Tag: copyright

CJEU delivers its judgement in the Liffers case: there is no bar in the Enforcement Directive on claiming compensation for both moral and material damage

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By its 17 March 2016 decision (here), the CJEU cleared the doubts raised by the Spanish Tribunal Supremo as to an IP holder’s right to be compensated, in accordance with Article 13(1) of the Enforcement Directive (Directive 2004/48), for both material damage on the basis of the hypothetical royalty criteria laid down by subparagraph 2, heading (a), of said article, and moral damage under heading (b) of the same subparagraph 2.

The Tribunal Supremo’s doubts arose from the wording of Article 13(1), whose subparagraphs 1 and 2 read as follows (emphasis and numbers added):

“[1] Member States shall ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement.

[2] When the judicial authorities set the damages:

(a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement;

or

(b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question”.

Indeed, the expressions “or” and “as an alternative to (a)” contained in subparagraph 2 of Article 13(1) may well be read as dividing the criteria for setting damages provided by headings (a) and (b), in such a way that the two cannot be invoked together by IP holders (nor merged by the judicial authorities). The CJEU did not stop at a literal interpretation of Article 13(1), though, but looked at the article “in light of the objectives” pursued, in its view, by the Enforcement Directive.

From this perspective, the Court said that subparagraph 1 of Article 13(1) was aimed at ensuring full compensation for the “actual prejudice suffered” by right-holders, which means compensation for both material and moral prejudice (see paragraph 25 of the ECJ decision).

As the “hypothetical royalty” criterion provided by heading (b) of Article 13(1), subparagraph 2, does not take into account moral prejudice, each time an IP holder suffered moral prejudice in addition to material prejudice, application of this criterion alone would prevent full compensation being awarded. This outcome is inconsistent with the goal and the very rationale of said provision.

On these grounds the Court of Justice, upholding the opinion of Advocate General Whatelet (here), answered the preliminary questions raised by the Tribunal Supremo by stating that Article 13(1) must be interpreted as permitting a party injured by an IP infringement, who claims compensation for his material damage as calculated on the basis of the “hypothetical royalty”, to also claim compensation for the moral prejudice he/she has suffered.

It may be noted that, from a strictly Italian standpoint, the CJEU decision does not really add anything new, as the national provisions into which Article 13(1) of the Enforcement Directive has been transposed do not contain any reference to an alternative between compensation for moral prejudice and for material prejudice. Article 158(3) of Italian Copyright Law expressly states that moral damages can be recovered in addition to material damages calculated on the basis of the “hypothetical royalty” criterion. And, albeit less explicitly, but nevertheless clearly, Article 125 of the Italian IP Code, concerning IP rights other than copyright, does the same.

Riccardo Perotti

CJEU, 17 March 2016, C-99/15, Liffers

US 2nd Circuit holds that Google Books does not infringe copyright

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Nearly two years after the US District Court for the Southern District of New York decision on the Google Books Library Project, the US Court of Appeals for the 2nd Circuit confirmed that the scanning activities of Google within its Library Project are to be considered a fair google-books-featured1-500x236use of copyright works under §107 of the US Copyright Act (full text here). The Litigation was brought against Google by the Association of American Publishers (AAP) and the Authors’ Guild, on behalf of authors whose books Google had digitized without permission, claiming that Google’s digital copying ofentire books, allowing users through the snippet function to read portions, would infringe author’s copyrights, providing consumers with a substitute for the original works.

In 2012, the AAP and Google concluded a settlement agreement, but this did not arrest the ongoing litigation between the Authors’ Guild and Google.

Judge Pierre N. Leval held among other things that Google’s making of a digital copy to provide a search function is a “highly transformative use”, with the meaning set forth in Campbell v. Acuff-Rose Music, Inc. (510 U.S. 569, U.S. 1994) to “add something new, with a further purpose or different character, altering the first with new expression, meaning, or message”.

In particular, the court said that Google’s book search function was transformative because it “augments public knowledge by making available information about the plaintiffs’ books without providing the public with a substantial substitute for matter protected by the plaintiffs’ copyright interests in the original works or derivatives of them”. Even if the snippet reveals some copyright–protected authorial expressions, the brevity and the cumbersome, disjointed and incomplete nature of the snippets just helps users to evaluate whether books falls within the scope of their interest, but does not allow to make them a competing substitute for the original.
A unanimous three-judge panel rejected the Author’s Guild’s argument that Google’s distribution of the digital copies to libraries exposed the books to risks of loss. On the contrary, the court said that Google Books did not have a strong effect on the potential market for the books and that any losses would eventually address interests unrelated to copyright.
If the decision will be upheld by the Supreme Court, it will predictably become a landmark ruling in copyright law. Its long term effects could be relevant. In addition to the public benefits of Google Books, which expands access to books and allows scholars to analyse huge amount of data, the decision might open the door for creating similar types of digitization projects involving copyrighted works. In this regard, it will be interesting to carefully follow if and how the decision will travel outside the United States, especially in those legal systems which does not have a fair use clause.

Predictably, in any case, the decision will not meet with unanimous praise. The decision proposes an extensive application of the transformative use doctrine, which could be interpreted as a lack of consistency concerning how the degree of transformativeness is to be assessed. This point could be matter for further guidance by the Supreme Court.

In the meantime, while Google heaved a sigh of relief, the next candidate is already on the horizon. It is the online trading platform Amazon, subject to both antitrust investigations and further calls for regulation. But this is another story…

Jacopo Ciani

The Court of Turin rules about authorship in copyright: toward protection of advertising ideas through moral rights?

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A recent interim decision of the Court of Turin (full Italian text here) in a copyright dispute faced an interesting issue concerning the concept and scope of right to co-authorship, hence also a moral right pursuant to art. 20 of Italian Copyright law (Law No. 633/1941).

In a nutshell, Mr. Pagani, a former employee of the advertising company Leo Burnet, claimed to be the author of the “creative idea” from which Fiat advertisement “Fiat 500 cult yacht” (which was awarded, among others, the Cannes Lion 2014 at the International Festival of Creativity) was produced. He expressed this idea in a script exposed during a meeting at Leo Burnet. The proposal was discarded by Fiat. Four years later the script was revived and elaborated by two other employees of Leo Burnet to produce the advert Fiat 500 cult yacht. Credits on the advert were then attributed to these two employees.

Taking aside the question whether scripts may be autonomously protected as creative works, the Court of Turin considered that (i) advertisements can be the subject of copyright protection, as works characterized by innovative ideas or new form of expression of previous ideas; (ii) a video advert is a complex work, which includes visual and audio elements; (iii) conception of the advert is a crucial phase within the creative process: the project of the advert constitutes the “synthesis” to be developed during the production of the video; (iv) Mr. Pagani’s script (as mean of expression of the advert idea) included all the main elements that characterize the final advert: the promotional message, its way of expression (i.e., the particular environment, the narrator’s voice, the final advertising claim) and the targeted public.

In light of the above, Mr. Pagani’s script expressed more than a mere idea and contributed decisively to the final advert. Thus, the Court ordered to rectify the credits of the advert including Mr. Pagani among the authors and to notify the interested parties.

This decision is far from granting copyright protection to mere ideas, since protection of Mr. Pagani’s idea was conditioned to (i) the expression on a physical medium (i.e., the script) and (ii) the presence of all the main expressive elements of the final advert. However, it confirms a flexible view in acknowledging (co)authorship to creative contributions of a work (on a similar ground, see Court of Milan 21 October 2003, which considered co-author the scriptwriter who conceived the characters of a comic).

Francesco Banterle

 Court of Turin, 31 March 2015, Riccardo Pagani v. Leo Burnett Company S.r.l.

ECJ: the Owner of an Online Database not Protected by Copyright or Sui Generis Right May Limit its Use by Contract

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On January 15, 2015 the Court of Justice of the European Union (ECJ), in Ryanair Ltd v PR Aviation BV, C-30/14, handed down a decision concerning the interpretation of Directive 96/9/EC on the legal protection of databases (full text here). The case concerned the unauthorized extraction of flight data (so called ‘screen scraping’) from Ryanair’s website by the PR Aviation, which operates a price comparison website where users can also book a flight on payment of commissions. Access to Ryanair’s website requires acceptance of the air company’s T&Cs, by ticking a box, which prohibit unauthorized ‘screen scraping’ practices.

Ryanair brought proceedings against PR Aviation before Dutch courts for infringement of copyright and sui generis right on its database as well as breach of contract. Upon preliminary ruling requested by the Dutch Supreme Court, the ECJ ruled that the Directive 96/9/EC is not applicable to databases which are not protected either by copyright or by the so-called sui generis database right granted to the maker of the database (whether Ryanair’s website may be entitled to such protection shall be determined by the competent national court).

Therefore, according to the ECJ, mandatory exceptions to restricted acts laid down by Articles 6 and 8 of the Directive (allowing the ‘lawful user’ of the same to use the protected database without the author’s or maker’s consent, in certain cases and if certain conditions are met) do not prevent the database owner from laying down contractual limitations on its use by third parties, while the same contractual limitations are null and void vis-à-vis lawful users of those databases which benefit from copyright and/or sui generis right protections.

While the interpretative principle outlined by the ECJ is actually not very striking (insofar as it is rather clear from the literal text of the Database Directive that the legal regime implemented by it – including the mandatory rights of ‘lawful users’ – only apply to those databases which can be protected with copyright or the sui generis right), it is important to highlight that, according to general principles of contract law, any contractual provisions governing the use of unprotected databases may only be binding on third parties who accepted those provisions (and that, accordingly, should be deemed to be already aware of their content) and, conversely, cannot bind any third parties extraneous to the contractual relationship with the website owner. In the Ryanair case discussed above, the ECJ makes clear that the company that had ‘scraped’ Ryanair’s flight data without authorization had previously accepted Ryanair’s general T&Cs by ticking a box to that effect. What about if ones were to take the disputed flight data not from Ryanair’s website but from the price comparison’s website? In this scenario, Ryanair’s T&Cs, notably the ‘screen scraping’ prohibition, should not be deemed to apply.

Federica De Santis

Court of Justice, 15 January 2015, C-30/, Ryanair Ltd v PR Aviation BV, C-30/14