Infringement of an EU trademark... but not in the whole of the EU

The Court of Justice of the European Union has recently delivered its judgment in case C-223/15, combit Software (judgment of 22 September 2016, ECLI:EU:C:2016:719) concerning the interpretation of the unitary character of the European Union trademark in relation to the scope of infringement actions against confusingly similar signs.

In the case that prompted the Oberlandesgericht Düsseldorf to make a reference for a preliminary ruling, that court considered that a company’s use of the word sign “Commit” for computer programs gave rise, on the part of the average German-speaking consumer, to a likelihood of confusion with the EU trademark “combit”.  However, in the German court’s view, there was no such likelihood of confusion on the part of the average English-speaking consumer, who could easily understand the conceptual difference between the English verb “to commit” and the term “combit”, comprised of the letters “com” for computer and “bit” for binary digit.

In those circumstances, the Oberlandesgericht Düsseldorf asked the CJEU for guidance as to which of those two consumer groups should be taken into account in order to assess the likelihood of confusion, and whether the EU trademark should be considered as infringed throughout the whole of the EU or whether the Member States should be differentiated individually.  

In response to the referring court’s question, the CJEU indicated that where there is a likelihood of confusion in one part of the European Union, it must be concluded that the EU trademark has been infringed, even if that likelihood of confusion does not exist in other parts of the EU. This solution is in keeping with the approach followed for oppositions to EU trademark applications, where the existence of a likelihood of confusion with an earlier trademark in one part of the European Union will suffice in order for the application to be refused.     

The Court of Justice nevertheless goes one step beyond the question referred by the German court and analyses the consequences of the declaration of infringement. Here, the CJEU is supported by the case-law established in its earlier judgment of 12 April 2011, DHL Express France (C-235/09, ECLI:EU:C:2011:238).  In that judgment, the Court of Justice had ruled that a prohibition on proceeding with acts which infringe or would infringe an EU trademark must, as a rule, extend to the entire area of the EU.  However, it established the exception (paragraph 48 of the judgment) that where the defendant proves that the use of the sign at issue does not affect, particularly on linguistic grounds, the functions of the trademark in part of the EU, the EU trademark court must limit the territorial scope of the prohibition that it issues.

Based on that reasoning, the Court of Justice has now concluded that in a situation such as the one raised by the Oberlandesgericht Düsseldorf, the EU trademark court must issue an order prohibiting use of the infringing sign for the entire area of the European Union with the exception of the part in respect of which there has been found to be no likelihood of confusion. In the CJEU’s opinion, this solution, which initially seems to contradict the principle of the unitary character of the EU trademark, is imposed by the need for exclusive rights to be exercised only in cases where the use of a similar sign by a third party adversely affects the functions of the trademark.

Author: Carlos Morán

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Confirmed! The holders of licenses in Community designs may also bring claims themselves even though the license has not been entered in the register

Only some months after having given a ruling (case C-163/15)  to the effect that the holders of licenses in Community trademarks (or, rather, “European Union trademarks”, as they now are)  were entitled to bring actions for infringement against third parties even though their licenses had not been entered in the register, the Court of Justice of the European Union was asked to give a preliminary ruling on whether the holders of licenses in Community designs (as they are still called) in turn had that right.

The CJEU has given its judgment in case C-419/15 which stemmed from a request for a preliminary ruling made by the Oberlandesgericht Düsseldorf (the German court of appeal) in connection with a dispute between two German companies. The first of the two, the plaintiff, was the holder of an exclusive unrecorded license in a Community design. The defendant was the distributor of a product which allegedly infringed that design.

In these circumstances the German court referred the following questions to the CJEU: 

• May a licensee who has not been entered in the register bring claims for infringement of the rights in a registered Community design? 

• In the affirmative, may the exclusive licensee also bring an action claiming damages on its own, or may it only intervene in an action brought by the rightholder itself?

The lessors of physical premises also infringe trademark rights

If you are going to let premises or a sales point in a market hall to a trader who could be infringing intellectual property rights, bear in mind that you could end up being sued by the rightholders.

The CJEU, in a judgment published yesterday (7 July 2016) in case C-494/15, considers lessors as an “intermediary” against whom an injunction can be issued.

The judgment stems from legal proceedings brought by Tommy Hilfiger, Lacoste and Burberry against Delta Center.  The defendant is the tenant of the marketplace ‘Pražská tržnice’ (Prague market halls), which sublets to market-traders the various sales areas in that marketplace.

The plaintiffs basically asked Prague City Court to order Delta Center to refrain from concluding or extending contracts for the rental of sales areas in the market halls with persons who infringe intellectual property rights.

The judgment concludes as follows: “The third sentence of Article 11 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights must be interpreted as meaning that the tenant of market halls who sublets the various sales points situated in those halls to market-traders, some of whom use their pitches in order to sell counterfeit branded products, falls within the concept of ‘an intermediary whose services are being used by a third party to infringe an intellectual property right’ within the meaning of that provision.”

The judgment goes on to specify that the conditions established for action against intermediaries in an online marketplace also apply to action against intermediaries in a physical marketplace, i.e., “injunctions must be equitable and proportionate. They must not therefore be excessively expensive and must not create barriers to legitimate trade. Nor can the intermediary be required to exercise general and permanent oversight over its customers.  By contrast, the intermediary may be forced to take measures which contribute to avoiding new infringements of the same nature by the same market-trader from taking place.”

Although the judgment calls for a fair balance to be struck, the subjective extension of the concept of “intermediary” to actions for intellectual property infringement in the physical marketplace seems clear.

Author: Antonio Castán

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Court of Justice of the European Union helps infringement claims by owners of unregistered designs

The judgment issued by the Court of Justice of the European Union in Case C-345/13 on 19 June 2014 clarifies two important aspects bearing on proceedings claiming infringement of unregistered Community designs, namely, consideration of the individual character requirement and the burden of proving that a design has individual character.

The court ruled on two questions referred by Ireland's Supreme Court in the context of a dispute between the British company Karen Millen Fashions ("KMF"), which had designed a striped blouse, and the Irish retail chain Dunnes Stores ("Dunnes"), which had sold a similar blouse. In proceedings instituted by KMF claiming infringement of their unregistered design, Dunnes admitted having copied the design but contested the design's validity, claiming that it lacked individual character.

The first question the Supreme Court of Ireland referred to the Court of Justice was whether, for the purpose of determining individual character, an unregistered design was to be compared to previously disclosed individual designs or whether, as Dunnes had maintained, the design could be compared to a combination of separate features extant in various earlier designs.

In its answer to this question the CJEU applied the same reasoning set out in the General Court's judgment of 22 June 2010 in Case T-153/08, advocating a literal reading of Article 6.1 of the Regulation on Community Designs, which speaks of the overall impression produced by "any design" which has been previously disclosed. The Court therefore construed the wording of this provision to mean that comparison must be conducted in relation to "specific, individualized, defined, and identified" designs from among all earlier designs.

Still, Article 25.1 of the TRIPS Agreement expressly provides for the possibility of comparison with combinations of known design features. The Court, however, regarded this as an option that has not been taken up by the Community.

The second question concerned the burden of proof as it relates to the individual character of unregistered designs, which Dunnes claimed should fall on the design holder. By contrast, the Court held that Article 85.2 of the Regulation establishes a presumption of validity for unregistered designs, to be interpreted as having the purpose of helping to achieve the objectives of simplicity and expeditiousness underpinning the idea of protection of unregistered designs as expressed in the recitals to the Registration.

For this reason the Court concluded that in the context of proceedings claiming infringement of an unregistered design, the right holder may not be required to prove that the design fulfils the requirement for individual character but need only indicate which features, in his view, confer individual character on the design.

This judgment will definitely be helpful for claiming infringement of unregistered designs, and it shares out the burden of proving the validity of designs in a manner consistent with that for other types of industrial property.

In short, the Court's interpretation of the Community Design Registration is favourable to the interests of companies – among them, clothing companies – which use unregistered Community designs to protect their creations.

Author: Carlos Morán

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Blocking user access to copyright-infringing websites – an option?

By Tobias Myrstrand Leander
Vía Flickr

The Court of Justice of the European Union (CJEU) has issued its judgment in Case C-314/12 dealing with a request for a preliminary ruling regarding interpretation of Article 8.3 of Directive 2001/29/EC (on harmonization of copyright in the information society) referred by Austria's Oberster Gerichtshof. The Austrian court asked whether copyright holders could apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright.

The case involved a rightholder who had applied for an injunction to force an Internet access provider to prevent its customers from accessing the website of a third party who was not itself a customer of the said access provider

The issue raised by the matter was whether the third party – who owned an infringing website – could, under Article 8.3 of the Directive, also be deemed to be using the services of providers of access to persons seeking to access the website in question.

The CJEU's decision is incontrovertible in ruling that the infringing third party was indeed using the services of access providers who allowed their customers to access the infringing website irrespective of whether or not there was a contractual link between provider and infringer. This means that an injunction may be ordered against all service providers, not only against the one that provides services to the infringer as its customer.

The judgment further rules that an injunction may be ordered without having to prove that an Internet service provider's customers have actually accessed a website containing unlawful content, because injunctions are aimed not only at bringing infringements of copyright and related rights to an end but also at preventing such infringements.

Nevertheless, the Court goes on to specify that the measures to be adopted by service providers in compliance with injunctions issued under the legislation cited may not unnecessarily deprive users of lawful access to the information while at the same time need to be reasonably effective so that they cannot be readily circumvented by users.

Accordingly, the judgment entitles copyright holders to apply to the courts for injunctive relief against Internet service providers whose services are used by users to access unauthorized material, and relief may comprise blocking access by users to copyright-infringing third-party websites such as websites providing downloads or streaming of films without the rightholder's consent.

Author: Joaquín Rovira 

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Is proof of damages required in Spain if patentee opts for equivalent royalty?

Article 13 of the Enforcement Directive 2004/48/CE rather confusingly seems to equate equivalent royalty with damages, whereas in many continental legal systems it might fit more easily into the category of unjust enrichment i.e. the infringer has obtained something to which he has no legitimate right. 

The reference to damages, which has been transposed in Article 66 of the Patents Act has caused particular problems in Spain where case law has traditionally held that damages must be “real and effective” and strictly limited to those that are proven. Should the patentee then have to prove damages if he opts for equivalent royalty which, after all, has nothing to do with any actual damage he has suffered? This has led to some rather confusing and contradictory case law and the development of the doctrine of “ex re ipsa” which seeks to somehow fit equivalent royalty into the traditional picture by saying that there is no need to prove the existence of damage if by the nature of the thing under analysis (res), the existence of damage is clear (from the thing itself). However it would have been much better to acknowledge that as equivalent royalty cannot really be equated with the continental law concept of damages, as then the question of proving damages does not even arise.

This is exactly what the Madrid Appeal Court has done in Judgment no. 25/2014 of 24 January 2014 in appeal no. 578/2012. The ruling sets out that the purpose of equivalent royalty is not to compensate a loss suffered by the patentee, but rather the illegitimate invasion of his exclusive right. The Court does not say that it is necessary to show that the existence of a loss is self-evident (ex re ipsa) but rather that there is no need to prove or even consider any such loss. This comes as good news to patentees who up to now ran the risk that a court might find that the loss was not as self evident as they claimed e.g. when the patentee himself is not exploiting the patent in Spain and has made no preparations to do so either directly or through the granting of licenses. Even better, the Court gives clear guidance on what type of equivalent license terms can be sought including an up front payment, a fixed minimum monthly royalty and variable royalty based on sales. This is good news for patent litigators in Spain where judges traditionally tend to be guarded in their damages awards.

Author:Colm Ahern

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Proprietors of Community trademarks are protected against use of their marks by all third parties, including parties holding a later registration in their own name. Judgment of the Court of Justice of the European Union dated 21 February 2013, Fédération Cynologique Internationale v Federación Canina Internacional de Perros de Pura Raza (C-561/11)

1. Background. The Fédération Cynologique Internationale, proprietors of Community trademark no. 4438751 FCI FEDERACION CYNOLOGIQUE INTERNATIONALES in Classes 35, 41, 42, and 44, lodged a trademark infringement action with Community Trade Mark Court No. 1 in Alicante against Federación Canina Internacional de Perros de Pura Raza, who were themselves the proprietors of various Spanish trademark registrations for FCI (one senior to complainants' Community trademark) as well as a Community trademark registration for FCI (figurative).

With an eye to the facts in this case, the Community Trade Mark Court in Alicante raised the issue of whether the rights conferred by a Community trademark registration entitle the proprietor to prohibit the owner of another registered trademark from using that mark or, by contrast, trademark infringement proceedings are conditional upon first or concomitantly invalidating the defendant's Community trademark.

In the circumstances the Spanish court decided to stay the proceedings and refer the question to the Court of Justice for a preliminary ruling with a view to ascertaining the actual scope of Article 9.1 of the Community Trade Mark Regulation, and in particular whether the words "all third parties" mean that a third party may be prevented from using his own trademark registration before that later trademark registration has been declared invalid.

2.  Findings. In paragraph 33 of the judgment (C-561/11), the Court states explicitly that "… Article 9(1) of the Regulation does not make any distinction on the basis of whether the third party is the proprietor of a Community trade mark or not" and afterwards goes on to add that, as it had already made plain in a Community design matter (judgment of 16 February 2012, Celaya, Case C-488/10), "… that provision grants the proprietor of a Community trade mark an exclusive right to prevent 'any third party', not having its consent, from using, in the course of trade, any signs liable to infringe its mark".

But the Court does not stop there. It also states that "… the proprietor of a Community trade mark is entitled both to apply to OHIM for a declaration of invalidity of the later Community trade mark and to oppose its use through infringement proceedings before a Community trade mark court." The court thus views these two actions as alternatives, as options to which the proprietor of a Community trade mark registration is entitled.

The Court interprets the provisions of the Community Trade Mark Regulation in light of the "priority principle", under which the earlier Community mark takes precedence over a later Community mark.

The court concludes by affirming that "… if the proprietor of an earlier trade mark, in order to prevent the use by a third party of a sign that is liable to affect the functions of its trade mark, were required to await the declaration of invalidity of the later Community mark held by that third party, the protection accorded to it by Article 9(1) of the Regulation would be significantly weakened" (paragraph 51).

3. Remarks. The judgment sets out exactly the same position the Court took in the matter of Community designs (judgment of 16 February 2012, Celaya, Case C-488/10). While this does afford the proprietor of an earlier trade mark registration some certainty, by the same token it is somewhat at odds with the obligation all trademark proprietors are under to use their mark. According to this recent judgment, the proprietor of a later registration will be in a weak and vulnerable position when he first commences using his mark.

However, in its judgment the Court does not enter into any deliberation on the final consideration set forth obiter dictum in paragraph 55 of the Advocate General's opinion, namely, "were the Court to accept the interpretation of the term 'third party' …, that interpretation would have also to include a third party who is the holder of a later registered trade mark in a Member State, regardless of the substance of the relevant national legislation."

In this regard it is important to note that the stance taken by the Supreme Court of Spain is quite different from the position taken by the Court of Justice. The Spanish Supreme Court takes the view that to be able to find that infringement has taken place, and consequently that there is liability for damages, there must also be a previous or concomitant ruling invalidating the later infringing registration (judgment of Chamber I of the Supreme Court on 4 April 2012) (in Spanish).

This difference will definitely have to be taken into account when taking legal action and, above all, when deciding whether to file for a Spanish or a Community trademark. There is also a chance that the Spanish Supreme Court may revise its position based on the judgment issued by the Court of Justice. We will therefore have to be alert to future developments. 

Author: Luis Baz

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European patent owners’ scope for procedural action under Regulation (EC) 44/2001 strengthened

We have learned from our good friend Aurelio López-Tarruella that in a judgment given on 12 July 2012, in reply to a request for a preliminary ruling submitted by the Dutch courts within the framework of an action for infringement of a European patent by various parties (Case C-616/10), the European Court of Justice has clarified the  scope of articles 6.1, 22.4 and 31 of Regulation No. 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

Two aspects of the judgment warrant special mention:

First, the ECJ allows that the special rule of jurisdiction laid down in article 6.1 of Regulation No. 44/2001 may prevail over the general rule based on the defendant’s domicile. For the ECJ the fact that actions for infringement of a European patent should, according to article 64 of the EPC, be dealt with by national law does not prevent the national court from deeming the different claims brought before it to be connected and thus permitting article 6.1 of the Regulation to kick in.

Second, the ECJ confirms that in the context of a European patent infringement action where the defendants have argued, by way of defence against the award of interim relief, that the patent is invalid, article 22.4 of Regulation No. 44/2001 (relating to jurisdiction as to the substance) shall not preclude the application of article 31 of that same Regulation (relating to jurisdiction over provisional or protective measures). The court states that the two provisions refer to different situations and have separate fields of application. Even so, the ECJ allows that the court seised of the application for interim measures may refuse such relief if it considers that there is a reasonable possibility of the patent ultimately being declared invalid by the competent court. 

Author: Enrique Armijo Chávarri

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The selection and use of a reputed trademark as a keyword with “due cause” does not constitute infringement of the rights of the trademark holder. Judgment of the CJEU of 22 September 2011, Interflora (C-462/09).

1.    Background.  Interflora, the famous network of independent florists with whom clients may place orders in person, on the telephone or via the Internet, brought legal action in the United Kingdom against Marks & Spencer (one of the main retailers in the United Kingdom) for having selected the registered trademark INTERFLORA, as well as other variants, as a keyword, which meant that when the term “Interflora” was entered into the Google search engine, Marks & Spencer advertisements appeared under the heading “sponsored links”.  The text of the advertisement did not, however, include the term “Interflora”, but it did contain references to M&S and <marksandspencer.com>.  The High Court of Justice (England & Wales), Chancery Division, stayed the proceedings and referred a number of questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling.  All of the questions were aimed at elucidating the extent to which Marks & Spencer’s conduct might constitute infringement of Interflora’s trademark rights.

2.    Findings.  The CJEU first of all refers to the doctrine enshrined in the judgments of 23 March 2010 (joined cases C-236/08 to C-238/08 Google) and 25 March 2010 (case C-278/08 BergSpechte), and stresses that the sign selected by an advertiser as a keyword constitutes use in trade.  The court confirms that the use of the mark is made in relation to the advertiser’s goods or services, even where the sign selected as a keyword does not appear in the advertisement itself, and in order for the trademark holder to be able to prevent such use, the existence of a double identity situation, as described in Article 5.1(a) of the “Trademark Directive”, will not suffice; rather, the use must have, or be liable to have, an adverse effect on the functions of the mark (the essential function ofguaranteeing the origin of the product to consumers and the advertising function), as well as the newly-coined trademark’s “investment” function which, despite overlapping with the advertising function to a certain degree, refers to the measures taken by a trademark holder “to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty”.

The second part of the judgment analyses the dispute from the standpoint of Article 5.1(b) of the “Trademark Directive” and from the perspective that the INTERFLORA trademark has a reputation.  The court finds that the holder of a reputed trademark is entitled to prevent the use of its mark by third parties where that use takes unfair advantage of the distinctive character or the repute of the trademark or is detrimental to that distinctive character or repute.  Based on case-law arising from the judgments handed down in cases C-408/01 Adidas and C-487/07 L'Oréal, the court holds that the selection of a sign identical or similar to a reputed trademark as a keyword within the context of an Internet referencing service does not necessarily contribute to a reduction in the sign’s distinctive character and its becoming a generic term.

In the final part of the judgment, the CJEU states that a trademark with a reputation selected within the context of an Internet referencing service by a party other than the trademark holder can be construed as having been used with due cause and within the scope of healthy and fair competition where the sponsored link advertisement proposes an alternative to the goods or services of the trademark holder without offering a mere imitation of the trademark holder’s goods or services, without causing dilution or tarnishment, and without adversely affecting the functions of the trademark in question. 

3.    Remarks.  This judgment once again tackles the boundaries of legality in the use of third-party trademarks as keywords, although it introduces two new aspects in respect of previous judgments.  On the one hand, it refers to the trademark’s “investment” function and, on the other hand, it tackles the dispute from the standpoint of a trademark with a reputation.  The court once again defends the principle of free competition, but provides the national courts with a series of guidelines and tools so that they can resolve any disputes arising between trademark holders (including holders of reputed trademarks) and those who select those marks as keywords based on the wording of the sponsored link and its content.

Author: Luis Baz

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The filling of packaging on the instructions of another company does not constitute third-party trademark infringement. Judgment handed down by the CJEU on 15 December 2011, Red Bull (C-119/10).

1.         Background.  The company Smart Drinks, Ltd. (Smart Drinks) instructed Frinsdranken Industrie Winters BV (Winters) to fill cans with fizzy drink.  The empty cans had previously been supplied to Winters by Smart Drinks and bore various distinctive signs, some of which were similar to the well-known energy drink trademark RED BULL.

Red Bull GmbH (Red Bull) filed proceedings with the Dutch courts against Winters for infringement of its RED BULL trademark.  The issue of whether the filling of packaging supplied by a third party bearing a certain sign constitutes use of that sign within the meaning of Article 5.1 of the First Trademark Directive was referred to the Court of Justice of the European Union, which held that that it does not.

2.         Findings.  The Court of Justice of the European Union exempts Winters from liability for any infringement of Red Bull’s trademarks.  It holds that Winters merely executed a technical part of the production process of the final product, without having the slightest interest in the product’s trade dress or in the signs affixed to the packaging.  In that regard, the Court refers to the findings laid down in the judgment of 23 March 2010, Google France and Google (C-236/08 & C-238/08), in which it was affirmed that creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses that sign within the meaning of Directive 89/104.

As an additional factor to support the finding that Winters had not infringed any trademark rights, the judgment adds that the necessary identity or similarity between the goods covered by the RED BULL trademark registrations (which identify a drink) and the services rendered by the company in question, consisting of the filling of packaging, is lacking.

3.         Remarks.  Red Bull and the European Commission had expressed their concerns to the Court of Justice of the European Union that trademark rights could be infringed through the strategy of dividing the production process into several stages, and entrusting those stages to different service providers.  The judgment expressly rejects this argument on the grounds that the protection conferred on the trademark owner is guaranteed by means of the possibility of holding the party contracting those successive services in order to obtain the final product to which the infringing sign is affixed liable for the acts of infringement.  In view of this doctrine, it will therefore be necessary for the trademark owner to design an adequate strategy to be followed so that defensive action can be instituted against the party that is truly liable for the trademark infringement.

Author: Carlos Morán Medina

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