EURid is the organisation responsible for the registration of .eu domain names in accordance with the Regulation (733/2002) on the implementation of the .eu Top Level Domain and the Regulation (874/2004) on the implementation and functions of the .eu Top Level Domain and the principles governing registration. EURid operates under a concession agreement with the EU Commission.
EURid Takes Action Against Domain Name Warehousing
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EURid claimed that the registrars were ‘warehousing’ domain names. Although domain name warehousing is sometimes described as registering large numbers of domain names for the purpose of reselling, the registrar agreement (between EURid and each registrar) defines ‘warehousing practices’ as ‘registering large numbers of domain names without being specifically instructed to do so by end-users’. It is important to note that this prohibition of ‘warehousing practices’ (as defined above) only applies to the registrars and does not prevent registrants from registering large numbers of domain names in order to resell them.
Registrars Launch Proceedings
In response, the registrars launched summary proceedings against EURid before the Court of First Instance seeking provisional injunctive relief, including the immediate unblocking of the 74,000 domain names and the reinstatement of the registrars’ access to EURid’s automated registration systems. The three Cyprus-based registrants, on behalf of which most of the 74,000 domain names had been registered, also intervened in the proceedings seeking the immediate unblocking of their domain names.
During the proceedings, the registrars refuted EURid’s allegations that they were ‘warehousing’ domain names. As a matter of fact, the registrars had registered each of the 74,000 domain names on specific instruction of their clients, the registrants.
Direct Navigation Not Domain Name Warehousing
The registrants were also able to show that the domain names had not been registered for the purposes of reselling; rather they were being used for ‘direct navigation’. Direct navigation is a recognised search method used by approximately 15 per cent of Internet users, in which they type the name or the item they are looking for as a domain name directly into the browser (rather than using a search engine such as Google). If that domain is a direct navigation site, it will generate a Web page containing targeted search results from a search engine, such as Google or Yahoo, based on the name of the domain in question.
The Internet user benefits by receiving a single Web page containing results that should be directly related to what he or she is searching for. The owner of the direct navigation site benefits because it will normally be paid for any click-through traffic generated by visitors to these Web pages.
The registrants used sophisticated computer modelling to select generic or descriptive domain names that constitute a likely ‘search’ phrase for direct navigation users and registered domain names on that basis. The registrants also have an established policy of returning domains to trademark holders (free of charge) if the domain names conflict with prior rights.
In light of this, the registrars and the registrants argued that the blocking of the 74,000 domain names had been done in violation of the applicable rules, namely Articles 3 and 20 of Regulation (874/2004) and Article 9(3) of EURid’s .eu Domain Name Registration Terms & Conditions.
Judgment
In its judgment of 27 September 2006, the Court of First Instance found that EURid acted without authority and in contradiction of both the governing regulations and its own rules: ‘[T]he blocking of the domain names…has prima facie been done unlawfully.’ While EURid had argued that the registrars had been acting as a front for non-existent registrants, the President specifically found the opposite was the case. The registrants have a normal contractual relationship with the registrars.
In deciding that the domain names must be unblocked, the President recognised the legitimacy of the registrants’ direct navigation business model: ‘Full, unobstructed and free disposal of the domain names is indispensable for the activities that the [registrants] want to undertake with these domain names, namely direct navigation’. The President directed that if EURid failed to act within 48 hours, it would be subject to a fine of €25,000 per domain per hour.
In addition, EURid had already conceded a number of other points requested by the registrants prior to the hearing. For example, EURid reinstated access to the EURid systems following the filing of the registrars’ legal action.
Aftermath
EURid has appealed against the judgment. The proceedings on the merits against the registrars are also still pending. Moreover, EURid has commenced separate proceedings on the merits against the registrants claiming that the registration of the domain names for direct navigation purposes violates the public policy rules laid down in Regulation 874/2004 since it does not serve to identify the registrant and fails to provide a clearly identified link with the EU.
Finally, EURid has recently amended many of the documents governing its relationship with registrars and registrants – such as the .eu Domain Name Registration Policy, the .eu Domain Name Registration Terms & Conditions and the Registrar Agreement – and is in the process of adopting a Registrar Code of Conduct and related Rules and Procedures.
These amendments seem to be a direct response to the judgment of the Court of First Instance and are aimed mostly, if not exclusively, at granting EURid large powers to revoke and block domain names, thus substantially reducing legal certainty for domain name holders. Also, many of the changes to the contractual relationship between EURid and the registrars place any non-European registrars at a distinct disadvantage. Last but not least, the definition of ‘warehousing practices’ in the registrar agreement has been amended.
Bastiaan Bruyndonckx is Counsel in the
