This article is based on a paper prepared for the recent ON.NET seminar on the CTM.
The key feature of the Community Trade Mark ("CTM") is its unitary character. In the context of enforcement, this means that the proprietor of a CTM has the option of commencing infringement proceedings in a Community Trade Mark Court ("CTM Court") in one member state in respect of extra-territorial acts of infringement ie acts of infringement in other member states. This aspect of the CTM is heralded as giving the CTM system a distinct advantage over national trade mark registrations and also its recently improved WIPO rival, the International Registration system.
In this article, I consider the scope for forum shopping under the CTM system and also whether in practice the extra-territorial subject matter jurisdiction of the CTM Courts will be as significant as it might at first appear. First, it is necessary to understand how jurisdiction for proceedings relating to infringement and validity of a CTM registration is determined.
Jurisdiction for Infringement and Validity Proceedings
The Regulation draws a distinction between proceedings relating to infringement and validity of a CTM (including proceedings for a declaration of non-infringement) and proceedings relating to other matters concerning a CTM such as ownership and licensing.
Jurisdiction for proceedings relating to infringement and validity of a CTM is governed by the Regulation and also the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters ("the Brussels Convention")1 save to the extent that the Brussels Convention is rendered inapplicable or varied by the Regulation.2
The Regulation provides that the CTM Courts have exclusive jurisdiction for proceedings relating to the following subject matter:
- infringement of a CTM and, if permitted under the national law of the member state where the CTM Court is located, threatened infringement of a CTM;
- if permitted under the national law of the member state where the CTM Court is located, a declaration of non-infringement of a CTM;
- claims for reasonable compensation for use of a CTM between the date of publication of the application and the date of grant;
- revocation of a CTM and a declaration of invalidity of a CTM brought by way of counterclaim in infringement proceedings.
The important question as to whether a CTM Court has extra-territorial subject matter jurisdiction ie jurisdiction over acts of infringement in other member states is determined by the basis on which that CTM Court has personal jurisdiction over the defendant.
In broad terms, the Regulation draws a distinction between two bases of personal jurisdiction - domicile and act of infringement:3
- if a CTM Court's personal jurisdiction is based on domicile, it has extra-territorial subject matter jurisdiction;
- if a CTM Court's personal jurisdiction is based on an act of infringement in the member state in which that CTM Court is located, it only has jurisdiction over acts of infringement in that member state.
(Art. 94.1 and 94.2)
Subject to two provisos discussed below, the rules for determining whether a CTM Court has personal jurisdiction based on domicile provide that:
- the proceedings must be brought in the CTM Court of the member state in which the defendant is domiciled or if he is not domiciled in any member state, in which he has an establishment4; [defendant's domicile]
- if the defendant is not domiciled and does not have an establishment in any member state, the proceedings must be brought in the CTM Court of the member state in which the plaintiff is domiciled or if he is not domiciled in any member state, in which he has an establishment; [plaintiff's domicile]
- if the plaintiff is similarly neither domiciled nor has an establishment in any member state, the proceedings shall be brought in the Spanish CTM Courts,
Spain being the member state where OHIM has its seat [OHIM's domicile].
The first proviso to the application of these rules is that the parties can agree that a different CTM Court may have jurisdiction in which case Article 17 of the Brussels Convention applies.5 The second is that if a defendant enters an appearance before a CTM Court which would not otherwise have jurisdiction by the application of these rules, Article 18 of the Brussels Convention applies6 thereby giving that CTM Court jurisdiction provided that the defendant has not entered an appearance solely to contest jurisdiction. In both cases, the CTM Court in which the proceedings are commenced will have extra-territorial subject matter jurisdiction.7 (Art. 93.4)
Apart from the CTM Courts which have personal jurisdiction based on domicile, the CTM Courts in a member state where an act of infringement has taken place also have jurisdiction but only in respect of the acts of infringement in that member state.8 A CTM Court which has personal jurisdiction based on an act of infringement as opposed to domicile does not have any extra-territorial subject matter jurisdiction.
Notwithstanding the rules for determining whether and if so on what basis a CTM Court has personal jurisdiction discussed above, the Regulation also provides that a plaintiff may apply to either the national courts or the CTM Courts of any member state for such provisional relief including a preliminary injunction as is available under the national law of that member state in respect of a national trade mark registration. A preliminary injunction obtained on such an application is limited to acts of infringement in that member state save where that court is in fact a CTM Court which would have personal jurisdiction based on domicile. In this latter case, the CTM Court has extra-territorial subject matter jurisdiction and may grant extra-territorial provisional relief. The Regulation provides that only the CTM Courts having personal jurisdiction based on domicile may grant such extra-territorial provisional relief. (Art. 99.1)
The Regulation provides that validity may only be put in issue in proceedings before a CTM Court by way of a counterclaim or by way of a defence.9 If a person wishes to challenge the validity of a CTM other than in infringement proceedings, he may do so by applying to OHIM for revocation or a declaration of invalidity. (Art. 55)
In the case of a defence, a defendant may put validity in issue only to the extent that the plea relates to non-use of the CTM in issue or a conflicting earlier right of the defendant.10 Otherwise, the CTM Court must treat the CTM as being valid. (Art. 95)
In the case of counterclaim for revocation or a declaration of invalidity, the plaintiff may apply to the CTM Court for the proceedings to be stayed pending the outcome of an application for revocation or a declaration of invalidity to OHIM. The CTM Court must hear both parties before making a decision. If the CTM Court decides that a stay is appropriate, it will ask the defendant to apply to OHIM for revocation or a declaration of invalidity. The CTM Court may also make an order for provisional relief pending the outcome of the application to OHIM. If the defendant fails to make the application to OHIM within the time specified by the CTM Court, the counterclaim is deemed to have been withdrawn and the infringement proceedings continue on the basis that the CTM is valid. (Art 96.7)
The CTM Court must reject a counterclaim if a final decision relating to the same subject matter and cause of action and involving the same parties has already been made by OHIM. (Art. 96.2) It is to be noted that this provision applies only to final decisions of OHIM and not other CTM Courts.
Conduct of Related CTM Actions11
The Brussels Convention lays down rules for determining how courts should deal with the problem of actions pending in different member states where the causes of action are the same or related.
In broad terms, these rules provide that in the case of proceedings involving the same cause of action and the same parties, the second court seized of the matter must decline jurisdiction12 but in the case of proceedings involving related causes of action, the second court seized may stay the proceedings pending the outcome of the proceedings in the court first seized or, subject to certain conditions being met, the second court seized may decline jurisdiction.13
The validity of a CTM can be put in issue in both proceedings before a CTM Court and also an application to OHIM. Accordingly, over and above the rules laid down in the Brussels Convention, the Regulation itself lays down rules for determining how the CTM Court and OHIM should deal with the particular problem of proceedings pending in different CTM Courts or OHIM in which the validity of a CTM is in issue. These rules provide that:
- if, in infringement proceedings before a CTM Court, the defendant counterclaims for revocation or a declaration of invalidity and the validity of the CTM is already in issue either in an application to OHIM or in proceedings in another CTM Court, that CTM Court must, of its own motion or at the request of one of the parties and only after having heard both parties, stay the infringement proceedings save where there special grounds for not doing so. (Art 100.1) The Regulation does not give any guidance on the reasons which would preclude a stay from being granted. If a stay is granted, the CTM Court may order provisional relief pending the outcome of the application to OHIM or the proceedings in the other CTM Court. (Art. 100.3)
- if an application for revocation or a declaration of invalidity is made to OHIM and the validity of the CTM is already in issue in proceedings in a CTM Court, OHIM must, of its motion or at the request of one of the parties and only after having heard both parties, stay the application save where there are special grounds for not doing so or save where the CTM Court decides to stay the proceedings before it. The CTM Court may decide to do so only at the request of one the parties to the proceedings but only after having heard both parties to the proceedings. (Art. 100.2) Again, the Regulation does not give any guidance on the reasons which would preclude a stay from being granted and again, if a stay is granted, the CTM Court may order provisional relief pending the outcome of the application to OHIM. (Art. 100.3)
The Scope for Forum Shopping
This brings me to the interesting and, from the brand owner's point of view, the practical question - where should I sue?
Only in a very limited number of cases will the CTM proprietor have no opportunity to choose in which member state to bring infringement proceedings:
- the infringer is domiciled in a member state or has an establishment in only one member state and is only infringing in that member state;
- the infringer is not domiciled nor has an establishment in any member state and is only infringing in the member state where the plaintiff is domiciled or where the plaintiff has his only establishment;
- neither the infringer nor the plaintiff is domiciled in any member state nor have either of them any establishments in any member states and the infringer is only infringing in Spain.
In all other cases, a prospective plaintiff will be able to bring infringement proceedings in more than one member state on the basis that the infringer will be infringing in at least one member state other than the one which has jurisdiction on the basis of domicile.
In some cases, the plaintiff may even be in a position to bring infringement proceedings in several member states:
- the infringement is widespread;
- the defendant not being domiciled in any member state has establishments in many member states;
- the defendant not being domiciled nor having an establishment in any member state and the plaintiff not being domiciled in any member state has establishments in many member states.
Factors Affecting Choice of Forum
Apart from such factors as cost, speed, competence, availability and grounds of appeal and evidence gathering procedures, the following factors are likely to be of particular importance in deciding whether to commence proceedings for infringement of a CTM in any given member state:
1) Availability and scope of extra-territorial injunctions
As explained above, the basis of a CTM Court's personal jurisdiction will determine whether that CTM Court has extra-territorial subject matter jurisdiction. The prospect of obtaining a preliminary or final injunction in respect of all acts of infringement in the Community will obviously be an extremely important factor to be taken into account when deciding where to bring infringement proceedings. However, it should be borne in mind that once a final judgment has been obtained in one member state, the prospect of the unsuccessful defendant successfully defending subsequent infringement proceedings brought in another member state in respect of essentially the same act of infringement (albeit taking place in that other member state) are likely to be low, the issues of infringement and validity having already been determined in the first proceedings. As a practical matter, therefore, a final judgment obtained in one member state is likely in many cases to determine the dispute between the parties.
2) Stay of Related CTM Proceedings
The prospect of a CTM Court ordering infringement proceedings to be stayed pending the outcome of other proceedings in the CTM Court of another member state or an application to OHIM in either of which the validity of the CTM is also in issue will not in most circumstances be welcomed by the plaintiff because of the delay which is likely to occur before he obtains a final judgment on the issue of infringement. Although the CTM Court may order provisional relief pending the outcome of the other proceedings or application, it is difficult to see how in most cases the plaintiff can be adequately protected by the delay. This delay will be exacerbated by the prospect of an appeal and in particular, a reference on matters concerning the interpretation of the Regulation to the European Court of Justice. It is worth noting that in the context of patent infringement proceedings, the approach taken by the courts of different member states to pending opposition proceedings before the EPO varies considerably. Thus, the English courts are generally reluctant to grant a stay pending determination of opposition proceedings whereas most other European courts appear to do so almost as a matter of course.
3) Application of Substantive Law
On the basis of the recent English decision in Wagamama Limited v City Centre Restaurants PLC and anr (unreported), there appears to be a difference of opinion between at least some of the member states on the scope of the rights conferred on the proprietor by the CTM and in particular, the meaning of Article 9(1)(b) of the Regulation. This provision is intended to mirror Article 5(1)(b) of the Trade Marks Harmonisation Directive which latter Article has been enacted in the UK by Section 10(2) of the Trade Marks Act 1994.
In Wagamama, Laddie J. construed the requirement in section 10(2) of the Trade Marks Act 1994 that "there exists a likelihood of confusion on the part of the public, which includes a likelihood of association" so as to encompass only confusion as to origin. He rejected the argument that the section encompassed what he termed ?non-origin association?.
The member states of the Benelux Trade Mark system appear to take a different view. Their law on infringement before the Trade Marks Harmonisation Directive came into force apparently gave the proprietor the right to stop the use of a mark on the basis of "non-origin association? (ie the calling to mind of the registered trade mark on seeing the defendant's mark without any actual confusion as to origin). Since the Directive came into force, the member states of the Benelux Trade Mark system have not changed their law on infringement. It therefore seems that they view the rights conferred on the proprietor under Article 5(1)(b) of the Trade Mark Harmonisation Directive and also therefore Article 9(1)(b) of the Regulation as encompassing the right to stop such "non-origin association". Whether their courts will come to a similar view is a matter which awaits to be seen. Assuming that they do so, then until this difference of approach is resolved, the Benelux courts and others courts taking a similar approach to the Benelux courts will obviously be seen as more favourable to the proprietor in this regard.
The CTM system offers the CTM proprietor the prospect of obtaining from those CTM Court whose jurisdiction is based on domicile extra-territorial preliminary and final injunctions. The CTM system also provides the CTM proprietor with the prospect of forum shopping for infringement proceedings.
Brand owners will therefore need to consider carefully the pros and cons of all the various jurisdictions available to them in each case before deciding which is the most appropriate CTM COURT to bring the infringement proceedings. In some cases, the CTM Court having extra-territorial subject matter jurisdiction is not going to be the only or necessarily the best forum.
Apart from the availability and scope of extra-territorial preliminary and final injunctions and such matters as speed, cost and competence, the factors to be taken into account in reaching a decision on this matter will include the prospects of the CTM Court staying the infringement proceedings and, at least in the early stages, the approach taken by the CTM Court and for that matter, the national courts of each member state to the now "harmonised" European law on trade mark infringement.
First published in Trade Mark World in February 1996.
1 Note that because the Brussels Convention has been amended as a result of new member states joining the Community, the same text is not necessarily in force in all member states. Accordingly, the Regulation provides that the text of the Brussels Convention relied on by a member state is that text in force at any given time. (Art 104)
2 Jurisdiction for proceedings relating to matters concerning a CTM other than infringement and validity is governed solely by the Brussels Convention on the basis that the CTM is treated as if it were a national trade mark registration. (Art. 102.1)
3 Note that Articles 2, 4, 5(1), 5(3), 5(4) and 5(5) of the Brussels Convention which would otherwise determine jurisdiction for proceedings relating to infringement and validity of a CTM are rendered inapplicable by the Regulation and need not therefore be considered further. (Art. 90)
4 It is assumed that by the term "establishment" is meant ?real and effective industrial or commercial establishment?. The full phrase as opposed to the shorthand version is used elsewhere in the Regulation. See the article entitled: "The Right of Nationals of Non Madrid Countries to Own International Registrations" by George Soutar for an explanation of the meaning of the term.
5 The relevant part of Article 17 of the Brussels Convention provides that: "If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a court or courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either in writing or evidenced in writing or in international trade and commerce, in a form which accords with practices in that trade and commerce of which the parties are or ought to have been aware. Where such an agreement is concluded by parties none of whom is domiciled in a Contracting State, the courts of other Contracting States shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction ... If an agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention"
6 Article 18 of the Brussels Convention provides that: "Apart from jurisdiction derived from other provisions of this Convention, a court of a Contracting State before whom a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered solely to contest jurisdiction or where another court has exclusive jurisdiction by virtue of Article 16.
7 It is assumed that in the case of a CTM COURT having jurisdiction by virtue of the defendant entering an appearance, it must have been plain on the face of the proceedings that the plaintiff was seeking relief in respect of extra-territorial acts of infringement.
8 This basis for personal jurisdiction is not applicable to proceedings for a declaration of non-infringement. (Art. 93.5)
9 Note that validity may not be put in issue in proceedings for a declaration of non-infringement.
10 See Articles 50, 51 and 52 of the Regulation relating to Grounds for Revocation and Absolute and Relative Grounds for Invalidity respectively.
11 The rules relating to the conduct of related actions involving CTMs and national trade mark registrations are governed Articles 21 and 22 of the Brussels Convention as modified by Article 105 of the Regulation.
12 Article 21 provides that: "Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Contracting States, any court other than the court first seized shall of its own motion decline jurisdiction in favour of that court. A court which would otherwise be required to decline jurisdiction may stay its proceedings if the jurisdiction of the other court is contested."
13 Article 22 of the Brussels Convention provides that: "Where related actions are brought in the courts of different Contracting States, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings. A court other than the court first seized may also, in the application of one of the parties decline jurisdiction if the law of that court permits the consolidation of related actions and the court first seized has jurisdiction over both actions. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgment from separate proceedings."