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A recent ruling by the Court of Justice of the European Union (CJEU) confirms that unrelated defendants domiciled in different member states can be sued in a single court if they are connected by an exclusive distribution agreement.
Beverage City Polska v Advance Magazine Publishers (Case C-832/21)
Advance Magazine Publishers Inc. (AMP), established in New York, is the publisher of the well-known magazine, VOGUE. AMP is the proprietor of several EU trade marks containing the word element ‘VOGUE’ for ‘printed matter’ in class 16.
The first and second defendants, Beverage City Polska and its manager, manufactures, advertises, and distributes an energy drink under the name ‘Diamant Vogue’ which is exclusively sold in Poland. The third and fourth defendants, Beverage City and Lifestyle (BCL) and their managing director, are all domiciled in Poland and sell the same product in Germany under an exclusive distribution agreement with BCP. BCP and BCL have no corporate connection whatsoever.
AMP sued all four defendants for trade mark infringement in front of the District Court of Düsseldorf, seeking a pan-European injunction. BCP, which sells ‘Diamant Vogue’ exclusively in Poland, challenged the jurisdiction arguing that German courts do not have international jurisdiction to hear and determine the action brought against them.
Prior to this case, the question of whether several unrelated defendants domiciled in different EU Member states can be sued before the same court was answered by Article 8(1) Brussels I Recast and EU Trade Mark Regulation.
Article 8(1) Brussels I Recast:
“A person domiciled in a Member State may also be sued:
The District Court of Düsseldorf upheld AMP’s claim and BCP and its managing director appealed to the Higher Regional Court of Düsseldorf.
The Higher Regional Court of Düsseldorf considered that the court did have jurisdiction under Article 8(1) Brussels I Recast, but recognised that there was an element of uncertainty so referred the jurisdiction point to the Court of Justice of the European Union (CJEU). The CJEU agreed with the German Court, and interpreted Article 8(1) Brussels I Recast to mean:
“…a number of defendants, domiciled in different Member States, may be sued in the courts for the place where one of them is domiciled […] where they are each accused of having committed a materially identical infringement of that trade mark and they are connected by an exclusive distribution agreement.”
Therefore, it appears that it is possible to sue unrelated defendants in the home domicile of one of them, where they each deal with the same alleged infringing goods pursuant to an exclusive distribution agreement.
Interestingly in this case, the claimant’s right to sue in a single jurisdiction extended to suing the manufacturer of the goods in the jurisdiction of one of its distributors.
The purpose behind this approach is avoiding incompatible or irreconcilable Judgments. It was recognised that this risk arises where there are the same issues of fact and law being addressed. The CJEU explained that the purpose of Article 8(1) Brussels I Recast is to minimise the possibility of parallel proceedings, and to circumvent conflicting outcomes if cases are decided separately.
The outcome of this case means that a claimant in a trade mark infringement action relating to an EU trade mark will, in many cases, be able to choose a preferred jurisdiction (i.e. one in which it perceives it has better merits). This should now be possible in all situations of pan-EU sales of alleged infringing products under exclusive distribution agreements.
Whether a distribution agreement between a supplier and reseller is exclusive is often not known or obvious to trade mark owners. Therefore, if the exclusive nature of the distribution agreement is a key factor in permitting this jurisdiction in these circumstances, then the lack of knowledge as to distribution channels might reduce the use of this potential opportunity.
However, the need to avoid irreconcilable Judgments and the rationale for this decision would appear to be no different with any form of distribution agreement or sales contracts. As such, this case creates the possibility for different unrelated defendants, domiciled in different countries to be sued in a court where one of them is domiciled, where they are accused of having committed a materially identical infringement of that trade mark and they are connected by a sales contract. Crucially, this looks like it may extend to manufacturers being sued in a jurisdiction where an unrelated retailer legitimately sells its products.
AA Thornton provides specialised guidance on utilising preferred jurisdiction for trade mark enforcement in Europe. Reach out for expert advice on how this can benefit your trade mark strategy.
Category: Latest Insights | Author: Geoff Hussey | Published: | Read more
