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IPEC sounded out on the question of jurisdiction

In a recent decision of AMS Neve v Heritage Audio, His Honour Judge Hacon has ruled on a preliminary issue of whether the possible infringement of an EU trade mark registration, two UK national trade mark registrations and a claim for passing off on a Spanish company's website may be heard in the English courts.

In a recent decision, His Honour Judge Hacon has ruled on a preliminary issue of whether the possible infringement of an EU trade mark registration, two UK national trade mark registrations and a claim for passing off on a Spanish company's website may be heard in the English courts. This ruling was made in AMS Neve Ltd and Others v Heritage Audio S.L. and Another [2016] EWHC 2563 (IPEC)which concerned the sale of pre-amplifiers under the brand 1073.

Background

AMS Neve has been selling 1073 branded pre-amplifiers for over 40 years and discovered that Heritage Audio based in Spain were selling cloned products also branded 1073 from their website. The website indicated that products could be bought from a UK distributor and also suggested that direct orders could be placed with Heritage Audio anywhere in the EU and that Heritage Audio would ship products to them. AMS Neve issued proceedings in the English courts for infringement of their EU trade mark registration, their two UK national trade mark registrations and also claimed Heritage Audio were passing their product off as AMS Neve's. Heritage Audio subsequently applied for an order that the English courts did not have jurisdiction to try the claim under CPR Part 11 – Disputing the Court's Jurisdiction.

The Jurisdiction Rules

HHJ Hacon drew a distinction between the rules governing national trade mark registrations and passing off and the rules governing EUTMs. The rules on national trade marks and passing off are governed by Regulation (EU) No. 1215/2012 ("the Jurisdiction and Judgments Regulation"), whilst the rules on EUTMs are governed by Council Regulation (EC) No. 207/2009 ("the EU Trade Mark Regulation") as amended by Regulation (EU) 2015/2424. Both Regulations say that initial presumption is that jurisdiction is given to the defendant's home courts (Article 4 of the Jurisdiction and Judgments Regulation, and Article 97(5) of the EU Trade Mark Regulation) but both also provide exceptions where another country's courts may have jurisdiction to hear an infringement action (Article 7 of the Jurisdiction and Judgments Regulation, and Article 97(1) of the EU Trade Mark Regulation). However, that is as far as the similarities go.

National Trade Mark Infringement

Article 7(2) of the Jurisdiction and Judgments Regulation provides quite a broad scope for an action to be heard outside of the defendant's home courts. An action for infringement of national trade mark registration may be heard in "the place where the harmful event occurred or may occur" where the matter relates to "tort, delict or quasi-delict" which the Court acknowledged the CJEU has previously ruled, is intended to cover both the place where the damage occurred and the place where the event giving rise to damage occurs.

It is left to the national courts where the national trade mark right exists to decide whether the "harmful event occurred or may occur" in their jurisdiction. In this instance, it was ruled, applying Case C-324/09 L'Oreal SA and Others v eBay International AG and Others, that the act complained of did occur in the UK as Heritage Audio's website was not just accessible in the UK but also aimed at UK customers (amongst other countries). Consequently HHJ Hacon ruled that the English courts have jurisdiction to decide on the infringement of the two UK national registrations.

Passing Off

It was noted that the CJEU had not only applied the Jurisdiction and Judgments Regulation to trade mark and copyright infringement, but that this had also been applied in common law cases, namely German competition law in Case C-360/12 Coty Germany GmbH v First Note Perfumes N.V ("Coty"). The Court applied the same principles and Article 7(2) to passing off in the same way because the common law right exists in England (as this is where the protectable goodwill may be found) and it is for the English courts to decide if there has been misrepresentation. Consequently, HHJ Hacon ruled that the English courts have jurisdiction to decide on the passing off claim.

EU Trade Mark Infringement

Whilst the Jurisdiction and Judgments Regulation gives scope for an action to be outside of a defendant's home court on the basis of where "the harmful event occurred", the EU Trade Mark Regulation says in Article 97(5) an action must be heard in "the Member State in which the act of infringement has been committed or threatened".

Whilst deliberating this, the Court discussed The CJEU's considerations when applying Article 97(5)'s predecessor in Coty which concluded:

" the concept of ‘the Member State in which the act of infringement has been committed’ in Article 93(5) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark must be interpreted as meaning that, in the event of a sale and delivery of a counterfeit product in one Member State, followed by a resale by the purchaser in another Member State, that provision does not allow jurisdiction to be established to hear an infringement action against the original seller who did not himself act in the Member State where the court seised is situated."

In Coty the CJEU was deciding whether the German courts had jurisdiction over a Belgian reseller who sold infringing goods in Belgium to a German importer.  Based on the decision in Coty, it was concluded that where "the act or infringement has been committed or threatened" under Article 97(5) of the EU Trade Mark Regulation would not necessarily be the same as "the place where the harmful event occurred or may occur" under Article 7(2) or the Jurisdiction and Judgments Regulation.

As Heritage Audio's act of alleged infringement, i.e. the actions that resulted in UK based customers being targeted by their website, occurred in Spain (where Heritage Audio are also domiciled) HHJ Hacon ruled that the English courts did not have jurisdiction to hear the action for infringement of AMS Neve's EUTM registration and that the correct jurisdiction would be Spain.

Comments

Although not being able to rely on their EUTM is unlikely to be terminal to AMS Neve's case, it does highlight how important it is to ensure that the correct forum is chosen when deciding to bring proceedings for trade mark infringement. If a claim is issued in the incorrect jurisdiction it will almost certainly be challenged. This will lead to delays and further costs and possibly having to withdraw your claim and starting again. However, if you find yourself as the defendant in proceedings it may be worth looking to see what rights have been relied upon and if it is possible to challenge the jurisdiction, especially if that claim has been issued outside of your home domicile.

Another issue highlighted by this case is the importance of having national trade mark rights in your home jurisdiction or where you have an established place of business due to the much broader scope for an action to be heard outside of a defendant's home courts under the Jurisdiction and Judgments Regulation than under the EU Trade Mark Regulation. Brand owners who hold only EUTMs will want to make certain that they have the ability to bring infringement proceedings in the UK in respect of online infringements into the UK from other EU Member States. To do this they should consider obtaining separate UK trade mark registrations. This could be a crucial advantage in a court action and will also help in avoiding the EUIPO torpedo.

For further information on forum shopping on trade mark disputes, an article entitled 'Factors driving forum shopping in trademark disputes: an EU perspective' by our own Leighton Cassidy and Sheena Sheikh Brown is available in the December 2016/January 2017 edition of the World Trademark Review (Issue 64).

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