The importance of intangible assets to start-ups: Keys to proper protection

The third industrial revolution is upon us. The first was marked by controlling natural resources and building infrastructure and the second by mass production and distribution. The third is marked by generating value through information. We live in an age of globalization and hyperconnectivity, when speed in developing and implementing valuable ideas means the difference between success and failure.

In line with this, corporate value is undergoing a shift from tangible to intangible assets. Companies like Google, Facebook, and Apple have very little in the way of tangible fixed assets; instead their growth is driven by their intangible assets. Companies will be piling onto this bandwagon more and more, and this includes even traditional companies, which are adapting or will have to adapt their business models to survive.

As intangible assets grow more and more important, protection of these assets has become a vital necessity. Brick and mortar can be protected by locks, alarms, and guards – but how do you protect a valuable idea? Using the framework of the law is key. Today, intellectual property is playing an increasingly important role, and that role will only become greater.

Intellectual property is like a hand with five fingers: trademarks, patents, designs, copyright, and trade secrets. This simile is an apt one here, because the hand is an extremely versatile tool capable of performing the most intricate tasks. Think of playing a musical instrument. The trick is to use the available rights wisely.

Which right is the right one, when and where should it be registered, should it be used in association with complementary rights, how can it be enforced against competitors, and what kind of valuation is appropriate for business transactions – all these questions are key to intelligent use of intellectual property.

Integrating intellectual property into the creative process is another key factor. It is not enough to develop something and then decide on protection-related issues when finished. Projects cannot be managed without managing employee and participant, partner company, supplier, and customer relations from the very outset.

Decisions to redirect or abandon a project cannot be taken without taking into consideration rights obtained, registered, or pending, possible repurposing, and the consequences of abandonment.

This is important to all companies, but it is vital to innovative SMEs and start-ups. It can spell the difference between success and failure. I have seen many young companies with important innovative business ideas fail because they failed to plan out their intellectual property matters as required.

Companies of this kind often complain that intellectual property is an expenditure, is very expensive, serves no real purpose. I can sympathize, even with the last of these objections, because intellectual property is of little benefit when it is not used wisely.

In other words, integrating it into the innovation process and using it intelligently is what makes intellectual property beneficial, necessary, fundamental. Doing this does not require so much money, only thinking about how and when to spend it, how to invest well so that it will help bring about success.

Author: Javier Fernández-Lasquetty
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Reduction of the statute of limitations for Spanish actions

Up till now Spanish plaintiffs benefitted from a more than generous fifteen year general statute of limitations for most actions in personam. In a major reform of the Spanish Civil Procedure Act and the Civil Code which entered into force last Wednesday, October 7, this has now been reduced to five years.

    

This affects many of the most common contract based actions such as breach, non-payment, supply of defective goods, rent review and all claims relating to a contract of sale. The new legislation seeks to strike a better balance between the creditor’s interest in preserving his claim and the need to ensure that there is a reasonable time-limit. Fifteen years was held by most operators to be excessive.  The system has now been brought into line with that of other European countries which have a five year limit.     

With a previous time limit of fifteen years, transitional provisions are obviously of great importance. As one might expect, the new limit will only apply to obligations arising after the entry into force of the reform. Those arising prior to 7 October 2000 are already statute-barred due to the expiry of the old fifteen year limit. Those arising between that date and 7 October 2005 remain subject to the old limit. Those arising after that date and before 7 October 2015 will be statute-barred on 7 October 2020, i.e. they will be given the benefit of five years from the date of entry. Thus an obligation arising on 7 October 2010 will now be barred in 2020 and not in 2025, a full five years earlier.

In view of the above, clients are advised to urgently review any outstanding claims arising after 7 October 2000. We remain at your disposal should you require any further information with respect to the above. 

Author: Alba Mª López

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180º turn in Spain's system of granting patents (II)

The different stages in the prosecution of Spanish patent applications have up to now started with an initial examination as to certain formal aspects along with certain technical features and clarity of the invention as claimed, followed by a search of the potentially anticipatory prior art preceding the filing date of the application, which is carried out by the Spanish Patent Examiner.

Spain's current Patent Act already prescribes that to be patentable an invention should be new and inventive (i.e., non-obvious) over all the prior art available up to the application's priority date.

This prior art search, called, in English translation, the "report on the state of the art", encompasses all documents disclosed by the Spanish Examiner which, in his or her opinion, could pose an obstacle to the patentability of the invention as claimed, either by reason of lack of novelty or because the invention is obvious in view of the prior art.

Paradoxically, however, as things currently stand, unless the applicant specifically requests the Patent Office to carry out an optional patentability examination, the application will automatically proceed to grant even if the Spanish Examiner has misgivings about an invention's patentability or, indeed, directly finds the invention to be unpatentable.

The resulting patent will, of course, be at risk of possible nullity proceedings in the Spanish courts at the request of any interested third party, and if the court agrees with the Examiner's opinion, the patent will most likely be ruled to be null and void, i.e., never to have had effect at all. This entails costs for the applicant, for third parties, and for society as a whole, and this situation could be mitigated if patents were granted only if they successfully passed a substantive patentability examination by the Spanish Patent Office, currently only optional.

Requesting a patentability examination was introduced as an option for Spanish patent applications in the early 2000's in the hope that it would gradually become common for applicants to request examination, particularly where the search report had been negative, in an endeavour to persuade the Examiner to reconsider the initially adverse opinion. Things have not, however, gone as intended, and today the patentability examination is requested for fewer than 10 % of patent applications, even where the search report is unambiguously unfavourable. This means that the validity of more than 90 % of the patents currently in force is potentially suspect.

No Safe Harbour: Sailing in the tempest (Case Maximillian Schrems v Data Protection Commissioner)

The long-awaited decision in Case C-362/14 Maximillian Schrems v Data Protection Commissioner was finally issued on 6 October 2015. Controversial in its findings, this preliminary ruling sheds new light on the ongoing debate regarding the collection, transfer and processing of EU citizens’ data by US companies, and the processing of that data by US intelligence agencies within the framework of the PRISM program.

Background information

Mr. Schrems, an Austrian citizen, has been a Facebook user since 2008. In the case of all users residing in the EU, some or all of the data with which they provide Facebook is transferred from Facebook’s Irish subsidiary to servers located in the United States, where it is processed.

Mr. Schrems lodged a complaint with the Irish supervisory authority (the Data Protection Commissioner) on the grounds that, in light of the revelations made by Edward Snowden in 2013 concerning the activities of the United States intelligence services (in particular, the NSA), the law and practice in force in the United States did not offer sufficient protection against surveillance by the public authorities of data transferred to that country. The Irish supervisory authority rejected the complaint on the basis of the decision of 26 July 2000, which considered that under the “safe harbour scheme” the United States ensured an adequate level of protection of the personal data transferred (known as the Safe Harbour Decision).

Mr. Schrems then filed an appeal with the High Court of Ireland, which considered that the issue prompting his action was closely related to EU law since, according to that High Court, the Safe Harbour Decision did not comply with the principles set forth in the judgments in C-293/12 and C-594/12, EU:C:2014:238.

Preliminary questions submitted to the CJEU

On 17 July 2014, the High Court of Ireland, before which the case had been brought, submitted the following questions to the Court of Justice for a preliminary ruling:

(1)  Whether in the course of determining a complaint which has been made to an independent office holder who has been vested by statute with the functions of administering and enforcing data protection legislation that personal data is being transferred to another third country (in this case, the United States of America) the laws and practices of which, it is claimed, do not contain adequate protections for the data subject, that office holder is absolutely bound by the Community finding to the contrary contained in [Decision 2000/520] having regard to Article 7, Article 8 and Article 47 of [the Charter], the provisions of Article 25(6) of Directive [95/46] notwithstanding?

(2)  Or, alternatively, may and/or must the office holder conduct his or her own investigation of the matter in the light of factual developments in the meantime since that Commission decision was first published?

The Advocate General’s Opinion of 23 September 2015

According to the Opinion of the Advocate General (Yves Bot), a company, by merely having a Safe Harbour certification, would not automatically comply with the European data directive on export requirements.

This argument had already been made in Communication COM(2013) 846 and Communication COM(2013) 847.

As was to be expected, the CJEU followed the arguments put forward by the Advocate General.

Impact of counterfeiting in Spain's sporting goods sector third-highest in the EU

Spain ranks third among EU countries in which counterfeiting has the greatest impact on the sporting goods sector, at 15.7 % of sales, more than twice the EU average (6.5 % of sales), behind only Lithuania and Latvia. Nevertheless, in absolute terms the greatest impact is in France and Spain, these two countries accounting for one-third of lost sales due to counterfeiting in the EU, amounting to a total of 492 million euros.

These are the main conclusions with regard to Spain in the recent report entitled "The Economic Cost of IPR Infringement on Sports Goods", issued jointly by the OHIM's European Observatory on Infringements of Intellectual Property Rights and the European Patent Office. According to the report, total consumption of sporting goods in the EU in 2012 was estimated at 7,500 million euros, with 4,271 companies manufacturing products of this kind, employing 43,000 workers in the EU.

In addition to the direct repercussions of counterfeiting in the form of lost sales by lawful companies in the sporting goods sector, other economic sectors are also indirectly affected, suffering losses of 361 million euros. Government revenues are also impacted, with lost taxes (VAT, income taxes, corporate taxes, and social security contributions) estimated at 150 million euros. The direct and indirect impact of counterfeiting in this sector on the EU economy is estimated at around 850 million euros and 5,800 lost jobs.

The report takes into account only manufacturing of sporting goods and equipment as such (e.g., golf clubs, tennis rackets and balls, skis, etc.), excluding sports apparel and footwear, so the economic costs associated with the counterfeiting of sporting goods are in fact higher than those estimated by the report.

Author: Juan José Caselles

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Product shape and acquired distinctiveness: possible registration of the KIT KAT trademark

On 16 September 2015, the Court of Justice of the European Union (CJEU) delivered its long-awaited judgment (case C-215/14) on the referral for a preliminary ruling made by the High Court of Justice of England & Wales concerning whether it was possible to register the shape of Kit Kat chocolate wafers as a trademark: 

Nestlé had filed an application for registration of the mark with the UK Trademark Office.  However, the Office accepted an opposition lodged by Cadbury and refused the application on the grounds that it had not been sufficiently demonstrated that the mark had acquired distinctive character.  It considered that the shape that had been applied for had three features, as follows:  

• The basic rectangular slab shape; 
• The presence, position and depth of the grooves running along the length of the bar; and
• The number of grooves which, together with the width of the bar, determine the number of ‘fingers’.

According to the UK Office, the first of those features was a shape that derived from the very nature of the goods claimed (with the exception of cakes and pastries), and the other two were necessary to obtain a technical result.

That decision was appealed to the High Court of Justice, which found that there was not enough case-law from the Court of Justice in respect of the issues that had been raised, and therefore made a referral for a preliminary ruling.  In its judgment, the CJEU changes the order of the three questions that had been referred to it, and first of all examines the question concerning the possibility of cumulatively applying the bar to registration of signs consisting of the shape of goods where that shape is imposed by the nature of the product and where it is necessary to obtain a technical result.  The reasoning behind this change of order is that a sign to which that ground for refusal applies can never acquire distinctive character through use. 

In that regard, the CJEU reiterates the legal doctrine established in the recent Hauck judgment, C 205/13, EU:C:2014:2233 (Tripp-Trapp chair), in the sense that the three particular grounds for refusing to register product shapes operate independently of one another. Therefore, in the Court’s view it is irrelevant whether a certain shape could be denied registration on the basis of a number of grounds, and it will suffice for just one of those grounds to be fully applicable to the shape in question in order for registration to be denied.

As the Advocate General had explained in points 65 and 66 of his Opinion of 11 June 2015, what the CJEU had precluded in the Hauck judgment was the possibility of applying the three different grounds for refusal in combination, but not the possibility of applying them cumulatively, provided that at least one of those grounds fully affects the sign in question.

A new Patent Act … In two years' time? (I)

Publication this summer of the new Patent Act, Act no. 24/2015 (in Spanish) of 24 July 2015, in the Official State Gazette (BOE) has resulted in the appearance of a flurry of urgent commentary and reviews in a wide range of different media outlets. This reaction comes as a bit of a surprise: while all law reform is newsworthy, what we have in this case is an Act that will not come into force until … 1 April 2017!!

This unusually protracted vacatio legis (22 months) highlights the far-reaching scope of the revision while at the same time likewise attesting to prudence on the part of lawmakers.

Not only will industry need some time to adapt, because certain changes (e.g., the change-over to a single system for grant involving the preliminary examination of all patent applications) will require major adjustments to current thinking and practice, but implementing the changes will require the Administration to undertake its own re-organization, with no room for improvisation.

For once the government is to be commended for not rushing headlong to put a law on the statute books when enforcement will hinge on a particularly arduous process of setting up the requisite implementing regulations. The painful examples of other, premature reform attempts (copyright, for instance?) are still with us.

The delay, amply justified as it is for the broad sweep of administrative adjustments needed by the Patent Office, is more vexing when it comes to other areas. As it evolved, the new Patent Act came to contain more and more changes bearing on legal proceedings and procedure. In the end, unexpectedly, the Act ushers in a whole aggiornamento addressing patent litigation proceedings (with collateral effects extending to other types of industrial property), so it will be bound to resonate. It is indeed unfortunate that we will be kept on tenterhooks for so long awaiting the tantalizing prospects for legal proceedings that the Act holds out to us.

ELZABURU will be reviewing and assessing the new Act in a series of posts that will be appearing on our blog in the coming weeks for our clients, colleagues, and friends. Until then, we can look forward with expectation to this new Act, that will be so long in coming, like a long-awaited dish of a favourite food.

Blog entries dealing with the new Patent Act:

I. A new Patent Act … In two years' time? (Antonio Castán)

II. 180º turn in Spain's system of granting patents  (Francisco J. Sáez)

III. The importance of professional advice (Francisco J. Sáez)

IV. Lawsuits under the new Patent Act (Antonio Castán)
V. Utility models under the new Patent Act (Pedro Saturio)

Author: Antonio Castán

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Good news for owners of reputed trademarks

TRADEMARKS HAVING A REPUTATION IN CERTAIN EU COUNTRIES MAY ALSO BE ENFORCED IN COUNTRIES WHERE THEY DO NOT HAVE A REPUTATION

In its judgment of 3 September 2015 in the matter of Iron & Smith kft/Unilever (Case C-125/14), the Court of Justice of the European Union ruled on an interesting question referred by a Hungarian court concerning the territorial effect of the reputation of a Community trademark under Article 4.3 of Directive 2008/95 (refusal of a trademark application conflicting with an earlier Community trademark having a reputation but covering different goods). At issue was whether the reputation of a Community trademark in certain EU countries could also be relied on and have legal effect in other EU countries in which the mark was not reputed.

Happy-go-lucky European citizens will lose no sleep over the question raised by the Hungarian court, but to IP practitioners the issue is intriguing, since it is directly related to those two pillars of the EU trademark system, namely, the unitary character of the Community trademark and the co-existence of that system with the various national systems.

These two principles are firmly enshrined in the Community Trade Mark Regulation and underpin the EU's trademark system, but day-to-day practice can give rise to interesting, hard-to-assess issues like the one raised by the Hungarian court in its referral, since grand principles and doctrines tend not to be so clear-cut and helpful when it comes down to dealing with individual cases in the context of local market realities.

The unitary character of the Community trademark means that it shall have equal effect throughout the European Union, as expressly laid down in Article 1 of the Community Trade Mark Regulation. The wording "equal effect" should mean not only that a registration as such is formally in force in the 28 Member States of the European Union but also that the rights conferred on its owner, jus prohibendi chief among them, are equally effective throughout the European Union.

In the case at hand, the Court of Justice was asked to rule on whether the prohibitive rights of action emanating from the reputation enjoyed by a Community trademark reputed in certain countries could also be wielded in other EU countries in which the mark did not have a reputation. In the case before the Hungarian court that referred the question for a ruling, an earlier Community trademark opposing a later trademark application had a reputation in the United Kingdom and Italy but not in Hungary, where the new application had been filed. As the Hungarian court adroitly noted, the question displayed certain similarities with the controversy surrounding the issue of Community trademark use and the territorial scope of use that was to be deemed sufficient, a question on which the CJEU had already ruled, chiefly in the Leno Case (C-149/11). The Court has held that a trademark's reputation needs to be assessed on its own terms, not necessarily the same ones used to assess use.

The Court's judgment is tightly argued and clearer than usual. So, setting aside its customary vagueness, the Court has ruled straightforwardly that:

1. If the reputation of an earlier Community mark is established in a substantial part of the European Union, which may in some circumstances coincide with the territory of a single Member State, the said earlier Community trademark is to be held to have a reputation in the European Union as a whole.
2. The principles concerning genuine use of Community trademarks laid down by the case law are not necessarily relevant for the purpose of establishing the existence of a reputation.
3. A Community trademark having a reputation may benefit from the extended protection specified for reputed marks in the Directive, even in a Member State in which it does not enjoy a reputation, where it is shown that a commercially significant part of the public is familiar with the mark and makes a connection between it and a later national mark and there is either actual and present injury to the Community trademark or there is a serious risk that such injury enjoy may occur in the future.

A Community trademark having a reputation can thus enjoy the extended protection conferred on reputed trademarks even in those countries in which it is not considered reputed, provided that certain conditions relating to actual and present injury are fulfilled, as the case law has in fact already been requiring even in those territories in which the reputation of an earlier mark is beyond question, as, for instance, in the judgments in the General Motors (C-375/97) and Royal Shakespeare (T-60/10) Cases.

Author: José Ignacio San Martín

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An end to unrestricted banking secrecy when investigating online sales of counterfeit goods

In its judgment of 16 July 2015 (Case C-580/13) the Court of Justice of the European Union (CJEU) placed limits on national laws protecting banking secrecy. In response to a request from Germany's Bundesgerichtshof (Federal Court of Justice) for a preliminary ruling on whether Germany's national banking secrecy law contravened Directive 2004/48/EC on the enforcement of intellectual property rights, the CJEU held that the Directive precluded a national provision which allows, in an unlimited and unconditional manner, a banking institution to invoke banking secrecy in order to refuse to provide the judicial authorities with information concerning the name and address of an account holder in the framework of proceedings dealing with the infringement of an intellectual property right.

In 2011 Coty Germany, exclusive licensees to the Community trademark for Davidoff Hot Water, purchased a bottle of perfume bearing that mark from an Internet auction platform and paid the purchase price into the seller's bank account with Stadtsparkasse Magdeburg. On observing that the perfume was counterfeit, Coty Germany asked the auction platform for the real name of the holder of the account from which the perfume had been sold under an assumed name. The party in question admitted to being the account holder but denied having sold the perfume and refused to furnish any additional information, relying on her right not to give evidence.

Coty Germany then asked the bank, Stadtsparkasse Magdeburg, to furnish the name and address of the holder of the bank account in which it had deposited the purchase price for the counterfeit perfume, but the bank refused to do so, invoking banking secrecy.

Coty Germany therefore instituted civil proceedings with the Landgericht Magdeburg (Regional Court, Magdeburg), which ordered the Stadtsparkasse to supply the information requested. This order was overturned by the Oberlandesgericht Naumburg (Higher Regional Court, Naumburg), ruling that under German civil law the bank was entitled to refuse to give evidence in civil proceedings. Coty Germany appealed this decision to the Bundesgerichtshof (Federal Court of Justice), which stayed the proceedings and referred a question to the CJEU for a preliminary ruling.

The question highlights the need to reconcile the right to an effective remedy and the right to intellectual property, on the one hand, and the right to protection of personal data, on the other.

Essentially the CJEU has held that, taken in isolation, the provision of national law that allows unlimited refusal by a banking institution to furnish information concerning the name and address of an account holder who engages in activities infringing an intellectual property right, inasmuch as the wording of the provision contains no condition or qualification, is liable to frustrate the fundamental right to an effective remedy and the fundamental right to intellectual property by preventing the competent national authorities from ordering the release of personal data pursuant to Article 8.1 of the above-mentioned Directive.

This ruling furnishes explicit support for national laws ensuring a fair balance between the different fundamental rights in question and clearly places limits on banking secrecy in investigations of cases of infringement of intellectual property rights. Given the invisibility available to sellers of counterfeit goods on the Internet, identifying the holder of the bank account into which payments are made can be critically important – in many cases the only way to uncover an infringer. The CJEU's ruling can be expected to have greater impact on civil matters in Spain, since it limits the banking secrecy that can be invoked in civil proceedings, and less on criminal matters, in which examining judges already enjoy broad powers to investigate crimes and set aside fundamental rights. In any case, the ruling is a big step forward in being able to combat the runaway scourge of sales of counterfeit branded goods on the Internet.

Author: Juan José Caselles

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Algeria joins the Madrid Protocol

Algeria deposited its instrument of accession to the Madrid Protocol on 31 July 2015, and the Protocol is to enter into force for Algeria on 31 October 2015.

Algeria was the only one of the 95 current member States of the Madrid System that was a party to the Madrid Agreement alone.

The Madrid Agreement is much less streamlined and up to date than the Protocol. For instance, international filings have to be based on a granted trademark registration, and certain procedures can only be carried out through the home Office. Not only do these sticking points give rise to delays and complications, but the Agreement does not allow the designation of States that are parties only to the Protocol, which include such major jurisdictions as the OHIM, JPO, and USPTO. This has no doubt been a stumbling block for Algerian trademark owners, who up to now have not been able to use the Madrid System to extend their rights to members that are parties to the Protocol alone.

Although the Madrid System comprises the Agreement, the Protocol and the Common Regulations, since the amendment of article 9 sexies of the Protocol (the safeguard clause) it is the Protocol alone which applies between States bound by both the Agreement and the Protocol. The accession of Algeria therefore represents a milestone for the Madrid System, given that from 31 October 2015 all international registrations of marks will be governed exclusively by the Protocol and the system as a whole will, as a result, be greatly simplified.

Author: Cristina Arroyo

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Recent entry into force of the new Rules of Procedure of the EU General Court

Back in March the European Union's General Court (GC) agreed to reform its Rules of Procedure. The revised legal text introduces some important new rules in the section relating to industrial and intellectual property cases (court proceedings relating to Community trademarks and Community designs). Some of the most significant new rules adopted are as follows:

• In direct appeals the language of the proceedings shall be that chosen by the plaintiff among the official EU languages. In the event of an objection to the language of the appeal by a party to the proceedings, the language of the decision of the Board of Appeal of the OHIM that is contested before the GC shall become the language of the proceeding.
• The possibility of supplementing the initial briefs of the parties via briefs of reply or rejoinders has been removed. 

• A cross-claim by a party to the proceedings must be submitted in a document separate from the brief of response to the appeal. 

• A cross-claim shall be deemed to be devoid of purpose when the applicant in the main appeal discontinues the main action and when the main action is declared manifestly inadmissible. 

• In terms of costs, under the new rules the General Court may order the OHIM to bear only its own costs where an appeal is successful (with the successful applicant paying its own).

• The possibility of appeals of this type being resolved by a single judge has been introduced.

In addition, under the new rules the Advocate General may intervene in appeals of this type whenever the difficulty or complexity of the case requires it.

The new rules of procedure entered into force on 1 July 2015.

Author: Enrique Armijo Chávarri

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More on the "cyber jurisdiction"

The umpteenth revision to the regulations on trademark conflicts issued by a social network and some recent cases call to mind a question I have been mulling over for a long time, one in fact that was addressed by an outstanding presentation by Andy Ramos at the First Madrid Law Conference.

Those of us who deal in intellectual and industrial property matters have traditionally grounded ourselves in national and Community legislation and international treaties, where appropriate supplemented by the applicable rules of procedure.

Even so, for some years now, it has been necessary to top off our knowledge of these aspects with the rules for dealing with disputes arising from improper trademark use, personality rights, copyright, etc. set by each social network.

Each network sets its own rules, and what are purportedly the social network's terms of use take on the effect of a body of legal and procedural rules that have to be followed (as far as possible) when trying to settle the growing number of disputes involving our clients. A cursory review indicates that as things stand today, one way or another some 80 % of our activities involve the Internet and social networks.

Let me say that I have nothing against rules that fall outside the authority of the State, and we all are aware that there have been a number of instances of successful self-regulatory systems. Looking at the UDRP rules governing disputes between trademarks and domain names shows that the overwhelming majority of cases are settled by panelists under the auspices of institutions not under the authority of any State, one notable example being the WIPO Arbitration and Mediation Center on account of the large number of cases dealt with and the quality of its services.

However, problems may arise where the rules have not grown out of consensus but rather have been dictated by the social network's owner and administrator. These problems are compounded where the rules have been made based more on a U.S. than on a European approach to law (indeed, cases of disputes on Chinese social networks have already arisen, a foretaste of things to come). Matters become more complicated still where each social network has its own separate rules. And to make matters worse, "policy", that is, how the rules are interpreted, depends on the individual views held by the management of each social network.

Not long ago I was involved in a dispute between two parties based in northwestern Spain over copyright on a social network. The parties overseeing the conflict started out by citing the Digital Millennium Copyright Act, fair use, and other recondite rules, to our client's bafflement. As might be expected, references to Spain's Copyright Act and Community Directives were conspicuous by their absence.

A more serious example involved the State Prosecutor's Office in a case in which the image rights of a minor had been infringed, but it proved to be impossible to enforce any of the measures sought outside the borders of Spain, even though the images had spread around the world.

There are many more examples of cases like these that crop up daily. Establishing a suitable legal framework of uniformity for these situations will require considerable deliberation.

There has been talk of a principle of territoriality, whereby "business in my territory is done under the laws of my territory", but this is only a partial solution given the non-territorial nature of social networks already mentioned above.

The authorities of the European Union are seeking to exert an influence on disputes arising on social networks by harmonizing European rules.

There is still a long road ahead of us, but there are also some examples of successful approaches showing that harmonized regulation can significantly decrease the number of disputes. Territorial regulations could then be restricted to those disputes that are strictly local in nature.

Author: Javier Fernández-Lasquetty

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Freedom of expression, verbal abuse, human rights

"For freedom, as for honour, one can and one should risk one's life."

Don Quijote de la Mancha

Miguel de Cervantes

The judgment by the European Court of Human Rights (ECHR) in the matter of Delfi AS vs Estonia (Case 64569/09) has caused a bit of a stir.

At its core is another conflict between freedom of expression and the right to honour involving the mass media – essentially digital media – and its empowerment/obligation to curb defamatory content.

The case stems from a matter in which the owners of a web news portal, Delfi, were held civilly liable by the Estonian courts, which ruled that a person's right to honour had been infringed by defamatory comments made in a comments section provided by the owners of the portal for each news item.

Delfi had comment regulating measures in place on its website (an automatic filter to block comments containing certain words and a rapid notice and take-down system to remove defamatory messages). It therefore maintained that the judgment by the Estonian Supreme Court infringed its right to freedom of expression, and it appealed to the ECHR.

In its first instance decision the ECHR had ruled that holding Delfi liable was a justified and proportionate restriction of freedom of expression and therefore that the judgment in Estonia did not contravene the Charter of Fundamental Rights of the European Union. Delfi then appealed to the Grand Chamber of the ECHR.

The Grand Chamber upheld the earlier decision on very similar, though not identical grounds. For one thing, unlike the earlier decision, the Grand Chamber's judgment was not unanimous.

The legal findings of the decision address both the issue of lawfulness of the interference and the issue of freedom of expression and restrictions on that freedom.

Lawfulness entails that a provision of law "should be accessible to the person concerned and foreseeable as to its effects". Since it is the consequences that cause a person to regulate his conduct, they must necessarily be foreseeable.

Delfi claimed that there was no domestic law stipulating that an intermediary should be regarded as a publisher. The company claimed that the applicable law to be relied on was European law, which expressly prohibited the imposition of liability on intermediaries pursuant to the E-Commerce Directive No. 2000/31/EC.

Realizing that the underlying issue basically hinged on whether Delfi was regarded as being merely an intermediary, the Grand Chamber pointed out that it was not its task to take the place of the domestic courts in aspects relating to the interpretation and application of domestic legislation but only to determine whether the measures adopted and the effects they entail were in conformity with the European Convention on Human Rights.

In this context the ECHR noted that Delfi, as one of the largest news portals in Estonia, should have been familiar with domestic legislation and case law and that the possibility of liability for the circumstances described was not unforeseeable.

The meaning and pronunciation of a Community trademark in a language that is not an official EU language may also count

The factors to be taken into account when assessing the likelihood of confusion between two trademarks are ordinarily clear, for instance, the degree of similarity between the marks and between the goods/services covered. It is also clear that when the similarity between trademarks is being evaluated, three factors, aural similarity, visual similarity, and conceptual similarity, are to be taken as a three-fold basis for the assessment.

These, in short, make up the factors which all IP professionals are familiar with and which are applied when examining the likelihood of confusion. But what about trademarks written in a language that is not an official language of the European Union? Should the assessment also take into account the meanings of the words and even how they are pronounced in their language? What interpretation should be given to Article 9(1)(b) CommunityTrade Mark Regulation?

These questions were referred by the Brussels Court of Appeal to the CJUE for a preliminary ruling in Case C-147/14. The Court's ruling was just recently published.

The Court's answer leaves no doubt whatsoever: whether or not the meaning and pronunciation of words written in a non-EU language should be taken into account depends on whether the relevant public has a basic knowledge of the language in question.

In the case at hand, the trademarks considered contained Arabic words written in both the Latin and Arabic scripts and were visually quite similar. By contrast, if compared in Arabic, the trademarks displayed major phonetic and visual differences, in that the meanings and pronunciations were substantially unlike.

At the same time, the goods sold under these Community trademarks were food products that were essentially Arabic in origin, so the relevant public necessarily consisted of Muslim consumers with a basic knowledge of written Arabic.

In view of all the foregoing, the CJUE came to the logical conclusion that "Article 9(1)(b) of Council Regulation (EC) no. 207/2009 of 26 February 2009 on the Community trade mark must be interpreted as meaning that, in order to assess the likelihood of confusion that may exist between a Community trade mark and a sign which cover identical or similar goods and which both contain a dominant Arabic word in Latin and Arabic script, those words being visually similar, in circumstances where the relevant public for the Community trade mark and for the sign at issue has a basic knowledge of written Arabic, the meaning and pronunciation of those words must be taken into account".

This conclusion is closely in keeping with the social and economic situation in the European Union, a market that encompasses consumers of all nationalities and ethnic groups. It is certainly the decision that makes the most sense in the context of a literal construction of the provision concerned.

Author: Joaquín Rovira

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World Anticounterfeiting Day

This coming 2 June is World Anticounterfeiting Day in a number of countries around the world. To mark the occasion, for the fifth consecutive year the Spanish Patent and Trademark Office and the National Brand Owners' Association are holding, in cooperation with the Finance Ministry and the various national Police Forces, a special day to raise awareness and sensitize the citizenry about the adverse repercussions caused by the manufacture and sale of counterfeit goods.

This year's event will take place in the city of Vigo. The choice of city is far from arbitrary but rather is the upshot of a police anticounterfeiting and antipiracy operation carried out at Vigo's "A Piedra" market in October 2014. And that's not all. Vigo and its market, famous for selling counterfeit goods, merited a mention on the US Trade Representative's international blacklist in February 2014, which specifically noted the city's status as a port of call for many cruise lines and the market's operation "under the supervision and control of the municipal government".

The choice of Vigo as the city in Spain to hold World Anticounterfeiting Day, then, could not be more apt. One would hope that holding World Anticounterfeiting Day there will indeed help open the eyes of local government officials to the need to combat this type of criminal activity more effectively to take their city off this shameful blacklist.

Author: Juan José Caselles and Transi Ruiz

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New world for appellations of origin: Lisbon renaissance in Geneva

The Diplomatic Conference convened to adopt a new Act of the Lisbon Agreement met at the headquarters of the World Intellectual Property Organization (WIPO) on 11 to 21 May 2015 and reached agreement to adopt the Geneva Act.

In preparation for the Diplomatic Conference, the ad hoc Working Group met 10 times from 2009 to 2014 to discuss and draw up the draft text that has yielded this new Act and the Regulations under the new Act.

One of the primary objectives of the new Act is to make the existing Lisbon Agreement on Appellations of Origin and their International Registration, which currently has only 28 Contracting Parties, more attractive for accession by new members.

Some of the main changes will permit accession to the Act by intergovernmental organizations and the international registration of both appellations of origin and geographical indications (up to now the Agreement provided only for the registration of appellations of origin) under a system that is of course in conformity with the TRIPS Agreement while also grounded in many respects in regulations concerning these modalities adopted by the European Union. The Geneva Act also includes Articles dealing with the (broad) scope of protection for geographical indications and appellations of origin in the Contracting Parties and with the subject of official fees (rather unusual in European Union regulations in this area).

Two intergovernmental organizations evinced particular interest over the course of the drafting process for the new Act, namely, the European Union (with the OHIM also present as a separate observer in its own right) and, to a lesser extent, the African Intellectual Property Organization (OAPI). As the efforts of the Working Group earned credibility with the drafting of proposed full wordings for the texts, it sparked the interest of more and more countries, and the delegations of certain world powers (the U.S., Russia, China), which initially either did not take part or were essentially passive participants, became more active, greatly enriching the deliberations, raising very interesting issues and proposals from a variety of legal, economic, and cultural perspectives.

Like the current Lisbon Agreement, registration is not limited to certain goods. Rather, appellations of origin and geographical indications can be registered for all types of goods (agricultural and non-agricultural), provided they comply with requirements.

The Geneva Act will enter into force three months after five Contracting Parties have deposited their instruments of ratification or accession.

It would be remiss to fail to mention the important role played by the delegations of organizations accorded observer status in the Working Group and at the Diplomatic Conference, chief among them CEIPI, for its rigorous academic contributions, MARQUES, oriGIn, and INTA, representing the interests of their members and the general interest of the community at large in achieving a text with the clearest possible wording so as to avert instances of legal uncertainty.

Author: Miguel Ángel Medina

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