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CJEU Rules on the Applicable Jurisdiction in EU Trademark Disputes

On the 5th of September 2019, the Court of Justice of the European Union (‘CJEU’) ruled on the interpretation of the international jurisdiction provisions under Regulation (EC) No 207/2009 (‘Regulation’) with respect to European Trademarks.  

The ruling was issued in the context of a preliminary reference in the case of AMS Neve and Others vs Heritage Audio SL. AMS Neve, a UK company which sells and manufactures audio equipment, brought an action in 2015 against Heritage Audio, a Spanish Audio company, claiming trademark infringement. The applicants brought an action before the UK Intellectual Property and Enterprise Court (‘IPEC’) alleging that Heritage Audio was bearing an identical sign to their EU and UK trademarks on imitations of AMS Neve goods. The applicants were able to provide a number of important documentation to support their claim including screenshots taken from the defendants’ website, Twitter and Facebook pages, which evidently offered goods on sale while simultaneously displaying the AMS Neve trademark.  

The point of contention arose after it was noticed that the defendant’s website was set up to accept orders from all EU member states, including the UK. 

The defendants, basing their argument on Article 97 of the Regulation, raised the argument that the IPEC had no jurisdiction to decide on matters relating to  EU trademarks and further contended that they never directly advertised their goods or made sales in the UK.  

The IPEC upheld the defendants jurisdictional claim and disregarded the applicants’ EU trademark expressing that according to Article 97 of the Regulation the Spanish courts had sole jurisdiction to determine the matter. The court’s raison d’être was that Heritage Audio and its sole director were both domiciled in Spain in accordance with Article 97(1) of the Regulation and that the direct ‘act of infringement’ was indeed carried out in Spain in accordance with Article 97(5) of that same Regulation. 

The applicants appealed the IPEC’s ruling to the UK Court of Appeal (England and Wales), on the basis that the court of first instance had arrived at its conclusion after wrongly misinterpreting a number of previous judgments which in effect gave rise to an erroneous judgment against the plaintiff company. Given the nature and circumstances of this case, the Court of Appeal was faced with a dilemma in terms of the interpretation stemming from Article 97 (1) and Article 97 (5) of the Regulation.  

The CJEU was thus asked to rule on: 

Where an undertaking is established and domiciled in Member State A and has advertised and offered for sale goods under a sign identical to an EU trademark on a website targeted at traders and consumers in Member State B: 

  1. Does an EU trade mark court in Member State B have jurisdiction to hear a claim for that infringement? 
  2. If not, which other criteria will determine whether the EU trade mark court has jurisdiction to hear that claim? 
  3. 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 will determine whether such active steps have been taken? 

In respect of the above, the CJEU held that the applicant must file an action for infringement in the member state where the defendant is domiciled and may also bring an action in the member state where ‘the act of infringement has been committed or threatened’. The CJEU thus confirmed that in such circumstances the applicants are given an opportunity to decide freely in which direction to institute such proceedings. Therefore, as suggested by Advocate General Szpunar, Article 97 does not restrict an applicant but on the contrary provides applicants with flexibility as to where one could file such trademark litigation lawsuit. 

In this particular case, since the infringement proceedings occurred in the UK, the applicants chose to institute an action in the Member State where ‘the act of infringement was committed or threatened’. Interestingly, the CJEU ruled that for such action to subsist, the act of infringement must be committed by the original seller and not by any third party. In this case, the issue of the resale of the Spanish counterfeit products by a third party to the UK cannot amount to ‘the act of infringement’ for this purpose. 

In addition, the EU trademark court should be able to confirm that the alleged act of infringement did in fact occur in the territory of that respective member state. However, with regards to the infringement caused by the defendants’ website, interpreting the location of the ‘act of infringement’ to be the actual place of setting up the website would limit the scope of Article 97(5). In relation to this, the CJEU did take into account that the interpretation could potentially ‘undermine the effectiveness’ of this provision, as several measures could be taken in the future to avoid such infringement.  

The act of infringement should be construed to be ‘committed’ in a territory where those acts have been made accessible to consumers and traders to whom it was directed. In this case, the act of infringement was directed towards UK consumers by means of the advertisements that they were exposed to and it is largely irrelevant whether the defendant’s advertising efforts materially formalized or not.  The focus therefore is on the location of the consumers, rather than the territory per se.  

The CJEU therefore strayed away from a restrictive interpretation and ascertained that the accessibility of the counterfeit products, even if online, suffices in proving that the act of infringement has occurred in a member state in turn vesting such member state with jurisdiction to adjudicate the matter. 

Article written by Dr Terence Cassar, Dr Sean Xerri de Caro and Legal Trainee Camille Pellicano. 

For more information or assistance on trademark and intellectual property law kindly contact Dr Ian Gauci on igauci@gtgadvocates.com or Dr Terence Cassar on tcassar@gtgadvocates.com 

This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.