U.S. improves Federal Trade Secrets Act, while in Europe …

On 4 April 2016 the U.S. Senate gave its unanimous (yes, unanimous) approval to the Defend Trade Secrets Act (DTSA), amending the Economic Espionage Act (EEA), the aim of which is to strengthen the position of the holders of trade secrets by granting them protection, through federal legislation, comparable to that afforded under trademarks, patents and copyright. The bill now has to go through Congress, where surprises are not to be expected as it would appear that opinion, including that of the White House, is undivided on the question that this is an issue which has a bearing on the economy of the nation and warrants the closest attention.

This new law represents one further advance along the long road that the U.S. has already traveled in the protection of trade secrets. Once case law, with roots in the eighteenth century, set about defining and circumscribing the concept, the States of the Union began adopting laws for the protection of these intangible assets. More case law has been generated unceasingly through to the present day, but the various state laws were subsequently supplemented with a federal law, the Economic Espionage Act, which further harmonized the concept and the fundamental elements in the protection of trade secrets. However, the Economic Espionage Act had certain limitations, as it was only applicable in cases of criminal infringements committed by foreigners. Furthermore, the protection provided did not extend to various aspects of misappropriation of trade secrets.

Under the system laid down in the DTSA, complaints relating to local goods or services will be lodged with a state court, but cases relating to interstate or international commerce may instead be litigated in federal courts. The DTSA sets uniform rules as regards the definition of a trade secret, what is to be considered unlawful, damages and injunctions. It also stipulates that the term for commencing the action shall be three years from the time that the infringement of the rights became known.

In Europe, meanwhile, the Trade Secrets Directive, which was proposed back in 2013 and aroused criticism of a not entirely comprehensible nature in certain quarters, was finally approved by the European Parliament on 14 April 2016, although two more years will still have to go by before it is actually implemented in the legislation of all the Member States.

The comparison between the initiatives taken on the one side of the Atlantic and on the other should lead us to reflect, in this particular matter and in others, on how legislation contributes to the prosperity of nations.

The protection of trade secrets is of major importance for technological development and affects not only companies but also state research institutions. The new directive should provide us with a better legal framework than that hitherto offered by each state individually and should harmonize the protection afforded. However, it will also oblige us to tackle many issues, for the appropriate protection and defence of trade secrets, even before it is transposed into Spanish law. I hope to have the opportunity to speak of that on another occasion in the relatively near future.

Author: Javier Fernández-Lasquetty

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Thursday, 14 April marked the 125th anniversary of the Madrid International Trademark System

Since it was first adopted in Madrid in 1891 with the aim of facilitating the internationalization of trademarks in a world that had already embarked on the path of globalization, the system has continued to adapt and grow.

The system currently covers 113 countries, which gives an idea as to its scale, since it is possible to file trademarks using this system in around half of the world’s jurisdictions.

The system has seen changes and improvements, and it has been made more flexible in order to pursue its commitment to internationalization.

Among other milestones, in the past few decades and through the Madrid Protocol, English and Spanish have been added to French as official languages. We have seen greater flexibility in the setting of time limits, the payment of fees and in the conditions of accession, and we have also seen filings admitted on the basis of trademark applications rather than registrations.

Thus, a great many countries, some of major economic, commercial and strategic importance and also important culturally and in terms of population size, have been able to benefit from the advantages the system holds for their country as well as for domestic and foreign investors. We may cite examples such as the USA, Mexico or Colombia, but there are of course other countries from different geographic, economic and cultural spheres, including countries in Europe, that have been able to find their place in the Madrid International Trademark System through the Protocol.

The administration of the system by WIPO, which has itself continuously sought to adapt and improve, has without doubt contributed to the system’s progress.

There are certainly challenges ahead for the system, such as its increased expansion to Latin American countries and to countries in other regions of the world, but throughout the past 125 years it has shown a capacity to adapt in a period in which the world has seen the biggest changes in its history, and therefore that capacity augurs a bright future.

Elzaburu would like to offer its congratulations to an international system which, we are proud to say, was born in Spain, itself a symbol of universality. Our congratulations naturally extend to WIPO, without whose continuous efforts the system would not have consolidated and grown as it continues to do.

Author: Juan Miguel Sainz de Marles

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

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

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

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?”

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