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CJEU rules on the scope of "reasonable compensation" for trade mark infringement

We previously reported on the Opinion of Advocate General Wathelet on the Nikolajeva case and on 22 June 2016, the CJEU handed down its final decision which largely follows AG Wathelet's Opinion, including on whether moral prejudice can be included as reasonable compensation for infringement of an EU trade mark.

We previously reported on the opinion of Advocate General Wathelet on the Nikolajeva case (see here). On 22 June 2016, the CJEU handed down its final decision (the full text of which can be found here) which largely follows AG Wathelet's Opinion, including on whether moral prejudice can be included as reasonable compensation for infringement of an EU trade mark.

The CJEU held that Article 9(3) of the European Trade Mark Regulation (the "EUTM Regulation") must be interpreted as meaning that compensation which the proprietor of an EU trademark can claim in respect of acts occurring between publication of an application of a trade mark and publication of the registration of the trade mark must be "smaller in scope" than that available after publication of the registration. This period of protection is "of a 'conditional' nature" because it is "not yet certain" at that stage of the process whether the trade mark will in fact be registered. The CJEU agreed with the AG that the damages for this period, and the scope of "reasonable compensation", should only include the recovery of profits since this is "within the scope of the objective pursued by that provision" and prevents third parties "improperly benefiting from the intrinsic economic value constituted by the application". Finally the Court confirmed that "the concept of 'reasonable compensation' rules out compensation for the wider harm which the proprietor of the trade mark may have suffered including, as the case may be, moral prejudice"

However, one point on which the CJEU takes a different approach to the AG is on the application of national law in this context. The CJEU stated that although "reasonable compensation" for acts carried out between publication of an application and its registration should be interpreted in a uniform and autonomous way, the EUTM Regulation "does not preclude the complementary application of national law relating to infringement, in particular national law relating to civil liability".

The difference in emphasis suggests that flexibility for national courts to apply national law on financial compensation for infringement will be maintained.  The tone in AG Wathelet's Opinion appeared to be laying the groundwork for greater harmonization in the area of financial compensation, whereas the CJEU reasserts the balance between national and EU law by explicitly referring to the role of national law in addressing infringement issues.

With many thanks to Nivetha Ramachandran for their help with this article.

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