Europe’s most senior court has said complaints for trademarkinfringement can be resolved only after counterclaims based on absolute groundshave been upheld.In its ruling, the Court of Justice of the European Union(CJEU) added that national courts can go on to dismiss the case even though thedecision on that counterclaim might not be final.The court was ruling on a dispute referred by the ObersterGerichtshof, Austria’s Supreme Court, dealing with a trademark battle between twoindividuals who sell herbal products that are added to alcohol.Hansruedi Raimund had sued Michaela Aigner for infringinghis EU trademark for ‘Baucherlwärmer’, a name she had adopted for her products.After Raimund sued in the Handelsgericht Wien (Vienna’sCommercial Court), Aigner sought to invalidate the mark because it had beenfiled in bad faith.
The court agreed with Aigner and dismissed the infringementcase.Vienna’s Higher Regional Court, the Oberlandesgericht Wien,then upheld the judgment, before Raimund appealed to the Supreme Court. Hequestioned whether the two lower courts were allowed to rule on bad faithdespite there being no final decision on the counterclaim for invalidity.According to the CJEU, the Supreme Court stated that thesuccess or failure of Raimund’s action for infringement depends solely on theinvalidity plea. Therefore, the referring court proposed that an infringementaction may be dismissed because of invalidity “only if, at leastsimultaneously, the counterclaim brought on the same ground is upheld”. “It considers that the mere bringing of such a counterclaimshould not be sufficient but that, on the other hand, it should not benecessary to wait for the decision on the counterclaim to become final.”The Supreme Court therefore asked two questions, the firstquerying whether an infringement proceeding can be dismissed following acounterclaim based on bad faith, even though the court has not yet ruled onthat counterclaim.The CJEU answered this with a ‘no’, ruling that thecounterclaim based on absolute grounds for invalidity must be adjudicatedfirst.With its second question the Supreme Court asked whether, ifthe first answer is ‘no’, the court can dismiss an action for infringementbased on an objection citing bad faith, “if the court at least simultaneouslyupholds the counterclaim for a declaration of invalidity”.”Or must the court delay the decision on the action forinfringement in any event until the decision on the counterclaim is resjudicata?” it asked.Addressing the second question, the CJEU said that despite acourt’s having to rule on invalidity first, “linking the outcome of theproceedings relating to the infringement action to the conduct of the partiesin relation to the appeals against the decision upholding the counterclaim fora declaration of invalidity would in all likelihood involve serious delays tothose proceedings”.”The possibility that one of the parties may seek, throughsuccessive appeals, to delay the definitive effect of court decisions cannottherefore prevail over the court’s obligation to determine the dispute broughtbefore it,” it added.Therefore, the CJEU said, national courts should not beprevented from dismissing infringement complaints despite the counterclaim forinvalidity not being final.