mardi, mars 08, 2011

France :'Free' is no free-for-all

In a decision of October 29 2010 the Paris Court of First Instance ruled that the use of the term 'free' in a domain name was not free, since it had become a well-known trademark owned by French internet service provider Free SAS.

Facts

Free was set up in 1999 and currently has a 25% market share in France. It owns several trademarks consisting of or including the term 'free', including a word mark registered on October 25 1989 and a semi-figurative mark registered on April 8 1999 containing the phrase 'la liberté n'a pas de prix' ('freedom is priceless'). Free also owns the domain name 'free.fr'.

The defendant, French company Osmozis SAS, sets up and markets wireless hotspots using WiFi technology. Osmozis registered the domain name 'freewifi.fr' on November 4 2005 and used it to point to a commercial website marketing its services and products. In addition, Osmozis included the metatag 'free' in the source code of its main website www.osmozis.com.

On June 12 2009 Free sent a cease and desist letter to Osmozis asking it to stop using the domain name, but Osmozis refused to cooperate. Free then filed a lawsuit against the company on July 31 2009 on the grounds of trademark infringement and tortious liability for violation of its company name, trade name and domain name. Free sought compensation and the transfer of the domain name.

Free submitted that the addition of the term 'WiFi' after its FREE trademark in the domain name did not preclude similarity between the domain name and the FREE trademark. In support of its assertion that the FREE trademark was well known, Free produced evidence of its significant notoriety and reputation, including opinion polls, data substantiating the number of registered users and decisions of the Office for Harmonisation in the Internal Market.

Osmozis contended that Free's trademark in the term 'free' was not distinctive, but merely descriptive of the products or services for which the trademark was registered and that it should therefore be revoked. Secondly, Osmozis argued that its products or services were different to those offered by Free and, in light of the principle of specialty of trademarks, there could be no infringement in the absence of use in relation to identical or similar products or services. Osmozis also argued that there was no risk of confusion between the domain name and the FREE trademark, as the term 'free' was purely descriptive. Finally, Osmozis submitted that the trademark FREE was not a well-known trademark.

Decision

The Paris Court of First Instance rejected Osmozis's contention that Free's trademark in the term 'free' was descriptive of the products or services for which it was registered, pointing out that it had not come to mean 'wireless' (in French) in the context of telecommunications, as Osmozis contended. The court agreed with Free that the term 'free' has no common meaning in French (although it is sometimes used in its English sense when associated with another term, such as 'free jazz'), and this was the case when the trademark was registered in 1989. Osmozis's request for Free's trademarks to be declared invalid was therefore denied.

The court refused to find that Osmozis was infringing Free's trademarks by using the domain name, as it was merely being used to point towards its main website, which did not reproduce the FREE trademarks. Importantly, however, the court then went on to rule in favour of Free in relation to the well-known nature of Free's word mark in the term 'free'. As a result of Article L. 713-5 of the IP Code, the mere registration of a domain name reproducing a well-known trademark could be sufficient to trigger the liability of the registrant of such a domain name under certain circumstances. The court considered that the use of the domain name by Osmozis could not be considered legitimate, especially given the risk of confusion in the mind of the public, which was likely as a result of the considerable reputation of the FREE trademark in the telecommunications field.

In addition, the court considered that the registration and use of the domain name by Osmozis was an act of unfair competition whereby Osmozis chose the domain name with a view to unduly benefiting from Free's established goodwill and reputation in its domain name, company name and trade name by creating a likelihood of association between the domain name and Free's name, products and services.

In view of the above, the court awarded Free damages of €15,000 and €10,000 in costs.

The Paris Court of First of Instance considered that the additional issue of the inclusion of the metatag 'free' in the source code of the website www.osmozis.com did not constitute either trademark infringement or grounds for tortious liability.

Comment

One notable aspect of the decision is that had Free not succeeded in proving that FREE was a well-known trademark, Free's claim in relation to trademark infringement would have failed for much the same reasons as its claims in relation to metatag use failed. This is because the domain name was merely being used to point towards the Osmozis website, which did not reproduce the FREE trademarks. Thus, the domain name was not being used in a trademark sense, but only as a technical means of granting access to a website.

A domain name used to point towards a website may remain in the address bar on arrival at the website, or the main address of the website may appear, depending on how the pointing has been set up. In this instance, even though internet users could obtain access to the Osmozis website by typing in the domain name, the pointing had been set up so that the domain name no longer appeared in the address bar on arrival at the website. It appears that the court may have been influenced by this, even though it did not specifically pick up the point. Thus, the outcome may potentially have been different if the domain name had remained in the address bar on arrival at the Osmozis website, given that the parties were operating in broadly the same field. However, the court overcame this issue by finding instead that FREE was a well-known trademark and thus benefited from a greater degree of protection.

The court also confirmed the specific status of domain names under French law, namely that through principles of tortious liability they are protected independently from a trademark which they might reproduce.

Finally, in the case at hand Free would probably have been in a good position to obtain transfer of the domain name by resorting to one of the alternative dispute resolution procedures implemented by AFNIC, the French domain name registry. However, it is not possible to obtain damages and costs through such procedures, unlike court proceedings. While court proceedings take much longer, they may ultimately act as a greater deterrent to potential infringers, who will often find it difficult to pay damages and costs, especially those in the region of €25,000.

For further information on this topic please contact David Taylor, Vincent Denoyelle or Jane Seager at Hogan Lovells by telephone (+33 1 53 67 47 47), fax (+33 1 53 67 47 48) or email (david.taylor@hoganlovells.com, vincent.denoyelle@hoganlovells.com or jane.seager@hoganlovells.com).

Contributed by Hogan Lovells