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29-01-2016 » Can a non-recorded Licensee sue for infringement of a Community trademark?

In his December 17, 2015 opinion, the Advocate General Mr. Melchior Wathelet suggests that the European Court of Justice should answer positively to this request for a preliminary ruling submitted by the Dusseldorf Oberlandsgerischt in proceedings concerning infringement of a Community trademark, brought by the CTM Licensee.

In the case in question, the licence agreement provided the right for the Licensee to file a suit in his own name in respect of acts of infringement.

In the first instance judgment, the Defendant, sued for trademark infringement, was ordered to provide information, to withdraw all infringing goods from the market and to proceed with their destruction. Additionally, the Defendant was ordered to pay compensatory damages.

The Defendant appealed against the decision, arguing that the trademark owner’s consent given to his Licensee to file an infringement action was not sufficient considering the fact that the Licence agreement was not recorded on the Community Register, as required by Article 23 § 1 of Council Regulation n°207/2009 on Trademarks.

This is the legal framework that gave rise to the submission of the above-mentioned request for a preliminary ruling to the ECJ.

The Advocate General recalls that Article 23 § 1 provides that: “Legal acts referred to in Articles 17, 19 and 22 … shall have effects vis-à-vis third parties in all the Member States only after entry in the Register” and underlined the need to define the “legal acts” governed by the aforementioned provision, in order to determine if infringement acts fall within the scope of the definition of “legal acts” in Article 23 § 1.

In fact, those acts are the transfer of rights (article 17), the constitution of a security using a CTM or another right in rem using a trademark (article 19), and the grant of a licence (article 22). Those acts all aim at creating or transferring a right in rem on the CTM. They only concern the creation of a right and not the Licensee’s right to file an infringement action.

However, only Article 17 § 6 provides that in order to invoke a right on a CTM it must be recorded on the Community Register. Articles 19 and 22 do not provide for such a requirement.

Consequently, the Licensee’s right to file an infringement action is not conditional upon the Licence agreement being recorded beforehand on the Community Register.

The Advocate General further mentions that if the Legislator had intended to provide for such a requirement as a necessary condition for a licensee to be allowed to file an infringement action, then he would have included such a provision in Article 22 of the (EC) Regulation, as he did for the transfer of rights, as previously mentioned.

Then, Mr. Wathelet refers again to Article 23 § 1 according to which such legal agreements shall have effect vis-à-vis third parties who have acquired rights in the trademark before the recordal on the Register, when those third parties knew of the agreement at the date on which they acquired their rights.

The Advocate General properly underlines that the third party effect can only accrue to those who acquired their rights legally and not to infringers who, by definition, cannot acquire any right in a trademark. In other words, “making registration a formal requirement such that failure to comply with that requirement would allow an infringer to claim that infringement proceedings brought by the licensee were inadmissible would be at odds with the objective pursued by the registration”.

If, despite this convincing opinion, the Court decides to rule that the Licensee cannot file legal proceedings against acts of infringement without having recorded the license agreement on the register, then the Court would have to answer the second question: “ Does the first sentence of Article 23§1 of [the Regulation] preclude a national legal practice whereby the licensee can enforce the trade mark proprietor’s rights against the infringer by virtue of the power conferred on it for that purpose (“Prozessstandschaft”)?”

IN BRIEF:

On January 26, 2016 the French Senate approved, on a first reading, a draft law on recovering biodiversity.

By an order of December 30, 2015 (No. 3860805) the State Council (Conseil d’Etat) cancelled certain of the provisions of the so-called SVA and SVR decrees (silence gives consent/silence means rejection). Later on we will give more information regarding the consequences of this order.

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