Beware of using photographs of Italian (cultural) beauties!

Italy is worldwide famous for its unique cultural heritage. Not surprisingly, Italian laws have been enacted in the years to regulate its exploitation, management and enjoyment by the public. The main law currently governing this subject matter is Legislative Decree no. 42/2004, setting the rules applicable for the protection and development of the Italian heritage.

It is such Decree that establishes the rules to follow to reproduce an asset eligible for protection as cultural heritage. According to article 107 of the Decree, “the Ministry of Cultural Heritage and the other public entities having rights on a cultural asset may authorize its reproduction and use, save […] for the provisions on copyright“. Article 108 identifies the rules applicable to calculate the amount of the fees to be paid for said reproduction, stating that “the concession fees and the consideration related to the reproduction of cultural assets shall be determined by the entity having right on the same asset, taking into account: a) the type of activity for which the concession is granted; b) the means and ways used to carry out the reproduction; c) the type and time of use of both the location and assets; d) the intended use of the reproduction and the economic benefits for the applicant“. No fee is due in case of reproductions made by individuals for personal use or for the purpose of study nor by private entities for cultural heritage development purposes, as long as the reproduction is carried out not for profit. The concession fees for each type of use are set by Ministerial Decree of 8 April 1994, without prejudice to the right of each entity or other administrative bodies to provide for different concession fees.

Although these rules have been set out years ago, almost no case law have dealt with unauthorized reproductions of the Italian heritage so far (and – we believe – not because of lack of violations but, most likely, for lack of interest in enforcing such rights). Overcoming such trend, two recent Italian decisions addressed the issue of commercially exploiting a cultural asset without having obtained the previous authorization from the entity in charge and, thus, without having paid the concession fee. More precisely, they determined the rules to follow when using photographs reproducing an asset which is eligible for protection under the Decree and, in particular, a work of art kept within a museum, and thus accessible only upon purchase of the ticket entrance, and one which is part of the city landscape and thus visible by anyone without restrictions.

  1. The first decision concerns the worldwide famous statue of David by Michelangelo. The statue is kept within the Uffizi Galleries in Florence, which are thus, according to the Decree, the legal entity having rights on the statue.

David

Uffizi Galleries sued a travel agency that was using on its promotional materials – including its brochures and website – photographs of the David and of the same Uffizi Galleries. According to Uffizi such uses constituted a violation of articles 107 and 108 of the Decree on the basis that (i) the statue was eligible for protection under the Decree, (ii) the use of an image embodying David shall be considered a reproduction under the Decree, (iii) such reproduction had never been authorized by Uffizi Galleries and (iv) no consideration was paid by the travel agency. The Court of Florence upheld Uffizi Galleries’ arguments and declared that the promotional use of the image representing the David made by the travel agency was unlawful under the Decree, granting an injunction to use the image of David in Italy and in Europe and ordering the immediate withdrawal from the market and destruction of any material embodying such image (see decision here).

It is worth noticing that the injunction granted to the Uffizi Gallery is not limited to the Italian territory but encompasses the whole Europe. The enforceability of the decision at stake outside Italy, however, is not immediate and triggers a number of doubts. The absence of supranational and international regulations applicable to the world cultural heritage excludes the possibility to automatically apply the decision abroad. Also, it is uncertain whether Regulation no 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments would be deemed applicable to this type of decisions as it applies only to civil and commercial matters, while administrative matters are expressly excluded. It seems odd that, in a field as international as culture, there are no instruments to effectively and easily stop the unlawful reproduction of an Italian cultural asset carried in a foreign country, with which Italy has not entered into a specific international agreement prohibiting such reproduction, unless a cross-border decision recognizable in such a State is granted.

2. The above legal framework is somehow complicated when the cultural asset is located in an open-air space. Any control of third parties reproductions is complex, not to say impossible. This is the case of the Teatro Massimo of Palermo, the biggest opera house in Italy, designed by the Italian architect Giovan Battista Filippo Basile at the end of the XIX century and reputed for its peculiar architecture and acoustic.

Teatro Massimo

Again, the Court of Palermo upheld the arguments of the Teatro Massimo Foundation that sued a bank for having used an image reproducing the theater palace (seen from outside, as in the picture above and decision here) in an advertising campaign on billboards and boards on the basis of articles 107 and 108 of the Decree. The bank questioned any violation of the Decree, stating that no rights can be claimed on reproductions of the outside architecture of a cultural asset which is part of the city landscape, that shall be considered in public domain as visible by anyone.

In such a scenario, the freedom of panorama doctrine comes into play. As known, its role is very different in the various jurisdictions. As far as Italy is concerned, the freedom of panorama is not recognized. Italian copyright law does not provide a specific exemption in this respect. Similarly, the Decree does not distinguish cultural heritage which is part of the Italian landscape from assets kept within closed areas, accessible only upon certain conditions. The Decree applies to both, as reiterated by the Ministry of Cultural Heritage in the interrogation available here.

Truth is that the application of the above rules leave room for many doubts: from the definition of “reproduction” to the limits to the entity’s discretion. That said, the above decisions seem to ring a bell to all entities having rights on Italian cultural heritage: Italian Courts could be favorable to recognize the right to concession fees in case of commercial reproductions, wherever made and independently from the type of asset concerned. This could be connected to the fact that concession fees appear to be aimed at granting an income to the entity having rights on the cultural asset, so to support its development, an ambition that is clearly stated in the Decree. Moreover, one of the Decree goals seems to be ensuring to the entities having rights a sort of control over third parties reproductions of the cultural asset, through the pre-authorization process. In this way, the entity may deny the authorization in case of uses that might result detrimental to the protection and development of the cultural heritage, as conceived by the single entity having rights.

Maria Luigia Franceschelli

Court of Florence, 26 October 2017, case No. 13758/2017 and Court of Palermo, 21 September 2017, case No. 4901/2017

 

Two recent decisions on selective distribution and infringement of luxury trademarks from the Court of Milan

The Court of Milan issued two recent decisions in similar cases of selective distribution of cosmetic products bearing luxury trademarks, finding in both cases trademark infringement for the sale of products by unauthorized distributors.

1. The l’Oreal case

Facts

In the first decision (Italian text here), the case concerned an urgent action brought by l’Oreal Italia and Helena Rubinstein Italia (jointly referred as “l’Oreal”), two Italian subsidiaries of l’Oreal Group, against IDS International Drugstore Italia (“IDS Italia”) for trademark infringement.

L’Oreal is the licensee of a series of luxury trademarks (e.g., Armani, Cacharel, Ralph Lauren, Diesel, Yves Saint Laurent, etc.), and set up a selective distribution system for the sale of cosmetic products. In particular, l’Oreal selective distribution was based on the following quality elements:

  1. brick-and-mortar retail: (i) location, display and fitting of the points of sale; (ii) the (necessary) presence of products bearing competitors’ brands; (iii) the way in which products are presented at the point of sale (dedicated space, cleaning, etc.); (iv) the professional qualification and standing of the staff involved in the sales, and consulting and demonstration services.
  2. online: (i) the localization and presentation of the website (graphic quality, visual appearance of the home page); (ii) the space dedicated to selective luxury perfumery/cosmetics within the website and its aesthetic quality; (iii) the online customer advice service, in as many languages as are offered by the website; (iv) professional qualification of the consultants, equal to that required for physical points of sale; (v) the conditions and terms of payment, the conditions of storage of goods, transport and shipping.
  3. L’Oreal group developed a system of product traceability to map the circulation of each product in the market, that is based on an “anti-diversion code” (“AD code”).

IDS Italia, part of Auchan Group, is a major retailer and manages a group of drugstores under the brand “Lillapois”.

L’Oreal objected to IDS Italia the sale of products bearing its licensed trademarks through its drugstores and on its own e-commerce website: products were displayed in a messy manner, with strong discounts, and placing stickers on the AD codes. Moreover, some of the products were imported from non-EEA countries.

IDS objected that: (i) they had a selective distribution agreement with L’Oreal Luxe (a luxury division of the group), that covered some of the contested trademarks; (ii) market surveys proved that Lillapois points of sale are considered premium stores by consumers; (iii) the intention of the complainants is in fact to restrict competition; (iv) all products were initially marketed in the EEA territory, as confirmed by IDS’s providers; (v) the selective distribution system could not benefit from the provisions of Reg. 330/2010 since parallel selective distribution systems were in place; (vi) they only placed anti-theft stickers.

The Court’s findings

The Court found that:

  • IDS did not prove that the products were marketed in the EEA with the trademark owner’s consent (and in particular that its suppliers purchased the products from the trademark owner or another authorised distributor in the EEA). The relevant burden of proof is on IDS. Indeed, l’Oreal applied a selective distribution and not an exclusive distribution system (only the latter would require the trademark owner to prove the absent consent to the marketing of the products in the EEA, based on Davidoff, CJEU C-414/99 – C-416/99);
  • L’Oreal set up a legitimate selective distribution according to Reg. UE 330/2010, as its relevant terms of sale define the quality and localisation of the point of sales, the characteristics of the display of the stores and the minimum professional requirements of authorized resellers. Thus, proving the objective and non-discriminatory nature of said criteria (based on Coty, CJEU C-230/2016);
  • The existence of a selective distribution may account to a legitimate reason for excluding the trademark exhaustion, if:

(a) the product is a luxury or premium item.

(b) prejudice to the premium image of the trademark occurs, due to the marketing of the products by entities not included in the selective distribution network (Copad, CJEU C-59/08), in particular based on the type of products, the volume of sales to resellers outside the selective distribution, the forms of distribution normally applied.

In this last regard, the Court observed that the criteria identified by trademark owner for the selective distribution system are not the only legitimate standards to be considered (see the Chantecler case, Court of Milan, 17 March 2016, full text here, and Peak Holding, CJEU C-16/03). Similarly, cash & carry channels are not themselves contrary to a luxury image. Rather, it is necessary to demonstrate that the particular sale modalities are impairing the trademark’s prestigious image. The Court found that IDS points of sale were too similar to discount stores, with low-quality furniture, poor lightings, close-up shelves with very different products (from detergents to toilet paper). Thus, they were able to impair the prestigious image of the trademarks.

2. The Landoll case

Facts

The second case (full text, here) concerns an urgent action brought by Landoll S.r.l., an Italian hair and body cosmetic manufacturer that owns the trademarks Nashi and Nashi Argan. Landoll set up a selective distribution system for its products, which includes agents, distributors, and resellers selling Landoll products to professional clients.

Landoll objected to MECS s.r.l. the sale of its products on a third-party e-commerce platform and on its own website – ermeshop.com – without being part of Landoll selective distribution network. Previously, in 2017, Landoll already sent a warning letter to Mecs, that at that time undertook to cease the sale of Landoll products.

Mecs denied this last circumstance and objected that it purchased Landoll products in good faith from a distributor.

The Court’s findings

The Court found that:

  • Landoll set up a legitimate selective distribution according to Reg. UE 330/2010, as this system is aimed at ensuring the professional preparation and training of the authorized distributors and the proper use of products for meeting the users’ needs, thus protecting the prestigious image of the Landoll products. The qualitative criteria set out by Landoll to select the authorized distributors are coherent with the purpose of protecting the prestigious image of the products, they are applied in a non-discriminatory way and proportioned to the objective sought.
  • The existence of a selective distribution may account to a legitimate reason for excluding the trademark exhaustion, if: (a) the product is a luxury or premium item; (b) a prejudice to the premium image of the trademark occurs due to the marketing of the products by entities not included in the selective distribution (Copad, CJEU C-59/08). In this case, the trademark owner can prohibit unauthorized resellers from selling products purchased from authorized distributors.
  • As regards the prejudice to the prestigious image of the trademark, the third party e-commerce platform used by Mecs, as well as its own website, were presenting the Landoll products in the same manner as any other generic product sold in the store, even of inferior quality, and no professional advice on how to use the products was offered. The Court held that this was enough to cause a prejudice to the trademarks.
  • The good faith of Mecs was excluded, since it received a warning letter, without ceasing the marketing of the Landoll products.
  • Mecs objected that Landoll products were in fact sold by a number of third parties outside the selective distribution network. In this regard, the Court held that the alleged inactivity of the trademark owner vis a vis the sale of products outside its selective distribution network is to be excluded, as Landoll proved to have already brought other legal actions in the past.

The reasoning of the Court is similar in both cases. It fully supports the establishment of selective distribution networks, following the CJEU position, although states that the existence of a selective distribution is not enough for excluding the trademark exhaustion: actual prejudice to the trademark is to be proven. On the other hand, the Landoll case seems in line with the Coty decision, acknowledging the chance of limiting the online resale, if the website is not meeting quality standards necessary to protect the prestigious image of the trademark. And the Court has given some examples on how this can occur. As the Coty case highlighted, this issue is particularly important for marketplaces. They tend to be less exclusive in terms of brand experience. However, if they allow special windows to be created within the marketplace (or special manner of displaying and offering premium products), it might be more difficult arguing a prejudice against the prestigious image of the trademark.

Francesco Banterle

Court of Milan, decision of 19 November 2018, docket no. 38739/2018, L’Oreal Italia S.p.a. and Helena Rubinstein Italia S.p.a. v. IDS International Drugstore Italia S.p.a.

Court of Milan, decision of 18 December 2018, docket no. 44211/2018, Landoll s.r.l. v. Mecs S.r.l.

Cloud Service Providers and the active role in communicating online digital contents

Introduction

Cloud Service Providers (CSPs) are relatively new intermediaries acting as “service providers” within the meaning of the Directive 2000/31/EC (i.e. any natural or legal person providing an information society service). They are commonly intended as the suppliers of the virtualized technical infrastructures where digital contents can be stored, distributed or communicated to the public and where computing resources can be shared between a number of clients. Thus, CSPs are usually not involved into responsibilities for illicit activities conducted through their means, since their role is considered merely passive in providing the technical infrastructure used by the clients.

It is worth noting that in some recent EU case law (see CJEU, C-265/16, V-CAST case) and in the process of approval of the a new EU Copyright Directive in the Digital Single Market (see the draft text approved last September by the European Parliament here and our comments here and here) are emerging signs of evolutions in the categorization of the CSPs, with a distinction between “active” CSPs and “passive” CSPs. This process seems not different from what has already happened in the context of the categorization of hosting service providers, where an higher level of responsibility is requested to those providers which play an “active” role (see our previous posts here, here and here).

Definition of Cloud Service Providers

Since there is no legal definition of CSPs available at EU level, the notion of CSP has to be reconstructed in different sources of law, at national and international level (see here). In the Italian legal system AgID – Agenzia per l’Italia Digitale introduced (see here) a legal definition of Cloud as “a set of remote technical resources utilized as virtual resources for memorization and elaboration in the context of a service”. According to this definition, the main features of the Cloud are that: (a) it entails a set of technical  resources that are remotely available (this means essentially via online connection); (b) the resources are considered as virtual resources (this means only for their overall processing capacity and not as the sum of single hardware and software); (c) the resources are used for offering specific services (this means that there is a clear distinction between the services offered and the equipment used for providing such services).

There are some differences between this definition and other definitions available at international level. According to the NIST, the US National Institute of Standards and Technologies, “Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” According to the EU Communication on the European Cloud Initiative dated 19th April 2016– COM (2016) 178, “the Cloud can be understood as the combination of three interdependent elements: the data infrastructures which store and manage data; the high-bandwidth networks which transport data; and the ever more powerful computers which can be used to process the data.

The NIST definition is more oriented to describe functional aspects of Cloud and the advantages in terms of accessibility and modularity of Cloud services, while the EU Commission definition focuses on structural and network aspects of Cloud. The AgID definition sounds pretty generic and does not mention some peculiar features of Cloud, such as the share of resources, the access on demand, the minimal management effort, the connection with high-bandwidth networks; the absence of such features entails that a wider variety of services can be considered Cloud services under the AgID Rules, even if they do not necessarily have some peculiar features of Cloud services.

The V-Cast case and the distinction between “active” and “passive” Cloud Service Providers

In the recent EU case law between V-Cast and RTI, the CJEU has ruled on a video-recording service of TV broadcasts through Cloud storage. The main result of this judgment of the Court is that V-Cast video-recording service has been found illicit in light of the Infosoc Directive. More in detail, the Court ruled that the Infosoc Directive, in particular Article 5(2)(b) thereof, must be interpreted as precluding national legislation which permits a commercial undertaking to provide private individuals with a Cloud service for the remote recording of private copies of works protected by copyright, by means of a computer system, by actively involving itself in the recording, without the rightholder’s consent. An interesting aspect of this decision seems to be the distinction drawn by the Court between “active” and “passive” Cloud Service Providers. Indeed, by describing the conditions under which the active CSP can be found liable, the Court seems implicitly enucleating also the conditions under which the passive CSP cannot be considered liable.

V-Cast is a company incorporated in the UK which makes available to its customers via the Internet a video-recording system, in storage space within the Cloud, for terrestrial programmes of the Italian broadcaster RTI, among others. The user selects a programme on the V-Cast website, which includes all the programming from the television channels covered by the V-Cast service. The user can specify either a certain programme or a time slot. The system operated by V-Cast then picks up the television signal using its own antennas and records the time slot for the selected programme in the Cloud data storage space indicated by the user. The storage space in the Cloud is purchased by the user from another provider.

More in detail, according to the CJEU under Article 5(2)(b) of the Directive 2001/29/CE, Member States may provide for exceptions or limitations to the reproduction right in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial. Moreover, Article 5(5) of this Directive states that the exceptions and limitations provided for, inter alia, in Article 5(2) of the Directive will only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject matter and do not unreasonably prejudice the legitimate interests of the rightsholder.

The Court has clarified that, in order to apply the exception for private copying, it is not necessary that the technical means used for reproduction purposes are directly available to the private users but they can be provided also by third party operators. The core element to figure out the correct legal interpretation is the type of activity offered by V-Cast to its users. In the Court’s opinion, such activity cannot be considered as a mere supply of Cloud storage, also because the storage itself is not provided by V-Cast but by another provided on behalf of V-Cast. V-Cast was offering a more comprehensive service, inclusive of the (unauthorized) access to the RTI broadcasts over DTT, their reproduction and conversion into another format for distribution over the Internet and their storage, on user’s request, in a Cloud storage service for subsequent access by users.

The service offered by V-Cast does not amount only to a violation of the reproduction right, since no private copying exception is applicable to such service, but can also be considered illicit according to Article 3 of the Directive 2001/29/CE, which prohibits any unauthorized communication to the public, including the making available of a protected work or subject matter, given that, as is apparent from recital 23 of the Directive, the right of communication of works to the public should be understood in a broad sense covering any transmission or retransmission of a work to the public by wire or wireless means, including broadcasting.

Even if the Court’s judgment is very specific and tailor-made for the V-Cast service, it is also interesting to understand what can be arguable reading this judgment a contrario. The mere provision of Cloud storage services of audio-visual contents, with reproductions made on individual requests of end-users, could be considered, at certain conditions, covered by the private copying exception since: (i) it is not a necessary requisite the fact that the users possess the reproduction means or equipment, given that such reproduction can be made also via means or equipment made available by third-party operators (§ 35 of the judgment); (ii) the provider which merely organizes the reproduction on behalf of the users could be considered within the limits of the private copying exception, where the provider does not play an active role and does not interfere with other exclusive rights, such as the communication to the public (§ 37-38 of the judgment).

The proposal of amendments to the EU Copyright Directive: the role of passive CSPs

The distinction between active and passive CSPs is part of the discussions around the proposal of a new Copyright Directive in the Digital Single Market, at least according to the Amendments to such Directive adopted by the European Parliament on 12 September 2018. With the Amendment 143 for introducing a new Recital 37 a, the European Parliament has proposed to introduce the definition of an Online Content Sharing Service Provider, which should encompass those Providers the main purposes of which is to store and give access to the public or to stream significant amounts of copyright protected content uploaded / made available by its users, and that optimise content, and promote for profit making purposes, including amongst others displaying, tagging, curating, sequencing, the uploaded works or other subject-matter, irrespective of the means used therefor, and therefore act in an active way.

The definition of Online Content Sharing Service Provider is relevant also because such Providers should not benefit from the liability exemption provided for in Article 14 of Directive 2000/31/EC (i.e. the safe harbour provision for hosting providers). What is relevant for excluding certain providers from the safe harbour regime is the fact that certain providers play an active role, in different ways (but mainly with an intervention aimed at creating added value in the supply of user generated contents), since the safe harbour regime was originally thought for mere technical service providers (in Recital 32 of the E-Commerce Directive is made clear that the role of the ISP which can enjoy limitations to liability “… is of a mere technical, automatic and passive nature, which implies that the information society service provider has neither knowledge of nor control over the information which is transmitted or stored”).

In its proposal of amendments, the European Parliament has expressly mentioned that also “Providers of cloud services for individual use which do not provide direct access to the public … should not be considered online content sharing service providers within the meaning of this Directive”. This provision, if approved, should be for the benefit of mere Cloud storage services, such as Dropbox o iCloud, where the request of reproduction is made by the private users and also the access to the stored contents is limited to the users with an account associated to those stored contents. This approach seems not far from the conclusions of the CJEU in the V-Cast case, at least considering what are the features of an active CSP in the opinion of the Court, and is the clear sign of the emerging distinction from a legal standpoint between active and passive Cloud Service Providers.

Gianluca Campus

CJEU – Judgment of the Court (Third Chamber) of 29 November 2017; VCAST Limited v RTI SpA; ECLI:EU:C:2017:913

Amendments adopted by the European Parliament on 12 September 2018 on the proposal for a directive of the European Parliament and of the Council on copyright in the Digital Single Market (COM(2016)0593 – C8-0383/2016 – 2016/0280(COD))

Two recent CJEU decisions and the fuzzy border between trademarks and designs

While no definite trend toward the approximation of trademark and design law has so far emerged in European case law, two recent decisions of the CJEU relating to designs show how fuzzy the border between trademark and design rights may be.

***.***.***

In Doceram (C-395/16, ECLI:EU:C:2018:172), the CJEU had to interpret the concept of designs subsisting “in features of appearance of a product which are solely dictated by its technical function”, which are excluded from protection under Article 8(1) of Regulation 6/2002 on Community designs (RCD). The Court was asked, in particular, to state whether such exclusion applies even when alternative designs exist which can perform the same technical function, so that the features of the design cannot be considered indispensable for performing said  function.

It is a classic dilemma. As AG Henrik Saugmandsgaard Øe noted in his opinion, in Europe the Courts and legal scholars have given both negative and positive answers.

The position whereby Article 8(1) RCD and the corresponding national provisions only apply when copying the design is the sole way to achieve the technical result is commonly referred to as the “mandatory” (or “multiplicity of forms”) theory. The opinion whereby, to the opposite, it does not matter whether or not alternative designs can fulfil the same function, insofar as the function in question is the sole driver of the shape, is usually referred to as the “causative theory”. In the past the EUIPO has ruled in line with the first theory [also supported by AG Colomer in the opinion submitted in Philips v. Remington (paragraph 34); and followed by the EU General Court in Industrias Francisco Ivars (see paragraph 22)], which is much more favorable to design right holders. Recently it seems to have veered towards the latter. As far as Italy is concerned, there is probably greater support for the “mandatory theory”.

In Doceram the Court (and before the Court AG Saugmandsgaard Øe) endorsed, with little hesitation, the “causative” theory:

if the existence of alternative designs fulfilling the same function as that of the product concerned was sufficient in itself to exclude the application of Article 8(1) of Regulation No 6/2002”, it said,

then

“a single economic operator would be able to obtain several registrations as a Community design of different possible forms of a product incorporating features of appearance of that product which are exclusively dictated by its technical function” (paragraph 30).

 That, added the Court,

“would enable such an operator to benefit, with regard to such a product, from exclusive protection which is, in practice, equivalent to that offered by a patent, but without being subject to the conditions applicable for obtaining the latter, which would prevent competitors offering a product incorporating certain functional features or limit the possible technical solutions, thereby depriving Article 8(1) of its full effectiveness” (ibidem).

By stating this, the CJEU de facto extended to designs the principles it affirmed with regard to trademarks “consisting exclusively of the shape of goods which is necessary to obtain a technical result”.

As is well known, in Philips v. Remington the CJEU stated that the relevant impediment to registration [now contained in Article 4(1)(e)(ii) of Directive 2015/2436] “cannot be overcome by establishing that there are other shapes which allow the same technical result to be obtained: which is, mutatis mutandis, what the CJEU said in Doceram.

 ***.***.***

Interestingly, another recent CJEU decision ended up extending the interpretation of provisions concerning trademarks to provisions concerning designs.

In Nintendo v. Bigben (C‑24/16 and C‑25/16, ECLI:EU:C:2017:724), the Court had (inter alia) to issue a preliminary ruling with regard to Article 20(c) RCD, which prevents design right holders from exercising their rights in respect of “acts of reproduction for the purpose of making citations or of teaching, provided that such acts are compatible with fair trade practice and do not unduly prejudice the normal exploitation of the design, and that mention is made of the source”.

The dispute in the main proceedings concerned the use of images of goods corresponding to EU registered designs in the advertisement of goods intended to be used as accessories to the above goods corresponding to EU registered designs. As in the following picture, which shows Nintendo Wii remote controllers, registered as EU designs, together with the charger for such controllers produced and sold by the defendant Bigben.

bigben

In addressing the issue, the Court said that Article 20(c) RCD, insofar as it refers to “acts … compatible  to fair trade practice”, can be interpreted in the light of the case law regarding uses of trademarks made in accordance with “honest practices in industrial or commercial matters” under Article 6(1) of Directive 89/104 [now Article 14(2) of Directive 2015/2436]. And it explicitly applied to designs – again: mutatis mutandis – the principles asserted in Gillette (17 March 2005, C-228/03, ECLI:EU:C:2005:177) with respect to the limitation of trademark rights:

an act of reproduction of a protected design for the purpose of making citations or of teaching is not compatible with fair trade practice … where it is done in such a manner that it gives the impression that there is a commercial connection between the third party and the holder of the rights conferred by those designs, or where the third party, who wishes to rely on that limitation in the course of selling goods that are used jointly with goods corresponding to the protected designs, infringes the rights conferred on the holder of the design protected by Article 19 of Regulation No 6/2002, or where that third party takes unfair advantage of the holder’s commercial repute” (paragraph 80).

Riccardo Perotti

European Parliament approves the DSM Copyright Directive Proposal

In yesterday’s session, the European Parliament approved the proposed Directive on Copyright in the Digital Single Market [see our previous comments here, here, and a more detailed position paper, here]. MEPs voted 438-226 with 39 abstentions.

Here is the text passed – a compromise solution that slightly changes from the previous version rejected by the European Parliament back in July.

Among the most controversial provisions:

  • the text and data mining (TDM) exception has been confirmed in its original structure (limited to research organizations). The new version adds an optional additional TDM exception (Article 3a) that applies in favor of lawful users except such TDM usage has been expressly reserved by the right holder.
  • the ancillary right for press publishers (art. 11) has been slightly amended:

1. Member States shall provide publishers of press publications with the rights provided for in Article 2 and Article 3(2) of Directive 2001/29/EC so that they may obtain fair and proportionate remuneration for the digital use of  their press publications by information society service providers.

1a. The rights referred to in paragraph 1 shall not prevent legitimate private and non-commercial use of press publications by individual users.

[…]

2a. The rights referred to in paragraph 1 shall not extend to mere hyperlinks which are accompanied by individual words.

4. The rights referred to in paragraph 1 shall expire 5 years after the publication of the press publication. This term shall be calculated from the first day of January of the year following the date of publication. The right referred to in paragraph 1 shall not apply with retroactive effect.

Recital 33 specifies that “the protection shall also not extend to factual information which is reported in journalistic articles from a press publication and will therefore not prevent anyone from reporting such factual information”. This seems a bit in contrast with the provision of 2a that allows reporting only “individual words”.

  • As regards article 13, filtering obligations have been only apparently removed, since in case right holders are not happy to license their contents, UGC platforms shall cooperate to block such contents

1. Without prejudice to Article 3(1) and (2) of Directive 2001/29/EC, online content sharing service providers perform an act of communication to the public.  They shall therefore conclude fair and appropriate licensing agreements with right holders.

2. Licensing agreements which are concluded by online content sharing service providers with right holders for the acts of communication referred to in paragraph 1, shall cover the liability for works uploaded by the users of such online content sharing services in line with the terms and conditions set out in the licensing agreement, provided that such users do not act for commercial purposes.

2a. Member States shall provide that where right holders do not wish to conclude licensing agreements, online content sharing service providers and right holders shall cooperate in good faith in order to ensure that unauthorised protected works or other subject matter are not available on their services. Cooperation between online content service providers and right holders shall not lead to preventing the availability of non-infringing works or other protected subject matter, including those covered by an exception or limitation to copyright. […]

Article 2(4b) sets out a very complex definition of the UGC platforms affected, taking into account the CJEU case law: “‘online content sharing service provider’ means a provider of an information society service one of the main purposes of which is to store and give access to the public to a significant amount of copyright protected works or other protected subject-matter uploaded by its users, which the service optimises and promotes for profit making purposes“. Recital 37a adds that this is “including amongst others displaying, tagging, curating, sequencing, the uploaded works or other subject-matter, irrespective of the means used therefor, and therefore act in an active way.” It then excludes from the definition of online content sharing service providers microenterprises and small sized enterprises, as well as service non-commercial providers such as online encyclopaedia or providers of online services where the content is uploaded with the authorisation of all right holders concerned, such as educational or scientific repositories.

Article 12a protecting sport event organizers has been introduced at a later stage (with no impact assessment).

This compromized version shows some slight improvements, despite the original defects of the Proposal still remain unsolved. Now the trilogue negotiations amongst the Parliament, the Council and the Commission will start.

Francesco Banterle

 

On the German Supreme Court’s ruling on linking

On December 2017, the German Supreme Court (Bundersgerichtshof, hereinafter “BGH”) released the motivations on which it grounded its decision of 21 September 2017 (available here) on the classification of “linking” as an act of communication to the public.

In the German proceedings, the defendant was the owner of a website incorporating a search engine function which completely relied on Google’s search engine. It resulted that four images, made available in a password-protected section on plaintiff’s websites only to paying users, were made illicitly accessible on the free internet and appeared also as results of the researches launched on defendant’s website.

Following a cease and desist letter, the defendant complied with plaintiff’s request to prevent users from visualizing  the previews of the images under discussion, hindering the connection between the search criterion and those pictures. Later on, however, the plaintiff discovered that other copyright protected images were made available on the very same search engine tool and decided to sue the website’s owner.

In its decision, the German Supreme Court affirmed that an “act of public communication” occurs when a protected work is reproduced using a technical procedure that differs from the one used so far or – otherwise – is reproduced for a new audience. In the present case, even if the images were shared by the same technical procedure (the internet), the defendant’s search process referred to an audience different from the one intended by the plaintiff, as the search was carried out by an indeterminate number of internet users, whereas the images were made available by the plaintiff only to paying users, in a password-protected section of the website.

Given the above, in order to determine the defendant’s liability for such communication to the public, the German Supreme Court followed the reasoning of the CJEU in the Svenssson case and GS Media cases (respectively, C‑466/12 and C-160/15) and tried to determine if the defendant made available the images for profit and if it could have been aware of the fact that the copyright’s owner did not gave his consent to the sharing of the pictures.

The conclusions of the German Court can be summarized as follows:

  • the Judges did not share the arguments on which the CJEU based the decisions above quoted, deeming that in those cases too broad relevance had been given to the financial gain element in order to assess whether the infringement occurred. According to the BGH, to connect the existence of a scope of profit with the knowledge that hyperlinks have been published without copyright holder’s permission amounts to a misleading presumption.
  • the results of a search engine are collected by the tool through the application of an algorithm that select the content in an automatized manner. Therefore, other than in the cases analyzed by the CJEU, the search engine provider does not have manual and/or direct control on the results displayed.
  • according to the Court, the provider of a search engine cannot reasonably be expected to ascertain whether the images of works or photographs found by the search programs have been lawfully posted on the internet before reproducing those images. Linking a photograph provided on a third-party website to another website by means of an electronic link does not constitute a copyright exploitation of public access as only the operator of the external website, who uploaded the photo to the internet – and not the search engine tool provider – can decide whether it remains accessible to the public.
  • A duty of the search provider to investigate the legality of the publication of the images found by search engines before their display is contrary to the task and mode of operation of the search engines themselves.
  • The Court concluded asserting that there is no doubt, on the basis of the assessment criteria established by the CJEU, that a public reproduction by the provider of a search engine tool, of works protected by copyright within the meaning of Article 3 (1) of InfoSoc Directive, exists only if the copyright holder has not permitted the publication of the works on the open internet and it is clear that the provider of the search function was aware of this or could reasonably have been. Moreover, as hinted, other than in the quoted CJEU decisions, the BGH does not automatically connect the awareness (or the reasonable awareness) of the illicit communication to the presence of a financial gain.

The decision of the BGH not only provides with a broader interpretation of the application of the CJEU case law but constitutes also a milestone in the already ‘historical’ contrast between copyright owners and search engine providers on who should bear the duty (and the costs) of monitoring the internet preventing the exploitation of copyright protected material. It can be inferred that the German Judges shared the opinion also expressed by the Courts of other EU Countries confirming that it is up to the copyright holder to perform such controls and inform the search engine provider accordingly; on its side, the latter should promptly comply with the requests to eliminate the contents illicitly made available.

Miriam Loro Piana

Bundesgerichtshof (German Supreme Court), decision of 21 September 2017, I ZR 11/16

Copyright protection of algorithms does not prevent the disclosure of their source code in the context of administrative proceedings

Algorithms are often used for managing complex administrative proceedings where multiple data and parameters have to be analysed to produce a result. Since algorithms can be protected under copyright laws as software (including their source code), it is questionable whether copyright protection might limit the right to access of interested parties in administrative proceedings. In two recent cases (here and here), the Italian Administrative Court of Lazio (TAR Lazio) has clarified the nature of the electronic administrative document and the scope of the right to access pursuant to Law n. 241/1990 with regard to the source code of an algorithm compiled by a software house on request by the Public Administration. The cases at stake have been promoted by a number of Italian trade unions against the Ministry of University and Education (“MUIR”) with the purposes of gaining access to the source code of the algorithm used by MUIR to manage the territorial relocation of school professors under mobility procedures.

Upon first request, the MUIR refused access to the source code of the algorithm developed by a software house on MUIR’s request on basis of the following arguments: (i) the source code itself cannot be considered part of the electronic administrative document and, consequently, does not imply the right to access of interested parties in administrative proceedings, and (ii) the source code enjoys the copyright protection as software and the access to the source code would prejudice the intellectual property rights of the software house. More in detail, MUIR has held that the disclosure of a document describing the way of functioning of the algorithm could be considered sufficient protection for the trade unions and that the Legislative Decree n. 97/2016 (Art. 6) on the civic right to access (for preventing corruption and enhancing transparency in the public sector) expressly excludes access to the acts of the Public Administration when the access could prejudice the economic interest of private parties, thus included their intellectual property rights.

In the Administrative Court’s opinion, the MUIR must allow access to the source code of the algorithm since it can be considered part of the administrative proceeding subject to the right to access of interested parties. MUIR has requested the software house to compile the algorithm with the specific purpose of managing in electronic form the public procedure of territorial relocation of school professors under mobility, according to public rules and collective employment agreements. From a structural point of view, the outputs of the algorithm: (i) are the results of the combination/elaboration of data collected in various endoprocedural acts and (ii) make application of the public rules on territorial mobility.

Taking into consideration the ratio of the right to access in administrative procedures, also the source code of the algorithm enjoys the nature of electronic administrative document and such nature implies that right to access should be allowed also with regards to algorithm. Reasoning to the contrary will lead to the unacceptable consequense that the right to access could be automatically excluded by decision of the Public Administration to manage the administrative proceeding by electronic means. TAR Lazio further clarified the notion of electronic administrative document which, in the Court’s opinion, should not include only those administrative documents formed via electronic means (for the purpose of documentation) but should also include those administrative documents where the elaboration of contents and data (for the purpose of issuing an output) are taken into account.

Also the copyright protection of software (which encompasses also the source code) has not been considered by the Court as an argument for excluding the right to access to the algorithm. First of all, TAR Lazio acknowledges that software can be protected under copyright laws not only as an informatic language but also as a creative work resulting from the use of a certain informatic language. In the case at stake, the algorithm is a software created for a specific purpose of the Public Administration and, in the absence of any indication to the contrary in the agreement between the PA and software house, can be assumed that the software house has transferred to the PA all the economic rights in the algorithm. In the Court’s opinion, the nature of creative work of the algorithm should not interfere with the right to access in the administrative proceedings of interested parties, since the right to access does not prejudice the right to exploitation of intellectual properties (any reproduction made by the interested parties is functional to the exercise of rights to control the administrative proceeding only and not to the commercial exploitation of the algorithm).

In addition, TAR LAZIO considered that is not relevant for excluding the right to access to the source code of the algorithm the fact that: (i) the source code is a pure informatic language unreadable by the public officers and written by a private company (i.e. the software house on behalf of the PA) and (ii) the source code is compiled for the mere application of public rules and collective labour agreements, which are accessible themselves even without direct access to the source code. The Court ruled in favour of the right to access to the source code also on the basis that what impact the giuridical position of private individuals are the outputs of the algorithm.

These interesting administrative rulings offer a clear and deep reconstruction of the notion of electronic administrative document (expanding such notion to include also algorithms) but should be subject to further analysis with regards to the asserted strike of balance between the right to access and the protection under copyright laws of the source code, exspecially taking into consideration possible future cases where the PA should make use of algorithms: (a) not specifically developed for a single administrative proceeding (under the assumption of a complete transfer of intellectual property rights) and/or (b) based on more sophisticated technologies licensed to the PA under a proprietary scheme.

Gianluca Campus

TAR Lazio, case No.  3742/2017, 21 March 2017, CISL, UIL, SNALS Vs MUIR (President of the Court: Hon. R. Savoia; Judge-Rapporteur Hon. M.C. Quiligotti)

TAR Lazio, case No.  3769/2017, 22 March 2017, Gilda Vs MUIR (President of the Court: Hon. R. Savoia; Judge-Rapporteur Hon. M.C. Quiligotti)

The Court of Rome affirms its jurisdiction in a torpedo case

In a post of some months ago, after noting that none of the torpedoes launched in Italy after the Asclepion ruling [Italian Court of Cassation, 10 June 2013, no. 14508, in Giur. ann. dir. ind., 2013 (for a full English translation, see IIC, 2014, pp. 822 ff.)] had been successful, we envisaged a possible end to the Italian torpedo story. A recent decision of the Court of Rome shows, however, that the end is yet to come. In a non-infringement action brought against an Austrian patentee (and two other defendants, also from Austria) with regard to the Italian part and several foreign parts of a European patent, the Court of Rome firmly stated that

the Italian courts have jurisdiction … for the French, German, Austrian and UK parts of the patent, on the basis of art. 5.3, EU Council Regulation 44/2001 of 22 December 2000, whereby the courts for the place where the harmful event occurred or may occur have jurisdiction, and on the basis of art. 27 of the Regulation, concerning jurisdiction for related actions”.

The brief reasoning of the decision (full text, in Italian) exclusively stems from a quotation of the Asclepion ruling of the Court of Cassation mentioned above. With regard to this ruling and its impact on torpedo actions (as well as for a review of the most recent decisions issued in Italy on the topic), we refer to the considerations already made here.

Riccardo Perotti

Court of Rome, 5 February 2018, Anki v. Stadlbauer 

The Court of Rome orders a mother to stop publishing on social networks contents relating her underage son

With the countdown to the GDPR almost at its end, this interim order from the Court of Rome (full Italian text here) has been largely debated in Italy in the last days.

These are the facts, in sum:

  • During a divorce proceedings, a mother has been publishing on social networks many photos, videos, posts relating this lawsuit, including information about her son – a 16 years old guy;
  • The son was really frustrated by this situation. Details about him were constantly disseminated on social networks by his mother and his history – in all details – became known to all his schoolmates. He started suffering serious psychological effects – particularly he was scared of being discriminated and considered “different” by his mates due to his private “issue”.
  • For this reason, the guardian of the son (previously appointed in another proceedings) asked the Court to confirm his right to attend a US college to get a new life far away from this nasty situation.

In the interim injunction, the Court ordered:

(i) the mother to stop publishing on social networks and any other media, images, information and any other data relating her son, (ii) to remove all these contents published so far on social networks; additionally the Court (iii) fixed a monetary sanction for any violation of these orders.

(iv) the guardian of the son to ask search engines to de-list and social networks to remove all images, information and any data relating the young guy.

The interim decision is of course reasonable. The Court has not relied on a particular legal qualification of the matter, however apparently based on general civil law principles considering psychological damages suffered by the young guy. Thus the decision seems to refer to a general right to privacy (even before considering a question of fair processing of personal data).

The case confirms how social networks can be risky for our privacy due to their media massive effect. A part from this specific case, we should wonder about possible negative consequences of posting certain contents about third parties, that we might not foresee. This is particularly true for underage people, where particular attention is to be paid to their privacy – also in the long term (for a view on the possible negative consequences of parental oversharing, see for example here: ‘it’s difficult for an individual to control that information once it’s out there. When it comes to our children, we’re making the decision to put things out on their behalf, and what seems appropriate now may not be appropriate in ten years’ time’).

Even before the GDPR, the EU data protection legislation required consent for publishing contents about third parties on social media, with some exception as in case of news reporting (that remains mostly a matter of national law). But not – of course – if it is a parent publishing data about his/her underage son. The GDPR is now paying new attention to:

(i) the processing of data of underage people (Recitals 38, 58, 65, 71, 75) – the GDPR requires parental consent for the use of information technology services (Art. 8). Although limited to this type of services, it sets the legal age for data protection choices (i.e., a “digital consent”) at 16 years old (there is some flexibility for national legislation, but this age cannot be below 13 years). If this applies also to the exercise of privacy rights is difficult to say (Recital 65 seems to confirm this option) and it shall probably consider national legislation as well. Recital 38 states that consent by a parent or guardian is not required in the context of preventive or counselling services offered directly to a child. For example, the provision of child protection services offered online to a child by means of an online chat service does not require prior parental authorization, clarifies the WP29 Guidelines on Consent under the GDPR (here).

(ii) the risk of discrimination – a risk we should often consider in certain personal data processing operations (we have discussed this aspect in relation to profiling activities here).

Francesco Banterle

Court of Rome – Judge Monica Velletti – order 23 December 2017

 

New French law on retouching advertising images of fashion models

Last year, France enacted a new legislation (Law no. 2016-41 on the modernisation of our health system dated January 26, 2017, which came into force on January 1st, 2017) with the aim to encourage more socially responsible ads and avoid the use of artificially thin images of fashion models, whose view may induce eating disorders amongst teenage.

Article L. 2133-2 of the French Public Health Code (FPHC), as introduced by the new law, provides that “Photographs for commercial purposes of models whose physical appearance has been altered by an image processing software in order to slim or to thicken the model’s figure shall be accompanied by the words “photographie retouchée”.

Moreover, article R. 2133-6 of the FPHC burdens the advertiser with a best-efforts obligation to verify that the commercial photographs that he buys directly or through different service providers have not been modified by image processing softwares.

Only the modifications of silhouettes that affect the model’s weight seem to be concerned by the new rule.

The modalities of implementation of this new obligation have been specified by a Decree (Decree n°2017-738 of 4 May 2017 relating to photographs for commercial use of models whose appearance has been modified), that came into force on October 1st, 2017.

The Decree states that the mention “photographie retouchée” must be 
affixed in: “an accessible, easily legible and clearly differentiated way from the advertising or promotional message. The presentation of messages shall respect the rules and use of best practices as defined by the profession, notably by the Professional Advertising Regulatory Authority (ARPP)”.

Until now, the ARPP has only provided unofficial guidance on how and where the mention “photographie retouchée” should be affixed (at the “Réunion ARPP d’échanges et de lecture commune consacrée au Décret n° 2017-738 du 4 mai 2017” as of July 4, 2017) (link).

Without any clear guideline from the Regulator, nor settled market practices or court’s ruling, there is a high degree of uncertainty among the stakeholders over the correct way to comply with the law.

It follows from the wording of the law that the mention “photographie retouchée” should be (i) of sufficient size, (ii) of a colour contrasting with those used in the background and (iii) not drowned among other mentions.

Neither the Law nor the Decree lay down clear provisions on where exactly the mention must be displayed (on the photograph itself, near the product description or as a disclaimer on the bottom of the brand’s website). Given this lack of specifications, positioning the disclaimer on the photograph itself appears to be the safest solution to comply with the Regulation, while the only use of a general notice at the bottom of the webpage might be enough only if a clear reference to the relevant photos concerned is provided thanks to an asterisk or another pictogram (except maybe in the case that all photographs are retouched).

This new obligation applies to “photographs for commercial purposes” published through all types of media (cf. article R. 2133-4 of the FPHC which provides for a non-exhaustive list of media, including press or online publications, e-commerce marketplaces, social networks’ posts, printed ads, newsletter or correspondence), except for videos and television ads.

The Regulation does not specify the territorial scope of the rule. A cautious approach would be to assume that it applies to photographs that are accessible by French consumers. Indeed, it is settled case-law that national law applies if a violation is committed through a website available in the country of reference or otherwise addressing its audience, being irrelevant the place where the servers are located or where the company is registered (CA Paris, 19 March 2010, PIBD n°920 III p.391; TGI Paris, 6 December 2012, n°10/12560; Cour de cassation, Chambre commerciale, 17 January 2012, n°10-27311).

The Decree provides that responsible for complying with the duty of disclosure is the “advertiser” (“Annonceur”). Failure to comply with the Regulation can be sanctioned by a fine up to € 37,500, the amount of which may be increased up to 30% of the advertising expenses. No definition of “advertising expenses” is provided nor the Regulation specifies if this fine applies to each non-compliant photograph. However, it may be expected that judges shall apply the sanction once only for the entire offense and not for each challenged photograph. In this way, it would appear reasonable that the “30 percent of the cost of creating the advertisement” shall be calculated on all the expenses incurred in connection with the contentious advertising campaign.

Similar provisions exist from 2012 in Israel (Weight Limitation in the Modelling Industry Act, colloquially referred to as the “Model Act” or the “Photoshop™ Act”). Such law also prohibits advertisements which display fashion models (both male and female) who are underweight in accordance with measuring formulas (namely, the Body Mass Index) provided by the law.

In Italy, although we don’t have a rule specifically requiring this kind of disclosure when a model’s general appearance is altered, Article 10 of the Italian Self-regulatory Code of Marketing Communication (link) provides that marketing communication should respect human dignity in every form and expression. Moreover, Article 12 establishes that marketing communication should not contain representations that may lead consumers to be less cautious than usual or less watchful and responsible towards their own health and safety. These provisions remind to be careful when using the body image which is likely to cause pressure to conform to an unrealistic or unhealthy body shape, or which are likely to create body confidence issues, particularly among young people (cf. decisions 121/2007 or 6/2002).

Jacopo Ciani

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