Jurisdiction in Online Trade Mark Infringement Litigation

So when your trade mark is infringed online in Europe, where should proceedings be brought?

The Background Principles

Infringements of EUTMs are governed by the European Trade Mark Regulation (“EUTMR”) which sets out a jurisdictional cascade:

1. an EUTM infringement action must be brought in the Member State in which the defendant is domiciled or established
2. if the defendant is not domiciled or established in a Member State, the EUTM infringement action must be brought in the plaintiff’s Member State of domicile or establishment;
3. if neither defendant nor plaintiff is domiciled or established in a Member State, the action must be brought in Spain; but
4. infringement actions “may also be brought in the courts of the Member State in which the act of infringement has been committed or threatened”

Meaning of “Establishment”

The first option is to target a defendant in the Member State where it is domiciled, or (if not domiciled in a Member State) where it has an establishment.

The definition of 'establishment' has been the subject of litigation and a low bar has been set i.e. it's sufficient if a company acts as a 'centre of operation' in the EU and 'has the appearance of permanency to the outside world'. 

Since many companies operate a system of local subsidiaries and representative companies, this (while not surprising) does open the door to possible forum shopping in relation to infringements by international corporate organisations, and expose US parents to being named as Defendants in European litigation relating to acts performed by subsidiaries in Europe. 

Location of Infringing Act

In questions of international infringement, the defendant’s domicile is not always the preferred jurisdiction for a claimant (plaintiff).  So if a claimant is not pursuing a pan-EU injunction, a claim may well instead be brought in the courts of the Member State where the infringing act was committed. For online trade mark infringements, there is currently controversy about whether that place is (1) the place where decisions about the content of the website are taken or (2) any country 'targeted' by the website (see below). We await the CJEU to provide clarity on this point.

Targeting of Online Infringements

'Targeting’ of websites is an important factor in assessing where an act of online infringement takes place. The mere fact that a website is accessible from the EU is not enough to conclude that it is targeting EU consumers, and all relevant circumstances, including those beyond the website itself, will be considered e.g. the nature and size of the trader’s business, the characteristics of the goods or services in issue and the number of visits made to the website by consumers in the EU. This makes it a highly fact-dependent assessment each time. The English Court of Appeal has recently given guidance summarising the relevant cases in this area.

The Impact of Brexit

Whether a Brexit deal will be struck between the EU and the UK remains to be seen. Regardless: 

• EUTMs will no longer cover the UK, but the UK will create a new equivalent right for EUTM holders, called a ‘comparable’ trade mark right. 
• Only the UK Courts will have jurisdiction to hear cases of infringement in the UK.
• EUTM courts will not have jurisdiction in respect of new comparable UK trade marks. 
• At the point of Brexit, the UK will be a third country from the perspective of the EU, just as the USA currently stands. 

It's also notable that many UK companies are, or have already, set up regional offices in the EU in order to have a representative (or more significant) presence in the common market.  After Brexit, it may therefore be possible to show that such a presence in an EU Member State is a sufficient "establishment" of the UK company to bring action against it before an EU court when fighting a trade mark infringement across the EU (although the remedies granted would not cover UK acts). 

An extended version of this article features in the 2019 edition of The International Comparative Legal Guide to Trade Marks, due for publication later this month, which will be available on www.iclg.com.

Note: Nick is speaking on a panel about these and related issues at the CIPA roadshow in Palo Alto in April 2019.