The Danish Supreme Court allows the “Alicante Torpedo”
Introduction
On the 16th of December 2021, the Danish Supreme Court affirmed a decision by the Danish Maritime and Commercial High Court to suspend two cases on trade mark infringement until a decision has been made by the EUIPO on an application for revocation or invalidity of the same trade mark. Thereby, the Danish Supreme Court allowed a manoeuvre known as the Alicante Torpedo.
The Alicante Torpedo is a method used by alleged infringers to suspend legal proceedings at an EU trade mark court by applying to cancel the rightsholder’s EU-trade mark (EUTM) at EUIPO. When EUIPO receives the application for cancellation or revocation, any related legal proceedings will have to await the outcome of EUIPO’s decision. This process can take several years.
The Alicante Torpedo has its legal basis in article 132(1) of the European Union Trade Mark Regulation (EUTMR). The purpose of the article is to avoid contradictory judgements where different EU trade mark courts decide matters regarding the same trade marks at the same time. Therefore, the article requires an EU trade mark court to suspend its proceedings until the EUIPO has made its decision.
The main question
The case before the Danish Supreme Court addressed the question of when an application for revocation or invalidity to the EUIPO must have been submitted, in order for the EU trade mark court to be obligated to suspend its proceedings. In essence, the case concerned whether an alleged infringer can delay the proceedings at an EU trade mark court, by submitting an application for invalidity to the EUIPO after the main proceedings are issued at an EU trade mark court, but before the alleged infringer state a counterclaim concerning the trade mark’s validity. If, on the other hand, the EU trade mark court is only obligated to suspend its proceedings when the application for revocation or invalidity is submitted before a writ has been filed with the EU trade mark court, then alleged infringers will only be able to use the Alicante Torpedo in cases where they can foresee a lawsuit.
The case
In the present case, the trade mark holder NHS Inc., an American sports equipment company, filed an infringement case on the 14th of May 2018 against the Danish companies SPORTS GROUP DENMARK A/S and SPORT24 A/S on the use of trade marks related to “Santa Cruz”.
Following this, on the 11th of June 2018, SPORTS GROUP DENMARK A/S filed an application for revocation or for a declaration of invalidity of the “Santa Cruz” trade marks in accordance with article 63 of the European Union Trade Mark Regulation.
On the 9th of April 2019, after NHS Inc. filed a second case, SPORTS GROUP DENMARK A/S and SPORT24 A/S put forth counterclaims for a declaration of invalidity in both cases. In both cases a claim to suspend the case based on art. 128(4), cf. art. 132(1) was also filed.
In a decision on the 11th of November 2019, the Danish Maritime- and Commercial High Court decided to suspend both cases until decision on the application for invalidity had been made by the EUIPO. The court based its decision on art. 128(4) and art. 132(1) EUTMR. The court found that since the counterclaims in both cases had been made after the application for invalidity at the EUIPO, both cases should be suspended until a decision has been reached by EUIPO.
On the 23rd of June 2020 the Danish Eastern High Court affirmed the decision to suspend both cases, and on the 16th of December 2021, the matter was brought before the Supreme Court of Denmark.
The court agreed with the reasoning of the Maritime- and Commercial Court and the Eastern High Court and based its decision on the fact that the counterclaims were made after the application for invalidity had been filed at the EUIPO.
The court found that the wording of art. 128(4) means that if an EU-trademark court processes a case of infringement of an EU trade mark, where counterclaims for revocation or for a declaration of invalidity has been made, the court should suspend its proceedings, if an application for revocation or for a declaration of invalidity in accordance with article 63 has been filed at the EUIPO before the counterclaims, cf. art. 132(1). The court found that art. 128(4) should lead to the entirety of the case being suspended and not just the matters relating to the counterclaims.
Our comment
The Danish Supreme Court thus confirmed the use of the Alicante Torpedo as a valid way to suspend legal proceedings in EU-trade mark infringement cases. The decision is in line with the intention to avoid contradictory judgements, but it does, however, afford the alleged infringer the opportunity to suspend infringement proceedings for long periods of time. This makes the pursuit of infringement claims much more costly and can extinguish the claimant’s appetite to pursue altogether. Furthermore, the deadline in Denmark for the alleged infringer’s statement of defence (and counterclaims) is often extended, meaning that the infringer has plenty of time to plan and execute the Alicante Torpedo.
Moving forward, trade mark holders in Denmark should therefore consider filing for a preliminary injunction before filing for the main proceedings. Proceedings regarding preliminary injunctions are rarely suspended, and the infringing actions can consequently be put to a halt in a swifter manner.
However, it is likely that rightsholders ought not to fear the use of the Alicante Torpedo in all instances, as the principles of the judgement are presumably not always applicable. As the name suggests, the Alicante Torpedo is prone to be used to circumvent (“torpedo”) the principle of lis pendens. If it is evident that article 132(1) EUTMR are taken advantage of by the alleged infringer to bypass the principle of lis pendens, then the EU trade mark court may not allow the legal proceedings to be suspended, thus leaving a life jacket for the trade mark holders.