The Court of Justice of the European Union (CJEU) ruled in the case of KP v TV, Gemeinde Bodman-Ludwigshafen (C-256/21) on the possibility of invalidating a trade mark by way of a counterclaim if the main action for infringement has been withdrawn. CJEU ruled that EU trade mark courts are still entitled to decide on counterclaims for trade mark invalidity, even if the main infringement action has been withdrawn.

(Judgment of the Court dated 13 October 2022 in Case C‑256/21)

Facts of the case

KP is the proprietor of the EU trade mark Apfelzügle for services in classes 35, 41 and 43. The word 'apfelzügle’ in German translates to a special vehicle for picking apples, consisting of several trailers pulled by a tractor. TV, the operator of the fruit farm, and the Municipality of Bodman-Ludwigshafen published promotional material for an activity involving apple picking and tasting as part of the Apfelzügle ride.

KP brought an action against them for trade mark infringement before the Regional Court in Munich. The defendants responded by filing a counterclaim to invalidate the disputed mark. At the hearing before the Regional Court in Munich, KP withdrew the trade mark infringement action, but the defendants maintained their counterclaim for invalidity of the trade mark.

The Regional Court found the counterclaim admissible and declared the mark invalid for services in Class 41, dismissing the claims for Classes 35 and 43. This decision was subsequently appealed by the Municipality of Bodman-Ludwigshafen to the Higher Regional Court in Munich, seeking to have the disputed mark declared invalid for services in the remaining classes.

Request for a preliminary ruling

The Higher Regional Court in Munich referred to the CJEU for a preliminary ruling on whether Regulation 2017/1001, in particular Article 124(a) and (d) and Article 128, provides the EU trademark courts with jurisdiction to decide on a counterclaim for invalidity despite withdrawal of the main action.

The referring court observed, in particular, that the registration of an EU trade mark constitutes an act of an EU body and that the national courts have no jurisdiction to declare such acts invalid, with the exception expressly provided for, such as the filing of a counterclaim.

CJEU judgement

In answering the preliminary question, the CJEU stated that, firstly, the counterclaim becomes independent of the main action and continues to exist if the main action is withdrawn. It is a separate claim, although it has been raised in the proceedings initiated by another legal action. It is therefore to be distinguished from an ordinary defence. Secondly, the CJEU noted that both the EUIPO and the EU trademark courts have jurisdiction to review the validity of EU trade marks. If an EU trade mark proprietor could deprive the EU trademark court of its jurisdiction to rule on a counterclaim for invalidity merely by withdrawing the infringement action, the scope of jurisdiction granted to the courts would effectively be disregarded. Thirdly, an EU trade mark court must be able to rule on a counterclaim for invalidity brought by the defendant in an infringement action, despite the withdrawal of the main action. This is necessary sto achieve the objective of avoiding unnecessary proceedings with the risk of conflicting judgments. The alternative solution, i.e. forcing a party to initiate proceedings before the EUIPO if the main action is withdrawn, would, according to the CJEU, be contrary to the principle of procedural economy.

Commentary

The CJEU, in its positive answer to the referring court’s question, emphasised the importance of the national courts retaining jurisdiction to consider the counterclaim independently of the main action. The CJEU confirmed that the mere withdrawal of an action for infringement of a mark will not prevent its owner from dealing with a counterclaim for invalidity of its mark. For many of the rights holders, such a litigation rule may have a significant impact on the choice of their litigation strategy to deal with infringement.