Coty Germany is proprietor of a 3D Community trademark (CTM) consisting of the shape of a perfume bottle. It markets “Davidoff Cool Water Woman” in these bottles. When allegedly infringing products were brought on the German market, Coty sued First Note Perfumes, a Belgian company, for infringement of its CTM and unfair competition, alleging that First Note had sold the infringing products in Belgium to a third party which had brought them into Germany and sold them here. Coty claimed that First Note was liable for participating in the third party’s infringement and had committed comparative advertising and misappropriation. The actions were dismissed at first and second instance for lack of jurisdiction over the foreign defendant First Note. On appeal to the German Supreme Court the following questions were referred to the Court of Justice:
1. Is Article 93 (5) CTMR to be interpreted as meaning that an act of infringement is committed in one Member State (Member State A), within the meaning of [that provision], in the case where, as a result of an act in another Member State (Member State B), there is participation in the infringement in the first-named Member State (Member State A)?
2. Is Article 5 (3) Brussels I Regulation to be interpreted as meaning that the harmful event occurred in one Member State (Member State A) if the tortious act which is the subject of the action or from which claims are derived was committed in another Member State (Member State B) and consists in participation in the tortious act (principal act) which took place in the first-named Member State (Member State A)?
Article 98 (5) CTMR as codified, the provision corresponding to Article 93 (5) CTMR in its original version, provides for jurisdiction over a defendant for CTM infringement in the Member State where “the act of infringement has been committed or threatened”. Article 5 (3) Brussels I Regulation provides that “a person domiciled in a Member State may, in another Member State, be sued […] in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur”.
The Court gave the following answers:
1. The concept of ‘the Member State in which the act of infringement has been committed’ in Article 93 (5) CTMR must be interpreted as meaning that, in the event of a sale and delivery of a counterfeit product in one Member State, followed by a resale by the purchaser in another Member State, that provision does not allow jurisdiction to be established to hear an infringement action against the original seller who did not himself act in the Member State where the court seised is situated.
2. Article 5 (3) Brussels I Regulation must be interpreted as meaning that, in the event of an allegation of unlawful comparative advertising or unfair imitation of a sign protected by a Community trademark, prohibited by the law against unfair competition (Gesetz gegen den unlauteren Wettbewerb) of the Member State in which the court seised is situated, that provision does not allow jurisdiction to be established, on the basis of the place where the event giving rise to the damage resulting from the infringement of that law occurred, for a court in that Member State where the presumed perpetrator who is sued there did not himself act there. By contrast, in such a case, that provision does allow jurisdiction to be established, on the basis of the place of occurrence of damage, to hear an action for damages based on that national law brought against a person established in another Member State and who is alleged to have committed, in that State, an act which caused or may cause damage within the jurisdiction of that court.
The Coty judgment is unfortunate as regards CTM infringements, and confirms the Court’s case law as regards Article 5 (3) Brussels I Regulation.
Concerning Article 5 (3) Brussels I Regulation, the case law of the Court of Justice, since the leading case Bier, Case 21/76, has consistently held that an action seeking redress for unlawful acts may be brought both in the Member State where the defendant has acted, and in the Member State where the damage occurred. This rule also applies in cases of multi-state infringements of intellectual property rights. The first question, regarding Article 98 (5) CTMR, sought clarification whether the same principle should apply in CTM infringement cases, where the wording of the provision differs somewhat from the wording of Article 5 (3) Brussels I Regulation. The answer of the Court – which followed the opinion of Advocate General Jääskinen – is clear: Jurisdiction is available only before the courts of the Member State where the defendant acted, not where the damage actually occurred. Thus, the Belgian defendant in the case before the German courts cannot be sued in Germany for infringement of Coty’s trademark rights, even if the Belgian defendant participated in the infringements committed by the German party (which was not before the Court).
This result is unfortunate because it makes the prosecution of infringements of Community trademarks more difficult by limiting the fora where a case based on Article 98 (5) CTMR may be brought. Also, the decision makes the enforcement of CTMs more difficult than the prosecution of infringements of national trademarks: The Court has previously judged, applying Article 5 (3) Brussels I Regulation, that infringements of national trademarks may be pursued both in the Member State where the mark is protected (Austria) and in the country where the infringer acted (Germany) (cf. Case C-523/10, Wintersteiger).
The only argument in the judgment, beyond the fact the words are different, relates to the scope of jurisdiction:
35 It should also be noted that the existence of jurisdiction under Article 93 (5) [CTMR] based on the place where the alleged infringement produces its effects would conflict with the wording of Article 94 (2) CTMR, which limits the jurisdiction of Community trademark courts under Article 93 (5) [CTMR] to acts committed or threatened in the Member State where the court seised is situated.
That argument can, of course, be made also for the opposite interpretation, namely that where jurisdiction would be based on the effect rather than the action, the scope of jurisdiction would be similarly limited to the country where the damage occurred, rather than where the defendant acted.
Another consequence of the Coty judgment is that in many situations the Member State where the defendant acted will be the Member State where the defendant is domiciled, and thus the bases of jurisdiction would in fact no longer be distinct. Finally, the Court disregards the situation of third-country defendants which are not subject to jurisdiction in the third country, where they acted, and apparently also not in the Member State where the damage occurred. This means that, de facto, third country defendants must always be sued in a CTM court with EU-wide jurisdiction.
The unfortunate situation now can be corrected only through new legislation – it seems indeed unlikely that the Court will reverse itself in the near future.
As regards the second question, relating to Article 5 (3) Brussels I Regulation, the answer is in line with the Court’s previous case law. In the future, German cases may increasingly be based on unfair competition claims rather than trademark infringement, so as to avoid a dismissal of the action for lack of jurisdiction. This is not exactly what the legislator had in mind when creating EU-wide intellectual property rights.