The judgment of the Court of Justice of the European Union (“CJEU”) dated October 13, 2022, in Case C-256/21 reveals that filing a lawsuit for infringement of a European Union trademark carries risks. If the trademark is vulnerable in terms of its validity, its owner risks the defendant filing a counterclaim for invalidity. Faced with this defense, it is out of the question to simply throw in the towel, withdraw the lawsuit, and wait for the case to end.
If the defendant continues to seek a declaration of invalidity of the trademark in the proceedings, the European Union Trademark Court retains jurisdiction to do so even if the plaintiff withdraws the action. This is the ruling of the Court of Justice.
The ruling stems from a request for a preliminary ruling filed by a German court in the context of a trademark infringement lawsuit brought by KP, as the owner of the EU word mark “Apfelzügle,” against TV, the owner of a fruit farm.
The defendant filed a counterclaim seeking a declaration of invalidity of the trademark to the extent that the term “Apfelzügle” refers to a convoy used for apple harvesting, consisting of several trailers pulled by a tractor.
At the trial hearing, the plaintiff formally withdrew her claim of infringement, but the defendant maintained its counterclaim seeking the invalidation of the trademark registrations.
Given that the jurisdiction of a European Union Trademark Court to declare a trademark invalid is limited to the case of a counterclaim in an infringement action, since general jurisdiction lies with the European Union Intellectual Property Office (“EUIPO”), the German court questions whether the European Union Trademark Court retains jurisdiction to rule on invalidity even after the action for infringement of that trademark has been validly withdrawn.
The withdrawal of a lawsuit alleging infringement of European Union trademarks does not end the litigation when there is a counterclaim for invalidation.
The CJEU’s response was significant: if the European Union Trademark Court were no longer competent, the defendant would have had to file a new action with the EUIPO to obtain a declaration of invalidity, and the plaintiff would have withdrawn from the lawsuit without prejudice to its registered ownership. In other words, filing an infringement action would not entail the risk of losing the trademark because, in the event of a counterclaim for invalidity, it would suffice to withdraw the action.
The CJEU, however, puts a stop to that strategy. The ruling notes that the determination of the validity of a European Union trademark falls under the “shared” jurisdiction of the EUIPO and the European Union Trademark Courts in the event of a counterclaim filed in response to an infringement action. Once the counterclaim has been filed, the European Union Trademark Court not only retains its jurisdiction—even if the plaintiff withdraws its infringement action—but is also, in a sense, required to rule on the validity of the trademark.
Although under the Spanish procedural system the same conclusion could have been reached by applying the principle of “perpetuatio iurisidictionis,” the CJEU’s ruling establishes an important legal doctrine in the specific context of actions involving European Union trademarks. It also draws attention to that other, unwritten principle of “procedural prudence,” which should never be lost sight of when bringing legal actions.
Author: Ana Sanz