By means of a recent decision of October 13th, 2022, the Court of Justice of the European Union (CJEU) has answered the question on whether an EU trademark court hearing an action for infringement based on an EU trademark – the validity of which is challenged by means of a counterclaim for a declaration of invalidity – still has jurisdiction to rule on the validity of that mark, in spite of the withdrawal of the main action.
The company KP (KP) is the owner of the EU word trademark ‘Apfelzügle' registered on October 19th, 2017, for goods and services in Classes 35, 41 and 43 and denoting a vehicle designed for the harvesting of apples, consisting of several trailers pulled by a tractor. On September 2018, TV, a fruit farm operator (TV), and the Municipality of Bodman-Ludwigshafen (MBL) published a promotion concerning an activity involving the harvesting and tasting of apples as part of a ride on the ‘Apfelzügle'.
KP brought an action for infringement before the Landgericht München (Regional Court, Munich, Germany), seeking an order barring TV and MBL from using the term ‘Apfelzügle' for the services covered by that mark. TV and MBL filed counterclaims for a declaration of invalidity, pursuant to Article 59(1)(a) of Regulation 2017/1001 (EUTMR), read in conjunction with Article 7(1)(b), (c) and (d) thereof.
In the course of those proceedings, KP withdrew its action for infringement, while TV and MBL continued in pursuing the counterclaims. Eventually, the Regional Court Munich held that those claims were admissible, hence declaring KP's mark invalid in respect of the services in Class 41. On appeal, the Oberlandesgericht München (Higher Regional Court, Munich, Germany) decided to stay the proceedings and refer the above question to the CJEU for a preliminary ruling.
In its decision, the CJUE based itself, first, on settled case-law on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, pursuant to which a counterclaim, although brought in proceedings initiated by means of another legal remedy, shall be deemed as ‘a separate and self-standing claim' (par. 38), to the point that it can be distinguished from a ‘mere defence' and its outcome ‘does not depend on that of the action for infringement on the occasion of which it was brought' (par. 40).
Secondly, the Court observed that jurisdiction on invalidity or revocation of an EU trademark (EUTM) is shared, pursuant to Articles 63 and 124 EUTMR, between the EU trademark courts designated by the Member States and EUIPO – European Union Intellectual Property Office. Given the above, in connection with the so-called ‘priority' principle, the Court observed that, if it were the case that the owner of an EUTM could deprive an EU trademark court of the possibility of ruling on a counterclaim for invalidity purely by withdrawing their infringement action, the scope of the jurisdiction conferred on EU trademark courts ‘would effectively be disregarded' (par. 52).
Thirdly, the CJEU relied upon its previous case-law in order to stress that, to the avoidance of unnecessary multiple proceedings and the subsequent risk of contradictory judgments, compelling the party who filed a counterclaim to initiate proceedings before EUIPO in the event of withdrawal by the principal ‘would run counter to the principle of procedural economy' (par. 56). In addition, the Court outlined that depriving the EU trade mark Court – in the event of withdrawal of the main action – of the possibility to give judgment on a counterclaim for a declaration of invalidity would allow the proprietor of an EU trade mark ‘to continue to use, as the case may be in bad faith, an EU trade mark that could be registered in disregard of the absolute grounds for refusal of registration referred to in Article 7(1) of Regulation 2017/1001' (par. 57).
On those grounds, the CJEU answered the question referred by ruling that ‘Article 124(a) and (d) and Article 128 of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark, must be interpreted as meaning that an EU trade mark court hearing an action for infringement based on an EU trade mark the validity of which is challenged by means of a counterclaim for a declaration of invalidity still has jurisdiction to rule on the validity of that mark, in spite of the withdrawal of the main action'.
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