The CJEU gives wings to compensation for moral damages

Compensation for moral damages in intellectual property infringement cases has, in the past, had to break through significant barriers and overcome considerable prejudice.  Some of those barriers are due to the very nature of the damages: it is always easier to argue that economic detriment has been suffered (when we are talking about trademarks, designs, patents or intellectual creations) than damage to the intangible or spiritual realm of the author or rightholder. Yet it is sad to think that reservations towards compensation for moral damages might also have come about as a result of a legislative deficiency.  

Directive 2004/48/EC, extending the means of protecting intellectual property rights, slotted moral damages into the context of negative economic consequences of infringement, just another aspect alongside lost profit suffered by the injured party and unfair profit made by the infringer (Art. 13.1 a).  Alternatively, the Directive provided for compensation based on a hypothetical royalty, i.e., the lump sum that would have been due if the infringer had requested the pertinent authorisation (Art. 13.1 b).

This gave the impression that if the plaintiff opted for this alternative criterion for assessing the value of the damages, i.e., the hypothetical royalty, moral damages could not enter into the equation. The Spanish lawmaker had followed this legislative anomaly to the letter, thanks to Act 19/2006, and applied it to all forms of intellectual property: the Trademark Act, the Patent Act, the National Designs Act and the consolidated wording of the Spanish Copyright Act.

It was the Court of Justice, in its judgment of 17 March 2016 in case C-99/15, which ultimately put things in their place. That judgment stemmed from a reference for a preliminary ruling made by the Spanish Supreme Court concerning the regulation of moral damages in copyright. The plaintiff (the director, screenwriter and producer of an audiovisual work) had sued the producer of a documentary that included passages of his work for infringement of his rights. The plaintiff had selected the compensatory criterion of the fee for unauthorised use of his work but also requested 10,000 Euros for moral damages. The Supreme Court wanted to know whether moral damages could additionally be requested in such cases. 

In its judgment, the Court of Justice clarified that a provision of EU law must be interpreted not just in terms of its wording, but also in terms of its context and the objectives that it pursues; that compensation for damages must seek to ensure full compensation for the prejudice actually suffered; and that hypothetical royalties only cover “material” damage. There is therefore nothing to prevent the rightholder from also being able to claim compensation for any “moral” damages suffered.  

This judgment is extremely significant due to its side effects: its clarifying scope extends to trademark, patent and design law. However, if the judgment gives wings to moral damages, we should not try to fly too high. There are rules governing moral damages too, and, just like Icarus, we could end up falling into the sea with our wings burned for flying too close to the sun, and this time a legislative deficiency would not be to blame!    

Author: Antonio Castán

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Goodbye OHIM, hello EUIPO

On Wednesday 23 March 2016 a large part of the changes provided for in the Amending Regulation took effect. Thus, what was formerly the Community trade mark (CTM) is now called the European Union trade mark (EUTM), while OHIM has similarly changed its name to the European Union Intellectual Property Office (EUIPO). 

However, while we may therefore bid OHIM rest in peace and wish long life to the EUIPO, the amendments to the EU trade mark system are not merely cosmetic.

As may be seen from this circular.

The Spanish Supreme Court applies CJEU doctrine in respect of use of third parties’ trademarks as search engine keywords

Judgment 105/2016, rendered by the Civil Chamber of the Spanish Supreme Court on 29 February, establishes the criteria pursuant to which the use of a third-party trademark as a search engine keyword must be examined in order to determine whether it infringes the trademark holder’s exclusive rights.     

To that end, the Supreme Court has followed in the footsteps of Alicante Court of Appeal and applied the doctrine established by the Court of Justice of the European Union in its judgments of 23 March 2010 (joined cases C-236/08 -Google France v Louis Vuitton-, C-237/08 -Google France v Viaticum- and C-238/08 - Google France v Centre National de Recherche en Relations Humaines), 12 July 2011 (C-324/09, L'Oréal SA v eBay International AG) and 22 September 2011 (C-323/09, Interflora Inc. v Marks & Spencer plc).

According to that doctrine, the use of third parties’ trademarks as keywords in principle infringes the trademark holder’s rights.  Nevertheless, since exclusive trademark rights are not absolute, under certain circumstances such use will not be considered as infringing.  Those circumstances are as follows: 

i) where the use of the trademark is not liable to affect the ‘product origin indicating’, advertising or investment functions of the trademark; and 
ii) where it is clear to the average Internet user that the goods or services advertised do not come from the trademark holder or from an undertaking economically connected to it.              

Unauthorized use of a trademark in advertisements published on the Internet without the consent of the advertiser

The Court of Justice of the European Union has just delivered a judgment (case C-179/15) in response to a request for a preliminary ruling submitted by the Fővárosi Törvényszék (Budapest Municipal Court, Hungary) in relation to the interesting question of the interpretation to be given to Article 5(1)(a) and (b) of the First Council Directive in a case where unauthorized use is made of a mark in an advertisement published on the Internet without the consent of the advertiser or which remains there despite the efforts of the latter to have it removed.

The background

The parties to the main proceedings out of which the question arose are a motor vehicle manufacturer and a Hungarian company engaged in the retailing of motor vehicles and their parts and in the repair and servicing of such vehicles.

In 2007 the two had entered into an after-sales service agreement under which the Hungarian company was entitled to describe itself as an authorized dealer of the motor vehicle brand. The agreement expired in March 2012.

While the agreement was in force, the Hungarian company ordered from an online advertising services provider the publication on the website www.telefonkonyv.hu of an advertisement in which the company was presented as an authorized dealer. The publication was to cover the years 2011 to 2012 only.

Following the expiry of the agreement, the Hungarian company tried to  remove from the Internet any advertisement in which it was presented as an authorized dealer of the brand to which the contract related. To that effect it contacted the provider it had engaged and also wrote to various operators of other websites on which advertisements, describing it as an authorized dealer, had appeared. However, those requests went unheeded.

In view of the ongoing use of its trademark, the motor vehicle manufacturer brought a legal action seeking: (i) a declaration that the Hungarian company had infringed the trademark through those advertisements; (ii) that the Hungarian company be ordered to remove those advertisements, to refrain from any further infringement and to publish a corrigendum in the national and regional press.

In its defence the Hungarian company argued that the only advertisement it had placed on the Internet was the one published on the website www.telefonkonyv.hu and that the others had been published without its consent. In this regard it submitted an expert report showing that the advertisements had been reproduced by certain providers of Internet advertising services without its knowledge or consent and that this is in fact a common commercial practice in which some operators engage. 

In these circumstances the Budapest Municipal Court stayed the proceedings in order to refer the following question to the Court of Justice for a preliminary ruling:

“Must Article 5(1)(b) of [Directive 89/104] be interpreted as meaning that the trade mark proprietor is entitled to prevent a third party named in an advertisement on the internet from making use, for services of that third party identical to the goods or services for which the trade mark is registered, of a sign likely to be confused with the trade mark, in such a way that the public might be given the mistaken impression that there is an official commercial relationship between the undertaking of that third party and the trade mark proprietor, even though the advertisement was not placed on the internet by the person featuring in it or on his behalf, or it is possible to access that advertisement on the internet despite the fact that the person named in it took all reasonable steps to have it removed, but did not succeed in doing so?”