CJEU: Interruption of the forfeiture period only in the event of serious legal action | Hogan Lovells

Background

Heitec AG holds the trade name “HEITEC” with priority from 1984 as well as an identical European Union word mark with German seniority from 1991. In 2008, Heitec AG became aware for the first time of application for and use of an EU trade mark. with the word element “Heitech” by Heitech Promotion GmbH, and in 2009 sent them a warning in this regard. In response to the warning, Heitech Promotion GmbH offered a coexistence agreement, but there would have been no further exchanges between the parties. Heitec AG filed an application for an injunction with the Nuremberg-Fürth Regional Court three years later, and in March 2013 the court informed the plaintiff that the advance payment of court costs and the original copy of the statement were still pending.

Heitec AG refused a coexistence agreement in September 2013 and instead offered to enter into a license agreement. At the end of the year, the plaintiff paid the court costs and filed a new declaration. At the request of the court, the plaintiff also filed the original statement in its original form in February 2014. However, the plaintiff was later informed that the motions contained in the originals now submitted did not match those of the statement submitted in 2012 .

The Regional Court of Nuremberg-Fürth granted Heitec AG a demand for payment of warning costs and dismissed the action in all other respects. Plaintiff’s appeal against this was dismissed for forfeiture. The Higher Regional Court in Nuremberg said that Heitec AG, being aware of the defendant’s uninterrupted use of the trademark “Heitech” over a period of five years, had failed to take sufficient measures to prevent such use. The five-year acquiescence period had not been interrupted by the action brought by Heitec AG, that action having become pending only after the expiry of the period.

Heitec AG appealed this decision to the German Federal Court of Justice (BGH) which declared that the decisive factor was an interpretation in accordance with the directive of Article 21 of the German trademark law, which governs the revocation in under German law. Any disqualification depends on whether Heitec AG has tolerated such use for the five years from the date of knowledge, which in turn depends on the effect of filing the action. The relevant standards were based on those of the Trademark Directive and the EU Trademark Regulation (Article 61 EUTMR), which is why the BGH considered that a referral to the CJEU was necessary in order to clarify if, a) in accordance with the relevant EU regulations, a warning also leads to the exclusion of acquiescence and b) if, for the calculation of the period of forfeiture in the event of legal action, only the filing of the pleading or receipt of the document by the defendant is relevant.

Judgment of the CJEU (judgment of 19.5.2022, C-466/20)

The CJEU has ruled that serious judicial assertion is necessary to end tolerance and that, for example, a warning without legal measures credibly aimed at providing a legally binding solution does not end tolerance. Forfeiture is also not prevented by legal action if the document initiating proceedings is filed before the expiry of the forfeiture period but is inadmissible, for lack of diligence on the part of the plaintiff, and it is not remedied the irregularities only after the expiry of the forfeiture period. Although in principle a warning can also interrupt the period of forfeiture, this only applies if this warning leads to a formal statement. A certain seriousness of the legal action must be demonstrated, which shows unambiguously that the right holder wants to defend himself against the infringement.

If confiscation has taken place, this also precludes the assertion of subsequent claims. Recital 12 of the Trademark Directive, according to which legal certainty for economic operators is of particular importance. Economic operators should be able to rely on the fact that they can no longer be held liable by a trademark right holder who tolerates use for a “longer period”. This situation was taken into account in the decision. The duration of this longer period is fixed at five years by art. 9 of the Trademark Directive and Article 54 of the EU Trademark Regulation, which regulates revocation by acquiescence, also sets the same period.

Consequences

The CJEU clarifies that only a properly prepared and potentially effective pursuit of rights interrupts the period of forfeiture. Although such termination may also be triggered by the notification of a warning, it must be followed by measures ensuring a legally binding cessation of the alleged trademark infringement. In the light of this opinion, a simple “sword cut” will therefore no longer suffice to interrupt the period of forfeiture and any action aimed at bringing the infringement of the mark to a legal end must meet the requirements of national (procedural) law. Commencing proceedings in a timely manner is essential, but so is exercising due diligence to ensure that nothing stands in the way of a lis pendens.

The question that remains open is whether negotiations to end litigation following a warning have the effect of interrupting the five-year forfeiture period. The wording chosen by the CJEU suggests that this could be the case if the owner of the prior rights has done enough to find a solution. However, if the latter has not pursued negotiations, as in this case, such post-warning settlement negotiations do not help.

This approach of the CJEU to an adequate prosecution of counterfeit infringements has already been applied in this way by the Court of Justice in the context of the invocation of a justification for the non-use of a mark within the framework of the 18 EUTMR (ECJ in case C-668/17 P, Boswelan) and has again been applied here.

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