C-256/21 – CJEU’s interpretation of counterclaims and EU trade mark courts’ jurisdiction

By its decision C-256/21 of 13 October 2022, the Court of Justice of the European Union (CJEU) answered a referred question regarding the jurisdiction of EU trade mark courts: under Regulation 2017/1001 (EUTMR), does an EU trade mark court have jurisdiction over the invalidity of an EU trade mark asserted by a counterclaim, even after the action for infringement upon which the counterclaim is based has been validly withdrawn?* 

Background 

KP is the proprietor of the EU word trade mark Apfelzügle (‘the contested mark’). The contested mark was registered on 19 October 2017 in Classes 35, 41 and 43 and has a common denotation of a vehicle specifically designed for harvesting apples. 

In September 2018, TV, a fruit farm operator, and the Municipality of Bodman-Ludwigshafen (MBL) published a promotion on an activity named Apfelzügle that involved apples harvesting and tasting. KP sought a court order from the Munich Regional Court to prohibit TV and MBL from using the term ‘Apfelzügle’ on the services covered by the contested mark. 

Before the same court, TV and MBL filed counterclaims aimed at obtaining a declaration of invalidity of the contested mark. KP withdrew its infringement action at a subsequent court hearing, but TV and MBL continued in pursuing the counterclaims. Eventually, the Regional Court Munich declared the invalidity of the contested mark in Class 41. 

MBL did not stop there. It appealed to the Munich Higher Regional Court, seeking to obtain an invalidation of the contested mark’s services in Classes 35 and 43. 

This court assessed the admissibility of the counterclaims in light of KP’s withdrawal, in accordance with the spirit and purpose of the counterclaim provided for by the EUTMR, and doubted an EU trade mark court’s jurisdiction in relation to such a counterclaim due to three principal reasons: 

• Registering a EUTM is an act of an EU body which national courts do not have jurisdiction to annul, unless per expressly provided exceptions, such as the filing of a counterclaim. 

• The predominant view in German legal literature is such that the present case would actually fall within the scope of the rules governing German civil procedure (specifically, Article 261(3)(2) of German Code of Civil Procedure, ‘the ZPO’), which provides that the jurisdiction of an EU trade mark court established as a result of the filing of a counterclaim is independent of the outcome of the action for infringement and can, therefore, not cease to exist in the event that the respective action is withdrawn. 

• The Higher Regional Court Munich also held that, as a result of KP’s withdrawal, the need to give the defendants an opportunity to defend themselves on that matter would no longer exist. However, the national procedural law, as provided for by the said Article of the ZPO, should only apply for a pending suit. 

Given the circumstances above, the Munich Higher Regional Court referred the case to the CJEU for a preliminary ruling on the following question: 

Whether Article 124(a) and (d) and Article 128 of EUTMR must be interpreted as meaning that the EU trade mark court hearing regarding an action for infringement based on an EU trade mark, the validity of which is challenged by means of a counterclaim for a declaration of invalidity, still has jurisdiction to rule on the validity of that mark, in spite of the withdrawal of the main action.

CJEU’s interpretation 

The CJEU answered the referred question by defining the meaning and scope of the term ‘counterclaim’ within the meaning of EUTMR. This involved four aspects. 

First, the general rule is that, as per the uniform application of EU law and the equality principle, the terms of a provision of EU law, which makes no express reference to the law of the Member States, must be given an autonomous and uniform interpretation throughout the EU. 

Second, the CJEU made reference to the usual meaning of the term through the relevant provisions of EUTMR in other languages versions (Danish, German and Greek). It was concluded that the term refers to ‘a cross-action lodged by the defendant in proceedings brought against him or her by the applicant before the same court.’ 

The third aspect involved the context in which the term occurred, from past to present. Accordingly, under EUTMR, the Court pointed out that the term ‘counterclaim’ shall be understood as a legal remedy, which is conditional on the implementation of an action for infringement, thus, linked to that very action. Nevertheless, it is independent of the main action and continues to exist in the withdrawal of the latter. A counterclaim is intended to extend the subject matter of the dispute and to obtain recognition of a claim which is separate and independent from the main claim, 'inter alia in order to have the mark concerned declared invalid'. 

The final aspect revolved around the purpose of the rules of which the term is part: 

(1) The objectives pursued by EUTMR are inter alia to avoid unnecessary multiple proceedings, entailing a risk of contradictory judgments, as apparent from the case law on the system established by the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. 

(2) In the vein of Point (1), despite the withdrawal of the main action, an EU trade mark court must be able to rule on the counterclaim brought by the defendant for a declaration of invalidity with regard to the EU trade mark concerned. 

Otherwise, it would turn into compelling the party who filed a counterclaim to initiate proceedings before EUIPO in the event of withdrawal by the principal claimant in order to ensure that they no longer have to defend themselves in the future against the principal claimant, which would be against the principle of procedural economy. Meanwhile, it would allow the proprietor to continue using their EUTM, which might be considered tantamount to bad faith, by withdrawing from an action of infringement initiated by himself/herself. 

In the light of the above considerations, CJEU concluded the answer to the question referred is as follows: 

Article 124(a) and (d) and Article 128 of Regulation 2017/1001 must be interpreted as meaning that an EU trade mark court hearing an action for infringement based on an EU trade mark the validity of which is challenged by means of a counterclaim for a declaration of invalidity still has jurisdiction to rule on the validity of that mark, in spite of the withdrawal of the main action. 

Comment 

This preliminary ruling delivered by the CJEU clearly addressed the referred question and demonstrated the adoption of the multi-dimensional approach in interpreting EU legislation. Furthermore, besides regular textual, historical and systematic methods, the purposive interpretation has been once again, in this Kat’s opinion, attributed substantial weight. 

*For the introduction to the EU trade mark courts, see an EUIPO’s report here.

Image by Tian.