Case C-172/18 AMS Neve Ltd & Others v Heritage Audio S.L. & Others
The case involves a recent Court of Appeal reference to the CJEU on the question of jurisdiction for infringement actions. It involved two manufactures of audio equipment. The first, AMS Neve Ltd, is a UK-based producer of very high end audio equipment used in professional recording studios. The other is Heritage Audio S.L., based in Spain.
One of Neve’s signature models is the ‘1073 microphone pre-amplifier’, first introduced in 1970. Heritage Audio produced a replica product, branded with ‘1073’ and described as follows:
“We introduce what, to our knowledge, is the most historically accurate reproduction ever made. Using the same components, specifications and equally important, same time consuming construction techniques, our 1073 looks and sounds as good as a Rupert Neve era 1073 module and will last as long”.
Neve issued proceedings at the IPEC for infringement of an EU trade mark registration, two UK national trade mark registrations, and a claim for passing-off.
Heritage challenged the jurisdiction of the English courts to hear the claim. At issue was whether the English court had jurisdiction to hear the claims for EU and national trade mark infringement and for passing-off where the defendant was established in Spain and where all of the actions of the defendant at issue had occurred in Spain, albeit with the effect of targeting UK customers.
Evidence was given that Heritage’s website (a) indicated that the products could be bought from a UK distributor, and (b) suggested also that direct orders could be placed on the website of Heritage Audio from anywhere in the EU, and that Heritage would ship products using UPS or FedEx. Additionally, Neve’s solicitor gave evidence of a conversation with the identified UK distributor who told her that orders taken by the distributor would be placed with Heritage and the goods would be built to order and shipped to the UK.
The jurisdiction rules
The rules on jurisdiction for national TMs are governed by the Brussels I Regulation (‘Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’). The rules for EUTMs are governed by the EU Trade Mark Regulation.
Both rule sets confirm that the primary position is that jurisdiction in infringement matters is given to the defendant’s home courts. However, both provide differing exceptions in relation to allowing another country’s courts to hear an infringement action. In particular, Article 7(2) of the Brussels regulation allows a much wider scope for an action to be heard elsewhere. An action for infringement of a national TM registration can also be heard in the ‘place where the harmful event occurred or may occur’, which can include the place where the defendant’s actions occurred, or the place where the damaging effects are felt. It is left to the national court of the country where the right exists to decide whether damaging effects have been felt there, and whether an act occurred that constitutes infringement. In this case, the act complained of was an offer for sale in England, namely, that the defendant’s website was not merely accessible from the UK, but was in fact targeted at UK customers (among others).
The rules governing EU trade mark infringement rules are different. Jurisdiction for a foreign (to the defendant) court is not based on the territory where ‘the harmful event occurred’ but is rather confined to ‘the Member State in which the act of infringement has been committed or threatened’ as stated in Article 97(5) [now Art. 125(5)] of the Trade Mark Regulation.
The decision at first instance (IPEC)
In relation to the UK national marks (and the action for passing off) HHJ Hacon held that the event giving rise to damage in this case was the offer for sale in the UK, (on the principles confirmed in L’Oreal v eBay International AG (C-324/09)) as Heritage’s website was held to be targeted at UK customers, as it stated that Heritage would ship to the UK and it had a UK distributor. As such, the event giving rise to damage was also in the UK, and therefore IPEC had jurisdiction.
In relation to the EUTM marks, the judge noted that the EU Trade Mark Regulation sets down rules explicitly acknowledged to be different from the Brussels I rules. He also referenced the CJEU decision in Coty Germany GmbH v Parfümerie Akzente GmbH (C‑230/16) where it was found that Article 97(5) EUTMR conferred jurisdiction solely on the courts in the Member State in which the defendant committed the relevant wrongful acts.
Applying Coty, HHJ Hacon held that the offer for sale in the UK was with respect to both UK and EU trade marks, but the necessary active conduct by Heritage (resulting in the infringement) was the placing of the offending signs on the website targeted at UK consumers; this, or the decision to do so, had taken place in Spain. In the judge’s view, the CJEU had made a “clear distinction” in Coty between this activity and the fact that the website was accessible in the UK. Since Heritage Audio’s active conduct – i.e. the actions of putting the sign on the website that subsequently resulted in the website being targeted at UK customers – occurred in Spain, and this was also where Heritage is established and domiciled, there was no jurisdiction for an English court to hear the action for infringement of the EUTM.
Neve appealed this part of the decision.
The Court of Appeal decision
Overall, the Court of Appeal was not entirely convinced by HHJ Hacon’s reasoning in the initial decision. Lord Justice Kitchin confirmed that he thought it strongly arguable that the act complained of – the offering for sale to UK consumers via the Heritage website – did constitute an infringing act happening in the UK, and therefore that the IPEC did have jurisdiction in relation to the EUTM registrations also.
Lord Justice Kitchin noted that HHJ Hacon’s decision found that it was necessary to draw a distinction between, on the one hand, the place where steps were taken to put a sign on a website (or the taking of a decision to that effect) and, on the other hand, the place where the sign was displayed on the website, and finding that only the courts of the former had jurisdiction. LJ Kitchin cast some doubt upon this approach:
“I believe the decisions of the Court of Justice in Pammer and L’Oréal provide support for the conclusion that the advertisement and offer for sale of goods bearing a sign identical to a registered EU trade mark through an online marketplace targeted at consumers in a Member State constitutes use of the sign in that Member State within the scope of Article 9 and active conduct within the meaning of Article 97(5) of that regulation in that territory.”
LJ Kitchin also distinguished Coty, considering it a “very different case”. In particular: “In that case there was no such activity for the defendant had done nothing in Germany. By contrast, the claimants in the present case say that requirement is amply satisfied for the judge has found that they have a good arguable case that the defendants have advertised and offered for sale the allegedly infringing products in the UK.“
However, in addition to Coty, Heritage referred to then very recent CJEU decision in a registered designs case, Nintendo v Big Ben Interactive (C-24/16 & C-25/16). LJ Kitchin considered that although this case could be distinguished from the present one, it could be said to provide “powerful support” for, in effect, the conclusion that HHJ Hacon had reached – i.e. that the placing by an undertaking in Member State A of an advertisement on a website targeted at consumers in Member State B is not sufficient to confer jurisdiction on an EU trade mark court in Member State B. However, he also considered that there were significant reasons why such a conclusion may not be correct. In particular, the earlier CJEU decisions in Pammer and L’Oréal providing support for the ‘use’ and ‘active conduct’ points, as discussed above, and furthermore, he also considered that a conclusion based on the Nintendo decision could in fact result in a situation whereby neither court had jurisdiction:
“Where a defendant in Member State A has targeted an advertisement at consumers in Member State B and has in that way used a sign identical with an EU trade mark in Member State B, jurisdiction is only conferred by Article 97(5) on the courts of Member State A as the territory in which the defendant activated the process of publishing the advertisement, it would seem that neither the courts of Member State A nor those of Member State B would have jurisdiction under that provision. The courts of Member State B would not have jurisdiction because the process of publishing the advertisement was activated in Member State A; and the courts of Member State A would not have jurisdiction because the infringement took place not there but in Member State B. It may be thought this is a result which the EU legislature cannot have intended.”
Noting that there was no ruling on this specific point by the CJEU to date, LJ Kitchin referred the following questions to the CJEU:
Does an EU trade mark court in Member State B have jurisdiction to hear a claim for infringement of the EU trade mark in respect of the advertisement and offer for sale of the goods in that territory?
- If not, which other criteria are to be taken into account by that EU trade mark court in determining whether it has jurisdiction to hear that claim?
- In so far as the answer to 2. requires that EU trade mark court to identify whether the undertaking has taken active steps in Member State B, which criteria are to be taken into account in determining whether the undertaking has taken such active steps?
HHJ Hacon’s original decision has been the subject of some debate since it issued in 2016, and the judge expressed some regret himself at the decision he felt obliged to reach, noting that it would invariably lead to procedural inefficiency.
The Court of Appeal decision, if followed by the CJEU, would seem to offer a more pragmatic solution, and one which avoids a situation whereby actions arising from the same alleged online infringements have to be tried in two different countries, simply on the basis that both national and EU trade marks are invoked. This is both costly, and creates uncertainty for rights holders looking to challenge online infringements that cross Member States, particularly in situations where the only rights the claimant is relying upon are EUTMs and/or the claimant is seeking a pan-European injunction. Given also the increased proliferation of cross-border internet sales in the modern marketplace, this is likely to be a live issue for a number of manufacturers.
Rights holders will no doubt await the CJEU’s decision with interest.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.