The ability to stop infringers across the EU with just one action is one of the most attractive features of the CTM system. Not so fast, though, with those writs. A recent ECJ judgment suggests that infringers may have more room than previously thought to argue that the geographical scope of injunctions based on CTMs should be limited. While in most cases the initial balance will still favour a pan-EU injunction, the ruling in DHL Express France SAS v Chronopost SA (C-235/09) has created a new battleground on the scope of the relief that is ultimately granted.
The ruling arose from a reference made by the French Cour de Cassation in a CTM infringement claim brought by Chronopost against its competitor in the international shipping business, DHL.
Chronopost, proprietor of French and CTM registrations for WEBSHIPPING for logistics and mail services, had sued DHL for infringement over the latter's use of an identical mark in respect of shipping services accessible via the Internet. Although Chronopost won the action, injunctive relief was granted only for France, leaving DHL free to continue use of WEBSHIPPING elsewhere in the EU.
On appeal, Chronopost argued that the injunction should have extended automatically to the whole of the EU. The case was referred to the ECJ for guidance.
One Important Exception
The ECJ was receptive to Chronopost's submissions, but it made an important exception.
The Court noted that under Article 93 CTMR, CTM courts have jurisdiction over acts or threatened acts of infringement in any EU country. It also acknowledged that CTM proprietors enjoy exclusive rights extending across the whole of the EU, and that CTMs are intended to have a unitary character. Consequently, one objective of the CTMR was to ensure the uniform protection of CTMs against infringements throughout the entirety of the EU.
Taking all this into account, the Court held that as a general rule, injunctions granted by CTM courts must be taken as extending automatically to the whole of the EU. Any other outcome would mean that CTM owners would have to bring multiple actions against the same infringer in various EU jurisdictions, thus raising costs and creating a risk of inconsistent decisions.
The exception laid down by the Court, however, was this: although the presumption must always be in favour of a pan-EU injunction where the action was brought in the member state where the defendant or claimant had its domicile, or in Spain where OHIM is based, nonetheless a court might restrict the relief to one or more specific member states if the use complained of in other member states would not affect the essential origin-indicating function of the mark there, such that an injunction in those countries would not be justified. The Court did not give any examples of cases where a geographically restricted injunction might be appropriate, but noted that linguistic reasons might provide a suitable justification.
The Court went on to consider the issue of coercive measures designed to penalise the breach of injunctions, holding that the possible unavailability of identical measures in other EU countries, such as financial penalties arising on breach of an injunction, did not justify restricting such penalties to the territory of the court granting the order. On the contrary, an order for coercive measures should, as a rule, cover the same territory as the injunction, and the courts of member states without corresponding coercive measures in their national laws were obliged to adopt appropriate measures under their national laws with the aim of meeting the same objective-namely, to penalise and thus discourage future acts of infringement in those territories.
In reality, Chronopost's appeal may have been largely academic. The nature of DHL's shipping business is international and the inability to offer and advertise its services under the WEBSHIPPING brand in a market as large as France will no doubt have prompted it to think very carefully about re-branding across the EU.
Nonetheless, the appeal in this case served an essential purpose in confirming that CTM owners are in general entitled to pan-EU injunctions when suing in a jurisdiction for which the geographical scope of the relief is not expressly limited in the CTMR (essentially, this happens only if the action is brought in the country of the infringement, where neither the defendant nor the claimant is based there). The point had not been contested at ECJ level before and this confirmation of the nature and value of CTM rights in enforcement matters is important.
Far from putting the issue to bed, however, the ruling in DHL v Chronopost has unleashed a new sub-category of disputes that is likely to run and run. In particular, defendants to CTM infringement claims are now likely de rigueur to hotly contest any claim that an injunction before any CTM court should extend beyond that court's own national boundaries. Where word marks are concerned, linguistic issues are likely to become the primary battleground, with defendants arguing that infringing marks would not in fact infringe in other EU markets, either because they would be understood descriptively there or because specific local market conditions (eg the channels through which goods are sold or services are offered) would remove the risk of confusion.
What some may regard as the most compelling ground for restricting the scope of an injunction, however, is likely under the current law to get short shrift. In particular, the mere fact that a claimant has only ever used its CTM in one EU market and shows no commercial intention ever to expand will not deprive it of the right to an automatic pan-EU injunction as the law stands. Moreover, until the EU hands down its ruling in ONEL on whether use in a single EU country is sufficient to maintain a CTM, infringers who feel hard done-by as a result of arguably overly-broad injunctions will have little recourse.
This autumn may well see proposals from the Commission to clarify the position on use, which are likely to be welcomed by most provided they are clear and not unduly complex. However, the Commission will have no reason to interfere with the ECJ's ruling in DHL v Chronopost, which offers a sensible brightline rule on injunctions that is consistent with the objectives of the CTM system.
Claimants suing for CTM infringement, therefore, should take note: pan-E.U. injunctions are not the done deal that many once assumed. While the ECJ has confirmed that pan-EU relief is the presumption, it has also carved out an important exception. Defendants now have reason to argue forcefully for the geographic restriction of relief, and can be expected to do so. Claimants must now be prepared to answer those arguments and to make the case for why relief should be as broad as their CTM rights.