23 August, 2016

A Piece of Humble Pie - Design of Apple Pie Not Registrable, Says US Court of Appeals

What is more enjoyable than a case involving food and an intellectual property law? This writer for one will freely admit his love of both, and any case that presents a scenario mixing the two is a delight. Many recent cases have touched on the design of various food items, including the recent Kit Kat litigation in the UK (discussed more here) and in the CJEU (discussed more here), and as manufacturers and makers of edible goods compete for marketshare, the shape of these items can become quite valuable and important. One still has to distinguish this from recipes (discussed more here), and while they are much less likely to be protectable, shapes are a different matter altogether. With that said, could you protect the shape of a dish, specifically a pie? The Court of Appeals in the US aimed to answer this question only late last month.

The case of Sweet Sweet Desserts, Inc. v Chudleigh's Ltd dealt with a design of a single-serving apple pie, meaning a whole pie meant for one person in a neat, convenient package. This particular food item was the creation of Scott Chudleigh, the owner of an apple farm and bakery in Ontario, Canada. It consisted of a ball-like shape, with upward facing, spiralling petals that overlap each other, encasing the apple pie filling within. He subsequently filed for a trademark in 2005 (US trademark 2262208, which includes an illustration of the design). The pies where distributed to various companies for resale, including a discussion with Applebee's in the US for the sale of the item in their restaurants, but the negotiations fell through. In 2010 Applebee's approached Sweet Sweet Desserts to create a single-serving apple pie, much akin to the idea conjured by Mr Chudleigh, who developed an "apple pocket" with a pie-like bottom and an overlapping spiral top design, leaving a gap in the top (subjectively quite similar to Chudleigh's apple pie design).  After launch Mr Chudleigh noticed, through online advertising, the similarities of the two designs, and took Sweet Sweet Desserts to court over trademark and trade dress infringement.

Little Jimmy's "floor pie" was received with less enthusiasm
The first issue dealt with by Justice Shwartz was whether Chudleigh's design was merely functional, and thus not registrable as a trademark. 15 USC section 1125(a) prohibits the use of any marks that would deceive a consumer as to the origin of goods or services, potentially including the aforementioned design, provided the design is not only functional and thus not a designation of such an origin. Justice Shwartz further set out that "...in general terms, a product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of the article". Even if a feature were deemed to not be functional, a court can still find against the owner should the mark put competitors "...at a significant non-reputation-related disadvantage", therefore potentially restricting competition in the field (i.e. if a design or shape of a mark is essential or near-essential to the creation or presentation of certain types of goods).

What the Court found was that the design was indeed functional, as "...the shape of the dough is essential to the purpose of an effective single-serving fruit pie, and affects its cost and quality". Arguably this is correct, since the folding of the dough in order to seal the filling into the pie does just that, and does not, at least for the most part, act as purely decorative, clearly designating an origin for those particular pies. Mr Chudleigh admitted to this fact somewhat, stating that the use of the dough in that particular shape was designed to save on cost and to fill a particular market need for single-serving pies. Additionally, the number of 'petals' in the pies would be predominantly as a functional aspect, giving the best results for holding in the filling and baking, again enforcing a lack of decorative purpose and pure functionality. The Court therefore determined the design to be functional, and revoked Mr Chudleigh's registration.

The final claim dealt with by the court was Sweet Sweet Desserts' claim for tortious interference with their relationship with Applebee's through Mr Chudleigh's assertion of his alleged rights (being very similar to groundless threats in the UK). Justice Shwartz quickly ruled against this claim, determining that Mr Chudleigh's cease-and-desist letter, sent to Applebee's after his discovery of the Sweet Sweet Desserts' apple pie, since the letter was an "...objectively plausible effort to enforce rights" and not a sham to extract a settlement from the parties prior to a full case. Even though he failed in the case at hand, losing his rights in the design, does not take away from his legitimate belief at the time as to the existence of these rights. The Court ultimately allowed the application for summary judgment for both parties.

The case, albeit not ground-breaking in any way, is a curious predicament for the law, especially considering the uncertain world of food-related trademarks and rights. This writer would fully agree with the Court, since the design of the pie was purely functional, and any decorative or indicative purposes were either incidental or minor in the grand scheme of things. It is unclear whether Mr Chudleigh could have succeeded in a claim for passing off in the UK, and this writer sure does have his doubts as to this, but the idea would seem to be a novel one as a hypothetical.

Source: JDSupra

16 August, 2016

Parallel Infringement - Parallel Importation of Rebranded Cigars Okay, Says Australian Full Federal Court

Tobacco packaging has been a popular topic in the last couple of years, including on this very blog (articles on which can be found here, here and here), particularly in the remit of plain packaging. Whether you dislike the initiative or support it, one can still appreciate the sentiment behind it. What the legislation has done is caused severe issues for products like cigarettes that heavily rely on these distinctive markings to indicate their own brand and distinguish its features from the rest. In Australia the law has been in effect since 2011 under the Tobacco Plain Packaging Act 2011, which means all tobacco products must conform to the requirements of the law in their packaging. With that said, could one repackage purchased tobacco products and subsequently resell them in Australia? The Full Federal Court took this question on after an appeal from the Federal Court whose decision was handed down in late 2015.

The case of Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd dealt with the sale of tobacco products in Australia, specifically cigars manufactured by STG Eersel. The company, in relation to the sale of these goods, also holds several trademarks for cigar brands, including Café Créme (No. 761892), Henri Wintermans (No. 179680) and La Paz (No. 643779). The cigars were manufactured in Belgium, Holland and Indonesia, using packaging incorporating the aforementioned marks. The same cigars are packaged differently for the Australian market in order to conform to the plain packaging legislation mentioned above, which is done abroad similarly to the branded products. Trojan is an importer and supplier of cigars and other tobacco products, supplying, among other items, STG's cigars to the Australian market from overseas, repackaging them to conform to the same legislation. At first instance, Chief Justice Allsop saw that Trojan had not infringed STG's trademarks by repackaging their branded products; however, the decision was appealed by STG.

The Full Federal Court firstly sought to establish was whether the trademarks mentioned above had been infringed by Trojan through their parallel importation, i.e. were STG's marks used "as a trade mark" under section 120 of the Trade Marks Act 1995 and if section 123 (allowing for the use of a trademark if the mark has been applied to the goods prior to or with the consent of the rightsholder) of the same Act applied to those uses.

Lewis now doubted the legitimacy of his cigarettes
What constitutes use "as a trade mark" was initially set out by the Court as "...[a] use of the mark as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods". This use still has to be assessed within its context, including how the marks are used, as "...not every use of a mark which is identical with or deceptively similar to a registered trade mark infringes the right of property which the proprietor of the mark possesses in virtue of the registration".

The Court concluded that "...a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of manufacture will have used the mark as a trade mark". Their conclusion relies heavily on the impact of parallel importation on the original manufacturer, and the existence of section 123, which, if this were not the case, would be largely redundant. This position follows previous Federal Court case law quite well, even with the existence of foreign cases accepting the opposite position.

As the Court had determined that the importation of the branded goods was indeed a use of the marks, they moved onto the question of whether the use amounted to an authorized use under section 123 of the Act. The section is engaged when, in the past or prior to the use under section 120, the rightsholder (or someone authorized by them) has applied the mark onto the packaging of the goods, which are subsequently sold onward by the third-party (i.e. used "as a trade mark" as discussed above). What seems to remain key here is the reapplication of the mark onto the new packaging by Trojan, which, according to the Court, should be covered by the section through a much wider interpretation of it. Ultimately what the Court concluded was that Trojan were protected under section 123 and did not infringe STG's trade marks.

Finally, the Court did briefly discuss issues surrounding a passing off claim and Australian consumer protection laws, and deemed that Trojan had not passed the repackaged cigars off as STG's, nor had they been in breach of any consumer legislation in their repackaging efforts (specifically deceive or mislead consumers).

The case is a very interesting illustration of the possible perils of parallel importation, and shows the differences in the approaches in the UK and Australia (and, to some extent, the EU). As the world and trade have become more and more global, parallel importation will be a bigger issue for the future. Even so, the Full Federal Court's approach is very sensible, considering the packaging environment that exists in the country for tobacco products. It is unclear whether the decision will be appealed to the High Court, but this writer thinks, after two successive losses, STG might have to just accept defeat.

Source: IP Whiteboard

12 August, 2016

One, Not the Other - Misuse of Confidential Information is Not (Necessarily) Copyright Infringement

Many areas of IP infringement often intersect, with one aspect potentially leading to the next. It can be difficult to distinguish these separate acts, and even harder to judge for one to have been committed and not the other. This separation, however, can be a crucial aspect of protecting both parties' interests, even if it could logically (in its non-legal definition) make sense to bundle the acts together. A recent case was dealt with by the Federal Court of Australia that touched on the intersection of breach of confidentiality and copyright infringement, tackling the aforementioned separation head on.

The case of TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd dealt with the provisions of services relating to background checks for prospective tenants, conducted by TICA, showing any defaults on previous leases and other tenancy applications they might have made. This is conducted via the company's website for an annual fee, or, for non-corporate entities, possibly on a one-off fee as well. What the case mainly concerned were the databases and the software that underpinned the service. Former employees, Anthony Nounnis, Reginald Joshua and Nathan Portelli, after leaving the company under varying circumstances, set up their own company called Datakatch Pty Ltd. After its incorporation, it came to light that the company might have copied the database and software used from TICA, who subsequently took them to court over breach of confidence and copyright infringement.

Copying software is nothing like the Matrix, Adam realized
The first question addressed by the Federal Court was whether the TICA system was indeed taken by the respondents in the matter. Justice Perram extensively discussed the circumstances and pleadings surrounding the case, additionally focusing on the similarities and dissimilarities of the source code and the stylesheets for each system. There were two things to note, which were highlighted by the judge. Mr Joshua and Mr Nounnis were deemed to have accessed the TICA website using some clients' login details, specifically for the purpose of assisting in the design of the Datakatch website. This included accessing the HTML code, which was subsequently modified heavily in its use in Datakatch's system. Even with access to the website they still were deemed to have not accessed and copied the source code, due to the circumstantial nature of the evidence put forth on this point. Justice Perram determined that the only aspect that was directly copied was the HTML code.

The judge then moved onto the question of copyright infringement, prior to dealing with the issue of a breach of confidentiality. This would be assessed, as many would be aware, as whether there was a substantial copying of the materials by Datakatch or not. A further layer was added in the decision in CA Inc v ISI Pty Limited, where the substantiality of any copying of computer software would be assessed looking at the "...taking into account the importance of function" of the software and its code. Justice Perram quickly concluded that the copyright in the work had not been infringed as "[t]he amount of code copied is trivial from a quantitative point of view" and no functional analysis was done. Although unnecessary after a finding on non-infringement, the judge still looked at the ownership aspect of the copyright issue, i.e. whether TICA owned the copyright in the works allegedly copied. He concluded that they did own the copyright in the works.

Justice Perram finally took on the issue of breach  of confidence against the defendants, who, as stated above, had clearly used usernames and passwords to access confidential information on TICA's systems, which were deemed to have the necessary protectable quality of confidentiality in them. After some discussion, the judge concluded that only Mr Nnounis had breached confidentiality, although only under section 183 of the Corporations Act 2001 (which prevents officers of a company to use information acquired through their position for their own personal gain). He additionally imposed an injunction against Datakatch over the use of the usernames and passwords, as Mr Joshua is a shareholder and director of the company.

The case shows clearly the distinction between intellectual property rights and confidential information, and how an infringement of one right does not necessarily automatically bring about an infringement of the other. Although not by any means a landmark case, this writer still found it interesting, and wonders where the case would've gone had the claimants argued their case differently (and admittedly, better, by the looks of the comments made by the judge).

Source: Davies Collison Cave

04 August, 2016

A Torrential Result - No Requirement to Censor Torrent Search Results, Says Paris Court

Just the mention of 'torrent' files can send shivers down the spines of rightsholders and their legal representatives. Often synonymous with online copyright infringement, the BitTorrent protocol is actually a very legitimate way to send and receive files without having specific hosting facilities to do so, saving on costs and often bandwidth. In a nutshell, the protocol allows for an individual or entity to download a file from several sources, taking only pieces and ultimately compiling them into one completely copied file. Even though entirely legitimate, the protocol has been used by file sharers for some time, allowing for the efficient and fast downloading of illegal files from the Internet, often utilizing websites such as The Pirate Bay (or any other search engine, for that matter) to find the torrent files linking to the illegal content. With this availability so ubiquitous, could rightsholders censor search results on search engines to prevent copyright infringement?

While there are no official translations of the case available, this writer has used machine translation for the purposes of providing quotations, and any translations should be regarded as unofficial and (possibly) not fully accurate.

Two recent cases in France aimed to deal with this issue head-on, where the French music producers' association, Syndicat national de l’édition phonographique (SNEP), took both Google and Microsoft (the decisions are only available in French) to court. Under Article L336-2 of the Code of Intellectual Property, a court can, upon application, force an intermediary to take all appropriate measures to prevent or stop such infringement, including, potentially, allowing and/or facilitating (through search results) access to torrent files.

Dealing with the case against Google, the Parisian Court found that, although Google France had no direct control over search results (ultimately controlled by its American patent company, Google Inc.), it still "...develops a commercial activity, which ensures funding for services offered free to users and participates operation the search engine business". They could not therefore, be exonerated from the claim brought by SNEP.

Leading the charge against Internet censors
The Court then moved onto discussing the admissibility of the claim, they quickly dismissed SNEP's claim due to a lack of ability to represent the parties in question (the artists named were Kendji Girac, Shy’m, and Christopher Willem). This was largely due to the SNEP's role as an enforcement provider for a select segment of the audio entertainment industry, and would not therefore qualify as a 'professional defense body' per Article L336-2. The Court ultimately rejected the case against Google, not forcing the search provider to censor the results containing torrent files to infringing files.

In a similar case, Microsoft faced a challenge in relation to its Bing search engine, which also provided access to results containing infringing music files from the aforementioned artists.The Parisian Court would not exonerate the company on similar grounds as Google's subsidiary, as the companies were tightly woven into the business of providing the search facilities.

The Court further rejected an assertion that Microsoft would be acting as a subsidiary by not blocking access to the infringing content, as Article L336-2 imposes no duty on companies to prevent access to infringing content. Although asserted by SNEP, Microsoft had not failed to comply with their notification procedure in Article 6-l-5 of the Law of Confidence in the Digital Economy, as the Court deemed that any action under Article L336-2 would be a separate action from the notification procedure. Ultimately, the Court rejected SNEP's entire case, as the censoring of all pages containing torrent links to infringing materials (concerning the artists in question now and in the future), would be "...general surveillance measure[s] and could cause the blocking of legitimate sites", even under the guise of protecting legitimate interests. They also added that the measures would be ineffective, and are not necessary, as the search facilities is seldom used to search for the artists in question with the term "torrent", which is quite easy to circumvent if needed.

Although this writer knows very little about French law, the cases seem quite interesting, especially in the context of the wider Internet. Allowing for the blocking of specific terms and the term "torrent" in a much broader scale would clearly impact the Internet experience many of us enjoy, be the use legitimate or not. The Parisian Court seems to have made a decision stemming from pragmatism and a deeper understanding of the Internet. While rightsholders would be dissatisfied with the decision, one can appreciate the balance that has to be struck when it comes to more overarching censorship measures.

Source: Ars Technica

26 July, 2016

Beyond the Horizon - Intellectual Property Law in Space

Even with the recent success of the Mars Exploration Rover program and the Juno mission, mankind is still quite far from a life outside of our own little blue planet. While we look up at the sky in anticipation, hopefully one day being able to colonize a far-away place (for better or worse, dependant on your perspective), we have to consider the ramifications of this endeavor in terms of the law. 129 nations so far have signed the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, which dictates that outer space is the common province of mankind, and that all activities conducted therein should be done for the benefit of humanity, not a single nation. That being said, this writer is not concerned with the broader picture, but likes to hone down on the things that matter, namely intellectual property. Therefore, what is the possible position in intellectual property law in our interstellar future?

As there is not much concrete legislation dealing with this area, one can only speculate as to what it might be; however, this writer will aim to share his thoughts on this as best he can on the basis of what exists already.

The closest mankind has reached out into space and inhabited for longer periods of time than hours or days is the International Space Station. The primary legal framework for the ISS is the International Space Station Intergovernmental Agreement, which sets out a "...long term international co-operative frame-work on the basis of genuine partnership, for the detailed design, development, operation, and utilisation of a permanently inhabited civil Space Station for peaceful purposes, in accordance with international law". Further, according to Article 5 of the Agreement, all registered parts of the ISS and its personnel are governed by the laws of their country, which adds a layer of complexity for IP in space. Article 21, however, discusses IP specifically in the context of the ISS. It states that "...for purposes of intellectual property law, an activity occurring in or on a Space Station flight element shall be deemed to have occurred only in the territory of the Partner State of that element's registry". This would indicate that any inventions or findings made would be protectable (given favorable national legislation), although this could still be disputed. The Article also touches on infringement, only allowing for the recovery of damages in one European country, rather than all of them (provided infringement has happened in more registered parts of the ISS).

We're not the only ones seeking our fortune in the stars...
The Treaty on Outer Space also acknowledges the jurisdiction of nations over their registered materials and people, but in the context of Article 1 and 2 of that treaty, all exploration in outer space is for the benefit of all mankind, and no materials or places (including the Moon) can be appropriated by any nation as well. This raises a concern when trying to claim IP rights in findings or materials, and arguably no nation or person could claim them under the treaty.

Most nations do not have provisions dealing with IP in space, or any related issues. The United States, however, has enacted a provision that deals with inventions in space, specifically 35 USC 105. It sets out that "Any invention made, used or sold in outer space on a space object or component thereof under the jurisdiction or control of the United States shall be considered to be made, used or sold within the United States for the purposes of this title, except with respect to any space object or component thereof that is specifically identified and otherwise provided for by an international agreement to which the United States is a party". This would mirror the international agreements above, where US national, space station modules etc. are treated as being under US jurisdiction. One could still envision issues, as discussed above, when it comes to the agreements the US is a party to, but it seems probable that most nations would treat intellectual property in a similar fashion in future legislation.

There remain some issues that do require clarification on a dawning Space Age. As set out in the report of the Workshop on Intellectual Property Rights in Space in 1999 (poignant even after over 15 years) that "More attention should be paid to the protection of intellectual property rights, in view of the growth in the commercialization and privatization of space-related activities... [and to develop] a view to enhancing international coordination and cooperation at the level of both the State and the private sector. In particular, the possible need for rules or principles covering issues such as the following could be examined and clarified: applicability of national legislation in outer space; ownership and use of intellectual property rights developed in space activities; and contract and licensing rules". This writer does agree, although reluctantly, since the inevitable commercialization of space materials, inventions and findings will be a reality in the coming decades, and this needs to be both protected (to incentivize that exploration and invention) yet regulated to retain a high level of openness and freedom for all of mankind and the Universe. For a more in-depth look into other issues, one should consult the WIPO paper on Intellectual Property and Space Activities, which, although a little dated, is a great summary of outstanding questions even today.

Space is indeed in many ways the final frontier, and the law will have to catch up with this new world eventually. While there is no pressure to develop the law in relation to space activities, in the coming decades this will become more and more pertinent, and intellectual property will be at the forefront of this development due to the value of technology, invention and exploration in the field (especially to corporations and other private ventures). It remains to be seen how we treat this future, but one can only hope it'll be a future that holds sharing and equal benefit above individual profiteering.

20 July, 2016

Watch the Fight - Court of Appeal Affirms Blocking Order for Cartier Against ISPs

Just as was discussed last week, the issue of counterfeit goods has plagued many retailers, brand owners and online sellers for years, with the availability of Chinese (or otherwise) manufactured counterfeit items being sold for pennies on many websites. While qualitatively often worse than the real thing, the lost sales and revenues from the counterfeit business are what ultimately matter, and brand owners have tried to combat this issue through various means. One such tool has been to utilize the ISPs as third-party intermediaries in stopping access to these sites, and with a High Court ruling allowing for ISPs to be possibly on the hook for this enforcement (more on which can be found here), the matter seemed all but settled. The providers appealed the case, and the Court of Appeal handed down its decision only a couple of weeks ago.

As a brief primer to those who are not familiar with the case, Cartier International AG & Others v British Sky Broadcasting Ltd & Others dealt with the sale of counterfeit Richemont goods, encompassing the Cartier and Montblanc brands specifically. The goods were sold on a set of specific websites, and the claimant pursued an order to block access to these websites through the ISPs. They contested the application, which was subsequently given to the claimant, for which the ISPs appealed to the Court of Appeal.

The first point of contention discussed by the Court was that of jurisdiction, specifically under Article 8(3) of the InfoSoc Directive, Article 11 of the Enforcement Directive (and the lack of its implementation into UK law) and section 97A of the UK Copyright, Designs and Patents Act 1988, which, arguably, does not allow for the granting of an injunction under domestic law in the UK. Cartier contended the assertion that the lack of implementation of Article 11 of the Enforcement Directive did not preclude jurisdiction, which stemmed from section 37 of the Senior Courts Act 1981.

A blocking order: the red card of the Internet
Lord Justice Kitchin, who delivered the majority judgment, determined that, although the ISPs are not guilty of any wrongdoing (as they did not encourage or participate in the infringement themselves) nor did they owe a duty of care (per CBS Songs v Armstrad) to Richemont, the court's would still have jurisdiction to give the order in the case. The rejection of this would, per his assessment: "...impose a straightjacket on the court and its ability to exercise its equitable powers which is not warranted by principle". The ability to impose injunctions was not restricted to apply to only infringers, and could be used in 'new ways'. This extension was also, in his view, fully covered by Article 11 of the Enforcement Directive.

The law Lord saw no issues with the provision of the order by law, especially in the light of limitations to the rights and freedoms set out in the Charter of Fundamental Rights of the EU.

To be able to issue a blocking order certain threshold conditions have to be observed. These are, as set out by Lord Justice Kitchin: "...First, the ISPs must be intermediaries within the meaning of the third sentence of Article 11 [of the Enforcement Directive]. Secondly, either the users or the operators of the website must be infringing the claimant's trade marks. Thirdly, the users or the operators of the website must use the services of the ISPs. Fourthly, the ISPs must have actual knowledge of this". After some discussion (which this writer consciously omits for brevity's sake), the Court did determine that the threshold conditions were indeed satisfied in this instance.

Finally, the Court dealt with the matter of principles to be applied  when considering the imposition of a blocking order. These were set out by Lord Justice Kitchin: "...the relief must (i) be necessary; (ii) be effective; (iii) be dissuasive; (iv) not be unnecessarily complicated or costly; (v) avoid barriers to legitimate trade; (vi) be fair and equitable and strike a "fair balance" between the applicable fundamental rights; and (vii) be proportionate". Primarily what these conditions operate as are a safe-guard for too broad, onerous and one-sided orders, allowing for a certain degree of leniency to be applied in the consideration of any blocking orders. This, however, has to be assessed with the substantiality of the websites in mind (one would think this would encompass user amounts, sales and accessibility, and the number of websites applied for, for example) and the need for remedies to properly function as safeguards to abuse.

Lord Justice Kitchin did see that the order could be justified in the light of the above principles in this instance. The Court ultimately disallowed the appeal and sustained the order.

The decision was by no means without its issues, and one primary concern was raised by Lord Justice Briggs on costs. While the majority agreed that the costs and time should be imposed on the ISPs, Lord Justice Briggs saw that these should be not placed on the ISPs, but the rightsholders (and this writer, agreed with him, as the ISPs, functioning as non-active entities in the infringement process, would be unduly burdened by the possibility of dozens/hundreds of blocking orders and their subsequent costs). Even though the costs are largely modest, as observed by Lord Justices Kitchin and Jackson, burdening the ISPs with them would seem onerous, especially considering they derive no benefit from the exploitation of those rights.

In the end the case is a very interesting example of the law adapting to its new playing field, and while it does provide a great opportunity for rightsholders, it does also cause some concern for ISPs and the automation of enforcement on the Internet.  In any event, this writer does envision the case possibly being appealed to the Supreme Court, who would have the final say in the matter.

12 July, 2016

The Physical and Intangible - CJEU Allows for the Prevention of Sale of Infringing Goods in Physical Marketplaces

The sale of online goods has been both a revelation and a curse for retailers, but a particular problem when it comes to deal with counterfeit or otherwise infringing goods being sold. Cases such as Cartier v British Sky Broadcasting have seemingly helped to remedy this issue, however, whether this rationale applied to the physical world, specifically in marketplaces and the like (as fellow Londoners can attest, many of these market stalls sell items of questionable origin). This particular thorn in retailers' collective sides is one that cannot be so easily removed, but in the vein of the above, could the stopping of online infringement be extended to applying outside of the Internet to these physical locations? The Court of Justice of the EU sought to clarify this position in a recent ruling.

The case of Tommy Hilfiger Licensing LLC and Others v DELTA CENTER a.s. dealt with the sale of fake goods at the Prague market halls (locally known as Pražská tržnice), where individual traders could sub-lease different sales areas within the halls to sell their items. Upon the sub-leasing of a sales space, the traders would be subject to an obligation to "...respect the regulations to which their activities are subject", i.e. law and regulations governing the sale of goods in the Czech Republic and the EU. Additionally, the traders were given a brochure that prohibits the sale of counterfeits under the threat of termination of the lease. It transpired that many of the stalls sold counterfeit goods of the applicants' brands, who subsequently took Delta Center to court over the issue.

The Czech court referred two questions to the CJEU: 1. Whether the third sentence of Article 11 of the Enforcement Directive encompasses a person with a lease of premises in a market, who provides the spaces for the purposes of selling goods, as an "...intermediar[y] whose services are used by a third party to infringe an intellectual property right"; and, is it possible to impose those persons the same impositions provided in the case of L’Oréal and Others v eBay? These measures would, as summarized by the Court, would allow for the Court to "...take measures aimed at bringing those infringements to an end and measures seeking to prevent further infringements".

The Court continued that, for an economic operator to fall under the definition of an 'intermediary', it must provide a service capable of being used by one or more persons in order to infringe one or more intellectual property rights, irrespective of a maintained relationship or not. The provider would still fall under the definition even if it does not provide a service other than the one used to infringe the aforementioned rights.

Ben's counterfeit spoon business took a hit from the ruling
Following a brief discussion of admitted facts, the Court quickly determined that "...an operator which provides to third parties a service relating to the letting or subletting of pitches in a marketplace, thanks to which they have access to that marketplace and offer for sale in that marketplace counterfeit branded products, must be classified as an ‘intermediary whose services are being used by a third party to infringe an intellectual property right’ within the meaning of that provision". The Court's rationale here is correct in this writer's opinion, since the provision of the service is integral to the infringement of the rights by third-parties, irrespective of their acquiescence to those activities. Following this they continued that the realm where the provision of services happens, i.e. physical or electronic, is irrelevant, which, again, makes sense considering the Court's earlier decision in L'Oreal. The Court therefore concluded that the third sentence of Article 11 would include the tenants subletting the plots that are used to sell infringing goods.

The Court then turned to the second question, which dealt with the ability to impose measures against those sellers per the L'Oreal case.

After a brief discussion of the nature of those measures that can be imposed (that they have to be e.g. proportionate, equitable, and not be barriers to legitimate trade), the Court saw that "...the conditions for an injunction within the meaning of that provision against an intermediary who provides a service relating to the letting of sales points in market halls are identical to those for injunctions which may be addressed to intermediaries in an online marketplace, set out by the Court in the judgment of L'Oreal". Arguably, this writer yet again agrees with the Court's assessment, as the provision of measures against infringing activities should function equally, when possible, across all mediums of sale, irrespective of whether they are physical or not.

The decision is very much of common sense, equating the internet as an equivalent space to physical marketplaces, which, considering the efficacy of the law's interpretation, makes sense. It will be interesting to see whether the decision is a spur to the industry in the prevention or addressing of the sale of physical counterfeit goods, but this writer thinks it will maintain the status quo, purely due to the expense and time taken up by enforcement activities. Even so, it is nice to see a parallel being drawn between these worlds, even when we shift to an ever-more electronic existence.

Source: IPKat