Trademark Infringement and Conflict of Laws

(IPRinfo 2/2009)

Sami Sunila
Senior Associate, Roschier, Attorneys Ltd

Rome II, i.e. the regulation on the law applicable to non-contractual obligations entered in force on 11 January 2009. What does it actually mean for intellectual property rights? It is time to revisit conflict of laws in the field of trademark infringements.

Subject to the principle of territoriality, the exclusive rights conferred by a trademark are limited to the relevant country of protection and cannot be enforced beyond its borders. The same is true for Community trademark rights, except that the country of protection for them is not a national state but the territory of the European Communities.

Under this territorial model, the enforcement of trademark rights is in many cases rather straightforward, at least from the viewpoint of private international law. The domicile of the infringer, the place of the infringing acts and the country of protection all coincide. As a result, there is hardly any need to bother one’s mind with the intricacies of private international law and the rules relating to conflict of laws.

However, in an era of the internet and digital technology, this has changed. Communication and trade are now much less confined to the borders of a nation-state than they used to be, and the number of cross-border trademark infringements is rising. Arguably, this would increase the need for a predictable and workable rule for a conflict of laws.

Rome II provides uniform rules for conflict of laws
The purpose of a conflict of laws rule is to provide a solution for situations in which the laws of more than one country would be eligible for application. Bearing in mind the varying legal traditions across Europe, it is no wonder that the issue of applicable law has not escaped the ever-so-vigilant eyes of the Community legislator.

After years of negotiations, Regulation 864/2007/EC on the law applicable to non-contractual obligations (Rome II) entered into force on 11 January 2009.

Rome II establishes uniform conflict of laws rules, which the courts in EU Member States must apply to disputes involving non-contractual obligations, including those arising from trademark infringements.

The general rule in Rome II is that the applicable law to non-contractual obligations is the law of the country in which the damage occurs (lex loci damni). As an exception to the general rule, the applicable law to the infringement of intellectual property rights is, according to Article 8 of Rome II, the law of the country of protection (lex loci protectionis).

Infringement of a national trademark
Before embarking on the implications of Rome II, it is necessary to recall what the situation was before. According to the traditional and well-established view, the infringement of a national trademark right was governed by the law of the country for which protection is claimed (lex loci protectionis).

For example, if a case concerning infringement of a trademark registered in country A was heard by a court in country B (assuming it had jurisdiction), the court would have applied the trademark law of country A.

The arguments in favor of the lex loci protectionis are numerous. It has mainly been argued that the rule is best suited to ensure that the principle of territoriality is respected. Also, national treatment provisions in Article 3(1) of the TRIPS Agreement and Article 2 of the Paris Convention have been seen an indication in favor of the lex loci protectionis. In this regard, it came as no surprise that Rome II adheres to the lex loci protectionis rule in cases of infringement of national IP rights.

Given that the traditional view and Rome II coincide, does Rome II then actually bring any changes to the issue of applicable law to trademark infringement? The answer is yes. Not all EU Member States have so far adhered to the lex loci protectionis. Rome II will at least change that.

Rome II brought questions of choice of law within the jurisdiction of the European Court of Justice. Furthermore, under Rome II the parties have no freedom of choice with regard to the applicable law.

In an infringement case involving multiple countries where the court and parties are faced with the prospect of having to apply multiple laws, the absolute ban on party autonomy may have wide-ranging implications, not least on the legal fees to be borne by the parties.

Law applicable to infringement of community trademark
According to Articles 14(1) and 97(1) of the Community Trademark Regulation 40/94/EEC (CTMR), the applicable law to the infringement of a Community trademark is the CTMR itself.

This solution is dictated by the nature of the Community trademark as an autonomous and unitary right, which should have the same effects across the European Union, irrespective of where and by which court the case is being handled. In this regard, Rome II simply preserves the existing rule.

In an infringement case, the CTMR thus governs the main substantive issues such as the scope of the exclusive rights as well as the usual defences (revocation and invalidation of the community trademark). As for remedies against infringement, only an injunction is directly provided for in the CTM Regulation.

For other aspects of infringement, recourse is made to applicable national laws. Under Article 97(2) of CTMR, a court shall apply its national law (lex fori) to the infringement of a Community trademark if no appropriate rule could be found in the CTM Regulation.

With regard to remedies other than an injunction, a court shall according to Article 98(2) apply the law of the country in which the act of infringement took place (lex loci delicti). Under Article 99, for interim measures regarding community trademark the applicable law is generally the lex fori.

An improvement of the current situation?
Rome II contains an attempt to replace these references to national laws. It provides for a new conflict of laws rule in Article 8(2): for any question that is not governed by the CTM Regulation, the applicable law is the law of the country in which the act of infringement was committed (lex loci delicti).

Although the new rule is surely intended by the Community legislator as an improvement of the current situation, the question may arise if any improvement is actually provided? At least in the case where a Community trademark has been infringed through several acts in multiple countries, the application of this rule seems to result in a multitude of different laws becoming applicable to those questions that are not governed by the CTM Regulation.

Moreover, there are some uncertainties as to the actual scope of the new rule and its relationship with the provisions of the CTM Regulation. According to Article 27 of Rome II, it shall not prejudice the application of provisions of Community law which lay down conflict of laws rules for particular matters.

Do the provisions of the CTM Regulation therefore remain intact? The answer probably is that the provisions in Article 97(2) and 98(2), at least, are not regarded as proper conflict of laws rules. Therefore they would be replaced by Article 8(2) of Rome II. This is a literal interpretation, which may subject to further development by the European Court of Justice.

More power to the ECJ?
At first sight, Rome II does not seem to change the landscape for the applicable law in trademark infringement cases very much. It simply preserves the existinglex loci protectionis rule. However, having scratched the surface a little, there may be more to it than meets the eye.
The greatest impact of Rome II may well be in that it gives the European Court of Justice jurisdiction to try cases regarding the applicable law. As is well known, the Court does not shy away from its powers to further develop the written law.

Legislation:
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).
OJ L 199, 31.7.2007, p. 40-49

Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (CTMR)
[OJ L 11, 14.1.1994] was repealed by a codified regulation in February 2009
Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (codified version)
OJ L 78, 24.3.2009