Friday, 1 July 2016

Damages in cases of EU trademark application infringement

In the main proceedings from which the questions referred to the CJEU stem (judgment of 22 June 2016, C-280/15), the plaintiff –the holder of an EU trademark- filed a complaint for unlawful use of her trademark as a “hidden keyword” on an Internet websiteThe use in question had allegedly commenced prior to the publication of the plaintiff’s trademark application and had continued after publication of the registration of the mark.   

The plaintiff sought three orders, namely: (i) a declaration of infringement of her trademark; (ii) compensation for the advantage improperly obtained by means of the infringement, calculated by multiplying the duration of the infringement by the fee established in the licensing agreement; and (iii) compensation for the moral damages suffered on account of the infringement.

The relief sought by the plaintiff gave rise to some uncertainty, and so the court decided to refer the following three questions to the CJEU:


  • First of all, the referring court asked whether Art. 102.1 EUTMR must be interpreted as meaning that an EU Trademark Court must issue an order which prohibits a third party from proceeding with acts of trademark infringement even though the trademark holder did not apply to the court for such an order.       

   
In reply to that question, the CJEU stated that Art. 102.1 EUTMR does not preclude an EU Trademark Court from refraining, pursuant to certain principles of national procedural law, from issuing an order which prohibits a third party from proceeding with acts of infringement on the grounds that the trademark holder concerned has not applied for such an order before that court.


  • The referring court’s second and third questions concern the second sentence of Art. 9.3 EUTMR on compensations and specifically question the following two aspects: 
(i) Whether the holder of an EU trademark may claim compensation in respect of acts of third parties occurring before publication of the application for registration of the trademark concerned; and 
(ii)Whether, in the case of acts occurring after publication of the application for registration of that mark, but before publication of the registration, the concept of “reasonable compensation” in that provision means damages intended to compensate for all the harm suffered by that holder, i.e., recovery of the usual value derived by the third party from use of the mark and compensation for the moral damages suffered. 
The answer to the first question is clear: the second sentence of Art. 9.3 EUTMR establishes a strictly circumscribed exception to the rule that an EU trademark cannot prevail against third parties prior to the publication of its registration (Art. 9.3, first sentence). Therefore, no compensation can be demanded for acts that take place prior to the publication of the application for registration of the trademark.  

In order to reply to the second question, the CJEU makes an interpretation of the concept of “reasonable compensation”, based on the following points:


  • The rights conferred by an application for registration of an EU trademark are conditional in nature, since at that point there is no certainty that the mark applied for will be granted.                                                       
  • It thus follows that the reasonable compensation that may be claimed in an action based on a trademark application must be smaller in scope than the damages that may be claimed by the holder of a registered trademark. 
  • Furthermore, a distinction is drawn in Art. 96 EUTMR between the actions in each case, i.e., (a) refers to any infringement action, whilst (b) refers to any action brought as a result of acts referred to in Art. 9.3, second sentence, EUTMR.  
  • Also, Art. 13 of Directive 2004/48 establishes rules on the subject of damages which, on the one hand, provide for full compensation for the harm suffered, which may include moral damages, in the event of acts of infringement committed knowingly and, on the other, recovery of profits or the payment of damages which may be pre-established where the acts of infringement have not been committed knowingly. 
All this confirms that the “reasonable compensation” provided under Art. 9.3, second sentence, EUTMR must be smaller in scope than the damages that can be claimed by the holder of an EU trademark for acts of infringement committed after the registration of the trademark, and must be limited to the recovery of profits actually derived by third-party infringers from use of the mark during that period, with moral damages being ruled out.  

In light of the above points, the CJEU replied to the referring court’s questions as follows:

1)      Article 102(1) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark must be interpreted as not precluding an EU trade mark court from refraining, pursuant to certain principles of national procedural law, from issuing an order which prohibits a third party from proceeding with acts of infringement on the ground that the proprietor of the trade mark concerned has not applied for such an order before that court.
2)      The second sentence of Article 9(3) of Regulation No 207/2009 must be interpreted as precluding the proprietor of an EU trade mark from being able to claim compensation in respect of acts of third parties occurring before publication of an application for registration of a trade mark.  In the case of acts of third parties committed during the period after publication of the application for registration of the mark concerned but before publication of its registration, the concept of ‘reasonable compensation’ in that provision refers to recovery of the profits actually derived by third parties from use of the mark during that period.  On the other hand, that concept of ‘reasonable compensation’ rules out compensation for the wider harm which the proprietor of the mark may have suffered, including, as the case may be, moral prejudice.

Author: Ana Sanz

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