On 13 July, the CJEU handed down its judgment in Case C-433/16 BMW AG v Acacia Srl, a reference from the Italian Court of Cassation. Our thanks go to Alex Woolgar and the learned David Stone of Allen & Overy for the following summary of the judgment.

The judgment provided, which deals with six questions on the topic of jurisdiction, is not all that surprising, but gives useful confirmation of the position nevertheless.

Acacia manufactures and sells online replica car wheels which fit Audi, BMW or Porsche cars. Acacia claims that these wheels fall within the so-called “repair clause” under Article 110(1) of the Design Regulation (No. 6/2002 of 12 December 2001). In 2013, Acacia sought in the courts of Italy a declaration of non-infringement (DNI) of certain of BMW’s registered Community designs. BMW subsequently entered an appearance in the Italian courts and filed a defence. Part of this defence disputed the Italian court’s jurisdiction to hear the DNI claim.  

Readers may be familiar with the jurisdictional provisions of the Design Regulation, so to summarise briefly: the thrust of Article 79 is that the Brussels Regulation will apply unless otherwise specified in the Design Regulation. (Because of the start date of the claim, in this case it is Brussels I, Regulation (EC) No. 44/2001 of 22 December 2001, and not “Brussels Recast”, which is relevant). Article 81 gives Community design courts exclusive jurisdiction to hear (among other things) DNI actions, if such an actions are permitted under national law. (DNIs are still not available under the national laws of some Member States). Article 82 provides the jurisdictional “cascade”, which requires that a defendant domiciled in a Member State must be sued in such Member State; the cascade then moves through where the defendant has an establishment, where the claimant is domiciled, where the claimant has an establishment, and finally (if none of the preceding jurisdictional “hooks” apply), in the courts of the EUIPO’s domicile i.e. Spain. Article 82(5) makes clear that certain actions (for infringement, and a counterclaim for invalidity in response to an infringement claim) may be brought in the courts of the Member State where the infringement has been committed or threatened, but no other forms of action are listed in Article 82(5).  

From the Brussels Regulation, the relevant provisions are Articles 27 (lis pendens) and 28 (related actions), which trump any other jurisdictional factors, Article 23 (which allows the parties to agree a particular court should have jurisdiction), and Article 24 (which, subject to the rule of exclusive jurisdiction, gives jurisdiction to the court where the defendant enters an appearance, except where such appearance has been entered to contest jurisdiction). In matters of tort, delict or quasi-delict, the courts of the Member State where the harmful event occurred are given non-exclusive jurisdiction pursuant to Article 5(3).

With this speedy summary in mind, we can now turn to the questions referred to the CJEU:

1.    Under Article 24 of Regulation No 44/2001, can an action to contest the jurisdiction of the national court seised that is brought before that court as a preliminary matter but in the alternative to other preliminary procedural objections and nevertheless before issues of substance are raised be interpreted as acceptance of the jurisdiction of that court?
2.    Must the absence of provision in Article 82(5) of Regulation No 6/2002 for alternative jurisdictions to that of the defendant as stipulated in Article 82(1) of that regulation for cases relating to negative declarations be interpreted as implying the attribution of exclusive jurisdiction for such cases?
3.    Is it also necessary, in order to resolve the [second question], to take account of the interpretation of the rules on exclusive jurisdiction in Regulation No 44/2001, and in particular in Article 22, which provides for such jurisdiction, inter alia in proceedings concerned with the registration or validity of patents, trade marks and designs but not in cases regarding negative declarations, and in Article 24, which provides for the possibility that the defendant may accept a different jurisdiction, except where jurisdiction is derived from other provisions of the regulation, thereby establishing the jurisdiction of the court seised by the applicant?
4.    Is the approach adopted by the Court of Justice in the judgment of 25 October 2012 (Folien Fischer and Fofitec (C‑133/11, EU:C:2012:664)) with regard to the applicability of Article 5(3) of Regulation No 44/2001 of a general and absolute nature applicable to every action for a negative declaration seeking to establish the absence of liability in tort, delict, or quasi-delict, including those for a declaration of non-infringement of Community designs, and hence in the present case is it the court referred to in Article 81 of Regulation No 6/2002 or that referred to in Article 5(3) of Regulation No 44/2001 that has jurisdiction, or may the applicant opt for one or other of the possible jurisdictions?
5.    If actions for abuse of a dominant position and unfair competition are brought in the context of a case concerning Community designs with which they are connected, in that their admissibility presupposes prior admissibility of the application for a negative declaration, can they be heard together with that case by the same court in accordance with a broad interpretation of Article 28(3) of Regulation No 44/2001?
6.    Do the two actions referred to [in the previous question] constitute a case of tort, delict or quasi-delict, and, if so, may they affect the applicability of Regulation No 44/2001 (Article 5(3)) or of Regulation No 6/2002 to the present case as regards jurisdiction?’

Unusually for references relating to Community designs, the CJEU issued its judgment without the benefit of an opinion from the Advocate General. This is perhaps a clue that the law engaged was already fairly settled. The CJEU reformulated the Italian court’s questions into four broad points, and answered them as follows:

1. BMW lodging a defence, part of which consisted of a rebuttal of the Italian court’s jurisdiction, did not lead to a prorogation of jurisdiction under Article 24 of the Brussels Regulation. BMW unambiguously contested jurisdiction (even if it did so in the alternative to its substantive defence), thus engaging a clear carve-out from Article 24.
2.      Article 82 of the Design Regulation must be interpreted to mean that a DNI action pursuant to Article 81(b) must, where the defendant is domiciled in a Member State, be brought in the courts of that Member State alone. The CJEU confirmed that the jurisdiction rules under the Design Regulation have the character of lex specialis in relation to (i.e. a special exception from) the rules under the Brussels Regulation, save that Articles 23 and 24 of Brussels will (if engaged) supplant the jurisdictional cascade in Article 82 of the Design Regulation.
3. The jurisdictional gateway under Article 5(3) of the Brussels Regulation does not apply to this situation; it is overruled by the jurisdictional rules of the Design Regulation.
4. Where claims seeking declaration of abuse of a dominant position and/or unfair competition are brought in connection with a DNI relating to a Community design, the jurisdictional rules under the Design Regulation (and not under Article 5(3) of the Brussels Regulation) apply. The CJEU also suggested that seeking a DNI goes to the heart of any such abuse / unfair competition arguments, because a DNI relates to the delimitation of a Community design holder’s monopoly.  

As mentioned above, this judgment is not surprising. The CJEU was right to give little credence to Acacia’s attempts to use the Brussels Regulation as a pretext to seise the Italian court of jurisdiction, and instead to confirm the lex specialis status of the jurisdictional rules under the Design Regulation.

The Brussels Regulation rules on jurisdiction over disputes regarding tort, delict and so on are acceptable when national rights are at stake, but of course Community designs are unitary rights, with special character. The exclusive and mandatory jurisdiction given to the courts of the Member State of the defendant’s domicile, pursuant to Articles 81(b) and 82, is designed to avoid forum shopping. (This also impliedly confirms the same principle in relation to EUTMs, the other current unitary EU right – the EUTM Regulation shares a similar cascade).

The CJEU’s approach in this case can be contrasted with its flawed judgment in Case C-617/15 Hummel v Nike which, interestingly, shared the same Rapporteur. In Hummel, the CJEU attempted to apply case law applicable to the Brussels Regulation (i.e. not relevant to unitary rights) to issues of whether the Düsseldorf court had jurisdiction to grant a pan-EU injunction for EUTM infringement. This resulted in an odd (to say the least) interpretation of the term “establishment”, which gave the German court pan-EU jurisdiction on the basis of an independent German subsidiary of a corporate group based outside of the EU.

The CJEU’s judgment in Acacia does of course confirm a lacuna in the remedies available to alleged infringers. As mentioned, some Member States do not allow DNIs under national law. If the relevant Community design holder is domiciled in one such Member State, the potential infringer has no choice but to wait until it is sued (in the infringer’s own domicile, or the Member State where the infringement occurs), and then prove its innocence in an infringement action. This lacuna needs to be addressed, either by way of the upcoming amendments to the Design Regulation, or the upcoming amendments to the Enforcement Directive (No. 2004/48/EC). There was no such lacuna here, however. Acacia could have sought a DNI in BMW’s native Germany, but chose not to, presumably because Acacia was hoping to use the Italian courts to slow down progress of the overall dispute, or thought that the Italian court would be more generous in relation to the DNI sought.

A final interesting point is that this case is part of a series of three claims involving Acacia that have been referred to the CJEU. The judgments in C-435/16, also involving Porsche, and C-397/16, also involving Audi, are upcoming (for background on the latter, see our earlier blog posting here). This suggests that there is still a great deal of value in the spare parts market for parties to fight over, and perhaps explains why it has been so difficult to reach political consensus of the correct long-term legislative solution.