The High Court of England and Wales has confirmed that counterclaims for the invalidity of a Community trade mark can only be brought by a defendant where the counterclaim would result in a defence to the claimant’s claim for infringement. Counterclaims that would not impact the main claim should be struck out.
The judgment concerned an application made during the course of a wider dispute between Adobe Systems Inc., and Netcom Distributors and others. Adobe alleged that Netcom had infringed Adobe’s UK trade marks and CTMs by way of parallel imports. Netcom’s defence to these allegations was to argue that Adobe was abusing a dominant position and other related competition law points. Netcom also counterclaimed for revocation of a number of Adobe’s trade marks on the basis of non-use. However, the classes for which non-use was alleged did not include the classes for which infringement was claimed. In essence, the counterclaim would not enable Netcom to defend the infringement claims.
On this basis, Adobe questioned whether the court had jurisdiction to hear a counterclaim in respect of the CTMs where the counterclaim would not provide a defence to the infringement claim. This was the question put before Mr Justice Mann.
The focus for both parties and the judge was the correct interpretation of Article 96 of the Community Trade Mark Regulation (CTMR). Article 96 of the CTMR sets out the jurisdiction of CTM courts, in particular Article 96(4) provides CTM courts with the jurisdiction to hear counterclaims for revocation or a declaration of invalidity pursuant to Article 100 of the CTMR. Both articles are silent on whether the counterclaim has to be in defence of the initial claim.
Adobe submitted that these provisions should be read purposively, denying the court jurisdiction, whilst Netcom argued for a literal interpretation that would not prevent the court hearing the counterclaim in the present case. Both cited various authorities for these propositions, but the judge pointed out that none had any direct bearing on the problem at hand. With no direct authority on the point, the judge was left with trying to ascertain what the European Council meant by its choice of wording in the specific context.
The judge was persuaded by the reasoning that the purposive approach to Article 96 was effectively an “absurdity argument”. It would be strange for a national court to acquire a jurisdiction it would not otherwise have just because the claim took the form of a counterclaim. The purpose of Article 96(4) was to allow the relevant CTM court to dispose of the totality of a dispute without having to refer the case to the Office of Harmonization for the Internal Market (OHIM) for a ruling on the validity of the marks in suit. Accordingly, the counterclaim must be linked to the defence of the main claim; in the judge’s words, this would be a “sensible encroachment on the regime which would otherwise leave validity matters to OHIM”.
On the contrary, the judge could find no justification for Article 96 granting a CTM court a jurisdiction wider than was necessary to allow a dispute to be dealt with in one forum. The judge was satisfied that this conclusion could be reached without a reference to the Court of Justice of the European Union.
Counterclaims for revocation of a mark are a powerful strategic weapon in the armoury of a defendant in infringement proceedings, as naturally they raise the stakes for claimants. This decision suggests in respect of CTMs that such attacks should be limited to the classes of the marks on which the infringement claims are based. From the perspective of the claimant, when drafting a claim for infringement, caution should be exercised to avoid exposing the mark to counterclaims for revocation unnecessarily.