Coty is major step for IP rights protection - but IP owners should not get 'over-excited'

European Union

On July 16 2015 the Court of Justice of the European Union (ECJ) delivered its decision in the matter of Coty Germany GmbH v Stadtsparkasse Magdeburg (Case C-580/13), which concerned a conflict between the right to [an effective remedy in relation to] the protection of property and the right to the protection of personal data. 

The ECJ held that national banking secrecy laws that allowed banks, in an unlimited and unconditional manner, to refuse to provide information (in the nature of personal data) which a rights owner required to protect its intellectual property, must be interpreted as being precluded by Article 8(3)(e) of the IP Rights Enforcement Directive (2004/48/EC). Consequently, such laws cannot be used to deny requests for information under the directive, which was enacted to ensure enforcement of IP rights.

The decision of the ECJ was in response to a reference for a preliminary ruling regarding the interpretation of the directive from the German Federal Court of Justice (Bundesgerichtshof), which was hearing a domestic appeal in this case. Coty, which held an exclusive licence for the Community trademark DAVIDOFF HOT WATER (CTM No 968661), had launched proceedings against Stadtsparkasse Magdeburg ('the bank') because of the latter's refusal to provide Coty with details of an account holder who had sold a counterfeit product bearing the abovementioned trademark.

Coty's claim for the information was based on the German legal provisions (Markengesetz, Article 19(2)) implementing Article 8(1)(c) of the directive, which provides courts with the authority to, at the request of a claimant, order the provision of information relevant to proceedings concerning infringement of IP rights. The bank refused to provide the relevant evidence, relying on the express exception stated in the German provision that allowed banks to refuse such requests as a result of the nature of their profession.

Coty argued that Article 8(3)(e) of the directive specifically states that the right to information in Article 8(1) is to apply without prejudice to any other statutory provisions governing the "protection of confidentiality of information sources or the processing of personal data" and, consequently, the German exception to the right to information had to be considered precluded. As this was a matter of interpretation of European law, the German court referred the question to the ECJ.

Following a strange challenge to admissibility by the bank, the ECJ first had to clarify that the directive applied in the context of proceedings relating to an obvious infringement of rights attached to a trademark. 

The question before the ECJ was fairly limited in the sense that there was only one legal issue to deal with:

"Must Article 8(3)(e) be interpreted as precluding a national provision which, in a case such as that in the main proceedings, allows a banking institution to refuse, by invoking banking secrecy, to provide information pursuant to Article 8(1)(c) of that directive concerning the name and address of an account holder?"

After reviewing the recitals and other background to the directive, including a provision that states that it shall not affect the substantive law on, among other things, data protection, the ECJ framed the reference as a matter of reconciling the right to an effective remedy in relation to the right to property (including intellectual property) against the right to the protection of personal data. Consequently, the court reviewed the principles relating to such a reconciliation as laid down in previous European cases, which were held to be as follows:

  1. Not only must national law be interpreted in a manner consistent with EU directives, but courts must also make sure that they do not rely on an interpretation of such directives which would be contrary to fundamental rights or other general principles of EU law.
  2. A measure which results in serious infringement of a right protected by the EU Charter of Fundamental Rights must be regarded as contravening the requirement that a fair balance be struck between fundamental rights when seeking to reconcile them.

The ECJ then noted that, while the directive does not recognise an autonomous right to information that Coty could use directly against the bank, it nevertheless imposed an obligation on EU member states to ensure that such information could be obtained through domestic courts. Since the German exception technically allowed for an unlimited and unconditional refusal to provide information, in itself, the German legal provision was liable to frustrate the right to information in the directive, thereby seriously infringing the fundamental right to an effective remedy and the fundamental right to intellectual property.

This meant that the operation of the German provision did not comply with the requirement to ensure a fair balance between different fundamental rights. Consequently, the ECJ held that Article 8(3)(e) of the directive had to be interpreted as precluding a national provision such as the one at issue (that is, one allowing unlimited and unconditional refusal to comply with Article 8(1)(c) of the directive).

The key takeaway from this case is that the ECJ is willing to afford IP rights robust and effective protection. The court recognised the protection of IP rights and effective remedies thereto as fundamental rights under the EU Charter of Fundamental Rights - while this was not a new holding laid down by the ECJ, the fact that this was expressly used as a cornerstone of the decision, and that the court was willing in practice to place these rights on the same pedestal as the right to protection of personal data, was a major step that will be appreciated by holders of IP rights.

However, it is important to note that the decision does not rank IP rights above data protection and banking secrecy laws in general. The raison d'etre of the decision lies in the fact that the German banking secrecy law allowed for unlimited and unconditional refusal to provide information, thereby entirely excluding an appreciation even of the right to information in the directive. A more nuanced domestic law would not fall foul of Article 8(3)(e), for example one which required a balancing test to be carried out by the domestic courts between data protection and the interest in the revelation of information.

A further reason to not get over-excited by the decision is a rather cryptic point raised in the penultimate paragraph of the decision, where the ECJ states that it is for the referring court to determine:

"whether there are, in the national law concerned, any other means or other remedies which would allow the competent judicial authorities to order that the necessary information concerning the identity of persons who are covered by Article 8(1) of Directive 2004/48 be provided."

The reasonable interpretation of this (despite not being set out in the judgment) is that, if some other German law allowed for the provision of the information at issue in this case, the court would not have reached the conclusion it did, as the existence of such a rule would mean that the right to effective remedy for protection of IP rights would not be frustrated. The ECJ's conclusion seems to be reliant on German law not providing an alternate remedy, yet it does not analyse or request an analysis from the referring court in relation to this.  This is no doubt something which the ECJ would expect a domestic court to do.  However, as a result, the ECJ decision applies to domestic laws taken in isolation such as the impugned German banking secrecy law, but could become irrelevant if alternative remedies exist in the relevant domestic law.

Mark Lubbock and Vakasha Sachdev, Ashurst LLP, London

Get unlimited access to all WTR content