Trade Marks: When being first on the list matters

31st May 2023

Joint ownership of a trade mark may sometimes arise in the context of a joint venture or another type of collaboration.

To ensure joint control on subsequent use and transfer of such mark, the parties to a joint venture or collaboration agreement may choose to have it registered under all their names instead of just one. In that case, which individual rights do the joint owners, jointly or individually, retain in the trade mark? For the CJEU, the answer depends on the national law applicable to each jointly owned trade mark.

In “Legea” (C-686/21) decision of 27 April 2023 [1], the CJEU ruled that the joint ownership of an EU trade mark is in principle governed by the national law of the Member State where the joint owner first mentioned in the Register has its seat, domicile or establishment..

Facts at issue – One for all, all for one?

In 1993, the joint owners of the national and EU trade marks “LEGEA” granted the company Legea an exclusive licence to use their marks for sporting goods. In 2006, one of the joint owners opposed the licence being continued, which resulted in a lawsuit in Italy.

The Naples District Court considered Legea’s post-2006 use unlawful because of the withdrawal of that joint owner’s consent. On appeal, the Naples Court of Appeal took the opposite view that the three other joint owners’ consent was sufficient to maintain the licence.

Uncertain as to the rules to apply to the withdrawal of a licence to use jointly owned trade marks, the Supreme Court of Italy referred the case to the CJEU for a preliminary ruling.

Decision – The response is in the Member States’ national law

The CJEU found that the conditions for exercising jointly owned trade mark rights are governed by national law.

To reach this conclusion, the CJEU based its reasoning on the Community trade mark (“CTM”) Directive 89/104 and Regulation 40/94 as those were applicable at the time.

In a nutshell:

1. Joint ownership of a national trade mark is in principle subject to the law of the Member State where the trade mark is registered.
   
   The CTM Directive does not contain any provisions on joint ownership of national trade marks in the EU. As a result, the CJEU concluded that this absence does not mean that such joint ownership is excluded, but that it is governed by national law, not by the CTM Directive.
   
2. Joint ownership of an EU trade mark is in principle subject to the law of the Member State of the joint owner first mentioned in the Register.
   
   The CTM Regulation refers to the principle that EU trade marks can be jointly owned, but does not contain any provisions governing the nature, scope, limitations or conditions of the joint owners’ rights.
   
   Based on the general provision applicable to EU trade marks as objects of property, these rights depend on the law of the Member State where:
   • the joint owner first mentioned has its seat, domicile or establishment;
   • failing this, the subsequent joint owners in the order mentioned have their seat, domicile or establishment;
   • failing this, the EUIPO has its seat, namely Spain (Article 16 CTM Regulation).

Highlights – Think twice before you file

The “Legea” (C-686/21) decision serves as a useful reminder to be cautious when filing an EU trade mark in the name of several owners.

To summarise:

1. The joint owner first mentioned in the EU trade mark application should be chosen carefully.
   
   Since the law applicable to the joint ownership is based by default on the order in which the joint owners are mentioned in the EU trade mark application, it is advisable to choose carefully which joint owner will be mentioned first. Absent any choice-of-law clause, or any joint ownership agreement, the law of the joint owner first mentioned will govern the rights each co-owner has, or does not have, individually or collectively. National laws in the EU differ substantially in this respect, for example, in relation to who can launch an infringement action, who can grant a license, and whether each joint owner can exploit the mark without compensation to the others.
   
2. Ensuring there is a prior agreement  addressing these issues in place  between joint owners is highly recommended to avoid unpleasant surprises.
   
   The best way to determine the conditions relating to jointly owned trade mark rights is for joint owners to finalise an agreement specifying the law applicable to the joint ownership prior to the filing of the trade mark application. Depending on the national law chosen, parties will have different degrees of freedom to devise their own contractual regime vs. being bound by mandatory statutes.
   
3. Trade mark owners are advised to check which law and conditions are applicable to the exercise of their jointly owned trade marks rights.
   
   The CJEU’s findings under the CTM Directive and Regulation are applicable under the EUTM Directive and Regulation, as they provide for the same approach of joint ownership.
   
   Brand owners are therefore advised to have their trade mark portfolio thoroughly reviewed to determine (i) which trade marks are jointly owned and (ii) which rules are applicable to the jointly owned rights.