by Christian Schröder*

On November 22, 2001, the German Supreme Court (Bundesgerichtshof, Docket Nr. I ZR 138/99, Shell.de) ruled that the use of one's private name as a domain name may violate not only a company's trademark rights but also the company's name rights under § 12 BGB (German Name Law, which prevents the abuse of names), see also Thorsten Dardat, "Recent German Cases on Generic Terms used as Domain Names". The Court additionally held that mere registration of the domain name, and not only the later use thereof, may violate the company's name rights.

Plaintiff in this case is a German registered limited liability corporation named Deutsche Shell GmbH ("Deutsche Shell"), which is a subsidiary company of the worldwide mineral oil tycoon Shell. When in 1996 German Shell wanted to register the domain "shell.de" it learned that the domain name had already been reserved for the defendant, whose legal name is Andreas Shell. The defendant installed under this domain name a website -colored in yellow and red -- for his own part-time business, for which he performed translations and issued press releases.

Deutsche Shell brought suit against Andreas Shell, seeking: 1) a permanent injunction with respect to the commercial use of the shell.de domain name; 2) a permanent injunction with respect to the private use of the shell.de domain name; 3) declaratory judgment that the defendant would be liable for monetary damages; and 4) relinquishment and transfer of all legal rights for the shell.de domain name to plaintiff.

Plaintiff prevailed before the district court and the court of appeals, both in Munich and defendant declared under penalty of perjury that he would cease and desist any future commercial use of this domain name (see also: Christiane Krueger: "Private Cease And Desist Orders") and he changed his website pursuant to the relief sought in plaintiff's complaint. On appeal, the German Supreme Court affirmed in part and reversed in part.

As to the first claim for relief, permanent injunction of commercial use, the court ruled that German trademark law (MarkenG), which applies to the commercial use of domain names, pre-empts in general three other sources of law on the subject: 1) the naming protection set forth in § 12 BGB; 2) unfair competition law under the Unfair Competition Act (§§ 1, 2 UWG); and tort law as it is stated in § 823 BGB (liability for breach of statute). Even applying the governing trademark law, however, the Court found no cause for issuance of a permanent injunction, reasoning that there was no imminent danger of a new violation of the plaintiff's trademark in light of the declaration given by the defendant in the lower courts.

As to the second claim for relief, permanent injunction of private use, the Court affirmed the lower courts' granting of the permanent injunctive relief based on § 12 BGB. This "name law," as it is set forth in § 12, is not pre-empted by the trademark law, and § 12 BGB was violated as soon as he registered the domain name. Because the internet permits only one domain name registration under the same top level domain (here: ".de"), the mere registration of the domain name of another person or legal entity interferes severely with the interests of the party possessing that name, which the court deemed worthy of protection.

The court's reason was based, at least in part, on the fact that a significant part of the public searches for information in the internet by typing the name of the searched company in the web address field. When someone has appropriated a domain name mirroring the company's name, the company loses the opportunity to readily provide consumers with information about itself. The court cautioned that, upon the facts of this case, such interference does not automatically result in a determination of encroachment of the company's name because the defendant's legal name was the same ("Shell"). The court announced that in these event, where an individual has the same name as the company, in general the rule applies that the name rights will be decided on a "first come first served" basis.

In the end, however, the court deemed this case to be so extraordinary that it carved an exception to the previously stated general rule. Balancing the parties' respective interests, the court discussed the broad name recognition enjoyed by Shell, which is such that internet users would for the most part assume that it can find such a well-known company's website without much difficulty. The defendant's interest in having someone find his website without entering additional information is far outweighed by that of Deutsche Shell and must give way to the more protection-worthy rights of Deutsche Shell. The court noted that not even the defendant's family members would expect to find defendant's private website under the domain name "shell.de". Hence the defendant was ordered to relinquish the shell.de website.

As to the third claim for relief, defendant's liability for damages, the Court upheld the lower court's ruling in favor of plaintiff. The court found damages appropriate because the distinctiveness of the company's trademark "shell" was diluted by the defendant's commercial use. The court used the same balancing test employed under the second claim for relief and again found that the interests of German Shell outweighed those of Andreas Shell. According to the court, defendant's conduct-draping his website in the red and yellow colors used by Shell-left no doubt as to his dishonesty.

The Court did, however, reject plaintiff's fourth claim for relief, in which it sought the transfer of the domain name shell.de to itself. The court held that, while plaintiff was entitled to injunctive relief to prevent defendant's ownership and/or use of the domain name in such a way as to injure plaintiff's interest, plaintiff was not entitled to transfer the domain name to itself. The court reasoned that a third party may have an equally valid or more compelling claim to the domain name, even though that was not an issue in the case before the court, such that plaintiff could not simply demand transfer. The defendant was required to relinquish his rights to the shell.de domain name with the domain name registration office, and the plaintiff was free to apply for registration therefore.

The court sided with the lower courts which carved out an exception to the "first come first serve rule" when individual shares a name with a famous company, the usually applicable rule of "first come first serve" must find its exception (see OLG Hamm, MMR 1998, 214; LG Hamburg, MMR 2000, 6220) by balancing the parties interests.

This approach, however, is subject to criticism, for instance by urging to share the domain between both name holders (see Thomas Hoeren, Internetrecht 45 (07/2002)). But there are doubts left if this measures up with the interest of the notorious name holder which are expected to satisfy the needs of numerous consumers. Recent developments such as opening up many new top level domains as ".biz", ".net" and ".info" afford companies more options to interact with their consumers.

Equally when new top level domains become generally accepted for internationally active companies may no longer argue that their interests outweigh those of individuals. The claim for domains within national top level domains will weaken in proportion to the growth and acceptance of new top level domains.

The generally increasing use of search engines as for example "google.com" also affects the court's easy assumption that internet users in general seek out well known companies only by typing their name into the browser. With more than 100 TLD's and new ones expected to appear frequently, the simple URL guess is technically outdated and should not deserve artificial legal protection.

The court's reluctance to order the transfer of the domain appears appropriate. Otherwise, the plaintiff company would receive more than it would have had without the interference of the defendant. Such relief would be incompatible with the concepts of German tort law which generally limits remedies to the actual damage.

* The author studied law at the Universities of Bonn (Germany) and Lausanne (Switzerland) and received his law degree in 2000. He participates in a PhD program with the University of Kiel in which he examines American and German data protection issues. Recently, he completed the written part of the comprehensive finals for the bar exam. Now, in the summer of 2002, he is an intern with Berliner, Corcoran & Rowe, LLP, Washington D.C.

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