IP rights v banking secrecy laws - lessons from Coty case

When does the protection of intellectual property override the protection of personal data? Sarah Hadland, director and principal at S.H. & Associates explains how the Coty Germany GmbH v Stadtsparkasse Magdeburg case achieved a fine balance between these two fundamental rights. Coty Germany GmbH v Stadtsparkasse Magdeburg: C-580/13

What was the background to this reference to the Court of Justice of the European Union (CJEU)?

This case concerned the balance of rights between the IP Enforcement Directive 2004/48/EC and banking secrecy laws.

Coty Germany (Coty) owns a Community trade mark for DAVIDOFF HOT WATER, registered for perfumery and part of its DAVIDOFF portfolio of trade marks. In 2011, Coty purchased on the internet counterfeit perfume bearing its trade mark. The seller had provided its bank details and Coty made the payment to that account, at Stadtsparkasse Magdeburg bank. Coty then contacted the bank and, under para 19(2) of Gesetz über den Schutz von Marken und sonstigen Kennzeichen (Markengesetz—MarkenG) (Law on the Protection of Trademarks and other distinguishing marks) 1994, requested the name and address of the account holder so that it could pursue the seller of the counterfeit product. The bank refused to disclose its client’s details, invoking banking secrecy rules.

Coty launched a successful action in the Regional Court and the matter was appealed up to the Federal Court of Justice.

The question referred to the CJEU was whether the IP Enforcement Directive, which protects intellectual property rights, took precedence over national banking secrecy laws protecting personal data, in a situation where a client is suspected of dealing in counterfeit goods.

What was the outcome?

The CJEU ruled that Germany’s banking secrecy laws, which provide banks with the ability to apply a blanket refusal to disclose clients’ confidential information, are unlawful on the basis that those laws:

  1. do not take into account any exceptions such as the fundamental right to intellectual property
  2. conflict with the IP Enforcement Directive which imposes on member states an obligation to ensure that information on unlawful activities can be obtained under court order

How would this scenario play out in the UK?

The Coty decision does not provide brand owners with a carte blanche to obtain details of banking customers—however, it does state that national laws must strike a fair balance between the right to privacy enjoyed by banking customers and the need to ensure that those carrying out unlawful activities are not unfairly sheltered.

UK banks can expect this case to be invoked in a similar action in the UK. For example, a brand owner might identify a seller of counterfeit goods on the internet and, having made a trap purchase and obtained the seller’s bank details, the brand owner may wish to be able to serve proceedings on that seller and approach the seller’s bank for their client’s name and address.

What can UK lawyers take from this case?

This case seeks to balance the obligation of institutions, such as banks to protect the personal data of their customers and the right to information of brand owners in the context of proceedings to protect their property.

It is interesting to consider this ruling in the context of existing legislation designed to prevent those carrying out unlawful activities from hiding behind client confidentiality and other protective rules. For example, the rules relating to money laundering impose on institutions and practitioners strict provisions regarding any client they may suspect of carrying out unlawful activity, where that client would otherwise be protected by client confidentiality rules.

The Coty decision provides another tool in the armoury against infringers, and is likely to be invoked with regard to all conflicting legislation such as data protection laws, and not just banking secrecy laws.

Interviewed by Stephanie Boyer.

This article is republished with kind permission of WIPIT’s sister site, Lexis®PSL IP & IT. For a free trial click here.

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