The Netherlands are certainly not the largest economy in Europe, but a lot of IP litigation in which foreign companies participate is taking place here. In many cases, even both plaintiff and defendant are non-Dutch companies. In fact, The Netherlands are probably in the top three for IP litigation in Europe, together with the United Kingdom and Germany. Why is this and what does it mean for your company’s trade mark strategy?
Lacking most natural resources, The Netherlands have been a trading nation for centuries. Establishing good trade relations has always been key policy. As a consequence, there is no prejudice whatsoever against foreign companies. That also applies to the legal system. It makes absolutely no difference whether a plaintiff or defendant is foreign or domestic.
The Netherlands are an important port of entry to Europe for many goods. In addition, there are many trading companies that sell throughout Europe and The Netherlands also house many distribution centres. On top of that, due to the comparatively favourable tax regime for royalties, The Netherlands house many IPR holding companies. So, although the national economy may not be that large, the international part of the economy is comparatively large.
The litigation system in The Netherlands is effective and competent. It has a lot of experience with international litigation. The districts courts in the larger cities have judges with expertise in IP matters. The District Court in The Hague even has a specialised IP chamber, consisting of some 10 judges, who handle a large amount of IP cases per year. This court has exclusive jurisdiction within the Netherlands in national and European patent matters, community trade mark litigation and community design right litigation. The Court of Appeal in The Hague also has a specialised IP chamber. The judges in The Hague actively exchange know-how and experiences with colleagues from other countries.
The litigation itself is expedient. Full proceedings on the merits take about 1,5 years in first instance, including the exchange of two written submissions per party and an oral hearing, where the case is pleaded. In addition, there is an inter partes preliminary injunction procedure, the Kort Geding, which takes about 8 weeks, in which the decision is based on an evaluation of the merits. Although the case may be referred to full proceedings if the issues of facts are too complicated for this type of procedure, that rarely ever happens in trade mark cases. The fact that complicated issues of law need to be decided is not a reason to refuse to deal with a matter in preliminary injunction proceedings.
A further advantage of Dutch litigation is the availability of cross-border relief. A plaintiff can obtain an injunction that covers the whole European Union, and may even extend beyond that. In as far as an injunction covers the European Union and Switzerland, enforcement is not a problem, since there is a EU Regulation and a treaty that provide for such enforcement. That will be different in as far as an injunction covers other countries, but even then the penalties forfeited by violating such an injunction may be enforced against assets within the EU. Thus, if an injunction covering the US would be awarded against a French company, that company’s assets in France might be seized if it violates the injunction in the US. This type of cross-border relief was first enabled by the Dutch Supreme Court in 1989 in its ruling in Lincoln v. Interlas, based on the rule of Dutch law that any party who is under an obligation to do something or refrain from doing something versus another party, including the obligation to refrain from IPR infringements, will be ordered by the courts to act accordingly upon request by that other party. The Supreme Court ruled that there were no reasons why such an obligation should be limited to the territory of The Netherlands. In 1998, the Court of Appeal in The Hague limited cross-border litigation against defendants from other EU member states to Dutch defendants and co-defendants in the same action based in other member states, if the Dutch defendant is the spider-in-the-web, deciding the policy for the allegedly infringing product. Last year, the Supreme Court confirmed in Philips v. Postech & Princo that such limitations do not apply to non-EU based defendants. More precisely, no limitations would apply to grant an injunction covering the whole EU against a Taiwanese company. The Supreme Court also ruled that there was no reason why such relief would not be available in preliminary injunction proceedings. So, for non-EU defendants, cross-border relief is readily available. Cross-border jurisdiction against non-EU defendants may even be based on infringements that take place within The Netherlands. For EU-defendants, the issue is currently subject to evaluation by the European Court of Justice in GAT v. LuK and Roche v. Immunomedics.
For community trademarks and design rights, the issue of cross-border jurisdiction is of course decided by the respective European Regulations themselves, which provide for such jurisdiction for the home court of the defendant. It seems that such jurisdiction would also allow for cross-border injunctions against co-defendants from other member states, but there is not any European Court of Justice case law on the issue yet. In addition, if the defendant is not based in the EU, the home court of the plaintiff will have cross-border jurisdiction and there are examples of this in Dutch case law.
For national and international trademarks the rules set out above apply. It helps to have a trade mark which is valid in The Netherlands, since that will allow the court to decide on a request for an injunction for The Netherlands and have the cross-border injunction as an add-on.
Substantive trade mark law has of course been harmonised by the Trademark Directive, but even then The Netherlands probably have one advantage over the other member states. Before the harmonisation, the criterion for infringement in The Netherlands was not likelihood of confusion, but likelihood of association, the test being whether a member of the relevant public, when confronted with the allegedly infringing sign, would associate that with the trademark, based on the general recollection he had of that trademark. Visual, aural or conceptual similarity could generate such an association. For some time the Dutch government believed they had been able to incorporate this criterion in the Directive, but that hope was destroyed by the European Court of Justice in 1997 in Puma v. Sabel. However, in 2003 the criterion was restored in part by the ECJ in Adidas v. Fitnessworld. In that judgment, the ECJ found that for trademarks with a reputation it would be sufficient for finding infringement if there would be a certain degree of similarity between the mark and the sign, by virtue of which the relevant section of the public makes a connection between the sign and the mark, that is to say, establishes a link between them even though it does not confuse them. This “mental link” for all practical purposes seems to be the same as the old criterion of association. The ECJ had decided in 1999 in General Motors v. Yplon that in order to invoke the protection for trademarks with a reputation under article 5 section 2 of the Trademark Directive, the trade mark should be known by a significant part of the public concerned by the products or services which it covers. In the Benelux territory, it is sufficient for the registered trade mark to be known by a significant part of the public concerned in a substantial part of that territory, which part according to the ECJ may consist of a part of one of the countries composing that territory.
It is of course for the national courts to decide when these conditions are met. The District Court in The Hague ruled on 1 September 2004 in Crazy Piano’s that this was the case, since yearly 800.000 people visited the trade mark owner’s establishment, its band had performed for audiences with a cumulative size of 210.000 people and there had also been some media coverage for the trademark. This seems to indicate that many international trademarks could invoke this special protection. Since likelihood of association used to be the standard criterion in The Netherlands, the courts have no difficulties applying it. That makes it worth while to look for litigation in The Netherlands if likelihood of confusion cannot be proven.
Customs seizures of counterfeit goods are of course available in The Netherlands, based on the European Regulation. In order to make effective use of such seizures, a good contact with the relevant customs authorities is important. Very often such seizures are followed by civil litigation.
There is a special police branch that deals with the criminal investigation of counterfeiting. Prosecution of such crimes however is not the public prosecutor’s top priority, but the investigation may be a way to get additional information on the infringements. That is helpful, as there is no discovery procedure in civil litigation.
Taking all into consideration, The Netherlands are worth considering as a forum for swift and effective litigation. In order to get the most out of that, a Benelux (or Community) trade mark registration is a good asset.
First published in the April 2005 issue of Managing Intellectual Property.