A Sour Result - CJEU Rules on Protection of Parts of Compound PGIs

Having discussed the protection of the term "Aceto Balsamico di Modena" after an opinion by Advocate General Hogan this Fall, this writer waited for the decision of the CJEU with great intrigue. This was colored by a love of balsamic itself, but also with intrigue in relation to whether separate components of a PGI are protectable. Like on Christmas morning, the CJEU finally delivered its judgment earlier this month.

As discussed above, the case of Consorzio Tutela Aceto Balsamico di Modena v Balema GmbH concerned the registration "Aceto Balsamico di Modena" (PGI application here) in relation to a balsamic vinegar which is produced in the Modena region of Italy. Consorzio is a consortium of producers of the products designated by the PGI. Balema produces and markets vinegar-based products made from wines from the Baden region, including bearing the terms "Balsamico" and "Deutscher balsamico". Consorzio subsequently took Balema to court for infringement of the PGI, with Balema arguing that it didn't infringe the PGI as it didn't use the entirety of it and the components to the name are not protected separately.

The Court faced only a single question, which asked "...whether Article 1 of Regulation No 583/2009 must be interpreted as meaning that the protection of the name ‘Aceto Balsamico di Modena’ extends to the use of the individual non-geographical terms of that name".

They first set the scene by stating that the protection of various constituent parts of a registered name falls under the jurisdiction of national courts. With regards to 'compound' marks, such as Aceto Balsamico, that have not specifically mentioned that the individual components of the name are protected separately doesn't mean that those components are not protected outright. As set in Chiciak and Fol, "...in the absence of specific circumstances pointing to the contrary, the protection... covers not only the compound name as a whole, but also each of its constituent parts, that will be the case only if that constituent part is not a generic or a common term".  Even though the case concerned an earlier Regulation, it still applies to Article 1.

The Court swiftly concluded that protection couldn't be afforded to the individual non-geographical terms of the Aceto Balsamico name. They further specified that "...the name ‘Aceto Balsamico di Modena’ that has an undeniable reputation on the national and international market and that it is therefore that compound name as a whole which meets the inherent condition for the product having a specific reputation linked to that name". To put simply, the terms ‘aceto’ and ‘balsamico’ (and their use in combination) won't benefit from the registration of the whole name.

The Court also noted that the terms would be designated as common terms under Chiciak (as they merely describe a common product such as a balm or a vinegar). Ultimately they denied protection for the individual terms in Aceto Balsamico di Modena.

The decision is not a very surprising one, as the extension of protection to non-geographical parts of PGIs could open the floodgates for the registration of incredibly long PGIs, and in effect deter competition in the marketplace in relation to similar products. Of course one expects the regional identifiers to remain protected, but extending protection to common terms would not be a good idea, especially since the authentic product is still protected through the PGI. The case is a good reminder to PGI holders to limit their protection to what matters; the stamp of regional quality for the product.

All Prettied Up - UK High Court Considers Copyright Protection in Physical Make-up Palette

Copyright protection in physical objects is a topic that one rarely sees being litigated, as many other avenues simply function better in the physical realm when dealing with possible infringers (such as passing off). Even so, a recent case piqued the curiosity of many IP practitioners and has shed some light on the topic of copyright in physical objects, and particularly ones with 'transient' designs that only last for a limited time. The High Court in the UK had a tall order to consider and handed down its judgment only a few months ago.

The case of Islestarr Holdings Ltd v Aldi Stores Ltd concerned the make-up brand Charlotte Tilbury, owned by Islestarr, who developed a make-up palette called the "Filmstar Palette". This incorporated two pieces of make-up – the Filmstar Bronze and Glow – organized in a metallic-looking box, including debossed sun rays running across the two pieces of make-up. The Palette was very successful in the marketplace, and due to its success, Islestarr alleges that Aldi subsequently copied the design in their cheaper palette sold in Aldi stores. Islestarr subsequently brought in a claim against Aldi and ultimately sought summary judgment for copyright infringement, which Deputy Master Linwood dealt with in their judgment.

Deputy Master Linwood started with summarising the law underpinning the matter. In brief, copyright can only subsist in specific types of work, provided they are original. A work is deemed original if the work is the author's "…own intellectual creation or independent skill and effort", which includes taking inspiration or influence from other works.

Whether a copyright-protected work is infringed, the courts have to assess whether all or a substantial part of the work has been copied by the other party. Even if deliberate variations or alterations are made to the work, it does not necessarily mean that it hasn't been copied. Often this assessment is made through a visual (or other) comparison of the works, noting similarities and dissimilarities. Once all of the above has been established, the court can make a determination on whether the copying has been substantial or not, focusing on the quality or the copying and not merely the quantity.

The Deputy Master then moved onto dealing with the issues of the matter, i.e. whether copyright subsists in the work; whether the alleged infringing designs were indirectly derived from the copyright works; and whether the alleged infringing designs reproduce a substantial part of the copyright works.

Some temporary works are definitely cooler than others

In considering whether copyright subsisted in the debossed make-up, the Deputy Master quickly saw that it did indeed attract copyright protection, even though the subject matter was merely 'temporary'. He noted that if no copyright subsisted in the palette, that no protection would be given to "...sculptures [made] out of sand at low water on a tidal beach... a pre-construction sketch or photograph of the completed work... [or] a bespoke wedding cake".  The transient nature of the work clearly doesn't impact the copyright protection it is given. Additionally, the Deputy Master saw no issues in the originality of the work, which was created by employees of Islestarr, even though the creators might've been aware of prior art in the make-up palette sector, and was clearly an original work of their author's intellectual creation.

The Deputy Master then moved onto the matter of infringement. He initially looked at the similarities and differences between the two palette designs, and ultimately concluded that the similarities are substantial from both a qualitative and quantitative point of view. Aldi additionally admitted that the designers of their palette had access to the Islestarr design at the time of production. The Deputy Master quickly determined that Aldi had indeed infringed on Islestarr's copyright in the palette design, as Aldi offered no valid defence to refute the burden of proof on them not copying the design.

Aldi, therefore, were determined to have infringed Islestarr's copyright in the palette.

The case is a very interesting one, particularly relating to the point of the transience of the design Islestarr had. It makes perfect sense to this writer since the dismissal of more 'temporary' designs from the remit of copyright would allow for many designs or works to be blatantly copied if they are not permanently fixed in some way. The decision is a firm reminder that copyright is a very wide form of IP, and the case will undoubtedly pave the way for many more similar cases to be brought against infringers in the future.

The One and Only - Advocate General Hogan Considers the Limits of Protected Geographical Indicators and their Individual Terms

Protected Geographical Indicators (or PGIs for short) are a crucial part of being able to identify local goods that have a particular quality and/or manufacturing methods that are unique to a particular region of the EU. Seeing a PGI in packaging can guarantee that the goods you're buying are legitimate, whether it is looking for that special something in Bolognian Mortadella or Gruyère cheese, it is key to distinguishing the 'real stuff' from the pretenders. Even so, sometimes the PGIs can become almost generic or the terminology used within it separated to hint at the PGI without actually containing the whole term. That being said, where does one draw the line when naming products similarly to PGIs? Luckily, the CJEU is slated to decide this question, and Advocate General Hogan gave their thoughts on this earlier this summer.

The case of Consorzio Tutela Aceto Balsamico di Modena v BALEMA GmbH concerned balsamic vinegar from the region of Modena – "Aceto Balsamico di Modena" (PGI application here). The product is an aged, flavoured vinegar made from grapes. The name does contain the word 'balsam', which has colloquially become to mean the same product, but historically it was used to denote a balm or a product with healing properties. Balema produce a German 'balsamic vinegar' called "Balsamico" made from Baden wine. Consorzio Tutela Aceto Balsamico di Modena, a consortium of producers of Modena balsamic vinegar, took Balema to court for the infringement of their PGI. Balema challenged this, with the CJEU left to decide whether the individual word components of the PGI could be protected as PGIs within the registration, or would be free to be used by others in isolation from the whole PGI as they were generic terms..

The AG started off with defining what amounted to a 'generic term'. Under Article Article 3(6) of Regulation No 1151/2012, a generic term is defined as "…the names of products which, although relating to the place, region or country where the product was originally produced or marketed, have become the common name of a product in the Union". This means that the PGI has become generic and no longer denotes the quality and characteristics that one would expect from that PGI. This also includes words that have always been generic, even if included within the PGI.

Ptahhotep was no fool when it came to new types of balms
(Source: AHRECS)

The AG added that, in order to determine whether a term has become generic, what is decisive is "…not necessarily whether a term has a particular meaning in a given language but rather whether it lacks a current geographical connotation". The same applies to terms that could be considered as being generic (i.e. mean something specific in one language), but do still retain their geographical connotation, therefore potentially avoiding becoming generic. Adding onto this, even if in one Member State the term is considered to be generic, it does not mean the term has become generic for the whole of the EU.

The specific test courts would have to apply is whether "…the manner in which these words would be perceived by the ‘average consumer who is reasonably well informed and reasonably observant and circumspect", i.e. does the average person consider the term generic or not.

The AG then moved onto considering the interpretation of Article 1 of Regulation No 583/2009 which denotes the registration of the specific PGI. The Regulation didn't provide any limitations or qualifications for the registration of the term 'Aceto Balsamico di Modena', or whether its components themselves would be generic or non-geographical terms separately from the PGI. The AG does point out that previous decisions have indicated that this does not mean that the terms would be protected individually as well as within the whole PGI.

In the light of the Regulation, the AG considered that the terms ‘Aceto’, ‘Aceto Balsamico’ and ‘Balsamico’ were generic terms, and protection was only afforded to the whole PGI. This was due to the common nature of the words, and the particular emphasis made by the Regulation on the entirety of the term.

The opinion is very interesting, albeit unsurprising, as the monopolization of 'common' words (even if used less these days) would be detrimental to the wider internal market. The protection of region specific goods is important, but this also needs to be balanced with the allowance for the use of words that describe goods, rather than their specific geographical origin. It remains to be seen if the CJEU agree with the AG, but this writer for one thinks they'll agree.

Ten Hut! - CJEU Decides on Derogation from Authors' Rights and Copyright Infringement in Relation to Military Reports

This blog discussed the issues of balancing the freedom of expression in the early part of this year (with more on news reporting at the CJEU here), and the issue has still lingered in the backlog of cases faced by the CJEU. The balance between protecting works, while affording the ability to review and use those works for specific , is a difficult one to strike, but one that the courts often have to face. Following an Advocate General's opinion in January this year, the CJEU were now tasked with clarifying this issue, and handed down their decision not too long ago.

As a very brief primer, the case of Funke Medien NRW GmbH v Bundesrepublik Deutschland concerned the publication of confidential military reports by Funken online by the daily newspaper Westdeutsche Allgemeine Zeitung (having obtained them through unknown means). The reports detailed the deployment of the German military abroad, and various developments at the locations. Due to the sensitive nature of the reports, the Republic of Germany took Funken to court for copyright infringement, with the matter ultimately ending up with the CJEU.

The referring court asked the CJEU three questions, the first of which asked "…whether Article 2(a) and Article 3(1) of Directive 2001/29 first, and Article 5(3)(c), second case, and (d) of [the] Directive… second, must be interpreted as constituting measures of full harmonisation".

The Court considered the matter very extensively in its judgment, concluding that only Articles 2 and 3 of the Directive constituted measures of full harmonization. Without getting too much into the depths of this question, the matter revolved around the differences in the provisions in terms of wording, where Articles 2 and 3 were unequivocal in their remit, while Article 5 left some room for Member State specific implementation.

In short, the Court answered the question as "…Article 2(a) and Article 3(1) of Directive 2001/29 must be interpreted as constituting measures of full harmonisation of the scope of the exceptions or limitations which they contain. Article 5(3)(c), second case, and (d) of Directive 2001/29 must be interpreted as not constituting measures of full harmonisation of the scope of the relevant exceptions or limitations".

The Court then jumped to the third question, which asked "…whether freedom of information and freedom of the press, enshrined in Article 11 of the Charter [of Fundamental Rights of the European Union], are capable of justifying, beyond the exceptions or limitations provided for in Article 5(2) and (3) of Directive 2001/29, a derogation from the author’s exclusive rights of reproduction and of communication to the public, referred to, respectively, in Article 2(a) and Article 3(1) of that directive".

To kick things off, the Court noted that the exceptions in Article 5 are exhaustive, but those will need to be balanced with the interests of the rightsholder as well. The balancing is required through the transposition of the exceptions into national law. The Court did mention that "…the exceptions and limitations provided for in Article 5(3)(c)… (d)… are specifically aimed at favouring the exercise of the right to freedom of expression by the users of protected subject matter and to freedom of the press… over the interest of the author in being able to prevent the use of his or her work, whilst ensuring that the author has the right, in principle, to have his or her name indicated". The use by users, however, cannot interfere with the author's normal use of the work.

Following this the Court determined that "…freedom of information and freedom of the press, enshrined in Article 11 of the Charter, are not capable of justifying, beyond the exceptions or limitations provided for in Article 5(2) and (3) of Directive 2001/29, a derogation from the author’s exclusive rights of reproduction and of communication to the public, referred to in Article 2(a) and Article 3(1) of that directive respectively".

The Court moved onto the second question, which asked "…whether, in striking the balance which it is incumbent on a national court to undertake between the exclusive rights of the author referred to in Article 2(a) and Article 3(1) of Directive 2001/29 on the one hand, and, on the other, the rights of the users of protected subject matter referred to in Article 5(3)(c), second case, and (d) of that directive, the latter derogating from the former, a national court may depart from a restrictive interpretation of the latter provisions in favour of an interpretation which takes full account of the need to respect freedom of expression and freedom of information, enshrined in Article 11 of the Charter". To put into other terms, can national courts go with a less restrictive interpretation of the rights given to users over protected works, particularly in the light of Funken not adding a summary of the document to the article (but merely linked to it).

When Member States transpose EU legislation into national legislation, this has to be done without conflict with the EU laws themselves, including through the interpretation used to devise national legislation. This means that any derogation from the provisions would have to be interpreted strictly. With regards to Article 5, the exceptions and limitations in it have to be protected in terms of their efficacy.

The Court continued that the Charter does expressly protect intellectual property rights, but those rights are by no means superior to everything, and can be broken given the appropriate exception. This means that both the rights held by the rightsholders, and the ability for users to use the materials for legitimate, fair purposes, have to be appropriately balanced.

The Court saw that Funken's use could fall under the exception of news reporting, due to the structure it was presented in, the notes added in and the further links given within the article. The specifics of which would have to be determined by the referring court in the end.

The answer to the second question therefore is "…that, in striking the balance which is incumbent on a national court between the exclusive rights of the author… on the one hand… the rights of the users of protected subject matter… the latter of which derogate from the former, a national court must, having regard to all the circumstances of the case before it, rely on an interpretation of those provisions which, whilst consistent with their wording and safeguarding their effectiveness, fully adheres to the fundamental rights enshrined in the Charter".

The case follows the other news reporting related cases that have come before it through the CJEU in recent times, and doesn't provide many surprises. News reporting would have to adhere to the Court's guidance on the matter, but it seems that similar use to that of Funken's would be covered by the exception under Article 5, to the potential chagrin of many authors that might not want this.

That's News to Me - CJEU Decides on Whether Copying for the Purpose of Reporting of Current Events Infringes Copyright

News reporting is an important part of society and one of the best ways to keep a population informed and up-to-date on current events. Many consider the preservation of news reporting, particularly an unfettered reporting, incredibly important. Quoting and copying of materials for the news isn't always as straightforward as that, with many instances amounting to copyright infringement. With that in mind, what are the limits to copying for the purposes of reporting current events? Luckily the CJEU took this question on and handed down its judgment only a few weeks ago.

The case of Spiegel Online GmbH v Volker Beck concerned a manuscript written by a German politician, Volker Beck. The manuscript, which dealt with criminal policy relating to sexual offences committed against minors, was originally published in 1988 under a pseudonym. At the time the manuscript's title, along with very small parts of its contents, were changed by the publisher, to Mr Volker's dismay. The manuscript was discovered 25 years later, which was put to Mr Volker during his then campaign for the German parliament. During this period Mr Volker provided some newspaper editors with the full manuscript to show it had been edited (but didn't give consent to the editors for publication), and published it on his website distancing himself from it. Spiegel Online, however, published an article contesting Mr Volker's stance, including links to the full manuscript with the article. Mr Volker subsequently sued the paper for copyright infringement, with the matter ending up with the CJEU sometime after.

The referring court asked the CJEU six questions, the first of which asking "…whether Article 5(3)(c), second case, and (d) of Directive 2001/29 must be interpreted as constituting measures of full harmonisation".

The CJEU dealt with the background of the question quite extensively, but decided that the Article does not constituting measures of full harmonization. As the transposition of legislation into national law is dealt with on a case-by-case basis, the Court saw that there was a high degree of discretion allowed for Member States, and therefore the provision isn't looking to harmonize EU law in a strict fashion across the board.

The Court then moved onto the third question, which asked "…whether freedom of information and freedom of the press, enshrined in Article 11 of the Charter [of Fundamental Rights of the European Union], are capable of justifying, beyond the exceptions or limitations provided for in Article 5(2) and (3) of Directive 2001/29, a derogation from the author’s exclusive rights of reproduction and of communication to the public". In other words, would the freedom of information go beyond the express exceptions already provided for in the legislation.

At the outset the Court noted that the exceptions contained in Article 5 are exhaustive, and seek to strike a balance on interests between protecting works, while allowing for users to access information where and when needed (especially regarding the freedom of expression and information). They continued that Article 5 is specifically aims at favoring the exercise of the right to freedom of expression by the users of protected subject matter and to freedom of the press over the interest of the author in being able to prevent the use of his or her work. Even so, allowing for an exception beyond the above remits would potentially endanger the effectiveness of the harmonization of copyright in the EU and legal certainty on its factual remit.

The CJEU then determined that "…freedom of information and freedom of the press, enshrined in… the Charter, are not capable of justifying, beyond the exceptions or limitations provided for in Article 5(2) and (3) of Directive 2001/29, a derogation from the author’s exclusive rights of reproduction and of communication to the public".

Having dealt with the third question, the Court turned to the second question, which asked "…whether, in striking the balance… between the exclusive rights of the author referred to in Article 2(a) and Article 3(1) of Directive 2001/29… and… the rights of the users of protected subject matter referred to in Article 5(3)(c)… and (d)… a national court may depart from a restrictive interpretation of the latter provisions in favour of an interpretation which takes full account of the need to respect freedom of expression and freedom of information".

According to the Court, the exceptions provided for in Article 5 confer specific rights to users of protected works, which should be given a broad interpretation, and the effectiveness of the provision needs to be safeguarded. Even though the Charter does expressly protect intellectual property, the rights given to rightsholders are not absolute. When striking a balance between the rights given to citizens by the Charter, courts have to consider the context in which that use occurs in the light of copyright protection. The Court considered that, in answering the question "…a national court must, having regard to all the circumstances of the case before it, rely on an interpretation of those provisions which, whilst consistent with their wording and safeguarding their effectiveness, fully adheres to the fundamental rights enshrined in the Charter".

The Court followed this with the fourth question, which asked "…whether Article 5(3)(c), second case, of Directive 2001/29 must be interpreted as precluding a national rule restricting the application of the exception or limitation provided for in that provision in cases where it is not reasonably possible to make a prior request for authorisation with a view to the use of a protected work for the purposes of reporting current events".

In answering the question, the Court noted that the exceptions in Article 5 don't require any authorization from the rightsholder prior to the use of a protected work. In considering the meaning of 'in connection with the reporting of current events', the Court saw that it meant "…the action of ‘reporting’… must be understood as that of providing information on a current event", but does not require the analysis of an event in detail. The reporting must also relate to 'current events', which is "…an event that, at the time at which it is reported, is of informatory interest to the public". The author of the protected work would also have to be attributed in the news reports.

The Court determined that national rules restricting the application of the exceptions would be precluded by EU law.

That was followed by the fifth question, which asked "…whether Article 5(3)(d) of Directive 2001/29 must be interpreted as meaning that the concept of ‘quotations’… covers a reference made by means of a hyperlink to a file which can be downloaded independently".

The Court commenced by looking at the meaning of 'quotation' under the provision, which is considered to be "…the use, by a user other than the copyright holder, of a work or, more generally, of an extract from a work for the purposes of illustrating an assertion, of defending an opinion or of allowing an intellectual comparison between that work and the assertions of that user". A direct and close link needs to be established between the quoted work and the author's own reflections. As such the quotation doesn't need to be inextricably integrated, by way of insertions or reproductions in footnotes for example, into the subject matter citing it, which allows for a hyperlink to be a quotation for the purposes of the provision.

The Court therefore answered the question as "…the concept of ‘quotations’, referred to in that provision, covers a reference made by means of a hyperlink to a file which can be downloaded independently".

Finally, the Court turned to the sixth and final question, which asked "…whether Article 5(3)(d) of Directive 2001/29 must be interpreted as meaning that a work has already been lawfully made available to the public where that work, in its specific form, was published previously with the author’s consent".

The Court noted that the exception for quotation only applies to works that already been lawfully made available to the public. If a work has been made lawfully available, it has been made available with the author's authorization, allowing for quotation. Mr Beck had clearly done so by publishing the manuscript on his website, even if he disassociated himself from the work (with the statement needing to be included with any quotation).

The Court therefore set out that "…Article 5(3)(d) of Directive 2001/29 must be interpreted as meaning that a work has already been lawfully made available to the public where that work, in its specific form, was previously made available to the public with the rightholder’s authorisation or in accordance with a non-contractual licence or statutory authorisation".

The case is yet another important update to the world of quotation, and how copyright protected works can be used in news reporting. The limits of what would amount to quotation can be tricky, and therefore a serious of cases from the CJEU dealing with the subject matter is a very welcome addition. Many news outlets will welcome this change, but will have to make sure to abide by it so as to not infringe copyright in any works.

Just a Little Taste - The CJEU Decides on Whether Music Sampling Infringes Copyright

Having discussed the recent opinion by Advocate General Szpunar in relation to copyright and sampling, the CJEU's decision has been very hotly anticipated, particularly by the music industry. Sampling has become incredibly common in the creation and production of music, and so the potential curtailing of sampling by the CJEU could pose a big problem to artists, producers and labels. Luckily (or unluckily) the CJEU has finally handed down its judgment very recently.

As a short primer, the case of Pelham GmbH v Ralf Hütter and Florian Schneider‑Esleben concerned the song "Metall auf Metall" created by the band Kraftwerk, which comprises of the respondents Hütter and Schneider‑Esleben. The song was sampled in another song called "Nur Mir", which was produced by Pelham in the late 1990s. Kraftwerk allege that Pelham sampled a two-second rhythm sequence from their song, and used it as a continuous loop in "Nur Mir", therefore infringing their copyright. Pelham contested the infringement allegation, and the case then ended up in the CJEU some years later.

The referring court asked the CJEU six questions, which the Court dealt with (mainly) in turn.

The first and sixth questions were dealt with by the CJEU together, which essentially asked "...whether Article 2(c) of Directive 2001/29 must, in the light of the Charter [of Fundamental Rights of the European Union], be interpreted as meaning that the exclusive right granted to a phonogram producer to reproduce and distribute his or her phonogram allows him to prevent another person from taking a sound sample, even if very short, of his or her phonogram for the purposes of including that sample in another phonogram".

The Court opened with setting the scene, in that the copying of a sound sample, even if very short, must be regarded as a reproduction ‘in part’ of that phonogram within the meaning of the Article. Even so, if a user is exercising their freedom of the arts to create a new, distinguishable phonogram work, that particular use wouldn't be classed as a 'reproduction' under the Article. The Court noted that a balance has to be struck between the rights afforded by copyright, and the rights under the Charter.

Having considered the questions, the Court determined that "…Article 2(c)… must, in the light of the Charter, be interpreted as meaning that the phonogram producer’s exclusive right under that provision to reproduce and distribute his or her phonogram allows him or her to prevent another person from taking a sound sample, even if very short, of his or her phonogram for the purposes of including that sample in another phonogram, unless that sample is included in the phonogram in a modified form unrecognisable to the ear". In short, an artist would have to utilize a short clip of music in more ways than simply copying it in and the work has to be unrecognizable when compared to the original.

The Court then moved onto the second question, which asked "…whether Article 9(1)(b) of Directive 2006/115 must be interpreted as meaning that a phonogram which contains sound samples transferred from another phonogram constitutes a ‘copy’, within the meaning of that provision, of that phonogram". The Article affords the owner of the rights in a phonogram the right to distribute copies of the work.

Having discussed the legislative backdrop of the provision quite extensively, the Court considered that samples transferred from another phonogram would be a 'copy' under the provision, as they are a 'duplicate' of the part of the work, since the samples contain sounds taken directly or indirectly from a phonogram.

The Court then considered the third question, which asked "…whether a Member State may, in its national law, lay down an exception or limitation, other than those provided for in Article 5 of Directive 2001/29, to the phonogram producer’s right provided for in Article 2(c) of Directive 2001/29" – or in other words, can additional exceptions be provided to the rights afforded to rightsholders in relation to phonograms.

The matter yet again circled around the balancing of interests in terms of the rights in works, and exceptions to those rights allowing for the use of works in specific circumstances (so long as it doesn't conflict with the normal exploitation of a work). The Court answered the question in the negative, considering that Member States cannot lay down additional exceptions outside of Article 5.

The fourth question concerned "…whether Article 5(3)(d) of [Directive 2001/29] must be interpreted as meaning that the concept of ‘quotations'… extends to a situation in which it is not possible to identify the work concerned by the quotation in question".

The Court first focussed on the requirements for quotation, which has to be made "in accordance with fair practice, and to the extent required by the specific purpose", meaning you can't simply copy a work and claim it as a quotation of that work if it exceeds the requirements and purpose of a given quotation. Also, the Court noted that the meaning of 'quotation' is the use of a copyright protected work to "….illustrat[e] an assertion, of defending an opinion or of allowing an intellectual comparison between that work and the assertions of that user", which is typically done through a 'dialogue' with that work.

A key consideration on quotation is that the work needs to be identifiable, which, in sampling, might not be as easy. Without the identification of the sample, it isn't strictly possible to have a 'dialogue' with the work as a part of the quotation. The Court therefore set out that "…the concept of ‘quotations’… does not extend to a situation in which it is not possible to identify the work concerned by the quotation in question". It is a case-by-case question, in terms of sampling, when the copying can be considered as a quotation within the provision.

Finally, the Court dealt with the fifth question, which concerned "…whether Article 2(c) of Directive 2001/29 must be interpreted as constituting measures of full harmonisation".

The Court emphasised that EU law takes precedent over national law, even if it concerns a Member State's constitution, and any national measures shouldn't undermine the effectiveness of the EU in its territory. That also means that EU legislation would have to be transposed into national legislation irrespective of their discretion. The Court therefore concluded that "…Article 2(c)… must be interpreted as constituting a measure of full harmonisation of the corresponding substantive law".

The decision is a big one, and potentially is a big blow to the music industry, but has shown more clarity in the area of quotation. The courts will undoubtedly grapple with this decision in the coming years, particularly due to the nature of whether a sample can be recognized within a different song where it is copied. This writer agrees with the Court, but will wait to see whether, or if at all, the decision will have an impact on the music industry.

I'm Offended! - Advocate General Bobeck Opines on When a TM is Contrary to Morality or Public Policy

Morality seems to be the topic of the day on this blog, having recently written about the US Supreme Court case relating to the registration of immoral trademarks. While this writer will is not by any means the 'morality police', it is an important topic to discuss, albeit unusually so in connection with intellectual property. Similarly to US legislation, many other jurisdictions prevent the registration of trademarks that contravenes morality, including in Europe. In the light of this, what makes a trademark contrary to morality, and when can the courts reject those marks? Luckily the CJEU is facing this very question, and Advocate General Bobeck gave his take on the matter very recently.

The case of Constantin Film Produktion GmbH v EUIPO concerned the registration of the name "Fack Ju Göhte" (EUTM 13971163) by the film company, which is a very successful German comedy. The company, naturally, wanted to register the mark due to this success, but the application was rejected by the EUIPO due to it being contrary to "accepted principles of morality". Constantin then appealed the rejection, which ended up going all the way to the CJEU.

A trademark application can be rejected under Article 7(1)(f) of the CTM Regulation if it is "...contrary to public policy or to accepted principles of morality". The Advocate General therefore had to opine on when a trade mark application is contrary to public policy or to accepted principles of morality, and what the relevant test is in determining that.

The first thing considered by the AG was the relationship between trademarks and the freedom of expression. The AG set out that, even though the registration of trademarks is a commercial activity by nature, it by no means limits the applicability of the freedom of expression to trademarks, and is further codified by the Regulation as a part of trademark law. He further set out that "…although freedom of expression, as well as other fundamental rights potentially at stake, must be taken into account in the overall balancing exercise, the protection of freedom of expression is not the primary goal of trade mark protection". One can agree with this, since trademarks, while clearly an important expression of a particular brand, are primarily focused on showcasing the quality of a product and ensuring its origin to the consumer; not to make statements for the sake of it.

The AG then moved onto consider the relationship between public policy and accepted principles of morality. In practice, the terms have been considered both interchangeably and separately, which leaves the option open for the CJEU to determine how exactly they should be considered.

In defining public policy, the AG set out that it means "…a normative vision of values and goals, defined by the relevant public authority, to be pursued now and in the future", i.e. the legislature's attempt to solidify the normative values of society at that time. Accepted principles of morality, however, are "…values and convictions currently adhered to by a given society, set and enforced by the prevailing social consensus within that society at a given time", which contrasts as a less guided sense of what is right, but how society at large feels about issues. The distinction therefore is a top-down v bottom-up approach to public morality, with the former being a more objective measure, and the latter a subjective one.

When relying on either one of the above grounds, the AG considered that the EUIPO must therefore establish, with references to the prevailing perception among the relevant public, why they believe that a given sign would offend those principles.

The AG considered that the public relevant to the matter at hand would be a general and German-speaking one, and that any public policy or morality considerations would have to be made in the light of that fact. Vulgarity in one language, here English, would not therefore necessarily be considered such by non-English speakers. Additionally, any assessment by the EUIPO cannot be made solely and exclusively looking at the word sign, in isolation from the broader societal perception and context, if any evidence for such exists.

In this matter the name "Fack Ju Göhte" was fully authorized to screen with the name by the German authorities with no age restrictions. They clearly therefore considered the name to not be vulgar; contrary to the findings of the EUIPO. This national context is important, which should be taken into account by the EUIPO. If the EUIPO wants to depart from this the standard of proof is raised, and in this case they failed to prove otherwise. The first ground of appeal consequently failed according to the AG.

The AG also criticized the EUIPO for a lack of consistency in its decision-making, and for failing to explain why this application's outcome was different to previous decisions (including in Die Wanderhure).

The opinion is very thorough and convincing, and it is very likely that the CJEU will follow the AG's well-reasoned view on the matter. Any rejections by the EUIPO over a contravention of morality should be consistent in their approach, and the CJEU's clarification will hopefully bring them to this outcome. This writer will wait for the CJEU's ultimate decision patiently.

That's Just Offensive - US Supreme Court Allows for the Registration of 'Immoral' Trademarks

The notion of morality is deeply embedded in human society, coloring most facets of it in some ways. Whether it is laws prohibiting deplorable actions, or simply stopping you from saying hateful things (in some jurisdictions), morality is an important part of the legislative framework. In the world of IP you rarely deal with issues of morality, but sometimes they do crop up. In the last few years, the registration of 'disparaging' trademarks has been a hot topic in the US (discussed more here and here), but what about marks that one could class as immoral? The Supreme Court were therefore tasked with deciding this part of trademark law, and handed down their judgment very recently.

The case of Iancu v Brunetti concerned an application to register the mark "FUCT", which was the brand of Mr Brunetti's clothing line. Under examination by the USPTO, the application was rejected due to it being immoral due to vulgarity under 15 USC 1052(a). Mr Brunetti subsequently appealed the decision, arguing that it infringes on his First Amendment right to free speech, with the case ultimately landing on the Supreme Court's desk.

As decided in the Tam case, preventing the registration of 'disparaging' trademarks violated the First Amendment as it "...discriminate[d] against ideas that offend". The grounds for rejecting trademarks that are 'immoral' falls within the same provision of US legislation as rejecting the registration of 'disparaging' ones.

Justice Kagan, handing down the majority's judgment, swiftly determined that the provision similarly violates the First Amendment. The Government argued that the prohibition was a viewpoint-neutral one, and would only be restricted to certain kinds of immorality, therefore being somewhat restricted. The Court didn't buy this argument, and saw that "...It covers the universe of immoral or scandalous—or (to use some PTO synonyms) offensive or disreputable—material". This means that almost anything that fits that criteria could therefore be rejected by the USPTO.

The Court honed matters down further, noting that the provision aims to suppress certain views, albeit 'immoral' ones, and would violate free speech., even if allegedly captured through the use of "viewpoint-neutral" legislative language.

Justice Kagan wrapped matters up by drawing a line in the sand: "There are a great many immoral and scandalous ideas in the world (even more than there are swearwords), and the Lanham Act covers them all. It therefore violates the First Amendment".

While most Supreme Court decisions are incredibly important, the decision in this case is in no way revolutionary. The Court has clearly put an end to the limitation on registering negative trademarks, no matter how offensive or immoral. Applicants can therefore rejoice over the possibility to go ham on registering ever-more offensive marks to their hearts' content...

Walking the Dotted Line - CJEU Decides on what Dotted Lines mean in Trademark Applications

The Devil is often in the details, especially when applying to register trademarks and/or patents. Sometimes the smallest of 'mistakes' or strategic choices could lead to the revocation or devaluation of your IP, so it is important to be sure you have set out the exact parameters in the best way possible to avoid potential issues. One such matter is how trademarks are presented in graphical form, including dotted lines (the Trunki case being a good example of when the illustration of a mark really mattered). With this in mind, how does the inclusion of dotted lines in trademark applications impact the mark, and can they be excluded as being simply illustrative?

The case of Deichmann SE v EUIPO concerned the registration of a trademark involving a cross design on the side of a shoe, where the shoe itself was marked using dotted lines to illustrate the position of the mark (EUTM 2923852). Infringement proceedings involving the mark were initiated by Deichmann 6 years after the registration of the mark, and the other party, Munich SL, counterclaimed for revocation and invalidity. The matter then ultimately ended with the CJEU for determination.

The crux of the matter is whether the mark can be revoked under Article 51 of the EU Trade Mark Regulation for a lack of genuine use in the EU. What the Court also had to consider was whether the mark was a figurative or a position mark, and whether that was an irrelevant fact for the determination of genuine use.

Does it really count if I signed on a dotted line?

The Court considered that "…it [is] irrelevant whether the mark at issue should be regarded as a position mark or a figurative mark". The General Court had previously determined that the mark was a figurative mark at the same time as being a position mark – which the Court agreed with. They further noted that "…‘position marks’ are similar to the categories of figurative and three-dimensional marks as they related to the application of three-dimensional elements to the surface of a product", and the distinction between a figurative and a position mark in the light of distinctiveness is irrelevant.

Similarly it was irrelevant to the assessment of genuine use. The Court emphasised that the acquisition of genuine use is analogous to that of distinctiveness, therefore rendering the distinction between a figurative and a position mark unnecessary for genuine use.

The Court then looked at the mark itself, which they saw consisted of "…broken or ‘dotted’ lines, which represent the appearance of the product covered by that mark, and two solid lines, representing an affixed cross". The dotted line therefore clearly denotes the location of the mark itself, rather than forming a part of the mark, i.e. making it a position mark.

The mark had been registered as a figurative mark, and even though the above sets it out as a position mark, this ultimately does not matter in the light of the mark's registration.

The case is by no means revolutionary, but does draw a line in the law in the light of dotted lines. Most of the time common sense prevails, and applicants can let out a sigh of relief in their world of dotted outlines.

We All Knew That - UK Supreme Court Rules on Patent Obviousness

Patents afford great protection for inventions, but have high threshold in order to ensure that few patents that disclose nothing new are issued. AS one can imagine from common sense, anything that is patented needs to not be obvious, as this would allow for the protection of something that lacks sufficient invention to merit protection. After all, if it is obvious, how can you claim you've invented or found it? Even with this is mind, what makes a patent 'obvious'? In a long awaited decision by the UK Supreme Court, the matter was (finally) put to bed, at least in the UK.

The case of Actavis Group PTC EHF v ICOS Corporation concerned a dosage patent owned by ICOS (EP1173181), which related to the use of tadalafil (more commonly known as Cialis) in a dosage form for the treatment of sexual dysfunction. The patent was exclusively licenced to Eli Lilly. Actavis initiated proceedings to revoke the patent, arguing that it was obvious (among other points), with the matter ultimately ending up with the Supreme Court.

The main point of contention in the case is section 3 of the Patents Act 1977, which sets out that "…an invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art". Put differently, an inventive step (a necessary component for being able to patent something) cannot include something that is 'obvious' to a person skilled in the art, having considered anything that forms the state of the art in which they are skilled in.

Typically the courts follow two tests on determining obviousness; (i) the Windsurfing/Pozzolli structure; and (ii) the EPO's problem-and-solution method.

The question of obviousness, as set out in Conor Medsystems Inc v Angiotech Pharmaceuticals Inc., concerns an undetermined set of factors in the light of all the relevant circumstances. These may include "…the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success".

Lord Hodge then set out a number of factors that he considered were relevant to the case at hand. Without diving deeply into each one of them (totaling at nine different factors), they included:

• whether it was obvious to undertake a specific piece of research, at the priority date, which had a reasonable or fair prospect of success;
• the routine nature of the research and any established practice of following such research through to a particular point;
• the burden and cost of the research programme; and
• the necessity for and the nature of the value judgments which the skilled team would have in the course of a testing programme.

Additionally, as the patent concerned is a dosage patent for the drug, one has to also take into consideration whether the specific dosage is indeed obvious.

The Court finally moved onto consider whether the patent in question was obvious. This began with the acknowledgement that it was obvious for the skilled team to pursue the pre-clinical and clinical research in order to implement the patent. The target for the research was also indeed to identify the appropriate dosage regime for tadalafil in the treatment of erectile dysfunction. The dosages tested would have included doses that were as low as described in the patent. This would, contrary to the decision at first instance, point to the patent being obvious more than not.

Clearly, as discussed by the Court, the approach to finding the correct dose would've been a 'no brainer' for the relevant skilled experts, and the patent was determined to be obvious. This was not contradicted even if following the EPO's problem-and-solution method.

In short, the Court found that "…the Court of Appeal was entitled to interfere with the trial judge’s assessment of obviousness and to hold that the… patent was invalid for lacking an inventive step".

The decision took a long hard look at the tests surrounding obviousness, and will clearly help further assessments of the same question in the future. The decision does also allow for the acceptance of routine or well-established inquiry as patentable subject matter, even if in this instance the dosage was obvious. 

It Ends Now - US Supreme Court Decides on Trademark Licence Expiry on Bankruptcy

An often overlooked facet of business is the aftermath of bankruptcy, particularly in commercial arrangements that don't directly involve a debt to the solvent third party. An example of such an arrangement is trademark licencing, where the party licensing a trademark merely enjoys the benefit of using the mark, and does not have any monies owed to them through the use of the mark (to put things very simply by way of example). One question that hasn't been fully answered in the US is what happens to the licence after the licensor goes bankrupt. The Court of Appeals has been torn on the issue of whether the company going bankrupt can effectively cancel the licence, which has now been looked at by the Supreme Court, who handed their decision in late May.

The case of Mission Product Holdings Inc. v Tempnology LLC concerned the brand "Coolcore", which was owned by Tempnology. The mark had been licenced to Mission in the US and worldwide and also exclusively allowed them to distribute certain Coolcore products in the US. Tempnology filed for bankruptcy during the licence term, and subsequently requested the 'rejection' (i.e. revocation) of the licence through the US Bankruptcy Court. Mission challenged the rejection of the licence, with the matter ultimately ending up with the Supreme Court.

Under section 365(a) of the US Bankruptcy Code the debtor gives a debtor the option, subject to court approval, to "assume or reject any executory contract", i.e. a contract that neither party has finished performing prior to the bankruptcy proceedings. Any rejection of a contract under the provision is an immediate breach of that agreement under contract law, giving the other party the possible route of seeking damages as a result of that breach.

Michael's strategy was no longer a desirable option

In considering the actual meaning of the provision, the Court set out that the section is there to preserve the rights owned by the company before bankruptcy in bankruptcy, and similarly cannot expand on those rights in the same vein. Any trustee in bankruptcy would, therefore, retain those rights and obligations even once bankruptcy proceedings have begun. The Court continued that "…If trustees (or debtors) could use rejection to rescind previously granted interests, then rejection would become functionally equivalent to avoidance… [and] would roll back a prior transfer". The Court was therefore very careful in protecting granted rights, even in the event of bankruptcy.

The Court also rejected Tempnology's argument that, due to exceptions being present in section 365 (providing for protection after 'rejection' to specific parties), that all other parties would therefore not be protected in the same way, including trademark licensees.

Ultimately, the Court therefore held that, under section 365(a), a rejection of a trademark licence under the provision would amount to a breach of contract, and therefore the company cannot rescind that the contract previously granted.

The decision gives needed clarity due to a split in the Court of Appeals Circuits, but does raise further uncertainties that will need to be answered in the future. This writer understands that those would include the scope of non-debtor parties' post-rejection rights under law outside of bankruptcy. In any event, the decision will have a big impact on any bankruptcy proceedings, and companies will have to take heed if any bankruptcy involves trademark licences.

It's all the Same - US Court of Appeals Considers When a Trademark is Generic

Having a well-known brand along with an innovative product can be a cruel mistress to many companies. As your product becomes the market leader, and your brand 'the brand' within that category, there is a risk that your trademark can come under threat of becoming generic. This writer for one has caught himself many times asking someone to "Google" something (found to not be a generic term) or referring to sticky bandages as "Band-Aids" - both of which are examples of misusing a trademark and illustrate the perils of becoming 'the brand'. This issue is rarely litigated extensively in the courts, but a recent case in the US Court of Appeals took it on again and giving us yet more insight into how the courts determine if a trademark is generic or not.

The case of Booking.com BV v USPTO concerned applications by Booking.com to register the name "BOOKING.COM" in a few variations. The marks were initially rejected by both the USPTO and the Trademark Trial and Appeal Board, which considered that the mark was generic as applied to the relevant services, finally succeeding with the District Court. The matter was ultimately appealed to the Court of Appeals, who was tasked with determining whether the mark is generic or not.

In terms of provenance of whether a mark is generic or not, according to the Court, the onus lies on the USPTO to prove this is indeed the case.

The Court then moved onto setting out the test to determine whether a mark is generic or not. The test consists of three factors: (i) identify the class of product or service to which use of the mark is relevant; (ii) identify the relevant consuming public; and (iii) determine whether the primary significance of the mark to the relevant public is as an indication of the nature of the class of the product or services to which the mark relates, which suggests that it is generic, or an indication of the source or brand, which suggests that it is not generic. Once a mark has been deemed to be generic, it cannot become distinctive.

Both parties agreed that, in relation to the first and second steps, the mark is used to identify the class or product to which it belongs (i.e. making hotel reservations for others) and the relevant purchasing public consists of consumers who use hotel reservation services offered via the internet or in person. What remains at issue is the third step, i.e. "…the public's understanding of what the term BOOKING.COM primarily refers to".

In considering the public's understanding of a term the courts may look at "…purchaser testimony, consumer surveys, listings and dictionaries, trade journals, newspapers, and other publications". To ascertain whether the same term is understood to primarily refer to the service or the source the Courts consider the proposed mark as a whole.

The Court subsequently had to consider whether the USPTO's evidence that the public use "booking.com" generically, and whether the inclusion of a top-level domain to a generic second-level domain 'booking' means the mark is necessarily generic.

The USPTO failed to show in their evidence that the mark had become generic. Even though other domain names featured the term 'booking', these alone didn't make the mark generic since the term 'booking' is used to book a multitude of things, not just hotels. Consumers, therefore, wouldn't necessarily understand the mark to automatically mean the provision of hotel booking services. Booking.com's consumer survey also indicated that over 70% of consumers identified the mark as meaning the company, and not just any booking service for hotels. The mark was descriptive, and not generic. The Court of Appeals, therefore, rejected the USPTO's first argument.

The USPTO then argued that the addition of the second-level domain ".com" meant that the mark was necessarily generic.

The Court followed by expanding on its considerations of compound marks, like Booking.com. This focusses on how the public perceives the mark as a whole, not simply as a collation of separate constituent parts. Leading from this the Court noted that the addition of ".com" doesn't in itself make a mark generic, as the public's perception would have to be considered in the light of the whole mark. Additionally, even though the mark describes the activity within the website "...it does not necessarily follow that the public commonly understands the mark to refer to the service broadly speaking". The Court, therefore, rejected the argument on the addition of ".com" making a mark generic.

The Court finally noted that, even though the mark does describe the activity of booking something via a website (specifically hotels), it doesn't prevent others from using the mark in a different context, e.g. booking a car rental or travel tickets.

The case does provide further discussion of an important facet of trademark law in the US, which isn't often touched upon by the courts. While the subject matter is somewhat established, it sets out in more detail the world of trademarks in an online environment, which is growing in importance as we become more and more entwined in an online marketplace.

It Ain't Bad - Advocate General Kotott Considers Bad Faith in TM Applications

Picking the right trademark can sometimes feel like it's the make-or-break moment for a brand, particularly when you are building a brand from nothing. Maybe taking 'inspiration' from a very well-known brand might be the boost you need, since people might naturally gravitate to your brand thinking it is another – but of course without meaning it is that one! Toeing the line of registering a trademark in bad faith is a tough one, since when is an application truly made in bad faith? This issue hasn't been touched on by the EU courts in a while, and in the lead-up to a CJEU decision Advocate General Kokott has given their two cents in a recently published opinion discussing this very issue.

The case of Koton Mağazacilik Tekstil Sanayi ve Ticaret v EUIPO concerned the application for the registration of a figurative mark by Nadal Esteban for the trademark "STYLO & KOTON", with the letters o written using symbols that look like flowers (EUTM 9917436). The application was opposed by Koton, who had earlier rights in the figurative trademark "KOTON", in which the letter o was also written using flowers. Koton argued that Mr Esteban's mark had been registered in bad faith, and should be declared invalid. After a rejection most recently by the EUIPO General Court, the matter has moved for determination by the CJEU, with the AG issuing their opinion ahead of the decision.

Under Article 52(1)(b) of the Trade Mark Regulation, an application can be declared invalid if the applicant was acting in bad faith when filing the application. For the Article to apply the mark applied for has to be identical or similar for identical or similar goods/services to the third-party mark being 'copied'. The General Court rejected Koton's argument under this premise since the mark being applied for was in relation to dissimilar good/services.

The AG emphasized that in assessing bad faith you have to, in addition to the above "…take into account all the relevant factors specific to the particular case which pertained at the time of filing the application". Factors in considering bad faith could include a lack of intention of using the mark at all, or the intention to use it in order to mislead consumers over the origin of goods or services. This could also include the attempt to register a mark knowing or thinking that registration by another would be imminent (i.e. registering iPad thinking Apple might start a line of tablets).

The AG therefore considered that based on the variety of factors raised by the AG (as discussed above) "…It is not therefore essential for recognition of bad faith that a third party is using an identical or similar sign for an identical or similar product or service capable of being confused with the sign for which registration is sought". Bad faith can include the registration of a similar or identical mark for wholly unidentical goods/services. 

The General Court had not considered Mr Esteban's earlier application as a factor when assessing bad faith, which was refused, for identical goods and services. After the EUIPO rejected his application Mr Esteban changed the goods and services included in his application and the mark was registered. The AG considered this to be an important factor and one that needed to be included. What the earlier application allows an inference to be drawn as to his intentions at the time of filing.

This highlights just how different bad faith is to other causes for invalidity, as it "…is not an inherent defect in the trade mark itself, but stems from the circumstances in which it was applied for". An application also cannot be divided into good and bad faith parts under Article 52 of the Regulation, but must be looked at as a whole in the light of bad faith. As such the AG saw that "…The fact that an application was originally filed for a trade mark for goods and services in respect of which the applicant knew or should have known that identical or similar trade marks existed may in any event be an important indication that the application to register that trade mark for other goods or services was also filed in bad faith".

The General Court also failed to properly assess whether Mr Esteban's defense to bad faith had any 'economic logic'. Having considered the new factor, and Mr Esteban's defense to bad faith, the AG concluded that the application had indeed been filed in bad faith.

While we wait for the CJEU's decision in the matter, it seems that the Advocate General has highlighted important oversights made by the General Court.

A Host of Problems - US Court of Appeals Decides on Copyright and Hosting User Uploaded Content

This writer fondly remembers the early days of the Internet when it felt like a totally lawless, open and free space where users could do whatever they wished with whatever they wanted. As the Internet has become more ubiquitous and 'corporate' this had to be reined in, and legislation has slowly caught up to how people use the Internet. One still meddling piece that the legislature and the courts have struggled with is user-uploaded content, where the service provider merely provides the platform for uploading content (infringing or not), and does not actively do it itself. With this in mind, where do you draw the line between freedom and intermediary liability when it comes to user-uploaded content? The US Court of Appeals recently issued an important decision trying to take on this issue.

The case of VHT Inc. v Zillow Group Inc. concerned Zillow, an online marketplace for real estate. VHT is a photography company who take professional pictures of houses and apartments that are then used to illustrate the location for sale to prospective buyers. VHT saves these pictures onto a centralized database, where they are given to clients under a license, which Zillow receives from various real estate related sources. VHT subsequently sued Zillow for copyright infringement for its use of VHT's pictures in its "Listing Platform" and "Digs" pages, exceeding the scope of the licenses issued to VHT's customers.

The first aspect of the case dealt with direct infringement, particularly in the context of Zillow's automated systems. While ownership in the copyright of the works can be easily established, infringement requires direction causation, i.e. volitional conduct. What this means is that "...'direct liability must be premised on conduct that can reasonably be described as the direct cause of the infringement'". What remains key here is who the ultimate selector of the content is; Zillow or the end-user. In order for Zillow to have liability VHT would have to "...show [the alleged infringer] exercised control (other than by general operation of [its website]); selected any material for upload, download, transmission, or storage; or instigated any copying, storage, or distribution" of its photos".

Zillow's systems operate on licensed feeds provided by external third parties, and the providers guarantee those licenses are up to date and authorized. The Court considered that this automated system didn't involve any volitional conduct on part of Zillow, not supporting an argument of direct infringement. This and the various rules within Zillow's systems protected it from direct infringement. Even when notices were filed on behalf of VHT, Zillow acted promptly and removed any infringing images. Overall the Court, therefore, rejected VHT's argument of direct infringement.

Even with this in mind, the jury at first instance did, however, find that Zillow's Digs service did infringe directly on VHT's rights. In considering the evidence issued to the jury, the Court overturned the jury verdict of direct infringement, as VHT had not presented substantial evidence of infringement.

The Court then turned to the matter of fair use in relation to the Digs service. As a short primer, fair use allows for the use of copyright-protected works under certain situations. This is assessed looking at four specific factors: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. In short, the user would have to do something different with the work, and the more it deviates from the original the more likely it is that fair use applies (in essence), i.e. whether it is 'transformative' or not.

How Digs operated was much like a search engine, allowing users to search for photos of apartments in specific styles or configurations. Recent case law has considered search engines to typically be transformative, but that is by no means a panacea to a claim of infringement.

In assessing the Digs service's features in relation to the first factor, the Court considered that it was not a transformative use, since, while the service tagged the photos and organized them, their intended use and nature remained the same; to display space in an apartment in an artful manner. The images didn't serve a different function from what VHT had intended them for.

In terms of the second factor, the Court quickly concluded that the creativity of the photos is critical to their nature, and therefore potentially deserve a higher degree of protection. While this is true, the fact that the photos were published on the listing platform for Zillow to use did work against them in a finding of non-fair use.

For the third and fourth categories, Zillow copied the entire images, which turned the third factor against them. As they were copied in their entirety, they had a direct impact on VHT's market for licensing photos, including to Zillow. The Court, therefore, rejected Zillow's argument of fair use.

The Court then moved onto secondary liability, which can be established if "...a party (1) has knowledge of another's infringement and (2) either (a) materially contributes to or (b) induces that infringement". A material contribution to infringement would require "...actual knowledge that specific infringing material is available using its system, and can take simple measures to prevent further damage to copyrighted works, yet continues to provide access to infringing works".

Most of Zillow's activities around the works were purely passive. Any evidence adduced in relation to those activities would not, according to the Court, fulfill the requirements for the second prong (even with knowledge of infringing materials). VHT argued that Zillow needed to take proactive steps to prevent infringement, including requesting the URLs of infringing works, which the Court promptly rejected. In the end, the Court considered that no jury would be convinced of secondary liability. In equal mesure, the Court rejected VHT's argument on vicarious liability.

The case is a very interesting one, and yet again demonstrates the difficult position internet services and search engines alike are when it comes to copyright infringement.

No Sample for You – Advocate General Szpunar Scratches Music Sampling under EU Copyright

Since the 1970s music sampling has become a staple in the industry, where parts of songs are taken to create parts of new song, particularly popularised by the rap genre. The practice has been an open secret, where artists freely have taken parts from other songs without much by way of repercussions or issues from a copyright perspective, even though an artistic work has been potentially copied. The matter hasn't been widely litigated, but a recent case in the CJEU is set to determine the issue once and for all at least within Europe. Prior to the full CJEU decision, Advocate General Szpunar gave his consideration on the matter in late 2018.

The case of Pelham GmbH v Ralf Hütter and Florian Schneider-Esleben concerned the band Kraftwerk (a well-known German electronic music band), consisting of the claimants Mr Hütter and Schneider-Esleben. The respondents Mr Pelham and Mr Haas had allegedly electronically sampled approximately a two second rhythm sequence from the Kraftwerk song "Metall auf Metall" in their song "Nur mir". Kraftwerk alleged that this sampling infringed their copyright in their song, with the matter ultimately ending with the CJEU from the German courts.

The CJEU were asked six questions, which will be dealt with in turn below.

The first question in essence asked "…whether Article 2(c) of Directive 2001/29 should be interpreted as meaning that taking an extract of a phonogram for the purpose of using it in another phonogram (sampling) infringes the exclusive right of the producer of the first phonogram… where it is taken without the latter’s permission".

After preliminary considerations, the Advocate General addressed the first question, quickly setting out that the copying of the loop would amount to a reproduction under Article 2 of the Directive. This means that the act would be an infringement of the rights afforded by the legislation to the author. However, the rights could be limited, and potential minimal (de minimis) copying could be allowed, i.e. the copying does not pose a financial threat to the original work or its author.

The Advocate General considered that "…A phonogram is not made up of small particles that are not protectable: it is protected as an indivisible whole… a sound or a word cannot be monopolised by an author as a result of its inclusion in a work". The rights afforded to them, therefore, would only be in the entire (or substantial) part of the song, not individual notes and/or sounds. Even so, the right to reproduce the song, or parts of it, are with the author alone, even though the same sound could be created and used in isolation of that work.

The Advocate General also struggled to formulate a test for de minimis copying, as it would be difficult to draw a line, and decide whether this would be a qualitative or quantitative assessment.

Although the parties (and interested third-parties, tried to argue for the de minimis threshold, the Advocate General was not convinced, and saw the answer to the first question as "…Article 2(c) of [the] Directive must be interpreted as meaning that taking an extract of a phonogram for the purpose of using it in another phonogram (sampling) infringes the exclusive right of the producer of the first phonogram to authorise or prohibit the reproduction of his phonogram within the meaning of that provision, where it is taken without the latter’s permission".

The second question referred to the Court concerned "…whether Article 9(1)(b) of Directive 2006/115 should be interpreted as meaning that a phonogram which contains extracts transferred from another phonogram (samples) is a copy of the other phonogram within the meaning of that provision".

Eric had no interest in sampling Anna's music

This question was briefly considered by the Advocate General, who saw that the meaning of a 'copy' of a work should be interpreted as something "…which incorporates all or a substantial part of the sounds of a protected phonogram and which are intended to replace lawful copies thereof". A sample does not replace the original work, but creates a new independent work. Similarly it does not incorporate all or a substantial part of the sounds of the original work.

The Advocate General therefore set out the answer to the second question as "…Article 9(1)(b) of [the] Directive must be interpreted as meaning that a phonogram which contains extracts transferred from another phonogram (samples) is not a copy of the other phonogram within the meaning of that provision".

The third question asked whether it would be possible for Member States to preclude the application of a national law to allow for the use of works without the consent of their author under Directive 2001/29.

As the exceptions included in Article 5 of the Directive don't include permitting the use of protected works for the creation of other works, the Advocate General fairly considered that "...Article 2(c) of Directive must be interpreted as precluding the application of a provision of the national law... according to which an independent work may be created in the free use of another work without the consent of the author of the work used".

The fourth question asks whether the quotation exception under Article 5(3)(d) of Directive 2001/29 applies when a extract of a song is used in another. While typically only associated with literary works, the Advocate General did concede that it is possible it could apply to musical works as well. However, for a copy to be regarded as quotation, it needs to fulfill two conditions: (i) the quotation must be ‘for purposes such as criticism or review’; and (ii) the extract quoted must be incorporated in the quoting work as such or, in any event, without modification.

Sampling clearly fails both conditions, as the use of the extract is not for criticism or review, or used without modification. The Advocate General clearly therefore answered the question in the negative.

The fifth question concerned the latitude afforded to Member States in transposing the relevant copyright directives into their respective national law. After some degree of discussion, the Advocate General answer the fifth question as "...Member States are required to ensure the protection, in their domestic law, of the exclusive rights set out in Articles 2 to 4 of Directive 2001/29, in so far as those rights can be limited only in the application of the exceptions and limitations listed exhaustively in Article 5 of that directive. Member States are nevertheless free as to the choice of form and methods which they consider appropriate to implement in order to comply with that obligation".

Finally, the Advocate General took on the sixth question, which asked "...how the fundamental rights set out in the Charter are to be taken into account when interpreting the scope of the exclusive rights of phonogram producers" under the above Directives. In effect it is asking whether there exists primacy of the freedom of the arts over the exclusive right of reproduction of phonogram producers.

After some discussion of the issue in relation to both German and EU law, the Advocate General considered that "...the exclusive right of phonogram producers under Article 2(c) of Directive 2001/29 to authorise or prohibit reproduction, in part, of their phonogram in the event of its use for sampling purposes is not contrary to the freedom of the arts as enshrined in Article 13 of the Charter.".

The case is a very interesting one, and the ultimate decision of the CJEU might have huge implications for the music industry, particularly genres that heavily rely on the use of samples in the production of new music. It remains to be seen what the CJEU say later this year, but this writer will, for one, wait for the beat drop with anticipation.

Radio Musings - My Contribution to BBC Radio on IP and the Right to Repair Movement

This writer recently had the honor and privilege of being interviewed by the BBC World Service for their Business Daily program on the business implications regarding IP on the right to repair movement and its future.

You can find the piece here: https://www.bbc.co.uk/programmes/w3cswgrc

The right to repair movement is incredibly interesting, and undoubtedly something that will impact companies and consumers in the near future. While the exact IP implications of any future legislation is still unclear, you can bet that it will have some effect, potentially even dramatic, on companies' IP and potential innovation.

McLoss - McDonald's Big Mac Trademark Revoked by EUIPO

It is not often when the 'little guy' wins in a court of law, particularly when coming up against more established and well-known brands and companies. This is even more monumental when the brand in question is near ubiquitous with an industry, namely McDonald's. Although the case has been very widely reported on in the IP community and the wider press, some nuance has been lost in the discourse on the case and what it ultimately means.

The case of Supermac's (Holdings) Ltd v McDonald's International Property Company Ltd concerned the trademark for the iconic Big Mac, which McDonald's had registered as an EU trademark in 1998 (EUTM 62638). Supermac's is an Irish fast food chain, which has been operating in Ireland since the late 1970s. After a prolonged legal fight due to the chain's name against McDonald's (unrelated to the revocation proceedings), Supermac's sought the revocation of the Big Mac trademark at the EUIPO Cancellation Division.

Supermac's argued at the EUIPO that the Big Mac trademark was not put to genuine use within the EU under Article 58 of the EU Trademark Regulation, which stipulates that "...if, within a continuous period of five years, the trade mark has not been put to genuine use in the Union in connection with the goods or services in respect of which it is registered" an EU trademark should be revoked.

What is key is that the Big Mac trademark was registered for a number of goods and services in classes 29 and 30 (covering food items), but also under class 42 for the provision of restaurant services.

The Cancellation Division first set out that genuine use requires "...actual use on the market of the registered goods and services and does not include token use for the sole purpose of preserving the rights conferred by the mark, nor use which is solely internal". Genuine use is assessed looking at all of the relevant facts and circumstances in establishing whether the commercial exploitation is real; however, this does not include commercial success or its scale.

Having reviewed an extensive amount of evidence filed by McDonald's, including affidavits, marketing and internet materials, the panel considered whether they demonstrated genuine use of the Big Mac trademark. Although a great deal of evidence was filed, the panel considered that it didn't prove the extent of the use of the trademark itself. this includes looking at "...the nature of the relevant goods or services and the characteristics of the market concerned, the territorial extent of use, its commercial volume, duration and frequency".

With regards to internet materials, McDonald's failed to submit evidence on the actual data relating to visitors, their locations and the time frame in which this was done. Similarly, the Cancellation Division considered that, although sandwiches using the trademark were demonstrated in the excerpts from the proprietor's website, it was not possible to order the items online (or information on total orders placed and their details if possible). Finally, while brochures were provided as evidence, details on their circulation were not provided to the panel. Clearly McDonald's failed to submit detailed evidence on the use of its trademark, even though common sense demonstrates that the trademark is used within the EU.

The Cancellation Division concluded that "...the evidence analysed above does not provide sufficient details concerning the extent of use; other than exhibiting the sign in relation to goods which could be considered to be part of the relevant goods, these materials do not give any data for the real commercial presence of the EUTM for any of the relevant goods or services".

The proprietor therefore failed to demonstrate that the products marked with the trademark are offered for actual sale, as there is no confirmation of any commercial transactions, either online, or via brick-and-mortar operations. The trademark was deemed to not have been genuinely used within the EU, and the panel revoked the mark.

Clearly the case is an instance of poor evidence selection and provision, and undoubtedly will be appealed by McDonald's to the EU Boards of Appeal. It only goes to show that even the biggest and most resourceful entities can fall foul of a lack of preparation and consideration of evidence. To McDonald's chagrin, their competitors are already taking advantage of the opportunity.

Military Grade News - CJEU Advocate General Opines on Copyright and the Freedom of Expression

IP and freedom of speech have always had a difficult relationship. What could be freer that the ability to use any works you have seen, and share them with a wider potentially different audience, while IP seeks to protect the interests of the original author, even sometimes at the expense of the rightsholders. These issues often come to blows in the courts, and a recent case in the CJEU has brought this conversation back to the forefront. Can you protect works using copyright, even with strong issues of freedom of speech underpinning the sharing of those documents? We found out the precursor to the European answer to this question late last October.

The case of Funke Medien NRW GmbH v Federal Republic of Germany concerned military status reports drawn up for the German government on a weekly basis, which detail developments of deployed forces abroad. These reports are subsequently sent to e.g. various members of the Federal Parliament and the Ministry of Defense for briefing purposes. The documents are classed as classified and restricted. Funke Media published summaries of some of these reports, having acquired copies of them through potentially illicit means as an application to access them was rejected by the German government. They were subsequently taken to court for copyright infringement, with the matter ultimately ending with Advocate General Szpunar.

The balancing act between ensuring freedom of expression, but still protecting copyright owners' rights, is a difficult one, since the interests are often very much in competition with each other. The Court was tasked in balancing this difficult dichotomy.

Copyright through numerous exceptions allows for some freedoms when it comes to using copyright materials, including for critique, satire and review. However, the exceptions are by no means very broad (like in the US under fair use), and could be used to curtail genuine public discourse and commentary.

The Charter of Fundamental Rights of the European Union sets out the various rights enjoyed within the Union, and Article 51 asserts those rights onto any EU legislation implemented by Member States. In this case, Article 11 is in contention, which gives everyone the right of freedom of expression.

Other methods might've worked better to keep matters 'secret'

The main question that the Advocate General sought to answer is whether the grounds asserted by the German government are good enough to trump the Claimant's right to freedom of expression. The Advocate General did, however, note that as the copyright holder in this case is a Member State, it does not enjoy the same rights as the people living in that Member State. He distinguished the matter in that "...the State cannot rely on the fundamental right to property as a means of restricting another fundamental right guaranteed by the ECHR or the Charter", even though the State might have a remedy under civil rights.

The Advocate General summarized the position as "...If the State were able to invoke its individual rights, other than the public interest, in order to limit fundamental rights, the result would be the destruction of those fundamental rights". The State would have to put forward an argument under public interest to protect the works in question in order to limit the fundamental rights guaranteed in the Charter. In his view, the State fails under the public interest argument.

He then turned to the matter of copyright protection offered for the military reports. Copyright at its core aims to achieve two objectives: (i) to protect the personal relationship between the author and his work as his intellectual creation; and (ii) to enable authors to exploit their works economically.

While Germany does own the copyright in the military reports, the country itself cannot be construed as the author of those works. Even though they were drafted by State employees, strictly speaking the works themselves do not have an author at all. The Advocate General saw that, as copyright endeavors to protect the relationship between the author and the works created, the State's interests cannot be protected in works it isn't the author of. As he put succinctly: "...where there is no author, there is no copyright, in the form of either moral or property rights".

Similarly, as the State does not seek to profit from the works themselves economically, but to protect the contents from public scrutiny, the Advocate General deemed the matter outside of the remit of copyright.

In short, "...the answer should be that Article 11 of the Charter, read in conjunction with Article 52(1) thereof, must be interpreted as precluding a Member State from invoking copyright under Article 2(a) and Article 3(1) of [the] Directive in order to prevent the communication to the public, in the context of a debate concerning matters of public interest, of confidential documents emanating from that Member State. That interpretation does not prevent the Member State from applying, in compliance with EU law, other provisions of its domestic law, including those relating to the protection of confidential information".

The Advocate General clearly sought to protect the interests of those seeking to share and disseminate information, while the State attempted to curtail those efforts through incorrect means. Copyright clearly was not the appropriate vehicle to protect the legitimate interests in keeping military documents secret, and the State therefore could pursue it through other avenues. In the end, it remains to be seen what the CJEU rules in this case.