Case C-425/16, Raimund – mulling over infringement before invalidity in trade mark procedural law

The procedural law problem in this trade mark spice-mix case is whether the Austrian courts can simply cut a corner and consider in the context of an infringement-action whether a trade mark has been invalidly applied for rather than first considering whether the trade mark has been infringed and then its validity.

Raimund started to sell its belly-warming spice mix ‘Baucherlwärmer’ back in 2000. In 2005, it filed to protect the word ‘Baucherlwärmer’ as a trademark. Soon thereafter, it tried to stop a company from selling a similarly-named spice-mix that was being put into spirit alcohol. However, its attempt failed. Furthermore, when sued for trade mark infringement, the company responded with a counter-claim that the trade mark was invalid because the mark had been applied for in bad faith.

The problem giving rise to the preliminary reference is one of procedural law. Namely, what should the Austrian courts have dealt with first in a situation where the claimant had brought an action claiming trademark infringement and then the defendant had brought a counter-claim seeking a judicial declaration as to the trademark’s invalidity?

In essence, Raimund claims that the Austrian judges at first instance should either have joined the actions or they should not have considered the issue of bad faith in the context of the infringement action because bad faith belongs to a separate action for invalidity.

The doubt in the minds of the five judges in the Austrian Supreme Court hearing the dispute was whether Raimund was legally right. This was because legal literature written in German seemed to suggest that a litigant needed first to counter-claim and obtain a judicial declaration that the contested mark was invalid, before going on to raise an objection to the trade mark on the basis that it had been applied for in bad faith. However, as the Austrian court also remarked, that body of literature also did not provide a clear answer as to whether a court must delay its decision on the infringement action until it had decided the counter-claim.

Judge Vogel and the four other judges in the Chamber decided to make a preliminary reference to the CJEU.

Questions Referred
According to the UK’s Intellectual Property Office, the Austrian Supreme Court has asked:

1. May an action for infringement of an EU trade mark (Article 96(a) of Regulation (EC) No 207/2009, as amended by Regulation (EU) 2015/2424) be dismissed on the ground of an objection that the trademark application was filed in bad faith (Article 52(1)(b) of Regulation (EC) No 207/2009, as amended by Regulation (EU) 2015/2424) if, despite the defendant having brought a well-founded counterclaim for a declaration of invalidity of the EU trade mark (Article 99(1) of Regulation (EC) No 207/2009, as amended by Regulation (EU) 2015/2424), the court has not yet ruled on that counterclaim?

2. If the answer is in the negative: May the court dismiss an action for infringement on the ground of an objection that the trademark application was filed in bad faith, if the court at least simultaneously upholds the counterclaim for a declaration of invalidity, or must the court delay the decision on the action for infringement in any event until the decision on the counterclaim is res judicata?

The Austrian Supreme Court does not refer to any CJEU case law in this preliminary reference.

What is mentioned in passing in this Austrian reference is Article 47 of the EU Charter and Article 6 ECHR about the right to a fair trial. The topic of procedural fairness features prominently in Case C-358/16, UBS – stopping a lawyer accessing innocence-establishing documents.

Spice mixes are also at stake in a consumer protection case currently pending at the CJEU; see further, Case C-289/16, Kamin und Grill Shop – an internet mail-order ‘direct sale’ barbecues consumer protection.

Update – 17 December 2016
There is a potentially important preliminary reference from the Dutch Supreme Court about the rules governing access to and the inspection of, evidence which is necessary to prove that an IP right has been infringed but in circumstances where there is also a counter claim that the IP right does not exist or is not infringed; see further, Case C-644/16, Synthon – resisting its impounded documents being inspected by a rival.