Only 'European Union trade mark courts', specifically selected national courts, may rule on infringement actions based on EU trade marks. However, not all EU trade mark courts may grant EU-wide relief.
Whether or not a particular EU trade mark court has this comprehensive power depends on whether it can base its international jurisdiction on Article 97(1) to (4) of the EU Trade Mark Regulation (EUTMR). Only then will a European Union trade mark court have jurisdiction in respect of acts of infringement committed or threatened within the territory of any of the Member States.
The Advocate General has now rendered an opinion which is important when a potential applicant wishes to obtain EU-wide relief against a defendant not domiciled in a Member State and that applicant must determine which specific EU trade mark court can grant this relief.
More specifically, the Advocate General advised on the notion of 'establishment' in art. 97(1) EUTMR:
"1. Subject to the provisions of this Regulation as well as to any provisions of Regulation (EC) No 44/2001 applicable by virtue of Article 94, proceedings in respect of the actions and claims referred to in Article 96 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.
2. If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.
3. If neither the defendant nor the plaintiff is so domiciled or has such an establishment, such proceedings shall be brought in the courts of the Member State where the Office has its seat."
Conclusion of the Advocate General CJEU 17 January 2017, Câ617/15 (Hummel Holding A/S / Nike Inc., Nike Retail B.V.) â
A question was referred by the German Higher Regional Court, Düsseldorf, in a case where the Danish company Hummel Holding A/S brought a trade mark infringement claim against Nike Inc. (U.S.) and the Dutch entity Nike Retail B.V., which is part of the Nike group. Most of the infringements of the plaintiff's European Union trade mark are alleged to have taken place in Germany.
The plaintiff before the German court requested, inter alia, an injunction prohibiting the infringement. Against Nike Inc. (U.S.) the injunction was sought with regard to the territory of the EU. The presence of Nike Deutschland GmbH in Germany, which is not a party to the main proceedings, in the capacity of a second-tier subsidiary of the Nike Inc., is central to the plaintiff's case on the jurisdiction of the German courts.
The question arose when a legally distinct second-tier subsidiary (i.e., a subsidiary of a first-tier subsidiary/a "granddaughter" of the main parent company), with its seat in an EU Member State, of an undertaking that itself has no seat in the European Union can be considered an "establishment" as referred to in Article 97(1) EUTMR.
Centre of operations with the appearance of permanency
The Advocate General concluded that the notion 'establishment' under Article 97(1) EUTMR comprises: (i) centre of operations which, (ii) in the Member State where it is situated, has the appearance of permanency, such as an extension of the third State parent body. The Advocate General explained these characteristics as follows:
- Centre of operations: the establishment must have a management at a local level and be materially equipped to negotiate business with third parties, so that they do not have to deal directly with the parent body. Some operational activity is required and a certain real and stable presence as manifested by personnel and material equipment on site is necessary. Certainly a minimum level of organisation and a degree of stability is required: e.g., the presence of goods and bank accounts alone is not sufficient.
The Advocate General deems Nike Deutschland GmbH fulfils the element of real and operative presence, where Nike Deutschland is a local company actually performing pre-sale and post-sale services for Nike customers in Germany. Nike Deutschland in addition is a legally independent GmbH; so the element of local management is satisfied.
- Appearance of permanency, such as an extension of a parent body: this characteristic suggests a certain degree of dependence and obedience on the part of the establishment. The argument that the establishment itself could not be bound by the judgment against its parent is irrelevant for the question, which is decisive, as to whether the subsidiary can be regarded as a base of the defendant company from which the latter can defend its interests. Actual direction and control is not at issue, but rather the perception of third parties in the State where the establishment is situated. They must have the impression that the entity belongs to the parent, and have the impression they do not have to deal directly with the parent body but may transact business at the place of business constituting the extension. What is decisive is that it contributes to the identification and representation of the parent from which it emanates.
The Advocate General noted that Nike Deutschland is presented as the German contact to be used concerning NIKE products and it forms, by providing pre-sale and post-sale services, a relevant part of the sales organisation firmly embedded in the group's operational structure. Although it does not act as a seller itself, it has an essential function within the management of the sales and is an integral part of the sales and merchandising organisation of Nike in Germany. An essential element of this integration is the prominent use of the name 'Nike' and also the fact that the name of the German subsidiary contains no restriction to certain tasks or businesses, but simply adds the country's name to the overall corporate name.
Situation of multiple 'establishments'
What if a defendant has more than one 'establishment' within the EU? Nike argued that only the court in the Member State of the principal establishment has international jurisdiction. Considering that Nike Retail B.V. (the Netherlands) clearly would be the principal establishment, this would mean that only a Dutch court would have international jurisdiction, and consequently that the German court could not issue the requested EU-wide relief. The Advocate General opined that any establishment in a Member State can serve as a connecting factor to establish international jurisdiction under Article 97(1) EUTMR, since the article leaves no room for an interpretation where only one of the establishments can serve as a connecting factor.
Hence, the Advocate General's opinion is that a legally distinct second-tier subsidiary, with its seat in an EU Member State, of an undertaking that itself has no seat in the EU can be considered an 'establishment' of that undertaking within the meaning of Article 97(1) EUTMR if that legally distinct second-tier subsidiary is a centre of operations which, in the Member State where it is situated, has the appearance of permanency, such as an extension of the third State parent body.
For now, we will have to wait to see whether the CJEU will follow the opinion of the Advocate General. The answer of the CJEU will give further clarification on what qualifies as an 'establishment' and consequently the important matter which specific court(s) must be addressed to obtain EU-wide relief when dealing with a defendant that is not domiciled in a Member State and/or whether there is a possibility of forum shopping when multiple 'establishments' can be identified.
Given that Article 82 Community Design Regulation is equivalent to Article 97 EUTMR, the CJEU's ruling will also be relevant to Community Designs.
The AKD 'Trade Marks & Design' desk helps your company register your intellectual assets. Read more about our Trade Marks & Design services here.
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Only 'European Union trade mark courts', specifically selected national courts, may rule on infringement actions based on EU trade marks. However, not all EU trade mark courts may grant EU-wide relief.
Whether or not a particular EU trade mark court has this comprehensive power depends on whether it can base its international jurisdiction on Article 97(1) to (4) of the EU Trade Mark Regulation (EUTMR). Only then will a European Union trade mark court have jurisdiction in respect of acts of infringement committed or threatened within the territory of any of the Member States.
The Advocate General has now rendered an opinion which is important when a potential applicant wishes to obtain EU-wide relief against a defendant not domiciled in a Member State and that applicant must determine which specific EU trade mark court can grant this relief.
More specifically, the Advocate General advised on the notion of 'establishment' in art. 97(1) EUTMR:
"1. Subject to the provisions of this Regulation as well as to any provisions of Regulation (EC) No 44/2001 applicable by virtue of Article 94, proceedings in respect of the actions and claims referred to in Article 96 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.
2. If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.
3. If neither the defendant nor the plaintiff is so domiciled or has such an establishment, such proceedings shall be brought in the courts of the Member State where the Office has its seat."
Conclusion of the Advocate General CJEU 17 January 2017, Câ617/15 (Hummel Holding A/S / Nike Inc., Nike Retail B.V.) â
A question was referred by the German Higher Regional Court, Düsseldorf, in a case where the Danish company Hummel Holding A/S brought a trade mark infringement claim against Nike Inc. (U.S.) and the Dutch entity Nike Retail B.V., which is part of the Nike group. Most of the infringements of the plaintiff's European Union trade mark are alleged to have taken place in Germany.
The plaintiff before the German court requested, inter alia, an injunction prohibiting the infringement. Against Nike Inc. (U.S.) the injunction was sought with regard to the territory of the EU. The presence of Nike Deutschland GmbH in Germany, which is not a party to the main proceedings, in the capacity of a second-tier subsidiary of the Nike Inc., is central to the plaintiff's case on the jurisdiction of the German courts.
The question arose when a legally distinct second-tier subsidiary (i.e., a subsidiary of a first-tier subsidiary/a "granddaughter" of the main parent company), with its seat in an EU Member State, of an undertaking that itself has no seat in the European Union can be considered an "establishment" as referred to in Article 97(1) EUTMR.
Centre of operations with the appearance of permanency
The Advocate General concluded that the notion 'establishment' under Article 97(1) EUTMR comprises: (i) centre of operations which, (ii) in the Member State where it is situated, has the appearance of permanency, such as an extension of the third State parent body. The Advocate General explained these characteristics as follows:
- Centre of operations: the establishment must have a management at a local level and be materially equipped to negotiate business with third parties, so that they do not have to deal directly with the parent body. Some operational activity is required and a certain real and stable presence as manifested by personnel and material equipment on site is necessary. Certainly a minimum level of organisation and a degree of stability is required: e.g., the presence of goods and bank accounts alone is not sufficient.
The Advocate General deems Nike Deutschland GmbH fulfils the element of real and operative presence, where Nike Deutschland is a local company actually performing pre-sale and post-sale services for Nike customers in Germany. Nike Deutschland in addition is a legally independent GmbH; so the element of local management is satisfied.
- Appearance of permanency, such as an extension of a parent body: this characteristic suggests a certain degree of dependence and obedience on the part of the establishment. The argument that the establishment itself could not be bound by the judgment against its parent is irrelevant for the question, which is decisive, as to whether the subsidiary can be regarded as a base of the defendant company from which the latter can defend its interests. Actual direction and control is not at issue, but rather the perception of third parties in the State where the establishment is situated. They must have the impression that the entity belongs to the parent, and have the impression they do not have to deal directly with the parent body but may transact business at the place of business constituting the extension. What is decisive is that it contributes to the identification and representation of the parent from which it emanates.
The Advocate General noted that Nike Deutschland is presented as the German contact to be used concerning NIKE products and it forms, by providing pre-sale and post-sale services, a relevant part of the sales organisation firmly embedded in the group's operational structure. Although it does not act as a seller itself, it has an essential function within the management of the sales and is an integral part of the sales and merchandising organisation of Nike in Germany. An essential element of this integration is the prominent use of the name 'Nike' and also the fact that the name of the German subsidiary contains no restriction to certain tasks or businesses, but simply adds the country's name to the overall corporate name.
Situation of multiple 'establishments'
What if a defendant has more than one 'establishment' within the EU? Nike argued that only the court in the Member State of the principal establishment has international jurisdiction. Considering that Nike Retail B.V. (the Netherlands) clearly would be the principal establishment, this would mean that only a Dutch court would have international jurisdiction, and consequently that the German court could not issue the requested EU-wide relief. The Advocate General opined that any establishment in a Member State can serve as a connecting factor to establish international jurisdiction under Article 97(1) EUTMR, since the article leaves no room for an interpretation where only one of the establishments can serve as a connecting factor.
Hence, the Advocate General's opinion is that a legally distinct second-tier subsidiary, with its seat in an EU Member State, of an undertaking that itself has no seat in the EU can be considered an 'establishment' of that undertaking within the meaning of Article 97(1) EUTMR if that legally distinct second-tier subsidiary is a centre of operations which, in the Member State where it is situated, has the appearance of permanency, such as an extension of the third State parent body.
For now, we will have to wait to see whether the CJEU will follow the opinion of the Advocate General. The answer of the CJEU will give further clarification on what qualifies as an 'establishment' and consequently the important matter which specific court(s) must be addressed to obtain EU-wide relief when dealing with a defendant that is not domiciled in a Member State and/or whether there is a possibility of forum shopping when multiple 'establishments' can be identified.
Given that Article 82 Community Design Regulation is equivalent to Article 97 EUTMR, the CJEU's ruling will also be relevant to Community Designs.
The AKD 'Trade Marks & Design' desk helps your company register your intellectual assets. Read more about our Trade Marks & Design services here.
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