Brian Miller Solicitor's IP Law Blog

Thursday 13 September 2012

IP Lawsuits: There’s one born every minute



The latest Apple v. Samsung case is just the tip of the iceberg.

In a trend Matt Asay recently dubbed ‘patent insanity’, the likes of Google, Nokia, HTC and even Amazon have joined old culprit Microsoft in turning their attention to feuding over IP.  This pattern is leading to concerns that innovation will be stifled in the electronic market.

After the introduction of the Android smartphone in January 2010 the late Steve Jobs declared:   ‘I’m going to destroy Android, because it’s a stolen product.  I’m willing to go thermonuclear war on this’.

His infamous knack for prediction would appear to be on the money once again as bloggers liken battles over IP between corporate giants to ‘WWIII’.  Certainly, IP suits have become fiercer, and with higher stakes.

The latest suit launched by Google against Apple threatens to ban iPhones, iPads and iPods from entry into the U.S., worth an estimated $120 billion in annual revenue.

Clearly, the current climate is not one in which to underestimate the value of IP.  If you are in doubt as to whether or not your invention ought to be patented or be protected in some other way, we can offer specialist advice.

Monday 20 August 2012

Authors at Risk of Non-Payment Through Volunteer-Run Libraries

Concerns have been raised as to whether the UK Government is breaking EU Copyright laws relating to volunteer-run libraries payment commitments. Nicola Solomon, chief executive of the Society of Authors (SoA), drew attention to the decreasing rates of authors’ compensation because of the increasing number of volunteer-run libraries, replacing traditional public libraries.   Under the EU’s copyright Directive in relation to rental and lending rights, authors generally have the exclusive right to authorise or prohibit the renting or lending of their original works or copies of said works. These authors are entitled to a "single equitable remuneration" in order to compensate for those who loan out their works. 

Yet the Directive state that EU member states may derogate from that "exclusive right" where it concerns public lending, such as public libraries, and they may "exempt certain categories of establishments from the payment of the remuneration" if they desire. In these cases the authors are entitled to receive remuneration for lending. 

However, although UK Law requires public "public libraries administered by local library authorities" to pay royalties to registered authors, under the Public Libraries Act, volunteer-run libraries are not included in this definition. Therefore, due to the wording of the act, such libraries are not required to pay royalties when lending or renting works. Solomon, on behalf of the SoA, seeked assurance that this would not result in a reduction of the overall amount paid to authors. She stated that if this were the case, "It would be unfair and deeply damaging to authors if authors were prejudiced by transfers of loans to volunteer libraries." It was also highlighted that the authors to which this would be of most damage is those whose books have ceased to be in print, yet are still being read by the public.
 
According to a report by the Guardian, The Department for Culture, Media and Sport (DCMS) have clearly stated that the increase in the number of volunteer-run libraries would hold no affect over the authors’ royalties payments. This is because the PLR payments are set annually and are not based on the number of loans from all libraries nationally. Instead, the royalties are based on the number of loans from a sample group of libraries. Volunteer-run libraries are not included within the sample group. However the DCMS argued that this would affect in no way the amount the authors received.

© Brian Miller, solicitor. This article may not be reproduced without the prior written permission of the author. This article reflects the current law and practice. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.

Brian can be contacted at Stone King Solicitors.  For further news and information on legal topics of interest, please visit Brian's other blogs:


Wednesday 25 April 2012

Grey Imports- Not Such A Grey Area After All (Part 2) by Brian Miller Solicitor

(previously featured in MCV Magazine)

In a previous article we discussed how manufacturers of various products often sell their products at different prices in different countries, in order to take advantage of the different market conditions that exist around the world. We also learnt how a distributor could import and repackage goods from one EU country into another, provided it complied with five key rules, details of which are repeated below.

In this article, we learn how the rules for those distributors wanting to import and sell goods from outside into the EU (sometimes called "grey imports") differ radically from the rules relating to imports from another EC country.

Distributors have for a long time capitalised on the disparate price differentials which exist around the world. They do this by purchasing cheap games consoles in one country before repackaging them and selling them below market price in another country, usually at a reasonable profit. As this practice of "parallel importation" interferes with the manufacturers' carefully formulated pricing policies, it is not surprising that the manufacturers often go out of their way to keep their markets partitioned by making life difficult for both parallel and grey importers.

As we learnt in Part 1, one favoured method of making life difficult for the entrepreneurs is to threaten them with legal proceedings for trade mark infringement. In parallel importation (ie. contained within the EU), this issue typically arises because the parallel importer needs to open up boxed consoles to replace certain components, such as the power lead, in order to make the products suitable for consumers in the new intended country of sale. The process of opening and closing boxed consoles amounts to ‘repackaging' in legal terms and it is this which can lead to potential trade mark infringement on the part of the importer.

How to avoid trade mark infringement within the EU

Readers will recollect from Part 1 that an importer of goods from one EU country to another can escape the allegation of trade mark infringement if it complies with the following conditions:

1. The repackaging must not affect the original condition of the consoles.

2. The new packaging must clearly state who was responsible for repackaging the consoles as well as the name of the manufacturer.

3. If the importer adds any additional items to the consoles (such as power plugs or RFU adaptors) then it must make it very clear that the manufacturer is not responsible for these items.

4. The importer must give the trade mark owner advance notice of its plans to put the repackaged consoles on sale, at least 15 working days before the repackaged products are put on the market.

5. The repackaging itself must actually be necessary in order for the importer to successfully market the consoles.

Importing consoles from outside the EEA

(a) No exhaustion of rights

If an importer intends to bring consoles into the UK from outside the EU (or European Economic Area ("EEA")1), then simply following the five rules on repackaging will not provide a sufficient defence to a claim of trade mark infringement. In this situation, different legal principles come into play.

EC law has a principle known as ‘exhaustion of rights', which applies to a trade mark owner which has put its goods on the market in one EEA Member State. If a manufacturer puts its games consoles on sale in Germany, then under EC law that manufacturer will have ‘exhausted' its ability to use its trade mark rights to prevent parallel importers from reselling the consoles in other EEA Member States, as long as the importers comply with the five rules above.

The European Court of Justice ("ECJ") has, however, made it clear that there is no corresponding principle of ‘international exhaustion' of rights under EC law. (By ‘international' the court means here a movement of goods from outside to inside the EEA). Furthermore, the ECJ has ruled that no EU Member State can introduce national legislation providing for the international exhaustion of trade mark rights, as this would allow grey importers to import goods from outside the EEA into that Member State and from there into the rest of the EEA. This would effectively allow the international exhaustion of rights on the whole of the EEA indirectly.

So if, for example, Italy attempted to enact laws which allowed Italian grey importers to import products which had been put on sale in Taiwan, regardless of any EU or Italian trade mark rights of the manufacturer, then those laws would be held by the ECJ to be contrary to EC law, which takes precedence over Italian law.

(b) The issue of consent

The issue of the international exhaustion of rights has been considered by the ECJ and the British courts on several occasions, particularly in the cases of Silhouette (1998), Sebago (1999), Davidoff (2001), Levi Strauss (2002) and Quicksilver (2004). The following principles have emerged from these cases.

If a manufacturer puts its consoles on sale outside the EEA, the only way in which that manufacturer could be said to have exhausted its trade mark rights within the EEA in relation to any importer of those consoles from outside the EEA is if the manufacturer had ‘consented' to those consoles being resold in the EEA.

It is up to the grey importer to prove that such consent has been unequivocally given by the trade mark owner. Consent can be inferred by the particular facts and circumstances in which the manufacturer has put the consoles on the market - but it is important to note that consent will not be implied where the manufacturer has simply remained silent on the issue.

Suppose that a manufacturer was selling its consoles to a distributor in Mexico, and that the distribution agreement between the parties was silent on the issue of whether the manufacturer consented to the consoles being resold into the EEA. In such a case, consent would not be implied and any grey importer who buys consoles from that Mexican distributor for ultimate sale in the EEA will find it very difficult to rely on the ‘consent' defence in a trade mark infringement lawsuit brought against it by the manufacturer.

Of course, if the distribution agreement happened to contain an express provision stating that the manufacturer did consent to the consoles being resold in EEA territories then the grey importer would be in a much better position, assuming that it is able to produce a copy of this agreement in any potential court case. However, console manufacturers are highly unlikely to give this kind of express consent in their contracts, as they will no doubt be well aware that this would damage their ability to partition markets.

The test for consent is therefore a tough one, and it seems that the only reliable ways for a grey importer to prove that express consent has unequivocally been given are (i) to ask the manufacturer to grant its express consent in return for a fee, or (ii) to ask the distributor for a copy of its distribution agreement with the manufacturer if this happened to contain an express consent provision.

It is crucial that the consent is obtained from the owner of the trade mark itself. In this article, we have assumed that the manufacturer owns the trade mark in question, but in practice this may not always be the case. The grey importer must therefore carefully investigate the ownership of any relevant trade marks. In addition, there may be complex chains of distribution at work, and it is important that the grey importer does not rely on any consents given by distributors alone. While a distributor may have a licence to use a trade mark for selling consoles in certain territories, the question of whether that distributor consents to the consoles being resold in the EEA is irrelevant. What matters is the consent of the trade mark owner, and this can only be given by the trade mark owner itself.

Conclusion

Any grey importer who is considering importing games consoles into the EEA from a country outside the EEA and in which the consoles have already been put on the market must ensure that it is able to prove, one way or the other, that the trade mark owner has given its express and unequivocal consent to those consoles being resold in the EEA. If the importer is aware that the manufacturer actively objects to the consoles being marketed in the EEA, then it should not proceed with its plans. Likewise, if the importer is unaware of the manufacturer's stance, then it would be ill-advised to proceed.

The grey importer who ignores the issue of the manufacturer's consent, like the parallel importer who ignores the five rules on repackaging, runs the very real risk of being on the wrong end of a lengthy and costly trade mark infringement lawsuit.

© Brian Miller, solicitor. This article may not be reproduced without the prior written permission of the author. This article reflects the current law and practice. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.

Brian can be contacted at Stone King Solicitors.  For further news and information on legal topics of interest, please visit Brian's other blogs:


1 The EEA comprises all of the EU Member States together with Iceland, Liechtenstein and Norway.


Wrongs and Rights of Grey Importing (Part 1) by Brian Miller Solicitor

(previously featured in Fashion Business Weekly)

Brand owners often sell their products at different prices in different countries, in order to take advantage of the different market conditions that exist around the world.

Traders have long capitalised on these price differentials, purchasing products cheaply in one country and selling at a profit but below market price in another. As this practice of 'parallel importation' interferes with the brand owner's carefully formulated pricing policies, it is not surprising that they go out of their way to keep their markets partitioned by making life difficult for both parallel and grey importers.

If a European importer intends to bring goods from outside the EU (or more exactly, the European Economic Area, which includes Iceland, Liechtenstein and Norway), he has to be aware of a principle known as 'exhaustion of rights', which applies to a trade-mark owner that has put its goods on the market in any EEA Member State. If the goods were put on sale in Germany, for example, then under European law that manufacturer will have 'exhausted' its ability to use its trade-mark rights to prevent parallel importers from reselling those goods in other EEA Member States.

The European Court of Justice (ECJ) has, however, made it clear that there is no corresponding principle of 'international exhaustion' of rights under European law - that is, the same law does not apply to imports from outside the EEA. Furthermore, the ECJ has ruled that no EU Member State can introduce national legislation providing for the international exhaustion of trade mark rights, as this would allow grey importers to import goods from outside the EEA into that Member State and from there into the rest of the EEA.

So if, for example, Italy attempted to enact laws that allowed Italian grey importers to import products that had been put on sale in Taiwan, regardless of any EU or Italian trademark rights of the brand owner, then those laws would be held by the ECJ to be contrary to EC law, which takes precedence over Italian law.

The issue of consent
The issue of the international exhaustion of rights has been considered by the ECJ and the British courts on several occasions, particularly in the cases of Silhouette (1998), Sebago (1999), Davidoff (2001), Levi Strauss (2002) and Quiksilver (2004). The following principles have emerged from these cases.

If a manufacturer puts its goods on sale outside the EEA, the only way in which that manufacturer could be said to have exhausted its trade-mark rights within the EEA in relation to any importer of those goods from outside the EEA is if the manufacturer had 'consented' to those goods being resold in the EEA.

It is up to the grey importer to prove that such consent has been unequivocally given by the trade-mark owner. Consent can be inferred by the particular facts and circumstances in which the manufacturer has put the goods on the market - but it is important to note that consent will not be implied where the manufacturer has simply remained silent on the issue.

Suppose that a brand owner was selling its garments to a wholesaler in Mexico, and that the distribution agreement between the parties was silent on the issue of whether the seller consented to the goods being resold into the EEA. In such a case, consent would not be implied and any grey importer who bought goods from that Mexican distributor for ultimate sale in the EEA would find it very difficult to rely on the 'consent' defence in a trade-mark infringement lawsuit.

Of course, if the distribution agreement happened to contain an express provision stating that the manufacturer did consent to the goods being resold in EEA territories, then the grey importer would be in a much better position, assuming that it was able to produce a copy of this agreement in any potential court case. However brand owners are highly unlikely to give this kind of express consent in their contracts, as they will no doubt be well aware that this would damage their ability to partition markets.

The test for consent is therefore a tough one, and it seems that the only reliable ways for a grey importer to prove that express consent has unequivocally been given are (i) to ask the brand owner to grant its express consent in return for a fee, or (ii) to ask the distributor for a copy of its distribution agreement with the brand owner, if this happened to contain an express consent provision. It is crucial that the consent is obtained from the owner of the trade mark itself, and that the importer does not rely on consent given by a distributor alone. While a distributor may have a licence to use a trade mark for selling goods in certain territories, the question of whether that distributor consents to the goods being resold in the EEA is irrelevant. What matters is the consent of the trade-mark owner, and this can only be given by the owner itself.

The grey importer who ignores the issue of the trademark owner's consent runs the very real risk of being on the wrong end of a lengthy and costly trade-mark infringement lawsuit.

© Brian Miller, solicitor. This article may not be reproduced without the prior written permission of the author. This article reflects the current law and practice. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.

Brian can be contacted at Stone King Solicitors.  For further news and information on legal topics of interest, please visit Brian's other blogs:



Tuesday 24 April 2012

Copyright for Webdesigners

(Originally published in .Net Magazine)

For the inexperienced, developing sites and software can be a legal minefield. This article explains how to keep control of your copyright.

Every lawyer’s favourite adage is ‘never assume’. It’s especially relevant for companies hoping to take part in the development of new sites. Each company may ‘assume’ that it will own the copyright of the final product, even though their contract makes no provision for it.

In the creative world of web design, it’s not uncommon for a client to commission a developer to build a web site, only for the relationship to collapse. If there is no contract (or even where there is and the contract isn’t specific), the client often believes that they will own the copyright of the work.
It has always been the case in common law (English case law) that, in the absence of prior agreement between the parties (it’s always best to get these things in writing), copyright remains in the hands of the author of the work, namely the developer or designer. This may come as a shock to many site owners, when they realise they don’t actually own the piece of software, or site design, for which they have often paid a substantial sum of money.

The Client
The precise nature of the rights that the client will acquire on purchasing a piece of software or a design will largely depend on the circumstances of the individual case. For instance, if it was made clear by the client that they would want to sell the software to third parties, although there was no express clause outlining this in any agreements, it’s more likely that the client will have not only a licence to use the software for the purposes for which it was commissioned, but also the right to licence it to third parties. In most cases, the law states that the client, in the absence of any specific agreement relating to copyright ownership, will generally have a licence for the software based on the following criteria:

· A non-exclusive, personal, irrevocable and royalty-free licence to use the software
· For the life of the copyright (ie, 70 years from the end of the calendar year in which the author (designer or coder) dies, or where the author is a company, from the end of the year in which the software was published)
· No automatic right to sub-licence the software to third parties
· A right to repair, maintain and upgrade the software in accordance with the requirements of the client’s business

It’s very rare for a court to award copyright ownership to a client (ie, not the creator of the work), in the absence of a prior agreement between the parties. The only time this would arise would be if the client needed, in addition to the right to use the software, the right to exclude the developer from using it and the ability to enforce the copyright against third parties. An example of when this might arise is where the purpose in commissioning the work is for the client to make and sell copies in the marketplace the work was created for, free from competition by the developer or third parties.

The Developer
As mentioned earlier, the developer can re-use the code they created to build the software for the client, provided that all of the client’s confidential information has been removed. Given that, by implication, the developer retains copyright ownership of the software, they’ll be in a position to assign copyright of the software to the client for a further sum. Alternatively, the developer could license the software to a third party to redevelop it for a new client, provided there are no remnants of the client’s confidential information.

As we have demonstrated, it’s never advisable to enter into a contract for development of some software (which would include a web site) without there being something in writing, particularly in relation to copyright. When planning new projects it’s worth getting these matters set down in writing to ensure that the rights of each party are clear and adequately protected. In the case of the commissioning party, that will mean that there are no surprises when it comes to claiming ownership, or indeed selling the software or web site to third parties

© Brian Miller 2012. This article may not be reproduced without the prior written permission of the author.

This article reflects the current law and practice. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.

Friday 20 April 2012

European Court of Justice Rules Private Copying Levy Permitted Under EU Copyright Law For Consumers


(originally posted on October 24, 2010)

The European Court of Justice has ruled that the private copying levies on blank CDs, MP3 players and other digital media are permitted under EU copyright law in respect of goods sold to consumers, but not for any products which a company may buy.

The position currently in Europe is that some European countries permit the a person who legitimately owns a copyright work to make a copy of it, as long as it is for private use. The new European Copyright Directive will continue to allow this, as long as there is ‘fair compensation’ for the copyright holders.

In those countries where private copying is permitted, the way it works is that a levy is charged on the media – discs, media players – that material is typically copied on to, in order to ensure fair compensation. That levy is then sent to collection societies for distribution to rights holders.

As it can reasonably be assumed that any blank media purchased by a consumer will be used for copying, the European Court of Justice (ECJ) has ruled that this levy is compatible with EU copyright law when charged on goods sold to consumers. It has also directed that the levy should not be charged when items are sold to businesses, because that assumption cannot be made.

The ruling is largely in line with an opinion published earlier this year by one of the ECJ’s Advocates General. The European Commission said last year that it wanted to end the situation where private copying was legal in some EU countries and not in others. The Commission said in a statement that it wanted to give “consumers certainty about what they can and cannot do with copyrighted songs, videos and films they download, by ending the current fragmentation of laws on ‘private copying’“.

© Brian Miller 2012. This article may not be reproduced without the prior written permission of the author.

This article reflects the current law and practice. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.