CJEU rules legal the technological measures preventing the use of homebrews on Nintendo consoles

The CJEU yesterday handed down a judgment (case C-355/12) resolving a request for preliminary guidance in a dispute that has arisen in Italy between the companies Nintendo and PC Box. The roots of the conflict were PC Box’s manufacture and sale of devices which, once installed in a Nintendo video game console, allow users to circumvent the piracy protection system and use counterfeit games. PC Box created the so-called homebrews expressly for use with Nintendo game consoles, and their aim is to deactivate technological protection measures so that consumers can play games by other manufacturers, listen to MP3s, and watch movies and videos.

The Italian court referred two questions to the CJEU. Firstly, whether the technological protection measures installed by Nintendo into its consoles to prevent the use of third-party programs, games and other content is in conformity with Community legislation, and, specifically, whether the concept of an effective technological measure set out in article 6 of EC Directive 2001/29 is applicable thereto. And, secondly, which criteria should be applied to evaluate the scope of legal protection against circumvention of effective technological protection measures.

(i) The first question is not without relevance, since the technological measures adopted by the complainant consist of an encryption system installed in the consoles and video games that prevents the use of video games lacking the encrypted code as well as the use of any other type of software, such as that aimed at reading MP3 files, videos or movies. According to PC Box, such technological measures go beyond the scope of the Directive, which excludes any type of interoperability between the console and equipment other than that of the company which produces the system. Recital 48 of the Directive states in this regard that the legal protection provided in respect of technological measures “should respect proportionality and should not prohibit those devices or activities which have a commercially significant purpose or use other than to circumvent the technical protection.”

Nintendo 3DS AquaOpenConsole

By Evan-Amos

Via Wikimedia Commons

However, according to the CJEU, there is nothing in EC Directive 2001/29 applicable to video games to suggest that Article 6.3 thereof does not refer to technological measures such as those used by Nintendo in its consoles. The concept of an effective technological measure is defined in a broad manner and also includes application of protection systems including encryption of the physical housing of video games such as the consoles themselves, which serves to prevent interoperability with equipment or devices lacking the encrypted code.

(ii) Secondly, the Italian court raises a question relating to the criteria or parameters in respect of which the scope of legal protection against the circumvention of technological protection measures should be assessed, and, specifically, whether account should be taken of the intended use attributed by the right holder to the product in which the protected content is inserted.

In this regard the Court holds that further to the said recital 48 of EC Directive 2001/29, the national court should take into account criteria such as the existence of other effective technological measures comparable to those adopted by the complainant, which would have caused less interference with the activities of third parties not requiring authorisation by the right holder, the costs of different types of measures, as well as other purposes of the devices used by the defendant aside from the circumvention of the technological measures and the frequency with which they are effectively used by third parties.

The fact is that a definite conclusion cannot be drawn from the CJEU’s judgment as to whether or not the homebrews manufactured and sold by PC Box are legal, since the assessment thereof is left in the hands of the national court depending on the proof of effective use provided by third parties. What has been clarified is that the concept of the effective technological measure set out in EC Directive 2001/29 also encompasses measures that serve to prevent the interoperability of a console with equipment, devices and software other than that of the company which produces the console.

By Maico Amorim

Via Wikimedia

Also of interest is the CJEU’s declaration relating to the legal definition of video games. In the Court’s opinion, video games constitute “complex matter”, comprising not only a computer program but also graphic and sound elements with a unique creative value, and should thus be protected by copyright together with the entire work, in the context of the system established by EC Directive 2001/29.

Author: Patricia Mariscal

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International Mediation Day: the relationship between mediation and industrial and intellectual property

By Ferran Cornellà
Vía Wikimedia

Since today is International Mediation Day, I thought I would share some thoughts on the role of this type of conflict resolution in the field of industrial and intellectual property (IP).

Mediation used to be identified in Spain with the resolution of family and work-related conflicts. And this remained more or less the case until the 2008 Directive revealed to many that mediation could also serve to resolve conflicts of a civil and commercial nature.

Since then, we have been witness to a legislative process that culminated a few months ago with the approval of Real Decree implementing the Mediation Act of 2012. There is still much to do in this field but we are progressing. In fact, the matter remains highly topical.

But on this day I want to remind everyone of the bodies and individuals who were working on mediation in IP before it became a relevant issue.

I should begin by mentioning the WIPO Arbitration andMediation Center, which celebrates its 20^th anniversary in 2014. The Center has been highly efficient in resolving domain name conflicts, but has also extended its activity into other areas, becoming a leading player in the promotion and establishment of mediation in the field of IP.

The Center has not only acted at a broad level in IP but has also sought out specific means to resolve conflicts in the Film & Media, ICT, R+D and technology transfer sectors. WIPO mediation is now an alternative for resolving conflicts regarding DESCA agreements on R+D projects in the EU. Work is also underway to use WIPO mediation in connection with FRAND licenses, and the Spanish collection agencies AGICOA and EGEDA have used its resources to set up their own systems. In addition, the Offices of Singapore and Brazil have implemented mediation systems in cooperation with the Center.

Other bodies in Spain have also used mediation as a tool for resolving IP conflicts. These include Alicante University and specifically UAIPIT, which has held its famous International Congress under Professor Lydia Esteve since 2009, an event that has always featured the subject of mediation in this field. In addition, IE Law School includes mediation in its programmes on intellectual and industrial property, and leading associations in the entertainment sector such as DENAE and foundations such as FIDE have for years promoted and organised training sessions on this subject. Furthermore, the subject has this year been added to the Master’s at Madrid’s Autonomous University.

Therefore, Spain is not lacking defenders, promoters and champions of mediation in this field. I am simply citing those I know and with whom I cooperate, with apologies to the rest, for there are surely many more.

When I discovered it a few years back, I realised that mediation is a highly efficient means of resolving conflicts in this field. With the passing of time I feel the same and even more strongly, after many years of litigation.

Industrial and intellectual property rights have a special nature of their own and the business that surrounds them requires a fast and efficient means of resolving conflicts, which does not scar the relationships between the parties, since IP plays a vital role in many areas of activity, all of them a small world in which the participants frequently cross paths.

Although some voices are in favour of a broad approach to mediation, I still believe that specialization is required, at least in this subject. As I see it, those who work with and are aware of industrial and intellectual property rights are the ones best placed to give the parties what they are looking for: a positive result, an efficient agreement. As time passes and once mediation becomes fully established in Spain, I believe that this criteria will take hold.

In any case, let us celebrate this international day and promote mediation in our daily professional activity. In the end we will all benefit.

Author: Javier Fernández-Lasquetty

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Private copying exception: not applicable to copies made from illegal sources

Yesterday, 9 January, Advocate General Pedro Cruz Villalón released his opinion in a case that once again requested further clarification on how to apply the exception laid down in Article 5.2.b) of Directive 2001/29, that is, the so-called private copying limitation (Case C-435/12) [in French].

The defendants in the main proceedings are Stichting de Thuiskopie, a Dutch entity in charge of collecting and distributing fair compensation for private copying as provided by the said Directive. The complainants are several companies that manufacture and import storage media and hence are obliged to pay compensation.

The main issue in the proceedings, which has been referred to the Court of Justice for a preliminary ruling, is whether Article 5.2.b) of the Directive is also applicable to copies of works obtained from illegal sources, and in that case whether such copies are to be included when calculating the compensation to be paid to rightholders. Unlike the legislation in other countries, like Spain, Dutch copyright law does not specify that the exception is applicable only to copies of works obtained legally. The text of the Directive does not make this distinction either.

The Dutch collecting society basically considers that since there are no effective technical means to prevent works from being copied, fair compensation payable to rightholders for private copying should also take into account copies made from illegal sources, particularly via the Internet. So doing would achieve effective compensation for the actual damage sustained by rightholders pursuant to the public availability of works on the web.

However, the Advocate General's opinion appears to take the opposite tack. Pedro Cruz Villalón maintains that, undeniably, while legislation along the lines proposed by the defendant collecting society could provide a lawful and suitable framework for addressing copyright infringement on the Internet, providing compensation for harm sustained by rightholders from this type of piracy is not the rationale for the private copying exception.

As an exception to copyright, private copying should be interpreted in accordance with the three-step test set forth in Article 5.5 of the Directive and hence should be strictly interpreted. Accordingly, this route, notwithstanding that it would allow rightholders to receive compensation, cannot be used to expand the scope of application of the exception to illegal copying, because so doing would entail making legal a practice that can only be regarded as wholly unlawful. It therefore inevitably follows that compensation for private copying should take into account only copies made from works accessed legally.

As concerns Spain, this opinion has interest because it once again calls into question the new system put into practice by Royal Decree no. 1657/2012 (in Spanish) of 7 December 2012 establishing a system of fair compensation charged against the federal budget. According to the Advocate General in Recital 43 of his opinion, compensation is to be funded by those responsible for causing harm, that is, by the physical persons making copies for private use. It seems clear that a system like Spain's is not in consonance with this interpretation.

Author: Patricia Mariscal

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European Commission proposes new directive on the protection of trade secrets

On 28 November 2013 the European Commission brought out its proposal for a Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. 

The proposal results from a public consultation and an external study carried out at the end of 2012 and during 2013 in connection with the relevance and protection of trade secrets in the European Union and is made within the framework of the global strategy adopted by the Commission aimed at optimising the internal IP market.

Through the external study the Internal Market and Services Directorate General of the European Commission had noted the marked differences existing between the Member States with respect to the legal protection of trade secrets and to the measures available to the holders thereof in the event of unlawful acquisition, use and disclosure. For this reason the Commission has drawn up this proposal for a Directive, within the general context of the harmonization of IP and related rights in the EU, with a view to making the legal protection of trade secrets more effective.

The proposal begins with a definition of trade secrets taken word for word from article 39.2 of the TRIPS Agreement. It then sets out the circumstances in which the acquisition, use and disclosure of a trade secret is unlawful, where the key element is the absence of consent of the trade secret holder. The proposal similarly makes reference to the circumstances in which such acquisition, use and disclosure is considered lawful. These include independent discovery and reverse engineering.

The proposal then establishes the measures, procedures and remedies that should be introduced in the laws of the Member States for the protection of trade secrets. The system of protection thus envisaged is similar to that relating to IP rights and provision is consequently made for the adoption of interim and precautionary measures and for the subsequent implementation of final measures resulting from the decision on the merits of the case, such as an order for cessation or prohibition of the use or disclosure of the trade secret and the removal from the marketplace and destruction of the infringing goods. It is likewise established that damages may be awarded to the holder for the detriment caused, that these may be calculated on the basis of hypothetical royalties, and that the judgment may be published. Lastly, provision is made for the imposition of sanctions in the event of non-compliance with any provisional or final measure adopted and reference is specifically made in this regard to recurring penalty payments.

The proposal introduces some procedural rules, such as the implementation of mechanisms to preserve the confidentiality of trade secrets disclosed in court for the purpose of litigation and the setting of a time limit of two years for bringing actions for the infringement of trade secrets, which will, when the time comes, require the amendment of the laws in Spain. It will also be necessary to include measures aimed at avoiding abuses of litigation.

In accordance with the ordinary legislative procedure, the proposal will now be referred to the Council and to the European Parliament prior to its approval, which the Commission expects will take place before the end of 2014. There will subsequently be a term of two years for transposition into the national laws of the Member States.

Author: Carlos Morán

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EPO to carry out searches on more than one invention in an application

The Administrative Council of the European Patent Office (EPO) has removed the obstacle to performing further searches for applications in the European regional phase (Euro-PCT applications) where an objection is raised on grounds of lack of unity of invention.

Under the current wording of Rules 164 and 135 of the Implementing Regulations to the EPC, where an application in the European regional phase is deemed not to comply with the unity of invention requirement, the EPO may only conduct a search on the invention appearing first in the claim set; no additional searches may be performed for any other inventions in the set. Since patent applications may not contain subject matter that has not undergone a search, up to now the only option for applicants interested in claiming such unsearched subject matter has been to file divisional applications, with the additional cost this entails. The costs attaching to filing a divisional application include paying anew all the official fees already paid previously for the parent application, including all the cumulative annuities, which can sometimes be considerable.

Rule 164 EPC is to be amended to allow additional searches where the EPO raises objections against the unity of invention of regional phase applications. The EPO will conduct a search on the first invention appearing in the claim set and will invite the applicant to pay further search fees for any other unsearched inventions within a two-month time limit.

The amended wording of these Rules will take effect on 1 November 2014.

Author: Ruth Sánchez

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Inventors' Day

The ELZABURU Firm marks Inventors' Day, celebrated on 9 November, in recognition of all the inventors who have worked with us.  

This day was chosen because it is the birthday of Hedy Lamarr, Austrian screen star, telecommunications engineer, and inventor. She invented an early version of the spread spectrum modulation technique used in telecommunications to transmit digital data over radio frequencies. As an actress, she had roles in many Hollywood pictures, including Samson and Delilah.

Inventors' Day is a day set aside in recognition of all those individuals who, working on their own or as employees, make a decisive contribution to our everyday lives and to the progress of society as a whole.

Inventions are the best testaments to human ingenuity and are an essential part of every country's innovation system. Behind an invention there is always someone (the inventor) who, alone or as part of a team, has expended great effort to achieve results that will benefit everyone.

This year, it should be remembered, a Spanish railway engineer, José Luis López Gómez, won the European Inventor Award 2013's Popular Prize. And so, to some extent Inventors' Day can be regarded as a tribute to all those who are engaged in research activity in Spain.

Author: Pedro Saturio

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Modernization of the trademark system in the European Union

In March 2013 the European Commission adopted a number of proposals to recast the Directive to approximate the laws of the EU Member States relating to trademarks (now codified as Directive2008/95/EC), and to revise the Regulation on the Community trademark (now codified as Council Regulation (EC) No. 207/2009) and the Regulation relating to fees (codified as Commission Regulation (EC) No.2869/95).

The aim of the proposals is not to create a new system; instead they intend to modernize the existing provisions to make the trademark registration system in Europe more accessible, coherent and efficient.

The new proposals include:

New terminology:

The OHIM will change its name to the ‘European Union Trade Marks and Designs Agency’ (or ‘EUTMDA’) and the terms Community trademark and Community Trademark Court will be changed to "European trademark" and "European Trademark Court".

Fees:

The number of classes covered by a trademark application fee will be reduced from three classes to one, and the application fee will be lowered to reflect this change.

Definition of European trademark:

The requirement that a sign be capable of being represented graphically will be eliminated.

Absolute grounds:

Trademarks applied for in a foreign language will not be granted protection if refused on absolute grounds once the mark is translated into an official language of an EU Member State.

Designation and classification of goods and services:

The new legal texts will codify the EU Court of Justice’s ruling in the "IP Translator" case (literal interpretation). The applicants must specify the goods and services to be covered as opposed to using the general class heading. The owners of CTMs applied for prior to 22 June 2012 will be given a term (probably around six months) in which to evaluate and reformulate the list of goods and services.

Rights conferred by a European trademark:

- CTM infringement actions shall be brought without prejudice to any existing prior rights (article 16 (1) of the TRIPS agreement).

- In cases of double identity and similarity (in relation to the signs and goods and services in question) the only criteria applied shall be the origin function (the functions of advertising, communication and investment shall no longer enjoy protection).

- The use of a protected mark as a trade name shall be considered an infringement.

-  The "own name" defense shall only be applied to personal names. 

 - Rights holders will be able to prevent the use of their marks on illegal comparative advertising.

Protection of geographical indications and traditional terms:

Grounds for refusal shall be adapted to European laws with respect to geographical indications and traditional terms in the wine sector and other specialist sectors. 

Geographical indications and designations of origin protected under EU laws shall be considered applicable as relative grounds for refusal of registration and may thus be cited as possible bases for opposition.

European certification marks:

European certification marks, which currently exist at a national level only in some Member States, are introduced throughout the EU.

Changes in procedures:

- Member States shall establish an administrative procedure for the invalidation and revocation of trademarks (rather than court procedures).

- Ex officio examinations by national offices shall be limited to absolute grounds for refusal. 

- The option of applying for European trademarks via National Offices shall be eliminated.

Anti-counterfeiting measures:

-  Rights holders will be able to oppose the transit of counterfeit goods throughout the EU customs territory, irrespective of whether or not the goods had been released for free circulation. 

- Rights holders may also prevent the import of counterfeit goods to the EU even if the sender is acting for commercial ends (with a view to combating the sale of counterfeit goods online).

- Rights holders may prevent the distribution and sale of labels and packaging that may subsequently be used in connection with counterfeit goods.

Trademarks as objects of property:

Incorporation of new rules relating to the use of trademarks for commercial purposes.

It is expected that the above proposals will be formally adopted in spring 2014. Once these proposals are adopted, the EU Member States will need to incorporate the provisions of the new trademark directive into their respective national laws within a term of two years. Most of the amendments to the new Regulation on the European Trademark, meanwhile, will come into effect after its entry into force in 2014.

Author: Enrique Armijo Chávarri

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