|Registering a Keyword: Trademark Infringement or Unfair Competition?|
In Finance Sélection v Capdevielle (October 1 2010), the Paris Court of Appeal confirmed that the purchase of keywords constitutes trademark use in the course of trade and can also constitute unfair competition. However, the reservation of domain names with the mere intent to prevent competitors from registering them, but without using them, cannot be considered to be trademark use, although it may constitute an act of unfair competition.
Linxea SARL is a French insurance company. It was established by David Capdevielle, who owned the French composite trademark LINXEA, registered for, among other things, insurance services.
In 2007 Finance Sélection, another French insurance company, registered 24 domain names incorporating the trademark LINXEA and purchased the keywords 'linxea' and 'linxeavie'. As a result, Linxea and Capdevielle initiated legal proceedings against Finance Sélection.
The Paris Court of First Instance held that the reservation of the domain names incorporating Linxea's company name and trade name constituted an act of unfair competition, since the only purpose was to stop Linxea from reserving new domain names and to hinder the further development of its internet activities, particularly because the domain names were never used for active websites. In addition, by purchasing the keywords 'linxea' and 'linxeavie' (which have no meaning in French), Finance Sélection tried to divert Linxea's customers for its own benefit. However, the court held that there had been no trademark infringement. The absence of use of the domain names excluded any likelihood of confusion and their mere reservation did not constitute trademark use. Furthermore, the use of a trademarked term as a keyword did not constitute trademark use.
On appeal, the Paris Court of Appeal partially annulled this decision, stating that the purchase of the keywords 'linxea' and 'linxeavie' was trademark use in the course of trade, since it was made within the context of a commercial activity. The purpose of the purchase of the keywords was to redirect Linxea's customers to Finance Sélection's own website offering insurance services. However, the appeal court agreed with the first instance court that the mere reservation of domain names was not trademark use since no goods or services were offered for sale. The appeal court also confirmed the first instance court's ruling that the reservation of the domain names and the purchase of keywords constituted acts of unfair competition. Therefore, the transfer order made by the first instance was unchanged.
Thus, brand owners confronted with domain name registrations incorporating their trademarks that are not being actively used are advised to think twice about bringing court action in France, unless there are potential causes of action other than trademark infringement, such as unfair competition. The registration and non-use of domain names by cybersquatters which are not active competitors is problematic, and one of the alternative dispute resolution procedures available in France may be a more suitable course of action than court proceedings.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Feb.17, 2011