Registration of a trademark license: the result of the CJEU is reasonable, but what about the Court's reasoning?
Eckhard Ratjen, a member of the Bremen office of Kat friend Boehmert & Boehmert, for discussing, in the firm’s most recent newsletter (and sharing his thoughts with this Kat), the judgment given by the CJEU on February 4, 2016 (Case C‑163/15, Youssef Hassan v Breiding Vertriebsgesellschaft mbH).
At issue is a question that has occupied trademark law and practice for many decades: must a trademark license be registered for a licensee to be authorized to bring an action for infringement? In the words of the referral—
“Does the first sentence of Article 23(1) of [the Regulation] preclude a licensee who is not registered …from bringing proceedings alleging infringement of a Community trade mark?”.Member States of the EU differ on the answer to the question (e.g., Spain— “yes”; Germany— “no”). The answer given by the CJEU is that no registration is required. While this Kat believes that the result is reasonable, the legal analysis given shows how inadequate the nature of CJEU decision-making can sometimes be in providing a compelling explanation in support of it ruling.
The focus of the Court’s attention is Article 23(1) of the European Union Trademark Regulation, which provides that—
“Legal acts referred to in Articles 17, 19 and 22 concerning a Community trade mark shall have effects vis-à-vis third parties in all the Member States only after entry in the Register. Nevertheless, such an act, before it is so entered, shall have effect vis-à-vis third parties who have acquired rights in the trade mark after the date of that act but who knew of the act at the date on which the rights were acquired.”The Court states (para. 18) that--
“Read in isolation, that sentence could be interpreted as meaning that the licensee cannot, if the licence has not been entered in the Register, rely on the rights conferred by that licence vis-à-vis third parties, including the party infringing the trade mark.”However, the Court goes on to qualify what seems to be the plain meaning of Article 23(1) in favor or requiring registration of the license, stating that (para. 19) –
“… in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (citation omitted).”Given this analytical framework for resolving the question, the Court reaches the conclusion that (para. 25)--
“With regard to the purpose of the rule laid down in the first sentence of Article 23(1) of the Regulation, the Court takes the view that … the lack of effects, vis-à-vis third parties, of the legal acts referred to in Articles 17 [transfer], 19 [rights in rem] and 22 [licensing] of the Regulation which have not been entered in the Register is intended to protect a person who has, or may have, rights in a Community trade mark as an object of property. It follows that the first sentence of Article 23(1) of the Regulation does not apply to a situation, such as that in the main proceedings, in which a third party, by infringing the mark, infringes the rights conferred by the Community trade mark.”
The question of whether registration of a trademark license is mandatory or permissive has arisen in various jurisdictions and the ultimate result is not uniform. At the end of the day, the tribunal decides either “yes” or “no”. As such, whatever their decision, courts that place a value on fully disclosing the underlying policy grounds for their decision will need to address two major issues; (i) do we want to require registration in such circumstances, and (ii) if so, it is workable? It is unfortunate that the CJEU did not do so to provide a helpful window into its policy considerations in connection with its ruling on trademark licensing.
Registration of a trademark license: the result of the CJEU is reasonable, but what about the Court's reasoning? Reviewed by Neil Wilkof on Sunday, June 26, 2016 Rating: