The Court of Justice of the European Union on the appropriate territorial scope of EU trademark injunctions

On 22 September 2016, the Court of Justice of the European Union handed down an important decision in the field of procedural EU trademark law. The question referred to the CJEU related to the appropriate territorial scope of an injunction granted in favour of the proprietor of an EU trademark. The CJEU held that, where an EU trademark court finds that there only exists a likelihood of confusion in a certain area of the European Union, the scope of the injunction granted to the trademark owner should be territorially limited to this specific area (Case C-223/15, combit Software GmbH v. Commit Business Solutions Ltd).

Combit Software GmbH (hereinafter: “combit”) is a company active in the sector of software development and marketing and is the proprietor of a German as well as an EU trademark registration for the sign “combit”. Faced with an Israeli competitor, more specifically the company Combit Business Solutions Ltd (hereinafter “Combit”), who sold software bearing the word sign “Commit” through its website www.commitcrm.com, combit brought proceedings against Combit before the Regional Court of Düsseldorf (Landgericht) based on both of its word marks.

The Landgericht Düsseldorf dismissed combit’s claim on the basis of the EU word mark registration, but upheld combit’s alternative claim on the basis of the German registration. Seeking an EU-wide injunction instead of a purely national one, combit brought an appeal against the Landgericht’s decision before the Higher Regional Court of Düsseldorf (Oberlandesgericht).

While the Oberlandesgericht accepted the existence of confusion between the signs “combit” and “Combit” on the part of the average German-speaking consumer, it was less convinced of this stance in relation to English speakers. In the court’s view, the average English-speaking consumer could readily understand the conceptual difference between (i) the English verb ‘to commit’ and (ii) the word “combit”, as “combit” is made up of the letters “com” for computer and “bit” for “binary digit”. The Oberlandesgericht considered that the phonetic similarity between “Commit” and “combit” is, from the perspective of the aforementioned English-speaking consumer, cancelled out by that conceptual difference. Unsure regarding the consequences of this viewpoint on the appropriate scope of the injunction which was to be granted, the Oberlandesgericht decided to submit the following question to the CJEU:

“In the assessment of the likelihood of confusion of an EU word mark, what is the significance of a situation in which, from the perspective of the average consumer in some Member States, the phonetic similarity of the EU trade mark with another sign claimed to infringe that trade mark is cancelled out by a conceptual difference, whereas from the perspective of the average consumer in other Member States it is not?

(a) In assessing the likelihood of confusion, is the perspective of some Member States, of the other Member States, or that of a fictive EU average consumer decisive?

(b) If there is a likelihood of confusion only in some Member States, has the EU trade mark been infringed across the European Union, or must the Member States be differentiated individually?”

In its decision, the CJEU quickly reverted to the function theory in EU trademark law, according to which there can only be a trademark infringement in case the allegedly infringing use affects or is liable to affect one of the functions of the trademark, be it the indication of the origin of the goods/services or the functions of quality guarantee, communication, investment or advertising. Important CJEU decisions in this regard are i.a. Arsenal (Case C-206/01), Adam Opel (Case C-48/05), Google France (Cases C-236/08 to C-238/08), Budweiser (Case C-482/09) and Interflora (Case C-323/09).

When the national court comes to the conclusion that there only is a likelihood of confusion in part of the European Union, declaring that there is no infringement of the EU trademark at issue is not an option. Indeed, this would disregard the fact that the function of indicating the origin of the goods/services at issue is (liable to be) adversely affected in that specific territory.

In principle, the injunction granted by a national court acting in its capacity of EU trademark court should extend across the entire EU territory. However, if the likelihood of confusion is limited to a given part of the EU – in particular in view of linguistic considerations –, the territorial scope of the injunction must be limited. Any prohibition going beyond this would, in the eyes of the CJEU as well as Advocate General Szpunar, constitute an unjustified expansion of the exclusive right conferred by an EU trademark. 

The CJEU hereby confirmed its stance already briefly indicated in the Chronopost decision (Case C-235/09), dating from 2011. The CJEU went on to point out the importance of identifying with precision the part of the European Union in respect of which no actual or potential adverse effect on the trademark’s function exists. A mere exclusion for “English-speaking” countries would in this regard be insufficient: the injunction must state comprehensively which areas it intends that term to cover. In relation to Belgium, it is probable that such an injunction will have to specify its concrete application to the different linguistic groups.

Finally, the CJEU observes that the possibility of granting an injunction which does not have EU-wide application does not undermine the unitary character of a EU trademark registration as such, as long as the proprietor’s right to prohibit all use which adversely affects such a trademark’s function is preserved. In essence, the CJEU has yet again confirmed that, in EU trademark law, the functions doctrine ranks above all.