Coty looses before BGH: International competition of German Courts in Union Trademark infringements

If an Internet distribution is carried out via a website operated from abroad, German courts are not competent for infringements of Union trademarks. Thus the Federal Court of Justice ruled and stressed that it was not enough that the Internet site can be called up in Germany. Is this a weakening of the Union’s trademark against national trademarks?

In its recent ruling (Az. I ZR 164/16), the Federal Supreme Court (Bundesgerichtshof, BGH) has reached a far-reaching decision on the international jurisdiction of German courts in the event of infringements of Union trademarks. In this landmark decision on trademark law, Coty lost its action for an injunction against the Italian import and export company Zacobi S. p. A. and and the German perfume wholesaler hit parfum GmbH in the perfume dispute.

Coty Germany GmbH merged with Coty Prestige at the beginning of 2012. Coty Prestige distributes licensed perfumes, cosmetics and various luxury goods such as jewellery. The portfolio includes several brands such as Balenciaga, Bottega Veneta, Calvin Klein, Cerruti, Chloé, Chopard, Covet, Davidoff, Jennifer Lopez, Jil Sander, JOOP! Karl Lagerfeld, Lancaster, Marc Jacobs, Nikos, Philosophy, Roberto Cavalli, Sarah Jessica Parker, Truth or Dare by Madonna, Vera Wang, Vivienne Westwood and Wolfgang Joop.

In March 2012, following a warning letter, the Italian export company agreed to refrain from continuing to import various perfume products into Germany or to offer, advertise or distribute them for sale in Germany. In August 2012, however, Zacobi handed over 150 Davidoff “Cool Water” perfumes to a company commissioned by hit parfum in Italy. The goods were fully paid for and shipped to a German warehouse of hit perfume. Coty saw this as a trademark infringement and argued that the perfumery had not been placed on the market within the European Union with its consent.

Short history of this case

2012: Coty sued before the Leipzig Regional Court. Zacobi, however, was of the opinion that the German courts had absolutely no jurisdiction over the matter. This question was subsequently separated and was heard by the Munich Regional Court in summer 2015
2015: The Munich Regional Court ruled in favour of Zacobi, dismissing the action as inadmissible because the German courts had no jurisdiction internationally.
2016: Appeal of Coty appealed to the Higher Regional Court of Munich. In June 2016, it established the admissibility of the action and the jurisdiction of the German courts.
2016: Zacobi brought the case before the BGH.

Arguments of the OLG for the admissibility of jurisdiction of the German courts

The Higher Regional Court saw international jurisdiction on the basis of Art. 97 (5) of the Ordinance (EC) No 207/2009 as well-founded. Coty’s claim for injunctive relief based on a violation of the “Davidoff” trademark is based on the risk of repetition and the infringement of other Union trademarks from the point of view of the risk of first inspection.

The registered German trademark “Covet” also establishes the jurisdiction of the German courts, here based on Art. 7 No 2 of Regulation (EU) No. 1215/2012 on Jurisdiction and Recognition, and Enforcement of judgments in civil and commercial matters (Brussels-Ia-VO).

According to the Federal Supreme Court, the conclusive assertion of an infringement of trademark rights committed in Germany is not sufficient as a precondition for the international jurisdiction of the German courts. The defendant’s internet presence in German does not establish the international jurisdiction of the German courts. Even if the website contained an order option or targeted commercial perfume buyers in Germany, this did not lead to the establishment of the international jurisdiction of the German courts (C-24/16, juris – Nintendo/BigBen). In the event of a dispute, it is not the place of damage success that matters, but whether or not the place of action lies in Germany. And the place of action for an Italian website is Italy.

Jurisdiction according to Art. 97.5 of Regulation (EC) No 207/2009?

In principle, the Federal Supreme Court confirms that international jurisdiction under Art. 97 (5) of Regulation (EC) No. 207/2009, as the international registration “Davidoff” claims protection for the territory of the Union (reference to Art. 145 of Regulation (EC) No 207/2009). However, in the present case, jurisdiction is excluded because the defendants are resident in another Member State of the European Union.

Reselling in other Member States

The sale and supply of a product which infringes the trade mark right in a Member State which is subsequently resold by the purchaser in another Member State does not subsequently give rise to an international jurisdiction of the courts of the Member State where the product is ultimately marketed in respect of actions against the original seller, who has not acted himself in the Member State to which the court seized of the goods has not acted, the BGH stated.

Coty’s injunctive relief is a claim for infringement of a Community trade mark.
Accordingly, the trademark owner may prohibit third parties from using a trademark infringing sign in business transactions.

However, the Federal Supreme Court found that the sale and delivery of the goods claimed to be infringing had not taken place solely in Italy. Because the trading partners based in Italy and Germany had concluded a contract electronically and hit parfum GmbH had the goods picked up in Italy only afterwards. Therefore, the goods claimed to be infringing were not acquired in Italy, although they were received there.

National trademark Covet falls under international jurisdiction of German courts

According to the Federal Supreme Court, the international jurisdiction of the German courts for the injunctive relief for threatened infringement of the “Covet” trademark is given because, according to the Federal Supreme Court, Germany is the place of realization of the damage success in the sense of Art. 5 No. 3 Brussels I-VO. The international jurisdiction to decide on an alleged infringement of a national trade mark is vested in the courts of the Member State in which the trade mark is protected (ECJ, GRUR 2012,654 marginal 26 et seq. – Wintersteiger).

In sum, the decision of the Federal Supreme Court leads to the paradox that German courts have no international competence for international registered trademarks, but for national registered trademarks. And this means weakening the Union’s trademark against national trademarks. In order to be able to sue in similar cases in Germany in the future, companies must also have protected their trademarks as German trademarks.