18 September, 2018

I Spy with My Little IP - An IP Address Not Enough to Identify Copyright Infringer, Says US Court of Appeals

The identification of infringers of intellectual property is incredibly important in order to mount a proper and, above all, fair prosecution of those who are infringing on your rights. This is, however, exceedingly difficult in the Internet age, where the person downloading a movie, for example, is difficult to tell from a household of four, let alone the swathes of nameless ‘individuals’ occupying Internet services. The IP address of a given for each computer, identifying them separately in a network when connected to it, has long been one way of distinguishing the infringers from other users. The protocol still has its issues in certainty, and therefore, is it a reliable piece of evidence when establishing liability? The US Court of Appeals took on this question not long ago.

The case of Cobbler Nevada LLC v Thomas Gonzales concerned the movie ‘The Cobbler’, for which Cobbler Nevada owned the copyrights to. Due to its popularity, the movie was swiftly shared on many websites online using the BitTorrent protocol. Cobbler Nevada identified one IP address in Nevada which downloaded and distributed the movie without authorization, later further identified as being Mr Gonzales’ internet service. The connection, however, was a freely accessible one, which was used by both residents and visitors at an adult care home. Legal counsel for Cobbler Nevada determined that they were unable to confirm that Mr Gonzales was the infringer in question. Nevertheless the company filed a complaint against him, alleging they copied and distributed the work online, basing this on the fact that he was the subscriber of the IP address used to do so.

The crux of the matter is whether the IP address used in the matter is enough to prove that Mr Gonzales had indeed been the infringing party. The Court correctly highlighted that “…a particular IP address (i.e., an account holder)… does not mean that the internet subscriber is also the infringer… simply establishing an account does not mean the subscriber is even accessing the internet, and multiple devices can access the internet under the same IP address”. This fact is further exacerbated by the fact that many people were able to freely access the connection at the location.

Cobbler Nevada promptly moved to more traditional
identification methods
The US court have firmly established that, for a claim to be established, you “…must show… the defendant himself violated one or more of the plaintiff’s exclusive rights”. The Court quickly determined that Cobbler Nevada had not done so in this case. As discussed above, their internal investigations yielded no confirmed result, and clearly led to unsubstantiated allegations of infringement. The claim was later amended to simply refer to the IP address and no particular defendant, which still left the claim with no clearly identified infringer.

The second claim revolved around contributory infringement, i.e. that Mr Gonzales had encouraged or facilitated the infringing activities using his network connection. To put into more concrete terms: "...one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another". Cobbler Nevada claimed that Mr Gonzales had failed to adequately police his Internet connection, especially in the light of several notices sent to him regarding the matter. The Court, yet again, dismissed this allegation out of hand, as the perfunctory allegation does not sufficiently link him to the alleged infringement. The courts have previously denied contributory liability merely through the possibility of the use of a technology to infringe in Sony Corporation v Universal City Studios (more on which here), which similarly would apply to an open Internet network.

Contributory infringement requires two strands of liability: (i) actively encouraging (or inducing) infringement through specific acts; or (ii) distributing a product distributees use to infringe copyrights, if the product is not capable of ‘substantial’ or ‘commercially significant’ non-infringing uses.

Cobbler Nevada lacked any allegations that Mr Gonzales had infringed along the first strand. They had done no acts to encourage anyone to infringe any rights, or materially contributed to the same. Similarly his Internet service was not capable of distributing a product or service that is not capable of substantial or significant non-infringing uses. The Court noted that Internet service owners should not have an affirmative duty to actively monitor their Internet connection.

The Court ultimately dismissed Cobbler Nevada's claim.

The case is an important milestone in establishing firmer rules of identification on the Internet. Should we simply use the closes possible approximator of liability we could expose swathes of people to direct or indirect liability, which is clearly not the intention of the legislation. While the lack of certainty in using IP addresses to identify potential infringers has been established before, this is an important reminder of the fact. Even so, infringers could face liability when identified via an IP address, so the decision is by no means absolution for the wicked.

14 August, 2018

No Free-For-All - Is Posting a Freely Available Image Online Copyright Infringement?

Posting images online, whether it is on your own website or otherwise, is so easy these days and often feels quite harmless. The lack of effort and often consequence for the copying and sharing an image, even if protected by copyright, can lead to what feels like a dissemination near free-for-all on intellectual property on the Internet. With this in mind, where does one draw the line on what is allowed and what isn't, and how do we assert control over any unauthorised sharing, even if your content is freely available on different websites? The CJEU took on this question early this month, and handed down a decision that has prompted a great deal of discussion in the general public.

The case of Land Nordrhein-Westfalen v Dirk Renckhoff concerned a photograph taken by Mr Renckhoff. This picture was exclusively licenced to an online travel portal for use, and had no restrictions on the website where it was posted. In 2009 a school student in Waltrop (within the Nord Rhine-Westphalia region of Germany) used the image in their presentation, which was subsequently posted on the school's website. Mr Renckhoff subsequently sued the school district for copyright infringement for the posting of the image on the school's website.

Only one question was referred to the CJEU, which asked "…whether the concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, must be interpreted as meaning that it covers the posting on one website of a photograph which has been previously published without restriction and with the consent of the copyright holder on another website".

As many will be aware, 'communication to the public' includes two cumulative criteria that need to be considered: (i) an act of communication; and (ii) the communication of that work to a 'public'.

The first criterion simply concerns an act where "…a work is made available to a public in such a way that the persons forming that public may access it, irrespective of whether or not they avail themselves of that opportunity". The Court swiftly determined that the posting of the work on the school's website did amount to 'an act of communication'.

The danger of copyright infringement made the creation of
school presentations all the more thrilling
In terms of the second criterion, a 'public' "…covers all potential users of the website on which the photograph is posted, that is an indeterminate and fairly large number recipients". Again, the Court quickly determined that the act had been a communication to a 'public' under this definition. However, the Court did note that for the act to be an infringing 'communication to the public' it needs to be done so to a 'new public', i.e. "…a public that was not already taken into account by the copyright holders when they authorised the initial communication to the public of their work".

Looking at the right to prevent the unauthorized communication of works, the Court saw that "…[s]uch a right of a preventive nature would be deprived of its effectiveness if it were to be held that the posting on one website of a work previously posted on another website with the consent of the copyright holder did not constitute a communication to a new public". The Directive, under Article 3(3), does not exhaust the rights held in works once they have been communicated to the public by the rightsholder or an authorized third-party.

Ultimately they concluded that the communication of a work in a separate website would amount to a communication to a new public under the Directive, as the publication of the work was only intended for the users of the authorized website, and no other third-party sites. Limitations on the copying or use of the particular work are irrelevant in this assessment.

The Court did, however, have to navigate the issues set by their earlier decision in Svensson and BestWater (discussed more here and here), which allowed for the sharing of links to content that was freely available, as the intended public for those works was, in essence, the entirety of the Internet.

The cases were distinguished as they related to hyperlinks, and not copies of available works. The former is required for the proper operation of the Internet, whereas works themselves would not contribute to this aim to the same extent. Hyperlinks can also be disabled by the removal of the website it links to; whereas once an image has been copied elsewhere its removal is much harder. The Court therefore clearly emphasised the preventative nature of their conclusion, rather than the imposition of arbitrary preclusions to the sharing of content (innocent or not).

In short, the Court concluded that "…the concept of ‘communication to the public’… must be interpreted as meaning that it covers the posting on one website of a photograph previously posted, without any restriction preventing it from being downloaded and with the consent of the copyright holder, on another website".

The decision is somewhat unsurprising, as the exhaustion of rights through the posting of any content on an authorized website would be devastating to many creating industries. The Court upheld the rightsholder's rights in their works, even if posted innocently on a school website. The case did briefly discuss exemptions relating to education and research, and one has to note that this was not a big part of the case and therefore not discussed at length. Any such use as in the case would most likely be fair use; the Court simply made sure that no rights were exhausted even if this were the case.

07 August, 2018

But I've Done Nothing Wrong! - Can You Infringe a Trademark Without Using the Trademark At All?

Quite often the simple use of a mark will amount to trademark infringement (to put things very simply). While there is some level of uncertainty that related to the specific assessment of infringement, many practitioners have no problems establishing trademark infringement when a particular mark is used by an unauthorised third-party. Even with that in mind, a recent case in the CJEU has challenged the simplicity in assessing trademark infringement; can you infringe a mark without ever using it? This puzzling question landed on the CJEU's desk late last month, which sets an interesting precedent for future infringement cases.

The case of Mitsubishi Shoji Kaisha Limited v Duma Forklifts NV concerns the sale of Mitsubishi forklifts, for which Mitsubishi's European arm has the exclusive rights to. The forklifts of course include the Mitsubishi logo, which the company has had as a registered trademark for nearly 20 years (EUTM 117713), and its name. Duma is a company that specialises in the sale of new and second-hand forklifts, including some under its own brands, and historically operated as the sub-dealer for Mitsubishi forklifts in Belgium. Since then Duma parallel imported Mitsubishi forklifts from outside the EEA to Europe, without authorisation, removing all signs from them identical to ones owned by Mitsubishi, and bringing them up to spec under EU regulations. All identification plates and serial numbers were also replaced. Mitsubishi took Duma to court over trademark infringement over the matter, with the case ending up all the way at the CJEU this summer.

The referring court asked the CJEU two questions, which it considered together, asking in essence "…whether Article 5 of Directive 2008/95 and Article 9 of Regulation No 207/2009 must be interpreted as meaning that the proprietor of a mark may oppose a third party removing all the signs identical to that mark and affixing other signs, without its consent, on products placed in the customs warehouse… with a view to importing them or trading them in the EEA where they have never yet been marketed". The articles are identical, so we're only concerned with the interpretation of the newer 2009 Regulation.

The Regulation, as decided in the Davidoff case, allows for the marketing of goods outside the EU, as is the case here, without losing your rights in the EU to those goods and the marks they bare, so long as those marks are registered within the EU. The Regulation also affords the proprietor the right to protect those rights within the EU against third parties, should they employ an identical mark in the marketing and/or selling of the goods in the EU.

After chiselling the badge off of his car for an hour
Tony realized it was a big mistake
What makes this case tricky is the removal of all Mitsubishi marks from the forklifts, and necessary modifications to comply with EU law, before they are imported into the EU. The court did, however, consider that the removal of the marks "…deprives the proprietor of that trade mark of the benefit of the essential right… to control the initial marketing in the EEA of goods bearing that mark". The placing of new marks on the goods also, according to the court, adversely affects the functioning of the original mark in the EU. The court considers that, as discussed in the TOP Logistics case "…any act by a third party preventing the proprietor of a registered trade mark in one or more Member States from exercising his right to control the first placing of goods bearing that mark on the market in the EEA, by its very nature undermines that essential function of the trade mark" (emphasis added). Clearly the court's thinking is that the act of removal should be reserved only for the proprietor of the mark, and Duma undertaking to do so undermines the function of that mark, or at least the choice in the use of the mark in the territory by the proprietor.

The Court also noted that consumers could identify the forklifts simply from their outwards appearance, and the removal of the marks from those goods and the subsequent harm to the marks would only be accentuated by that fact.

The removal of the mark additionally precludes the proprietor "…from being able to retain customers by virtue of the quality of its goods and affects the functions of investment and advertising of the mark where, as in the present case, the product in question is not still marketed under the trade mark of the proprietor on that market by him or with his consent". The placing of the goods without the mark further highlights the Court's reluctance to allow for the choice of introducing the goods to the market to be taken away from the proprietor by a third-party. They also emphasise the loss in reputation and economic value, among other things, due to the removal and subsequent marketing/sale of the goods in the EU by the third-party, and not by the proprietor.

The Court noted that the removal of the marks is also, in their view, a way to try and avoid the possibility of the prevention of the goods' importation into the EU by the proprietor, further adding to their reluctance to take away power from the proprietor (and therefore preventing distorted competition).

Importantly, the Court saw that the in concept of 'use in the course of trade' (a key component in establishing infringement) "…an operation consisting, on the part of the third party, of removing signs identical to the trade mark in order to affix its own signs, involves active conduct on the part of that third party, which, since it is done with a view to importing those goods into the EEA and marketing them there and is therefore carried out in the exercise of a commercial activity for economic advantage… may be regarded as a use in the course of trade". This only emphasises the removal of the choice from the proprietor, and the Court is clearly protecting the ability to do so for the proprietor, and also the easy avoidance of trademark infringement.

In short: "…Article 5 of Directive 2008/95 and Article 9 of Regulation No 207/2009 must be interpreted as meaning that the proprietor of a mark is entitled to oppose a third party, without his consent, removing all the signs identical to that mark and affixing other signs on the products placed in the customs warehouse, such as in the main proceedings, with a view to importing them or trading them in the EEA where they have never yet been marketed".

The decision is definitely an oddity, but to this writer at least, is clearly a marker being put down by the Court to protect the interests and rights of trademark holders, and to prevent the avoidance of infringement through the removal of registered marks from goods. What makes the decision weird is that the Court is saying that the removal of marks equates to the use of an identical trademark, even though no such mark exists on the goods themselves. In the end, it seems like the decision is one that will stand out, particularly from a trademark infringement perspective, and it will be interesting to see whether the decision will have more significant impact than you would initially think.

31 July, 2018

KitKat Cut - The KitKat Shape Trademark Ultimately Rejected by CJEU

The KitKat shape trademark saga has been detailed on this blog in great detail, going back several years (e.g. here, here and here). The fight over the chocolate bar shape seems to have gone on forever, and this writer thought he would be old and grey before the matter ultimately concluded. After Advocate General Wathelet's opinion in April, the CJEU has finally taken the matter on, and the decision will decide the fate of the current KitKat shape registration.

While the facts of the case have been discussed extensively, it is still useful to recite the basics to anyone not familiar with the background. The case of Société des produits Nestlé v Mondelez UK Holdings & Services concerns the registration of the shape of the KitKat chocolate bar (EUTM 2632529), owned by Nestle. Cadbury challenged the registration, seeking to invalidate it, with the matter ending up with the CJEU 11 years later.

The case revolves around Article 52(2) of the CTM Regulation, which allows for the registration of marks that have acquired distinctiveness through the use of the mark in conjunction with the goods or services. The distinctive character of the mark has to exist in the entirety of the EU for it to avoid invalidation.

What underpinned the matter was whether evidence has to be proved for the entirety of the EU, and not just a select sample of countries. In the case of August Storck KG v OHIM, the CJEU saw that a mark can be registered under Article 7(3) (which has to be read in conjunction with Article 52 above) "…only if evidence is provided that it has acquired, in consequence of the use which has been made of it, distinctive character in the part of the [EU] in which it did not, ab initio, have such character". If no distinctiveness exists in relation to the mark from the very beginning, acquired distinctiveness would have to be shown in the EU.

No amount of cute advertising
could save the KitKat shape
When it comes to acquired distinctiveness, the Court emphasised that, for any mark devoid of inherent distinctiveness, "…evidence be submitted, in respect of each individual Member State, of the acquisition by that mark of distinctive character through use, the evidence submitted must be capable of establishing such acquisition throughout the Member States of the European Union". Evidence therefore does not have to be produced for each individual Member State, but can be produced in a way that shows acquired distinctiveness due to proximity in geography, culture or linguistics, and therefore acquired via another Member State even in the absence of evidence for that particular Member State.

The assessment of whether the evidence produced is enough to give the mark acquired distinctiveness in the EU is a matter for the EUIPO or its appellate courts in any given case.

The CJEU agreed with the General Court's decision, which rejected the argument by Nestle that the evidence covered the entirety of the EU, or a substantial part of it, leading to sufficient coverage. The Court therefore rejected all of Nestle's appeals, and the mark was invalidated.

The decision is a huge culmination of years of litigation, but by no means is the end of the KitKat shape trademark. While evidence was lacking for the current registration with regards to Belgium, Ireland, Greece and Portugal, Nestle are still within their rights to apply for a new registration, producing evidence to cover any missing Member States. Due to the clear monetary value of the mark, it is clear that Nestle will pursue to register the shape one way or another; however, this might just be the beginnings of a reboot for this particular litigation series

24 July, 2018

Victory Plain and Simple - Australia Triumphs on Tobacco Plain Packaging Law Challenge at WTO

Discussion around plain packaging laws in relation to tobacco products has gone quite in recent times, and the slow movement towards more plain packaging laws hasn't helped this movement. Nevertheless, this blog has discussed the topic to some degree (more here, here and here), and one particular issue in the back burner has been a WTO challenge against the Australian plain packaging legislation. The matter started nearly 5 years ago, and only recently found its ultimate conclusion. The decision by the WTO panel is a behemoth at nearly 900 pages, so this blog post will endeavour to only focus on the main parts, rather than summarise the whole decision. For anyone wanting to know more, please refer to the full decision.

By way of a primer, the case of Australia v Indonesia and others concerned WTO proceedings with regards to the Australian Tobacco Plain Packaging Act 2011, which set certain rules on the packaging of tobacco products. According to Indonesia (and other countries such as Honduras, Cuba and the Dominican Republic) the law contravenes a number of WTO agreements, including the TRIPS Agreement, TBT Agreement and GATT 1994.

The panel first looked at whether the Australian Act contravened Article 2.2 of the TBT Agreement, which prohibits regulations that create unnecessary obstacles for trade that go beyond what's necessary to protect a legitimate objective, including "…protection of human health or safety, animal or plant life or health, or the environment". The panel concluded that the objective of protecting people's health by reducing smoking rates, as put forth by Australia, was a legitimate objective, and didn't restrict trade beyond achieving that legitimate objective (although did potentially restrict trade volumes). They made a 'meaningful contribution' to those ends, and the risk of the non-fulfilment of the objectives by declaring the measures unlawful under Article 2.2 would potentially have grave consequences.

Tobacco manufacturers yearn for the 'good old days'
In relation to the arguments under Article 15 of the TRIP Agreement, which prevents the prohibition of the registration of trademarks where the application of the mark would form an obstacle for registration of the mark. The panel rejected this argument, as the Act does not prevent the registration of marks, even if might impact the level of protection to those marks. They can be registered just as well, just not applied to tobacco products. In terms of Article 16.1 of the TRIPS Agreement, the panel saw that the reduced likelihood of confusion between brands was not an infringement of the article, as "…Article 16.1 does not require Members to refrain from regulatory measures that may affect the ability to maintain distinctiveness of individual trademarks or to provide a "minimum opportunity" to use a trademark to protect such distinctiveness". Article 16.1 is only concerned with the rights afforded to rightsholders relating to trademarks, and not their efficacy (or reduction thereof) through legislation. Rightholders still have the capability to prevent unauthorized use of identical or similar tobacco trademarks on identical or similar products where such use would result in a likelihood of confusion.

Similarly, the Panel saw that Article 16.3 was not infringed either (mandating the protection of 'well-known' trademarks), as the possibility of a reduced knowledge of previously well-known trademarks in the market does not, in itself, constitute a violation of Article 16.3. The panel emphasised that "…Article 16.3 does not require Members to refrain from taking measures that may affect the ability of right owners to maintain the well-known trademark status of individual trademarks, or to provide a "minimum opportunity" to use a trademark in the market".

The Panel then moved onto Article 20 of the TRIPS Agreement, which prevents the unjust encumbering of trademark use through special requirements. They ultimately concluded that Australia's public policy considerations offered an appropriate intervention in the use of tobacco related trademarks through special requirements, i.e. plain packaging. The Panel acknowledged the economic value in the trademarks themselves, but the efforts to curb smoking in Australia through plain packaging have had a genuine impact on smoking rates, and are therefore justifiable under Article 20.

Ultimately the panel saw no infringement of Australia's international obligations under the treaties, and allowed the law to stand.

The decision goes into great detail in many aspects of trade and international legislation surrounding trademarks – well beyond what this blog can, and should, discuss. The decision is hugely important, and will undoubtedly encourage other countries in their adoption of plain packaging measures. Honduras has already stated that they have appealed the decision, so the plain packaging saga will go on for a further number of years, due to the sheer value of the marks and brands at stake.

Source: BBC News

18 July, 2018

A Barrel of Joy - CJEU Sets Limits on the Assessment of Infringement of Geographical Indicators

Whisky is a point of pride for Scotland (enough where the addition of an extra letter gets some people's blood boiling), and as such there is a huge incentive to protect both the product and its name. This blog recently discussed a case in the European courts where the very name was the focus of the matter, and after an opinion from Advocate General Øe, the case has finally ended up on the lap of the CJEU, which gave its judgment only last month.

As a short primer, the case of Scotch Whisky Association v Michael Klotz concerned the sale of a whisky called "Glen Buchenbach" by Mr Klotz, which was produced in Germany. The name is derived from the Buchenbach, a valley in Swabia, and the addition of the word 'Glen' at the front of it. The Scotch Whisky Association, whose objectives include protecting the trade in Scottish whisky both in Scotland and abroad and the use of the PDO for whisky. The SWA objected to the use of the word 'Glen' in conjunction with a whisky not originating from Scotland.

The referring court asked the CJEU four different questions, all of which related to the Geographical Indications Regulation.

The first question, in essence, asked whether "…Article 16(a) of Regulation No 110/2008 must be interpreted as meaning that, for the purpose of establishing that there is ‘indirect commercial use’ of a registered geographical indication, the disputed element must be used in a form that is either identical to that indication or phonetically and/or visually similar to it, or whether it is sufficient that that element evokes in the relevant public some kind of association with the indication concerned or the geographical area relating to it".

The court determined that, for the use to be covered by Article 16(a), the use needs to be in an identical form or at least in a form that is phonetically and/or visually highly similar to the geographical indicator. The use, however, still can be both direct and indirect to potentially fall under the provision. The Advocate General distinguished the uses as "…‘direct’ use, which implies that the protected geographical indication is affixed directly to the product concerned or its packaging, ‘indirect’ use requires the indication to feature in supplementary marketing or information sources, such as an advertisement for that product or documents relating to it".

With this in mind, the court still rejected the argument that all that is necessary is a simple association in the mind of the relevant consumer for there to be infringement. This would deprive Article 16(b) of any practical effect (the provision precludes any "any misuse, imitation or evocation" of a GI), and therefore should not be applicable to Article 16(a). A simple 'impression' would also fail in being indirect use, which would not be identical or phonetically/visually similar to the GI being protected. A simple 'association in the minds of the public' would not be an infringement.

Glenn's budding fake beverage business took a beating that night
The court then moved onto the second question, which asked "…whether Article 16(b)… must be interpreted as meaning that, for the purpose of establishing that there is an ‘evocation’ of a registered geographical indication, the disputed element must be phonetically and/or visually similar to that indication, or whether it is sufficient that that element evokes in the relevant public some kind of association with the indication concerned or the geographical area relating to it". The question focusses on the context of the use of the mark, and not just the mark itself, i.e. what the impression is that the mark gives in its full context to the relevant consumer, or the use of wording that associates the goods with a GI.

Previous case law, particularly the case of Viiniverla, has determined that 'evocation' covers situations where "…the term used to designate a product incorporates part of a protected [GI], so that when the consumer is confronted with the name of the product in question, the image triggered in his mind is that of the product whose indication is protected". This is assessed through a decision on the presumed reaction of the consumers in the light of the term used, and that there is a link between the term and the GI. The appearance of the goods and the similarity of the name and the GI can be taken into account.

In short, the court set out that "…for determining whether there is an ‘evocation’ within the meaning of Article 16(b)… the decisive criterion is whether, when the consumer is confronted with a disputed designation, the image triggered directly in his mind is that of the product whose geographical indication is protected… taking into account, as the case may be, the partial incorporation of a protected geographical indication in the disputed designation, any phonetic and/or visual similarity, or any conceptual proximity, between the designation and the indication". They did, however, reject the argument that evocation as to geographical region should be included, as this does not create a sufficient link with the GI and the goods being sold.

The court did also reject the argument of including context within the assessment, setting out that "…for the purpose of establishing that there is an ‘evocation’ of a registered geographical indication, account is not to be taken either of the context surrounding the disputed element, or, in particular, of the fact that that element is accompanied by an indication of the true origin of the product concerned".

Finally the court moved onto the third question, which asked "…whether Article 16(c)… must be interpreted as meaning that, for the purpose of establishing that there is a ‘false or misleading indication’, as prohibited by that provision, account must be taken of the context in which the disputed element is used, in particular where that element is accompanied by an indication of the true origin of the product concerned".

After brief consideration, the court set out that "…Article 16(c)… must be interpreted as meaning that, for the purpose of establishing that there is a ‘false or misleading indication’, as prohibited by that provision, account is not be taken of the context in which the disputed element is used". This follows their logic in the above question, where context was also disregarded. The addition of further information, and therefore avoiding infringement through its inclusion, could compromise the protection offered by GIs.

Overall the decision is important, particularly in establishing the remit through which GI infringement is assessed. Thinking of the issues further, this writer agrees with the court, as the inclusion of context could indeed compromise the protection offered, and allow for the sale of 'infringing' goods with enough contextual information to avoid infringement (whether consumers notice it at all or not).

27 June, 2018

A Terrible Cover-Up - Addition of a Small Label is not Repackaging (and Doesn't Infringe TMs), says CJEU


Repackaging branded goods can be a legitimate way to resell branded goods in a different jurisdiction, avoiding the potential confusion of where the goods actually originate from (and whether they are counterfeit). The allowance is still a tough line to toe, particularly when minimal efforts are taken to repackage the relevant goods. In the light of this, what amounts to repackaging, and what would be a potential minimum standard for repackaging so as to avoid trademark infringement in the EU? Luckily, the CJEU was poised to answer this question in a case that was decided last month.

The case of Junek Europ-Vertrieb GmbH v Lohmann & Rauscher International GmbH & Co KG concerned the sale of medical dressings made by Lohmann, sold under the brand "Debrisoft" (TM No. 8852279). Junek parallel imported and sold sanitary preparations in Austria, including Debrisoft products. In a package of Debrisoft, purchased by Lohmann in Austria, Junek had affixed a label onto the box that contained its address and telephone number, a barcode and a central pharmaceutical number. The label was applied to a non-printed part of the packaging. Junek had not notified Lohmann of the reimportation of the products, nor had they supplied Junek with the modified packaging. Lohmann then took Junek to court for trademark infringement.

The referring court set out a single question for the CJEU, which, in essence, asked "…whether Article 13(2) of [the CTM Regulation] must be interpreted as meaning that the proprietor of a mark may oppose the further commercialisation, by a parallel importer, of a medical device in its original internal and external packaging when an additional label, such as that at issue in the main proceedings, has been added by the importer". Additionally the court asks whether the principles in the cases Bristol-Meyers Squibb and Boehringer Ingelheim apply without restrictions to parallel imports of medical devices.

When it comes to repackaging of goods, the Court emphasised that any repackaging done by a third party without the proprietor's consent could create a risk in terms of the guarantee of origin of the goods. Even so, original proprietors cannot prevent the importation of repackaged goods simply to derogate from the free movement of goods, although the repackaging should not adversely affect the original condition of the goods or the reputation of the mark.

When repackaging, be honest
The CJEU has previously in the above two cases set out the principles under which exhaustion of rights operates in relation to parallel imports. A proprietor can oppose the further commercialisation of pharmaceutical products imported from another Member State in its original internal and external packaging with an additional external label applied by the importer, unless:

(i) it is established that the use of the trade mark rights by the proprietor thereof to oppose the marketing of the relabelled products under that trade mark would contribute to the artificial partitioning of the markets between Member States; (ii) it is shown that the repackaging cannot affect the original condition of the product inside the packaging; (iii) the new packaging states clearly who repackaged the product and the name of the manufacturer; (iv) the presentation of the repackaged product is not such as to be liable to damage the reputation of the trade mark and of its owner; thus, the packaging must not be defective, of poor quality, or untidy; and (v) the importer gives notice to the trade mark proprietor before the repackaged product is put on sale, and, on demand, supplies him with a specimen of the repackaged product.

In the light of the above, 'repackaging' of goods also includes relabeling the products bearing the mark.

The Court distinguished the current case from the facts of Boehringer Ingelheim, which dealt with repackaging, albeit both affixing an external label and opening the packaging and inserting an information leaflet. In contrast, Junek had only affixed a small label on the outside of the packaging, which didn't obscure the mark or any other details. The Court concluded that their actions therefore would not amount to repackaging as set out in Boehringer Ingelheim. Due to this the Court precluded Junek from preventing the importation of the goods to the Member State.

The Court summarised its answer to the question as "… Article 13(2)… must be interpreted as meaning that the proprietor of a mark cannot oppose the further commercialisation, by a parallel importer, of a medical device in its original internal and external packaging where an additional label… has been added by the importer, which, by its content, function, size, presentation and placement, does not give rise to a risk to the guarantee of origin of the medical device bearing the mark".

Clearly the Court drew a line in the impact a small label could have to the guarantee of origin of goods, as it does not affect the consumer's knowledge of the origin or the contents of the package. One can indeed appreciate this common sense approach, as the prohibition of the addition of a parallel importer's details could also result in the impossibility of resolving any issues with the product when imported separately from the original proprietor.