Court of Appeal of Paris (Pole 5 - Chamber 2), Decision of 1 October 2010, Finance Sélection v. David Capdevielle and Linxea SARL

The Court of Appeal of Paris confirmed that the purchase of keywords is a trademark use in the course of trade. The reservation of domain names with the mere intention to prevent competitors from registering but not to use them cannot be considered a trademark use but constitutes an act of unfair competition.

Linxea SARL is a French company operating in the insurance sector. M. David Capdevielle, who established Linxea, is the owner of the French composite trademark "Linxea", registered for, inter alia, insurance services.

Please click here to view David Capdevielle's trademark.

In 2007, Finance Sélection, a French company also operating in the insurance sector, registered 24 domain names incorporating the trademark "Linxea" and purchased the keywords "linxea" and "linxeavie."

Linxea and M. Capdevielle initiated legal proceedings against Finance Sélection. Linxea requested Finance Sélection to transfer the domain names, basing its claims on unfair competition practice. M. Capdevielle claimed infringement of its trademark rights in "Linxea."

The Paris Court of First Instance held that the reservation of the domain names incorporating Linxea's company name and trade name constituted an act of unfair competition since its only purpose was to hinder Linxea to reserve new domain names and to further develop its internet activities, in particular as a use or exploitation of the 24 websites has never been planned. In addition, by purchasing the keywords "linxea" and "linxeavie" (which have no meaning in French) Finance Sélection tried to position itself in the wake of Linxea and to divert Linxea's customers for its own benefit. However, the court held that there was no trademark infringement. The absence of use of the domain names excluded any likelihood of confusion. The mere reservation of domain names did not constitute a trademark use. The use of a trademark as a keyword was not a trademark use.

On appeal, the Court of Appeal of Paris partially annulled this decision, stating that the purchase of the keywords "linxea" and "linxeavie" was a trademark use in the course of trade since it has been made within the context of a commercial activity. The purpose of the purchase of the keywords was to re-direct Linxea's customers to its own website which offers insurance services. The court, however, agreed with the Court of First Instance that the mere reservation of domain names was not a trademark use since there were no goods or services offered for sale.

The Court of Appeal also confirmed the Court of First Instance's ruling that the reservation of the domain names and the purchase of keywords constituted acts of unfair competition.