Subsidiary, parent company and an EU Court decision

111The European Court issued a decision to what extent a subsidiary company can be responsible for action taken by its parent company. The case C‑617/15 Hummel Holding A/S  v Nike Inc.,  Nike Retail BV concerns the following:

Hummel Holding is an undertaking with its seat in Denmark which manufactures sports goods, sports and leisure clothing and sports and leisure footwear. It is the proprietor of the international figurative trade mark registered under No 943057 with effect in the European Union for goods in Class 25 of the Nice Agreement concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended, corresponding to the following description: ‘Clothing, footwear, headgear’.

Nike, which has its seat in the United States, is the ultimate holding company of the Nike Group, which sells sports goods across the world. Nike Retail, which has its seat in the Netherlands, also belongs to that group. Nike Retail operates the website on which Nike goods are advertised and offered for sale, in Germany in particular. In addition to online sales on that website, Nike goods are sold in Germany through independent dealers supplied by Nike Retail. Wholesale or retail sales in Germany are not directly conducted by the companies in the Nike Group.

Nike Deutschland GmbH, which has its seat in Frankfurt am Main (Germany) and is not a party to the main proceedings, is, according to the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf, Germany), a subsidiary of Nike Retail. Nike Deutschland does not have its own website and does not sell goods to end consumers or intermediaries. However, it negotiates contracts between intermediaries and Nike Retail, and supports Nike Retail in connection with advertising and the performance of contracts. Nike Deutschland also provides aftersales service for end consumers.

Hummel Holding claims that some Nike products, in particular, basketball shorts, infringe the trade mark referred to in paragraph 13 above and that most of the infringements took place in Germany. It brought an action against Nike and Nike Retail before the Landgericht Düsseldorf (Regional Court, Düsseldorf, Germany), which ruled that it had jurisdiction on the ground that Nike Deutschland was an establishment of Nike, but dismissed the action on the merits. Hummel Holding appealed to the referring court against that decision.

Hummel Holding seeks an order that the defendants cease from importing, exporting and advertising those goods, offering them for sale, placing them on the market and allowing them to be placed on the market, in the European Union (in the alternative, in the Federal Republic of Germany) as regards Nike and in the Federal Republic of Germany as regards Nike Retail.

Nike and Nike Retail object that the German courts lack international jurisdiction.

The referring court considers that the international jurisdiction of the German courts to hear the action in respect of the European Union as a whole, brought against the companies in the Nike group, can be based only on Article 97(1) of Regulation No 207/2009. It states, however, that the scope of the concept of ‘establishment’ within the meaning of that provision, with regard to distinct first and second-tier subsidiaries, is disputed and has not been clarified by the Court.

In those circumstances, the Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Under which circumstances is a legally distinct second-tier subsidiary, with its seat in an EU Member State, of an undertaking that itself has no seat in the European Union to be considered as an “establishment” of that undertaking within the meaning of Article 97(1) of [Regulation No 207/2009]?’

The Court’s decision:

Article 97(1) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark must be interpreted as meaning that a legally distinct second-tier subsidiary, with its seat in a Member State, of a parent body that has no seat in the European Union is an ‘establishment’, within the meaning of that provision, of that parent body if the subsidiary is a centre of operations which, in the Member State where it is located, has a certain real and stable presence from which commercial activity is pursued, and has the appearance of permanency to the outside world, such as an extension of the parent body.