The difficulty of early dismissal of a trade mark infringement action

Author: Peter Jabaly (Jabaly Law)

Car-Freshner, Corp. v Getty Images, Inc., No. 7:09-CV-1252 (N.D.N.Y.) 27 September 2011

Journal of Intellectual Property Law & Practice (2012), doi: 10.1093/jiplp/jps002, first published online: February 22, 2012

Trade mark infringement cases are difficult to defend at the early stages, making the fair use defence of limited use.

Legal context

Trade mark law seeks, inter alia, to prohibit false designations of origin and false associations with other sources of goods or services. This rule is, unsurprisingly, accompanied by at least one exception, described broadly as fair use: the putative infringer may defend against allegations of infringement by asserting that the use of the trade mark is necessary to achieve a more important objective such as product criticism and analysis, as well as comparative advertising in which contrasts are made between competing products. A defendant to a trade mark infringement claim must demonstrate that he has made use of the trade mark (i) other than as a mark, (ii) in a descriptive sense, and (iii) in good faith. In addition, any consumer confusion tends to favour a decision rejecting a fair use defence.

The more distinctive the trade mark, the less likely an arbiter will be to determine the use as fair because there will be a much lower number of generic uses of the trade mark. Getty Images, Inc. would also assert a novel argument, the nominative fair use defence. Never expressly adopted by the Second Circuit Court of Appeals, this defence states that although the trade mark is commercially used, the alleged infringer is not capitalizing on consumer confusion and is therefore shielded from liability.


Car-Freshner, Corp. is the manufacturer of a wide array of car scents. Getty Images, Inc. is an agency which supplies stock photographic images both to businesses and to consumers. The car scents are in the shape of pine trees and are ordinarily hung under a vehicle's rear-view mirror. Car-Freshner's complaint alleged that Getty Images's collection of millions of stock photographs contained an unspecified number of images with the protected trade mark. Car-Freshner included a number of representative images in support of its complaint.

Getty Images asserted in its pre-trial motion to dismiss and/or for summary judgment that the trade mark was not used intentionally and that it was only incidental to the photograph. Car-Freshner argued that the use was not incidental and that it sought to capitalize commercially on consumers' recognition of the mark. For instance, one representative photograph depicts a scruffy male with what is presumably the scented tree under his armpit, back dropped with pine trees, suggesting that it was an odour fighter. Car-Freshner used this and similar photographs to support its argument that Getty Images's use fell outside the fair use exception.

Car-Freshner asserted that its trade mark was famous, which would allow for much greater protection from dilution and tarnishment by competitors than was available to ordinary trade mark owners (no doubt this was a result of lobbying efforts in 2006 during the passage of the Trademark Dilution Revision Act).

The parties to this matter were some of the more litigious parties on the global corporate scene. Getty Images is known to avoid sending cease and desist letters, preferring to utilize demand letters for large and (some would say) unsubstantiated sums of money. The company vigorously defends its IP rights in cases that some others would consider self-policing gone awry.


The legal standard for a federal motion to dismiss is usually based on a failure to state a claim. This means either that pleading is insufficient or that the claim is simply non-cognizable. The former is more common.

Although the Supreme Court has interpreted its pleading standard liberally by requiring a ‘short and plain’ pleading standard, it must give a defendant fair notice of the basis for the plaintiff's claims. Whether by design or by accident, this tension makes it difficult to apply the standard consistently at the trial phase. More recently, the US Supreme Court has explained that an actionable claim must set forth enough facts to maintain a plausible claim at a level which lies above the merely speculative; a simple recitation of the elements of a cause of action followed by legal conclusions is not enough. And, although the factual allegations should be considered in the light most favourable to the non-moving party, the legal conclusions derived from it do not. When considering the motion to dismiss, the complaint's allegations, along with any attached instruments, are among the limited items to which a judge can give consideration.

To discuss the facts of this case properly, it is important to discuss the images that were part of the complaint, these being the same images the court considered in reaching its decision.

One image shows a tree mark bearing the words ‘Car-Freshner’ and ‘Royal Pine’ with its shadow. Another image shows a red pine mark bearing the words ‘Fresh Scent’ in tall grass in the middle of an open field with trees and more grass in the background. A third image portrays a pine tree mark dangling underneath the armpit of a big half-shirtless man. A fourth image has 10 or so tree marks hanging from a garbage can, presumably referencing the odour-fighting quality of the plaintiff's product. Finally, four other images hang from a rear-view mirror of an automobile, in the manner in which the plaintiff's product often hangs.

These images formed the basis of the Northern District of New York's decision to deny Getty Images' motion to dismiss. Getty Images had argued that the tree marks were not being used commercially. The use of the tree marks was solely in the descriptive sense. Regarding the first prong of the fair use defence, the district court found that Car-Freshner had alleged facts plausibly indicating that the tree marks were being used in commerce as trade marks (‘use in commerce’ as defined by the Lanham Act).

A secondary and somewhat more novel argument made by the defendant was based on nominative fair use doctrine. The doctrine allows a defendant to use a trade mark so long as there is no confusion regarding the origin or the affiliation of the mark. The Ninth Circuit Court explained further:
[f]irst, the product or service in question must be one not readily identifiable without use of the trade mark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trade mark holder. New Kids on the Block v News Am. Publ'g, Inc., 971 F.2d 302, 308 (9th Cir. 1992).
The district court had already found that there existed a plausible claim that the images found on the Getty website used Car-Freshner's trade mark and that it was plausible that these images caused consumer confusion regarding the origins, sponsorship, or affiliation of the mark with the defendants' images. Citing Rescuecom v Google, Inc., the court made clear that it had ‘no idea’ regarding whether the plaintiffs could prove that consumer confusion actually occurred. In closing, it stated that a parody defence cannot be useful to a defendant who capitalizes on the mark's fame for commercial gain. However, the court did dismiss the plaintiffs' claims of vicarious liability and contributory infringement.

Practical significance

It is clear that there is little chance that a typical trade mark infringement case will be dismissed at the pre-trial phase unless the factual allegations contained in the complaint are altogether speculative. The legal standard plays prominently in this result, but there are reasons. Consumer confusion (or its lack) is difficult to assess without the pain, cost and inconvenience of trial and a jury verdict. Even a case in which trade mark infringement seems bound to end in a finding of no liability, the defendant must endure economic losses in defending the suit to settlement or verdict. Additionally, the decision seems troubling because of the chilling effect it could have on future copyright holders. Such a precedent would gum up the creation of these photographs and their sale. The worry would be unintentionally capturing trade marks in such common photographs as streetscapes and being subject to litigation by some of the most litigious participants in the market.

"It is interesting to note that ..." there is a bee in the editorial bonnet

In my capacity as Editor of the Journal of Intellectual Property Law & Practice I receive a good deal of correspondence from contributors on issues of style as well as substance. While questions of substance are usually raised before an article is submitted, those of style generally follow the event.

One point that greatly concerns me is the padding of text through the addition of redundant phraseology, repetition, grandiose phraseology and stretching the word count by expressing in the passive mood that which is more succinctly said in the active.  Readers may be unaware -- though authors may be painfully conscious -- that some submissions are as much as 30% shorter on publication than at their submission date.

For the guidance of JIPLP authors I reproduce the following exchange between a valued contributor to the journal and the Editor.  The contributor wrote:
"At line [...] there was some text deleted from my original submission which, I think, needs to be restored. I had started the sentence by saying, “It is interesting to note that”, because I wanted the reader to know that I was subtly moving to a new – but related – point. Perhaps the phrase “It is interesting to note that” or, even better, “It is noteworthy that” could be restored?"
He received the following response:
"I appreciate your concern – and your subtlety – but I’m afraid you have to contend with the deep-seated prejudice of a cantankerous old editor.

The words “It is interesting to note that” are to all intents and purposes banned from JIPLP since they generally add nothing but length. If the text which follows those words is interesting, they are redundant; if it is not interesting, it shouldn’t be there in the first place. And if your reader is reading what you’ve written, he’s going to note it whether you tell him that it is interesting to do so or not.

I’ve edited these words out of most of the Current Intelligence items and articles that I’ve edited since 2005. I’ve pulled them out of paragraphs and rooted them out of footnotes. And I’ve only just begun … 
If – as you say -- you’re moving to a new but related point, I’ve a great suggestion. How about “On a new but related point, .. ”".
You have been warned!

Those long URLs: readers' suggestions welcomed

The weight of a footnote burdened
with long domain names can
be simply crushing ...
All modern law publishers are faced with the problem of what to do with long URLs ("uniform resource locators" -- a long-winded way of saying website addresses). They provide a vital means of access to information which has been made available on the internet and authors increasingly employ them in footnoted references. However, they can be infuriatingly long, clumsy and unmemorable, which makes them difficult to proof-read and even more difficult for the reader to type with accuracy.  They are also subject to change, for example when the organisation which has uploaded footnoted material makes subsequent amendments to the content of a previously published page (as is the norm with Wikipedia), relocates them to another part of the host website or puts them into archival storage.

While the electronic version of JIPLP can at least put URLs into a hyperlinked format such as
Draft European Parliament Legislative Resolution on the proposal for a regulation of the European Parliament and of the Council on agricultural product quality schemes:
Draft European Parliament Legislative Resolution on the proposal for a regulation of the European Parliament and of the Council on agricultural product quality schemes here
the reader of the printed version faces something like
Draft European Parliament Legislative Resolution on the proposal for a regulation of the European Parliament:
which is not aesthetically very engaging and which, in the context of a printed page with two columns of print per page, may take up three or four lines of a footnoted reference.

Tiny URLs are increasingly popular in society at large, particularly in relation to restricted character communication via Twitter. Use of a Tiny URL would shrink [122 characters]
down to [26 characters]
There does however appear to be some reluctance to use Tiny URLs in formal academic and professional publishing.

A further solution, which is particularly attractive where the material to which reference is made is located on the website of an institutional website with internal search facilities and which is also open to search by the regular search engines such as Google, Yahoo! and Bing, would be to say simply
Draft European Parliament Legislative Resolution on the proposal for a regulation of the European Parliament (available on the European Parliament website)
thus leaving it to readers to find the document themselves if they chose to do so. And is it worth giving online references to the addresses of statutes, treaties and other documents which everyone now knows, or ought to know, are freely available from a large number of different websites.

Readers' thoughts on this subject are welcome, particularly if I receive them ahead of the next JIPLP team meeting which takes place on Monday 12 March. Please feel free to post your comments below.

The Pirate Bay: sunk without a say?

Darren Meale (SNR Denton UK LLP) is a regular contributor to JIPLP. Here he writes a Current Intelligence note on Dramatico Entertainment Ltd and others v British Sky Broadcasting Ltd and others [2012] EWHC 268 (Ch) (20 February 2012) -- a case which has attracted considerable attention in its approach to the blocking of The Pirate Bay's BitTorrent-driven file-sharing site.

This action will be before the court again in June. Since publication of this Current Intelligence note by conventional means would mean that it would be available readers only very shortly before the further hearing, JIPLP has decided to make it available online now via this weblog.  Following the second hearing, Darren will produce a further, ideally final, piece on this action.

"The Pirate Bay: sunk without a say? 
Dramatico Entertainment Ltd and others v British Sky Broadcasting Ltd and others [2012] EWHC 268 (Ch) (20 February 2012) 
The world's most famous online pirates have, unsurprisingly, been held to infringe UK copyright in an application brought not against the notorious The Pirate Bay bittorrent tracker itself but against the UK's six leading ISPs, in a bid to have each of them block their users from accessing it.

Online copyright infringement remains rampant and a significant threat to the growing legal business models providing consumers with access to music, film and other content online. The major film and music studios have shown willingness to enforce their rights in the courts, but many of their victories have been hollow: the infringers just pop up again with a different name, in a different form or in a jurisdiction in which enforcement is difficult. Rightsholders have therefore changed tack, seeking to force internet service providers to prevent their subscribers from accessing the infringing services in the first place. 

Last year a group of film studios scored a significant victory in the Internet piracy battle when they succeeded in forcing BT, one of the UK's most popular internet service providers, to block access to an online service called NewzBin2. NewzBin2 was a sequel service to NewzBin, a site which greatly facilitated its paid users' attempts to download copyright-infringing films and other media. The Studios beat the first NewzBin in a 2010 High Court action, forcing its shutdown. But the sequel service quickly rose in its place. In 2011, in a test case against BT (for more details see my earlier CI, "NewzBin2: the first section 97A injunction against an ISP" here), the Studios changed tactics. Rather than attack the infringing service direct, they targeted one of the ISPs through which individuals accessed it. In doing so they sought, successfully, to rely on section 97A of the Copyright, Designs and Patents Act 1988 (“CDPA”), a previously unused provision which provides that “The High Court…shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.” 
With BT ordered to block Newzbin2, the Studios obtained similar blocks against ISPs Sky and TalkTalk. 
No doubt buoyed by these successes, a group of record companies are now seeking an order that six of the UK's largest ISPs block a different – and far more high profile – service: The Pirate Bay (TPB). Like most services of its type, TPB does not host infringing content. It provides links to torrent files, which allow users to download content using the BitTorrent peer-to-peer file sharing protocol. Most of the content available on TPB is unlawful copies of films, music and software. TPB is probably fairly described as the celebrity poster-boy of piracy. It has been the subject of countless court actions around the world, and its four founding Swedish members have been criminally prosecuted for their part in the service, receiving custodial sentences and large fines (although as far as this author knows, these penalties have yet to be served or paid). Yet the site still operates, defiantly describing itself as "The galaxy's most resilient BitTorrent site". As at the end of last year, it was the 43rd most popular website in the UK (according to Alexa) and generating millions of dollars of advertising revenue a month. 
With the agreement of both sides, the record companies' application has been split in two: a preliminary hearing to decide whether the users and operators of TPB infringe the record companies' copyright; followed by a hearing on whether a block should be ordered and what form it would take (although the court held that it was not necessary to split such applications in this way – they could well be heard all at once). Mr Justice Arnold has now ruled on the first issue, finding overwhelmingly in the record companies' favour. 
It is worth noting that, unusually, none of the affected parties defended this part of the record companies' application. The question to be answered was "does TPB or its users infringe copyright?", yet neither were parties to the claim (nor had it been served on them). Ultimately, the record companies are seeking an order against ISPs, but none of the six targeted chose to defend the application either. Perhaps this is unsurprising – the ISPs rightly point out that it is not for them to decide whether TPB's activities are unlawful. Further, had the ISPs sought to defend a service which so openly revels in its misdeeds, they may have suffered negative costs consequences when that defence inevitably failed. Declining to resist this part of the application may mitigate any liability to those costs the ISPs may ultimate have. 
Given its notoriety, it was a fairly safe bet to assume the High Court would find that both TPB and its users infringed the record companies' copyright, but Mr Justice Arnold nevertheless gave thorough consideration to the legal issues, not least because there was no party present to defend the alleged perpetrators. 

Arnold J focused his attention on the following three issues: 
1 Was it appropriate to consider the liability of TPB and its users in their absence? 
Yes, held Arnold J, for three reasons. First, section 97A of the CDPA (which has its origins in Article 8(3) of the Information Society Directive 2001/29) is directed at service providers, not the directly infringing services or their directly infringing users. There was no jurisdictional requirement for the latter to be involved. Second, courts in the UK and Europe applying Article 8(3) have proceeded on the basis that direct infringers need not be joined. Third, it would be impractical to join or serve TPB's users and the whereabouts of its operators (including the four founding members referred to above – they appear to have fled Sweden to escape custody) are unknown. The judge also took into account that TPB's website contains a clear statement of the operators' attitude to the law – they do not respect it and have no intention of engaging with the legal process. 
2 Were TPB's users infringing the record companies' copyright? 
Yes, held the judge – users were committing the restricted acts of "copying" and "communication to the public". Copying was fairly straightforward – when a user selects a torrent file, he or she then downloads a copy of the film or music track in question. The judge was satisfied that doing so without consent of the rightsholder amounted to an infringement of copyright. 
"Communication to the public" was more challenging and involved a thorough examination of a number of recent and current ECJ references on the meaning of this restricted act. These included SGAE v Rafeal Hoteles Case C-306/55; ITV v TVCatchup C-607/11 (reference pending); FA v QC Leisure C-403/08 and C-429/08; Airfield v SABAM C-431/09 and C-432/09; and Football Dataco v Sportradar C-173/11 (reference pending). This act restricts, among other things, "the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them" (section 20(2)(b) CDPA). One of the key points debated in these cases is the principle that the "public" to whom the communication is made must be a "new public", one that is different to the public which the rightsholder took into account when it authorised the original communication to the public of the work. 
The judge was satisfied that participation in file sharing using torrent files acquired through TPB satisfied the basic requirements of the restricted act. As regards the "new public" question, he was satisfied that this requirement was also met, as copies of sound recordings where being made available to users who had not purchased them from an authorised source. Accordingly, he concluded that TPB's users were infringing the record companies' copyright in this way as well. 
3 Were TPB's operators infringing the record companies' copyright? 
The record companies did not contend that TPB was a direct infringer of their rights, rather that they were liable as accessories to the acts of their users. First, as it authorised the acts of their users; second, as it participated in a "common design" with its users to infringe. 
To authorise means "to grant or purport to grant to a third person the right to do the act complained of" (see CBS v Amstrad [1988] 1 AC 1013). In the first Newzbin case, Kitchin J considered a number of factors to determine whether the operators of Newzbin were liable for their users' acts. These were also considered by Arnold J as follows: the nature of the relationship between them (TPB "goes to great lengths to facilitate and promote the download of torrent files by its users"); how inevitable infringement was (infringement was TPB's objective and intention); and the degree of control and steps taken to prevent infringement (TPB could remove infringing torrents, but did not and did not want to do so). On this basis, he concluded that TPB did authorise its users' infringements, noting that "I consider the present case to be indistinguishable from [Newzbin] in this respect. If anything, it is a stronger case." 

On the basis of the matters considered for authorisation, the judge also concluded that the operators of TPB induced, incited or persuaded its users to commit infringement of copyright and that they and the users acted pursuant to a common design to infringe. This made TPB jointly liable for the users' infringements. 
Practical Significance 
With that the record companies scored something of a slam dunk against TPB, which comes as no surprise given TPB's notoriety and the lack of any one present in court to attempt to spin any clever arguments in their defence. Experience learned from the Newzbin cases, combined with the facts that the claim was undefended and brought by a large representative group of record companies, means that the industry has probably obtained this judgment for a fairly modest cost, as compared to the usual expense of a fully-fought copyright dispute. This will not make it cost effective to bring similar claims in respect of every infringing service on the Internet, but it may make it feasible to repeat the endeavour against some of the other main offenders. 
This was only stage one – the next stage is to have the Court order a block. But everything looks good on that front. The hard part in the Newzbin cases was probably obtaining the original infringement judgment, the follow-up application under section 97A of the CDPA, although making new ground, was relatively straightforward and it came as no surprise when the block against BT was ordered. The hearing on the block is set for June, but it is hard to see what outcome there will be other than an order against all six ISPs to block access to TPB. BT put forward all the arguments it could against the block in Newzbin2; they all failed. There is very little to distinguish the Newzbin service from TPB's. In fact, as Arnold J noted, TPB is arguably the stronger case of infringement. 
Following the first block against BT in Newzbin2, section 97A appeared to be a fairly powerful weapon for rightsholders, and they are well on the way to deploying it successfully here. The record companies approach appears cleverly engineered: the ISPs will not oppose the claim of infringement, and once that unopposed (and likely therefore quicker and cheaper) claim succeeds it is almost inevitable that the court will order a block. The efficiency of this process, and the way in which ISPs are likely to react to future applications by rightsholders, may well depend on how the Court decides the matter of costs. In Newzbin2, BT had to pay the costs of the film studios' application because it resisted it, as well as the costs of implementing the order. Declining to oppose the copyright infringement claim here may save the ISPs some costs, but we have yet to see what position they will take on the block and whether, if it is granted, the court will again require them to pay for its implementation. 
To conclude on a more practical point: will the block work? Already, and with its usual defiance, TPB has vowed to fight on and adapt so as to become harder to block. It will now switch completely from using torrent files to using "magnet" files on the basis that the latter are harder to block. Further, many of the mechanisms available to ISPs for blocking websites (eg, IP address blocking and re-routing, URL blocking) can be circumvented using fairly straightforward methods such as by using proxy servers. There are also countless websites and YouTube videos purporting to explain how to get round blocks – although websites devoted to circumvention may be covered by the terms of any blocking order too. 
The author will revisit this case once its second part is heard in the summer".

Court of Justice balances IP rights and international trade

Author: Anna Giulia Micara (Department of International Studies, Università degli Studi of Milan, Italy)

Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd, Far East Sourcing Ltd, Röhlig Hong Kong Ltd, Röhlig Belgium NV and Nokia Corporation v Her Majesty's Commissioners of Revenue and Customs, Court of Justice of the European Union (ECJ), Joined Cases C-446/09 and C-495/09, 1 December 2011

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps016, first published online: February 20, 2012

The ECJ found that goods can be considered ‘counterfeit’ or ‘pirated’ where it is proved that they are intended to be put on sale in the EU, while goods coming from a non-Member State which are imitations of goods protected in the EU by a trade mark, copyright, or design cannot be classified as ‘counterfeit’ or ‘pirated’ merely on the basis of the fact that they are brought into the EU under a suspensive procedure. The judgment is particularly interesting because the possibility for customs authorities to stop goods which are technically outside the EU territory was an unsettled and much debated issue.

Legal context

Border measures are a fundamental tool for IP holders. The procedure enables customs to suspend the release of goods suspected of infringing IP rights ex officio or by request of the right holder, therefore immobilizing goods which the holder could not control in the country of production. EU border measures are provided for by Regulation 3295/94 laying down measures concerning the entry into the Community and the export and re-export from the Community of goods infringing certain IP rights as amended by Regulation 1383/2003 concerning customs action against goods suspected of infringing certain IP rights and the measures to be taken against goods found to have infringed such rights. The possibility for customs authorities to stop goods under a customs suspensive procedure was still an unsettled issue. Such suspensive procedures, such as storing goods in a free zone or warehouse or external transit (referring to goods coming from and directed to a third country) imply that goods remain technically outside the EU territory since they are not to be released for free circulation there.

In Case C-383/98, Polo Lauren, the ECJ declared Regulation 3295/94 applicable to non-Community goods in external transit without reference to any need to prove the risk of diversion into the EU market, but stated that ‘after all, the external transit of non-Community goods is not completely devoid of effect on the internal market’. In Case C-281/05 Montex, however, the ECJ held that external transit did not infringe the essential functions of the trade mark in Germany and that, in order for the goods to be stopped by customs, the risk of their possible diversion should be manifest.

The literature is divided. On the one hand, stopping goods not released in the EU market and not presenting risk of fraudulent diversion amounts to a violation of the territoriality principle and hinders legitimate trade; on the other hand, there is the risk that counterfeiters need only to declare a good in external transit in order to sell their goods in the EU. The issue has also been made even more relevant by the case of generic drugs coming from India and directed to Brazil, where they were fully legitimate, but stopped by Dutch authorities because they infringed patent rights in the Netherlands. The nature of the goods, a second-line HIV/AIDS medication for patients awaiting them urgently, made this debate highly relevant and the consistency of EU law with the Trade-related aspects of Intellectual Property Rights (TRIPS) agreement was discussed at the World Trade Organization. Finally, the issue is discussed within the process of revision of Regulation 1383/2003 (proposal COM (2011) 285).


In Case C-446/09, Belgian customs authorities inspected in the port of Antwerp a cargo of electric shavers from China (to an uncertain destination) resembling designs of shavers developed by Philips and protected by Philips in Benelux through an international design registration. Suspecting that the goods inspected were pirated goods, the customs authorities suspended the release of the goods and informed Philips. Afterwards, Philips brought an action against Lucheng, Far East Sourcing, and Röhlig before the Court of First Instance of Antwerp seeking a ruling confirming infringement and an order to pay damages.

In Case C-495/09, Her Majesty's Commissioners of Revenue and Customs (HMRC) inspected at London Heathrow Airport a consignment of mobile phones and accessories, coming from Hong Kong and destined for Colombia, with a sign identical to the Community trade mark registered by Nokia. Suspecting that the goods were fake, HMRC informed Nokia but, when Nokia asked for the seizure of the consignment, HMRC denied the request stating that, in the absence of evidence of diversion into the EU, the goods could not be considered counterfeit, according to case Montex. Consequently, Nokia brought an action against HMRC before the High Court of Justice of England and Wales.


The preliminary questions ask, in essence, whether goods coming from a non-Member State which are copies of designs protected in the EU, such as Chinese shavers in Case C-446/09, or imitations of goods protected in the EU by trade marks, such as the mobiles inspected at Heathrow Airport, can be classified as ‘counterfeit’ or ‘pirated’ within the meaning of Regulation 3295/94, as amended by Regulation 1383/2003, considering that they are not released for free circulation in the EU territory but merely on the basis of the fact that they are brought into the customs territory of the EU, under a suspensive procedure referred to in Article 84 of the Customs Code. Indeed, in Case C-446/09, goods were under the customs warehousing procedure, therefore stored in a warehouse under customs supervision, and in Case C-495/09 goods were in external transit. The goods were counterfeit under EU or national law, but they were under customs procedures which did not entail the goods being put into commerce in the EU.

Citing Montex and other cases, the ECJ held that goods placed under a suspensive procedure cannot infringe EU IP rights: they infringe only if they are put on sale in the EU. Concerning the risk of fraudulent diversion, the ECJ noted that customs authorities, in order to detain goods, do not need proof that goods have already been sold, offered for sale, or advertised to EU consumers, it being sufficient that there be material such as to give rise to suspicion. Moreover, it clarified Montex by stating that it is sufficient that, for example, the destination of the goods is not declared or there is no precise or reliable information as to the identity or address of the manufacturer or consignor of the goods, or there is lack of cooperation with customs authorities or documents suggesting the risk of diversion. In Case C-495/09, the ECJ affirmed that national courts should consider relevant that it was impossible to identify the consignor of the goods in question. These examples are broad, so the main argument in favour of the control of goods in external transit (that it is sufficient for counterfeiters to declare a goods under a suspensive procedure, as right holders argued) no longer appears substantiated. The only limit is that a suspicion of risk of fraudulent diversion must be based on facts and not be abstract, so that the ECJ ensures that legitimate international trade is not hindered, even by a temporary detention. Moreover, concerning goods suspected of infringing IP rights in the country of destination, the ECJ noted that customs authorities may cooperate with the customs authorities of third countries under Article 69 TRIPS.

Secondly, dealing with Case C-446/09 where goods were already detained, the ECJ rejected the so-called manufacturing fiction, an approach which appears to have been applied for the first time by a Dutch court in 2004 and which consists in the treatment of non-EU goods in transit as though they had been manufactured in the Member State in which they are situated and are, accordingly, subject to the IP legislation in force in that Member State, regardless of whether those goods are destined for the EU market. Indeed, the court observed that, in the event that the competent authority finds infringement, goods are destroyed or abandoned and therefore operators concerned cannot suffer such dispossession or penalties on the sole basis of a risk of fraud or on the basis of the manufacturing fiction. Consequently, that authority cannot classify as ‘counterfeit’ and ‘pirated’ goods which a customs authority suspects of infringing an IP right applicable in the EU but in respect of which it is not proven that they are intended to be put on sale in the EU. According to the ECJ, the effectiveness of Regulation 1383/2003 is not compromised because the end of detention does not mean that customs have no more control over it since each stage of the suspensive procedure is monitored.

Finally, as Nokia pointed out, the ECJ held that precautionary considerations may militate in favour of an immediate seizure of goods identified as posing health and safety risks, irrespective of the customs procedure under which they are placed, but Regulations 3295/94 and 1383/2003 deal only with IP infringements so these aspects must be assessed on the basis of other EU provisions. Thus a case dealing with, for example, generics could still address elements that have not been fully settled.

Practical significance

The ECJ had the possibility of clarifying an important matter and of establishing a uniform interpretation of EU Regulations 3295/94 and 1383/2003. It is now clear that customs authorities cannot suspend the release or detain goods (in order to immobilize them pending the determination to be made by the authority competent to take a substantive decision) under a suspensive customs procedure, which does not imply goods to be put into the EU market, unless there are indications giving rise to suspicion of fraudulent diversion into the EU market.

Database copyright does not protect fixture list data, says AG

JIPLP's goal is to publish material
before it's out of date
The advantage of publishing a legal journal with not only a formal website but also its own weblog is demonstrated today in the posting, below, of a Current Intelligence note by a trio of authors from London-based international legal practice Herbert Smith -- Mark Shillito, JIPLP editorial board member Rachel Montagnon and MadeleineTunstall.

This note was drafted as a comment on Football Dataco Ltd and others v Yahoo! UK Limited Case C-604/10, a case that was referred to the Court of Justice of the European Union for a preliminary ruling by the Court of Appeal for England and Wales in December 2010.  While it usually takes in excess of two years from initial reference to final ruling, this case -- probably on account of its relative legal simplicity -- has positively raced along. The Advocate General’s opinion was delivered 15 December 2011  -- which would normally indicate a full judgment about six months later, leaving sufficient time for legal commentators to write on the opinion and get it published ahead of the ruling.

Football Dataco has however maintained its velocity, since we have learned today that the ECJ expects to deliver its full decision on 1 March, well ahead of expectations.  Under normal circumstances a Current Intelligence comment on the Advocate General's opinion would not be published until after the court had delivered judgment, with the result that it would be of largely historical interest by the time it came to be published.  However, with the ruling still some ten days away, JIPLP is delighted to bring this item to your attention while it is still hot.  We hope you will enjoy it.
"Database copyright does not protect fixture list data, says AG

Football Dataco Ltd and others v Yahoo! UK Limited Case C-604/10, Court of Justice of the European Union (ECJ), Advocate General’s opinion of 15 December 2011

The AG interprets the Database Directive narrowly, denying database copyright to data within a database and reserving this right to the structure rather than the contents of a database.

Legal context

In 2004, producers of football fixture lists and producers of lists of horseracing runners and riders failed to persuade the ECJ as to the subsistence of sui generis database rights in such lists under the Database Directive 96/9 (see British Horseracing Board Ltd and Others v William Hill Organization Ltd (C-203/02) [2004] I-10415; Fixtures Marketing Ltd v Organismos prognostikon agonon podosfairou AE (OPAP) (C-444/02) [2004] I-10549; Fixtures Marketing Ltd v Oy Veikkaus Ab (C-46/02) [2004] ECR I-10365). However, no attempt was made at the time to argue that database copyright which the Directive also attempted to harmonize might provide an alternative form of protection for exploitation of these databases.

In Football Dataco Ltd and others v Yahoo! UK Limited [2010] EWCA Civ, the English and Scottish Premier and Football Leagues sought to rely on database copyright in a claim against Yahoo and others in relation to the latter’s use of their fixture lists. The Court of Appeal referred two questions to the ECJ: first, on the interpretation of Article 3(1) of the Directive, whether work involved in creating the fixtures could be classified as ‘selection or arrangement’ and hence qualify for database copyright protection and also on the interpretation of ‘author’s own intellectual creation’ (Article 3(1) provides that ‘databases which, by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation, shall be protected as such by copyright’); and secondly, on whether the Directive precluded national rights in the nature of copyright in databases other than those provided for by the Directive.


The FA Premier League, Scottish Premier League, and the English and Scottish football leagues (all applicants in the appeal from which questions were referred to the ECJ) arranged fixtures for the English and Scottish football leagues, and Football Dataco and another managed the rights on their behalf. Yahoo and the other defendants used the information in these lists to provide news and information and/or to organize betting activities. Football Dataco et al. alleged that this infringed their rights.

At first instance, on the preliminary issue of what rights existed in the fixture lists, Floyd J found that considerable skill and effort went in to preparing these lists in order to comply as nearly as possible with numerous requirements— for example that home matches should not be played on the same day by clubs in close geographical proximity and that only a certain number of consecutive matches should be played at home for each club. The court concluded that the fixtures schedule could not have been created by a computer, but took creative input.

Since fixture lists were previously refused protection under the ‘sui generis’ database rights, Football Dataco instead alleged database copyright infringement. Floyd J found that there was database copyright in the fixture lists but not ‘sui generis’ database right, nor any ‘national’ copyright (other than database copyright as provided for under Article 3 of the Directive).

Floyd J’s decision was appealed and the Court of Appeal then referred the two questions to the ECJ:
(1) When interpreting Article 3(1) of the Directive,
(a) should the intellectual effort and skill of creating data be excluded?
(b) does ‘selection or arrangement’ include adding important significance to a pre-existing item of data (as in fixing the date of a football match)? and
(c) does ‘author’s own intellectual creation’ require more than significant labour and skill from the author, and if so what? and

(2) Does the Directive preclude national rights in the nature of copyright in databases other than those provided for by the Directive?
In his Opinion, Advocate General Mengozzi proposes that the ECJ provide a preliminary ruling that:
(1) A database can be protected by copyright, for the purposes of Article 3 of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases only if it is an original intellectual creation of its author. For the purpose of that assessment, the activities involved in the creation of the data cannot be taken into account. In the case of a football fixture list, the determination of all the elements relating to each single match is a data creation activity.

(2) Directive 96/9 precludes national law from conferring copyright protection upon a database which does not meet the requirements laid down in Article 3 of the Directive itself.

The AG first noted that one reading of the Directive is that ‘sui generis’ protection is regarded as a second-level protection, which can only apply to a database that does not possess the necessary originality to be protected by the copyright. If that were the case the fact that, in its judgments of November 2004, the ECJ ruled out the possibility of ‘sui generis’ protection (the ‘lesser’ protection) for football fixtures would mean that protection under the copyright (the ‘greater’ protection) was therefore automatically excluded. However, the AG said that careful examination of the Directive shows that such an interpretation is not correct and that the two types of protection must be regarded as mutually independent in all respects, a fact which all the parties who submitted observations in Football Dataco, including the Commission, appeared to accept.

The AG commented on the relationship between protection under database copyright and sui generis protection, stating that the object of the two types of protection was different. Database copyright protection focuses on the structure of the database, the way it has been put together through the selection of the data to be included or the way in which they are presented. Article 3(2) states that the copyright provided for in that article ‘shall not extend to [the] contents of databases, which can be protected by copyright autonomously, but are not protected by virtue of being entered in a protected database’.

Further, Recital 15 states that the copyright protection ‘covers the structure of the database’. In contrast, the ‘sui generis’ right protects the content, but protection is simply a right to prohibit extraction or re-utilization of the data contained in the database ‘that right is conferred not to protect the originality of the database in itself, but to compensate the effort expended in obtaining, verifying and/or presenting the data contained therein’.

However, the AG’s opinion was that the scope of protection of the Directive does not cover the creation of the data itself but just its collection, verification, and presentation, distinguishing between the time when the data were created (which the Directive does not concern) and the time when it was collected or developed (which it does concern and is relevant for the purposes of determining whether the database is eligible for protection).

The ECJ drew these distinctions when it considered ‘sui generis’ rights in 2004, but the AG’s opinion is that ‘these are considerations which concern more generally the very concept of a database for the purposes of the Directive. The Directive protects the creation of databases but not the data itself. The objective of the Directive is to encourage the creation of systems for collecting and consulting information not the creation of data’.

Thus the effort expended in the creation of the data cannot be taken into account for the purposes of assessing eligibility for protection under the copyright, just as it cannot be taken into account for assessing ‘sui generis’ right. That is not to say that attribution of additional specific characteristics to an item already entered into a database could not amount to ‘selection and arrangement’ sufficient to qualify for copyright protection under Article 3. Rather, adding a date to a selection of two teams in this case was not sufficient, said the AG. The AG’s opinion was that, to draw this conclusion, as he felt the court of first instance had done, was to make a decision based on a mistaken premise; all details relating to each match in a given league must be regarded as having been fixed by the time they are entered in the database. This is all data creation and therefore not protected under the Directive. Thus, all the evidence on the skill and judgment on creation of fixtures put forward before Floyd J is irrelevant.

The individual components of a database must have autonomous informative value (Fixtures Marketing). Generic lists of teams, dates, and times cannot be regarded as genuinely ‘informative’, ‘only the set of details identifying each individual match can have such value.’ However, the AG did not rule out the possibility that there could be circumstances in which important significance would be added to the existing data by entering them into a database. This would be ‘arrangement of contents’ which is properly protected by database copyright—and which the database ‘adds’ to the data.

In considering the meaning of ‘intellectual creation’, the AG noted the tendency among common law countries for the decisive criteria in determining the subsistence of copyright to be the application of ‘labour, skills or effort’ whereas ‘in countries of the continental tradition’ there must be an element of creativity or expression of the creator’s personality. He felt that the phrase ‘intellectual creation’ echoed the continental tradition. Although the phrase could not be defined in general terms and assessments of ‘intellectual creation’ are for the national courts to make on an individual basis, the AG did observe that a work will reflect the personality of the author who is able to make free and creative choices in the production of the work. The AG’s opinion was that database copyright required something ‘creative’, not just skill and labour.

‘Mechanical’ efforts are rewarded by the sui generis rights along common law lines, but for database copyright the ‘continental tradition’ applied. The necessary originality would also be absent if the features of a work are predetermined by its function.

The AG gave as an example of the sort of creative touch which would attract database copyright as using ‘sufficiently original features’ in putting it together eg: ‘the use of colours or other graphic elements’. The AG opined that this ‘could certainly qualify for copyright protection under the Directive’. However, it would only be this form of representation that was protected, ‘not the data represented’.

The AG dealt swiftly with the question as to whether any other form of copyright could be deployed to protect databases, concluding that they could not. In support of this he noted Recitals 3 and 12 to the Directive (these reflect the EU legislature’s intention that the directive completely harmonize the protection of databases by copyright so that further rights cannot be conferred at the national level) and Article 14 which establishes transitional arrangements for databases formerly protected by copyright under national rules which do not meet the requirements for copyright protection under the Directive. Such arrangements would make no sense, said the AG, if any ‘national’ rights were intended to continue.

Practical significance

If the CJEU follows the AG’s Opinion, those creating as well as exploiting data such as fixture lists, TV listings and telephone directives will have little left in the way of rights over such data. They will need to look to the potential for the individual items of data to have copyright protection in themselves, rather than to gain protection by virtue of being in a database. In this case, the AG concluded that there was no copyright in each fixture, as the parties had
acknowledged earlier in the course of proceedings.

Databases composed of pre-existing data, not created by the database compiler, still have the potential for sui generis database right protection and could, if the ECJ shares the AG’s Opinion, attract database copyright if there was ‘creative’ effort used in the structure of the database or some other addition to the informative quality of the data by virtue of its addition to the database.

In the meantime, as indicated in our article in JIPLP [2011] 6 (7) 455–462, database owners should consider separating the creation of data from the creation of databases (investment in the obtaining, verification, and presentation of data) in order to maximize their chances of gaining protection for the database, and against extraction and re-utilization of data from it, under sui generis rights. If, for example, the database were formatted in a particular way it could qualify for database copyright and if this formatting were copied that could breach database copyrights (colour coding for example, as suggested by the AG).

The AG’s interpretation of the meaning of the ‘author’s own intellectual creation’, in particular the requirement for it to be an expression of personality, is significant. The Court of Appeal specifically found (in its referring judgment) that Article 3 ‘does not on its face call for anything artistic’. Whilst ‘mere sweat of the brow’ was excluded from the ‘author’s own intellectual creation’, the Court of Appeal found it ‘far from self-evident that other, truly creative but not artistic work is excluded’. The Court of Appeal called the meaning of ‘author’s own intellectual creation’, ‘a question calling for an answer’. The AG’s opinion is one answer, although not as specific as the Court of Appeal might have hoped. This could qualify for database copyright even though the original list did not.

However, none of the scenarios is of much comfort to those seeking to protect the data itself from extraction and use, something that sui generis database rights cover precisely but which data creators would not seem to have a chance of protecting in a database also managed by them if the AG’s opinion is followed by the ECJ. That is, unless there is another aspect to the structure of the database which is then also copied by the unlicensed user".

Better writing: another guide

Published last September, My Grammar and I (Or Should That Be 'Me'?) has only just attracted my attention.  It is the work of two authors the first of whom -- Caroline Taggart -- has spent nearly two decades as a freelance editor of non-fiction while the second -- J. A. Wines -- is a freelance editor and author whose works include the endearingly-titled Mondegreens: a Book of Mishearings.

Anyone who follows the editor of the Journal of Intellectual Property Law & Practice (JIPLP) on Twitter for even a short while will be aware of his trials and triumphs in the battle to edit legal articles in a manner which is succinct, intelligible and accessible. To this end, he is happy to recommend this little book to any current or future author who would like to make his or her text more readable as well as more grammatically correct.

What might a read of this book accomplish? Let the publisher's web blurb explain:
"A runaway hit and Sunday Times bestseller in 2008, My Grammar and I has continued to grow in popularity, becoming the go-to guide for grammar. Repackaged with a fresh jacket design, this much-loved gift title is now available in paperback, for new readers and fans of the series alike. My Grammar and I offers amusing examples of awful grammar, while steering you in the direction of grammatical greatness. Taking you on a tour of the English language through the minefield of rules and conditions that can catch you out, from dangling modifiers to split infinitives, it highlights the common pitfalls that every English language user faces on a day to day basis. Refreshing everything you should have learnt at school and more, My Grammar and I is informative yet entertaining - an ideal buy for any English language enthusiast".
There might have been a time when a book such as this would be thought principally useful for contributors from jurisdictions in which English is not the first language. However, improvements in the teaching of English as a foreign language and the deterioration of the teaching of English as a first language have achieved something of a homogenising effect: the same errors and poor style are now as likely to be found in a Current Intelligence note or article emanating from Oxford as arising from the banks of the Orinoco.

For further information about this book, you can access its web page here.

March 2012 JIPLP, with Editorial on self-interest, now available

The online version of the March 2012 issue of the Journal of Intellectual Property Law and Practice (JIPLP) is now available to subscribers via the journal's website.  Even if you are not a subscriber, you can still visit the journal's website and purchase short-term access to aerticles which you wish you read.  The list of contents of the latest issue can always be found here.
The March 2012 Editorial, which is reproduced in full below, considers the extent to which, in a global era, national governments are entitled to put their own intellectual property interests ahead of the greater good.

"Self-interest and the international stage
IP law is no stranger to self-interest. Almost from its very outset, self-interest was not so much a by-product of IP protection as a driving force which shaped it. The Venetian patent law of 1474 sought only to protect the inventions of foreigners, luring them to Venice with the prospect of a 10-year monopoly that would shield them from local competitors. Early English patent protection was also aimed at attracting foreign skills for the benefit of the English, whether it be wool-dyers from Flanders or craftsmen in glass from Venice. It was not the act of creation, or investment in it, but the desire to possess another nation's skills which motivated both legislation and the exercise of the royal prerogative.
By the late nineteenth century, while competition between states remained acute and trade advantage was a sufficient ground to go to war, IP protection was no longer regarded a battlefield on which such contests were fought. Those two great pillars of international IP legislation, the Paris Convention of 1883 (for industrial property) and the Berne Convention of 1886 (for copyright), were erected on the foundations of equal treatment and reciprocity: thus, for example, British copyright law was directed to assist French authors, while British authors could expect protection from the droit d'auteur, and signatory states to the Paris Convention had to treat foreigners as well—or in many cases as badly—as they treated their own citizens. What is remarkable is the fact that both equal treatment and reciprocity arose at a time when the word ‘globalization’ was still a century away from being coined and most trade, if not entirely national, was far from being the sort of international trade we take for granted today.
One might have thought that, with the internationalization of trade and the World Trade Organization's increasing thrust towards a barrier- and tariff-free world in which to trade, self-interest would have been a thing of the past, a curious relic of interest only to academics. Particularly, within Europe, where the relentless drive towards the single market and a level-playing field has flattened many a local commercial hillock, the idea of a country saying: ‘we really must develop IP laws that stimulate local trade and help local businesses gain an advantage over their rivals abroad’ sounds somehow wrong. But this is a message which we are increasingly hearing.
The USA has recently emerged from a bitter debate over the reform of its patent system with the passage of the America Invents Act—a debate in which those who favoured its introduction and those who opposed it tugged like dogs contesting a bone over the right to say that their position more greatly favoured American interests over those of aliens. The title itself reflects parochial self-interest. But do not let it be thought that the USA is alone. In the UK too, the recent discussions on how to protect the interests of small- and medium-sized enterprises not just against infringers but against the depredations of bigger IP owners have also invited contributions designed to bolster local British interests in a predominantly non-British world.
I believe that every government in every country has not only the right but also the responsibility to take care of the commercial interests of its own businesses and to seek to attract investment in the creation and development of new products, processes, and concepts. However, I cannot accept that there exists any argument in favour of the proposition that either creating different national IP laws or allowing existing differences to persist is the best way of achieving this. Once the proposition is accepted that IP law is beneficial to the interests of all its stakeholders, efforts should be redoubled to ensure that, across the board, we identify and implement the best and most efficacious means of bringing national laws closer together, and eventually eliminating national differences entirely, without allowing the case for any national self-interest to bar the path to full harmonization of national rights".

JIPLP now available by rolling subscription

Readers of this weblog who have not visited the official JIPLP website for a while may not yet know that they can take out a rolling 12-month subscription at any point in the year: you don't have to wait till the beginning of the year or sign up on a volume-by-volume basis.

If you are thinking of subscribing to an intellectual property monthly, obviously you will be guided by considerations of content, currency and presentation.  But if price is a relevant factor, you may not be aware that the subscription rates for the Journal of Intellectual Property Law and Practice are very competitive. In sterling terms, a 12-month subscription to JIPLP -- covering both the printed issues and online access -- currently costs just £611, as compared with Intellectual Property Magazine (for which a print and online subscription costs £1,045) and the European Intellectual Property Review (for which a print-only subscription costs £1,219). 

JIPLP also offers a special rate of £132 for personal subscribers to the print-only version of the journal.

For further details of JIPLP subscriptions, in sterling, US dollars and Euros, click here. To request a print or online sample click here.

Chocs away for registration of Cadbury's purple

Author: Ilanah Simon Fhima (Faculty of Laws, University College London)

Application by Cadbury Ltd to Register a Shade of the Colour Purple for Goods in Class 30; Opposition by Société des Produits Nestlé SA, United Kingdom Trade Marks Registry, O-358-11, 20 October 2011

Journal of Intellectual Property Law & Practice (2012), doi: 10.1093/jiplp/jpr210, first published online: February 10, 2012

A senior hearing officer in the IPO rules on the registrability of a single colour mark.

Legal context

Following the decision of the Court of Justice of the European Union (ECJ) in Libertel Groep BV v Benelux-Merkenbureau (C-104/01) [2003] ECR I-3793, it is clear that single undelimited colours can be registered as trade marks. However, it is equally clear that colour marks face many challenges, including how they can be adequately graphically represented and whether consumers will view them as distinguishing the origin of the goods or services on which they are used. In practice, there have been few decisions on the registrability of single colours since Libertel. In this decision, Hearing Officer Allan James provides much needed guidance on the correct approach to registering a colour mark that will be familiar to many UK consumers.


In October 2004, Cadbury applied to register ‘The colour purple (Pantone 2685C), as shown in the form of application, applied to the whole visible surface or being the predominant colour applied to the whole visible surface, of the packaging of the goods’, accompanied by a colour sample, for ‘chocolate in bar and tablet form, chocolate confectionery, chocolate assortments, cocoa-based beverages, chocolate-based beverages, preparations for chocolate-based beverages, chocolate cakes’. After the examiner objected to the application for want of distinctive character, Cadbury produced evidence of acquired distinctiveness and the application was accepted and published. However, Nestlé opposed the application, arguing that it was not adequately graphically represented, was not a sign, and was incapable of distinguishing. Nestlé also claimed the mark fell foul of sections 3(1)(b), (c), and (d) of the Trade Marks Act 1994, had not acquired distinctive character, and had been applied for in bad faith because Cadbury had no intention to use the mark for the ‘whole visible surface’ of goods, or for the wide range of goods specified.


Section 3(1)(a) grounds

All three section 3(1)(a) grounds were rejected by the Hearing Officer. Following Libertel, colours clearly can be signs, but they cannot be presumed to be signs. A colour might be a simple property of the goods, eg brown is the natural colour of chocolate, or may be incidental, eg the colour of the shoes of a child shown eating a bar of chocolate on the packaging of the chocolate. Neither type of use would send any information to consumers. However, there was nothing suggesting that the applied-for colour was a property of chocolate.

Nestlé had argued that the colour was not a sign because it encompassed an infinite number of signs. This too was rejected by the Hearing Officer. The fact that the mark envisaged the use of variable quantities of the mark did not matter as the mark itself, the colour purple Pantone 2685C, was fixed and stable. Any other answer would undermine the ECJ's previous findings that colours in the abstract can be registered. The applied-for mark was not analogous to the mark applied for in Dyson Ltd v Registrar of Trade Marks (C-321/03) [2007] ECR I-687 because the colour was not a mere property of the goods. Nor was it excluded under Heidelberger Bauchemie GmbH's Trade Mark Application (C49/02) [2004] ECR I-6129. While colour combinations must be presented in a predetermined and uniform way, this does not mean that contours or other methods of spatial definition must be utilized for either colour combinations or single colours. That the specification mentioned the use of purple as a ‘predominant’ colour did not render the applied-for mark a colour combination. While it envisaged the use of the purple with other material, this other material did not constitute part of the mark. Likewise, Nestlé's argument that the representation of Cadbury's mark would permit a variation in the use of the colour ranging from an uncertain percentage to 100 per cent was also flawed. It is not normally necessary to specify how a trade mark will actually be used as part of the graphic representation. Libertel made no mention of such a requirement, which was particularly significant because that case, like this one, involved a single colour. The requirement in Heidelberger Bauchemie was for a ‘fixed relationship’, not a spatial definition demonstrating actual use. Indeed, the cases suggested that it would have been acceptable for Cadbury to have requested registration merely by reference to the Pantone number, without mentioning the actual use.

Nestlé argued that the inclusion of the words ‘being the predominant colour’ was too vague and meant that the sign was not adequately graphically represented. This too was rejected. The mere provision of a colour sample, accompanied by a Pantone number, would have satisfied the Libertel requirements for the graphic representation of the colour. The added wording made the sign no less clear, precise, self-contained, easily accessible, and intelligible, but arguably made the representation clearer. Although the wording required a decision-taker to judge whether the colour was the ‘predominant’ one used, this was no more complicated than any of the other judgments that would be made during infringement proceedings.

In relation to whether the mark was capable of distinguishing, it was clear from Libertel that a single colour is not incapable of distinguishing. In any event, this aspect was contingent on the outcome of any objections under sections 3(1)(b), (c), and (d), and could not apply if acquired distinctiveness was shown.

Bad faith

Nestlé claimed that Cadbury had demonstrated bad faith as, at the time of registration, it had no intention to use the colour mark ‘applied to the whole visible surface … of the packaging of the goods’. The Hearing Officer accepted that a lack of intention to use a mark may constitute bad faith. However, there was no lack of an intention to use here. The Cadbury mark was not a bundle of marks, consisting of varying percentages of purple rolled into one. Instead, the use of the colour purple on the entirety of the packaging was just the ultimate example of the colour being predominant on the packaging of the goods. Moreover, there was evidence that one Cadbury product had been sold in a wrapper that was completely the relevant shade of purple. Nestlé's argument that the colour had not been applied to the ‘whole visible surface’ because the brand name was also present in a different colour was dismissed as ‘absurd’ and Cadbury's use of the words in such circumstances could not constitute activity which fell short of the standard of commercial behaviour observed by reasonable businessmen in the area.

Lack of distinctiveness

Cadbury accepted that the colour mark was not inherently distinctive. Consequently, there was no need to examine the mark under sections 3(1)(b), (c), or (d). Instead, the question was whether the mark had acquired distinctiveness by the application date. The Hearing Officer was guided by the ECJ's decisions in Libertel, and Windsurfing Chiemsee Produktions- und Vertriebs GmbH v Boots- und Segelzubehor Walter Huber (C108/97) [1999] ECR I-2779. These required him to remember that colours would not necessarily be perceived by consumers in the same way as word marks, but that the method of, and factors to be taken into account for, assessing acquired distinctiveness remained the same. Additionally, the general interest in not unreasonably restricting access to colours had to be considered, although this had to be done by ‘critically assessing’ acquired distinctiveness for every item specified, rather than through refusing registration where a mark was shown to have acquired distinctiveness.

Clearly, there was an association of some sort in the public's mind between the purple colour and Cadbury, but the relevant question was whether the mark was distinctive of the goods, rather than just the company. On the evidence, the mark was distinctive for chocolate in bar and tablet form. A shade of the colour purple had been used for the Dairy Milk chocolate bar, which was the best-selling confectionery product in the UK, for nearly 20 years. Cadbury spent £35m on advertising including the colour in 2004 alone and the colour had been used in promotional contexts, including sponsorship of the Commonwealth Games and a popular television soap. Evidence from trade associations pointed to acquired distinctiveness, as did a survey showing 44 per cent unprompted association between the colour and Cadbury. Furthermore, third party use of purple on chocolate bars was limited to use on an ‘imitation’ own brand product, use which started a mere four months before Cadbury's application and which was limited in scale. The Hearing Officer also noted that exclusivity is not required for acquired distinctiveness. In order to show acquired distinctiveness, it was necessary to show that consumer association went beyond merely being ‘reminded’ of Cadbury. However, evidence of detrimental reliance such as confusion was not required as such evidence was unlikely to come to light in relation to a low cost item. Instead, reasonable inferences could be drawn from the use of the mark.

Purple had also acquired distinctiveness for chocolate confectionery products consisting just of chocolate since Cadbury had used the mark for over a decade for popular products fitting that description. Moreover, because these products were pure chocolate, there would have been a spill-over effect from Dairy Milk. However, there was insufficient evidence to show acquired distinctiveness for other forms of chocolate confectionery. Likewise, the mark had acquired distinctiveness for drinking chocolate and preparations for making drinking chocolate. Again the goods had been on sale in purple packaging since the early 1990s; Cadbury had 55 per cent of the drinking chocolate market in 2007 and survey evidence showed 69 per cent recognition from the same year. While this was three years after the application date, the Hearing Officer judged it unlikely that such a strong position could have been built up from nothing. The distinctiveness for chocolate bars was once again helpful, as drinking chocolate would be perceived as chocolate in liquid form.

However, the mark lacked acquired distinctiveness for chocolate assortments and chocolate cakes. In the former case, the evidence suggested that such products were less associated with Cadbury than with chocolate per se. Moreover, its best-selling assortment had been sold in a blue, rather than a purple box. In relation to the latter, there was insufficient evidence of how purple had actually been used for cakes.

Practical significance

This is a decision where less, arguably, would have been more. Cadbury's presumably well-meaning, but unnecessary attempts to clarify the scope of its use of the shade of purple applied for led directly to the challenges based on whether the mark was a sign, whether it was adequately graphically represented, and whether it was applied for in bad faith. However, the Hearing Officer took a common-sense approach to these challenges, true to the spirit of Libertel, which makes it clear that single undelimited colours are registrable.

In relation to acquired distinctiveness, the Hearing Officer viewed a detailed consideration of acquired distinctiveness in relation to each of the products applied for as the way to ensure that concerns about monopolizing colours could be taken into account. Yet, one would expect this form of analysis to take place in relation to judging acquired distinctiveness of every form of mark. Also of interest is how the very strong acquired distinctiveness in relation to chocolate bars and tablets had a ‘trickle-down’ effect to other products viewed essentially as chocolate, even though the evidence of acquired distinctiveness in relation to those products was not as strong. Finally, the Hearing Officer raised, but did not solve, an enduring problem: how to distinguish between mere association between a mark and a company, as opposed to acquired distinctiveness as to origin—an issue which is particularly acute where a mark is as familiar as Cadbury's purple is.

The February 2012 issue

If you find terrestrial delivery too
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If you subscribe to the hard copy version of the Journal of Intellectual Property Law and Practice (JIPLP), your copy should have been safely delivered to you by now.

Just to remind you, this is a special issue which carries a number of features on IP ownership and transactional topics. There's also a guest editorial by Dr Neil J. Wilkof -- "Do we need a rationale for IP sublicensing?" -- which you can enjoy free of charge on this weblog here.

You can check our the February issue's contents here.

Business methods patentable in Canada according to Federal Court of Appeal

Author: Emir Crowne (Associate Professor, Faculty of Law, University of Windsor)

Commissioner of Patents v Inc., 2011 FCA 328, 24 November 2011

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps006, first published online: January 30, 2012

The Canadian Federal Court of Appeal has held that business methods, when properly construed, can constitute patentable subject matter.

Legal context

Section 2 of the Canadian Patent Act, R.S.C. 1985, c. P-4 defines an ‘invention’ as
any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter.
Any invention under the Act must therefore fit within one of these five categories (or be an improvement of one of those five categories).

The only statutory exclusion found in the Act is sub-section 27(8), which provides that:
No patent shall be granted for any mere scientific principle or abstract theorem.

On 11 September 1998, filed an application for a ‘Method and System for Placing a Purchase Order via a Communications Network’. It claimed priority over two earlier US applications. The applicant sought a patent for a system of placing orders online using one click (commonly referred to as the ‘one-click patent’). Customers were identified using cookies that were stored locally on their computers; these identifiers were then used to obtain the customer's pre-recorded information from's database.

The Patent Examiner rejected the application, stating that all claims (1 through 75) were either obvious or directed towards non-statutory subject matter. The Patent Appeal Board recommended that the Examiner's findings on obviousness be overturned, but that the application still be denied on the grounds of subject matter eligibility. As is common practice, the Commissioner of Patents accepted those findings wholesale, and imported them into her decision verbatim [Re Kaphan Patent Application No. 2,246,933, 2009 LNCPAT 2; for a detailed discussion of the Commissioner's decision, see Crowne-Mohammed, E., ‘Canadian Patent Appeal Board denies's one-click patent application’, Journal of Intellectual Property Law & Practice, (2010) 5 (1): 5–8].

On appeal to the Federal Court ( Inc. v Commissioner of Patents, 2010 FC 1011), Justice Phelan overturned the decision of the Commissioner, holding that business methods could constitute patentable subject matter [for a detailed discussion of the Federal Court's decision, see Crowne, E. and Arman, V., ‘Business methods patentable in Canada according to Federal Court’, Journal of Intellectual Property Law & Practice, (2011) 6 (2): 67–69].


At the outset of its decision, the Federal Court of Appeal declared that the lower court's ‘directions amount[ed] to an order to the Commissioner to grant the patent’ (ibid., para 1). Instead, the Federal Court of Appeal held that a purposive construction of the claims at issue (which was a task for the Commissioner alone) might yield patentability. At para 63, which I have parsed into three elements for convenience, the court held that:
It is arguable that the patent claims in issue in this case could fail on the same reasoning, depending upon whether a purposive construction of the claims in issue leads to the conclusion that Schlumberger [denying the patentability of a computer and underlying mathematical formula used to interpret certain measurements obtained when drilling boreholes] cannot be distinguished because the only inventive aspect of the claimed invention is the algorithm—a mathematical formula—that is programmed into the computer to cause it to take the necessary steps to accomplish a one-click online purchase. 
On the other hand, it is also arguable that a purposive construction of the claims may lead to the conclusion that Schlumberger is distinguishable because a new one-click method of completing an online purchase is not the whole invention but only one of a number of essential elements in a novel combination. 
In my view, the task of purposive construction of the claims in this case should be undertaken anew by the Commissioner, with a mind open to the possibility that a novel business method may be an essential element of a valid patent claim (emphasis added).
The Commissioner's view in Re Kaphan Patent Application that patentable subject matter must be ‘scientific’ or ‘technological’ in nature was also expressly disapproved of by the Federal Court of Appeal. Justice Sharlow, writing for a unanimous court, found this requirement vague, highly subjective, and unpredictable. According to her, ‘this test should not be used as a stand-alone basis for distinguishing patentable from non-patentable subject matter’ (para 57). If, according to the court, the Commissioner's adoption of these terms was merely a convenient way to exclude things like fine art or works of art from patentable subject matter then that ‘point could have been made more plainly’ (para 58). In fact, earlier in her judgment at para 53, Justice Sharlow warned about straying too far from jurisprudential principles when speaking about patentable subject matter; she astutely warned that ‘[c]atch phrases, tag words and generalizations can take on a life of their own, diverting attention from the governing principles’.

Practical significance

Any refusal to grant a patent on subject matter eligibility grounds must be grounded in the Patent Act. The subject matter must fall outside the definition of invention set out in section 2 (or be excluded by sub-section 27(8)). At para 60, the Federal Court of Appeal rightly noted that ‘no Canadian jurisprudence determines conclusively that a business method cannot be patentable subject matter’. Their decision seemingly continues this tradition by recognizing that a business method may indeed be an essential element of a valid patent claim.