Sunday, 15 July 2018

Milan court applies Nintendo v Big Ben in fast fashion lawsuit against ZARA

Diesel (L) and Zara (R)
The relevance of the fashion industry to world economies has grown over time. Today it equals 2% of world's Gross Domestic Product

A phenomenon that has really boomed over the past few years is that of 'fast fashion', which is characterized - also raising a number of concerns, including sustainability (or lack thereof) - by very rapid production cycles, low cost and prices, and items 'inspired' - see, eg, Saint Laurent/ZaraGucci/Forever 21Acne/Zara - by looks seen on catwalks or those worn by celebrities.

According to statistics, fast fashion items are worn less than 5 times. Hence, also the 'wearing' cycle is short-lived.

But when does inspiration translate to an actual IP infringement? And is it worth it - or even altogether possible from a legal standpoint - for, say, a fashion house to take action in an attempt to repress the production and sale of garments that look a bit too similar to the real thing?

The Milan decision

Good news for fashion houses comes from Italy, where recently the Milan Court of First Instance (decision 5390/2018) confirmed the interim injunction granted in 2016 in favour of OTB (which is the parent company of, inter alia, DIESEL and MARNI), and found that Zara had infringed:
  • Diesel's Community registered design right No 2649491-002 (filed on 10 March 2015) and unregistered design right relating to women's skinny jeans SKINZEE-SP2;
  • Marni's unregistered Community design right concerning its winter sandal FUSSBET, first disclosed in February 2014.
Let's see what happened.

Background

In its action first brought in 2016, OTB sued the Zara group of companies (including, inter alia, ZARA ESPANA and ZARA ITALIA) before the Milan Court of First Instance, claiming that:
  • Zara had infringed the IP rights mentioned above by marketing, respectively, jeans named BIKER CERNIERE (5899/167) and a pair of ZARA HOME sandals (15049071);
  • Zara had acted contrary to the principles of fair competition under Article 2598 of the Italian Civil Code;
  • It was entitled to receive compensation for the entire amount of the damages suffered in the territory of the EU due to Zara's infringements.
The defendants sought the dismissal of the action, also submitting that the Italian court would lack jurisdiction under Article 8(1) of Regulation 6/02 (Community Design Regulation) over defendants established abroad, and that this would be in line with the position of the Court of Justice of the European Union (CJEU).

Marni's FUSSBET
Jurisdiction

First, the Court addressed the claim that it would lack jurisdiction in relation to foreign defendants.

It rejected this claim, holding that jurisdiction would subsist under Article 8(1) No 1 of the Brussels I Regulation recast. This provision states that person domiciled in a Member State may also be sued "where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings".

The substantial assessment

With regard to the merits of the case, the Court focused on the notions of individual character and informed user. With regard to the latter, the Court recalled the definition as provided by the CJEU in PepsiCo. With regard to the former, it noted how account should be taken of the degree of freedom of the designer, as required under Article 6 of Regulation 6/02. 

In the case at issue such freedom would not be really influenced by functional aspects (which relate to the shape of the human body) but rather by the [note: all translations from Italian are mine] "extremely crowded character of the clothing sector (in particular, jeans)". It follows that "modest differences which may nonetheless be perceived by the informed user as different from already known shapes may justify the validity of the right". In any case attention should be paid to the overall impression provided by the designs at issue.

The Court held DIESEL's rights over SKINZEE-SP2 valid and found that ZARA had infringed such rights. In relation to Marni's claim, the Court confirmed the validity of the unregistered Community design right for the statutory 3-year term, holding that "the appearance of Marni's sandal presents enough characteristic elements to produce an overall different impression in the sector". 

'Skinny' jeans
Territorial scope

With regard to the territorial scope of the measures to be adopted and the compensation of damages, the question was whether the court in Italy would have competence to rule also in relation to activities of a defendant domiciled in Spain for the same infringing activities committed outside Italy but still within the EU territory.

The Milan judges answered this point in the affirmative, referring to the recent CJEU decision in Nintendo v Big Ben [commented on this blog here], whose background proceedings were considered "entirely similar" to the present case.

This means that, not only would the Milan court have EU-wide jurisdiction to rule on the infringement, but it would also have EU-wide jurisdiction in relation to remedies, including damages:
Indeed such measure [award of damages] - which is an ancillary request to the one seeking declaration of infringement, rooted in this case within the jurisdiction of the Community design court under Article 83(1) of Regulation 6/02 - falls within the scope of Article 88(2) of Regulation 6/02, which states that on all matters not covered by it, a Community design court shall apply its national law and its private international law. 
The Milan court held that this requires consideration - in line with the CJEU decision in Ergo Insurance - of the Rome II Regulation. According to Article 19 therein, for activities of ZARA ESPANA other than those which have given rise to the infringement on the Italian territory, the applicable law would be the Spanish one. 

The Court ordered the defendants to cease any production and selling activities related to SKINZEE-SP2 and withdraw the infringing products form the market in relation to the entire EU territory (the expiry of the right over the FUSSBET sandal meant that no such order could be made). It also ordered that the proceedings continue in order to determine the actual amount of the damage to be awarded to the claimants, also taking into account Spanish law with regard to ZARA ESPANA's activities.

Comment

The decision of the Milan court represents one the first national applications of the CJEU ruling in Nintendo v Big Ben. It confirms that in principle a design court in a EU Member State has jurisdiction to consider remedies, including damages, also in relation to infringing activities occurred outside the territory where the court seised has its seat. May this be just the beginning of a new approach in the fight, among other things, against fast fashion?

[Originally published on The IPKat on 15 July 2018]

Tuesday, 10 July 2018

The value gap proposal in the JURI Committee Report as a consolidation of the existing framework (not the end of the internet)

Mind the gap, please
Following a number of delays, a few days ago the JURI Committee (Legal Affairs) of the European Parliament finally adopted the text of the Report on the proposed Directive on copyright in the Digital Single Market (DSM Directive) as drafted by its Rapporteur, MEP Voss. 

This development, which would allow the European Parliament to begin trilogue negotiations (negotiations between the Council and the European Parliament to reach a compromise between the respective versions of the DSM Directive) follows the earlier vote and, with it, agreed negotiating mandate in the Council of the European Union [here]

This week (5 July) the plenary of the European Parliament will vote on whether the trilogue negotiations, on the basis of the mandate represented by the JURI Committee Report, may begin [see this helpful Politico infographic] 

The text of the proposed DSM directive has attracted significant attention since its release by the EU Commission in September 2016. Among other things, the provision in Article 13 (value gap or transfer of value) has been commented extensively. According to critics, this proposal – if adopted – would affect dramatically the functioning of the internet and introduce brand-new obligations for online actors (online content sharing service providers).

But would this be actually the case?

The structure and content of Article 13 in the JURI Committee Report

Compared to earlier versions of the value gap provision, the most notable elements of the JURI Committee version are probably those outlined below.

Definition of online content sharing service providers

Online content sharing service providers that would be subject to Article 13 obligations are defined (Recital 37a and Article 2) as ‘information society service providers one of the main purposes of which is to store and give access to the public or to stream copyright protected content uploaded / made available by its users and that optimise content, including amongst others promoting displaying, tagging, curating, sequencing the uploaded works or other subject-matter, irrespective of the means used therefor, and therefore act in an active way.’

Non-commercial service providers (eg online encyclopaedias), providers which allow content be uploaded with the authorization of all rightholders concerned, providers of private, open source software developing platforms, and online marketplaces whose main activity is online retail of physical goods are outside the scope of the definition of online content sharing service providers and, therefore, Article 13 of the DSM Directive.

Nature and obligations of online content sharing service providers

The JURI Committee Report (Article 13 and Recitals 37-39c) states that providers within the definition above:

  • are deemed to make acts of communication to the public and are therefore responsible (and potentially liable) for user-uploaded content (UUC) made available through their services;
  • if they make acts of communication to the public, are not eligible for the safe harbour within Article 14 of the Ecommerce Directive. In any case, the safe harbour would not apply when a service provider plays an active role, including by optimizing the presentation of the uploaded works or subject-matter or promoting them, irrespective of the nature of the means used therefore;
  • are under an obligation to conclude ‘fair and appropriate’ licensing agreements with relevant rightholders (the latter are, however, under no obligation to issue licences), and this obligation also applies to information society service providers that automatically reproduce or refer to significant amounts to copyright works and make them available to the public for the purpose of indexing and referencing (Article 13b) (the latter appears to resemble a law adopted in France in 2016);
  • the licences granted also cover any liability of users of the service for non-commercial UUC in line with the terms of the relevant licence;
  • shall, in cooperation with rightholders, take ‘appropriate and proportionate’ measures to ensure the functioning of the licensing agreements concluded for use of relevant works on their services;
  • are under an obligation to prevent the availability of infringing content by adopting proportionate and effective measures – based on information provided by rightholders – while not preventing the availability of lawful UUC (this obligation subsists also when the safe harbour protection applies and in the absence of licensing agreements);
  • are under an obligation of transparency towards rightholders and users alike regarding the use and implementation of relevant measures.


Obligations of EU Member States

In the JURI Committee version EU Member States:

  • are under an obligation to ensure that the implementation of the measures referred to in Article 13 is: (i) proportionate; (ii) strikes an appropriate balance between different fundamental rights protected by the EU Charter of Fundamental Rights; and (iii) is in accordance with the prohibition of general monitoring within Article 15 of the Ecommerce Directive.
  • must ensure that: (i) providers put in place effective and expeditious complaints and redress mechanisms to prevent misuses or limitations to the exercise of relevant exceptions and limitations (any complaint filed under such mechanisms is to be processed without undue delay); (ii) the measures adopted by online content sharing service providers to prevent the availability of infringing content be compliant with the GDPR and the Directive on privacy and electronic communications and require no identification of individual users and the processing of their personal data; (iii) users have access to judicial remedies to assert reliance on an exception or limitation; (iv) authors and performers, who do not opt for a non-exclusive usage right for all users free of charge, receive fair and proportionate remuneration for the exploitation of their works, including online.


What the law already says

The version of the value gap proposal approved by the JURI Committee moves from the idea that online content sharing providers make acts of communication to the public and are ineligible for the safe harbour protection in relation to their own copyright-relevant acts.

Commentaries on the JURI Committee Report have rapidly emerged [eg, herehereherehere]. Criticisms have focused, in particular and among other things, on the following aspects:

  • Online content sharing service providers do not make acts of communication to the public;
  • Online content sharing service providers are eligible for the safe harbour protection;
  • Online content sharing service providers may not be required to implement filtering systems;
  • Article 13 of the DSM Directive would seriously impair freedom of expression/information, as well as data protection/privacy, thus breaching users’ fundamental rights.
The current legal framework – as developed at the level of both the Court of Justice of the European Union (CJEU) and national courts – seems to have moved already towards the direction envisaged by the value gap proposal. It may be indeed the case that Article 13, also if adopted in the form proposed by the JURI Committee, would not represent a dramatic shift from the way in which the law has developed up till now. In relation to critics’ legitimate and important concerns, guidance appears in fact already available under the existing framework.

Responsibility and liability for unauthorized acts of communication to the public

The right of communication to the public within Article 3(1) of the InfoSoc Directive has been progressively construed by the CJEU through its nearly 20 judgments on this point. In more recent cases the Court has focused in particular and among other things on the ‘indispensable intervention’ of the user/defendant, and referred to the user’s profit-making intention.

In Filmspeler [here], the Court held that an intervention enabling a direct link to be established between those who make available infringing works and users of such works, “is quite different from the mere provision of physical facilities, referred to in recital 27 of [the InfoSoc Directive].” Such an intervention – made “with full knowledge of the consequences” of such a conduct – facilitates access to unlicensed content that would be otherwise more difficult to locate and triggers the liability of the subject who makes it.

Coherently with this understanding, in its 2017 judgment in The Pirate Bay [analyzed more in detail here], the CJEU concluded that the operators of an online platform may be liable for unauthorized acts of communication to the public.

The undertaking by the platform operators of indexing, categorization, deletion, or filtering activities – no matter how they are performed – excludes any assimilation to the mere provision of facilities. The making available and management of an online sharing platform must be therefore considered an act of communication for the purposes of Article 3(1) of the InfoSoc Directive.

Although the platform at issue in The Pirate Bay was (and still is) principally devoted to piracy, it appears questionable to hold the outcome of that case would be only applicable to egregious scenarios like the one at stake there. Acts of communication may be made also by the operators of other, non-piracy focused, platforms giving access to UUC. National case law has begun emerging and confirmed this point: a court in Austria (in the context of interim proceedings) has recently ruled that YouTube makes acts of communication to the public. The Federal Court of Justice in Germany is also expected to rule on whether YouTube may be regarded as primarily responsible (and liable) for acts of communication to the public in September.

Overall, the evolution – also at the judicial level – has been in the sense of acknowledging that certain platforms may have moved away from a nature of pure, passive hosts.

Thrilled to be in the water ...
where's that safe harbour?
Safe harbour protection

With regard to the unavailability of the safe harbour for hosting providers within Article 14 of the Ecommerce Directive to platforms liable for unauthorized acts of communication to the public, this should not come as a surprise (although in its original proposal the EU Commission suggested that the safe harbour could be still available to platforms making acts of communication).

The safe harbours in the Ecommerce Directive are only available to passive providers. This is clear from the language of the relevant provisions as well as CJEU case law, including Google France and eBay.

Furthermore, the Ecommerce Directive (Recital 44) explicitly excludes the applicability of safe harbours in case of direct infringements of mere conduit and caching providers in collaboration with recipients of their services. For hosting providers it appears fair to assume that the same regime applies. The safe harbour relates in fact to possible liability of a hosting provider on a secondary basis for third-party infringements, not direct infringements by the provider (Recital 46 and Article 14(2)).

Although some scholars have suggested a different reading of the Ecommerce Directive (holding that Ecommerce safe harbours would apply irrespective of the form of liability), the CJEU appears to have taken a different direction in The Pirate Bay. Unlike the Opinion of the Advocate General, the decision contains no references to the Ecommerce Directive and envisages further hypotheses of liability than what the Opinion does.

Lack of references to the Ecommerce Directive in that judgment suggests that the exemptions/limitations from liability envisaged in the latter would be inapplicable in case of primary infringement by platform operators. This is coherent with the idea that the insulation offered by the safe harbours is only available to information society service providers that act as mere intermediaries.

Filtering
Filtering obligations

With regard to the suggestion that EU law prohibits the imposition of monitoring (filtering) obligations, this is true with regard to general monitoring only (as also confirmed in eBay and McFadden).

Some commentators have referred to the twin decisions in Scarlet and Netlog, arguing that the CJEU has clarified that an obligation like the one that would be imposed under Article 13 of the DSM Directive would be absolutely contrary to EU law.

It is suggested that this is an incorrect reading of those judgments, which are narrower in scope than what has been claimed. In fact, what the CJEU found incompatible with EU law in those case (see also the operative part of the decision) would be only a filtering system imposed on a provider that would: (1) filter information which is stored on its servers by its service users; (2) which applies indiscriminately to all of those users; (3) as a preventative measure; (4) exclusively at its expense; and (5) for an unlimited period, which is capable of identifying electronic files containing copyright material, with a view to preventing those works from being made available to the public without a licence.

In The Pirate Bay the CJEU held that liability for unauthorized acts of communication to the public arises in case of actual and constructive knowledge and – potentially – also in cases in which knowledge is presumed (in a GS Media sense). In this sense, operators of platforms with a profit-making intention would have an ex ante reasonable duty of care and be subject to an ex post notice-and-takedown system, which would also include an obligation to prevent infringements of the same kind, eg by means of re-uploads of the same content. This appears in line with eBay, in which the CJEU clarified the obligations of a ‘diligent economic operator’ and also held that an injunction against an intermediary may be aimed not just at repressing existing infringements but also preventing new ones from occurring. Also national courts have reached similar conclusions regarding preventing re-uploads of infringing content, eg in Germany and Italy.

This, in substance, is what the language of the value gap proposal also suggests and does not appear to be at odds with developments already occurred at the CJEU and national case law levels.

Fundamental rights, including freedom of expression/privacy and data protection/privacy

Finally, some have argued that the value gap proposal would ban memes and GIFs and ‘censor’ the internet. Yet Article 13: (a) requires undertaking a balancing of different rights and interests, and (b) is without prejudice to available exceptions and limitations (which remain optional for Member States to introduce, irrespective of whether the value gap proposal is adopted or not).

Some have also suggested that automated filtering systems are not in a position to determine whether a certain use of a copyright work falls under an available exception. Whilst this might be true (yet platforms that already have filtering systems in place are flooded with parodies, quotations, reviews, etc), the proposal also clarifies that Member States must ensure that systems to prevent misuses or undue limitations to the exercise of relevant exceptions and limitations are in place, together with complaint and redress mechanisms.

If there is a problem with copyright exceptions and limitations in the EU (and the freedom to make and post GIF and memes), this has existed for a long time, well before and independently from the release of the proposal for a DSM Directive [The IPKat discussed it here]. It is due to: (a) the fact that Article 5 of the InfoSoc Directive leaves Member States free to pick and choose what exceptions and limitations transpose in their legal systems (with the sole exclusion of temporary copies) and (b) as a matter of fact, national transpositions of Article 5 exceptions and limitations have been different across the EU, with the result – if one did not consider the work of the CJEU in this area – that there appears to be no real level playing field for copyright exceptions and limitations across the EU.

Finally, some critics have also noted that the obligations imposed on providers to prevent the availability of infringing content would be contrary to data protection/privacy principles and Article 8 of the EU Charter. This concern is difficult to fully grasp in abstracto, as the proposal refers expressly not only to the respect of fundamental rights but also to the GDPR and the Directive on privacy and electronic communications.

Conclusion

While the proposal in Article 13 (read in light of Recitals 38 and 39) raises practical questions (eg different approaches will likely be required depending on the type of content at issue, information regarding content will need to be provided accurately by rightholders to comply with the eBay decision, providers will need to make technical choices and adopt appropriate filtering systems, etc), some of the concerns raised against it relate to issues that have been already addressed within the existing EU framework, as also interpreted at the judicial level.

In this sense, the adoption of the value gap proposal would hardly signal a major departure from the law as it has already developed under existing legislative instruments: it would rather represent a consolidation and possibly a clarification thereof. While there is room to improve the text of Article 13 further, its main tenets do not appear at odds with EU law, including fundamental rights.

[Originally published on The IPKat on 2 July 2018]

Wednesday, 13 June 2018

BREAKING: UK Supreme Court rules that ISPs do NOT have to pay implementation costs in Cartier case

Overturning the decisions at first instance [IPKat report here and hereand on appeal [IPKat report here], this morning the UK Supreme Court has ruled that the ISPs (internet access providers) do NOT have to bear the costs of implementation of the injunction (in this case, a blocking injunction) issued against them pursuant to section 37(1) of the Senior Courts Act 1981 (SCA), requiring them to block access to a number of websites making available for sale goods infringing trade mark rights.

As explained in this post, the appeal to the UK Supreme Court focused indeed on the issue of cost allocation. 

The previous episodes

Although Kitchin LJ (writing for the Court of Appeal) acknowledged that "the ISPs are not guilty of any wrongdoing”, nor do they owe a common law duty of care to take reasonable care to ensure that their services are not used by the operators of the offending websites, the operators of the infringing websites need the services of the ISPs in order to offer for sale and sell their counterfeit goods to UK consumers. It followed that "the ISPs are therefore inevitable and essential actors in those infringing activities." 

The Court of Appeal confirmed that the High Court (Arnold) J "was entitled to require the ISPs to bear the costs of the implementation [while the costs of application should be borne by the rightholders] of the orders in issue." 

Similarly to Arnold J at first instance, Kitchin LJ in the Court of Appeal observed that it was implicit in Recital 59 of the InfoSoc Directive and Recital 23 of the Enforcement Directive that it would be “entirely appropriate for a national court to order that the costs of implementation of any such injunction should be borne by the intermediary”. 

The Court of Appeal also approved of Arnold J's proper consideration of the economic impact of website blocking orders upon the businesses of the ISPs, and that these could either bear these costs themselves or pass them on to their subscribers in the form of higher subscription charges.

The decision of the Court of Appeal contains however the dissent of Briggs LJ (as he then was) on the issue of cost allocation. In his view, “the cost burden attributable to the implementation of a particular blocking order should fall upon the rightholder making the application for it." The reason why that should be that case is a domestic one. 

It is true that both the Enforcement Directive and the InfoSoc Directive provide that rightholders should have the possibility of applying for an injunction against an intermediary who either carries a third party's infringement of a protected work in a network (in copyright cases) or whose services are being used by a third party to infringe the rightholder's industrial property right (in relation to trade marks). In both cases, however, the conditions and modalities relating to such injunctions, or the conditions and procedures relating to such injunctions should be left to the national law of the Member States. 

Briggs LJ noted that jurisdiction within section 37(1) SCA in substance reflects an originally unfettered jurisdiction exercised by the Court of Chancery on equitable principles. In the case of orders against innocent third parties, the law has evolved so to ensure that a standard condition or 'modality' for the grant of an injunction is that the cost reasonably incurred by the innocent respondent should be reimbursed by the applicant. In his view the Norwich Pharmacal jurisdiction should be intended as applicable in the case of intermediary injunctions and shield intermediaries from any responsibility for costs of injunctions against them. 

- You pay!
- No, you pay!
Today's judgment

This morning the Supreme Court held that neither EU directives nor judgments of the Court of Justice of the European Union (notably, the ones in L'Oréal and Telekabel) really set any rules as regards the allocation of costs of intermediary injunctions. 

It follows that this is a matter for individual Member States to decide. According to Lord Sumption (writing for the Court),
the incidence of compliance costs is a matter for English law, within the broad limits set by the EU principles of effectiveness and equivalence, and the requirement that any remedy should be fair, proportionate and not unnecessarily costly. [para 31]
It follows [still at para 31] that
As a matter of English law, the ordinary principle is that unless there are good reasons for a different order an innocent intermediary is entitled to be indemnified by the rights-holder against the costs of complying with a website-blocking order. The position in relation to website-blocking orders is no different in principle from the established position in domestic law in the case of Norwich Pharmacal orders, freezing orders and other injunctions granted to require an innocent party to assist the claimant in the assertion of its rights against a wrongdoer.
Comment

A more detailed analysis will be provided once I have read the judgment more carefully. However, there seems to be little doubt that a key question raised by the UK Supreme Court decision is whether its take on allocation of costs should be intended limited to orders granted under section 37(1) SCA, that is injunctions in trade mark cases (at least for now), or could be intended - instead - as having broader applicability, notably with regard to injunctions in copyright cases pursuant to section 97A CDPA

Since the first blocking injunction [in Newzbin 2] the rule in copyright website blocking case law has  been in fact that ISPs pay the costs of implementation of the injunction, while rightholders bear the costs of application. The High Court and the Court of Appeal deemed it appropriate to extend it to trade mark injunctions, although relying on a different legal basis [the UK did not provide a specific implementation of the third sentence in Article 11 of the Enforcement Directive]


Whether things should now change also in copyright cases and how far the Supreme Court judgment goes is likely to give rise to lively debates ... what do readers think?


[Originally published on The IPKat on 13 June 2018]

Tuesday, 12 June 2018

BREAKING: CJEU rules that Louboutin red sole mark does NOT fall within absolute ground for refusal

The Louboutin mark
Is the Louboutin red sole mark a valid trade mark or not? At last - the moment all IP aficionados were waiting for has come! 

The Court of Justice of the European Union (CJEU) has just issued its much-awaited judgment in Louboutin C-163/16, ruling that a mark consisting of a colour applied to the sole of a shoe is NOT covered by the prohibition of the registration of shapesSuch a mark does not consist ‘exclusively of the shape’.

The question that the Rechtbank Den Haag referred to the CJEU was the following:
Is the notion of ‘shape’ within the meaning of Article 3(1)(e)(iii) of [the 2008 Trade Mark Directive, ie the absolute ground for refusal concerning signs consisting exclusively of "the shape which gives substantial value to the goods"] (‘Form’, ‘vorm’ and ‘forme’ in the German, Dutch and French language versions of the Trade Marks Directive respectively) limited to the three dimensional properties of the goods, such as their contours, measurements and volume (expressed three-dimensionally), or does it include other (non three-dimensional) properties of the goods, such as their colour?
As readers will remember, this case has featured: a first Opinion of Advocate General (AG) Szpunar [reported by The IPKat here]; the reopening of the oral procedure and the assignment of the case to the Grand Chamber, so that the CJEU would rule with a greater (13) number of judges than the ordinary chamber procedure (3 or 5 judges), on consideration of the topicality of the issues underlying this reference for a preliminary ruling; and a second Opinion of AG Szpunar [which has sparked some controversy regarding its actual interpretation: see Katpost here].

A pair of Louboutin pumps
The text of the judgment is not yet available, but according to the press release:

In today's judgment, the Court takes the view that, since the trade mark directive provides no definition of the concept of ‘shape’, the meaning of that concept must be determined by considering its usual meaning in everyday language. The Court points out that it does not follow from the usual meaning of that concept that a colour per se, without an outline, may constitute a ‘shape’. 
Furthermore, while it is true that the shape of the product or of a part of the product plays a role in creating an outline for the colour, it cannot, however, be held that a sign consists of that shape in the case where the registration of the mark did not seek to protect that shape but sought solely to protect the application of a colour to a specific part of that product. 
In the present instance, the mark does not relate to a specific shape of sole for high-heeled shoes since the description of that mark explicitly states that the contour of the shoe does not form part of the mark and is intended purely to show the positioning of the red colour covered by the registration. 
The Court also holds that a sign, such as that at issue, cannot, in any event, be regarded as consisting ‘exclusively’ of a shape, where the main element of that sign is a specific colour designated by an internationally recognised identification code."
A more detailed analysis will follow as soon as the judgment becomes available: stay tuned!

Wednesday, 6 June 2018

Respect of family life cannot be abused to trump copyright protection, says AG Szpunar

Clearly looking at something very interesting
While it is true that Member States retain significant freedom in devising relevant procedures for repressing copyright infringements and awarding damages, Article 8 of the InfoSoc Directive requires resulting sanctions and remedies be effective, proportionate and dissuasive. This provision is in line with what also Article 3 of the Enforcement Directive mandates.

In this sense, the question that arises – and has actually arisen – is whether it is compatible with EU law to provide that the owner of an internet connection, through which copyright infringements have been committed, may escape liability thereof by indicating, without the need to provide any further details, a family member that has also had access to such connection.

In a nutshell, this is the issue at stake in Bastei Lübbe C-149/17, a reference for a preliminary ruling from the District Court Munich I (Germany) arisen in the context of litigation between Bastei Lübbe, a German phonogram producer, and Michael Strotzer, the owner of an internet connection through which an infringement was committed in 2010. 

The latter submitted that he had not committed the infringement himself and that his internet connection was sufficiently protected. He also argued that his parents, with whom he lived, also had access to the connection but, as far as he was aware, they had not committed the infringement either. Following dismissal of Bastei Lübbe’s action at first instance on grounds that the defendant could not be deemed to have committed the relevant infringement, the case reached the District Court Munich I.

The Munich court appeared keen on holding Strotzer liable by means of a presumption under German law. However, doubts subsisted in light of certain decisions of Germany’s Federal Court of Justice. Hence, the court decided to refer the case to the Court of Justice of the European Union (CJEU) for guidance.

This morning Advocate General Szpunar delivered another interesting Opinion [not yet available in English], in which he advised the CJEU to rule that EU law does not require to provide, at the national level, a presumption of liability of the owner of an internet connection for copyright infringements committed through such connection. However, if national law envisages such presumption to ensure the protection of copyright, this shall be applied coherently to guarantee effective copyright protection. In this sense, the right to family and private life under Article 7 of the EU Charter of Fundamental Rights may not be interpreted in such as way as to deprive copyright owners of any possibility of effective protection of their own intellectual property, the protection of which is mandated by Article 17(2) of the EU Charter.

Let’s see a bit more in detail how the AG reasoned.

The EU framework

First, AG Szpunar observed that Article 8 of the InfoSoc Directive is rather laconic when it comes to measures aimed at guaranteeing the respect of the economic rights harmonized therein. However, it would be a mistake to consider Article 8 of the InfoSoc Directive in its isolation, because it is [the translation from Italian is mine] “part of the harmonized system of protection of intellectual property rights provided by Directive 2004/48. Such system goes beyond the mere procedural freedom of Member States, imposing on them concrete obligations the respect of which, including their procedural aspects, falls within the control of the Court, which goes beyond the traditional control of the principles of equivalence and effectiveness.” [para 27]

It follows that, if Article 8(2) of the InfoSoc Directive, complemented and clarified by Article 13(1) of the Enforcement Directive, envisages the right of the copyright owner to seek damages, this implies an obligation for Member States to provide procedural mechanisms that concretely allow rightholders to obtain such compensation.

Family life ...
The case at issue

In the particular context of online copyright infringements, it is difficult for copyright owners to identify the subjects responsible for such infringements and prove their involvement. Only the IP address through which the infringement has been committed may be used as a hint. However, the IP address alone is not proof of the liability of a certain person, especially if the relevant internet connection is accessible to more than one person.

It is essentially because of these difficulties that national laws tend to relax the burden of the proof in such cases. The introduction of a presumption of liability (like the one under German law) is not mandated by EU law. However, where it exists, such presumption must be applied in a coherent and effective fashion: such measure could not fulfil its objective if it were too easy to overcome the presumption of liability, thus leaving the subject damaged by the infringement without any other possibility to enforce his rights and claim compensation for the damage suffered.

Fundamental rights

Turning to fundamental rights, the AG recalled that the status of the Charter is that of primary source of EU law. The application of the provisions through which Member States have transposed the InfoSoc and Enforcement Directives into their own legal regimes is thus bound to respecting the provisions of the Charter.

In a scenario like the one at issue, in which different fundamental rights are in conflict with each other, it is for the national courts to provide an appropriate balance. In any case, it is necessary to guarantee the respect of the “essential content of the fundamental rights at issue” [para 38].

At this point the AG drew an interesting parallel with banking secrecy, when he recalled that in Coty Germany the CJEU held that a bank cannot invoke secrecy to avoid disclosing the details of an account holder, when such details would allow one to enforce his own IP rights.

... IP protection
The same reasoning may be applied here: if one was able to invoke Article 7 of the Charter to avoid having to disclose the names of those who might have used the connection, then the copyright owner would be deprived of his IP right. In any case, should a national court deem such intrusion into one’s own right to family life inadmissible, then the owner of the internet connection should be presumed liable for the relevant infringement, insofar as the copyright owner has not other means to identify the actual infringers.

The AG also touched upon the issue of abuse of rights within Article 54 of the Charter, noting that it is for the national court to determine whether Strotzer has abused his right to family life by invoking it, not to protect his own family members, but rather to elude his own liability for the infringement.

Comment

The most interesting aspect of the Opinion is probably the part in which the interplay between different fundamental rights is discussed.

In the CJEU case law on copyright the fundamental rights angle has become increasingly relevant, though it has arguably not been subject to particularly in-depth analysis by the Court. Decisions like Luksan and Telekabel refer for instance to the EU Charter, but in such a way that extracting guiding principles is not straightforward.

In this sense, this latest Opinion of AG Szpunar is helpful in understanding how IP protection should be seen and balanced against conflicting fundamental rights.

While the AG confirmed that different rights are ranked on the same level, he focused his attention on two key aspects: first, that any assessment should consider whether the rights at stake would be deprived of their essential content; secondly, that a fundamental right might not be invoked to safeguard a legitimate and genuine right, but rather to avoid liability towards a third party whose fundamental right has been infringed. A behaviour of this kind should be deemed an abuse of rights and, as such, be considered not deserving of protection. 

[Originally published on The IPKat on 6 June 2018]