WEB SHIPPING ruling: CTM injunctions both are and aren't pan-European

This morning the Court of Justice gave its ruling in Case C-235/09, DHL Express France SAS (formerly DHL International SA) v Chronopost SA, a case which tytoc collie suspects will be greatly discussed, analysed, applied and indeed misapplied in years to come.

Web shipping, or clipper art?

The facts were quite straightforward. Chronopost owned both French and Community trade marks for the sign WEBSHIPPING, for, inter alia, "services relating to: logistics and data transmission; telecommunications; transport by road; collecting mail, newspaper and parcels; and express mail management". DHL, a competitor, had used the signs WEB SHIPPING, Web Shipping and/or Webshipping to designate its own online-accessible express mail management service. Chronopost sued DHL for trade mark infringement before the Tribunal de grande instance de Paris, a Community trade mark court. The court held DHL liable for infringing Chronopost's French mark, but did not adjudicate on infringement of the Community trade mark. Following an appeal, the Cour d’appel de Paris prohibited DHL from continuing to use Chronopost's French and Community trade marks, also ordering a periodic penalty payment if the injunction were breached.

DHL's appeal to the Cour de cassation was dismissed, but that court heard the cross-appeal of Chronopost in which it submitted that the Cour d’appel judgment was contrary to Articles 1 and 98 of Community Trade Mark Regulation 40/94 (CTMR) in so far as the prohibition against further infringement of the Community trade mark WEBSHIPPING, subject to a periodic penalty payment, did not explicitly extend to the entire area of the European Union.  According to the Cour de cassation, since the judgment did not contain any operative words expressly relating to the application to extend the prohibition issued by that court to the entire area of the European Union, it must be construed as applying only to French territory. However, since it had doubts as to its interpretation of Article 98 of the CTMR, the Cour de cassation decided to stay proceedings and to refer the following questions for a preliminary ruling:

"1. Must Article 98 ... be interpreted as meaning that the prohibition issued by a Community trade mark court has effect as a matter of law throughout the entire area of the [European Union]?

2. If not, is that court entitled to apply specifically that prohibition to the territories of other States in which the acts of infringement are committed or threatened?

3. In either case, are the coercive measures which the court, by application of its national law, has attached to the prohibition issued by it applicable within the territories of the Member States in which that prohibition would have effect?

4. In the contrary case, may that court order such a coercive measure, similar to or different from that which it adopts pursuant to its national law, by application of the national laws of the States in which that prohibition would have effect?"

In answer to these questions, the Court ruled thus:

"1. Article 98(1) ... must be interpreted as meaning that the scope of the prohibition against further infringement or threatened infringement of a Community trade mark, issued by a Community trade mark court whose jurisdiction is based on Articles 93(1) to (4) and 94(1) of that regulation, extends, as a rule, to the entire area of the European Union. [see comment below]

2. Article 98(1), second sentence, ...  must be interpreted as meaning that a coercive measure, such as a periodic penalty payment, ordered by a Community trade mark court by application of its national law, in order to ensure compliance with a prohibition against further infringement or threatened infringement which it has issued, has effect in Member States to which the territorial scope of such a prohibition extends other than the Member State of that court, under the conditions laid down, in Chapter III of Council Regulation ... 44/2001 ... on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, with regard to the recognition and enforcement of judgments. Where the national law of one of those other Member States does not contain a coercive measure similar to that ordered by the Community trade mark court, the objective pursued by that measure must be attained by the competent court of that other Member State by having recourse to the relevant provisions of its national law which are such as to ensure that the prohibition is complied with in an equivalent manner". [This should be fun in terms of compliance. EU Regulations are directly applicable in national law, but courts may not find that their national law lets them make up equivalent relief all by themselves.  Article 11 of the IP Enforcement Directive makes recurrent payments optional, but the effect of this ruling is to make them compulsory in these circumstances even if they are not available to local litigants]

Essentially, what the court said was that, since the jurisdiction of Community trade mark courts is pan-European and the scope of Community trade marks is pan-European, in principle an order made by a Community trade mark court in respect of a Community trade mark is pan-European too -- even though infringement of a Community trade mark is governed in each country's Community trade mark court by the national law relating to infringement of a national trade mark.  There are two exceptions to this. One is where the plaintiff only asks for partial relief.  Also, in paras 46 to 48:

"... The exclusive right of a Community trade mark proprietor, as provided for under Article 9(1) of Regulation No 40/94, is conferred in order to enable that proprietor to protect his specific interests as such, that is, to ensure that the trade mark is able to fulfil its functions. The exercise of that right must therefore be reserved to cases in which a third party’s use of the sign affects or is liable to affect the functions of the trade mark (see, to that effect, Joined Cases C-236/08 to C‑238/08 Google France and Google [2010] ECR I-0000, paragraph 75 and the case-law cited)

It follows ... that the exclusive right of a Community trade mark proprietor and, hence, the territorial scope of that right, may not extend beyond what that right allows its proprietor to do in order to protect his trade mark, that is, to prohibit only uses which are liable to affect the functions of the trade mark. The acts or future acts of a defendant (namely the person whose use of the Community trade mark is complained of) which do not affect the functions of the Community trade mark, cannot therefore be prohibited".

Accordingly, if a Community trade mark court ... finds that the acts of infringement or threatened infringement of a Community trade mark are limited to a single Member State or to part of the territory of the European Union ... because the defendant proves that the use of the sign at issue does not affect or is not liable to affect the functions of the trade mark, for example on linguistic grounds, that court must limit the territorial scope of the prohibition which it issues. [Does this mean that where, on account of phonetic and conceptual similarity that exists in some EU states but not others, an injunction to prohibit use of a mark similar to a CTM cannot be prohibited in countries in which no likelihood of confusion exists, since that cannot affect the functions of the CTM?  Or does it mean that functions other than the "essential function" of indicating identity of origin have to be invoked in order to retain the pan-EU nature of the injunction?]

Merpel notes para.42 of the ruling:

"The unitary character of the Community trade mark is also apparent from the fifteenth and sixteenth recitals in the preamble to Regulation No 40/94. These state, first, that the effects of decisions regarding the validity and infringement of Community trade marks must cover the entire area of the European Union, in order to prevent inconsistent decisions on the part of the courts and OHIM and to ensure that the unitary character of Community trade marks is not undermined, and, second, that contradictory judgments should be avoided in actions which involve the same acts and the same parties and which are brought on the basis of a Community trade mark and parallel national trade marks. ".

This would appear to suggest that the court did not intend anything it said about the unitary character of the Community trade mark to point to its likely position on "genuine use" of a Community trade mark in only part of the EU.