Czech Republic: Unfair Competition and Infringements of IP Rights – Who Is Competent?

One of the most important facts to know in dispute resolution law is the local and material jurisdiction of courts with respect to the proceedings. Significant difficulties could arise if the petition is not brought before the right court, including cancellation of the judgement¹. As a result, a party should be aware of procedural rules and use them to his advantage, in particular if the dispute was decided by a body not authorised to do so.

General rules

The general procedural rules for local and material jurisdiction are contained in Act. No. 99/1963 Coll. of the Civil Procedure Code (CPC). The proceedings are held before a court which is locally and materially competent to make a decision in the matter, as determined by the facts existing at the time of commencement of the proceedings. Such facts are decisive until the end of the proceedings; nothing can change the jurisdiction during the period of the trial.

District courts are the competent courts of first instance unless otherwise indicated². The rules for local competence stipulate that the competent court is the court where the defendant has his domicile (in the case of a natural person), place of business (a natural person doing business) or registered office (legal entity). If the foreign defendant has an enterprise or branch in the Czech Republic, local jurisdiction can be established based on the branch's location³. If more than one locally competent court exists, the claimant as the "master of proceedings" may choose in which court to file the claim.

However, it is usually more complicated to determine which court is competent for specific proceedings, such as unfair competition. Moreover, if intellectual property rights are involved in the unfair competition matter, such as trademarks or know-how, a dichotomy of the locally competent court arises.

Unfair competition and IP-law

Protection from unfair competition is one of the proceedings to which different rules apply. Material jurisdiction is given to the regional courts, whereas determining local jurisdiction is more complicated, because the CPC recognises several procedures to determine the competent court. The locally competent court can be a general court, the court in the jurisdiction where the defendant has his permanent place of work, the court in the jurisdiction where the fact establishing a right to damages occurred or the court where the defendant's branch is located.

Act No. 221/2006 Coll., on the enforcement of intellectual property rights (Enforcement Act), established in 2006 specific rules for the determination of a court's jurisdiction for IP proceedings. Material jurisdiction is given to the regional court in cases involving unfair competition. The regulation of local competence is given exclusively to the municipal court in Prague. The main reason for this is the fact that the Czech Industrial Property Office is located in Prague.

However, the crucial issue is not that specific jurisdiction is established for IP disputes but that the legislator has not comprehensively defined IP rights.

Meanwhile, IP rights specifically stipulated in special laws (patents, trademarks or designs) are explicitly determined to be the subject of protection under the Enforcement Act, but know-how or some other cases of IP-related rights are not determined as being subjects of the specific provision on jurisdiction.

Where is the locally competent court?

Since problems caused by the unclear regulation of court jurisdiction in cases of unfair competition and IP-rights disputes were quite frequent, the representatives of the high courts in Prague and Olomouc (there are only two courts in the Czech Republic) adopted a joint statement on the jurisdiction issue in early 2010.

Consequently, in cases involving the argumentation of IP rights in civil or commercial law disputes regarding unfair competition, the only materially and locally competent court shall be the municipal court in Prague. Should such a claim be brought before another regional court, such court shall not be competent and shall refer the claim.

This solution is not only reasonable from the point of view of legal certainty but also in regards to consistent legislation.

Conclusion

In unfair competition cases based on the IP rights of the claimant filed with a different regional court than the municipal court in Prague, the regional court in question must declare its lack of competence to decide on the dispute and refer the claim to the municipal court in Prague.

However, since the joint statement of the high courts is not well known, the problem of acceptance of a claim by an incompetent court is common. Many legal practitioners are not aware of all the regulations for the establishment of the competent court and submit petitions to the wrong court.

It may happen that no harm will come to the client from the delegation of the claim by the incompetent court because the commencement of the proceedings remains preserved. However, such error could cost the claimant a year or more of anxiety and legal uncertainty.

Footnotes

1. Sec. 219a Para. 1 Lit. a) CPC.

2. There are many exceptions enumerated in Sec. 9 Paras. 2, 3, 4 and others CPC.

3. Sec. 86 Para. 3 CPC.

This article was originally published in the schoenherr roadmap`11 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.