19 December, 2017

Hollowed Out - Can You Register a Geographical Name as a Trademark?

The origin of the materials of goods can be very influential as a part of a consumer's purchase decision, often signalling particularly high quality or desired traits not seen in similar materials from elsewhere. As such the location's name carries weight, and many different products can be made from the materials from the same source, albeit potentially still varying in quality. Being able to use the location's name is therefore quite important to all interested parties, so this begs the question; can you register the name as a trademark? The matter was recently discussed in the IPEC this past summer.

The case of Mermeren Kombinat AD v Fox Marble Holdings Plc concerned marble quarried from the Sivec region in Macedonia, where these types of activities have been going on since Ancient Rome. Mermeren is a marble extraction company operating since the 1950s in Prilep, a region that includes Sivec. They registered the name SIVEC as a trademark in 2014 (EUTM 12057915), ultimately pursuing Fox Marble for trademark infringement for using the name SIVEC. Fox Marble also counterclaimed for invalidity of the trademark.

The matter focussed on whether the trademark was invalid under Article 7(1)(c) of the CTM Regulation, which sets out that marks consisting exclusively of "…or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service" cannot be registered. Even with this focus the above Article is still subject to Article 7(3), where a mark can avoid Article 7(1)(c) if it has inherent distinctive character.

The Court then moved on to assessing whether the mark in question has inherent distinctive character. After an exhaustive review of case law relating to inherent distinctive character, Judge Hacon, presiding over the matter, set out the summarised eleven principles relevant when considering distinctiveness. While not discussed at length in the decision, they are still important to keep in mind when thinking about distinctiveness.

The judge started by looking at who the average consumer is. He did, however, first observe that the CJEU has not considered the meaning of a 'relevant class of persons' or what a 'significant proportion', which are an important part of this principle. Judge Hacon concluded that this would be "…a proportion markedly above de minimis but not necessarily over half" – a line that is difficult to draw when a majority isn't needed, so will heavily rely on the facts in each case.

Not all art materials are created equal
The judge first very quickly dealt with the question of the average consumer in the matter. Agreed by both parties, the average consumer is "…a specialist dealer in marble or a person who advises their customers on the choice of materials to be used in a building, such as an architect or designer of interiors", but this person would have to be from the EU and therefore not Macedonia.

The second matter was whether the mark had inherent distinctive character. Judge Hacon swiftly determined that the mark would not have inherent distinctive character denoting geographical origin due to the obscurity of the location it referred to. The average consumer wouldn't have heard of Sivec, unless you lived near the area, which eliminates the possibility of the name having inherent distinctiveness. Use of the name would have to be disregarded, as that relates to acquired distinctive character.

The Court then moved onto the matter of acquired distinctive character. Fox Marble argued three assumptions to support a non-finding of acquired distinctiveness: the trademark is inherently distinctive and therefore can be argued to not be distinctive through use; the average consumer would only see it as denoting a geographical origin, even without knowing the place exists; and that not enough people would perceive the goods to come from Mermeren.

The judge quickly dealt with the first two assumptions, with the former having been decided when no inherent distinctive character was found. The latter was accepted by the judge, as it is possible for the average consumer to perceive the origin of the goods through this assumption; however, their actual perception would differ from this when considering the mark's use in isolation from this assumption.

Finally, the judge considered the 'messy reality' of the relevant persons' belief as to the meaning of the mark. As discussed above, the judge highlighted that, although the mark has to be perceived by a significant portion of the relevant people, this can be a portion that is markedly above de minimis. Therefore, even if all people are not persuaded, the law can still consider the amount significant.

Judge Hacon then moved onto the extensive evidence on acquired distinctive character. He concluded that "…by August 2013 a significant proportion of relevant persons, certainly markedly above de minimis and probably higher than that, had come to believe that 'Sivec' was a trade mark owned by Mermeren, signifying that marble marked with that name came from a single undertaking" and had therefore acquired distinctiveness. The more influential evidence included invoices, presence at exhibitions and advertising campaigns launched by Mermeren.

The trademark had ultimately remained validly registered and had no grounds for revocation.

The case is not ground-breaking by any means (although clarified important parts of the law in acquired distinctiveness), but shows that, through a concerted effort to educate the population as to the origin of a trademark, even if a place on Earth, can lead to a successful registration and maintenance of a mark. Evidence was clearly key in the case, rather than complex legal arguments.

Source: IPKat

12 December, 2017

All Luxury - CJEU Decides on the Legality of Selective Distribution Agreements for Luxury Goods

Prestige and exclusivity are the cornerstones of luxury goods, and the maintenance of that perception is paramount to both retaining customers and to drawing in new purchasers. As discussed in a previous article, the sale of these goods online can be difficult, especially when considering the retention of the above image. After the Advocate General's opinion in September the question of restricting the sale of luxury goods online has finally landed on the CJEU's desk, who handed down their judgment only last week.

As a brief primer, the case of Coty Germany GmbH v Parfümerie Akzente GmbH concerned the sale of luxury cosmetics made by Coty. The company selected distributors for its network, which included a selective distribution agreement that included a provision on the preservation of the brand's luxury image. Akzente was one of these distributors, primarily selling through their store, website and Amazon as a third-party seller. The agreement was amended by Coty sometime after, which stipulated that all internet sales have to be done through an 'electronic shop window' that preserves the luxury image of the goods. Akzente refused to sign this supplement, and Coty took matters to court in order to prohibit the sale of their goods on Amazon.

The matter ended up in the CJEU who had to answer four questions in the proceedings dealing with anti-competitive practices, and whether the selective distribution arrangements are exempt from the anti-competition provisions.

The first question posed to the Court asked, in essence, "…whether Article 101(1) TFEU must be interpreted as meaning that a selective distribution system for luxury goods designed, primarily, to preserve the luxury image of those goods can comply with that provision". The Article prevents any agreements on undertakings that may affect trade between Member States and have as their object or effect the prevention, restriction or distortion of competition in the EU.

In considering this question, the Court reiterated that selective distribution networks are allowed under Article 101 if the resellers are chosen on the basis of objective criteria of a qualitative nature; the criteria are not applied in a discriminatory fashion; the characteristics of the products necessitate such a network to preserve those characteristics; and the criteria don't go beyond what is necessary. With regards to luxury goods, the Court saw that selective distribution networks may be necessary for luxury goods, where the quality and allure and prestige of those goods is essential and should be protectable. The same applies for mandatory displays in sales to preserve that image.

In answering the first question the Court concluded that "…a selective distribution system for luxury goods designed, primarily, to preserve the luxury image of those goods complies with that provision"; however, they still have to conform to the criteria set out above.

The second question asked "…whether Article 101(1)… must be interpreted as precluding a contractual clause… which prohibits authorised distributors in a selective distribution system for luxury goods designed, primarily, to preserve the luxury image of those goods from using, in a discernible manner, third-party platforms for the online sale of the contract goods". In other words, it is asking whether a selective distribution agreement can prohibit the sale of luxury goods on websites like Amazon.

The same criteria as set out above apply to the lawfulness of the clause in the second question. Should it satisfy them it will not fall foul of Article 101.

The CJEU looked at the clause and its provisions, and concluded that it didn't contravene Article 101. The objective of the requirements on online sales is to preserve the image that it is exclusively associated with the distributor. The aim was therefore legitimate in the light of the protection of the luxury image the goods have. What the prohibition also achieves is to ensure the goods are sold in an environment that corresponds to the qualitative conditions that were agreed between Coty and Akzente. This allows for the supplier to make sure, and enforce, the sale of the goods online and to prevent any harm against the luxury image of the goods.

Luxury is worth the price (Source: HistoryTwins)
The CJEU looked at the clause and its provisions, and concluded that it didn't contravene Article 101. The objective of the requirements on online sales is to preserve the image that it is exclusively associated with the distributor. The aim was therefore legitimate in the light of the protection of the luxury image the goods have. What the prohibition also achieves is to ensure the goods are sold in an environment that corresponds to the qualitative conditions that were agreed between Coty and Akzente. This allows for the supplier to make sure, and enforce, the sale of the goods online and to prevent any harm against the luxury image of the goods.

The Court then moved onto whether the prohibition goes beyond what is necessary for the objective pursued. Due to the prohibition only applying to third-party websites, and not the Internet as a whole, the distributors are still free to sell the goods online, albeit only through a store window. Studies have also shown that the majority of online sales are made through distributors' own websites, leading to very little detriment through the prohibition (although third-party sites are growing in importance). The measure therefore does not go beyond the objective pursued.

The CJEU looked at the clause and its provisions, and concluded that it didn't contravene Article 101. The objective of the requirements on online sales is to preserve the image that it is exclusively associated with the distributor. The aim was therefore legitimate in the light of the protection of the luxury image the goods have. What the prohibition also achieves is to ensure the goods are sold in an environment that corresponds to the qualitative conditions that were agreed between Coty and Akzente. This allows for the supplier to make sure, and enforce, the sale of the goods online and to prevent any harm against the luxury image of the goods.

The answer to the question was set out as "…Article 101(1)… must be interpreted as not precluding a contractual clause… which prohibits authorised distributors in a selective distribution system for luxury goods designed, primarily, to preserve the luxury image of those goods from using, in a discernible manner, third-party platforms for the internet sale of the contract goods, on condition that that clause has the objective of preserving the luxury image of those goods, that it is laid down uniformly and not applied in a discriminatory fashion, and that it is proportionate in the light of the objective pursued, these being matters to be determined by the referring court".

The Court considered the third and fourth questions together, which asked, in essence "…whether Article 4 of Regulation No 330/2010 must be interpreted as meaning that… the prohibition imposed on the members of a selective distribution system for luxury goods, which operate as distributors at the retail level of trade, of making use, in a discernible manner, of third-party undertakings for internet sales constitutes a restriction of their customers, within the meaning of Article 4(b)... or a restriction of passive sales to end users, within the meaning of Article 4(c)".

If the distribution agreement would restrict who the distributor can sell the goods to or authorised passive sales to end users, it will not be caught by the Article 2 exemption and treated as unlawful.

The Court quickly observed that the agreement does not prohibit the use of the internet as a means of marketing the goods, nor circumscribe who can buy the goods online. Additionally, the agreement allows distributors to advertise the goods online, and considering all of the above, there is no restriction on distributors as to who the goods can be sold to or passive sales.

In short, the third and fourth questions were answered as "…the prohibition imposed on the members of a selective distribution system for luxury goods, which operate as distributors at the retail level of trade, of making use, in a discernible manner, of third-party undertakings for internet sales does not constitute a restriction of customers… or a restriction of passive sales to end users".

The case is quite an important one, which considers issues that will often pertain to the sale of luxury goods, particularly on the Internet. Clearly the image of the goods is protectable through contractual arrangements, including through some restrictions on those sales, and both distributors and brand owners should heed the decision and ensure their contracts are up to snuff.

Source: IPKat

05 December, 2017

Cast Aside - Recording of TV Through the Cloud Infringes Copyright, Says CJEU

Many foreign nationals who have immigrated abroad yearn for a piece of home, either through food, music or TV and movies. Often this is done using online or on-demand services, and this interest can create opportunists who wish to capitalise on the home-sickness of ex-pats. Quite a few websites offer both legitimate and illegitimate means of doing so. In that vein, would the recording of TV shows for users, without copying it into your own servers, infringe copyright?

The case of VCAST Limited v RTI SpA concerns this question, where VCAST offered a service to users enabling them to record Italian television on-demand to an external storage provider of their choice. The user would select which show on which channel they would want to record, which VCAST then recorded for them onto their storage provider's servers. VCAST was subsequently sued by RTI, an Italian TV channel, for copyright infringement, ending up all the way at the CJEU.

The CJEU was posed two questions in the proceedings, which it subsequently merged into one, as they asked two sides of the same coin. The question was whether "…[the InfoSoc Directive], in particular Article 5(2)(b) thereof, precludes national legislation which permits a commercial undertaking to provide private individuals with a cloud service for the remote recording of private copies of works protected by copyright, by means of a computer system, by actively involving itself in the recording, without the rightholder’s consent". In other words, is it possible for national legislation to prevent the private copying of copyright protected works using a cloud recording service.

As set out by the Court: "…Article 5(2)(b) of Directive 2001/29, Member States may provide for exceptions or limitations to the reproduction right in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial". So long this use doesn't conflict with the works' normal exploitation or prejudice the legitimate interests in the works, exceptions and/or limitations are allowed.

According to case law, the CJEU considered that copying by natural persons acting in a private capacity would be likely to cause harm to the rightsholders concerned if prior authorisation from them isn't sought. This position was developed further in ACI Adam where the Court allowed for rightsholders objecting to infringements that might accompany the making of private copies, even though the exception prohibits them from objecting to private copying. Finally, third-parties can be involved in the making of private copies, provided they are a precondition to it.

The distinction between a mere third-party copying content and VCAST is VCAST's provision of the programs themselves, which the user then selects from. They therefore both copy and make available the copyright protected works to the consumer.

The Cloud can makes emotions run high
Even though rightsholders are prohibited from preventing the private copying of copyright works, as discussed above, they are not prohibited from preventing access to the works that are desired to be privately copied. This allowed the Court to move onto the matter of communication to the public, which third-parties cannot do. The distinction between simply copying, where the entity does not make the content available in a wider scale, and making works available and then copying them on request, is important and requires the court to address this point.

When assessing 'communication to the public' Courts have to consider two cumulative criteria; an 'act of communication' that is done to a 'public'. The former is a transmission of protected works, irrespective of technical means, and the latter an undetermined amount, although impliedly large, of people as possible recipients.

Through their service VCAST records broadcasts of TV shows and makes them available for its users. The amount of users is clearly enough to constitute a 'public', while the original transmission through VCAST's service is transmitted to that public. The service therefore infringes the right to communication to the public, and would require the authorisation of RTI (and other relevant parties not involved in the litigation).

The CJEU concluded that VCAST's service does not fall under the scope of Article 5(2)(b). In different words, answering the question posed: "…Directive 2001/29, in particular Article 5(2)(b) thereof, precludes national legislation which permits a commercial undertaking to provide private individuals with a cloud service for the remote recording of private copies of works protected by copyright, by means of a computer system, by actively involving itself in the recording, without the rightholder’s consent".

The case is quite surprising, since the matter didn't involve communication to the public at the face of it, only private copying. Even so, the connection made between the two makes sense, and is a relevant consideration in the wider issue. Third-parties making copies for users is still very much allowed; however, the stumbling block will be the making available of that content to users as done by VCAST.

21 November, 2017

Indexing Free-for-All - US District Court Issues Injunction against Canadian Supreme Court De-indexing Order

After the decision in the Canadian Supreme court in the Equustek case, many, including this writer, raised concerns about the possible abuse of the precedent set by the case. The de-indexing of online content, while well-intentioned in the removal of infringing content, could still be used as a sword more than a shield against legitimate infringement, including against free speech. This writer for one awaited the first application of the case, particularly in a jurisdiction that leans more towards free speech, and seems like the wish has been granted by the District Court of the Northern District of California only a few weeks ago.

The case of Google LLC v Equustek Solutions Inc. concerns the same subject matter as the Canadian case. In short, Equustek sued Google seeking to force Google to block websites selling infringing goods all over the world, not just in Canada where Google had blocked the websites selling the goods. The Supreme Court of Canada ultimately issued the order, and forced Google to block access to the websites all over the world.

Google challenged this ruling in the United States, arguing that the order conflicts with the First Amendment right to free speech, and disregards the Communication Decency Act, which affords immunity to interactive service providers.

Justice Davila first looked at the CDA, which affords immunity from claims to "…providers of interactive computer services against liability arising from content created by third parties". This means that should another publisher, using these services, publish infringing content Google couldn't be sued for that infringement. Even so, to qualify for immunity three criteria need to be satisfied: (1) the company is a "provider or user of an interactive computer service"; (2) the information in question was "provided by another information content provider"; and (3) the Canadian order would hold it liable as the "publisher or speaker" of that information.

Looking at the first criterion, Justice Davila concluded that Google was a 'provider of interactive computer services'. This means that the company provides "…any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server", which encompasses Google's search facility, among other services.

As the content, i.e. the website and the information contained in it (including the infringing goods for sale), was provided by Datalink and not Google, the second criteria was also easily fulfilled. The provision of Google's search facility relies on the company 'crawling' websites on the Internet, which it then indexes and makes available through search results. This allows for users to discover the content, which Google does not post, clearly being provided by 'another information content provider'.

The First Amendment - the best kind of pop-up
Finally, the third criterion looks at whether Google would be held liable for the content provided by another under the order made by the Canadian Supreme Court as the 'publisher or speaker' of that content. According to the order Google has to "…de-index the Datalink websites [from its global search results]… [because it is] the determinative player in allowing the harm to occur".

Per the decision in Barnes v Yahoo!, "…removing content is something publishers do, and to impose liability on the basis of such conduct necessarily involves treating the liable party as a publisher of the content it failed to remove". This liability as a third party for the non-removal of content, should Google not do so when ordered, clearly treats Google as the publisher of that content rather than a mere intermediary with no liability.

Justice Davila therefore considered that Google was immune from the claim under the CDA.

The Court then turned to the question of free speech and irreparable harm. Justice Davila swiftly determined that the Canadian order restricts Google's activity protected by the CDA, and deprives of it of benefits given by US federal law. Similarly an injunction wouldn't serve the public interest, as free speech would be restricted if websites "…were to face tort liability for hosting user-generated content". This has been particularly legislated against through the CDA. As the Internet and other interactive computer services "…offer a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity", the legislature deemed it required protecting for that purpose to flourish.

Justice Davila issued the injunction against the Canadian order as it "…undermines the policy goals of [the CDA] and threatens free speech on the global internet".

The decision is a very interesting one, and strongly advocates for the protection of the Internet from blanket orders requiring the removal of content globally. This writer is very much a proponent of this approach, as, amongst its faults, the Internet is a bastion of freedom and dissemination of information (including this blog as a very example of that). Infringements should be dealt with appropriately, but blanket de-indexing orders might not be the best way; however, with this in mind, third-party service providers do have to take some responsibility on the removal of content when needed.

14 November, 2017

Indistinct Taxi Service - London Taxi Design not Distinctive, says UK Court of Appeal

Shape trademarks have always been a difficult issue for the courts. The balancing act of trying to protect the general shape of something while being distinctive to get protection is a difficult line to tread, as the recent Kit Kat cases have shown among other decisions. One such saga that is currently being waged is over the design of the London black taxi, which many, this writer included, have used on a regular basis in the city. After a defeat at first instance, The London Taxi Company pursued the matter further into the Court of Appeal, who rendered their decision very recently.

The case of The London Taxi Corporation Ltd (t/a the London Taxi Company) v Frazer-Nash Research Ltd dealt with, as mentioned above, EU and UK trademarks over the design of the London black taxi (EUTM 951871 and UKTM 2440659). Frazer-Nash Research, a vehicle research and design company, designed and were ready to launch a new London taxi called the Metrocab (a hybrid electric car). In anticipation of infringement, LTC sued FNR for trademark infringement and passing off.

The Court had to look at 8 different points of appeal focusing on the validity of the trademarks and infringement of the trademarks if deemed valid.

The first point dealt with the definition of the average consumer in the case, particularly whether it would be the taxi driver who purchases the taxi or the same together with members of the public who hire taxis. Having extensively considered case law on the definition of 'average consumer', Lord Justice Floyd saw that the 'average consumer' is "…any class of consumer to whom the guarantee of origin is directed and who would be likely to rely on it". It followed from this that the 'average consumer' could include both the purchaser and the hirer of the services, but the Court didn't make a full decision on this point.

The second point dealt with the trademarks' inherent or acquired distinctive character.

In terms of inherent distinctive character, Lord Justice Floyd observed that the test for assessing distinctiveness for 3D trademarks, as set in Freixenet, is whether "…the appearance of the product itself [is] no different from those applicable to other categories of trade mark". Additionally, the trademark has to depart significantly from the norm of the customs of the sector would have distinctive character. Lord Justice Floyd then set out his test for determining whether a mark departs significantly from the norms and customs of the sector (1) determine what the sector is; (2) identify common norms and customs, if any, of that sector; and (3) whether the mark departs significantly from those norms and customs. Following this test, Lord Justice Floyd determined that the trademarks didn't have inherent distinctive character, since none of the features in the design registered were a significant departure from features in other taxis in the sector.

Therefore, the only way for the trademarks to have distinctive character is for them to have acquired it through use. As set in the recent Court of Appeal judgment in Nestle (see more in the link above), the test for acquired distinctiveness is that "…the mark must have come to identify the relevant goods as originating from a particular undertaking and so to distinguish those goods from those of other undertakings". In other words, the London Taxi Company's taxis would have to be distinguishable from other taxis through their design.

Blake loved the design of his taxi a little too much
Following the decision of Justice Arnold at first instance, Lord Justice Floyd decided that the trademarks had not acquired distinctive character among taxi drivers, and that consumers were not concerned with the origin of the taxis they hired and therefore the trademarks wouldn't have acquired distinctive character in the mind of the average consumer. Lord Justice Floyd ultimately considered the marks to be invalid, but still went through the other points of appeal for the sake of clarity.

The third point is whether the shape of the mark gives substantial value to the goods, exclusive of any goodwill in the shape. Lord Justice Floyd found the guidance on this point unclear, and would have referred the matter to the CJEU if this point would still have been relevant.

The fourth point was revocation for a lack of use of the EUTM. If the mark hasn't been used in five years within the EU, the trademark is revoked. The only activity that LTC had undertaken in the EU in relation to the marks was to sell them second-hand, as production had ceased some time ago (the EUTM model was an older model of the taxi). Lord Justice Floyd, in his hypothetical answer, saw that the mark had been used in the EU, although only through the later models that were sold.

The fifth and sixth points dealt with infringement of the trademarks under Article 9(1)(b) and 5(1)(b), and Articles 9(1)(c) and 5(2). As the Metrocab and the trademark designs differed significantly, there would likely be no infringement on the marks under the former two Articles, according to Lord Justice Floyd. With regards to the latter two, there could be infringement, had distinctive character been established in the marks, as the Metrocab would've caused detriment to the trademarks' distinctiveness.

The seventh point concerned a defence of using an EUTM as an indication of, among others, quality, quantity and geographical origin. As set in Maier v ASOS, the legitimacy of the use is considered looking at "…whether there exists a likelihood of confusion; whether the trade mark has a reputation; whether the use of the sign complained of takes advantage of or is detrimental to the distinctive character or repute of the trade mark; and whether the possibility of conflict was something which the defendant was thought to have been aware".

Having considered the matter briefly, Lord Justice Floyd accepted LTC's assertion that there would be no defence of legitimate use, as the rights of a trademark holder should not be trumped by the conveying of a message that the vehicle is a licenced London taxi. This would be possible to be displayed otherwise, without infringement (although none happened in the matter).

Finally, the Court looked at the point of passing off. Lord Justice Floyd swiftly dismissed the claim of passing off, as, similarly to acquired distinctiveness above, LTC would struggle to prove goodwill in the design of the trademark. Even so, the design of the Metrocab is very different to LTC's design, and therefore wouldn't infringe even if goodwill were present in the case. The Court ultimately dismissed the appeal.

The case is yet another painful reminder of the difficulty in registering and particularly maintaining 3D trademarks. Distinctiveness is the hurdle most fall on, and the LTC taxi was no different. LTC have indicated that they might appeal to the Supreme Court, so the fight over taxis might not be over just yet.

07 November, 2017

Database Error - UK High Court Takes on Copyright Infringement of Cloud Databases

Databases are a curious creature within the world of IP, existing on the fringes of protectability, at least when considering from the perspective of originality. Specific rights attach to databases outside of mere copyright protection, and the remit of those rights has been debated by the courts for some time. Since the advent of cloud computing, database rights in purely 'cloud-based' technologies haven't been debated much in the courts, and the question therefore arises: do you have database rights in a cloud database? The High Court took on this issue in a recent decision handed down in late August 2017.

The case of Technomed Ltd v Bluecrest Health Screening Ltd concerned electrocardiograms and the analysis of the data created through the ECG measurements. An ECG measures the movement of electricity through a patient's heart, giving details of its health to varying degrees based on the ECG technology used. Technomed supplied ECG equipment, systems and services, including an online ECG analysis and reporting system called "ECG Cloud". The platform allows for ECG information to be analysed externally (the information itself is reviewed remotely by a qualified cardiologist) when taking the readings, offering a simplified analysis using three colors to indicate the heart's health status. The analysis is done using resources in Technomed's database, including characteristics of ECG readings and their associated issues. Technomed licenced its technology to Bluecrest, and after a relationship breakdown proceedings were initiated to protect the rights in the database and its reporting format, which were passed onto a competitor (the second Defendant in the case) by Bluecrest.

The crux of the case revolved around sui generis rights in the database (protection of the money, time and effort put into the database, rather than), copyright in the database, copyright in the reporting software that produces the results from ECG Cloud in XML format, and copyright in various other peripheral elements of the system, e.g. images and explanatory materials.

After assessing the decision of Fixtures Marketing Limited v OPAP, Deputy Judge Stone concluded that Technomed's database was a database as defined under the Database Directive, meaning "…a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means". Even so, Technomed still had to establish a sui generis right in that database.

Sui generis rights are afforded to a database under the Directive, in essence, when the maker shows substantial investment in obtaining, verifying and presenting the data in the database, derived from pre-existing information. The Court quickly determined that there had been substantial investment in the above by Technomed (taking hundreds of hours to do so), affording them a sui generis right in the database.

Infringement of sui generis rights in databases falls under the Directive as well, happening when the data is 'extracted' and 're-utilized' by another party. As Bluecrest had extracted the whole database, which was then provided to the competitor, it infringed Technomed's right in the database. Additionally, should a party repeatedly and systematically reproduce the database, it will also infringe on the sui generis rights afforded. Bluecrest repeatedly produced the XML reports from the database, prejudicing Technomed's legitimate interests in the database until the reports were updated to no longer infringe in 2016.

Even databases have feelings
The Court then moved onto the matter of copyright in the database under section 3A of the Copyright, Designs and Patents Act 1988. As both parties agreed that the assessment for copyright protection is the same as for the sui generis right (as set in Football Dataco v Brittens), Judge Stone quickly concluded that the database had copyright in it. Similarly, as the sui generis right was infringed, the copyright in the database was also infringed. While he didn't need to address the alternate pleading in infringement of a literary work in the database, Judge Stone nonetheless concluded that the database was a literary work (a PDF copy of it) and that it was infringed by Bluecrest by copying the same.

Judge Stone then moved onto the other works, including the XML report format. For them to qualify as protected works, the works will have to be the "…author's own intellectual creation". Even though no rights were claimed in the XML format itself, the reports did, as agreed by Judge Stone, contain the personal stamp of its authors, and was protected by copyright. As Bluecrest had the report format copied by a competitor, it clearly was infringed as well.

The Court also decided that further documents, such as explanatory materials and patient definitions were also protected by copyright, but only the explanatory materials were infringed, as the patient definitions were only used as a starting point to create new definitions by the defendants.

Bluecrest did combat the infringement claims through an argument against causation, i.e. that they didn't cause any damage to Technomed through their alleged infringement. Judge Stone dismissed this out of hand, as through the clear infringement detailed above there would have been loss caused to Technomed.

Judge Stone concluded that all of the rights in the works had been infringed, but there would be no continuing threat of infringement.

While the case is by no means a landmark one, it is still a continuing reminder in database rights and their infringement, including copyright and sui generis rights. This writer always seems to forget about the strength of these rights, particularly as databases don't come across ones desk too often, so the case was an interesting and refreshing read.

31 October, 2017

Needs Formatting - TV Show Formats Potentially Protected by Copyright

As companies like Netflix and Hulu are entering the fray of traditional TV production, creating their original content and licensing others, the value of more typical TV competition for eyeballs on particular timeslots has become negligible. Grabbing the attention of viewers are a fixed time, competing with other networks for the same slot, used to be a competition of outsmart and 'outcreate', giving TV formats incredible value if done right. Even if the specific production of 'prime time' TV has diminished due to the shift towards on-demand, TV formats still have value under IP laws. The matter rarely sees the light of day in a court room, but a recent UK High Court decision discussed whether a TV format can be protected under copyright.

The case of Banner Universal Motion Pictures Ltd v Endemol Shine Group Ltd & Anor concerned a TV gameshow called "Minute Winner", which was created by Derek Banner, the owner of Banner Universal Motion Pictures. Allegedly Mr Banner had disclosed a document detailing the format of the show to Friday TV (the second defendant in the matter), a Swedish TV production company at a meeting in 2005. Mr Banner also claimed that the defendants had misused confidential information to create and broadcast a show called "A Minute to Win It" in 2011, infringing on BUMP's rights in the format, breaching confidence in the same and passing off. The defendants contested the rights in the format document, that a breach of confidence claim was estopped due to a decision earlier by the Swedish courts and the passing off claim.

The Court first addressed the issue of whether the format document was a copyright protected work, specifically as a dramatic work under section 1 of the Copyright, Designs and Patents Act 1988.

As discussed, for example in SAS Institute Inc. v World Programming Ltd, a work has to be 'original', i.e. "…the work must be an expression of the author's own intellectual creation". This is assessed by looking at the whole of the work, not just its constituent parts, including both novel and non-novel parts. A dramatic work itself is defined as "…a work of action, with or without words or music, which is capable of being performed before an audience".

There has been some degree of case law on TV formats; however, only in the far-away land of New Zealand. The leading authority is Green v Broadcasting Corporation of New Zealand, where the New Zealand Court of Appeal considered that merely the idea of a TV format is not sufficient to be a dramatic work protected by copyright. This was in that "…because [the format] could not be acted or performed, being no more than a general scheme for a proposed entertainment", and "…in what way the underlying idea has been distilled out and translated into an expression thereof in a material form sufficiently identifiable to be copied". Due to this lack of tangible expression, bar an idea, leaves the subject matter unclear and therefore not protectable.

Brad was truly captivated by the TV format
Justice Snowden disagreed with the New Zealand authorities, and set out that TV show formats could arguably be protected by copyright under certain criteria. These would be, as a minimum: "…(i) there are a number of clearly identified features which, taken together, distinguish the show in question from others of a similar type; and (ii) that those distinguishing features are connected with each other in a coherent framework which can be repeatedly applied so as to enable the show to be reproduced in recognisable form". Under the criteria, Justice Snowden concluded that BUMP had a low likelihood of success to meet them for an arguable case of infringement, due to a lack of "…a coherent framework or structure which could be relied upon to reproduce a distinctive game show in recognisable form". All of the features of the show were commonplace and indistinguishable from other similar shows (including its name). Even if there were copyright in the work, the show that was produced differed from the BUMP work in many ways, and there would be no infringement.

The second matter was of breach of confidence. Having considered the principles of estoppel and res judicata, Justice Snowden determined that the action would fail due to Mr Banner being estopped from pursuing the claim as it is res judicata or an abuse of process. The legislation in the UK and Sweden is sufficiently similar so as to not require further determination.

Finally, the Court considered the matter of passing off. As discussed in Starbucks (HK), to establish a claim under passing off the claimant has to "…establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question". Even without a physical presence in the country it is possible to have goodwill. Justice Snowden swiftly dismissed this argument, as Mr Banner never had any customers in the UK who purchased the rights to the TV show. He did have a website displaying his formats, but the TV show in question was only one of several on that site, and it was nonetheless one of many sent to ITV by email after the meeting in 2005. No goodwill was therefore established in the UK, and the passing off claim failed.

The case has opened the door for claims on TV show formats, but clearly sets a high threshold to establish actual rights in that format. As no UK authorities have dealt with this subject matter, the case is a welcome one, even though the matter is a very niche one. A good TV show format is still very valuable, and protection should be offered, but not willy-nilly.

Source: IPKat

18 October, 2017

Citation Needed - CJEU Decides on Use of Registered Designs as Citations for the Sale of Goods Online

Marketing your goods online can be very tricky, especially if you are in the business of making proprietary goods or accessories relating to well-known brands or goods. Using the name, image or design of the goods your items relate to is almost necessary to communicate the relationship of the goods to the consumer, but without proper authorisation this can be a thorny issue. The law does allow for the use of registered designs for some purposes, but could the use of a design for the sale of goods be allowed under EU law? The CJEU took on this question in late September, giving some clarity to those wishing to do so.

The case of Nintendo Co. Ltd v BigBen Interactive GmbH dealt with the manufacture sale of remote controls and other accessories for the Nintendo Wii gaming console by BigBen, selling them online to consumers in France, Belgium and Luxembourg, and to its German subsidiary. The German entity sold the goods, manufactured by BigBen in France, to consumers in Austria and Germany. The German entity in itself does not hold any stock, but orders them when needed from the French entity. Both companies used images of the Wii and its official accessories (protected by registered designs, e.g. here and here) in the sale of these goods. Nintendo took both entities to court in Germany for design infringement.

The CJEU faced three questions in the matter, specifically dealing with whether the court of a Member State has jurisdiction over the matter where the infringement happened elsewhere; is this use allowed as citation under EU law; and how the place of infringement would be determined.

The first question, as summarized by the court, asked in essence whether the Community Designs Regulation (along with Article 6(1) of the Jurisdiction Regulation) gives jurisdiction to a court to impose an injunction against a party who is supplied by another party in another Member State for infringement of a registered design.

The CJEU first dealt with the issue of jurisdiction. Article 82 of the Community Designs Regulation sets out that "…claims fall primarily within the international jurisdiction of the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment". This can also include the Member State where the act of infringement has been committed or is threatened. For Article 6 of the Jurisdiction Regulation to apply there has to be a connection between various defendants in different jurisdictions "…that it is expedient to determine those actions together in order to avoid the risk of irreconcilable judgments resulting from separate proceedings". The court also highlighted that, under case law, two companies in the same group acting in an identical or similar manner would constitute the same situation of fact.

According to the CJEU, "…the territorial jurisdiction of a Community design court seised of an action for infringement within the meaning of Article 81(a)… extends throughout the European Union also in respect of the defendant who is not domiciled in the Member State of the forum". This means that there would be no jurisdictional issue with regards to pursuing a company in a different Member State through a national court within the EU.

The court then moved onto the second issue of use of the design as a citation. The question posed to the court, in short, asked whether Article 20 of the Community Designs Regulation meant that the use of a registered design by a third party, without authorisation, to demonstrate goods being sold online would be use as a citation and therefore allowed.

Burt definitely needed a citation (Source: xkcd)
The CJEU first looked at the meaning of 'citation'. They emphasised the designs' use for an illustrative purpose, in that "…a third party that lawfully sells goods intended to be used with specific goods corresponding to Community designs and reproduces the latter in order to explain or demonstrate the joint use of the goods it sells and a product corresponding to a protected design carries out an act of reproduction for the purpose of making ‘citations'". The use, however, would be assessed using three cumulative conditions: "…the compatibility of the acts of reproduction with fair trade practice, the absence of undue prejudice to the normal exploitation of the design on account of such acts and mention of the source".

The first condition look at whether the reproduction of the design falls within 'honest practices in industrial or commercial matters', i.e. should the design be reproduced in such a way as to create an impression of a commercial connection between the two entities, it would not be made for the purpose of citation. The second condition concerns the reproduction of the design that negatively affects the economic interest or their normal exploitation by the rightsholder. The third condition is simply attribution, so that a reasonable and observant consumer will know the design's commercial origin.

The court concluded that in the matter at hand the reproduction would be for the purpose of citation if it fulfils all of the above conditions.

Finally, the court addressed the last question of where the infringement would be committed between the two group companies, as the group companies reside and have committed infringements in several EU Member States. The CJEU, having considered the legislative framework, considered that "…the ‘country in which the act of infringement was committed’ within the meaning of Article 8(2) of that regulation must be interpreted as meaning that it refers to the country where the event giving rise to the damage occurred, namely the country on whose territory the act of infringement was committed". This hones down the legislation as applying to where the act was committed, rather than the damage occurring (i.e. infringement in Germany damaging a country in France).

As acknowledged by the court, IP does leave this interpretation as difficult, since the act could happen in a variety of locations in one time. In the light of this, the CJEU set out that "… where the same defendant is accused of various acts of infringement falling under the concept of ‘use’ within the meaning of Article 19(1) of [the Community Designs Regulation] in various Member States, the correct approach for identifying the event giving rise to the damage is not to refer to each alleged act of infringement, but to make an overall assessment of that defendant’s conduct in order to determine the place where the initial act of infringement at the origin of that conduct was committed or threatened". In the situation in the current matter, the place where the goods were put on sale online would be where the infringement took place.

 The CJEU's decision is a very interesting one, and while they made no assessment on the particular infringements in the case, it still gives national courts the tools to do so themselves in a more flexible manner rather than just designating each infringement in its respective country. This will make the assessment of infringement, and similarly of citation, much clearer for the future.

10 October, 2017

Shared by a Little Bird - Does Retweeting Protected Works Infringe IP?

Social media has made the near-thoughtless sharing of content a part of everyday life, whether it is sharing an article you liked or a picture you found somewhere. Even though the sharing of the content seems innocuous and more often than not will drive views towards the original creator, the possible legal issues of sharing without actually seeking permission or checking whether, for example, a Creative Commons licence exists. One such platform that might not come to people's mind at first is Twitter, where users can 'retweet' content that someone else has posted on their Twitter account (more on Twitter in general here and here) with very little effort. In the light of this, could the retweeting of content infringe on someone's rights?

This question will soon potentially get an answer, after a claim was commenced in the District Court of the Middle District of Pennsylvania, as reported on JDSupra. In the complaint Keith Bell, a well-known sports psychologist and author, sued King's College (a Pennsylvanian private educational institution) and Jeffrey Knarr (the head coach of American football at King's College) for both copyright and trademark infringement. Mr Knarr had retweeted two images of pages from Mr Bell's book "Winning Isn’t Normal", which were originally shared by a separate Twitter account operated by Northeastern State University's baseball team. While the baseball team removed their tweet after being approached by Mr Bell, Mr Knarr didn't do so, and his retweet had garnered some degree of interest. Mr Bell had registered copyright and trademark rights in his book well before the claim.

Sharing is caring?
As a starting point, Twitters TOS set out that "[b]y submitting, posting or displaying Content on or through the Services, you grant us a worldwide, non-exclusive, royalty-free license (with the right to sublicense) to use, copy, reproduce, process, adapt, modify, publish, transmit, display and distribute such Content in any and all media or distribution methods (now known or later developed). This license authorizes us to make your Content available to the rest of the world and to let others do the same". Clearly this is simply to protect Twitter's position in the event that an author of a work posts their content on the platform, but it doesn't offer a safe harbour for those who post material they have no rights in (or equally, further sharing that material through retweets). Clearly there would be no protection offered by the TOS to any users sharing materials without ensuring its legitimacy.

Case law doesn't shed light on this issue much, as most cases dealing with social media have yet to hit the scene in a big way. For example, a similar claim to the above was filed in 2015, but the case settled before being decided.

Even so, the case of Agence France Presse v Morel offers some guidance. In the case a photographer claimed copyright infringement after a picture they took was copied from their Twitter account and used in newspaper reporting. Among many other observations, the District Court of the Southern District Court of New York saw that the Twitter TOS didn't protect copying the works from the service, as the artists retained the rights in the works even when posted (but Twitter could put them on the website and display them on the artist's account). No licence is therefore given to the copier, even if the TOS state terms that might indicate as such. The retention of rights and the work's subsequent copying are therefore the important considerations around Twitter and copyright infringement.

Arguably, by retweeting e.g. a picture of a work you are creating a copy of that work, and should it be substantial enough it can be copyright infringement. There can be an argument under fair use in the US, which would be, in this writer's mind, a good one, but in the UK fair dealing would be more difficult to argue. A claim of trademark infringement would also be very viable, as the full name of the book (a registered trademark) is included in the Twitter post with the body of the text.

Overall it seems that retweeting material can be risky, particularly if the content is not attributed at all. This writer is a large proponent of sharing content on social media, and believes that the more sharing the better (with proper attribution, of course); however, users need to keep in mind that not everyone wants that to happen. It will be interesting to see where the law develops in terms of social media in the coming years, but it seems that the rights in an author's works would still very much remain and be enforceable.

03 October, 2017

Hungry for a Fight - Are There Rights in a Recipe How-to Video?

Food has become incredibly trendy in recent years (not that people didn't eat in years before), and many aspiring home cooks and chefs alike have moved onto modern platforms to share their know-how and passion with others. Sites like YouTube are filled with instructional and entertaining cooking videos, garnering millions of views from all over the world. Because of this, there is tremendous value in these videos and their viewers, and competition can get heated. This blog has discussed IP and food before (more here and here), and this writer has just come across a very interesting dispute over a how-to video involving cupcakes.

While the case has only recently begun, it still shows an interesting facet of copyright, particularly surrounding recipe videos.

The case of Elizabeth Labau v Food Network (complaint accessible here) concerns a recipe video made by Ms Labau for her website SugarHero. After a very successful online recipe that went viral, Ms Labau created a how-to video showing how to make her recipe step-by-step, following the success of her recipe article, which was subsequently published in December 2016. Sometime later in December 2016, the Food Network had published a video illustrating their take on the snow globe cupcake, and according to Ms Labau, copied numerous elements from her video, including "...choices of shots, camera angles, colors, and lighting [and] textual descriptors". Ms Labau has since complained to the District Court of the Central District of California, alleging copyright infringement.

Alex's take on cupcakes was a little "unique"
Although the decision from the District Court is still pending, the case will face its share of problems along the way. Ms Labau has not asserted copyright infringement in the recipe for the snow globe cupcakes, but only in the video showing how to make the cupcakes themselves. As discussed on this blog before, recipes are incredibly difficult to protect, and the only thing one can pursue in relation to them is the expression of that recipe, i.e. pictures or video. A simple list of ingredients won't be protectable.

It'll be interesting to see where the case goes, and whether the Food Network has actually copied elements of Ms Labau's video. Due to the proximity on posting the videos it is likely that one took inspiration from another, but as long as the expression of the recipe differs from Ms Labau's video, it'll be difficult for an argument for infringement to be established. This writer thinks Ms Labau could have a case, but this would require a near exact shot-for-shot recreation to have much strength in a court of law.

This writer does think that the case will most likely settle out of court, but a proper inspection of how-to videos and copyright would be very interesting, considering the generic nature of these types of videos. The style of many cooking how-to videos are only distinguished through choices of lighting and general filmography, and this writer thinks it would be interesting to see whether a sequence of steps could attract copyright protection, and how close would one have to get to infringe those rights, seeing as the style of these types of videos if widely established. Should the court side with Ms Labau, it could open the floodgates for many claims involving simple step-by-step videos of the same, or similar recipes to fight for the scrupulous viewership of today's Internet populace.

Source: Hollywood Reporter

26 September, 2017

Side by Side - AG Mengozzi Sets Out the Rules Around Parallel Importation and TM Infringement

Many brands don't only compete in a domestic market these days, but a larger global market where individual countries can be incredibly valuable in addition to the country of origin. In these instances parallel importation can be a thorny subject, particularly when the rights to particular goods (or the IP in them) has been licensed or even sold on from the original proprietor. Parallel importation also shares the field with exhaustion, potentially leaving the original seller without recourse as their rights have expired, but the matter hasn't been addressed in the EU courts for over 20 years. In the light of this silence, a case has recently been referred to the CJEU, and ahead of its decision an Advocate General stepped in to provide some well-needed insight into the law and its interpretation.

The case of Schweppes SA v Red Paralela SL related to the sale of soda water. The Schweppes brand of soda water has been sold since the late 18th century by Schweppes. The company also registered the name as a trademark in all European countries as national marks, e.g. the UK (TM 508257). In 1999 Schweppes sold the rights to the name to the Coca-Cola Company in 13 EU Member States (including the UK), keeping their rights in 18 other countries in the EU, among which was Spain. Red Paralela started to import bottles of Schweppes from the UK to Spain, after which Schweppes took Red Paralela to court for trademark infringement, with Red Paralela defending the matter under exhaustion.

The referring court asked four questions, which revolve around Article 7 old Trade Mark Directive and Article 15 of the new Trade Mark Directive relating to the exhaustion of rights in registered trademarks.

Advocate General Mengozzi set out to considered all of the questions together, summarising them as asking "…whether Article 36 TFEU and Article 7(1) of Directive 2008/95 preclude… the licensee of the proprietor of a national trade mark from invoking the exclusive rights enjoyed by the latter under the law of the Member State in which the trade mark is registered in order to oppose the importing into and/or marketing in that State of goods bearing an identical trade mark which come from another Member State, one in which that trade mark, which was once owned by the group to which both the proprietor of the mark in the importing State and its licensee belong, is owned by a third party which has acquired the rights to it by assignment".

In essence, the questions ask whether it is possible for the original owner of trademark rights, having since sold them in some jurisdictions, to prevent a seller from importing legally sources goods from another country to another where the rights don't exist for those goods.

The AG started off with setting out what the exhaustion of rights under EU law looked like.

Parallel imports provide "great" opportunities for young adults
In order for exhaustion to operate, two conditions have to be met: (1) the goods bearing the trade mark must have been put on the market in the EEA; and (2) the proprietor of the trade mark must, if it has not itself put the goods on the market, have consented to their being put on the market. The first condition is only met when the goods are sold, not merely imported on the market. The second condition requires consent, which can be, according to case law, derived from when the goods are put on the market by an operator that is economically linked to the trade mark proprietor, such as, inter alia, a licensee. This stems from the protection of the free movement of goods under EU law. Consent can also be implied in the absence of an economic link through circumstances and facts before, during or at the same time of placing the goods on the market, which demonstrate an unequivocal renouncement of rights.

The next point was the fragmentation of rights and the exhaustion of those rights through the distribution of exclusive rights for the goods.

National trademarks, according to EU case law, operate independently. If the importing entity and the owner of the national trademark in that country are the same or economically linked, the rights are exhausted. This does require that the goods were manufactured under the control of a single body, and that there was a possibility of control over the quality of the goods. In the event of assignment, there is no control over the quality of the goods by the original owner of the rights, and exhaustion therefore wouldn't apply.

In the light of the above, the AG then considered whether the importation of Schweppes from the UK to Spain would infringe on Schweppe's rights.

The AG looked at the economic link between the parties, specifically in the instance of parallel importation after the assignment of rights in different countries. Exhaustion, in the AG's view, can also exist not only where the two entities are strictly dependant on each other, but also where the trademark is under 'unitary control' in the circumstances of a matter. This would also be the case where the two parties that own national rights have 'joint control' over the exportation and importation process, or if the marketing and manufacturing of the goods happens under unitary control. Joint control would have to entail an agreement as to "…determining directly or indirectly the goods to which the trade mark may be affixed and of controlling their quality". In other words, exhaustion can apply where two companies "…coordinate their commercial policies with a view to exercising joint control of the use of their respective marks".

From an evidentiary standpoint, the burden of proof on the relationship between the companies and their business relating to the relevant marks falls on the parallel importer (Coca-Cola in this instance), showcasing the exhaustion of rights. Should there be enough evidence to potentially prove exhaustion; the original proprietor has to prove that they have no agreement in place, or collaboration, with the importer on unitary control, which exhausts their rights.

In short, the AG set out his opinion on the questions asked: "… Article 36 TFEU and Article 7(1) of [the] Directive… preclude the licensee of the proprietor of a national trade mark from invoking the exclusive rights enjoyed by the latter under the law of the Member State in which the trade mark is registered in order to oppose the importing into and/or marketing in that State of goods bearing an identical trade mark which come from another Member State, one in which that trade mark, which was once owned by the group to which both the proprietor of the mark in the importing State and its licensee belong, is owned by a third party which has acquired the rights to it by assignment where, given the economic links existing between the proprietor of the mark in the importing State and the proprietor of the mark in the exporting State, it is clear that the marks are under unitary control and that the proprietor of the mark in the importing State has the possibility of determining directly or indirectly the goods to which the trade mark in the exporting State may be affixed and of controlling their quality".

The opinion does set the tone for the decision by the CJEU in the near future, and it will be an important landmark on the law surrounding parallel importation. The simple assignment of some rights, at least in the mind of this writer, shouldn't preclude the restriction of importation by a competitor in the absence of clear acquiescence through either agreement or a joint relationship relating to those goods. The division of rights sets a clear marker on the retention of rights in key jurisdictions, and the ignorance of that purely through assignment would be short-sighted and effectively remove the possibility of doing so anywhere in the fear of losing global rights elsewhere.  In the end the CJEU will set the test for this, but the AG's opinion seems like a realistic and common sense approach to the issue at hand.

19 September, 2017

Throwing a Flag - The Use of an Amazon Listing can be TM Infringement and Passing Off

With more sales of goods being conducted online, it is often very difficult to distinguish your goods from a cascade of others, particularly on third-party selling platforms like Amazon. How these platforms often work is either by listing individual sales in isolation, therefore potentially swarming the website with similar, isolated sales of the same goods, or by lumping them together in one entry, promoting the best price for the consumer from all of the sellers on that listing (how Amazon works, for example). But with this mixing of sellers on a given listing could there be trademark infringement or passing off in these instances over the original goods being sold? A recent Intellectual Property Enterprise Court decision looked at this very question.

The case of Jadebay Ltd & Ors v Clarke-Coles Ltd (t/a Feel Good UK) dealt with the sale of aluminium flagpoles on Amazon. Jadebay sold the flagpoles under the trademark "Design Elements" (UKTM 2653159) on the platform through a licensor, which were listed under the seller "DesignElements" on the website. The defendant, Feel Good, listed their equivalent flagpole, with a lower price, under the sale Amazon listing, ultimately becoming the default seller of the goods on the listing. The claimants took Feel Good to court, alleging both trademark infringement and passing off due to Feel Good's use of the listing for inferior, non-identical goods, also excluding the trademark as above.

Judge Clarke, the presiding IPEC judge for the case, first considered the matter of trademark infringement. Under section 10(2) of the Trade Marks Act 1994, a trademark is infringed if, in short, it is used in the course of trade and there is a likelihood of confusion on part of the public, including association with the registered trademark.

The use of a sign in the course of trade includes "…offering or exposing goods for sale, putting them on the market or stocking them for those purposes under the sign", or simply used "…in the context of commercial activity with a view to economic advantage and not as a private matter". A variety of principles are applied when considering a likelihood of confusion, set out in more detail in the decision of Comic Enterprises Ltd v Twentieth Century Fox Film Corporation (discussed more here).

An alternate claim under section 10(3) of the TMA sets out that a trademark is infringed when it a person "…uses in the course of trade, in relation to goods or services, a sign which is identical with or similar to the trade mark, where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark".

Finally, the claim of passing off concerns the elements set out in Reckitt & Colman Product v Borden (discussed more here), which look at goodwill or reputation, misrepresentation leading to deception or a likelihood of deception, and damage resulting from the misrepresentation.

Judge Clarke then turned to analysing the issues at hand, starting with trademark infringement.

In her view, the average consumer would be an average flagpole-buying consumer, purchasing it for their home or commercial setting. The purchase would be driven by considerations of utility, quality and price rather than aesthetics or design, and that his purchase will be a considered one, rather than a whimsical or impulsive one, leading to an inclination of looking at the details and specifications of the listing used.

In terms of the use of the sign that was complained about, i.e. the name "Design Elements", the judge saw that it had been used by the Defendant. I her view "…[w]hether the sign complained of appears in the listing title itself, or in the descriptor 'by DesignElements', it still acts to indicate the origin of the goods for sale on the listing". The descriptor isn't merely a shop name, but an indicator of manufacturing origin, and a sign of their quality to the consumer.

Throwing your flags away isn't a viable option to avoid infringement
Looking at the actual similarities of the signed complained of and the registered trademark above, the judged had to consider their visual, aural and conceptual similarities (does it sound the same, look the same and cover the same or similar good/services). Their aural and conceptual similarities were not disputed by the defendant, so the judged quickly determined them to be identical. As to their visual similarity, the judge concluded that, as the trademark and the sign complained of share the same words in the same order, and while they are connected as one word, they are nonetheless separated by the capitalization of both words. Lastly, stylistically there were few differences between the two. Judge Clark therefore decided that the sign and the trademark had a high degree of similarity.

The judge then moved onto the next components in infringement. She swiftly determined that the sign is clearly used in the course of trade, and that it was used in relation to similar goods (i.e. the sale of flagpoles).

The next step is to establish a likelihood of confusion on the part of the average consumer. In her view, after a review of all of the circumstances, there was a high probability of a likelihood of confusion. This included factors such as the similarity of the sign and the trademark, careful consideration by the average purchasing consumer and the likelihood that the average consumer would think the product came from Design Elements. While she considered the lack of evidence of actual confusion, this didn't change the ultimate determination.

The judge concluded that there was therefore trademark infringement under section 10(2).

Judge Clark moved onto infringement under section 10(3). In looking at the trademark's reputation in the UK, the first limb of the test under the subsection, the judge saw that reputation in relation to the trademark only existed with the people who had bought a flagpole bearing the trademark. Without proper evidence as to the relevant public judge Clark couldn't establish that the trademark would have a reputation amongst a significant part of the relevant public. Infringement under section 10(3) therefore failed.

Finally, the judge turned to the claim of passing off, and determined that the defendant had passed off their goods as the claimant's.

It was quickly established that the claimant's business did have goodwill in the UK (albeit at a very low threshold on non-triviality). According to the judge, the sale of many flagpoles of a number of years, including garnering positive reviews, clearly demonstrated goodwill. The judge also agreed that a substantial number of members of the public would be misled by the defendant's listing, especially once the consumer would dive deeper into the details of the listing and the flagpoles themselves. Finally, the judge saw that almost every sale the defendant made would have been a lost sale to the claimant, and they had suffered damage as a result.

The case is quite the curious one, since it has, in effect, created a new type of trademark offense. Should someone use a pre-existing Amazon listing, they could potentially infringe on any associated trademarks, and would have to be careful to sell goods under that particular brand. The decision does set the bar quite high, and anyone selling authentic goods for a lower price would be safe, but anyone trying to ride the coat tails of a more well-known brand, selling inferior or different branded goods, might just fall foul of the precedent set.

12 September, 2017

A Point of Direction - UK Supreme Court Considers Direct and Indirect Patent Infringement

Due to the limited monopoly period in patents, infringement can be very problematic for the rightsholder, and would need to be dealt with as quickly as possible to maintain the competitive edge the patent provides. What remains tricky is establishing whether a competing product infringes on the patent, be it directly or indirectly. Drawing the line in the sand for the two types of infringement is very important, and judicial consideration on both might not be as clear as one hopes. In an attempt to clarify the position, the UK Supreme Court took on a case that involves two rivals in the pharmaceutical business.

The case of Eli Lilly v Actavis UK Ltd dealt with the chemical Pemetrexed, developed by Eli Lilly, used for the treatment of cancerous tumors. Used solely by itself the drug can be harmful, even fatal, and hence is not used as an anti-cancer drug. The side-effects of the drug could, however, be negated by using it in combination with vitamin B12 or folic acid and used for its original purpose. Eli Lilly has sold the combination drug, called Alimta, since 2004. The company also patented this combination drug in the EU (patent no. 1313508) including designations in France, Italy and Spain. Actavis proposed the launch of competing products that used pemetrexed together with vitamin B12, but, instead of using the same active ingredient Actavis would've used a different, albeit similar combination (differing from the patent claims). Eli Lilly alleged that the products would directly or indirectly infringe on their patent, with the matter ultimately reaching the Supreme Court in July.

The focal point of the matter is the use of a particular pemetrexed diacid or a pemetrexed salt with vitamin B12, which is specified in claim 1 of the patent, while Actavis uses a slightly different salt. Article 69 of the European Patent Convention sets out the extent of a patent's protection, which "…shall be determined by the claims. Nevertheless, the description and drawings shall be used to interpret the claims". A combination of the claims and its associated description should be used to determine the patent's remit of protection, i.e. could it include more compounds than the one set out in claim 1. The relevant provision for the infringement of patents in the UK is section 60 of the Patents Act 1977, which is governed by the above provision in the EPC.

After discussing the precedential history of patent infringement in both the UK and Europe, Lord Justice Neuberger, handing down the Court's unanimous decision, set out the proper test on patent infringement. In his view, to assess patent infringement matters, one has to look at two issues through the eyes of the person skilled in the relevant art. Namely, "...(i) does the variant infringe any of the claims as a matter of normal interpretation; and, if not, (ii) does the variant nonetheless infringe because it varies from the invention in a way or ways which is or are immaterial". He further specified that the second issue should viewed as not merely identifying what the words of the claim would mean to the skilled person, but also considering the extent if any to which the scope of protection afforded by the claim should extend beyond that meaning.

Lord Justice Neuberger then moved onto discussing the two issues above in more depth.

The first issue, in his view, is a straightforward application of claim interpretation, considering that the ingredients used by Actavis would not fall within the expression "pemetrexed disodium" in claim 1.

Steve wasn't a big fan of taking Pemetrexed 
The second issue proved to be trickier. Lord Justice Neuberger saw that, to determine what would amount to an 'immaterial' variation of the invention, it would be helpful to look at the three questions set out in Improver Corpn v Remington Consumer Products Ltd. These ask "i) Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, ie the inventive concept revealed by the patent? ii) Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention? iii) Would such a reader of the patent have concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention?"

The judge then turned to answering the above three questions.

For the first question Lord Justice Neuberger quickly determined that both drugs work in the same way as the patented invention, ultimately comprising of a medicament containing the pemetrexed anion and vitamin B12. The drug will achieve substantially the same result, in the same way, as the invention.

In the light of the second question, Lord Justice Neuberger considered that the skilled person would appreciate that each of the Actavis products would work in precisely the same way as pemetrexed disodium when included in a medicament with vitamin B12. The use of different free acids or salts would not change this outcome, as they were clearly established as at the priority date of the patent, and the skilled person would clearly investigate their effects as a part of routine. A test for knowing whether the drugs work or not would, in his mind, is too strict.

In answering the third question, Lord Justice Neuberger diverged from the Court of Appeal's decision. He considered that the skilled person would understand that the use of ' pemetrexed disodium' would not limit infringement to only that particular salt – this just happened to be the one used during experimentation. He concluded that it is unlikely that any other pemetrexed salts or pemetrexed free acid would have been excluded from the scope of protection.

Lord Justice Neuberger ultimately saw that the patent had been directly infringed by Actavis. He affirmed his position even in the light of the patent's prosecution history, as reliance on it should be reserved to limited instances and not every matter concerning infringement. The judge also considered direct infringement in France, Italy and Spain, and concluded that the patent had been infringed in these jurisdictions as well.

Finally, the Court looked at whether the patent had also been indirectly infringed had they determined the patent to not have been directly infringed, also set out in section 60 of the Patents Act 1977. The parties argued about the manufacture and administration of the drugs, diverging on whether both contribute to infringement or not. Ultimately Lord Justice Neuberger determined that Actavis would have indirectly infringed Eli Lilly's patent if they knew, or it was obvious given the circumstances, that the drug would be used by dissolving it into a saline solution

The Supreme Court's decision in the case will be very influential, and redefines how direct infringement in particular is assessed. It'll be interesting to see how the new tests are applied to different types of patents, not just pharmaceuticals, and whether it will make proving infringement easier or more difficult.

05 September, 2017

Sales are Offline - Advocate General Allows for the Restriction of Third-Party Sales of Goods Online

Selling goods online can be incredibly lucrative, since the potential reach of your business can be near anywhere in the world to millions of people. Many companies therefore sell their goods either exclusively online, or through various third-parties, who could even purchase your goods and then resell them elsewhere without your permission. While the exhaustion of rights is quite pertinent in this scenario (e.g. more on which in relation to patents can be found here), could you still be able to prevent others from selling your goods? After a lengthy spell in the European Courts, a case dealing with just this question has landed on an Advocate General's desk, who has given their opinion on it only some weeks ago.

The case of Coty Germany GmbH v Parfümerie Akzente GmbH dealt with the sale of luxury cosmetics, made by Coty. The company sells its goods through a variety of distributors in a select network, all of which are contracted to do so under a distribution agreement (and its various undertakings). Akzente has been a Coty distributor for some years selling their goods via their retailer stores, including physical locations and via the Internet, primarily through Amazon.de. Coty wanted to make changes to their distributor agreement, which, among others, required that all goods sold online be sold via an electronic store window (not using websites like Amazon) to protect the brand and its image. Akzente refused the amendments, and Coty took the matter to court, which ultimately ended up going to the CJEU.

The crux of the case revolves around the Treaty of the Functioning of the EU and its provisions preventing the distortion of competition. Article 101 of the TFEU, in short, prevents companies from employing contractual measures that affect trade between Member States in a negative way. This could potentially include selective distribution systems, such as Coty's.

The CJEU faced four questions from the referring court, which primarily focussed on the applicability of Article 101 to the above facts.

The first question, as summarized by the Court, asked "…whether selective distribution networks for the distribution of luxury and prestige goods aimed mainly at preserving the luxury image of those goods are caught by the prohibition laid down in Article 101(1) TFEU".

The AG considered both parties' submissions relating to the first question, ultimately deciding that, in his opinion, that selective distribution networks for luxury goods would not be caught by Article 101. Following previous case law, the AG set out the three criteria that have to be met for purely qualitative selective distribution systems not to be prohibited under Article 101:

(1) it must be established that the properties of the product necessitate a selective distribution system, in the sense that such a system constitutes a legitimate requirement, having regard to the nature of the products concerned, and in particular their high quality or highly technical nature, in order to preserve their quality and to ensure that they are correctly used; (2) resellers must be chosen on the basis of objective criteria of a qualitative nature which are determined uniformly for all potential resellers and applied in a non-discriminatory manner; and (3) the criteria defined must not go beyond what is necessary.

Online sales definitely make life easier
The first criteria, necessity of the selective distribution system, needs to take into account the qualitative characteristics of the goods themselves, i.e. that it maintains the high quality of the goods when sold. This can include both the physical characteristics and the 'luxury' image of the goods. The AG summarized that "…the selective distribution networks relating to the distribution of luxury and prestige goods and seeking mainly to preserve the brand image of those goods are not caught by the prohibition laid down in Article 101(1) TFEU". Even so, the AG wanted the CJEU to clarify the possible prohibition of these types of clauses, which has been asserted under case law (particularly in Pierre Fabre Dermo-Cosmétique).

The AG considered that the case should not negate prior case law regarding the allowance of selective distribution networks under EU law, as its judgment only related to the review of the proportionality of a clause preventing the sale of goods online outright. However, he still observed that should the objective of protecting the prestige of the goods not be legitimate and therefore not allowed under EU law. Retaining the exemption for the above distribution systems is important for the preservation of trademark rights, which could be compromised if not allowed to be protected.

Ultimately, the AG set out that the answer to question one should be that such selective distribution systems should be allowed under Article 101, provided they conform to the three criteria set above.

The second question was summarized by the AG asking "…whether and to what extent Article 101(1) TFEU must be interpreted as meaning that it precludes the prohibition imposed on the members of a selective distribution system for luxury products, who operate as authorised retailers on the market, from using in a discernible manner third-party platforms for internet sales of the products concerned".

Following Metro SB-Groβmärkte, the AG set out that, to answer the above question, one would have to assess whether "…operators were chosen by reference to objective criteria of a qualitative nature, determined uniformly for all potential resellers and applied in a non-discriminatory fashion, whether the properties of the product(s) concerned require, in order to preserve their quality and to ensure that they are correctly used, such a distribution network and… whether the conditions defined are consistent with the principle of proportionality". He did note that only the necessity and proportionality criteria would have to be considered in this instance.

Should the prohibition of the use of third-party platforms be used legitimately to protect the quality of the goods, the AG considered this to be allowable. Not only does it potentially ensure that the goods are authentic, but also protects the brand. Therefore the prevention of the use of third-party websites in a distribution agreement would not be contrary to competition law. Coty didn't prevent the parties from selling them online altogether, allowing the goods to be sold on the sellers' websites, just not on third-party sites like Amazon.

The AG also considered that the clause would not be disproportionate to the objective pursued. Due to the original supplier not being able to control the third-party pages in the absence of a direct contractual relationship with them (as opposed to with the distributors), the clause would be proportionate to reach the means of controlling quality. He concluded that the clause would therefore be compatible with Article 101.

Finally, the AG, under the guise of a hypothetical determination of an infringement of Article 101 in a clause such as in the matter, set out possible further provisions that might come into play in that event. This would be Article 4(b) and 4(c) of the Vertical Agreements Regulation. These relate to the restriction of the territory in which goods can be sold, and a restriction of passive sales respectively.

In short, the AG considered that the prohibition imposed on members of the distribution system was not a restriction on the seller's customers under Article 4(b). The clause only prevents the seller from selling on third-party websites, and not online entirely, which does not limit the territory or customers accessible to the seller. The prohibition was not a restriction of passive sales under Article 4(c) either, as the restriction only applies to third-party websites, and not the entire internet. Passive sales can happen via the seller's website just as well as from a third-party site.

The case will be very important to suppliers of luxury goods who wish to maintain the image and the distribution networks selling the goods in a very close and controlled fashion. The AG's opinion would seem to be correct, since the disallowance of these types of restrictions could genuinely dilute the image and value of luxury goods, and only guide the way in which the goods are sold, not preventing some avenues like online sales. In the end the CJEU will decide the matter, but it seems unlikely they will deviate from the AG's opinion.

Source: IPKat