Acquiescence: don't delay in bringing infringement actions or you might lose your rights, says ECJ

What has happened?

• UK and EU trade mark law provides that a trade mark owner can – in certain circumstances – lose the right to invalidate or object to the use of a later registered trade mark. This occurs if the owner of the earlier mark has knowingly acquiesced to the use of the later registered mark for five continuous years (see Acquiescence: a quick guide). 
• In HEITEC AG v HEITECH Promotion GmbH and RW, the ECJ considered what action the owner of an earlier mark needs to take to stop the clock running, ie to preserve its right to take action. It held that, where a warning letter is unsuccessful, the owner must take the steps necessary to bring about a legally binding solution through an administrative or court action.
• The decision makes clear that trade mark owners must act decisively against potential infringers where the infringer is using a registered mark. If an agreement cannot be reached with the alleged infringer, then administrative or court action will ultimately be required so that the  owner of the earlier mark is not deemed to have acquiesced. 
• The decision is not binding on the UK (now that it has left the EU). While it is possible that the UK courts would have come to the same conclusion on the facts, it seems unlikely the UK courts would construe the law in a way that "forces" parties to litigate where there are other options. 

Want to know more?

The ECJ preliminary ruling was in response to questions referred by the Bundesgerichtshof (the German Federal Court of Justice). The claimant in the underlying German action, HEITEC AG, took action against the use by the defendant of the trade name Heitech Promotion GmbH and various registered trade marks containing the word "heitech". The action was based on infringement of the claimant's rights in its trade name HEITEC and its registered EUTM, HEITEC. 

After sending a warning letter to the defendant in April 2009, the claimant filed an action with the Nuremberg-Fürth Regional Court in December 2012 for injunctive relief and various claims under trade mark law. However, the action was not served until May 2014. (This was because the claimant repeatedly failed to submit originals of the statement of claim and to pay an advance on court costs.) 

The lower court considered that the claimant's claims were time-barred due to acquiescence. The claimant had been aware of the use by the defendant of the Heitech marks/name for an uninterrupted period of at least five years, and had not taken sufficient measures to stop that use. The court action was too late, with there being more than five years between the sending of the initial warning letter (when the claimant must have had actual knowledge of the use of the later registered marks by the defendant) and the service of the claim on the defendant.

On appeal, the Bundesgerichtshof referred questions on the requirements for termination of the acquiescence period to the ECJ. It asked:

• Can acquiescence be excluded not only by means of an administrative or court action, but also through conduct not involving a court or administrative authority?
• If so, does the sending of a warning letter (in which the owner of the earlier sign, before initiating legal proceedings, requires the owner of the later sign to agree to refrain from using the sign, and to enter into an obligation to pay a contractual penalty in the event of an infringement) constitute conduct precluding acquiescence? 
• When seeking judicial redress, is the bringing of the action before the court or the receipt of the action by the defendant decisive for calculating the five-year acquiescence period? Is it significant that receipt of the action by the defendant is delayed beyond the expiry of the five-year period through the fault of the owner of the earlier trade mark? 

• Does the limitation of rights due to acquiescence encompass consequential claims under trade mark law, for example, claims for compensation, provision of information or destruction, as well as prohibitory injunctions?

Is sending a warning letter sufficient to end the acquiescence period?

The ECJ started by examining the basis for the acquiescence regime. It aims to strike a balance between the interest of trade mark owners and other economic operators. Legal certainty for other operators is particularly relevant. Trade mark owners must be sufficiently vigilant by opposing the use of signs likely to infringe their marks where they are aware of the use of such signs. 

The ECJ has already ruled (C-482/09 - Budějovický Budvar) that the filing of an administrative or court action ends the acquiescence period being an unequivocal expression of the trade mark owner's wish to oppose the use of the later mark and remedy the alleged infringement of its rights. 

In the present case, it held that the mere sending of a warning letter on its own is insufficient to stop the clock. If the warning letter is unsuccessful, the trade mark owner must take the steps necessary to bring about a legally binding solution by bringing an administrative or court action. Any other interpretation would mean that a  trade mark owner could send a warning letter every five years to circumvent the acquiescence regime. 

Does the filing or service of a claim end the acquiescence period?

The ECJ noted that, in the context of rules concerning judicial cooperation in civil matters, the date on which a court action is deemed to have been brought is the date on which the application initiating proceedings was lodged. However, the court concerned can be deemed to be seised at that time only if the applicant has not subsequently failed to take the steps it was required to take to have service effected on the defendant (see, eg, C 489/14 and C 29/16).

The ECJ considered this rule to be relevant in the present case. It held that the decisive factor is the filing of the request for a judicial remedy, specifically the filing of the document instituting the proceedings. This is because, by filing a statement of claim, the trade mark owner clearly expresses a genuine and unambiguous wish to assert its rights. 

However, the conduct of the claimant may, in certain cases, raise doubts as to that wish and the serious nature of the action. That might be the case where, owing to a lack of diligence on the part of the claimant, the application initiating proceedings is not served on the defendant.

It therefore seems that, if the claimant does not comply with the requirements of national law for service of the statement of claim, and if these deficiencies are not remedied until after the expiry of the five-year acquiescence period for reasons mainly attributable to the claimant, the filing of the statement of claim does not end the acquiescence period. 

The Bundesgerichtshof must now examine whether it was mainly due to the claimant's conduct - in the sense of lack of due diligence - that the defects in service of the claim were not remedied until after the expiry of the acquiescence period. Having said this, it is questionable whether the ECJ's ruling will have any significance for the underlying infringement proceedings because the claimant's "HEITEC" trade mark has now been revoked due to lack of genuine use (T-520/19 - HEITEC). 

Are consequential claims also forfeited?

The ECJ ruled that consequential claims under trade mark law, such as claims for damages, information and destruction, as well as claims for injunctive relief, are lost where there is limitation due to acquiescence. This was necessary for legal certainty. The owner of the later trade mark can therefore be sure that it will no longer be ordered to pay damages or even to destroy goods after the expiry of the acquiescence period.

What does this mean for you?

• The ECJ's decision increases the obligations on the owners of earlier marks and other rights to counteract a claim of acquiescence. If a warning letter is unsuccessful, they must ultimately take administrative or legal action to bring about a legally binding solution. This would be by way of an application to invalidate the later registration or an infringement claim in respect of the use of the later registered mark. 
• Any such action must be properly initiated to stop the acquiescence period. Anything which suggests that the owner of the earlier mark or right is not serious in bringing the claim - eg not serving the claim form within the five-year period – might mean that the acquiescence period continues to run.
• It is worth noting that, if a warning letter is successful (eg because it results in a co-existence agreement), then the acquiescence period would stop. However, if that co-existence agreement is subsequently breached and ceases to have effect, then a new five year acquiescence period would commence (assuming the owner of the earlier mark or right is aware of such use) (R 267/2014-2).