In its Solvay/Honeywell judgment (C-616/10) of 12 July, the CJEU decided on several important issues regarding the Brussels I Regulation. Those active in international commercial litigation, particularly patent infringement proceedings, will be interested in this case. The questions in Solvay concern the application of several ‘Brussels I’ rules of jurisdiction to cross-border patent infringement proceedings. The CJEU gets the chance to clarify some questions-left-open related to the 2006 cases GAT v. LuK (C-4/03 ) and Roche v. Primus (C-539/03). Unfortunately, the ruling in Solvay itself also leaves several questions unanswered. I wonder especially whether it was necessary for the CJEU to ‘reformulate’ the questions put before it. I’m afraid it looks like the ‘reformulation’ has obscured the view of what is really going on here.
As was pointed out in an earlier post, the Commission report under Article 27(2) Rome I Regulation (Regulation (EC) 593/2008 on the law applicable to contractual obligations) will be based on a recent study by the BIICL titled “Study on the question of effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over a right of another person”. Although the title is a bit misleading (as the study itself indicates, the study deals not with the effectiveness but with the law applicable to the effectiveness of an assignment or subrogation of a claim against third parties and to priority issues), this is a thorough and excellent study. The report consists of a collection of statistical data, an EU-wide empirical analysis, national reports from twelve Member States and a comprehensive analysis of the question of whether it would be desirable to amend Art. 14 Rome I Regulation to include the third-party aspects of assignment.
The results of the questionnaire show that a vast majority of stakeholders who addressed this particular issue indicated that a uniform EU solution would be of positive impact to their business. Reduction of legal costs and due diligence, increased legal certainty and higher transaction volumes are regarded as positive effects of the introduction of a uniform rule on the property aspects of an assignment. In view of this, it seems highly unlikely that those who argue in favour of preserving the status quo (the description of which can be found in the earlier post) will win the day. The maxim ‘any rule is better than no rule at all’ wins at the expense of the principle ‘no rule better than a bad rule’. In other words, legal certainty is a commodity to be valued in itself and there is a general need for a rule that covers all proprietary aspects of assignment. Which rule will it be?
On 12 July 2012 the European Court of Justice (ECJ) ruled in the VALE case (C-378/10) that
“Articles 49 TFEU and 54 TFEU are to be interpreted as precluding national legislation which enables companies established under national law to convert, but does not allow, in a general manner, companies governed by the law of another Member State to convert to companies governed by national law by incorporating such a company.”
The case concerned a cross-border conversion of a company established under Italian law, VALE Construzioni Srl, into a company incorporated under Hungarian law, VALE Építési kft. Under Italian law it is possible for a company to convert into a company established under foreign law. Under Hungarian law only companies incorporated under the law of Hungary are allowed to convert. The VALE case is the ‘mirror image’ of the Cartesio case (C-210/06) which concerns a transfer of a registered office of a company under Hungarian law to Italy without a conversion. In the Vale case the Court stated that a Member State may restrict a company governed by its law to retain the status of the company established under the law of that Member State if the company intends to move its seat to another Member State, thereby breaking the connecting factor required under the national law of the Member State of incorporation. However, the Member State of origin of that company cannot prevent a company from converting itself into a company governed by the law of the other Member State, to the extent that it is permitted under that law to do so.
Under Article 27(2) of the Rome I Regulation (Regulation (EC) 593/2008 on the law applicable to contractual obligations), the Commission is charged with the task to submit to the EP, the Council and the European Economic and Social Committee a report on the proprietary aspects of voluntary assignment. The Commission report under Article 27(2) Rome I will be based on a comprehensive study that has just been released titled “Study on the question of effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over a right of another person”. This study shall serve as a potential future proposal to amend Art. 14 Rome I Regulation to provide for a new harmonized conflict of laws solution for the third-party aspects of assignment. Why was this necessary?
The rule in art. 14 Rome I Regulation is concerned with the law applicable to assignment of debt and subrogation. As far as the third-party aspects are concerned however, no uniform solution to a conflict–rule could be agreed upon in the drafting process of Rome I and, consequently, the Rome I Regulation (save a reference in recital 38) doesn’t regulate the proprietary aspects of assignment. As a result, Member States currently adopt different approaches. The current incomplete conflict of laws solution in Article 14 Rome I gives rise to various problems, as described in the study. To end this situation, the Commission has to deliver a report (which, incidentally, was due 17 June 2010) accompanied with, if appropriate, a proposal to amend the Rome I Regulation and an impact assessment.
When the Commission will deliver its report is unclear at this point but there is no doubt that it will rely heavily on this study. We will go into more detail in subsequent posts.
Another episode in the line of cases before the Court concerning Google AdWords. The Intellectual Property battle over the use of trademarks as keywords for the purpose of triggering advertisements on Google’s search result pages can be seen in the cases (most notably) C-236-238/08 Google/Louis Vuitton, C-558/08 Portakabin, C-324/09 L’Oréal/eBay and C-323/09 Interflora. The recently handed down judgment in the case Wintersteiger (C-523/10) however, concerns the interpretation of the notion ‘place where the harmful event occurred or may occur’ in Article 5(3) Brussels I Regulation in cases of alleged Trademark infringement through registration of a Google AdWord.
An Austrian company, Wintersteiger, initiated proceedings in Austria for infringement of its Austrian Trademark ‘Wintersteiger’ by a German company, Products 4U. Products 4U had reserved the Trademark ‘Wintersteiger’ as Google Adword for Google’s German top-level domain (www.google.de). Wintersteiger argued that the Austrian judge could assume jurisdiction under Article 5(3) since the website google.de is also accessible in Austria. On appeal, the Austrian Oberster Gerichtshof (OGH) asked the Court which criteria are to be used to determine jurisdiction under Article 5(3) to hear an action relating to an alleged infringement of a trademark through the use of a Google AdWord on the website operating under a top-level domain different from that of the Member State where the trademark is registered…
The case of G/Cornelius de Visser (C-292/10) resembles the Lindner case (C-327/10), on which we reported earlier. The case involves numerous issues, some of which will be dealt with in this post. The factual background of the case simply cannot pass unmentioned. A German girl, Ms G, approached the owner (Mr de Visser) of the domain name www.****.de (I call upon the reader’s imagination here) to show her interest in having photographs taken of herself (their intended use being ‘für eine Party’). The photographs were duly made in Germany and Ms G agreed that they would be published. However, her consent was strictly limited to the pictures being used ‘for a party’, and did not include widespread distribution online.
Taunted by co-workers as she was (according to the judgment she was ‘shown the photographs (…) by work colleagues’), she initiated proceedings in Germany against De Visser. Mr de Visser was registered as owner of the domain with an address in Terneuzen and a postal address in Venlo (both in the Netherlands). It had not, however, been possible to effect service at those addresses in the Netherlands, since both letters were returned marked ‘Unknown at this address’. The Consulate of the Netherlands in Munich stated, on request, that Mr de Visser was not listed in any population register in the Netherlands. To sum up, as was the case in Lindner, the defendant was nowhere to be found. Since both the Hague Convention on the service of documents 1965 and the EU Service Regulation are inapplicable in the case of a defendant with unknown address, the German judge resorted to public notice of the document under German procedural law. This was done by affixing a notice of that service to the bulletin board of the Landgericht Regensburg from 11 February to 15 March 2010. Could this be deemed in conformity with Article 6 ECHR and Article 47 Charter of Fundamental Rights of the EU? The Court held: Continue reading
Section 4 of the Brussels I Regulation (Regulation 44/2001/EC) contains special rules of jurisdiction over consumer contracts, generally designed to protect the weaker party (i.e. the consumer). According to Article 16 (2), the professional party may sue the consumer only in the courts of the Member State where the consumer is domiciled. Does this provision also apply to consumers who left their last known domicile and are simply nowhere to be found? Does the Brussels I Regulation preclude the use of provisions of national law which enable proceedings to be brought against persons of unknown address? These, essentially, were the questions referred to the Court in the case of mr Lindner (C-327/10). A Czech bank brought proceedings in the Czech republic against Lindner, a German national. It appeared Lindner had left his last known domicile in the Czech republic before the proceedings against him were brought. The Czech courts tried to track him down, to no avail. The court held:
55 - (…) in a situation such as that in the main proceedings, in which a consumer who is a party to a long-term mortgage loan contract, which includes the obligation to inform the other party to the contract of any change of address, renounces his domicile before proceedings against him for breach of his contractual obligations are brought, the courts of the Member State in which the consumer had his last known domicile have jurisdiction, pursuant to Article 16(2) of that regulation, to deal with proceedings in the case where they have been unable to determine, pursuant to Article 59 of that regulation, the defendant’s current domicile and also have no firm evidence allowing them to conclude that the defendant is in fact domiciled outside the European Union;
- that regulation does not preclude the application of a provision of national procedural law of a Member State which, with a view to avoiding situations of denial of justice, enables proceedings to be brought against, and in the absence of, a person whose domicile is unknown, if the court seised of the matter is satisfied, before giving a ruling in those proceedings, that all investigations required by the principles of diligence and good faith have been undertaken with a view to tracing the defendant.
In its Cartesio judgment (C-210/06) the Court ruled that “as Community law now stands, Articles 43 EC and 48 EC are to be interpreted as not precluding legislation of a Member State under which a company incorporated under the law of that Member State may not transfer its seat to another Member State whilst retaining its status as a company governed by the law of the Member State of incorporation.”
The Court also stated that a Member State has the power to define the connecting factors to determine whether a company is incorporated under the law of that Member State. However this power “enjoys any form of immunity from the rules of the EC Treaty on freedom of establishment, cannot, in particular, justify the Member State of incorporation, by requiring the winding-up or liquidation of the company, in preventing that company from converting itself into a company governed by the law of the other Member State, to the extent that it is permitted under that law to do so”.
This judgment confirms the necessity of harmonizing the regimes of cross border transfer of company seat within the European Union, but it does not provide any clarification.
Considering the developments in the case law of the Court as well as the Stockholm Programme and its implementation, the European Parliament (EP) adopted a resolution on cross border transfer of company seat within the European Union on 2 February 2012. In the resolution, the EP requests the European Commission to swiftly submit a proposal for a directive on cross border transfer of company seat.
Last October, the grand chamber of the Court ruled in the joined cases of eDate and Martinez (C-509/09 and C-161/10) on the interpretation of Article 5(3) of the Brussels I Regulation (Regulation 44/2001/EC) in cases of alleged infringement of personality rights by means of content placed on an internet website. Article 5(3) grants jurisdiction to the court of the place where the harmful event occurred or may occur.
In earlier case law, Fiona Shevill, the Court had held that in case of defamation by means of a newspaper article distributed in several Member States, Article 5(3) must be interpreted as giving the victim a choice between fora. Firstly, the victim may bring the action before the courts of the Member State of the place where the publisher of the defamatory publication is established, which have jurisdiction to award damages for all of the harm caused by the defamation. Secondly and alternatively, the victim may bring the action before the courts of each Member State in which the publication was distributed and where the victim claims to have suffered injury to his reputation, and which have jurisdiction to rule solely in respect of the harm caused in the State of the court seised (paragraph 33 of Shevill). Could these criteria be applied in cases where the defamatory content was published on the internet?