Pattern trademark do not consist exclusively of a shape whenever they are not indissociable from the product

On March 14, 2019, the CJEU ruled on two preliminary questions submitted by the Court of Appeal of Stockholm in the case Textilis – Keskin v Svenskt Tenn (C-21/18).

josef-frank_textile-manhattan-315-linenSvenskt Tenn, as trademark and copyright holder over a renowned design pattern of a furnishing fabric, filed a lawsuit against Textilis, a UK company that sells textiles in the UK, arguing infringement of its rights and asking for an injunction prohibiting such sales.

 

Textilis in turn filed a counterclaim arguing for the invalidation of the EUTM on the grounds of lack of distinctiveness (Article 7(1)(b) EUTMR) and since it would consisted of a shape which gives substantial value to the goods (Article 7(1)(e)(iii) EUTMR).

On March 22, 2016 the Stockholm District Court found that Textilis was guilty of trade mark and copyright infringement. The court noted that Textilis had not provided any evidence that the trade mark in question lacked distinctiveness. In relation to Article 7(1)(e)(iii), the court dismissed the claim simply based on the fact that the contested trade mark does not consist of “a shape” within the meaning of Article 7(1)(e)(iii) of EUTMR.

Textilis then appealed that decision before the Court of Appeal, Patents and Market division, in Stockholm.

The Swedish Court of Appeal focused on the interpretation of Article 7(1)(e)(iii) of Reg. 207/2009. In particular, the CJEU was asked to rule on the meaning of the wording “consist exclusively of the shape” (used both in the original text of the EUTMR provision and in the new Regulation No 2015/2424 (“EUTMR as amended”) which entered into force on March 23, 2016) and whether its scope encompasses a sign consisting of the two-dimensional representation of a two-dimensional product, such as the fabric decorated with the sign in question.

The CJEU observed that, since the EUTMR does not provide any definition of the term “shape”, its meaning must be established with reference to its usual meaning in everyday language, while also considering the context in which it occurs and the purposes of the rules to which it belongs.

The CJEU affirmed that “it cannot be held that a sign consisting of two-dimensional decorative motifs is indissociable from the shape of the goods where that sign is affixed to goods, such as fabric or paper, the form of which differs from those decorative motifs”.

The CJEU recalled its previous Louboutin decision (Case C‑163/16), where it established that the application of a particular color to a specific location of a product does not mean that the sign in question consists of a “shape” within the meaning of Article 3(1)(e)(iii) of Directive 2008/95. This is because what the applicants intended to protect through the trademark registration in Louboutin was not the form of the product or part of the product on which it may be affixed, but only the positioning of that color in that exact location.

The Court also added that the fact that the drawings covered by the Trademark enjoy copyright protection does not affect this finding in any way.

Therefore, the CJEU concluded that the exclusion from registration established in Article 7(1)(e)(iii) of EUTMR is not applicable to the sign at issue in the main proceedings on the grounds that “a sign such as that at issue in the main proceedings, consisting of two-dimensional decorative motifs, which are affixed to goods, such as fabric or paper, does not ‘consist exclusively of the shape’, within the meaning of that provision”.

Judgment of the Court (Fifth Chamber) of 14 March 2019, Textilis Ltd and Ozgur Keskin v Svenskt Tenn Aktiebolag, Case C-21/18

Jacopo Ciani

The taste of a food product is not eligible for copyright protection

On November 13 2018, the Court of Justice of the European Union (CJEU) has handed down its judgment in the case Levola Hengelo BV v. Smile Foods BV(C-310/17, ECLI:EU:C:2018:899) answering to a request for a preliminary ruling referred by the Regional Court of Appeal, Arnhem-Leeuwarden, Netherlands, concerning whether copyright could vest in the taste of a spreadable cream cheese called ‘Heksenkaas’ and produce since 2007.

The request for preliminary ruling was made in a proceedings concerning an alleged infringement of intellectual property rights relating to the taste of such a product by Smilde, a company manufacturing a taste-alike product called ‘Witte Wievenkaas’.

Until this judgement, there was wide divergence in the case-law of the national courts of the European Union Member States when it comes to the question as to whether a scent may be protected by copyright.

While countries as Italy and the Netherlands accepted in principle the possibility of recognising copyright in the scent of a perfume (see. judgment of 16 June 2006, Lancôme, NL:HR:2006:AU8940), other countries such as France or Great Britain has rejected such possibility (Cour de Cassation, judgment of 10 December 2013,FR:CCASS:2013:CO01205).

This is the first time that the CJEU rules on the copyright of the taste of a food product.

Until now, the Court has taken a position only in respect of smells’ registration as trademarks in Europe. The CJEU held in Sieckmann v Deutsches Patent- und Markenamt(Case C-273/00, 12 December 2002) that “smells” are capable of performing the function of a trademark, but they are not capable of registration, since they cannot be represented in a trademark register in a clear, precise, self-contained, easily accessible, intelligible, durable and objective manner.

In the present case, the CJEU ruled that a company should not have the right to copyright the flavour of a food product on very similar grounds.

Following the AG Melchior Wathelet’ s Opinion, the Court stated that the flavour of food can not be regarded as a “work” under Directive 2001/29.

For there to be a ‘work’ as per Directive 2001/29, the subject matter protected by copyright must be expressed in a manner which makes it identifiable with sufficient precision and objectivity, even though that expression is not necessarily in permanent form.

That is because, first, the authorities responsible for ensuring that the exclusive rights inherent in copyright are protected must be able to identify, clearly and precisely, the subject matter so protected. The same is true for individuals, in particular economic operators, who must be able to identify, clearly and precisely, what is the subject matter of protection which third parties, especially competitors, enjoy”.

Secondly, the need to ensure that there is no element of subjectivity –– given that it is detrimental to legal certainty –– in the process of identifying the protected subject matter means that the latter must be capable of being expressed in a precise and objective manner” (decision, para. 41).

Unlike, for example, a literary, pictorial, cinematographic or musical work, which is a precise and objective form of expression, the taste of a food product will be identified essentially on the basis of taste sensations and experiences, which are subjective and variable since they depend, inter alia, on factors particular to the person tasting the product concerned, such as age, food preferences and consumption habits, as well as on the environment or context in which the product is consumed” (decision para. 42).

Moreover, “it is not possible in the current state of scientific development to achieve by technical means a precise and objective identification of the taste of a food product which enables it to be distinguished from the taste of other products of the same kind” (decision para. 43).

It must therefore be concluded that the taste of a food product cannot be pinned down with precision and objectivity and, consequently, “cannot be classified as a ‘work’ within the meaning of Directive 2001/29” (decision para. 44).

This case is particularly interesting as the CJEU attempt for the first time to harmonise the meaning of “works” at EU level, giving to it “an autonomous and uniform interpretation throughout the European Union”.

This should limit the ability for national courts to assess autonomously the protectability of non-conventional categories of work (such as the smell of perfume) and contribute to favour a uniform application of EU law.

While the author shares the CJEU’s concerns about granting copyright protection to smells which cannot be identified precisely, doubt remains about whether copyright protection should be granted to them, when the available technology should make it possible such objective identification in the next future.

Likewise in the Sickmann case, it seems that the CJEU would have preferred to provide a non-definitive response to the issue.

CJEU, 13 November 2018, Levola Hengelo BV v. Smile Foods BV, C-310/17, ECLI:EU:C:2018:899

Jacopo Ciani

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))

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

 

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)

First results of the public consultation on revision of the EU Database Directive

Last 6 October, the European Commission published the first results of the public consultation on revision of the Database Directive 96/9/EC (here) that took place between 24 May and 30 August 2017 (here).

Among the various initiatives to foster European data economy, the European Commission is conducting an ex-post evaluation of the Database Directive. In its view, the Directive should play a key role in increasing legal certainty for database makers and users, and enhancing the re-use of data.

There is however little evidence regarding the application and effects of the Directive. The previous report published in 2005 concluded that “the economic impact of the ‘sui generis’ right on database production is unproven” (here). The 2005 Report (not really positive) invited for more analysis on the Directive’s effects.

After more than 10 years, where the CJEU had to clarify the boundaries of the sui generis right, the aim of the consultation is “to understand how the Database Directive, and in particular the sui generis protection of databases, is used, to evaluate its impact on users and to identify possible needs of adjustment”.

The European Commission asked in particular if:

  1. by creating the sui generis right, the Directive has protected investment in the creation updating or maintenance of a database
  2. the Directive is encouraging investments in advances information processing systems
  3. the Directive reached a good balance between interest of rightholders and users
  4. the Directive has achieved harmonisation
  5. national contract law give more legal certainty than sui generis protection when it comes to prevention of extracting or re-using database content
  6. the Directive still fit for purpose in an increasingly data driven economy

Respondents were a mix of business, academics/research institutions, trade associations, and non-governmental organizations.

At a first glance views are divided, particularly in relation to whether [I have tried to count the answers, including the report of the anonymous replies, taking aside hesitant positions – so apologies for any inaccuracy]:

  • the Directive sufficiently protects investments in creating databases (II.2.1) – pro: 45 / contra 25
  • the Directive has achieved its objective to protect and stimulate a wide variety of databasesand innovation in advanced processing systems (II.2.2) – pro: 38/ contra 39, and development of the data market (II.3.9) – pro: 39/ contra 39
  • the current scope of the sui generisright is still satisfactory (III.5.1) pro (satisfactory – too narrow): 42 / contra (too broad – unclear): 53
  • the original objectives of the Directive are still in line with the needs of the EU (III.1) – pro: 53/ contra 39
  • the Directive is coherent with the EU Data Economy Package objectives (III.4.4) pro: 27 / contra: 34
  • the sui generis right has brought more legal certainty for database makers (II.3.1) – pro: 43 / contra: 42, and lawful users (II.3.2) – pro: 38 / contra: 47
  • the Directive achieves a good balance between interests of rightholders and users (II.2.4) – pro: 32 / contra 49
  • the Directive had a positive effect on (i) access to data (II.3.5) – pro 29 / contra (negative or no effect) 57; or (ii) re-use of data (II.3.6) – pro: 30 / contra (negative or no effect) 51
  • national case law gives more legal certainty than the sui generis right (II.2.6) – pro: 30 / contra: 35
  • whether the Directive still fit for purpose in an increasingly data driven economy (2g) – pro: 36 / contra: 47
  • whether the restriction drawn by the CJEU on the scope of the sui generis right (i.e., no protection of the investment made in the creation of data) had positive effect on the scope of the protection of database (III.9.1) – pro: 33 / contra: 27
  • The sui generis right should apply to databases which contain automatically collected and/or machine-generated data (III.10.2) – pro: 20 / contra: 36

As said, opinions are divided, although at a first glance, the general outcome seems not very positive.

It is difficult to foresee which adjustments the European Commission is willing to propose, if any. It is known that the introduction of the sui generis right has been largely criticized (going in the opposite direction than that endorsed by Feist in the US). And it does not seem that any other country has been inspired by and replicated our EU database protection system. Both the 2005 evaluation and this public consultation highlighted that the subject matter and the extension of the sui generis right are often unclear. Indeed, the CJEU intervention has been necessary to limit an excessive extension and the possibility to protect the investments in the creation of data (only those relating collection, verification and presentation of data can be protected – see here and here). However, the points raised in this consultation seem to suggest that the European Commission is trying to question the CJEU approach. The European Commission indeed has inquired about the respondents’ approval of the CJEU interpretation (to ask whether they would instead include also the creation of data under the database right) and whether businesses have appetite to explore the extension of rights also in non-personal raw data (machine generated data), at the moment excluded by the scope of the database right (that requires the investment in the “organization” of data – i.e., the contrary of “raw” data). Thus it seems that apparently the goal is finding confirmations from the market to legitimize a stronger legislative approach to data.

As a confirmation, the European Commission has already launched at least two other recent consultations about the opportunity to strengthen the legislative approach to data, respectively in (i) 2016, see the “Synopsis report – public consultation on the regulatory environment for data and cloud computing”, of 12 May 2016 here at § 4.2.4.; and (ii) in 2017, see the “Synopsis report – public consultation on building a European data economy, of 7 September 2017, here, at p. 5. However, the answer of the market seems always the same: the data value chains are extremely varied, making it difficult to design one-size-fits-all solutions, and freedom of contract should prevail (see here for our comments against the introduction of new exclusive rights in data).

Instead, adjustment can be introduced in the boundaries of the exclusive given by the sui generis right, such as the concept of “substantiality” of the extraction/re-use (Art. 7 of the Database Directive) and – above all – exceptions. Exceptions – especially those for research – should be made mandatory and not optional (see Articles 6.2 and 9 of Database Directive). In this regard, it should also be advisable to introduce the Text and Data Mining (TDM) exception suggested by the DSM Copyright Directive Proposal (see our comments here). However, we repeat that the new exception should allow also TDM for commercial purposes although based on compensation (paying access), in order to stimulate auto-regulation and new access schemes. TDM is not competing with the exploitation of the original database (in line with Art. 8.2 of the Database Directive) and seems instead a good mechanism to ensure flexibility and open data (that is a real instrument to foster a European data market).

In any case, the public consultation should push the European Commission to analyze the economic impact of the ‘sui generis’ right, in order to justify its stay in the EU acquis. We will keep monitoring the next communications from the European Commission on this issue.

Francesco Banterle

The relevance of profit for the qualification of an act of communication to the public according to the Italian Court of Frosinone

The decision of the Court of Frosinone, published on February 2017 (available here), relies on a criminal investigation carried out by the Italian Tax Police earlier in 2014 against several websites that shared protected contents without the authorization of the right holders. Among these websites, there was also filmakerz.org.

The users of filmakerz.org were allowed to access without right holders’ consent a large number of movies and TV series through hyperlinks posted on the website. However, before being able to check the list of links that redirected to other websites, users were forced to see advertising banners.

The Italian Tax Police initially requested the Review Court of Rome, competent to rule on precautionary measures, to grant the preventive seizure of the website to exclude any further access to the infringing material. Other than expected, the Court rejected the request considering that the information insofar collected by the Tax Police was insufficient to prove the capacity of the advertising banners to produce profit in favor of the website’s holder, considering the profit purpose crucial to grant any precautionary measure against filmakerz.org.

Following further investigations, the Tax Police found out that after the first instance request, the websites filmakerz.org and the affiliated websites filmakerz.me and filmkerz.biz, automatically redirected to the website cineteka.org. According to the Tax Police, it was highly reasonable that all the domains were managed by the same person (filmakerz.org‘s holder), who set the redirection to bypass any possible block applied against filmakerz.org and the other affiliated websites.

The evidence presented before the Prefecture of Frosinone in the administrative proceedings was instead considered sufficient by the Judge to issue a fine of Euros 546,528.69 according to Article 171-ter, para. 2, letter a-bis of the Italian Copyright Act (which punishes everyone who “In violation of art. 16 of the Copyright Act, for profit, communicates to the public a copyright-protected work or part of it, by entering it into a system of telematic networks, by means of connections of any kind”).

The infringer appealed the administrative sanction before the Court of Frosinone which overruled the Prefecture’s decision. According to the Court the Italian Copyright Act requires the unauthorized communication to the public to be performed for profit, namely the intention to gain a consistent economic advantage or patrimonial increase from the infringer’s illegal conduct. It follows that the hyperlinker cannot be sanctioned for the sole act of linking to unauthorized protected material, but it is necessary that this leads to a considerable economic benefit.

In the case at stake, the evidence collected was deemed not sufficient to prove that the creator of filmakerz.org, filmakerz.me, filmkerz.biz and cineteka.org was obtaining any significant profit from his/her activity.

The Court of Frosinone has been one of the first in Italy to deal with the linking issue after the CJEU recent cases (particularly Svensson, GS Media and more recently the Pirate Bay case).

The meaning of “profit” – and the possibility to detect the existence of such purpose – assumes in the case at stake a prominent relevance. The same factor has been considered also in the CJEU case law, leading to different conclusions.

In the GS Media case (available here), the CJEU did not clarify what should be intended as “lucrative purpose”, though the Court specified that the presence of the profit intention is relevant to determine whether the conduct of the hyperlinker amounts to an “act of communication to the public”. In fact, in case hyperlinking is made for profit it must be assumed that it has been made following previous controls, from which the hyperlinker should have verified that the work in question is not unlawfully published on the site to which those hyperlinks refer. Even though no lucrative purpose is detected, hyperlinking can still be considered an “act of communication to the public” if the hyperlinker is aware – or should have been reasonably aware – of the fact that said work had been published on the Internet without authorization. In the GS Media case the CJEU asserted that a profit purpose existed. But the absence of lucrative purpose would not have directly led to the exclusion of the hyperlinker’s liability: it would have just implied the need for further evidence (based on the awareness criterion).

In the Pirate Bay case (available here) the EU Court stated: “there can be no dispute that the making available and management of an online sharing platform, such as that at issue in the main proceedings, is carried out with the purpose of obtaining profit therefrom, it being clear from the observations submitted to the Court that that platform generates considerable advertising revenues”. In this case, the presence of the profit intention is strictly connected to the fact that the hyperlinker was obtaining “considerable advertising revenues” from its activity, in a way which highly resembles the case held before the Court of Frosinone. Indirect income, such as the one obtained from the advertising banners, might be qualified as source of profit in the way intended by the CJEU in the Pirate Bay case. Moving from this decision, the Court of Frosinone might have qualified the profit incoming from the advertising banners, placed on the websites under investigation, as sufficient to consider fulfilled the requirement prescribed by Article 171-ter of the Italian Copyright Act.

The other way around, the Italian Court seems to have considered that the investigation did not provided enough evidence to prove that the infringer gained an economic benefit from his/her conduct. Without clarifying if, in the Court’s view, this circumstance relied on the impossibility to qualify the advertising banners as a source of profit or, conversely, on the inability to prove that the economic advantage gained was “considerable” (that is the term used by the Court). Such consideration would require assessing when the economic benefit can be deemed “considerable” within the scope of the Italian Copyright Law, in contrast with Article 171-ter which refers only to the profit intention itself regardless any quantification.

The above considerations remain however unanswered since the decision does not share any in depth reasoning about the grounds on which the Court ruled, probably without taking into consideration to the CJEU caselaw.

Miriam Loro Piana

Court of Frosinone, docket No. 1766/2015, 7 February 2017, Unknown vs Prefecture of Frosinone (Judge Gemma Carlomusto)

 

The Court of Appeal of Milan and the active role of the ISP in selling infringing services via the e-marketplaces White Pages and Yellow Pages

The liability of the Internet Service Providers (ISPs) is still an unsettled area of the case law both at European and national level, with a lot of recent cases that deal with ISPs and the unauthorized online distribution of audio-visual contents (see CJEU case C-610/15 and Court of Appeal of Rome – case Break Media – and Court of Turin – case Delta TV). Anyway, there is also another side of the case law on the liability of ISPs that deals with the selling of goods and services which infringe IP rights via e-marketplace (the leading case of the CJEU is case C-324/09 L’Oréal Vs eBay). In a recent decision, the Court of Appeal of Milan (here) shed light on the joint liability of the ISP and the professional users of its services.

The case at stake is based on the alleged infringement of the trademarks of some major manufacturers of domestic appliance (Electrolux, Candy, Ariston, Bosch, Hoover, Smeg and others, collectively the “Claimants”) by the company ABB, with others (the “Defendant”) via some adverts on the Italianonline’s websites White Pages and Yellow Pages. ABB offered maintenance and support services for domestic appliances – on the White Pages and Yellow Pages edited by Italiaonline – using the ABB’s registered trademarks “Boschexpert”, “Candyexpert”, Aristonexpert” and so on. The Court of Milan in first instance held that ABB’s trademarks were void and found ABB liable of trademark infringement and unfair competition against the manufacturers, since the consumers were misled by the use of ABB’s trademarks on the real origin of the support and maintenance services. Italiaonline has been found jointly liable of such IP violations and both ABB and Italiaonline have been ordered to jointly pay damages to the Claimants. Italiaonline reached a settlement with the Claimants while ABB appealed the Court’s ruling of first instance.

The Court of Appeal of Milan has confirmed the ruling of the Court of first instance in terms of determination of the illicit conduct and quantification of the damages but has clarified the position of Italiaonline as ISP whose electronic means have been use for committing an IPR infringement. Indeed, in the first instance Italiaonline has been fully indemnified by ABB since ABB had a preeminent role in the illicit conduct. This seemed to ABB inconsistent, since Italiaonline has been declared jointly liable for the same illicit conduct. According to ABB, Italiaonline as a technical ISP is the sole responsible of the search engine for the adverts on the websites White Pages and Yellow Pages, which results are misleading and determining confusion to the consumers.

According to the Court of Appeal, Italianonline’s websites can be considered Information Society Services pursuant to E-commerce Directive (despite the fact the White Pages and the Yellow Pages are published both in paper and in electronic form). This leads to the fact that Italianonline can be considered a host provider pursuant to Article 14 of the E-Commerce Directive for the websites White Pages and Yellow Pages, since it technically hosts on such websites the adverts of its professional clients, such as ABB. More in detail, in this case the ISP cannot invoke the safe harbour provision pursuant to Article 14 of the E-Commerce Directive due to its active role for the third-party adverts in return for payment, where Italiaonline does not merely technically process third party adverts but also edits promotional messages coupled with the third-party adverts and identifies the key-words for its search engine. While playing this active role – according to the Court of Appeals – the ISP is responsible for lack of control and for not having expeditiously removed the infringing adverts after the notices of the Claimants (the earliest ones dated 2003).

With regards to the relation between the infringing activity of ABB and the cooperation of Italialonline, the Court of Appeal found that, even if jointly liable, ABB had effectively a preeminent role in terms of relevance and wilfulness of the conduct and that the joint liability must be evaluated according to Article 2055 of the Italian Civil Code, pursuant to which, where two or more parties are held jointly liable, the party paying the damages can recover from the other parties the pro quota of damages attributable to the level of wilfulness and to the consequences of the conduct of the other parties (so called, right of recourse). The request raised by Italianoneline for indemnification of the damages determined by ABB is considered by the Court of Appeal as a right of recourse aimed at clarifying the pro quota  of responsibility of Italiaonline. The right of recourse is applicable pro quota also to ABB as party paying the damages. In light of this interpretation, the Court of Appeal awarded also to ABB a recourse against Italiaonline equal to the 30% of damages to be paid to the Claimants.

This precedent seems of interest because the Court of Appeal of Milan, while making clear application of the principles set forth by the Court of Justice in the leading European case law L’Oréal Vs eBay (an e-marketplace cannot invoke the safe harbour provisions under E-Commerce Directive if it plays an active role by optimizing and promoting the selling of infringing products or services), has even moved forward by clarifying a possible criterion for the attribution of responsibility between professional users and e-marketplaces. It would be of interest verifying whether the same approach could be adopted by other foreign jurisdictions, since the regime of joint responsibility under tort law seems to be matter of domestic jurisdiction.

Gianluca Campus

Court of Appeal of Milan, case No.  1076/2014, 14 December 2016, Italiaonline Spa Vs ABB Srl and Others (President of the Court: Hon. A.M. Vigorelli; Judge-Rapporteur Hon. F. Fiecconi)

The shape of the worldwide famous Vespa obtains protection in Italy under copyright law

Piaggio, the Italian company producer of the world wide famous Vespa scooter, was recently sued by the Chinese company Zhejiang Zhongneng Industry Group (“ZZIG”) in a quite complex case.

ZZIG offered for sale three scooters named “Revival”, protected by a Community design registration no. 001783655-0002, “Cityzen” and “Ves”, the shape of which was not covered by any registered IP right in Italy or in the European Union.

Capture ZZIG

As to Piaggio, the company owns the Italian 3D trademark no.1556520 claiming priority of the Community trademark no. 011686482, filed on 7 August 2013 and registered on 29 August 2013.

Capture Vespa

When Piaggio obtained the seizure of the three above motorbike models in the context of a Fair held in Milan, the Chinese company started an ordinary proceeding on the merits before the Court of Turin against Piaggio, seeking the declaration of non-infringement of Piaggio Vespa 3D trademark by its “Revival”, “Cityzen” and “Ves” scooters. Besides, it asked a declaration of invalidity of Piaggio’s Vespa trademark, based on the fact that it was anticipated by their design and thus not novel. Also, it held that the 3D trademark was void, as it does not respect the absolute ground for refusal established by the law.

Piaggio resisted and asked the Court of Turin to reject the above claims, declare that the Vespa shape is protected under copyright law, trademark law and unfair competition law and that those rights were infringed by ZIGG three models of scooters. As a matter of fact, Vespa was offered for sale by Piaggio since 1945.

First of all, the Court of Turin declared that the Vespa trademark does not lack of novelty, as it reflects a model of Vespa marketed since 2005, before the commercialization of ZZIG first scooter, i.e. “Cityzen”. Moreover, the Court of Turin excluded the existence of any absolute ground for refusal, stating that its shape was not technical nor standard and not even substantial as the reason why consumers chose the Vespa were not merely aesthetical. Based on these findings, the Court finally affirmed that only the “Ves” scooter constitute an infringement of Piaggio trademark.

This  said, the Court of Turin further held that the Vespa shape is eligible for protection under copyright law, as it is since long time worldwide recognized as an icon of Italian design and style, shown in advertising and movies, presented plenty of times at museum and exhibitions and part of many books, articles, magazines and publications. All considered, safe and sound evidence show that the shape of Vespa is unequivocally believed to be an artistic piece of designs by the main communities of experts worldwide. Nevertheless, the Court held that, again, only Ves scooter infringed Piaggio rights vested on its scooter as it presents features similar to the ones protected both under the Vespa trademark and copyright.

The decision (full text here) is indeed interesting as it critically examines the similarities and differences between the “original” good and the ones that are claimed to be infringing products and, while asserting the eligibility for protection of the Vespa shape both under trademark and copyright law, it excludes infringement for two products through a detailed and careful examination. This narrow approach is indeed interesting because it affirms the principle that the infringement of designs protected under copyright law shall be evaluated with an analytical examination similar to those applied in cases of trademark infringement.

A doubt might remain about the overlapping of trademark and copyright protection. Since the former never expires as long as the product is on the market (plus the subsequent five years, according to Italian law), one might ask what advantage for the right holder might subsist by ‘adding’ a protection limited in time, such as copyright’s. The answer might be: the dual protection functions as a ‘parachute’ for the case that one of the two, in a subsequent Judgement (Appeal or High Court: Cassazione in Italy) should be successfully challenged by a competitor.

Maria Luigia Franceschelli

Court of Turin, case No. 13811/2014, 6 April 2017, Zhejiang Zhongneng Industry Group, Taizhou Zhongneng Import And Export Co. vs Piaggio & c. S.p.a..

Design’s artistic value: no univocal definition according to the Italian Supreme Court

With the decision at stake (dated November 13, 2015, full decision here) on the possible copyright protection of an out-door seat, the Supreme Court interestingly expressed a subtle (but crucial) critic on the current approach adopted by some Italian decisions that seem to ‘generously’ recognize the existence of artistic value for design objects, leaning on apparently weak – or lonely – evidence. This appears to be, for example, the case of the recent decision of the Supreme Court affirming that Moon Boots were artistic, as allegedly proved by the fact that the boots were exposed in an exhibition of industrial design works at the Louvre Museum (see full decision here).

A more severe approach seems to be adopted by the decision in comment, concerning the design of a line of outdoor seats called “Libre”, created by the plaintiff and claimed to be eligible for protection under copyright law. The Court of first instance and the Court of Appeal of Venice excluded the existence of an artistic value and thus excluded any copyright infringement by a line of similar outdoors seat created by a competitor. So, the plaintiff asked the Supreme Court to interpret such notion.

Capture Libre

The Italian Supreme Court, after having made a useful recognition of the current trends adopted by Italian Courts in the interpretation of such requirement, affirmed that the concept of artistic value cannot be confined in one, unique and exhaustive definition. The cases being too various, it is more useful defining a number of parameters that Judges can apply on a case-by-case basis, considering in depth the concrete facts occurred. Those parameters, continues the Court, have both subjective and objective aspects.

As to the former, they consist in the capability of the object to stir aesthetic emotions, in the greater creativity or originality of the shape – compared the others normally found in similar products on the market – transcending the practical functionality of the good: aesthetic have its own independent and distinct relevance. These emotions, admits the Supreme Court, are inevitably subject to the personal experience, culture, feeling and taste of the individual doing the evaluation. The result of the assessment on the existence of artistic value may thus change depending on who looks at the piece of design. So, it is necessary to indicate more objective parameters.

It is therefore to be considered the recognition that the piece of design has received within the cultural and institutional circles with respect to its artistic and aesthetic features. This witnesses that the aesthetic appearance is considered capable of giving to the object a value and a meaning independent from its strict functionality. In concrete, this is shown by the presence of the object at museum or exhibitions, mentions in specialized newspapers and journals (not having a commercial scope), the critics, awards, prices and similar. On top of that, crucial appears the circumstance that the object has gained an autonomous value on the market of pieces of art, parallel to the commercial one or, more commonly, that it has reached a high economic value showing that the public appreciates and recognizes (and is ready to pay) its artistic merits. All the above elements are inevitably influenced by time: if a product is new it would have had no time to receive such prices, honors and awards from third parties. Even this parameter shall thus not be considered as absolute, but still connected to a case by case analysis.

With the above, wide and flexible interpretation of the concept of artistic value, the Supreme Court appears to distance itself from a jurisprudence that focused the existence of  even just one of the above circumstances.  In particular, it seems to downplay the current trend, more and more popular in the merit Courts,  whereby the presence of the piece of design in museums and exhibitions constitutes per se a sufficient evidence of the artistic merits of an object. The decision in comment seems to ask the lower Courts to be more selective and in ascertaining the existence of an artistic merit in the design object. And to do this on a case-by-case analysis, excluding any “a priori” single-criterion-based assessment.

By this decision the Supreme Court gives objectively rules in favor of small or new designers and firms, whose products could achieve protection on the basis of a concrete analysis of the single object’s potentialities, independently from its long-lasting presence on the market, huge marketing efforts, or the capability to  exhibit  the object in a museum. The current approach, criticized by the Supreme Court, seems indeed to privilege ( moreover, in an era of crisis) companies that are already solidly established and powerful on the market. This decision is good news for competition.

Maria Luigia Franceschelli

Italian Supreme Court, case No. 23292/2015, 13 November 2015, Metalco S.p.A. vs City Design S.r.l. and City Design S.p.A..