Trade marks: infringement action by unregistered licensee

Summary
The European Court of Justice (ECJ) has held that a licensee of a Community trade mark (CTM) may bring an action for infringement even if the licence is unregistered.

Background
The acts referred to in Articles 17 (transfer), 19 (security) and 22 (licensing) in relation to a CTM shall have effect on third parties in EU member states only after the relevant agreement is entered  in the register (Article 23(1), CTM Regulation (207/2009/EC)) (Article 23(1)). Before registration, those acts will have effect on third parties who have acquired rights in the CTM after the date of that act but who knew of the act at the date on which the rights were acquired.

A licensee of a UK national trade mark needs to apply to register the licence before it can sue for infringement (section 25(3)(b), Trade Marks Act 1994) (section 25(3)(b)).

Facts
A CTM licence stated that the licensee, B, was to assert rights in its own name arising from the infringement of the CTM. B sued H in Germany for infringement of the mark. H appealed, arguing that B could not bring proceedings for infringement because the licence had not been registered.

The Higher Regional Court of Düsseldorf stayed the proceedings and referred to the ECJ the question whether Article 23(1) meant that the licensee could not bring proceedings for infringement of the licensed mark if the licence had not been registered.

Decision
The ECJ held that a licensee of a CTM was not prevented from bringing an action for infringement even if the licence is unregistered.

Although Article 23(1) provides that transfers and licences concerning a CTM shall have effect on third parties in all member states only after entry in the register, this did not prevent B bringing proceedings even if the licence was not registered.

Under Article 22(3) of the CTM Regulation, a licensee’s right to bring infringement proceedings was subject only to the CTM owner’s consent (without prejudice to the provisions of the licence). Article 22(5) provided that the licence may be entered in the register on request of one of the parties, but did not contain any requirement similar to Article 17(6) (relating to the transfer of CTMs) which provides that as long as the transfer had not been registered, the successor in title could not invoke the rights arising from registration. The purpose behind Article 23(1) was to protect third parties who sought to gain rights in the property of CTMs and not to protect alleged infringers.

Comment
Despite this decision, it remains important for licensees of CTMs to protect themselves by registering against the grant of further licences or the sale of the CTMs by the owner, or other conflicting interests.

Licensees will continue to need the consent of the CTM owner before they can bring infringement proceedings, although an exclusive licensee can commence proceedings if the owner does not do so within an appropriate period after formal notice. This decision appears to apply equally to non-exclusive, sole and exclusive licences.

The position for CTMs is different to that for UK trade marks, where section 25(3)(b) will apply.

First published in the April 2016 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.