16 August, 2022

These Shoes are Made for Selling - AG Szpunar Opines on Intermediary Liability and the 'Use' of a Trademark for Online Marketplaces

Intermediaries in e-commerce are a near necessity for many online sellers of products, but they can produce headaches and issues where potentially unauthorized goods are sold through them that infringe a company's IP rights. The status of intermediaries' liability has been slowly evolving in the courts, and a hotly anticipated decision by the CJEU on the issues is very close in the horizon that should clear matters up significantly in Europe. Before this, however, Attorney General Szpunar has had their say and issued their opinion earlier this Summer (the opinion only being available in English very recently). The opinion sets the scene for the CJEU and could be a glimpse into the CJEU's position on the matter in the near future. 

The case of Christian Louboutin v Amazon Europe Core Sàrl concerned infringement proceedings launched by Christian Louboutin against Amazon, under which they alleged that: (i) Amazon is liable for infringement of his trade mark; (ii) it should cease the use, in the course of trade, of signs identical to that trade mark in the EU; and (iii) he is entitled to damages for the harm caused by the unlawful use at issue. Amazon unsurprisingly challenged this position, arguing that it is merely an operator of an online marketplace and cannot be held liable for the actions of its sellers. The Luxembourg courts referred the matter to the CJEU for clarification, which is closing in on the crescendo of the decision itself following AG Szpunar's opinion.

The case combines two separate actions in Luxembourg and Belgium involving the two parties. 

AG Szpunar noted that they both concerned the interpretation of the concept of ‘use’ for the purposes of Article 9(2) of Regulation 2017/1001. In essence the referring courts are asking "…whether Article 9(2)… must be interpreted as meaning that the operator of an online sales platform must be regarded as using a trade mark in an offer for sale published by a third party on that platform on account of the fact that, first, it publishes both its own commercial offerings and those of third parties uniformly without distinguishing them as to their origin in the way in which they are displayed, by allowing its own logo as a renowned distributor to appear on those advertisements, and, secondly, it offers third-party sellers the additional services of stocking and shipping goods posted on its platform by informing potential purchasers that it will be responsible for those activities". The courts also asked "...whether the perception of a reasonably well-informed and reasonably observant internet user has an impact on the interpretation of the concept of ‘use’"

As a primer, Article 9(2) provides that the proprietor of an EU trademark is entitled to prevent all third parties not having their consent from using, in the course of trade, any sign which is identical with the trademark. However, what amounts to 'use' in this context is paramount to determining potential liability under the provision for any would-be infringer. 

AG Szpunar then moved on to discussing the current definition of 'use' under Article 9. Some of the main decisions here are Daimler AG v Együd Garage Gépjárműjavító és Értékesítő Kft, Coty Germany GmbH v Amazon Services Europe Sàrl, Google France SARL and Google Inc. v Louis Vuitton Malletier SA and L’Oréal SA v eBay International AG

The CJEU has found that the term 'using' in terms of intermediaries involves active behavior and direct or indirect control of the act constituting the use, and that the act of use presupposes, at the very least, that that third party uses the sign in its own commercial communication. The latter point was key in this according to the AG and without it any such use would be lacking.

In terms of the commercial communication aspect, the CJEU has determined that a referencing service provider does not use a sign in its own commercial communication since it only allows its clients themselves to use the relevant signs, with the result that it "…merely creates the technical conditions necessary for the use of a sign"

Similarly, a marketplace operator would not be using a sign in its own commercial communication when it provides a service consisting in enabling its customers to display that sign in their commercial activities, and that the stocking of goods bearing the relevant sign is not a use of that sign in a third party’s own commercial communication since it has not itself offered the goods for sale or put them on the market. 

The AG does highlight that this set of definitions is not a clear one and needs to be more specific and focused to make better sense. 

The AG very cleverly shifted the definition towards the recipient away from the actual communicator, i.e. the platforms. He discussed that the commercial communication of an undertaking would be to promote goods or services to third parties. To put simply, the intermediary adopts the sign to such an extent that that sign appears to be part of its activity.

The adoption condition still has to be looked at from the perspective of the recipient, i.e. the user of the marketplace, to determine whether the sign is perceived by that user as being integrated into that commercial communication. The user that this would be assessed against is a "reasonably well-informed and reasonably observant internet user"

AG Szpunar then moved on to discussing Amazon's particular business model and whether they would be 'using' a trademark in the course of their business. 

The first question referred to the CJEU concerned, primarily, if "…the activity of a marketplace operator of publishing commercial offerings from third-party sellers on its website where those offers for sale display a sign which is identical with a trade mark"

As noted above, this activity would not constitute a 'use' of a trademark (specifically decided in the eBay case), however, Amazon operates differently to eBay as a marketplace. Amazon provides a much more comprehensive offering, where third party sellers can post their own advertisements for goods in addition to Amazon's own. In those instances, the Amazon logo is merely present to indicate to consumers that the ad was posted by a third party seller. 

In that instances the AG noted that that would not lead to a reasonably well-informed and reasonably observant internet user to perceive the signs displayed on the advertisements of third-party sellers as part of Amazon’s commercial communication. The same would apply to the integration of third-party ads by Amazon into specific shops on the platform, which is the type of organization that is integral to the functioning of these types of online platforms. 

The referring courts also asked whether "…the fact that Amazon offers a ‘comprehensive’ service, including providing assistance in preparing advertisements and the stocking and shipment of certain goods, has an impact on the classification of the use of a sign displayed on those advertisements by Amazon"

To properly consider this the AG highlighted that you must consider Amazon’s activities as a whole to determine whether the involvement of that company might be classified as use of that sign. The AG thought that this would not be the case. 

Amazon's involvement, while able to give them more control over the sale of a product that may infringe a trademark, but that involvement was only for the benefit of the consumer so that they could ensure prompt and guaranteed delivery after a product is purchased. In the AG's view this is not sufficient to establish that Amazon has used the sign at issue in its own commercial communication. 

This position ties in with the decision in Coty, where the CJEU determined that "…a sign cannot be regarded as having been used in the marketplace operator’s own commercial communication where that operator stocks goods bearing a sign on behalf of a third-party seller without itself pursuing the aim of offering those goods or putting them on the market"

The AG also noted that Amazon's posting of the ads in question would not be 'using' the sign in question either. 

To round things off, the AG summarized their position as answering the questions that "…Article 9(2)… must be interpreted as meaning that the operator of an online sales platform cannot be regarded as using a trade mark in an offer for sale published by a third party on that platform on account of the fact that, first, it publishes both its own commercial offerings and those of third parties uniformly, without distinguishing them as to their origin in the way in which they are displayed, by allowing its own logo as a renowned distributor to appear on those advertisements, both on its website and in the advertising categories of third-party websites and, secondly, it offers third-party sellers the additional services of assistance, stocking and shipping of goods posted on its platform by informing potential purchasers that it will be responsible for the provision of those services, provided that such elements do not lead the reasonably well-informed and reasonably observant internet user to perceive the trade mark in question as an integral part of the operator’s commercial communication".

The AG's opinion really sets the scene for the CJEU and seems very sensible in protecting the functionality of online marketplaces, like Amazon. If the courts would see things otherwise, this would clearly massively impede the functionality of these services, and in fact, without heavy moderation by the platforms themselves, would make them impossible to operate. This should not be seen as carte blanche for the platforms either, but could set sensible, clearer boundaries for both platforms, brands and third party sellers, but it remains to be seen what the CJEU's position will be. 

03 August, 2022

The EPO Are Not 'Board' of AI Yet - EPO Board of Appeal Weighs in on Whether Artificial Intelligence Can Be an Inventor

The progression of AI in the world of IP rights keeps trundling along, with many national and international bodies having already weighed in on whether AI can be an inventor for the purpose of patent law or not (discussed on this blog before). The answer seems to have been a resounding "no", however, following an earlier decision by the EPO, the EPO Board of Appeal has now issued its decision in the ever-continuing DABUS saga, which does shed some further light on the matter and does show that the current legislative framework does seem robust enough on the matter of AI (though this writer would think that specific legislative updates are still a must).

The case of Designation of inventor/DABUS (case J 0008/20) concerned two patent applications filed at the EPO (namely EP18275163 and EP18275174). The applications didn't list an inventor for the patents, but, following a clarification by the applicant, Stephen Thaler, the inventor was noted to be "DABUS". DABUS is an AI created by Mr Thaler. The EPO Receiving Section rejected both applications on the grounds that the designated inventor, DABUS, didn't meet the requirements for an inventor, that being a need for them to be a 'natural person'. Mr Thaler subsequently appealed both decisions to the Board of Appeal.

The appeal was brought on three separate grounds: (i) whether an applicant can designate an entity which is not a natural person as the inventor under Article 81 of the European Patent Convention; (ii) to comply with the EPC is it enough for an applicant to file any declaration irrespective of its content, or does the latter need to satisfy specific requirements; and (iii) whether and to what extent the EPO can examine and object to statements filed under Article 81.

To set the scene, Article 81 requires that an inventor be designated for all patent applications, and any deficient designation of an inventor can be amended under Rule 21 of the EPC. Further, Article 61 of the EPC notes that "[t]he right to a European patent shall belong to the inventor or his successor in title" (the latter being a legal successor in the title of the rights), and the rights of any employee, if they are the inventor, will be determined by the national legislation where they are employed. 

The Board of Appeal first dealt with the main request in the matter, i.e. whether an AI can be an inventor of a patent. The Board firmly rejected this point, as they determined that "[u]nder the EPC the designated inventor has to be a person with legal capacity", so adopting a simpler, ordinary meaning approach in deciding what an 'inventor' is. What the provisions around designating an inventor seek to do are to confer and protect the rights of the inventor, facilitate the enforcement of potential compensation claims provided under domestic law, and identify a legal basis for entitlement to the application. The Board clearly set out that "[d]esignating a machine without legal capacity can serve neither of these purposes"

The Board also noted that there is no practice or agreement that would allow for the Board to overcome this specific language. The appellant also advanced an argument of fairness allowing for AI to be an inventor of a patent; however, the Board immediately rejected this argument as well. 

The Board therefore confirmed that the Receiving Section's decision was correct in raising an objection to the applications. 

In summarizing its position, the Board decided that "…the main request does not comply with the EPC, because a machine is not an inventor within the meaning of the EPC. For this reason alone it is not allowable"

The Board then turned to the auxiliary request, i.e. whether the first sentence of Article 81 does not apply where the application does not relate to a human-made invention. The Board swiftly sided with the request and agreed that the part of Article 81 would not apply in that instance, since the provisions were drafted to confer specific rights on the inventor, so where no human inventor can be identified, then Article 81 does not apply. 

The appellant had provided a statement with this request noting that they had derived the right to the European patent as owner and creator of the machine. The Board disagreed and stated that the statement didn't bring them within the remit of Article 60, since there is no legal situation or transaction which would have made him successor in title of an inventor. 

The Board did consider two referrals that were requested to be made to the Enlarged Board, however, the referrals were rejected. 

In discussing why no referral was needed, the Board turned to matters surrounding Article 52 of the EPC, which specifies that an invention is one which is novel, industrially applicable and involves an inventive step is patentable. The appellant argued that the provision only relates to human-made inventions, and the Board agreed with this position. How a particular invention was made doesn't play a part in the patent system, so therefore it is possible that AI-generated inventions too are patentable under Article 52. However, this position can't co-exist with Article 60, so you would have inventions that are patentable under Article 52, but for which no rights are provided under Article 60. 

The Board also considered the requirement to file a statement of origin of the right to a European patent where the inventor and the applicant differ. The Board noted that this is only a formal requirement, and only informs the public of the origin of the right, but that it would be disproportionate to deny protection to patentable subject-matter for failing to fulfil such a formal requirement. 

Additionally, they noted that, as the lawmakers only had human-made inventions in mind when drafting Article 60, so it is possible that no statement on the origin of the right is required where the application concerns an invention developed by a machine. 

The crux of why Mr Thaler's applications have failed in light of the above is that there is nothing preventing him from listing himself as the inventor in relation to both applications. The Board highlighted that there is no case law "…which would prevent the user or the owner of a device involved in an inventive activity to designate himself as inventor under European patent law".

The decision is yet another among many that highlight the issues of AI inventorship and why there is simply a need for evolution in the law to accommodate AI inventions somehow. However, as noted by the Board, the creator of the AI could be listed as the inventor, bypassing this issue, however, it seems that Mr Thaler was deadset on setting a new precedent and allowing for direct ownership by the AI systems. This presents the problem of enforcement and/or remuneration, and undoubtedly these would be handled by the creator themselves, rendering this problem almost moot in this writer's view. We will see if the case progresses to the Enlarged Board, but it seems that Mr Thaler is in no way done with the DABUS saga as things stand.