International jurisdiction in online EU trade mark infringement cases: CJEU rules that targeting may serve to establish jurisdiction

Will this Kat be competent to judge?

When it comes to determining international jurisdiction in proceedings resulting from the alleged online infringement of an EU trade mark, where is the place of infringement, as per Article 97(5) of the 2009 EU Trade Mark Regulation (EUTMR, now Article 125(5) of the 2017 Regulation), located? 

This was the question at the heart of the referral in AMS Neve, C-172/18, which the Court of Justice of the European Union (CJEU) decided today. 

More specifically, the question referred by the Court of Appeal (England and Wales) related to a situation in which the defendant is established and domiciled in Member State A (in this case, Spain) and advertised and offered for sales infringing goods on a website targeted at traders and consumers in Member State B (in this case, the UK). Could courts in Member State B have jurisdiction to hear a claim for infringement of an EU trade mark? 

In line with the Opinion of Advocate General Szpunar last March, today the CJEU answered in the affirmative. 

In the background proceedings, at first instance the Intellectual Property and Enterprise Court held that it had no jurisdiction to hear such action. The Court of Appeal was unsure, so it referred the matter to the CJEU for guidance. 

It should be observed that, while the CJEU has already rule on matters of international jurisdiction relating to online infringements of national trade marks (Wintersteiger) and offline infringements of EU trade marks (Coty), the Court had not been given the chance - until AMS Neve - to rule on international jurisdiction in online EU trade mark infringement cases. 

Let’s see more in detail how the Court reasoned. 

Inapplicability of the Brussels I Regulation recast 

The CJEU recalled at the outset that the EUTMR excludes application of the jurisdiction rules contained in the Brussels I Regulation recast (which were instead interpreted and applied in Wintersteiger in relation to national trade mark infringement proceedings). In this sense, the jurisdiction rules in the EUTMR have the character of lex specialis. 

The basic rule under Article 97/125 is that the defendant is to be sued where they are domiciled/established. Paragraph 5 also allows to bring an action before courts of the Member State "in which the act of infringement has been committed or threatened". However, choosing one route instead of the other (they are alternative, not cumulative options) is not devoid of consequences, as the extent of the territorial jurisdiction of the court seized differs. When the infringement action is based the former criterion, jurisdiction potentially covers acts of infringement committed throughout the EU, whereas, when the action is based on paragraph 5, the action is restricted to acts of infringement committed or threatened within the Member State where the court before which the action is brought is situated. 

The effects of L’Oréal 

Recalling earlier case law, the CJEU noted that an EU trade mark court “must, when it is called upon to review its jurisdiction to give a ruling on whether there is an infringement in the territory of the Member State where that court is situated, be satisfied that the acts allegedly committed by the defendant were committed in that territory.” (para 46) 

In a case like the one at issue, the ruling in L’Oréal prompts the conclusion that the infringing acts (advertising and offering for sale) “were committed in the territory where the consumers or traders to whom that advertising and those offers for sale are directed are located, notwithstanding the fact that the defendant is established elsewhere, that the server of the electronic network that he uses is located elsewhere, or even that the products that are the subject of such advertising and offers for sale are located elsewhere.” (para 47) 

No activity here, whether infringing or not

Rejection of a narrow interpretation 

The Court also noted that, if the wording "Member State in which the act of infringement has been committed" were to be interpreted as meaning that it refers to the Member State in the territory of which the person carrying out those commercial acts set up his website and activated the display of his advertising and offers for sale, “parties established within the European Union committing an infringement, operating electronically and seeking to prevent the proprietors of infringed EU marks from resorting to an alternative forum, would have to do no more than ensure that the territory where the advertising and offers for sale were placed online was the same territory as that where those parties are established.” (para 50) This would mean that this alternative jurisdiction criterion would “deprived of any scope constituting an alternative to that of the rule on jurisdiction laid down in Article 97(1)”. 

The CJEU also considered that an interpretation of the jurisdiction criterion in the sense that the place of infringement is where the defendant took decisions and technical measures to activate a display on a website would be “all the more inappropriate given that it may, in many cases, prove excessively difficult, or even impossible, for the applicant to identify that place.” (para 51) 

Finally, the CJEU excluded that an interpretation like the one adopted would not be at odds with the holding in Nintendo, on consideration that the legislative instrument at issue in that case (Rome II Regulation) is fundamentally different from both the EUTMR and the Brussels I Regulation recast. 

Comment 

The issue of international jurisdiction in online EU trade mark infringement cases is something that I have also found interesting (and problematic) for some time. In an article I wrote three years ago, I reviewed case law as existing at that time. 

Among other things, I considered that L’Oréal would not constitute a good ‘precedent’ to identify the competent court(s). First, that case concerned the applicability of EU trade mark legal instruments to an online platform established outside the territory of the EU, rather than the determination of jurisdiction in such cases. Second, similarly to Article 7(2) of the Brussels I Regulation recast (as interpreted by the CJEU in Pinckney, Hi Hotel and Hejduk) there is nothing in Article 97/125 that appears to require targeting/intention to target to determine judicial competence. 

I thus concluded that the place of infringement should be located where the activation process for the display of content (goods or services) that infringes a EUTM has occurred. In most cases such place is likely to coincide with the Member State where the defendant is domiciled/established and, therefore, with the criterion of jurisdiction indicated at paragraph 1. There may, however, be instances in which this will not be the case. 

In light of this, I considered that, if the CJEU were to endorse such an interpretation, there would be some unwanted consequences. 

On the one hand, the choices for the claimant would be reduced, in the sense that the criterion at paragraph 5 would probably be the same (even if not always) as that of the place of domicile/establishment of the defendant. In addition, unlike Article 7(2) of the Brussels I Regulation recast and in light of the CJEU stance in Coty, the place where the damage occurred could not represent a valid criterion to determine jurisdiction. The shortcomings of limiting jurisdiction only to the courts located in the place of the causal event have been highlighted both by Advocates General Darmon and Léger and the CJEU in Shevill, when it considered that this place would like coincide with the place where the defendant is domiciled or established, and limiting jurisdiction only to this ground would make the special rule in Article 7(2) of the Brussels I Regulation recast (and consequently also Article 97(5) EUTMR) "meaningless". Finally, with particular regard to online infringement cases, determination of the defendant’s domicile/establishment may not always be a straightforward process.

On the other hand, in Article 97(5) situations, jurisdiction would subsist even without the need to prove that the allegedly infringing activities of the defendant where directed at consumers located in that Member State. However, the fact that targeting would not be expressly required to establish jurisdiction might have implications with regard to the damages that the claimant would be realistically able to seek and obtain in that particular Member State. For a claimant to be able to rely effectively on paragraph 5 —and make it worthwhile for him/her to start proceedings in a certain Member State—it would be in fact necessary to demonstrate not only that the defendant has acted in that territory by activating the relevant display process, but also that the activity at issue may be considered as having been directed to consumers on that specific territory. 

With today’s ruling, the CJEU has pushed the interpretation of Article 97(5)/125(5) EUTMR further than what its wording, origin and context alone would have allowed. This was motivated by the need to provide a helpful solution to issues of interpretation. To this end, the Court relied on L’Oréal in a dynamic fashion that helped it construe a purpose-driven interpretation of the provision.

[Originally published on The IPKat on 5 September 2019]