AMS Neve v Heritage Audio: The jurisdiction of EU member states and online trade mark infringement

In the recent case of AMS Neve v Heritage Audio (Case C-172/18), the Court of Justice of the European Union (CJEU) was asked to decide on a point of law referred to them by the Court of Appeal in England and Wales. In a nutshell, the question posed to the CJEU was: which court has jurisdiction to hear a case where a third party infringer based in one member state of the European Union, uses online platforms and advertising to “target” consumers in a different member state.

Background:

AMS Neve (the claimant), a manufacturer of digital and analogue music consoles, has been selling a brand of pre-amplifiers called ‘1073’ for over 40 years. The claimant alleged that Heritage Audio (the defendant), a Spanish company, was advertising copycat products also branded ‘1073’ on their website.

While the website was administered in Spain, it was alleged that the products available on the website were directed at or “targeted” consumers in the United Kingdom. Relying on its earlier trade mark registrations and use of ‘1073’ the claimant brought an action in the UK’s Intellectual Property Enterprise Court (IPEC) claiming infringement and passing off.

UK Court Proceedings:

At the IPEC the presiding judge HHJ Hacon concluded that, while the English court had jurisdiction to hear the matter in respect of the UK trade mark registrations and the claim of passing off, the court did not have jurisdiction to decide on infringement in respect of the EU trade mark registration. This was due to the court’s interpretation of the EU Trade Mark Regulation (207/2009), namely that the regulation required that infringement proceedings be brought in the member state in which the act of infringement was committed.

Therefore the presiding judge decided, that since the alleged infringer was based in Spain and the act of infringement had nominally occurred in Spain, that he did not have jurisdiction to try the infringement of the EU trade marks.

The claimant appealed the IPEC’s decision to the Court of Appeal. The Court of Appeal realised that the inability to enforce EU trade marks, in circumstances such as online infringement perpetrated in different member states, had the potential to undermine the EU trade mark system. The Court of Appeal also recognised that this interpretation of the law could lead to infringers being able to avoid liability, if they were based or operating outside the EU when the infringement took place. Accordingly, the Court of Appeal referred the question of the interpretation of the EU Trade Mark Regulation to the CJEU.

CJEU referral:

The following questions were forwarded to the CJEU:

“In circumstances where an undertaking is established and domiciled in Member State A and has taken steps in that territory to advertise and offer for sale goods under a sign identical to an EU trade mark on a website targeted at traders and consumers in Member State B:

(i) does an EU trade mark court in Member State B have jurisdiction to hear a claim for infringement of the EU trade mark in respect of the advertisement and offer for sale of the goods in that territory?

(ii) if not, which other criteria are to be taken into account by that EU trade mark court in determining whether it has jurisdiction to hear that claim?

(iii) in so far as the answer to (ii) requires that EU trade mark court to identify whether the undertaking has taken active steps in Member State B, which criteria are to be taken into account in determining whether the undertaking has taken such active steps?”

In response, the CJEU concluded that the EU Trade Mark Regulation must be interpreted so that the proprietor of an EU trade mark may bring an infringement action against a third party before the court of any EU member state where consumers, to whom online advertising or offers for sale are directed or targeted, are based. Whether or not the third party was based in, or made decisions in, another jurisdiction was deemed to be irrelevant.

The case has now been returned to the Court of Appeal in the United Kingdom to implement the ruling.

Concluding remarks:

This case has important implications on the enforcement of EU trade marks. The CJEU has recognised that restricting the enforceability of EU trade marks merely to location of third party infringer is incompatible with the modern world of online advertising and sales. It is clear that any other interpretation of the EU Trade Mark Regulation would have made it easier for defendants to hide behind state borders. The CJEU’s pragmatic approach in interpretation has essentially moved the point where infringement is considered closer to the harmful event and establishes that any jurisdiction in the EU can hear a case where infringement has been targeted at consumers in that state.

If you would like any advice on trade mark enforcement, please get in touch to speak to one of our attorneys.


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