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ONLINE PIRACY: FOR THE FIRST TIME EVER THE COURT OF MILAN ORDERS THE BLOCKING OF SERVICES ALSO TO A CDN PROVIDER

07/10/2020

On October 5, 2020, the Court of Milan – Specialized Section of Enterprise, for the first time ordered a provider to immediately interrupt, in the management of the Content Delivery Network (CDN) service, the supply of all information society services and/or intermediation services – however qualified/qualifiable – provided in favor of online services that transmitted protected contents without authorization.

 

The Order confirmed a precautionary measure issued inaudita altera parte in September 2019 against some providers involved in the transmission of protected contents through online services. The Court ordered the intermediaries to immediately interrupt the supply of mere conduit and hosting services related to online services, regardless of the domain name used or the IP address number, in accordance with the provisions of Articles 14 et seq. D. Legislative Decree no. 70/2003, implementation of Directive 2000/31/EC (better known as the Ecommerce Directive).

In particular, pursuant to Art. 14, concerning mere conduits (i.e. those who provide access to the communication network) and Art. 16, concerning hosting providers (i.e. providers of information storage services provided by a recipient of the service), the judicial or administrative authority with supervisory functions may require, even as a matter of urgency, that the provider prevent or terminate the committed infringements. The same order may be issued, pursuant to art. 15 of Legislative Decree no. 70/2003, against providers of automatic, intermediate, and temporary storage services (i.e. “caching” providers). Pursuant to Article 17 of Legislative Decree no. 70/2003, among others, the provider is civilly liable for the contents of such services if, requested by the judicial or administrative authority, it has not acted promptly to prevent access to said content.

One of the defendant intermediaries, a provider of CDN (Content Delivery Network) services, i.e. the accelerating transmission of contents, defended itself by raising some exceptions, including the lack of jurisdiction and its own lack of passive legitimation. In this regard, it stated that it could not be subject to the injunction order, since it would have just provided transitory data storage services consisting in optimizing the use of web services and that it had not manipulated, modified or operated directly on the contents of its customers’ websites. For this reason, the Provider would not have had the possibility to intervene on the servers hosting the unauthorized content. With reference to the qualification of its activities, the Provider stated that a CDN service could not be qualified as a “hosting” service, being rather a mix of “caching” and “mere conduit”.

The Court of Milan considered the Defendant’s objection unfounded, stating that the service supplied by the Provider, by allowing unlawfully transmitted data to pass through the Internet via the Content Delivery Network (CDN) service without being stored, constitutes in any case a conduct that contributes – including through the temporary storage of static data – to permit third parties to carry out the unlawful action that is the subject of the proceedings. The Court has therefore clarified that all information society service providers are passively legitimated against actions for injunctions, regardless of their subjective element (which is not even investigated here), and also regardless of their role.

The Court of Milan has therefore fully confirmed the measure issued inaudita altera parte also against the CDN service provider, specifically ordering the latter to terminate in any case and immediately the supply of all information society services and/or intermediation – however qualified/qualifiable – provided in favor of abusive online services, regardless of the domain name or IP address number used by them.

This is an innovative decision, the outcome of a precautionary proceedings that lasted more than a year, by which the Court fully granted the claims of the owner of the rights and of the exclusive licensee. Indeed, for the Plaintiffs’ defense, it was undeniable that the CDN provider should be the target of the injunction order, like any other information society service provider, although not falling within the categories – provided for by the Ecommerce Directive – of mere conduit, caching, hosting service provider.
Moreover, according to the thesis of the Plaintiffs, the Provider’s activities could not in any case fall within the definition of “caching”, because the Provider’s services also included “storage” activities carried out in a non-transitory manner, thus qualifying as hosting activities.
In any case, the qualification of the provider (mere conduit, caching or hosting) would not have changed the substance of the order that should have been issued against the operator, since – regardless of the qualification of the service rendered by the operator itself – the provider must terminate the illicit activities as soon as it receives the order from the competent court, this both on the basis of the Ecommerce Directive n. 2000/31/EC, the Legislative Decree 70/2003 and the general rules. Indeed, the failure to comply with the order is a cause of responsibility for the operator of the information society service that remains inert.
The Provider had also claimed its lack of passive legitimation on the basis of the consideration that the termination of its services could not have completely prevented the services from being provided through other means. Also on this point the Court considered that the argument could not be accepted, since it found on the one hand the involvement of the Provider in the illegal activities, and on the other hand the circumstance that the termination of its services could still produce useful results for the holder of the rights, even in terms of temporary suspension or difficulties in providing the abusive online service. The Court, on the basis of the evidence provided by the Plaintiffs, also found that the Defendant, on several occasions in Italy and abroad, had actually terminated the CDN services in relation to internet sites linked to copyright infringements on the basis of judicial orders.

Margherita Stucchi


THE SIGN “MESSI” IS ELIGIBLE FOR REGISTRATION AS A TRADEMARK: THE HIGH SIMILARITY WITH AN EARLIER MARK “MASSI” AND THE IDENTITY OF THE RELATED PRODUCTS DO NOT CAUSE ANY LIKELIHOOD OF CONFUSION IF THE LATER MARK “MESSI” INCLUDES THE NAME OF A NOTORIOUS PERSON

30/09/2020

With the judgment of September 17, 2020, rendered within the joined cases C-449/18 e C-474/18 (currently available in French and Spanish at the following link), the European Union Court of Justice (“EUCJ”) rejected the appeals filed by EUIPO and a Spanish company against the decision issued by the EU General Court which had authorized the football player Messi registering his surname as a trademark.

 

The background.
In 2011, the international soccer ace Lionel Messi filed an application with the EUIPO for the registration of a device mark containing, in its denominative part, his surname MESSI, with reference to products of clothing, shoes and sport apparel. The application, once published, was subject to opposition by the owner of the earlier trademark “MASSI”, also registered with regard to clothing and sports footwear. The opponent invoked the existence of a risk of confusion between the signs, given their high phonetic and visual similarity and the identity of the goods. By decision of June 12, 2013, the EUIPO upheld the opposition and rejected the trademark MESSI. The decision was confirmed in the appeal promoted before the EUIPO’s Board of Appeal. The dispute was then brought before the General Court of the European Union, which with a decision of 26 April 2018 upheld the appeal of the Argentinian football player and annulled EUIPO’s decision on the ground that the reputation of the applicant neutralizes the visual and phonetic similarities between the signs and therefore excludes the likelihood of confusion.
Both EUIPO and the owner of the earlier mark filed an appeal before the Court of Justice of the European Union, contesting, among other, that the General Court wrongly took into consideration Messi’s reputation in order to affirm the presence of a likelihood of confusion; the ground of appeal was based on the EU settled case law which states that in order to assess the likelihood of confusion for the public of consumers, only the reputation of the earlier trademark should be assessed, and that in any case the assessment on reputation should concern the sign and not its owner.

The Court’s judgment.
With the decision in comment, the EUCJ endorsed the General Court’s judgment and excluded any likelihood of confusion between the opposing marks, thus confirming the registrability of the trademark MESSI.
Among the grounds of the judgment, it appears of particular interest the part in which the Judges of Luxembourg ruled on the main theme invoked by the appellants and therefore on the possible relevance, in the assessment on the likelihood of confusion, of the reputation of the later sign and its owner. On this point, the Court does not contest that – as argued by the appellants – the assessment of the reputation of the earlier mark is of fundamental importance for the determination of the likelihood of confusion, being it an essential factor. That said, the Court goes further: recalling a precedent in terms (Case C-328/18, judgment of 4 March 2020), the EUCJ explains that the assessment on the likelihood of confusion between trademarks is complex and must take into account a variety of equally relevant factors. Among these, the reputation of the earlier mark is certainly relevant. However, this does not exclude that it is appropriate and, in some cases, necessary to take into due consideration also the reputation of the person applying for the registration of his name as a trademark, if and to the extent that such reputation can actually influence the perception of the trademark by the public of consumers.
In the present case, the Court concludes, the reputation of the football player Messi in most of the EU territory is so strong (to the point of considering it as a “notorious” fact, i.e. a fact that can be known by anyone or of which one may become aware through generally accessible sources) that it is clearly able to distinguish the MESSI trademark from the earlier one from a conceptual point of view, thus excluding any risk of confusion.

Giorgio Rapaccini


EUIPO: BANKSY’S “FLOWER THROWER” TRADEMARK REGISTRATION WAS FILED IN BAD FAITH AS THE OWNER INTENDED TO OBTAIN AN EXCLUSIVE RIGHT FOR “PURPOSES OTHER THAN THOSE FALLING WITHIN THE FUNCTIONS OF A TRADEMARK”.

24/09/2020

The company Pest Control Office Limited is said to represent the famous but still unidentified artist called BANKSY. The company filed an EU device trademark application, seeking protection for the “flower thrower”, the artist’s most iconic work. It first appeared more than 15 years ago as a graffiti in Jerusalem. The trademark application was filed in February 2014 and registered in September of the same year. Graphic Colour Black Ltd., a graffiti post card producer filed an application for a declaration of invalidity. EUIPO’s cancellation division declared that the owner applied for the trademark in bad faith as the purpose of the filing was “other than those falling within the function of a trademark”.

 

The EUIPO decision was issued in invalidity proceedings pursuant to Art. 59 EUTMR. The applicant, the company Graphic Colour Black Ltd, argued that the trademark owner had no intention to use the trademark. Any commercialisation of goods, after the ending of the grace period, had the sole purpose of circumventing the trademark validity requirement of genuine use. The filing was also an attempt to circumvent the copyright protection characterized by its lifetime plus 70-year limit, by the possibility of an eternal trademark protection. Banksy, known for his critical position regarding intellectual property, would have given free reign to the general public to use his works and issued public statements such as “any advert in public space that gives you no choice whether you see it or not is yours. It’s yours to take, re-arrange and re-use”.

The trademark owner argued that bad faith was not proven and that the artist had never agreed to any commercial use of the work. Banksy’s public statements, including those inciting to disrespect others intellectual property would not prohibit obtaining protection for a given sign, nor change the law in any way. Moreover, the fundamental right of the freedom of expression requires that public statements, also when fundamentally criticizing established principles of intellectual property protection, can be voiced without expecting acts of retaliation. Trademark law granted a five-year grace period during which the owner of a sign has no obligation to know the future use of a sign.

EUIPO’s cancellation division observed that there was no unique definition of the bad faith criterion. Though the relevant aspect in time was the moment of the trademark application’s filing, also previous and later aspects could become relevant in assessing the applicant’s state of mind. After having considered that the intentions of the trademark owner cannot be separated from those of the artist himself, the EUIPO considered that the trademark filing could have been motivated by the intention to circumvent possible problems the artist would face when enforcing copyright protection: the artists anonymity and the very nature of graffiti works (which usually do not enjoy the consent of the owner of the respective surface). Moreover, the artist himself had tolerated a widespread use, declaring openly that copyright was “for losers”.

The Cancellation division quotes the ECJs considerations in the decision SKY vs Skykick (C-371/18): bad faith was the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark. Such criteria were met in the case at stake: in particular the attempt to commercialize goods in a very restricted manner but still sufficient to overcome the threshold of the genuine-use requirement would show a manner inconsistent with honest practices.

The decision is part of a case-law that has already been elaborated in the past and that concerns not only the works but also, more generally, the controversial figure of the artist. Such case-law, also considering Banksy’s anonymity, his statements and the same nature of graffiti works, raises questions that concern both copyright and trademark law. The decision is not final and it remains to be seen how the balance between the always delicate issue of limits to the accumulation of the various industrial property rights and a definition of the criterion of “bad faith” will be articulated in the future.

Tankred Thiem


COMMUNICATION TO THE PUBLIC AND TECHNICAL PROTECTION MEASURES ON THE WEB: THE OPINION OF THE ADVOCATE GENERAL AND THE DIFFERENCES BETWEEN INLINE LINKING AND FRAMING

18/09/2020

On September 10, 2020, the Opinion of Advocate General Szpunar in Case C-392/19 (VG Bild-Kunst v Stiftung Preußischer Kulturbesitz) pending before the Court of Justice of the European Union was published, stating that the incorporation of works from other websites into an internet page by means of so-called inline linking (links reproducing content without action carried out by the user) requires the authorisation of the holder of the rights to such works as it constitutes ‘communication to the public’. On the contrary, if it is an incorporation by “framing” (i.e. within a box – more or less – visible on the internet page) of content whose visualisation requires prior action by the user, it is not a “communication to the public” and this is also the case when such incorporation circumvents protective measures against framing.

 

Facts, procedure and preliminary question
The case, now before the Court of Justice, arises from a dispute between the German foundation Stiftung Preußischer Kulturbesitz (“SPK”), operator of the Deutsche Digital Bibliothek (DDB), and the visual arts collecting rights society “VG Bild-Kunst”. The latter, in order to license the use of its members’ works, intended to impose a contractual undertaking on SPK to introduce technological protection measures against third party “framing” of the licensed works by SPK.
SPK therefore initiated legal proceedings aimed at obtaining a declaration that such an undertaking would be unreasonable from the copyright point of view and that VG Bild-Kunst would be obliged to grant the licence at issue without making it conditional on the adoption of such technological measures. This action was brought before the German Supreme Court, which referred to the CJEU the question whether the incorporation by “framing” of a work available on a website freely accessible with the right holder’s consent on third-party websites constituted a communication to the public of the work within the meaning of Article 3, paragraph 1 of Directive 2001/29 in the event of circumvention of the protective measures against “framing” which the right holder has adopted or has had adopted.

Hyperlinks and communication to the public
The Advocate General highlights the question whether the work in issue appears on the incorporating website as an “integral part” or whether there is actually a redirection to an external site. The analysis carried out by the Advocate General focuses on whether the use of a hyperlink in general, made by a third party website to a work belonging to another party, constitutes (or does not constitute) a communication to the public within the meaning of Article 3, paragraph 1 of Directive 2001/29, i.e. whether the inclusion of such a link falls within the exclusive right of the copyright holder to that work. According to a critical analysis of the case law of the Court, the use of hyperlinks would, to all intents and purposes, constitute an “act of communication” but not necessarily an “act of communication to the public”.
It should be assessed whether this is a public to which the work had already been made available by the right holder or a “new public”. In the latter case, the hypertext link (if not authorised by the rightholder) would constitute an infringement of the author’s exclusive rights, especially in cases where the hypertext link would make it possible to circumvent the technological measures restricting access to the work (see Case C-466/12, judgment of February 13, 2014, Svensson case). This ruling was confirmed in later case-law in the event of links implemented through “framing”, adding that the purpose of profit and the knowledge (or knowability) of the circumvention represented indexes to determine the unlawfulness of the act of communication (see Case C-348/13, order of October 21, 2014, BestWater case and Case C-160/15, judgment of September 8, 2016, GS Media case).
According to the Advocate General, from the elaboration of the most recent case-law of the Court it appears that by authorising the making available to the public of his work on a freely accessible internet page, the copyright holder takes into consideration all the public who theoretically have access to that internet page. Thus, the public which accesses it via hyperlinks is also included. Therefore, such links, while constituting acts of communication, as they give direct access to the work, are covered by the copyright holder’s authorisation issued at the time of the first making available. In this case, the “new public” element does not apply.

Inline linking and framing
In case of inline linking, as defined by the Advocate General, the work is automatically incorporated into the third party’s internet page, and appears without the user being required to click on the link at issue, potentially changing the audience originally expected by the owner of the original work made available to the public. Such automatism may not exist in framing and the user (perhaps the more experienced one) would in any case be aware of being redirected to a different site from the one originally searched for. The Advocate General reiterates in his explanatory statement that the technical difference between inline linking and framing is in any case not clear enough to serve as a criterion: instead, the question of whether or not the user’s action is necessary to view the content is important.

Automatic visualization and action carried out by the user
By pointing out the difference between automatism, on the one hand, and the action carried out by the user, on the other, in the traditional terminology of the Court which distinguishes between “new public” and the public to which the rights holder has intended to communicate his work, the Advocate General concludes as follows: the public which does not realise or cannot realise an external connection should be considered as “new public”. Otherwise, in the case of an action carried out by the user, as may also occur in the case of framing, the public would be deemed to be the original addressee of the authorised act of communication.

Protection measures
It remains to be clarified whether the use of framing within a site that requires user action to view the protected work should not also be considered “communication to the public” if framing protection measures are circumvented. It could be argued that even in this case there would be a “new public” not taken into account by the rights holder at the time of the first communication. However, rejecting such an approach, the Advocate General points out that such a circumstance would introduce a dangerous rule since the application of protective measures would become a prerequisite for the legal protection granted by copyright.

Alessandro Bura


E-COMMERCE: AMAZON HELD LIABLE FOR DAMAGES CAUSED BY DEFECTIVE PRODUCT SOLD ON ITS ONLINE MARKETPLACE

09/09/2020

With the historical decision Cal. Ct. App., 4th District, No. D075738 – Bolger vs Amazon.com LLC (Fully available at the following link: https://law.justia.com/cases/california/court-of-appeal/2020/d075738.html) on August 13, 2020, the Fourth Section of the District Court of Appeals of the State of California stated for the first time that the e-commerce company is liable for defects and damages caused by products sold on its marketplace.

 

THE CASE
The case originates from the purchase on the Amazon online marketplace, made by Ms. Angela Bolger, of a spare battery for a laptop. The item at issue was ordered from the seller Lenoge Technology (HK) Ltd and accepted by Amazon itself, which handled, processed and finalized the delivery to the buyer. A few months after the purchase, the battery turned out to be defective, resulting in an unexpected explosion that caused serious injury to the woman’s body. The latter sued Amazon and the third Lenoge seller – who remained in absentia – in order to claim restitution of the amount paid for the purchase of the product and a substantial compensation for the damage suffered. In the first instance, the U.S. Judges upheld Amazon’s defense, pointing out that the company is a simple “online marketplace” but does not manufacture, distribute or market the product at issue directly. As a result, the Judges concluded, nothing can be imputed to them in relation to the defectiveness of the product. The judgment of first instance was followed by the appeal, in which the initial decision was completely overturned on the basis of a motivation – at the moment unique in the global legal scenario – which identifies a clear responsibility also towards the e-commerce marketplace.

THE LOGICAL-LEGAL REASONING OF THE COURT
Despite what was stated in the first instance, in the judgment of the U.S. Court of Appeals Amazon is identified as a real intermediary figure between the third seller on the one hand (Lenoge Technology) and the final buyer on the other (Ms. Bolger). In fact, the importance of Amazon within the product distribution chain is highlighted, beyond the mere terminological qualification that can be attributed to it as a simple “intermediary”, “facilitator” or real “distributor”. The most important elements that define the logical-legal reasoning developed in the second instance procedure concern the fact that Amazon has authorized the seller to offer its products for sale within the e-commerce marketplace, thus providing the digital space necessary for the offer to the consumers. Moreover the product at issue has remained stored in one of the c.d. “fulfilment center” by Amazon and subsequently sent from this last one to the buyer. In fact, according to what asserted by the U.S. Court of Appeal, since the beginning the buyer has never had a direct connection with the third seller, interacting simply and only with a single subject, that is the e-commerce marketplace. In addition, a further element highlighted by the Court concerns the payment made for the purchase of the product: specifically, it is pointed out that the transaction itself did not involve the third party seller, who remained totally unaware of what was purchased until Amazon itself decided to forward an official communication. Based on these multiple elements, the Court of Appeal comes to affirm that Amazon is “an integral part of the entire production and distribution complex that should sustain the course of the injuries resulting from defective products”[1]. In fact, in the eyes of the consumer, Amazon is the real seller of the product, the real player of the sales process and, therefore, since it is a fundamental contribution, full liability cannot be excluded in case of defective product sold on its e-commerce marketplace.

POTENTIAL IMPLICATIONS
The decision at issue is a real “unicum” and could pave the way for similar decisions on the subject of the liability of the online seller towards the consumer for defective products sold on its marketplace. In this regard, it should be duly highlighted the fact that this decision has been pronounced in the United States, where it is particularly frequent and consolidated the use of jurisprudence to address deficiencies from the interpretation point of view and to try to classify from the regulatory point of view the new figures and commercial methods increasingly used in everyday life.
However, in trying (as far as possible) to transpose the Californian Court’s ruling at European level, nowadays it would seem unlikely to accept such an innovative interpretation. It is currently strongly consolidated, in both doctrine and jurisprudence, the legal figure of the so-called “provider”, a category within which can be traced the so-called marketplace giants such as, among others, Facebook, Ebay and Amazon itself. These service providers, pursuant to art. 15 of Directive 2000/31 EC (so-called “Directive on electronic commerce”), transposed into our legal system by Legislative Decree no. 70 of 2003, are not required to fulfill a “general obligation to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activities”, being required to “inform without delay the competent public authority of alleged illegal activities or information provided by the recipients of their services or to communicate information that allows the identification of recipients of their services”. It is clear, however, that the current regulation on this point, if carefully examined, does not include the case dealt with by the Californian Judges , which refers to the seller’s liability for defective products and not to the performance of illegal activities, as stated in the aforementioned regulation. This undoubtedly suggests the innovative approach of the Californian Court of Appeals, which could lead to the identification of a new legal figure even in Europe, completely different from the simple notion of “provider” and able to fully regulate the relationship that increasingly often now arises between the simple customer-buyer on the one hand and the giant marketplaces on the other, real active players in product sales procedures. In any case, while waiting to know if there could be, actually, a real regulatory evolution in this sense, it is unrealistic that such an evolution could be accepted overseas and introduced at a regulatory level without the essential intervention of the European legislator.

[1] On this matter, see the original text of the decision, which states that “Amazon is an integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.” (Vandermark, 61 Cal.2d at p. 262).

Paolo Rovera