24 February, 2021

That's my Dataset! - AG Szpunar Opines on Whether Search Engines' Indexing can Infringe Database Rights

In the age of big data databases can be worth their weight (or in reality, lack thereof) in gold, since the compilation of those databases can take years and cost tremendous amounts of money. As such, databases are afforded special protection through database rights (i.e sui generis rights). These rights don't always pop up in the courts, but when they do, it's worth taking note, since the infringement of these rights can be deceptively simple, at least on the face of things. As a part of the functioning of the Internet as we know it today, search engines like Google index the websites that allow for it to do so, which in effect adds them to the collective directory of that search engine (and accessible to those searching for it). This indexing will affect all websites and sub-pages that are allowed to be indexed, but could that indexing infringe database rights if done so? As luck would have it the CJEU is slated to decide this matter in the near future, but Advocate General Szpunar has given his opinion on the matter ahead of this decision. 

The case of SIA ‘CV-Online Latvia’ v SIA ‘Melons’ concerns the website 'CV.lv', operated by CV-Online, which includes a database containing notices of jobs published by employers. The website also uses meta tags, allowing for the easier identification of content on each of the site's pages for indexing purposes. The meta tags contain typical information like the name of the job being advertised, place of employment and the date when the ad was posted. 

SIA Melons operates a website called 'KurDarbs.lv', which is a search engine specialising in notices of employment, allowing for several websites posting these notices to be searched on it. The site then refers to the people searching to the websites where the information was found in via hyperlinks (including to the site operated by CV-Online). The meta tags inserted by CV-Online on its website are also displayed in the list of results obtained when SIA Melons’ website is used. 

CV-Online subsequently brought proceedings against SIA Melons for the breach of its sui generis database rights, alleging that it copies substantial parts of the contents of the database on the CV-Online website. Following decisions in the Latvian courts the case ultimately landed on the CJEU's desk, with the Advocate General giving its opinion before the decision.

The AG first discussed the basics of database rights set out in Article 1 of Directive 96/9. The article sets out databases as "...a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means". The 'independent works' discussed should be ones that are "...separable from one another without their informative, literary, artistic, musical or other value being affected", or in other words, they need to have autonomous informative value. The database itself has to include "...technical means such as electronic, electromagnetic or electro-optical processes... or other means... to allow the retrieval of any independent material contained within it"

In addition to the above there has to have been "...qualitatively and/or qualitatively a substantial investment in either the obtaining, verification or presentation of the contents of that database".

Following on from this the AG quickly set out that the job ads contained in the database were indeed units of information which has autonomous informative value which are separable from the other ads in the same database. The only question that remained therefore was whether CV-Online had made a substantial investment in creating its database. 

Discussing the actual wording of the two questions referred to the court the AG considered that they should be reworded and considered together, namely whether "...under Article 7(1) and (2)... the maker of a database that is freely accessible on the internet is entitled to prevent the use of that database by an internet search engine that specialises in searching the contents of databases"

According to the AG, after the reformulation of the questions the case at hand resembles the decision in Innoweb BV v Wegener ICT Media BV, in which the CJEU held that where the operator of a meta search engine reutilised the whole or a substantial part of the contents of a database constituted by the website on which that meta search engine allowed searches to be carried out. The use of a meta search engine allowed users to access the whole database through those searches other than intended by the marker (and breached the database rights as a result). 

Looking at whether Melons' website acts as a meta search engine, as in Innoweb, the AG concluded that this is irrelevant, as this is not a requirement for a potential infringement of database rights. He concluded that "...a search engine that copies and indexes the whole or a substantial part of databases which are freely accessible on the internet and then allows its users to carry out searches in those databases according to criteria that are relevant from the aspect of their contents effects an extraction and a reutilisation of those contents"

However, even with this mind we have to have a balance of allowing for the indexing (and therefore searching) of the Internet, while protecting against 'parasitic' services utilizing databases they didn't create. Keeping this in mind the AG thought that national courts should verify not only whether the extraction or reutilization of the whole or a substantial part of the contents of a database and whether a substantial investment has been made into the database, but also whether the reutilization or extraction prevents the recouping of that investment. If the latter is the case, the database should be protected.  

Furthermore, national courts should consider the protection of competition within the marketplace. This is to prevent the use of database rights to prevent legitimate competition within the EU, essentially through the abuse of a dominant position through the ownership of key information through database rights. If the reutilization of that information, e.g. such as what Melons has done, does not negatively impact the business of the database rights owner, the courts should allow for the reutilization to allow for fair competition. Thinking about these issues will effectively limit the rights of the database maker, provided there is no or limited impact on the recouping of their investment. 

Ultimately the AG answered the two questions as follows, namely that Article 7(1) and (2) must be interpreted as meaning:

(i) a search engine which copies and indexes the whole or a substantial part of the contents of databases which are freely accessible on the internet and then allows its users to carry out searches in those databases according to criteria that are relevant from the aspect of their contents effects an extraction and a reutilisation of those contents within the meaning of that provision; and

(ii) the maker of a database is entitled to prevent the extraction or the reutilisation of the whole or a substantial part of the contents of that database only on condition that such extraction or reutilisation adversely affects its investment in obtaining, verifying or presenting those contents, that is to say, that it constitutes a risk for the possibilities of recouping that investment by the normal exploitation of the database in question, which it is for the referring court to ascertain.

But one must still keep in mind that this must not result in the abuse of a dominant position under Article 102 TFEU. 

The opinion is an important one in the light of how the Internet functions and sets clear guidelines on how the CJEU should answer the questions posed in this case. The ultimate decision by the CJEU could impact the operation of search engines tremendously if it creates very stringent requirements for the indexing of data, but this writer hopes that certain limits are put while respecting the functionality of the Internet. Provided no, or little, damage is done to the original website's recoupment of its investment, indexing should be rightfully allowed. 

18 February, 2021

It’s a Sword! It’s a Shield! It’s Res Judicata! - The dilemma of patent validity in South Africa

We're really grateful for the extremely comprehensive article below on a very important case in South Africa, which was brilliantly written by Sfiso Nxumalo. He is a South African lawyer, currently reading for the Bachelor of Civil Law degree at the University of Oxford. He worked at Bowmans as a candidate attorney, and also worked as a law clerk at the South African Constitutional Court before reading for the BCL. You can find his LinkedIn profile here


On 9 May 2019, the South African Constitutional Court, the highest appellate court in South Africa, heard its first ever patent litigation case in Ascendis Animal Health (Pty) Limited v Merck Sharpe Dohme Corporation. The case required the Constitutional Court to interpret the South African Patent Act 57 of 1978 and decide the correct approach to proceedings concerning the (in)validity of patents. 

The legal issue before the Constitutional Court was significant, namely: are the different grounds of challenging the validity of a patent separate and distinct causes of action or are they one cause of action. In addressing this issue, the Court also had to consider whether the bifurcated nature of the patent litigation affected the main issue. More precisely, does it matter if the challenge of (in)validity of patents is raised in patent revocation proceedings (as a ‘sword’) or in patent infringement proceedings (as a ‘shield’)? 

Unfortunately, the Court was evenly split in its decision (usually 11 justices sit on the bench – but the Court had one justice missing due to other judicial commitments). Thus, the first patent case to be heard by the apex Court of South Africa is of very little jurisprudential value. However, the want of jurisprudential value should not stop us from engaging some of the key issues in the case. 


In June 2011, Ascendis Animal Health (Pty) Limited (the applicant) initiated revocation proceedings against Merck Sharp Dohme Corporation and Merial Limited (the respondents) for the annulment and repeal of the Patent 1998/10975 (the patent) in terms of section 61(1) of the Patents Act 57 of 1978 (the Act) because the invention was not patentable under section 25 of the Act as the invention was not new and it lacked an inventive step. These were the revocation proceedings. 

While the revocation proceedings were taking place, the respondents in October 2011 instituted proceedings against the applicant for infringing the patent. The respondents argued that, since August 2011, the applicant had made, sold, used, offered for sale and/or imported an anti-parasitic formulation under the trademark entitled Ivermax LA Platinum and had infringed the patent. This was the infringement action. 

The infringement action was stayed awaiting the conclusion of the revocation proceedings. The applicant challenged the patent exclusively on the ground of novelty. At first instance, the Commissioner of Patents found in favour of the applicant and revoked the patent for its lack of novelty. 

On appeal the Supreme Court of Appeal overturned the decision of the Commissioner of Patents and found in favour of the respondents. After this decision, the applicant sought to amend its plea in the infringement action, to remove the defence of novelty (since it lost this case in the revocation proceedings) and sought to include an additional defence – inutility. In response, the respondents sought to amend their pleadings in the same proceedings and argue that all the defences by the respondent were res judicata (already decided by a court) since the question of the validity of the patent had been definitively decided and upheld by the Supreme Court of Appeal.

In hearing the infringement action, the Commissioner of Patents granted the respondents’ amendment and held that the grounds on which an applicant may rely on to attack the validity of a patent are not separate causes of action. It held that the applicant had effectively abandoned the obviousness claim as a basis of invalidity in the revocation proceedings and that it had not formally elected to reserve the right to rely on a separate cause of action. This is the decision the applicants subsequently appealed to the highest court. 

The Constitutional Court’s decision

Five justices of the Court in a judgment penned by Justice Khampepe upheld the appeal and ordered that the parties’ pleadings should be allowed to be amended. The other five justices in a judgment penned by Justice Cameron, held that they would dismiss the appeal. The effect of this is that there is no majority decision and the decision of the Commissioner of Patents stands. The issues are discussed in more detail below.

(i) Are the grounds of challenging the validity of the patent single or distinct and separate causes of action

Justice Khampepe held that the grounds on which a patent may be challenged under section 61 of the Act (such as novelty, utility and obviousness) are concrete, distinct and separate causes of action. She opined that a cause of action comprises every fact that would be necessary for the plaintiff to prove in order to support his right to judgment of the Court. A cause of action, she emphasised, comprises facta probanda (the facts required to be proved) as opposed to the facta probantia (the facts by means of which they are proved, i.e. particulars or evidence). She then strongly reasoned that each ground of revocation are separate, distinct and independent causes of action because the facta probanda that need to be proven for each ground are markedly different. She then explained that although the legal conclusion that results from claims of either novelty, obviousness or inutility may be the same (i.e. the finding of a patent’s invalidity), it does not mean that they all represent a single cause of action. The facts required to prove a claim of novelty, inutility and obviousness are disparate as the elements constituting each ground are dissimilar. 

A compelling point is raised by Justice Khampepe when she reminds us that South Africa is a non-examination state, i.e. the state does not check whether an invention is novel before it is registered as a patent. As a result, South Africa relies on private parties to challenge the artificial monopolies created by way of registering a patent.

In the opposing judgment, Justice Cameron held that the default position should be that a previously unsuccessful patent validity claim should bar an applicant from raising the validity of the patent as a defence in an infringement action. He posited that the question is essentially the validity of the patent and this was definitively decided by the Supreme Court of Appeal and thus the matter was res judicata or is barred by issue estoppel. In his opinion, all the grounds constituted a single cause of action. 

While Justice Cameron’s argument that there is a need to stabilise our patent litigation system is attractive, it does not overcome Justice Khampepe’s reminder that South Africa relies on private parties to litigate the validity of patents. If the state relies on private parties to litigate, such parties should not be subjected to burdensome procedural requirements seeing that their litigation, while it may be driven by profit, benefits the public. Of greater consequence, allowing parties to challenge patents ensures competition in key industries and thus benefits the larger public. This does not mean that piecemeal litigation should be permitted and encouraged. In this author’s opinion the different grounds of validity claims are separate causes of actions and parties should bring as many claims known to them at the time of instituting proceedings. Should they later bring another ground, it should not be barred based on res judicata or issue estoppel. To my mind, this is a lesser evil, compared to a complete bar, which would mean that parties have one shot at challenging a patent, and should they fail, the patent holder gains a product monopoly. Justice Cameron’s conclusion is striking because it seems to go further than just bar the litigant party. He seems to suggest that res judicata could be relaxed even regarding different parties litigating over the same ‘issue’. 

(ii) Are the defences raised in the infringement action res judicata

On this issue, Justice Khampepe held that the defences were not res judicata. She described the scheme of the Act in great detail and she then distinguished between revocation proceedings and infringement actions. Justice Khampepe considered that, in revocation proceedings, evidence is provided by way of affidavit, whereas in an infringement action, evidence is given orally. In addition, the remedies available in these proceedings are different – revocation proceedings remove the patent from the register of patents, thus making it a remedy in rem (against a thing); whereas an invalidity defence in an infringement action does not remove the patent from the register but simply renders it unenforceable against the person challenging it, thus making it a remedy in personam (against a person). She then found that ‘the findings in the revocation proceedings have a final effect on the infringement action for causes which have not actually been adjudicated upon in revocation proceedings.’ In other words, in revocation proceedings the grounds of patent validity are a sword; and in infringement actions such grounds are a shield. And in her view this matters because it would lead to the dual proceedings being nugatory and of no effect because a finding on the revocation proceedings could be carried over to the infringement action.

In plain terms, Justice Cameron argued that the dispute is essentially about the validity of the patent. Once a court of appeal has ruled on the validity of a patent, the applicant is estopped from bringing the same issue of patent validity (regardless of the ground) in the infringement proceedings. He opined that same cause of action can be interpreted widely to include the same issue (the issue being the validity of the patent). 

Again, Justice Khampepe’s incisive approach is appealing. There seems to be stark differences between the two proceedings. In this author’s view, a statutory basis for the differences indicate that the legislature intended for them to be serve different functions (i.e. a sword and shield). The applicant of course will be barred from raising the same grounds that have been decided before in revocation proceedings. In my mind, requiring parties to bring all their claims at the in one suit might have adverse effects on the patent litigation going forward.


No patent litigation regime is without disadvantages, and the law should be applied with a purposive approach that serves the (national) objectives of patents. While there was no binding decision by the Constitutional Court, its importance lies in its detailed discussion of the South African patent system. 

27 November, 2020

It's Just a Part of the Process - The Disclosure of Copyright Protected Materials Is Not Communication to the Public

Any litigator will be very familiar with the process of disclosure (or discovery for our American friends), where you exchange a wealth of documents with each other as parties to litigation in order to better assess the case you have and what materials support it. Often the breadth of disclosure can be immense and encompass a huge variety of documents of all sorts, from emails, internal notes to photos, depending on the case at hand. Unsurprisingly many of these documents will be protected by copyright, and it's unclear, at least on its face, whether the sharing of those documents as a part of disclosure would infringe copyright (or could be prevented using copyright to do so). Luckily enough the CJEU was tasked to answer this question in a recent case and handed down their judgment in late October. 

The case of BY v CX concerned litigation between the parties in the Swedish civil courts, where during the disclosure process CX sent the court a seized copy of a page of text containing a photograph as evidence in the proceedings via email, which was taken from BY's website. BY requested that CX pay damages for copyright infringement for the sharing of the photographs with the court. At first instance the Swedish courts dismissed BY's claim, as, although the photographs were protected by copyright, no harm was suffered since they were shared as a part of litigation. BY subsequently appealed the decision, which ultimately ended up with the CJEU. 

The Court considered the four questions submitted to it together, which asked "...whether Article 3(1) of Directive 2001/29 must be interpreted as meaning that the concept of ‘communication to the public’, referred to in that provision, covers the transmission by electronic means to a court, as evidence in judicial proceedings between individuals, of a protected work".

To kick things off the Court went through the requirements for what amounts to a 'communication to the public', namely: (i) an act of communication of a work and (ii) the communication of that work to a public.

The Court first noted that 'an act of communication' includes any act by which a user gives access to protected works, with full knowledge of the consequences of that action, is liable to constitute an act of communication, This would be the case, prima facie, where a protected work is transmitted by electronic means to a court as evidence in judicial proceedings between individuals.

Even though you get access to the documents doesn't mean they're interesting
Even if you get access to court documents doesn't mean they're interesting

Secondly, the work has to be communicated to a 'public', which refers to an indeterminate number of potential recipients and implies, moreover, a fairly large number of persons, which does not simply mean private groups but could be the general public. 

In the current case the Court determined that the public in this instance would be a clearly defined and closed group of persons holding public service functions within a court, and not to an indeterminate number of potential recipients. The communication has not therefore been made generally, but to a specific set of professionals in the court system. In the light of this the Court saw that it would not amount to a 'communication to the public'. 

Further, even if national legislation allows for the public inspection of documents in court proceedings does not change this fact. In these instances access is granted by the courts, and not the person that sent the documents to the courts, which is often under an obligation to provide access to court documents. Article 9 specifically allows for this, as it permits the transmission of copyright protected materials for the purpose of access to public documents. 

The CJEU therefore decided that: "Article 3(1)… must be interpreted as meaning that the concept of ‘communication to the public’, referred to in that provision, does not cover the transmission by electronic means of a protected work to a court, as evidence in judicial proceedings between individuals".

The decision is in no way surprising, since access to litigation related documents is paramount in many jurisdictions, and preventing access to them would hinder the availability of important documentation. The argument was indeed a very novel one, but one that was set to fail from the beginning. This writer wonders whether it was simply an attempt to hinder the disclosure process, but that is merely conjecture.

05 October, 2020

An Emotional Case - Can Sherlock Holmes Exhibiting More Emotions be Copyright Infringement?

 The world of copyright often springs up very odd cases and arguments for copyright infringement, and the character of Sherlock Holmes is by no means unfamiliar in that particular world (discussed on this blog, for example, here and here). With some of Sir Arthur Conan Doyle's iconic stories falling out of copyright some years ago, it would be easy to assume that the character is totally out of copyright and that an inevitable free-for-all on the character will be hitting various screens and mediums soon. However, there are still stories that the author penned that remain protected by copyright (specifically the stories written in the early to mid-1920s), and the estate of the deceased author will got to great lengths to protect those rights. With this in mind, a new case has sprung up revolving around the detective, bringing the question of whether the exhibition of emotions can showcase copyright infringement. 

According to numerous news outlets the estate of Sir Arthur Conan Doyle has sued Netflix and the author Nancy Springer for copyright infringement relating to their new movie, Enola Holmes, which focusses on Sherlock Holmes' teenage sister, based on the books by Nancy Springer on the same character. 

In their complaint the estate argue that the character of Sherlock Holmes changed in the last 10 books from an aloof, near emotionless individual to one that actually had a heart and could form friendships and express his emotions, and respect women (one can appreciate that this stance was probably quite progressive in the 1920s). Mr Holmes' relationship also changed with his companion Watson to one of actual friendship and not merely one of master and assistant. 

In the Enola Holmes movie by Netflix (and also the books by Ms Springer), Sherlock Holmes showcases the detective transforming from a cold, aloof individual to one who is warm, respectful and kind in his relationships. He also worries about his friend Watson's health during altercations in those stories. Sherlock also exhibits other emotions such as that of worry and distraught, being unable to eat due to his internal turmoil. Finally, Sherlock also shows that he cares for his sister Enola and shows brotherly love towards her. 

The estate argues that this emotional depth is never exhibited in the books that are in the public domain, and therefore are protected by copyright as it relates to the latter 10 books where Sherlock Holmes evolves into a more fleshed out, emotionally open person. 

Arguably, the estate's argument is quite flimsy, since, unless either Ms Springer or Netflix have copied the actual expression within the last ten books by the author, it will be hard to stretch copyright protection over the simple aspect of emotional depth or development. There are near countless adaptations of Sherlock Holmes, which, to varying degrees, will showcase emotions or the lack thereof. While it is arguable that some specific expressions of emotions could be protected by copyright (for example, as noted by the Verge, Sherlock caring about dogs), overall emotional depth or availability will be hard to stretch to cover any thematic arcs in the books themselves. 

Although the courts have acknowledged in Klinger v Conan Doyle Estate that Sherlock Holmes as a character is protectable (within the relevant term), the extent of "roundedness" that could extend outside of the term is very debatable. The court also discusses the alleged incremental nature of copyright in the depiction of the characters and denies that such an incremental approach could be taken. 

There is a very good chance that this case will never see the light of day in court, as the parties will undoubtedly settle the issue out of court, but it would be interesting to see whether the courts would consider emotional development for characters to be something that copyright would protect. This writer is very doubtful that the courts would find any infringement here, but bigger surprises have been created by the courts in the past.

26 August, 2020

A Swirl of Personality - Can You Have Copyright in a Fingerprint in the US?

It's easy to forget how such a minor detail as a person's fingerprint can be an important part of their person. Even setting aside the old school method of identification of potential criminals, smearing their ink covered fingers onto a police log book, a fingerprint evokes a more romantic notion of individuality; a truly unique set of impressions that are yours and only yours. While there is some truth to this notion, it might not be entirely the case, but nonetheless it's a hard thought to let go of. Fingerprints have often also been used in art, undoubtedly playing to the above thinking, but as it has been used in creative works, could one own the copyright to a fingerprint? Luckily, the USP Copyright Office issued a decision answering this question earlier this month. 

The decision in Re Equilibrium concerned an application to register the copyright in a variety of works by the artist Manjit Dhaliwal. The works, including one titled "Equilibrium", comprised different partial fingerprints cropped into four geometric shapes, namely a square, hexagon, circle, and triangle. Mr Dhaliwal attempted to have the works registered as early as 2018, however, the Copyright Office rejected the applications for a lack of authorship in those works. Mr Dhaliwal then requested that the applications be reconsidered a total of two times, the latter of which is the decision in question. 

The matter concerned whether the works could be deemed as original works. This means that they have to be an "...original work of authorship fixed in any tangible medium of expression", meaning that they were (i) independently created by the author and (ii) possess sufficient creativity. This can include the mere arrangement of common or standard designs, but the author has to show some creative authorship in its delineation or form. 

Also, patterns can be protected by copyright (including a fingerprint pattern), so long as the use of the shapes in the patterns is sufficiently creative.  

After the discussion of the legal background, the Copyright Office then dove into the assessment of the works themselves. The Board quickly determined that none of the elements in the works, including the fingerprints, are sufficiently creative to be eligible for copyright protection. 

Specifically in relation to the fingerprints, the Copyright Office noted that copyright does not protect the design found on a human fingerprint, as copyright will only protect an original work of authorship created by a human being and not works produced by nature. Since a fingerprint is  a part of the human body formed by natural processes outside of human control, it cannot have human authorship, and thus isn't original. Even though the author had made alterations to the fingerprint by cropping and amending its lines, it still wasn't sufficiently original to be protected. 

The Copyright Office therefore rejected Mr Dhaliwal's application for registration of the copyright in the above works. 

The decision is quite a curious one, but makes sense, as protection in a fingerprint would extend its remit beyond human creation, but also into the realm of natural creation. Even though the artist had made alterations in the shape and lines of the prints, they remained largely as they were scanned, and very little originality was applied bar the shape and order of the scanned fingerprints. While unsurprising, it's always nice to see discussions of more novel things in the sphere of copyright within governing bodies. 

20 August, 2020

I'm Not Involved! - AG Øe Opines on the Liability of Intermediaries in Copyright Infringement by Communication to the Public

The freedom of many services on the Internet can create a pile of problems for service providers, particularly when users have a wide berth in the use of those services. YouTube has faced a deluge of issues in relation to copyright over the years, since users are free to upload whatever they please, and those materials are then processed through the Content ID system for any potential copyright infringement. As copyright holders have taken issue on this freedom and have demanded for more direct action, YouTube itself hasn't faced a great deal of litigation around copyright infringement matters. A recent saga in the European courts, however, changed this, where the service provider was alleged to have infringed copyright through its users' actions. The case is now closing on its end in the CJEU, and Advocate General Øe gave their opinion only recently on the case before the decision of the CJEU.  

The case of Frank Peterson v Google LLC concerned music tracks and a live concert that were uploaded onto YouTube in 2008 by the users of the platform from an artist, Sarah Brightman's, album 'A Winter Symphony', in which Mr Peterson owned the copyright. After requests for the removal of the music were unsuccessful, Mr Peterson took Google to court in Germany for copyright infringement requiring the removal of the materials and the acquisition of profits made from the works availability. Google challenged Mr Peterson's actions, which ultimately were referred to the CJEU for further clarification. The CJEU has joined the above case with two similar ones concerning Cyando AG (who operated a file-sharing site onto which potentially infringing works were uploaded) Elsevier (who also sued Google for copyright infringement over the uploading of episodes of the TV show 'Gray's Anatomy) that concerned similar questions on liability.

The above cases raised a number of questions to the CJEU predominantly in relation to the liability of service providers for the uploading of infringing materials onto their platforms. For the sake of brevity, this article will not discuss every nuance of the judgment, so it is advised for anyone wanting a full picture to consult the opinion for themselves if needed. 

The first question asked whether "...the operator of a video-sharing platform and the operator of a file-hosting and ‑sharing platform carry out an act of ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29 when a user of their platforms uploads a protected work there"

The AG first set out what amounts to a 'communication to the public', which is comprised of two separate elements: (i) an act of ‘communication’ of a work and (ii) a ‘public’. In relation to the first element, a person or company carries out an act of 'communication' when it "...transmits a work and thus makes it perceptible at a distance" - or to put in different terms, transmission a work via the Internet or makes a work available on the same. This includes interactive on-demand transmissions where members of the public may access the work from a place and at a time individually chosen by them, such as uploading a work onto a website. As to the second element, a 'public' refers to "...an ‘indeterminate’ and ‘fairly large’ number of persons", including the general public that can access a website. 

The AG swiftly concluded that works shared on YouTube would be communicated to the public under the Directive. The uploading of the works is also not covered by the exceptions under Article 5 of the Directive.

The AG then moved onto considering whether the user uploading a work or platforms like YouTube, carries out the act of communication to the public. He considered that the acts of companies like YouTube are those of an intermediary, and not of a party that communicates a work to the public. This is due to the fact that intermediaries don't decide, on their own initiative, to transmit works to a public, but follow the instructions of their users. The communicator is therefore the user alone. However, if a service provider intervenes actively in the ‘communication to the public’ of works, i.e. selects the content transmitted, determines it in some other way or presents it to the public in such a way that it appears to be its own, the provider would be the communicator to the public. 

The AG then concluded that service providers like YouTube don't communicate works to the public that are uploaded by their users onto their services, as they merely provide the 'physical facilities' necessary for the communication of those works (as envisaged by recital 27). Clearly, passive service providers will not be deemed as such, but ones that take an active role in the selection of materials to be communicated would potentially be in breach.

He ultimately suggested that the answer to the first question is "...the operator of a video-sharing platform and the operator of a file-hosting and -sharing platform do not carry out an act of ‘communication to the public’ within the meaning of Article 3(1)... when a user of their platforms uploads a protected work there"

The AG then moved onto the second question, which asked "...whether operators such as YouTube and Cyando can benefit from Article 14(1) of Directive 2000/31 with regard to the files that they store at the request of users of their platforms"

Article 14 provides an exclusion over liability for the storage of files by service providers, which, according to the AG, applies in relation to both primary and secondary liability for the information provided and the activities initiated by those users. In the AG's view Article 14 doesn't apply where a provider communicates to the public its ‘own’ content, but does apply on the other hand when the content communicated was provided by the users of its service. 

After an incredibly exhaustive discussion on the details of Article 14, the AG saw that Article 14 therefore applies to service providers like YouTube would be exempted under the provision in relation to liability for files that have been uploaded by their users. 

The case then moved onto the third question, which asked whether the conditions mentioned in Article 14(1)(a) refer to specific illegal information. The provision relates to the discussion above, as the service providers cannot have knowledge of illegal activities or information on their service in order to benefit from the exemption. This could, potentially, include any infringing materials on those services, and it is important for providers like YouTube to have actual and abstract knowledge or awareness of those materials. 

According to the AG, this knowledge has to be specific and in relation to objective factors relating to specific information on its servers, which then obligates the service provider to remove that material from its servers. To summarize: "...a service provider is obliged diligently to process facts and circumstances brought to its knowledge, in particular by notifications, concerning specific illegal information". They are, however, in no way obligated to actively search for infringing materials before notification. 

Even with that in mind, the awareness factor cannot be used as a shield by service providers and any bad faith would make them lose the exemption altogether. 

In short, the AG noted that "...Article 14(1)(a)...  must be interpreted as meaning that... where a service provider has ‘actual knowledge of illegal activity or information’ and the situation where such a provider is ‘aware of facts or circumstances from which the illegal activity or information is apparent’ — refer to specific illegal information".

The AG then moved onto the fourth question, which asked what the conditions are for rightsholders to be able to apply for an injunction under Article 8(3). 

After some discussion in relation to German legal concepts in terms of conditions, the AG determined that this is possible "...where it is established that third parties infringe its rights through the service provided by the intermediary, without the need to wait for an infringement to take place again and without the need to show improper conduct by the latter". This means that rightsholders won't necessarily have to establish infringement and apply for an injunction each time an infringement occurs, but future infringements could also be prevented through a court order. This could include measures to 'detect and block', which, according to the AG, does not infringe Article 15(1). However, as discussed above, this should not be in order to establish a pre-emptive detection system, as actual knowledge is still required. 

 The AG summarized his position in relation to question four as "...Article 8(3)... precludes rightholders from being able to apply for an injunction against a provider whose service that consists of the storage of information provided by a user is used by third parties to infringe a copyright or related right only if such an infringement has taken place again after notification of a clear infringement has been provided".

The fifth and sixth questions asked whether the operators, such as YouTube, would be regarded as 'infringers' pursuant to Article 13(1). If the operators are not deemed to be 'communicating to the public' they of course would not be classed as infringers. Even so, the legislation does leave a great deal of room for national harmonization in this respect. 

The case is really important in establishing the remit of infringement, and liability over the same, in materials uploaded to services like YouTube by their users. As such the CJEU's decision will be an important one, which will most likely be handed down later this year. This writer will await in with bated breath, as undoubtedly many companies like Google who offer services allowing for user-uploaded materials. 

28 July, 2020

None of My Concern - CJEU Looks at TM Infringement on Online Marketplaces and Operators' Liability

Online business, particularly for consumer goods, has exploded in the last ten years, and this writer for one can attest to being one of the most rabid online shoppers. However, with the explosion in popularity comes the legal challenges that often accompany popularity, especially due to the use of third party sales platforms to sell illegitimate goods to unsuspecting consumers. The misuse of trademarks by third-party sellers is not a new thing to be battled over in the courts, but online platforms like Amazon do present new challenges as to the liability of the marketplace itself, which allows for the sale of these goods with relative impunity. Even with this in mind, the CJEU has been set up to answer the question of whether platforms like Amazon can have any liability in relation to the misuse of trademarks by sellers and handed down their judgment on this topic only a few weeks ago.

The case of Coty Germany GmbH v Amazon Services Europe Sàrl concerned the sale of knock-off Davidoff perfume on Amazon. The claimant, Coty, owns the rights to distribute Davidoff perfumes in the EU under the registered trademark (EUTM 876874). After a number of test purchases on the Amazon platform for Davidoff perfumes sold by third parties, with orders being fulfilled by Amazon, Coty pursued the platform itself due to the infringement of the trademark by the third-party sellers. Coty pursued an order that third-party sellers, and Amazon, would not be able to stock the knockoff Davidoff goods - with the matter ultimately ending up with the CJEU through the German courts.

The CJEU only had to look at one question, which asked "...whether Article 9(2)(b) of Regulation No 207/2009 and Article 9(3)(b) of Regulation 2017/1001 must be interpreted as meaning that a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims". In essence, the question concerns liability for the proprietor over the sale of goods on an online marketplace, like Amazon.  

As a part of the prohibitions under Article 9(3)(b), a third-party is prevented from offering trademark protected goods, putting them on the market or stocking them. This could include the proprietors of online marketplaces if they are seen to be doing this through the offering of goods on their website by third-party sellers. 

As a part of the platform's service, Amazon stored the goods of third-party sellers, including the counterfeit perfume, which are sold on the platform and processed by Amazon after sale. The Court therefore had to determine whether such a storage operation may be regarded as 'using' or 'stocking' the trademark goods under the above Regulations. 

According to case law, 'using' a trademark entails active behavior and direct or indirect control of the act constituting the use, which includes the activities under Article 9 of the Regulations. However, the prohibitions only apply to third-parties that have direct or indirect control of the act constituting the use, and can therefore comply with those prohibitions. 

Also, the Court noted that operators of e-commerce platforms are not using trademarks in relation to goods sold by sellers on that platform, and the ultimate 'user' of the trademarks is the seller. Similarly, any warehouse-keeper who is sent goods to be held for sale does not use the trademarks contained in those goods. 

Following an extensive discussion of the above precedent and other cases, the Court determined that "...in order for the storage of goods bearing signs identical, or similar to trade marks to be classified as ‘using’ those signs, it is also necessary... for the economic operator providing the storage itself to pursue the aim... which is offering the goods or putting them on the market". In essence this means that requires Amazon, or other similar operators, to actively offering goods they hold for sale, and not simply allowing for third parties to do so using their platform (and their logistics facilities).

This led the Court to conclude that Amazon was not using the trademarks when third parties sold goods through their platform. 

The Court then summarized the matter as "...a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as not stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims"

The decision makes perfect sense, since Amazon, or any other similar operator, is not actively selling any counterfeit goods on their platform, but merely enable third parties to be doing so. To conclude that the marketplaces themselves would be liable would hinder their effective operation, and potentially cause them to be liable for 'actions' that they have not taken; namely selling goods unknowingly that are counterfeit. The decision does, however, put them on notice, and ensures that marketplaces that do indeed actively sell counterfeit goods can still be pursued for trademark infringement in that event.