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.
Showing posts with label group. Show all posts
Showing posts with label group. Show all posts
11 April, 2019
16 August, 2016
Parallel Infringement - Parallel Importation of Rebranded Cigars Okay, Says Australian Full Federal Court
Tobacco packaging has been a popular topic in the last couple of years, including on this very blog (articles on which can be found here, here and here), particularly in the remit of plain packaging. Whether you dislike the initiative or support it, one can still appreciate the sentiment behind it. What the legislation has done is caused severe issues for products like cigarettes that heavily rely on these distinctive markings to indicate their own brand and distinguish its features from the rest. In Australia the law has been in effect since 2011 under the Tobacco Plain Packaging Act 2011, which means all tobacco products must conform to the requirements of the law in their packaging. With that said, could one repackage purchased tobacco products and subsequently resell them in Australia? The Full Federal Court took this question on after an appeal from the Federal Court whose decision was handed down in late 2015.
The case of Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd dealt with the sale of tobacco products in Australia, specifically cigars manufactured by STG Eersel. The company, in relation to the sale of these goods, also holds several trademarks for cigar brands, including Café Créme (No. 761892), Henri Wintermans (No. 179680) and La Paz (No. 643779). The cigars were manufactured in Belgium, Holland and Indonesia, using packaging incorporating the aforementioned marks. The same cigars are packaged differently for the Australian market in order to conform to the plain packaging legislation mentioned above, which is done abroad similarly to the branded products. Trojan is an importer and supplier of cigars and other tobacco products, supplying, among other items, STG's cigars to the Australian market from overseas, repackaging them to conform to the same legislation. At first instance, Chief Justice Allsop saw that Trojan had not infringed STG's trademarks by repackaging their branded products; however, the decision was appealed by STG.
The Full Federal Court firstly sought to establish was whether the trademarks mentioned above had been infringed by Trojan through their parallel importation, i.e. were STG's marks used "as a trade mark" under section 120 of the Trade Marks Act 1995 and if section 123 (allowing for the use of a trademark if the mark has been applied to the goods prior to or with the consent of the rightsholder) of the same Act applied to those uses.
What constitutes use "as a trade mark" was initially set out by the Court as "...[a] use of the mark as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods". This use still has to be assessed within its context, including how the marks are used, as "...not every use of a mark which is identical with or deceptively similar to a registered trade mark infringes the right of property which the proprietor of the mark possesses in virtue of the registration".
The Court concluded that "...a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of manufacture will have used the mark as a trade mark". Their conclusion relies heavily on the impact of parallel importation on the original manufacturer, and the existence of section 123, which, if this were not the case, would be largely redundant. This position follows previous Federal Court case law quite well, even with the existence of foreign cases accepting the opposite position.
As the Court had determined that the importation of the branded goods was indeed a use of the marks, they moved onto the question of whether the use amounted to an authorized use under section 123 of the Act. The section is engaged when, in the past or prior to the use under section 120, the rightsholder (or someone authorized by them) has applied the mark onto the packaging of the goods, which are subsequently sold onward by the third-party (i.e. used "as a trade mark" as discussed above). What seems to remain key here is the reapplication of the mark onto the new packaging by Trojan, which, according to the Court, should be covered by the section through a much wider interpretation of it. Ultimately what the Court concluded was that Trojan were protected under section 123 and did not infringe STG's trade marks.
Finally, the Court did briefly discuss issues surrounding a passing off claim and Australian consumer protection laws, and deemed that Trojan had not passed the repackaged cigars off as STG's, nor had they been in breach of any consumer legislation in their repackaging efforts (specifically deceive or mislead consumers).
The case is a very interesting illustration of the possible perils of parallel importation, and shows the differences in the approaches in the UK and Australia (and, to some extent, the EU). As the world and trade have become more and more global, parallel importation will be a bigger issue for the future. Even so, the Full Federal Court's approach is very sensible, considering the packaging environment that exists in the country for tobacco products. It is unclear whether the decision will be appealed to the High Court, but this writer thinks, after two successive losses, STG might have to just accept defeat.
Source: IP Whiteboard
The case of Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd dealt with the sale of tobacco products in Australia, specifically cigars manufactured by STG Eersel. The company, in relation to the sale of these goods, also holds several trademarks for cigar brands, including Café Créme (No. 761892), Henri Wintermans (No. 179680) and La Paz (No. 643779). The cigars were manufactured in Belgium, Holland and Indonesia, using packaging incorporating the aforementioned marks. The same cigars are packaged differently for the Australian market in order to conform to the plain packaging legislation mentioned above, which is done abroad similarly to the branded products. Trojan is an importer and supplier of cigars and other tobacco products, supplying, among other items, STG's cigars to the Australian market from overseas, repackaging them to conform to the same legislation. At first instance, Chief Justice Allsop saw that Trojan had not infringed STG's trademarks by repackaging their branded products; however, the decision was appealed by STG.
The Full Federal Court firstly sought to establish was whether the trademarks mentioned above had been infringed by Trojan through their parallel importation, i.e. were STG's marks used "as a trade mark" under section 120 of the Trade Marks Act 1995 and if section 123 (allowing for the use of a trademark if the mark has been applied to the goods prior to or with the consent of the rightsholder) of the same Act applied to those uses.
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| Lewis now doubted the legitimacy of his cigarettes |
The Court concluded that "...a person who, in the course of trade, imports and sells goods to which a registered mark was applied by its owner at the time of manufacture will have used the mark as a trade mark". Their conclusion relies heavily on the impact of parallel importation on the original manufacturer, and the existence of section 123, which, if this were not the case, would be largely redundant. This position follows previous Federal Court case law quite well, even with the existence of foreign cases accepting the opposite position.
As the Court had determined that the importation of the branded goods was indeed a use of the marks, they moved onto the question of whether the use amounted to an authorized use under section 123 of the Act. The section is engaged when, in the past or prior to the use under section 120, the rightsholder (or someone authorized by them) has applied the mark onto the packaging of the goods, which are subsequently sold onward by the third-party (i.e. used "as a trade mark" as discussed above). What seems to remain key here is the reapplication of the mark onto the new packaging by Trojan, which, according to the Court, should be covered by the section through a much wider interpretation of it. Ultimately what the Court concluded was that Trojan were protected under section 123 and did not infringe STG's trade marks.
Finally, the Court did briefly discuss issues surrounding a passing off claim and Australian consumer protection laws, and deemed that Trojan had not passed the repackaged cigars off as STG's, nor had they been in breach of any consumer legislation in their repackaging efforts (specifically deceive or mislead consumers).
The case is a very interesting illustration of the possible perils of parallel importation, and shows the differences in the approaches in the UK and Australia (and, to some extent, the EU). As the world and trade have become more and more global, parallel importation will be a bigger issue for the future. Even so, the Full Federal Court's approach is very sensible, considering the packaging environment that exists in the country for tobacco products. It is unclear whether the decision will be appealed to the High Court, but this writer thinks, after two successive losses, STG might have to just accept defeat.
Source: IP Whiteboard
16 May, 2016
Hidden Benefit - Use of Trademarks as Google AdWords Allowed in Australia
There are many aspects of the Internet that most of its users are blissfully unaware of, including mountains of code and infrastructure that goes unseen. This is important, since seeing every aspect of a web browsing experience would cause information to be muddled and hard to digest, if not impossible to handle properly, so this 'invisible' network is necessary for the modern experience. Even so, the hidden layers of the Internet could be used for nefarious purposes, or possibly to try and take advantage of the goodwill of businesses or their trademarks, which puts it in a position of some scrutiny. While this blog has discussed metatags before (in a Canadian context), a similar question arose yet again, only this time all the way across the world in Australia.
The case of Veda Advantage Limited v Malouf Group Enterprises Pty Limited dealt with Veda, who are a big credit reporting organization in Australia. Among providing consumer credit reports, they also offer a credit repair service, expunging incorrect or otherwise erroneous listing on a consumer's credit report, therefore improving their credit score (although Veda do not do this proactively, only responding to customer's notices on this information). Malouf Group offer a similar service, although liaising with Veda on their customers behalf (in the process acquiring a copy of their report from them). Veda are also in possession of several registered trademarks over its name, or variants of it, including VEDA, VEDA ADVANTAGE and VEDACHECK. In advertising their business online, Malouf used the name Veda in 86 Google AdWords keywords, which were targeted at those wanting to contact Veda and would be directed to Malouf's services. They were subsequently sued by Veda for trademark infringement for their use of the name (or its variants) in their Google AdWords campaigns, potentially contravening section 120 of the Australia Trade Marks Act 1995.
Under the section above a trademark is infringed when a sign is "...use[d] as a trade mark... that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered". The key questions therefore are whether the name "Veda" was used 'as a trade mark' and whether this was done 'in relation to services' that the marks were registered for.
Judge Katzmann, handing down the Federal Court's judgment, first dealt with the issue of whether the name Veda was used as a trade mark by Malouf in their use of it in their Google AdWords advertising. The use would have to be "...as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods". This has to be done objectively, including taking into account the nature and purpose of the use.
She rejected the notion that Malouf were using the signs as trademarks, as, in her mind, the selection of marks used in the Google AdWords platform does not create a connection with the services of the marks' owner, but act as a way to direct possibly interested parties to your own services. They can equally be acquired by any business, including Malouf's competitors, which would add further links in the search results. The marks are also invisible to the user, who will not see them outside of the results and their search query itself. The invisible nature of the marks would not create an impression on the user that that specific word is what brought up the results, and therefore would not confuse them as to their indication of origin. She distinguished Google AdWords from metatags, which function differently and are possibly visible to the user (although, this writer will contest that many will ever see them), being therefore used as a trademark in the context of the Act. She concluded that "...the use of a sign which is invisible to the consumer is [not] use as a trade mark within the meaning of the Trade Marks Act".
Judge Katzmann then moved onto discussing the marks' use in the sponsored links that appear at the top of results when a keyword or words are searched. What is worth also noting is the use of the name Veda (and other words) in custom headings that appear within these sponsored results. Judge Katzmann saw that in the majority of the instances (all but one) the use of Veda was not a use as a trademark. In her view the use was to "...describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark". To put this into slightly different terms, this meant that the mark was used merely to describe a specific service, and not as an indication that it originated from Veda.
The final point in relation to infringement was whether the marks were used in relation to services in respect of which the trade marks were registered. As the marks were registered for several different classes they encompassed a wide array of services, including consultation, advice and analysis in relation to financial services (with plain financial services not being offered by Malouf). Judge Katzmann rejected Malouf's assertion, and accepted that the marks were used in relation to the services they were registered for, even if the services offered by Malouf were not identical to Veda's. After a very brief discussion, Malouf was also deemed not to have a defence under section 122 of the Act through a use in good faith. In the end Judge Katzmann saw that Malouf only infringed the marks in respect of two search queries (specifically "The Veda Report Centre" and "The Veda-Report Centre"), with the rest deemed not to infringe under the Act.
What was curious in the case is the discussion surrounding the European or UK position in relation to this type of meta-information and infringement of trademarks. Judge Katzmann distinguished both Google France SARL v Louis Vuitton Malletier SA and Interflora Inc and Anor v Marks & Spencer, determining that the wording used in the EU legislation was not an equivalent to the Australian wording, especially with the difference in 'using in the course of trade' (per Article 5 of the first Trade Mark Directive) and 'used as a trademark' under section 120 of the Australian Act. In her view, the use would have to be, contrary to the aforementioned judgments, as a 'badge of origin' and not merely in the course of trade (whether used as a badge or not). The invisibility of the use seems to be key here in an Australian context, whereas in Europe this seems to be mostly irrelevant under previous considerations.
The case also dealt with competition issues under the Australian Consumer Law, and Judge Katzmann deemed that the provisions were only contravened under the above two search queries for which the marks were also infringed.
All in all the case is very interesting, and provides some valuable insight into the nuanced world of the Internet and its hidden facets. Australian law seems to diverge, at least for now, from its cousins in Europe and the UK, and this judgment strongly cements it as such.
Source: K&W IP Whiteboard
The case of Veda Advantage Limited v Malouf Group Enterprises Pty Limited dealt with Veda, who are a big credit reporting organization in Australia. Among providing consumer credit reports, they also offer a credit repair service, expunging incorrect or otherwise erroneous listing on a consumer's credit report, therefore improving their credit score (although Veda do not do this proactively, only responding to customer's notices on this information). Malouf Group offer a similar service, although liaising with Veda on their customers behalf (in the process acquiring a copy of their report from them). Veda are also in possession of several registered trademarks over its name, or variants of it, including VEDA, VEDA ADVANTAGE and VEDACHECK. In advertising their business online, Malouf used the name Veda in 86 Google AdWords keywords, which were targeted at those wanting to contact Veda and would be directed to Malouf's services. They were subsequently sued by Veda for trademark infringement for their use of the name (or its variants) in their Google AdWords campaigns, potentially contravening section 120 of the Australia Trade Marks Act 1995.
Under the section above a trademark is infringed when a sign is "...use[d] as a trade mark... that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered". The key questions therefore are whether the name "Veda" was used 'as a trade mark' and whether this was done 'in relation to services' that the marks were registered for.
Judge Katzmann, handing down the Federal Court's judgment, first dealt with the issue of whether the name Veda was used as a trade mark by Malouf in their use of it in their Google AdWords advertising. The use would have to be "...as a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods". This has to be done objectively, including taking into account the nature and purpose of the use.
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| Google AdWords can be questionable at times |
Judge Katzmann then moved onto discussing the marks' use in the sponsored links that appear at the top of results when a keyword or words are searched. What is worth also noting is the use of the name Veda (and other words) in custom headings that appear within these sponsored results. Judge Katzmann saw that in the majority of the instances (all but one) the use of Veda was not a use as a trademark. In her view the use was to "...describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark". To put this into slightly different terms, this meant that the mark was used merely to describe a specific service, and not as an indication that it originated from Veda.
The final point in relation to infringement was whether the marks were used in relation to services in respect of which the trade marks were registered. As the marks were registered for several different classes they encompassed a wide array of services, including consultation, advice and analysis in relation to financial services (with plain financial services not being offered by Malouf). Judge Katzmann rejected Malouf's assertion, and accepted that the marks were used in relation to the services they were registered for, even if the services offered by Malouf were not identical to Veda's. After a very brief discussion, Malouf was also deemed not to have a defence under section 122 of the Act through a use in good faith. In the end Judge Katzmann saw that Malouf only infringed the marks in respect of two search queries (specifically "The Veda Report Centre" and "The Veda-Report Centre"), with the rest deemed not to infringe under the Act.
What was curious in the case is the discussion surrounding the European or UK position in relation to this type of meta-information and infringement of trademarks. Judge Katzmann distinguished both Google France SARL v Louis Vuitton Malletier SA and Interflora Inc and Anor v Marks & Spencer, determining that the wording used in the EU legislation was not an equivalent to the Australian wording, especially with the difference in 'using in the course of trade' (per Article 5 of the first Trade Mark Directive) and 'used as a trademark' under section 120 of the Australian Act. In her view, the use would have to be, contrary to the aforementioned judgments, as a 'badge of origin' and not merely in the course of trade (whether used as a badge or not). The invisibility of the use seems to be key here in an Australian context, whereas in Europe this seems to be mostly irrelevant under previous considerations.
The case also dealt with competition issues under the Australian Consumer Law, and Judge Katzmann deemed that the provisions were only contravened under the above two search queries for which the marks were also infringed.
All in all the case is very interesting, and provides some valuable insight into the nuanced world of the Internet and its hidden facets. Australian law seems to diverge, at least for now, from its cousins in Europe and the UK, and this judgment strongly cements it as such.
Source: K&W IP Whiteboard
29 May, 2015
Supreme Goodwill - UK Supreme Court Addresses Jurisdictional Goodwill
In today's business world reputation is everything when selling your goods or services to the masses at large. Goodwill, the inherent reputation of your goods or services, can easily overreach beyond the mere confides of countries, continents, or even the solar system. With this in mind, how far a business' goodwill can, and does, reach is hugely important, especially when it comes to someone passing off their goods or services as a famous brands' equivalents. What makes things even more complex is the nature of the online world we are all a part of, which has a wholly borderless reach (excluding geo-blocking), and in which anyone can pass themselves off as someone or something else without much difficulty. This begs the question: how far does your goodwill extend, even if you have no or very little presence in a given territory, due to your goodwill online? The Supreme Court of the United Kingdom endeavored to answer this question only a little over a month ago.
The case in question was Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others, which concerned the use of IPTV, or in more simplistic terms, the streaming of TV via the Internet using dedicated hardware to do so, very much like cable TV but in an online environment. Starbucks (HK) and PCCW Media Ltd, two corporate members of a larger group (referred to as "PCCM" in the judgment as a whole), which operated an IPTV service called "NOW BROADBAND TV", subsequently renamed to "NOW TV", in Hong Kong, being the largest entity in its respective IPTV business in the country. Most of the channels offered through the NOW TV service are in Chinese, and are not accessible in the United Kingdom, although some people in the UK had been identified as being aware of the service. PCCM had since considered expanding internationally, and did so by launching a mobile app called NOW aimed at the Chinese-speaking population in the UK. Prior to the launching of the app in the same year Sky announced its "NOW TV" on-demand service, which went into its beta phase roughly at the same time as the launching of PCCM's mobile app. PCCM subsequently sued Sky under the tort of passing off (more on which can be found here), with the case ending up all the way in the Supreme Court.
Passing off, as has been noted in the article above, hinges on three factors that need to be established in order to prove the tort of passing off: (i) goodwill or reputation in the goods or services provided in the minds of the purchasing public; (ii) a misrepresentation by the defendant to the public that leads or is likely to lead, the public to think the goods or services are provided by the plaintiff; and (iii) the plaintiff suffers, or is likely to suffer, damage as a result of this misrepresentation. PCCM established the latter two requirements at first instances, and therefore the Supreme Court had to decide on whether Sky's service fulfilled the first requirement, amounting to passing off.
The main question therefore to the Supreme Court was whether PCCM had goodwill in the jurisdiction in question, in other words a customer base, meaning the UK. As the court stated, reiterating Lord Justice Oliver in Anheuser-Buch v Budejovicky Budvar NP, that goodwill is very much "localized" and that "...reputation which may, no doubt, and frequently does, exist without any supporting local business… does not by itself constitute a property which the law protects". In other words, even if goods or services have a certain, even strong reputation to them, does not mean it inherently commands it everywhere, irrespective of actual use or not. This line of thinking very much confirms precedent from decades prior, where similar conclusions have been made as to the localized nature of goodwill.
After a presentation as to the law from both sides the Court finally discussed its decision on whether passing off, or goodwill, has a territorial nature to it. As Lord Neuberger remarked: "...I consider that we should reaffirm that the law is that a claimant in a passing off claim must establish that it has actual goodwill in this jurisdiction, and that such goodwill involves the presence of clients or customers in the jurisdiction for the products or services in question. And, where the claimant's business is abroad, people who are in the jurisdiction, but who are not customers of the claimant in the jurisdiction, will not do, even if they are customers of the claimant when they go abroad". To put Lord Neuberger's argument in different words, goodwill can only exist in a jurisdiction if its goods or services are used by actual customers in that jurisdiction, irrespective of foreign users who have emigrated or visit that jurisdiction (although, one would imagine, given a sufficient amount of immigrants this would be acceptable). As said, this is fully in line with older precedent, and also foreign authorities within the common law, as was put forth by Sky in its argument. PCCM had very little presence in the UK, although it did establish some user base did exist.
Finally, Lord Neuberger aimed to settle two questions that remained: "(i) clarification as to what constitutes sufficient business to give rise to goodwill as a matter of principle, and (ii) resolution of the judicial disagreement as to the jurisdictional division of goodwill".
In answering the first question Lord Neuberger quickly settled the matter by largely stating what has already been settled above: "The claimant must show that it has a significant goodwill, in the form of customers, in the jurisdiction, but it is not necessary that the claimant actually has an establishment or office in this country. In order to establish goodwill, the claimant must have customers within the jurisdiction, as opposed to people in the jurisdiction who happen to be customers elsewhere. Thus, where the claimant's business is carried on abroad, it is not enough for a claimant to show that there are people in this jurisdiction who happen to be its customers when they are abroad. However, it could be enough if the claimant could show that there were people in this jurisdiction who, by booking with, or purchasing from, an entity in this country, obtained the right to receive the claimant's service abroad.". Lord Neuberger's answer to the first question further establishes that a business has to have some form of customer base in a jurisdiction it wishes to protect its intellectual property in that jurisdiction, and that business would have to be, mostly at least, permanent in that jurisdiction, rather than just transient.
The answer to the second question leads to a much wider discussion than can be settled in this blog post, and merits reading in its own rights by those who might be interested. What needs to be said, however, is that Lord Diplock's comments in Star Industrial Co Ltd v Yap Kwee Kor further support Lord Neuberger's conclusions and highlight the distinction between goodwill in different jurisdictions through the existence of separation of judiciaries; i.e. not one court can decide an issue of a foreign court. Allowing for territorial overlap would let businesses simply claim a right in a name in another jurisdiction with a minimal presence, thus restricting business and trade for legitimate entities in that jurisdiction.
Ultimately the Supreme Court dismissed PCCM's appeal, and concluded that their claim in "NOW TV" had no basis in the UK, as they did not have the requisite consuming public in the UK for their service to merit protection under passing off.
This case is an interesting one, and although one could say the decision is very much a common sense approach, it still does answer some question relating to goodwill, especially in a digital age where the Internet permeates nearly every part of the globe. Businesses have to have a legitimate business presence in a given country in the form of a customer base, even in this digital age.
Source: KWM Legal Insights
The case in question was Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others, which concerned the use of IPTV, or in more simplistic terms, the streaming of TV via the Internet using dedicated hardware to do so, very much like cable TV but in an online environment. Starbucks (HK) and PCCW Media Ltd, two corporate members of a larger group (referred to as "PCCM" in the judgment as a whole), which operated an IPTV service called "NOW BROADBAND TV", subsequently renamed to "NOW TV", in Hong Kong, being the largest entity in its respective IPTV business in the country. Most of the channels offered through the NOW TV service are in Chinese, and are not accessible in the United Kingdom, although some people in the UK had been identified as being aware of the service. PCCM had since considered expanding internationally, and did so by launching a mobile app called NOW aimed at the Chinese-speaking population in the UK. Prior to the launching of the app in the same year Sky announced its "NOW TV" on-demand service, which went into its beta phase roughly at the same time as the launching of PCCM's mobile app. PCCM subsequently sued Sky under the tort of passing off (more on which can be found here), with the case ending up all the way in the Supreme Court.
Passing off, as has been noted in the article above, hinges on three factors that need to be established in order to prove the tort of passing off: (i) goodwill or reputation in the goods or services provided in the minds of the purchasing public; (ii) a misrepresentation by the defendant to the public that leads or is likely to lead, the public to think the goods or services are provided by the plaintiff; and (iii) the plaintiff suffers, or is likely to suffer, damage as a result of this misrepresentation. PCCM established the latter two requirements at first instances, and therefore the Supreme Court had to decide on whether Sky's service fulfilled the first requirement, amounting to passing off.
The main question therefore to the Supreme Court was whether PCCM had goodwill in the jurisdiction in question, in other words a customer base, meaning the UK. As the court stated, reiterating Lord Justice Oliver in Anheuser-Buch v Budejovicky Budvar NP, that goodwill is very much "localized" and that "...reputation which may, no doubt, and frequently does, exist without any supporting local business… does not by itself constitute a property which the law protects". In other words, even if goods or services have a certain, even strong reputation to them, does not mean it inherently commands it everywhere, irrespective of actual use or not. This line of thinking very much confirms precedent from decades prior, where similar conclusions have been made as to the localized nature of goodwill.
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| Territorial issues can be dealt with amicably at times |
Finally, Lord Neuberger aimed to settle two questions that remained: "(i) clarification as to what constitutes sufficient business to give rise to goodwill as a matter of principle, and (ii) resolution of the judicial disagreement as to the jurisdictional division of goodwill".
In answering the first question Lord Neuberger quickly settled the matter by largely stating what has already been settled above: "The claimant must show that it has a significant goodwill, in the form of customers, in the jurisdiction, but it is not necessary that the claimant actually has an establishment or office in this country. In order to establish goodwill, the claimant must have customers within the jurisdiction, as opposed to people in the jurisdiction who happen to be customers elsewhere. Thus, where the claimant's business is carried on abroad, it is not enough for a claimant to show that there are people in this jurisdiction who happen to be its customers when they are abroad. However, it could be enough if the claimant could show that there were people in this jurisdiction who, by booking with, or purchasing from, an entity in this country, obtained the right to receive the claimant's service abroad.". Lord Neuberger's answer to the first question further establishes that a business has to have some form of customer base in a jurisdiction it wishes to protect its intellectual property in that jurisdiction, and that business would have to be, mostly at least, permanent in that jurisdiction, rather than just transient.
The answer to the second question leads to a much wider discussion than can be settled in this blog post, and merits reading in its own rights by those who might be interested. What needs to be said, however, is that Lord Diplock's comments in Star Industrial Co Ltd v Yap Kwee Kor further support Lord Neuberger's conclusions and highlight the distinction between goodwill in different jurisdictions through the existence of separation of judiciaries; i.e. not one court can decide an issue of a foreign court. Allowing for territorial overlap would let businesses simply claim a right in a name in another jurisdiction with a minimal presence, thus restricting business and trade for legitimate entities in that jurisdiction.
Ultimately the Supreme Court dismissed PCCM's appeal, and concluded that their claim in "NOW TV" had no basis in the UK, as they did not have the requisite consuming public in the UK for their service to merit protection under passing off.
This case is an interesting one, and although one could say the decision is very much a common sense approach, it still does answer some question relating to goodwill, especially in a digital age where the Internet permeates nearly every part of the globe. Businesses have to have a legitimate business presence in a given country in the form of a customer base, even in this digital age.
Source: KWM Legal Insights
12 February, 2015
Passing Off on Persons - Rihanna Wins Appeal Case
If reality TV has taught something to most individuals is that personality, and personas especially, are valuable. This, along with other celebrities, musicians and actors, illustrates an interesting aspect of humanity; a self-imposed value on the eccentric and the unusual, making people and their respective persons more than salable. People often buy things based on association, be it quality, notoriety or just through the endorsement of the right person. Because of this there is a huge amount of value in the right brand or good being associated with the right person, even if that image is conjured up through more 'nefarious' means, i.e. through the illusion of association or endorsement, which can potentially damage the 'brand' of an individual. After a recent case, this writer was inspired to answer one question: can you pass off on a person, not just a brand?
The case in question was Fenty & Ors v Arcadia Group Brands Ltd, decided in the Court of Appeal in the early days of 2015, which dealt with the sale of a simple article of clothing; a t-shirt. Topshop, a well-known store for all that is clothing, sold a t-shirt printed with the image of Robyn Fenty - more commonly known as Rihanna. The image itself was one of her posing, taken during the shooting of a music video for one of her songs. The picture was taken by a third-party photographer, and not commissioned by Rihanna herself, allowing the photographer to sell the rights to the image to Topshop, which he promptly had done, leading to its use in the aforementioned garment. Rihanna subsequently objected to this use, and initiated proceedings against Topshop for the image's use, citing an infringement of her rights, and claiming its use can confuse consumers to believe she endorses the shirt, amounting to passing off (more on which can be found here).
The starting-point for the discussion surrounding the law was set out by Lord Justice Kitchin: "There is in English law no "image right" or "character right" which allows a celebrity to control the use of his or her name or image". In the United States, under various State legislation, an individual's personality or persona can be protected; something that isn't protectable per say under UK legislation.
Nevertheless, the protection offered under passing off can potentially extend to individuals, at least on a prima facie application of the requisite elements: there has to be goodwill associated with that individual; a misrepresentation as to that goodwill applying to goods and/or services not associated with that individual; and actual or potential damage to said goodwill. Should Topshop have sufficiently misrepresented a connection with Rihanna, they could be liable under passing off. To put things in more simplistic terms, as described by Lord Justice Kitchin: "...it was [Rihanna's] case that the misrepresentation that she was associated with the t-shirt made it more attractive and so played a material part in the decision of the public to buy it".
Lord Kitchin turned to the earlier decision in Edmund Irvine Tidswell Ltd v Talksport Ltd, where Justice Laddie formulated two criteria that needed to be established for a successful case in passing off in a false endorsement matter: "It follows from the views expressed above that there is nothing which prevents an action for passing off succeeding in a false endorsement case. However, to succeed, the burden on the claimant includes a need to prove at least two, interrelated facts. First, that at the time of the acts complained of he had a significant reputation or goodwill. Second, that the actions of the defendant gave rise to a false message which would be understood by a not insignificant section of his market that his goods have been endorsed, recommended or approved of by the claimant".
Whether the public perceive the image of Rihanna as an endorsement or not is very much irrelevant, As long as an image of a potential endorser is used, the use can amount to a misrepresentation to that individual's endorsement of that product. This, however, does not allow a celebrity to unilaterally prevent all uses of their images, but is an assessment that has to be made in every instance and relating to every specific use separately. Topshop had attempted to use Rihanna's fame to their advantage through prior campaigns and contests, clearly leveraging her image to boost their sales. This does not amount to passing off itself, but is a contributing factor usable by the courts. In the end the Court saw that Topshop were indeed liable under passing off, and prevented the further sale of the above t-shirt.
While this case is not a landmark one, it serves an interesting curiosity in the world of celebrity and marketing, and showcases that even images can carry weight and value. Next time you print an image of your loved ones on custom-made t-shirts, think twice.
Source: BBC
The case in question was Fenty & Ors v Arcadia Group Brands Ltd, decided in the Court of Appeal in the early days of 2015, which dealt with the sale of a simple article of clothing; a t-shirt. Topshop, a well-known store for all that is clothing, sold a t-shirt printed with the image of Robyn Fenty - more commonly known as Rihanna. The image itself was one of her posing, taken during the shooting of a music video for one of her songs. The picture was taken by a third-party photographer, and not commissioned by Rihanna herself, allowing the photographer to sell the rights to the image to Topshop, which he promptly had done, leading to its use in the aforementioned garment. Rihanna subsequently objected to this use, and initiated proceedings against Topshop for the image's use, citing an infringement of her rights, and claiming its use can confuse consumers to believe she endorses the shirt, amounting to passing off (more on which can be found here).
The starting-point for the discussion surrounding the law was set out by Lord Justice Kitchin: "There is in English law no "image right" or "character right" which allows a celebrity to control the use of his or her name or image". In the United States, under various State legislation, an individual's personality or persona can be protected; something that isn't protectable per say under UK legislation.
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| Some faces are just made for t-shirts |
Lord Kitchin turned to the earlier decision in Edmund Irvine Tidswell Ltd v Talksport Ltd, where Justice Laddie formulated two criteria that needed to be established for a successful case in passing off in a false endorsement matter: "It follows from the views expressed above that there is nothing which prevents an action for passing off succeeding in a false endorsement case. However, to succeed, the burden on the claimant includes a need to prove at least two, interrelated facts. First, that at the time of the acts complained of he had a significant reputation or goodwill. Second, that the actions of the defendant gave rise to a false message which would be understood by a not insignificant section of his market that his goods have been endorsed, recommended or approved of by the claimant".
Whether the public perceive the image of Rihanna as an endorsement or not is very much irrelevant, As long as an image of a potential endorser is used, the use can amount to a misrepresentation to that individual's endorsement of that product. This, however, does not allow a celebrity to unilaterally prevent all uses of their images, but is an assessment that has to be made in every instance and relating to every specific use separately. Topshop had attempted to use Rihanna's fame to their advantage through prior campaigns and contests, clearly leveraging her image to boost their sales. This does not amount to passing off itself, but is a contributing factor usable by the courts. In the end the Court saw that Topshop were indeed liable under passing off, and prevented the further sale of the above t-shirt.
While this case is not a landmark one, it serves an interesting curiosity in the world of celebrity and marketing, and showcases that even images can carry weight and value. Next time you print an image of your loved ones on custom-made t-shirts, think twice.
Source: BBC
09 February, 2014
Retrospective - Intention to Use Trademarks
Often in business it pays off to preempt what might be the next big thing, especially when it comes to names. The right timing can yield quite the monetary results, even if such predatory practices could be argued to linger outside of what is acceptable. To limit the potential hoarding of signs which could be used as trademarks, most common law legislatures have enacted provisions preventing such practices, such as in the United Kingdom and Australia for example. Under such provisions a mark has to be used, or intended to be used, as a trademark for it to be eligible for protection as such. Without proper use, or the compulsion to do so, companies would hoard any and all marks they could, with no intent to use them, only to sue for infringement if others would use that mark even when they are not doing so themselves. Even with the existence of such provisions, the question still remains as to what counts as an intention to use in the absence of actual usage; a question which was subsequently answered in the 1980s.
The case in question is Imperial Group v Philip Morris & Co, decided in the very beginning of the 80s. This concerned the prior Trade Marks Act 1938; however the provision in question is still in the currently in force Trade Marks Act 1994, and would apply equally in relation to the more modern legislation. The case concerned the word "NERIT", which was successfully registered by Philip Morris. Their registration of the word was a result of an unsuccessful attempt to register the word "MERIT" in relation to tobacco products; a mark which was rejected due to it being a laudatory and thus, descriptive word. In their mind the registration of the word "NERIT" would be close enough to be used to enforce against any uses of the word "MERIT" should their competition adopt or use the word in relation to competing products. To further legitimize the mark, Philip Morris sold roughly 1 million cigarettes under the name "NERIT", although had no real interest in using the mark as a legitimate trademark aside from its potential use against anyone using the word "MERIT". Subsequently Imperial Group challenged the mark, having used the word "MERIT" in relation to their cigarettes, and the case finally ended up in the UK Court of Appeals.
In its deliberation the Court of Appeals saw that Philip Morris' mark was merely a ghost mark, with no real intention to be used as a legitimate trademark, and was registered under bad faith, contrary to the Trade Marks Act 1938. For a trademark to be considered legitimate under the legislation it must be used "...in the normal course of trade", and not merely under the guise of use through the manufacture of a small batch in order to legitimize the mark or its use. What the plaintiff had was merely a ghost mark. To further illustrate the intent by the plaintiff in the matter, the Court saw that "[t]hey wanted to treat the word "MERIT" as if they had a copyright interest in it"; which they clearly did not have. The Court of Appeal in the end determined that the word "NERIT" was not registered bona fide, and clearly not used for a legitimate commercial purpose and therefore would not be allowed as a registered trademark.
As one can see the use of trademarks is complex, and predatory registrations are no longer allowed. Registration of ghost marks was common practice before the Imperial Group decision, and clearly the case illustrates a well-needed adjustment from those practices. Should frivolous marks, or unused marks, be allowed to be registered by anyone, their function as a badge of origin could potentially cease to exist, and would only serve as a means to prevent others from trading through legitimate marks. The Imperial Group case has been decided in a multitude of countries, such as Australia, with similar results, clearly showcasing the common law's position in relation to modern trademark law with regards to ghost marks.
The case in question is Imperial Group v Philip Morris & Co, decided in the very beginning of the 80s. This concerned the prior Trade Marks Act 1938; however the provision in question is still in the currently in force Trade Marks Act 1994, and would apply equally in relation to the more modern legislation. The case concerned the word "NERIT", which was successfully registered by Philip Morris. Their registration of the word was a result of an unsuccessful attempt to register the word "MERIT" in relation to tobacco products; a mark which was rejected due to it being a laudatory and thus, descriptive word. In their mind the registration of the word "NERIT" would be close enough to be used to enforce against any uses of the word "MERIT" should their competition adopt or use the word in relation to competing products. To further legitimize the mark, Philip Morris sold roughly 1 million cigarettes under the name "NERIT", although had no real interest in using the mark as a legitimate trademark aside from its potential use against anyone using the word "MERIT". Subsequently Imperial Group challenged the mark, having used the word "MERIT" in relation to their cigarettes, and the case finally ended up in the UK Court of Appeals.
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| Mark loved to dress up as a ghost |
As one can see the use of trademarks is complex, and predatory registrations are no longer allowed. Registration of ghost marks was common practice before the Imperial Group decision, and clearly the case illustrates a well-needed adjustment from those practices. Should frivolous marks, or unused marks, be allowed to be registered by anyone, their function as a badge of origin could potentially cease to exist, and would only serve as a means to prevent others from trading through legitimate marks. The Imperial Group case has been decided in a multitude of countries, such as Australia, with similar results, clearly showcasing the common law's position in relation to modern trademark law with regards to ghost marks.
28 April, 2013
Safe Harbors and 70s Music
Online services in the United States, such as websites where content is shared, have relied heavily on the protection of the Safe Harbor provisions in the Digital Millennium Act to protect themselves from infringement through their services. The provision itself excludes online service providers from liability should the users of their services do so, on the condition that they are unaware of this activity and should they be notified of any infringements, take immediate action to stop the infringements or remove any infringing material. As one can see, the legislation encourages service providers to take a proactive stance, and limits their liability should their services be misused in a way which they're unaware of. From a provider's stand-point not only does this allow for start-ups to engage in their respective service provision, but it also prevents them from being immediately swamped by law suits and therefore never getting off the starting line. The matter of whether service providers, specifically music streaming services, would be protected from liability for sound recordings made before protection was awarded to them through Statute in 1972 (albeit still existed through common law) was deliberated by the New York State Appeals Court a mere few days ago in the case of UMG Records Inc v Escape Media Group Inc.
The case concerned the website Grooveshark, where users could stream content that uploaded by other users,creating playlists or listening to selected artists, with revenue coming through user subscriptions or advertisements during streaming. The claimant, UMG Records argued that the Safe Harbor provisions did not offer escape from liability for service providers, due to the DMCA amending the prior Copyright Act which expressly set out that any sound recordings made before 1972 would not be covered under the Federal legislation. This would in turn mean that the amendments made in the DMCA would not apply to those songs, rendering the Safe Harbor provisions unusable to protect service providers, as liability would still exist through the common law.
In their decision the court stated that the provisions would not apply to songs made before 1972, causing the service provider to potentially be liable under common law. The decision went against a District Court decision a few years before, Capitol Records v MP3tunes, where Judge Pauley saw that there was no indication that the legislation would exclude sound recordings made prior to 1972. The decision in the NY Court is one of strict interpretation, and in this writer's honest opinion, lacks the common knowledge and application to today's needs for service providers. The legislation does not expressly limit its scope, and applying pre-Internet legislation in its interpretation would undermine what the Safe Harbor provisions set out to achieve; to offer protection for service providers in an age where millions have access to services, making their full control and prevention of infringement an arduous and difficult undertaking. The case will be appealed and hopefully rectified in higher courts.
The case itself shows yet again, as has been discussed in this blog several times, the datedness of copyright legislation in the US. Without express and clear provisions dealing with subject matters such as this, bringing copyright legislation to the 21st century, both users and service providers will end up fighting an uphill battle trying to protect their rights and ability to utilize the Internet to its fullest. Whether action will be taken will remain to be seen, but there clearly is a need for reform.
Source: Thomson Reuters
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| The grooviest of all sharks |
In their decision the court stated that the provisions would not apply to songs made before 1972, causing the service provider to potentially be liable under common law. The decision went against a District Court decision a few years before, Capitol Records v MP3tunes, where Judge Pauley saw that there was no indication that the legislation would exclude sound recordings made prior to 1972. The decision in the NY Court is one of strict interpretation, and in this writer's honest opinion, lacks the common knowledge and application to today's needs for service providers. The legislation does not expressly limit its scope, and applying pre-Internet legislation in its interpretation would undermine what the Safe Harbor provisions set out to achieve; to offer protection for service providers in an age where millions have access to services, making their full control and prevention of infringement an arduous and difficult undertaking. The case will be appealed and hopefully rectified in higher courts.
The case itself shows yet again, as has been discussed in this blog several times, the datedness of copyright legislation in the US. Without express and clear provisions dealing with subject matters such as this, bringing copyright legislation to the 21st century, both users and service providers will end up fighting an uphill battle trying to protect their rights and ability to utilize the Internet to its fullest. Whether action will be taken will remain to be seen, but there clearly is a need for reform.
Source: Thomson Reuters
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