On 8 March 2011, the Court of Justice of the European Union (the "ECJ") delivered its long-awaited opinion on the envisaged agreement creating a Unified Patent Litigation System (currently named European and Community Patents Court) (the "Agreement").
As its name suggests, the new court structure would have jurisdiction for specific litigation relating to European Patents (granted on the basis of the European Patent Convention) as well as the future Community (or EU) Patent. Nevertheless, the negotiating parties in the enhanced co-operation procedure to create the Community patent insist that the agreement creating the Unified Patent Litigation System would be separate from the creation of the Community Patent.
In its opinion, the ECJ held that the proposed system is, in its current form, incompatible with European Union law.
In particular, the ECJ maintained that the Agreement would affect the system set up by the Treaty on the Functioning of the European Union which ensures the correct application and uniform interpretation of European Union law.
In addition, the ECJ held that the Agreement falls short of the principle that "a Member State is obliged to make good damage caused to individuals as a result of breaches of European Union law for which it is responsible." According to the ECJ, "[...] that principle also applies to judicial bodies". The ECJ added that "it is clear that if a decision of the [European and Community Patents Court] were to be in breach of European Union law, that decision could not be subject of infringement proceedings nor could it give rise to any financial liability on the part of one or more Member States".
The negative opinion of the ECJ implies that the Agreement cannot be adopted in its current form.
EU Council Gives Green Light for Enhanced Cooperation on Community Patent
On 10 March 2011, the Council of Ministers of the European Union (the "Council") decided to proceed with the enhanced cooperation procedure for the creation of the EU patent. Last year, negotiations to create a single and unitary EU patent covering all EU Member States had reached a dead end when Spain and Italy rejected the latest text proposed by the Belgian presidency of the Council (See, this Newsletter, Volume 2010. No. 12, p. 7).
During the Council's meeting of 10 March 2011, the ministers of the remaining 25 Member States gave the green light for the European Commission to propose regulations on the creation of the EU patent. The proposal will consist of two separate sets of rules, one dealing with the substance of patent creation and another one addressing the language regime. It is expected that the proposals will be presented shortly.
Since Spain and Italy do not participate in the so-called "enhanced cooperation procedure", the EU patent created on this basis would not apply to those two countries. Nevertheless, the Member States which take part in the enhanced cooperation procedure have expressed the hope that both remaining countries will still join the negotiations. Representatives of Spain and Italy, on the other hand, have warned that they reserve the right to appeal against the enhanced cooperation mechanism.
Max Planck Study on Trade Marks in EU
The Max Planck Institute for Intellectual Property and Competition Law (the "Max Planck Institute") has published the results of its 18-month Study on the Overall Functioning of the European Trade Mark System (the "Study"). The Study had been commissioned by the European Commission as a preliminary step to improve trade marks in the EU. It covers the whole range of issues relating to trade mark law in the EU.
In general, the Study's recommendations are essentially pro-EU and promote greater harmonisation and cooperation within the EU. The Study also favours the co-existence of the national offices and the Office for the Harmonisation of the Internal Market ("OHIM") which is the administrative authority overseeing the registration of Community Trade Marks. According to the Max Planck Institute, national offices should strengthen their "complementarity to and competition with the Community Trade Mark system". This implies increased cooperation between national offices and the OHIM; the development of common guidelines for examination; and the creation of common rules governing the classification of goods and services.
The 279-page Study contains a number of recommendations to improve the EU trade mark system.
First, the Study suggests that "genuine use", which is required for the validity of a trade mark, should be assessed on a case-by-case basis in reliance on the criteria developed by the Court of Justice of the EU (the "ECJ"). The relevant criteria relate, inter alia, the extent to which a trade mark has been used by the trade mark holder, including the territory in which it was used. The Study states that the ECJ should clarify whether the use of an earlier Community Trade Mark ("CTM") in only one Member State should count as "genuine use" of a mark for the entire EU territory. However, the Study suggests that the ECJ should not take political frontiers into consideration to determine the territorial scope of "genuine use".
In addition, to establish an appropriate balance between the fight against counterfeiting and the respect for free trade, the Study suggests that a clarification is needed to explain that the use of a trade mark also includes its use in custom free zones. The Study further proposes that apart from the situations addressed by the ECJ in case C-281/05 (Montex/Diesel), the use of trade marks on goods in transit should fall under Article 5 of Directive 2008/95/EC of 22 October 2008 to approximate the laws of the Member States relating to trade marks (the "Trade Mark Directive") or Article 9 of Regulation 207/2009 on the Community Trade Mark (the "CTM Regulation") if the goods are counterfeit goods under the definition of the TRIPS Agreement and if they would be infringing in the country of transit (or in the European Union) and in the country of destination. At the moment, the position of trade mark infringement by goods in transit is also under review by the ECJ (See, this Newsletter, Volume 2011, No. 2, p. 7).
The Study also wishes to see the national offices become more active in the combat against counterfeiting by arranging awareness campaigns, organising seminars and other professional education programmes, etc.
Moreover, the Study recommends keeping the period after which a trade mark can be revoked if it has not been used at five years. Certain stakeholders argued in favour of a shorter period of non-use (three years), maintaining that this would clear the trade mark register more effectively than the current five-year period.
According to the Max Planck Institute, there is no reason to believe that a diminished period of non-use would have such an effect.
Another recommendation of the Study relates to trade marks with a "reputation", which benefit from increased protection under Article 5 (2) of the Trade Mark Directive. The Study suggests clarifying that a mark which satisfies the conditions of reputation in the Member State at the same time qualifies as a "well-known mark" under Article 6bis of the Paris Convention. As a result, a trade mark with a reputation would enjoy protection against the likelihood of confusion as well as against unfair use of, and detriment to, its reputation or distinctive character, irrespective of whether it is registered or not in the territory where protection is sought. Indeed, the protection given under Article 6bis relates to registered trade marks as well as non-registered marks, whereas the extended protection under Article 5 (2) of the Trade Mark Directive is limited to registered trade marks.
Furthermore, the Study recommends that a separate fee should be due for each additional class of goods or services beyond the first for which registration is sought. Under the current system, an additional fee is only due as of the second additional class of goods or services. Clearly, if the second class is "free", many trade mark applicants include a second class in their application although the use of the trade mark is limited to a single class of goods or services. The Study's recommendation therefore seeks to reduce unwarranted claims for goods or services not really required by the proprietor of the mark.
As regards additional tasks or activities for trade mark and design offices, the Study considers that there is a wide variety of tasks that could be envisaged for the OHIM. It suggests for example that the OHIM could administer the register for designations of origin and geographical indications, or it could help in the fight against counterfeiting and piracy, and many other "harmonisation" activities, within and beyond the field of intellectual property. However, the Study points out that a legislative change would be required for the OHIM to engage in such additional activities.
The Study is a contribution to the European Commission's overall evaluation of the functioning of the trade mark system in Europe. A legal disclaimer nevertheless makes it clear that the Study does not represent the official position of the European Commission. Finally, an additional notice affirms that the Study's results do not prejudge any proposals which the European Commission may make on the basis of its overall analysis of the European trade mark system and on the basis of an impact assessment of different conceivable options of legislative or non legislative nature.
The full Study can be consulted at: http://ec.europa.eu/internal_market/indprop/docs/tm/20110308_allensbach-study_en.pdf.
Court of Justice of European Union Rejects "1000" as Community Trade Mark
On 10 March 2011, the Court of Justice of the European Union (the "ECJ") handed down its judgment in case C-51/10, pitting Agecja Wydawnicza Technopol ("Technopol") against the Office of Harmonisation in the Internal Market ("OHIM") concerning the registration of the sign "1000" as a Community trade mark ("CTM").
The facts of the case at hand date from 2005, when Technopol filed an application for registration of the sign "1000" as a CTM for brochures, periodicals, including periodicals containing crossword puzzles and rebus puzzles, as well as newspapers. The OHIM examiner found that the sign did not have any distinctive character and constituted a description of the goods concerned, which resulted in the refusal of Technopol's application on the basis of Article 7(1)(b) and (c) of Regulation No 40/94 of 20 December 1993 on the Community trade mark, now replaced by Regulation No 207/2009 on the Community Trade Mark (the "CTM Regulation"). Under Article 7(1)(b) of the CTM Regulation, registration as a CTM is refused for trade marks which are devoid of any distinctive character.
On appeal, the Board of Appeal of OHIM also dismissed Technopol's arguments and Technopol subsequently brought an action for annulment of the decision of the Board of Appeal of OHIM decision before the Court of First Instance (now the "General Court"). This action was dismissed and Technopol decided to appeal the General Court's decision to the ECJ.
In its judgment of 10 March 2011, the ECJ held that the lower courts had not erred in law and dismissed Technopol's appeal. The ECJ first considered that Article 4 of the CTM Regulation clearly stipulates that a numeral can constitute a CTM. In addition, the ECJ pointed out that for the registration of a sign composed of numerals as a CTM, it is not required for the sign to be stylized in a creative or artistic way.
However, the ECJ held that for a sign to be registered as a CTM, it should be capable of distinguishing the goods or services of one undertaking from those of another undertaking. This is, in principle, not the case for signs that are perceived as descriptive in relation to the goods or services for which their registration is sought by the relevant public. The ECJ specified that it is sufficient that the sign could be used to describe a characteristic of the goods or services and it is not required that the sign be the usual way of designating the goods or services.
In relation to the goods at hand, the ECJ considered that such collections of puzzles were often designated by the number of puzzles they contain and therefore "it is reasonable to believe that a sign composed of numerals – such as that at issue – will actually be recognized by the relevant class of persons as a description of that quantity and therefore as a characteristic of those goods". Accordingly, the ECJ held that the General Court had not erred in law when it held that registration of the sign "1000" had to be refused in the case at hand.
Advocate General Requires Fair Compensation for Cross-border Distance Selling of Disks
In an opinion published on 10 March 2011 (the "Opinion"), Advocate General Niilo Jääskinen offered the view that companies engaged in distance selling, thereby specifically targeting customers in other Member States where fair compensation on the basis of Article 5(2)(b) of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society (the "Copyright Directive") is due, must pay compensation in one of those states.
Under copyright law, the exclusive right to authorise reproductions of copyright protected works belongs to the author, performer or producer. However, under the Copyright Directive, Member States are permitted to authorise copies for "private use" without the right holder's consent when the right holders receive "fair compensation" for the use of their work. The Court of Justice of the European Union (the "ECJ") determined that the actual harm resulting from the unauthorised reproduction of the author's work constitutes the criterion to be taken into consideration to determine the amount of the compensation.
The Opinion answers a number of questions referred to the ECJ by the Dutch Supreme Court in a case opposing Stichting de Thuiskopie ("Thuiskopie"), a Dutch copyright collecting society, and Opus, a German online reseller of blank recording media. In July 2005, Thuiskopie had sought a court order against Opus for the latter's failure to pay remuneration on blank recording media imposed by Article 16c of the Dutch Law on Copyright (Wet van 23 september 1912 houdende nieuwe regeling van het auteursrecht) and Article 5(2)(b) of the Copyright Directive in The Netherlands (i.e., where the goods are sold) or in Germany (i.e., where the seller is established). Thuiskopie's claim related to sales on Dutch and other language websites selling recording media in The Netherlands.
Thuiskopie's claim was dismissed at first instance and again on appeal. Thuiskopie further appealed to the Dutch Supreme Court (Hoge Raad der Nederlanden), which stayed the proceedings to request a preliminary ruling from the ECJ. The ECJ was requested to explain who owed the private-copying levy which Member States impose under Article 5(2)(b) of the Copyright Directive in cases of cross-border sales within the EU. More specifically, the Dutch Court asked whether a company established in one Member State, which is involved in distance selling via the Internet to customers in another Member State where the sale of the products is subject to fair compensation, must pay the compensation in one of the two Member States when both countries allow private copying.
The Advocate General held that fair compensation may in principle be owed by both parties, i.e., the customer as well as the company engaged in cross-border distance selling of the recording media. Indeed, the Advocate General stated that recording media imported from another Member State should not be exempt from the obligation to pay fair compensation. Advocate General Jääskinen specified that if a seller is explicitly targeting customers from another Member State, the seller should pay the fair compensation.
The Advocate General further held that if the Member State where the seller is established requires fair compensation to be paid and the seller pays that compensation, the seller should not pay again in the country where the goods are sold. It is left up to the collecting society of the country where the seller is established to distribute the compensation paid to the responsible collecting society in the targeted country. Finally, the Advocate General also considered that the right to fair compensation cannot be contracted out between professional sellers and customers by considering the buyer as the importer liable to pay the compensation fee.
Advocate General Advises on Separate-Rights Clearance in Belgian TV Satellite-Transmission Case
On 17 March 2011, Advocate General Jääskinen gave his opinion in joint cases C-432/09 and C-431/09. The Advocate General explains that satellite TV operators need to clear rights separately when retransmitting broadcasts available on free-to-air platforms.
The facts underlying the opinion relate to two cases brought by Belgian collecting societies, Agicoa Belgium BVBA ("Agicao") and Belgische vereniging van auteurs, componisten en uitgevers CVBA ("Sabam") (See, this Newsletter, Volume 2009, No. 11, p. 5). Both collecting societies sued satellite operator Airfield NV, which operates a satellite broadcasting service in Belgium under the commercial name TV Vlaanderen, and its technical partner, Canal Digitaal BV. The collecting societies claimed that Airfields and Canal Digitaal had not obtained approval from the copyright holders for the transmission of broadcasters' programmes by satellite.
The initial broadcasters had acquired such a licence from copyright holders to deliver the relevant programmes to the broadcasters' audience. However, in addition, the programmes were retransmitted by Airfield which used Canal Digitaal's installations to deliver the programmes to Airfield's customers via satellite. The Brussels Court of Appeal referred questions to the Court of Justice of the European Union (the "ECJ") to find out whether retransmission rights for broadcasting are cleared on the basis of the initial authorisation.
The Advocate General answered in the negative, taking the view that a satellite-TV distributor is required to clear rights for public broadcasting channels separately in cases of direct retransmission. According to the Advocate General, Airfield should be considered an independent operator, carrying out an act exploiting works protected by copyright because it determines the encryption keys and the composition of the bundle programmes that are retransmitted by satellite. As a result, the retransmission of broadcasting programmes by satellite would qualify as "a communication to the public by satellite" within the meaning of Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (the "Satellite Broadcasting Directive").
The Advocate General was of the opinion that the primary authorisation given by right holders to a broadcaster does not permit the retransmission of its work by an independent operator when it is grouped with other programmes to meet the demands of a specific public which could be incompatible with the customers targeted by the right holder in the primary retransmission.
Therefore, the Advocate General concluded that the Satellite Broadcasting Directive requires the prior approval of copyright holders before any satellite broadcasting platform transmits a programme. The Advocate General justified its opinion on the basis of the preservation of the financial and moral rights of the right holders in determining the manner in which their protected work is used.
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