ECJ clarifies territorial effect of sanctions

European Union
In DHL Express France SAS v Chronopost SA (Case C-235/09, April 12 2011), responding to a reference from the French Cour de Cassation, the Court of Justice of the European Union (ECJ) has clarified the territorial scope of injunctions and the coercive measures used to enforce such injunctions for infringement of a Community trademark (CTM).
The Community Trademark Regulation (40/94 at the time of the dispute, and now amended and codified in Regulation 207/2009) provides the legal basis for the CTM - an IP right which enables undertakings to file an application to register a single trademark covering all 27 jurisdictions of the European Union. At the heart of the apparent success of the CTM system lies the principle set down at Article 1(2) of the regulation, which states as follows:
"A Community trademark shall have a unitary character. It shall have equal effect throughout the Community: it shall not be registered, transferred or surrendered or be the subject of a decision revoking the rights of the proprietor or declaring it invalid, nor shall its use be prohibited, save in respect of the whole Community. This principle shall apply unless otherwise provided in this regulation".
This"unitary principle" - reinforced by the recitals to, and other provisions of, the regulation - thus requires the rights attached to a CTM to apply equally across the European Union.
In the present case, Chronopost SA attacked the validity of an injunction imposed on DHL Express France SAS by the French Cour d'Appel for infringement of Chronopost's CTM WEBSHIPPING on the basis that, because the injunction covered only France, it did not comply with the unitary principle. The Cour de Cassation subsequently referred this issue to the ECJ (for further details please see “Questions referred to ECJ as to scope of prohibition measures”).
The ECJ set out the legislation relevant to interpreting the questions referred to it, and emphasised, in particular:
  • the unitary principle under the regulation; and
  • that the effects of decisions regarding validity and infringement must cover the whole of the European Union.
The ECJ concluded that:
"the scope of the prohibition against further infringement or threatened infringement of a Community trademark, issued by a Community trademark court… extends, as a rule, to the entire area of the European Union."
Questions of how this might work in practice have already been considered at the High Court of England and Wales in a hearing on April 14 2011 in Kingspan v Rockwool regarding the form of declaration and relief to be ordered following the decision on February 24 2011. The court imposed an injunction covering only the United Kingdom and Ireland, although Rockwool had also undertaken not to infringe Kingspan's trademarks in the remainder of the European Union. The decision suggests that the English courts, at least, are prepared to adopt a pragmatic approach (for further details please see “Comparative advertising decision opens the door to civil remedies”).
The ECJ, however, recognised that, in some situations, it might not be practical for an injunction to cover the whole of the territory of the European Union. The court suggested circumstances in which the territorial scope of an injunction may be restricted, including:
  • where a claimant in some way limits the extent of its action; and
  • where there are differing conceptual or linguistic interpretations in determining confusion under Article 9(1)(b).
It will be interesting to see if similar arguments will be made in respect of Article 9(1)(c) regarding a CTM with a reputation, where that reputation does not cover the whole of the European Union. A defendant will need to present evidence to limit the territorial scope of the injunction at the time it is being granted, rather than following the breach of its terms.
The ECJ also considered questions referred to it about the territorial scope of "coercive measures" which may be imposed by a national court (acting as CTM court) to enforce compliance with injunctions. It noted the provisions of Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters and, in particular, the requirement of the courts of another member state to recognise and enforce any coercive measures ordered by the court of the member state seised of the relevant action. The ECJ decided as follows:
"…Where the national law of one of those other member states does not contain a coercive measure similar to that ordered by the Community trademark court, the objective pursued by that measure must be attained by the competent court of that other member state by having recourse to the relevant provisions of its national law which are such as to ensure that the prohibition is complied with in an equivalent manner."
The key points to bear in mind are as follows:
  • Injunctions prohibiting the infringement of a CTM which have been ordered in one jurisdiction will generally extend automatically across the whole of the European Union;
  • Litigants in CTM infringement proceedings should consider carefully the arguments for limiting the scope of an injunction and the evidence adduced in support of those arguments, for example in relation to confusion; and
  • Businesses may find themselves the subject of coercive measures imposed by the courts of other member states.
The question that arises in the United Kingdom is how an English court, which has no power to order "coercive measures" of the sort ordered by the Cour d'Appel in DHL v Chronopost (ie, periodic penalty payments), could "ensure that the prohibition is complied with in an equivalent manner". It seems most likely that contempt proceedings would result in the English courts imposing fines for a failure to comply with the terms of an injunction imposed by a foreign CTM court.
Joel Smith and Julian Gauld, Herbert Smith LLP, London

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