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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EU Trademarks: CJEU obliges EUIPO to accept staggered partial renewal requests

In its judgment in case C-207/15 P, published on 22 June 2016, the CJEU found in favour of Nissan Jidosha KK and against the EUIPO in ex parte proceedings relating to the possibility of renewing an EU trademark in two stages.

Nissan had requested, within the six months preceding the due date, the partial renewal, in two classes, of a trademark registered in three. Subsequently, within the six-month grace period after the due date, the registrant submitted a further request for renewal in the remaining class, which the Office turned down.

Why was that? According to the EUIPO, the request for partial renewal in just two of the three classes in which the trademark had been granted registration entailed the surrender of the third class. The Office also maintained that reasons of legal certainty entered into play, given that the partial renewal in two classes had already been entered on the records, Nissan had been notified thereof, erga omnes effects had consequently been created and Nissan could therefore not be allowed to go back on its initial decision not to renew the trademark in the third class.

The EUIPO thus interpreted article 50 (relating to surrender) broadly and article 47 (relating to renewal) narrowly, contrary to the interests of Nissan in both cases.

However, in its judgment the CJEU has held that “it is not apparent from those provisions that the submission, during the periods referred to in Article 47(3) of Regulation No 207/2009, of requests for renewal of an EU trade mark, staggered over time and relating to different classes of goods or services, is prohibited”.

It seems strange that both the EUIPO and the General Court should have interpreted those provisions in a manner adverse to the interests of the trademark owner, rather than in favour thereof, when the controversy arose out of a gap in the regulations and the registrant and its representative acted entirely within the bounds of the law (at least according to the German, Portuguese, Finnish and Dutch language versions of article 47.3)

It is also rather surprising that the EUIPO should have come out so strongly in defence of legal certainty when we all know perfectly well that there is a six-month grace period for the renewal of an EU trademark and, therefore, that one should never assume that the registration may have lapsed until that term has expired. It appears to us that we should be equally cautious and draw no conclusions until after the expiry of that term in cases where the registration has been renewed but only partially.

We all look for legal certainty, but in doing so we ought to be consistent. From this standpoint, to deny a trademark owner the right to renew a registration in two stages, while the grace period is still running, would not seem logical when, in contrast, insufficient attention is paid to the need to keep the information on the status of the trademarks in the EUIPO databases current. On occasions updates are subject to delays of some months and this circumstance evidently generates uncertainty.

Author: Ramón Cañizares

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The Rubik’s cube: a shape necessary to obtain a technical result or a distinctive sign?

The outward appearance of goods is having an ever more important bearing on the decision of the consumer to make a given purchase. As a result, the filing of applications for three-dimensional trademarks, with a view to protecting shapes likely to influence that decision, has become a common practice.

However, the registration of marks of this type, consisting of the shape or representation of a product without anything else, has always been a controversial issue. The problem lies in striking a balance between granting an exclusive right to the trademark owner and avoiding the creation of a monopoly in the marketing of a given product.

From the prohibition on registration laid down in article 7.1e) EUTMR it follows that the three-dimensional trademark cannot and must not act as a system for the protection of technical results. For that purpose there are other more appropriate legal instruments, such as patents or utility models, whose limitation in time is essential to the proper functioning of the system for the protection of inventions.

That prohibition seeks to draw a line between the trademark and patent systems, preventing the grant of an exclusive right without limitation in time which would in practice entail the perpetuation of a monopoly in a technical solution.

At times, however, it is not easy to pinpoint those representations whose purpose is to protect the sign which identifies the business origin of a product rather than the technical features of that product.

The case of the “Rubik’s cube”, which has reached the Court of Justice of the EU, relates to that issue.

In 1999 the British company Seven Towns Ltd registered EU three-dimensional trademark No. 162784, in the shape of the Rubik’s cube, in respect of “three-dimensional puzzles” in class 28.

Elzaburu once again ranked among Spain’s most highly reputed law firms

In 2015 the firm registered a turnover of over 14 million euros for yet another year.

Madrid, 1 June 2016. Elzaburu once again figures among the most prestigious law firms in Spain according to the ranking published annually by the economic and business daily Expansión. A turnover of 14 million euros positions it among the country’s 20 top rated firms.

At the same time the firm has pursued its enlargement plans, increasing the number of lawyers on its staff by 14.3%. Elzaburu is thus among the 25 firms headquartered in Spain which most strengthened their workforce in 2015.

Elzaburu ranks fourteenth in terms of invoicing per practitioner with a figure of 235,000 euros. This is significantly higher than the average in Spain, which in 2015 was 190,887 euros per practitioner. In terms of invoicing purely by lawyer, Elzaburu moves up to tenth place on the ranking.

Year on year, experience and professionalism have proved to be the twin pillars of the firm, ensuring Elzaburu a place among the best in Spain.