That Sounds Good - Do You Have IP Rights in Your Own Voice?

Even though many of us don't like the sound of our own voice (although some way less than others), it is still a very personal aspect of who we are and often a very unique identifier. It can also be very valuable, with some voice actors being incredibly memorable for their characters and thus very compelling through just their voice for viewers (for example, Michael Buffer and his iconic "Lets Get Ready to Rumble" phrase). With that in mind, do you have rights in your own voice?

Copyright

The starting point would be protection under copyright, which clearly would protect any voice acting done by an individual. One could argue that daily, non-performing speech would not be protected, since it's not, on the face of it, a performance of a copyright protected work. Speeches and other oral forms of expression would also be arguably protected, affording the speaker rights in their work, and thus in a way their own voice.

The Copyright, Designs and Patents Act 1988 also affords certain performers' rights under sections 182-184, which, among other things, make it illegal to record a live performance without consent or to make copies of recordings without consent. This has been considered by the UK Court of Appeal to potentially apply to performances by deceased artists in the case of Experience Hendrix LLC v Purple Haze Records Ltd (which dealt with performances by the late Jimi Hendrix). Clearly one could protect their voice through the performances themselves, but their voice in isolation is probably not protected.

In the US voice actors have been confirmed to have certain rights in their works. In Midler v Ford Motor Co., the singer and voice-actor Bette Midler asserted her rights in her voice, which was imitated in an advert by Ford. Although the Court of Appeal stated that "…A voice is not copyrightable. The sounds are not 'fixed'", they did afford her rights under common law for appropriation of identity. They highlighted that "…[a] voice is as distinctive and personal as a face. The human voice is one of the most palpable ways identity is manifested". Arguably this is correct, since just a person's voice in the abstract is not necessarily protectable, but the underlying work, including the recording of that work, could be.

Similarly in Waits v Frito-Lay Inc., the US Court of Appeal determined that a radio commercial that imitated the voice of Tom Waits, a famous singer with a very unique voice, amounted to appropriation of publicity rights under California law and false, implied endorsement under federal law.

Copyright does offer the widest set of rights in one's voice, particularly in the United States, which would be used to protect a distinctive, well-known voice, but it would be unlikely that someone without the notoriety would succeed.

Trademarks

Beyond the protection given to recorded voice works as above, could you register a voice as a trademark to protect it?

Peter loved the sound of his own voice - maybe a little too much

Before the introduction of the new EU trade mark Implementing Regulation in late 2015, all EU trademarks had to be graphically represented so as to be able to be registered. This was difficult for sound marks since they could not be graphically represented in a clear and precise way. Examples of failed sound marks would be Tarzan's yell and the famous MGM Lion's roar (although the yell and the roar were successfully registered in 2006 and 2011 respectively). Applications can now include a sound file as a part of the application, which clearly paves the way for the registration of sounds, potentially including a person's voice.

Sound marks can also be registered in the US, which has had a much longer period of acceptance towards more unconventional trademarks. As per the decision in Re General Electric Broadcasting Co. Inc., so long as the sound creates an association for a particular good or service in the mind of the listener, a sound can be registered as a trademark (discussed in more depth in the case of re Vertex Group LLC). The arrangement, however, needs to be definitive.

Clearly it is possible to register a person's voice as a trademark, but only for a particular phrase or arrangement that is clearly defined in the application, for example, through a sound file. This wouldn't confer rights to your voice in general, but could protect some aspects such as catch phrases.

Patents

Although patents don't offer a clear way to protect a voice, they do offer some interesting applications in terms of voices overall.

In a US patent (US20130151243) Samsung have claimed an invention that can be used to modulate voices. Based on this writer's reading of the patent (wrong or not), the module takes in a voice, processes it for particular properties, and then modulates the voices when used, in a way mimicking the voice it's been listening to. A similar Chinese patent (WO2017059694) looks to imitate a source voice altogether.

As is clear patents are not the way to protect anyone's voice, but as AI and technology develops they will be in the forefront of protecting the technologies that might just copy our voices one day.

Conclusion

Overall protecting one's voice seems to be quite tricky, which leaves someone quite exposed should imitation software and other methods of recreation become more widely used, for nefarious purposes or not. Even so, especially without an image right like in the US, one would hope that the law will see a change , as someone's voice can be an iconic part of their person, which should be protected in some way. Legitimate uses, for example for parody and satire, should of course be allowed, but the misappropriation of one's voice should be prevented. How you would do this, this writer isn't exactly sure, but one could look for direction from the US cases and legislation discussed above.

Problem Fixed - CJEU Decides on IP and the Right to Repair Goods

Tinkering with old gadgets or cars is a beloved pastime for many, and often prolongs the life of the goods you own even beyond their warranty periods. Many manufacturers are making it increasingly difficult to repair items, particularly high-end electronics, and with discussions heating up relating to Apple's slow-down of their devices due to hardware aging, it is conceivable even more important for people to fix their old items. We've discussed IP issues relating to repairing or tinkering with tractors, but there has been very little judicial consideration around it. In that vein, what are the limits of IP and peoples' right to repair their goods? The CJEU took this question on late last year.

The case of Acacia Srl v Pneusgarda Srl and Audi AG concerned the sale of alloy rims for cars, for which Audi owns several registered community designs (e.g. RCD 132899 and 207667). Acacia manufactured rims under the brand WSP Italy, sold on their website, which are identical to the rims registered by Audi. The rims made by Acacia were clearly stamped as not made by the OEM, and were sold exclusively as replacement parts for the purpose of making repairs. Audi took Acacia to court over design infringement, with the matter ending up with the CJEU. Porsche had a similar matter joined with the Audi case against Acacia.

The Court joined the questions from both matters, which, essentially inquired about EU law in relation to repairs and design infringement.

The first combined question dealt by the Court asked whether "…Article 110(1) of Regulation No 6/2002 must be interpreted as meaning that the ‘repair’ clause in it makes the exclusion of protection as a Community design for a design which constitutes a component part of a complex product which is used for the purpose of the repair of that complex product so as to restore its original appearance subject to the condition that the protected design is dependent upon the appearance of the complex product".

The restoration of a vehicle's appearance is important, especially in a crash situation, and without the exception this wouldn't be possible. The Article 110 exception allows for this, and the CJEU had to therefore consider the provision's remit.

The CJEU rejected the condition that the exception only operates where the design is dependent upon the appearance of the complex product due to the absence of this phraseology in the legislation. The provision also protects against captive markets, where only the design holder can produce certain spare parts, allowing for consumers to purchase less expensive alternatives and not be tied to one particular provider. The Court therefore set out that "…Article 110(1)… must be interpreted as meaning that the ‘repair’ clause in it does not make the exclusion of protection as a Community design for a design which constitutes a component part of a complex product which is used for the purpose of the repair of that complex product so as to restore its original appearance subject to the condition that the protected design is dependent upon the appearance of the complex product".

The Court then moved onto the second combined question, which asked "…to which conditions the ‘repair’ clause in Article 110(1)… subjects the exclusion of protection as a Community design for a design which constitutes a component part of a complex product which is used for the purpose of the repair of a complex product so as to restore its original appearance".

The CJEU quickly set out that the provision is subject to three conditions: (i) the existence of a Community design; (ii) the presence of a ‘component part of a complex product’; and (iii) to the need for ‘[use] within the meaning of Article 19(1) for the purpose of the repair of that complex product so as to restore its original appearance’.

It's not just sellers who struggle with auto repairs

In specifying these conditions, the Court first observed that the second condition (as rights exist in the wheel rims) covers "…multiple components, intended to be assembled into a complex industrial or handicraft item, which can be replaced permitting disassembly and re-assembly of such an item, without which the complex product could not be subject to normal use", and that a wheel rim would indeed fall under this definition.

With regards to the third condition, the CJEU saw that 'use' of that product for the purpose of repairing that product includes making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes. This use, however, has to be with the aim to 'permitting the repair of the product', which encompasses the situation where, if that part were faulty or missing, this would prevent the product's normal use.

In short, the 'use' of the product, set out above, needs to be necessary for the repairing of that product if it has become defective through damage or lack of original parts. Purely aesthetic repairs wouldn't be covered by the provision, as it's only for convenience. Even still, the repairing would have to be done ‘so as to restore its original appearance’.

What this amounts to is that "…the component part must be used so as to restore the complex product to the appearance it had when it was placed on the market". The CJEU also added that the clause only applies to component parts of a complex product that are visually identical to the original parts.

In short, the CJEU saw that "…the ‘repair’ clause in it makes the exclusion of protection as a [RCD] for a design which constitutes a component part of a complex product which is used for the purpose of the repair of that complex product so as to restore its original appearance subject to the condition that the replacement part must have an identical visual appearance to that of the part which was originally incorporated into the complex product when it was placed on the market".

The Court then moved onto the final combined question, which asked "…whether Article 110(1)... must be interpreted as meaning that, in order to rely on the ‘repair’ clause in that provision, the manufacturer or seller of a component part of a complex product must ensure and, in that case, how it must ensure, that the component part can be purchased exclusively for repair purposes".

As detailed above, the repair clause is subject to a number of conditions, and in particular ones that emphasises a genuine need for repairs. This imposes compliance on part of the downstream user, not just the seller. This means that the seller needs to inform the buyer that "…the component part concerned incorporates a design of which they are not the holder and, on the other, that the part is intended exclusively to be used for the purpose of the repair of the complex product so as to restore its original appearance". Similarly, this needs to be ensured and enforced through contractual means with the buyer. Finally, "…the manufacturer or seller must refrain from selling such a component part where they know or, in the light of all the relevant circumstances, ought reasonably to know that the part in question will not be used in accordance with the conditions laid down in Article 110(1)".

In summary, the CJEU stated that "…Article 110(1)… must be interpreted as meaning that, in order to rely on the ‘repair’ clause contained in that provision, the manufacturer or seller of a component part of a complex product are under a duty of diligence as regards compliance by downstream users with the conditions laid down in that provision".

The case is a very important one, and clarifies the provisions surrounding the repairing of vehicles or goods owned by an individual and in particular the sale of those goods for repair. The onus is clearly on the seller, which makes sense, as they are the ones likely to benefit from the sales of the goods for repair, rather than the rightsholder.

Source: D Young

Not Like Two Peas in a Pod - Parallel Importation is Okay if TMs Assigned Abroad, says CJEU

The global marketplace for goods is a very tough one, especially when products are sold in various countries under different entities, even if controlled by a central entity. This gets even more complicated if rights are cherry picked and sold to other companies. Advocate General Mengozzi looked at this conundrum this past summer (more on which here), with a focus on the exhaustion of rights when those rights are sold to another company. The matter finally landed on the CJEU's desk, which rendered their decision in late December.

As a short recap, the case of Schweppes SA v Red Paralela SL dealt with the sale of Schweppes' tonic water, for which the company owned several trademarks in many jurisdictions. In the UK the company assigned their rights to the name Schweppes to Coca-Cola in 1999, but remained the owner of the rights in other EU jurisdictions, including Spain. Red Paralela imported the beverage from the UK to Spain, which were put on the market by Coca-Cola. Schweppes subsequently took Red Paralela to court for trademark infringement.

The CJEU was asked four questions, which it dealt with together, asking in essence "…whether Article 7(1) of Directive 2008/95, read in the light of Article 36 TFEU, must be interpreted as precluding the proprietor of a national trade mark from opposing the import of identical goods bearing the same mark originating in another Member State in which that mark, which initially belonged to that proprietor, is now owned by a third party which has acquired the rights thereto by assignment".

What is important is whether Schweppes rights have been exhausted as a result of their assignment of rights in the UK for the importation of goods into another country where those rights remain.

The Court considered that the rights awarded by trademarks cannot be circumvented through the affixing of the relevant mark on the goods and selling in another territory, even if done legally through assignment. This is still, however, reliant on "…that each of those marks has, from the date of expropriation or assignment, independently fulfilled its function, within its own territorial field of application, of guaranteeing that the trade marked goods originate from one single source". The Court further set out that this condition would not be satisfied when the proprietor (without or without the third-party that was assigned the rights) promoted a global brand with no clear single origin. Through this the proprietor's trademark, as determined by the Court "…no longer independently fulfill[s] its essential function within its own territorial field of application, [and] the proprietor has himself compromised or distorted that function". The proprietor therefore loses their right to oppose the importation of those goods through this distortion.

However, should the parties be one and the same, or maintain an economic link, the prohibition of the importation of the goods might be possible.

Some parallel imports miss the mark

The Court set out that an economic link exists where "…the goods in question have been put into circulation by a licensee, by a parent company, by a subsidiary of the same group, or by an exclusive distributor". Through these relationships the proprietor can directly control the quality of the goods themselves. This is very important, as the actual exercise of control isn't needed, but merely the possibility of exerting control. The proprietor therefore takes responsibility over the goods' quality.

Following the Advocate General's opinion, the CJEU set out that an economic link also exists where "…[after] the division of national parallel trade marks resulting from a territorially limited assignment, the proprietors of those marks coordinate their commercial policies or reach an agreement in order to exercise joint control over the use of those marks, so that it is possible for them to determine, directly or indirectly, the goods to which the trade mark is affixed and to control the quality of those goods". There the prohibition of importation would not be justified to preserve the essential function of the trademark.

An economic link isn't dependant on the companies being formally dependant on each other for the joint exploitation of the mark, nor whether they take control of the quality of the goods or not. Assignment by itself will not create an economic link necessarily.

In summarising their decision, the CJEU set out that "… Article 7(1)... must be interpreted as precluding the proprietor of a national trade mark from opposing the import of identical goods bearing the same mark originating in another Member State in which that mark, which initially belonged to that proprietor, is now owned by a third party which has acquired the rights thereto by assignment, when, following that assignment; the proprietor, either acting alone or maintaining its coordinated trade mark strategy with that third party, has actively and deliberately continued to promote the appearance or image of a single global trade mark, thereby generating or increasing confusion on the part of the public concerned as to the commercial origin of goods bearing that mark; or there exist economic links between the proprietor and that third party, inasmuch as they coordinate their commercial policies or reach an agreement in order to exercise joint control over the use of the trade mark, so that it is possible for them to determine, directly or indirectly, the goods to which the trade mark is affixed and to control the quality of those goods".

The case is an important landmark in the partial assignment of rights for global trademarks. Should a proprietor want to maintain full control, they would have to assign the rights to an entity that they control, or have an economic link with, lest risk the loss of their capability to prevent parallel importation to a maintained jurisdiction. This makes sense, since the assignment of rights would lose their value if the original proprietor still maintained the capability to prevent importation when and where ever they wished.

The Inside Scoop - Can You Use 'Champagne' to Describe a Sorbet?

Using a different name brand with another, particularly when it comes to food tie-ups, can be very persuasive when trying to nab the ever-changing attention of the buying public. These collaborations can include the mixing of cookies with ice cream, or making cakes from well-known chocolate bars, but rely on the use of a trademark to identify that collaboration. While this is perfectly legitimate when agreed between the relevant parties, could a mark, more specifically a Protected Designation of Origin, be used when describing goods made using the protected goods themselves? The CJEU took on this question very recently in a very interesting decision.

The case of Comité Interprofessionnel du Vin de Champagne v Aldi Süd Dienstleistungs-GmbH & Co. OHG dealt with the sale of a sorbet by Aldi, manufactured by a third-party. The sorbet was called 'Champagner Sorbet', consisting of 12% champagne among the various ingredients used. The name 'Champagne' has long been registered as a PDO (PDO-FR-A1359), protected by CIVIC, the claimant, which is the association of champagne producers. They objected to the name 'Champagner Sorbet' and took Aldi to court to prevent the sale of the sorbet in Germany. The matter ultimately ended up at the CJEU.

The first question asked whether "…Article 118m(2)(a)(ii) of Regulation No 1234/2007 and Article 103(2)(a)(ii) of Regulation No 1308/2013… are to be interpreted as meaning that the scope of those provisions covers a situation where a PDO, such as ‘Champagne’, is used as part of the name under which a foodstuff is sold, such as ‘Champagner Sorbet’, and where that foodstuff does not correspond to the product specifications for that PDO but contains an ingredient which does correspond to those specifications". Both provisions prevent the use of the PDO in commercial use, including sale of goods, if they don't comply with the PDO's specifications and attempt to exploit its reputation.

Per the CJEU, the protection afforded aims to ensure the high quality of goods in the EU, including as an ingredient in other goods, and similarly the use of the PDO has to apply to goods that only meet the specifications set. This means that the Articles above "…are applicable to the commercial use of a PDO, such as ‘Champagne’, as part of the name of a foodstuff, such as ‘Champagner Sorbet’, containing an ingredient which corresponds to the product specifications of the PDO".

The second question enquired whether "…[the Articles] are to be interpreted as meaning that the use of a PDO as part of the name under which is sold a foodstuff that does not correspond to the product specifications for that PDO but contains an ingredient that does correspond to those specifications, such as ‘Champagner Sorbet’, constitutes exploitation of the reputation of a PDO… where the name of the foodstuff corresponds to the name by which the relevant public usually refers to that foodstuff and the ingredient has been added in sufficient quantity to give the foodstuff one of its essential characteristics". Put in a different way; can you use the name Champagne to describe goods that have champagne as an ingredient, so long as it is used in sufficient quantity.

As discussed by the CJEU, the reputation of a PDO derives from the guaranteed quality the specifications offer the consumer, i.e. that what they buy is always consistent. The reputation has to be protected from third-parties seeking to benefit from it by using the name without the quality demanded. The same applies to marketing activities where a PDO is used in conjunction with a product to sell goods not conforming to the specifications. The Court therefore settled that the use of the name champagne could potentially be unduly exploiting the PDO when used in the name 'Champagner Sorbet', conveying an air of luxury and prestige.

Not all cold treats are received as well

The Court moved on to discussing the components of unduly exploiting a PDO's reputation. As said above, the provisions don't require the use of the PDO in conjunction with goods that don't correspond to the specifications, for it to be at odds with the protection offered by PDOs, even if corresponding goods are used as ingredients in them. The Court further specified that a geographical indication cannot be used as a compound term unless all of the alcohol originates exclusively from the same spirit drink. Even so, the Guidelines on the use of PDOs as ingredients does allow for their mentioning, under certain conditions, as a part of the name for those goods.

The CJEU determined that "…the use of a PDO as part of the name under which is sold a foodstuff that does not correspond to the product specifications for that PDO but contains an ingredient which does correspond to those specifications cannot be regarded, in itself, as an unfair use". [48-]

The Court then considered the test of whether a 'sufficient quantity' of the specification corresponding goods has been used as an ingredient. They did note that there would be no minimum percentage, and those goods using them as an ingredient would take unfair advantage of the PDO if that ingredient does not confer on that foodstuff one of its essential characteristics. How this is determined is, according to the Court "…establishing that that foodstuff has... the aroma or taste imparted by that ingredient".

The CJEU summarised its conclusion as "…the use of a PDO as part of the name under which is sold a foodstuff that does not correspond to the product specifications for that PDO but contains an ingredient that does correspond to those specifications… constitutes exploitation of the reputation of a PDO… if that foodstuff does not have, as one of its essential characteristics, a taste attributable primarily to the presence of that ingredient in the composition of the foodstuff".

They then moved onto the third question, which asked whether the use of a PDO in the name of goods containing a corresponding good as its ingredient would amount to misuse, imitation or evocation within the meaning of the above Articles. Following their answer to the first and second questions, the Court quickly dismissed this as the use of the PDO to claim openly a gustatory quality connected with goods does not amount to misuse, imitation or evocation.

Finally, the Court took on the fourth question, which asked whether the Articles above are to be interpreted as applying only to false or misleading indications that the goods are of the same quality and origin as the PDO.

The CJEU swiftly set out that the Articles apply to both to false or misleading indications as to the geographical origin of the product concerned and to its nature or essential qualities. Should the sorbet not have had champagne as an essential characteristic the provider would have made a false or misleading indication within the meaning of the Articles.

The case is very interesting, particularly as it opens the door for producers to use PDOs and similar marks in conjunction with goods that incorporate them as an essential characteristic, i.e. a prominent ingredient. This writer could think of Roquefort ice cream or even Parma hamburgers, as potential uses of this new capability; however, the incorporation of PDO goods might be trickier than the case may indicate.

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

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

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

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

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

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

Not all art materials are created equal

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

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

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

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

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

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

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

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

Source: IPKat

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

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

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

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

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

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

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

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

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

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

Luxury is worth the price (Source: HistoryTwins)

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

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

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

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

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

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

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

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

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

Source: IPKat

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

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

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

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

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

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

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



The Cloud can makes emotions run high

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

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

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

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

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