CJEU in Brite Strike disagrees with Advocate-General, but comes to the same conclusion

Yesterday CJEU published its decision in the case Brite Strike (C-230/15), a case regarding the Benelux Trademark "BriteStrike" in which the US mother company BrightStrike brought proceedings about a Luxembourg-based former licensee that had registered the mark.

Brite Strike "tactical lighting"

It brought those proceedings before the Rechtbank Den Haag (Court of The Hague). Based on the so called Brussels I regulation (Regulation 44/2001 at the time; now 1215/2012) that court would have jurisdiction based on article 22.4 of the regulation (which gives -amongst others- jurisdiction to the courts of the country where registration has taken place) as the Benelux trademark is administered by the Benelux Organisation for Industrial Property located in The Hague.

Jurisdiction rules within the 2005 Benelux Convention for Industrial Property (BCIP) however explicitly disallow the place of registration as a connecting factor leading to jurisdiction. In the case of disputes regarding validity of marks, it grants jurisdiction to the location where the seat of the trademark owner is: Luxembourg.

A few years ago the Dutch Hague Court of Appeal decided that not the Benelux Convention, but the Brussels I convention was relevant for determining jurisdiction, after which Dutch courts would evaluate jurisdiction on both conventions, and -in case of a conflicting conclusion- would suggest to ask CJEU.

The discussion in Dutch courts was almost a philosophical one. Since entry into force of the Brussels I regulation new conventions on jurisdiction between member states are not allowed anymore. The 2005 BCIP was clearly newer and thus was not allowed to take precedence (as the Hague court of appeal held), but it took its jurisdiction rules directly from the much older Benelux Convention on Trademarks and the Benelux Convention on Industrial Designs that it replaced. In other words, there were "old" jurisdiction rules about "old" Benelux IP rights, copy pasted in a "new" BCIP convention.

Advocate General

Advocate General Henrik Saugmandsgaard Øe

The AG opinion took this as the most important issue to be settled and concluded that the convention should be deemed a continuation of the old conventions, and thus an "old" convention within the meaning of Brussels I. It only added one extra requirement for the Benelux rules to be allowed to take precedence: they must not go against the fundamental principles of EU law. To me a surprise in itself, as that would amount to a non-literal interpretation of the Brussels I regulation, which has been the rule in the past years. The AG took Article 350 (see below) of the TFEU as an additional argument for choosing such an interpretation

Court decision

The Benelux, a Union to be allowed "completion"

The Court took its decision only 2 months after the AG decision and added a point to the discussion that was previously not part of the debate: the fact that Benelux trademarks are.. Benelux trademarks. As the AG already had alluded, The Benelux Union has a special place in Article 350 of the Treaty on the Functioning of the European Union: 

The provisions of the Treaties shall not preclude the existence or completion of regional unions between Belgium and Luxembourg, or between Belgium, Luxembourg and the Netherlands, to the extent that the objectives of these regional unions are not attained by application of the Treaties.

Based on this article, the court decided it had to establish whether:
1) Rules can only remain in force to the extent the Benelux "is further advanced than the internal market"
This was the case according to CJEU, when it compared the regulations regarding harmonisation of national trademarks with the Benelux trademarks (one could however also say that the Benelux is not more advanced, because with the Union Trademark, the EU is just as advanced!) 
2) The rules are indispensable for the proper functioning of the Benelux system
The court found an argument for this in the fact that the EU regulator had also deemed Brussels I unsuitable for the unitary EU Trademark (where jurisdiction is governed by the EU Trademark Regulation), and also by the fact that multiple languages exist in the Benelux thus making a jurisdiction system necessary where the defendant can be heard in his own language.
3) the rules cannot "compromise the principles which underlie judicial cooperation in civil and commercial matters in the European Union"
This last requirement (also suggested by the AG) was held to be fulfilled, especially because the system is place of the defendant-based, which is also a corner stone of the Brussels I regulation.

conclusion

So
-the AG tries to fit the BCIP within te exception of Article 71 of the Brussels I regulation by regarding that treaty as an "older" treaty because it is part of an older system of conventions, using Article 350 TFEU (the "Benelux exception") as an argument
-The Court starts of with Article 350 TFEU (the "Benelux exception") and looks whether article 71 in this case is in conflict with that, and thus should be put aside.

That is quite a different reasoning boiling down to the same conclusion: Benelux rules govern jurisdiction in Benelux Trademarks. 

Especially with regards to point one above, it would be easy for the court to come to the opposite conclusion, which would have required the court to see if it would follow the AG opinions reasoning regarding article 71. 

For the Benelux, this decision is more welcome than the AG decision as it reinforces (or at least confirms ) the rights of article 350 TFEU regarding IP rights, even if they are already unified. The Benelux thus could come up with a unitary copyright (or even European patent ;-)) if they wanted to. Whether that is really helpful is a different matter: there seems not much political will to further "complete" the Benelux Union...

CJEU Case C 230/15: Advocate General advices interpretation "à caractère non formaliste"

On 26 May, European Court of Justice Advocate-General Saugmandsgaard Øe delivered his opinion in case C 230/15 (ECLI:EU:C:2016:366). The case may sound trivial: the The Hague court asked (in ECLI:NL:RBDHA:2015:5716) whether the Dutch courts and/or the Luxembourg courts have jurisdiction regarding the validity of Benelux mark 0877058 "Brite-Strike"?

The case is however relevant to put to rest a difference of judicial opinion on which jurisdiction rules apply regarding Benelux marks (and Benelux industrial designs): those in the Benelux Convention on Intellectual Property (BCIP) or those in the Brussels I regulation (EC 44/2001 when this case started, presently EU 1215/2012). See earlier posts on the exact questions referred to CJEU and how Belgian and Dutch judges have treated the matter in the past years.

Saugmandsgaard Øe is a new CJEU AG, so we have not seen much about him. In this opinion he is -in my opinion- sensible, his opinion can easily be followed, but it seems also slightly activist. Despite the wealth of judgements calling for a literal interpretation of Brussels I, Øe here strongly relies on the intention of the regulation. But I am getting ahead of myself, let's examine his points first:

This is a general problem

While the case at hand may be solved by giving a narrow answer regarding jurisdiction (focussing on a trademark invalidity rather than infringement of rights etc), the AG agrees with the Dutch court that the general problem is the hierarchy between BCIP and Brussels I and suggests the questions is treated that way (few! any narrowing down would give rise to more questions!). 

Two formal requirements; and one more...

The AG first notes that the conflict between other conventions is treated in Article 71.1 and 71.2(a)

1. This Regulation shall not affect any conventions to which the Member States are parties and which in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments. 

2. With a view to its uniform interpretation, paragraph 1 shall be applied in the following manner:

1. (a)  this Regulation shall not prevent a court of a Member State, which is a party to a convention on a particular matter, from assuming jurisdiction in accordance with that convention, even where the defendant is domiciled in another Member State which is not a party to that convention. The court hearing the action shall, in any event, apply Article 26 of this Regulation; (...)

and that thus -unlike other private international law EU regulations- it does not explicitly replace all pre-existing conventions between EU states. He concludes that 3 requirements have to be met for conventions to have precedence over Brussels I:

1. It should govern a particular matter
2. the Member States should already be a party to the other convention
3. The jurisdiction rules cannot go against the objectives of EU law.

Point 1: A particular matter

The first point is relatively easy: the jurisdiction rules only govern Benelux Trademarks and Designs (the AG can't stop himself from pointing out that despite the wide scope suggested by the name of the convention on Intellectual Property, it only governs those two types), that that's clearly a particular matter. 

Point 2: EU countries should already be a party

This rule was new in the Regulation compared to the Brussels convention it replaced. So from around 2001 (approval of the regulation) or 2003 (entry into force) no new conventions could take precedence anymore. The BCIP is from 2005 and thus clearly a younger (or: posterior) convention and thus the European Commission argued that the convention should not take precedence. Saugsmandsgaard however notices the special character of the 2005 convention: it was a new convention merging and modernising  2 conventions regarding Benelux trademarks (1971) and industrial designs (1975). The jurisdiction rules in those conventions were essentially the same and were merely copied into the 2005 convention. Saugsmandsgaard thus concludes (in an approach he considers "à caractère non formaliste") the jurisdiction rules in relation to the matter they governed (trademarks/designs) should be considered older: the BCIP should thus NOT be regarded a posterior convention. 

point 3: The jurisdiction rules cannot go against the objectives of EU law

The third point doesn't stem from an interpretation of the text of article 71 per se, but from CJEU case law. The AG refers to C 533/08 (ECLI:EU:C:2010:243, TNT Express v AXA), requires those rules not to be applied against the objectives of EU law:

 While it is apparent from the foregoing considerations that Article 71 of Regulation No 44/2001 provides, in relation to matters governed by specialised conventions, for the application of those conventions, the fact remains that their application cannot compromise the principles which underlie judicial cooperation in civil and commercial matters in the European Union, such as the principles, recalled in recitals 6, 11, 12 and 15 to 17 in the preamble to Regulation No 44/2001, of free movement of judgments in civil and commercial matters, predictability as to the courts having jurisdiction and therefore legal certainty for litigants, sound administration of justice, minimisation of the risk of concurrent proceedings, and mutual trust in the administration of justice in the European Union.

In evaluating whether in BCIP this criterion is met, the AG notes that unitary intellectual property rights (the EU Trademark, the Community Design, the unitary patent, but even the European patent as far as proceedings for the EPO are concerned) are always treated specifically as the general Brussels I rules are not adapted to it. The AG thus argues that using the BCIP obtains a better result than applying 44/2001. 

Conclusion

The AG thus concludes that BCIP jurisdiction rules should govern Benelux trademarks and designs and thus dismisses decision ECLI:NL:GHDHA:2013:4466 of the Hague Court of Appeal of 2013 that started the confusion: before that case BCIP was always applied without discussion, but that court came to the opposite conclusion (Brussels I prevails) and was so certain that it explicitly remarked that it deemed CJEU questions not necessary. If followed, that is a welcome and sensible outcome!

Conflict of the Conflict of the Laws: jurisdiction involving Choice of Court Agreements

Which court has jurisdiction in international cases is a classic “conflict of law” subject and several instruments exist (bilateral and multilateral), to avoid the unsatisfactory result that the same case is litigated in several venues, and –worse- those venues reach different outcomes. 

In Europe, two complimentary instruments exist with regards to "civil and commercial matters": the Brussels regulation applied in the European Union and the Lugano convention in the European Union, Iceland, Norway and Switzerland. A case purely related to the European Union falls outside the scope of the Lugano convention. 

Changes: new Brussels Regulation and Hague Convention

2015 saw two important changes to this system: In January, the original Brussels regulation (44/2001) was replaced by a new one (2012/2015). While the old Brussels Regulation was almost to the letter identical to the Lugano Convention, the new Brussels regulation is not. Significantly –and the object of this post– is an exception to the “lis pendens” system, a corner stone of both instruments that indicates that the court seized first has jurisdiction and other courts should stay their proceedings until that first court has given its decision. This provision is to be regarded so strictly, that even if the parties had a Choice of Court Agreement for -say- a German court but proceedings were brought first for an Italian court, that German court would have to wait for the Italian court to determine it had no jurisdiction, before it could take jurisdiction. This sometimes resulted in seizing a non-chosen court being a useful delay tactic (especially when a backlogged court was chosen), informally termed the “Italian Torpedo”.  The new Brussels I Regulation addressed this and allowed a court to take jurisdiction, if the court unambiguously was chosen in a  valid choice of court agreement; even if parallel proceedings in a different court had been commenced.

The second change is more recent: the entry into force of the 2005 Hague Convention on Choice of Court Agreements. The convention now has two parties: Mexico and the European Union, which means that it applies immediately to 28 states (in addition to Mexico, all EU member states except Denmark). The convention has a much more limited scope than the Brussels regulation or the Lugano convention, as it only applies when a choice of court agreement is concluded. The system is similar to the new Brussels Regulation: the chosen court must hear the case, regardless of any pending actions for other courts. Courts not chosen should declare themselves not competent to hear the case. Also similar to the Brussels system: a decision should be recognised in other Hague convention states, regardless of the merits of the decision. 

From 1 October, the membership of those three instruments is as follows:

Country	EU member	Lugano	Hague Convention
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and UK	x	x	x
Denmark	x	x	-
Iceland, Norway, Switzerland	-	x	-
Mexico	-	-	x

Conflict of the Conflict of law measures

So now we have ended up -in the European Union at least at least- with 3 systems to determine international jurisdiction in the presence of a choice of court agreement. Although they all -eventually- favour the agreement, the reasons to reject them varies. Furthermore, the Lugano convention still places the lis pendens regime above the choice of court agreement, so the chosen court will have to wait until the non-chosen court has rejected jurisdiction. It thus matters under which legal instrument the choice of court clause is evaluated. 

For the relationship between the Lugano and the Brussels convention is quite clear in this area. If a resident of Iceland, Norway or Liechtenstein is involved, or such a court is chosen, or seized before the chosen court is seized, the Lugano convention will apply, while in cases involving solely the EU, the Brussels convention applies (and yes, there are some areas, where there is ambiguity, but I won't go into that).

The relationship between the Hague Convention and other conventions is treated in article 26 and indicates that the convention should be interpreted as far as possible consistenly with other treaties. The rest of the provisions are complex to read, because they are phrased with many double negations (... where non of the parties (...) is not  a member ....). I will try to rephrase them positively, as that is a lot easier to understand. It may however come at the loss of some exactness (possibly when a person should be considered resident in more than one location). 
-26(2): Another convention [e.g. Lugano] takes precedence if all parties are residents of
-:'states, which are party to that other convention [e.g. Lugano]; and/or
-:'non Hague convention states 
-26(3): If the court seized has conflicting obligations with respect to an older [concluded before the contracting state became a Hague party, e.g. Lugano] treaty with respect to a non-Hague State (e.g. Switzerland). 
-26(6)a: The rules of a Regional Economic Integration Organization (REIO, e.g. the EU; applying Brussels Regulation) apply when all parties are residents of 
-:'REIO states [e.g. Brussels regulation]; and/or
-:'non Hague convention states' 

How does that all work in practice, especially in relation to the Italian torpedo risk? I'll evaluate that using a hypothetical case. The case concerns a dispute regarding a contract with a choice of court agreement favouring "the courts of state A" and the contract parties are party A, resident in State A and party B, resident in State B. When a conflict arises, Party B sues in State C. Subsequently Party A starts a procedure for (the chosen court) of state A. Let's see what happens, when we make A, B and C specific, I get the following applicable instruments:

	A	B	C	Applicable instrument in state A	lis pendens?
	(party A, Chosen courts)	(party B)	court first seized	[applicable Hague "advantage"  provision]
1	France	Belgium	Greece	Brussels I [Hague 26(6)]	no
2	France	Belgium	United States	Brussels I [Hague 26(6)]	no
3	France	Mexico	Greece	Hague	no
4	France	Belgium	Switzerland	Lugano [Hague 26(2)]	yes
5	France	Mexico	Switzerland	Lugano [Hague 26(3)]	yes
6	Switzerland	Mexico	France	Lugano	yes
7	France	United States	Belgium	Brussels I [Hague 26(6)]	no
8	United States	France	France	-	no

Case 1 is quite straight forward: if only EU states are involved, the Brussels I regulation applies, and -in its new version- that means no waiting for the Greek court to have decided. Case 2 involves only EU residents, and thus Brussels I applies at well. When residents of only non-EU Hague State Mexico are involved, the Hague Convention applies (example 3). 

However (example 5), the French court has the possibility to stay proceedings pending a decision by the Swiss court: under Hague 29(3), the Lugano convention's lis pendens regime is an international treaty obligation which should be respected, as non-Hague state Switzerland is involved. However, this give-way rule only applies when a non-Hague state is involved, so should Switzerland however become a member to the Hague Convention, then the Hague convention should be applied. 

In case 7 the EU system applies again, as no non-EU Hague states are involved. 

This whole system of examples does not change a lot when other Lugano states become party to the Hague Convention: only in example 5 (Hague 26(3)), Lugano would be inapplicable when Switzerland joins the Hague convention, as it allows only for conventions to gain precedence with regards to treaty obligations in relation to non Hague parties. 

Remaining Lugano Relevance
However, the rules under article 26(2) (if only Lugano states are involved + other states that are non Hague states), the Lugano convention applies) are still applicable. That means that the lis pendens regime in the Lugano states can only be resolved through a change in that convention. It puzzels me why no -public- mention of such negotiations is known: the divergence between Lugano an Brussels regulation seems something that politicians have tried to avoid for ages. There must be some hidden problem in the new Brussels regulation as far as the other Lugano states are involved, that hampers the corresponding change in the Lugano convention. Or could it have been that a tactical error has been made in not involving them in the negotiations of the Brussels I regulation recast, and they feel uncomfortable with a "take it or leave it" attitude with regards the corresponding change in the Lugano convention? Who knows!?