IP Update: Europe’s Highest Court Rules on Registration of CTM Licences
20 April 2016
The Court of Justice of the European Union (“CJEU”) has recently ruled on whether licensees of a Community Trade Mark (“CTM”) (now known as a European Union trade mark or "EUTM") need to have registered the licence in the Register of Community trade marks (the “Register”) in order to bring an action for infringement of the licenced trade mark.
In the case in question (Case c-163/15) the licensee had not registered its CTM licence in the Register. The infringing party sought to rely on Art 23(1) of the Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community Trade Mark (the “Regulation”) to prevent the licensee from taking action against him, on the basis that the licence had not been registered.
The CJEU was asked to interpret the first sentence of Article 23(1) of the Regulation, which reads "Legal acts referred to in Articles 17, 19, and 22 concerning a Community trade mark shall have effects vis-à-vis third parties in all Member States only after entry in the Register."
Articles 17, 19, & 22 of the Regulation cover transfer of a CTM, the creation of rights in rem over a CTM and the grant of a licence respectively.
When read in isolation the first sentence of Article 23(1) appears to suggest that a licensee cannot enforce its rights against third party infringers if the licence is not registered. However the CJEU considered it in the context of other provisions in the Regulation.
Article 17 of the Regulation relates to the transfer of CTMs. Article 17(6) specifically provides that a transfer of a CTM cannot be invoked by the successor in title until such time as it has been entered on the Register. There is no similar provision in the Regulation in relation to CTM licences.
The CJEU are of the opinion that if it was intended that such a requirement exist in relation to CTM licences, then Article 22 of the Regulation which relates to licences would contain a similar provision to Article 17(6).
The only requirement under Article 22 relating to the enforcement of a licence by a licensee is that that licensee may bring proceedings for infringement of a community trade mark only if its proprietor consents to it.
In considering Article 23 the CJEU found that it is intended to protect third parties who have acquired rights in a CTM in good faith and not third party infringers. For example where a third party acquires a right in a CTM without knowledge that that CTM has previously been the subject of a licence, that third party will take it free of the licence if the licence has not been registered.
In light of this, the CJEU confirmed that since the licensee had the consent to assert rights arising from Infringement as requested by Art 22(3) of the Regulations it was entitled to do so even without the licence being registered.
This decision may be a comfort to those who have not registered their CTM license and wish to take action against a third party for infringement of the CTM.
However licensees should still ensure that their licences are registered in order to protect themselves from conflicting interest such as the grant of further licenses or the transfer of the CTM by the owner. Furthermore the CJEU’s decision is in relation to CTMs only.
For more information, please contact a member of our Intellectual Property Team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.