ‘dominance leveraging’ argument in Magill by stating:
‘A further element of the abuse is that, by virtue of their current policies and
practices, ITP, BBC and RTE, which are each dominant on the market for their own
listings, retain for themselves also the derivative market for weekly TV guides, a
market upon which competition could otherwise take place’89. This was a finding that
the CFI and ECJ implicitly accepted by upholding the Commission Decision in the
18
case90. The CFI ruling in Tetra Pak I91 upholding a Commission decision that taking
over another firm and thereby acquiring an exclusive license in a related market
amounted to an abuse of a dominant position, may offer additional support to the view
that by taking over a domain name registration and acquiring a potential natural
monopoly, as there can only be one of any such domain name, the trademark
registrant is abusing their dominant position on the trademark market.
A final argument by which the conduct of the trademark owner may amount to an
abuse is based upon concepts developed under US antitrust, specifically the notion
that sham lawsuits may breach the prohibitions in Section 2 of the Sherman Act
against monopolization and attempted monopolization. The California Motor case92
established that lawsuits instigated in the United States without probable cause and
regardless of the merits of the case may amount to a “judicial sham”. Thereby not
benefiting from the Noerr-Pennington Doctrine93 under US antitrust, the doctrine
under which firms can claim immunity from antitrust laws as the nature of the
conduct in question (i.e. instigating litigation) is implicitly authorised by the State.
Hylton suggests that a broad reading of California Motor suggests ‘even if the
plaintiff has a valid claim, if the real motive of the lawsuit is anticompetitive
exclusion, the plaintiff may lose Noerr immunity’94 and thus may fall foul of the
antitrust laws. Yet the California Motor ruling appears to have developed a narrow
interpretation in common law, demonstrated by the Professional Real Estate Investors
case95, whereby the test was held to be whether the claim is objectively baseless and
intended to interfere directly with the defendants business relationships. Thus, even
under the narrow interpretation of California Motor, US antitrust could theoretically
find a trademark owner guilty of a §2 violation by instigating an action under the
UDRP against a domain name registrant when trademark infringement is not taking
place in the traditional sense, hence the claim may not be objectively justified. The
obvious difficulty with utilising such an argument when suggesting a trademark
owner could be abusing a dominant position under Article 82 EC Treaty by
instigating a claim under the UDRP, is that the concept of a “judicial sham” currently
has little support under Community competition law. The Commission has, however,
given some support, and perhaps a basis, to this argument by suggesting that litigation
with an anticompetitive purpose could amount to an abuse of a dominant position in
Boosey and Hawkes96, there is also a possibility that the Commission decision in
AstraZeneca97 could facilitate findings of abusive behaviour in the future against
undertakings ‘misusing’ their IP rights for an anticompetitive purpose.
In light of the foregoing discussion, it is clearly arguable that by seeking to ‘evict’ an
existing registrant and takeover a domain name utilising the UDRP, a trademark
owner is infringing Article 82 EC Treaty by abusing their dominant position on the
trademark market. In certain cases, however, where the domain name registrant is
involved in cybersquatting or is intentionally seeking to benefit from the commercial
value of another undertaking’s trademark by registering an identical or similar
second-level domain, the attempt to forcibly transfer a domain name by the trademark
owner would not constitute an abuse as the conduct, under such circumstances, is both
objectively justifiable and proportionate in order to protect the IP rights afforded to
the rightholder.
5. Conclusion
19
EC Competition law now has an increasingly important and influential role in the
exercise of intellectual property rights, the legal difficulties caused by the application
of IP laws in the online environment has made competition law involvement even
more pertinent. Yet just as in other facets of law, the application of traditional
principles of competition law in a new, technological medium is both difficult and
controversial.
This article has sought to determine the applicability of Article 82 EC Treaty to
disputes between trademark owners and domain name registrants. We have found that
a strict analysis and interpretation of Article 82 does not easily facilitate the
application of competition law principles in such a context; however, a more
discretionary interpretation, without leading to either misapplication nor deviation
from the true nature of competition law, may facilitate competition law involvement
and offer a viable alternative to the current rules and principles under the UDRP.
Competition law involvement in these disputes could offer viable alternatives that are
unavailable under the current system based on trademark law principles. This could
thereby create new norms and dogmas on how domain name disputes should be
settled. It is suggested that if the UDRP were adapted to incorporate competition law
principles by defining the relevant market and trying to establish the dominance of
trademark owners, leading to a possible finding of abuse, the UDRP could become a
more thorough way of settling these disputes. In the meantime, while changes in the
UDRP are unlikely, application of EC competition law in this context can offer the
alternative of private competition law enforcement for registrants before their national
courts. Registrants may be able to claim damages against trademark owners for
breaches of Article 82 EC Treaty if they have suffered harm as a result of a baseless
domain name claim98.
Notes and References
1
The general antipathy of rightholders to competition law involvement in IP rights use was arguably
seen in Magill (also known as the TV Listings case); Case C-241 & 242/91 Radio Telefis Eireann
(RTE) and Independent Television Publications Ltd. (ITP) v. Commission, [1995] ECR I-743, [1995] 4
CMLR 718, [1995] All ER (EC) 416, where U.S. based Intellectual Property Owners Inc. intervened in
support of the Irish and English appellants.
2
See Case 24/67 Parke, Davis & Co. v. Probel, Reese, Beintema-Interpharm and Centrafarm, [1968]
ECR 55, [1968] CMLR 47.
3
Ibid. ‘Although a patent confers on its holder a special protection at national level, it does not follow
that the exercise of the rights thus conferred implies the presence together of all three elements [of Art
82]. It could only do so if the use of the patent were to degenerate into an abuse of the abovementioned
protection.’; Cases 56 & 58/64 Etablissements Consten SA and Grundig GmbH v. Commission [1966]
ECR 299, [1966] CMLR 418 para 10 ‘The Community rules on competition do not allow the improper
use of rights under national trade - mark law in order to frustrate the Community's law on cartels.’;
Case 238/87 Volvo AB v. Erik Veng (UK) Ltd., [1988] ECR 6211, [1989] 4 CMLR 122; and Case C241 & 242/91 Radio Telefis Eireann (RTE) and Independent Television Publications Ltd. (ITP) v.
Commission, [1995] ECR I-743, [1995] 4 CMLR 718, [1995] All ER (EC) 416, ‘48 With regard to the
issue of abuse, the arguments of the appellants and IPO wrongly presuppose that where the conduct of
an undertaking in a dominant position consists of the exercise of a right classified by national law as
'copyright', such conduct can never be reviewed in relation to Article [82] of the Treaty. 49 Admittedly,
in the absence of Community standardization or harmonization of laws, determination of the conditions
and procedures for granting protection of an intellectual property right is a matter for national rules.
Further, the exclusive right of reproduction forms part of the author' s rights, so that refusal to grant a
licence, even if it is the act of an undertaking holding a dominant position, cannot in itself constitute
20
abuse of a dominant position… 50 However, it is also clear…that the exercise of an exclusive right by
the proprietor may, in exceptional circumstances, involve abusive conduct.’
4
Case C-418/01 IMS Health GmbH & Co OHG v. NDC Health GmbH & Co KG, Judgment of the ECJ
on 29th April 2004, [2004] 4 CMLR 28.
5
As evident from the recent high profile Commission Decision against Microsoft: C(2004)900final of
24.03.2004 relating to a proceeding under Article 82 of the EC Treaty (Case COMP C-3/37.792
Microsoft), imposing a record €497 million fine and significant behavioural remedies, appeal before the
CFI pending; Case T-201/04. In addition to causing conflict between IP rightholders and competition
authorities, the Decision has also renewed tension in the relationship between the Commission and US
antitrust authorities, see Department of Justice Press Release 04-184 ‘Assistant Attorney General for
Antitrust, R. Hewitt Pate, issues statement on the EC’s decision in its Microsoft investigation’.
6
The actual Internet addresses (Internet Protocol Addresses) are unique numbers, each with an
assigned corresponding unique name in order to deal with frailty of human memory.
7
The present generic top-level domain names (gTLDs) include .aero, .biz, .com, .coop, .info, .museum,
.name, .net, .org, .pro.
8
The administration of ccTLDs is delegated by ICANN to authorities in the relevant country. For
example in the UK the authority responsible for the administration of the .uk ccTLD is Nominet.
9
See, Association Franeaise pour le Nommage Internet en Cooperation (“AFNIC”), Name Allocation
Charter for the .fr Area, at http://www.afnic.fr/obtenir/choix, accessed on the 29th of July 2004.
10
Some country code domain names have become attractive and popular for reasons unrelated to
geography. For example, doctors in the United States are purchasing names in the Moldova country
code domain name, namely .md.
11
See, IANA, Request for Comments (“RFC”) 1591, at 1 (March 1994), at http://www.isi.edu/innotes/rfc1591.txt, accessed on the 29th of July 2004.
12
See, ICANN, New TLD Application Process Overview, at http://www.icann.org/tlds/applicationprocess-03aug00.htm, accessed on the 29th of July 2004.
13
Graeme B. Dinwoodie, (National) Trademark Laws and the (Non-National) Domain Name System,
21 U. Pa. J. Int’l Econ. L. 495
14
e.g. McDonalds™ and www.mcdonalds.com
15
See, Brookfield Comms., Inc. v. West Coast Ent. Corp., 174 F 3d. 1036 (9 th Cir. 1999).
16
See, Lozano Enters. V. LA Op. Publ’g Co., No. CV 96-5969 CBM (Mex), 1997 US Dist. LEXIS
20372, at 14 (C.D. Cal. July 29, 1997).
17
See, Hasbro, Inc. v. Clue Computing, Inc., 66 F. Supp. 2d 117 (D. Mass. 1999).
18
Ibid.
19
Ibid.
20
71 F. Supp. 2d 500 (D. Md. 1999).
21
Ibid.
22
Ibid.
23
Ibid.
24
See, ICANN Statistical Summary of Proceedings Under Uniform Domain Name Dispute Resolution
Policy, at http://www.icann.org/udrp/proceedings-stat.htm, accessed on the 4th of August 2004.
25
See for example, Michael Geist, Fair.com?: An Examination of Systematic Unfairness in the ICANN
UDRP, at http:/aix1.uottawa.ca/~geist/geistudrp.pdf, accessed on the 4 th of August 2004.
26
Educational Testing Service v Web Connections, D2000-0044.
27
DeRisk IT Ltd. v. DeRisk IT, Inc., Case No. D2000-1288
28
Ibid.
29
Ibid.
30
Council Directive No 89/104/EC of the 21st day of December 1988 to approximate laws of the
Member States relating to trade marks (the "Trade Marks Directive").
31
Catherine Colston, Principles of Intellectual Property Law, Cavendish Publishing Limited.
32
Section 10 3 (1) of the 1994 Act.
33
Section 68 (2) of the 1938 Act.
34
Kerly on Trademarks and Tradenames from Sweet & Maxwell, Chapter 13 – The Definition of
Infringement.
35
Implementing the same words of the Trademarks Directive, Article 5 (1) and (2)
36
Aristoc Ltd. v. Rysta Ltd. 1945 62 RPC 65at 83
37
Beauticatic v. Mitchell [2000] F.S.R. 267
38
This was the position under the 1938 Act. As Dillon L. J. said in Mothercare UK v. Penguin Books
[1998] R.P.C. 113, at 118: “Indeed it stands to reason that a Trademarks Act would only be concerned
21
to restrict the use of a mark as a trademark or in a trademark sense, and should be construed
accordingly. If descriptive words are legitimately registered in Part A of the register, there is still no
reason why other people should not be free to use the words in a descriptive sense, and not in any
trademark sense”. Even though it is important for this analysis, it needs to be noted that the domestic
view emerged also at the report stage of the Bill. Lord Peston moved an amendment to what is now
section 9 of the Act seeking to add a sentence that the use of the mark must be in the course of business
and “to indicate a commercial connection” with the goods or services for which the mark is registered,
that is to say that the use of the mark must be trademark use. On behalf of the Government, Lord
Strathclyde, Minister of State, Department of Trade and Industry, resisted the amendment stating: “As
a matter of general trademark law it is implicit that the use of a registered trademark must be trademark
use in order that the rights given by the Bill may be enforced”.
39
It states: “The protection afforded by the registered trademark, the function of which is in particular
to guarantee the trademark as an indication of origin…”
40
C251/95 [1997] E.C.R. 1-6191; [1998] R.P.C. 199
41
UDRP, paragraph 4(c)(iii).
42
ICANN Second Staff Report on Implementation Documents for the Uniform Dispute Resolution
Policy, 5 October 1999, http://www.icann.org/udrp/udrp-second-staff-report-24oct99.htm .
43
Konstantinos Komaitis, Cruel Intentions: ICANN’s Uniform Domain Name Dispute Resolution
Policy and Arbitration, Intellectual Property Forum, Issue 56, 18, (March 2004) at p. 25.
44
D2001-0843
45
Ibid.
46
Ibid.
47
Discussed in more detail below, particularly when considering potential abuses of Article 82 EC
Treaty.
48
Case 127/73 Belgische Radio en Televisie v. SV SABAM and NV Fonior, [1974] ECR 313, [1974] 2
CMLR 238.
49
Article 4 of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark,
OJ [1994] L11/1.
50
Article 7(1)(a) of Regulation 40/94.
51
Case C-41/90 Höfner and Elser v. Macrotron GmbH, [1991] ECR I-1979, [1993] 4 CMLR 306, see
para 21.
52
Case C-309/99 Wouters v. Algemene Raad van de Nederlandsche Orde van Advocaten [2002] ECR
I-1577, [2002] 4 CMLR 913, see para 57.
53
Case 56/65 Société Technique Minière v. Maschinenbau Ulm, [1966] ECR 235, [1966] CMLR 357 at
375.
54
Cases 6 and 7/73 Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents Corporation v
Commission, [1974] ECR 223, [1974] 1 CMLR 309.
55
Ibid. at paras 31 and 33.
56
Case C-241 & 242/91 Radio Telefis Eireann (RTE) and Independent Television Publications Ltd.
(ITP) v. Commission, [1995] ECR I-743, [1995] 4 CMLR 718, [1995] All ER (EC) 416, at para 46.
57
Case 27/76 United Brands v. Commission [1978] ECR 207, [1978] 1 CMLR 429 at para 65.
58
See Commission Notice on the definition of relevant market for the purposes of Community
competition law, 1997 OJ C372/5, at paragraph 2, 7 and 8.
59
Cases 56 & 58/64 Etablissements Consten SA and Grundig GmbH v. Commission [1966] ECR 299,
[1966] CMLR 418.
60
Ibid.
61
Commission Notice on the definition of relevant market for the purposes of Community competition
law, 1997 OJ C372/5, at para 4.
62
Case C-241 & 242/91 Radio Telefis Eireann (RTE) and Independent Television Publications Ltd.
(ITP) v. Commission, [1995] ECR I-743, [1995] 4 CMLR 718, [1995] All ER (EC) 416.
63
As noted by Whish, R., Competition Law, (5th Ed. 2003, OUP) at p.521.
64
Case T-69/89 Radio Telefis Eireann v. Commission, [1991] ECR II-485, at paras 61-64; Case T70/89 British Broadcasting Corporation and BBC Enterprises Ltd v. Commission [1991] ECR II-535 at
paras 47-50; and Case T-76/89 Independent Television Publications Ltd v. Commission, [1991] ECR II575, at paras 47-49.
65
Case C-241 & 242/91 Radio Telefis Eireann (RTE) and Independent Television Publications Ltd.
(ITP) v. Commission, [1995] ECR I-743, [1995] 4 CMLR 718, [1995] All ER (EC) 416 at para 47
66
Case C-418/01, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG., judgement of the
ECJ on 29th April 2004, [2004] 4 CMLR 28.
22
67
Ibid., although note that the case before the ECJ was a preliminary reference under Article 234 EC
Treaty by the Landgericht Frankfurt am Main (Germany), and the ECJ ruling, concerning the criteria
for licensing of IP rights, did not directly relate to the question of relevant markets or dominance,
although the relevant market and dominance was the accepted background to the case.
68
Case T-30/89 Hilti AG v. Commission [1990] ECR II-163.
69
Case 53/92 P Hilti AG v. Commission [1994] ECR I-667.
70
(92/163/EEC), Commission Decision of 24 July 1991 relating to a proceeding pursuant to Article
[82] of the [EC] Treaty (IV/31043 - Tetra Pak II), OJ [1992] L72/1, upheld on appeal before the CFI
in Case T-83/91 Tetra Pak International SA v. Commission [1994] ECR II-755, [1997] 4 CMLR 726,
and on further appeal to the ECJ in Case C-333/94 P Tetra Pak International SA v. Commission [1996]
ECR I-5951, [1997] 4 CMLR 662.
71
See Case 27/76 United Brands v. Commission, [1978] ECR 207, particularly at paras 10-11.
72
Potentially causing difficulty if the trademark owner if found to be dominant, as dominance must be
held within the common market or in a substantial part of it, but see range of Community cases and
Commission Decisions where substantiality requirement has been met by dominant position occupied
on very small geographic market, for example: Sealink/B and I – Holyhead: Interim Measures [1992] 5
CMLR 255 at para 40; and Sea Containers v. Stena Sealink – Interim Measures OJ [1994] L15/8. Also
see 3.4.5 infra.
73
Advance Magazine Publishers Inc. v. Lisa Whaley, Case No. D2001-0248
74
See CFI ruling in Case T-70/89 British Broadcasting Corporation and BBC Enterprises Ltd v.
Commission [1991] ECR II-535 at para 49 where this argument was used in finding that the
programme listings, which ‘are utilizable only as programme information, essential for the production
of television magazines’ form a distinct market from the programmes themselves as ‘the markets for
weekly listings and for the television magazines in which they are published fall within a sphere of
economic activity – publishing – which is entirely separate from that of broadcasting’.
75
See the approach of the UK competition authorities to the proposed takeover of Safeway by other
supermarket chains, in particular the Competition Commission (CC) report “Safeway plc and Asda
Group Limited (owned by Wal-Mart Stores Inc); Wm Morrison Supermarkets PLC; J Sainsbury plc;
and Tesco plc - A report on the mergers in contemplation" (Cm 5950), of 18 th August 2003 and the
Secretary of State’s subsequent order prohibiting the proposed acquisition by Asda, Sainsbury and
Tesco on 26th September 2003 (DTI Press Release P/2003/499).
76
Commission Decision against Microsoft: C(2004)900final of 24.03.2004 relating to a proceeding
under Article 82 of the EC Treaty (Case COMP C-3/37.792 Microsoft), imposing a record €497 million
fine and significant behavioural remedies, appeal before the CFI pending; Case T-201/04.
77
Such as Cases 6 and 7/73 Istituto Chemioterapico Italiano SpA and Commercial Solvents Corp. v.
Commission, [1974] ECR 223, [1974] q CMLR 309; Case 22/78 Hugin v. Commission [1979] ECR
1869, [1979] 3 CMLR 345; Case 53/87 CICRA v. Régie Nationale des Usines Renault [1988] ECR
6039, [1990] 4 CMLR 265; and Case 238/87 AB Volvo v. Erik Veng (UK) Ltd. [1988] ECR 6211,
[1989] 4 CMLR 122.
78
For an extreme example of a narrow market definition see: (2000/12/EC): Commission Decision of
20 July 1999 relating to a proceeding under Article 82 of the EC Treaty and Article 54 of the EEA
Agreement (Case IV/36.888 - 1998 Football World Cup) (notified under document number C(1999)
2295), OJ [2000] L5/55.
79
See Peeperkorn, L., ‘IP Licenses and Competition Rules: Striking the Right Balance’, (2003) 26/4
World Competition 527 at p.539.
80
Case 6/72 Europemballage Corporation and Continental Can Company Inc. v. Commission, [1973]
ECR 215, [1973] ECLR 199.
81
Ibid. at para 26.
82
Ibid. at para 21.
83
Ibid. at para 25.
84
Ibid. at para 22.
85
Ibid. at para 23.
86
See Case C-334/94 P Tetra Pak v. Commission [1996] ECR I-5951, [1997] 4 CMLR 662 at para 24;
Cases 395/96 P etc Companie Maritime Belge Transports SA v. Commission [2000] ECR I-1365,
[2000] 4 CMLR 1076 at para 114, and Advocate General Fennelly’s Opinion in latter case at para 136.
87
See ECJ decision in Case 322/81 Nederlandsche Banden-Industrie Michelin NV v. Commission,
[1983] ECR 3461, [1985] 1 CMLR 282, at para 57.
88
See for example Case 311/84 Centre Belge d’Etudes de Marche Telemarketing v. CLT [1985] ECR
3261, [1986] 2 CMLR 558, at para 26; and the approach of the European Commission in decisions:
23
Eurofix-Bauco v. Hilti OJ [1988] L65/19; Tetra Pak 1 (BTG License) OJ [1988] L272/27; and
(87/500/EEC): Commission Decision of 29 July 1987 relating to a proceeding under Article 86 of the
EEC Treaty (IV/32.279 - BBI/Boosey & Hawkes: Interim measures), OJ [1987] L286/36.
89
(89/205/EEC) Commission Decision of 21 December 1988 relating to a proceeding under Article
[82] of the [EC] Treaty (IV/31.851 - Magill TV Guide/ITP, BBC and RTE), 1989 OJ L78/43 at para 23.
90
See Case T-69/89 Radio Telefis Eireann v. Commission, [1991] ECR II-485; Case T-70/89 British
Broadcasting Corporation and BBC Enterprises Ltd v. Commission [1991] ECR II-535; Case T-76/89
Independent Television Publications Ltd v. Commission, [1991] ECR II-575; and Case C-241 & 242/91
Radio Telefis Eireann (RTE) and Independent Television Publications Ltd. (ITP) v. Commission, (ECJ)
[1995] ECR I-743, [1995] 4 CMLR 718, [1995] All ER (EC) 416.
91
Case T-51/89 Tetra Pak Rausing v. Commission [1990] ECR II-309, upholding Commission
Decision Tetra Pak I (BTG License) OJ [1988] L272/27.
92
California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972).
93
Derived from the Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S.
127 (1961); and United Mine Workers of America v. Pennington, 381 U.S. 657 (1965) cases.
94
Hylton, K.N. ‘Antitrust Law: Economic Theory & Common Law Evolution’ (Cambridge, 2003) at
p.370.
95
Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, 508 U.S. 49 (1993).
96
See (87/500/EEC): Commission Decision of 29 July 1987 relating to a proceeding under Article 86
of the [EC] Treaty (IV/32.279 - BBI/Boosey & Hawkes: Interim measures) OJ [1987] L286/36 at para
19.
97
See Press Release IP/05/737 on 15th June 2005 where the European Commission fined AstraZeneca
€60 million for misusing the patent system for an anticompetitive purpose.
98
See Court of Appeal ruling in Crehan (Bernard) v. Inntrepreneur Pub Co, (CPC), 21st May 2004,
[2004] EWCA Civ 637. Note that there is also the possibility of registrants seeking injunctions against
trademark owners from pursuing action through the UDRP, although this raises questions on the
validity of domain name registration agreements which recognise the primacy of the UDRP in settling
disputes, and is not dealt with in this paper.
24