CJEU judgment on ALCOLOCK case rejects Brexit stay argument

European Union
  • ACS requested that proceedings be stayed until the United Kingdom had withdrawn from the European Union
  • The Court of Justice rejected the request as it was on purely hypothetical grounds that Brexit would affect outcome of invalidity proceedings based on UK trademarks
  • Given the court’s decision, it appears that stays will not be available even if common sense suggests that a stay would be appropriate

The Court of Justice of the European Union (CJEU) has handed down judgment in an appeal brought by Alcohol Countermeasure Systems (International) Inc (Case C340/17 P). The decision dealt with genuine use of a trademark but also considered the impact of Brexit on EU proceedings where one party relies on a UK registered trademark only.

In 2012, Lion Laboratories applied to invalidate ACS’s 2010 EU trademark registration for ALCOLOCK in Classes 9, 37 and 42. Lion Laboratories relied on its 1996 UK trademark registration for ALCOLOCK covering alcohol breathalysers in Class 9. ACS requested that Lion Laboratories prove use of the earlier mark.

The Cancellation Division held that Lion Laboratories’ earlier mark had been put to genuine use, and consequently found ACS’s EU trademark invalid. The First Board of Appeal and the General Court both dismissed appeals from ACS seeking to overturn the decision.

The CJEU decision dealt with certain issues regarding Lion’s evidence of genuine use that did little more than show desperation on ACS’s part. However, of importance was ACS’s request to have the proceedings stayed because of Brexit. ACS argued that, at the time the General Court handed down its judgment, the United Kingdom had given notice under Article 50 of the Lisbon Treaty of its intention to leave the European Union. ACS sought to persuade the CJEU that, as a matter of public policy, the proceedings should be stayed pending the United Kingdom’s withdrawal from the European Union. Lion Laboratories relied on a UK registration only and this would cease to be relevant to the EU trademark cancellation proceedings.

The CJEU rejected this argument, declaring that it would be contrary to case law to hold that the General Court was required to stay proceedings pending the withdrawal of the United Kingdom from the European Union on the – at that stage purely hypothetical – ground that the withdrawal would retrospectively affect the outcome of invalidity proceedings based on UK trademarks.

The CJEU noted that it was not the case that EU law would cease to apply from the date of the triggering of Article 50 of the Lisbon Treaty, but from the date of the United Kingdom’s actual withdrawal from the European Union.

It is unsurprising that parties to EU trademark proceedings involving UK trademark rights would consider that a stay might be appropriate. Given the status of Brexit, the CJEU’s decision here appears to be correct, although many European trademark practitioners will have some sympathy for ACS’s attempt to seek a stay on proceedings.

If a final date for Brexit (including any transition period) is agreed and as the day when the United Kingdom actually leaves the European Union approaches, it will not be unreasonable for owners of EU trademark applications (or registrations) challenged on the basis of UK trademark rights to feel that it is not sensible for the EUIPO and the EU courts to require the parties to allocate time and resources to proceedings that will terminate at the date of Brexit. Given this decision of the CJEU, it appears that stays will not be available even if common sense suggests that a stay would be appropriate.

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