It is settled case law that the use of a trademark in a domain name can constitute a “use as a trademark”. The Federal Court of Justice has now further defined the legal constraints for a use of such domain names by (re)sellers and thereby strengthened the rights of owners of well-known trademarks.

It is well established that the use of a trademark in a domain name that refers to a website offering goods or services covered by the trademark generally constitutes a trademark infringement.

It has, however, been a matter of dispute whether and to what extent sellers or resellers of branded goods are entitled to use domain names containing the trademark for their websites and online shops. The German Federal Supreme Court has now defined the criteria for the admissibility of such use in relation to well-known trademarks in more detail, thereby strengthening the rights of the owners of well-known trademarks (BGH, judgement of June 28, 2018 – I ZR 236/16 – keine-vorwerk-vertretung).

In the case in question, the proprietor of an online shop for used Vorwerk vacuum cleaners as well as spare parts and accessories for Vorwerk products from various manufacturers had operated an online shop under the domain name keine-vorwerk-vertretung.de. The owner of the well-known trademark Vorwerk took action against this practice based on an alleged trademark infringement. The operator of the online shop referred in the first place to the fact that he was entitled to use the trademark pursuant to the exemption in Section 23 Para. 1 No. 3 German Trade Mark Act, since he used the trademark for the purpose of identifying the goods offered on the website as those of the owner of the trademark or as an indication of the intended purpose of the goods as accessories or spare parts for Vorwerk products. Furthermore, he argued that his right to use the trademark in the domain name followed from Section 24 German Trade Mark Act as the trademark rights of the trademark owner had been exhausted with regard to the used goods offered on the website.

The Federal Court of Justice followed the online shop operator’s line of argument to the extent that it confirmed that the use of a well-known trademark in the domain name of a reseller who – in addition to the trademarked goods – also sells compatible products of other manufacturers, represents an indication of the intended purpose of the goods within the meaning of Section 23 No. 3 German Trade Mark Act. At the same time, however, the court found that there were more adequate alternatives available for the reseller to indicate the compatibility of his products. The use of the trademark in the domain name was furthermore found to be contrary to moral standards because it also serves to draw the attention of potential customers to the range of goods offered under the domain. The trademark was thus used in the domain name for advertising purposes exceeding the incidental advertising effect associated with the necessary indication of the intended use of the products. Accordingly, the use in question was not found to be privileged pursuant to Section 23 para. 2 German Trade Mark Act and constitutes a trademark infringement.

Since the court of appeal had not provided sufficient reasoning in relation to the possible exhaustion of the plaintiff’s rights in the trademark, the case was referred back to the lower instance court. The Federal Court of Justice, however, inidcated that by using a well-known trademark in a domain name, the reseller illegitimately exploits the advertising effect resulting from the trademark’s reputation for promoting his online shop. The owner of the well-known trademark is thus entitled to prohibit the use of the trademark notwithstanding the principle of exhaustion.

Even though the judgment concerns a well-known trademark, it contains general considerations defining legal limitations to the use of trademarks in domain names. According to the considerations of the Federal Court of Justice, the use of a trademark as part of a domain name is more than a mere indication of the compatibility of one’s own products with the trademarked goods. Rather, it has a considerable advertising effect which surpasses the usual advertising effect associated with the necessary indication of the intended use. Though it remains to be seen how this decision will be received by the lower instance courts, resellers will probably find it more difficult in the future to justify the use of a trademark as part of the domain name without a prior permission by the trademark owner.