The matter at hand

Following an order by a Sofia Court, Diageo, the trade mark proprietor of JOHNNY WALKER, seized a container with JOHNNY WALKER whisky that was headed to Simiramida. Although the trade mark rights to the goods had not exhausted, the Sofia Court of Appeal annulled the order. As a consequence, the seizure was lifted. The Bulgarian Supreme Court subsequently dismissed the appeal in cassation brought by Diageo Brands on formal grounds.

In the substantive proceedings brought by Diageo against Simiramida for infringement of its mark, the Sofia City Court dismissed Diageo’s claims, holding that it followed from an interpretative decision delivered by the Bulgarian Supreme Court that the import into Bulgaria of goods placed on the market outside the European Economic Area (EEA) with the permission of the proprietor of the trade mark does not infringe the rights conferred by the trade mark. The Sofia City Court considered itself bound by that interpretative decision by virtue of Bulgarian procedural law. As Diageo Brands did not bring any appeal against the judgment of the Sofia City Court, this judgment became final.

Simiramida filed a claim against Diageo in the Netherlands for compensation of the damages it had incurred as a consequence of the seizure. In its defence, Diageo Brands submitted that that judgment cannot be recognised in the Netherlands as it is manifestly contrary to public policy in the Netherlands, within the meaning of Article 34(1) of Brussels ICouncil Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, claiming that the Sofia City Court manifestly misapplied EU law by basing its ruling on the interpretative decision of the Bulgarian Supreme Court, which is vitiated by a substantive error.

The Supreme Court in the Netherlands raised two questions on Article 34(1) of Brussels ICouncil Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters: i) whether the fact that a judgment of a court of a Member State is manifestly contrary to EU law constitutes a ground for refusal of recognition under that article; and ii) whether such a refusal of recognition is precluded by the fact that the party which has recourse to that ground for refusal failed to make use of the legal remedies available in the Member State of origin of the decision, even if the use of the legal remedies in the Member State of origin of the decision was pointless because it has to be assumed that it would not have led to any different decision.

The Supreme Court moreover raised a question on whether the provision of legal costs in Article 14 of the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights also applies “in the context of proceedings for damages brought in a Member State if the claim and the defence relate to the alleged liability of the defendant by reason of the seizures which it made and the notices which it served with a view to enforcing its trade mark rights in another Member State, and in that connection a question arises concerning the recognition in the former Member State of a decision of the court in the latter Member State.”

The judgment of the ECJ

With regards to the first two questions, the ECJ first refers to the criteria set in case C‑302/13 (flyLAL-Lithuanian Airlines), to conclude that “in order for the prohibition of any review of the substance of a judgment of another Member State to be observed, the infringement would have to constitute a manifest breach of a rule of law regarded as essential in the legal order of the State in which recognition is sought or of a right recognised as being fundamental within that legal order” (paragraph 44). The judgment provides little guidance as to when an infringement of law constitutes ‘a manifest breach of a rule of law regarded as essential in the legal order’, but the ECJ does conclude that this “is not the case [in the event] of an error affecting the application of a provision such as Article 5(3) of the Trade Mark Directive” (paragraph 68).

Then, with regard to the second question, the ECJ refers to “the principle of mutual trust between the Member States, which is of fundamental importance in EU law, [which] requires, […] each of those States, save in exceptional circumstances, to consider all the other Member States to be complying with EU law and particularly with the fundamental rights recognised by EU law” (paragraph 40). The ECJ goes on to consider that it is that trust “which permits the inference that, in the event of the misapplication of national law or EU law, the system of legal remedies in each Member State, together with the preliminary ruling procedure […], affords a sufficient guarantee to individuals” (paragraph 49). For these reasons, the ECJ concludes that, for Article 34 of Brussels ICouncil Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to be invoked successfully, “individuals are required, in principle, to use all the legal remedies made available by the law of the Member State of origin […] save where specific circumstances make it too difficult or impossible to make use of the legal remedies in the Member State of origin” (paragraph 64).

With regards to the third question, on the costs, the ECJ first refers to its finding in case C‑435/12 (ACI Adam), where it is considered that the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights is intended to govern those aspects of intellectual property rights inherent in the enforcement of those rights and in infringement of them (paragraph 73). An action for compensation, as is the subject of the matter at hand, “constitute[s] guarantees which the legislature deemed necessary as a counterweight to the prompt and effective provisional measures for which it made provision” (paragraphs 74-75). A procedure such as the case at hand must for this reason be considered to fall within the scope of the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (paragraph 76). Given the broadly framed and general wording of Article 14 of the Enforcement DirectiveDirective 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, the ECJ holds that that provision is applicable to the legal costs incurred in the context of any procedure falling within the scope of that directive (paragraph 78), i.e. including the matter at hand.