From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Thursday, 19 February 2015

Europe-wide injunctions and Community trade mark infringement: the theory and the reality

Injunctive relief for Community trade mark infringement across that patchwork quilt of lands we call the European Union is a topic that has grown in interest and significance in recent years, as the attractions of blanket prohibitions on the use of a trade mark are increasingly seen as having a detrimental effect where a ban on use covers not only jurisdictions in which confused consumers need protection but those where there is no confusion at all.  In the light of this, the IPKat is delighted to host this guest post from Jeremy Blum, a partner in Bristows LLP and a fellow IP enthusiast to the core.  This is what Jeremy writes:
In principle, a key benefit of a Community trade mark (CTM) is its potential for the proprietor to obtain a Europe-wide injunction to prevent further or threatened infringement. However, in practice, how easy is it to obtain one in the UK?  Last week’s High Court, England and Wales, ruling in Enterprise v Europcar [2015] EWHC 300 (Ch), not yet available on BAILII, shows this is by no means a settled area and is likely to generate future requests for guidance from the Court of Justice of the European Union (CJEU). As explored below, the approach of the judge seems to suggest that, at least in England and Wales, in cases under Article 9(1)(b) and Article 9(1)(c) of the CTM Regulation,  the High Court is likely to require potentially extensive evidence from a claimant to justify an EU-wide injunction. As the judge acknowledged, this may not be the correct interpretation of the law.

The CJEU’s ruling in DHL v Chronopost

The CJEU made it manifestly clear in its 2011 ruling in Case C-235/09 DHL v Chronopost [see previous Katpost here] that a Europe-wide injunction should only be granted in order to ensure that the proprietor can protect his trade mark, prohibiting only uses which affect or are liable to affect the functions of the trade mark.  

To ensure uniform protection, the CJEU said at [44] that a prohibition against further infringement or threatened infringement must, as a rule, extend to the entire area of the EU. However the CJEU added at [46] that in certain circumstances the territorial scope of the prohibition against further or threatened infringement may be restricted.  In particular the CJEU said at [48], where a Community trade mark court  
“finds that the acts of infringement or threatened infringement of a Community trade mark are limited to a single Member State or to part of the territory of the European Union, in particular because the applicant for a prohibition order has restricted the territorial scope of its action in exercising its freedom to determine the extent of that action, or because the defendant proves that the use of the sign at issue does not affect or is not liable to affect the functions of the trade mark, for example, on linguistic grounds, that court must limit the territorial scope of the prohibition which it issues”.
The judge’s analysis in Enterprise v Europcar 

In Enterprise, Arnold J had found that Europcar was liable for infringement of Enterprise’s trade marks under Article 9(1)(b) of the CTM Regulation. However, in determining the geographic scope of the injunction he contrasted the approach between the different basis for infringement (i.e. under Article 9(1)(a), (b) and (c)) when interpreting the CJEU’s DHL ruling. 

Infringement under Article 9(1)(a) [“double identity”: same mark, same goods and/or services]

Here, Arnold J said, the burden is on the defendant to show the use does not affect or is not liable to affect the functions of the trade mark, and the DHL dictum makes sense.  Accordingly, the scope of the injunction may be limited by a defendant proving that his use does not affect or in not liable to affect the functions of the trade mark.

Infringement under Article 9(1)(b) or (c) [likelihood of confusion or reputation-related infringement without due cause]

Article 9(1)(b) and 9(1)(c) infringements did not follow the same logic as under Article 9(1)(a), said Arnold J, since he considered that the onus lay on the claimant/proprietor to establish a likelihood of confusion under Article 9(1)(b) or one of the three types of injury for Article 9(1)(c) in order to prove infringement. Article 9(1)(b) or Article 9(1)(c) cases would not accord with the logic of the CJEU in DHL if the defendant bore the onus of proving that the use of the sign did not affect and was not liable to affect any of the functions of the trade mark with respect to assessing the scope of the injunction.  Accordingly, by this analysis, the onus is on the claimant to justify an EU-wide injunction.

The outcome in Enterprise

Arnold J, seeking to apply the CJEU’s ruling in DHL as best he could, held that the scope of the injunction should be confined to the UK (the scope of the damages inquiry was also confined to the UK  -- but this piece does not analyse that finding).  The first reason was because he found that the claimant had restricted the territorial scope of its action (this is the first exception to the grant of an EU-wide injunction envisaged in DHL). Not only had the claimant abandoned its case regarding France (and had been refused permission to allege infringement across the EU) but Arnold J had made no findings outside of the UK regarding distinctive character or evidence of actual confusion because there was no evidence in support. He noted, for example, that there was no survey evidence relating to other Member States or evidence of actual confusion. 

In any event, he added, the second exception in DHL also applied where the defendant’s use would not affect or be liable to affect the functions of the trade mark in any Member State other than the UK. He reached this conclusion on the basis that evidence of the position in other Member States was not extensive and, in relation to many Member States, there was effectively no evidence at all.

‘Far from clear that interpretation of the law is correct’

Regarding this application of the law in Enterprise, it is highly likely Arnold J’s legal analysis will be subject to further debate. In fairness this was envisaged by the Judge at [11] where he acknowledged: ‘it is far from clear that interpretation of the law is correct…’ 

A determination that the burden of proof was different, depending on the basis of infringement, raises numerous questions in light of DHL and an alternative view is that the CJEU did not intend to put the burden on the claimant to justify an EU-wide injunction. Indeed, one could say that the language the CJEU used in DHL at [48] suggests its intention that the defendant would have the burden (see passage above) to justify restricting the scope of the injunction. Further, the CJEU’s example that the defendant proves the trade mark’s functions have not been affected on linguistic grounds is equally applicable to all three grounds of infringement under Article 9(1). Moreover, the CJEU gave its reasoning on the basis of Article 9(1) as an entire provision and did not separate the different basis of infringement suggesting its dictum applied equally to the three grounds of infringement.

It makes sense that the proprietor can only protect his rights if the defendant’s use affects or is liable to affect the functions of the trade mark but the consequence is that there might be a different outcome across the EU.  For example under Article 9(1)(b) the distinctive character might be of varying degrees between Member States which could affect the likelihood of confusion.  With respect to Article 9(1)(c) the claimant ‘only’ has to prove a reputation in a substantial part of the EU (as mandated by the CJEU in Case C-301/07 PAGO [discussed by the IPKat here] to prove infringement. The query arises whether in both cases to obtain an EU wide injunction it has to establish a distinctive character or reputation in all the Member States where the injunction is sought.  That is one unanswered consequence of DHL. However, the fact injunctions may be restricted in certain circumstances does not arguably mean the CJEU intended a different burden to be applied.

Such a differentiated burden raises the prospect that the Enterprise approach is not in line with the CJEU statement in DHL that a prohibition against further infringement or threatened infringement must therefore, as a rule, extend to the entire EU. Rather than the territorial scope of the injunction being restricted in certain circumstances, the burden being put on the claimant means the territorial scope of the injunction is most likely to be restricted rather than being restricted in certain circumstances. 

How to prepare your case?

The shift in burden advocated in Enterprise raises issues for practitioners preparing a case in the UK where an EU wide injunction is desired. As a general observation, it seems that Enterprise signals that, in the UK, if the action only relates to UK acts of infringement under Article 9(1)(b) or Article 9(1)(c), even if jurisdiction is based on the domicile of the defendant/claimant the High Court might not grant an EU wide injunction unless the claimant has provided appropriate evidence to prove the acts of the defendant affects or is liable to affect the functions of the trade mark in other Member States.

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Clearly, to avoid unwittingly restricting the territory at issue the pleading should cover all relevant Member States where infringement is alleged as well as seeking appropriate EU wide relief.  But, this will mean the scope of disclosure and scope of evidence in the case could be vast.  For example, if there are differences in the average consumer or regarding distinctive character in the different Member States, evidence will need to be lead particular to each market.  Arnold J specifically mentioned the lack of evidence in relation to ‘many Member States’ as a factor in his decision. This suggests that, rather than allowing a general class of evidence, evidence relevant to each Member State on a country by country basis will need to be adduced in the UK. The judge also mentioned the lack of survey evidence, thus suggesting if a survey was to be proposed and permitted, it should also extend to those Member States.  The consequence of these findings is that in a single action under Article 9(1)(b) or Article 9(1)(c) in the UK, the court is likely to require broad evidence from the claimant before awarding an injunction extending outside the UK. This then raises an additional query whether the injunction would only be granted in those pleaded Member States which evidence has been adduced that the use affects or is liable to affect the functions of the trade mark or could it then be EU wide?

To avoid fragmentation between Member States’ approaches to awarding CTM injunctions, the sooner this state of affairs is clarified the better.
Merpel agrees though it seems to her that, if the process of clarification and avoidance of fragmentation as between Member States were to start this very minute, it would still take a good few years to achieve it, whether through the organised and deliberate process of initiating and discussing an appropriately-worded piece of legislation or through the more uncertain, indeed random process of litigating a case upon which the CJEU might be invited to give its guidance.

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