23 October 2017Trademarks

Invalidity, then infringement, says CJEU

Europe’s most senior court has said complaints for trademark infringement can be resolved only after counterclaims based on absolute grounds have been upheld.

In its ruling on Thursday, October 19, the Court of Justice of the European Union (CJEU) added that national courts can go on to dismiss the case even though the decision on that counterclaim might not be final.

The court was ruling on a dispute referred by the Oberster Gerichtshof, Austria’s Supreme Court, dealing with a trademark battle between two individuals who sell herbal products that are added to alcohol.

Hansruedi Raimund had sued Michaela Aigner for infringing his EU trademark for ‘Baucherlwärmer’, a name she had adopted for her products.

After Raimund sued in the Handelsgericht Wien (Vienna’s Commercial Court), Aigner sought to invalidate the mark because it had been filed in bad faith. The court agreed with Aigner and dismissed the infringement case.

Vienna’s Higher Regional Court, the Oberlandesgericht Wien, then upheld the judgment, before Raimund appealed to the Supreme Court. He questioned whether the two lower courts were allowed to rule on bad faith despite there being no final decision on the counterclaim for invalidity.

According to the CJEU, the Supreme Court stated that the success or failure of Raimund’s action for infringement depends solely on the invalidity plea. Therefore, the referring court proposed that an infringement action may be dismissed because of invalidity “only if, at least simultaneously, the counterclaim brought on the same ground is upheld”.

“It considers that the mere bringing of such a counterclaim should not be sufficient but that, on the other hand, it should not be necessary to wait for the decision on the counterclaim to become final.”

The Supreme Court therefore asked two questions, the first querying whether an infringement proceeding can be dismissed following a counterclaim based on bad faith, even though the court has not yet ruled on that counterclaim.

The CJEU answered this with a ‘no’, ruling that the counterclaim based on absolute grounds for invalidity must be adjudicated first.

With its second question the Supreme Court asked whether, if the first answer is ‘no’, the court can dismiss an action for infringement based on an objection citing bad faith, “if the court at least simultaneously upholds the counterclaim for a declaration of invalidity”.

“Or must the court delay the decision on the action for infringement in any event until the decision on the counterclaim is res judicata?” it asked.

Addressing the second question, the CJEU said that despite a court’s having to rule on invalidity first, “linking the outcome of the proceedings relating to the infringement action to the conduct of the parties in relation to the appeals against the decision upholding the counterclaim for a declaration of invalidity would in all likelihood involve serious delays to those proceedings”.

“The possibility that one of the parties may seek, through successive appeals, to delay the definitive effect of court decisions cannot therefore prevail over the court’s obligation to determine the dispute brought before it,” it added.

Therefore, the CJEU said, national courts should not be prevented from dismissing infringement complaints despite the counterclaim for invalidity not being final.

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