The internet is a boundless place. Along with the web's opportunities to easily trade across borders come corresponding risks of IP infringements, committed from literally anywhere in the world. The lack of borders in the online sphere brings significant challenges for right holders seeking to enforce their intellectual property. The ubiquity of infringing activities, and of their harmful impact, also calls for careful consideration of the existing tests for establishing international jurisdiction and the applicable law.
Quo vado? Where best to enforce EU trademarks against online infringements?
When enforcing their trademarks against cross-border online infringements, right holders are regularly faced with the fundamental question: Quo vado? Somewhat astonishingly, the answer to this question has been far from clear with regard to EU trademarks, and has sparked significant debate over the last years.
Uncertainties particularly accumulated around Art. 125 (5) of the European Union Trademark Regulation (EUTMR) which provides that besides the defendant's seat, proceedings may also be brought before the courts of the EU Member State "in which the act of infringement has been committed". This wording provides clear answers for physical infringements such as print ads or infringing merchandise sold in brick and mortar outlets. But which of the many geographic connections of an online infringement is relevant to establish the place of the infringing activity? Is it the place from which the infringer uploaded the infringing offers and adverts? Is it the location of the server on which the infringing content is hosted? Or is it the place where the public is targeted and where the infringements have their effects?
The German Federal Court of Justice went down the first route in its hotly debated "Coty" decision (judgment of 9 November 2017, Case no. I ZR 164/16), holding that the location of the infringing act is the place where the infringer initiated the process of publishing the online content in question. Under this very narrow test, owners of an EU trademark were effectively limited to bringing infringement actions only in the home jurisdiction of the infringer - thus unduly favouring the defendant and eliminating the choice of venue provided by Art 125 EUTMR. This outcome left EU trademarks significantly less attractive and in consequence, we have seen many right holders resort to basing their claims on national rather than EU trademarks.
With AMS Neve vs. Heritage Audio (C-172/18), the CJEU now had the opportunity to address the scope of Art. 125 (5) EUTMR for online infringement cases and provide its guidance to courts across the EU.
AMS Neve vs. Heritage Audio
AMS Neve, a UK-based audio equipment manufacturer, accused Spanish company Heritage Audio of having offered and promoted imitations of their products to British customers through e-mails and several online presences, including websites and Social Media accounts. Based on its EU trademark, AMS Neve brought an infringement action against Heritage Audio in England. AMS Neve argued that the offers particularly addressed the British public because the online presences were published in English and (also) offered delivery to the UK.
Heritage Audio did not deny that the products at issue might have been purchased by UK customers. However, it took the view that English courts nonetheless had no jurisdiction as Heritage Audio had not advertised or conducted any sales activity from within the UK. All activity originated from Spain, so if there was an infringement, only Spanish courts were said to have jurisdiction.
While Heritage Audio was successful with this line of argument at first instance, the Court of Appeal of England & Wales referred the matter to the CJEU, raising doubts about the line of reasoning the German Federal Supreme Court had taken in its "Coty" decision.
The CJEU's decision
The CJEU, following the opinion of AG Spzunar, applied a broader test to Art. 125(5) EUTMR: A trademark owner may bring an infringement action in any Member State in which the customers targeted by the infringing offers are located. According to the court, it is irrelevant where the defendant is based, where the servers and the infringing products are located, or whether there have actually been any sales. AMS Neve could therefore bring its infringement action before the English courts, even though Heritage Audio did not conduct any infringing activity in the UK.
The CJEU supports this test with a number of convincing arguments:
Firstly, the court rightly points out that Art. 125(5) EUTMR is meant to provide an alternative forum for right holders beyond the defendant's home jurisdiction. This purpose would be undermined if the forum were to be determined by the place from which the defendant orchestrates the publication of infringing content, as this place will in most cases coincide with the defendant's seat.
Secondly, it is extremely difficult, sometimes even practically impossible, for a right owner to identify the place from where the defendant took operative decisions before even bringing the infringement action. In particular, the defendant cannot be compelled to disclose the relevant information before an action is pending.
Thirdly, the courts of the Member State of the targeted public are said to be particularly suited to determining whether or not an infringement has taken place. Through their proximity, they can assess the effect of the alleged infringement more appropriately and can more easily take evidence.
And finally, the CJEU notes that there must be some congruence between the rules for jurisdiction of the EUTMR and of the Brussels Ia Regulation which determines jurisdiction for the infringement of national marks. Otherwise, right owners might find themselves in a situation where they have to enforce their EU trademarks and their corresponding national marks in different jurisdictions, although both are infringed by the very same acts.
The CJEU handed down a balanced decision that provides right owners with the necessary degree of choice for their enforcement. The court acknowledged the difficulties trademark owners were faced with after the "Coty" decision of the German Federal Court of Justice, and has provided clear and consistent guidance on the circumstances under which online infringers can be sued out of their home jurisdiction.
It must of course be borne in mind that Art. 125 (5) EUTMR in any event only affords a limited scope of jurisdiction for "acts committed or threatened within the territory of the Member State" pursuant to Art. 126 (2) EUTMR. With that caveat in mind, the CJEU's ruling boosts the attractiveness of EU trademarks as bases of claims to combat cross-border online infringements. More often than not, the test applied by the CJEU will even provide trademark owners with the advantage of a "home match", relieving them from the additional costs of enforcing their rights abroad. And correspondingly, the decision also affects portfolio strategy. While the "Coty" decision may temporarily have boosted the importance of national registrations, EU trademarks have now been restored to their rightful place.
Co-authors: Anthonia Ghalamkarizadeh and Florian Richter, Hogan Lovells International LLP