Jane Seager David Taylor December 19 2011 Appeal court finds AFNIC not liable for failing to 'freeze' a domain name Hogan Lovells | Intellectual Property - France Jane Seager, David Taylor Intellectual Property Facts Decision Appeal Comment In October 2009 the French Association for Internet Names and Cooperation (AFNIC), the registry for the '.fr' country-code top-level domain (ccTLD), was ordered to pay compensation of €4,500 to Francelot (a company specialising in the management and building of residential housing) for failing to 'freeze' a domain name upon its request. However, to AFNIC's great relief, this decision was recently overturned.Facts Francelot registered the FRANCE LOTS trademark in France in 1989 and registered the domain name 'francelot.com' in 1999. However, in January 2007 Francelot discovered that a private individual – whose details were hidden in the publicly available WHOIS, in accordance with French data protection law requirements – had registered the domain name 'francelot.fr'. The domain name pointed to a parking website which offered links to websites of competitors of Francelot.In May 2007 Francelot asked AFNIC to disclose the registrant's details and freeze the domain name in order to prevent any further use and/or transfer, but AFNIC rejected its requests. In June 2007 Francelot obtained a summary judgment against AFNIC in order to force it to disclose this information.(1) Having obtained the registrant's details, Francelot decided to bring a court action for trademark infringement and unfair competition not only against the domain name registrant but also against AFNIC. Francelot argued that AFNIC's failure to freeze the domain name further to its legitimate request had forced it to bring court proceedings. The domain name was subsequently recovered, but only after Francelot had incurred significant legal costs.In addition, Francelot alleged that AFNIC had acted negligently by allowing the domain name registrant to pursue its illegal actions. Finally, Francelot argued that AFNIC and EuroDNS, which acted respectively as the registry and registrar of the domain name, had the means to freeze the domain name – from both a technical and legal standpoint (ie, the AFNIC charter setting out the registration principles for the registration of '.fr' domain names and the February 2007 government decree on domain names, respectively) – and thus should not be entitled to avoid liability based on their status as technical intermediaries.Decision After dismissing Francelot's request against the domain name registrant for procedural reasons, the Versailles Court of First Instance proceeded to analyse AFNIC's actions to decide whether liability should be found.First, the court held that AFNIC did not incur liability for failing to disclose the registrant's details upon request. The then-applicable AFNIC charter – which constituted a contract between AFNIC and its registrars and registrants of domain names under the ccTLDs for which AFNIC is responsible – was clearly in alignment with French data protection legislation and specified the conditions according to which the details of private individuals could be disclosed (ie, either further to a court injunction or after the initiation of dispute resolution proceedings).Regarding AFNIC's refusal to freeze the domain name, the court found differently. While the arguments relating to the 2007 decree were dismissed, given that the domain name had been registered prior to the implementation of this decree and thus did not fall under its scope of application, the court decided that AFNIC was indeed liable based on the terms of its charter. The court noted that according to the charter's provisions, AFNIC was under an obligation to freeze a domain name if its registration constituted a violation of the terms of the charter.Further, according to the court, the terms of the cease and desist letter sent by Francelot to AFNIC in May 2007 contained sufficient information for AFNIC to freeze the domain name. Thus, by refusing to act upon receipt of the cease and desist letter, in the court's opinion AFNIC contributed to the unfair competition and loss of goodwill suffered by Francelot.Appeal In May 2011 AFNIC appealed the court's decision. On September 15 2011 the Court of Appeal of Versailles overruled the court of first instance's ruling and rejected all of Francelot's claims against AFNIC.Like the court of first instance, the appeal court dismissed Francelot's arguments relating to the 2007 decree. First, as stated by the court of first instance, since the domain name had been registered prior to the decree's implementation, it did not fall within its scope of application. Under French law, a newly enacted law has immediate effect, but does not apply retroactively. In addition, the appeal court held that the 2007 decree applied only to registries which had been officially designated, which was not the case for AFNIC on February 19 2010.The appeal court also held that AFNIC had not breached by refusing to freeze the domain name and thus could not be considered as having committed any tort against Francelot. Francelot alleged that, under the charter, AFNIC was obliged to identify potential breaches of a registrant's contractual obligation when registering a domain name, thereby implying that AFNIC should have prevented the registration since it infringed Francelot's trademark rights over the term 'francelot'. AFNIC replied that it had neither the means nor the ability to decide whether a registrant had actually infringed a third party's rights. Although AFNIC could check whether a registrant had breached its contractual obligations under the charter, the appeal court held that AFNIC was not in fact obliged to do so – this would have been the case only if a court had ordered AFNIC to do so or if an alternative dispute resolution procedure had been initiated. Therefore, AFNIC could not be considered liable for refusing to freeze the 'francelot.fr' domain name.Finally, the appeal court noted that Francelot could have initiated urgent proceedings against the registrant after its details had been disclosed in order to put an end to the alleged infringement.Comment Although the appeal court did not examine the reasons why AFNIC had not considered itself competent to assess whether the domain name registrant had infringed Francelot's rights, it seems evident that it should not be within AFNIC's remit as the '.fr' ccTLD registry to make such an assessment. Indeed, this would imply that under French law AFNIC would have a duty to investigate how a registrant used a specific domain name (eg, whether the term 'francelot' was used to designate the products or services covered by the FRANCELOT trademark, and also whether the website at the domain name actually targeted the French public). Given that there are currently over 2 million domain names registered in the '.fr' domain, it would be an almost impossible task for AFNIC to ensure that these are used correctly – even if such an obligation applied only once AFNIC had been notified of any supposed wrongdoing.With the recent new charter on '.fr' domain names, the new French law and associated decree on domain names, as well as the recently adopted new alternative dispute resolution procedure relating to '.fr' domain names, the issues that this case raised may now be resolved differently in future. In any event, the Versailles Court of Appeal's decision may help prevent any future rulings finding AFNIC liable in its role as the registry for '.fr' domain names.This decision(2) is also relevant with regard to the potential liability of domain name registries in general, especially after the new generic top-level domain process begins and many new entities throughout the world (including in France) become responsible for their own generic top-level domains.For further information on this topic please contact Sarah Taieb, Jane Seager or David Taylor at Hogan Lovells by telephone (+33 1 53 67 47 47), fax (+33 1 53 67 47 48) or email ([email protected], [email protected] or [email protected]). Endnotes (1) Since then, AFNIC has relaxed its rules and will now generally disclose the registration details of private individuals when presented with evidence of a valid prior right.(2) A copy of the decision (in French) can be found at http://www.legalis.net/spip.php?page=jurisprudence-decision&id_article=3254.