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Court of Justice of The EU Ruled on Trade Marks Used Only to Indicate Quality Standards

Trade marks will not only be associated with the company they origin from, but might also be associated with certain quality or ethical standards. Certain associations are using their trade marks only to license it to producers who fulfill a certain standard. While some jurisdictions recognize such use of a trade mark as sufficient to maintain trademark protection, the European Union Trade Mark Regulation (EUTMR) does only mentioning the term “genuine use” of a trade mark. On 8 June 2017, the Court of Justice of the European Union (CJEU) has decided whether using a trade mark only to indicate certain quality or ethical standards can be seen as “genuine use”.

The Facts

The Verein Bremer Baumwolle (VBB), an association under German law, owns an individual European Union trade mark (EUTM) displaying a cotton flower. The VBB concludes license agreements under this trade mark with associated producers of textiles who oblige themselves to comply with certain quality standards concerning the cotton they use. The defendant, a German manufacturer of textiles, displayed this trade mark on its products without having an appropriate license to do so.

VBB sued the defendant for trade mark infringement. The defendant brought a counterclaim for declaration of invalidity of this trade mark. In first instance the Düsseldorf District Court found infringement , but the Düsseldorf Court of Appeals referred the case to the CJEU with the following questions: Is the use of a trade mark as a label for quality a “genuine use” in regards to an individual trade mark? Must such a trade mark be declared invalid, if the holder of said trade mark does not ensure the quality standard by carrying out periodic quality controls?

First Question

According to the CJEU, the essential function of a trade mark is to guarantee that all goods or services marked by the sign come from the same undertaking or economically linked undertakings. It might be a secondary purpose of a trade mark to ensure a certain quality, but the “genuine use” of a trade mark is only to guarantee that the goods origin from the same or an economically linked entity. Therefore, the proprietor is not using the trade mark in terms of the EUTMR, if it is only licensing the trade mark to ensure a certain quality. This is particularly relevant, because, if there is no “genuine use” of a trade mark for five years, the trade mark proprietor might face an application for revocation of its trade mark.

Second Question

In relation to the second question, the CJEU stated that an individual trade mark is not to be declared invalid, if the proprietor does not conduct quality controls on a regular basis. While this is a reason for invalidation of collective trade marks, it cannot be applied to individual trade marks because these trade marks are not designed to guarantee a certain quality standard. Individual trademarks might be declared invalid, however, if the public is made to believe that there will be quality controls while the trade mark proprietor never intended to conduct them.

Background

The judgment is apparently guided by the fact that the EUTMR provides two specific instruments to mark products that come from certain undertakings. There is the possibility to file a collective trade mark to display that the user of the trade mark is a member of a certain association that follows certain standards. Further, as of 1 October 2017, a certification trade mark could be used to show that certain standards are met. The CJEU apparently tries to ensure that individual trade marks cannot be used to circumvent the requirements for collective and certification trade marks.

Hands playing a cube gameOn 10 November 2016, the Court of Justice of the European Union (CJEU) ruled that a trademark on the shape of the Rubik’s Cube—supposedly the world’s bestselling toy of all time—is invalid (Case C‑30/15 P). With its judgment, the Court, inter alia, annulled a 2009 decision of the European Union Intellectual Property Office (EUIPO) that initially confirmed registration of the cube as an EU trademark.

The Rubik’s Cube was invented in 1974 by Hungarian architect Ernő Rubik. It was originally named “Magic Cube.” In 1980, the toy was renamed Rubik’s Cube and launched internationally.

The Facts of the Case

In 1999, the company behind the Rubik’s Cube brand, Seven Towns Ltd., registered a “three-dimensional mark in the shape of a cube with surfaces having a grid structure” with the EUIPO. On 15 November 2006, German toy manufacturer Simba Toys GmbH & Co. KG filed an application for a declaration of invalidity of that mark. The company, inter alia, claimed that the cube’s rotating capability may be protected only by patent and not as a trademark. On 14 October 2008, the Opposition Division of the EUIPO rejected that application in its entirety. On 1 September 2009, the rejection was confirmed by the EUIPO Boards of Appeal (Case R 1526/2008-2).

On 6 November 2009, Simba Toys brought an action seeking annulment of the EUIPO decision before the EU General Court. In support of its action, the company, inter alia, argued that the shape of the Rubik’s Cube was necessary to obtain a technical result (rotation), which is grounds for invalidity of the three-dimensional mark (now codified in Article 3(1)(e)(ii) of the Trademark Directive (2008/95/EC)). On 25 November 2014, the EU General Court dismissed the action. The court held that the graphic representation of the mark, the grid structure on each surface of the cube, gave no indication as to the well-known rotating capability of the Rubik’s Cube. Therefore, Simba Toys’ reasoning was not based on the representation of the mark as filed but on an “invisible element” (Case T-450/09).

The CJEU’s Decision

On 25 May 2016, Advocate General Maciej Szpunar delivered an opinion that the grid structure of the cube did not constitute “a decorative and imaginative element” but performed a technical function (Case C‑30/15 P). The cube’s structure divided the movable elements of the puzzle so that they were rotatable. Beyond these functional characteristics, the mark in question contained “no arbitrary or decorative characteristics.”

In its judgment, the CJEU followed the advocate general’s opinion and held that the sign at issue consisted of the shape of actual goods and not of an abstract shape. The EU General Court should have taken the fact that the goods function as a three-dimensional puzzle into account when assessing the functionality of the essential characteristics of the sign. While it was indeed necessary to consider the graphic representation of the shape at issue, that analysis could not be made “without taking into consideration, where appropriate, the additional elements relating to the function of the actual goods at issue.”

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

Hand holding smartphone with wi-fi connection in cafeOn 15 September 2016 (C-484/14), the Court of Justice of the European Union (CJEU) ruled that the operator of a shop, hotel or bar that offers free Wi-Fi to the public is not liable for copyright infringements committed by the network’s users. However, the operator may be required to password-protect its network in order to prevent—or cease—these infringements.

The Facts of the Case

The case concerns a dispute between Tobias Mc Fadden, the owner of a lighting and sound system shop, and Sony Music Germany. Mc Fadden’s shop offered free Wi-Fi in order to bring in new customers. In 2010, someone used Mc Fadden’s Wi-Fi network to unlawfully offer a copyright-protected musical for downloading. The Regional Court of Munich, Germany, took the view that while Mc Fadden was not the actual infringer, he could be indirectly liable on the grounds that his Wi-Fi network had not been made secure. However, the court was not sure whether the E-Commerce Directive (2000/31/EC) precluded such indirect liability and referred a series of preliminary questions to the CJEU.

Opinion of the Advocate General

On 16 March 2016, Advocate General Maciej Szpunar recommended to the CJEU that the operators of free Wi-Fi networks should not be held liable for copyright infringements committed over their networks. The opinion confirmed the applicability of the E-Commerce Directive—and the “mere conduit” defense in Article 12 of that directive—to free Wi-Fi providers. While acknowledging that the scope of application of Article 12 largely depended on the potential economic nature of the provision of the service, the advocate general opined that the safe harbor provisions should also apply to operators who, as an adjunct to their principal economic activity, offer a Wi-Fi network that is accessible to the public free of charge.

He further commented that the safe harbor provisions prevent courts from making orders against these intermediary service providers for payment of damages and even for the costs of giving formal notices. However, the advocate general said this limitation of liability would not prevent the right holder from seeking an injunction against the Wi-Fi operator to end the infringement. But that injunction could not go so far as to require that the operator terminate or password-protect the internet connection or examine all communications transmitted through it.

Judgment of the CJEU

In its judgment, the CJEU largely followed the opinion of the advocate general while disagreeing on two crucial points. The Court ruled that the operator of a free Wi-Fi network provides an “information society service” within the meaning of Article 12(1) of the E-Commerce Directive if he provides access to the network for the purpose of advertising the goods sold or services supplied by him. This means that the operator can directly rely on the liability exemption laid down in Article 12(1).

However, in the eyes of the Court, the operator of the free Wi-Fi network could be required to protect the network with a password in order to deter users from infringing copyrights. The CJEU further ruled that the right holder can claim from the network operator the costs of giving formal notices and court costs when such claims are made to obtain injunctive relief to prevent the operator from allowing the infringement to continue.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

interior of a modern photo studioOn 8 September 2016 (C-160/15), the Court of Justice of the European Union (CJEU) ruled that the posting of a hyperlink to copyright-protected works located on another web site does not constitute copyright infringement when the link poster does not seek financial gain and acts without knowledge of the illegal publication. However, when the posting of a hyperlink is carried out for profit, it has to be presumed that the posting has occurred with the full knowledge of the protected nature of that work and the possible lack of consent from the copyright holder to publication on the linked web site.

Facts of the Case

The case involved a dispute between the operators of Dutch web-magazine GreenStijl.nl – GS Media – and, inter alia, Playboy Magazine. In 2011, GS Media published a hyperlink on their weblog directing viewers to an Australian web site where photos of Britt Dekker, a Dutch TV presenter, were made available for download. The photos which were taken for Playboy Magazine were published without the consent of the copyright holder, Sanoma Media Netherlands. Despite Sanoma’s demands, GS Media refused to remove the hyperlink at issue. When the Australian web site removed the photos at Sanoma’s request, GreenStijl published a new hyperlink to another web site on which the photos from Dekker’s Playboy shoot were available.

According to Sanoma, GS Media infringed copyright. Hearing the appeal, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) submitted a request for a preliminary ruling from the CJEU on this subject.

Answer to the Question Referred for a Preliminary Ruling

This request for a preliminary ruling concerned the interpretation of Article 3(1) of Directive 2001/29/EC – in particular, whether the posting of a hyperlink to works available on another web site without the consent of the copyright holder constitutes a “communication to the public” within the meaning of that provision.

In answering that question, the CJEU referred to its decision of 13 February 2014 (C-466/12) in which the Court interpreted Article 3(1) to mean that the posting of hyperlinks to works which have been made available on another web site with the consent of the right holder cannot be categorized as a “communication to the public” as covered by that provision. Where the work is already available to all internet users on another web site with the authorization of the copyright holder, the hyperlink did not communicate that work to a new public, that is to say, to a public that was not already taken into account by the copyright holder when he authorized the initial publication of his work.

However, it could not be inferred from prior decisions that the posting of hyperlinks to protected works which have been made available without the consent of the copyright holders would be excluded, as a matter of principle, from the concept of “communication to the public”. An individual assessment is always required. For the purposes of such an assessment, an account had to be taken of several complementary criteria, inter alia, of whether the posting of a hyperlink was carried out by a person who, in so doing, pursued a profit and whether that person could have reasonably known that the work had been published on the linked web site without the consent of the copyright holder.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

big stadiumOn 16 June 2016, the General Court of the European Union rejected an opposition by Fútbol Club Barcelona to the wordmark “KULE” (T‑614/14). The opposition was based on an alleged infringement of the club’s Spanish wordmark “CULE,” the term culé being a Spanish variation of the Catalan word cul and used as a nickname for supporters of the club. Apparently, this is not the only negative experience Fútbol Club Barcelona has had with the General Court in recent years. In 2015, the General Court dismissed an action brought by the club seeking registration of the outline of its crest as a Community trademark (T-615/14).

Facts of the Case

On 22 April 2011, US-based fashion company Kule filed an application for registration of the EU wordmark “KULE” with the European Union Intellectual Property Office (EUIPO). The goods for which registration was sought are in class 14 (jewellery and precious stones), class 18 (wallets, purses and trunks) and class 25 (clothing, footwear and headgear). On 2 November 2011, Fútbol Club Barcelona filed a notice of opposition to registration of the wordmark in respect of all goods concerned. The opposition was based on an alleged infringement of the Spanish wordmark “CULE,” which the club applied for in 1982 and which was also registered to cover goods in classes 14, 18 and 25.

On 1 October 2013, the Opposition Division rejected the opposition. An appeal against the Opposition Division’s decision was dismissed by the EUIPO Board of Appeal on 18 June 2014. The Board of Appeal found that the documents presented by the Fútbol Club did not demonstrate genuine use of the earlier trademark in relation to the goods concerned. This decision was now confirmed by the General Court. Pursuant to Article 42(2) and (3) of Regulation No. 207/2009/EC, a trademark opposition shall be rejected if, at the applicant’s request, the opposer is unable to prove genuine use of the earlier mark during the five years preceding publication of the new mark.

Key Considerations of the General Court

The General Court followed previous Court of Justice of the European Union (CJEU) decisions that genuine use of a trademark could be found where the mark is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered. Regarding the extent of the use made of the earlier trademark, the General Court stated that account must be taken to both the commercial volume of the overall use of the mark and the length of the period during which that mark was used, including the frequency of that use.

In the present case, the General Court found that Fútbol Club Barcelona had not adduced evidence “to show the place, time, extent or nature of use of the earlier trade marks in relation to the goods covered.” While the General Court acknowledged that the Spanish term culé was indeed used as a nickname for the supporters and players of the club, the use of that term had not been proven in relation to the goods covered by the ”CULE” wordmark.

 

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated channel available here.

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The EU Trademark Regulation (2015/2424/EU) (the “new Regulation”) amending the Community Trademark Regulation (the “old Regulation”) entered into force on 23 March 2016. Among other things, it brought about new rules concerning the transit of counterfeit trademark goods through the EU.

The Old Rules

The transit of goods was not specifically dealt with under the old Regulation. The latter contained only general provisions about the rights conferred by a Community Trademark, and what should be considered an infringement of a trademark. Section 9 para. 2 of the old Regulation listed infringement actions that could be prohibited by the trademark owner, including, for instance, affixing the sign to goods or to the packaging thereof, offering the goods, putting them on the market or stocking them for these purposes under that sign, among others. The transit of goods from countries outside the EU through the EU territory was not included in the list of infringement actions.

Based on Section 9 of the old Regulation, the Court of Justice of the European Union issued a few decisions according to which:

  • the mere transit of products containing the trademark or a similar sign did not per se constitute a trademark infringement. An infringement would only exist if the party having requested the transit (“the shipper”) took concrete actions to put the trademarked goods on the market, for instance, by selling or offering to sell the goods within the EU during transit (C-405/03, Class Unilever case);
  • in the absence of a trademark infringement, the customs authorities would not be entitled to take action pursuant to the Regulation (EC) No. 1383/03 (now Regulation (EU) No. 608/2013) on the customs enforcement of IP rights (C-446/09 and C-495/09, Philips/Nokia cases),
  • however, trademark owners were entitled to prevent the release for free circulation of trademarked goods into the EU without their authorization, even if the goods were not yet released for consumption, but instead were detained in a tax warehouse until the import duties were paid (C-379/14, Bacardi case).

The trademark owner was the one bearing the burden of proving the trademark infringement.

The New Regulation

Under the new Regulation, trademark owners are now expressly allowed to oppose the transit of goods bearing without authorization the EU trademark or a sign essentially similar, even if the goods are not released for free circulation or intended to be put on the European market. This new rule is codified in Section 9 para. 4 and also specifically addressed in Recital No. 16 of the new Regulation. Trademark owners may further contest other customs situations such as transhipment, warehousing, free zones, temporary storage, inward processing or temporary admission. Customs authorities are entitled to take the actions laid down in the Regulation (EC) No. 608/2013 on the customs enforcement of IP rights, such as detaining shipments suspected to infringe a EU trademark.

However, Section 9 para. 4 also establishes that such a right of the EU trademark owner shall cease to exist if, during the proceedings to determine whether the trademark has been infringed according to the Regulation No. 608/2013,  the shipper provides evidence that the trademark is not protected in the country of final destination. According to Recital No. 17 of the new Regulation, this rule is intended to strike a balance between fighting counterfeiting and the need to protect the free trade of legitimate goods.

New Challenges for Trademark Owners?

At first glance, the new rules seem to strengthen the rights of trademark owners. However, the changes might also create difficulties, especially in cases in which the final destination of the goods is not declared in the customs declaration. In this case, in practice, the trademark owner will not know whether or not it is entitled to have the customs authority detain the shipment. If it decides to have the shipment seized and start infringement proceedings, it will run the risk that the shipper declares a country of destination in which the trademark is not protected. This might expose the trademark owner to the risk of liability towards the shipper.

abstract light in city at nightIn a dispute between the operator of a public Wi-Fi network and Sony Music over the download of copyright-protected music via that network, the Court of Justice of the European Union (CJEU) was asked to clarify whether and to what extent the operator of a shop, hotel or bar that offers free Wi-Fi to the public is liable for copyright infringements committed by the network’s users (C-484/14).

On 16 March 2016, Advocate General Maciej Szpunar recommended to the Court that the operators of a free Wi-Fi network should not be held liable for copyright infringements committed over their network. The opinion confirms the applicability of the E-Commerce Directive (2000/31/EC), and the “mere conduit” defense in Article 12 of that directive, to free Wi-Fi providers. While acknowledging that the scope of application of Article 12 largely depended on the potential economic nature of the provision of the service, the Advocate General opined that the safe harbor provisions should also apply to operators who, as an adjunct to their principal economic activity, offer a Wi-Fi network that is accessible to the public free of charge.

He further commented that the safe harbor provisions prevent courts from making orders against these intermediary service providers for payment of damages and even for the costs for giving formal notices. However, the Advocate General said this limitation of liability would not prevent the rightholder from seeking an injunction against the Wi-Fi operator to end the infringement. But that injunction could not go so far as to require that the operator terminate or password-protect the internet connection or examine all communications transmitted through it.

The ultimate decision of the CJEU is expected to be issued within the next few months. In the majority of cases, the CJEU judges tend to follow the opinions of the Advocates General.

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On 5 November 2015, the German Federal Court of Justice ruled that a copyright holder’s right to distribute its work to the public (Section 17 para. 1 of the German Copyright Act) includes the right to offer the original, or a copy, of a protected work to the public for sale. Thus, any unauthorized advertisement of the original or a copy of that work constitutes copyright infringement.

Background

The case before the Federal Court of Justice covers three separate proceedings: In the first two proceedings, the defendant, a company resident in Italy, offered for sale reproductions of certain furniture designs which enjoy copyright protection in Germany but not in Italy. The company made online and print advertising in German (directed at German citizens) to come to Italy to buy those pieces and take them home. In a third proceeding, the defendant offered for sale a DVD with a non-authorized live recording of the musician Al Di Meola performing in Tokyo.

In all three proceedings, the plaintiffs sought to prevent the advertisement of works (or copies thereof) which are protected by copyright, or, in the latter case, a neighboring right of the performing artist (section 77 para. 2 of the German Copyright Act). The plaintiffs argued that included in the exclusive right of the copyright holder to distribute its work to the public (Section 77 para. 2 of the German Copyright Act) is the right to advertise the original, or any copy of that work.

Reference for a Preliminary Ruling

The Federal Court of Justice stayed the proceedings and asked the Court of Justice of the European Union (CJEU) whether the distribution right established in Article 4(1) of Directive 2001/29 includes the right to offer the original or a copy of a protected work to the public for sale. If that question was answered in the affirmative, then the Federal Court of Justice asked first, whether the right to offer the original of a work or copies of it also includes the exclusive right to advertise those objects and, second, whether the distribution right is infringed where no purchase of such an original or such copies takes place on the basis of the offer for sale of them.

In its ruling on 13 May 2015, the CJEU (C-516/13) responded in the affirmative to all questions and held that Article 4(1) of Directive 2001/29 must be interpreted to allow a holder of an exclusive right to prohibit any form of distribution to the public by sale or otherwise. This shall include the right to, inter alia, prevent an advertisement of the original or a copy of that work, even if it is not established that that advertisement gave rise to the purchase of the protected object by an EU buyer. It was sufficient that the advertisement invites consumers of the Member State in which that work is protected by copyright to purchase it.

Decision of the Federal Court of Justice

The Federal Court of Justice followed the CJEU’s ruling and held that a copyright holder has the right to prevent the unauthorized advertising of copies of a protected work, or the work itself, even if no actual sales have taken place. It is sufficient that the advertisement invites consumers in Germany – where the work enjoys copyright protection – to purchase it. The same rights shall be conferred to the holder of a neighboring right of the performing artist (section 77 para. 2 of the German Copyright Act).

iStock_000054731098_MediumOn 30 September 2015, the General Court of the European Union (T-364/13) ruled that the caiman logo that Polish apparel company Mocek and Wenta sought to register with the Office for Harmonisation in the Internal Market (OHIM) was similar enough to Lacoste’s iconic crocodile logo to cause confusion. Thus, the Court upheld the OHIM’s refusal to register the sign Continue Reading Lacoste Wins EU Trademark Fight Over its Crocodile Logo

unlock security lock on credit cards representing data encryption to prevent data theft

In its judgment of 6 October 2015 (C-362/14), the Court of Justice of the European Union (“CJEU”) held that transfers of personal data of European citizens to the United States made under the so-called Safe Harbor scheme are subject to significant risks, and declared the corresponding decision of the European Commission to be invalid. As a consequence, EU entities of U.S. companies so far relying on Safe Harbor will need to revise their practice of submitting personal data to the U.S. to comply with EU data protection law.

The background to this CJEU ruling was a complaint lodged by European Facebook user Maximilian Schrems with the Irish data protection authority. Facebook Ireland, the company’s European headquarters, transfers the data of its subscribers to the servers of its parental company in the U.S. Schrems argued that the law and practices of the United States offered no real protection against U.S. surveillance of his data. The Irish authority rejected the complaint relying on the “Safe Harbor” decision of the European Commission of 26 July 2000 (Decision 2000/520/EC). Safe Harbor is a U.S. government framework containing a set of principles on the treatment of sensitive personal data of EU citizens. According to the Commission’s decision, it is assumed that an adequate level of data protection is guaranteed where U.S. companies agree to comply with these principles. In the Irish data protection authority’s opinion, national data protection authorities should thus be prevented from launching investigations into data transfers covered by the Safe Harbor scheme. The case was brought before the High Court of Ireland, which further referred it to the CJEU.

The key elements of the CJEU ruling are as follows:

  • Primarily, the CJEU held that a Commission decision finding that a third country ensured an adequate level of data protection could not reduce the national supervisory authorities’ investigative and banning powers granted by EU law. The Member States had to be able to take the measures necessary to safeguard the fundamental right to the protection of personal data under the Charter of Fundamental Rights of the EU.
  • Furthermore, the CJEU explicitly declared the Commission’s decision 2000/520/EC to be invalid. In the eyes of the CJEU, the Commission’s decision did not satisfy the requirements of EU data protection law. This finding is, inter alia, based on the fact that the Safe Harbor scheme was not applicable to U.S. public authorities. Thus, legislation permitting U.S. public authorities to have access to the content of electronic communications on a generalized basis would have to be regarded as compromising fundamental rights.

Conclusion

Whether one agrees with the CJEU’s findings or not, this judgment will have substantial impact on international companies’ practice of processing personal data. Data transfers to the U.S. are now associated with high legal uncertainty. Additionally, the ruling is likely to affect not only data transfers to the U.S., but also to other countries which the Commission has previously considered to have adequate data protection regimes. Some of the Safe Harbor scheme’s shortcomings addressed in the CJEU ruling might be mitigated by the so-called “Umbrella Agreement” the U.S. and the EU have been negotiating. However, the extent to which the CJEU ruling will have an impact on the negotiations remains as of yet unclear.

 

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