The European Court of Justice (“ECJ”) has ruled that a licensee of a European Union trade mark (formerly known as Community trade marks) (“EUTM”) can take enforcement action even if its licence has not been registered, so long as the licensee has the trade mark owner’s consent to assert such rights.
In the recent case of Youssef Hassan v Breiding Vertriebsgesellschaft mbH (Case C 163/15, 4 February 2016), Breiding Vertriebsgesellschaft (“Brieding”) had a licensing agreement with the owner of the “ARKTIS” EUTM. That agreement entitled Brieding to “assert in its own name, rights arising from infringement of the trade mark”.
Yousseff Hassan, a businessman, advertised products for sale bearing the name “ARKTIS”. Breiding, as the holder of a licence for the EUTM “ARKTIS”, subsequently launched legal proceedings in Germany for infringement of the mark.
The German Court asked the ECJ to confirm whether Brieding was entitled to bring proceedings against Hassan, in accordance with Article 23(1) of the EUTM Regulation (207/2009/EC) (the “Regulation”), since the licence had not been registered in the Register of EUTMs.
Article 23(1) provides that: “Legal acts referred to in Articles 17 [transfer of a EUTM], 19 [creation of rights in rem over the EUTM] and 22 [grant of a licence] concerning a [European Union] trade mark shall have effects vis-à-vis third parties in all the Member States only after entry in the Register. Nevertheless, such an act, before it is so entered, shall have effect vis-à-vis third parties who have acquired rights in the trade mark after the date of that act but who knew of the act at the date on which the rights were acquired.”
The ECJ noted that, if read in isolation, Article 23(1) could be interpreted as meaning that if the licence has not been entered in the Register the licensee cannot rely on the rights conferred by that licence vis-à-vis third parties.
However, in reaching its decision, the ECJ stressed the importance of considering the context in which the wording of Article 23(1) occurs and the objectives pursued by the rules of which it is part. It took the view that the intention of Article 23(1) is to protect those that have, or may have, rights in a EUTM as an object of property, and not to protect alleged infringers.
Moreover, under Article 22(3) of the Regulation, a licensee’s right to bring infringement proceedings was subject only to the EUTM owner’s consent (without prejudice to the provisions of the licence). On this basis, the ECJ ruled that Breiding had the required consent of the EUTM owner and so Article 23(1) meant that the licensee could bring infringement proceedings of a licensed EUTM even if the licence had not been registered.
Arguably, it was already clear that the purpose of Article 23(1) was not to protect alleged infringers, but to protect third parties with rights in EUTMs instead. However, questions around whether the registration of a EUTM license is mandatory or not has arisen in various jurisdictions and so the ECJ’s clarification here may prove helpful in securing more uniform decisions cross-jurisdiction.
Although this case dealt specifically with a licensee, it could be argued that the principle behind it could equally apply to assignees of EUTMs pursuing infringers, as the ECJ referenced both licences and assignments in its reasoning.
Despite the decision, licensees (and assignees) should register any licenses (and assignments) of EUTMs as soon as possible as a matter of good business practice and to protect themselves in relation to the grant of further licences or the sale of the EUTMs by the owner, or other conflicting interests.
It is also worth emphasising that licensees will continue to need the consent of the EUTM owner before they can bring infringement proceedings (however, an exclusive licensee can commence proceedings if the owner does not do so within an appropriate period after formal notice).
There is a contrast between the position of EUTMs and the position of UK national trade marks - licensees of UK national trade marks are expressly excluded from bringing infringement proceedings and obtaining remedies until the licence is registered (sections 23(3)(b) and 30 and 31 of Trade Marks Act 1994).
Licensees and assignees may also be prevented from recovering costs in infringement proceedings for the period between when the UK trade mark was infringed and its eventual date of registration (if this date is six months after the date the licence (or assignment) was entered into, and it was not registered as soon as practicable thereafter)(section 24(4) of the Trade Marks Act 1994).