The case: An application for deletion of disruptive domains is often one option where the domain disrupts your business. What needs to be considered?

Joachim Schmid, CEO of ‘on-collect solutions AG’, registered a number of related domains with DENIC in 2010, including

The domains were registered in Schmid’s own personal name and he used them exclusively to redirect the internet user to the website of ‘on-collect solutions AG’, with the intention of increasing the site’s traffic. ‘on-collect solutions AG’ is a debt collection service provider for the energy supply industry.

Many years later, in 2020, two companies in the Thüga Group set up a competing debt collection service for the energy supply industry. They gave it a catchy name, one that resembled Schmid’s existing domains:

The new service provider was, of course, concerned by the fact that Schmid’s domains contained their company name, which prevented them from registering their own ‘energy-collect’ domain. In addition, Schmid’s various domains were causing considerable confusion among customers in the market.

As Schmid’s domains did not relate directly to an active website, energy-collect saw an opportunity to apply for the disruptive domains to be deleted: it took legal action against Schmid, with the aim of gaining consent to the deletion of his domains due to unauthorised appropriation of the company’s right to its name: ‘energy COLLECT’.

How likely was this to succeed?

In fact, energy COLLECT had the prior rights. Schmid had not acquired any rights of his own to ‘energycollect’ and ‘energy-collect’ that he could assert against the later name of energy COLLECT.

He did not acquire any such rights by registering the domains with DENIC. Through the contract with DENIC, he had only acquired a contractual right of use – similar to a contract for the allocation of a telephone number. Importantly, Schmid only used the domains as computer addresses and forwarding instruments, and not with his own active website. He therefore had not acquired any name or trade name rights in them.

Schmid was in fact using the prior third-party name ‘energy COLLECT’ without authorisation by retaining and continuing to use his domains after the new company had been founded. Schmid had also caused confusion by this unauthorised appropriation of another person’s name.

However, a balancing of interests is required in order to successfully enforce a claim for unauthorised appropriation of a name that causes confusion. Names – including the company name energy Collect – form part of the general personal rights of individuals, but they can also be in conflict with a large number of other people’s user interests, which are also based on personal rights. Therefore, the interest to use a certain name must predominate for a name infringement to be successfully asserted.

Could energy COLLECT rely on such overriding interests?

Yes, decided the two lower courts in the legal dispute. On Schmid’s side, only the interest in terms of a purely technical use of the domains for redirecting the internet users could be taken into consideration. However, these were not specific interests under the law of names and therefore were not worthy of protection. The lower courts ordered Schmid to agree to the deletion of his domains.

However, the German Federal Supreme Court (BGH) disagreed. All interests had to be taken into account in the balancing of interests. This includes, in particular, the economic interests of the domain owner, including the interest in using domains to redirect a user to another website in order to influence its Google ranking.

Energy COLLECT, however, had less interest in using its name. It had to be prepared, when creating its company name, there might be adverse effects arising from any existing domains; it could have chosen or switched to another name if necessary. Therefore, there was no infringement of its prior rights to its name.

The BGH decision is correct. The pursuit of economic interests is also part of the free development of personality and is protected by the domain holder’s general personal rights. The prior right to a name has its limits in the better interest of others in the development of their personality.

The BGH overturned the appellate judgment and referred the case back to the appellate court for a new hearing and decision.

Federal Supreme Court (BGH), 26 October 2023, I ZR 107/22.

 

Learnings: If you develop a company name for your business, you should make sure that second-level domains created from that name are available and can still be registered. If such second-level domains already exist, you cannot be sure that legal action with the aim of gaining consent to a deletion of these domains due to unauthorised appropriation of the rights to your name will be successful in Germany.