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Friday, 21 October 2016

HHJ Hacon amplifies the law on EU trade mark jurisdiction: AMS-Neve v Heritage Audio

Recording studio engineers speak in hushed tones about the 1073 microphone pre-amplifier, and not just because they're habitually conditioned to keeping their voices down in the studio's control room. The “1073” is a top-end piece of vintage studio recording kit, swooned over by musicians and producers alike for "its beautiful top-end, rich lows and euphonically massaged low-mids"

Merpel says: Don't blame me; the IPKat told me to insert
 "a cool picture of some cat with a microphone".
Photo: Marcel Antonisse / Anefo - Nationaal Archief 
All very edifying no doubt, and an unimpeachable excuse for the IPKat to finally use the word "euphonically" in a post, but what's this got to do with IP? 

Well, the “1073” brand of pre-amplifier has been produced by AMS-Neve for over 40 years, so they reacted with some dismay to the appearance of a cloned product, also branded “1073”, on the website of a Spanish company called Heritage Audio. Dismay, quickly followed by the issuance of proceedings for infringement of an EU trade mark registrations, two UK national trade mark registrations, and a claim for passing-off.

Heritage Audio challenged the jurisdiction of the English courts to hear the claim, and HHJ Hacon has issued his decision on this preliminary point , finding that the IPEC has jurisdiction to hear the action for infringement of the UK TM registrations and the action for passing-off but has no jurisdiction over the EUTM infringement action.The decision is AMS Neve Ltd & Ors v Heritage Audio S.L. & Anor [2016] EWHC 2563 (IPEC)

Background

Because this was not a full trial of the action, the findings of fact are preliminary, but evidence was given that Heritage Audio’s website (a) indicated that the products could be bought from a UK distributor, and (b) suggested also that direct orders could be placed on the website of Heritage Audio from anywhere in the EU and that Heritage would ship products using UPS or FedEx. Although there is dispute over whether the website reflected the reality of Heritage's business model, the judge was prepared to accept that the website targeted UK customers. Additionally, Neve’s solicitor gave evidence of a conversation with the identified UK distributor who told her that orders taken by the distributor would be placed with Heritage and the goods would be built to order and shipped to England.

At issue in the case was whether the English court had jurisdiction to hear the claims for EU and national trade mark infringement and for passing-off where the defendant was established in Spain and where all of the actions of the defendant at issue had occurred in Spain., albeit with the effect of targeting sales at UK customers.

The jurisdiction rules

HHJ Hacon distinguished between the jurisdiction rules for national TMs and passing-off on the one hand, these being governed by the Brussels I Regulation, and the rules for EUTMs on the other, being governed by the EU Trade Mark Regulation. Both rule sets say that the primary rule is that jurisdiction is given to the defendant’s home courts, and both provide exceptions allowing another country’s courts to hear an infringement action, but the similarities end there.

National TM infringement

In particular, as the judge noted, Article 7(2) of Brussels allows a much wider scope for an action to be heard elsewhere than the defendant's home country. An action for infringement of a national TM registration can be heard in the 'place where the harmful event occurred or may occur', and this can include the place where the defendant’s actions occurred, or the place where the damaging effects are felt. It is up to the national court of the country where the right exists (i.e. the courts of England and Wales in the case of the UK trade mark registrations) to decide whether damaging effects have been felt in the UK and whether an act occurred that constitutes infringement. In this case, the act complained of was an offer for sale in England, on the principles laid down in L’Oreal v eBay, i.e. the defendant’s website was not merely accessible from the UK but was in fact targeted at (among others) English customers.

The allegedly infringing product on Heritage Audio's site
Passing-off

For passing-off, the judge noted that the CJEU had applied the Brussels I rules not only to trade mark and copyright infringement claims but also to claims based on German unfair competition law in Case C-360/12 Coty Germany GmbH v First Note Perfumes NV [2014] E.T.M.R. 49. He therefore felt safe in saying that the same principles apply to passing-off: the right exists in England, where the protectable goodwill resides, and it is for the English courts to decide if there has been an actionable misrepresentation.

EUTM infringement

EU trade mark infringement rules are different. Jurisdiction for a foreign (to the defendant) court is not based on the place where “the harmful event occurred” (per Brussels I, with this extending to the place where damage was felt), but more specifically is confined to "the Member State in which the act of infringement has been committed or threatened" as stated in Article 97(5) of the Trade Mark Regulation. As the CJEU held in Coty, the “linking factor relates to active conduct on the part of the person causing that infringement. … Consequently, jurisdiction … may be established solely in favour of Community trade mark courts in the Member State in which the defendant committed the alleged unlawful act.”

And since Heritage Audio’s active conduct, i.e. the actions that resulted in the website being targeted at UK customers, occurred in Spain, and this was also where Heritage is established and domiciled, there was no jurisdiction for an English court to hear the action for infringement of the EUTM.

HHJ Hacon noted that there might be some procedural inefficiency in this result, but there was little prospect of conflicting decisions and in any event he could not find otherwise since the EU Trade Mark Regulation sets down rules explicitly acknowledged to be different from the Brussels I rules for infringement of national rights.

Joint tortfeasorship - which law applies?

A final question related to joint tortfeasorship. The sole director of Heritage Audio is named as a second defendant. Neve argued that he was liable as a joint tortfeasor, but Heritage argued that the question of whether he was a joint tortfeasor depended on Spanish law and they made submissions on how the question would be viewed in Spain, which the judge was urged to accept.

HHJ Hacon greeted this Spanish argument with all the enthusiasm of Sir Francis Drake spying a galleon sailing up the English Channel: “I reject this contention. The question whether one party is jointly liable with another for acts of infringement of trade marks and/or passing off in England can be determined only by reference to English law and the relevant facts. The law has been recently considered by the Supreme Court in Sea Shepherd UK v Fish & Fish Limited [2015] UKSC 10[2015] AC 1229, which I sought to summarise in Vertical Leisure Limited v Poleplus Limited [2015] EWHC 841 (IPEC).” He concluded that there was a good arguable case that the director was a joint tortfeasor, and so will be a joint defendant in the trial for UK TM infringement and passing-off. (Then, Merpel presumes, the judge returned to his game of bowls pending the full trial of the action).

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