ECJ ruling on banking secrecy is good news - but not a ground-breaking victory

The Court of Justice of the European Union has issued its decision in Coty Germany GmbH v Stadtsparkasse Magdeburg (Case C-580/13), which explores the limits of banking secrecy within the context of the right to information under Article 8(3)(e) of the IP Rights Enforcement Directive (2004/48/EC). In a move that will be welcomed by brand owners struggling to find the source of counterfeit products, the ECJ ruled that Article 8(3)(e) precluded a national rule that allowed banks to invoke banking secrecy unconditionally to reject requests for information. However, as one commentator told Word Trademark Review (WTR), this does not mean that rights holders’ interests trump data protection or banking secrecy laws per se.

In the underlying case, Coty Germany held an exclusive licence for the Community trademark DAVIDOFF HOT WATER for perfumes. In 2011 Coty purchased a bottle of perfume bearing that mark on an Internet auction platform, paying the corresponding price into the seller’s bank account, which had been opened with the Stadtsparkasse Magdeburg, a banking institution.

After becoming aware that it had purchased a counterfeit product, Coty contacted the Stadtsparkasse to ask, under Paragraph 19(2) of the Markengesetz (the German trademark law), for the name and address of the holder of the bank account. The Stadtsparkasse refused, invoking banking secrecy.

Coty brought an action before the Regional Court, Magdeburg, which ordered the Stadtsparkasse to provide the information requested. However, on appeal the Higher Regional Court, Naumburg, held that the request for information was not justified under the Markengesetz. The court considered that, although the services provided by the Stadtsparkasse had been used to carry out the infringing activity, the banking institution was entitled to refuse to give evidence in civil proceedings.

Coty appealed to the Federal Court of Justice, which decided to stay the proceedings and to refer the following question to the ECJ for a preliminary ruling:

Must Article 8(3)(e) of Directive 2004/48 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?

Yesterday afternoon the ECJ replied affirmatively, stating that Article 8(3)(e) must be interpreted as precluding a national provision allowing, “in an unlimited and unconditional manner”, a banking institution to invoke banking secrecy in order to refuse to provide such information.

While this seems like good news for IP rights owners, Gareth Dickson, of Cooley (UK) LLP, qualifies the decision: “The ECJ rarely delivers truly blockbusting judgments, and on closer inspection, it hasn’t done so in Coty, either”, he told WTR. “What the ECJ has said is that national laws which absolutely prevent a rights holder from gaining information necessary to exercise a fundamental right guaranteed under the Charter of Fundamental Rights, including the right to an effective remedy for IP infringement, are a serious infringement on that fundamental right and are therefore contrary to EU law. Importantly, however, it says that Germany’s banking secrecies laws are unlawful because they give priority to data protection rights over rights holders’ interests without any requirement to take account of the factors mandated by the IP Enforcement Directive.”

Therefore, as Dickson points out, the decision does not imply that rights holders’ interests trump data protection or banking secrecy laws per se: “The ECJ has not said that banks must now disclose information to rights holders, nor even that banking secrecy laws cannot ever prevent the disclosure of personal data to rights holders: all it has said is that national laws must strike a fair balance between opposing fundamental rights in light of the specific characteristics of each IP right and, where appropriate, the intentional or unintentional character of the infringement. It is not a foregone conclusion that any national law which meets these requirements will result in personal data always being disclosed to a rights holder.”

Dickson predicts that it is likely that Germany’s banking secrecy law “will have to be disapplied by a German court and eventually replaced by a law which strikes the right balance between the protection of personal data and the enforcement of IP rights”. In the meantime, “it remains to be seen whether banks and others called upon to disclose contact information of alleged infringers will be able to rely on any alternative laws, in particular those transposing the Data Protection Directive, to avoid disclosing that data”.

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