AdWords: Wintersteiger v Products 4U Sondermaschinenbau

The Austrian company Wintersteiger was the manufacturer and seller of various ski and snow board tools and accessories, and owned a trade mark registration for WINTERSTEIGER in Austria (the mark).

Products 4U, a company established in Germany, was a competitor of Wintersteiger also making and selling accessories for Wintersteiger’s tools. Products 4U reserved the keyword WINTERSTEIGER as a Google AdWord only in respect of Google’s German top-level domain, ie, google.de. It did not reserve that keyword on google.at (the Austrian Google site).

Wintersteiger brought an action for an injunction in Austria claiming that Products 4U’s use of the keyword on google.de infringed the mark and argued that the Austrian courts had jurisdiction on the basis of Article 5(3) of the Brussels Regulation, in that ‘google.de’ can be accessed in Austria and the referencing service is in German.

The key principle of the rules of jurisdiction under the Brussels Regulation is that a person domiciled in a Member State shall be sued in its country of domicile. Such a principle is subject to a number of exceptions (Special Jurisdiction), including Article 5(3), which provides that a person domiciled in a Member State may be sued in another Member State in matters relating to tort - ie, including trade mark infringement - in the courts of the “place where the harmful event occurred or may occur”. According to EU case law, these exceptions are to be construed narrowly.

The CJEU first observed that the derogation in Article 5(3) is

based on the existence of a particularly close connecting factor between the dispute and the courts of the place where the harmful event occurred” and jurisdiction is attributed to those courts “for reasons relating to the sound administration of justice and the efficacious conduct of proceedings.

The CJEU confirmed that the last phrase of Article 5(3) means both:

1. The place where the damage occurred (ie, where the event which may give rise to liability resulted in damage); and
2. The place of the event giving rise to the damage.

How did the CJEU interpret these two concepts in relation to the facts of the case?

1. Place where the damage occurred

The place where the damage occurred is determined by identifying the ‘centre of interests’ of the person whose rights have been infringed. This criterion is intended to enable the claimant to identify easily the competent court and also to allow the defendant to foresee before which court it may be sued.

In relation to a national mark, the centre of interests of the registered proprietor will be the Member State in which the mark is registered. Reasons for this include: (1) the registered proprietor can only rely on trade mark protection in that territory, (2) the courts of that Member State are best able to assess issues of infringement, and (3) such choice would satisfy the requirements of foreseeability and sound administration of justice.

2. Place of the event giving rise to the damage

In the case of keyword advertising, the relevant event would be ‘the activation by the advertiser of the technical process’ aimed at displaying the advertisement (ie, the reservation of the AdWord). On that basis, the ‘place of the event’ would be the place of establishment of the advertiser and not of the provider of the referencing service. The former is to be preferred because it is foreseeable and would facilitate the taking of evidence and the conduct of the proceedings.

This meant that the action could be brought either in Germany, as the place of establishment of the advertiser, or in Austria (ie, where the damage occurred because of Wintersteiger’s national trade mark registration).

Whilst the CJEU’s decision seems to turn on its specific facts, we believe it is also likely to apply where the top-level domain of the referencing service provider is not necessarily a country code (.de, .fr, .co.uk) but also a generic one (.com, .net, etc). This means that there could be forum shopping in the case of a proprietor with national marks in different jurisdictions (although any injunctive relief should be limited to that country only).

Conversely, we think it is unlikely that the CJEU’s interpretation of the phrase “place where the harmful event occurred or may occur” will have an impact where a similar claim is brought in relation to a Community trade mark. When it comes to interpreting “the place where the damage occurred”, the fact that the place of the registration of a CTM is in theory every single Member State, such Member States should not allow trade mark owners to engage in ‘unbridled’ forum shopping. This is because the CJEU’s findings were in relation to a national mark and, even if such findings were applied by analogy to a CTM, a court is unlikely to recognise Special Jurisdiction under Article 5(3) of the Brussels Regulation if the choice of forum does not satisfy the requirements of foreseeability (ie, would the defendant expect to be sued in that jurisdiction?) and sound administration of justice. This is particularly so as Articles 97 and 98 of the Community Trade Mark Regulation set out a specific code dealing with issues of jurisdiction and the relief a court is permitted to grant.

Useful links

Decision C-523/10 Wintersteiger AG v Products 4U Sondermaschinenbau