This article was originally written for and featured in Fresh Business Thinking.
Where and when you bring a claim for infringement of intellectual property (IP) rights can give you an advantage from the beginning. No-one likes to play away from home, in what may not be your native language and different jurisdictions across Europe run at very different paces. When dealing with European IP rights, such as trade marks and designs, then strategy will be important.
The rules on European jurisdiction have been fashioned to ensure that the potential for parallel proceedings and conflicting judgments across the European Union is minimised, if not removed altogether. Generally speaking once one Community Court has been seised (legal speak for having accepted a case) then all proceedings regarding that action must be brought in front of that Community Court. A litigating party ignores this at its peril. For example, in the recent Judgment of the English Court of Appeal in the Samsung v Apple tablet wars, the English Judges anger at Apple’s decision to bring infringement proceedings in Germany, although infringement proceedings were already underway in the English High Court at the same time was apparent.
The European Regulations on registered designs and trade marks both contain specific provisions in relation to jurisdiction, which are similar in form.
The general position is:
Defendant plays at home
As is usual under EU jurisdiction, if the Defendant has its domicile (broadly its registered office) within the EU then it should be sued in that jurisdiction. For instance, an English limited company should be sued in the English Courts.
Defendant plays away
If the Defendant does not have any presence in an EU member state then the location and domicile of the Claimant comes into play. For example, if the Defendant is a Korean based company with no subsidiaries within the EU then a Claimant based in France could sue this Defendant in France for infringement of its Community Trade Mark.
Neither party’s in the European Union
If neither Claimant or Defendant have any presence in any EU member state then any action should be brought in the Spanish Courts (where the Office for Harmonisation of the Internal Market is based), although such a situation is fairly unlikely to arise.
However, a jurisdiction can be agreed by the parties or, alternatively, if one party is served with proceedings and takes steps in those proceedings then it will be deemed to have agreed that the Court in that member state has jurisdiction. If you think an action has been brought in the wrong place then you should say so quickly and at the start of an action or may be left regretting that you didn’t!
A third way?
Any actions brought as set out above will be pan European and deal with all acts of infringement committed or threatened within the European Union. However, even if your Defendant is based in the EU, it is possible to bring an action in your home member state or another member state where the Defendant is not based, provided you can show that an infringement has been committed or threatened in that member state.
In these circumstances, any action will only relate to those infringements and will not have pan European effect. So you can have a French Defendant that is selling infringing products across the EU, you can sue it in England, however, any English Judgment would have no effect outside of the country. This could be an acceptable way forward if the sales of an infringing product are located mainly in one member state. Alternatively, even if the sales are minimal in your home member state, you may be able to press the infringer for a compromise, if they are locked into proceedings outside of their home member state. However, this must be balanced against the potential cost of pursuing an infringer, when you know the action will not address the full, or even a substantial part of the problem. Further, even if you do get a Judgment (large or small), if the Defendant is based in a different member state, you will still need to get that Judgment recognised and enforced. Of course, an injunction, even if limited to one member state, may, in the right circumstances, be worth the trouble.
One way to wrong foot a party claiming infringement against you may be to file an invalidity action with OHIM. If an application for invalidity is filed at OHIM, then other than an action for a declaration of non-infringement, no other Community Court will be able to consider the matter until OHIM has reached a decision unless “special grounds” exist. This can have a critical impact, given that OHIM is currently taking between 2-3 years to consider applications (without even factoring in appeals) and there is no procedure for expediting decisions.
In the English Courts this has been a fruitful source of litigation, with the Samsung v Apple case (which was for a declaration of non-infringement) and the Sky cases regarding Now Tv all considering what represented “special grounds”. If the issue of validity is already before OHIM then a national Court can stay proceedings and make protective orders. However, for example in the English Courts, even if they are prepared to grant an interim injunction pending the decision of OHIM, a Claimant is unlikely to want to give a cross undertaking to cover all damages suffered by the Defendant in the intervening 2 — 10 years if it is shown that the injunction was wrongly granted.
However, while this approach can succeed in gunging a potential claim up, it does transform you from being the hunted into the hunter, with all the associated costs and obligations to push the action forward. Ultimately, as a Defendant you rarely want to be involved in litigation in the first place so may want to sit back and see what a Claimant threatening action will do rather than jumping in headfirst. But this is fact dependent and if costly litigation is almost inevitable (see Samsung v Apple) then you may want to go for it anyway, although Sky did come in for criticism when it took this approach in the Now Tv case. Also, if the national Court can see your tactics then it may assist the counterparty in showing “special grounds”.
The key point with jurisdiction is to think first, jump later. Once you take steps you cannot step back. Each matter will be different and sometimes you are stuck with what you have got but sometimes there are options which can make life easier for you and hell for some one else.