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

Can I have a Big Mac – or should I now say “layered double cheeseburger”? Amid non-use and well-known facts.

This past January, the revocation of McDonald’s “BIG MAC” word EU trade mark for non-use  was widely reported, both among IP aficionados (here, here, here and here) and in the media (here, here and here). The EUIPO decision (Cancellation No 14 788 C) can be read here.

A few days later, McDonald’s arch-rival Burger King temporarily renamed the sandwiches on the menu of its Swedish operation “Not Big Mac’s” (see the article on The Guardian, here). The opportunity for a poignant joke was evidently too “juicy” to be missed (it would appear that the video of Burger King’s Swedish stunt is not available on YouTube any longer, but you can still see it here).

big mac

Unsurprisingly, McDonald’s has recently filed an appeal against the EUIPO Cancellation Division’s decision (see here).

Waiting to see what the Boards of Appeal will eventually decide, the “BIG MAC” decision offers an interesting chance to discuss the role of evidence and of “well-known facts” in the assessment of (non-)use and reputation of trade marks in the EU.

The EUIPO decision

McDonald’s filed the “BIG MAC” word EU trade mark (No. 62638) for goods and services in classes 29, 30 and 42, which included “meat sandwiches“.

Supermac’s, an Irish burger chain, brought an application under Article 58(1)(a) of the EUTMR, requesting the revocation of “BIG MAC” in its entirety, arguing that the mark was not put to genuine use during a continuous period of five years in the EU. The application for revocation followed McDonald’s own opposition against an EU trade mark application for “SUPERMAC’S”.

In reply, McDonald’s provided the following evidence of genuine use:

  • 3 affidavits signed by McDonald’s representatives claiming significant sales of “Big Mac” sandwiches in EU Member States;
  • brochures and printouts of advertising posters, packaging and menus showing “Big Mac” sandwiches;
  • printouts from McDonald’s official websites for many (18) EU Member States, depicting, among others, “Big Mac” sandwiches; and
  • a printout from the English version of Wikipedia, providing information, nutritional values and history on the “Big Mac” sandwich.

Supermac’s argued that the evidence of use submitted by McDonald’s did not prove that the “BIG MAC” mark was put to genuine use “for anything other than sandwiches“, thus allowing that use for sandwiches would be proved.

However, the Cancellation Division found that the evidence submitted was insufficient to establish genuine use of the trade mark for all products and services. In particular, the Cancellation Division noted that:

  • ex parte affidavits, although explicitly allowed as means of evidence before the EUIPO, are “generally given less weight than independent evidence“;
  • practically all evidence submitted originated from the EUTM proprietor itself;
  • the mere presence of a trade mark on a website is, of itself, insufficient to prove genuine use “unless it shows also the place, time and extent of use or unless this information is otherwise provided“;
  • in this regard, the EUTM proprietor could have provided records of internet traffic, hits, or online orders; however, the printouts submitted carried “no information of a single order being placed“;
  • Wikipedia entries cannot be considered a reliable source of information, as they can be amended by users and may be relevant only if supported by other pieces of evidence; and
  • a declaration by the applicant itself concluding that the evidence submitted was sufficient to prove use of the trade mark in relation to some of the goods (i.e. sandwiches) could not have any effect on the Office’s findings.

On these grounds, the Cancellation Division revoked the “BIG MAC” trade mark in its entirety.

A bitter pill (or “bite” as Italians would say) for the trade mark proprietor?

Following the publication of the decision, many comments highlighted how, although ostensibly strict, the Cancellation Division provided helpful guidance to trade mark proprietors on the kind of evidence that would be needed to show genuine use (here, here, here and here).

In the context of opposition or cancellation proceedings, it is quite common to rely, among others, on affidavits and printouts from company websites and online sources (such as Wikipedia) as evidence of use and reputation. However, the “Big Mac” decision suggests that this may be not enough.

It is most likely that McDonald’s will now try to submit additional evidence before the Board of Appeal, along the lines suggested in the cancellation decision. According to Art. 27 of the EUTMDR, this could be allowed since: “the Board of Appeal may accept facts or evidence submitted for the first time before it” provided that “they are, on the face of it, likely to be relevant for the outcome of the case; and […] they are merely supplementing relevant facts and evidence which had already been submitted in due time“.

In any case, leaving aside the inherent limits of the evidence submitted by the trade mark proprietor, the outcome of the “BIG MAC” decision seems somewhat counter-intuitive.

After all, Big Mac is one of (if not “the”) signature sandwiches of the largest restaurant chain in the world, and it has been sold continuously for the past fifty years (WARNING: these are Wikipedia facts!). Big Mac is such a globally wide-spread product that, in the late 80’s, The Economist developed the “Big Mac index” using the different local prices of the sandwich to measure buying power and currency misalignments across the world. The “Big Mac index” has been used and updated for more than 30 years (for more Burgernomics, see here).

big mac index

One may thus wonder: how can such a “famous” trade mark be legitimately revoked because of insufficient evidence of genuine use, at least in relation to some of the goods and services (notably: hamburger sandwiches!)?

Perhaps, the doctrine of “well-known facts” (in Italian, the so-called “fatti notori“) could (or should) have played a bigger role in the reasoning of the Cancellation Division. In fact, the CJEU case law on trade marks suggests that well-known facts can be taken into account when assessing elements such as reputation, likelihood of confusion and distinctiveness.

For instance, in the Picasso/Picaro case, the General Court argued that “the restriction of the factual basis of the examination by the Board of Appeal does not preclude it from taking into consideration, in addition to the facts expressly put forward by the parties to the opposition proceedings, facts which are well known, that is, which are likely to be known by anyone or which may be learnt from generally accessible sources. […] Article 74(1) of Regulation No 40/94 cannot have the purpose of compelling the opposition division or Board of Appeal consciously to adopt a decision on the basis of factual hypotheses which are manifestly incomplete or contrary to reality. Nor is it intended to require the parties to opposition proceedings to put forward before OHIM every well-known fact which might possibly be relevant to the decision to be adopted” (T-185/02, 22 June 2004, Claude Ruiz-Picasso and Others/OHIM; see also T-623/11, 9 April 2014, Pico Food GmbH/Bogumił Sobieraj, § 19).

Along the same lines, the General Court more recently allowed that “where the Board of Appeal finds that the mark applied for is not intrinsically distinctive, it may base its analysis on well-known facts, namely facts resulting from the generally acquired practical experience of marketing products of wide consumption, which facts are likely to be known to any person” (T-618/14, 29 June 2015, Grupo Bimbo, SAB de CV/OHIM, free translation from Spanish).

In Italy, this principle is enshrined in Art. 115(2) of the Code of Civil Procedure, which provides that “the judge may, without the need for proof, base its decision on facts which are part of the common knowledge“.

And, when considering the distinctiveness of Apple’s device trademark in the context of opposition proceedings, the same Italian Patent and Trademark Office (“IPTO”) argued that “although on the basis of the evidence on file it is not possible to assess the percentage of the relevant public which purchases the products and services distinguished by the […] trade mark […] the [reputation of the] trade mark consisting in the representation of an apple bitten on the right side belongs to the category of well-known facts” (IPTO decision 193/2016 of 20 May 2016, in the opposition No. 1083/2013, BITTEN APPLE WITH LEAF/BITTEN PEAR WITH LEAF§§33-34, here; see also IPTO decision 340/2017 of 21 September 2017, in the opposition No. 959/2014, AppleFace§§ 30-31, here).

A similar stance was taken also in relation to the “DECATHLON PLAY MORE PAY LESS” trade mark, whose reputation was held to be “in the public domain, so it does not need a specific burden of proof on behalf of the opponent” (IPTO decision 40/2015 of 10 February 2015, DECATHLON PLAY MORE PAY LESS/DECATHLON ITALY; on the IPTO practice on well-known facts, please refer also to the comments on the SPRINT portal by Prof. Stefano Sandri: here, here and here, all in Italian).

Of course, this is not to suggest that the burden of proof of genuine use should be lifted entirely when the trade mark at stake is so-to-say “famous”. However, in the assessment of the evidence on trade mark aspects such as genuine use or reputation, administrative bodies and courts should take into account the facts that “are likely to be known by anyone or which may be learnt from generally accessible sources“. Amongst these – it could be argued – one may count the continuous use of the “BIG MAC” word trade mark in relation to (at least) sandwiches in the EU. And this especially in a case where the applicant of the revocation action itself acknowledged that the trade mark was genuinely used in relation to these goods.

Finally, on the relevance of written statements and affidavits before the EUIPO, we note that Art. 97(1)(f) of the EUTMR, provides that “in any proceedings before the Office, the means of giving or obtaining evidence shall include […] statements in writing sworn or affirmed or having a similar effect under the law of the State in which the statement is drawn up“. This provision implies that the admissibility, the formal requirements and the probative value of written statements and affidavits are tied to the law of the country where they were drawn up. To take into account the different approaches, a study on the regimes on written statements in several EU Member States was commissioned by the EUIPO and can be found here.

Giovanni Trabucco

EUIPO Cancellation Division, Cancellation No. 14 788 C, Supermac’s (Holdings) Ltd vs. McDonald’s International Property Company, Ltd., 11 January 2019

Peppa Pig meets Tobbia – a tale of pigs and tapirs

Peppa Pig is a children’s animated TV series that traces the adventures of Peppa, her family and friends. Peppa is actually an animal – a pig that possesses all the human traits and so do all the animals in the series – they speak, read, go to school, drive and do all we humans do. As of 2012 Entertainment One UK Ltd and Astley Baker Davies Ltd, the entities behind Peppa Pig, hold the following registered EU figurative trade mark for, among others, “clothing, footwear, headgear” in Class 25 of the Nice Agreement:

download (1)

In 2013, Mr Xianhao Pan residing in Rome (Italy) succeeded in registering the following EU figurative mark for “clothing, footwear, headgear” in Class 25 of the Nice Agreement:

download

A few years later, in 2015, Entertainment One UK Ltd and Astley Baker Davies Ltd initiated an invalidity action against Mr Xianhao Pan based on Article 53(1)(a) of Regulation No 207/2009 (now Article 60(1)(a) of Regulation 2017/1001), read in conjunction with Article 8(1)(b) of Regulation No 207/2009 (now Article 8(1)(b) of Regulation 2017/1001).

Peppa Pigs’ creators argued that considering the complete identity of the goods, the two signs are confusingly similar to the extent that the TOBBIA trade mark had to be cancelled.

Judgment of the General Court of the EU (T-777/17)

On 21 March 2019, the General Court of the EU ruled that likelihood of confusion between the two marks exists and therefore the First Board of Appeal was correct in upholding the appeal and invalidating the TOBBIA trade mark (here).

Setting aside some preliminary procedural issues the meat of the General Court judgment was the comparison of the two signs. As usual, this had to be done taking into account the visual, phonetic and conceptual similarities between the two and evaluating the overall impression that the signs produce.

The Applicant before the Court, in this case Mr Xianhao Pan, insisted that there were no similarities between the two signs emphasising the fact that the animal in the TOBBIA mark is indeed a tapir as opposed to a pig – the animal depicted in the PEPPA PIG mark.

The Court admitted that the signs at issue differ in certain figurative elements: the colour range; the fact that the TOBBIA mark animal was in trousers, while the PEPPA PIG mark animal wore a dress; the PEPPA PIG mark had a tail and its arms were positioned in a different way as compared to the TOBBIA mark animal. Yet, the Court insisted that these differences were not capable of outweighing the similarities. Considering that the relevant public is the general one, which does not proceed to analyse all the various details of the marks but perceives them as a whole, the First Board correctly assessed that the marks were visually similar. The Board held that both signs depicted an anthropomorphic animal, namely a pig. The depiction of the head and snout were nearly identical, as well as the shape of the head and further elements on the face of the animals. The differences between the two were appreciated, but nevertheless the visual similarities were more.

The discussion on phonetic comparison followed the classical lines and confirmed some degree of correlation.

As far as the conceptual analysis is concerned, the Court was clear that that the general European public would perceive the two animals as a pig and thus conceptual similarity was also present.

All in all, the identity of the goods coupled with the similarity of the signs led to a ruling in favour of PEPPA PIG and a finding of likelihood of confusion.

An interesting discussion was brought at this stage by the Applicant in relation to the type of the animal in its TOBBIA mark. It was argued that the general public would be capable of recognising the animal in the TOBBIA trade mark as a tapir, which would have allegedly sufficed in drawing the line between the two signs. Well, the Court was certainly not convinced as it stated that the assessment of the similarity between the marks would in no way be affected “whether the public identifies the graphic elements of the two marks as two pigs or two tapirs.”

One may wonder on what ground would one even think about bringing the outlandish argument that the animal represents a tapir, which is an animal particularly well known to the public. Well, seems like the Applicant (or at least, its legal representatives), resident in Rome (Italy) is a fan of the Italian TV program Striscia la notizia”, which in line with its satirical tone, awards public figures with a price in the form of a small statute for errors, omissions to keep promises or basic embarrassing situations. Not surprisingly, this statute takes the form of a tapir and looks like this:

Tapiro d'oro

 

As entertaining as this tale of pigs and tapirs may be, the General Court was neither impressed nor convinced. It correctly pointed out the irrelevance of such argument as the relevant public at stake was the general European public (and not only the Italian one) taking into consideration the fact that the TOBBIA trade mark was a European one.

Comment

The case does not entail any ground-breaking analysis, nor particularly peculiar application of rarely raised grounds such as bad faith or intricate fiduciary relationship conundrums. Instead, it is a classic likelihood of confusion discussion comparing goods (which in the present case were even identical) and signs.

That said and regardless of how much weight one would give to the shared elements between the two signs (the presence of an anthropomorphic animals with identically shaped heads), one must admit that the two signs in fact bear rather minor similarities. The legal team of the PEPPA PIG trade mark would have been wise to raise further grounds of invalidity, namely to invoke Article 53(1)(a) in conjunction with Article 8(5) EUTMR, which provides famous marks such as PEPPA PIG with an extra layer of protection. In these cases lesser degree of signs’ similarity is required as compared to the classical likelihood of confusion situations under Article 8(1)(b) EUTMR. This would have guaranteed the ultimate success for the Peppa Pig creators provided that the relevant section of the public makes a mere connection between the marks, i.e. it establishes a link between them. This is a well-established principle following long-standing judgments of the CJEU in the Adidas (C-408/01), as well as the Intel cases (C-252/07).

Nevertheless, both the First Board of EUIPO and the General Court are to be complimented for having employed a very adequate level of common sense and rightly held that the TOBBIA mark shall be invalid in light of the PEPPA PIG mark. The analysis avoids crude formalistic application of dry legal principles, which may have risked resulting in a loss for PEPPA PIG as it is certainly questionable whether the similarity between the signs meets the standard required by Article 8(1)(b) EUTMR. Besides, the TOBBIA mark indeed resembles a poor copy of PEPPA PIG, which is further supported by the fact that the Applicant seems to be a trade mark squatter of children’s brands. A quick search on the EUIPO database reveals that the Applicant has unsuccessfully tried to register the following marks, which regardless of how far detached from childhood one is do certainly ring a bell:

  • Happy duck(filing number 009282161, opposed by, among others, Disney Enterprises Inc.)
  • Sponteboll(filing number 009482175, opposed by Viacom International Inc.)
  • Doggy dog(filing number 010776177, opposed by, among others, Turner Entertainment Co.)

Alina Trapova

General Court (Eighth Chamber), 21 march 2019, Xianhao Pan v European Union Intellectual Property Office (EUIPO), Case T-777/17

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

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)

Birkenstock fails to register as a trademark its shoes’ sole pattern

European Union General Court, 9 November 2016, Case T-579/14, Birkenstock Sales GmbH v EUIPO


By its judgement of 9 November 2016 the European Union General Court confirmed the refusal of protection of the international trademark registration of the Birkenstock sole pattern presenting wavy lines crisscrossing at right angles in a repetitive sequBirkenstock imageence.

The GC agreed with the assessment of the EUIPO Board of Appeal that the trade mark in question was devoid of any distinctive character in respect of orthopaedic shoes and parts therefor.

The GC found that the repetitive sequence could extend infinitely in all four directions of the square and therefore be applied to any two- or three-dimensional surface.

Thus the sign at issue would be perceived immediately as representing a surface pattern.

It observed that the case-law relating to signs that are indissociable from the appearance of the products should be applicable in the case at issue.

Such case-law stated that as the average consumers do not usually presume the commercial origin of goods on the basis of the signs that are indissociable from the goods themselves, those signs will have distinctive character only if they depart signicantly from the sectorial standards or usual practices (judgments of 12 January 2006, Deutsche SiSi-Werke v OHIM, C‑173/04 P, EU:C:2006:20, paragraph 31, and 22 June 2006, Storck v OHIM, C‑25/05 P, EU:C:2006:422, paragraph 28).

In the judgment of 19 September 2012, Fraas v OHIM, “Tartan pattern in dark grey, light grey, black, beige, dark red and light red” (T‑50/11) the Court already applied such a test  in the case of a figurative mark consisting of a part of the shape of the product that it represents, inasmuch as the relevant public will immediately and without further thought perceive it as a representation of a particularly interesting or attractive detail of the product in question, rather than as an indication of its commercial origin.

According to such case law, the court concluded that it was well known that the surfaces of goods or their packaging are decorated with patterns for a variety of reasons, including enhancing their aesthetic appearance and/or for technical reasons.

The decision has been appealed before the ECJ (C-26/17 P).

This is not the first case addressing whether an outsole is capable of functioning as a trademark. Many will remenber that Louboutin, the renowned footwear brand based in Paris, registered as a trademark the bright-red lacquered sole featuring its luxury footwear and filed a trademark infringement lawsuit against Yves Saint Laurent, Zara and other competitors, in a number of countries, including Swiss, France, Germany, Belgium and the United States. In these cases, however, the limits of the protection granted to the colour red contained in a trademark were at issue, with very different outcomes.

Just for mention the most significant findings, the U.S. Second Circuit Court of Appeals (No. 11-3303, 2013) found that the Red Sole Trademark had acquired secondary meaning, but only to the extent the sole did contrast with the upper part of a shoe (i.e., not in case of monochromatic red shoes). On the contrary, The Swiss Federal Administrative Court ruled that the red soles are merely a decoration, ineligible for trademark protection (decision B-6219/2013) and the French Supreme Court (may 30, 2012) stated the 3D mark could not be registered because the shape lacks distinctiveness and is imposed by its function.

Jacopo Ciani

Patent or Utility Model: which distinction?

Four months ago, the Italian Supreme Court ruled again on the distinction between Patents and Utility Models (full Italian text here).

Vecam S.p.A. brought action before Milan IP Court asking for the declaration of invalidity of the Italian portion of European Patent No. 1024331, owned by Tecnosystemi S.p.A. The patent dealt with a “Flush-mount enclosure, particularly for making provisions for air-conditioning systems”. While resisting against Vecam, Tecnosystemy in alternative asked to establish whether the requirements for conversion of the Patent into a Utility Model were met.

Article 76.3 of the Italian Intellectual Property Code reads “A null patent may produce the effects of a different patent of which it possesses the requirements of validity and that would have been desired by the requesting party, if he had known of the nullity”.

On 13 May 2010, the IP Court upheld the claim of Vecam declaring the Italian portion of European patent no. 1024331 invalid. At the same time, the Court asserted that the legal requirements for conversion of the patent into a utility model were met.

Against the first instance decision, which downgraded the Patent into a Utility Model, Tecnosystemi filed an Appeal before Milan’s Court asking for the Italian European Patent no.1024331 to be recognized valid.

The Court of Appeal confirmed the decision of the first instance stating that the technological solution constituted an utility model. In particular, the Court explained that Tecnosystemi improved the usefulness of something already existing whilst it did not invent anything new.

More precisely, the air conditioning unit was built with a new device allowing a 180 degrees rotation of the flush-mount enclosure’s base aiming to facilitate the condensate’s drain.

Tecnosystemi then filed an appeal before the Italian Supreme Court assuming that the Court of Appeal, as the Judge of first instance had done, had not been able to identify how to correctly distinguish between Patent and Utility Model.

The Supreme Court declared the appeal inadmissible and, quoting two precedents (Italian Supreme Court – Judgments 8510/2008 – and 19688/2009), it clarified that Utility Models: require an inventive step capable of increasing the usefulness of something already existing rather than inventing a completely new product or process.

By this decision the Italian Supreme Court followed the so-called “Qualitative Doctrine”, whereby, while Patents relate to a new product or a new process Utility Models concern an existing object.

However, several scholars share the so-called “Quantitative Doctrine” whereby Patents require an higher inventive step.

Other proposals have emerged in Italy in the last few years, which aim at across-the board abolishing the category itself of utility models. This, on the basis of the intrinsic inconsistency of separating two different levels of ‘inventive character’ vis-à-vis the fact that, even for patents, nothing more than ‘non obviousness’ is required. Thus, once the ‘inventive step’ is a unitary requirement, there is no reason why to retain two different types /level of protection.

Giovanna Sverzellati

 Italian Supreme Court – Judgment No. 16949 of 10 August 2016

HOW MUCH A TRADEMARK SHALL BE USED BY A NON-PROFIT ASSOCIATION TO AVOID BEING DECLARED REVOKED FOR NON-USE? THE SEVERE OPINION OF THE COURT OF BOLOGNA

According to article 24 of the Italian Intellectual Property Code, an Italian trade mark shall be revoked (i) if, within a continuous period of five years, it has not been put to genuine use in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non-use or (ii) if the use is suspended for the same amount of time.

Not many Italian decisions addressed the question of which uses are considered “genuine” and which is the sufficient amount of use that would put the right-owner safe from any contestation.

The Court of Bologna had the chance to investigate this question in a case (available here) involving a non-profit sailing club that sued a company when it discovered that it had started the production and commercialization of sailing cloths and accessories using the exact same trade mark already registered by the club and had registered a number of identical and similar trademarks for identical products (i.e. sailing accessories and garments).

immagine-iplens-moro

According to the defendants, however, the plaintiff could not enforce its earlier trademark because it had been used on the market in a manner that was not effective. Thus, they counter-claimed to declare it revoked for non-use.

The plaintiff resisted claiming that the use made of the “IL MORO” trademark in the years was genuine and continuous, in line with the purposes of the sailing club and the activities organized by its members. In particular, the plaintiff showed, by filing a number of pictures and invoices, that the trademark was used for clothes, shoes and accessories that were distributed for free during sailing races and similar events.

Bearing in mind that the rationale behind the provision on revocation for non-use is to “clean” the register from those trademark registration preventing third parties from registering and using a name or a logo as trademark in absence in the right owner of any interest in being secured such monopoly – which is indeed a goal consistent with the pro-competitive rationale of the requirement of availability (i.e. the need to keep free) – the case law actually adopts different approaches on the notion of use that is sufficient to evidence the subsistence of said interest.

According to a first theory, any type of use is sufficient, as long as it shows an actual interest of the right holder in continuing to distinguish its products/services on the market. Consequently, only the complete and total cessation, in any mode, of the trademark’s use would cause its revocation. Even a local, restrained in time or intermittent use could be thus considered sufficient (see Court of Milan decision of 10 October 1996, Court of Milan decision of 30 September 2002, Court of Turin decision of 21 December 2004 and Court of Rome decision of 22 May 2003 and, among the leading scholars, A. Vanzetti – V. Di Cataldo, Manuale di diritto industriale, Milan, 2012, page 283).

According to a second theory, to which the decision in comment adheres, only a sufficiently intense, stable and continuous use of the trademark on products or services offered for sale on the market can prevent revocation. This use shall be not symbolic: consumers shall be aware of the sign so that it is capable of distinguishing the products or services from the competitors’ (see Supreme Court case no. 16664 decision of 1 October 2012, Court of Naples decision of 2 February and Court of Milan 20 September 2002).

By upholding this second theory the Court of Bologna non only affirmed that the use made by the plaintiff was too limited for the small amount of sailing clothes and accessories produced by the club, but also claimed that said use was not genuine. This because the garments and accessories on which the trademark was fixed were promotional gadgets intended to be distributed for free to club members and in occasion of sailing events. In other words, they were not for sale. Thus, the “IL MORO” figurative trademark was, according to the Court of Bologna, not used to distinguish the sailing club’s products from the ones offered by other companies on the relevant market.

Even if the ‘requirement of availability’ would support the result of the decision, due to the limited use made of the trademark on the market, it is also true that trademark law does not require that only companies with a profitable business (and the consequent capability of demonstrating wide sales made on the Italian market) are entitled to register a trademark.

In particular, the provision requires the existence of a use and not that such use has generated incomes to the right owner. The EU Court of First Instance seems to have confirmed this point, having assessed – with respect to EU trademarks, but the provision is equivalent – that “the purpose of the provision is not to assess commercial success or to review the economic strategy of an undertaking, nor is it intended to restrict trade-mark protection to the case where large-scale commercial use has been made of the marks” (Case T-191/07 Anheuser‑Busch v OHIM, Inc. see also case T‑169/06, Charlott v OHIM and case T‑203/02 Sunrider v OHIM).

It thus seems that the evaluation of the existence of a use should be carried on taking into account also the type of business of the right-owner, on the basis of a case-to-case analysis. Otherwise, the trademarks registered by non-profit organizations would be seriously compromised.

Court of Bologna, case No. 9754/2013, 9 September 2015, Europa Yacht Club, Moro S.r.l. and Giovanni Benito Ballestrazzi v. Punta della Maestra S.r.l., Overseas Property LLC, ASD Il Moro di Venezia Yacht Club and Rama S.n.c..

Competition law’s application to patent settlement agreements: the first UK decision

When a pharmaceutical patent expires, the patent owner will normally face the competition of ‘generic‘ versions of the patented drug, which often means a dramatic fall in the originator product’s prices as well as an impending revenue cliff.

GlaxoSmithKline (hereinafter “GSK”) faced such a situation with regard to its patented anti-depressant product, Seroxat®, one of its best selling medications during the 2001-2004 time period. In 2001, a number of generics producers were taking steps to enter the market with their own versions of the product. GSK responded to the threat by commencing proceedings against two generics producers, Alpharma Limited (Alpharma) and Generics (UK) Limited (GUK), for breaching its patents.

Rather than taking the matter to trial, the parties proceeded to settle the case. The settlement terms included GSK paying certain sums to the generics producers and appointing them as its distributors of Seroxat®. In return, the generics producers agreed not to launch their own products into the UK market.

On the 12th of February 2016, the Competition and Markets Authority (former Office of Fair Trading) ran out an investigation against GSK and the generic companies finding that they had entered into anti-competitive reverse-payment settlements agreements for breaches of Chapter I of the Competition Act 1998 and Article 101 of the Treaty on the Functioning of the European Union (TFEU) (ex-Article 81 of the Treaty Establishing the European Community, TEC) (see the CMA press release at https://www.gov.uk/government/news/cma-fines-pharma-companies-45-millionfull, text of the decision yet to be published). The CMA found that the agreements effectively prevented the generic competitors from entering the paroxetine market and deprived the National Health Service of price falls averaging 70 per cent. Therefore it characterised the arrangements as a cartel and as an abuse of dominance by GSK.

The decision culminates in total fines of just under £50 million including a fine of £37.6 million against GSK. The size of the fine is itself significant: it is the second largest to have been imposed on an individual company by the UK competition authorities.

This is the first UK decision to consider the application of competition law to patent settlement agreements. However, the pharmaceuticals sector is not new to the attention of the competition authorities.

In the U.S., the FTC’s efforts to combat harmful reverse-payment settlement agreements resulted in the Supreme Court’s landmark decision in FTC v. Actavis, Inc., 133 S. Ct. 2223 (June 17, 2013), which held that these settlements are subject to antitrust scrutiny.

At the EU level, patent settlement were thoroughly reviewed in the Pharmaceutical Sector Inquiry, a report of the European Commission published on 8 July 2009 and followed by yearly Monitoring Reports (full texts here http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/).

In 2013, the EU Commission fined Danish pharmaceutical company Lundbeck €93.8 million and its generic competitors €52.2 million following an investigation which found that Lundbeck had concluded deals with them to unlawfully prevent the market entry of competing generic versions of its branded citalopram, a blockbuster antidepressant, following the expiry of its patents (full text here http://ec.europa.eu/competition/antitrust/cases/dec_docs/39226/39226_8310_11.pdf).

Essentially, the Commission considered that Lundbeck had paid substantial sums to the generic competitors in return for a delay in launching generic products onto the market. Now Lundbeck is appealing against the Commission decision and a judgment is expected later this year.

In 2014, the European Commission fined the French pharmaceutical company Servier and five generics companies a total of 427.7 million (EUR). In that case, Servier implemented a strategy to exclude competitors and delay the entry of cheaper generic versions of its bestselling blood pressure medicine, perindopril. Since its patent protection came to an end generics companies started developing their own products, Servier challenged them and subsequently settled the cases, paying the generics companies to stay out of the market. Also Servier’s appeal against the Commission’s findings is currently before the European General Court.

Waiting for the outcomes of these rulings, the case at stake seems to fall squarely within the territory that the EU consistently considers as giving rise to an “object” or automatic infringement of EU and EU national competition law (cf. Guidelines on the application of article 101 TFEU (ex Article 81 TEC) to technology transfer agreements, 2014/C 89/03 of 28.3.2014). Indeed, the misuse of the patent settlements to restrict competition emerges clearly looking at the direction of the transfer of value. In genuine patent litigation settlement, any payment will tipically flow from the alleged infringer to the patentee. Here, on the contrary, it is the patentee which provides compensation to the infringer. This deal is a straight horizontal agreement in restraint of competition, which would be equally unlawful if it had been stipulated by two producers of generics. As Prof. Ghidini outlines in Profili evolutivi del diritto industriale, 2015, 426, the deal is unlawful not because it concerns a patent, but due to the payment for delaying the product’s entry in the market (cfr. Abbott A.F., Michel S.T., The right balance of competition policy and intellectual property: A perspective on settlement of pharmaceutical patent litigation, IDEA, 2006, 46).

It remains to be seen what further repercussions GSK may face from this case. It is possible that the Department of Health and any other customers of the product could consider to launch a claim for recovering loss they may have suffered because of the amount Seroxat® was overpriced as a result of GSK’s conduct.

Jacopo Ciani

 

UK Competition and Market Authority, 12 February 2016, CMA v. GlaxoSmithKline plc  and others, CE/9531-11