Opinion of Advocate General Pitruzzella delivered on 27 April 2023.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2023:356
• Date: 27 April 2023
• Celex Number: 62021CC0655
• Court: Court of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

PITRUZZELLA

delivered on 27 April 2023 (1)

Case C‑655/21

Criminal proceedings

against

G. ST. T.,

Other party:

Rayonna prokuratura Burgas, TO Nesebar

(Request for a preliminary ruling lodged by the Rayonen sad Nesebar (District Court, Nesebar, Bulgaria))

(Reference for a preliminary ruling – Enforcement of intellectual property rights – TRIPS Agreement – Criminal sanctions for trade mark infringements – Applicability of the Charter of Fundamental Rights of the European Union – Principles of legality and proportionality of criminal offences and penalties)

1. In the case to which the present Opinion relates, the Rayonen sad Nesebar (District Court, Nesebar, Bulgaria) refers four questions to the Court for a preliminary ruling, the first two on the interpretation of Directive 2004/48/EC, (2) and the last two on the interpretation of Article 49 of the Charter of Fundamental Rights of the European Union (‘the Charter’). Those questions are raised in connection with criminal proceedings brought against G. ST. T., who is charged with several offences of trade mark infringement.

I. Legal framework

A. EU legislation

2. With regard to primary law, Article 49 of the Charter is relevant in the order for reference from the point of view of both the legality and the proportionality of criminal offences and penalties, referred to in paragraphs 1 and 3 of that article respectively. With regard to Directive 2004/48, the referring court refers to recitals 26 and 28, as well as to Article 13, concerning compensation for the prejudice suffered as a result of the infringement of intellectual property rights. To save space, I shall confine myself here to referring to the relevant wording of those provisions, reserving the right to draw attention to their content, where necessary, in the remainder of the present Opinion.

B. Bulgarian law

3. The request for a preliminary ruling refers to Articles 13, 119 and 127 of the Zakon za markite i geografskite oznacheniya (Law on trade marks and geographical indications; ‘the ZMGO’) and to Articles 13, 76b and 81 of the Zakon za markite i geografskite oznacheniya (Law on trade marks and geographical indications, repealed, in force on 22 June 2016; ‘the ZMGO 2016’). In particular, Article 127(1) of the ZMGO and Article 81(1) of the ZMGO 2016 provide for an administrative sanction to be imposed on a person who, in the course of trade, uses goods or services that bear a sign identical or similar to a registered trade mark without the consent of the proprietor thereof.

4. The referring court further draws attention to Articles 55, 66 and 172b of the Nakazatelen kodeks (Criminal Code; ‘the NK’) and to Articles 84 to 88 and 247c of the Nakazatelno-protsesualen kodeks (Code of Criminal Procedure; ‘the NPK’). For the purposes of the present case, Article 172b of the NK is of particular relevance; its wording, which it is appropriate to point out at this stage, reads as follows:

‘(1) A person who, without the consent of the holder of the exclusive right, uses in the course of trade a trade mark, design, plant variety or animal breed which is the subject of that exclusive right, or who uses a geographical indication or an imitation thereof without a legal basis, shall be punished by a term of imprisonment not exceeding five years and a fine not exceeding 5 000 Bulgarian leva (BGN).

(2) If the act referred to in paragraph 1 is repeated or causes significant harmful effects, it shall be punishable by a term of imprisonment of five to eight years and a fine of BGN 5 000 to BGN 8 000.

(3) The object of the offence shall be confiscated and destroyed irrespective of whose property it is.’

II. Main proceedings and procedure before the Court

5. The accused, G. ST. T., a sole trader, is accused of having committed several offences involving the counterfeiting of registered trade marks in 2016, by offering for sale, without the consent of the holder of the corresponding right, items of clothing bearing signs that resembled those trade marks, for a total value of BGN 1 404 590 in the case of the original clothing and of BGN 80 201 in the case of the counterfeit clothing. The goods in question, seized at the commercial establishment in which they were being offered for sale, were confiscated and subsequently destroyed.

6. The referring court points out, in the first place, that the offences referred to in Article 172b(1) and (2) of the NK were introduced in the Republic of Bulgaria within the scope of the discretion conferred by recital 28 of Directive 2004/48. They complement the administrative offence currently provided for in Article 81(1) of the ZMGO 2016. That court essentially states that the constituent elements of the offence under Article 172b(2) of the NK require an assessment of the magnitude of the harm caused to the right holder. To that end, the national case-law applies a presumption not provided for in Directive 2004/48, whereby the harm caused by that offence corresponds to the equivalent of the retail prices of lawfully manufactured goods that are identical or similar to the infringing goods, and is exclusive of both lost profit and non-material damage. In those circumstances, that court is unsure whether the Bulgarian legislation is compatible with Directive 2004/48.

7. In the second place, having stated that the criminal offence under Article 172b of the NK and the administrative offence provided for in the ZMGO came within the scope of EU law because they were penalty-related provisions applicable to legal relationships that were regulated by EU law, the referring court has doubts as to whether the Bulgarian legislation, which categorises the same conduct as an administrative offence and as a criminal offence, without providing a clear and precise criterion for differentiating the two, is compatible with Article 49(1) of the Charter.

8. Lastly, that court has doubts as to whether the custodial sentence provided for in Article 172b(2) of the NK, with a particularly high lower limit in terms of sentencing and an upper limit that cannot be regarded as low either, complies with the principle of proportionality set out in Article 49(3) of the Charter, also in the light of the fact that the practical possibilities for a reduction of the sentence are extremely limited.

9. It is in this context that the Rayonen sad Nesebar (District Court, Nesebar) stayed the proceedings and referred the following questions to the Court of Justice for a preliminary ruling:

‘(1) Are the legislation and case-law in accordance with which the harm suffered by the trade mark proprietor forms part of the constituent elements of the offences referred to in Article 172b(1) and (2) of the NK consistent with the standards introduced by [Directive 2004/48]in relation to harm caused by the unlawful exercise of intellectual property rights?

(2) If the first question is answered in the affirmative, is the automatic presumption, introduced by case-law in the Republic of Bulgaria, for determining the harm – in the amount of the value of the goods offered for sale, calculated on the basis of the retail prices of lawfully manufactured goods – consistent with the standards of [Directive 2004/48]?

(3) Is legislation which does not distinguish between an administrative offence (Article 127(1) of the [ZMGO] currently in force and Article 81(1) of the ZMGO in force in 2016), the criminal offence under Article 172b(1) of the NK and, if the first question is answered in the negative, the criminal offence under Article 172b(2) of the NK compatible with the principle of legality of criminal offences, as enshrined in Article 49 of the [Charter]?

(4) Are the penalties provided for in Article 172b(2) of the NK (custodial sentence of 5 to 8 years and a fine of BGN 5 000 to BGN 8 000) consistent with the principle established in Article 49(3) of the [Charter] (the severity of penalties must not be disproportionate to the criminal offence)?’

10. The Republic of Austria and the European Commission submitted written observations under Article 23 of the Statute of the Court of Justice of the European Union. By way of a measure of organisation of procedure, the Court put to the interested parties, within the meaning of Article 23 of the Statute, certain questions, to be answered in writing, concerning Articles 49 and 51 of the Charter. The Republic of Austria and the Commission complied with that measure.

11. In accordance with the Court’s request, the present Opinion will deal only with the third and fourth questions referred for a preliminary ruling.

III. Analysis

A. Jurisdiction of the Court: preliminary observations

12. The Court’s jurisdiction to answer the third and fourth questions referred for a preliminary ruling depends on whether the Charter is applicable to the main proceedings. That applicability depends in turn on whether, as required by Article 51(1) of the Charter, which delimits its own scope, the Bulgarian legislature, in defining the sanctions laid down in Article 172b of the NK, was implementing EU law. The answer to that question would clearly be in the affirmative if it were to be held, as the referring court holds, that Article 172b of the NK constitutes a penalty-related provision adopted as part of the transposition into Bulgarian law of Directive 2004/48. The Court will have to rule on that point in the answer to be given to the first two questions referred for a preliminary ruling.

13. The present Opinion, which, as has been said, does not deal with those questions, aims instead to examine the applicability of the Charter from a different angle and therefore starts from the premiss of a Court ruling that the criminal legislation whose compatibility with Directive 2004/48 the referring court seeks to assess falls outside the scope of that directive. More precisely, I will examine below whether the application of the Charter, and thus the...