European Court of Justice (ECJ): In a far-reaching decision, the Bench of C. Lycourgos (Rapporteur), President of the Chamber, S. Rodin, J.-C. Bonichot, L.S. Rossi and O. Spineanu-Matei, JJ., held that sending of a warning letter for trademark infringement, per se, will not break the limitation period and end acquiescence for use of the similar later trademark.
The German Federal Court of Justice had requested the ECJ for a preliminary ruling on the interpretation of Article 9 of Directive 2008/95/EC of the European Parliament of 22-10-2008 to approximate the laws of the Member States relating to trademarks, and Articles 54 and 111 of Council Regulation (EC) No 207/2009 of 26-02-2009 on the Community trademark.
The European Union law in question provides that where, in a Member State, the proprietor of an earlier trademark has acquiesced, for a period of five successive years, use of a similar later trademark while being aware of such use, he shall no longer be entitled either to apply for a declaration that the later trademark is invalid or to oppose the use of the later trademark in respect of the goods or services for which the later trademark has been used; unless registration of the later trademark was applied for in bad faith.
Factual Backdrop
The request had been made in proceedings between HEITEC AG (the applicant) and HEITECH Promotion GmbH and RW concerning the use of the trade name HEITECH Promotion GmbH and trademarks containing the word element ‘heitech' by the latter.
The applicant is the proprietor of the EU word mark HEITEC, with seniority claimed as from 13-07-1991, and registered on 04-07-2005. It was entered in the commercial register in 1984 under the name Heitec Industrieplanung GmbH which was later changed to Heitec GmbH. Since the year 2000, it has been operating under the name of Heitec AG.
Heitech, of which RW is the managing director, was entered in the commercial register on 16-04-2003 as the proprietor of a German figurative mark containing the word element ‘heitech promotion' and of an EU figurative mark containing the word element ‘heitech', applied for on 06-02-2008 and registered on 20-11- 2008, which it has used since 06-05-2009 at the latest.
Chronology of Events
The applicant became aware of Heitech's application for registration of the EU figurative mark containing the word element ‘heitech' on 07-07-2008 and by a letter dated 22-04-2009, it sent Heitech a warning letter regarding the latter's use of its tradename and the EU trademark containing the word element ‘heitech'. In its reply, Heitech proposed to enter into a coexistence agreement.
On 31-12-2012, the applicant approached the Nuremberg Regional Court to initiate proceedings against Heitech and RW. However, the proceedings could not begin since the applicant had failed to make the advance payment and lodge the originals of the application initiating proceedings. It was only on 30-12-2013 that the Regional Court received written submissions dated 12-12-2013 from the applicant, together with a cheque for court fees and a new application initiating proceedings bearing the date 04-10-2013. The preliminary proceedings were finally opened on 16-05-2014 and a notice was served to the defendants in the main proceeding on 23-05-2014.
Meanwhile, in a letter dated 23-09-2013, the applicant informed Heitech that it refused to conclude a coexistence agreement and proposed to conclude a licence agreement while stating that it had initiated legal proceedings.
Finally, the applicant claimed the infringement of its trademark rights and contended that Heitech should be ordered to refrain from identifying its company by the trade name ‘HEITECH Promotion GmbH', to refrain from affixing the word elements ‘heitech promotion' and ‘heitech' on goods and from marketing or advertising goods or services under those signs, to refrain from using or transferring, for commercial purposes, the website heitech-promotion.de and to agree to the removal of its company name from the commercial register.
The applicant also brought claims for information, for a finding of an obligation to pay compensation, for the destruction of goods and for the payment of the costs of sending the warning letter.
Findings of the Nuremberg Regional Courts
The Regional Court ordered Heitech to pay the applicant EUR 1 353.80, plus interest, for the costs of sending the warning letter and rejected the other claims. Aggrieved, the applicant appealed before the Nuremberg Higher Regional Court, which held that the applicant's action was unfounded as it was time-barred.
The Higher Regional Court noted that Heitech had used its later signs for an uninterrupted period of at least five years and that the applicant had acquiesced in such use, since, although it was aware of that use, it had not taken sufficient measures to stop that use.
The Higher Court held that the court action had not interrupted the period of limitation, since it had been served on Heitech and RW only after five years had elapsed since the warning letter which preceded that action.
The applicant challenged the afore-mentioned findings before the Federal Court of Justice, Germany (referring court).
Questions Referred
That referring court noted that the outcome of the appeal depends on the interpretation of European Union (EU) law on whether the applicant is time-barred from bringing its claim for an injunction and its ancillary claims. Therefore, the referring court referred the following questions to the Court of Justice for a preliminary ruling:
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Can acquiescence be excluded not only by means of an administrative or court action but also through conduct not involving a court or administrative authority?
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Does the sending of a warning letter, in which the proprietor of the earlier sign, before initiating legal proceedings, requires the proprietor of the later sign to agree to refrain from using the sign, and to enter into an obligation to pay a contractual penalty in the event of an infringement, constitute conduct precluding acquiescence?
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When seeking judicial redress, is the bringing of the action before the court or the receipt of the action by the defendant decisive for calculating the five-year acquiescence period? Is it significant in this regard that receipt of the action by the defendant is delayed beyond the expiry of the five-year period through the fault of the proprietor of the earlier trademark?
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Does the limitation of rights encompass consequential claims under trademark law; i.e., claims for compensation, provision of information or destruction, as well as prohibitory injunctions?
Analysis and Findings
Is a warning letter sufficient to break the limitation period and end acquiescence?
Relying on Levi Strauss, C 145/05, the Court noted that by setting a period of limitation in consequence of acquiescence of five consecutive years with knowledge of the use of the later trademark, the EU legislature sought to ensure that the protection conferred by an earlier trademark on its proprietor remains limited to cases where the proprietor shows itself to be sufficiently vigilant by opposing the use of signs by other operators likely to infringe its mark.
Opining that the rule on limitation in consequence of acquiescence is intended to safeguard legal certainty, the Court stated,
“Where the proprietor of an earlier mark or other earlier right, within the meaning of Directive 2008/95 or Regulation No 207/2009, has knowingly ‘acquiesced' in the use of a later mark applied for in good faith for a continuous period of five years, the proprietor of the latter mark must be certain in law that such use can no longer be challenged by the proprietor of that earlier mark or other earlier right.”
As regards the conditions under which the proprietor of the earlier mark or other earlier right may be regarded as having carried out an act that interrupts the period of limitation, the Court observed that the proprietor must bring an administrative or court action before the expiry of the limitation period.
The Court observed that where the proprietor of the earlier mark has issued a warning letter with which the proprietor of the latter mark did not comply, the warning letter will only interrupt the period of limitation in consequence of acquiescence when, following the unsatisfactory response to the warning letter, the proprietor of the earlier mark invokes an administrative or court action to enforce its rights. In contrast, in such a scenario, the failure to bring an administrative or court action will mean that the proprietor of the earlier mark has failed to take the measures available to it to put an end to the alleged infringement of its rights. The Court opined,
“Any interpretation to the effect that sending a warning letter is sufficient to interrupt the period of limitation would allow the proprietor of the earlier mark or other earlier right to circumvent the regime for limitation in consequence of acquiescence by repeatedly sending a warning letter approximately every five years. Such a situation would undermine the objectives of the regime for limitation in consequence of acquiescence and would deprive that regime of its effectiveness.”
Date of action v/s Date of receipt by Defendant: Which one is decisive for calculating the five-year acquiescence period?
Referring to the rule as followed in civil matters, the Court observed that the date on which the application initiating proceedings was lodged is the date on which a court action must be deemed to have been brought.
The Court, though agreed with the opinion of the Advocate General that the lodging of the application initiating proceedings reflects the genuine and unambiguous wish of the applicant to assert its rights, which is sufficient to end acquiescence and to interrupt the period of limitation, it noted that the conduct of that party may nevertheless, raise doubts as to that wish and the seriousness of the action brought before the court.
Noting that the Regional Court with which the applicant had lodged an application initiating proceedings, repeatedly contacted it in order to draw its attention to irregularities that prevented service of the notice on the defendants, the Court opined that the applicant could not claim to have put an end to the acquiescence of the use of the later mark by lodging the application initiating proceedings. The Court noted,
“Where the application initiating proceedings, although filed before the date of expiry of the period of limitation, did not, owing to a lack of diligence on the part of the applicant, satisfy the requirements of the applicable national law for service and was rectified only after that date the action must be regarded as time-barred.”
Consequently, the Court held that it is for the referring court to ascertain whether the date on which the application to initiate proceedings was rectified to enable the court to commence the proceedings and to serve that document on the defendants was within the period of limitation and whether the conduct of the applicant in initiating proceedings could be characterized as lack of diligence.
Whether a proprietor of the earlier mark being time-barred from seeking a declaration of invalidity of a later mark, is also time-barred from bringing ancillary or related claims?
Affirming the opinion of the Advocate General that it would be contrary to the objectives of the regime for limitation in consequence of acquiescence to allow the proprietor of the earlier mark to bring an action against the proprietor of that later mark for damages and injunctions after the end of the limitation period, the Court held,
“If such action or such claims were to succeed after the expiry of the period of limitation, it would amount to leaving intact, beyond that date, the possibility of a finding that the use of the later mark infringes the earlier mark and to attributing a non-contractual liability to the proprietor of the later mark.”
The Court added,
“Such an interpretation of the regime of limitation in consequence of acquiescence would undermine the objective pursued by that regime, which is to give the proprietor of the later trademark the certainty, at the end of that period, that the use of that mark can no longer be challenged, by whatever legal means, by the person that has knowingly acquiesced in its use for an uninterrupted period of five years.”
Conclusion
In the backdrop of above, the Court ruled:
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A warning letter, by which the proprietor of an earlier mark or other earlier right opposes the use of a later mark without taking the necessary steps to obtain a legally binding solution, does not stop acquiescence and, consequently, does not interrupt the period of limitation.
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The application of action will be time-barred where the application initiating proceedings, although filed before the date of expiry of the period of limitation, did not, owing to a lack of diligence on the part of the applicant, satisfy the requirements of the applicable national law for service and was rectified only after that date for reasons attributable to the applicant.
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Where the proprietor of an earlier mark is time-barred from seeking a declaration of invalidity of a later mark and from opposing the use of that later mark, that proprietor is also time-barred from bringing ancillary or related claims, such as claims for damages, the provision of information or the destruction of goods.
[HEITEC AG v. HEITECH Promotion GmbH, C466/20, decided on 19-05-2022]
*Kamini Sharma, Editorial Assistant has reported this brief
