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?”

Lawsuits under the new Patent Act, a rara avis on the Spanish judicial scene (IV)

Since the reform of patent law in Spain under the Act of 1986, lawsuits in this field have always been different, given the host of specialties they entail, and it is no exaggeration to say that when the new Law 24/2015 enters into force they could come to be considered a veritable rara avis within our judicial system. The singularities which that new Act ushers in are so many and so far-reaching that any resemblance to other legal actions will from then on be attributable solely to coincidence.

On the one hand, a curious aspect of the changes we may expect to witness is that from 1 April 2017 lawsuits in the field of intellectual property, with the exception of those based on Community trademarks or designs, may tend to migrate towards Barcelona. Under the new Act, jurisdiction lies with the mercantile courts of the cities which are seats of the High Court of Justice, but only within those autonomous communities where the National Judicial Council has designated specific mercantile courts to specialize in patent matters. Although the Madrid mercantile courts have realized the implications of this and are consequently on the way to obtaining that designation, only Barcelona has courts that so far qualify. It is not unlikely that the decision to introduce this requirement was to some extent influenced by the positive image associated with the hyper-specialization trend in Catalonia. Be that as it may, the change is significant.

Second, intellectual property lawsuits are going to spark off no little envy within the legal profession due to a factor which might appear incidental but in practice has considerable importance: the time limit for responding to the complaint in any civil action regulated by Law 24/2015 will be two months, whereas in any other field it is only twenty days. This significant, and admittedly rather preferential, extension of the standard term may be justified in view of the technical issues underlying disputes in this area and the need to resolve strategic questions bearing on the challenge to the property right.

Then there is a third factor which sets patent law proceedings apart from any others: the creation of nothing less than an instrument for relief against interlocutory relief. Under the new Act it will be possible for those who envisage that the court may be asked to grant interim relief against them, without their first being heard, to put forward, through a “preventive submission”, arguments against the adoption thereof. It is not yet known whether this arrangement, so foreign to traditional procedure in Spain, will have the effect of a brake or of a piston, as in the way it is designed it could generate conflicts where they did not previously exist or instead put out the fire before the flame has time to take hold. Once again, we are faced with innovative provisions which have no equivalent in any other area of law.

This special configuration of the patent lawsuit takes on yet more importance when we consider that the procedural provisions of Law 24/2015 also apply to trademarks and designs. In this regard one may ask up to what point some actions in the area of trademark law, such as revocation for non-use, really deserve to be included in so exceptional a system.

As we shall be seeing in future chapters, the changes we have outlined above are not the only ones which allow lawsuits in this field to be termed a rara avis.

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

Visit our website: http://www.elzaburu.es/en

The new Patent Act (III) – The importance of professional advice

The new Patent Act, Act No. 24/2015, set to take effect on 1 April 2017, provides for far-reaching changes in the procedure for obtaining patents of invention in Spain in the future but at the same time ushers in new demands as well.

Earlier blog entries have dealt with the patentability requirements and the mandatory examination for all new applications filed after the new Patent Act and its Implementing Regulations have come into force. This means that applicants who up to now have made use of the general procedure for grant and hence are not used to replying to communications from the Spanish Patent Office raising objections to the patentability of their applications can expect to encounter new stumbling blocks to overcome during patent prosecution. Here are just a few examples of some of the substantive changes:

  

• To begin with, Examiners will now be able to object that lack of clarity of the claims prevents him or her from carrying out a meaningful search of the prior art.

• Further, applicants will need to bear in mind that the patentability of an invention can be vitiated by European patent applications designating Spain and published in Spanish and by PCT applications that have entered the national phase in Spain and were filed before the priority date of the application even if only published afterwards. Should this situation arise, it will bear on the novelty requirement but not on the inventive step requirement.

• In addition, where an invention relates to either biological material, either animal or vegetable, the new Act requires the application to disclose the geographical origin or source, though that information will not prejudice the validity of the patent. 

• The new Patent Act will also expressly define substances and compositions "for use as medicines" as patentable, something not contemplated under the Patent Act (Act No. 11/1986) currently in force. 

• In an important new development regarding utility models, the novelty requirement will change from local (Spain only) to absolute (worldwide) novelty. In addition, utility models will be able to be used to protect not only mechanical devices but also chemical, though not pharmaceutical, substances and compositions.

• And finally, the patentability requirements (novelty, inventive step, and industrial applicability) and how they are assessed by the SPTO will be new concerns for some applicants with a view to responding convincingly and appropriately to objections by Examiners and thus avoiding additional objections – for instance, on grounds of lack of clarity.

What is more, the changes being implemented by the Patent Act address not just substantive matters but also a number of other significant aspects of patent prosecution. To mention only a few of the most important: 

• The new Act stipulates that the fee for the Report on the State of the Art (search report) will have to be paid along with the filing fee. 

• Applicants will have three months from publication of the search report to request the substantive examination. Absent a timely request for examination, or if the request is withdrawn, the application too will be deemed to have been abandoned. When requesting the examination, an applicant may, at the same time, respond to any objections raised in the SPTO's Examiner's written opinion issued with the search report. 

• There will no longer be only one chance to overcome any deficiencies noted by the Examiner before the reasoned opinion, and Examiners will have to allow applicants additional opportunities to amend the application and submit new arguments under a procedure to be specified in the Implementing Regulations. All amendments will have to include an explanation as to why they make a difference, and support for the amendments in the application as originally filed will have to be shown. If there is no response to the Examiner's communications, or if the applicant is unable to overcome the objections, the application will be refused. 

• Third-party opposition proceedings will now take place after grant, within six months of the date of grant, instead of prior to grant as provided under the current Act. There will be new administrative procedures to enable applicants to voluntarily limit and surrender patents, where appropriate.

So it is that upon entry into force of the new Patent Act, applicants seeking patents of invention in Spain will encounter a completely new scenario, with many substantive and procedural changes. This highlights the need for top professional assistance with a view to optimizing your industrial property assets by minimizing the stumbling blocks that can be anticipated during patent prosecution.

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: Francisco Javier Sáez

Visit our website: http://www.elzaburu.es/en

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
Visit our website: http://www.elzaburu.es/en

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

Visit our website: http://www.elzaburu.es/en

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.