The lack of specific regulations. Brief account of the proposed legislation
The courts resort to the principles governing trade marks
Domain names: distinctive signs or mere electronic addresses?
The issue of trade marks similarity: signs and products or services
In Italy, following perhaps a slower pace than in other areas of the world, the Internet started to emerge as a standard for commercial communication around the mid-nineties. From 1995 onwards the trend of penetration among the public has been constantly growing although the most impressive increase has taken place only in the last three-four years.
Of the several questions that the new medium has put forward concerning the status of the, let us call them traditional, rights over the net, the one dealing with domain names and their relation with trade marks and other distinctive signs used in commerce is the one which will be developed in further detail in the following notes.
No doubt that Italy, as many other EU countries, can be defined as a second comer compared to the US in establishing a legal framework for the disputes arising between domain names registrants and trade mark holders if we only bear in mind that no court was faced with this issue before 1996: the first precedents date back to 1996 (Court of Modena, 23.10.1996, RDI 1997, II, 96; Court of Bari, 24.7.1996, Foro It. 1997, I, 2316).
Yet our insight is directly into one of the areas where the conflict between the Internet, or better the sites domain names, and traditional trade mark rules has blown up: the case for the registration with the Registration Authority of a domain name identical or similar to a previously registered (or even used without registration) trade mark (or other distincitive sign).
We will refer to this particular conflict as ‘the domain names vs. trade marks dispute’, one which at present still lacks a specific regulation in Italy and has so far be dealt with recurring to the fundamental patterns governing the conflicts between distinctive signs laid down by our Trade Mark Law of June, 1929, n. 929 (last amended in 1992, 1996 and 1999, TML)1.
But we can also figure that trade mark counterfeiting on the internet follows a more conventional path: this is the case when a trade mark is used with no authorisation from the legitimate holder on the web pages of a third party’s site. This conflict appears to me as a traditional one since it is clearly irrelevant as to the finding of counterfeiting whether the unauthorised use takes place off-line, like it has always used to be in the real world, or on-line as in the virtual world of the internet: no doubt that the latter must be classified as a commercial channel and the use of a trade mark on the internet equals the one is an advertising activity.
It follows that the Trade Mark Law principles plainly rule this conflict in respect both to the issues of identity or similarity between the signs on the one hand, and between the products or services for which the trade mark was registered and the supposed infringer’s web site contents on the other (sects. 1.1.b, 17.1. TML). An exception to this rule is provided for the case of well-known trade marks which are protected in their intrinsic selling power notwhitstanding the products or services of registration (sects. 1.1.c, 17.1.g TML).
“The use inside the web pages of a third party’s site of a trade mark which is identical with a previously registered one amounts to trade mark infringement and unfair competition by confusion when the site’s contents deal with the same products for which the trade mark was originally registered”.
(Court of Velletri, 20.5.2000, AIDA 2000, n. 732).
But also on the side of what we have called ‘the domain names vs. trade marks dispute’ we are witnessing a large application by the italian courts of the Trade Mark Law with results that are more than satisfactory.
The lack of specific regulations. Brief account of the proposed legislation
Trade Mark Law application was the first instance of the attempt by the courts to deal with ‘the domain names vs. trade marks dispute’ once it become established that domain names share with trade marks the nature of distinctive signs used in the course of commerce. This point of view, agreed upon by the majority of the courts although at the beginning not entirely consolidated (see § 4 below), was fostered and perhaps even forced by the lack at the time of a specific legislation.
Some time has elapsed and the stream of decisions is nowadays pressing but no legislative result has been reached so far.
In any event, this situation might cause lesser uncertainites than the ones which would have arisen had the legislator approved the Bill proposed by Sen. Passigli early this Year (Decree approved by the Council of Ministers on March 13, 2000).
The recent changing of the political scene in Italy casts a well-grounded shadow of doubt over the destiny of this Bill which was not approved by the out-going Parliament before this spring elections, then elapsed, and has not been represented so far. Still, being the one and only attempt to handle the matter with some degree of specificity and competence, it is worth examining at least in its most characterizing features.
As we will immediately see, the degree of carelessness of the legislation in progress is striking even to the layman, particularly if compared with the fine work of the judges in tuning the TML principles to the nature of the ‘the domain names vs. trade marks dispute’. This explains the criticism that most of the commentators have shown towards it.
We will point our attention to articles 1 (Domain names registration), 1 bis (Domain names unlawfully registered), ending with a brief comment on the rationale behind art. 32 (Proposed National Commission for Access to the Internet and Other Telematic Nets).
Most important according to article 1 (1.1, 1.2, 1.3) is that personal names and trade marks may be registered as domain names only by one of their legitimate righholders and on a first to file basis. The rule is comprehensive in the sense that any personal name (not only famous names, and what for the case of omonymous?) and any registered trade mark whatsoever (famous or not), irrespective of the products or services for which registration was sought, gives the right to the corresponding domain name even if, according the the first come-first served rule, this results in the legitimate trade mark holder in a different field of activity being deprived of the acces to the internet using his sign.
The first to file rule, commonly intended as a technical rule of the Internet world that cannot interfere with any substantial right granted by the norms (see § 4 below), is vested with the status of a principle of law (art. 1.5).
Surprisingly, unregistered trade marks are not to included in article 1 listing.
Face this all-inclusive catalogue of infringing conducts, the sanctions provided for by art. 1 bis (¤ 5.000 to 30.000) are undoubtely eccessive. Moreover ISP’s are concurrently responsible for the damages caused by any illegitimate domain name registration. On the side of the contents of a site, criminal liability extends also to the ISP when these contents amount to an offence.
Finally art. 32 establishes a National Commission for Access to the Internet and Other Telematic Nets with the aim of concentrating domain names registration and administration in the hands of a governative entity.
This body’s main tasks will be the ones of dictating the guidelines for domain names registration and of recording all the relevant information concerning domain names and their applying parties in the National Register. Being a governmental body the setup of this Authority, which would supersede the existing ones, moves in the opposite direction than the ones of informality, flexibility and quickness that have characterised the net since it was borne and could therefore have an hindering effect over its functioning.
As I have already mentioned this Bill is currently pending and the chance of it being approved in a short delay are virtually non existent.
Let us now look at how the ‘domain names vs. trade marks dispute’ has been approached by the courts.
The courts resort to the principles governing trade marks
Due to the approach of this paper I would deliberately skip the usual technical introduction concerning the functioning of the domain names registration system in Italy; it suffices to say that it lacks whatsoever specificity if compared to the international standards and its rules almost entirely recall the procedures followed by the relevant authorities in the US. As we will shortly see afterwards, this is certainly the case for the Rules of Naming and Domain Names Dispute Resolution Policy whose last version (3.6) is in force since August 14th, 2001.
Faced with an increasing number of conflicts between trade mark holders and third parties having registered with the Registration Authority an interfering domain name and in order to assess the role of TML principles, the courts had first to establish whether a domain name shared with trade marks and other similar signs used in commerce the nature of a distinctive sign or not, being in this latter case a mere telematic address in order to locate a given computer in the internet universe.
It was of course a crucial and preliminary question since the resort to the rules of trade marks and unfair competition was bound to the affirmative. The point was not to establish that strictly speaking a domain name equals a trade mark but that, if found to share the same nature of distinctive signs in general, it could be subjected to the TML regulations and also to the ones of art. 2598 of the civil code concerning unfair competition. Art. 2598 founds the tort of unfair competion in its differents conducts; our present concern is for art. 2598 n.1 dealing with unfair competition caused by way of using confusing signs; this clause aims at protecting registered as well as unregistered trade marks and similar signs against confusion and its relevance as to domain names is straightforward. Art. 2598 c.c. obviously applies only when its premises are met namely that the parties are commercial entepreneurs competing on a potentially common market.
The leading argument put forward by the first commentators in order to establish that domain names are distinctive signs relies on the fact that the internet is indeed a commercial vehicle and the web site defines not only an area of virtual commercial activity but also a new channel to communicate with the public, to adverstise one’s products or services, etc…: the site domain name, which like a trade mark is freely chosen by the registrant, then primarly functions as a medium to convey the consumer’s interest (see FRASSI, Internet e segni distintivi, RDI 1997, 177, 182; SENA, Il nuovo diritto dei marchi, Milan 2001, 96 ff.).
It must also be rembered that TML already considers the case of a trade mark conflicting with some other distinctive sign as well as the case where a different sign is anticipated by a prevoius trade mark; section 13 e 17 TML therefore lay down a bunch of general rules that are not restricted to trade mark but apply to conflicts arising between registered trade marks and other signs whose right stems from use. In this connection, TML rules could find a direct application to domain names, provided their nature of commercial distinctive signs is recognised.
This last reasoning was soon upheld by the courts.
In an early decision where the issue was exactely the one of a trade mark holder for a travel agency (Amadeus) reacting against the adoption of an identical domain name for a site offering travel packages; the Court of Milan affirmed:
“it is not questionable that a domain name has a distinctive character which helps to identify the holder’s site and its commercial offer to the public through an interconnection of nets (the internet)… a website can be appreciated as the virtual place where an undertaking meets the consumer in order to stiuplate a contract”
(10. 6.1997, RDI, 1998, II, 430, confirmed by Court of Milan, 22.7.1997, ivi).
Among the most recent decisions, the Court of Biella has ruled that:
“A registered domain name is protected trough IP rights even if of a non typical nature”
(16.5.2000, Giur.piem. 2000, 443)
where ‘non typical’ means that stricly speaking a domain name name is of course not a trade mark or other expressely regulated sign.
Accordingly, the “first to file first to serve” rule is considered of a purely technical nature and cannot frustrate any of the rights granted by the law over a given sign, being this a trade mark or other kind of distinctive sign.
If, following the findings illustrated above, the principles dictated by TML and art. 2598 apply to all distinctive signs they also rule the conflict between domain names:
“The use of a domain name identical with the one of a third party amounts to an act of unfair competition according to art. 2598 if this use results in confusion”
(Court of Ivrea, 29.7.2000, Dir. Ind. 2001, 177).
Domain names: distinctive signs or mere electronic addresses?
This being the direction follewed by the mainstream, we must also account for the opposite trend although it is one only scarcely represented.
The idea that a domain name qualifies for nothing more than an electronic address and is therefore deprived of the commercial potential underlying trade marks was first adopted in 1996 by the Court of Bari (24.7.1996, Foro it. 1997, I, 2316) and quite recently upheld by the Court of Florence, according to which:
“The purpose of a domain name is to allow people to reach a given web page”
“the rules of the internet regulate a self contained system and are of a strictly technical nature…the domain name is a mere address, a telephone number, a medium to reach a certain site that functions as do numbers in the street to locate someone’s site or telephone numbers to speak with someone”.
“being a technical device, no problem can possibly arise as to the conflict between a domain name and trade mark or other distinctive sign”.
(Court of Florence, 29.6.2000, Dir. Inf. 2000, 672; see also Subsidiary Sect. of Empoli, 23.11.2000, in GALLI, I domain names nella giurisprudenza, Milan 2001, p. 398)
The rationale behind this idea is that the internet is a world apart, following a set of technical rules among which stand out the ones governing domain names assignement (and notably the first to file first to serve rule) and whose compliance exhausts any need to resort to the legal principles dictated for distinctive signs in general.
As already said, that domain names are distinctive signs used in a commercial context such as the one of the internet and that TML principles plainly cover also the ‘domain names vs. trade marks dispute’ is now commonly accepted by the majority of the courts.
Great consensus is also around the opinion that:
“ the first to file first to serve rule regulate the granting of domain names on the internet but cannot turn into a lawful one the use of a name that is in conflict with the basic legal principles of distinctive signs”.
(Court of Vicenza, 6.7.1998, GADI, 3824; see also Court of Rome, 2.7.1997, ivi, 3770).
The focus has then shifted to the specific conditions that according to TML (and similarly art. 2598 c.c.) must be satisfied in order to upheld a finding of an ordinary trade mark infringement against a domain name.
According to sect. 1.1.b TML, trade mark protection requires that a risk of confusion for the public arises due to:
- the identity or similarity between the signs;
- the identity or similarity in respect with the products or services. In the case of domain names, one will look at the products or services for which registration was sought and at the site’s contents.
When we talk about this general rule for ordinary trade marks, we are obviuosly leaving apart the area of famous trade marks whose protection hangs upons specific conditions that lie far away from confusion (see sect. 1.1.c, 17.1.g TML); we will come back to this topic in a while (§ 6).
The issue of trade marks similarity: signs and products or services
Talking about identity or similarity where at issue are a domain name facing a previously registered trade mark (but the same applies when two domain names are involved), the courts where soon required to answer the following question: is a difference in the top-level domain name (TLD) enough to conclude that two signs are not similar ?
The answer has been a clearly negative one.
As stated by the Court of Milan in relation to the geographical TLD .it:
“.it suffix is deprived of distinctive character since its purpose is the mere geographical localization of the computer where a certain site resides”
(10.06.1997, RDI 1998, II, 431; with reference to a conflict between two domain names bearing a different TLD see Court of Genova 17.7.1999, Dir. Inf. 2000, 341).
As a result the comparison between a trade mark and a corresponding domain name:
“must be limited to the second level domain name adopted by the second comer, which appears identical to a fraction of the plaintiff’s trade mark”
(Court of Modena, 1.8.2000, in GALLI, I domain names nella giurisprudenza, cit.,p. 358).
Similar conclusion as to the lack of distincitve character in generic TLD’s has been reached concerning the TLD .net (Court of Milan 3.2.2000, Dir. Inf. 2000, 493; Court of Genova 13.10.1999, Dir. Inf. 2000, 346), so that we can conlcude that this rule applies in general to all TLD, whether geographical or merely generic.
Only the Court of Rome can be reported to have chosen an ambiguos approach in a dispute beween a .com and .it TLD’s (Court of Rome 9.3.2000, Dir. Inf. 2000, 360).
For the sake of precision, I must say that when two signs share their most characterising part, as in many of the cases reported above involving a second level domain name and a pre-existing trade mark, the issue is not the one of similarity as the courts tend to assert but the one of identity notwhistanding the addition of a different top-level domain name (but the contrary has been ruled by Court of Rome last cited that has excluded identity as well similarity due to a difference in TLD’s).
If the conflict is between domain names, it is likewise of no relevance the adoption of two different TLD.
In practical terms this could lead us into assuming that, whenever the two signs also refer to the same products or services, it is sect. 1.1.a TML that calls for application instead of sect. b, with the result that an evaluation of the potential confusion is no longer imposed2.
In this direction points a recent decision of the Court of Pistoia (15.10.2001, copy on file with the author) concerning the domain name Shell.it, recordable as the first to have applied art. 1.1.a) TML to a domain name vs. trade mark dispute involving the aforedescribed domain name registered by a third party and the corresponding trade mark of the petroleum company, registered also for the products (software, hardware, informatic tools, internet services, etc) to which the site in question referred.
To sum up, identity or similarity between signs must be scrutinized adopting a substantial approach and irrespective of whatsoever graphical device that may be used in order to avoid a finding of literal correspondence (to give an example, I think that the following: Giorgio.Armani.xxx; Giorgio-Armani.xxx; giorgioarmani.xxx; giorgio-armani.xxx; Giorgio/Armani.XXX; giorgio/armani.xxx, etc…, should all be considered identical to the registered trade mark consisting of first and last name of the famous fashion designer, left apart the question of renown).
TML principles mandate that a finding of infringement depends on a risk of confusion resulting from signs as well as from products or services.
The approach that the courts have adopted so far in the ‘domain names vs. trade mark dispute’ requires, once an interference between signs is established, a concurrent finding of interference between the goods or services for which the trade mark was originally registered and the contents of the challenged site (or between the contents of both sites, when two domain names are at issue).
According to the traditional test followed in trade mark cases, similarity between products and services and a site’s contents occur when the consumer is led into believing that a link exists between the site and the original trade mark owner, being this link a source of confusion or simple association between the site content’s and the trade mark’s owner production.
“According the the general principles of TLM we must then evalutate whether in the specific case submitted the domain name carpoint.msn.com. is confusingly similar to the domain name carpoint.it and the trade mark Carpoint…We must investigate whether due to an undoubtable similarity between the parties product or services (car dealers) consumers are likely to be confused or to associate the two signs: counterfeiting of a trade mark takes place only when similarity between products and activities may lead the public to believe that some kind of link exists as to the source where the products originate from…”
(Court of Rome, 9.3.2000, cited; counterfeiting was not upheld. Also considering the matter Court of Pescara, 9.1.1997, Dir.inf. 1997, 952; Court of Milan, 10.6.1997, 22.7.1997, RDI 1998, II, 430; Court of Verona, 25.5.1999, RDI 2000, 162).
Nevertheless the unavoidable shortcomings of this literally shifting the traditional approach to “the domain names vs. trade mark dispute” immediately come to the surface when approaching a few collateral problems on the internet of no lesser importance.
The so called specialty rule, according to which a trade mark is protected for the goods or services for which registration was originally sought openly conflicts with one of the internet golden rules: the web does not support two identical domain names. But according to the specialty rule, we all know that similar or identical trade marks may, to a certain extent, peacefully coexist in the real world if registered for different products.
From a slightly different point of view, one could seriously question that the specialty rule can still play a role when the site, whose domain name literally interfers with some other sign, is inactive; in such a case one of the terms of comparison is obviously missing.
Quid iuris then?
Of course some of these difficulties can be overcome when dealing with well-known marks that by definition are protected irrespective of an interference on the side of goods or services.
Infact the Court of Vicenza with regard to the Vuitton trade mark has affirmed that:
“Also the mere registration of a domain name consisting of the most characterising part of a third party’s trade mark amounts to an infringement of the aforesaid trade mark”
(22.3.2000, GADI 2000).
But what for ordinary trade marks ?
No clue can be drawn from precedents since the issue has not been examined yet by the courts; we can nontheless suggest a few guidelines.
When one term of the comparison lacks a good or content reference as in the case of an inactive site, the domain name has to be considered in its purely nominative dimension; as a consequence, the comparison with a different sign, being this a trade mark or other, can then be based only on the literal aspect. Each time the product or content side of the equation is missing, we are facing a substanially abstract comparison.
When talking about ordinary trade marks, we face the two following scenarios.
We can regard the mere registration of a domain name bearing a correspondence to a third party’s ordinary trade mark as non infringing since products interference is lacking, therefore concluding that mere registration could be relevant only when a famous trade mark is involved, as in the Vuitton case reported above.
According to this opinion an infringement may arise when the domain name is eventually connected with a given activity exercised through the site and confusion ought then to be apprecitaed in line with the traditional principles of TML.
A different approach consists of applying the rule formulated for well-known trade marks also to ordinary ones which conflict with the mere regiatration of a corresponding domain name; in taking this direction one should consider that whenever a domain name is only merely registrated absent any use, the side of the goods or activities offered through the site is always missing, leaving no room for the application of the so-called “specialty rule”. Were we to conclude that the mere registration of a domain name has a blocking effect on the correpsonding trade mark rightholder’s intention of approaching the internet with the same sign, we could not underestimate the risks entailed in such a consistent enlargement of the trade mark’s owner exclusive rights.
Putting aside the case of inactive sites and in more general terms, one could still question the meaning and the role of product or service confusion drawn from the trade marks world if applied in the virtual universe of the internet.
It has infact been argued that due to the features of the internet, what is relevant to the consumer approaching the net is the name itself which is typed on the keyboard irrespective of the products or services offered, at least at the initial stage (LIGUORI, Dir. Inf., 1997, 962 ff.; FRASSI, RDI 1997, II, 183).
From a different point of view, it is certain that the peaceful coexistence od similar or identical signs in the real market cannot be simply transposed in the virtual one due to the technical constraints of the internet domain name system.
When a legitimate trade mark owner registers the same as a domain name no doubt that no one else, even if lawfully using in the real world a similar or even identical trade mark for different products or activities, can enter the net using the same as domain name since the previous registration has a blocking effect due to the structure ot the internet.
What are then we to conclude regarding this situation ?
I don’t think that the first legitimate comer can be denied its right to the corresponding domain name, even if as a result the second comer would have to adpot a different choice, for example using a different TLD or a slightly modified sign. This is one area, the one of hte so-called “honest claims” (CORNISH, Intellectual Property, 4TH ed., London 1999, 612) where in practice the internet rulesmandate to supersede TML principles.
In this connection the Court of Modena has stated:
“…in accordance with the so–called specialty rule, protection of a trade mark not necessarily streches as to cover the rightholder’s claim to use the same trade mark as a domain name. In particular, no protection seems to arise when the trade mark’s holder registration as a domain name is superseeded by the registration of the same name by another legitimate holder active in a totally different market”
(Court of Modena, 24.1.2001, in GALLI, I domain names nella giurisprudenza, cit., p.458).
A brief and conclusive remark is therefore that TML rules need to be applied to the world of the conflicts in internet with a certain caution and may not fully help in understanding and resolving the different issues that the net is bringing under the courts’ attention.
For part II of this article, please click here.
1 D. lgs. 480/1992 extensively amended the Trade Mark Law in order to implement EC Directive 89/104/CE; d. lgs. 198/1996 followed Italy’s ratification of the Trips Agreement of 1994 and d. lgs. 447/1999 the one of the Madrid Protocol of 1989.
2 Sect. 1.1.a TML states that the rightholder can forbid to a third party to use, without his consent, “a trade mark which is identical for products or services which are identical to the ones for which registration was sought”.