CJEU - Judgment C-655/21 G. ST. T. 19 Oct 2023

JUDGMENT OF THE COURT (Fourth Chamber)

19 October 2023 (*)

(Reference for a preliminary ruling – Enforcement of intellectual property rights – Directive 2004/48/EC– Article 13 – Criminal procedure – Scope – Harm suffered by the trade mark proprietor as a constituent element of the offence – Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) – Article 61 – Charter of Fundamental Rights of the European Union – Article 51(1) – Implementation of EU law – Powers – Article 49(1) and (3) – Legality and proportionality of penalties)

In Case C-655/21,

REQUEST for a preliminary ruling under Article 267 TFEU from the Rayonen sad – Nesebar (District Court, Nesebar, Bulgaria), made by decision of 14 October 2021, received at the Court on 27 October 2021, in the criminal proceedings against

G. ST. T.,

interested party:

Rayonna prokuratura Burgas, TO Nesebar,

THE COURT (Fourth Chamber),

composed of C. Lycourgos, President of the Chamber, O. Spineanu-Matei (Rapporteur), J.-C. Bonichot, S. Rodin and L.S. Rossi, Judges,

Advocate General: G. Pitruzzella,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

– the Austrian Government, by A. Posch, J. Schmoll and A. Kögl, acting as Agents,

– the European Commission, by S.L. Kalėda and I. Zaloguin, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 27 April 2023,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 13 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (OJ 2004 L 157, p. 45), and of Article 49 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

2 The request has been made in criminal proceedings brought against G. ST. T. concerning trade mark infringement.

Legal context

International law

3 The Agreement on Trade-Related Aspects of Intellectual Property Rights (‘the TRIPS Agreement’), which constitutes Annex 1C to the Agreement establishing the World Trade Organisation (WTO), signed at Marrakesh on 15 April 1994 and approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1), contains a Part III, entitled ‘Enforcement of intellectual property rights’.

4 Section 5 of Part III of the TRIPS Agreement is entitled ‘Criminal procedures’ and contains Article 61, which provides:

‘Members shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity. In appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence. Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed wilfully and on a commercial scale.’

European Union law

5 Recital 28 of Directive 2004/48 states:

‘In addition to the civil and administrative measures, procedures and remedies provided for under this Directive, criminal sanctions also constitute, in appropriate cases, a means of ensuring the enforcement of intellectual property rights.’

6 In accordance with Article 1 thereof, entitled ‘Subject matter’, that directive ‘concerns the measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights’.

7 Article 2 of that directive, entitled ‘Scope’, provides:

‘1. Without prejudice to the means which are or may be provided for in Community or national legislation, in so far as those means may be more favourable for rightholders, the measures, procedures and remedies provided for by this Directive shall apply, in accordance with Article 3, to any infringement of intellectual property rights as provided for by Community law and/or by the national law of the Member State concerned.

2. This Directive shall be without prejudice to the specific provisions on the enforcement of rights and on exceptions contained in Community legislation concerning copyright and rights related to copyright, notably those found in [Council] Directive 91/250/EEC [of 14 May 1991 on the legal protection of computer programs (OJ 1991 L 122, p. 42)] and, in particular, Article 7 thereof or in Directive 2001/29/EC [of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10)] and, in particular, Articles 2 to 6 and Article 8 thereof.

3. This Directive shall not affect:

…

(b) Member States’ international obligations and notably the TRIPS Agreement, including those relating to criminal procedures and penalties;

(c) any national provisions in Member States relating to criminal procedures or penalties in respect of infringement of intellectual property rights.’

8 Article 13 of that directive, entitled ‘Damages’, provides:

‘1. Member States shall ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement.

When the judicial authorities set the damages:

(a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement;

(b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.

2. Where the infringer did not knowingly, or with reasonable grounds [to] know, engage in infringing activity, Member States may lay down that the judicial authorities may order the recovery of profits or the payment of damages, which may be pre-established.’

9 Under Article 16 of that directive, entitled ‘Sanctions by Member States’:

‘Without prejudice to the civil and administrative measures, procedures and remedies laid down by this Directive, Member States may apply other appropriate sanctions in cases where intellectual property rights have been infringed.’

Bulgarian law

The Criminal Code

10 Article 172b of the Nakazatelen kodeks (Criminal Code), in the version applicable at the material time (‘the Criminal Code’), provides:

‘(1) A person who, without the consent of the holder of the exclusive right, uses in the course of trade a trade mark … 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 punished 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 criminal offence shall be confiscated, irrespective of whose property it is, and destroyed.’

The old ZMGO and the new ZMGO

11 Article 13 of the Zakon za markite i geografskite oznachenia (Law on trade marks and geographical indications, DV No 81 of 14 September 1999), in the version applicable to the dispute in the main proceedings (‘the old ZMGO’), provided:

‘(1) The right to a trade mark includes the right of its proprietor to use it, dispose of it, and prevent third parties not having his or her consent from using in the course of trade, any sign which:

1. is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;

2. on account of being identical with, or similar to, the trade mark and on account of the goods or services covered by the mark and by the sign being identical or similar, there exists a likelihood of confusion on the part of consumers, which includes the likelihood of association between the sign and the trade mark;

3. is identical with, or similar to, the trade mark in relation to goods or services which are not identical with or similar to those for which the trade mark is registered, where the [trade mark] has a reputation in the Republic of Bulgaria and use of the sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the reputation of the [trade mark].

(2) Use in the course of trade within the meaning of paragraph 1 shall consist in:

1. affixing the sign to the goods or to the packaging thereof;

2. offering the goods bearing that sign for sale or placing them on the market, or storing those goods to this end, and offering or providing services under that sign;

3. importing or exporting goods bearing that sign;

…’

12 Article 76b of that law, entitled ‘Specific cases of compensation’, provided:

‘(1) When the action is well founded but the information regarding the amount of the claim is insufficient, the applicant may claim by way of compensation:

1. BGN 500 to BGN 100 000, the determination of the specific amount being a matter for the court subject to the conditions laid down in Article 76a(2) and (3), or

2. the equivalent of the retail price of lawfully manufactured goods that are identical with, or similar to, the goods that are the object of the offence.

(2) When determining the compensation within the meaning of paragraph 1, the revenue generated as a result of the offence shall also be taken into account.’

13 Article 81 of that law, entitled ‘Administrative offences and penalties’, provided:

‘(1) A person who uses in the course of trade within the meaning of Article 13 goods or services which bear a sign that is identical with, or similar to, a registered trade mark, without the consent of its proprietor, shall be punishable by a fine of BGN 500 to BGN 1 500, and sole traders and legal persons shall be punishable by a financial penalty of BGN 1 000 to BGN 3 000.

(2) Where an offence for the purposes of paragraph 1 has been repeated, the person shall be punishable by a fine of BGN 1 500 to BGN 3 000, and sole traders and legal persons shall be punishable by a financial penalty of BGN 3 000 to BGN 5 000.

(3) An offence shall be considered to have been repeated where it is committed within one year after entry into force of the decision imposing an administrative penalty, penalising that person for the same type of offence.

…

(5) The goods referred to in paragraph 1, irrespective of whose property they are, shall be confiscated and handed over for destruction, the proprietor of the trade mark or a person authorised by that proprietor being allowed to be present at the destruction.

…’

14 The old ZMGO was repealed and replaced by the Zakon za markite i geografskite oznachenia (Law on trade marks and geographical indications, DV No 98 of 13 December 2019; ‘the new ZMGO’). Article 13 of the new ZMGO has the same wording as Article 13 of the old ZMGO, now repealed.

15 Article 127 of the new ZMGO, entitled ‘Administrative offences and penalties’, provides, in paragraph 1 thereof:

‘A person who uses in the course of trade within the meaning of Article 13(1) and (2) goods or services which bear a sign that is identical with, or similar to, a registered trade mark, without the consent of its proprietor, shall be punished by a fine of BGN 2 000 to BGN 10 000, and sole traders and legal persons shall be punished by a financial penalty of BGN 3 000 to BGN 20 000.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

16 G. ST. T. owns a sole-trader business, which is engaged in the sale of clothes.

17 In 2016, officials from the Bulgarian Ministry of the Interior conducted an inspection in a commercial establishment rented by that trader in the municipality of Nesebar (Bulgaria) and seized goods offered for sale there. The expert report ordered by the court stated that the signs affixed on those goods were similar to registered trade marks, and estimated the total value of those goods at BGN 1 404 590 (approximately EUR 718 000) ‘as originals’ and BGN 80 201 (approximately EUR 41 000) ‘as imitations’.

18 The Rayonna prokuratura Burgas, TO Nesebar (Burgas District Public Prosecutor’s Office, Nesebar division, Bulgaria) took the view that G. ST. T. had thus used in the course of trade, without the consent of the holders of the exclusive rights, marks covered by those exclusive rights and that that activity had caused ‘significant harmful effects’, with the result that the person concerned was charged before the Rayonen sad – Nesebar (District Court, Nesebar, Bulgaria), which is the referring court, with the offence of aggravated trade mark infringement, as provided for in Article 172b(2) of the Criminal Code.

19 None of the injured legal persons has submitted an application for compensation against G. ST. T. or has sought to join a civil action to those proceedings.

20 The referring court states, in essence, that, in the context of the freedom of the Member States, in accordance with recital 28 of Directive 2004/48, to provide for criminal sanctions where intellectual property rights have been infringed, the Republic of Bulgaria introduced Article 172b(1) and (2) of the Criminal Code. That provision, in paragraph 1 thereof, categorises as a criminal offence the use of a trade mark in the course of trade without the consent of the holder of the exclusive right and refers, in paragraph 2 thereof, to the case where that act has been committed repeatedly or has caused ‘significant harmful effects’. That Member State also introduced, in Article 81(1) of the old ZMGO, which has since been replaced by Article 127(1) of the new ZMGO, an administrative offence intended to penalise the same facts.

21 In the first place, the referring court is uncertain whether a national provision, such as Article 172b(2) of the Criminal Code, according to which the harm suffered by the trade mark proprietor forms part of the constituent elements of the criminal offence which it lays down, is consistent with the standards in relation to harm caused as a result of the unlawful exercise of intellectual property rights introduced by Directive 2004/48 and, if so, whether the mechanism for determining harm based on a presumption, that is to say, according to the value of the goods offered for sale calculated on the basis of the retail prices of lawfully manufactured goods, introduced by the Bulgarian legislation, is consistent with those standards.

22 In the second place, the referring court states that the principle of the legality of criminal offences and penalties, enshrined in Article 49(1) of the Charter, presupposes that legislation coming within the scope of EU law clearly lays down the limits of the conduct that constitutes a criminal offence and, in particular, determines the constituent elements of the offence in question. The Bulgarian legislation contains provisions which define the same conduct, namely use in the course of trade of a trade mark without the consent of the holder of the exclusive right, as an administrative offence (Article 81(1) of the old ZMGO and Article 127(1) of the new ZMGO) and as a criminal offence (Article 172b of the Criminal Code). Nevertheless, that legislation does not include any criterion to differentiate categorisation as a criminal offence and as an administrative offence. That absence of a clear and precise criterion leads to contradictory practice and unequal treatment of litigants who have committed practically the same acts.

23 In the third place, the referring court seeks clarification as to whether the principle of proportionality enshrined in Article 49(3) of the Charter precludes legislation such as the Bulgarian legislation, having regard to the severity of the penalties provided for with a view to punishing the offence under Article 172b(2) of the Criminal Code, namely a long term of imprisonment, together with a heavy fine. That court states, in that context, that the possibilities to reduce or suspend the sentence are limited and that those penalties are accompanied by the confiscation and destruction of the counterfeit goods.

24 In those circumstances, the Rayonen sad – Nesebar (District Court, Nesebar) decided to stay the proceedings and to refer 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 [Criminal Code] 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 [new ZMGO] and Article 81(1) of [the old ZMGO]), the criminal offence under Article 172b(1) of the [Criminal Code] and, if the first question is answered in the negative, the criminal offence under Article 172b(2) of the [Criminal Code] compatible with the principle of legality of criminal offences [and penalties], as enshrined in Article 49 of the [Charter]?

(4) Are the penalties provided for in Article 172b(2) of the [Criminal Code] (custodial sentence of [five to eight] 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)?’

Consideration of the questions referred

The first and second questions

25 By its first and second questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 13 of Directive 2004/48 must be interpreted as precluding national legislation and case-law pursuant to which the extent of the harm suffered forms part of the constituent elements of the criminal offence of aggravated trade mark infringement. If this is answered in the negative, the referring court is uncertain whether a mechanism for determining harm based on a presumption is consistent with the standards laid down by that directive.

26 In that regard, it must be noted that Article 2 of Directive 2004/48, relating to its scope, states, in paragraphs 1 and 2 thereof, that the measures, procedures and remedies provided for by that directive are to apply to any infringement of intellectual property rights as provided for by EU law or by the national law of the Member State concerned, and that that directive is without prejudice to the specific provisions on the enforcement of rights and on exceptions contained in EU legislation concerning copyright and rights related to copyright.

27 Nevertheless, Article 2 of Directive 2004/48 adds, in points (b) and (c) of paragraph 3 thereof, that that directive affects neither Member States’ international obligations and notably the TRIPS Agreement, including those relating to criminal procedures and penalties, nor any national provisions relating to those procedures or penalties in respect of infringement of intellectual property rights.

28 Furthermore, Article 16 of that directive states that, without prejudice to the civil and administrative measures, procedures and remedies laid down by that directive, Member States may apply other appropriate sanctions in cases where intellectual property rights have been infringed.

29 Lastly, recital 28 of that directive states that criminal sanctions also constitute, in appropriate cases, a means of ensuring the enforcement of intellectual property rights, in addition to those civil and administrative measures, procedures and remedies provided for under that directive.

30 It is apparent from those provisions and that recital that Directive 2004/48 does not govern criminal procedures and penalties in respect of infringement of intellectual property rights, whilst at the same time granting Member States the option of legislating pursuant to national or international law in order to provide for penalties, inter alia of a criminal nature, that they consider appropriate in respect of infringement of those rights.

31 According to settled case-law, the Court must examine the circumstances in which cases are referred to it by the national court in order to assess whether it has jurisdiction or whether the request submitted to it is admissible. In that regard, the Court has regularly pointed out that the procedure provided for in Article 267 TFEU is an instrument of cooperation between the Court of Justice and the national courts, by means of which the Court provides the national courts with the points of interpretation of EU law which they need in order to decide the disputes before them and that the justification for a reference for a preliminary ruling is not that it enables advisory opinions on general or hypothetical questions to be delivered, but rather that it is necessary for the effective resolution of a dispute. As is apparent from the actual wording of Article 267 TFEU, the question referred for a preliminary ruling must be ‘necessary’ to enable the referring court to ‘give judgment’ in the case before it (judgment of 22 March 2022, Prokurator Generalny and Others (Disciplinary Chamber of the Supreme Court – Appointment), C-508/19, EU:C:2022:201, paragraphs 59 to 61 and the case-law cited).

32 As Directive 2004/48 does not apply to national rules relating to criminal procedures and criminal penalties where intellectual property rights have been infringed, the interpretation of that directive sought by the referring court by its first and second questions is not necessary for the resolution of the dispute in the main proceedings, which is a purely criminal procedure.

33 It follows that the first and second questions are inadmissible.

The third and fourth questions

The jurisdiction of the Court

34 By its third and fourth questions, the referring court seeks an interpretation of Article 49 of the Charter for the purpose of ascertaining whether that article is compatible with Article 172b(2) of the Criminal Code.

35 At the outset, it must be borne in mind that the Court has jurisdiction to reply to the questions referred for a preliminary ruling where the legal situation which gave rise to the main proceedings comes within the scope of EU law. In that regard, it is settled case-law that any provisions of the Charter relied upon cannot, of themselves, form the basis for such jurisdiction (judgment of 24 February 2022, Viva Telecom Bulgaria, C-257/20, EU:C:2022:125, paragraph 128 and the case-law cited).

36 The Austrian Government argues that the Court has no jurisdiction to reply to the third and fourth questions. According to that government, the criminal provisions at issue in the main proceedings do not amount to an implementation of EU law for the purposes of Article 51(1) of the Charter and they cannot, therefore, be assessed in the light of Article 49 of the Charter.

37 In that regard, according to Article 51(1) of the Charter, the provisions of the Charter are addressed to the Member States only when they are implementing EU law. Accordingly, as follows from settled case-law, the fundamental rights guaranteed by the Charter are applicable in all situations governed by EU law, but not outside such situations (judgments of 26 February 2013, Åkerberg Fransson, C-617/10, EU:C:2013:105, paragraphs 17 and 19 and the case-law cited, and of 5 May 2022, BPC Lux 2 and Others, C-83/20, EU:C:2022:346, paragraphs 25 and 26).

38 The Court previously held that when Member States perform their obligations resulting from an international agreement entered into by the European Union, which forms an integral part of EU law from its entry into force, they must be considered to be implementing EU law, within the meaning of Article 51(1) of the Charter (see, to that effect, judgment of 6 October 2020, Commission v Hungary (Higher education), C-66/18, EU:C:2020:792, paragraphs 69 and 213).

39 The Agreement establishing the WTO, which includes the TRIPS Agreement, was entered into by the European Union and thus forms an integral part of EU law from its entry into force, namely from 1 January 1995 (see, to that effect, judgments of 15 March 2012, SCF, C-135/10, EU:C:2012:140, paragraphs 39 and 40, and of 6 October 2020, Commission v Hungary (Higher education), C-66/18, EU:C:2020:792, paragraphs 69 to 71).

40 The TRIPS Agreement has the objective, inter alia, of reducing distortions of international trade by ensuring, in the territory of each member of the WTO, the effective and adequate protection of intellectual property rights. Part II of that agreement contributes to attaining that objective by setting out, for each of the principal categories of intellectual property rights, rules which must be applied by every member of the WTO (judgment of 18 July 2013, Daiichi Sankyo and Sanofi-Aventis Deutschland, C-414/11, EU:C:2013:520, paragraph 58). Part III of that agreement, which also pursues that objective, relates to ‘enforcement of intellectual property rights’ and sets out, in particular, the procedures and measures that the members of the WTO are obliged, for the purposes of that objective, to introduce in their legislation.

41 Thus, under Section 5, entitled ‘Criminal procedures’, in Part III, Article 61 of the TRIPS Agreement states that ‘[members of the WTO] shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale’, that ‘remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity’, and that, ‘in appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence’.

42 It follows that, as the Advocate General noted in point 30 of his Opinion, when Member States are discharging their obligations under the TRIPS Agreement, including those arising from Article 61 thereof, they must be considered to be implementing EU law, within the meaning of Article 51(1) of the Charter.

43 The obligation under Article 61 of the TRIPS Agreement to provide for criminal procedures that are, at the very least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale, capable of resulting in effective, deterrent and proportionate penalties, binds each member of the WTO, including the European Union and its Member States, and forms part, as is apparent from the case-law referred to in paragraph 39 above, of EU law, irrespective of acts of internal harmonisation. The Court’s case-law according to which a Member State is implementing EU law, within the meaning of Article 51(1) of the Charter, where it is discharging an obligation, laid down in a provision of EU law, to provide for effective, proportionate and deterrent penalties against the persons responsible for the offences referred to by that provision (see, to that effect, judgment of 20 March 2018, Garlsson Real Estate and Others, C-537/16, EU:C:2018:193, paragraphs 22 and 23) applies to the case at hand. The fact that that obligation is laid down in an international agreement entered into by the European Union and not in internal EU legislation is, in that regard, irrelevant, as follows from the case-law referred to in paragraph 38 above.

44 Consequently, if a Member State is discharging the obligation laid down in Article 61 of the TRIPS Agreement, that Member State is implementing EU law, with the result that the Charter is applicable.

45 In the present case, subject to verification by the referring court, Article 172b(1) and (2) of the Criminal Code appears to amount to an implementation by the Bulgarian law of the obligations under Article 61 of the TRIPS Agreement.

46 It follows that the Court has jurisdiction to reply to the third and fourth questions.

Substance

– The third question

47 By its third question, the referring court asks, in essence, whether Article 49(1) of the Charter must be interpreted as meaning that the principle of the legality of criminal offences and penalties precludes national legislation which provides, where a mark is used in the course of trade without the consent of the holder of the exclusive right, that the same conduct may be categorised both as an administrative offence and as a criminal offence, without that legislation including criteria allowing a distinction to be drawn between, on the one hand, the administrative offence and, on the other, the criminal offence or the aggravated criminal offence.

48 The referring court states that, in accordance with the Bulgarian legislation, certain conduct may amount to both an administrative offence and a criminal offence. That is the case where a mark is used in the course of trade without the consent of the holder of the exclusive right, an act which gives rise not only to the administrative offence referred to in Article 81(1) of the old ZMGO, applicable to the facts at issue in the main proceedings, but also to the criminal offence defined in Article 172b(1) of the Criminal Code. Furthermore, according to that court, the criminal offence laid down in Article 172b(2) of that code overlaps in part, as regards its constituent elements, with Article 172b(1) of that code, inasmuch as it also seeks to penalise that prohibited use.

49 In that regard, under the principle of the legality of criminal offences and penalties, enshrined in Article 49(1) of the Charter, criminal law provisions must comply with certain requirements of accessibility and predictability as regards both the definition of the offence and the sentencing (judgment of 11 June 2020, JI, C-634/18, EU:C:2020:455, paragraph 48).

50 According to the Court’s case-law, that principle constitutes a specific expression of the general principle of legal certainty and implies, inter alia, that legislation must clearly define offences and the penalties which they attract (see, to that effect, judgment of 8 March 2022, Bezirkshauptmannschaft Hartberg-Fürstenfeld (Direct effect), C-205/20, EU:C:2022:168, paragraph 47 and the case-law cited).

51 This requirement is met where the individual is in a position, on the basis of the wording of the relevant provision and if necessary with the help of the interpretation made by the courts and a legal opinion, to know which acts or omissions will make him or her criminally liable (see, to that effect, judgments of 5 December 2017, M.A.S. and M.B., C-42/17, EU:C:2017:936, paragraph 56, and of 5 May 2022, BV, C-570/20, EU:C:2022:348, paragraph 38 and the case-law cited).

52 In the present case, Article 172b of the Criminal Code provides that any use in the course of trade of a mark without the consent of the holder of the exclusive right is a criminal offence and leads to the imposition of the sentences referred to in that provision.

53 It is true that, pursuant to the Bulgarian law on trade marks, the ZMGO, that conduct is also categorised as an administrative offence and may lead to the imposition of an administrative fine.

54 Thus, it is apparent from those provisions that the same conduct, consisting in use in the course of trade of a mark without the consent of the holder of the exclusive right, is categorised as a criminal offence and as an administrative offence and, accordingly, may give rise to both criminal and administrative penalties.

55 Nevertheless, subject to observance of the general principles of EU law, including the principle of proportionality, which is the subject matter of the fourth question referred, the Member States may impose, for the same acts, a combination of administrative and criminal penalties (see, to that effect, judgments of 26 February 2013, Åkerberg Fransson, C-617/10, EU:C:2013:105, paragraph 34, and of 24 July 2023, Lin, C-107/23 PPU, EU:C:2023:606, paragraph 84 and the case-law cited).

56 It follows that, provided that the criminal provision is, as such, consistent with the requirements deriving from the principle of the legality of criminal offences and penalties referred to in paragraphs 50 and 51 above, that principle does not preclude national legislation from categorising the same conduct as a criminal offence and as an administrative offence and thus defining the conduct sanctioned by those offences in similar, or identical, terms.

57 Use in the course of trade of a mark without the consent of the holder of the exclusive right is unambiguously presented, by Article 172b of the Criminal Code, as a criminal offence which gives rise to the sentences laid down therein. In those circumstances, in accordance with the case-law referred to in paragraphs 50 and 51 above, it must be considered, subject to verification by the referring court, that the principle of the legality of criminal offences and penalties laid down in Article 49(1) of the Charter has been observed.

58 As regards the circumstance, referred to by the national court, that the national legislation, in particular Article 81(1) of the old ZMGO and Article 172b of the Criminal Code, does not contain criteria allowing a distinction to be drawn between, on the one hand, the administrative offence and, on the other, the criminal offence, it must be noted that that principle does not give rise to a requirement for the national legislation to contain such criteria.

59 Having regard to the foregoing considerations, the answer to the third question is that Article 49(1) of the Charter must be interpreted as meaning that the principle of the legality of criminal offences and penalties does not preclude national legislation which provides, where a trade mark is used in the course of trade without the consent of the holder of the exclusive right, that the same conduct may be categorised both as an administrative offence and as a criminal offence, without that legislation including criteria allowing a distinction to be drawn between, on the one hand, the administrative offence and, on the other, the criminal offence, the offence being described in similar, or identical, terms, in the criminal law and the law on trade marks.

– The fourth question

60 By its fourth question, the referring court asks, in essence, whether Article 49(3) of the Charter must be interpreted as precluding a national legal provision that, where a mark is used in the course of trade without the consent of the holder of the exclusive right, provides for the imposition of criminal penalties which are both custodial and financial, the custodial sentence ranging from five to eight years of imprisonment where that use has occurred repeatedly or has caused significant harmful effects.

61 In that regard, the referring court states that the lower limit of that custodial sentence is extremely long and that that sentence is, moreover, combined with a fine of an equally high amount. Furthermore, the possibilities for the court to reduce or suspend the sentence are very limited. Lastly, the additional measure of confiscation and destruction of the goods that are the object of the offence contribute to the increase in the overall severity of the penalties incurred.

62 In accordance with Article 49(3) of the Charter, which applies, as pointed out in paragraphs 44 and 45 above, provided that the national provision at issue in the main proceedings is implementing Article 61 of the TRIPS Agreement, the severity of penalties must not be disproportionate to the offence.

63 In that regard, it must be borne in mind that, while leaving the choice and detailed rules of the criminal procedures and the applicable penalties to the discretion of the members of the WTO, Article 61 of the TRIPS Agreement requires those members to impose criminal sanctions on at least some infringements of intellectual property rights, such as wilful trademark counterfeiting on a commercial scale. Furthermore, that article states that the remedies must include ‘imprisonment and/or monetary fines sufficient to provide a deterrent’ and must be ‘[consistent] with the level of penalties applied for crimes of a corresponding gravity’. In appropriate cases, the remedies available must ‘also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence’.

64 As the Advocate General stated in point 46 of his Opinion, in the absence of internal EU legislation in the field of the sanctions applicable, the Member States have the power to determine the nature and level of those penalties, subject, inter alia, to the principle of proportionality (see, to that effect, judgment of 11 February 2021, K. M. (Sanctions imposed on the master of a vessel), C-77/20, EU:C:2021:112, paragraph 36 and the case-law cited).

65 According to the Court’s case-law, in accordance with that principle, the punitive measures permitted under national legislation must not go beyond what is necessary in order to attain the objectives legitimately pursued by that legislation. The severity of the sanctions must be commensurate with the seriousness of the infringements for which they are imposed, in particular by ensuring a genuinely deterrent effect, while not going beyond what is necessary to attain that objective (see, to that effect, judgments of 11 February 2021, K. M. (Sanctions imposed on the master of a vessel), C-77/20, EU:C:2021:112, paragraphs 37 and 38 and the case-law cited, and of 14 October 2021, Landespolizeidirektion Steiermark (Gaming machines), C-231/20, EU:C:2021:845, paragraph 45).

66 Thus, where the national legislation provides for the duplication of penalties of a criminal nature, such as the combination of financial penalties and custodial sentences, the competent authorities are under an obligation to ensure that the severity of all of the penalties imposed does not exceed the seriousness of the offence identified, failing which the principle of proportionality would not be observed (see, to that effect, judgment of 5 May 2022, BV, C-570/20, EU:C:2022:348, paragraphs 49 and 50).

67 The Court has further held that the principle of proportionality requires that the individual circumstances of the particular case are taken into account in determining the penalty and fixing the amount of the fine (see, to that effect, judgment of 4 October 2018, Link Logistik N&N, C-384/17, EU:C:2018:810, paragraph 45).

68 In order to assess the proportionality of penalties, account must be also be taken of the possibility for national courts to amend the categorisation as set out in the bill of indictment, that possibility being capable of leading to a less severe penalty, and of the possibility to vary the penalty depending on the seriousness of the offence identified (see, to that effect, judgments of 16 July 2015, Chmielewski, C-255/14, EU:C:2015:475, paragraph 26, and of 11 February 2021, K. M. (Sanctions imposed on the master of a vessel), C-77/20, EU:C:2021:112, paragraph 51).

69 In the present case, in the first place, it is apparent from the order for reference that Article 172b(2) of the Criminal Code, on the basis of which criminal proceedings were brought against G. ST. T., seeks to penalise use in the course of trade of a mark without the consent of the holder of the exclusive right where that use is of a certain seriousness, either because it has been committed repeatedly or because it has caused significant harmful effects.

70 Inasmuch as it provides, by way of penalising such an act, for a custodial sentence of five to eight years and a fine of BGN 5 000 to BGN 8 000, that national legislation appears appropriate to attain the legitimate objectives pursued by Article 61 of the TRIPS Agreement, which requires sufficiently deterrent criminal sanctions, at the very least, for wilful trademark counterfeiting on a commercial scale.

71 In the present case, as regards the question of whether the measure goes beyond what is necessary in order to attain the objectives pursued, it is apparent from the order for reference that the custodial sentence laid down for the offence of aggravated trade mark infringement referred to in Article 172b(2) of the Criminal Code is set at a minimum threshold of five years, which the referring court considers to be ‘extremely long’.

72 Furthermore, that provision states that that custodial sentence is in addition to a fine of a criminal nature, amounting to BGN 5 000 to BGN 8 000, which that court also considers to be high.

73 Moreover, the referring court refers to the obligation, laid down in Article 172b(3) of the Criminal Code, to impose an additional measure consisting in confiscating the goods that are the object of the offence and destroying them. Those measures contribute, according to that court, to the increase in the severity of the overall penalty imposed.

74 In that regard, it is important to note, as has been pointed out in paragraph 63 above, that Article 61 of the TRIPS Agreement states that the remedies that the members of the WTO must provide for ‘include imprisonment and/or monetary fines sufficient to provide a deterrent’. By using the conjunctions ‘and’ and ‘or’, that article thus authorises those members to provide, in their legislation, for the combination of a custodial sentence and a fine for the purpose of sanctioning that conduct.

75 Furthermore, Article 61 of the TRIPS Agreement obliges the members of the WTO to provide that, in appropriate cases, the remedies available ‘also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence’. Besides the financial consequences that they entail for the counterfeiter, such measures can contribute to the effectiveness of the penalty inasmuch as they prevent those goods infringing an intellectual property right from remaining on the market and being used in the future.

76 Thus, it is the very provisions of Article 61 of the TRIPS Agreement that require a sufficiently high degree of severity in order to prevent the conduct complained of from being adopted or repeated.

77 Consequently, it cannot be argued that criminal legislation introduced by a Member State in order to penalise trade mark infringements of a certain seriousness is disproportionate on account of the sole fact that it provides, in appropriate cases, in addition to the imposition of a fine and the destruction of the goods at issue and of the tools used in the commission of the offence, for the imposition of a custodial sentence.

78 However, as also follows from Article 61 of the TRIPS Agreement, which reflects in that regard the requirement of proportionality, which is also laid down in Article 49(3) of the Charter, any criminal penalty provided for by that legislation must be commensurate with the seriousness of the corresponding offence.

79 Subject to verification by the referring court, the unlawful conduct referred to in Article 172b of the Criminal Code, consisting in ‘use’ in the course of trade of a mark without the consent of the holder of the exclusive right, appears to cover all the acts referred to in Article 13(1) and (2) of both the old and new ZMGO. The latter provisions correspond, in essence, to Article 10(2) and (3) of Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks (OJ 2015 L 336, p. 1).

80 It thus appears that Article 172b of the Criminal Code is liable to concern any act of use, in the course of trade, of a mark without the consent of the holder of the exclusive right. Furthermore, pursuant to Article 172b(2) of that code, any act that corresponds to that description and has been committed repeatedly or has caused significant harmful effects is punished, inter alia, by a custodial sentence of a minimum of five years.

81 While such a penalty is not necessarily disproportionate in certain instances of trade mark infringements, it must nevertheless be stated that a provision such as Article 172b(2) of the Criminal Code, which links an especially broad description of an offence to a custodial sentence of a minimum of five years, does not guarantee that the competent authorities are able to ensure in each individual case, in accordance with the obligation under Article 49(3) of the Charter, recalled in paragraph 66 above, that the severity of the penalties imposed does not exceed the seriousness of the offence identified.

82 Those authorities might have to examine acts of unauthorised use of a mark whose effect remains especially limited in the course of trade, even where those acts have been committed wilfully and repeatedly.

83 Those authorities might also have to, apart from specific instances relating to counterfeit goods, examine acts of unauthorised use of a mark which, while committed wilfully, repeatedly and involving significant effects in the course of trade, are not proved to be unlawful until after a complex assessment of the scope of the exclusive right is carried out.

84 By providing for a custodial sentence of a minimum of five years for all cases of unauthorised use of a mark in the course of trade, a national legal provision such as that covered by the fourth question referred for a preliminary ruling makes excessively difficult the competent authorities’ task of setting, having regard to all of the relevant factors, a penalty with a degree of severity that does not exceed the seriousness of the offence identified.

85 The referring court stated that the possibility granted by Bulgarian criminal law of setting a penalty that is lower than the minimum penalty provided for in Article 172b(2) of the Criminal Code is limited to cases where the attenuating circumstances are either exceptional or numerous. That court also stated that the possibility of suspending a custodial sentence is available only if that sentence does not exceed three years. Having regard to the fact that Article 172b(2) of the Criminal Code sets a custodial sentence of a minimum of five years for all cases of unauthorised use of a mark in the course of trade, those limited possibilities of reducing and suspending the sentence can prove insufficient in order to moderate in each case the penalty to one which is proportionate to the seriousness of the offence.

86 In the light of the foregoing, the answer to the fourth question is that Article 49(3) of the Charter must be interpreted as precluding a national legal provision that provides for a custodial sentence of a minimum of five years where a trade mark is used, repeatedly or with significant harmful effects, in the course of trade without the consent of the holder of the exclusive right.

Costs

87 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

1. Article 49(1) of the Charter of Fundamental Rights of the European Union

must be interpreted as meaning that the principle of the legality of criminal offences and penalties does not preclude national legislation which provides, where a trade mark is used in the course of trade without the consent of the holder of the exclusive right, that the same conduct may be categorised both as an administrative offence and as a criminal offence, without that legislation including criteria allowing a distinction to be drawn between, on the one hand, the administrative offence and, on the other, the criminal offence, the offence being described in similar, or identical, terms, in the criminal law and the law on trade marks.

2. Article 49(3) of the Charter of Fundamental Rights of the European Union

must be interpreted as precluding a national legal provision that provides for a custodial sentence of a minimum of five years where a trade mark is used, repeatedly or with significant harmful effects, in the course of trade without the consent of the holder of the exclusive right.

[Signatures]

* Language of the case: Bulgarian.

CJEU, 19 Oct 2023, C-655/21 (G. ST. T.), ECLI:EU:C:2023:791.