Bank in hot water over Hot Water: Coty ruling brings good news to brand owners

This weblog has already visited Luxembourg once today, to pick up breaking news of the Huawei-ZTE ruling, and now it's back there again: the excuse? The Court of Justice of the European Union (Fourth Chamber) gave judgment today in Case C-580/13 Coty Germany GmbH v Stadtsparkasse Magdeburg, an October 2013 reference for a preliminary ruling from the German Bundesgerichtshof.

In short, Coty was the exclusive licensee for the Community trade mark DAVIDOFF HOT WATER for perfumery. In January 2011, Coty bought a bottle of perfume bearing the trade mark DAVIDOFF HOT WATER from an internet auction platform, paying the purchase price into the seller's bank with the Stadtsparkasse. Finding that it had bought a fake from a seller with a false name, Coty asked the auction platform to provide it with the seller's real name. The person in question admitted to being the account holder but said she didn't sell the fake product and, relying on her right not to give evidence, refused to provide any further information.

Coty contacted the Stadtsparkasse to ask it for the name and address of the account holder. No, said the Stadtsparkasse, invoking its duty under German law to maintain banking secrecy. Coty then sought and obtained an order that the Stadtsparkasse provide the information requested. On appeal, the Higher Regional Court, Naumburg, reversed the trial court’s decision, holding that the request to be provided with that information was not legally justified: even though the current account services provided by the Stadtsparkasse had been used to carry out the infringing activity, since it was a bank it was entitled to refuse to give evidence in civil proceedings, whatever Article 8 of the Intellectual Property Enforcement Directive 2004/48 had to say on the subject.

Coty then appealed to the Bundesgerichtshof which, entertaining doubts as the interpretation to be given to Directive 2004/48, decided to stay the proceedings and ask the Court of Justice:

‘Must Article 8(3)(e) of Directive 2004/48 be interpreted as precluding a national provision which, in a case such as that in the main proceedings, allows a banking institution to refuse, by invoking banking secrecy, to provide information pursuant to Article 8(1)(c) of that directive concerning the name and address of an account holder?’

Admissibility

Some like it Hot!

The Stadtsparkasse argued that the request for a preliminary ruling was inadmissible, since the dispute before the referring court was governed not by Directive 2004/48 but by national law alone, since the request for information at issue in the main proceedings did not relate to proceedings concerning an infringement of an intellectual property right but rather to a case of obvious infringement of rights attached to a Community trade mark [don't worry if you didn't understand the difference: Merpel read this about six times before she decided that there was one, and even now she's not sure she's got it right ...]. However, the Directive is supposed to be interpreted widely and applies just as much to infringement of Community trade marks as it does to national ones and there was no basis for arguing that the reference was inadmissible.

The actual question 

In principle, EU law requires that, when implementing directives into national law, Member States must take care to rely on an interpretation of them which allows a fair balance to be struck between the various fundamental rights protected by the EU legal order. Here, German law allowed a banking institution to invoke banking secrecy [itself being a fundamental right] in order to refuse to provide information concerning the name and address of an account holder, while Directive 2004/48 imposed on Member States an obligation to ensure that information about unlawful activities can be obtained by means of measures of enquiry ordered by a court.

Taken by itself, if the German banking law allowed an unlimited refusal to supply the information requested, since its wording did not contain any condition or qualification, this would frustrate the right to information recognised in Directive 2004/48 and was therefore such as to infringe the fundamental right to an effective remedy for intellectual property infringement.  However, it was for the referring court to determine whether there were, under German law, any other means or remedies which would allow the competent judicial authorities to order that the necessary information be provided. Accordingly, the Court ruled:

Article 8(3)(e) of Directive 2004/48 ... must be interpreted as precluding a national provision, such as that at issue in the main proceedings, which allows, in an unlimited and unconditional manner, a banking institution to invoke banking secrecy in order to refuse to provide ... information concerning the name and address of an account holder.

Says the IPKat, apart from the fact that it's good news for hard-pressed brand owners who have enough trouble finding sources of fake products without also having to watch real and alleged infringers hide behind bankers' apron-strings, the decision is also common sense since it allows national courts the freedom to achieve the right balance between respect for privacy and secrecy on one hand and the disclosure of information necessary for the pursuit of justice on the other hand.

Cats and hot water here, here and here