No registration requirement for a license to use a EUTM
On February 4, 2016, the CJEU confirmed with its Judgment in Case C-163/15 that a licensee may bring proceedings alleging infringement of a European Union Trademark (EUTM) which is the subject of a license, despite the fact that the license has not been entered in the Register of European Union Trademarks.
In the main proceedings in Germany, the holder of a license to use a EUTM took court action against a third party because of trademark infringement. Under the license agreement, the licensee is not only entitled but also obliged to enforce the trademark rights of the licensor and proprietor in its own name. The license is not entered in the Register of European Union Trademarks.
The request for a preliminary ruling of the Higher Regional Court Düsseldorf, Germany, concerns the interpretation of Article 23 (1) EUTMR (European Union Trademark Regulation), according to which legal acts concerning a EUTM, such as a license (Article 22 EUTMR), shall have effects vis-à-vis third parties only after entry in the Register of European Union Trademarks. However, contrary to the wording of the relevant legal provision, the CJEU found that there is no registration requirement for a license to use a EUTM in order to bring proceedings alleging trademark infringement before EU-trademark Courts. It is held that it follows from a systematic and teleological interpretation of the European Union trademark regulation that licensees, in general, can enforce the right to use the EUTM vis-à-vis infringers without entry in the Register.
In this relation, the CJEU puts forward the following observations: Firstly, according to the first sentence of Article 22 (3) EUTMR, the licensee’s right to bring proceedings for infringement of a EUTM is subject only to the proprietor’s consent thereto. Secondly, a provision such as Article 17 (6) EUTMR, which explicitly prescribes the requirement of registration in the event of transfer of a EUTM, would serve no useful purpose if Article 23 (1) EUTMR had to be interpreted as precluding reliance, vis-à-vis all third parties, on all of the legal acts referred to in Articles 17 (transfer), 19 (rights in rem) and 22 (licensing) EUTMR as long as they have not been entered in the Register. Finally, the purpose of the rule laid down in the first sentence of Article 23 (1) EUTMR, namely third party protection, does not come into play in case of trademark infringement.
The judgment improves legal certainty and clarity for licensees, proprietors and assignees. Further, it is likely that the findings of the CJEU can also be applied with respect to rights in rem (Article 19 EUTMR) and since Article 33 CDR (Community design regulation) is a corresponding provision to Article 23 (1) EUTMR, there are good reasons to say that the same applies with respect to Community designs.
Nevertheless, it is still highly recommendable to enter a license to use a EUTM in the Register of European Union trademarks. The following two scenarios should be borne in mind: After granting an exclusive license which is not entered in the Register, a trademark proprietor could grant another exclusive license to a third party which is entered in the Register with the unfavorable result that the “earlier” license could simply vanish. The same applies in the relevant case if a EUTM, which is subject to a non-exclusive or exclusive license, is assigned to a third party. Without entry in the Register, it should be difficult for the licensee to furnish proof that the assignee was actually aware of the license to use the EUTM (second sentence of Article 23 (1) EUTMR).