The Court of Justice of the EU has ruled on an interesting but unusual question, namely: can an EU trade mark court rule on the validity of a trade mark in a counterclaim, even if the action for infringement is withdrawn?
The question arose in a case in Germany concerning an EU trade mark for Apfelzügle for services in classes 35, 41 and 43. The proprietor of the mark, KP, brought an infringement action against TV, which operates a fruit farm, and the Municipality of Bodman-Ludwigshafen.
The word Apfelzügle denotes a vehicle for harvesting apples in German, and the defendants filed a counterclaim for a declaration of invalidity of the trade mark.
At the court hearing, KP withdrew his action, but the defendants pursued their counterclaim.
The Regional Court of Munich found the claims were admissible and declared the mark invalid for services in class 41. On appeal, the Higher Regional Court referred a question to the CJEU.
Responding to the question, in a judgment published on 13 October, the CJEU ruled that the EUTM Regulation “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”.
The judgment is Case C-256/21, KP v TV and Gemeinde Bodman-Ludwigshafen.
The Court’s decision was based on three reasons.
First, it said that a counterclaim “becomes independent of the main action and continues to exist in the event of withdrawal of the main action”. It is therefore different from “a mere defence”.
Secondly, it noted that both the EUIPO and EU trade mark courts both have jurisdiction to rule on the validity of EU trade marks. If the proprietor of an EUTM could deprive an EU trade mark court of the possibility of ruling on a counterclaim for invalidity purely by withdrawing their infringement action, then the Court said the scope of the jurisdiction conferred on EU trade mark courts “would effectively be disregarded”.
Thirdly, an EU trade mark court must be able to rule on a counterclaim for invalidity to achieve the objectives of avoiding unnecessary proceedings and the risk of contradictory judgments. The alternative (i.e. compelling the party to initiate proceedings before EUIPO) “would run counter to the principle of procedural economy” and could allow the trade mark proprietor 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”.
Avoid unnecessary risks
The Court’s well-reasoned decision is sensible and practical and should help to avoid duplicate proceedings in cases concerning EUTMs.
From a strategic point of view, this ruling makes it even more important to fully review the facts and arguments in your case before bringing an infringement action. Failing to do so could mean that your trade mark becomes a target even if your infringement claim sinks.
If you are considering bringing a trade mark infringement action, we can support you by reviewing all the relevant circumstances and help to avoid any unnecessary risks.