Can a trademark be invalidated even if the claim for the lawsuit is withdrawn? – an EU Court decision

The European Court has ruled in an important case C‑256/21 KP v TV, Gemeinde Bodman-Ludwigshafen, which concerns the issue of to what extent one trademark can be invalidated if the main claim for the lawsuit is withdrawn. The dispute has the following background:

KP is the proprietor of the EU word mark Apfelzügle (‘the contested mark’), registered on 19 October 2017 for services in Classes 35, 41, and 43. It is common ground that the term ‘Apfelzügle’ denotes a vehicle designed for the harvesting of apples, consisting of several trailers pulled by a tractor.

On 26 September 2018, TV, which operates a fruit farm, and the Municipality of Bodman-Ludwigshafen published promotional information on an activity involving the harvesting and tasting of apples as part of a ride on the Apfelzügle.

KP brought an action for infringement of the contested mark before the Regional Court, Munich, Germany, seeking an order prohibiting TV and the Municipality of Bodman-Ludwigshafen from using the term ‘Apfelzügle’ for the services covered by that mark. Before that court, TV and the Municipality of Bodman-Ludwigshafen filed counterclaims for a declaration of invalidity of the contested mark, pursuant to Article 59(1)(a) of Regulation 2017/1001, read in conjunction with Article 7(1)(b), (c) and (d) thereof.

At the hearing before the Regional Court, Munich, KP withdrew his action for infringement.

TV and the Municipality of Bodman-Ludwigshafen having pursued their counterclaims in spite of that withdrawal, the Landgericht München (Regional Court, Munich), by a judgment of 10 March 2020, held that those claims were admissible, declared the contested mark invalid in respect of the services in Class 41 and rejected the claims in question as to the remainder.

The Municipality of Bodman-Ludwigshafen appealed against that judgment before the Higher Regional Court, Munich, Germany – the referring court – seeking a declaration of invalidity of the contested mark also as regards the services in Classes 35 and 43.

In its decision, the referring court states that it must first assess the admissibility of the counterclaims brought by the defendants in the light of the withdrawal by KP, noting that it is not bound on that point by the decision of the court of first instance.

In that regard, relying on the spirit and purpose of the counterclaim provided for by Regulation 2017/1001, the referring court expresses doubts as to whether an EU trademark court may rule on such a counterclaim if there has been a withdrawal of the action for infringement in response to which the counterclaim was brought.

Specifically, the referring court notes that the registration of an EU trademark is an act of a body of the European Union and that national courts do not have jurisdiction to annul such acts, save in the case of an exception expressly provided for, such as that of the filing of a counterclaim, which is, moreover, confirmed in Article 128(7) of Regulation 2017/1001. In the view of the referring court, EUIPO has ‘jurisdiction in principle’ in the matter, which is conferred on it ‘as a matter of priority’. That follows, inter alia, from Article 63(1) of Regulation 2017/1001.

The referring court observes that, according to the predominant view in German legal literature, a case such as the present one comes not within the scope of Regulation 2017/1001 but rather, pursuant to Article 129(3) of that regulation, within the scope of the rules governing German civil procedure and, specifically, of Paragraph 261(3)(2) of the ZPO, according to which the jurisdiction of the EU trade mark court established as a result of the filing of a counterclaim is independent of the outcome of the action for infringement and cannot therefore cease to exist in the event that that action is withdrawn.

However, in the view of the referring court, the need to give the defendant an opportunity to defend himself or herself no longer exists where, as a result of a withdrawal, there is no longer any need for the EU trademark court to rule on the action for infringement. That interpretation is, moreover, supported by the judgment of 19 October 2017, Raimund (C‑425/16, EU:C:2017:776). Thus, national procedural law should apply only for as long as an action provided for under EU law is pending. Furthermore, such an interpretation would not place an undue and disproportionate burden on the counterclaimant, since he or she will still be able to bring proceedings before EUIPO under Article 63 of Regulation 2017/1001.

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

‘Must Article 124(d) and Article 128 of Regulation 2017/1001 be interpreted as meaning that the EU trademark court has jurisdiction to rule on the invalidity of an EU trademark asserted by a counterclaim within the meaning of Article 128 of Regulation 2017/1001 even after the action for infringement based on that EU trade mark for the purposes of Article 124(a) [of that regulation] has been validly withdrawn?’

The Court’s decision:

Article 124(a) and (d) and Article 128 of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trademark,

must be interpreted as meaning that an EU trademark court hearing an action for infringement based on an EU trade mark the validity of which is challenged by means of a counterclaim for a declaration of invalidity still has jurisdiction to rule on the validity of that mark, in spite of the withdrawal of the main action.

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