ECJ Ruling on EU Trade Mark Jurisdiction: Online Infringers Can No Longer ‘Hide’ From Justice
An ECJ ruling clarifies the power of EU Trade Mark Courts in Member States to deal with online infringement of EU trade marks where the target audience is in one Member State but the physical steps taken in the infringement occur in another Member State.
In short, EU courts situated in a Member State do have jurisdiction to hear an infringement claim relating to EU trade marks, even where the steps taken to cause the infringement occurred outside of that Member State. This is of course provided that customers within that Member State have been targeted – and it is for the court of that Member State to decide whether targeting has actually occurred.
The case involved a UK based audio equipment manufacturer pursuing a Spanish trader. The Spanish trader’s website ‘targeted’ UK consumers, however it was entirely run and operated from Spain. The question was therefore whether the IPEC (as an EU Trade Mark Court) had jurisdiction to hear a case against a defendant domiciled in Spain, on the basis of their EU trade marks, where no physical actions have taken place in the UK.
First Instance Decision
Jurisdiction over UK trade marks is governed by the Recast Brussels Regulation, whereas jurisdiction over EU trade marks is governed by the EU Trade Mark Regulation. The provisions of each are different:
- Under the Brussels Regulation, a defendant can be sued either in their own Member State, or alternatively where the ‘harm’ occurs – which is either (1) the place where damage occurred or (2) the place where the event giving rise to damage occurred.
- Under the EU Trade Mark Regulation, a defendant can only be sued either in their own Member State, or in the place where the act of infringement has been committed or threatened.
In this case, the steps had been taken to put the sign on a website in Spain, but the place that was targeted by that website was the UK. Therefore, on a literal reading of the regulations, the English courts had jurisdiction over UK trade marks (under Brussels), but only the Spanish courts would have jurisdiction over the EU trade marks (under the EUTMR).
Appeal and Reference
The decision appears to be technically correct (on a literal reading of the EUTMR), but it creates a practical issue of limiting the places in which infringement actions can be brought against a defendant. If the defendant is domiciled in a Member State, and carries out all practical acts in relation to the infringement in that Member State, that is the only place in which an action can be brought, even if the harm occurs elsewhere (and even if it is desirable that the action be brought elsewhere).
The claimant appealed this decision and invited the Court of Appeal to refer the matter to the ECJ. The ECJ agreed with the Claimant and ruled:
‘Courts in Member State B could have jurisdiction over a claim where the Defendant is established and domiciled in Member State A, where the Defendant had advertised and offered goods for sale on a website that targets customers in Member State B’
Whilst broadly good news for the claimant, this does have some consequences. Whilst a defendant sued in their Member State of domicile can be held liable for their actions across the whole of the EU, a defendant sued on this basis (in another Member State) can only be held liable for their actions in relation to that particular Member State (thus affecting the damages or the breadth of any injunction granted).
The interpretation of the law by the ECJ is interesting in that is a stretch of the literal meaning of the wording in the EU Trade Mark Regulation. However, it does appear entirely sensible (and pro rights-holder). Not least because without this interpretation, the alternative forums provided by the EUTMR would be meaningless, where an infringer is operating in its own Member State.
It may still be necessary to pursue infringers in the Member State of their domicile; in particular when their actions are causing harm across the EU. However, this judgement opens the door for claimants to bring action in another member state, if that is where the real harm is being done.
The key practical implication of this decision relates to litigation strategy. Trade mark infringers (and in particular counterfeiters) can no longer hide behind red-tape when it comes to infringing EU trade marks. It would previously have been possible for an undertaking to incorporate and operate its website from a jurisdiction in which proceedings are expensive, or very slow, and target a jurisdiction where they would have faced swift justice (such as the UK). Following this judgment, they can now be sued in the territory they are targeting and this is good news for rights owners.
Even post Brexit, this will still be an important point for UK holders of EU trade marks, who will be interested in bringing proceedings in the most appropriate place in the EU, even if this is no longer the UK.
Case: AMS Neve Ltd (and others) v Heritage Audio SL (and others):
For more information please contact Peter Byrd on +44 (0)20 7427 6754 or at email@example.com.