HomeInsightsAdvocate General opines that a proprietor of an earlier right can only terminate a period of acquiescence by taking judicial or administrative action

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The issue

The proprietor of an EU registered trade mark cannot enforce its rights in that mark if it has acquiesced, for a period of five successive years, in the use of a later EU trade mark in the European Union while being aware of such use.   The issue in this case is how and when that five-year period (the Limitation Period) can be interrupted, so that the proprietor’s rights continue.

Facts

The claimant, Heitec AG, has been trading since 1984 under the name Heitec. It is the owner of an EU registered trade mark for HEITEC (the EU HEITEC Mark), which claimed seniority from 13 July 1991 and was registered on 4 July 2005.

The defendant, Heitech Promotion GmbH, has been trading since April 2003 under the name Heitech. It owns a German figurative trade mark containing the word HEITECH (the German HEITECH Mark), which was registered on 4 February 2003 and which it had used since 29 September 2004 at the latest. It also owns an EU figurative mark containing the word HEITECH (the EU HEITECH Mark), which was registered on 20 November 2008 and which it used from 6 May 2009.

In 2004, Heitech wrote to Heitec proposing that the parties enter into a coexistence agreement. Heitec did not reply.

In July 2008, EUIPO told Heitec about Heitech’s application for the EU HEITECH mark. Heitec did not take action to oppose the application.

In April 2009, Heitec wrote to Heitech warning against its use of the Heitech name and the EU HEITECH Mark (the Warning Letter). Heitech responded by again proposing a coexistence agreement.

In December 2012, Heitec issued proceedings in the German courts against Heitech for infringement of its trade name, Heitec, and of its EU HEITEC Mark due to Heitech’s use of the signs Heitech and Heitech Promotion, as well as its use of the German HEITECH Mark and the EU HEITECH Mark. It did not serve the proceedings on Heitech at this time.

In September 2013, Heitec wrote to Heitech to inform it that it was not willing to enter into a coexistence agreement and offering a licence instead. It also informed Heitech of the legal proceedings. The documents were finally served on Heitech in May 2014.

Heitec’s claim was dismissed at first instance. Heitec appealed and the action was held to be unfounded on the grounds that Heitec was time-barred. The appellate court said that Heitech had used its later signs for an uninterrupted period of at least five years and that Heitec had acquiesced to that since, although it was aware of this use, it had not taken sufficient measures to stop it within a period of five years. The appellate court said that the first instance proceedings had not interrupted the Limitation Period, since they had not been served on Heitech until after five years had elapsed since Heitec had sent the Warning Letter. The appellate court also held that acquiescence had not ended when the Warning Letter was sent since it had taken Heitec a further three years to issue the proceedings.

Heitec appealed to the Federal Court of Germany, which has said that the outcome depends on whether Heitec is time-barred from bringing its claims under Articles 54(1) and (2) and Article 111(2) of the Trade Mark Regulation (207/2009/EC). It has also referred four questions to the Court of Justice of the European Union in relation to the conditions for “acquiescence” under Articles 9(1) and (2) of the Trade Mark Directive (2008/95/EC) and Article 111(2) of the Regulation.

Opinion

The first and second questions essentially ask whether Limitation Period is only considered to have been interrupted by the issue of administrative or court proceedings or whether the sending of a warning letter that is not immediately followed by the issuing of court proceedings will suffice.

Advocate General Pitruzzella noted that Article 9(1) of the Directive (and Article 54(1) of the Regulation) provide that the owner of an earlier trade mark (national or EU) who has acquiesced to the use of a later mark for a period of five consecutive years and with knowledge of such use, may no longer apply for a declaration of invalidity or oppose the use of the later mark on the basis of the earlier mark in respect of the goods or services for which the later mark has been used. This limitation can be overcome if: (i) the application for the later mark was made in bad faith; or (ii) it is no longer possible to establish acquiescence on the part of the owner of the earlier mark. Article 111(2) of the Regulation provides for a similar scheme.

The AG noted that in Case C-482/09 Budějovický Budvar (Budvar), the CJEU found that “the characteristic of a person who acquiesces is that he is passive and declines to take measures open to him to remedy a situation of which he is aware and which is not necessarily as he wishes. … the concept of “acquiescence” implies that the person who acquiesces remains inactive when faced with a situation which he would be in a position to oppose”.

Therefore, the AG said, first, the owner of the earlier trade mark must have “knowingly tolerated” the use of a later trade mark, for a substantial length of time, “intentionally”, and “in full knowledge of the facts”.

The CJEU in Budvar also held that the objective of the Directive is to “strike a balance between the interest of the proprietor of a trade mark to safeguard its essential function and the interests of other economic operators in having signs capable of denoting their goods and services”. Therefore, it said, “in order to safeguard that essential function, the proprietor of an earlier trade mark must be capable … of opposing the use of a later trade mark identical to [its] own”. Accordingly, the CJEU held that “the effect of any administrative action or court action initiated by the proprietor of the earlier trade mark within the period prescribed in Article 9(1) [of the Directive] is to interrupt the period of limitation in consequence of acquiescence”.

However, the AG said, it was not clear whether only an administrative or court action could interrupt the Limitation Period. There was no such explicit requirement in the legislation. Therefore, it could easily be concluded that any behaviour of the owner of the earlier mark demonstrating disagreement with the owner of the later mark in relation to his/her use of that mark, could suffice to interrupt the Limitation Period.

However, considering the purpose of the relevant provisions, which according to Recital 12 of the Directive, were introduced “for reasons of legal certainty and without inequitably prejudicing the interests of a proprietor of an earlier trade mark”, and the need to strike a balance between the parties’ interests, the AG opined that acquiescence is terminated when the owner of the earlier mark “takes the measures” open to it to “put an end to the infringement of its rights”. Further, such action “must be formalised by recourse to the legal means available to obtain a binding solution”.

Therefore, the mere sending of a letter did not suffice to interrupt the Limitation Period, as that would mean that the legal position of the owner of the later trade mark could never be consolidated. Further, legal certainty requires that both the starting point of the Limitation Period and the time at which it is interrupted or expires must be precisely determined. Therefore, only an event that unequivocally shows a clear and serious intention to assert rights, by the proprietor of the earlier rights taking judicial or administrative action, will put an end to acquiescence.

The referring court has also asked for clarification as to the exact moment at which the Limitation Period is deemed to have ended where court proceedings are issued.

The AG said, the Limitation Period should be considered interrupted on the date of the application initiating the proceedings, as this is the time that a serious and unequivocal intention to assert rights is demonstrated. This is for the national court to decide. Using the date of service was riskier, the AG said, given the differences in national practices across Member States.

Further, an interruption to the Limitation Period should only be found if: (i) the action is admissible; (ii) the defendant has been informed of the existence of the action within a relatively short period of time; and (iii) the applicant has not delayed in regularising the action by, e.g., not paying the fees.

In addition, the AG said that the owner of the earlier right should not leave it until the last moment of the five-year period to bring the claim.

Finally, the referring court has asked whether the limitation on rights in consequence of acquiescence covers not only claims for an injunction, but also claims for damages, provision of information and the destruction of goods.

The AG noted that the legislation does not specify the effects of the limitation of rights. However, the legislation does provide that, where the owner of the earlier mark is time-barred, he/she is no longer entitled to apply for a declaration that the later mark is invalid or to oppose the use of the later mark. Put another way, until limitation in consequence of acquiescence occurs, the owner of a trade mark can request that the later mark be declared invalid or oppose its use by means of infringement proceedings.

Considering the purpose of the legislation, the AG said that if limitation in consequence of acquiescence is a mechanism to ensure that competing interests are balanced and to preserve legal certainty, it would be contrary to the latter if, after five years of acquiescence, the owner of the earlier mark could no longer request the invalidity of the later mark or oppose its use, but could continue to obtain compensation following use that it had not opposed and which it could no longer oppose because of the limitation. Further, where there is acquiescence, it would be a legal absurdity to be able to obtain the destruction of goods that could not be classified as counterfeit.

The AG therefore opined that Articles 9(1) and (2) of the Directive and Articles 54(1), (2) and 111(2) of the Regulation must be interpreted broadly so that, from the moment when the limitation in consequence of acquiescence is established, the owner of the earlier mark loses all its privileges relating to the earlier mark vis-à-vis the owner of the later mark whose use it has tolerated and that limitation in consequence of acquiescence must be understood as affecting all claims. (Case C-466/20 HEITEC AG v HEITECH Promotion GmbH EU:C:2022:25 (Opinion of Advocate General) (13 January 2022) — to read the Opinion in full, click here).

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