New EU problems for Facebook regarding privacy protection

The European Court has ruled in case C‑319/20 Meta Platforms Ireland Limited, formerly Facebook Ireland Limited, v Bundesverband der Verbraucherzentralen und Verbraucherverbände – Verbraucherzentrale Bundesverband e.V.

The case concerns the issue of whether consumer protection associations bring legal proceedings for breach of privacy even without a particular mandate from consumers. The dispute has the following background:

Meta Platforms Ireland, which manages the provision of services of the online social network Facebook in the European Union, is the controller of the personal data of users of that social network in the European Union. Facebook Germany GmbH, which has its registered office in Germany, promotes the sale of advertising space at the internet address http://www.facebook.de. The Facebook internet platform contains, inter alia, at the internet address http://www.facebook.de, an area called ‘App-Zentrum’ (‘App Center’) on which Meta Platforms Ireland makes available to users free games provided by third parties. When consulting the App Center of some of those games, an indication appears informing the user that the use of the application concerned enables the gaming company to obtain a certain amount of personal data and, by that use, permission is given for it to publish data on behalf of that user, such as his or her score and other information. The consequence of that use is that the user accepts the general terms and conditions of the application and its data protection policy. In addition, in the case of a specific game, it is stated that the application has permission to post the status, photos and other information on behalf of that user.

The Federal Union, a body which has standing under Paragraph 4 of the Law on Injunctions, considers that the information provided by the games concerned in the App Center is unfair, in particular in terms of the failure to comply with the legal requirements which apply to the obtention of valid consent from the user under the provisions governing data protection. Moreover, it considers that the statement that the application has permission to publish certain personal information of the user on his or her behalf constitutes a general condition which unduly disadvantages the user.

In that context, the Federal Union brought an action for an injunction before the Regional Court, Berlin, Germany against Meta Platforms Ireland based on Paragraph 3a of the Law against unfair competition, the first sentence of point 11 of Paragraph 2(2) of the Law on Injunctions and the Civil Code. It brought that action independently of a specific infringement of a data subject’s right to protection of his or her data and without being mandated to do so by such a person.

The Regional Court, Berlin ruled against Meta Platforms Ireland, in accordance with the form of order sought by the Federal Union. The appeal brought by Meta Platforms Ireland before the Higher Regional Court, Berlin, Germany was dismissed. Meta Platforms Ireland then brought an appeal on a point of law (Revision) before the referring court against the dismissal decision adopted by the Higher Regional Court, Berlin.

The referring court considers that the action brought by the Federal Union is well founded, in so far as Meta Platforms Ireland infringed Paragraph 3a of the Law against unfair competition and the first sentence of point 11 of Paragraph 2(2) of the Law on Injunctions, and used an invalid general condition, within the meaning of Paragraph 1 of the Law on Injunctions.

However, that court has doubts as to the admissibility of the action brought by the Federal Union. It takes the view that it cannot be ruled out that the Federal Union, which did indeed have standing to bring proceedings on the date on which it brought the action – on the basis of Paragraph 8(3) of the Law against unfair competition and point 1 of the first sentence of Paragraph 3(1) of the Law on Injunctions – lost that status during the proceedings, following the entry into force of the GDPR and, in particular, Article 80(1) and (2) and Article 84(1) thereof. If that were the case, the referring court would have to uphold the appeal on a point of law brought by Meta Platforms Ireland and dismiss the action of the Federal Union, since, under German procedural law, standing to bring proceedings must endure until the end of the proceedings at last instance.

According to the referring court, the answer in that regard is not clear from the assessment of the wording, scheme and objectives of the provisions of the GDPR.

As regards the wording of the provisions of the GDPR, the referring court notes that the existence of standing to bring proceedings of not-for-profit bodies, organisations or associations which have been properly constituted in accordance with the law of a Member State, pursuant to Article 80(1) of the GDPR, presupposes that the data subject has mandated a body, organisation or association for it to exercise on his or her behalf the rights referred to in Articles 77 to 79 of the GDPR and the right to compensation referred to in Article 82 of the GDPR where the law of a Member State so provides.

The referring court states that standing to bring proceedings under Paragraph 8(3)(3) of the Law against unfair competition does not cover such an action brought on the basis of a mandate and on behalf of a data subject in order to assert his or her personal rights. On the contrary, it confers on an association, by virtue of a right peculiar to it and stemming from Paragraph 3(1) and Paragraph 3a of the Law against unfair competition, standing to bring proceedings on an objective basis against infringements of the provisions of the GDPR, independently of the infringement of specific rights of data subjects and of a mandate conferred by them.

In addition, the referring court observes that Article 80(2) of the GDPR does not provide for an association’s standing to bring proceedings in order to secure the application, objectively, of the law on the protection of personal data since that provision presupposes that the rights of a data subject laid down in the GDPR have actually been infringed as a result of the processing of specific data.

Furthermore, an association’s standing to bring proceedings, such as that provided for in Paragraph 8(3) of the Law against unfair competition, cannot result from Article 84(1) of the GDPR, under which the Member States are to lay down the rules on other penalties applicable to infringements of that regulation and are to take all measures necessary to ensure that they are implemented. The standing of an association, such as that referred to in Paragraph 8(3) of the Law against unfair competition, cannot be regarded as constituting a ‘penalty’ within the meaning of that provision of the GDPR.

As regards the scheme of the provisions of the GDPR, the referring court considers that it may be inferred from the fact that it harmonised, inter alia, the powers of the supervisory authorities that it is principally for those authorities to verify the application of the provisions of that regulation. However, the expression ‘without prejudice to any other … remedy’, which appears in Article 77(1), Article 78(1) and (2) and Article 79(1) of the GDPR, may undermine the argument that oversight of the application of the law is exhaustively governed by that regulation.

As regards the objective of the provisions of the GDPR, the referring court notes that the effectiveness of that regulation may support an argument in favour of associations having standing to bring proceedings on the basis of competition law, in accordance with Paragraph 8(3)(3) of the Law against unfair competition, independently of the infringement of specific rights of data subjects, since that would allow an additional opportunity to supervise the application of the law to remain, in order to ensure as high a level as possible of protection of personal data, in accordance with recital 10 of the GDPR. Nonetheless, accepting that associations have standing to bring proceedings under competition law may be considered to run counter to the objective of harmonisation pursued by the GDPR.

In the light of those considerations, the Federal Court of Justice decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Do the rules in Chapter VIII, in particular in Article 80(1) and (2) and Article 84(1), of [the GDPR] preclude national rules which – alongside the powers of intervention of the supervisory authorities responsible for monitoring and enforcing the Regulation and the options for legal redress for data subjects – empower, on the one hand, competitors and, on the other, associations, entities and chambers entitled under national law, to bring proceedings for breaches of [the GDPR], independently of the infringement of specific rights of individual data subjects and without being mandated to do so by a data subject, against [the person responsible for that infringement] before the civil courts on the basis of the prohibition of unfair commercial practices or breach of a consumer protection law or the prohibition of the use of invalid general terms and conditions?’

The Court’s decision:

Article 80(2) of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) must be interpreted as not precluding national legislation which allows a consumer protection association to bring legal proceedings, in the absence of a mandate conferred on it for that purpose and independently of the infringement of specific rights of the data subjects, against the person allegedly responsible for an infringement of the laws protecting personal data, on the basis of the infringement of the prohibition of unfair commercial practices, a breach of a consumer protection law or the prohibition of the use of invalid general terms and conditions, where the data processing concerned is liable to affect the rights that identified or identifiable natural persons derive from that regulation.

Infringement of BMW wheel rims Community design – a European Court decision

The European Court has ruled in case C‑421/20 Acacia Srl v Bayerische Motoren Werke AG, which targets the issue of Community design enforcement and the applicable national jurisdiction. The case has the following background:

Acacia is a company incorporated under Italian law which produces, in Italy, wheel rims for motor vehicles and distributes them in a number of Member States.

Taking the view that Acacia’s distribution of certain wheel rims in Germany constitutes an infringement of a registered Community design of which it is the holder, BMW brought an action for infringement before a Community design court designated by the Federal Republic of Germany. That court declared that it had jurisdiction pursuant to Article 82(5) of Regulation No 6/2002. Acacia, in its capacity as defendant, argued that the wheel rims at issue are covered by Article 110 of that regulation and that there is therefore no infringement.

That court held that Acacia had committed the acts of infringement alleged by BMW, ordered that the infringement be brought to an end and, referring to Article 8(2) of Regulation No 864/2007, applied German law to BMW’s ‘supplementary’ claims seeking damages, the provision of information, the provision of documents, the surrender of accounts and the handing over of infringing products with a view to their being destroyed. On the basis of the rules contained in that national law, those claims were, in essence, upheld.

Acacia brought an appeal before the referring court. It disputes the existence of an infringement and takes the view, furthermore, that the law applicable to BMW’s supplementary claims is Italian law.

The referring court states that the jurisdiction of the Community design courts designated by the Federal Republic of Germany arises, in the present case, from Article 82(5) of Regulation No 6/2002 and that Acacia has committed the acts of infringement alleged by BMW.

However, it has doubts as to which national law applies to BMW’s supplementary claims. The referring court observes that the outcome of the dispute will, to some extent, depend on that question, since the rules of German law on the provision of documents and the surrender of accounts differ from those of Italian law.

That court considers that it could follow from Article 8(2) of Regulation No 864/2007, as interpreted by the Court in the judgment of 27 September 2017, Nintendo (C‑24/16 and C‑25/16, EU:C:2017:724), that Italian law applies in the present case. The referring court finds, in that regard, that the event giving rise to the damage is located in Italy, since the products at issue were delivered to Germany from that other Member State.

Nevertheless, the infringing products at issue in the main proceedings were sold in Germany and, to that end, were advertised online to consumers located in the territory of that Member State.

In those circumstances the Higher Regional Court, Düsseldorf, Germany decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1. In proceedings for an infringement of Community designs, can the national court dealing with the infringement proceedings having international jurisdiction pursuant to Article 82(5) of [Regulation No 6/2002] apply the national law of the Member State in which the court dealing with the infringement proceedings is situated (lex fori) to [supplementary] claims in relation to the territory of its Member State?

2. If Question 1 is answered in the negative: Can the “initial place of infringement” for the purposes of the [Court in judgment of [27 September 2017, Nintendo (C‑24/16 and C‑25/16, EU:C:2017:724)] regarding the determination of the law applicable to [supplementary] claims under Article 8(2) of [Regulation No 864/2007] also lie in the Member State where the consumers to whom internet advertising is addressed are located and where goods infringing designs are put on the market within the meaning of Article 19 of [Regulation No 6/2002], in so far as only the offering and the putting on the market in that Member State are challenged, even if the internet offers on which the offering and the putting on the market are based were launched in another Member State?’

The Court’s decision:

Article 88(2) and Article 89(1)(d) of Council Regulation (EC) No 6/2002 of 12 December 2001 of Community designs, and Article 8(2) of Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) must be interpreted as meaning that the Community design courts before which an action for infringement pursuant to Article 82(5) of Regulation No 6/2002 is brought concerning acts of infringement committed or threatened within a single Member State must examine the claims supplementary to that action, seeking the award of damages, the submission of information, documents and accounts and the handing over of the infringing products with a view to their being destroyed, on the basis of the law of the Member State in which the acts allegedly infringing the Community design relied upon are committed or are threatened, which is the same, in the circumstances of an action brought pursuant to that Article 82(5), as the law of the Member State in which those courts are situated.

CJEU confirmed that private copying compensations include cloud storage too

The European Court has ruled recently in the Case C‑433/20 Austro-Mechana Gesellschaft zur Wahrnehmung mechanisch-musikalischer Urheberrechte Gesellschaft mbH v Strato AG.

This case has the following background:

Austro-Mechana is a copyright collecting society which, acting in its own name but in a fiduciary capacity in the interest and on behalf of the rightholders, exercises, inter alia, the statutory rights to the remuneration that is due under Paragraph 42b(1) of the Law on Copyright, in the version applicable to the dispute in the main proceedings.

Austro-Mechana applied to the Commercial Court, Vienna, Austria for an order to allow it to invoice for, and take payment of remuneration in respect of, ‘storage media of any kind’, on the ground that Strato provides its business and private customers with a service known as ‘HiDrive’, by which it makes cloud computing storage space available to them.

Strato contested the application on the ground that no remuneration was due in respect of cloud computing services. That company stated that it had already paid the required copyright fee in Germany, the Member State in which its servers are hosted, that fee having been incorporated in the price of the servers by their manufacturer or importer. It added that users in Austria had also already paid a levy for the making of private copies (‘the private copying levy’) on the terminal equipment necessary to upload content to the cloud.

By judgment of 25 February 2020, the Commercial Court, Vienna dismissed Austro-Mechana’s application, holding that Strato does not make storage media available to its customers, but provides them with an online storage service.

Austro-Mechana appealed against that judgment to the Higher Regional Court, Vienna, Austria, which observes, referring to the judgment of 29 November 2017, VCAST (C‑265/16, EU:C:2017:913), that it is not entirely clear whether the storage of content in the context of cloud computing comes within the scope of Article 5(2)(b) of Directive 2001/29.

In those circumstances, the Higher Regional Court, Vienna decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1) Is the expression “on any medium” in Article 5(2)(b) of Directive [2001/29] to be interpreted as meaning that it also includes servers owned by third parties which make available to natural persons (customers) for private use (and for ends that are neither directly nor indirectly commercial) storage space on those servers which those customers use for reproduction by storage (“cloud computing”)?

(2) If so: is the provision cited in Question 1 to be interpreted as meaning that it is applicable to national legislation under which the author is entitled to equitable remuneration (remuneration for exploitation of the right of reproduction on storage media), in the case:

–   where a work (which has been broadcast, made available to the public or recorded on a storage medium produced for commercial purposes) is by its nature likely to be reproduced for personal or private use by being stored “on a storage medium of any kind which is suitable for such reproduction and, in the course of a commercial activity, is placed on the market in national territory”,

–    and where the storage method used in that context is that described in Question 1?’

The Court’s decision:

1.  Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the expression ‘reproductions on any medium’, referred to in that provision, covers the saving, for private purposes, of copies of works protected by copyright on a server in which storage space is made available to a user by the provider of a cloud computing service.

2.  Article 5(2)(b) of Directive 2001/29 must be interpreted as not precluding national legislation that has transposed the exception referred to in that provision and that does not make the providers of storage services in the context of cloud computing subject to the payment of fair compensation in respect of the unauthorised saving of copies of copyright-protected works by natural persons, who are users of those services, for private use and for ends that are neither directly nor indirectly commercial, in so far as that legislation provides for the payment of fair compensation to the rightholders.

Which party bears the burden to prove genuine use of a trademark? – an EU Court decision

The European Court has ruled in case C‑183/21 Maxxus Group GmbH & Co. KG v Globus Holding GmbH & Co. KG.

The case, which poses the question of who bears the burden to prove genuine use of a trademark, has the following background:

Under Paragraph 49(1) of the Law on the protection of trademarks and other signs) of 25 October 1994 (BGBl. 1994 I, p. 3082, the registration of a trademark is, upon application, to be cancelled on the ground of revocation if the trademark has not been used within a continuous period of five years.

Under Paragraph 55(2)(1) of that law, any person may bring an action pursuant to Paragraph 49 thereof for a declaration of revocation of a trademark in so far as he or she pleads non-use of that mark.

The facts giving rise to the dispute in the main proceedings and the question referred for a preliminary ruling

Globus is the proprietor of the word mark MAXUS. That mark was registered in July 1996 at the German Patent and Trade Mark Office, Germany for a number of goods in Classes 1 to 9 and 11 to 34.

In addition, Globus is the proprietor of the following figurative mark, registered at the German Patent and Trade Mark Office in May 1996 for goods in Classes 1 to 9 and 11 to 34:

On 28 November 2019, Maxxus brought before the Regional Court, Saarbrücken, Germany, which is the referring court, an action seeking, in essence, a declaration revoking Globus’s trademarks referred to in paragraphs 13 and 14 of the present judgment on the ground of non-use.

In support of its application, Maxxus submits that over the past five years Globus did not make a use of those trademarks that is such as to preserve its rights over them. Maxxus states that it has searched online, including on Globus’s website, and that those searches have provided no indication of such use. If the term ‘MAXUS’ is entered in the internal search tool on Globus’s website, two results are displayed, which refer to a beverage store in Germany operated by a company connected to Globus. However, it is apparent from research on the internet that the beverages sold by that company bear not the trademark MAXUS, but other marks of third-party manufacturers. That was confirmed by investigations carried out in the store in question by a detective agency instructed by Maxxus.

Globus disputes those contentions and maintains that it has made a use of the two trademarks at issue that is such as to preserve its rights over them.

The referring court points out that, in the context of proceedings for revocation of a trademark for non-use, under the case-law of the Bundesgerichtshof (Federal Court of Justice, Germany) a distinction is to be drawn between the burden of setting out the facts (Darlegungslast) and the burden of proof. As regards the setting out of the facts, it is incumbent upon the applicant to set out, in a substantiated manner, the matters intended to show non-use of the trademark. For that purpose, it should, using its own resources, conduct an investigation to ascertain whether the proprietor used the mark concerned in such a way as to preserve its rights. Since the applicant does not, generally, have knowledge of the business processes of the proprietor of the mark, the proprietor could then bear a ‘secondary’ burden of setting out the facts. As to the burden of proof in respect of non-use, that burden rests on the applicant.

The referring court observes that, following the judgment of 22 October 2020, Ferrari (C‑720/18 and C‑721/18, EU:C:2020:854, paragraph 82), in which the Court of Justice ruled that the burden of proof that a trade mark has been put to ‘genuine use’, within the meaning of Article 12(1) of Directive 2008/95, rests on the proprietor of that mark, the abovementioned case-law of the Bundesgerichtshof (Federal Court of Justice) relating to the burden of proof is no longer tenable. It considers, however, that the question whether national law may continue to place the burden of setting out the facts on the applicant remains unresolved. In its view, that question must be answered in the affirmative.

In that regard, the referring court provides explanation of the distinction drawn in German law between the burden of setting out the facts and the burden of proof. The burden of setting out the facts requires a party to be as concrete as possible in its submissions, at the risk of losing the case if it does not fulfill that obligation. German procedural law also imposes on the defendant a secondary burden of setting out the facts. Each of the parties is required to carry out investigations in their own sphere of activity. Those various burdens and obligations are separate from the burden of proof. The burden of setting out the facts differs from the burden of proof in that each party must present submissions concerning the facts that are known to it or can be researched with reasonable effort.

The referring court takes the view that EU law, and, in particular, Directive 2015/2436, do not preclude the burden of setting out the facts from being placed on the party that applies for revocation of a trademark for non-use. That burden may be justified by a weighing up of the interests of the parties concerned. In proceedings for revocation of a trademark for non-use, it is incumbent upon the applicant to verify, to the extent possible, whether the defendant has put its mark to genuine use. It is only after such an investigation has been conducted and its results set out that the defendant is to be required to reveal the use that it has made of its mark. Since no specific legal interest in bringing proceedings is required in order to apply for revocation of a trademark for non-use, any person might require the proprietor to disclose the use that it makes of its mark, entailing a serious risk of proceedings being brought that constitute an abuse. The applicant could require the proprietor of the mark concerned to give up trade secrets and to make considerable efforts in the research necessary to demonstrate genuine use of its mark.

Since Directive 2015/2436 does not govern the national procedure relating to an application for revocation of a trademark for non-use, the referring court takes the view that the judgment of 22 October 2020, Ferrari (C‑720/18 and C‑721/18, EU:C:2020:854), does not preclude the applicant from bearing a burden of setting out the facts as contemplated by that court.

It was in those circumstances that the Regional Court, Saarbrücken decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Is EU law, in particular with regard to [Directive 2008/95], in particular in Article 12, and Directive [2015/2436], in particular in Articles 16, 17 and 19, to be interpreted as meaning that the effet utile of those provisions prohibits an interpretation of national procedural law which:

(a)  imposes on the applicant in civil proceedings for cancellation of a nationally registered trademark on grounds of revocation for non-use a burden of setting out the facts, as distinguished from the burden of proof; and

(b)  requires the applicant, in the context of that burden of setting out the facts,

–   to make, in such proceedings, substantiated submissions regarding the defendant’s non-use of the trademark, to the extent that it is possible for the applicant to do so; and

–  to carry out, for that purpose, its own research into the market, in a manner which is appropriate to the request for cancellation and to the specific nature of the trademark concerned?’

The EU Court’s position:

Article 19 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 trademarks must be interpreted as precluding a procedural rule of a Member State which, in proceedings concerning an application for revocation of a trademark for non-use, requires the applicant to carry out market research concerning the possible use of that mark by its proprietor and to make in that regard, to the extent possible, substantiated submissions in support of its application.

When a lip balm package can be a European trademark?

Registration of three-dimensional trademarks sometimes is gambling without any guarantees for success.

Recently the General Court of the European Union has ruled in the case C‑672/21 P, Eos Products Sàrl v EUIPO, which targets this issue.

The US company Eos Products filed the following three-dimensional European trademark, which represents an egg-shaped lip balm package for classes 3, 5, and 21:

The EUIPO refused registration of the sign based on absolute grounds – lack of distinctive character. What’s more, the Office concluded that the shape of the products does not depart significantly from similar products in the market, which is one of the requirements for 3D signs to be successfully registered as trademarks.

The decision was appealed with the argument that the sign had inherent distinctiveness. In addition, the US company submitted evidence for acquiring one.

The Board of Appeal dismissed the arguments for the inherent distinctive character of the product finding that many other similar forms existed which was clear even from the paper submitted by the applicant itself.

For the acquired secondary distinctiveness, the Board concluded that evidence was insufficient. Eos Products gave example for the use of the lip balm container but for packages in different colors. This was in contrast with the way how the 3D mark was applied for – in white.

What’s more all of the submitted lip balm packages included the word part EOS. The available surveys concerned only Germany and Austria which was not enough in order acquired distinctiveness to be proved for the entire territory of the EU.

So registration of three-dimensional trademarks can be a real challenge. In another similar case, however, the applicant of 3D mark for the lipstick container Guerlain successfully overcame an initial refusal by the EUIPO.

Source: IPKat.

Skechers lost a trademark dispute in the EU

The US-based footwear company Skechers lost a case T‑598/20 before the General Court of the European Union.

The dispute at hand concerns an application for a European trademark ARCHFIT in class 25 – Footwear.

The EUIPO refused to register this sign based on absolute grounds Article 7(1)(b) and (c) of Regulation 2017/1001 – descriptiveness and lack of distinctiveness.

The decision was appealed. According to Skechers, the Office erred in its assessment because the sign could have more than one meaning. What’s more a similar mark EXACT FIT was registered as an EU trademark in classes 18 and 25 overcoming an initial refusal.

The General Court, however, dismissed the appeal finding the EUIPO decision as correct in the light of the particular circumstances.

According to the Court:

 In the present case, in the first place, in the context of footwear, the average consumer, who is reasonably well informed and reasonably circumspect, in the relevant public, namely the English-speaking general public, will perceive the element ‘arch’ as relating to the ‘raised part of the foot formed by a curved section of bones’. That meaning is one of the basic – that is to say, not remote or nuanced – meanings of that word, as is apparent from the online dictionary for English learners that can be consulted at the following address: https://www.oxfordlearnersdictionaries.com. When confronted with the word ‘arch’ designating footwear, the English-speaking general public will not engage in an analysis for the purpose of verifying, on its part, whether other meanings of the word ‘arch’ could also be chosen. In connection with footwear, that public will not hesitate to associate that word with the human foot.

As for the element ‘fit’, the English-speaking general public will understand it as a verb referring directly to the meaning of the terms ‘be the right shape and size for somebody/something’, in accordance with one of the first meanings of that verb set out in the online dictionary referred to in paragraph 39 above. This is a common and obvious meaning that will come to mind naturally and without further thought for the relevant public. The element ‘fit’ could also be perceived by the relevant public as a common noun referring, in the circumstances of the present case, to the meaning of the terms set out in the online dictionary referred to in paragraph 39 above, the ‘way that two things match each other or are suitable for each other’, such as in the expression ‘a perfect fit’. The average consumer, who is reasonably well informed and reasonably circumspect and part of the English-speaking general public will rule out any other meaning of the element ‘fit’ in the circumstances of the present case. More specifically, he or she will not think of the meaning that ‘fit’ has in, for example, the expressions ‘a fit of laughter’ or ‘epileptic fit’.

Without there being any need to ascertain whether, in the mark applied for, the word ‘fit’ will be perceived as a verb or a common noun, it must be stated that, as the Board of Appeal stated correctly of the contested decision, the combination of the words ‘arch’ and ‘fit’ will be understood by the English-speaking general public as an indication that the footwear designated by the mark applied for is designed specifically to fit the arch of the user’s foot.

The fact that the footwear fits or must fit the foot, the raised part of the human foot called ‘the arch’ in particular, must be regarded as the description of one of the characteristics which is objective and inherent to the nature of those goods and intrinsic and permanent with regard to those goods, within the meaning of the case-law cited.

In the second place, it must be borne in mind that, according to case-law, if a mark which consists of a word produced by a combination of elements is to be regarded as descriptive, it is not sufficient that each of its components may be found to be descriptive. The word itself must be found to be descriptive (judgment of 12 February 2004, Koninklijke KPN Nederland, C‑363/99, EU:C:2004:86). This applies mutatis mutandis to an expression which is merely a combination of word elements. Moreover, it must be borne in mind that, as a general rule, a mere combination of elements, each of which is descriptive of characteristics of the goods or services in respect of which registration is sought, itself remains descriptive of those characteristics. Merely bringing those elements together without introducing any unusual variations, in particular as to syntax or meaning, cannot result in anything other than a mark consisting exclusively of signs or indications which may serve, in trade, to designate characteristics of the goods or services concerned (judgment of 12 February 2004, Koninklijke KPN Nederland, C‑363/99, EU:C:2004:86).

In the present case, not only are the terms ‘arch’ and ‘fit’ capable, in themselves, of communicating a descriptive message relating to footwear, but so is their combined use. Taken as a whole, the grammatical structure of the expression ‘arch fit’ is not so unusual as to lead to a finding that it modifies the message communicated by each of those elements by itself in the context of footwear.

In the third and last place, it must be found that, in the present case, the link between the mark applied for and the goods in question, namely footwear, is sufficiently direct and specific, within the meaning of the case-law cited in paragraph 28 above, for the relevant public immediately to perceive, without any particular mental effort, that mark as the description of one of the characteristics of those goods. For the English-speaking general public, the message communicated by ‘arch fit’ in connection with footwear will be unambiguous, as the words comprising that expression will be understood in accordance with one of their basic meanings and that expression does not contain any grammatical or semantic peculiarities likely to modify those basic meanings.

A Subsidiary can have problems in case of competition disputes in the EU

The European Court has ruled in case C‑882/19 Sumal SL v Mercedes Benz Trucks España SL. This dispute has the following background:

Mercedes Benz Trucks España is a subsidiary company in the Daimler group, the parent company of which is Daimler. Between 1997 and 1999, Sumal acquired two trucks from Mercedes Benz Trucks España, via the intermediary Stern Motor SL, a dealership for the Daimler group.

On 19 July 2016, the Commission adopted Decision C(2016) 4673 final relating to proceedings under Article 101 [TFEU] and Article 53 of the EEA Agreement (Case AT.39824 – Trucks), a summary of which was published in the Official Journal of the European Union of 6 April 2017 (OJ 2017 C 108, p. 6) (‘the decision of 19 July 2016’).

According to that decision, 15 European truck producers, including Daimler, participated in a cartel that took the form of a single continuous infringement of Article 101 TFEU and Article 53 of the Agreement on the European Economic Area of 2 May 1992 (OJ 1994 L 1, p. 3), consisting of concluding collusive arrangements on pricing and gross price increases for trucks in the European Economic Area (EEA) and on the timing and the passing on of costs for the introduction of emission technologies for those trucks as required by the standards in force. For 3 of the participating companies, that infringement took place between 17 January 1997 and 20 September 2010 and, for the 12 other participating companies, including Daimler, between 17 January 1997 and 18 January 2011.

Following that decision, Sumal brought an action for damages before the Commercial Court no 07 of Barcelona, Spain seeking to obtain from Mercedes Benz Trucks España a payment of EUR 22 204.35, corresponding to the additional cost of acquisition that it bore due to the cartel in which Daimler, the parent company of Mercedes Benz Trucks España, had taken part.

By a judgment of 23 January 2019, that court rejected the action on the ground that Mercedes Benz Trucks España could not be sued by means of that action since Daimler, which alone is referred to in the Commission decision, must be regarded as solely responsible for the infringement concerned.

Sumal brought an appeal against that judgment before the referring court, which wonders whether the actions for damages following decisions of competition authorities making findings of anticompetitive practices may be brought against subsidiary companies which are not referred to in those decisions but which are wholly owned by the companies directly referred to in those decisions.

In that regard, it sets out the differences in the positions adopted by the Spanish courts. Whereas some of those courts accept that such actions may be brought against subsidiary companies, relying on the ‘doctrine of a single economic unit’, others reject such actions on the ground that that doctrine permits the civil liability of a subsidiary company to be attributed to a parent company but does not permit a subsidiary company to be sued as a result of the conduct of its parent company.

In those circumstances, the Provincial Court of Barcelona, Spain decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)  Does the doctrine of the single economic unit developed by the [Court] itself provide grounds for extending liability from the parent company to the subsidiary, or does the doctrine apply solely in order to extend liability from subsidiaries to the parent company?

(2) In the context of intra-group relationships, should the concept of single economic unit be extended solely on the basis of issues of control, or can it also be extended on the basis of other criteria, including the possibility that the subsidiary may have benefited from the infringing acts?

(3) If it is possible to extend liability from the parent company to the subsidiary, what would be required in order for it to be possible?

(4) If the answers to the earlier questions support the extension of subsidiaries’ liability to cover acts of the parent company, would a provision of national law such as Article 71(2) of the [Law on the Protection of Competition], which provides only for liability incurred by the subsidiary to be extended to the parent company, and then only where the parent company exercises control over the subsidiary, be compatible with that line of the Court’s case‑law?’

The Court’s decision:

  1. Article 101(1) TFEU must be interpreted as meaning that the victim of an anticompetitive practice by an undertaking may bring an action for damages, without distinction, either against a parent company who has been punished by the Commission for that practice in a decision or against a subsidiary of that company which is not referred to in that decision, where those companies together constitute a single economic unit. The subsidiary company concerned must be able effectively to rely on its rights of the defence in order to show that it does not belong to that undertaking and, where no decision has been adopted by the Commission under Article 101 TFEU, it is also entitled to dispute the very existence of the conduct alleged to amount to an infringement.
  2. Article 101(1) TFEU must be interpreted as precluding a national law which provides for the possibility of imputing liability for one company’s conduct to another company only in circumstances where the second company controls the first company.