Trademark Coexistence Agreements and International Jurisdiction
Negotiation of coexistence agreements is certainly a common and advisable matter whenever a trademark conflict arises (as said among practicioners, a bad agreement is always better than a good court procedure). In these agreements, the parties commit to stop using one or another trademark and/or to refrain from applying for the registration of certain distinctive signs within a more or less long period of time (usually in an indefinite manner). The worldwide scope of the business activities of the companies involved in such conflicts, as well as the trademarks territorial scope, causes that such obligations spread to many countries or even the whole world.
In this post we ask ourselves what happens when one party infringes a previously signed coexistence agreement – either because it keeps on using one of the conflictive trademarks or because it applies for a non authorized (following the wording of the said agreement) new registration – and the other party contemplates to sue in response. The international nature of these agreements makes that a difficult decision.
Certainly, there is always the option of filing the lawsuit before the courts of the domicile of the allegedly infringing party. The ground of jurisdiction of the defendant´s domicile is recognized globally in every country (by way of example, in the EU, art. 6 of Brussels I Regulation). However, this solution has several inconvenients in cases where the infringement has not taken place in that same country (the defendant´s domicile). By way of example, let´s suppose that the defendant is domiciled in Italy, but the conflictive application has been lodged in Australia. In such case, if the complaint is filed in Italy and the defendant is condemned, then it will be necessary to recognize and enforce the court decision in Australia, which entails significant costs and time spent. Surely, it is possible to request for interim injunctions in Australia while the proceeding is in course in Italy but, again, costs can be high.
Although it is not always like this, in many cases it is appropriate to litigate in the country where the application/use of the trademark in breach the agreement has taken place in order to reduce the possible damages to our client´s interest in the fastest manner.
One way to achieve this goal would be to invoke the forum executionis (the jurisdiction of the courts of the where the obligation is to be performed) which, for example, in the European Union is set forth in art. 7.1 of Brussels I Regulation. Nevertheless, the possible application of this ground of jurisdiction will depend on how the obligations have been detailed in the agreement. The reason is that the forum executionis designates as competent the courts “of the place where the obligation which is the basis of the complaint has been performed or is to be performed”, but not the place where the breach of the obligation occurred. In those cases in which the coexistence agreement stipulates in detail the countries in which the trademark cannot be used or registered, it can be understood that there is multiple obligations entailing the non registration/use, each of which, must be complied in a single State. Thus, if the agreement stipulates that one party cannot make use of a trademark in both Spain and Italy, and this party uses it in Spain, it can be understood that the obligation of non-using it in Spain has been breached and therefore, the Spanish courts shall be competent.
In those agreements – the most common ones in practice- in which the countries where the trademark are registered are not detailed, or in those cases involving Community trademarks, the resource of the forum executionis will be more problematic. In our opinion, in particular within the framework of the Brussels I Regulation, recourse to this ground of jurisdiction is not possible. The reason is that the obligations assumed by the parties in the coexistence agreements are usually of “non-making” something (do not use/do not register) and, if there is a global scope (the trademark cannot be used/registered in any country), there is not a place of performance of the obligation or this place is the whole world. The same happens with a Community trademark: not a single Member State can be appointed as the place of performance. The fiction of considering that the place of fulfillment is located where the infringement has taken place is not admitted, pursuant to art. 7.1 of the Brussels I Regulation by the CJEU (Judgment 9 February 2002, C-256/00, “Besix”). In this case, the Court considered that the forum executionis is not applicable. As a result, in those coexistence agreements in which the parties do not state in detail the countries where the trademark cannot be used/registered, the plaintiff may be unable to sue in the place where the trademark has been registered or used. The same goes to coexistence agreements related to Community Trademarks.
A second option to solve these problematic cases could be by filing an extra-contractual actions (by considering the trademark application/use means a trademark infringement) and thereupon take advantage of the forum delicti commissi, ground of jurisdiction established in most legal systems for extracontractual matters. Indeed, it could be understood that the suit could be filed in the country where such application/use has taken place, being this country considered as the place where the harmful event -this is the trademark infringement- has taken place or may take place (in this sense, art. 7.2 Brussels I Regulation). In our opinion, this option is not viable or, at least, is not free of problems. The reason thereof is that what is being claimed for is, at the same time, an infringement and a breach of contract (the trademark application/use can be considered an infringement but also the breach of an obligation entered into by the parties by means of the corresponding agreement) and, as it is stated, the contract is “law between the parties”. That is to say, what is signed between the parties must prevail. Certainly, in some procedural systems, it may be admitted that the parties choose to sue with basis on the same facts either by means of contractual or extra-contractual actions, but at international cases this possibility is not clear enough as far as it would allow the parties to advocate for the so-called forum shopping in their own benefit, which would create great legal uncertainty and would affect the defendant´s right to a effective judicial protection. In this sense, it must be recalled the CJUE Judgement 13 March 2014, C-548/12, “Brogsitter” which states that, for the purposes of the Brussels I Regulation, the actions that in the national Law can have an extra-contractual nature are, however, included in the contractual nature of art. 7.2 “where the conduct complained of may be considered a breach of the terms of the contract, which may be established by taking into account the purpose of the contract.”.
In light of the limitations of the forum executionis, and the impossibility to resort to the forum delicti commissi, there is in our opinion one final option to ease the claim stemming from a coexistence agreement breach in countries other than the defendant´s domicile: the inclusion of an express choice of forum clause. The negotiation of these clauses is not easy provided that each party tries that the courts designated in such clauses be their own home courts. Stress should be laid on the fact that this choice has some benefits (e.g. litigate at home) but also some inconvenients. In particular, the need to get the court´s decision recognized and enforced in a foreign jurisdiction if the defendant has his assets in a different country. The relevance of this problems increases in coexistence agreements since it will be strange that the trademark has been used/registered in the country appointed by the choice of forum clause. Our expertise shows us that, at the time of drafting such clauses, one has to be creative and make use of the flexibility provided by the jurisdiction rules.
In this context, the proposal made to our clients consists of the inclusion of a choice of forum clause that, in the event of contractual breach, allows the plaintiff to file the lawsuit before: a) the defendant´s home courts; b) the Courts of the country in which the trademark at issue has been applied for/used, with the possibility if it has been applied for or used in several countries, of concentrating all the said uses/applications before the courts of any of those countries. While the second alternative does not directly identify the competent courts, it provides the elements according to which such court can be determined thus there is little doubt of the validity of these clauses following the ECJ Case Law in CJUE Judgement of 9 November 2000, 387/1998, “Coreck Maritime“.
If the plaintiff wants to assure a quick blockage on the infringing application or the injunction over the use of the trademark, he can file the complaint in the country in which such application or use has taken place. If such facts have taken place in different countries, instead of bringing legal actions in each of them, he can gather all of them in one single country of his choice. However, nothing prevents him from filing one or several lawsuits on the occurred facts in one or several countries. Alternatively, the plaintiff can choose the defendant´s home courts if, for example, he intends to get a good economic compensation.
This is, undoubtedly, a clause in favor of the plaintiff since it offers great alternatives to litigate and in turn complies with an indirect aim: discouraging the breach of contract.
Related Posts:
- The hazards of choice of forum clauses in favor of foreign courts
- On the Different Interpretation of Forum Delicti Commissi in Relation to EU Trademarks and National Trademarks
- CJEU Judgment “Brogsitter”: Is It Possible to File an Extracontractual Action when the Parties under Litigation are Linked by an Intellectual Property License?
- Implications of the Spanish Act on international judicial cooperation in civil matters and the amendments of the Spanish Organic Act of the Judicial Power for international litigation in intellectual property matters