Horsham Nutraceuticals Ltd & Anor v Manna Pro Products LLC

An EU trade mark court may entertain a counterclaim challenging the validity of an EU trade mark where the counterclaim is defensive, closely related to the claimant’s case and directly concerns the mark, even though the proceedings are not infringement proceedings. The restriction on challenging validity by claim protects the division between the EUIPO’s vertical jurisdiction and national courts’ horizontal jurisdiction. Article 21(2) of the EUTMR is not prescriptive: it identifies routes to seek assignment but does not remove the jurisdiction of national courts under the general rules. Strike out is inappropriate where the legal issue is suitable for determination but the pleaded case is not certain to fail. Summary judgment should also be refused where contractual construction depends materially on the agreement, factual matrix or disputed questions about consent.

The claimants sought declarations concerning ownership of the CORTAFLEX EU trade mark, non-infringement and associated goodwill. The defendant counterclaimed for assignment of the mark under Article 21 of the EUTMR, or alternatively for invalidity under Article 60(1)(c), relying on an earlier right under Article 8(4). The claimants applied to strike out those parts of the defence and counterclaim, arguing that the High Court lacked jurisdiction because the counterclaim was not brought in infringement proceedings.

The claimants also sought summary judgment on the defendant’s reliance on a 1998 agreement containing a consent-to-assignment clause. The issues were whether the validity counterclaim and Article 21 claim fell within the court’s jurisdiction, and whether the contractual issue could properly be resolved without a trial.

1. Strike out. The strike-out application was dismissed. Although the jurisdictional questions were unsettled, they were questions of law suitable for determination before trial. The court did not need to postpone them until factual findings were made.
2. Validity counterclaim. Articles 58 to 60 identify substantive grounds of revocation and invalidity. Their references to an application to the EUIPO or a counterclaim in infringement proceedings describe procedural routes, but do not necessarily exhaust the procedural circumstances in which a relevant counterclaim may be made. The reference in Article 128(1) to the grounds for invalidity concerns the substantive grounds, not the introductory procedural wording of Articles 58 to 60.
3. Articles 124, 127 and 135 ensure that a declaration affecting the validity of an EU trade mark can be made only by an EU trade mark court and by way of counterclaim. Article 127(1) permits validity to be put in issue by any relevant counterclaim for invalidity. The counterclaim must be referable to, and defensive in nature in relation to, the claim. Here, the claimant’s declarations directly concerned the CORTAFLEX EUTM, and the defendant’s invalidity counterclaim was closely related to those claims. The policy identified in DHL Express v Chronopost—uniform protection and avoidance of inconsistent decisions—supported that conclusion.
4. The declarations sought were not declarations of non-infringement within Article 124(b), because they sought to establish that the defendant had no rights in the EUTM rather than that existing rights were not infringed. Article 127(2) therefore did not deprive the court of jurisdiction.
5. Article 21. The rejection of the claimants’ restrictive interpretation of Article 128 meant that the Article 21 claim could proceed. The court’s preferred view was that Article 21(2) is not prescriptive. It makes clear that a proprietor may apply to the EUIPO or an EU trade mark court, but does not remove national-court jurisdiction under the general rules. A demand for assignment is not itself a request for a declaration of invalidity.
6. Summary judgment. Summary judgment on the 1998 agreement was refused. The construction of clause 13.2 had to be considered in the context of the agreement as a whole and, to some extent, the factual matrix. Whether consent was unreasonably withheld, waived or unnecessary also depended on factual investigation. The issue could properly be dealt with at trial.
7. The claimants’ applications to strike out parts of the defence and counterclaim and for summary judgment were dismissed.