Friday, 23 August 2013

Using a specific domain name or metadata as misleading advertising - CJEU in BEST (C-657/11)

11 July 2013: CJEU judgment in case Belgian Electronic Sorting Technology (C-657/11)

In this judgment the CJEU determined what could be perceived as advertising for the purposes of determining its misleading or comparative character, taking into account modern forms of expression, that is: registration of a domain names, use of a domain name, use of metatags in a website's metadata. (Par. 32)

BEST and Visys are both producers and distributors of sorting machines and sorting systems using laser-technology, with the second company having been established by a former employee of BEST. In 2007 Visys registered a domain name 'www.bestlasersorter.com' and hosted a website under that domain name which was identical to the usual website of Visys - 'www.visys.be' and 'www.visysglobal.be'. Additionally, Visys used for its websites various metatags that referred to the products offered by BEST. As a result, upon entering in the search engine words 'best laser sorter', the website of Visys showed as a second result directly beneath the result for BEST's website. BEST considered the registration and the use of the domain 'bestlasersorter.com' as well as the use of these metadata as infringing rules of misleading and comparative advertising.

The CJEU reminds the definition of advertising from Art. 2(1) of Directive 84/450 and Art. 2(a) of Directive 2006/114 namely as 'a representation in any form made in connection with a trade, business, craft or profession in order to promote the supply of goods or services'. (Par. 34) It is a broad definition, not limited to traditional form of advertising. (Par. 35) In general, advertising is supposed to allow 'competitors to highlight objectively the merits of the various comparable products in order to stimulate competition to the consumer’s advantage while, at the same time, prohibiting practices which may distort competition, be detrimental to competitors and have an adverse effect on consumer choice'. (Par. 37) It is undisputed that the registration and the use of 'bestlasersorter.com' domain as well as the use of metatags was part of the commercial activity of Visys. (Par. 40) 

In its judgment the CJEU decides that while the registration of a domain name cannot be seen as advertising, the use thereof as well as the use of metatags could be perceived as advertising. The registration of a domain name is a purely formal act, which does not necessarily lead to any website's creation and may not influence internet users awareness of that domain name. (Par. 42) In that respect, consumers' choice may not be influenced by domain's registration and therefore, it does not need to promote the supply of goods or services of the domain name holder which does not make it an advertisement. (Par. 43) At best, it could limit competitor's communication opportunities, which, however, could be prohibited under different laws. (Par. 44) On the other hand, the use of a domain name to host a website, identical to a website of a company, is clearly a commercial activity focused on promoting companies' goods or services. (Par. 46) In that respect a use of a specific domain name could be perceived as advertising since 'it is not only by means of a website hosted under the domain name that that holder seeks to promote its products or its services, but also by using a carefully chosen domain name, intended to encourage the greatest possible number of internet users to visit that site and to take an interest in its offer. Furthermore, such use of a domain name, which makes reference to certain goods or services or to the trade name of a company, constitutes a form of representation that is made to potential consumers and suggests to them that they will find, under that name, a website relating to those goods or services, or relating to that company.'. (Par. 47-48) The court had also no doubts that the metatags' use influences promotion of companies' goods or services, since it influences the ranking of the sites by a search engine. (Par. 53-54) As a result consumers looking for a specific goods of a competitor entering a certain (trade) name into a search engine will get results of the search that have been changed to the advantage of the metatags' user, which falls under the definition of advertising. (Par. 57) It does not matter that these metatags are not visible to internet users. (Par. 58)

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