International Court Jurisdiction in Disputes Concerning Unlawful Use of Trademarks on the Internet

With the emergence of the Internet, the enforcement of cross-border infringements concerning unlawful use of trademarks on the internet has become highly relevant. Therefore, the determination of particular jurisdiction in disputes concerning unlawful use of trademarks on the internet is a current and burning topic. The question addressed in this paper is what jurisdiction has to be chosen in order to ensure both the effective enforcement of trademark law online and sufficient protection of legitimate interests of users.

After the internet became a worldwide phenomenon, theorists were trying to answer a question of how to regulate it by law. Two main theoretical concepts were created. Goldsmith (1998) is a representative of a cyber-paternalistic concept. Goldsmith’s concept is based on not making a difference between the real world and a virtual one. According to Goldsmith, everything is about communication of existing individuals whose location is always known. In conclusion, this concept is based on application of law according to location of acting (communicating) individuals. If the law cannot be applied directly to the acting person, Goldsmith states, that the law should be applied to the person who is indirectly involved, such as internet connection provider, hardware or software manufacturer etc. In case that the subject has a branch office or other property in that state, law can be also applied to him. Goldsmith distinguishes between scope of a legal act and an enforcement of a legal act. This approach leads to extraterritorial effectiveness of law and Goldsmith compares it to air pollution, which destroys the environment not only in a state that produces it, but also its neighbors. For determining court jurisdiction, he has created a concept of so-called substantial effect, according to which, act can be regulated wherever it can create such effect. Lessig (2006) has a similar view. He understands internet user as a subject over which has a full jurisdiction not only state law, but also rules of cyberspace created by the users themselves. Johnson and Post (1996) represent a different opinion. They propose creation of a new approach for dealing with relations on the internet. In their opinion this new approach is needed because of the specific nature of internet as a tool capable of transferring double-sided information regardless of state borders. Unlike Goldsmith, they reach conclusion that the court jurisdiction cannot be examined by substantial effect criteria on the territory of the affected state. Johnson and Post state, that the relationship between the two communicators can have an impact everywhere, so every court of every state could claim its jurisdiction. This situation cannot be acceptable, because it would create the unreal criterion that everyone would have to be familiar with every law system in the entire world in order to share an information on the internet (there could be potential unjust effect committed everywhere).

In accordance with cyber-libertarian concept, Johnson and Post propose a different approach when regarding the internet. In their opinion, internet is a territory sui generis, so called cyberspace, which should be governed by its own law system based on a contract called cyberlaw, with its citizens named netizens. These ideas have a direct effect to determining court jurisdictions, therefore to extensive, restrictive and moderate approach to dealing with this problem (will be discussed later).

In conclusion, cyber-paternalistic and cyber-libertarian conceptions form an opinion on a question, whether on transactions made through the use of internet should be applied the same rules as to those in the real world or society has to create its own set of rules made specially for this purpose.

In the real world, due to a unique nature of a dispute, courts sometime have to deal with a conflict of two law systems. This happens all the more in the internet environment, which enables creation of an international element more easily thanks to fast communication. In many cases, the application of a border determinant in disputes regarding internet is the same as in the regular cases. Examples of such determinants can be residency, place of business of subjects that conclude a contract. Due to delocalization of legal relations, more problematic is determining a “place where the harmful event occurred or may occur” (see article 7 paragraph 2 of a Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters), which is important to violations of a trademark rights. Placing an information, for example foreign trademark, on a website in one country can cause harm to its owner in other country. This is not just an illustrative example; this situation was a subject of multiple litigations which will be discussed later. Typical for international private law is significant connection with border determinants used in the real world, due to that, their application in disputes connected with activity on the internet is very complicated. This leads to all kinds of proposals, how to deal with this situation and reform a current law. Apart from traditional border determinants, new ones were created, adapted to virtual environment. Typical example can be “location of a server” (Svantesson, 2012) providing a specific service. Authors of this article think, that this border determinant is not a good tool to improve a current situation, because between server and a matter in dispute is no deeper connection, other than that the information is located on the server itself. From this technical relation, vital legal consequences such as international court jurisdiction or decisive law cannot be implied. Also, it is not a big problem to move the content of the server which is a matter in dispute, in case the court jurisdiction would be established using this border determinant. Other alternative border determinants represent location where the information was uploaded to a server, or location where the information was downloaded (see ruling of a High Court of Australia in Dow Jones & Company Inc. vs. Gutnick from 2002). In current judicial practice (see further) the new criteria did not apply often, courts usually adapt current border determinants on internet conditions. American and European judicial practice accepted the necessity of adapting current border determinants in spirit of Johnsons and Posts approach. Key for determining court jurisdiction of follow up problems is forum of a dispute (Rozehnalová, 2010), from which implies application of civil proceeding rules, conflicting rules of law and mandatory rules etc. Application on relations emerging on the internet developed from extensive approach to approaches more moderate built on finding a particular connection between the court of a country and actions on the internet. Above mentioned court rulings declare development in establishing international court jurisdiction in litigations over use of trademarks on the internet.

Crucial for this area is Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters (Brussels I.) and its recast Regulation (EU) No 1215/2012 of the European parliament and of the Council on jurisdiction and the recognition and enforcement of judgements in civil and commercials matters (Brussels I. bis). Authors of this article are also mentioning the older version because of its relevance to important judgements of the Court of Justice of the European Union. Stated regulations are establishing court jurisdiction first by stating general jurisdiction (article 2 of Brussels I and article 4 of Brussels I bis) and cases when special jurisdiction applies (article 5 Brussels I and article 7 Brussels I bis). Principal of a general jurisdiction can be applied when defendant has a place of business or residence on territory of the EU. The nationality is not a key factor. In some cases, it is appropriate not to use general jurisdiction rule but use a rule that is due to its nature, the closest to the relevant case (Rozehnalová and Tyč, 2003). This approach is known as a special or alternative jurisdiction. Reflecting the nature of this article and therefore concentrating on violations of rights to intellectual property, special (alternative) jurisdiction rule can be for example article 5 paragraph 3 regulation Brussels I (article 7 paragraph 2 Brussels I bis) “in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur”. Interpretation of a word “place” regarding actions on the internet, will be explained in the next chapter discussing rulings of Court of Justice of The European Union.

To complete the subject, we will add interpretation of article 5 paragraph 5 regulation Brussels I (article 7 paragraph 5 Brussels I bis) which states following: “as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated”. The key aspect of this discussion is term “branch” meaning other agency or other establishment which has no legal personality. Court of Justice of the European Union defined key elements of this term in judgement Somafer SA against Saar-Ferngas AG, from 1978 (C-33/78), those are: *

Permanent nature

Regarding subject of this article, we can ask ourselves, whether we can consider website to be a branch. Business owner, doing his business through this virtual space does not have to have an actual shop to fulfill his line of business. If yes, does that mean that availability of a website in a certain country mean also jurisdiction of its procedural and private law?

There are opinions of extensive interpretation and also opinions completely different. The protagonist of an extensive approach Polčák (2007) states that website, accessible under particular domain can be considered to be a branch because of its fulfillment of criteria stated above. On the contrary Svantesson (2016) states that because of lack of a link between website and specific a country, webpage cannot fulfill the criteria, thus it cannot be considered as a branch.

In accordance with older rulings of the Court of Justice of the European Union (for example Bier v. Mines de Potasse d’Alsance publ from 1976 (C-21/76)) it is necessary to consider “place where harmful event occurred” to be a place, where negotiation which led to the harmful event occurred. This interpretation enables plaintiff to defend violations of his subjective rights and also claim different thing in multiple different courts, e.g. trademark rights, unfair competition (Bogdan, 2011).

Undermentioned judgements represent attitude of the Court of Justice of the European Union on localization of the activity, respectively its consequences on the internet.

We may ask if there are some principles of determination international court jurisdiction in internet cases which can be used worldwide. It seems to be obvious that national courts tend to find a link between commercial activity on the internet and the territory of each particular state. The deeper is the link, more willing are courts to determine their own jurisdiction. In practice it can be very helpful to use WIPO Joint Recommendation Concerning Provisions on the Protection of Marks, and Other Industrial Property Rights in Signs, on the Internet.

Available online at https://www.wipo.int/edocs/pubdocs/en/marks/845/pub845.pdf [07-02-2019].

Any of these factors shall serve as guidelines to assist for determination whether the use of a sign has produced a commercial effect in the territory and not as pre-conditions for reaching that determination. Determination in each case will depend upon the particular circumstances of that case.

In the past few years unlawful use of trademarks on the internet has become more frequent. As regards trademarks the vast majority of cases in this field concern domain names. Nonetheless, there are examples of other forms of unlawful use of trademark as well. Private international law raises some of the most difficult questions in this area. First, it is necessary to decide which court has jurisdiction in unlawful use of trademarks cases online. Secondly, once the court jurisdiction is established, there is a need to determine what substantive law the court has to apply.

Collision of two principles, territorial jurisdiction of trademarks and a global range of the internet, went through a development in case of international court jurisdiction. However, this development did not initiate a need to change current procedural law. Original, strictly extensive interpretation of impacts of acting on the internet, is based on a criterion of availability. That consists in stating that damage can potentially happen on all locations, where the website is available. This interpretation would lead to so called forum shopping, therefore purpose-built choosing of a court, and would mean unpredictability in establishing court jurisdiction. On the other hand, limitation of a territorial jurisdiction of a trademark cannot exclude international court jurisdiction of a court from abroad. Such behavior would be too restrictive, given the global range of internet communication and would lead to denial of a court protection. Nowadays, courts in different countries move within these extremes and establish jurisdiction based on intensiveness of a link between activity which is subject matter in a dispute and an area where the trial should take place. In American case-law we can find zippo test, effects test or a targeting test. In case law of CJEU aim criteria, criteria of center of interests and criteria of a place where the harmful event occurred or may occur. With regard to trademarks, all those criteria have something in common, which is a will of an originator, that his actions will have business effects in a specific country. According to authors of this article, there is no need to change conflicting rules of law based on a principal of lex loci protections, therefore application of a substantive law of a country, to which protection of a trademarks applies. Unpredictability of court judgements and interference to a trial itself should not be a factor due to substantive law harmonization in EU. Thereof European and American courts lead up to finding a link, between a territory and actions on the internet through commercial effects (WIPO Joint recommendation seems to be very useful for this purpose). For those reasons it is not necessary to look for new border determinations, for example location of an information on the internet, because in term of an application of a substantive law, they are irrelevant. Relevant fact is unlawful use of a trademark (on a website, in a keyword of a search engine, in a domain name etc.). From a technical point of view, it is basically information transfer which can be difficult to trace because of its location and transfer of a data on the internet (divided and decentralized data transfer, location on a different server, deposition in cache computer memory). Moreover, content of an information, basically wrote in binary code, is easily alterable. It is necessary to evaluate the given fact from a point of view of a specific person, who places the information on the internet. Such action has to be qualified as a use of a trademark within trademark law.