Can a trademark license be discontinued only by one of the mark’s co-owners?

The Advocate General of the European Court M. CAMPOS SÁNCHEZ-BORDONA has provided an opinion in the case C‑686/21 VW, Legea Srl срещу SW, CQ, ET, VW, Legea Srl.

This case focuses our attention on the question of whether one of the co-owners of a trademark can put an end to a license alone without consent from the other co-owners. The background of the case is as follows:

In 1990, VW, SW, CQ and ET formed a general partnership which, on 29 July 1992, filed an application for national registration of the trade mark Legea for sports goods. Registration was granted on 11 May 1995 under the number 650850.

In 1993, the joint proprietors of the trade mark ‘Legea’ unanimously granted Legea Srl (‘the company Legea’) a licence to use that mark for an indefinite period and free of charge. 

In December 2006, VW expressed his dissent to the continuation of the licence. 

In 2009, the company Legea instituted proceedings before the District Court, Naples, Italy)seeking to obtain, inter alia, a declaration of invalidity of certain marks registered by VW which contained the word ‘Legea’. For his part, VW lodged a counterclaim in the same proceedings.

In those proceedings, the dispute concerned:

–  whether the assignment of the use of the mark in 1993 required the unanimous consent of the joint proprietors or, on the other hand, majority agreement was sufficient;

–  whether that assignment could be revoked by the withdrawal of consent by one of the joint proprietors (VW).

On 11 June 2014, the District Court, Naples gave judgment, ruling that the use of the mark by the company Legea was: (a) lawful until 31 December 2006, since it occurred with the unanimous consent of all the joint proprietors; and (b) unlawful after 31 December 2006, in the light of the disagreement expressed by VW.

An appeal was lodged against that judgment before the Court of Appeal, Naples, Italy, which set the judgment aside in part in its judgment of 11 April 2016.

The appeal court held that use of the mark by the company Legea was also lawful in the period after 31 December 2006, because the joint proprietors had legitimately decided by a three quarters majority to allow that company to continue using the mark after that date. In the case of joint proprietorship, there would be no need for the unanimous agreement of the joint proprietors in order to assign the exclusive use of the trade mark to a third party.

VW appealed against the appellate judgment before the Supreme Court of Cassation. In summary, that court has put forward the following arguments as the basis for its request for a preliminary ruling:

– The provisions of the Civil Code governing joint ownership of property, which are applicable to joint proprietorship of trade marks, along with the provisions governing withdrawal from a contract, must be interpreted in the light of EU trade mark legislation.

–  EU trade mark law provides that trade marks may be the subject of a licence and acknowledges the possibility of joint proprietorship of a mark. However, it does not lay down any express rules governing whether the exercise of the rights relating to joint ownership of property requires unanimous or majority agreement in order to assign the right of exclusive use of a mark to a third party, for an indefinite period and free of charge.

– It is also necessary to clarify whether, where such an assignment occurs by unanimous agreement, one of the joint proprietors may subsequently dissent and terminate the assignment.

Against that background, the Supreme Court of Cassation has referred the following questions to the Court of Justice for a preliminary ruling:

‘(1)  Are the EU rules in question [Article 10 of Directive 2015/2436 and Article 9 of Regulation 2017/1001], in so far as they provide for the exclusive rights of the proprietor of an EU trade mark and, at the same time, for the possibility of such a mark being owned by several individuals in shares, to be interpreted as meaning that the assignment to a third party of the exclusive right to use a shared trade mark, free of charge and for an indefinite period, can be decided upon by a majority of the joint proprietors, or as meaning that it requires their unanimous consent instead?

(2) If it is the latter, in the case where an EU trade mark or a national trade mark is owned by several individuals, would it be consistent with the principles of EU law for it to be impossible for one of the joint proprietors of the mark, after the mark has been assigned to a third party by unanimous decision, free of charge and for an indefinite period, unilaterally to withdraw from that decision or, alternatively, would it, on the contrary, be consistent with the principles of EU law if the joint proprietor were not bound in perpetuity by the original intent, such that he or she could retract, with the resulting effect on the act of assignment?’

The Advocate’s opinion is that there is no harmonisation on the EU level and due to that the issue remains to be solved based on the national law and practice in every Member State:

Article 5 of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks and Article 9(1) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark, together with, where relevant, the corresponding provisions of Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks and of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark

are to be interpreted as meaning that in the case of joint proprietorship of a trade mark, the formation of common consent on the part of the joint proprietors to grant a third party a licence to use a national or a European Union trade mark, or to terminate that licence, is governed by the applicable provisions of the Member State.