10 August 2020
Brands update - August 2020 – 3 of 7 Insights
The latest decision in the case of AMS Neve Limited v Heritage Audio has been handed down by IPEC. This has been a long-running case involving various issues relating to jurisdiction in EU trade mark cases.
The claimants brought proceedings at IPEC for infringement of an EU trade mark and two UK trade marks, and for passing off. The EU mark was a word mark for 1073 and the two UK marks were device marks.
UK-based audio equipment manufacturer, AMS Neve (AMS), claimed the Spanish company, Heritage Audio (Heritage), was selling and marketing imitation equipment to UK consumers. The products were sold under the mark 1073 and were marketed via emails, through websites and social media channels.
AMS pursued legal action in the UK against Heritage, relying on its EU trade mark and claiming infringement. AMS argued that Heritage targeted the UK public as the websites and social media accounts were available in the UK and the products were available for purchase by and shipped to UK consumers.
Heritage did not deny the products could be purchased by UK consumers but rejected that any marketing or sales occurred in the UK. Heritage also challenged English jurisdiction. Heritage argued it had not advertised or sold products within the UK, nor appointed a UK distributor. It further argued that all marketing and sales activities originated from Spain and if there was possible infringement, only a Spanish court had jurisdiction.
The judge found that the AMS had established a good arguable case that Heritage's website was targeted at the UK and that, through the website, it had advertised and offered its goods for sale in the UK. He held that the English court had jurisdiction to hear the claims for infringement of the UK trade marks and passing off, but not the claim for infringement of the EU mark. The claimants appealed against that decision and the Court of Appeal made a reference to the CJEU.
Subsequently, the defendants applied for a declaration of invalidity of the EU trade mark at the EUIPO (that EUTM has been declared invalid by the EUIPO, although the claimants have appealed the decision to the Board of Appeal). The defendants have not yet applied for a counterclaim for invalidity of the EU trade mark in the UK infringement proceedings but have indicated that they intend to do so. The defendants asked IPEC to stay the entire UK action pending a final decision by the EUIPO on invalidity.
EU trade mark owners may take legal actions in any EU Member State where targeted consumers of infringing offers are located. The CJEU held that it is irrelevant where the defendant is based, where the servers are situated, where the infringing products are located, or whether any sales occurred. What matters is the location of the consumers being targeted (with reference to Article 125(5) of Regulation (EU) 2017/1001).
AMS was correct in taking legal action before the UK courts, despite Heritage not conducting any sales or marketing activities based out of the UK. UK consumers were being targeted and for that reason the CJEU decided that UK courts had jurisdiction to determine infringement of the EU trade mark in the UK.
The relevant law under consideration in this latest decision is Articles 132(1) and 128(4) of the Regulation (EU) 2017/1001.
Article 132(1) provides that, where an invalidity application has been made in the EUIPO – or in a counterclaim in another Member State court – subsequent trade mark infringement proceedings in a Member State are stayed in the absence of special circumstances (this is known as an invalidity torpedo).
Article 128(4) provides that – if an application for a declaration of invalidity of an EU trade mark has already been filed at the EUIPO before the filing of a counterclaim for invalidity of the same mark in infringement proceedings – the court shall stay the "proceedings" in accordance with Article 132(1).
The defendants argued that the effect of Article 128(4)/132(1) is that the entire UK action should be stayed. The question IPEC had to decide in this decision was what does the word "proceedings" mean in Article 128(4); is it just the counterclaim for invalidity that is stayed or the infringement claim, too?
The court held that Article 132 only applied in the specific circumstances mentioned (where infringement is filed after a claim for invalidity). An action for infringement is not the same as a counterclaim for invalidity: all that had to be stayed was the counterclaim and not the original infringement action. If this were not the case, a defendant could simply issue an invalidity application at the EUIPO after the bringing of an infringement action and then make a counterclaim (leading to an invalidity torpedo).
Even if IPEC had been required to stay the EU trade mark claim, it would not have stayed the rest of the action (infringement of the UK trade marks and passing off). Those issues could not be tried anywhere else and there would be no point staying them.
The decision has been appealed to the Court of Appeal.
Case Ref: IP-2015-000171
by Mark Owen
by Julia King