Saturday, October 9, 2010

The First Supreme Court Decision on Domain Names

Huťko is happy to announce the existence of the first domain name ruling rendered by Supreme Court of Slovak republic (Najvyšší Súd SR). It is a usual trademark dispute with really unusually filed action. Huťko apologize for not attaching decision itself (3 Obo 197/06), but the Supreme Court decided to sent him only paper version. Anyway, if some of Huťko's readers really want to read the decision, just write him an email (he might scan it somewhere). The decision is rather short (6 pages) and not so fresh (rendered on the 12th of July 2007.). Working name BMW v. SK-NIC.

The story is also quite simple. Some squatter registered domain name rover.sk and BMW, as a owner of the two national word-trademarks ROVER (150 029, 181 629), "unexpectedly" filled the lawsuit. The nature of the website content was not stated in the ruling.

Here comes the surprising part, at least for Huťko and his friends. The plaintiff unusually sued not the squatter, but only the national domain name authority (SK-NIC, a.s.). Why? Nobody knows. Plaintiff asked the court to terminate the contract between the domain authority and squatter. The first instance (Krajský súd v Bratislave) ordered termination of the contract and awarded plaintiff costs of proceedings. Defendant, SK-NIC a.s., appealed to the Supreme Court.

Plaintiff based his claim on

a) defendant's art. 11.4 of general rules of the domain name registration ("Rules") and
b) trademark law.

AD a)
The Rules basically say that domain name shall not contain any substantial part of the trade mark. If so, the contract can be terminated by the domain name authority.

Plaintiff argued that contract in question was concluded contrary to defendant's own Rules. Although he agreed that domain authority is not responsible for squatter's act of registration (selection of domain name), he objected breach of defendant's own rules of registration when entering into the contract with squatter. He went further to say that defendant is a profiting company (public limited company) and this kind of registrations only generate him more income. This, in plaintiff's view, is also the reason why he is reluctant to terminate even blatantly "conflicting" contracts upon justified request.

On the other, defendant asserted that this termination (provision in contract) is neither "automatic" nor his legal obligation. According to defendant, the termination is only his right.

AD b)
Furthermore, plaintiff also based his "termination" relief on the trademark law. He pointed out that pursuant to § 26 of Trademark Act (former one) he is entitled to prohibit the use of his trademark erga omnes.

Assessments of the Court
This title is rather funny when looking at the decision. Actual assessments are embodied in two or three paragraphs. Anyway, the Supreme Court noted that domain name contract, which include the Rules, was concluded between squatter and defendant. Since the plaintiff is not a party of the contract, he can not successfully claim it's breach. Only parties of the domain name contract are entitled to this as any contract has it's legal effect only inter partes. Regarding trademark claim, the Court cited the role of defendant from his Rules and concluded that "only the domain name holder could infringe trademark rights of plaintiff". The Court went further to say that plaintiff could rather sue squatter asking for the refrain or clearance of infringement. Hence the Court dismissed the action for lack of entitlement to be sued.

Huťko's remarks
When it comes to relief for termination, I have no doubt it was bad decision of the plaintiff's counsel. Even though I suppose that outcome of the case is basically correct, I am just surprised that Court rejected infringement on the side of domain name authority without examining it's grounds. It is obvious that domain name authority only provide the technical means, but I would expect at least something like this (Google France C-236/08).

57 The fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign. To the extent to which it has permitted its client to make such a use of the sign, its role must, as necessary, be examined from the angle of rules of law other than Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94, such as those referred to in paragraph 107 of the present judgment.

58 It follows from the foregoing that a referencing service provider is not involved in use in the course of trade within the meaning of the abovementioned provisions of Directive 89/104 and of Regulation No 40/94.
Although domain name authority is not AdWords, I think that opinion of the Court of Justice is applicable mutatis mutandis in this case. Hence I would expect Court to say that either there is no wrongful act or there is no use of the trademark by domain name authority. Thus no corresponding infringement. Huťko also dislike that nobody ever mentions his bellowed e-commerce directive and the fact that domain name authority is an information society service provider (Article 1(2) of Directive 98/34/EC as amended by Directive 98/48/EC).

‘any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services’.
I would expect the Court to clarify why is the DNS outside of the hosting safe harbour (art. 14) and why is the domain name authority not responsible at all. Even though action in question was dismissed I believe that lack of entitlement to be sued would not occur in the proceedings where domain name authority is only the second defendant (in order to be obliged to execution of the ruling against the first one - squatter). Otherwise it would not be very pleasant outcome for internet enforcement.

The ruling is also interesting from another aspect. If there is no construction of contractual provision in favor of a third party (e.g. to request termination), how could also the order for domain name transfer be declaratory as I have never acquired this right (to request the transfer) as non-party. Therefore is this decision of constitutive nature? If so, where is the empowering provision of law for the court?

§ 50 Civil Code
(1) The participants may also conclude and agreement in favour of a third person.
(2) Unless this Act or agreement between the participants stipulate otherwise, the third person shall be entitled from the agreement from the moment when he expresses his consent to the agreement. ...
(3) Until the third person expresses its consent, the agreement shall be valid only between those who concluded it; ...
To be honest, this is still big riddle for Huťko ...

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