For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

Two of our regular Kats are currently on blogging sabbaticals. They are David Brophy and Catherine Lee.

Friday, 18 April 2014

What does the ACI Adam decision mean for InfoSoc system of exceptions and limitations?

A few days have passed since the Court of Justice of the European Union (CJEU) issued its decision in Case C-435/12 ACI Adam [here], ruling that Article 5(2)(b) of the InfoSoc Directive, read in conjunction with paragraph 5 of the same provision [this imported the 3-step test into EU copyright law], must be interpreted as precluding national legislations that do not distinguish the situation in which the source from which a reproduction for private use is made is lawful from that in which that source is unlawful.

As readers will remember, this case concerned the compatibility of Dutch private copying exception with EU law. Article 16 of the Dutch Copyright Act stated that the reproduction of a work or any part thereof would not be an infringement of copyright, provided that the reproduction was carried out without any direct or indirect commercial motivation and was intended exclusively for personal exercise, study or use by the natural person who made the reproduction. 


Interpretation of Dutch law has been in the sense of including also copies made from unlicensed sources, eg unlawful downloads from the internet. The Dutch State Secretary held the view that reproducing works from unlicensed sources should no longer be part of the private copying exception, although these activities should not be punishable. However, at the end of 2012, Dutch Parliament dismissed this proposal, and decided instead to impose temporary private copy levies on certain digital and electronic devices and storage media. 

Litigation ensued before Dutch courts between a number of importers and manufacturers of blank data media, eg CDs and CD-Rs, and two Dutch collecting societies. The former argued that they did not have to pay levies for reproductions from unlawful sources, in that only reproductions from lawful copies could fall within the scope of the private copying exception and, as a result, the amount of the applicable private copying levies should not take into account compensation for harm suffered as a result of copies of works made from unlawful sources. 

No need for an investigation:
the Directive does simply omit to say whether
only lawful or also unlawful

Following two unfavourable judicial outcomes, ACI Adam and other importers and manufacturers brought their case before the Dutch Supreme Court. This decided to stay the proceedings and seek guidance from the CJEU.


As Advocate General Cruz Villalon observed in his Opinion [from which the Court did not depart], although in some Member States (Denmark, Germany, Spain, Italy, Portugal) the law already excludes applicability of the relevant national private copying exception to reproductions from unlawful sources, and some national judges (eg the French Conseil d’État) have interpreted the scope of this exception in the sense of excluding its applicability to reproductions from unlawful sources, whether the private copying exception within Article 5(2)(b) of the InfoSoc Directive may only encompass reproductions from licensed sources was an issue on which the CJEU had not ruled yet.


The Court observed that Article 5(2)(b) does not address expressly the lawful or unlawful nature of the source from which a reproduction may be made. However, when adopting the InfoSoc Directive, one of the objectives of EU legislature was to provide a high level of copyright protection. As a consequence, exceptions and limitations to exclusive rights must be interpreted strictly, and Member States must comply with the three-step test as per Article 5(5) of this directive. In compliance with these principles – notably that of strict interpretation of exceptions and limitations – the private copying exception must be understood as excluding reproductions from unlicensed sources.

The 3-step steps
This conclusion is also compliant with what is required by the 3-step test in Article 5(5). To accept that reproductions for private uses may be made from an unlawful source would encourage the circulation of unlicensed works, thus inevitably reducing the volume of sales or of other lawful transactions relating to the protected works. This would conflict with the principle that exceptions and limitations must not conflict with a normal exploitation of the work and must not unreasonably prejudice the legitimate interests of rightholders.

The outcome of this case is not particularly surprisingThe judgment is however extremely relevant in that it further clarifies [current?] CJEU understanding of Article 5 system of exceptions and limitations.  

The InfoSoc Directive harmonised copyright exceptions and limitations, on belief that – similarly to the case of exclusive rights [discussed also here]differences among the laws of Member States had direct negative effects on the functioning of the internal market, and that such differences would have become more pronounced in view of the further development of cross-border exploitation of works. 

While the rationale of Article 5 is to require a coherent application of the various exceptions and limitations, it leaves Member States the option (the sole exception being temporary acts of reproduction) to provide for certain (21) exceptions or limitations. 

Aww ... If only shopping for copyright
exceptions was this cute
Eminent commentators have held the view that in most cases Article 5 ‘shopping list’ would be composed of categorically worded prototypes rather than precisely circumscribed exceptions, thus leaving the Member States broad margins of discretion at the stage of national implementation. This is indeed what has happened in practice, the Dutch case being a notable example.

To this Kat the current question, however, is whether this is what the InfoSoc Directive actually allows (or allowed) Member States to do, also considering that Recital 32 requires Member States to arrive at a coherent application of Article 5 exceptions and limitations. 

In its decisions in Case C-510/10 TV2 Danmark [here] and, prior to this, Case C-467/08 Padawan [here], the CJEU seemed to suggest that, unless where the InfoSoc Directive leaves it to Member States to fine-tune the scope of resulting exceptions and limitations, it is not possible for them to alter the scope of the exceptions and limitations that they have decided to transpose into their national regimes.

This conclusion appears not only confirmed by the ACI Adam decision, but likely to be even stricter than what those decisions suggested. 

It's all about the market
At paras 33 and 34 of the decision, the CJEU stated that it follows from Recital 32 in the preamble to the InfoSoc Directive that Member States have the option of introducing the different exceptions provided for in Article 5 in accordance with their legal traditions. However, once they have made the choice of introducing a certain exception or limitation, this must be applied coherently across the EU. This is necessary to avoid undermining the objectives of this directive, including that of ensuring the proper functioning of the internal market. Incidentally, compliance with this objective has become central to the achievement of unexpected outcomes in a number of recent CJEU cases in the area of copyright [let's just think of the decisions in FAPL or UsedSoft].

Overall, it appears that Member States’ freedom to fine-tune the breadth of resulting national exceptions and limitations may be much narrower than what has been understood so far. In most cases Article 5 exceptions and limitations would not be just categorically-worded prototypes. 

Above all, as the CJEU appeared to suggest at para 27 of its decision, Member States’ freedom (where it exists) would be just in the sense of limiting the scope of the resulting national exceptions or limitations, not also in the sense of extending it beyond the scope of what is provided in the relevant Article 5 exception or limitation. 

This would follow from Recital 44 in the preamble to the InfoSoc Directive. 


According to the Court, this Recital suggests that when Member States provide for one of the exceptions and limitations referred to by the InfoSoc Directive, the scope of the resulting national exception or limitation could be limited even more when it comes to certain new uses of copyright works and other subject-matter. By contrast, neither this Recital nor any other provision in the Directive appears to envisage the possibility for Member States to extend the scope of the national exception or limitation beyond what is permitted by Article 5. 

Is this the above good or bad news for fans of Article 5? 

Of course, it depends on which side of the copyright debate (and related interests) you wish to place yourself, but if it is true that current Article 5 system - at least in the view of the CJEU - is and should be less flexible than what has been understood so far, and Member States' discretion could be solely exerted to narrow down the scope of resulting national exceptions or limitations, perhaps the time is apt to think whether this is what is best for a European Union, that - thorough its usually outspoken European Commissioners - has consistently expressed its desire to put in place and maintain a competitive and attractive copyright system.

Thursday, 17 April 2014

3D printing: be careful what you wish for?

This blog post will be about taxes. In particular, we will consider whether the utopian vision of "every home a workplace" thanks to 3D printing also contains a dystopian element from the perspective of the public interest in a socially responsible tax system. Before Kat readers immediately decide to eschew the rest of this blog in favour of watching grass grow, engaging in a series of yawns, or doing anything else seemingly more interesting than having a discussion on income taxes, they should remember this: one of the great challenges of any modern government is to maintain a fair tax system whereby those who owe taxes should pay and where the number of those who evade their responsibility is minimal. One may disagree about the scope of public services funded by taxation (consider the Tea Party movement in the U.S.) but, whatever the scope of public spending, it must ultimately be paid for by public tax receipts.

Against this backdrop, this Kat was struck by a comment that he heard made on a recent podcast broadcast, in which it was claimed that at least 20% of the entire US economy takes place in the black market. While this may not reach the proportional size of the black market attributed to national economies such as Greece, Spain and Italy, the figure seemed to signal an increasingly expanding hole in the foundation of the US tax collection system. And it got this Kat to wonder—might not the world of innovation, invention and creation contribute to this phenomenon? From there, it was a quick leap to the projected brave new world of 3D printing, with every man and woman, within the confines of the home, simultaneously both a potential manufacturer and consumer. Let’s think about classic mass manufacturing. Machinery is bought, increasingly skilled labour (and perhaps proprietary IP) is brought to bear on manufacture, and goods are then produced and sold.

Within this paradigm, taxable income is generated at a number of sources. The fact that the manufacture is mass imposes a material degree of tax discipline on the actors involved. Seen in this way, the prospect that 3D printing will turn every home into a potential workplace disrupts this arrangement. True, the manufacturer of the 3D printer will sell its IP-protected (more or less) product (and pay tax on the income generated), as will the purveyor of the materials (also perhaps enjoying IP protection) used to enable the 3D manufacture (and pay tax on the income generated). The software files used to instruct the 3D printing machine, if not freely available to the public, will also generate revenues (and taxes). So will various ancillary services that will develop around this core ecosystem. But, and it is a big “but”, the actual product that is made will not be sold, not wholesale, not retail, not at all. Within the confines of the home, it will be made and then consumed, all without generating any taxable revenue. As such, there will be even fewer tradable goods (about which Nobel Laureate in Economics, Professor Michael Spence, here, has brought to our attention) both within and between countries. If so, and on one view of 3D printing, the greater the success of 3D printing at the private level, the potentially greater is the harm to the legitimate public coffers.

This Kat recognizes that this focus of the potentially deleterious impact of home-bound 3D printing deviates significantly from that which is typically expressed. Thus, especially from the IP perspective, what is of concern is that home-bound manufacture enables a new vista for infringing various third-party IP rights and thereby depriving of such rights holders of their just compensation. This Kat does not disagree. In the past, the sheer impossibility of enforcing IP rights when the alleged wrong-doer is acting within the confines of his home, as well concern over invading one’s privacy, has led to exceptions for private copying and the like, garnished a bit with a levy sometimes imposed on the manufacture or sale of the devices used for such copying, the better to compensate rights holders with.

But the loss of income that has accompanied this (mostly copyright-focused) approach seems hopelessly over-manned when we consider the future possibility of every man and woman being a potential home manufacturer made to order. This vision, taken its logical conclusion, could lead to a situation where the black market is not only based on tax evasion largely in virtually untraceable services but becomes a structural by-product of the way that goods are made and consumed. Solutions anyone?

Red and yellow and pink and green… or just black and white? Important new European Common Practice on black and white trade marks

Having been announced back in November’s Alicante News, details were published on 15 April in this Common Communication of the new European trade mark Common Practice as regards black and white trade marks, and how they are to be compared to colour versions of the same. In this Kat’s view, this is a highly significant change in practice that will affect many trade mark owners, perhaps adversely. Its aim is to ensure common trade mark practice throughout Europe, but as you’ll see below there’s something of a bull in a china shop to how supposed consistency is being achieved.
It means terrible disaster for the world of
trade marks, Rainbow Cat, terrible disaster!
What follows is an explanation of what is and isn’t changing, where it is changing, when and in respect of what. In short, practice is changing some places, where the scope of protection a black and white mark provides will be significantly less than it used to be. Elsewhere it won’t be changing either because the Member State isn’t interested or it can’t legally change. In some places the change will apply even to pending application and proceedings, elsewhere only to new ones. Sorry to spoil the ending, but this Kat’s not impressed.
Three things in scope, six out – plus six countries who aren’t having anything to do with it
Three issues are in scope:
1.    Priority: is a trade mark in B&W and/or greyscale from which priority is claimed identical to the same mark in colour?
2.    Relative grounds: is an earlier trade mark in B&W and/or greyscale identical to the same mark in colour?
3.    Genuine use: is the use of a colour version of a trade mark registered in B&W/greyscale (and vice versa) acceptable for the purpose of establishing genuine use?
Six are out of scope, and so remain subject to local practice:
4.    Priority: is a trade mark in colour from which priority is claimed identical to the same mark in B&W and/or greyscale? (so the question the other way around is not addressed).
5.    Relative grounds: is an earlier trade mark in colour identical to the same mark in B&W and/or greyscale? (so again the question the other way around is not addressed).
6.    The assessment of similarities between colours is not addressed including the question: is an earlier trade mark in B&W and/or greyscale similar to the same mark in colour?
7.    Acquired distinctiveness: where marks registered in B&W that have acquired distinctiveness in a specific colour due to extensive use (the Specsavers scenario – see links below).
8.    Colour marks per se.
9.    Infringement issues (although one would expect the new practice for relative grounds at 2. above would impact on infringement as well – again see below).
The common practice is only common to a degree:
Italy, France and Finland have not participated. Sweden, Denmark (and Norway) opted out of implementing the practice due to legal constraints. The statements those last three states have given suggest that as their existing laws provide for black and white marks to cover all colours, they are not in a position to adopt a change in practice without new legislation.
Alright, get on with it – what is the common practice?
The world's most famous black and white cat
If you’ve got your head around what this isn’t about, here’s what you need to know.
1.    Priority: is a trade mark in B&W and/or greyscale from which priority is claimed identical to the same mark in colour?
The new Common Practice explains that:
“A trade mark in B&W from which priority is claimed is not identical to the same mark in colour unless the differences in colour are insignificant.
A trade mark in greyscale from which priority is claimed is not identical to the same mark in colour or in B&W unless the differences in the colours or in the contrast of shades are insignificant.“
The gist of this change appears to be that an applicant’s ability to claim the usual six months priority under the Paris Convention will be lost if the earlier mark is in black and white while the later mark is in colour.
“Insignificant” means differences which are “so insignificant that they may go unnoticed by the average consumer”, the Court of Justice of the European Union’s (CJEU) identity test in Case C-291/00 LTJ Diffusion. The Common Communication provides that (its emphasis) “an insignificant difference between two marks is a difference that a reasonably observant consumer will perceive only upon a side by side examination of the marks.”
2.    Relative grounds: is an earlier trade mark in B&W and/or greyscale identical to the same mark in colour?
The new Common Practice explains that:
“An earlier trade mark in B&W is not identical to the same mark in colour unless the differences in colour are insignificant.
An earlier trade mark in greyscale is not identical to the same mark in colour, or in B&W, unless the differences in the colours or in the contrast of shades are insignificant.“
So the effect is that if you have an earlier mark in black and white, if you file an opposition against an application for the mark in colour then your earlier mark will not be considered identical. The Common Communication takes the view that a black and white and coloured version of the same sign should now only be considered identical under “exceptional circumstances”, applying the “insignificant differences” test above.
3.    Genuine use: is the use of a colour version of a trade mark registered in B&W/greyscale (and vice versa) acceptable for the purpose of establishing genuine use?
Art 10.1(a) of the Trade Marks Directive (Directive 2008/95/EC) makes clear that use of a trade mark in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered constitutes use of the mark as registered. The new Common Practice explains that:
“A change only in colour does not alter the distinctive character of the trade mark, as long as the following requirements are met:
a) the word/figurative elements coincide and are the main distinctive elements;
b) the contrast of shades is respected;
c) colour or combination of colours does not possess distinctive character in itself and;
d) colour is not one of the main contributors to the overall distinctiveness of the mark.
For establishing genuine use, the principles applicable to trade marks in B&W also apply to greyscale trade marks.”
This purports to follow the guidance of the General Court in Case T-152/11 “MAD” (sadly not available in English, although referred to in the current OHIM Guidelines on Proof of Use, see page 41).
What is the meaning of this??!
Those behind this Common Practice, led it would appear by OHIM, take the view that the concept of identity is one that needs to be interpreted strictly, in line with the decision in LTJ Diffusion.
The Common Practice must be implemented within three months of 15 April, so 15 July. OHIM will implement it with effect from 2 June 2014.
The impact of this is likely to be significant. The new practice will be applied by all 22 trade mark offices which have signed up plus OHIM to all applications and proceedings filed after the implementation date. However, in some offices, including the Benelux and German offices and OHIM, the practice will be applied on the implementation date retrospectively to all pending applications and proceedings. This is controversial to say the least. It means that an applicant that has already paid its filing fee may find it is now going to get less than it applied for. An opposition or cancellation may suddenly take on a different complexion, and the party expecting to win might suddenly find itself on the losing side.
Brand owners may now need to review their entire portfolios, especially those heavy in devices and logos and where colour is an important part of their brand image. A portfolio with a handful of black and white registrations will now provide a much narrower scope of protection than a comprehensive portfolio with numerous colour variants of marks. That sort of protection just got a lot more expensive. More filings equal more fees for the offices, OHIM and, this Kat supposes, lawyers, but ramping up the price for no gain based on a desire for consistency that won’t even be achieved (because Italy, France, Finland, Sweden, Denmark and Norway are having nothing to do with it) doesn’t seem fair. Merpel’s not holding back – she thinks it’s outrageous.
So is it all down to similarity now?
Taking a closer look at the impact on relative grounds oppositions and cancellations (of most interest to this Kat who spends a lot of his time litigating trade marks), it is worth taking a step back. The new practice does not say that a black and white version of a mark can’t be used to successfully oppose a colour variant. It won’t be as easy as it was: depending on the practice in the particular office concerned, before the two would be treated as identical. Now in most cases the opposer will need to argue the variants are confusingly similar. That’s a much tougher ask, potentially requiring evidence of confusion or a likelihood of the same. In some cases this won’t be a problem, but this Kat can recall disputes he’s been involved in where it could break a case that would previously have been a dead cert.
Nyan Cat - link below for those
who've never seen it in action
Infringement issues are expressly out of scope of the common practice. But it can’t be right that there is now one rule for relative grounds and one for infringement. Shouldn’t they be the same? So anyone now trying to assert a black and white mark against a colour variant (or something similar in colour) must now be in a much more challenging position. Or will marks registered prior to the change be treated under the old practice and new ones less favourably? Will acts which are infringements today cease to be come 2 June onwards?
It may take a while, but the CJEU is bound to be called open to look at this at some stage. The issue pervades all aspects of trade mark law and seems to be far too significant to be left to the offices themselves to decide. This is a question of law – not practice – and the scope of protection provided by a trade mark. Alternatively, might this be the subject of a judicial review in one or more jurisdictions?
Where is this actually a change?
The Common Communication implies that the change is not going to be a change everywhere, and that some offices already work in this way. This Kat does not know which, and speaking to his colleagues gets the impression that it is far from obvious that the change moves in the direction of the majority.
Speaking from an English law perspective, the new practice goes very much against the law here. In Specsavers International Healthcare Limited & Others v Asda Stores Limited [2010] EWHC 2035 (Ch), Mr Justice Mann in the High Court held at paragraph 119 that (emphasis added):
“If the registered mark is limited to a colour, then the mark that is used has to be compared, as used, to the mark that is registered, as registered (and therefore in colour). If the registered mark is unlimited as to colour then it is registered for all colours. This means that the colour of the offending sign becomes irrelevant. It will not be possible to say that its colour prevents there being an infringement. At this point one can take one of two courses, each of which ought to have the same result. The first is to imagine the registered mark in the same colour as the offending sign. The second is to drain the colour from the offending sign. Either way one then has the material for comparison. One could even imagine them both in a third colour. It does not matter… As a matter of visual convenience it seems to me to be easier to imagine the registered mark in a colour than to imagine the offending sign drained of colour, and I propose to adopt that course.
The English Court of Appeal is of the same view, see paragraph 96 of the appeal in the same case Specsavers International Healthcare Ltd & Others v Asda Stores Ltd [2012] EWCA Civ 24 and Jacob LJ in Phones4u Ltd & Anor v Phone4u.Co.UK & Ors [2006] EWCA Civ 244 at paragraph 70.
Is the UKIPO, OHIM et al empowered to ignore the law and the practice that has been adopted here (and elsewhere) for many years?
Readers will be clear that this Kat is pretty bemused (not to mention frustrated) by all this, and does not think he is alone (and Merpel is not the only company). Perhaps readers would, be they in agreement or otherwise, add a comment on how the present approach in their jurisdictions differs (or does not differ) from the new Common Practice. 
Nyan Cat. Careful if you have your sound turned up loud...

Twitter suspends @JamesDean account: an impersonation rebel with(out) a cause?

@JamesDean
Those IPKat readers who are also keen followers of Hollywood stories, gossip and business-related news will probably remember when in February last The Hollywood Reporter published an article concerning James Dean (or rather, his estate), Twitter and the account @JamesDean. 

Of course iconic James Dean, who died in 1955 aged just 24, was sadly never able to tweet. 

What happened here is that an anonymous Twitter user registered the username @JamesDean and tweeted tributes to legendary Hollywood rebel from this account. Although often referring to James Dean in third person, this account did bear no mention that it was neither an officially sanctioned nor a fan account. 

Apparently CMG Worldwide, a firm that manages the actor's (and many other dead celebrities') licensing empire, was not particularly happy about this state of affairs [well, sniffs Merpel, if CMG was so concerned about unauthorised uses of James Dean's name and likeness, why didn't it think of registering the @JamesDean account in the first place, as other more tech- (or just marketing-) savvy celebrities are used to do?]


Shammai, Gigi and Claire deceptively
portrayed to look as if they were only
concerned about their meal,
when they are actually pondering
Twitter impersonation policy
Hence, it repeatedly asked Twitter to suspend the @JamesDean account. However, the micro-blogging website refused, on grounds that a certain degree or likelihood of confusion is required by its applicable removal policies. 

Twitter's impersonation policy indeed states that "Accounts with similar usernames or that are similar in appearance (e.g. the same background or avatar image) are not automatically in violation of the impersonation policy [but this Kat suspects that this may nonetheless result in a violation of Twitter copyright policy]. In order to be impersonation, the account must also portray another person in a misleading or deceptive manner." 

Could a @JamesDean follower possibly be misled into believing that those tweets actually came from James Dean himself? That would be actually quite miraculous indeed ...

Also Twitter's trademark policy implies that a certain degree of user (consumer) confusion is required [is this compatible with EU trademark law, especially when it comes to trademarks with a reputation?]: "Using a company or business name, logo, or other trademark-protected materials in a manner that may mislead or confuse others with regard to its brand or business affiliation may be considered a trademark policy violation." If you take a trip to the "James Dean" trademarks registered with the US Patent and Trademark Office, you'll see that there are just two trademarks still "live", for use in connection with "giftware - namely, porcelain plates, mugs and figurines" and "clothing, namely T-shirts, jackets and headwear", respectively.


Probably reading a guide
to the Top5 ways you can breach
the law on Twitter without knowing it
Following Twitter's repeated refusal to suspend the @JamesDean account, James Dean Inc and CMG filed a complaint before an Indiana state court claiming - among other things - trademark infringement pursuant to Section 32(1) or 43(A) of the Lanham Act, false endorsement pursuant to Section 43(A) of the Lanham Act, and breach of James Dean's right of publicity, as per the Indiana State Statutory Right of Publicity. Among other things, this states that "A person may not use an aspect of a personality's right of publicity for a commercial purpose during the personality's lifetime or for one hundred (100) years after the date of the personality's death without having obtained previous written consent". This Kat understands that Indiana law is particularly generous if compared to other statutes, like that of the state of New York, which do not recognise a posthumous right of publicity.

In all this, it would seem that no claim of copyright infringement was made, probably [but this is just Kat-speculation] because CMG does not own the copyright to the James Dean images - including the profile picture - published by @JamesDean.

Could Twitter rely on the First Amendment, for instance by referring to the transformative value of @JamesDean, similarly to what happened with this Kat's beloved Mad Men and the legal row over its opening credits?


Ehm ... Are you perhaps
being a little
too bold here?
We may never know, as yesterday former guest Kat James John Roberts reported on Gigaom that Twitter "quietly suspended" the @JamesDean account in the last few weeks. 

Twitter declined to comment, on grounds that it does not comment on individual account actions for privacy and security reasons, while CMG CEO stated that We looked at it as a positive sign that as the litigation moves forward, Twitter has suspended the site. No, there isn’t any judgement yet”.

Although the (current) outcome of the James Dean case appears (deeply) linked to the peculiarities of Indiana law, what might the broader implications be, both in terms of Twitter impersonation (and trademark) policies and user activities over this social networking site? 

This Kat wonders whether all this may mean that the "bio" section of one's Twitter account is bound to become an actual "legal disclaimer" section about (1) Who you are NOT; (2) What you do NOT do; (3) Who/What you do NOT endorse. 

Well, says Merpel, isn't this already what the bio section of lawyers is all about (RTs not endorsements, personal views only, not my employer's opinions, etc)?

Wednesday, 16 April 2014

Locum lawyer loses company cognomen* costs complaint

This one is about the ever-useful Company Names Tribunal, and the cost consequences of ignoring pre-action correspondence and waiting for a party to bring an application against you before you give in and change your company’s name. The decision is here.
The company names in suit were BLUE SKY LAW LIMITED vs BLUE SKY LEGAL SERVICES LIMITED. Section 69(1) of the Companies Act 2006 provides:
“(1) A person (“the applicant”) may object to a company's registered name on the ground– (a) that it is the same as a name associated with the applicant in which he has goodwill, or (b) that it is sufficiently similar to such a name that its use in the United Kingdom would be likely to mislead by suggesting a connection between the company and the applicant.”
Section 69(4) provides a number of defences to such an objection, including that the name was adopted in good faith; that it was registered before the applicant acquired its goodwill; that the respondent is actually operating under the name; or that the interests of the applicant are not adversely affected to any significant extent. In this way, the section 69 jurisdiction focuses on the company name equivalent of cybersquatters – those who register company names with a view to extorting cash from the owner of the goodwill or preventing it from registering the name.
There was no evidence that the respondent here was a namesquatter – but rather a company set up for legitimate accounting purposes by an individual locum lawyer working in London. Nevertheless, the applicant was concerned to find a company operating in the legal services market with a name which only differed by using “legal services” rather than “law”. So it wrote to the respondent asking it to change its name. When no reply was received, the applicant’s trade mark agent wrote a further letter. The parties then entered brief email correspondence and the respondent promised a substantive reply. None was provided, and the applicant made “numerous” attempted phone calls to the respondent to chase. Having got nowhere, the applicant then commenced its application, and in doing so sought to join the respondent’s sole director (successfully, the sole director having then failed to object to this despite being invited to comment).
Pay it to the winning side, of course!
The respondent quickly relented and changed its name, becoming the quite different TOP NOTCH LEGAL SERVICES LIMITED. The Tribunal then moved to close the application, but the applicant asked for some costs. The Tribunal has discretion to award costs, using a set scale (see its Practice Direction).
That’s when the arguments really got going. The respondent’s sole director was quite upset by the applicant’s claim for costs, opposing it and asking for an award of costs in her own favour to reflect the work she had done in respect of the application. The Tribunal invited the respondent to apply to be heard in person on the matter (under Rule 5(3) of the Company Names Adjudicator Rules 2008), but this was not taken up.
The Tribunal reflected on its rules and Practice Direction, noting that where a company voluntarily changes its name after an application, costs could still be awarded where the company was given sufficient notice that an application would be made. In light of the attempts at pre-action correspondence above, the Adjudicator concluded:
“…I have absolutely no hesitation concluding that the applicant took all reasonable steps to settle this matter by agreement before it made its application to the Tribunal. As all these steps proved unsuccessful, the application to the Tribunal was, in my view, both reasonable and proportionate, and, as a consequence, the applicant is entitled to a contribution towards the costs it incurred in making its application.”
The Adjudicator awarded costs of £600; the £400 filing fee and £200 for the applicant’s statement of case. The award was made against the respondent company and its sole director on a joint and several basis.
Small costs, perhaps, when compared to what litigation can cost, but clearly a sum worth fighting over for the respondent and its director. In the circumstances, the decision seems a fair one – there appear to have been ample opportunities for the respondent to have reached a settlement prior to the application before it began, but for whatever reason these were ignored. There is an element of harshness – not least because there is no evidence the respondent adopted the BLUE SKY name in bad faith and so may have actually had a defence had it fought the application – but the decision demonstrates the importance of treating the pre-action process seriously. Wait until someone actually sues, and it might cost you. And if proceedings are issued in the court (perhaps here for passing-off?), it’ll be a lot more than £600.
Tip o’ the Kathat to Sally Cooper, who along with Barbara Cookson of Filemot, acted for the successful applicant.

*cognomen: name; especially: a distinguishing nickname or epithet

AdWords dock in a French safe harbour


If you thought that the Google AdWords saga ended when the Court of Justice of the European Union (‘CJEU’) ruled that hosting keywords corresponding to trade marks does not amount to a “use in the course of trade” that the right owner can prevent [Google France v Louis Vuitton Mattelier, Joined Cases C-236/08 to C-238/08], then you may want to think twice. This is also because of a tasty decision of the Paris Court of Appeal rendered last week [decision of 9 April 2014, available here in French]. Letting (almost) aside the issue of the “use in the course of trade”, the Court of Appeal considered whether Google’s activities with AdWords would qualify it as an “active provider” and, if so, whether this would exclude applicability of the safe harbour provided by Article 14 of the E-Commerce DirectiveHere’s how it went.


So they say. 
The claimants were two French companies providing tourist services: Voyageurs du Monde [‘World Travellers’] and Terres d’Aventures [‘Adventure Lands’]. Between 2004 and 2005, they discovered that some competitors were using AdWords to provide advertising popups when users searched on Google words identical or similar to their trademarks. Consequently, they sent Google a number of notices, seeking the take down of the allegedly infringing contents. Google promptly took down the contested ads and, upon request from the claimants, included some terms [like “voyageur du monde”, “vdm”, “terres d’aventures”, “terredav”, “terre d’aventure” and “voyage terre d’aventure”, just to mention a few] in the AdWords’ filtering list. Later on, however, the claimants found out that other competitors’ advertisements still appeared when users searched their trade marks on Google. Thus, in 2006 Voyageurs du Monde and Terres d’Aventures brought proceedings before the District Court of Paris, claiming that Google itself had infringed their own trade marks and that it was also liable for acts of unfair competition and misleading advertising.

Whilst dismissing the trade mark infringement claims, the District Court of Paris found Google liable of unfair competition and misleading advertising [the decision is available here, in French]. In particular, the District Court ruled that, in providing the AdWords service, Google “directs, suggests and supports” users’ advertising activity. Accordingly, the Court considered that the Big G could not benefit from the liability exemption pursuant to the E-Commerce Directive and that, instead, it had to comply with the liability rules applicable to “traditional” publishers.

The Paris Court of Appeal, however, took a different view.

Firstly, the Court of Appeal considered that, by providing the AdWords service, Google is to be considered an hosting provider within Article 14 of the E-Commerce Directive [and Article 6 of French Law No 2004-575, which transposed the Directive into the French system], and it is thus exempted from liability for third-party content hosted on its platform. Recalling the CJEU in Google France v Louis Vuitton Mattelier, according to which

“Article 14 of [the E-Commerce Directive] … must be interpreted as meaning that the rule laid down therein applies to an internet referencing service provider in the case where that service provider has not played an active role of such a kind as to give it knowledge of, or control over, the data stored”,

the Court of Appeal focused on Google’s role towards “the identification and the selection of keywords, alongside with the redaction of the commercial message accompanying the promotional link”. In this regard, it held that the process for generating and selecting keywords - as well as creating commercial advertisings – was entirely automatic: it is the user that “chooses on his/her own motion the keyword reproducing the trade marks upon which protection is claimed”, and he/she does so through software that does not entail any active intervention by Google.

The same principles apply to the “suggestion” of keywords performed by the AdWords’ system during the bid, which the claimants had indicated as an evidence of Google’s active role. The Court held that:

“The suggestion of keywords … is performed automatically on the basis of the most frequent queries of earlier users. This does not suffice for the purpose of establishing an active role of Google, which only intervenes in the choice process by warning users about the possible … existence … of terms that might be covered by exclusive rights”.

As it is the user that chooses the keyword and edits the advertising through a wholly automatic process, then, “within the act of providing the AdWords service, Google’s intervention is of … merely technical, automatic and passive nature, consequently lacking control and knowledge of the hosted information”.

As such, Google can generally benefit from the safe harbour provided by the E-Commerce Directive and the relevant provisions under French law.

Harbour must be somewhere there...
This said, the Court of Appeal went on and considered whether in this specific case Google failed to comply with the obligations imposed on hosting providers. In principle, the Court noted that Google had neither a general duty to monitor information stored nor to seek illegal activities or to set up general filters. On the other hand, Article 6 of French Law No 2004-575 provides that liability for information generated by third parties arises if the hosting provider “has actual knowledge of their illegal nature or of facts or circumstances from which the illegal nature or information is apparent; or, after obtaining such knowledge, it [does not] act expeditiously to remove or to disable access to the information”. The same provision further states that the ISP’s knowledge is to be presumed only when an infringement notice sent by the right holder includes certain detailed information like “the specific localisation of the contested content” -- that is to say, the URL of the allegedly infringing content. Any time Voyageurs du Monde and Terres d’Aventures did so between 2004 and 2005, the Court said, Google complied with Article 6 obligations by removing the contested ads in due time. On the contrary, the claimants’ further notices lacked information about the URLs or hyperlinks to the contested information. This prevented Google from becoming aware of the existence of infringing contents and, consequently, could not result in Google’s liability.

As to the contested ads that appeared after the initial take downs, the Court found that they were generated by ‘Broad Match”, ie an AdWords’ function allowing promotional messages to automatically popup also on variations of the selected keywords. In the case at issue, Google proved that the contested ads were generated by users searching generic words included in the claimants’ trade marks, such as “voyageur” (travelers), “mond” (world), “terre” (lands) or “aventure” (adventure). Such function was neither eligible for proving an active approach towards keywords nor could be “considered illegal as such”, the Court said, and this was particularly the case when – as it happened here – it involves generic words that have to remain free to use as keywords in advertising.

Finally, the Court excluded that the contested ads were misleading, as the indication “promoted ads”, the different background colour and the links to third parties’ websites allowed the average internet user to perceive them as something different from the natural results and, thus, not to confuse them as advertisings coming from Voyageurs du Monde or Terres d’Aventures.

Confusing clues of activity
This decision of the Paris Court of Appeal comes a few weeks after another national ruling on ISP liability by the Court of Appeal of Madrid [the Telecinco case, on which see this Kat’s note here]. These twin cases might signal a certain trend. After the confusing (to say the least) CJEU’s guidelines on how an ISP should behave to be considered “neutral” [ie not active, ie eligible to benefit from the safe harbour] in Google France v LVMH and L’Oréal v eBay, such national courts pointed out that a non-neutral approach towards the data stored cannot be inferred from the provision of automatic services in addition to the mere hosting [such the “related videos” in the Spanish case or the “suggested keywords” service in Adwords]. If such services are as “technic, automatic and passive” as the mere hosting, there is really no reason why an ISP should be excluded from the liability exemption provided by the E-Commerce Directive. Instead, these decisions adopted a strict [and, in this Kat’s view, more compliant with the rationale of the E-Commerce Directive] concept of ISPs' actual “knowledge of, or control over” the third-party content. If knowledge has to be “actual”, the same is required with “control”, which has not to be merely technical or automatic, but rather “active” or - in other words -  “human”. 

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