First Published: October 12, 2000
By Thorsten Dardat*
Within the past two years, German courts have developed internet law by applying these statutes to domain names: The Trademark Act (Markengesetz: MarkenG), the Unfair Competition Act (Gesetz gegen unlauteren Wettbewerb: UWG) and sections of the Civil Code (Buergerliches Gesetzbuch: BGB). This report outlines the major trends.
I. Domain Names in Conflict with the German Trademark and Unfair Competition Act
Frequently, the issue arises whether domain names may be composed of generic terms. A generic term within the meaning of trademark law is simply a common name for a good or a service. Because of their general availability for daily use, generic terms can never be trademarks (see § 8 II MarkenG). The new question for the courts is whether such terms are permissible domain names or whether they conflict with common principles of trademark law, for instance, the principle that nobody may adopt a common expression to identify and/or distinguish himself as a natural or legal person from others. The Hamburg Court of Appeals, Oberlandesgericht (OLG), discussed the issue as follows (OLG Hamburg CR 1999, 779):
1. Type of Problem / Facts
The plaintiff is a German registered society with some 40 members. As a legal entity, it includes also individuals and promotes common interests, while members retain their legal identity. The plaintiff's members arrange short term lodgings for tenants in various German cities. The plaintiff uses the domain name www.HomeCompany.de. The defendant is also a registered society with 25 members and registered with Deutsche Network Information Center (DENIC) the domain name "Mitwohnzentrale.de". Mitwohnzentrale is a common expression that consumers associate with this type of service. HomeCompany sought against Mitwohnzentrale.de an injunction to disallow its domain name. The court of first instance (Landgericht Hamburg) held for the plaintiff, and the Hamburg Court of Appeal upheld the decision.
2. Summary of the Court's Reasoning
The use of the generic term "Mitwohnzentrale" as a domain name violates the Unfair Competition Act. § 1 UWG states that any detracting from business activity of any competitor through measures of unfair competition caused by another competitor is a restraint of trade, and therefore unlawful. The court held that HomeCompany is effectively shut out from business on the internet and found § 1 UWG to be violated . In the court's opinion, consumers are "caught" by the use of generic terms as domain names, since internet users search information on the internet by guessing simple common words as domain names for services or goods. A domain name like "Mitwohnzentrale" guides consumer to the corresponding registered domain address, and if satisfied with what they find on such a site consumers would not search for additional vendors even if they might know of their existence; if not, they may believe that there are no other vendors. In either case, the court finds the vendor with the generic term to enjoy an advantage because the term simply channels consumers to only one site and keeps competitors from enjoying the fruit of their labor in violation of § 1 UWG. Moreover, in order to prevent the use of common expressions as domain names, the court argued that under German trademark a generic term can be neither a trademark (see § 8 II MarkenG) nor a domain name.
The court of appeals linked trademark law principles with the general clause of preventing restraint of trade under the German Competition Act. The application of legal principles to domain names seems questionable.
Generally, § 1 UWG should apply to domain names used to compete in business even if domain names were traditionally used in scientific, non-commercial contexts. But § 1 UWG also requires that generic term-domain names influence the consumer's declaration of intents in business (see Baumbach/Hefermehl, UWG 16th ed., § 1 No 4). This would require that consumers are being misguided in their normal decision-making. Now that the internet has become a commercial venue for individuals or legal persons, a generic term as a domain name hardly effects adversely a consumers' choice among services and goods. Nobody can seriously expect that a search by a generic term would generate a list of all vendors. It is a general knowledge that each domain name links to one entity and not to an index prepared by an impartial and reasonable third person. Therefore, a generic term cannot unduely influence a consumer's choice, but such undue influence would be required by the court. To say that customers get simply "caught" while surfing the internet by guessing common names for what they might look for, as the court did, does not meet the standard established by § 1 UWG.
Further, a violation of § 1 UWG must at least be contrary to business usages (Baumbach/Hefermehl, UWG 16th ed, § 1 No 2). Since the inception of the internet some 20 years ago, the standard has been "first come first serve". The use of any term was possible without regard to commercial standards. Thus, a generic term as a domain name is not in breach of internet business customs.
The court also found that the use of commonly known expressions as domain names offends § 8 II MarkenG because generic terms can never be a trademark; hence, they are not allowed as domain names either. A trademark identifies a product from a particular company. A common synonym for a trademark is brand name. But a domain name is far from synonymous with a trademark. Apparently, the court's understanding of the internet is mistaken. The internet is nothing but a huge encyclopaedia, and domain names serve merely as search patterns for specific information. Whereas use or abuse of a trademark revolves around remedies, that of domain names does not; these names preclude others from offering their information under the same character string on the internet (see Hartmann, CR 1999, 782). Trademarks and domain names are not the same from a legal perspective. Of course, trademarks find their way into domain names in order to promote a brand or service, just as they find their way into street names, vanity tags and telephone numbers. Yet, such identities can hardly be equated with trademarks.
II. Domain Names in Conflict with the German Civil Code (§ 12 BGB)
Problems arise not just in case of generic terms as domain names. Various courts held that domain names are protected by § 12 of the German Civil Code. § 12 prevents the abuse of names. The sequence of letters in a domain name has the same function as in any other name (LG Hamburg CR 1997, 157), because it makes a web site identifiable under a domain name just as a personal name makes the person identifiable (OLG Hamburg CR 1999, 184). Three types of names concerning domain names exist in the context of § 12 BGB. The first type is a domain name which is both a name and a generic term. The city of Braunschweig in Niedersachsen sought an injunction against a person who had registered the domain Braunschweig.de and who offered cultural and business services and information about the city. The defendant's name is unrelated to the city. Recognizing the issues are different from those involving a domain composed of a generic term, the Braunschweig court (CR 1997, 414) held for the city because of § 12 BGB and argued that the statute includes any misuse of names. Since the defendant's name or business has nothing in common with Braunschweig, only the city may register its name as domain. The court also considered this use of a name an illegal use of trademarks under § 50 I MarkenG. The second type of names involves domain names that are also a trademark (LG Köln CR 1998, 362; LG Braunschweig CR 1998, 364). The trademark law applies because any use of a trademark is the same as in any other use, whether or not the internet is involved. A different treatment controls the third type of domain names where a domain name is identical with a registered trademark but is used as domain name for a different good or service than the registered trademark. One court held for the trademark owner because it believed in his right to use an equivalent domain name for its registered goods or services (LG Braunschweig CR 1998, 364), another court did not (LG München I CR 1997, 540). The first court applied the principle of trademark law that any design or word mark that is to distinguish one company, good or service from another is similar to a trademark falls under the Trademark Act. By contrast, the Munich court held that not every association with a good or service as a design or word mark enables its owner to register the word mark as a domain name and to demand the transfer from the competing registrant of the domain name, except when the domain owner is in the same business as the trademark owner. In a deadlock where a trademark owner and a registrant of an identical domain name dispute each other's privilege some German courts apply the "priority principle". § 6 MarkenG states, the older right shall prevail over the younger one (OLG Hamburg CR 1999, 184), which is basically a "first come first serve" rule. Other courts do not allow trademark law to creep into the area of internet law (LG Düsseldorf, CR 1999, 716).
III. Half way in prison
On 14th of September 2000 the Munich court sent a 27 years old German to prison for 1 year and 10 months on probation (AKTENZEICHEN). He registered under several famous German brand names, for example, BITBURGER brewery, and intended to sell the domain names to the trademark owner. Otherwise, he would block the domains for several years. Indeed, he succeded in the sale of two domain names. The Trademark Act includes in §§ 143 pp. a criminal section that applies in the case of an abuse of trademarks. The penalty can either be a fee or imprisonment for at the most of three years. The defendant did not only register domain names but defrauded also with credit cards. Yet, less facts about the Munich court's judgment are known to make sure why and for which actions the defendant received a suspended prison sentence.
The principle of "first come -- first serve" is not the end of the world, although some German judges and lawyers think it is. They fear a lawless internet. "First come -- first serve" is an unknown principle in German law that is based on abstract written acts. Nonetheless, this rule works well in other fields, for example, telephone numbers including a trademark (e.g. 1800 258 BLUE VAN). There is no reason why it should not apply to the internet. German trademark and unfair competition statutes are difficult to construe and apply when it comes to domain names, as this initial set of cases illustrates. Therefore, caution would seem appropriate when applying old statutory construction to the internet. That points to the following solutions:
Whoever comes first should be able to register a domain name. In case of conflicting interests between a trademark owner and a domain registrant "first come -- first serve" can adequately protect against abuse within the meaning of § 826 BGB under German tort law in the Civil Code. § 826 BGB establish civil liability for any person who acts with malicious intent to cause damage on another person. Under this section, damage on the internet would consists of the unjustified use of a domain name that is also a trademark; the remedy would be the release of the registered domain (see § 249 BGB). It appears that the cases above are easily solved by these two principles, and they do not seem to necessitate the application of trademark law.
V. Post Scriptum
The German Federal Surpreme Court decided in 2001 that generic domain names are ok. For a fresh analysis of the reasons, see the German text by Harald Dingeldey, Esq.