On March 25, 2021, the U.S. Court of Appeals for the Fourth Circuit held that the French Republic was entitled to sovereign immunity against France.com, Inc.’s trademark infringement suit, reversing the District Court for the Eastern District of Virginia.
The Fourth Circuit first stated that sovereign immunity was a jurisdictional issue that should be addressed “as near to the outset of the case as is reasonably possible.” In so holding, the court reasoned that the French Republic is immune under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1604, because neither the “commercial activity” exception, 28 U.S.C. § 1605(a)(2), nor the “expropriation” exception, 28 U.S.C. § 1605(a)(3), applies. The court stated that in this case, “seizure” or transfer of the domain name did not constitute a commercial activity or a taking.
This judgment comes after six years of litigation, first in France and then in the United States. Jean-Noël Frydman is a French-born American who bought France.com from Web.com in 1994. For 20 years, Frydman operated an online travel agency, France.com, Inc., and trademarked “France.com” in the US and the EU. In 2015, the French Republic asserted in a French district court that it held the exclusive right to use the term “France” commercially. In 2017, the French appellate court declared the French Republic the rightful owner of the domain name.
France.com, Inc., then brought suit against several defendants, including the French Republic, Atout France, and the domain name “France.com,” in the District Court for the Eastern District of Virginia, alleging trademark infringement, federal unfair competition, and expropriation, among other claims. The district court denied the defendants’ motion to dismiss that asserted entitlement to FSIA immunity.
Circuit Judge Diana Gribbon Motz, joined by Judges Henry Floyd and Allison Jones Rushing, held that the French Republic, Atout France, the Ministry for Europe and Foreign Affairs, and the domain name “France.com” (collectively, the “French State”) were immune from the jurisdiction of the United States. The core of the court’s reasoning was about two exceptions to sovereign immunity: the “commercial activity” exception and the “expropriation” exception. The “commercial activity” exception strips a foreign state of immunity based upon the foreign state’s commercial activity and that activity’s connection with the United States. The “expropriation” exception applies when property is taken in violation of international law and is connected to a commercial activity in the United States.
Judge Motz, writing on behalf of the court, first rejected the “commercial activity” exception because what harmed France.com, Inc. was not the French State’s commercial activities under France.com but either the preceding French court judgment or the French State’s “seizure” of that domain name. Judge Motz also rejected the corporation’s arguments that France seized the domain name in order to pursue commercial activities. The court stated that the text of FSIA refers to the “outward form of the conduct that the foreign state performs,” rather than the “reason why the foreign state engages in the activity.” Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992).
The court also held that the “expropriation” exception did not apply. Judge Motz stated that four requirements must be satisfied for the “expropriation” exception. He found that the two requirements at issue in this case – that property was “taken,” and that it was taken in violation of international law – were not satisfied. First, the court was dubious that the Corporation’s domain name was “taken” at all since France did not nationalise the domain nor take the property through eminent domain. Instead, France simply owns the word “France” and is thus entitled to the domain name. Second, France.com, Inc. failed to identify any violation of international law.
Pursuant to the Fourth Circuit’s holding, France continues to own France.com. Vivek Krishnamurthy, a lawyer and instructor at Harvard Law School’s Cyberlaw Clinic, argues that France’s ownership of France.com relies on a legal theory that “could really disrupt the security of domain names.” The legal theory – that the word “France” constitutes an element of identity for the French Republic, “akin to the family name of a natural person,” such that the French Republic can claim ownership over France.com – could leave other private ownership over domain names in jeopardy.
This case may not be over. Frydman’s efforts to take back the ownership of his domain name, France.com, could continue through an appeal to the Supreme Court. Litigation that began in the French courts is still pending in the French Supreme Court, Cour de Cassation, following France.com, Inc.’s appeal. In the meantime, Web.com has already transferred the domain name to the Minister of Europe and Foreign Affairs of the French Republic, pursuant to the Paris Court of Appeals decision. Frydman has been locked out of France.com for 3 years.