European Union Trademark Licenses do not Need to be Registered for Licensees to Pursue Infringers, Says CJEU, as Opposed to the Interpretation of the EU Trademark Court of Alicante
Victoria Balaguer / Amaya Ortiz
Just some months ago, the European Court of Justice (CJEU) decided about a preliminary issue of law raised by the Oberlandesgerischt Düsseldorf (High Regional Court of Appeal of Düsseldorf, Germany) requesting an interpretation of article 23.1 of European Union Trademark Regulation (EUTMR) 207/2009 (consolidated version after entering into force of Regulation 2015/2424) in Judgment of CJEU of 4 February 2016, C-163/15 “Hassan”.
The matter was outlined in this context. On the one hand, the company Breiding is the holder of a license, which is not registered in the Register of European Union trademarks, relating to the European Union word mark ARKTIS, which covers bedding and blankets. On the other hand, Youssef Hassan is the managing director of several companies, which offered for sale on the internet different down duvets under the ‘Arktis” denomination.
Following a cease and desist request made by Breiding, Mr Hassan signed a so-called ‘cease-and-desist declaration’, by which he undertook to refrain from using the sign ‘Arktis’ for bedding under a penalty for non-compliance to be determined at the discretion of the licensee.
In proceedings brought by Breiding before German courts, the court hearing the case at first instance declared the cease-and-desist agreement to be valid. Mr Hassan brought an appeal against that decision, alleging that Breiding – which, according to the license agreement- has the consent of the trademark holder, as required by Article 22(3) of the EUTMR- may not bring proceedings for infringement of that trademark due to the fact that the license has not been entered in the Register.
In these circumstances, the Oberlandesgericht Düsseldorf (High Regional Court of Appeal, Düsseldorf) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘1. Does the first sentence of Article 23(1) of the EUTMR preclude a licensee who is not entered in the Register … from bringing proceedings alleging infringement of a Community trademark?
Let’s remember first of all the wording of article 23.1:
“Effects vis-à-vis third parties
- Legal acts referred to in Articles 17, 19 and 22 concerning a Community trade mark shall have effects vis-à-vis third parties in all the Member States only after entry in the Register. Nevertheless, such an act, before it is so entered, shall have effect vis-à-vis third parties who have acquired rights in the trademark after the date of that act but who knew of the act at the date on which the rights were acquired.”
Read in isolation, first sentence of Article 23(1) of the Regulation could be interpreted as meaning that the licensee cannot, if the license has not been entered in the Register, rely on the rights conferred by that licence vis-à-vis third parties, including the party infringing the trade mark. Such a strict interpretation has been applied by the Spanish courts so far. In particular, Section 8th of the Court of Appeal of Alicante (former Community Trademark, now named European Union Trademark Court) passed in 2014, among others, Judgment No. 223/2014 (AC 2015/491) of 7 November, which stated as follows:
[…] This Community Trademark Court has had before the opportunity (Judgment of this court dated 23 January 2009 is the first judgment of a series of decisions that follow the same criterion) of deciding about the exercise of actions for the infringement carried out by a licensee whose license was not registered at the OHIM, which is the same situation as the case at stake) providing grounds (reasoned in depth because the Court modified the criterion followed for many years which was established in the famous CANNA case) that “…regarding the former (actions for community trademark infringement) they lack active legal standing because article 23.1 of the Council Regulation No. 40/94 of 20 December of 1993 on community trademark (hereinafter CTMR) sets forth that the license agreement shall have effect vis-à-vis third parties in all the Member States only after entry in the Register, this is, the entry of the license agreement in the Registry is a requisite for the effect vis-à-vis third parties. In the case at issue, it has not been proved that the license agreement granted by the holder, “…” in favor of the other defendant has been registered”.
However, the ECJ at the time of deciding about this preliminary issue of law has concluded that article 23.1, first sentence, of the EUTMR must be interpreted in the sense that the licensee counting with the authorization of the trademark holder, may start legal actions in the event of infringement of the European Union trademark subject to license, even though the later has not been entered in the Register. That is, the ECJ understands that such sentence is solely applicable to the assumption of acquisition of good faith.
Thus, it must be observed that the first sentence of article 23.1 of the EUTMR is qualified by the second sentence of the same article as it allows the licensee to use the license vis-à-vis “third parties who have acquired rights over the trademark” after the date of the said license but who knew about the existence of the license when the rights were acquired.
In this sense, the Advocate General of the “Hassan” case already said in his conclusions that, by definition, the infringer has not acquired any right over the trademark. This means, such third party has not become holder in good faith of any right over the trademark. Consequently, article 23.1 of the EUTMR is not applicable to the litigation at stake, in which the third party infringes the rights granted by European Union trademark.
For this reason the ECJ concludes that “legal acts referred to in Articles 17, 19 and 22 concerning a Community trade mark shall have effects vis-à-vis third parties in all the Member States only after entry in the Register, is aimed at protecting who can or who is entitled to have rights over a Community trademark as an object of property”.
Considering all the above we would expect that the Spanish courts from now on applied article 23.1 of the EUTMR in accordance with the interpretation made by the ECJ, which in our opinion is positive, because, otherwise, in the cases in which the trademark holder decides not to take action due to different reasons, the licensees without registered license would not be able to defend their interests towards infringing third parties, who shall never be considered as good faith third parties.
Related Posts:
- The ECJ Decision on “Pie Optiek” and the concept of prior right licensee
- According to the CJEU, The period of 5 years following registration constitutes a grace period for the trademark holder
- The trade mark system reform: a closer look at the ‘intervening rights’ as a defence
- What is the Scope of the “Reasonable Compensation” for a Trademark Infringement Established in Art. 9.3 EUTMR? – CJUE Judgment of 22 June 2016, C-280/15, “Nikolajeva”