CJEU interprets counterclaims and EU Trade Marks Courts’ jurisdiction

On 13 October 2022, the Court of Justice of the European Union (the “CJEU”) delivered a ruling in the case of KP v TV, Gemeinde Bodman-Ludwigshafen (Case C‑256/21) wherein it held that an EU trade mark court has jurisdiction to rule on the validity of a trade mark challenged through a counterclaim, notwithstanding that the main action for infringement of that trade mark is withdrawn.

Case Background

The main proceedings before the Landgericht München (the “Munich Regional Court” or the “Referring Court”) involved an action for infringement of the EU word mark ‘Apfelzügle’ (the “Contested Mark”) brought by KP, the proprietor of the Contested Mark. The Contested Mark was registered on 19 October 2017, and denotes a vehicle specifically designed for harvesting apples. On 26 September 2018, TV, a fruit farm operator, and the Municipality of Bodman-Ludwigshafen (“MBL”) released promotional materials on an activity including the harvesting and tasting of apples as part of a ride on the Apfelzügle. The action for infringement brought by KP sought an order to prohibit the use of the term Apfelzügle for the services covered by the Contested Mark by TV and MBL.

In turn, the latter parties filed counterclaims for a declaration of invalidity of the Contested Mark on the basis of Articles 59(1)(a) and 7(1)(b), (c) and (d) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (“Regulation 2017/1001”). KP withdrew his infringement action, however, notwithstanding such withdrawal, TV and MBL pursued their counterclaims, and in its judgement of 10 March 2020, the Munich Regional Court went on to declare those counterclaims admissible and the Contested Mark invalid in relation to the services in one of the classes it was registered in. This decision was then appealed by MBL in an effort to  obtain a declaration of invalidity of the Contested Mark with regards to the services in the remaining classes.

The Munich Regional Court noted that in considering the appeal, it must first determine whether the defendants’ counterclaims are admissible in light of KP’s withdrawal of the infringement action. In this regard, the Munich Regional Court expressed its doubts as to its jurisdiction in relation to such counterclaims due to three main reasons:

  1. Unless there are expressly provided exceptions, such as the filing of a counterclaim, national courts lack jurisdiction to annul acts, including the registration of an EU trade mark, of a European Union body.
  1. According to the prevailing view in German legal literature, the case at hand would fall within the scope of the regulations governing German civil procedure which holds that the jurisdiction of an EU trade mark court established as a result of the filing of a counterclaim is independent of the outcome of the action for infringement, and cannot, as a result, cease to exist in the event that the action for infringement is withdrawn.
  1. Notwithstanding the abovementioned view, the requirement of providing the defendants with an opportunity to defend themselves in an action for infringement through the filing of a counterclaim for a declaration of invalidity would cease to exist when such action is withdrawn. Therefore, national procedural law should only apply during the pendency of the action as provided for under EU Law.

In light of the above, the Munich Regional Court referred the case to the CJEU for a preliminary ruling on whether Article 124(a) and (d) and Article 128 of Regulation 2017/1001 must be interpreted as meaning that the EU trade mark court retains jurisdiction to decide on a counterclaim for a declaration of invalidity of an EU trade mark despite the withdrawal of the main infringement action.

Legal Context

Regulation 2017/1001 lays down EU-wide regulations for the granting of an EU trade mark that enjoys uniform protection and produces effects throughout the entire area of the Union.

According to Article 124 (a) and (d) of Regulation 2017/1001 the EU trade mark courts shall have exclusive jurisdiction for all infringement actions and for counterclaims for revocation or for a declaration of invalidity of the EU trade mark.

Counterclaims are then dealt with specifically under Article 128 of Regulation 2017/1001. This Article outlines the basis on which a counterclaim can be filed and the EU trade mark courts’ jurisdiction over such counterclaims. With respect to the latter, this Article details the circumstances under which an EU trade mark court is obliged to, or has discretion to, stay proceedings pending the decision of the European Union Intellectual Property Office (the “EUIPO”). Moreover, this Article confirms the erga omnes effect of a judgement on a counterclaim for revocation or for a declaration of invalidity of an EU trade mark by an EU trade mark court.

Legal Considerations

In answering the referred question, the CJEU delved into defining the meaning and scope of the term ‘counterclaim’ within the meaning of Regulation 2017/1001 by analysing several aspects.

The first aspect related to the general rule that a provision of EU law that does not expressly derive its meaning and scope from the law of the Member States must be given an autonomous and uniform interpretation throughout the EU to ensure that the principles of equality and uniform application of EU law are upheld. Since Regulation 2017/1001 makes no express reference to the law of the Member States for the purpose of determining the meaning and scope of the term ‘counterclaim’, such term must be considered as an autonomous concept of EU law and must consequently be interpreted uniformly throughout the European Union. The CJEU referred to the term’s common meaning by citing the applicable clauses of Regulation 2017/1001 in different language versions and concluded that the term refers to “a cross-action lodged by the defendant in proceedings brought against him or her by the applicant before the same court.”

Another consideration regarded the historical and contemporary context of the term. As a result, the Court emphasised that under Regulation 2017/1001, the term ‘counterclaim’ should be construed as meaning a legal remedy that is dependent upon the filing of an action for infringement and is, therefore, connected to that same action. Nevertheless, it exists independently of the main action and is not affected by the withdrawal of such main action. A counterclaim seeks to broaden the scope of the dispute and to be recognised for a claim that is distinct from the main claim. Because of this, the counterclaim may be distinguished from a mere defence and its outcome is independent of the outcome of the infringement action on the basis of which it was brought.

Furthermore, the CJEU disagreed with the Referring Court that the jurisdiction conferred on EU trade mark courts in relation to the annulment of an EU trade mark constitutes an ‘exception’ to the EUIPO’s jurisdiction, and held that it instead constitutes the direct application of a rule conferring jurisdiction laid down in Regulation 2017/1001. The CJEU continued to clarify that the EU legislative intended to confer jurisdiction for the review of the validity of EU trade marks on both the EUIPO, and in relation to their decisions on counterclaims, on EU trade mark courts.

The final consideration related to the aim of the rules that the term forms part of. First of all, one of the goals pursued by Regulation 2017/1001 includes the sound administration of justice through the avoidance of unnecessary multiple proceedings which entail the risk of contradictory judgements.  In line with this, an EU trade mark court must be able to decide on the defendant’s counterclaim for a declaration of invalidity with regard to the concerned EU trade mark, despite the withdrawal of the primary action. This is because if this were not the case, if the principal claimant withdraws their claim, the party filing the counterclaim would be compelled to initiate legal proceedings before the EUIPO to ensure that they can avoid having to defend themselves against the principal claimant in the future. Apart from being against the principle of procedural economy, this would allow the proprietor to act in bad faith by withdrawing from an infringement action initiated by themselves with the aim of disrupting the counterclaim and continuing to use their EU trade mark.

The CJEU’s Ruling

The CJEU answered the question referred to it by ruling that Article 124(a) and (d) and Article 128 of Regulation 2017/1001 must be interpreted as meaning that an EU trade mark court retains its jurisdiction to decide on a counterclaim for a declaration of invalidity of an EU trade mark, in spite of the valid withdrawal of the main infringement action.

Concluding Remarks

Particularly interesting in this case is the multi-dimensional approach taken by the CJEU in interpreting the applicable EU legislation and the substantial weight attributed to the purposive interpretation. Finally, it can be concluded that the case sets a valuable precedent for the pursuance of counterclaims in situations where the primary action in a trade mark infringement action has been withdrawn and clearly establishes the EU courts’ jurisdiction over such matters.

This article was first published in The Malta Independent (26 October 2022).