AMS Neve Ltd v. Heritage Audio; Case No. C‑172/18
The Court of Justice of the European Union (“CJEU”) recently issued a decision on the UK Court of Appeals’ (“UKCA”) request for a preliminary ruling concerning the application of the EUTM Regulation on international jurisdiction over claims of EUTM infringement committed over the Internet. Specifically, the UKCA asked:
“In circumstances where an undertaking is established and domiciled in Member State A and has taken steps in that territory to advertise and offer for sale goods under a sign identical to an EU trade mark on a website targeted at traders and consumers in Member State B:
Does an EU trade mark court in Member State B have jurisdiction to hear a claim for infringement of the EU trade mark in respect of the advertisement and offer for sale of the goods in that territory?”
In a ruling that surely provided a sense of relief to many EUTM owners, the CJEU answered “yes.” The Court held that, regardless of other considerations, a Member State whose residents are the target of an infringing advertisement or offer for sale featuring a mark identical, or highly similar, to a registered EUTM has jurisdiction over claims resulting from such infringement in the Member State’s territory, provided that the infringing content is actually made accessible to the targeted population.
As discussed below, the Court’s decision focused on an interpretation of the EUTM Regulation granting jurisdiction to Member States “in which the act of infringement has been committed” – which represents a particularly nebulous concept in connection with the use of infringing marks on the internet.
Today many brand-owners offer and promote their goods primarily via the internet, as social-media and digital marketplace platforms make it easier to reach customers around the globe. The internet also provides ample opportunity to infringers, enabling them to easily mask the nature of their counterfeit and infringing products behind the veneer of professionally-crafted and legitimate-looking websites. Digital commerce presents unique challenges to brand-owners’ efforts to police and enforce their trademark rights, as it provides infringers with a degree of anonymity and the ability to seamlessly integrate online presence, website operations, advertising, logistics, and sales to any part of the world from any part of the world.
Against this backdrop, AMS Neve Ltd and other co-plaintiffs (collectively “AMS Neve”), the owners of the EUTM registration for the mark 1073 covering, inter alia, “sound studio recording, mixing and processing equipment”, brought an infringement suit before the Intellectual Property Enterprise Court in the United Kingdom (“IPEC UK”) against co-defendants Heritage Audio SL, a company established in Spain, and Pedro Rodríguez Arribas, domiciled in Spain (collectively “Heritage”). The complaint alleged, among other things, that Heritage’s use of signs identical and similar to the 1073 mark in connection with the offering, advertisement, and sale of imitation AMS Neve audio equipment via Heritage’s website specifically targeted consumers in the United Kingdom and constituted infringement within the United Kingdom.
EUTM infringement claims must generally be brought in the Member State where the defendant is domiciled or has a place of business. However, the EUTM Regulations provide an alternative jurisdiction in the Member State in which the act of infringement has been committed or threatened. Here, the IPEC UK’s initial decision held that it did not have jurisdiction over the infringement claim based on the EUTM registration because the record showed that: 1) Heritage is based in and solely operates from Spain, and 2) the infringing act committed by Heritage, namely posting the infringing content online, was committed in Spain.
The IPEC UK cited various regulations and case law (with an emphasis on the CJEU’s decision in Coty Germany GmbH v First Note Perfumes NV (Case No. C‑360/1, June 5, 2014) for the premise that the term “commit” in the EUTM Regulations implies that “active conduct” must have been taken by the defendant. The lower court further reasoned that the active steps taken by Heritage were those related to its decision to put the infringing sign on its website and to implement such decision. The court found that these steps occurred in Spain.
Accordingly, the IPEC UK dismissed AMS Neve’s claims against Heritage based on infringement of AMS Neve’s EUTM registration.
The CJEU Decision
On appeal, the UKCA referred the question of jurisdiction to the CJEU.
The CJEU found that the lower court misinterpreted the relevant case law and adopted an overly-restrictive interpretation of the EUTM Regulations providing alternative jurisdiction to the Member State in which the infringement has been committed.
In its analysis, the Court considered the purpose and context of the EUTM Regulations, the application of the case law in various scenarios, and practical concerns regarding online commerce and trademark enforcement, and crafted its own interpretation of the relevant EUTM Regulations in an attempt to balance such considerations. The Court held that the infringing use of the mark in advertising and offers for sale are “committed” in the territory where the consumers are located to whom such advertising and offers for sale are directed, as long as such commercial content has actually been made accessible to those consumers. The Court further explained that this alternative jurisdiction is available regardless of whether the infringing offer or advertisement resulted in a sale, regardless of the territory (i) in which the defendant is established or domiciled; (ii) in which the server utilized is located; or (iii) in which the products that are the subject of the infringing offers and advertisements are located.
The Court’s interpretation that these infringing commercial acts must be “directed” to and made available in the Member State in which jurisdiction is sought appears to satisfy the requirement for “active conduct” established in case law, while also accounting for the practicalities and nature of online trade.
The Court further clarified that the Member State where jurisdiction is sought must determine whether the advertisement or offering would constitute an infringement, and, based on the content of the website and the platforms at issue, whether it is apparent that such infringing advertisement or offering has been “directed” and made available to consumers within that Member State.
While the Court did not define the term “directed” or fully elaborate on what the Member State should look for within the allegedly infringing online-content, the Court’s decision was based on an opinion from the Advocate General that contains some guidance. While not an exhaustive or exclusive list of criteria, the Advocate General notes that the following factors indicate whether the infringing online content is targeted or directed toward a specific jurisdiction:
- whether the offer or advertisement expressly refers to the public of a specific Member State;
- whether the offer or advertisement is featured on a website with a country-specific top-level domain;
- whether the offer or advertisement is featured on a website listing a telephone number with the national prefix of the specific Member State; and/or
- whether the prices are given in a specific Member State’s national currency (other than the Euro).