Infringement and Enforcement Issues:
Procedural aspects of a Community Trade Mark

Dr. Wolfgang Festl-Wietek Viering, Jentschura & Partner, Munich, Germany

Each and every IP right is only of value to the extent it can be enforced against infringers. The Unitary System of the CTM with its effect throughout the EU can to a large extent be enforced in proceedings before the OHIM. However, as there exists no European law of civil procedure and no European jurisdiction of one legal process over several instances, but only a European Court of Justice which, if resorted to by a national court, is entitled to decide on points of law, there remains the question whether the CTM can be effectively enforced. The Council of the European Union recognized this problem and, in the recitals, determined measures in order to strengthen the protection of Community Trademarks in the Member States (CTMR recital 14). The aim of these measures was to also render court decisions possible which are effective throughout the EU, thus avoiding contradictory decisions and an undermining of the unitary character (CTMR recital 15). The cross border injunction, which so far was considered as an exception, is standard with the CTM. This interplay between the CTMR effect with its unitary system and the national jurisdictions of the 15 member states has been regulated as follows:

Important principles that govern the procedure of CTM litigation

1. The Member States shall designate in their territories national courts of first and second instance: the 'Community trade mark courts' (CTM court) which shall have exclusive jurisdiction, Art 91 CTMR. Germany, Austria, Denmark, Netherlands, United Kingdom and Sweden designated such courts.
   
   
2. Proceedings shall be brought
   a. in the State in which the defendant is domiciled
   b. if not, in the State in which he has an establishment
   c. if not, in the State in which the plaintiff is domiciled
   d. if not, in which he has an establishment
   e. if not, at the seat of OHIM in Alicante, Spain
   f. additionally, in any case in the State of infringement

   Art 93 CTMR reads: A CTM court shall have jurisdiction in respect of acts of infringement committed or threatened within the territory of any of the Member States, except the court of the country of infringement (last alternative above), which has jurisdiction for this particular State only, Art 94 CTMR.

3. The CTM courts shall apply the provisions of the CTM Regulation. On all matters not covered by this Regulation a CTM court shall apply its national law, including its private international law, Art 97 (I) CTMR.
   
   
4. The national rules of procedure are applicable, Art. 97 (II) CTMR.
   
   
5. Where a Community trade mark court finds that the defendant has infringed a CTM, it shall issue an order prohibiting the defendant from proceeding with the acts that infringe the CTM. It shall also take such measures in accordance with its national law as are aimed at ensuring that this prohibition is complied with, Art. 98 CTMR.
   
   
6. The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, signed in Brussels on 27 September 1968 in its amended version (Brussels Convention) is applicable, Art. 90 CTMR.
   
   
7. The decision of a CTM court with Europe-wide jurisdiction (cf cases 2 a - e) is effective throughout the EU, Art 94 CTMR, subject to the recognition and enforcement process. According to Art 25 Brussels Convention no special procedure for the recognition is required. As a rule, the respective enforcement clause is issued by the court in whose district the judgment is to be enforced.
   
   
8. The CTM courts shall treat the Community trade mark as valid unless its validity is put in issue by the defendant with a counterclaim for revocation or for a declaration of invalidity, Art. 95 (I) CTMR.
   
   
9. A counterclaim for revocation or for a declaration of invalidity may only be based on the grounds for revocation or invalidity mentioned in the CTM Regulation. A CTM court shall reject a counterclaim for revocation or for a declaration of invalidity if a decision taken by the Office relating to the same subject matter and cause of action and involving the same parties has already become final, Art. 95, 96 CTMR..

The model case (a war story):

America, Inc. owns the registered CTM "Irokko". America, Inc. has a subsidiary in London. Iroko Ltd. (Turkey) uses the mark "Iroko" in the United Kingdom, Benelux, Austria and Germany for the products in categories of goods covered by the Irokko CTM. Iroko Ltd. has establishments in Rome, Italy and Frankfurt, Germany and does not react to any of the letters sent out by America Inc. or its attorneys.

The CTM owner America, Inc. takes the following steps:

1. He sends a warning letter to Iroko Ltd. This letter contains the serious request that the infringer - under threat of penalty - formally agrees to refrain from using the mark for the particular goods in the future. There is no reply, or no satisfying reply, respectively.
   
   
2. America, Inc. considers forum shopping. The primary considerations for selecting a country for the proceedings are
   - Big market for customers
   - Competent courts
   - Fast decision
   - Clearly defined national regulations as to material rights, e.g. damage claims
   - Inexpensive proceedings
   - Fast enforcement
   - Community wide enforcement
   
   Selecting a court in the U.K. has the advantage that America, Inc. has a subsidiary there. However, since the infringer has an establishment in a different Member State, this court can only be selected as the court of infringement (cf. 2. a - e). Therefore, any decision by the court of infringement will only be effective in the U.K., Art. 94 (II) CTMR.
   
   Selecting Italy will lead to a country with no designated CTM court and to both courts and official organs for enforcement by execution being greatly overburdened with work.
   
   In view of its economical importance, comparatively quick-working CTM- Co urts and enforcement organs, a calculable cost risk as well as relatively clear regulations for calculating damages, America, Inc. selects Germany and decides to start proceedings in Frankfurt, Germany. This way, America, Inc. can obtain an order from a court seated where the infringer has an establishment. Such a court will have EU wide jurisdiction over the infringer and America Inc. will - according to German national civil procedure - not only be able to recover the court fees and the own reimbursable lawyers fees, but will - according to German national trademark law - also receive damages even in case of the infringer having been negligent.
   
   
3. A German attorney at law in cooperation with the patent attorney start legal proceedings before the court in Frankfurt. A request for a preliminary injunction is filed with the claim for an injunction, Art. 935 German ZPO (Law on civil procedure).
   
   The plaintiff has to show (1) that he is the owner of the CTM, (2) that there is an infringment, and (3) that he has only known of the infringement for a short period of time (a few weeks) and the matter is urgent. He has to substantiate his request by way of prima facie evidence (e.g., affidavits). The request is based on the CTM only. The further basis of national unfair competition law (passing off) is not being claimed within the scope of the preliminary injunction in order to render the uniform Europe-wide enforcement possible. The court issues the injunction according to Art. 921 German Code of Civil Procedure without oral hearing in just 2 days.
   
   America, Inc. is afraid that it might be difficult to serve the injunction on the infringer in the infringer's country. Therefore, America, Inc. asks for a seizure of goods at the custom houses in Frankfurt, Berlin, and Munich. The seizure is granted, supported on the preliminary injunction.
   
   
4. America, Inc. wants to enforce this preliminary injunction in the U.K and in Italy. However, since the injunction was issued without oral hearing and since, according to the jurisdiction of the European Court of Justice (e.g. ECJ 05.21.1980 Denilauler/couchet Frères) and according to Art. 27 (II) Brussels Convention, injunctions are acknowledged only if they are based on adversarial proceedings (in this case the request for the injunction has not been served to Iroko Ltd. and no oral hearing took place), enforcement in the U.K. and Italy is not possible. Had Iroko Ltd. set up a defence against the preliminary injunction and had an oral hearing been fixed, the preliminary injunction would have been enforceable throughout Europe, too, Art. 99 (II) CTMR.
   
   America, Inc. considers to file separate preliminary injunctions in the U.K. and Italy and will present the German injunction, which cannot be enforced in these countries, but which might influence the Italian and U.K. courts.
   
   
5. In parallel, in Germany an ordinary suit is filed with the claim that a final decision be pronounced with respect to the injunction. This suit also serves the purpose of gaining information concerning the extent of the infringing activities and of assessing damages. The statement of claim must be translated into Turkish language and has to be served in Turkey. The first oral hearing will take place in approximately 6 months after the statement of claim has been served. A decision of the first instance is expected within one year.

   The decision concerning the injunction takes effect in all member countries of the European Union.

   • The infringer has to reimburse the court fees of the suit (app. USD 3000) that America, Inc. incurred for the suit plus the reimburseable attorney fees America, Inc. incurred. (app. USD 8000, according to German procedural law.). Since the Germany attorneys very probably calculated their costs on an hourly basis, but as there is no deposition in Germany, the number of hours is very small compared to the US so that very often most of the own attorney fees are reimbursed.
     
     The above stated amounts apply to minor or average cases. With big cases, of course, costs will rise, but will still be calculable as they will be based on the values of the matter in dispute determined by law.
     
     
   • The decision is open to appeal, but can be enforced against payment of a bail.
     
     
   • The injunction is based on CTM law and America, Inc. requested a decision in parts. Part 1 (injunction) is enforceable as ndependent judgment.
     
     
   • Part 2 of the decision (damages) obliges the infringer to supply information concerning the manner of distribution of the goods and data concerning its customers according to national law as well as paying damages.
     
     Since national law is applicable with respect to all claims other than the injunction, America, Inc. restricted all claims with respect to information and damages to the countries of severe infringement, namely the U.K. and Germany. Otherwise protracting arguments within the German court might arise to which the German court would have to apply the national laws of individual Member States of countries where only minor infringements occurred.
     
     In Germany damages are assessed on the basis of a license analogy the calculation of which is based on the turnover achieved by the infringer.
     
     
6. The enforcement of decisions made by the Community trademark courts is only regulated by the Convention of Brussels. The CTM Regulation does not contain any directions in this respect. America Inc. files the requests for execution with the respective foreign courts.
   

Option

Art. 6 Brussels Convention renders it possible to also sue further involved parties, for example distribution partners with seat in a different EU state, in one single action together with the defendant, provided the "main defendant" is sued at the place of his domicile. The prerequisite is, however, that the suits against the "main defendant" and the further involved party are of a close factual connection.

Defense and Counterclaim

Apart from denying the infringement, the defendant can only argue on the grounds of a non registrability of the Community trademark, i.e. of its descriptive character or the lack of distinctiveness, by way of a revocation counterclaim. CTM courts, however, can only decide on the effectiveness of a CTM on the basis of a revocation counterclaim, an isolated revocation claim is inadmissible. The reason is that the competence regarding the grant and/or revocation of a CTM lies primarily with the Office for Harmonization. It is there, in the Office of Harmonization, where an independent request for revocation, or for a declaration of invalidity may be filed (Article 50 pp. CTMR).

Article 100 CTMR must be seen in context with the above. It deals with co-pending proceedings regarding the validity of the Community trademark. According to the Article, an infringement suit or counterclaim for revocation filed at a Community trademark court is to be stayed if it was preceded by an application for revocation at the Office (Article 100 (1) CTMR). Conversely, if the application for revocation was preceded by a counterclaim for revocation, the Office may stay the revocation proceedings, but does not have to do so (Article 100 (2) CTMR). If the Office does not stay the proceedings, the Community trademark court should stay them instead. Finally, the Community trademark court can also refer the defendant to the Office proceedings, and stay the counterclaim proceedings in their turn (Article 96 (7) CTMR).

The effects of the (valid) court decision on the counterclaim for revocation are mainly the following: the decision in favour of a revocation as a fundamental ruling is effective inter omnes. The dismissal of the revocation counterclaim, however, is effective inter partes, but also for any subsequent revocation proceedings held at the Office regarding the same subject matter. The same applies in the reverse case, i.e. the non-appealable Office decision on the revocation of a Community trademark.