Defeat before OHIM no laughing matter for Dave TV

Author: Suzy Schmitz (Kemp Little)

UK Gold Services Ltd v Dave Soho Ltd, OHIM Opposition Division, Case B-1294448, 24 January 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr068, first published online: 16 May 2011

The UK's Dave TV station may need to think creatively about its brand, following OHIM's decision to reject its trade mark application for its key services on the grounds of earlier unregistered rights.

Legal context

Under Article 8(4) of the Community Trade Mark Regulation, a trade mark opposition can be brought before OHIM based on unregistered rights as well as registered ones. More specifically, a party can rely upon an earlier non-registered trade mark of ‘more than mere local significance’, where local laws confer on the owner the right to prohibit the use of a subsequent trade mark.

This case illustrates OHIM's application of the UK law of passing off, the local law which applied in this case given that the parties were UK entities, resulting in a refusal of Dave TV's application for most of its classes of goods and services. In principle, this leads Dave TV facing a rebrand, if not an action for past infringement. However, OHIM's analysis of the ‘classic trinity’ required for passing off is unlikely to survive close scrutiny, so it is reasonable to expect that Dave TV will appeal the decision and that this will not be the end of the proceedings.


UK Gold Limited, operator of the ‘Dave’ comedy TV channel, applied to register the word mark DAVE as a Community trade mark (CTM) for goods and services in classes 9, 16, 28, 35, 38, and 41. Of these, classes 38 and 41 would appear to be the most crucial for UK Gold's business, given they include ‘broadcasting’ and ‘organization, production, presentation, distribution, syndication, and rental of television programmes’. The filing date of the application was 18 July 2007.

UK Gold's application was opposed by another UK company, Dave Soho Limited, which argued that they held unregistered rights in the UK in relation to classes 9, 16, 35, 38, 41, and 42; Dave Soho did not hold any earlier registered rights for the mark on which to rely. They argued, however, that their earlier unregistered rights were of ‘more than mere local significance’ in the UK, ie they provided the basis for a passing off action, and that they could rely on them for the purpose of Article 8(4). By way of background, Dave Soho is a creative business consultancy involved in advertising, marketing, and communications. The company was incorporated under its current name in 2004 and adduced a variety of evidence to demonstrate that its use preceded UK Gold's application, and was sufficient to establish a case in passing off.

OHIM examined the case first by considering whether Dave Soho's use of the mark DAVE amounted to ‘prior use in the course of trade of a trade mark of more than mere local significance’. To do so it examined the detailed evidence put forward on the opponent's behalf, including history of trading under the name, ownership of URLs containing the mark, annual returns, receipt of industry awards, and examples of client accounts, including Nokia. OHIM explained that its assessment must take into account a number of factors including the territory in which the mark is used, the length of time and economic dimension of use, the relevant consumers, and the extent of advertising of the sign.

Having taken all this into account, OHIM was prepared to find that Dave Soho had used the DAVE mark in relation to goods and services in all of its pleaded classes. It was particularly convinced that the mark had ‘more than local significance’ by the receipt of awards from foreign entities.

OHIM then proceeded to examine Dave Soho's opposition under the UK law of passing off. After accepting that the law in this area is ‘complex’, OHIM summarized the three elements which need to be established. These are (a) that the opponents’ goods or services have acquired a goodwill or reputation in the market and are known by some distinguishing feature, (b) there is a misrepresentation by the applicant, and (c) the misrepresentation causes damage to the opponent (or is likely to).

Having outlined the points it needed to address, OHIM wasted no time in dealing with them. In considering the first limb, it found that the opponent had goodwill in the UK as a result of the ‘significant commercial volume of use’ as well as the fact that the use was continuous and frequent. In respect of misrepresentation, OHIM examined each of the classes of goods and services (concluding most were identical or similar), and then compared the marks side by side and concluded they were identical. Having carried out these two assessments, OHIM decided that the public would be led to believe that the goods of the applicant originate from the opponent, concluding that a misrepresentation was being made. Its conclusion on damage was equally as affirmative and swift.


Oppositions under Article 8(4) of the Community Trade Mark Regulation are relatively infrequent, so it is interesting to see how OHIM applied the UK law of passing off to this case. However, OHIM's approach when assessing whether a misrepresentation had occurred was reminiscent of the way in which it would assess whether a sign is confusingly similar to a registered trade mark, rather than resembling the approach one would expect for passing off. In particular, it did not explore the concept of deception, an important element of a passing off action, and whether Dave TV's use would have this effect on consumers. This leaves an avenue for appeal open for Dave TV.

Practical significance

Given the substantial impact which this decision could have on Dave TV's operations, with the potential need for a full rebrand and the risk of infringement proceedings, it is likely they will be considering all avenues for appeal. OHIM's questionable approach to the law of passing off might provide them with the answer they need. More generally, the case shows that, if a party wishes to bring an opposition under Article 8(4) of the Community Trade Mark Regulation, it is advisable to produce comprehensive evidence of its trading history, which might include sample clients and even industry awards. Ideally, this evidence should span a number of years and be generated from a variety of sources.

Point Made

Point Made: How to Write Like the Nation's Top Advocates is the title of a readable little book by Ross Guberman (president of Legal Writing Pro, an advanced legal-writing training and consulting firm).  According to the book's (and JIPLP's) publishers Oxford University Press:
"With Point Made, legal writing expert Ross Guberman throws a life preserver to attorneys, who are under more pressure than ever to produce compelling prose. What is the strongest opening for a motion or brief? How to draft winning headings? How to tell a persuasive story when the record is dry and dense? The answers are "more science than art," says Guberman, who has analyzed stellar arguments by distinguished attorneys to develop step-by-step instructions for achieving the results you want. 

The author takes an empirical approach, drawing heavily on the writings of the nation's 50 most influential lawyers, including Barack Obama, John Roberts, Elena Kagan, Ted Olson, and David Boies. Their strategies, demystified and broken down into specific, learnable techniques, become a detailed writing guide full of practical models. ... 
Each chapter of Point Made focuses on a typically tough challenge, providing a strategic roadmap and practical tips along with annotated examples of how prominent attorneys have resolved that challenge in varied trial and appellate briefs. Short examples and explanations with engaging titles--"Brass Tacks," "Talk to Yourself," "Russian Doll"--deliver weighty materials with a light tone, making the guidelines easy to remember and apply".
This book may be of substantial assistance to contributors to JIPLP, since its advice is applicable not merely to trial advocates but to lawyers who want their writing to be understood and appreciated by their readers.  Most of its content does not consist of strokes of genius, blinding flashes of rhetoric that can fell a bench of judges at 500 yards and save the day for an ever-grateful client.  Principally the book shows how the best way to write well is to avoid writing badly.  The author pays close attention to the little things, right down to punctuation, and demonstrates through his chosen exponents how simple good writing can be.

The price is cheap; the advice is priceless. Buy it and blush when next you review your prose.

Bibliographic details. Paperback, 338 pages. ISBN 13: 9780195394870; ISBN 10: 0195394879. Price: $19.95.  Web page here.

"People also read ..." cross-linking trial

Subscribers to the online version of JIPLP may already have noticed that the journal is trialling a new "People also read ..." cross-linking service. The idea is that, when any item is accessed online, readers will be informed of the existence of one or more other items which readers of that article have also read.

This service will be found in a little box in the column next to all abstract, HTML and PDF pages, with a voting box beneath allowing readers to offer some feedback as to whether the articles offered to them were relevant.

Obviously this will work better for articles that have been available online for some time, since an article that has just been placed online won't have been read by many people yet. However it should be a useful tool for readers who, when reading up on a particular topic, find themselves directed (ideally) to other published material on the same subject.

Manufacture or repair revisited

Authors: Brian Whitehead and Richard Kempner (Kempner & Partners LLP)

Schütz (U.K.) Limited v Werit UK Limited, Protechna SA, [2011] EWCA Civ 303, 29 March 2011

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr072, first published online: May 12, 2011

The Court of Appeal for England and Wales has overturned Floyd J's judgment in Schütz v Werit. While it is still the case that there is no free-standing right to repair in patent law, the ‘whole of the inventive concept’ test (ie asking whether, when the part in question is removed, what is left embodies the whole of the inventive concept of the claim) is no longer applicable to patent infringement. Instead, the correct approach is simply to ask whether the defendant has made a product falling within the scope of the patent claims.

Legal context

By section 60(1)(a) of the Patents Act 1977, a product patent is infringed by making, disposing, or offering to dispose of, using or importing the protected product, or keeping it for disposal or otherwise, without the consent of the patentee. This is a wide range of activities, but the concepts of repairing or reconditioning products are not specifically addressed in the Patents Act. Accordingly, it is necessary to decide whether the act of repairing or reconditioning a product constitutes ‘making’ a patented product.


This case relates to a type of container, used for transportation of liquids, known as an intermediate bulk container (IBC). This consists of an outer protective cage and a removable plastic inner bottle in which the liquid is held. In some IBCs, the bottle can be replaced when it becomes unusable. IBC manufacturers sell replacement bottles, but there is also a market for replacement bottles produced by manufacturers other than the manufacturer of the original IBC. Delta Containers Limited (‘Delta’) reconditions used IBCs by removing the old bottle, repairing the cage as appropriate, and fitting a new bottle. Delta purchased its replacement bottles from Werit, the first defendant. The reconditioned IBCs were then sold in competition with the original manufacturers’ products.

Schütz, the owner of European Patents (UK) 0 370 307 (‘307’) and 0 734 967 (‘967’) relating to IBCs, sued Werit for secondary infringement under section 60(2) of the Patents Act 1977 and (in separate proceedings) Delta for primary infringement.

In the Patents Court ([2010] EWHC 660 (Pat); see authors’ earlier article at JIPLP 2011, 6(1), 9–10) [published on the jiplp weblog, here], Floyd J held that ‘the correct approach is to ask whether, when the part in question is removed, what is left embodies the whole of the inventive concept of the claim’. On the basis of this approach, Floyd J concluded that replacing the inner container of a Schütz IBC with a Werit bottle does not amount to making a product which fell within the scope of either patent, as the inventive concept of the patents resided entirely in the cage, rather than the bottle. The patents were therefore held not to be infringed.


Jacob LJ reconsidered the authorities, including the leading case on whether an activity constitutes ‘making’ a patent product, United Wire Ltd v Screen Services (Scotland) ([2001] RPC 24). Jacob LJ disagreed with Floyd J's analysis, holding that the ‘whole of the inventive concept’ test was not part of English law. In particular, Jacob LJ said ‘ … I think that United Wire not only endorses the “making” test but excludes any additional “whole inventive concept” test’. The correct question was simply ‘does the act of putting a bottle into a Schütz cage, constitute “making a product which is the subject-matter of the patent”’?

On the basis of this test, the defendant, in putting a new bottle in a repaired cage, had clearly made a product falling within the claims of the patent, and the patent was accordingly infringed.

Practical significance

Both Floyd J and Jacob LJ discussed the well-known conundrum of whether a patent for an inventive tennis racquet frame, with a claim calling for a strung racquet coupled to the inventive frame, would prevent re-stringing of the racquet. Jacob LJ mentioned two similar examples: a patent covering a steam whistle, with a sub-claim to a battleship fitted with the whistle, and a patent for a photocopier including a sub-claim for the machine when loaded with paper. Would the latter, for example, be infringed by a user merely loading paper into the machine, meaning that the patentee could insist on users buying his paper? Jacob LJ acknowledged such issues but said ‘It is not necessary for us to provide any general answer to the “restringing problem”’.

In the authors’ view, it is perhaps unfortunate that the ‘whole of the inventive concept’ test has now been disallowed. That test provided a solution to the above problems, albeit one without foundation in the Patents Act, and that could give rise to difficulties where the inventive concept is a combination of the retained and replaced/repaired parts. The ‘making’ test is undoubtedly easier to apply, but can give rise to strange and arguably unjust results, eg a tennis racquet manufacturer being able to monopolize the repairing of its products, or a photocopier manufacturer being able to control the supply of paper for it. Counsel for Schütz suggested that market considerations and competition law may prevent such outcomes. This may well be correct, but in the authors’ opinion IP law ought to be able to prevent such abuses without the need to invoke other areas of law.

Jacob LJ, during his long and illustrious career, did so much to clarify IP law that it is, to some, perhaps surprising that he did not feel able in this case to answer such potentially important questions as those posed in this case, other than implicitly accepting that competition law may be relevant and that each case needs to be decided on its own facts. Accordingly, the ‘restringing problem’ will need to be resolved in a future case.

Creation -- or competition?

The June 2011 issue of the Journal of Intellectual Property Law & Practice (JIPLP) is now available online to subscribers. The full list of contents of this issue is accessible to everyone: you can check it out here.  This month's editorial asks whether the innovation- and achievement-oriented culture of the United States is attributable less to its intellectual property laws and more to its relatively relaxed approach to competition and antitrust.  You can read it in full here:
"Creating the conditions for creation —or competition?

by Jeremy Phillips

That there exists a chasm between the achievements of innovative and entrepreneurial businesses in the USA and those in Europe is beyond doubt. There are few major pre-digital era industries in which the USA does not dominate and none in the digital age. The infrastructure of the internet is driven by search engines such as Google and Yahoo! Social media are dominated by Facebook, Twitter, and YouTube. We trade on eBay, Amazon, Expedia, and a host of other American online malls. Boot up your computer and you come face to face with Microsoft, Intel, Hewlett-Packard, and Dell. Your choice of personal entertainment comes from Apple, Disney, Warner, and Dreamworks—it sometimes appears as though the list is endless.

Let us assume that the inhabitants of the USA are not inherently more gifted than those of other regions of the world and that their genetic make-up is the same as that of the nations which gifted the USA with most of its inhabitants, whether as settlers, pilgrims, refugees, opportunists, or illegal immigrants. If Americans are made of the same stuff as the rest of us, it would appear reasonable to suggest that there is something in that jurisdiction's laws, customs, and business practices that set it aside, enabling talent to succeed, innovation to take root and dreams to bear fruit.

Some commentators have maintained that American competitive edge over Europe is a consequence of its greater scope for protection of intellectual creativity, particularly in the sphere of patent law where the US formula for patent eligibility is not hedged with European-style exceptions. Though popular, this argument is open to the objection that, if there exists greater protection in the USA and less in Europe, each of those factors operates equally for US and EU businesses. Obtaining international protection is now becoming increasingly routine, and it is difficult to accept that greater protection (if it exists at all) in one's home market should account for the degree of dominance which US enterprises exert over their European brethren.

A second explanation is based on the two continents’ contrasting cultures of failure. US banks are said to be far more confident to lend to a business which has suffered a failure than are European institutions, which are said to favour a policy of only backing winners. While there may be more than a grain of truth in that hypothesis, it may be that it is more relevant to the funding of start-ups than to the investment in taking a business from a small, modestly successful one, with a discernibly positive ‘track record’, to a major player in a global market.

A third explanation is that the continents demonstrate very different attitudes towards competition in an open market. Both the US and the European Union cherish the same ideal—a market in which competitors are able to pitch against one another in seeking to attract custom from a market in which the consumer is sufficiently well informed to be able to make a logical decision as to which of them to favour. However, the manner in which the two jurisdictions seek to bring this about is quite different. A short editorial cannot do justice to the contrast, but it may be crudely summarized as follows. US legislation and government practice is to wait for a problem to happen and then deal with it, while the European preference is to discourage the problem happening in the first place wherever possible. Putting it another way, the Americans wait till they can see the whites of the monopolist's eyes before they pull the trigger, while the Europeans try to restrain him, from a distance, by casting a regulatory net over him before he comes too close.

This Editorial wonders whether the European approach is simply too cautious. It keeps the European zone as a pool in which medium-sized businesses may compete with one another, and sometimes lawfully cooperate, but which does not assist them when seeking to grow in scale and market power in a global market which, for the most part, is less regulated. Does this result in a form of kindness to competition which kills or inhibits the successful global establishment of innovations? It would be good to know.".

Google's universal digital library dream is shattered

Author: Giovanna Occhipinti Trigona

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr069, first published online 12 May 2011

Authors Guild v Google, United States Southern District Court of New York, Opinion 05 Civ. 8136, filed 22 March 2011, Class Action

The US District Court has rejected Google's legal framework for a universal digital library.

Legal context

Since 2004 Google has scanned more than 12 million copyright works without seeking rights owners’ consent. Google has also delivered digital copies to supplier libraries, organized an online database of books, and made snippets available for searching. In 2005 the Authors Guild and other publishers brought a copyright infringement claim before the New York District Court through a Rule 23 class action. Within this framework, in 2006, the parties convened in a settlement agreement, which was submitted to the Court for approval. A favourable preliminary order was issued in 2009 under condition of certain amendments to the original version. However, in consequence of the many objections expressed during the fairness hearing held in 2010, the judge overturned the preliminary approval on the ground that the amended settlement agreement was not ‘fair, adequate and reasonable’, as Rule 23(e)(2) of the USA Federal Rules of Civil Procedure prescribes for settlement to get court approval, and that the content of the amended settlement agreement exceeded the 2005 claim.

Judge Chin's conclusion

Since the preliminary order approved the Amended Settlement Agreement (ASA), Judge Denny Chin was expected to answer the final question whether the settlement was ‘fair, adequate and reasonable’, as prescribed by Rule 23 of the USA Federal Rules of Civil Procedure to any proposal to obtain final judicial approval.

Following the concerns expressed by objectors in the fairness hearing, including the Department of Justice, Judge Chin overturned his earlier order on 22 March 2011 on the ground that the ASA did not fulfil the Rule 23 requirements even though, as he conceded, the ASA was creating a universal digital library to benefit many: the proposal went too far by implementing a ‘forward-looking business arrangement’ (DOJ Statement of Interest 2, 4 February 2010, ECF No 922) and granted Google significant rights to exploit entire books, without permission of copyright owners, plus a significant advantage over competitors. Moreover, the use of the class action would release claims well beyond those presented in the present case.

Facts and analysis

Applicable law: adequacy of class notice and representation

In determining whether the ASA was ‘fair, adequate and reasonable’, Denny Chin decided to take the traditional circuit that courts are to follow in the absence of criteria under Rule 23(e)(2), and applied the Grinnell factors (set forth in City of Detroit v Grinnell Corp., 495 F. 2d 448, 463 (2d Cir. 1974)). So that, while it was true that, for the Judge's consequent legal reasoning, most of the Grinnell factors favoured the ASA approval, the only one that weighted against his favourable decision was the ‘reaction of the class members’. Not only, he found, were the objections to the settlement great in number, but also an unexpectedly high number of class members had opted out (around 6800). Moreover, even if copyright owners were adequately notified—in 36 languages everywhere in the world—most of the potential class members had considered not to be adequately represented by plaintiffs. As a conclusion, Judge Chin decided that the ASA raised a substantial question on the existence of antagonistic interests and that, also considering the number of objectors, the issue made the settlement inadequate to conclude the trial, so unreasonable to achieve Rule 23(e) objectives.

Scope of relief under Rule 23

Judge Chin
The ASA is a complex document (166 pages, plus 15 attachments) with two different objectives: (i) the final settlement of a 2005 dispute between Google and representatives of rights owners, over the unlawful digitalization and display of snippets of copyright books without authorization; (ii) the introduction of a forward-looking commercial arrangement granting certain rights to Google and releasing its liability for future activities. Judge Chin considered that the second objective went too far, being persuaded, then troubled, by the statement that the parties were using the judicial procedure to create the legal framework of ‘a marketplace for digital books’ (Hr'g Tr. 117–8 (William Cavanaugh)). Indeed, he remarked that the ASA contemplated an arrangement that exceeded what the court would permit under Rule 23.

Matter for Congress

A ground for rejection was offered by Sony Corp. of Am. v Universal City Studios, Inc., 464 US 417, 429 (1984), where the Supreme Court stated that it was Congress’ responsibility to adapt copyright law in response to changes in technology. For Judge Chin, the departure point was Article I, §8, cl 8 of the US Constitution, which vests in Congress the power to ‘promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries’. Chin felt that the courts should, only with reluctance, encroach on Congress's legislative prerogative to address copyright issues arising from technological developments. Nevertheless, his biggest concern was for orphan works—even if the ASA was to create an independent entity, the Unclaimed Works Fiduciary, to represent the interest of those who did not register but were covered merely because they did not opt out. Likely, he was reluctant to entrust anybody with guardianship over orphan works and thought that the issue could be adequately governed neither by an agreement between self-interested parties nor by the courts, and that it was better to leave the matter for Congress (Eldred v Ashcroft 537 US 186, 212 (2003)), especially since many international concerns were raised.

Scope of pleading

Judge Chin considered that an approval decision would release claims well beyond those contemplated by the pleading. Indeed the lawsuit was brought to challenge Google's scanning of books and display of snippets for online searching, allegedly copyright infringements. So far, there was no allegation against Google for making full books available online, and the case was not about access and sale of complete copyright works. On the other hand, ‘Google would not have tried to defend digitizing and selling entire books’ as its counsel declared at the fairness hearing (Hr'g Tr. 150 Daralyn J. Durie). While it was true, Chin reasoned, that Google would have no defence against a claim of infringement for unauthorized copying, sale, or other exploitation of entire copyright books as Google scanned them, it was not for making them available. Therefore, what was to be granted on final approval, was control over the digital commercialization of millions of books, including orphan books and other unclaimed works. Judge Chin challenged the fairness and reasonableness of the ASA also on the assumption that final approval would not release claims properly before the court. He clearly saw how Google was trying to take a shortcut by copying books regardless of their copyright status, where competitors would go through the costly process of obtaining rights owners’ permission before scanning (Counsel for Microsoft Thomas Rubin Hr'g Tr. 43). Chin agreed with who had said that Google's real business plan was: ‘sue me’ (Objection of Robert M. Kunstadt to Proposed Settlement 3, ECF No 74), and sought to be released from other IP claims that could not be asserted in this case. Then, following Firefighters (478 US at 525), Chin concluded that released claims would not come within the general scope of the case made by pleading and, citing Wal-Mart Stores (396 F ed at 107) held that the ASA would release only those claims whose subject would share ‘identical factual predicate’ with the conduct that was the subject of the settled claims.

Interest of class members

Judge Chin sympathized with the objections of academic authors, who asserted that they did not feel represented before the Court by class members, as for academics value would stand in maximizing access to knowledge, while plaintiffs’ interests were in maximizing profits (Samuelson Letter 3 (ECF No 893)). Moreover, Chin observed that neither foreign nor unclaimed work rights-holders’ interests were represented within the class members and concluded that, although notice of the ASA was massively disseminated, the procedure presented a lack of representation. Nor was Judge Chin convinced by the plaintiffs’ argument that any class action would neglect the hearing of some class members. Indeed, he dealt easily with the point that, in ordinary class actions, members merely release claims for damages, whereas in the ASA class members would be giving up property rights in their creative works, as they would be deemed—by silence—to have granted Google a licence for future use of their copyright works.

Copyright concerns

In addition to the constitutional concerns, he noted that the ASA could raise statutory infractions, and how objections on opt-out denial consent provisions sounded as real. Indeed, the ASA opt-out would grant Google the ability to expropriate the property of owners who did not agree to transfer those rights. Judge Chin read the silence of rights-holders in the light of the Copyright Act, 17 USC §201(e):
When an individual author's ownership of a copyright, or any of the exclusive rights under a copyright, has not previously been transferred voluntarily by that individual author, no action by any governmental body or other official or organization purporting to seize, expropriate, transfer, or exercise rights of ownership with respect to the copyright, or any of the exclusive rights under the copyright, shall be given effect under this title, except as provided under title 11.
In so doing, he perceived as real the possibility that the ASA could expropriate rights of individuals, against their will, even if Google argued that §201(e) did not apply to private parties. The matter of deciding whether the ASA would violate §201(e) became very sensitive, and Judge Chin wanted to avoid a court-approved settlement agreement that would ever release copyright interests of individuals rights owners who did not voluntarily consent to transfer them. Much case law had stated that a ‘copyright owner's right to exclude others from using his property is fundamental and beyond dispute’ (Fox Film Corp. v Doyal, 286 US 123, 127 (1932)), so it became clear for Chin that he had to look after the interests of the absent class members who, in having failed to opt out, would be deemed to have released their rights. The thought of copyright owners doing nothing and losing all their property rights to Google's benefit troubled him, especially upon hearing the large number of concerns expressed by objectors. Sympathizing with their moral indignation, he eventually realized how Google's way of thinking was inconsistent with the purpose of copyright law and decided that legally it made no sense to impose the burden on copyright owners to come forward to protect their rights, when Google copied their works without first seeking permission, given the likelihood that some authors would not know about the ASA project.

Antitrust concerns

Amazon, Microsoft, and also the United States Department for Justice, among others, raised antitrust concerns. Too many objections were brought to the attention of Chin to be ignored:
‘This de facto exclusivity (at least as to orphan works) appears to create a dangerous probability that only Google would have the ability to market to libraries and other institutions a comprehensive digital-book subscription’ wrote the United States (DOJ Statement of Interest 24, Sept. 18, 2009, ECF No. 720);
Google would be empowered with a right, which no one else in the world would have, … to digitize works with impunity, without any risk of statutory liability, for something like 150 years’ said Hadrian Katz, Counsel for the Internet Archive (Hr'g Tr.95);
‘The heart of the [ASA] is that it would give Google a license to sell complete copies of out-of-print books unless their copyright owners object. It is all but certain that many orphan copyright owners will be unable to object. This sweeping default license will operate only in Google's favor, instantly giving it a dominant market position.’ (Letter from Inst. for Info. Law & Policy to Court 5 (Jan. 28, 2010) (ECF No. 856));
‘Google would have the right to make complete copies of orphan works and use them for both display and non-display purposes, with no risk of copyright liability. Competitors that attempted to do the same thing, however, would face exposure to statutory damages’ (Mem. of Internet Archive in Opp'n to ASA 3–4, ECF No. 811).
If even the amicus curiae Public Knowledge, a non-profit public interest organization ‘devoted to preserving the free flow of information in the digital age’, was worried that Google could gain ‘a monopoly in the market for orphan books’, where, on the contrary, ‘public access to orphan books must be open to all comers on a level playing field’ (Br. of Pub. Knowledge in Opp'n to ASA 2, ECF No 895), this meant for Chin that the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyright works without permission, while releasing claims well beyond those presented in the case.

Privacy concerns

Although data privacy concerns would not, as such, provide sufficient ground for rejection, it appeared certain to the judge that protection for users of Google Book Search was poor (ASA §6.6(c)(iii), (d); ASA § 6.6(f)) and that the ASA needed to be incorporated with additional provisions to limit disclosure of reader information. Equally inadequate sounded the commitment undertaken by Google's defence to welcome the adoption of some safeguards, and Chin dismissed the proposal on the assumption that it was made on a voluntary basis (Def.'s Br. in Supp. of Approval of ASA 55–6, ECF No 941).

International law concerns

Another sensitive point to deal with was the ASA's geographical scope. The original version of the settlement, which included all books published after 1989 in any country signatory to the Berne Convention, was amended and the definition narrowed in that a non-‘United States work’ would be covered only if the copyright was registered in Washington, D.C. or if the book was published in Canada, the UK, or Australia, on or before 5 January 2009. Nonetheless, foreign rights holders remained concerned. As France and Germany pointed out, many foreign books were registered in the USA to ensure coverage under US law, especially before 1989, when the Berne Convention entered into force (Germany Mem. 2–3, ECF No 852; Suppl. Decl. of French Republic 2, ECF No 853). Authors and publishers from too many countries remained opposed to the ASA even after revisions, thought Judge Chin, and had brought to his attention how difficult it was to determine whether they were covered (Germany Mem. 6–7, ECF No 852; Letter from Centro Español de Derechos Reprográficos to Court 1 (22 January 2010) (ECF No 827); Letter from Irish Copyright Licensing Agency Ltd. to Court 1 (26 January 2010) (ECF No 881); Letter from Assucopie to Court 1 (22 January 2010) (ECF No 882)). But the main concern they all expressed was whether the ASA would violate international law, including the Berne Convention and the Agreement on Trade-related Aspects of Intellectual Property Rights. Again Chin found inadequate Google's counterargument that the ‘case was about United States copyright interests. It's about uses of works in the United States’ (Hr'g Tr. 157–8 (Daralyn J. Durie)), and considered this thesis expressed Google's poor understanding of the ASA's impact on foreign rights-holders, as the quantity of foreign allegations for violations of international principles and treaties would demonstrate. In the end, Judge Chin recognized that whether the ASA would violate international law was not an issue for his decision. Nevertheless, in the light of other nations’ objections, he became fully convinced that he was taking the right decision: the matter was better left to Congress.

Judge Chin eventually denied final approval without prejudice to renewal of the motion, in the event that the parties would negotiate a revised settlement agreement.

Practical significance

The final order is destined to constitute an important precedent for the handling of class action procedures. With regard to copyright, the order presents fewer surprises.

While the case confirms Grinnell factors’ applicability in determining whether a settlement is fair, reasonable, and adequate under Rule 23(e)(2), from now on the ‘reaction of the class circuit’ will be evaluated also on the basis of the amplitude of the action and number of objections expressed before the court. Therefore, the assumption that the broader actions may involve too many heterogenic class members, who may trigger antagonistic interests not represented by the class plaintiffs, will prevail as the settlement will be unable to put an end to the original dispute.

The impact on class action judicial procedure is important since the order may constitute material for future use in copyright infringement claims. Judge Chin identified most of the weakness of a dispute instrument such as this in which its effects may be unpredictably wide and release claims not properly before the court. In this case, the court assessed that the opt-in opt-out access mechanism was ‘unfair, inadequate, and unreasonable’, by reason of the ‘by default’ access it gives to the parties who want to stay on the side lines of the class action, without expressing their rejection. According to the normal system of class actions, any decision or settlement will produce effects even toward these parties, as it bans claims they could plead in the future.

The order may also change the role that the judge plays within class actions, as Judge Chin felt that he had to be looking after absent parties’ rights, as well as looking after the interests of owners of orphan works and rights in unclaimed books.

From now on, within settlement proposals under Rule 23(e), class members will be able to dispose of economic considerations for damage but not of individuals’ property rights. As a consequence, Rule 23(e) will be more appropriate for settling past situations than future undertakings.

The winding-up of Spanish companies for trade mark infringement

Authors: Sergio Miralles Miravet and Alejandro Milá Valle (Freshfields Bruckhaus Deringer LLP)

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr054, first published online: 10 May 2011
Rothschilds Continuation Holdings AG and Rothschild España, S.A. v Rothschild Immobilien-Vermögensverwaltung und Treuhand, S.A., Decision of the Mallorca Commercial Registry, 11 March 2010

The Mallorca Commercial Registry has wound up a company for infringement of pre-existing intellectual property rights under a special provision of the Spanish Trade Mark Act.

Legal context

The Spanish Trade Marks Act (Ley 17/2001, de 7 de diciembre, de Marcas) establishes in its 17th Additional Provision that a company may be wound up if specific circumstances occur: where a judgment in trade mark infringement proceedings orders a change of company name and the change is not made within one year, the company shall be wound up for all legal effects and purposes, and the Registrar of Companies shall expunge it from the Register.


Rothschilds Continuation Holdings AG and Rothschild España, S.A. (Rothschild) initiated trade mark and unfair competition actions in 2004 against a Spanish company, Rothschild Immobilien-Vermögensverwaltung und Treuhand, S.A. (Rothschild Immobilien) and a shareholder-director, a German citizen surnamed ‘Rothschild’. The defendant company offered financial and real estate advisory services in Palma de Mallorca, Spain.

The parties to the proceedings reached a settlement before the end of the trial. The settlement agreement, which was approved by the Court, included the obligation on Rothschild Immobilien to amend its company name to remove the word ‘Rothschild’. The defendants complied with all the settlement obligations except the change of company name. After various attempts to resolve the problem amicably, Rothschild asked the Palma de Mallorca Commercial Court to enforce the settlement agreement by means of a court order. That order was granted in 2007 but, again, not complied with by the defendants.

Rothschild finally filed the settlement agreement approved by the Court in the ledger of Rothschild Immobilien at the Mallorca Commercial Registry. Following a year's inaction by the defendant company, the plaintiff asked the Commercial Registrar to wind up Rothschild Immobilien pursuant to the 17th Additional Provision.

The Commercial Registrar accepted Rothschild's petition and registered the winding up of Rothschild Immobilien on 11 March 2010.


Lack of coordination between the Spanish Central Commercial Registry and the Spanish Patent and Trade Mark OfficeThe defendants would not have been able to offer services under the ROTHSCHILD trade mark due to the priority of the registered rights held by Rothschild. However, they used a loophole to incorporate a company whose name merely provided a pretext to offer services under the ROTHSCHILD mark.

The 14th Additional Provision of the Trade Mark Act sets forth that the registry bodies empowered to grant or verify company names shall refuse the name applied for if it coincides or may be confused with well-known and reputed trade marks or trade names (unless the holder of the trade mark or trade name so authorizes).

Nevertheless, current Spanish legislation does not set up any system of coordination between the Spanish Central Commercial Registry—which is the institution with powers to grant a company name—and the Spanish Patent and Trade Mark Office or any system allowing third parties to file oppositions against would-be company names.

Therefore, in the event that someone registers a company name infringing IP rights held by a third party, this can only be challenged at a later stage by pursuing court actions of IP infringement, invalidity of company names, or unfair competition.

In this context, the Spanish Directorate-General of Registries and Notaries—which is the public body supervising the Spanish Central Commercial Registry—has stated the following (Resolution dated 4 October 2001 [RJ 2002\719]):
The doctrine of this institution, after pointing out the evident conceptual and functional differences between the company name and the trade name—with the first being used to distinguish a legal subject party to legal relations and the holder of assets with a responsibility towards them, and the second being used in order to avoid the likelihood of confusion regarding entrepreneurial activities pursued in trade—has reiterated the expedience of greater coordination between corporate law and trade mark law to avoid the granting of company names coinciding with trade names or publicly well-known trade marks (cfr. resolutions dated 24/02/1999, 24/06/1999, 25/06/1999 and 10/06/2000) [as it is necessary] to avoid the confusion which said identity may engender in trade, even if there is no confusion between companies. Such coordination should prevent, in line with the prohibition set forth by article 7.3 of the Spanish Civil Code, the abuse of rights that would arise if the Spanish Central Commercial Registry's silence was exploited to adopt names socially related to an existing entity in a significant manner, names which may well be trade names with evident significance given that sometimes there is no clear distinction in trade between the entrepreneur as a legal entity and the entrepreneurial activity that it pursues.

This interpretation was supported by the Spanish Supreme Court, which considered it to be ‘an abuse of rights to use a company name outside the limits of its adequate and licit use’ (Judgment of 28 September 2000 [RJ 2000\8128]). Thus it has been deemed essential to change the company name in the event of conflict between company names and trade marks to avoid the likely confusion that would otherwise be caused among consumers.
A similar case was analysed by the 15th Section of the Barcelona Provincial Court (Judgment of 16 February 2000, AC 2000\534), involving the consulting firm McKinsey & Company. McKinsey sued a Spanish company, McKinsey División España, S.L. whose corporate purpose included the provision of consultancy services, pursuing delinquent accounts, and carrying out bureaucratic procedures, and which advertised itself as ‘the American firm’. McKinsey División España, S.L. was ordered to (i) change its company name; (ii) stop using McKinsey trade marks; (iii) publish the whole judgment in La Vanguadia and El Periódico de Catalunya (the two major Catalan newspapers); and (iv) pay all litigation costs. Similarly, the defendants had incorporated the company to offer services under the McKinsey trade marks which were protected by McKinsey & Company, Inc. and McKinsey & Company, S.L.

Even a certain Spanish listed company has recently been put on the spot by a legal challenge. Affirma Consultores, S.L., a consulting firm, initiated actions against the Spanish real estate company Afirma Grupo Inmobiliario, S.A. (BMAD: QBT) regarding the use of the term ‘Afirma’. The Community Trade Mark Court of Alicante (Decision of 25 February 2010, La Ley 21386/2010) held that ‘Affirma’ and ‘Afirma’ might create a similar perception among consumers and therefore granted a preliminary injunction in favour of the claimant—which was the holder of prior Community trade marks. The Court ordered the defendant to (i) cease its use of the term ‘Afirma’ in its company name, and (ii) register the invalidity claim against that trade mark with the Spanish Patent and Trade Mark Office. As a result, the defendant eventually changed its company name to Quabit Inmobiliaria, S.A.

Limitations to the exclusive rights of trade marksUnder Article 37 (a) of the Trade Mark Act, and provided that the use made respects honest practice in industrial or commercial matters, the right to a trade mark will not entitle the right holder to prohibit a third party from using its own name or address in the course of its business.

It was thought for some time that this name limitation applied only to natural persons—indeed this notion was supported by the joint declaration of the Council of the European Union and the Commission of the European Communities (recorded in the minutes of the Council when Directive 89/104 was adopted) and also by leading Spanish commentators (eg C Fernández Nóvoa, Tratado sobre Derecho de Marcas, Madrid, 2004, 456–458). However, both the Court of Justice of the European Union (Cases C-245/02 Anheuser-Busch v Budějovický Budvar [2004] and C-17/06 Céline SARL v Céline SA [2007]) and the Spanish Supreme Court (Judgment of 2 March 2009 [RJ 2009\2789]) have interpreted the provision in the sense that it is not, in fact, limited to the names of natural persons.

Be that as it may, in Rothschild's view Article 37(a) of the Trade Mark Act would not apply in this case as Rothschild Immobilien failed to act in accordance with honest practices. Reasons included the following: (i) it failed to show due care by conducting a search of registered ROTHSCHILD trade marks before starting operations; (ii) it acted in bad faith using only the part of the name that coincided with the well-known trade mark registered by Rothschild; (iii) its services fell within the same category as those of Rothschild (class 36 relating to both real estate and financial services); (iv) it sought to confuse the public and profit from a third party's reputation; and (v) the ROTHSCHILD mark was illegitimately used both as a trade mark and as trade name to identify its products and services in the market, in actions categorized as unfair competition.

Practical significance

De lege ferenda, it would be desirable to see a system of coordination between the Spanish Central Commercial Registry and the Spanish Patent and Trade Mark Office in order to prevent the registration of company names that infringe pre-existing IP rights.

Meanwhile, the Spanish legal system offers a powerful remedy—the winding-up of companies. This is significant not only as it is a corporate remedy for an IP issue, but also because to our knowledge it is unique to Spain.

Bits and pieces

Here comes the May issue ...
The printed version of the May 2011 issue of JIPLP was dispatched last week and subscribers should be receiving their copies imminently if they have not already done so. Don't forget -- the "real" subscription to JIPLP is to the online version, which appears several weeks ahead of the print version and which has a conveniently searchable archive and lots of other attractions.

Earlier experiments
in delivering JIPLP
by phone were bound
to fail.
On the subject of other attractions, we've already mentioned that JIPLP will soon be available in a mobile-enabled format. But there's more to come. Later this month JIPLP will be trialling a new cross-linking software which will, if I've understood the proposition correctly, discreetly draw the reader's attention to other JPLP articles, current intelligence notes and material which the reader might not know about. This can save time, effort and stress by, for example, alerting a reader to the existence of another article which discusses the same topic while reaching a different conclusion, or which reveals the existence of a later piece that updates the content of an earlier one. More details will be provided in due course.

The May 2012 issue of JIPLP (the "INTA Special", since extra copies are distributed at the annual International Trademark Meeting) will carry a special focus on the protection and exploitation of geographical indications. This is very much a hot topic, not just in terms of whether trade mark protection or sui generis regulation is the best approach but also in terms of developing countries reclaiming terms that have become generic or descriptive in other markets and with regard to the current proliferation of bilateral and plurilateral treaties that impose requirements for their protection.  If you have a specific interest or expertise in this area and would like to suggest a specific topic which like to see covered or would like to volunteer to write on such a topic, it would be helpful to know as early as possible.  To express an interest, please email me here with the subject line "JIPLP GI issue".  Note, though: JIPLP only wishes to receive submissions from authors with some particular insight which they can add to the knowledge of the journal's readership.  Please do not offer student dissertations and essays which do no more than summarise existing law and policy, drawing on well-known materials and secondary sources.