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JILT 2005 Issue 2 & 3 - Applying EC Competition Principles in the Case of Domain Names

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


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 to1. 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 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).


This is a refereed article published on: 30 January 2006.

Citation: Galloway and Komaitis, ' Assessing the Justification for Rights Management Systems’, 2005 (2-3) The Journal of Information, Law and Technology (JILT).<http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/2005_2-3/galloway-komaitis/>.


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 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.

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 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

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”.

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 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 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 anti-competitive 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 SABAM48, 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.

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 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 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 market63 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 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 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 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.

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 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 Treaty84, 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 place89. This was a finding that the CFI and ECJ implicitly accepted by upholding the Commission Decision in the 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 immunity94 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

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 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, ‘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 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/in-notes/rfc1591.txt, accessed on the 29th of July 2004.

12 See, ICANN, New TLD Application Process Overview, at http://www.icann.org/tlds/application-process-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 (9th 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 4th 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 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 T-70/89 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 II-575, 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.

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 18th 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: 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.