The CJEU has recently clarified what jurisdiction the Courts of EU Member States have in relation to infringement proceedings concerning EU trade marks. The judgment in AMS Neve v Heritage Audio (Case C-172/18) is the result of clarification sought by the English Court of Appeal and follows Advocate General Szpunar's opinion earlier this year (see our earlier blogs: IPEC sounded out on the question of jurisdiction and Advocate General considers tricky jurisdictional questions over trade mark infringement).
This clarification is to be welcomed by entities which trade across borders and is particularly relevant in light of the ever increasing e-commerce conducted through websites, social media and digital platforms.
AMS Neve (AMS) sells 1073 branded pre-amplifiers. A Spanish entity, Heritage Audio, was selling cloned products also branded 1073 from their website. The website indicated that products could be bought from a UK distributor, suggested that direct orders could be placed with Heritage Audio anywhere in the EU and that Heritage Audio would ship the products.
AMS issued proceedings in the UK in the Intellectual Property Enterprise Court (IPEC) for infringement of its EU trade mark (EUTM) registration, its two UK national trade mark registrations and passing off. Heritage Audio subsequently applied for an order that the English courts did not have jurisdiction to try the claim.
In the IPEC, HHJ Hacon held that the IPEC had jurisdiction to decide claims relating to the UK trade marks and passing off. However, it did not have jurisdiction to hear claims relating to the EUTM. This was because Regulation No. 207/2009 (now Regulation (EU) 2017/1001) ("the EUTM Regulations") excludes the application of the Brussels Regulations which deal with the jurisdiction to hear claims. Article 97(1) and 97(5) of the EUTM Regulations designate when a Member State court has jurisdiction to hear a claim: (i) when the defendant is domiciled or established in that Member State; or (ii) when the act of infringement has been committed or threatened in that Member State.
HHJ Hacon reasoned that because Heritage Audio was domiciled in Spain and the decision to advertise or offer for sale its products on its website and social media forums was made in Spain, the UK Court had no jurisdiction to hear an EUTM infringement claim under Article 97.
AMS appeared to the Court of Appeal, which referred 3 questions for a preliminary ruling.
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:
- Does an EUTM court in member state B have jurisdiction to hear a claim for infringement of the EUTM in respect of the advertisement and offer for sale of the goods in that territory?
- If not, which other criteria are to be taken into account by that EUTM court in determining whether it has jurisdiction to hear that claim?
- In so far as the answer to (2) requires that EUTM 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?
The CJEU's judgment
The CJEU held that the EUTM Regulations were lex specialis – legislation specifically governing EU trade marks, whereas the Brussels Regulations applied to national trade marks.
Article 97(1) states that action should be brought in the Member State where the defendant is domiciled or established, where 97(5) states an applicant may "also" bring an action in the Member State where the act of infringement has been committed or threatened. Article 98(1) then makes clear that where an action is brought under Article 97(1) (i.e. because the defendant is domiciled there) the Court has jurisdiction over any infringement in any Member State in the EU, whereas in an Article 97(5) claim (i.e. where the act of infringement has been committed) the Court only has jurisdiction in that Member State. The CJEU reasoned that this gave rights-holders a choice as to the territorial scope of their claim.
For an Article 97(5), the Court must be satisfied that the infringing acts were committed in their territory. Advertising or offering goods for sale are infringing acts which are committed in the territory where the consumers or traders targeted by the advert or offer are located.
The CJEU reasoned that if this were not the case, a third party could undermine the effect of Article 97(5) by asserting (as Heritage did) that the advertisement or offer for sale was carried out in the territory where the advert or offer was placed online (in this case, Spain). If that were the case, Article 97(5) would not provide rights-holders with an alternative forum and a choice as to where to issue a claim. If rights-holders were required to prove in which territory the infringer made the decision, this would be excessively difficult or even impossible to identify.
Whether advertising and offering for sale had been committed in the territory concerned must require the commercial content to in fact be made accessible to consumers and traders targeted by the advert or offer. In these proceedings, it was for the Court of Appeal to determine whether it was apparent that Heritage Audio were targeting consumers or traders in the UK so as to give it jurisdiction to hear the claim.
This judgment is a good result for EUTM proprietors and recognises the reality of cross-border trading which targets customers in another Member State. Article 125(5) of Regulation 2017/1001 incorporates the old Article 97, so the judgment is equally applicable to the new legislation.
The judgment is also consistent with the idea that an EUTM is a unitary right. It ensures that an infringer who is located in an obscure jurisdiction, or even outside of the EU, who targets consumers or traders within an EU Member State, is not immune from legal proceedings within that Member State.
The judgment also underlines the importance of issuing legal proceedings in the most advantageous forum by reference to the jurisdiction that Court has to deal with the infringement.