The CJEU has just been posed the following questions on the interpretation of Article 97(5) of the EU Trade Mark Regulation ((EC) No. 207/2009) by the English Court of Appeal. The questions concern jurisdiction to hear EU trade mark infringement claims in a cross-border online advertisement and sale case and the answers will have consequences not only for EU trade mark but also for EU design litigation across Europe. That’s because the jurisdiction provision in issue is in identical terms in the Community Designs Regulation (Article 82(5), (EC) No.6/2002).

The questions

In circumstances where an undertaking is established and domiciled in Member State A and has taken steps in that territory to advertise and offer for sale goods under a sign identical to an EU trade mark on a website targeted at traders and consumers in Member State B:

i) does an EU trade mark court in Member State B have jurisdiction to hear a claim for infringement of the EU trade mark in respect of the advertisement and offer for sale of the goods in that territory?

ii) if not, which other criteria are to be taken into account by that EU trade mark court in determining whether it has jurisdiction to hear that claim?

iii) in so far as the answer to (ii) requires that EU trade mark court to identify whether the undertaking has taken active steps in Member State B, which criteria are to be taken into account in determining whether the undertaking has taken such active steps?

Case background

At the end of 2016, the judge in charge of the UK’s Intellectual Property Enterprise Court (IPEC), Judge Hacon, handed down his ruling on jurisdictional challenge in a case concerning the enforcement of registered UK national and EU trade marks: AMS Neve Ltd & Ors v Heritage Audio S.L. & Ors [2016] EWHC 2563 (IPEC). This decision has baffled UK IP lawyers for the past year. As we explain below, it has also somewhat baffled the English Court of Appeal which handed down its judgment on 1 February 2018 along with the above questions for the CJEU: [2018] EWCA Civ 86.

The Claimant/Appellant, AMS Neve Limited (“AMS”), has manufactured and sold a “1073”-branded microphone preamplifier in the UK since the 1970s. By all accounts, this piece of equipment is extremely well-known in the recording industry and is at the very top end of its market, retailing for $4,749. AMS is the proprietor of three trade marks: one EU trade mark for the word “1073”, and to UK trade marks for logos incorporating a stylised sine wave, all registered for goods associated with sound recording and processing in class 9.

The Defendant/Respondent, Heritage Audio S.L. (“Heritage”), is a Spanish company. Fairly recently it started producing an identical “1073” product and offered it for sale on its website. AMS issued proceedings in the UK for infringement of all three of the above trade marks and for passing off, on the basis that Heritage’s offers for sale and sales of infringing products have occurred, among other places, in the UK.

Heritage applied for a declaration that the English courts did not have jurisdiction to try the claim. In his decision, Judge Hacon accepted that Heritage’s English-language website sold to UK customers: any EU customers could place orders and Heritage would ship to them, and the website indicated that their products could be purchased from a UK distributor.

National trade mark infringement and passing off

Article 7(2) of the Re-cast Brussels I Regulation (No. 1215/2012) (“Brussels I”) which governs jurisdiction with respect to national trade mark infringement states that, “[a] person domiciled in a Member State may be sued […] in the courts of the place where the harmful event occurred or may occur.” (emphasis added).

This has been long-established to include either the place of the event giving rise to the damage (i.e., where the infringing act occurred) or the place where the damage is felt (i.e. the country in which the trade mark is registered).

The judge held that the event giving rise to damage in this case was the offer for sale in the UK, on the principles laid down in L’Oreal v eBay International AG (C-324/09): Heritage’s website was held to be targeted at (amongst others) UK customers since it stated that Heritage would ship to the UK and had a UK distributor. As such, the event giving rise to damage was also in the UK, and so IPEC had jurisdiction.

EU trade mark infringement

Article 97(5) of Council Regulation (EC) No. 207/2009 (the “EUTM Regulation”), now Article 125 (5) 2017/1001, governs jurisdiction in relation to EU trade mark infringement, and states that:

“[p]roceedings […] may also be brought in the courts of the Member State in which the act of infringement has been committed or threatened“.

(emphasis added: note the slightly different wording to that of Brussels I, above.)

In Coty the CJEU had ruled on the predecessor provision of Article 97(5) (formerly Article 93(5) of Council Regulation (EC) No 40/94), holding that it conferred jurisdiction solely on the courts in the Member State in which the defendant committed the relevant wrongful acts. Therefore where a seller did not himself act in the Member State where the court seised was situated, that court had no jurisdiction.

Applying Coty Judge Hacon held that the offer for sale in the UK was with respect to both UK and EU trade marks, but the necessary active conduct by Heritage (resulting in the infringement) was the placing of the offending signs on the website targeted at UK consumers: this, or the decision to do so, had taken place in Spain. In the judge’s view, the CJEU had made a “clear distinction” in the Coty case between this activity and the mere fact that the website was accessible in the UK. As a result, the judge declined to hear the EU trade mark infringement part of the case. AMS appealed this part of his decision.

Appeal court’s analysis

Lord Justice Kitchin gave the judgment of the Court of Appeal on 1 February 2018. He was not persuaded that the judge’s conclusion necessarily followed from the CJEU’s decision in Coty.

His start point for analysis was the acts of which AMS complained, namely the advertisement and offer for sale in the UK through the Heritage Audio website of audio products bearing the offending signs. Just on the basis of this initial observation he thought it was strongly arguable that IPEC did have jurisdiction, on the basis that the acts complained of had been performed within the UK.

Kitchin LJ went on to analyse Coty, and the very recent decision of the CJEU concerning EU Community Design infringement cases, Nintendo v Big Ben Interactive (C-24/16 & C-25/16, 27 September 2017).

Coty, he said, (at [42]):

was a very different case. There the proprietor of an EU trade mark sought to establish the jurisdiction of the courts in Germany to hear a claim for infringement against a Belgian company, as the sole defendant, arising from the activities of that company in Belgium. The Court of Justice held that [Article 97(5) of the EUTM Regulation] conferred jurisdiction on the courts of the territory where the alleged infringement had occurred. The relevant linking factor related to active conduct by the alleged infringer in that territory. In that case there was no such activity for the defendant had done nothing in Germany. By contrast, the claimants in the present case say that requirement is amply satisfied for the judge has found that they have a good arguable case that the defendants have advertised and offered for sale the allegedly infringing products in the UK.

The relevant parts of the CJEU’s decision in Nintendo dealt with the question of which country’s law governs the imposition of sanctions against infringers which are not expressly set out but are permitted in general terms in Article 89of the Community Designs Regulation ((EC) No. 6/2002). In the Nintendo case, the relevant acts (for present purposes) were those of a French defendant supplying goods into Germany. In relation to infringements of EU intellectual property rights, Article 8(2) of the Rome II Regulation – which governs EU conflicts of laws – says that the applicable law is that of “the country in which the act of infringement was committed.” (emphasis added). One can immediately see the issue in cross-border IP disputes, where a number of acts in different countries are involved. On this issue, the CJEU held at [111] that in this context:

…the ‘country in which the act of infringement was committed’ … refers to the country where the event giving rise to the damage occurred.” and so

“Where the same defendant is accused of various acts of infringement committed in various Member States, the correct approach for identifying the event giving rise to the damage is not to refer to each alleged act of infringement, but to make an overall assessment of that defendant’s conduct in order to determine the place where the initial act of infringement at the origin of that conduct was committed or threatened by it.

Kitchin LJ noted that the Nintendo decision was made in a different context (as explained above) but acknowledged that it could be said to provide powerful support for, in effect, the conclusion that Judge Hacon had reached on Article 97(5) of the EUTM Regulation: i.e. that the placing by an undertaking in Member State A of an advertisement on a website targeted at consumers in Member State B is not sufficient to confer jurisdiction on an EU trade mark court in Member State B. However, he went on to point out that there had been no CJEU decision specifically on the point in issue in the current case and, in any event, he believed that there were substantial arguments why such a conclusion based on Nintendo may not be correct. His reasons are summarised below.

Court of Appeal’s reasons why Nintendo may not bar jurisdiction

First, it might be thought inherent in the EUTM Regulation jurisdictional scheme that a defendant who has activated in its own Member State infringements of a particular kind, which are carried out in several other Member States, may be sued in any one of those other Member States for the particular infringements which have taken place in that territory.

Secondly, the CJEU in Coty had held that Article 97(5) of the EUTM Regulation must be interpreted independently of the concept of “the place where the harmful event occurred or may occur” in what is now Article 7(2) of Brussels I. In the light of Coty, that concept relates to active conduct on the part of the person causing that infringement and the provision confers jurisdiction upon the courts in the Member State in which the defendant has committed the alleged unlawful act. Kitchin LJ regarded the earlier CJEU decisions of Pammer and L’Oréal as providing support for the conclusion that the advertisement and offer for sale of goods bearing a sign identical to a registered EU trade mark through an online marketplace targeted at consumers in a Member State constitutes both “use” of the sign in that Member State and “active conduct” in that territory sufficient to ground jurisdiction under Article 97(5).

Thirdly, Kitchin LJ said that Articles 97(5) and 98(2) read together make it clear that an EU trade mark court whose jurisdiction is based on Article 97(5) only has jurisdiction in respect of acts committed in that territory. That being the case, he thought that a conclusion based on the Nintendo ruling would lead to a result that might be thought to have been unintended by the EU legislature, namely that neither the courts of Member State A nor Member State B would have jurisdiction: “The courts of Member State B would not have jurisdiction because the process of publishing the advertisement was activated in Member State A; and the courts of Member State A would not have jurisdiction because the infringement took place not there but in Member State B.

Referral to CJEU

For these reasons he concluded that the questions set out at the beginning of this blog should be referred to the CJEU in order to clarify the proper interpretation of Article 97(5) of the EUTM Regulation.

Comment

In his original decision, Judge Hacon acknowledged that the conclusion he was reluctantly driven to by the prior CJEU rulings would result in some procedural inefficiency: that seriously understates the position. It is highly undesirable for actions arising from the same alleged online infringements to be tried in two different countries merely because both national and EU trade marks are invoked. Aside from being incredibly costly, it undermines the entire project of EU harmonisation of trade mark law and creates a great deal of uncertainty for rights holders looking to challenge online infringements that cross Member States. For the sake of rights holders and alleged infringers alike, one would hope that the roadmap to a sensible resolution of this problem that Lord Justice Kitchin has set out in his detailed and persuasive judgment will in due course be followed by the CJEU.

Now the action shifts to Luxembourg. Lime Green IP will be back with further news as the case progresses.