Suspension of infringement proceedings

Trademark infringement proceedings can be suspended because of pending cancellation proceedings in Germany – if there is a “certain” probability that the trade mark will be cancelled. But how likely does it have to be?

Priority – the prerequisite for the suspension of infringement proceedings in pending cancellation proceedings – can only be considered if there is a certain probability that the trade mark will be cancelled in the registration proceedings, applies according to the case law of the German Federal Court of Justice (Bundesgerichtshof (BGH)). However, how likely the cancellation of the trade mark must be is still disputed in the legal literature. A leading decision of the OLG Frankfurt makes an interesting contribution to this.

Multiple infringement proceedings and counterclaims

The “Ledare” case before the Higher Regional Court of Frankfurt (OLG Frankfurt, 6 W 126/20) involved multiple infringement proceedings and counterclaims concerning word marks for lamps. The plaintiff sued for cancellation against a German trade mark as well as against an EU trade mark and IR trade mark of the defendant. The following grounds for invalidity were asserted: application for a trademark in bad faith, lack of distinctive character as well as a descriptive indication of quality and the designation which had become customary according to Art. 7 (1) UMV.

The defendant in turn reacted with a counterclaim. On the one hand, it filed an application for cancellation of the trade mark in suit (invoking the same grounds for invalidity that the plaintiff had invoked). In addition, the defendant filed an action against the cancellation and the declaration of invalidity of the extension of protection to the EU, claiming – and making a claim for – damages against the plaintiff.

By order of October 2020, the German Court of first instance (LG Frankfurt) hearing the case stayed the litigation – pending the decision of the German Patent and Trade Mark Office (DPMA) on the pending cancellation proceedings against the trademarks in suit. In doing so, the LG Frankfurt referred to § 148 of the German Code of Civil Procedure (deutsche Zivilprozessordnung (ZBO)).

The plaintiff (and proprietor of the trademarks in suit) filed an appeal against this decision, which was decided before the OLG Frankfurt, even as a leading decision on the stay in infringement proceedings concerning trade marks with regard to pending cancellation proceedings.

The OLG Frankfurt confirmed the success of the plaintiff’s appeal and overturned the decision of the LG Frankfurt at first instance. The factual requirements for a stay in infringement proceedings under § 148 ZPO were not met, the OLG ruled, and the LG Frankfurt had also stayed the litigation without exercising its discretion.

Suspension of infringement proceedings

In principle, a stay of infringement proceedings under § 148 of the ZBO requires that the decision in the parallel proceedings on the existence of rights is prior. This has already been clarified in the case law of the BGH: a stay of proceedings under § 148 of the ZBO (with regard to pending cancellation proceedings) can therefore only be considered if the cancellation of the trademark in the proceedings under registration law “is likely” to take place. Only then would the delay in proceedings associated with the stay be justified.

Lead sentence decision: Suspension in infringement proceedings

The OLG Frankfurt followed this case law and formulated a differentiating guiding principle decision with regard to the required degree of probability.
Accordingly, there must be a high degree of probability for the cancellation of the trademark in the registration proceedings, the OLG requires “rather high prospects of success” with regard to the grounds for cancellation.

It applies:

“An anticipatory nature of the cancellation proceedings for the infringement dispute can only exist if the dispute is not ready for decision even without the decision on the existence of the trademark, which is why the court of first instance must examine this.”
(Sentence 1 of the leading sentence decision of the OLG Frankfurt).

The situation is different if a trademark application in bad faith is asserted as a ground for cancellation. In such a case, the OLG specified in its leading sentence decision, lower requirements must be placed on the prospects of success.

“The claim for cancellation of a trademark based on § 4 (4) German Unfair competion act (UWG) because of a trademark application in bad faith is in principle independent of the maturity for cancellation according to § 8 ( 2) No. 13 German MarkenG. Therefore, infringement litigation cannot be suspended with regard to pending cancellation proceedings.”
(Sentence 4 of the leading sentence decision of the OLG Frankfurt).

Probability of cancellation not to be assessed in general terms

The Regional Court of Frankfurt had not complied with the factual requirements for a stay because it had stated in its order, without further justification, that the applications for relief and also the counterclaims were to be regarded as unfounded or inadmissible from the outset, explained the Higher Regional Court. In no case can the prospects of success of the application for cancellation be assessed in general terms.

Even a discretionary decision does not stand up to legal scrutiny, the OLG ruled, because no sufficient justification was given. The correctness of a discretionary decision is only comprehensible with sufficient considerations – related to the individual case.

Claims from infringement and bad faith trademark application

In addition, the OLG ruled that the suspension decision was unlawful with regard to the application for cancellation of the trade mark in suit filed with the counterclaim on the grounds of a trade mark application in bad faith, as the cancellation proceedings were already lacking priority. The court explained that the parallel existence of the trademark-law and unfair trade-mark cancellation claim due to an abusive trade-mark application meant that the civil court had to conduct an independent unfair trade-mark examination. The decision of the Patent Office under trade mark law had no prejudicial effect on the examination under unfair competition law by the civil court and was therefore not prejudicial. Therefore, infringement litigation cannot be suspended with regard to pending cancellation proceedings.

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