THE FRAND EXCEPTION WILL BE DISCUSSED AGAIN BEFORE THE COURT OF JUSTICE: THE COURT OF DÜSSELDORF REFERS SOME OF THE MOST DEBATED ISSUES IN THE PATENT FIELD TO THE JUDGES OF LUXEMBOURG

09/12/2020

In the proceedings that Nokia Technologies Oy brought against Daimler AG for infringement of the German part of a European patent, the Court of Düsseldorf (Germany) announced last week that it would not issue an injunction against Daimler. Instead, the Court addressed the Court of Justice with a series of questions concerning the scope of application of the so-called FRAND exception: the patent concerns a method for sending data in a telecommunication system, being essential for the LTE (4G) standard. The battle between Nokia (and other owners of patents essential for the standard) against Daimler has already seen several decisions of the courts in Mannheim and Munich that excluded referral to the Court of Justice.

 

The patent litigation concerns the German portion of patent EP 2 087 629 B1. Its owner, Nokia Technologies Oy, has applied for an injunction against the car manufacturer Daimler AG. This patent is essential for the LTE (4G) standard, which requires the use of LTE-enabled modules from various suppliers, which are installed in Daimler machines. These modules allow services such as music streaming or ether updates. As early as September 2014, the actress’s predecessor declared that he considered his patent essential to the LTE standard and issued a FRAND declaration, undertaking to grant licenses to third parties on fair, reasonable and non-discriminatory terms. However, not only the defendant Daimler but also many of its suppliers had so far used the standard (and thus also the patent in question) without having obtained a license. In the proceedings before the court in Düsseldorf, the defendant Daimler points out that, on the basis of the EU internal market rules and the FRAND declaration of September 2014, the plaintiff must grant a license to each applicant. In terms of scope, the license should be unlimited for all types of use that the standard allows.
The standard procedure in the automotive industry would require suppliers to obtain licenses. A central aspect of the dispute between Nokia and Daimler is, in fact, the granting of licenses in articulated supply chains, composed of various levels. It should be noted that there are different practices in different sectors: In the mobile communications sector, licenses are traditionally negotiated at the level of the manufacturer of the final product. In the automotive industry, on the other hand, licenses are traditionally granted to suppliers, leading to the exhaustion of licensing rights downstream along the supply chain. On the contrary, the actress Nokia argues that the choice of supplier within a business chain to which to grant a license is solely up to her as the owner of the patent essential to the standard. In the automotive industry, on the other hand, licenses are traditionally granted to suppliers, leading to the exhaustion of licensing rights downstream along the supply chain. On the contrary, the actress Nokia argues that the choice of supplier within a business chain to whom a license is granted is up to itself as the owner of the patent that is essential to the standard.

The Court did not reject the defendant Daimler’s argument and raised the question whether Nokia’s initiative could be considered an abuse of a dominant position. The questions submitted to the Court of Justice belong to two macro-themes. The first concerns the question whether there is an obligation of the holder of a patent essential standard to grant licenses to suppliers in priority. The second concerns specifications of the obligations formulated in the judgment of 16 July 2015 of the Court of Justice in the Huawei case. ZTE (C-170/13).
With regard to the possible obligation to grant licenses, in priority, to suppliers (intended as upstream in the commercial chain), the Court specified the question as follows: can a company that is downstream in the commercial chain invoke the abuse of a dominant position within the meaning of Article 102 TFEU if the patent holder has refused to grant a license to suppliers that are upstream in the commercial chain?

The Court of Düsseldorf – perhaps having in mind what factor could be decisive for the answer – then formulated a further question: is it relevant for the answer the existence of a commercial practice – in the field of the final product – according to which it is the supplier to take action to obtain the necessary licenses for the components supplied? Is there such a priority to grant a license to suppliers at every level of the commercial chain or only to the last supplier? Is the practice of trade decisive in this case too?
Even in the latter case, the formulation of the questions suggests a clear trend of the German court.
Regarding the second macro-theme, the Court of Düsseldorf also referred more general questions relating to FRAND’s defense to the Court of Justice: First, the Court of Düsseldorf asks whether the impending circumstances of the judgment in the Huawei case. ZTE for both parties can be fulfilled even after the initiation of legal proceedings. Secondly, the court asks what the prerequisites are for qualifying a proposal as sufficient by those who intend to use a standard essential patent within the mechanism of the decision.

The decision of the Court of Düsseldorf to make a request for referral to the Court of Justice on the one hand increases the hope of achieving greater clarity and uniformity of application in the future. However, in view of the proceedings already in progress and/or established before a final decision is made, the mere pending before the Court of Justice entails the risk of further suspension decisions, which is why one can only hope for a speedy final decision.

Tankred Thiem


PROHIBITION OF DISCRIMINATION FOR PERFORMERS OUTSIDE THE EU: THE CGUE RECOGNISES THE RIGHT TO FAIR COMPENSATION

27/11/2020

By decision of 8 September 2020 in case C-265/19, the Court of Justice of the European Union clarified the subjective scope of application of Article 8 of Directive 2006/115/EC on rental right and lending right and on certain rights related to copyright in favour of performers of works fixed in phonograms and communicated to the public by producers. In particular, the Court specified that the territorial origin of the rightholder may not be a determining factor with respect to the emergence of the right to obtain the fair compensation provided for by the Directive in favour of performers for broadcasting or for any communication to the public of protected musical works within the territory of the Union.

 

The case
The case that has reached the Court of Justice of the European Union originates from a dispute between two Irish collective management societies of copyright and related rights in relation to the enforceability of the right to fair compensation by performers from countries outside the EEA (in particular the United States of America) for broadcasting or for any communication to the public of protected musical works within the Irish territory.
In detail, the Recorded Artists Actors Performers Ltd (“RAAP”) – which manages the rights of performers in Ireland – and Phonographic Performance (Ireland) Ltd (“PPI”) – which manages the rights of phonogram producers in Ireland – entered into a contract to regulate the way in which the rights to fair compensation payable by RAAP members in respect of the exploitation of protected works by PPI members are divided.
However, a dispute arose about the enforceability of these rights by persons from outside the EU because, according to the PPI phonographic producers’ collection, the Irish national legislation on copyright and related rights would only make the right to fair compensation enforceable in favour of an Irish citizen coming from or domiciled in a state of the European Economic Area (EEA) or, finally, of a country included in the list of states with conditions of reciprocity. On the contrary, the RAAP Performers’ Collections considered that also subjects coming from non-EEA territories (such as the United States of America) would have accrued the rights deriving from the fair compensation for the exploitation of the protected works because in EU law (nor in any international treaty signed by Ireland) there would be no limitation with respect to the territorial origin of the performers.

The decision of the Court
First, the Court specified that the definition of ‘performers’ in Article 8(2) of Directive 2006/115 must be interpreted uniformly throughout the Union in the absence of any reference to national rights as regards the scope of this definition. Since this provision does not expressly specify whether the term ‘performers’ refers only to performers who are nationals of a State in whose territory this Directive applies, or whether it also refers to performers who are nationals of another State, any limitation of territorial origin should be considered excluded.
The right to fair compensation is in fact, according to the Court, a right of a compensatory nature whose causal factor is the communication to the public of the interpretation or performance of the work fixed on a phonogram published for commercial purposes. It follows that each Member State of the Union should ensure, on the one hand, that a single equitable remuneration is paid by the user when a phonogram published for commercial purposes, or a reproduction thereof, is used for broadcasting or for any communication to the public and, on the other hand, that such remuneration is shared between the performer and the producer of the phonogram.

There is therefore no limitation on the territorial origin of the person who may claim such compensation.
This conclusion would also be confirmed by the international treaties signed by European States, including the Rome Convention of 26 October 1961 in relation to the protection of performers, according to which any performer who is a national of a Contracting State to that Convention must benefit from the national treatment accorded by the other Contracting States to their own nationals if the performance is recorded on a phonogram protected under that Convention.
According to the Court, the right to a single equitable remuneration, recognised by Article 8 of Directive 2006/115, cannot be reserved by the national legislature to nationals of EEA Member States alone, with the consequent disapplication of any national legislation (in the present case the Irish legislation) which conflicts with that harmonised definition.

Alessandro Bura


COURT OF JUSTICE OF THE EUROPEAN UNION: THE TRANSMISSION OF A COPY OF A PHOTOGRAPH IN JUDICIAL PROCEEDINGS BETWEEN INDIVIDUALS DOES NOT CONSTITUTE COMMUNICATION TO THE PUBLIC

11/11/2020

By judgment of October 28, 2020, the Court of Justice ruled in a dispute (Case C- 637/19) concerning the potential use of a copyright protected work as evidence in judicial proceedings between individuals. The Court, balancing copyright with the right to an effective remedy granted by the Charter of Fundamental Rights, underlined that the criterion of “public” communication does not apply in case of use for defensive purposes.

 

The fact and the judgment of first instance:
The case herein concerns two individuals resident in Sweden, who both run their own websites. In the main proceedings originally initiated before the Swedish civil court, the defendant was held liable for the infringement of the plaintiff’s copyright on a photograph: the transmission to the court seised of a copy of a page of a text extracted from the plaintiff’s website and involving a photograph would qualify as unauthorised communication to the public.
The transfer of such content by electronic means was functional to its use as evidence in the judgement. The applicant had argued that such behaviour, claiming ownership of his copyright on the photograph at issue, seeking an order for damages for copyright infringement and also claiming infringement of the special legislation conferred on photographs by Swedish copyright law. On this point, since the photograph in question had been transmitted to a court as a procedural document, the court of first instance had first found that anyone could request its communication. The court had also qualified the action brought by the defendant as a genuine ‘distribution to the public’ of that photograph under Swedish law. In conclusion, however, the court rejected the plaintiff’s request, finding that the damage suffered was not proven.

The uncertainties in the appeal proceedings:
In light of this ruling, the appellant filed an appeal before the Stockholm Court of Appeal. In this case, many doubts were raised about the correct interpretation, within the framework of European Union law, of the concepts of “communication to the public” and “distribution to the public” in case of transmission of a work protected by copyright to a competent Court. The main question was whether a court could be considered as falling, for all intents and purposes, within the concept of “public” within the meaning of Directive 2001/29 and whether the term “public” had the same meaning for the purposes of applying Articles 3(1) [1] and 4(1) [2] of that directive. The Swedish Court of Appeal referred the questions to the Court of Justice.

The CJEU’s decision:
The Court of Justice has underlined that the concept of “communication to the public” includes two criteria The first one, i.e. communication, understood as “any act by which a user gives access to protected works, in full knowledge of the consequences of his or her behaviour” occurs in the present case, where the transmission of a protected work to a court by e-mail has occurred.
The same cannot be said for the second criteria that requires protected works to be effectively communicated to the so-called “people in general”, i.e. to an indeterminate number of recipients, a rather considerable number of people in their amount: the communication was intended for a defined and limited group of professionals exercising their functions to satisfy a public interest. It would not, therefore, be a communication to a generalised and indefinite audience, but to well-defined individuals. In this context, the national rules allowing access to public documents are irrelevant since such access is not granted by the user who has transmitted the work to the court, but by the latter to individuals who request it.
The Court also stressed that this interpretation ensures a fair balance between the interests of copyright holders and the protection of the interests of all those who use protected material in the digital and electronic environment. In conclusion, therefore, the Court of Justice of the European Union ruled out that the transmission by electronic means of a protected work to a court of law as evidence in judicial proceedings between individuals could not be included within the notion of “communication to the public”, considering also the fundamental right to an effective remedy before a court guaranteed by Article 47 of the Charter of Fundamental Rights of the European Union.

[1] Article 3(1) of Directive 2001/29 states that “Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them”;
[2] Article 3(1) of Directive 2001/29 states that “Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise”.

Paolo Rovera


PUBLISHED THE COMMON PRACTICE “USE OF A TRADEMARK IN A FORM DIFFERING FROM THE ONE REGISTERED” DRAFTED BY EUIPN

06/11/2020

On 15 October 2020, the Intellectual Property Offices of the Member States of the European Union published the Common Practice on the use of trademarks in a form different from the one in which they were registered, drafted by the European Union Intellectual Property Network (EUIPN).

 

The issue
The problem concerning the use of trademarks in a form other than the registered one is relevant with regard to the decadence for non-use of the trademark. National legislation (Articles 24 and 26 CPI) and European legislation (Articles 18 and 54 EU Regulation 2017/1001), in fact, establishes that a trademark is subject to revocation if it is not effectively used by the owner during the 5 years following registration or if its use is suspended for an uninterrupted period of 5 years.
Moreover, the above mentioned law provides that the use of the trademark in a modified or different form from the registered one is considered relevant unless the distinctive character as registered is altered.
The Common Practice intervenes on this aspect and aims at providing useful indications to assess whether the use of the trademark in a modified form alters its distinctive character, causing as a consequence the irrelevance of its use for the purposes of revocation. The importance of this publication is due to the fact that often in company practice changes, revisions or updates are made to registered trademarks over time.
The Common Practice
The published text is the result of a process of consultation with the national intellectual property offices of the EU, EUIPO and international partners that started in October 2017 and, as anticipated, aims to identify a set of homogeneous principles and canons to assess when changes to a sign lead to the alteration of the distinctive character of the trademark actually registered. In particular, the Common Practice assesses the impact that additions, omissions and changes in characteristics have on the distinctive character of a word, figurative or mixed mark.
The EUIPN identifies two key steps to make this assessment. First, the registered trademark must be considered with reference to its distinctive and visually dominant elements in order to determine which of them contribute to the distinctive character of the sign. Secondly, once these elements have been identified, it is necessary to establish whether these elements exist in the use of the sign which is made in practice through direct comparison between the two signs and by assessing in practice both the differences and the effect they have on the original mark.
In order to make it easier to understand, the Office proceeds with the listing of some examples, including:

In this first case, the Office maintains that the added figurative element does not interact with the trademark as registered and is perceived by the public regardless of the sign used. For this reason, the introduction of the figurative part (the fish) does not affect the distinctive character of the sign, which remains unchanged.

In the second example, on the other hand, a second figurative element is added to the registered trademark which, in the opinion of the Office, alters its distinctive character. In particular, the addition of the second figurative element implies the creation of a new concept (big fish eats small fish).
As far as the application of the Common Practice in administrative judgements is concerned, each Member State has indicated both the date of implementation and which procedures will be applied. As far as Italy is concerned, the Common Practice will only become applicable in proceedings instituted after 15 January 2021. Consequently, all proceedings that are pending but were introduced prior to that date are excluded.
Conclusions
Although the assessment of the actual use of a trademark is to be considered on a case-by-case basis, we believe that the Common Practice is a useful guide to facilitate and homogenise the decisions of national intellectual property offices and individual Courts.
The full text of the Common Practice is available at the following address: https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/contentPdfs/about_euipo/who_we_are/common_communication/common_communication_cp8_en.pdf

Paolo Passadori


PRODUCT PLACEMENT IN ROVAZZI’S MUSIC VIDEO-CLIP: THE PROCEEDINGS STARTED BY AGCM WITH MANDATORY COMMITMENTS OF PROFESSIONALS HAVE BEEN CONCLUDED

05/11/2020

With two measures published on November 2, 2020, the Antitrust Authority concluded the proceedings against LG, WINDTRE and Fabio Rovazzi, which concerned the inclusion of commercial brands in the video clip of the song “Senza Pensieri” in non-transparent mode. The artist and the operators involved presented specific commitments that the Authority has deemed appropriate to remedy the possible profiles of illegality.

 

The initiation of the proceedings
At the beginning of 2020, following the recommendation of the National Consumers’ Union, two separate investigation procedures were initiated (PS11603 concerning LG and PS11604 concerning Wind), both concerning a potential case of hidden advertising due to the presence of the WindTre and LG brands within the video clip of the song “Senza Pensieri” by Fabio Rovazzi, made available from August 1, 2019 on the singer’s “YouTube” channel and found on the Internet and on television networks.
In particular, the reporter claimed that the methods used to highlight the inclusion of trademarks for promotional purposes may be inadequate to make clear the existence of a contract relationship with the trademarks shown in the video, in order to ensure the consumer an adequate critical spirit, with possible violation under Articles 20 c. 2, 22 c. 2 and 23 c. 1 lett. m) of the Consumer Code. The warnings used “Sponsor Adv WindTre&LG”, were in fact external to the video and any consultation, visible only by clicking on “Show Other”, placed in the text below the video, along with other information. The Authority also ascertained that the above wording would be included in the description of the YouTube video only on November 6, 2019, a few months after publication.
During the preliminary activity, the artist reported that a modification of the video aimed at inserting new writings and warnings within it would require the upload of a new version of the video on the “YouTube” channel, with the deletion of the previous version of the video, resulting in the loss of all counted views and economic damage to the professional.

The commitments of the professionals involved
Fabio Rovazzi and the other professionals involved (including Universal, the production companies Bmovie Italia and 9.99 Films and the marketing agency Evolution People) have presented to AGCM specific commitments to eliminate the alleged violations in relation to the video clip under investigation and avoid future similar situations.
In particular, Fabio Rovazzi has committed himself to use the tool made available by YouTube called “Positions and approvals of paid products”, which does not involve reloading the video clip on the platform but makes the words “include paid promotions” appear in overlay for 16 seconds at the beginning of the video. This change is now already visible on the video clip of the song.
Again, in the event that the video was requested by television broadcasters, Fabio Rovazzi committed himself to deliver the work containing final credits, with specific warnings of the presence of product placement and explicit mention of commercial partners. Moreover, the singer will also deliver the video clip with the above mentioned warnings to Universal Music Italia S.r.l., the licensee of the rights of the above mentioned work.
In relation to future video clips, Fabio Rovazzi has also committed to include in the end credits of the video clip specific warnings regarding the presence of product placement, with explicit indication of the brands and brands present.
Finally, with regard to future communications by social media, the artist committed himself to include hashtags such as #advertising, #sponsored, #adversiting, #adv.
The LG operator, on the other hand, committed itself to sending a communication to the top management of the company to demand compliance with the regulations and avoid, in relations with influencers, occult advertising, adopting a self-regulatory code relating to product placement, and amending its contracts to strengthen the obligations of influencers with regard to compliance with the rules of the code of conduct.
The operator WindTre committed, for the new contracts that will be signed and that will have as their object artistic performances involving internet platforms where one of the brands of WindTre is present, to ask the other contractual party to insert a negotiating clause providing for the inclusion of a disclaimer to inform the user of the inclusion of commercial messages. This warning will be inserted in the position chosen by the artist, in sliding or static mode, at the beginning of the video before viewing or at the end of the video, with mention of the sponsor. The counterparty must provide WindTre with appropriate periodic reports on the initiatives undertaken.
Similar commitments have been made by the other operators involved.

The provisions of the AGCM
The AGCM has deemed the commitments presented suitable to eliminate the possible profiles of the illegitimacy of the disputed commercial practice, meeting the requirements of Article 27, paragraph 7, of the Consumer Code.
In particular, the Authority stated that the commitments – which can be traced back to parties active in various ways throughout the video clip production process – represent a common effort particularly effective in ensuring compliance with transparency rules.
The Authority has therefore closed the proceedings without determining any infringements, making the commitments made mandatory and pointing out that, in the event of non-compliance, a pecuniary administrative sanction ranging from 10,000.00 to 5,000,000.00 euros will be applied.

The rules of advertising
According to Directive 2006/114/CE concerning misleading and comparative advertising is “advertising”, any form of message which is broadcast in the exercise of a commercial, industrial, artisan or professional activity, with the aim of promoting the supply of goods or services, including real estate, rights and obligations”. The definition is rather wide and is suitable to include any form of communication, including those that use the Internet, such as links, banners, popups, showcases, email marketing, as well as social and/or blog posts and even music videos, when these forms of communication are aimed at promoting consumption.
Articles 18 et seq. of Consumer Code, also applicable to online advertising, state that advertising is lawful if it is “clear, truthful and correct”. In particular, it is defined as “misleading” the commercial message that misleads the consumer by prejudicing his economic behaviour and causing injury to competitors, including in this concept also the reticence” and “suggestiveness” of the message. The induction in error may concern the price, the availability on the market of the product, its characteristics, the risks connected to its use.
The Code also indicates commercial practices that must, in any case, be considered misleading (such as, for example, displaying a trustworthy mark, a quality mark or an equivalent mark, without having obtained the necessary authorisation, and similar behaviour) or aggressive (such as, for example, explicitly informing the consumer that, if he or she does not purchase the product or service, the work or subsistence of the professional will be endangered, and so on).
Another important regulatory measure is Legislative Decree 145/2007 on misleading advertising, Article 5 of which clarifies how advertising must always be recognisable as such, and how all forms of subliminal advertising are prohibited. Among other things, hidden product placement is prohibited, i.e. the highlighting of a product during a “storytelling” so that the presence of the good appears to be the result of the author’s natural choice, while in reality, it is the object of an economic agreement between the influencer and the company that produces the product. Special attention should be paid to children and adolescents, since according to art. 7 of the decree, advertising that may abuse the natural credulity or lack of experience of this particular segment of the public, which is very numerous in the world of social media and blogs, is considered misleading.
In the event of violation of law provisions that prohibit misleading advertising, the involvement of the civil judge who may prohibit the conduct is provided for even as a precautionary and urgent measure, as well as order compensation for any damage caused.
In this industry, the role played by the Competition and Market Authority (AGCM) is also very important, which, according to Article 8 of Legislative Decree No. 145/2007, can in turn issue an injunction against the continuation and temporary suspension of misleading advertising.
The AGCM may also apply a fine ranging from € 5,000.00 to € 500,000.00, taking into account the seriousness and duration of the violation.
In addition to the provisions of the law, in the advertising industry there is a code of self-discipline, managed by the “Istituto dell’Autodisciplina Pubblicitaria” (IAP): it is a “private” code of conduct, in the sense of a contract between the parties (mainly the advertising media) who enter into it.
The IAP launched in June 2016 (and integrated in 2017) the so-called “Digital Chart”, a document that carries out a survey of the most widespread forms of commercial communication on the web and in the digital world and sets the criteria for the recognition of commercial communication. With reference to advertising by means of celebrities, influencers, bloggers and/or vloggers, carried out both by post and live video, the Digital Chart clarifies that, in order for the commercial message to be clearly recognizable, these subjects must include in a clearly distinguishable way in the initial part of the post the words: “Pubblicità /Advertising”, o “Promosso da (brand)/Promoted by (brand)” o “Sponsorizzato da (brand)/Sponsored by (brand)” o “in collaborazione con (brand)”o “in partnership with (brand)”; e/o entro i primi tre hashtag (#) una delle seguenti diciture: “#Pubblicità/#Advertising”, “#Sponsorizzato da (brand)”/“#Sponsored by (brand)” o “#ad” unitamente a “#brand”.
Violation of the Digital Chart rules may result in the issue of a cease and desist commercial communication order by the Giurì.

Margherita Stucchi