Advocate General understands that a subsidiary in the EU should be considered an establishment for the purpose of the EU Trademark Regulation
On 12 January 2017, Advocate General (AG) Evgeni Tanchev published his Opinion on the case C-617/15 “Hummel Holding” related to the concept of “establishment in a Member State” for the purpose of Art. 97 Regulation 207/2009 on the EU Trademark (EUTR).
The case is referred to an infringement action brought by Hummel Holding, a Danish company, before the German courts against Nike Inc. (USA) and Nike Retail BV (The Netherlands). Among other things, Hummel Holding asks for an injunction against Nike Inc. prohibiting the import, export, advertising, offering for sale and placing on the market of the goods concerned in the whole territory of the European Union.
The problem for Hummel Holding is that according to Art. 97 EUTR, for the German courts to declare jurisdiction for the infringement committed in the whole territory of the EU either the defendant should be domiciled or should have an establishment in Germany. If that is not the case, German courts’ jurisdiction would be limited to the infringement committed in Germany (art. 97.5). Nike Inc. is domiciled in the US, however it has a subsidiary in Germany, Nike Deustchland Gmbh (a “legally distinct second-tier subsidiary”). In the reference to the CJEU, the German court ask whether such a subsidiary can be considered an “establishment” within the meaning of Art. 97.1 EUTR.
First, the AG understands that courts cannot refer to their national legal system in order to interpret the term “establishment”. An autonomous interpretation for the purpose of the EUTR is needed.
Second, in order to establish that autonomous interpretation, the AG understands that the vast amount of CJEU judgements on the interpretation of the term “establishment” for the purpose of Art. 7.5 Regulation 1215/2012 (Brussels I Regulation) cannot be applied by analogy to Art. 97 EUTR. This is in line with the CJEU Judgement of 5 June 2014, C-360/12, “Coty Germany” where the Court understood that the interpretation criteria of the Brussels I Regulation do not necessarily apply in the context of the EUTR.
Third, in the opinion of the AG, the autonomous notion of “establishment” for the purpose of Art. 97 EUTR shall include a subsidiary such as Nike Deustchland Gmbh as far as:
- The subsidiary acts as a “center of operation” in the EU of the foreign parent company. This is the case where the subsidiary has a management and is materially equipped to negotiate business with third parties, so that they do not have to deal directly with the foreign parent company. The fact that the directors of the subsidiary are not the same that those of the parent company is irrelevant.
- There is an “appearance of permanency”. The subsidiary should be seen as an extension of the parent company. This implies that a certain degree of dependence and obedience on the part of the establishment towards the parent company must exist. For the AG the fact that the subsidiary is a legally independent company is irrelevant. In fact, the subsidiary is that the connecting factor needed for the jurisdiction over the parent company to be founded, but the subsidiary does not need to be sued.
The proposed interpretation of the AG favors the effective protection of EU Trademarks in the sense that increases the forum shopping options for EU Trademark owner to initiate pan-EU infringement actions. However, in our opinion, predictability of the grounds of jurisdiction is harmed. In fact, contrary to what the CJUE states about Art. 7.4 Brussels I Regulation, in order to file the complaint before the court where the establishment (subsidiary) is located it is not required that the infringement arose “out of the operations of that establishment”. Let’s see if the Court agrees with the position of the AG.
Related Posts:
- On the Different Interpretation of Forum Delicti Commissi in Relation to EU Trademarks and National Trademarks
- AG Opinion on “Solvay”: cross-border interim measures in patent disputes
- International Jurisdiction in IPR Infringements Committed on the Internet – Revisiting CJUE decisions in “Pinckney” and “Hejduk”
- CJEU Judgement “Wintersteiger”: useful criteria to determine jurisdiction in Internet-related IP disputes