A Community Trade Mark (CTM) is a trademark which has been registered in the European Union as a whole, rather than in an individual country. It gives the holder the exclusive right to use their trademark in all 27 member states of the European Union. However, up until now it has been unclear exactly how much power the court of an individual member state has when enforcing a CTM.
A recent decision by the Court of Justice of the European Union (CJEU) has clarified that, in most circumstances, an injunction granted in one state will have effect in all 27 member states.
The case that this decision arose from concerned two shipping companies, DHL Express France SAS and Chronopost SA. Chronopost owned a CTM for “WEBSHIPPING”, which was subsequently infringed by DHL. Chronopost appealed to the French courts, who ruled that the mark was valid and infringed and granted an injunction against the use of it by DHL. However, they did not state whether the injunction was only applicable in France, or whether it was enforceable across the whole of the EU.
The relevant piece of legislation is Art 98(1) of the CTM Regulation, which states:
“where a Community trade mark court finds that the defendant has infringed or threatened to infringe a Community trade mark, it shall, unless there are special reasons for not doing so, issue an order prohibiting the defendant from proceeding with the acts which infringed or would infringe the Community trade mark. It shall also take such measures in accordance with its national law as are aimed at ensuring that this prohibition is complied with.”
This Article does not explicitly state whether an injunction granted in one member state may be enforced across the EU or whether it is only applicable in the country in which it was granted, and the question was referred to the CJEU.
The CJEU reasoned that the territorial scope of an injunction must be determined by both the territorial jurisdiction of the relevant CTM court, and by the territorial extent of the CTM proprietor’s exclusive right which is adversely affected by the infringement. However, if an injunction only took effect in the member state in which it was granted, an infringer could avoid such an injunction by moving their activities to a different member state. In addition, inconsistent judgements between courts in different jurisdictions would create legal uncertainty.
The final decision was therefore that:
“...a prohibition against further infringement or threatened infringement issued by a competent Community trade mark court must, therefore, as a rule, extend to the entire area of the European Union.”
However, in certain circumstances the territorial scope of an injunction may be limited. This may be because the acts of infringement are limited to a single member state or part of the EU, or if the defendant can prove that the sign at issue does not affect the function of the CTM (eg due to language barriers).
It will still be necessary for the injunction to be enforced by the individual member states, but this will be considerably less costly than pursuing a separate action for infringement in each. In addition, the CJEU stated that any coercive measures ordered by the court should be recognised in other member states. If they do not have an equivalent under national law, that member state may use whichever of its national laws would ensure compliance with the injunction.
This decision is of great benefit to owners of CTMs, as it will reduce the cost of enforcing their mark across the EU, at the same time creating legal certainty through one set of infringement proceedings. However, the caveat that the injunction may be limited in certain circumstances means that the scope of such an injunction is likely to be strongly contested by defendants.
6 May 2011