Recent creation of EUROPOL's Intellectual Property Crime Coordinated Coalition (IPC3)

On 12 July 2016 EUROPOL’s headquarters in The Hague witnessed the launch of the Intellectual Property Crime Coordinated Coalition (IPC3).
This organization constitutes the EU’s response to offences against intellectual property and stems from the joining of the strengths of EUROPOL and the EUIPO in this area.

The IPC3 arose out of a strategic agreement between EUROPOL and the EUIPO signed in 2013. It has been incorporated into the current structure of EUROPOL and receives financial support from the EUIPO in the amount of 500,000 euros per year.

The organization provides technical and operational support for law enforcement agencies and other partners both inside and outside the EU by:

• a) facilitating and coordinating cross-border investigations;
• b) monitoring and reporting on trends in on-line offences and watching for the appearance of new modus operandi;
• c) improving the harmonization and standardization of legal instruments and operating procedures to fight intellectual property crime globally;
• d) reaching the public and law enforcement agencies by enhancing awareness and providing training in this specific area of knowledge. 

The creation of the IPC3 is more than warranted if we consider the impact of counterfeit or pirated goods within the EU, which account for 5% of imports with a total value of 85,000 million euros. The fight against offences of this nature has to be given priority in order to provide consumers with protection against dangerous or defective products and to tackle the organized criminal networks engaging in these illicit activities which are frequently also linked to other serious forms of transnational crime (smuggling, illegal immigration, labour exploitation, tax evasion, money laundering, financing terrorist activities, etc.).

The Joint Task Force Observatory EUIPO-INTA of INTA’s EU Anti-Counterfeiting Subcommittee, of which ELZABURU forms part, had for some time been strongly advocating the setting up of a specific organization within EUROPOL to combat crime of this nature.

Author: Juan José Caselles

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Brexit in IP? Not so fast

The decision of the United Kingdom to “withdraw from the Union” – in the language of the much mentioned article 50 of the Treaty on European Union – appears to have opened up The Gate of the Hundred Sorrows, to borrow the title of the story by the British writer Rudyard Kipling. Lamentations and cries of alarm abound. However, the fact is that the gate is not open yet (the UK has not notified the European Council of its intention and will probably take some time to do so) and it remains to be seen on what conditions the withdrawal will take place and, therefore, what degree of suffering it may actually cause.

As regards intellectual property it is clear, at least on paper, that the withdrawal of the UK will test the strength of the systems so laboriously constructed over more than half a century to achieve unification and harmonization in the fields of trademarks, designs, geographical indications, designations of origin, plant varieties, trade secrets and patents. Trademarks and designs registered at the European Union Intellectual Property Office (EUIPO) in Alicante will cease to have effects in the UK and means will have to be put in place to determine what will happen to the existing registrations and the applications under prosecution. A similar situation will arise with regard to geographical indications, designations of origin and plant varieties, while the harmonization of trade secrets which was recently agreed upon will not be applicable in the UK.

The European patent with unitary effect, a project to which Spain has not adhered, loses one of its most prominent partners. A future unitary protection for patents will no longer be able to extend to the UK. In addition, the proposed International Agreement on a Unified Patent Court will require a different form of ratification and will also need to be reworked, given that London was the seat chosen for one of the three sections of the Central Division: that dealing with chemistry, metallurgy and life sciences.

While companies will have to assess, within the context of their intangibles strategies, the impact that opting for systems which leave out so relevant a territory may have, there would not appear to be any need, for the moment, to take decisions hurriedly. It is true that when the time comes the unitary effect of the trademarks and designs and the actions of the courts of the EU will no longer extend to the UK, but that is the way it used to be not too long ago and companies and practitioners were able to live with that situation.

However, the departure of the UK will also have consequences which are less foreseeable but could prove of undoubted importance for industrial property and also for copyright. It is undeniable that in many sensitive areas the UK embodied a manner of seeing things which on no few occasions conflicted with the more European or continental view. The tensions between the two visions of intellectual property, or even of unfair competition, emerged plainly in the very gestation of Community law and in the interpretation thereof by the Court of Justice. Upon the waning of the British influence, the situation could change in the future and the delicate balance which has been achieved in certain areas could be lost for ever. 

To conclude, as we began, by quoting (loosely) from a work by Kipling, on this occasion his famous poem “If”, in the phase which is now commencing the European Union will need to endeavour to keep its head when all about are losing theirs, and watch the things it gave its life to, broken, and stoop and build ‘em up with worn-out tools.

Author: Luis Baz

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The European Commission launches the EU-U.S. Privacy Shield

On 12 July 2016, the European Commission adopted a new arrangement for international exchanges of data between the United States and the European Union, namely, the “Privacy Shield”.

The need for this new framework arose from the judgment rendered by the CJEU last October in the Schrems case. In its decision, the European Court pointed out the serious deficiencies in the previous “Safe Harbor” arrangement, to the extent that it was ruled invalid. [see our article on Safe Harbor]

In that regard, in February 2016 it was announced that there would be a new framework that would provide the necessary guarantees for the transatlantic flow of EU citizens’ personal data.  Just this month, the French data protection authority (the Commission Nationale de l’Informatique et des Libertés –CNIL-) asked Facebook to stop compiling the data of users who did not have an account with the social media site and to stop transferring that data to the U.S., thus creating a growing awareness of transatlantic data transfers throughout the whole of Europe.   

For this reason, this new arrangement has been in the spotlight in a number of sectors ever since it was conceived.

The final wording of the arrangement seeks to reflect the following principles: 

• Robust obligations on companies that handle data
• Transparency and clear safeguards on U.S. government access                
• Effective protection of individual rights
• Annual joint review mechanism              

Those principles will be implemented by the following means: U.S. companies handling European citizens’ data will have to register to be on the “Privacy Shield” list and self-certify that they meet the standards set out by the arrangement; there will also be dispute resolution mechanisms that may be accessed by citizens who consider their rights to have been violated within the context of this system; and there will be cooperation between the European Commission and the U.S. Department of Commerce.                                        

The above measures merely seek to ensure an adequate level of protection of the personal data of EU citizens, as well as assurances for U.S. companies which, as market operators, handle that data. 

The adequacy decision is now in force, though U.S. companies will not be able to register to be on the aforementioned list until 1 August 2016. As regards EU citizens, the European Commission has announced that it will be publishing a guide to help get complaints procedures against companies underway.  For the time being, information has been provided in FAQ format along with the press release.

As is typically the case where such momentous issues are concerned, the terms of this new arrangement have been subject to heavy debate.

Figures such as the Euro MP Jan–Philipp Albrecht consider that although the arrangement might, at first glance, appear to provide guarantees, the practical application of its mechanisms could render it meaningless.  He highlights the intricate and complex nature of the rules for legal redress for unauthorised use of citizens’ personal data due to the large number of intermediaries involved, such as arbitration bodies and national authorities.  Also, a number of sectors have pointed out that the wording concerning mass surveillance echoes the “Safe Harbor” framework almost word for word.

It should nevertheless be noted that the “Privacy Shield” has been tweaked throughout the drafting process to accommodate the suggestions and opinions of the many authorities on the subject, such as the Article 29 Working Party, the European Parliament and the European Data Protection Supervisor.  

This provides another tool to promote trade between the European Union and the United States, one that is based on a vision that offers more guarantees as far as citizens’ rights are concerned.

Authors: Fernando Díaz y Martín Bello

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Updating the design protection system

Two studies were recently commissioned by the European Commission for the purpose of reviewing and assessing the effectiveness of design protection systems in Europe. One was conducted from the economic standpoint and the other from the legal perspective.

Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs sought to approximate and harmonize the laws of the Member States relating to designs. Subsequently, in 2001, the creation, in line with that Directive, of the system for the protection of Community designs constituted a milestone in that it permitted unitary protection to be obtained in all the countries of the EU through a single application. The first applications were filed at the EUIPO (then OHIM) in 2003.

The purpose of the study carried out from the legal perspective was to determine whether the current EU design protection framework is contributing to the strategy as regards innovation and, if appropriate, to make recommendations. The goal of that strategy is to create an environment wherein it will be easier to transform ideas into products, thus favouring economic growth and employment. 

One very positive conclusion arising out of the study is that a high degree of harmonization has been reached in various aspects of the design system thanks, to a large extent, to the power of convergence resulting from the practice and decisions of the EUIPO relating to designs. In this regard reference is made to the convergence programmes of the EUIPO and to the agreements between the EUIPO and various national patent offices of EU Member States for the establishment of common practices in the field of designs.

The study team also highlights the efforts made by national patent offices and courts to bring their decisions into line with the interpretations of the EUIPO and the EU Court of Justice.  

At the same time, some controversial points have emerged, among them the very definition of design, the concept of functionality and the notions of disclosure and scope of protection.

Among the recommendations made by the study team, the need to clarify the concepts of individual character and industrial sector may be highlighted. It is suggested that, when determining the individual character of a design, national patent offices and courts should also refer to the nature of the product, the manner of use thereof, the purpose for which it is intended and the industrial sector to which it belongs or where it circulates.

Another recommendation is that the current notions of visibility and normal use be reviewed and that the definition of design should signify that all designs should be visible in order to qualify for protection. Also noteworthy are the recommendations made with respect to the graphic representations. In this regard, the EUIPO's CP6 Convergence Programme has already addressed the issue of corvengence in the graphic representaation of a design.

The study also deals with two key issues connected with design protection: 3D printing and spare parts. 3D printing is a relatively recent area of technology whose impact extends not only to designs but also to other forms of IP such as patents, trademarks and copyright. The study team takes a very cautious approach to this subject, stressing the need for deeper analysis from all standpoints and making recommendations regarding the possible adoption of provisions on direct or indirect design infringement. 

The question of spare parts had already been addressed in Directive 98/71/EC which put in place the transitional “freeze plus” solution. This system allowed each country to maintain its existing legal provisions on the subject but also to make changes provided that their goal was to liberalize the market for component parts used for the purpose of repairing complex products. However, national laws are not harmonized. In some countries, and in the case of EU designs, it is not possible to exercise the rights derived from the design of component parts of complex products upon whose appearance the protected design  is dependent for repair purposes. In contrast, it is possible in other countries, such as France and Germany. The study team strongly suggests that this situation be remedied and recommends that the spare parts issue be addressed in conjunction with that of 3D printing, as this technology may impact the manufacture and distribution of spare parts.

As Directive 98/71/EC is about to come of age and over 13 years have elapsed since the system for the protection of Community designs was implemented at the EUIPO, an updating process was by now called for. What the Commission has therefore done is call a pause in order to evaluate the current situation and propose improvements for the consideration of all parties with an interest in the design protection system.

N.B. Article originally published in Iuris & Lex.

Author: Pedro Saturio

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The lessors of physical premises also infringe trademark rights

If you are going to let premises or a sales point in a market hall to a trader who could be infringing intellectual property rights, bear in mind that you could end up being sued by the rightholders.

The CJEU, in a judgment published yesterday (7 July 2016) in case C-494/15, considers lessors as an “intermediary” against whom an injunction can be issued.

The judgment stems from legal proceedings brought by Tommy Hilfiger, Lacoste and Burberry against Delta Center.  The defendant is the tenant of the marketplace ‘Pražská tržnice’ (Prague market halls), which sublets to market-traders the various sales areas in that marketplace.

The plaintiffs basically asked Prague City Court to order Delta Center to refrain from concluding or extending contracts for the rental of sales areas in the market halls with persons who infringe intellectual property rights.

The judgment concludes as follows: “The third sentence of Article 11 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights must be interpreted as meaning that the tenant of market halls who sublets the various sales points situated in those halls to market-traders, some of whom use their pitches in order to sell counterfeit branded products, falls within the concept of ‘an intermediary whose services are being used by a third party to infringe an intellectual property right’ within the meaning of that provision.”

The judgment goes on to specify that the conditions established for action against intermediaries in an online marketplace also apply to action against intermediaries in a physical marketplace, i.e., “injunctions must be equitable and proportionate. They must not therefore be excessively expensive and must not create barriers to legitimate trade. Nor can the intermediary be required to exercise general and permanent oversight over its customers.  By contrast, the intermediary may be forced to take measures which contribute to avoiding new infringements of the same nature by the same market-trader from taking place.”

Although the judgment calls for a fair balance to be struck, the subjective extension of the concept of “intermediary” to actions for intellectual property infringement in the physical marketplace seems clear.

Author: Antonio Castán

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Damages in cases of EU trademark application infringement

In the main proceedings from which the questions referred to the CJEU stem (judgment of 22 June 2016, C-280/15), the plaintiff –the holder of an EU trademark- filed a complaint for unlawful use of her trademark as a “hidden keyword” on an Internet website. The use in question had allegedly commenced prior to the publication of the plaintiff’s trademark application and had continued after publication of the registration of the mark.   

The plaintiff sought three orders, namely: (i) a declaration of infringement of her trademark; (ii) compensation for the advantage improperly obtained by means of the infringement, calculated by multiplying the duration of the infringement by the fee established in the licensing agreement; and (iii) compensation for the moral damages suffered on account of the infringement.

The relief sought by the plaintiff gave rise to some uncertainty, and so the court decided to refer the following three questions to the CJEU:

• First of all, the referring court asked whether Art. 102.1 EUTMR must be interpreted as meaning that an EU Trademark Court must issue an order which prohibits a third party from proceeding with acts of trademark infringement even though the trademark holder did not apply to the court for such an order.       

   

In reply to that question, the CJEU stated that Art. 102.1 EUTMR does not preclude an EU Trademark Court from refraining, pursuant to certain principles of national procedural law, from issuing an order which prohibits a third party from proceeding with acts of infringement on the grounds that the trademark holder concerned has not applied for such an order before that court.

• The referring court’s second and third questions concern the second sentence of Art. 9.3 EUTMR on compensations and specifically question the following two aspects: 

(i) Whether the holder of an EU trademark may claim compensation in respect of acts of third parties occurring before publication of the application for registration of the trademark concerned; and 

(ii)Whether, in the case of acts occurring after publication of the application for registration of that mark, but before publication of the registration, the concept of “reasonable compensation” in that provision means damages intended to compensate for all the harm suffered by that holder, i.e., recovery of the usual value derived by the third party from use of the mark and compensation for the moral damages suffered. 

The answer to the first question is clear: the second sentence of Art. 9.3 EUTMR establishes a strictly circumscribed exception to the rule that an EU trademark cannot prevail against third parties prior to the publication of its registration (Art. 9.3, first sentence). Therefore, no compensation can be demanded for acts that take place prior to the publication of the application for registration of the trademark.  

In order to reply to the second question, the CJEU makes an interpretation of the concept of “reasonable compensation”, based on the following points:

• The rights conferred by an application for registration of an EU trademark are conditional in nature, since at that point there is no certainty that the mark applied for will be granted.                                                       
• It thus follows that the reasonable compensation that may be claimed in an action based on a trademark application must be smaller in scope than the damages that may be claimed by the holder of a registered trademark. 
• Furthermore, a distinction is drawn in Art. 96 EUTMR between the actions in each case, i.e., (a) refers to any infringement action, whilst (b) refers to any action brought as a result of acts referred to in Art. 9.3, second sentence, EUTMR.  
• Also, Art. 13 of Directive 2004/48 establishes rules on the subject of damages which, on the one hand, provide for full compensation for the harm suffered, which may include moral damages, in the event of acts of infringement committed knowingly and, on the other, recovery of profits or the payment of damages which may be pre-established where the acts of infringement have not been committed knowingly. 

All this confirms that the “reasonable compensation” provided under Art. 9.3, second sentence, EUTMR must be smaller in scope than the damages that can be claimed by the holder of an EU trademark for acts of infringement committed after the registration of the trademark, and must be limited to the recovery of profits actually derived by third-party infringers from use of the mark during that period, with moral damages being ruled out.  

In light of the above points, the CJEU replied to the referring court’s questions as follows:

1)      Article 102(1) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark must be interpreted as not precluding an EU trade mark court from refraining, pursuant to certain principles of national procedural law, from issuing an order which prohibits a third party from proceeding with acts of infringement on the ground that the proprietor of the trade mark concerned has not applied for such an order before that court.
2)      The second sentence of Article 9(3) of Regulation No 207/2009 must be interpreted as precluding the proprietor of an EU trade mark from being able to claim compensation in respect of acts of third parties occurring before publication of an application for registration of a trade mark.  In the case of acts of third parties committed during the period after publication of the application for registration of the mark concerned but before publication of its registration, the concept of ‘reasonable compensation’ in that provision refers to recovery of the profits actually derived by third parties from use of the mark during that period.  On the other hand, that concept of ‘reasonable compensation’ rules out compensation for the wider harm which the proprietor of the mark may have suffered, including, as the case may be, moral prejudice.

Author: Ana Sanz

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