Source: https://elawnora.blogspot.com/2018/06/
Timestamp: 2019-04-26 08:54:16+00:00

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Overturning the decisions at first instance [IPKat report here and here] and on appeal [IPKat report here], this morning the UK Supreme Court has ruled that the ISPs (internet access providers) do NOT have to bear the costs of implementation of the injunction (in this case, a blocking injunction) issued against them pursuant to section 37(1) of the Senior Courts Act 1981 (SCA), requiring them to block access to a number of websites making available for sale goods infringing trade mark rights.
As explained in this post, the appeal to the UK Supreme Court focused indeed on the issue of cost allocation.
Although Kitchin LJ (writing for the Court of Appeal) acknowledged that "the ISPs are not guilty of any wrongdoing”, nor do they owe a common law duty of care to take reasonable care to ensure that their services are not used by the operators of the offending websites, the operators of the infringing websites need the services of the ISPs in order to offer for sale and sell their counterfeit goods to UK consumers. It followed that "the ISPs are therefore inevitable and essential actors in those infringing activities."
The Court of Appeal confirmed that the High Court (Arnold) J "was entitled to require the ISPs to bear the costs of the implementation [while the costs of application should be borne by the rightholders] of the orders in issue."
Similarly to Arnold J at first instance, Kitchin LJ in the Court of Appeal observed that it was implicit in Recital 59 of the InfoSoc Directive and Recital 23 of the Enforcement Directive that it would be “entirely appropriate for a national court to order that the costs of implementation of any such injunction should be borne by the intermediary”.
The Court of Appeal also approved of Arnold J's proper consideration of the economic impact of website blocking orders upon the businesses of the ISPs, and that these could either bear these costs themselves or pass them on to their subscribers in the form of higher subscription charges.
The decision of the Court of Appeal contains however the dissent of Briggs LJ (as he then was) on the issue of cost allocation. In his view, “the cost burden attributable to the implementation of a particular blocking order should fall upon the rightholder making the application for it." The reason why that should be that case is a domestic one.
It is true that both the Enforcement Directive and the InfoSoc Directive provide that rightholders should have the possibility of applying for an injunction against an intermediary who either carries a third party's infringement of a protected work in a network (in copyright cases) or whose services are being used by a third party to infringe the rightholder's industrial property right (in relation to trade marks). In both cases, however, the conditions and modalities relating to such injunctions, or the conditions and procedures relating to such injunctions should be left to the national law of the Member States.
Briggs LJ noted that jurisdiction within section 37(1) SCA in substance reflects an originally unfettered jurisdiction exercised by the Court of Chancery on equitable principles. In the case of orders against innocent third parties, the law has evolved so to ensure that a standard condition or 'modality' for the grant of an injunction is that the cost reasonably incurred by the innocent respondent should be reimbursed by the applicant. In his view the Norwich Pharmacal jurisdiction should be intended as applicable in the case of intermediary injunctions and shield intermediaries from any responsibility for costs of injunctions against them.
This morning the Supreme Court held that neither EU directives nor judgments of the Court of Justice of the European Union (notably, the ones in L'Oréal and Telekabel) really set any rules as regards the allocation of costs of intermediary injunctions.
As a matter of English law, the ordinary principle is that unless there are good reasons for a different order an innocent intermediary is entitled to be indemnified by the rights-holder against the costs of complying with a website-blocking order. The position in relation to website-blocking orders is no different in principle from the established position in domestic law in the case of Norwich Pharmacal orders, freezing orders and other injunctions granted to require an innocent party to assist the claimant in the assertion of its rights against a wrongdoer.
A more detailed analysis will be provided once I have read the judgment more carefully. However, there seems to be little doubt that a key question raised by the UK Supreme Court decision is whether its take on allocation of costs should be intended limited to orders granted under section 37(1) SCA, that is injunctions in trade mark cases (at least for now), or could be intended - instead - as having broader applicability, notably with regard to injunctions in copyright cases pursuant to section 97A CDPA.
Since the first blocking injunction [in Newzbin 2] the rule in copyright website blocking case law has been in fact that ISPs pay the costs of implementation of the injunction, while rightholders bear the costs of application. The High Court and the Court of Appeal deemed it appropriate to extend it to trade mark injunctions, although relying on a different legal basis [the UK did not provide a specific implementation of the third sentence in Article 11 of the Enforcement Directive].
Whether things should now change also in copyright cases and how far the Supreme Court judgment goes is likely to give rise to lively debates ... what do readers think?
Is the Louboutin red sole mark a valid trade mark or not? At last - the moment all IP aficionados were waiting for has come!
The Court of Justice of the European Union (CJEU) has just issued its much-awaited judgment in Louboutin C-163/16, ruling that a mark consisting of a colour applied to the sole of a shoe is NOT covered by the prohibition of the registration of shapes. Such a mark does not consist ‘exclusively of the shape’.
Is the notion of ‘shape’ within the meaning of Article 3(1)(e)(iii) of [the 2008 Trade Mark Directive, ie the absolute ground for refusal concerning signs consisting exclusively of "the shape which gives substantial value to the goods"] (‘Form’, ‘vorm’ and ‘forme’ in the German, Dutch and French language versions of the Trade Marks Directive respectively) limited to the three dimensional properties of the goods, such as their contours, measurements and volume (expressed three-dimensionally), or does it include other (non three-dimensional) properties of the goods, such as their colour?
As readers will remember, this case has featured: a first Opinion of Advocate General (AG) Szpunar [reported by The IPKat here]; the reopening of the oral procedure and the assignment of the case to the Grand Chamber, so that the CJEU would rule with a greater (13) number of judges than the ordinary chamber procedure (3 or 5 judges), on consideration of the topicality of the issues underlying this reference for a preliminary ruling; and a second Opinion of AG Szpunar [which has sparked some controversy regarding its actual interpretation: see Katpost here].
In today's judgment, the Court takes the view that, since the trade mark directive provides no definition of the concept of ‘shape’, the meaning of that concept must be determined by considering its usual meaning in everyday language. The Court points out that it does not follow from the usual meaning of that concept that a colour per se, without an outline, may constitute a ‘shape’.
The Court also holds that a sign, such as that at issue, cannot, in any event, be regarded as consisting ‘exclusively’ of a shape, where the main element of that sign is a specific colour designated by an internationally recognised identification code."
While it is true that Member States retain significant freedom in devising relevant procedures for repressing copyright infringements and awarding damages, Article 8 of the InfoSoc Directive requires resulting sanctions and remedies be effective, proportionate and dissuasive. This provision is in line with what also Article 3 of the Enforcement Directive mandates.
In this sense, the question that arises – and has actually arisen – is whether it is compatible with EU law to provide that the owner of an internet connection, through which copyright infringements have been committed, may escape liability thereof by indicating, without the need to provide any further details, a family member that has also had access to such connection.
In a nutshell, this is the issue at stake in Bastei Lübbe C-149/17, a reference for a preliminary ruling from the District Court Munich I (Germany) arisen in the context of litigation between Bastei Lübbe, a German phonogram producer, and Michael Strotzer, the owner of an internet connection through which an infringement was committed in 2010.
The latter submitted that he had not committed the infringement himself and that his internet connection was sufficiently protected. He also argued that his parents, with whom he lived, also had access to the connection but, as far as he was aware, they had not committed the infringement either. Following dismissal of Bastei Lübbe’s action at first instance on grounds that the defendant could not be deemed to have committed the relevant infringement, the case reached the District Court Munich I.
The Munich court appeared keen on holding Strotzer liable by means of a presumption under German law. However, doubts subsisted in light of certain decisions of Germany’s Federal Court of Justice. Hence, the court decided to refer the case to the Court of Justice of the European Union (CJEU) for guidance.
This morning Advocate General Szpunar delivered another interesting Opinion [not yet available in English], in which he advised the CJEU to rule that EU law does not require to provide, at the national level, a presumption of liability of the owner of an internet connection for copyright infringements committed through such connection. However, if national law envisages such presumption to ensure the protection of copyright, this shall be applied coherently to guarantee effective copyright protection. In this sense, the right to family and private life under Article 7 of the EU Charter of Fundamental Rights may not be interpreted in such as way as to deprive copyright owners of any possibility of effective protection of their own intellectual property, the protection of which is mandated by Article 17(2) of the EU Charter.
Let’s see a bit more in detail how the AG reasoned.
It follows that, if Article 8(2) of the InfoSoc Directive, complemented and clarified by Article 13(1) of the Enforcement Directive, envisages the right of the copyright owner to seek damages, this implies an obligation for Member States to provide procedural mechanisms that concretely allow rightholders to obtain such compensation.
In the particular context of online copyright infringements, it is difficult for copyright owners to identify the subjects responsible for such infringements and prove their involvement. Only the IP address through which the infringement has been committed may be used as a hint. However, the IP address alone is not proof of the liability of a certain person, especially if the relevant internet connection is accessible to more than one person.
It is essentially because of these difficulties that national laws tend to relax the burden of the proof in such cases. The introduction of a presumption of liability (like the one under German law) is not mandated by EU law. However, where it exists, such presumption must be applied in a coherent and effective fashion: such measure could not fulfil its objective if it were too easy to overcome the presumption of liability, thus leaving the subject damaged by the infringement without any other possibility to enforce his rights and claim compensation for the damage suffered.
Turning to fundamental rights, the AG recalled that the status of the Charter is that of primary source of EU law. The application of the provisions through which Member States have transposed the InfoSoc and Enforcement Directives into their own legal regimes is thus bound to respecting the provisions of the Charter.
In a scenario like the one at issue, in which different fundamental rights are in conflict with each other, it is for the national courts to provide an appropriate balance. In any case, it is necessary to guarantee the respect of the “essential content of the fundamental rights at issue” [para 38].
At this point the AG drew an interesting parallel with banking secrecy, when he recalled that in Coty Germany the CJEU held that a bank cannot invoke secrecy to avoid disclosing the details of an account holder, when such details would allow one to enforce his own IP rights.
The same reasoning may be applied here: if one was able to invoke Article 7 of the Charter to avoid having to disclose the names of those who might have used the connection, then the copyright owner would be deprived of his IP right. In any case, should a national court deem such intrusion into one’s own right to family life inadmissible, then the owner of the internet connection should be presumed liable for the relevant infringement, insofar as the copyright owner has not other means to identify the actual infringers.
The AG also touched upon the issue of abuse of rights within Article 54 of the Charter, noting that it is for the national court to determine whether Strotzer has abused his right to family life by invoking it, not to protect his own family members, but rather to elude his own liability for the infringement.
The most interesting aspect of the Opinion is probably the part in which the interplay between different fundamental rights is discussed.
In the CJEU case law on copyright the fundamental rights angle has become increasingly relevant, though it has arguably not been subject to particularly in-depth analysis by the Court. Decisions like Luksan and Telekabel refer for instance to the EU Charter, but in such a way that extracting guiding principles is not straightforward.
In this sense, this latest Opinion of AG Szpunar is helpful in understanding how IP protection should be seen and balanced against conflicting fundamental rights.
While the AG confirmed that different rights are ranked on the same level, he focused his attention on two key aspects: first, that any assessment should consider whether the rights at stake would be deprived of their essential content; secondly, that a fundamental right might not be invoked to safeguard a legitimate and genuine right, but rather to avoid liability towards a third party whose fundamental right has been infringed. A behaviour of this kind should be deemed an abuse of rights and, as such, be considered not deserving of protection.
Ready for some licensed TV?
Can the making available – following payment of an IPTV subscription fee – of streams to unlicensed content amount to an infringement of copyright/related rights?
This is the issue that the District Court of Limburg (in Maastricht, The Netherlands) had to address in a recent case that anti-piracy foundation Brein brought against Leaper (also acting as ‘Flickstore’, ‘Dump Die Deal’ and ‘Live TV Store’).
Unsurprisingly, the court answered in the affirmative. The judgment (in Dutch) is available here.
What is interesting is the reasoning of the court, which also reviewed the interpretation of Article 3 of the InfoSoc Directive as provided by the Court of Justice of the European Union (CJEU) in its fairly rich case law.
The service offered by Leaper was structured as follows: further to payment by the consumer of the subscription fee, Leaper would send him a unique activation code (this, according to Brein, would involve the provision of a hyperlink in a shortened and user-friendly form) that would need to be inserted into a special Live TV app on the TV Box. This would allow the consumer to obtain an .m3u file and access thousands of TV channels on Leaper’s ‘FlickStore’, including subscription and film channels. The subscription would also grant access to over 1,000 links to unlawful offering of films.
According to the court the key issue was whether Leaper itself would make an act of making available to the public (which is part of the broader right of communication to the public ex Art 3(1) of the InfoSoc Directive) within the meaning of Art 3(2) of the InfoSoc Directive or whether instead, as Leaper claimed, it merely acted as an intermediary between the wannabe users and those who make the content freely and unlawfully available in the first place.
The court noted that the notion of communication to the public is not defined in the directive. The CJEU held that the concept should be interpreted broadly, so to comply with the objective of that directive, which is to grant authors a high level of protection.
The court then referred to CJEU case law which has stressed – amongst others – the relevance of considering whether the defendant has made an ‘indispensable intervention’ and pursues a profit-making intention.
Both were found to subsist in the case at issue, including Leaper’s awareness that the content linked to was not licensed (one of the slogans used was “Also being fed up with the limited channel offer and complicated television subscriptions that cost tons of money?”). The court concluded that Leaper would be making unauthorized acts of communication/making available to the public.
Also the argument that there would be no public because the activation codes were sent to individual users was rejected by the court: with its actions, against payment, Leaper would reach an indefinite number of potential recipients who can access the protected content and constitute therefore a new public.
In that case the CJEU adopted a relaxed notion of what constitutes an ‘indispensable intervention’ on the side of the user/defendant, which it subsequently confirmed in its Ziggo decision [Katposts here].
To determine whether the user/defendant has played an essential role, when he intervenes, in full knowledge of the consequences of his action (ie accepting the possible consequences thereof), to give access to a protected work to his customers and does so, in particular, where, in the absence of that intervention, his customers would not, in principle, be able to enjoy the broadcast work. In this sense an intervention is indispensable not just when it is the sine qua non condition to access certain protected content, but also when it merely facilitates access to such content.

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