Generic domain names: a challenge for competition law
Domain names are originally a technical shortcut, hiding the IP address of a website server to make it easily and quickly accessible. Easily memorable names have replaced inconvenient series of numbers. Nowadays however, domain names have become genuine identifiers, and distinctive signs in the same way as trademarks.
Yet, bringing closer the legal principles applicable to domain names to those applicable to trademarks is uneasy. A domain name remains a purely technical resource to which it may be difficult to apply a property right, be it intellectual or industrial. On the one hand, its holder only has a right to use this name and its provider manages it more than it owns it. On the other hand, the volatility of domain names and their technical nature make them hybrid signs that the law in general has a hard time grasping.
For several years, however, conflicts between trademarks and domain names have existed. Arbitration centers have been created and specific procedures put in place. Any holder of a domain name is subject to the authority of these centers. While results are satisfactory – on average 90% of complaints are considered well-founded – certain cases present specific difficulties, in particular when the domain name is a generic term.
Generic second-level domains
A domain name is composed of a second level name (or SLD) and a first level name (or TLD), separated by a dot. For example, the name <iptwins.com> has the second level “iptwins” and the first level “com”.
Until recently, there were only few TLDs. Apart from national codes such as .fr, only 22 TLDs existed. These are the classics .com, .org, .net, etc. The conflicts therefore focused mainly on the SLD, the TLD then being considered as a technical resource which should not be taken into consideration, except in specific cases. Two cases arise when the SLD is generic.
When the generic SLD reproduces a trademark, the problem is straightforward and the procedures in place largely apply. For example, in a rather recent dispute on the domain name <vente-privee.com>, the VENTE PRIVEE brand – widely known in France – is easily identifiable, although the “vente-privee” SLD is generic (“private sale”).
The issue is quite different when the name is not protected by a trademark right, because an entire economic sector might suffer from it, not just one single company. A domain name can only be registered by one person at a time, and a name like <telephone.com> could indeed affect all actors in the manufacturing and distribution chain, as well as consumers. Only its holder will benefit from such a generic name, in particular by taking advantage search engine optimization.
This is the reason why the French Supreme Court prohibits certain professions from using generic terms in their domain names, so as not to distort natural competition. The Court held that the use of the domain names <avocat-divorce.com> (“divorce attorney”) gives its holder a disproportionate competitive advantage by creating “a situation leading to the appropriation of a business shared by the whole legal profession and maintaining confusion in the minds of the public”. For such reasons, the use of such generic domain names is prohibited to lawyers.
The generic domain name <marriagesencorse.com> (“Weddings in Corsica”) was also judged to be unprotected by the competition rules by the Court of Appeal of Bastia. In order to benefit from protection under unfair competition, the domain name still had to be distinctive, that is neither generic nor descriptive of the products which it covers.
However, unfair commercial practices are prohibited when they affect several companies in a sector, and even more so when the distortion is such that the general public is affected. The prohibition of deceptive practices therefore applies to generic domain names.
This is one of the reasons why domain names registries managing new domain name extensions have set up “premium” lists. These names, with strong marketing value, are initially blocked by the registries with the objective of healthy competition between the different players in the same sector. Finally, it is important to note that since these names are generic, no extrajudicial procedure is applicable to them.
Generic top-level domains
With the arrival on the market of new domain name extensions (new TLDs), more than 1,300 extensions will eventually coexist alongside the traditional .com or .net. Among these new extensions, there are brands (.loreal, .axa …), cities (.paris, .berlin …), but also generic extensions (.company, .shop …).
Anyone could apply for a new extension, subject to the acceptance of their application. Many private companies have submitted requests to be delegated the management of generic extensions. Amazon filed nearly 100 applications for several extensions, including .store, .book, or .music. Their assignment to Amazon is not a problem per se, as long as the registration of domain names in these extensions is open to the public.
Several companies, however, have indicated that they will use the generic extensions allocated to them in a closed manner, thus allowing them a huge advantage over competition, since it is a whole part of the internet naming space that they thus reserved. Many voices raised against these “closed generics”. Microsoft denounced an “unjustified advantage in direct navigation and online search”, these companies being “directly associated with the type of products or services they offer”.
For example, the Richemont group, which specializes in the luxury industry and which owns brands such as Cartier or Montblanc, applied for the management of .jewelry. In the event of the group’s closed use of this extension, the obstacles to competition will be obvious. It is easier to understand with such an illustration the concerns of the major internet players who believe that competition will suffer. According to them, consumers should have a choice, not be confined to the products or services of a single group.
The debate is even more striking when the interference with competition relates to regulated sectors such as health. The delegation of .wine was long debated in the internet community.
However, one can understand the wish of companies to use generic extensions in a closed manner in terms of the material, human and financial investments. What could be more natural than wanting to succeed more than competitors? Freedoms of business and competition are essential, especially with the internationalization of trade. But they must necessarily be enclosed within limits, those of healthy competition and consumer safety. As ICANN has promised a new wave of new gTLDs in the years to come, the face of the Internet is changing radically.