May non-registered licensee bring proceedings alleging infringement of the licensed European Union trademark? Yes, decides the Court of Justice, if the proprietor consents thereto and without prejudice to the provisions of the licensing contract.
The Court (February 4, 2016, case C-163/15) interprets the first sentence of Article 23(1) of EC Regulation No 207/2009 of 26 February 2009 on the EU trade mark not only literally but also in light of the context and objectives pursued by the Regulation.
Indeed, according to this article, legal acts concerning a EU trade mark which purpose or effect is to create or transfer a right in respect of a trade mark (transfer of the EU trade mark, creation of rights in rem over that mark and grant of a license) shall have effects vis-à-vis third parties in all the Member States only after their entry in the Register.
But, read as a whole, Article 23 is intended to govern the enforceability of those legal acts in respect of third parties who have, or are likely to have, rights in the EU trade mark. It is thus intended to protect a person who has, or may have, rights in a EU trade mark as an object of property (assignee, licensee, holder of a pledge), but not to protect potential infringers to the rights conferred by the EU trade mark. The trademark infringer cannot take advantage of this provision to preclude a non-registered licensee from suing him.
In the present case, this interpretation seems appropriate. On February 3, 2010, the counterfeiter submitted a ‘cease-and-desist declaration’, by which he undertook to refrain from using the EU trademark for bedding, failing which he would be subject to a non-compliance penalty to be determined at the discretion of the licensee. By pursuing to use the trademark, he exposed itself to infringement proceedings, intended to obtain measures of prohibition of use and damages. With regard to the infringer, no matter who (either the owner or the person authorized by the owner to legitimately use the trademark) carries the action. The new licensee, even if not registered, should be allowed to assert its rights against the infringer if the trademark’s owner so decides.
However, in practice, the recordal of license gives a reliable and certain date enforceable against third parties. It is not uncommon to have contracts belatedly drawn up with an effective date much earlier than the date of signature. The amount of damages may consequently vary significantly depending on the date of enforceability of the contract.
To avoid any misinterpretation, we suggest:
- Drafting the license agreement by clearly indicating the possibilities of action of the licensee in connection with the defense of the trademark;
- Entering the license in the EUIPO register as soon as possible to give an indisputable effective date to the contract.