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Evaluating criminal national laws: The proportionality principle via the prism of the CJEU

Updated: Apr 30

CJEU October 19, 2023, Case C-655/21



On October 19, 2023, the Court of Justice of the European Union (CJEU) issued a judgment in Case C-655/21 regarding the enforcement of intellectual property rights. The case concerned the proportionality of a custodial sentence of a minimum of five years for trademark infringement in Bulgaria. The CJEU ruled that such a sentence may prove to be disproportionate and that national courts must ensure that penalties for intellectual property rights (IPR) infringement are proportionate to the offense committed. The judgment is in line with the TRIPS Agreement, which allows Member States to impose custodial sentences for certain acts of trademark infringement, but only if they are proportionate.


Facts and issuess :

The Bulgarian authorities conducted an inspection in a commercial establishment rented by an undertaking selling clothes and found that the signs affixed on the goods were similar to already registered trademarks. The trader was charged before the competent Bulgarian court in respect of use of trademarks without the consent of their proprietors. The Bulgarian legislation contains provisions which define the same conduct both as a criminal offence and as an administrative offence. The court has asked the Court of Justice for clarification on the compatibility with EU law of the Bulgarian law penalising trademark infringements, given that the penalties provided for are severe and the absence of a clear and precise criterion as regards categorisation as a criminal or as an administrative offence leads to contradictory practice and unequal treatment of litigants who have committed practically the same acts.


The Court of Justice clarifies that trade mark infringement may be categorised by national law both as an administrative offence and as a criminal offence. However, criminal law provisions must be accessible, predictable and clear as regards the definition of the offence and the sentencing. A national provision which, where a trademark is infringed repeatedly or with significant harmful effects, provides for a custodial sentence of a minimum of five years is contrary to EU law. Such legislation fails to take account of any specific aspects of the circumstances in which those offences were committed.


Legality of Criminal Offences and Penalties:

The principle of legality of criminal offences and penalties, enshrined in Article 49(1) of the Charter of Fundamental Rights of the European Union (Charter), is a cornerstone for ensuring justice and equality before the law. The fact that the same behaviour is defined by Bulgarian law as both an administrative and a criminal offence, even in the absence of explicit criteria for distinction, creates a situation with a certain legal dilemma.


Characterisation of offences:

The same behaviour - the unlawful use of a trademark in the course of commerce - is classified by Bulgarian law, according to the ruling, as both an administrative and a criminal offence. Nevertheless, there are no precise standards in the law to distinguish between these two classifications. This duplex categorization leads to significant legal ambiguity, which could be used as grounds for arbitrary enforcement and judgements that compromise the concept of legality.


A web of legal ambiguities can result from the lack of specific and unambiguous standards for differentiating between administrative and criminal offences. It could lead to a wide range of judicial interpretations that are inconsistent and to different treatment of plaintiffs who are engaging in almost identical activities. This lack of distinction runs counter to the fundamental requirements of the legality principle, which calls for predictable, unambiguous, and non-arbitrary legal regulations.


A strong legal system must guarantee legal certainty so that people know the consequences of their acts from a legal standpoint. This assurance may be undermined by the ambiguity resulting from the way in which Bulgarian legislation defines offences, which could lead to a cloudy legal environment for organisations engaged in trade and commerce.


Potential for unequal treatment:

The ruling clarifies the possibility of treating litigants differently even when their actions were almost identical. The ideal of equality before the law, which is essential to guaranteeing justice and fairness within the legal framework, is strikingly violated in this situation.


The ruling also calls for consideration of how to harmonise IPR enforcement practises within the European Union. It emphasises how important it is to have a unified and clear legal framework that supports the values of legality, predictability, and clarity while also supporting the larger goals of the EU legislation.


Principle of Proportionality:

The ruling emphasises the severe sentences for trademark infringement specified in the Bulgarian Criminal Code, which include a lengthy prison sentence and a substantial fine. Analysing whether these penalties adhere to the principle of proportionality is essential given the seriousness of the offence and its repercussions.


The severity of the trademark infringement penalties stipulated by Bulgarian law, in contrast to the limited options for sentence reduction or suspension, indicates a breach of the proportionality principle. The possibility exists that the few clemency options will lead to harsher penalties, undermining the justice and equity of the enforcement system.


A comparative study of the criminal justice systems of various EU member states for comparable offences could lead to a better understanding of the proportionality debate. The ruling makes these comparative analyses conceivable and could lead to a more uniform approach to intellectual property rights infringement fines inside the EU.


The concept of proportionality is not just theoretical; it is important for the efficient application of intellectual property rights. Excessive fines have the potential to deter innovation and business, but insufficient sanctions may not be enough to stop violations. The Court’s decision, which highlights the necessity of a rational criminal justice system, echoes this delicate line.


Implications on IPR Enforcement:

The ruling encourages contemplation on the harmonisation of criminal laws throughout the European Union, promoting a reasonable strategy that preserves proportionality while guaranteeing efficient intellectual property rights enforcement. It encourages a conversation that aims to bring disparate national penal codes under a unified EU framework, promoting justice and legal certainty.


The European Union's intellectual property rights (IPR) jurisprudential environment is always changing as it attempts to create a uniform legal framework that strikes a careful balance between the interests of the community and the individual.

The decision in CJEU case C‑655/21 highlights the continuous struggle to build a unified IPR legal framework throughout the EU by exposing the complex link between state legislation and EU directives.

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