Supreme Court considers anti-suit injunctions based on coexistence agreements

Switzerland

The Supreme Court has issued its decision in a dispute between Swatch AG, the proprietor of the trademark SWATCH, and TKS sa (Belgium), the proprietor of the (newer) trademark ICE-WATCH (4A_589/2011, April 3 2012).

The parties had concluded a coexistence agreement according to which Swatch consented to the use and registration of the mark ICE-WATCH by TKS under certain conditions.

Swatch later alleged that TKS was in breach of its contractual obligations under the coexistence agreement, resigned from the agreement and filed oppositions against several of TKS' ICE WATCH applications. TKS claimed that:

  • the termination was null and void;
  • the coexistence agreement was binding; and
  • therefore, Swatch had broken its consent not to oppose TKS' applications provided that they conformed to the specifications of the coexistence agreement (which was the case, according to TKS).

TKS filed suit against Swatch before the Commercial Court of Berne, asking, among other things, that Swatch be enjoined from filing oppositions against TKS' ICE WATCH marks. Swatch argued, among other things, that this would amount to an anti-suit injunction in the sense of Turner v Grovit (Case C-159/02). The Commercial Court did not agree, and Swatch appealed to the Supreme Court.

The Supreme Court, in a carefully argued and lengthy decision, agreed with the Commercial Court on this issue.

The Supreme Court noted that, in this case, the prohibition to file oppositions was based on substantive law - that is, it was based on Swatch's contractual obligations (the lower court having found that the termination was void). It was not comparable to a purely procedural anti-suit injunction. The fact that anti-suit injunctions are illegal under the Brussels Convention/Lugano Convention does not prevent the courts from issuing such injunctions in order to enforce contractual obligations.

This decision is not surprising, but is a relief for anybody who has ever drafted a coexistence agreement under Swiss law. Many coexistence agreements contain 'anti-suit' provisions in the sense that X shall not oppose trademark applications by Y, provided that Y conforms to certain conditions. If these provisions were unenforceable in practice, it would be a significant problem. Luckily, the Supreme Court decided otherwise.

Mark Schweizer, Meyerlustenberger Lachenal, Zurich 

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