TRADEMARKS – The use of paid referencing by a competitor located in another member state may ground the jurisdiction of the country targeted by the said referencing

CJEU, 5th Chamber, 27 Apr. 2023, C-104/22: the Court of Justice of the European Union (CJEU) ruled that the proprietor of a European Union trademark may initiate an infringement action before the court of the Member State in which the infringement took place if the defendant used paid referencing to target the public in that State.

In the present case, a Finnish company initiate an infringement action before the Finnish court against two German companies belonging to the group BERKY, based on its EU trademark “WATERMASTER”.

The Finnish company accused them of having committed acts of infringement on Finnish territory:

• for the first company, by using its trademark to perform a paid referencing on www.google.fi (with the “.fi” extension) and thus display an advertisement for its own products.
• for the second company, by using a meta-tag[1] on the website www.Flickr.com featuring its trademark in order to benefit from natural referencing of images for its own products on www.google.fi.

The two defendants claimed the lack of jurisdiction of the Finnish court on the grounds that the acts had not been committed in Finland because neither the commercial promotion activities nor the product sales activities were aimed at Finnish consumers and that the mere accessibility of the allegedly infringing content did not make it possible to establish that those acts were aimed at the Finnish public.

Interrogated by the Finnish court, the CJEU first specified that the jurisdiction rules that applied were those of Regulation No 2017/1001 on the EU trademark, to the exclusion of Regulation No 1215/2012 on jurisdiction.

The CJEU then recalled the principle that an infringement action must be brought before the courts where the defendant is located, in which case it covers acts committed in the whole territory of the European Union.

The Court then set out the possibility for the trademark owner to bring alternatively an action before the courts of the Member State “where the act of infringement was committed or threatens to be committed“, in which case compensation can only be obtained for acts committed exclusively in the territory of the State concerned.

In view of the claimant’s choice to bring proceedings before the court in which territory the infringement took place, the Court stated that it must be examined whether there is “a sufficient connecting factor with the Member State in which the court seized of the infringement action is situated“, which requires “active conduct on the part of the person causing the infringement“.

In the absence of accurate information on the geographic delivery areas of the goods concerned, which is a “particularly important” evidence, the connecting factor must be established on the basis of other factors, such as the currency used or the language spoken in the country where the seller is located, the telephone numbers with the international prefix, the domain name used (including the extension), the expenditure on a referencing service or the address of the customers, being emphasized that “the mere fact that a website is accessible from the territory covered by the trademark is not a sufficient basis”.

More specifically regarding the two situations at stake, the Court concluded that:

• the first company had engaged an active conduct as it “pays the operator of a search engine website with a national top-level domain of a Member State other than that in which it is established, in order to display, for the public of that Member State, a link to that undertaking’s website, thereby enabling a specifically targeted public to access its product offering“. Paid referencing therefore constitutes a sufficient connecting factor.
• the second company had not engaged in active conduct, since ” the meta tag is intended only to enable search engines better to identify the images contained on that website” and “a website with a generic top-level domain is not intended for the public of any specific Member State“.

Accordingly, the CJEU found that the Finnish courts had jurisdiction over the action brought against the first company, but dismissed the action against the second company in the absence of evidence showing that such natural referencing was targeting a public established in Finland.

[1] A meta tag is an element of the website’s source code. It is not visible to website’s visitors but is used by search engines for referencing purposes.