Are EU policy-makers fighting the right copyright battles?

The guest editorial for the September 2015 issue of JIPLP is written by current Deputy Editor and future Editor Eleonora Rosati:

Are EU policy-makers fighting the right copyright battles?

Debate is currently being undertaken at the level of EU institutions as to whether the existing legislative framework in the area of copyright should be updated. In May 2015 the EU Commission issued its Digital Single Market (DSM) Strategy. As far as copyright is concerned, despite earlier statements by Commissioners Ansip (from @Ansip: “We are reforming & modernising #copyright rules to get rid of pointless barriers on transfer & access to digital content” (23 February 2015); “#copyright rules fit for digital age? I don't think so” (19 March 2015)) and Oettinger (from @GOettingerEU: “Modern #copyright rules … are the key goals for 2015” (6 January 2015)), the DSM Strategy does not contain much. Policy action is in fact only likely to occur in relation to three issues: (1) (lack of) cross-border access to content and its portability; (2) text and data mining for non-commercial and commercial purposes alike; and (3) discussion around civil enforcement and the role of ISPs. In addition to the very narrow focus of proposed interventions, the DSM Strategy does not clarify what legal instruments (if any) would be adopted to undertake reform in the proposed areas.

In parallel to initiatives on the side of the Commission, the European Parliament has also engaged in the copyright reform debate. Pirate Party member and MEP Julia Reda was tasked with drafting a Report on the implementation of Directive 2001/29 (‘the InfoSoc Directive’). The original version contained a number of ambitious proposals to reform EU copyright. Following its publication in early 2015, numerous amendments were however presented, so that the text approved by the Legal Committee of the European Parliament in mid-2015 represents a significantly watered-down version of the original Report.

Among the things that have generated a heated debate is the so-called freedom of panorama. Article 5(3)(h) of the InfoSoc Directive allows Member States to introduce into their own national copyright laws an exception or limitation to copyright exclusive rights to allow “use of works, such as works of architecture or sculpture, made to be located permanently in public places”. Due to the optional (with the sole exclusion of the temporary copies exemption) nature of exceptions and limitations in Article 5 of the Directive, there is a number of Member States, eg France and Italy, that have decided not to transpose Article 5(3)(h) into their own copyright laws.

In the Report as originally enacted, among other things Ms Reda recommended that freedom of panorama be made mandatory (rather than merely optional) for Member States to implement into their own legal regimes. The amended version of the Report (as approved by the Legal Committee) includes a recommendation that “the commercial use of photographs, video footage or other images of works which are permanently located in physical public places should always be subject to prior authorisation from the authors or any proxy acting for them”.

To translate the latter proposal to reality it would be necessary to amend the InfoSoc Directive. However, at the moment re-opening the InfoSoc Directive does not seem to feature high in the agenda of the Commission (although it is unclear how text and data mining for commercial and non-commercial purposes alike would be achieved).

In any case, besides legal technicalities the current approach to (a lack of) freedom of panorama has generated (outraged) headlines. These have ranged from ‘How the absurd EU copyright law threatens to censor holiday snaps’ of The Times (24 June 2015) to ‘Why the EU wants to stop you posting your vacation photos online’ of Forbes (25 June 2015), and ‘Freedom of panorama: EU proposal could mean holiday snaps breach copyright’ of The Telegraph (25 June 2015). Such reactions suggest a complete lack of support on the side of public opinion. Thus the question that arises is whether relevant EU policy-makers have chosen the right battle to fight: is it so vital to restrict freedom of panorama at the EU level?

Paucity of case law even in those Member States that do not acknowledge freedom of panorama may suggest that this is not really an issue about which relevant rightholders are so passionate that they cannot stand the idea of not suing alleged infringers. All in all, the main message that is being conveyed and perceived by the general public is that copyright imposes unreasonable restrictions and is, ultimately, a ridiculous set of norms. Is this good for creators, copyright owners, and users of copyright-protected works alike? Not really.

Safe and sound: CJEU confirms a safener can be an active ingredient too

Author: Laura Whiting (Hogan Lovells International LLP)

Bayer CropScience AG v Deutsches Patent- und Marken Amt, Case C-11/13, EU:C:2014:2010, 13 February 2014, Judgment, Court of Justice of the European Union (CJEU)

Journal of Intellectual Property Law & Practice (2014), doi: 10.1093/jiplp/jpu139, first published online: August 1, 2014

The CJEU has confirmed the broader interpretation of ‘active substance’ proposed by AG Jääskinen (EU:C:2014:86) in the context of supplementary protection certificates (SPCs) for plant protection products—will this decision result in a move away from the strict approach previously applied in relation to SPCs for medicinal products?

Legal context

Bayer is a direct reference from the German Patent and Trade Mark Office (DPMA) in relation to the scope of supplementary protection certificates (SPCs) for plant protection products. The referral concerns the question of whether a ‘safener’—a substance contained in a plant protection product which improves herbicide selectivity for weeds by protecting crop plants from the toxic effect of the herbicide—falls within the scope of the terms ‘product’ and ‘active substance’ in Plant Protection Regulation 1610/96 (the ‘PP Regulation’). Like the SPC Regulation (469/2009), the PP Regulation requires that a valid authorization to place the ‘product’ on the market has been granted as a pre-requisite to the grant of a certificate (Art 3(b)). Under Article 1(8) of the PP Regulation, a product is the active substance or combination of active substances in the plant protection product.

Facts

The product concerned in this reference is MaisTer, a combination of the herbicides foramsulfuron and iodosulfuron, and the safener isoxadifen. Bayer's marketing authorization for MaisTer named only foramsulfuron and iodosulfuron as the active substances (although an earlier provisional MA had also listed isoxadifen as an active substance). Bayer applied for an SPC for isoxadifen based on this MA. The application was rejected on the grounds that the safener was not an ‘active substance’ and therefore could not be a ‘product’ under the PP Regulation.

Analysis

The Court of Justice of the European Union (CJEU) has ruled that the definition of ‘active substance’ can include safeners (or other substances) where the substance has a ‘toxic, phytotoxic or plant protection action of its own’. In such a case, the safener may be entitled to SPC protection if it satisfies the other requirements of the PP Regulation.

Article 1(3) of the PP Regulation defines an active substance as a substance which has ‘general or specific action: (a) against harmful organisms; or (b) on plants, parts of plants or plant products’. The CJEU interpreted Article 1(3) in light of Article 1(1) which sets out the effects which a ‘plant protection product’ containing one or more active substance may have. Therefore, according to the decision, any substance which exerts a toxic, phytotoxic or plant protection action itself is to be included in the definition, whether or not its action is direct or indirect. This is slightly different to the definition proposed by AG Jääskinen, who considered an active substance was one which ‘causes an action, chemical or biological, as an integral part of a causal chain whose objective is to produce a general or specific action’ on a plant.

The Advocate General's reasoning took support from two earlier CJEU decisions. Söll v Tetra (C-420/10, Judgment, EU:C:2012:111) related to the interpretation of Directive 98/8 on the placing of biocidal products on the market, which also contains a definition of active substance. In that case, the CJEU found that a flocculating agent could be an active substance in a biocidal product, as although it did not have a direct harmful effect on the organism itself, it was an integral part of a causal chain in controlling it. Chemische Fabrik Kreussler v Sunstar Deutschland (C-308/11, Judgment, EU:C:2012:548) related to the definition of ‘medicinal product’ in Directive 2001/83 on medicinal products for human use. The CJEU there considered that a substance which does not interact with a human cellular constituent may nonetheless qualify as a medicinal product if it directly or indirectly restores, corrects or modifies human physiological functions.

The CJEU's reasoning follows the rationale of Söll and Chemische Fabrik Kreussler in not requiring a direct relationship between the active substance in question and the effect produced. The Court also relied on its previous decisions concerning the SPC Regulation in which both excipients (Judgment in MIT, C-431/04, EU:C:2006:291) and adjuvants (Order in GSK, C-210/13, EU:C:2013:762) were held not to be entitled to SPC protection on the basis that both were substances ‘with no pharmaceutical effects of [their] own’ and therefore could not satisfy the definition of ‘product’ in the SPC Regulation. These cases are cited by the CJEU in support of its reasoning that a substance with no toxic, phytotoxic or plant protection action could not be considered to be an active substance.

Having set out the test under which a safener may qualify as an active substance, the CJEU then referred the decision on the facts of this specific case back to the national court.

Practical significance

The CJEU's decision does not suggest that medicinal products and plant protection products should be treated differently. While it relied on its decisions in MIT and GSK, no factual comparison between those cases and the present one was undertaken. It is therefore unclear whether this decision marks the start of a divergence between the legal treatment of SPCs for plant protection products and those for medicinal products, or whether it indicates the first step in a shift in direction for the jurisprudence of both systems.

Applying the Bayer decision to SPCs for medicinal products could (with the appropriate facts) potentially open up a wider category of products to SPC protection. In the case of adjuvants in particular, following the reasoning of the CJEU, it could be argued that if the adjuvant has an effect on the effectiveness or tolerability (or other qualities) of the active substance, then it should qualify as a ‘product’ under the SPC Regulation.

The CJEU will have an opportunity to consider the question of adjuvants again in Forsgren (C-631/13, a reference lodged on 2 December 2013). In this case, the adjuvant is a protein carrier molecule which is covalently bonded to various pneumococcal polysaccharides in a vaccine composition and is said to intensify the effect of those polysaccharides. It is further said to have a therapeutic effect of its own. The CJEU has been asked whether this carrier protein is itself an active ingredient either by virtue of its own therapeutic action or as a result of its intensifying effect on the pneumococcal polysaccharides. If the reasoning in Bayer were followed, this should be enough to qualify it as an active substance—but readers will have to wait for the answer, as no dates in the procedure have yet been set.

Keeping it clean: invalidity of a registered Community design based on likelihood of confusion with earlier 3D Community trade mark

Author: Birgit Clark (Baker & McKenzie LLP, London)

Case T-55/12 Su-Chen v OHIM—AM Denmark (Dispositif de nettoyage), General Court of the European Union, 25 April 2013

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpt249, first published online: January 9, 2014

The General Court of the European Union confirmed the invalidity of a registered Community design for a cleaning device based on a likelihood of confusion with an earlier 3D Community trade mark covering ‘equipment and containers for cleaning’ in Nice Class 21.

Legal context

Article 25(1)(e) of the Community Design Regulation (CDR) stipulates that

a Community design may be declared invalid if a distinctive sign is used in a subsequent design, and Community law or the law of the Member State governing that sign confers on the right holder of the sign the right to prohibit such use.

Article 9(1)(b) of the Community Trade Mark Regulation (CTMR) provides that the proprietor of a Community trade mark (CTM) shall be entitled to prevent all third parties not having his consent from using in the course of trade: any sign where, because of its identity with or similarity to the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark.

Facts

The applicant in the invalidity proceedings argued that a third party's registered Community design (RCD) for a part of a cleaning device should be declared invalid since it infringed the applicant's earlier 3D CTM, inter alia, registered for ‘equipment and containers for cleaning, including sponges, brushes, wipes, dusting cloths, mops’ in Nice class 21.

Analysis

The contested design

The applicant based its declaration for invalidity of the RCD on Article 25(1)(e) CDR, claiming a likelihood of confusion between its earlier 3D CTM and the design in the sense of Article 9(1)(b) CTMR. The Office of Harmonization for the Internal Market (OHIM), OHIM's Board of Appeal and the General Court all agreed with the trade mark proprietor.

The earlier 3D
trade mark

On further appeal, the General Court confirmed the invalidity of the contested RCD based on a likelihood of confusion with the applicant's earlier 3D Community trade mark.  In its decision, the General Court confirmed that OHIM was correct when it considered ‘that the earlier mark was used in the contested design’ despite the obvious differences between the shapes. In particular, the court explained what was meant by ‘use’ in the sense of Article 25(1) (e) CDR, which does not necessarily presuppose a full and detailed reproduction of an earlier distinctive sign in a subsequent Community design. Even if the contested Community design lacks certain features of the sign in question or has different, additional features, there may be ‘use’ of that sign, particularly where the omitted or added features are of secondary importance (para 23).
This is particularly so since

the public retains only an imperfect memory of the marks registered in the Member States or of Community marks.

The judges therefore concluded that OHIM's finding

… that the geometric form and dimensions of the earlier mark and of the contested design are highly similar and identical in part must be approved.

Further, while the contested design had certain differences and additions when compared with the earlier 3D trade mark, the judges found that these were

limited to a transparent cap, a transparent bottom part on both sides of the main body, and a thin plastic cover placed around the sponge. OHIM rightly notes that, in view of their secondary importance, those additions and differences cannot dominate the impression left by the contested design (para 27).

Given that both shapes were similar (in the words of the court: ‘compact rectangular body rounded at the edges which houses a spray device and a cylindrical sponge’) was enough to show ‘use’ in the sense of Article 25(1)(e) CDR and ‘trade mark type’ similarity under Article 9(1)(b) CTMR. The court stressed that the ‘cleaning devices’ in which the contested designs were intended to be incorporated are included in the list of class 21 goods for which the earlier mark was registered, and that they were therefore identical to those covered by the earlier mark in the sense of Article 9(1)(b) CTMR.

As regards the relevant consumer, the judges held that the goods concerned are everyday consumer items directed at the general public and that the relevant consumer was the average consumer throughout the European Union, who is deemed to be reasonably well-informed and reasonably observant and circumspect. As regards the visual comparison of the earlier mark and the contested design, the court took the view that it was ‘apparent’ that the geometric form, dimensions and shape of the earlier mark and the contested design are highly similar and identical in part, and that any small differences did not alter its overall shape, even though the earlier 3D mark only possessed a minimum degree of overall distinctiveness.

On balance, the General Court decided that the shape of RCD was sufficiently unusual compared to the norms of the sector and sufficiently striking for it to be capable of fulfilling the essential function of a trade mark (here, cleaning products). The judges also emphasized that the owner of the RCD

claimed without success that the minimum degree of distinctive character which OHIM conceded to the earlier mark derives exclusively from the word element ‘am’ and that the assessment of the similarity can be carried out solely on the basis of that word element. It stands to reason that the word element, the negligible character of which was demonstrated …, cannot of itself dominate the image of the earlier mark which the relevant public keeps in min (paras 55, 52).

In conclusion, the judges found that there was likelihood of confusion as required by Article 9(1)(b) CTMR.

Practical significance

There has been a recent upsurge of General Court cases relating to a conflict between trade marks and designs, for example Beifa Group v OHIM—Schwan-Stabilo Schwanhäußer (Instrument d'écriture) (Cases T-148/08 [2010] ECR II-01681 of 12 May 2010 and T-608/11 of 27 June 2013) and Danuta Budziewska v OHIM/Puma SE (Case T-666/11 of 7 November 2013) relating to an infringement of Article 6(1)(b) CDR.

However, Su-Chen appears to be one of a few cases so far in which the General Court has declared a registered design invalid due to a likelihood of confusion with an earlier (3D) trade mark applying the same criteria as one would in a ‘pure’ trade mark cases. Moreover, and somewhat remarkably, the General Court in Su-Chen puts the burden of proof as to whether consumers perceive the shape as a trade indication in a trade mark sense on the defendant, rather than on the trade mark owner claimant (paras 54, 60). The old practice of filing a shape mark together with another element (here the word element am) to avoid a distinctiveness objection has also received some unexpected backing. The General Court only compared the shapes of the RCD and the 3D CTM, finding, in essence, that the word element ‘am’ incorporated in the earlier 3D trade mark would more or less be ignored by the relevant consumers.

While the recent line of General Court decisions concerning conflicts between designs and trade marks may alert trade mark owners to the possibility of supplementing their trade mark portfolio with RCD design registrations, the General Court's decision in this case should certainly boost the practice of adding ‘little bits and pieces’ to an otherwise perhaps slightly bland shape to render it registrable as a trade mark.

More on decision-taking and legal formalism at OHIM

"Hmm. If those  marks don't
look similar, why does the law
say they are?"

On Sunday this weblog announced the availability to JIPLP's online subscribers of a controversial and stimulating article by Rhys Morgan, "Ensuring greater legal certainty in OHIM decision-taking by abandoning legal formalism".

This article has already generated a great deal of interest.  To facilitate public debate, JIPLP's publishers Oxford University Press have kindly agreed to place it on open access.

You can read this article in full by clicking here.

Decision-taking and legal formalism at OHIM

The Journal of Intellectual Property Law and Practice (JIPLP) strives to bring before its readers a selection of articles that address a broad range of IP topics over the course of time in a manner that is topical, practical and, where possible, of more than transient interest. All of the journal's articles are peer-reviewed. Having set for ourselves an ambitious targets in terms of quality, relevance and reader-accessibility, we have worked hard first to achieve and then to maintain the standard to which we aspire.

While we have confidence in all our articles, ever so often we receive a submission that appears to us to be exception.  One such piece is "Ensuring greater legal certainty in OHIM decision-taking by abandoning legal formalism", by Rhys Morgan. This article, which has been available to online subscribers since last Friday, is a good deal longer than the typical JIPLP piece, but we felt that the depth of legal analysis and the power of the author's writing fully justified its publication in full.

Here is the abstract:

"The President of OHIM has made legal certainty a priority, but he has inherited a legal practice based on legal formalism, which is characterized by rigidity, lack of sophistication, and unpredictability, and this article argues that legal formalism is an inappropriate way of resolving trade mark issues since it is founded on the erroneous premise that all legal issues can be reduced to objectively identifiable, measurable factors which obey certain rules.

Decisions which ought to be based on trade mark law and an understanding of the broader issues of free and fair competition are instead based on letter-counting, ‘measurements’ of distinctiveness, and doubtful platitudes posing as empirical statements. Legal formalism, or ‘mechanical reasoning’, was adopted by OHIM a decade ago to meet the needs of a short-term business plan, since it offered the promise of ‘automated’ quick decisions. But legal certainty and intellectual rigour have suffered ever since. By way of illustration, the article focuses on OHIM opposition decisions and highlights a number of problems, including the lack of predictability of decisions, a lack of clarity regarding what the trade mark owner has protection for and how far that protection extends, and the damage being caused to a modern competitive market in which a brand is the trader's most valuable commodity.

The article calls for the abandonment of legal formalism and for OHIM to encourage examiners to apply the law in a realistic way, taking account of the subjective nature of trade marks, as well as competition principles and market realities".

In the Editor's opinion, it is the most detailed and fundamental critique of the mode of applying Community trade mark law that he has yet read.  It is also one of the very most important.  He strongly urges anyone concerned with trade law in Europe -- and anyone imvolved in legal policy -- to read it.

Levies for private copying when blank media are imported: who pays?

Author: Sophie C. van Loon (Attorney-at-law, Kennedy Van der Laan The Netherlands)

Stichting De Thuiskopie v Opus Supplies Deutschland GmbH, Mijndert van der Lee and Hananja van der Lee, Case C-462/09 Court of Justice of the European Union (Third Chamber), 16 June 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr146, first published online: 18 October 2011

European Union Member States have a duty to guarantee that authors receive a fair compensation for private copying. The end user carrying out the copying is the person responsible for paying such fair compensation. However, if it is impossible to ensure recovery of the levy from the end user, national courts must interpret national law in order to allow recovery of that compensation from a debtor acting on a commercial basis.

Legal context

The Dutch Supreme Court referred a case concerning levies for private copying to the European Court of Justice for a preliminary ruling. The case concerned a manufacturer of blank media, Opus Supplies, which supplied customers in the Netherlands from Germany. Although the Dutch Copyright Act obliges the ‘importer’ of blank media to pay a private copying levy, neither the Dutch customers nor Opus Supplies paid such levy in relation to the blank media that the customers bought from Opus Supplies. Dutch courts had ruled that the individual customers might be regarded as ‘importer’. However, the Dutch Supreme Court hesitated as to whether such interpretation would be compliant with Directive 2001/29 (Copyright in the Information Society; ‘InfoSoc’). The reason for this was that, according to the Dutch Supreme Court, such interpretation of the national law would be tantamount to admitting that the levy cannot in fact be recovered, since individual purchasers in practice cannot easily be identified. As a result, the European Court of Justice had to decide on the interpretation of Articles 5(2)(b) and 5(5) of the Directive: the provision establishing the exception for private copying and the provision containing the three-step test.

Facts

Opus GmbH, a German entity managed by a Dutch couple, sold blank media such as CDs and DVDs through the internet. It had customers in various Member States, among which many were in the Netherlands. Before 2003, sales were handled by Dutch entity Opus BV, which paid levies for private copying to Stichting De Thuiskopie, the Dutch foundation responsible for the recovery of private copying levies imposed on blank media. As of 2003, all sales were executed from Germany through websites operated by Opus GmbH. However, customers could still use the website www.opus.nl and place their orders in the Dutch language.

Opus GmbH paid no copyright levies to De Thuiskopie or to its German equivalent. In Germany, no levies are due if the products are not brought into the German market. In the Netherlands, Article 16c of the Dutch Copyright Act states that the ‘importer’ of blank media is responsible for paying the ‘fair compensation’ for private copying that Member States are obliged to recover on the basis of the InfoSoc Directive. In this respect, it is relevant that, when placing an order online, Opus's customers had to accept its general terms and conditions, stating that:

Orders are placed by the customer directly with Opus Supplies Deutschland GmbH in Heinsberg, Germany. … Prices do not include Levy, Auvibel, Thuiskopie, GEMA or other charges. Goods are dispatched by order of the customer via TPG Post or DHL Express and always in the name of the customer. Accordingly, you may be regarded in your own country as the importer … .

The products were subsequently transported to the Netherlands at the customers' own expense and risk.

Opus GmbH clearly took the view that this arrangement would release it from the obligation to pay copyright levies in the Netherlands. Stichting De Thuiskopie, however, thought otherwise, and started summary proceedings in 2005 in order to recover the levies that it believed Opus should pay. According to De Thuiskopie, the sales performed by Opus constituted approximately one-third of the total sale of blank media in the Netherlands, so the amounts involved were considerable.

Analysis

Both in first instance and appeal, the court ruled that Opus was not to be regarded ‘importer’ and therefore was under no obligation to pay levies. However, neither was the consumer: from the legislative history, it appeared that it was not the legislative intent to oblige consumers buying blank media abroad to pay levies. The courts were clearly unhappy with this result. However, this did not change their ruling. Probably the fact that it concerned summary proceedings played a role in this respect.

The Dutch Supreme Court was not pleased with the outcome either, and referred the following questions to the ECJ for a preliminary ruling:

1. Does Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, provide any assistance in determining who should be regarded under national law as owing the ‘fair compensation’ referred to in Article 5(2)(b)? If so, what assistance does it provide?
   
2. In a case of distance selling in which the buyer is established in a different Member State to that of the seller, does Article 5(5) of Directive [2001/29] require national law to be interpreted so broadly that a person owing the ‘fair compensation’ referred to in Article 5(2)(b) of the directive who is acting on a commercial basis owes such compensation in at least one of the Member States involved in the distance selling?

In its answer to the first question, the ECJ established that the InfoSoc Directive does not indicate who should pay the fair compensation, so that Member States enjoy much freedom in this respect (paragraph 23). The ‘fair compensation’ in Article 5(2) of the directive must be regarded as compensation for the harm resulting for the author from the reproduction for private use of his protected work without his authorization. Therefore, the ECJ ruled, the person who performs such reproduction for its private use should be responsible for financing the fair compensation (paragraph 26). Here, the ECJ relied heavily on its recent Padawan judgment (Case C-467/08) where it decided accordingly, and acknowledged that ‘there may be practical difficulties in identifying private users and making them pay compensation to right holders. In those circumstances, it is open to Member States to institute a “private copying levy” payable by persons who have digital reproduction equipment, devices and media and who, on that basis, in law or in fact, make that equipment available to private users or who provide copying services for them’ (Padawan, paragraph 46).

Thus the ECJ's answer to the first question may be summarized as follows: although the consumer in principle is responsible for the payment of the fair compensation, as he is the one bringing the harm to the author involved, the Member States are free to determine that manufacturers of blank media should pay levies. Such manufacturers may then charge the consumer higher prices, so that in the end the consumer still pays for the harm that it has brought authors by making reproductions of their works without their permission.

However, the freedom that Member States enjoy with respect to the decision as to who should pay the levies for private copying is curtailed by the conclusion of the ECJ that the recovery of a fair compensation must be regarded as an obligation to guarantee a certain result (paragraph 34). In its answer to the second question, the ECJ ruled that Member States that have implemented a system whereby manufactures should pay the levy must safeguard actual payment of that levy. If it is impossible to collect that levy with the buyers of the blank media, national courts are obliged to interpret the national law in such a way that a compensation can be recovered from a debtor acting on a commercial basis.

Practical significance

The ECJ has decided that someone should pay one way or another. In this case, this probably means that the Dutch courts will have to consider Opus as the ‘importer’ even though both the factual and legal circumstances may point in a different direction. Shortly after the judgment, Opus has announced that it will no longer sell blank media to Dutch customers.

However, the further practical significance of this case may be limited. Not many consumers still frequently use CDs and DVDs; rather, they make reproductions on USB sticks, hard disks, or even in the cloud, for example by using NPVR (Network Personal Video Recorder) systems. In the Netherlands, manufacturers and providers of such services are not obliged to pay a private copying levy. Therefore, even though De Thuiskopie will probably be pleased with the outcome in this case, it may be facing far greater challenges in the future

European Commission publishes Memorandum of Understanding on the sale of counterfeit goods over the internet

Author: Leigh Smith (McDermott Will & Emery UK LLP)

Memorandum of Understanding on the sale of counterfeit goods over the internet, 4 May 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr139, first published online: September 5, 2011

On 4 May 2011, participants in one of the European Commission's Stakeholder Dialogues signed a non-binding Memorandum of Understanding on the sale of counterfeit goods over the internet, aimed at collaboration between interested parties in the reduction of the sale of counterfeits via e-commerce platforms.


Legal context

Stakeholder Dialogues are used by the European Commission to bring together a representative group of participants in a particular field to discuss the common issues affecting that field. The desired outcome of a Stakeholder Dialogue is to find solutions based on voluntary cooperation within the pre-existing legal framework, thus avoiding the need for legislative reform. The current dialogue, which focuses on the problems of IP rights enforcement, forms part of the wider Digital Agenda for Europe, outlined by the Commission in May 2010.

Facts

The Stakeholder Dialogue comprised a number of meetings in 2009 and 2010, which resulted in the Memorandum of Understanding on the sale of counterfeit goods over the internet (the ‘MoU’). The MoU was signed on 4 May 2011 and was effective from 5 May 2011. The signatories to the MoU include anti-counterfeiting organizations, as well as leading rights holders and trade associations with a vested interest in the field. The majority of the MoU focuses on the relationship between two categories of signatories: ‘rights owners’ and ‘internet platforms’. The latter are defined in the MoU as providers of e-commerce trading services.

The MoU, which is stated to be non-binding, provides that the signatory companies will commit themselves to undertake certain measures to combat counterfeit sales and to collaborate in the fight against the sale of counterfeit goods over the internet, while the signatory trade associations will further promote the MoU among their members. Explicitly excluded from the ambit of the MoU are parallel imports, or so-called grey goods. The MoU includes a moratorium on litigation whereby the signatories state that they are willing to cooperate and assist each other to reduce internet counterfeit sales and agree not to initiate any new litigation against each other concerning matters covered by it.

With regard to mechanisms of enforcement other than litigation, the MoU notes the importance of notice and takedown procedures, describing them as ‘indispensable’ in the fight against the sale of counterfeit goods over the internet. It states that rights owners should have the ability to notify internet platforms of sellers engaged in such sales. Internet platforms agree to take such information into consideration as part of the preventive measures they are required to introduce under the MoU. Internet platforms agree to take appropriate, commercially reasonable, and technically feasible measures to identify and/or prevent the sale of counterfeit goods. However, the MoU is clear that the primary responsibility for enforcement remains with the rights owners. To this end, rights owners agree to take commercially reasonable and available steps to monitor sales on internet platform websites.

Internet platforms commit to adopt, publish, and enforce IPR policies, which should be clearly communicated and indicated on their websites and reflected in the contracts they conclude with their sellers. Further, they commit to disclose, upon request by rights owners, relevant information including the identity and contact details of alleged infringers and their user names insofar as permitted by applicable data protection laws (recognizing that in some Member States a court order may be required). Rights owners commit to making requests for disclosure in good faith and in compliance with data protection laws.

As for repeat infringers, internet platforms commit themselves to implement and enforce deterrent repeat infringer policies, which will include the suspension or restriction of accounts or sellers. Rights owners are to provide information to internet platforms concerning repeat infringers. In return, internet platforms will use their best efforts to prevent re-registration of permanently suspended sellers. All signatories commit to cooperating and assisting law enforcement authorities such as customs and border authorities, where appropriate.

There will be an assessment period of 1 year to review and measure progress. After the assessment period, signatories may extend the MoU indefinitely. The signatories will meet biannually to review the MoU and take further steps if necessary.

Analysis

The European Commission's response to the MoU has been positive, describing the MoU as striking ‘a fair balance between the interests of the parties concerned’ and ‘a good first pragmatic step to strengthen the fight against counterfeiting and piracy on the internet’. Further, ‘The agreement on the MoU demonstrates that voluntary arrangements can, in certain circumstances, provide flexibility to adapt quickly to technological developments and deliver efficient solutions.’

Whether ‘efficient solutions’ are actually delivered will no doubt form the subject of the reviews envisaged by the MoU. Arguably, much of its content reflects the present relationship between rights owners and the internet platforms, especially with regard to notice and takedown procedures. There is already a broad consensus on the importance of notice and takedown procedures. Where disagreement lies, however, and what the MoU carefully avoids, is the more controversial minutiae of these procedures, such as the evidential threshold an internet platform will apply before removing listings or releasing the details of sellers of alleged counterfeit goods. The explicit exclusion of grey goods also avoids a complex area which would have benefited from clarification.

While the European Commission encourages these voluntary arrangements, arguably the better solution in the long term is appropriate legislation to deal with counterfeiting and piracy in the digital age. This could perhaps at least be addressed as part of the review of the Community trade mark regime, when this review is formally set in motion, or the planned review of the IP Enforcement Regulations, scheduled for 2012.

Practical significance

As the MoU is non-binding and signed by only a small portion of the participants in the market, the practical significance of the MoU is likely to be limited. It is more of a symbolic gesture, which through its reviews may lead to something more concrete, whether a binding agreement or by influencing the European Commission's legislative policy.

In the meantime, signatories should ensure that their actions are aligned with the wording and spirit of the MoU. Although it explicitly states that it does not create any binding obligations on the signatories, a signatory can request that the European Commission call a plenary meeting of the signatories if it believes that another signatory is ‘not respecting the principles’ established by the MoU. The European Commission can then request that the signatory withdraws from the MoU, although it does not appear that the signatory would in fact have any obligation to do so.

Non-signatories affected by the contents of the MoU should consider whether, as a first step, they are willing to adopt the contents of the MoU as best practice in their enforcement activities. As the MoU is open to additional signatories, non-signatories may wish to consider signing both to be seen to be aiming for the higher standards envisaged by the MoU and to have the opportunity to shape the approach to IP enforcement online in the future.

Is comparison of the non-verifiable misleading comparative advertising?

Author: Shalini Bengani

Lidl SNC v Vierzon Distribution SA, Case C-159/09 Court of Justice of the European Union (Fourth Chamber), 18 November 2010

Journal of Intellectual Property Law & Practice, first published online February 11, 2011

This judgment will cause consternation to companies embarking on comparative advertising in Europe as the Court has raised the bar for verifiability, holding that the description of competing products should be sufficiently clear to enable consumers to identify them in order to test the accuracy of the prices shown in the advertisement.

Legal context

This ruling deals with the interpretation of Article 3a of Council Directive 84/450/EEC on Misleading and Comparative Advertising as amended by Directive 97/55/EC.

Facts

The two supermarkets battling it out in this case are Lidl and Vierzon Distribution (which sells everyday consumer goods under the name ‘Leclerc’). The battleground was an advertisement circulated by the latter in 2006 which reproduced till receipts listing, by means of general descriptions, accompanied by their weight or volume, 34 products, in the main foodstuffs, purchased from Vierzon and Lidl respectively. It compared a total cost of EUR 46.30 for Vierzon products as against EUR 51.40 for those of Lidl. It also included the slogans ‘Not everybody can be E. Leclerc! Low prices – And the proof is E. Leclerc is still the cheapest’ and ‘In English, they say “hard discount” – in French they say “E. Leclerc”.’

In 2007 Lidl brought an action before the Bourges Commercial Court seeking damages on the ground of unfair competition and publication of extracts from this judgment in the press and on posters in its store. It contended that the advertisement deceived and/or misled consumers on three counts:

* Reproduction alone of till receipts showing the list of the products compared did not enable consumers to perceive the specific characteristics of those products or understand the reasons for the differences in prices since the advertisement was based on a selection of a limited number of foodstuffs marketed by Lidl and Vierzon which were identified by generic names.

* Vierzon selected only products which placed it in an advantageous position after aligning its prices with those of Lidl.

* The products were not comparable, since their qualitative and quantitative differences meant that they did not meet the same needs.

The Bourges Commercial Court decided to stay the proceedings and refer the following question to the Court of Justice for a preliminary ruling:

Is Article 3a of Directive 84/450 to be interpreted as meaning that it is unlawful to engage in comparative advertising on the basis of the price of products meeting the same needs or intended for the same purpose, that is to say, products which are sufficiently interchangeable, on the sole ground that, in regard to food products, the extent to which consumers would like to eat those products or, in any case, the pleasure of consuming them, is completely different according to the conditions and the place of production, the ingredients used and the experience of the producer?

Analysis

Referring to its recent L'Oréal v Bellure judgment, the Court reiterated that the purpose of the various conditions listed in Article 3a(1) is to achieve a balance between the different interests which may be affected by allowing comparative advertising. It is apparent from a reading of Recitals 2, 7 and 9 in the preamble to Directive 97/55 that the aim of Article 3a is to stimulate competition between suppliers of goods and services to the consumer's advantage, by allowing competitors to highlight objectively the merits of various comparable products, while prohibiting practices which may distort competition, be detrimental to competitors and have an adverse effect on consumer choice.

Thereafter, the court drew up a taxonomy of the different subsections of this Article, interpretation of which were critical for this case.

Article 3a(1)(b)

While elaborating on Article 3a(1)(b), the court relied on Lidl Belgium and De Landtsheer Emmanuel (ie cases relating to food products) and held that the goods being compared must display a sufficient degree of interchangeability. Further, Recital 9 in the preamble lends credence to the fact that only comparisons between ‘competing’ goods meeting the same needs or intended for the same purpose should be permitted. The Court added that the rationale for this Article is to be found under Article 2(2a) in the identification of a ‘competitor’ of the advertiser or of the goods which it offers and the affirmation that whether undertakings are competing undertakings depends on the substitutable nature of the goods. However, the court cautioned that an individual and specific assessment of the products is necessary and this falls within the jurisdiction of the national courts. The Court of Justice expressed its inability to do so as the national Court had not provided the Court with any information allowing the precise identification of those products and of their specific characteristics or, a fortiori, referred any question of interpretation relating to such specific data.

Article 3a(1)(a)

Citing heavily from Lidl Belgium, the Court held that it is for the national courts to ascertain whether the advertisement may be misleading by taking into account the perception of an average consumer of the products who is reasonably well informed, observant and circumspect, as the impugned advertisement was not addressed to a specialist public but to end consumers who purchase their basic consumables in a chain of stores.

Expounding further, the Court held that an advertisement could first be misleading, if the national Court were to find that the decision to buy on the part of a significant number of consumers may be made in the mistaken belief that the selection of goods made by the advertiser is representative of the general level of his prices as compared with those charged by his competitor and that they will therefore make savings of the kind claimed by the advertisement by buying their goods from the advertiser rather than from the competitor, or in the mistaken belief that all of the advertiser's products are cheaper than those of his competitor.

Second, if it is found that, for the purposes of the price based comparison in the advertisement, food products were selected which are in fact objectively different and the differences are capable of significantly affecting the buyer's choice. If such differences are not disclosed, such advertising, may be perceived by the average consumer as claiming, by implication, that the other characteristics of the products in question, which may also have a significant effect on the choices made by such a consumer, are equivalent. The Court has already held that, where the brand name of the products may significantly affect the buyer's choice and the comparison concerns rival products whose respective brand names differ considerably, omission of the better-known brand name goes against Article 3a(1)(a). The same may be true, with regard to other features of the products compared, such as their composition or the method or place of production, where it is apparent that such features may, by their nature, have a significant effect on the buyer's choice. In such cases the consumer may be under the impression that he will obtain an economic advantage because of the competitive nature of the advertiser's offer and not because of objective differences between the products being compared.

Article 3a(1)(c)

The Court stated that it is for the national Court to verify whether the description of the products compared, is sufficiently clear to enable the consumer to identify the products so as to check the accuracy of the prices shown in the advertisement. That objective would be thwarted if the stores referred to in the advertisement marketed a number of food products which might tally with the descriptions given on the till receipts reproduced on that advertisement, so that it is not possible to identify precisely the goods thus compared.

Practical significance

This was a much awaited decision of this Court, which had received so much flak for its earlier judgment of L'Oréal v Bellure on the issue of comparative advertising. However, this case yet again makes it difficult for companies to comparatively advertise while being on the right side of law. Although at one end, the court's ambition is to promote an interpretation in favour of the promotion of comparative advertising, its hair-splitting interpretation (raising the condition of verifiability) serves little purpose because the till receipts usually have an itemized description of the store's products. In my opinion, the courts should either be a little indulgent in cases such as this or develop a range of legal standards that can be applied to lend greater certainty for companies indulging in comparative advertising. Until then, companies across the European Community should either aim at giving the consumers the unvarnished truth while comparatively advertising or tumble into the litigation abyss.

The dark side of GIs: protection for ‘Palomar’ hides behind ‘Valencia’

Author: Miguel Angel Medina González (Elzaburu, Madrid)

Abadía Retuerta, S.A. v OHIM, General Court of the European Union (Third Chamber), Case T-237/08, 11 May 2010

Citation: Journal of Intellectual Property Law & Practice, doi:10.1093/jiplp/jpq107

The General Court confirms the decision in which OHIM rejected a Community trade mark (CTM) application for CUVÉE PALOMAR for wines, for conflicting with the legal protection of the registered designation of origin (RDO) ‘Valencia’ for wines, which extends itself to the locality ‘El Palomar’ in the area covered by that RDO.


Legal context

The case deals with three different levels of protection of geographical indications (GIs): international, Community and national.

Community and National levels are the most relevant, as the International level concerns the TRIPs Agreement, the applicability of which is assured by means of the Community legislation, which has been amended to comply with it.

At Community level two Regulations were considered. The first is Council Regulation 40/94 (now 207/2009) on the Community trade mark, art. 7(1)(j), prohibiting registration of CTMs for wines which contain or consist of a geographical indication identifying wines with respect to such wines not having that origin. The second is Council Regulation 1493/1999 on the common organisation of the market in wine, arts 47 (2)(e), 50(1) and (2), 52 (1) and 54. The latter regulation establishes that, if a Member State uses the name of a specified region to designate a quality wine produced in specified regions (‘quality wine psr’), that name may not be used to designate products of the wine sector not produced in that region and/or products not designated by the name in accordance with the provisions of the relevant Community and national rules. Article 54 states that Member States shall forward to the Commission the list of quality wines psr which they have recognised, stating, for each of these quality wines psr, details of the national provisions governing the production and manufacture of those quality wines psr, being this list published in the Official Journal.

Finally at national level, there is a new regulation on the RDO ‘Valencia’, ratified by Ministerial Order of 2000, arts 2(1) and (2), and the version amended by Ministerial Order APA/1815/2002 of 2002, Article 4(1). Article 2 provides that the protection of the RDO ‘Valencia’ covers the expression ‘Valencia’ and all names of the sub-regions, districts, local administrative areas, localities and estates which comprise the production and ageing areas referred to in Article 4. It also prohibits the use for other wines of the names, marks, words, expressions and signs which may, by their phonetic or graphical similarity with those protected by the RDO, be confused with those wines. Article 4 expressly mentions ‘El Palomar’.

Facts

The CTM application for CUVÉE PALOMAR was filed in 2006. The OHIM rejected it on the basis of art. 7(1)(j) CTM regulation 40/94. The applicant's appeal was rejected by the Board of Appeal, which stressed that the prohibition on registering such a term is absolute and unconditional, since it is not subject to the condition of causing deception as to the place of origin. The Board stressed the fact that ‘El Palomar’ constitutes an area of production protected by the RDO ‘Valencia’, which can create confusion with the expression ‘Palomar’ in the trade mark applied for, as the goods do not have their origin in that locality. The restriction of the description to ‘wines from an estate known as Pago Palomar, situated in the local administrative area of Sardón de Duero (Valladolid, Spain)’ does not overcome the objection. Neither did the fact that the applicant owned very similar trade marks which included the expression PALOMAR.

The applicant appealed to the General Court, putting forward a single plea in support of its appeal, in essence, that art. 7(1)(j) must be construed in a restrictive manner.

Analysis

After some linguistic lucubration, the Court made a careful and detailed analysis of the regulation of geographical designations of the wines applicable to the case.

The Court considered that the concept of geographical indications identifying wines for this purpose must be read in the light of the relevant provision of Community Law (Regulation 1493/1999), according to which it is for the Member States to determine, for their respective territories, the geographical indications which are intended to be protected, which leads us to the New Regulation on the RDO ‘Valencia’.

As a result, the Court concluded that ‘the name el Palomar is a geographical indication for a quality wine psr’ and ‘therefore constitutes a geographical indication within the meaning of art. 7(1)(j) of Regulation 40/94’. The fact that the name ‘El Palomar’ is not expressly mentioned in the list of quality wines psr published in the EC Official Journal is not relevant, since those lists are published in the Journal's C Series for information purposes while the regulation governing the RDO was published in the national (Spanish) Official Journal, which is what was decisive.

The only obligation for Member States was to forward the list of quality wines psr which they recognised to the Commission and to state, for each of them, details of the governing national provisions for publication by the Commission.

Even if the trade mark applied for has several meanings or does not exactly match the expression ‘El Palomar’, this does not rule out the application of art. 7(1)(j). It would only be otherwise if the geographical indication consisted of a name of a place containing an article which is inseparable from that name and which gives that name its own, autonomous meaning.

Practical significance

Like the Moon, the land protected by geographical indications down on planet Earth may also have a dark side, at least in legal terms. This could be a possible view of what has been ‘disclosed’ by the decision analysed here. Possibly its main significance is to call our attention to the dangers faced by trade mark owners and all those who intervene in the market if clear regulations on GIs are not adopted. Two questions stand out:

Protection of what could be called ‘hidden names’ or ‘hidden GIs’ (those protected names which have not been published in the lists of quality wines psr, but which are considered as such)
Their protection derives from national regulation (eg a Spanish Ministerial Order) which regulates a specific and different designation of origin (here the RDO ‘Valencia’), which is considered to give legal cover to those other designations (eg Palomar) which are not expressly published in the EU's Official Journal. These ‘hidden names’ do not necessarily bear any resemblance to the designation of origin published in the Official Journal. Likewise the national regulation is also not published at the Community level (nor evidently, are there any official translations to other languages), there being only a reference to it.

The interpretation of the Court seriously weakens legal certainty in the market. The Court itself stated that, although the publication by the Commission complies with EU law, it ‘hardly seems effective to ensure that the public is fully and completely informed’ as to the name of the local administrative areas which benefit from an indication of origin. If this decision becomes final, it would confirm that entrepreneurs could be unexpectedly infringing geographical indications by using or applying for signs which consist of names which do not have any similarity to a designation of origin, but only with any of those ‘hidden names’. On the other hand, it would be unsurprising to find ‘hidden names’ protected under certain RDOs which conflict with each other.

Protection as GIs of expressions which have several meanings (polysemy)

These expressions are likely to be found frequently, even in cases where the names are common or might even be related in some manner to specific products or to the place where such goods are usually produced independently of the specific geographical name. Palomar is a common name (‘dovecote’) and is likely to be found as part of other villages' names. The Court's ruling that the protection of GIs is absolute in these cases can lead to conflict.

Now that new EU regulations for wine have been adopted, under which new wine GIs will be registered through a Community procedure, it is to be expected that the Commission takes measures to ensure that there is sufficient publicity for all the protected names so that interested parties have the opportunity to oppose and be aware of the existence of all the names which are going to be protected in order to avoid facing a possible infringement claim.

This also means that extreme care is called for when carrying out clearance searches for signs for wines.

Finally, art. 2(1) of the regulation of the RDO ‘Valencia’ was amended on 20 April 2010 to state that the protection extends itself to the expression ‘Valencia’, but it does not expressly state that it is extended to other names, as it did before. Let us see whether this deters the appellant from appealing this decision to the Court of Justice.

The enemy within?

Here's the editorial for the April 2010 issue of JIPLP.

"The enemy within?"

From the outside and at a respectable distance, the economically intercommunicating territories of Europe look remarkably solid. Though the euro has not yet penetrated the entirety of the continent from which it takes its name, it is the official currency in 16 of the European Union's 27 Member States and is accepted de facto in most shops and markets throughout the rest. Common rules govern many aspects of daily European life and the impression is received that the path to European integration is open to traffic in one direction only. Fortress Europe from without, Eurovision Song Contest from within, a shared culture and a shared future look assured.

The IP community knows this is not an accurate depiction of reality. Linguistic diversity means that a single trade mark is inappropriate for all countries. It also now seems that the body that grants the single Community trade mark (CTM) is itself something of a hate-object for the national (in the case of Benelux, regional) trade mark granting offices. The success of the CTM system has it seems brought about a hostile reaction from its localized and geographically limited forebears.

That the Office for Harmonisation in the Internal Market (OHIM), which administers the CTM system, wishes to refund more than 300 million euros of excessive fees is a matter that has caused deep irritation among some national offices. Concern has been expressed that the popularity of the CTM with its users is the death-knell of national systems and that any overpaid fees should be deployed by way of subsidy so that the latter may remain viable. There is also resentment at the manner in which OHIM seeks to assert its pro-Community line in the face of opposition from the representatives of national offices who sit on its controlling committees. Like Gulliver in the hands of the Lilliputians, OHIM is constrained by whose individual strength is weak but whose collective position of power remains unassailable. If national offices can force OHIM to keep its fees high and to channel any residue towards their needs, the CTM system can be brought to its knees.

A further attack on the system has come from the position taken by the Benelux and Hungarian Offices that, for the purposes of ascertaining whether a CTM relied on in local opposition proceedings has been the subject of ‘genuine use’, use of a CTM in a single Member State of the European Union cannot be regarded as ‘genuine’. While this proposition is, I believe, wrong in law, it is at least a proposition which can be seriously argued and for which some support can be found. What is significant is not the fact that the issue of whether ‘genuine use’ of a CTM must involve a plurality of Member States has been raised; it was a question waiting to be asked and which, surprisingly, was left open by the legislators when the foundations of modern European trade mark were dug. The significance lies in the fact that the question is being asked now, the best part of 20 years since the Community system was concretized.

In the long term, the outcome of these little spats over the autonomy of national registries and the status of CTM use is assured. OHIM will eventually be governed centrally, from Brussels, and use of a CTM will be ‘genuine’ even if it is only in one Member State, so long as it conforms to the other criteria of use to which any mark is subject. The reason why these outcomes will prevail is that they are the only outcomes that are politically acceptable in a Europe which continues to grow closer, a Europe which is pressing for a Unified Patent Litigation System and which—love it or loathe it—will soon have one. So are national offices, and the national interests that cause them to raise their heads above the parapet, the enemy within? I think not. They may win some battles but they will lose the wars. Before they do so, however, they will have brought about at least one beneficial result: they will have forced their opponents to articulate their pan-Europeanism in terms which are more precise, more persuasive, and more complete than the hotchpotch of statements, recommendations, travaux, and decisions from which we must now seek to glean the pan-Europeanists' intentions.

Crystal-clear ruling in border measures reference

Author: Marius Schneider (Eeman & Partners, Attorneys-at-law, Brussels; co-author of Border Measures)

Citation: Journal of Intellectual Property Law & Practice 2009 4(11):782-784; doi:10.1093/jiplp/jpp151

Zino Davidoff SA v Bundesfinanzdirektion Südost (Case C-302/08) European Court of Justice, 2 July 2009

The holder of an internationally registered trade mark designating the European Community is entitled to file a ‘Community’ application for customs action under Article 5(4) of Regulation (EC) 1383/2003 of 22 July 2003, just like the proprietor of a Community trade mark.

Legal Context

The European Union's ‘border measures’ Regulation 1383/2003 empowers the customs authorities of the EU Member States to retain goods suspected of infringing certain IP rights in order to enable the right-holder, within a fixed term, to initiate proceedings to determine whether an IP right has been infringed or to settle the matter under the simplified procedure. The filing of an application for action with customs by the right-holder is a cornerstone of the system of border measures, since this application contains important information and a detailed description of the authentic as well as the infringing goods that facilitate their recognition and identification by the customs authorities.

Since the filing and annual renewal of national applications for action throughout the 27 Member States can be burdensome, right-holders often prefer to take advantage of the possibility to file a ‘Community’ application for action under Article 5(4) of the Regulation. A Community application for action is a single application for action designating several Member States. Only the owners of a ‘Community IP right’—a Community trade mark, a Community design right, a Community plant variety right, a designation of origin, geographical indication, or geographical designation protected by the Community—may file such a Community application for action.

Facts

Davidoff lodged a Community application for action with the competent German customs department, the Bundesfinanzdirektion Südost, on the basis of several internationally registered trade marks designating the Community. That application was dismissed on the grounds that Article 5(4) of the Regulation concerns only ‘the right-holder of a Community trade mark’ and that that the Border Measures Regulation was not amended by Community legislation despite the Community's accession to the Protocol relating to the Madrid Agreement concerning the international registration of marks of 27 June 1989 (the ‘Madrid Protocol’).
Davidoff appealed to the Finanzgericht München, which took the view that, by its very wording, Article 5(4) of the Regulation also applied to the right-holder of an internationally registered trade mark designating the Community, since such a trade mark is treated as a Community trade mark with regard to its effects in the Community. Nevertheless, the Finanzgericht München decided to stay the proceedings and to seek clarification from the European Court of Justice (ECJ).

Analysis

The ECJ manifestly thought the case was crystal-clear, since it did not only decide to proceed with the ruling without the need for an Opinion of the Advocate General but also handed down a very short judgment of merely 27 paragraphs. The fact that all parties, namely the referring court, Davidoff as the applicant in the main proceedings, all Member States submitting observations, and the EU Commission, agreed on the answer to be given to the question referred probably encouraged the Court to be concise.

At the outset, the Court noted that Regulation 1383/2003 was adopted before the accession of the Community to the Madrid Protocol, its accession date being 1 October 2004.

The ECJ then emphasized that Article 151(2) of Regulation 207/2009 of 26 February 2009 on the Community trade mark (codified version OJ 2009 L 78 p 1), which provides that

‘if no refusal has been notified ... or if any such refusal has been withdrawn, the international registration of a mark designating the European Community shall ... have the same effect as the registration of a mark as a Community trade mark',

meant to treat, as far as the practical effects are concerned, internationally registered marks as Community trade marks.

The Court concluded that, following this assimilation into Community trade marks of internationally registered trade marks, it must necessarily be accepted that, by acceding to the Madrid Protocol, the Community legislature intended to allow the right-holders of internationally registered Community trade marks to file a Community application for customs action under Article 5(4) of the border measures Regulation.

Practical Significance

Although one may regret the fact that the operative part of the ECJ's judgment does not specifically provide that the owners of internationally registered trade marks designating the Community may lodge Community applications for action like right-holders of a Community trade mark and even though the decision contains a few typos, the judgment is to be approved.

The owners of internationally registered trade marks—and by analogy also designs—designating the Community may file Community applications for action with customs. They thus enjoy the main advantage of the Community application for border seizure which is, certainly in comparison to the handling of 27 national applications, a simplified exercise in management:

Only one Community application for action need to be filed with one of the competent customs departments in any Member State. Once granted in the first Member State, the decision is addressed by the customs department which took the decision to the other Member States designated in the application for action.

The Community application for action has a uniform expiry date, as the period during which the customs authorities are to take action on the basis of the application shall be set at 1 year, and can be renewed under a simplified renewal procedure with a single renewal request.

The right-holder may, as long as the Community application for action remains valid, in the Member State where the application was originally lodged, enter a request for action to be taken in another Member State not previously mentioned. In such a case, the period of validity of the new application will be the period remaining under the original application, and it may be renewed in accordance with the conditions applying to the original application.

The decision represents progress in reducing administrative hurdles for IP right-holders in the everlasting battle against counterfeiting and piracy and, although the case appeared crystal-clear from the outset, the clarification is welcome.

The author's correspondence email address is here