Sunday, 4 August 2019

The CJEU Pelham decision: only recognizable samples as acts of reproduction?

Moses Pelham
Earlier this week, The IPKat reported [hereherehereon three new, seminal copyright decisions of
the Court of Justice of the European Union (CJEU) and promised a more detailed analysis. 

It also noted that these referrals had at least three things in common: they all concerned (to a greater or lesser extent) the interplay between copyright and fundamental rights; the same Advocate General (AG Szpunar) had delivered an Opinion in all the cases; and they were decided by the Court in a Grand Chamber composition (15 judges, instead of the usual chambers of 3 or 5 judges). Now that the decisions are available, there is a fourth element of identity between them, and that is that they also share the same Judge Rapporteur (Judge Ilešič). 

Let’s get started with the first judgment, the one concerning sampling of musical content: Pelham, C-476/17 (also known as the Metall auf Metall case). 

For a summary of the factual background and of the AG Opinion, see here and here

The issues 

The referral in this litigation that began approximately 20 years ago concerned two key issues (even if the questions referred were actually 6): 
  1. Is it a potential infringement of a phonogram producer’s exclusive right of reproduction under Article 2(c) of the InfoSoc Directive to take “very short snatches” (2 seconds of a rhythm sequence in the background proceedings) from a phonogram and use it in another phonogram without authorization [translated: does sampling require a licence?]? If so, can quotation in Article 5(3)(d) of that directive be nonetheless successfully invoked by the defendant? [translated: if so, can unauthorized sampling still be considered non-infringing?] 
  2. Are national exceptions beyond what is allowed under EU law (in this case, German ‘free use’ within Paragraph 24(1) UrHG) compatible with EU law? More generally, what freedom do Member States enjoy in areas harmonized at the EU level?
1. Sampling and copyright 

Sampling falls within the scope of the right of reproduction

The CJEU began its analysis by considering Article 2(c) of the InfoSoc Directive and noting that there is no definition of ‘reproduction … in whole or in part’ as such. Hence, this concept must be determined by considering the usual meaning in everyday language, while also taking into account the context in which it occurs and the purpose of the rules of which it is part. With regard to the latter, it is worth recalling that the InfoSoc Directive is aimed at guaranteeing a high level of protection. 

(I would also add that the concept of reproduction must be regarded as an autonomous concept of EU, since no reference is made to Member States’ laws in the directive: it follows that the same concept of ‘reproduction … in whole or in part’ must be envisaged across the EU.) 

All the above leads to the conclusion that: 
the reproduction by a user of a sound sample, even if very short, of a phonogram must, in principle, be regarded as a reproduction ‘in part’ of that phonogram within the meaning of the provision, and that such a reproduction therefore falls within the exclusive right granted to the producer of such a phonogram under that provision. (para 29) 
The Court noted that this finding is consistent with the objective of guaranteeing a high level of protection and safeguarding the specific objective of the exclusive right of the phonogram producer, referred to in Recital 10, “which is to protect a phonogram producer’s investment” (para 30). 

Does it matter if the sample is recognizable? ... Yes

All this said, the Court noted that: 
where a user, in exercising the freedom of the arts, takes a sound sample from a phonogram in order to use it, in a modified form unrecognisable to the ear, in a new work, it must be held that such use does not constitute ‘reproduction’ within the meaning of Article 2(c) of Directive 2001/29. (para 31) 
This would be consistent with Recitals 3 and 31 of the directive and the objective of guaranteeing a fair balance of different rights and interests. With particular regard to the Charter and recognition of IP (and, so, copyright) as a fundamental right, the CJEU recalled that nothing in the wording of Article 17(2) of the Charter suggests that its protection should be absolute. Rather, IP protection should be weighed against other fundamental rights and freedoms, including freedom of the arts (Article 13) and freedom of expression (Article 11 and Article 10(1) ECHR), the latter two being relevant to sampling. 

The Court reasoned as follows: 
to regard a sample taken from a phonogram and used in a new work in a modified form unrecognisable to the ear for the purposes of a distinct artistic creation, as constituting ‘reproduction’ of that phonogram within the meaning of Article 2(c) of Directive 2001/29 would not only run counter to the usual meaning of that word in everyday language, within the meaning of the case-law set out in paragraph 28 above, but would also fail to meet the requirement of a fair balance set out in paragraph 32 above.  
In particular, such an interpretation would allow the phonogram producer to prevent another person from taking a sound sample, even if very short, from his or her phonogram for the purposes of artistic creation in such a case, despite the fact that such sampling would not interfere with the opportunity which the producer has of realising satisfactory returns on his or her investment. (paras 37-38) 
Sampling not within the scope of the Rental and Lending Rights Directive 

Turning to Article 9(1)(b) of the Rental and Lending Rights Directive, the Court noted that protection under that piece of EU legislation is aimed at fighting piracy (Recital 2) and contrasting the production and distribution to the public of counterfeit copies of phonograms, that is articles which reproduce all or a substantial part of the sounds fixed in a phonogram to replace lawful copies of a phonogram. 

The is not the case of sampling, which – as a result – should not be considered a copy of a phonogram within the meaning of Article 9(1) of the Rental and Lending Rights Directive. This conclusion would be also supported by Article 1(c) of the Geneva Convention

Quotation and sampling: defence only available for recognizable samples 

Finally, with regard to quotation, the CJEU noted that Article 5(3)(d) of the InfoSoc Directive requires a quotation be made “in accordance with fair practice, and to the extent required by the specific purpose”. This means that “the use at issue for the purposes of quotation must not be extended beyond the confines of what it necessary to achieve the informatory purpose of that particular quotation.” (para 69) 

Similarly to ‘reproduction’, the InfoSoc Directive does not define the concept of ‘quotation’. The Court found that the essential characteristics of quotation in accordance with its meaning in everyday language are (para 71): 
  1. use, by a user other than the copyright holder, of a work or, more generally, of an extract from a work
  2. for the purposes of illustrating an assertion, of defending an opinion or of allowing an intellectual comparison between that work and the assertions of that user, 
  3. as such, the user of a protected work wishing to rely on the quotation exception must have the intention of entering into ‘dialogue’ with that work. 
It follows that the user of a sample might invoke the quotation defence in principle (if available under the relevant national law), but only in relation to a sample that is recognizable to the ear (para 72). The Court stated that there can be no dialogue between the original phonogram and the one that samples from it where it is not possible to identify the work concerned by the quotation at issue (para 73). 

2. National freedom beyond the InfoSoc Directive 

Exceptions beyond the InfoSoc catalogue 

Turning to the issue of whether EU Member States may envisage exceptions beyond the catalogue allowed under EU law (ie the InfoSoc Directive, since sampling does not fall within the scope of the Rental and Lending Rights Directive: para 57), the CJEU (unsurprisingly) answered that such possibility does not exist. 

The list provided in the InfoSoc Directive is in fact exhaustive. It is true that Recital 32 mandates a ‘fair balance’, but the balancing mechanisms are envisaged within the directive itself, by harmonizing exclusive rights and relevant exceptions and limitations. Also the three-step test in Article 5(5) contributes to such balancing goal. 

The referring court was of the view that German ‘free use’ should not be regarded as an exception, but rather as an ‘inherent’ limitation to the scope of copyright protection, “based on the idea that it is not possible to conceive of a cultural creation without that creation building upon the previous work of other authors.” (para 56) 

The CJEU did not agree, and stated that both the very goals of harmonization (see also Recital 31) and the principle of legal certainty would be defeated if Member States were free to derogate from an author’s exclusive rights going beyond the exceptions and limitations in Article 5 of the InfoSoc Directive. 

National transpositions of EU law provisions 

The Court had been also asked whether the InfoSoc and Rental and Lending Rights Directive allow any latitude in terms of implementation in national law. 

To answer this question, the Court recalled that the principle of primacy of EU law means that rules of national law, even of a constitutional order, cannot be allowed to undermine the effectiveness of EU law in the territory of that State. This said, in situations in which action of the Member States is not entirely determined by EU law, national legislatures retain some discretion and national authorities and courts remain free to apply national standards of protection of fundamental rights, provided that the level of protection provided for by the Charter and the primacy, unity and effectiveness of EU law are not compromised (para 80). 

However, no freedom is left under Article 2(c) of the InfoSoc Directive: “that provision is not qualified by any condition, nor is it subject, in its implementation or effects, to any measure being taken in any particular form.” Hence, “Article 2(c) of Directive 2001/29 constitutes a measure of full harmonisation of the corresponding substantive law” (para 85). 

The IPKat's favourite use
of the term 'sample' 

The CJEU Pelham decision is not surprising, and I agree with most of the analysis carried out by the Court. 

Recognizable and unrecognizable samples

The bit in relation to which I have some doubts relates to the distinction that the Court makes between a sample that is recognizable to the ear (which falls within the scope of Article 2(c) of the InfoSoc Directive) and a sample that is not and, as such, is not to be regarded as a reproduction. 

The reason why I find it difficult to understand this distinction is twofold. 

First, in both cases there is the taking of an extract from a third-party phonogram. Hence, in both cases there is the doing of a restricted act. In principle this entails the need for a licence from the relevant rightholder. 

It should not matter what the purpose of the use (non-transformative or transformative) is to determine whether there is a reproduction or not. It seems to me that a reproduction would be made in both instances. 

The difference would be that, in the case of a transformative reproduction, the original sample might become unrecognizable. But is such lack of recognition enough to exclude that the relevant rightholder had a right to control reproductions of their subject matter? 

If the use of the original sample was required, even to create something that ends up being very different from the original, then the rightholder’s reproduction right would be relevant. If the original sample was not needed to create something the sounds differently, then why taking from the original phonogram in the first place? 

Second, I find it contradictory on the side of the Court to say at the outset that a non-recognizable sample is not an act of reproduction, and then conduct an assessment as to whether the quotation defence would nonetheless apply. The consideration of exceptions and limitations should follow from a finding of prima facie liability as resulting from the unauthorized doing of a restricted act: if the Court thinks that an unrecognizable sample is not an act of reproduction, then there is no need to consider exceptions and limitations. 

Protection of phonograms

The Court avoided engaging in a comparison between the right of reproduction as applied to works and the right of reproduction as applied to other subject matter (in this case, phonograms). This way, it avoided tackling the effects of the Infopaq string of cases, which – instead – AG Szpunar had considered in his Opinion (receiving widespread, yet in my view misplaced, criticism). Despite this, the Court’s analysis appears to endorse the analysis of its AG, which in my view was correct. 

This means that, while for works there is an act of reproduction in part when what is reproduced is sufficiently original, for other subject matter (eg, phonograms), there is no need to consider whether what has been taken is original.

Further points

Other points of interest are the following. 

First, the Court confirmed that the EU copyright framework does not leave Member States the freedom that, clearly, they thought they had. Case law issued over the past few years has been consistent in this sense, and the holding in Pelham is not different. The EU copyright framework is an (in)flexbile, rather than a flexible, one.

Second, the Court had the chance to elaborate a bit further on the concept of quotation (it first tackled it in Painer), and clarified that, indeed, a quotation cannot be for any reason. If we transfer this reasoning to the UK, a country that only in 2014 introduced a quotation defence taking advantage of the possibility in Article 5(3)(d) of the InfoSoc Directive, it follows from Pelham that, even if section 30(1ZA) CDPA does not specify the purpose of the quotation at issue for the defence to be available in principle, if an opportunity arises for UK courts to interpret this provision, then the fair dealing assessment will need to take into account the guidance provided by the CJEU: a quotation must be indeed justified by its purpose.

[Originally published on The IPKat on 4 August 2019]

Tuesday, 16 July 2019

Today's the 10-year anniversary of the CJEU judgment that changed EU copyright

Members of the Court in 2018
On this day 10 years ago, the Court of Justice of the European Union (CJEU) issued the judgment
that set a new course for the development and construction of EU copyright law, a course in which the role of EU judiciary would become as important as and, in certain areas, even more important than that of EU legislative. 

That decision is the one in Infopaq, C-5/08

As readers know, the core of that referral concerned the notion of reproduction 'in part': is it an infringement of the right of reproduction in Article 2 of the InfoSoc Directive to reproduce short extracts of newspaper articles without a licence? To answer this, the CJEU said that there is reproduction 'in part' when what is being reproduced is sufficiently original. 

Fair enough: the Court could have stopped here - nothing too surprising.

In fact, unlike what is for subject matter like softwaredatabases and photographs, the InfoSoc Directive does not contain a harmonized concept of originality. In this sense, it might have well been the case that individual EU Member States could have defined originality in accordance with their own national copyright traditions.

However, this is not what the CJEU decided. 

In fact, the Court held that the InfoSoc Directive is rooted within the same principles found in those directives that contain a harmonized notion of originality. 

Thus, also for subject matter falling within the scope of the InfoSoc Directive, protection arises when a sufficient degree of originality - to be intended as the 'author's own intellectual creation' - is found to subsist.

A Copernican Revolution had just begun and nothing could stay the same!

A new era

As far originality is directly concerned, the Court progressively refined its own understanding in subsequent case law, submitting that originality requires the making of 'free and creative choices', that the work carries the 'personal touch' of the author, and that 'significant labour and skill' are not enough. 

Although 10 years have passed since the Infopaq decision, we are still struggling with PTSD the full implications of all this: the referral in Cofemel (in progress) stands as a demonstration [Katpost hereand recent cases like Levola Hengelo [Katposts here and here- concerning the notion of 'work' - also required the CJEU to tackle Infopaq and its progeny.

Overall, in the post-Infopaq years, the role of the Court has indeed acquired centrality, with commentators referring to this process as 'harmonization by stealth' or the Court's approach as a 'harmonising agenda'. 

A progressive development

Irrespective of the opinion that one might have of resulting case law, the Court has developed relevant copyright concepts progressively and - in my view - coherently, without any drastic departure from earlier decisions despite the lack of a formal system of binding precedent at the CJEU level. 

Lack of a formal system of binding precedent

The reason why no binding precedent was introduced at the CJEU level was the fear that a system of stare decisis would be inappropriate for an institution acting as court of first and last resort. Envisaging binding precedent would mean that, to challenge a certain decision, a review of the Treaties would be necessary. 

However, the very fact that the Court often uses the expression 'it is settled case law' or that it would issue an order, in lieu of a judgment, in cases that contain questions identical to those on which the Court has already ruled or the reply to which may be clearly deduced from existing case law is indicative that earlier decisions have in fact a value which, if not akin to that of a binding precedent, is at least one in which earlier decisions matter. 

According to authoritative commentators, this system, which is now codified but what first initiated by the Court in its seminal decision in Da Costamay be regarded as akin to a system of precedent under EU law.

De facto specialization

In addition, as discussed at greater length here, although the Court does not have specialist chambers or specialist expertise, as a matter of fact specialization may be discerned in respect of various areas. 

This has been possible both through the appointment, each time, of a Judge-Rapporteur from a narrow pool (with Jiří Malenovský acting as Judge-Rapporteur in over 50% of the copyright referrals over the past twenty years) and that for certain issues, eg Advocate General (AG) Yves Bot in cases concerning the interpretation of the Software Directive or AG Maciej Szpunar in relation to cases concerning the interplay between copyright and other fundamental rights, the same AG has also been appointed. 

Expansive reading of copyright provisions

Further, the Court has shown a (statistically relevant) tendency towards endorsing the Opinion of the AG appointed in a certain case, when this proposed an expansive reading of the scope of copyright protection.

Autonomous concepts of EU law

In addition, the Court has relied on a certain number of standards to interpret the EU acquis, and has done so consistently. Of particular importance for the Court's 'harmonising agenda' is the fact that, when a certain provision in a EU directive makes no reference to national legislation, relevant concepts are not to be defined at the national level, but are rather to be intended as autonomous concepts of EU law. As such, they are to be given a uniform application throughout the EU. This is an expression of the principle of autonomy of EU law. 

The CJEU has often employed this standard in its copyright case law, with the practical effect of strengthening harmonization of copyright laws across the EU.  

In relation to its construction of economic rights, the CJEU referred to the need of considering the notion of ‘public’ within Article 3(1) of the InfoSoc Directive as an autonomous concept of EU law in its first decision on the right of communication to the public (SGAE). 

It achieved a similar conclusion with regard to the notions of ‘reproduction’ (FAPL) and ‘reproduction in part’ (Infopaq) within Article 2 of the InfoSoc Directive and the notions of ‘distribution’ (DonnerDimensione Direct Sales and Labianca) within Article 4 of the same directive. With reference to the right of distribution, in UsedSoft, the Court clarified that also the notion of ‘sale’ within Article 4(2) of the Software Directive is to be regarded an autonomous concept of EU law. 

Recently, Levola Hengelo, the Court also held that ‘work’ under the InfoSoc Directive is an autonomous concept of EU law.

A similar pattern may be discerned with reference to exceptions and limitations. The CJEU has referred to the following as autonomous concepts of EU law: ‘fair compensation’ for private copying within Article 5(2)(b) of the InfoSoc Directive (PadawanHewlett-Packard BelgiumEGEDA and Others); the concept of ‘by means of its own facilities’ within Article 5(2)(d) of the InfoSoc Directive (DR and TV2 Danmark); and ‘parody’ under Article 5(3)(k) of the InfoSoc Directive (Deckmyn).

Waiting for the next CJEU copyright decision ...
You won't need to wait long though: 
29 July is the date of 3 of them: Funke Medien,
Pelham and Spiegel Online!
Legacy of CJEU case law

In all this, the CJEU understanding and construction of economic rights has had a significant impact on both national copyright regimes and the development of EU policy in this area of the law.

With regard to the former, CJEU case law has helped shaping corresponding national economic rights, determining the subsistence of copyright protection (including the notion of ‘work’), and defining the standard of infringement. 

Turning to the latter, the recently adopted DSM Directive [Katposts hereshows how any review of EU copyright rules would not just need to consider the (formally rich but substantially relatively thin) existing legislative framework, but also – and possibly above all – the CJEU interpretation of existing sets of rules. 

In this sense, the discussion around certain provisions in the DSM Directive included the relationship with existing CJEU case law and whether and to what extent EU legislature should retain it. Examples in this sense are: Article 17 (as stated in Recital 64, that OCSSPs communicate to the public is a clarification of existing (case) law); Article 16 (which was meant to 'erase' Reprobel) and Article 8 (which was meant to remedy Soulier).

2009 was the year that changed EU copyright. There is no reason to think that the Court would cease having a central role in the clarification, construction and development of the copyright framework in the near future. Although doubts might remain regarding the role and actual competence of the Court in building, rather than just interpreting (but how do you draw the line?) the law around copyright, this trend appears bound to stay ... Happy Infopaqversary! 

[Originally published on The IPKat on 16 July 2019]

Wednesday, 19 June 2019

General Court confirms invalidity of (one of the) adidas three-stripe mark(s)

Earlier today, the General Court (GC) issued a keenly-awaited ruling (T‑307/17), in which it upheld the earlier decision of the EUIPO Second Board of Appeal (R 1515/2016-2), and found this three-stripe EU trade mark (EUTM) owned by adidas:
invalid. In a nutshell, the GC found that:
  • The trade mark at issue would not be a pattern mark, but an ordinary figurative mark; 
  • The forms of use, eg colour scheme, of said trade mark should not to be taken into account; and 
  • adidas failed to prove acquired distinctiveness throughout the EU.
Let's see more in detail how the court reasoned.


In 2014. adidas obtained an EUTM for the sign represented above, described as consisting of "three parallel equidistant stripes of identical width, applied on the product in any direction" for goods in Class 25 of the Nice Agreement.

Also that year, Shoe Branding Europe filed an application for a declaration of invalidity of the EUTM pursuant to what is now Article 59(1)(a) EUTMR, in conjunction with Article 7(1)(b) therein.

In 2016, the EUIPO Cancellation Division granted the application and held adidas's EUTM invalid due to lack of distinctive character, both inherent and acquired through use.

adidas appealed and, while it did not dispute the lack of inherent lack of distinctiveness, it submitted that its EUTM had acquired distinctiveness through use. The appeal was rejected, and adidas brought the matter before the GC.

Unjustified dismissal of some of the evidence

adidas submitted that the EUIPO Board of Appeal had unduly dismissed evidence on the ground that said evidence was related to signs other than the mark at issue. According to adidas, by doing so the Board both misinterpreted the mark at issue and misapplied the ‘law of permissible variations’. 

Misinterpretation of the mark at issue: a 'surface pattern'?

With regard to the former, adidas argued that the Board had incorrectly assumed that the mark at issue was only claimed in specific dimensions and, in particular, in a specific ratio of height to width. Instead, the Board should have treated it as a surface pattern that may be reproduced in different dimensions and proportions depending on the goods on which it is applied. 

The GC disagreed with adidas, and noted how the EUIPO can only consider what is set out in the application for registration and any description provided of said sign. Also recalling the well-known Sieckmann decision, the GC noted how
it is for the trade mark applicant to file a graphic representation of the mark corresponding precisely to the subject matter of the protection he wishes to secure. Once a trade mark is registered, the proprietor is not entitled to a broader protection than that afforded by that graphic representation [...].
The court also noted that the EUTM had been registered as a figurative mark, and that no indications were provided that it should be intended as a pattern mark. This 'classification' means that, in principle, registration is in the proportions shown in the relevant graphic representation. This conclusion cannot be questioned by rulings like Apple [Katpost here]:
That judgment merely states that a design may be registered as a trade mark, even though it bears no indication of the size and proportions of the object which it represents. However, that judgment does not imply that a mark may be registered without defining the proportions of the sign itself.
Misapplication of the ‘law of permissible variations’

Turning to the alleged misapplication of the ‘law of permissible variations’, that is the possibility of using a mark with variations that do not affect its distinctive character, the Board had considered that:
  • where a trade mark is extremely simple, even a slight difference could lead to a significant alteration to the characteristics of the mark as it had been registered; 
  • use of the mark at issue in the form where the colour scheme is reversed necessarily alters the distinctive character of that mark;
  • some of the evidence showed a sign with two instead of three stripes and; 
  • the use of sloping stripes altered the distinctive character of that mark.

The Board had considered the following as examples of evidence that failed to show genuine use of the mark at issue:

The GC sided with the Board and concluded that this had rightly dismissed the images above on the ground that they were related to signs other than the mark at issue. Consequently, no infringement of the ‘law of permissible variations’ had occurred.

Error of assessment regarding the acquisition of distinctive character through use

adidas also claimed that the Board had erred in finding that the applicant had not shown that the mark at issue had acquired distinctive character as a result of the use which had been made of it within the EU.

The court noted at the outset that:
in order to demonstrate that the mark at issue has acquired distinctive character, the applicant cannot rely on all of the evidence which shows a mark consisting of three parallel equidistant stripes. Indeed, it follows from the answer to the first part of the plea in law that the relevant evidence is only that which shows the mark at issue in its registered form or, failing that, in forms which are broadly equivalent, which excludes forms of use where the colour scheme is reversed or which fail to respect the other essential characteristics of the mark at issue.
It then recalled the principles established in earlier case law re acquired distinctiveness, and reviewed the evidence submitted by adidas. The court noted that it follows from the unitary character of the EU trade mark that, in order to be accepted for registration, a sign must have distinctive character, inherent or acquired through use, throughout the EU.

This does not mean that proof is required for each individual Member State. However, "the evidence submitted must be capable of establishing such acquisition throughout the Member States of the European Union".

In this case, the only evidence which is, to some extent, relevant were 5 market surveys completed in only 5 Member States. This was deemed insufficient to prove acquired distinctiveness throughout the EU.


Is this the end of the adidas three-stripe trade mark(s)? Of course not. Not only does adidas own several three-stripe marks [just check the EUIPO database for EU registrations] which are not affected by today's ruling, but the decision might be appealed one last time to the Court of Justice of the European Union. The last word is thus yet to be told.

In any event, today's ruling is a useful reminder that the 'law of permissible variations' is not limitless and must be applied having specific regard to the mark at issue. In addition, evidence serves indeed to prove something: parties must be careful about the type that they submit, no matter how well-known the sign at issue is perceived to be. Though in a different context, readers might in fact remember that not long time ago another arguably well-known trade mark, McDonald's BIG MAC, suffered from problems of poor evidence. The result was that:
an overall assessment of the evidence does not allow the conclusion, without resorting to probabilities and presumptions, that the mark was genuinely used during the relevant period for the relevant goods or services
[Originally published on The IPKat on 19 June 2019]