The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Pavis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Monday, 21 August 2017

Around the IP Blogs!

This Kitten is delighted to bring you the highlights from some recently published IP blogs.

Driving around the Blogs!
Marie-Andree Weiss on The 1709 Blog summarizes the motion for judgment on the pleadings filed by the defendants in Solid Oak Sketches, LLC. v 2K GAMES, INC. and TAKE-TWO INTERACTIVE SOFTWARE, INC., Case No. 1:16-cv-724-LTS-RLE. The defendants argued that the reproduction of the tattoos that appear on three players in the NBA 2K video game does not amount to copyright infringement but rather “constitutes de minimis use and fair use”. 

Moving to trademarks, Michael Factor reports on The IP Factor the opposition lodged by Paletas Masa S.A. de C.V. and Sweet Reality Sweet Marketing Company against the 3D trademark application filed by Grupo Bimbo S.A.B. de C.V., consisting in the shape of a paintbrush covering confectionery in class 30. The Israel Patent Office refused the registration on the grounds that the proposed shape did not fulfill the essential function of a trademark (badge of origin), it has aesthetic appeal and there was no evidence that it had acquired distinctiveness. Thus, the requirements established in Circular 033/2016 for registering 3D trademarks were not fulfilled.

Turning to designs, David Musker blogs on MARQUES CLASS 99 about the case Chanel SAS v EUIPO, ECLI:EU:T:207:517, T-57/16 (not in English yet). There, the General Court of the CJEU overruled the decision issued by the EUIPO Board of Appeal on the ground that the Registered Community Design 1689027-0001 (comprising two interlocking S shapes) does not produce a different overall impression on the informed user in relation to the Channel monogram (comprising two interlocking C shapes) registered as a trademark in France since 1989.

Switching to patents, Dennis Crouch analyzes on PATENTLYO the case Georgetown Rail Equipment Company v. Holland L.P., No. 16-2297 (Fed. Cir 2017).  As reported, the US Court of Appeals for the Federal Circuit upheld the decision rendered by the District Court of Texas, which found Holland L.P. liable for infringing US Patent No. 7,616,329 (system and method for inspecting railroad track), based on the Court's construction of the preamble of the claim 16, ruling that it does not limit the scope of protection but rather it “is meant to describe the principal intended use of the invention”.

Last, but not least, Hirotaka Nonaka provides on TRUSTinIP some insights regarding the report issued by the Ministry of Economy, Trade, and Industry (METI) of Japan. In particular, attention is drawn to the proposal for compulsory licenses on SEPs (Standard Essential Patents) and an alternative dispute resolution system, which will be discussed by METI at the end of this year.

Sunday, 20 August 2017

When "mayo" is not mayonnaise, yet still is mayonnnaise: All a matter of the label?


When is “mayo” not mayonnaise yet still can be called “mayo”, even when the product has no egg-based ingredient? This Kat was reminded of this question in reading recently that Hampton Creek, Inc., a much ballyhooed, unicorn-valued food tech company with a knack for attracting headlines, seems to have done it once again. In the words of the July 17th article that appeared on Bloomberg.com-- “Hampton Creek’s Entire Board Leaves Except for CEO.” Seeing this headline recalled the “mayo/mayonnaise” episode that engaged the company in 2014-2015. The tale is worth recounting as a window into how regulators deal with arguably descriptive or misdescriptive terms.

Let’s first start with the trademark aspect. As it appears on the on-line USPTO registry, the mark JUST MAYO was registered (no. 4786403) on August 4, 2015, for “vegetable-based spreads”, in class 29 and “egg-and dairy-free mayonnaise; salad dressing”, in class 30. The mark seems to have gone through examination without any descriptiveness or misdescriptiveness objection, despite that the word “mayo” is recognized as shortened form of “mayonnaise”. This Kat suspects that the fact that the word “mayo” was disclaimed in accordance with US practice (“no claim is made to the exclusive right to use ‘mayo’ apart from the mark as shown”) eased the potential problem of the word being deemed as descriptive or misdescriptive.

The Federal Drug Administration (“FDA”), the federal regulatory body that monitors packaging and labeling of food products, was of a different view, at least initially. It sent a warning letter to Hampton Creek Foods on August 12, 2015, claiming inter alia as follows: “
3. Your Just Mayo and Just Mayo Sriracha products are misbranded …. in that they purport to be the standardized food mayonnaise due to the misleading name and imagery used on the label, but do not qualify as the standardized food mayonnaise…. The name “Just Mayo” and an image of an egg are prominently featured on the labels for these products. The term “mayo” has long been used and understood as shorthand or slang for mayonnaise. The use of the term “mayo” in the product names and the image of an egg may be misleading to consumers because it may lead them to believe that the products are the standardized food, mayonnaise, which must contain eggs …. Additionally, the use of the term "Just" together with "Mayo" reinforces the impression that the products are real mayonnaise by suggesting that they are ‘all mayonnaise’ or ‘nothing but’ mayonnaise.”

“4. Your Just Mayo and Just Mayo Sriracha products are misbranded ....Specifically, these products purport to be mayonnaise by prominently featuring the word “Mayo” on the labels, which has long been used to refer to mayonnaise. Mayonnaise is a food for which a definition and standard of identity has been prescribed by regulation …. According to the standard of identity for mayonnaise, egg is a required ingredient ….”
The FDA complaint was issued several months after Unilever (in support of its HELLMAN and BEST FOODS mayonnaise brands) had filed an action against Hampton Creek, claiming that the JUST MAYO mark violated truth-in-advertising laws, resting on a 1957 FDA regulation that required mayonnaise products to contain an egg ingredient. Subsequently, however, Unilever withdrew its law suit (but later introduced a similar product). Still, the FDA went ahead with the filing of its August 12, 2015 complaint.

The TRULY MAYO brand seemed to have a real problem, whether or not it had been registered as a trademark. After all, one thought that “mayo”, or “mayonnaise” had to be egg-based. Au contraire—on December 17, 2015, following meetings between the agency and the company, the FDA reversed course and issued a statement, whereby the issues so forcefully raised in its warning letter were deemed to have been “resolved”. In practice, as reported (here, here and here) that meant that Hampton Creek was permitted to maintain the brand name and logo, subject to various changes to the product packaging.

These changes included using a larger font size to indicate product attributes, such as “egg-free”, adding the words “Spread &* Dressing” (suggesting that the FDA was not comfortable with simply redefining the term mayonnaise to include various new ingredients), and making smaller the visual image of an egg with a pea shoot inside. As well, the label would define the word “just” to mean "guided by reason, justice and fairness”, rather than to suggest that the product was “just” another form of mayonnaise.

This Kat does remain a bit puzzled about all of this. What exactly is the problem being resolved here? What is meant by “mayo” and “mayonnaise”; what exactly is “egg-free” mayonnaise? At the consumer level, on what basis did the FDA have reason to believe that these changes to the labeling would resolve the regulatory issues regarding the name “just mayo” (the definition of the word “just” as a prophylactic measure seems particularly problematic to this Kat).

Friday, 18 August 2017

Friday fantasies

I heard IP events?
CITMA Autumn Conference -- IP and social media

12th October 2017, 10am – 7pm
Hyatt Regency Birmingham
Earn 5 hours’ CPD
Registration has opened, see further details here

UNION-IP September Dinner Meeting - "Actavis v Lilly, interpretation and file wrapper – what do we do now?"

UNION-IP is delighted to announce that Andrew Waugh QC of Three New Square will be speaking at their autumn dinner meeting on Thursday 28 September 2017. Having been involved in the recent Actavis v Lilly Supreme Court case, and indeed some of the earlier leading decisions as well, Andrew will take participants through the history and implications of Actavis v Lilly and lead the debate: Actavis, interpretation and file wrapper – what do we do now?
Full details of the event can be found here.

LeadershIP in Brussels on 25 September 2017

The LeadershIP conferences are a catalyst for a balanced and open discussion on current hotly-debated global issues at the intersection of intellectual property rights and antitrust policy. See further information here

Location update:

"As demand has been so high for attendance at the "Equivalents: K = Na. Is the genie out of the bottle?" event on 1 November 2017, we have moved the event to a larger hall."
The event will now take place at:
UCL Institute of Education (Logan Hall)
20 Bedford Way
Bloomsbury
London WC1H 0AL


Photo courtesy of Mr. He Gong for his lovely kitten Ruobai.

Never Too Late: If you missed the IPKat Last Week!

Been away and want to catch up with last week's IP news? No problem! As always, IPKat is here to bring you a quick summary - the 159th edition of Never Too Late.
Keeping one eye open for the latest IP news

How does one calculate the damages caused by an interim injunction? Eibhlin explains the recent Patents Court decision of Napp Pharmaceutical Holdings Limited v (1) Dr Reddy's Laboratories (2) Sandoz Limited (and Ohers) [2017] EWHC 1433 (Pat) which provided guidance on the issue.

Neil pays homage to June Foray, the voice behind a portfolio of character’s such as Lucifer the cat from Cinderella, Jokey Smurf, Mrs. Cauldron from The Garfield Show, Rocket J. Squirrel and Natasha Fatale from “Rocky and his Friends”. Neil ponders the legal protection of voice creations. 

Can grey markets be considered akin to trade in counterfeit goods, when it comes to the application of criminal provisions in trade mark law? The UK Supreme Court answered this question in the affirmative earlier this week in its judgment in R v M & Ors [2017] UKSC 58.

Katfriend Yannos Paramythiotis brings the news of Greece’s recently adopted administrative procedure to tackle online copyright infringements.

Katfriend Darren Meale reports on the CJEU decision Continental Reifen Deutschland v Compagnie generale des etablissements Michelin which upheld tyre giant Continental’s appeal against Michelin, concerning their stylised registered mark ‘X’.

Kat friends Lau Kok KengNicholas Lauw and Jiamin Leow report on how the Singapore Court of Appeal has addressed the issue of database protection in the case of Global Yellow Pages Ltd v Promedia Directories Pte Ltd and anor matter [2017] SGCA 28

Mathilde Pavis explains a decision from the French courts which stated that both internet service providers and browser providers can be legally bound to block infringing content, and pick up the bill for the costs of such injunctions. 

Readers are invited to attend the INTA Trademark Administrators and Practitioners Meeting (TMAP) which takes place in New Orleans from September 17th -19th. 

The 5th edition of TILTing which took place at the Tilburg University from 17 until 20 May 2017. In the first part of this 2 part conference report Verónica discusses two talks. The first on Israel's copyright infringement strategies though intermediaries and the courts, and the second focused on the algorithm of said intermediaries. 

How much do copyright owners lose from online platforms hosting links to unauthorized copies of their works uploaded by third parties? The Paris Criminal Court of Appeal awarded a total amount of 13 million euros and 12 months’ imprisonment in the case of D.M. v APP, Microsoft, Sacem and others, available in French language here.



PREVIOUSLY ON NEVER TOO LATE

Never Too Late 158 [week ending Sunday 30 July] The right of communication to the public ... in a chart I From Coca-Cola Zero to Coca-Cola Zero Sugar: big deal or no deal? I Brexit roundtable for brand owners in the financial services industry I CREATe Summer Summit 2017: Open Science, Open Culture & the Global South (and everything between) I BREAKING: BGH asks CJEU what a 'quotation' is: only unaltered reproductions or also something else? I AG Wahl says that, at certain conditions, suppliers of luxury goods may prohibit retailers from selling on third-party online platforms I Book Review: Common Innovation I EPO takes an ‘about turn’ on the patentability of products obtained by essentially biological processes I More on broccoli, tomatoes, and the patentability of a plant or animal obtained by means of an essentially biological process I Copyright protection of minimalist furniture design I Geographical Indications: News from the UK and New Zealand I French Supreme Court : End of the trade mark dispute over 'Cheval Blanc' I Event Report: The European Intellectual Property Teacher's Network 10th Anniversary Conference I Around the IP Blogs

Never Too Late 157 [week ending Sunday 23 July] Sky v SkyKick - no CJEU reference re removal of own name defence to EUTMs | An improved improver? UK Supreme Court moves towards a UK Doctrine of Equivalents in Lilly pemetrexed battle? | An improved Improver? Part 2 | It may be use, but is it trade mark use? | The protection of TV formats: an Italian mock trial | What can the possible implications of the CJEU Pirate Bay decision be? A new paper | In memoriam of Kenneth Jay Lane: "My designs are all original"; "original from someone" | French Commercial Tribunal: clarity in paternity is key 

Never Too Late 156 [week ending Sunday 16 July] A film is a film is a film: at Cannes, it's not that simple | BGH grants compulsory license in preliminary proceedings | An improved Improver? UK Supreme Court moves towards a UK Doctrine of Equivalents in Lilly pemetrexed battle | The Smoking Gun - Is IP research the next tobacco scandal? | the special world of pesticide products, counterfeits and parallel imports | New CJEU reference ... asking whether InfoSoc Directive envisages digital exhaustion | Freedom of panorama in Italy: does it exist? | Can Crowdsourcing Solve the Orphan Works Problem? | the EU IPO Observatory study finds trade secrets rule the roost over patents in Europe | Mock (culinary) trial at INTA 2017 | Weetabix in New Zealand Customs dispute over local rival Weet-bix 

Never Too Late 155 [week ending Sunday 9 July] First application of the parody exception in Canadian law - long live Deckmyn!| "Big Box" not found generic or lacking distinctive character, but still .... | Changes to the Singapore copyright system: an update on the recent public consultations | he diplomatic crisis of Qatar and Gulf Cooperation Council's IP | Bundesgerichtshof's landmark ruling to hook extra-territorial patent infringement in Germany | BREAKING: Eli Lilly success as UK Supreme Court finds Actavis products directly and indirectly infringe pemetrexed patent | Monday Miscellany | Sunday Surprises 

Photo credit: frankieleon

Thursday, 17 August 2017

Freedom of panorama in Portugal: content and scope of the exception

Santuário de Cristo Rei (1959),
Lisbon
Until fairly recently, freedom of panorama within Article 5(3)(h) of the InfoSoc Directive was a relatively little-known copyright exception within those available to Member States under EU law.

With proposals that would make this exception mandatory for EU Member States to adopt and recent national legislative reforms (eg in Belgium and France), this is no longer the case.

After Italy, today the IPKat travels to Portugal to discover the situation in this Member State.

Carlos Madureira and David Serras Pereira (both Sociedade Portuguesa de Autores) explain. 

Heres’ what they write:

One of the most controversial issues pending in the EU copyright reform – with a directive proposed by the Commission on 14 September last and currently being discussed in the European Parliament Committees – concerns the panorama exception, also known as freedom of panorama.

In addition to the discussion whether or not the exception should be harmonised further via legislative proposals, the topic is also being subject to court rulings. Among these we have to highlight the Swedish Patent and Market Court ruling of 6 July 2017, in which that court decided in favour of Bildupphovsrätt in a copyright dispute against Wikimedia Sweden concerning the communication to the general public by the latter, via the internet, of copyright-protected artworks permanently placed in or at a public place. Among other things, in excluding the availability of the panorama exception to Wikimedia, the Swedish court stressed that whether the communication took place for commercial purposes or not was of no significance.

We find it very important to present the Portuguese model for the panorama exception and discuss its application in contexts covered by the adaptation right. Furthermore, the discussion below offers an approach to the concept of public places for the purpose of the panorama exception and its relevant implications, as well the distinction between direct and indirect commercial purposes.

Portuguese provision on panorama and the Berne’s three-step test

The Portuguese provision at stake is Article 75.º, paragraph 2, point q) of the Portuguese Code of Authors’ Rights and Neighbouring Rights (Código do Direito de Autor e dos Direitos Conexos), created by the Decree-Law No. 63/85 of 14 March 1985 (as last amended by the Law No. 49/2015 of 5 June 2015).

This provision contains a catalogue of the exceptions/limitations to authors’ exclusive rights (exceptions to economic rights, not also moral rights), where its “closed” nature is the natural consequence of the structure of Article 5 of the InfoSoc Directive, as well as arguably the first step under Berne Convention three-step test.

The wording of the provision states that, among the uses allowed, there is “the use of works, such as, for instance, works of architecture or sculpture, made to be located permanently in public places” (75.º, paragraph 2, point q)

75.º § 4 completes the three-step test by including the two additional steps and stating that “the ways of exercising the uses foreseen in the preceding paragraphs shall not be contrary to the normal exploitation of the work, nor cause an unjustified prejudice to the legitimate interests of the author.

75.º § 3 states that  The distribution of the legally reproduced copies, to the extent justified by the purpose of the act of reproduction, is also legal.”

71.º adds that: “The statutory right to use a work without the author’s previous consent includes the statutory right to translate or otherwise transform, to the extent necessary to such use.

As mentioned above, the exception is only available in respect of economic rights, not also moral rights. Article 76.º a) states that “The free uses mentioned in the preceding article shall be accompanied by (...) the indication, wherever possible, of the name of the author and of the publisher, the title of the work and other circumstances that identify them”. Article 56º underlines that the author enjoys the right to oppose all acts / uses / adaptations of the work that might affect his honour and reputation.

The first thing to underline is that, like all the other EU Member States, the list of exceptions under Portuguese law is exhaustive.

Secondly, the ‘special cases’ covered by relevant exceptions must be also subject to a use that: (a) is not contrary to the normal exploitation of the work; and (2) does not cause an unjustified prejudice to the legitimate interests of the author. Overall Portuguese copyright law uses very balanced and strict criteria to allow the exceptions to authors´ rights. 

Therefore the exceptions to authors’ rights (including the panorama one):

-       are only allowed in special cases (closed catalogue);
-       must not be contrary to the normal exploitation of the work;
-       must not cause an unjustified prejudice to the legitimate interests of the author;
-       are only allowed to the extent justified by the purpose of the exception at issue.

Commercial (direct and indirect) uses not covered

Portuguese copyright law is such that commercial uses are not covered by the panorama exception under Article 75.º § 2 q).

The commercial use of works by for-profit undertakings would deprive authors of potential commercial revenue arising from the exploitation of the various dissemination channels, therefore damaging the normal exploitation of the work at issue and amounting to an unjustified prejudice. Furthermore, a commercial use would exceed the extent justified by the purpose of the exception.

Will Adriano's photographs be covered
by the panorama exception?
The adaptation right and panorama

The above-mentioned conclusion can be also extended to the adaptation right (Article 71.º), which already includes the condition of the extent justified by the purpose of the exception. This is in line with Article 13 of the TRIPS Agreement. It shall not be, however, seen as an argument the non-harmonisation of the adaptation right within the scope of the InfoSoc Directive.

The misleading discussion regarding the concept of public place

Some intend to limit the scope of exclusive rights by trying to focus the discussion on the Portuguese concept of ‘public places’, and arguing that it must be understood as a place that is publicly accessible, even if the access to the public is implicit and/or an entrance fee is charged and/or the right of admission is reserved.

The main question is not “What is a public place?”. It is rather knowing if the work was made to be located permanently in public places. The main question is, therefore, to understand the intention of the author when he realised the work.

This leads to the conclusion that a ‘public place’ for the purpose of the panorama exception must be understood within the context in which it is included. We have to understand the concept “made to be located permanently”. With this expression the Legislator sent a clear message that a public place must be able to receive the permanent location of a work, and that the intention of the author, when creating the work, was to confer it a permanent location.

This is the reason why the Legislator introduced, as the types of works included in the exception, “sculptures and works of architecture”. Those two types of works are intrinsically linked to the concept of permanent location nature, and thereby public places.

The Portuguese exception is able to cover public interiors (for example a public subway station), yet it will not able to cover works in museums if the works were not made to be located there permanently. Such assumption is not based on the definition of public places, but rather on the concept of permanence and will of permanence.”

Tuesday, 15 August 2017

TILTing Perspectives 2017 (Second Part: Digital exhaustion and Music-file sharing)

Get ready for the second part of this Kitten’s report! The first part (online enforcement and black box tinkering), can be reviewed here

Exhaustion of Copyright in Digital Objects

Prof. Dan L. Burk (University of California-Irvine School of Law) provided an overview of cases which addressed whether digital exhaustion applies to digital works protected by copyright exists under US and EU law. By this is meant whether the principle of exhaustion, whereby the rightsholder cannot hinder the further distribution after the first sale authorized by the IP owner of a work protected by copyright, applies as well to digital works.

Prof. Burk highlighted that this topic has taken on a polemical character due to the social expectation of purchasers being able to resale digital copies of works, lawfully acquired, which are protected by copyright.

From a US perspective, Prof. Burk started with the case, Capitol Records, LLC v. ReDigi Inc, 934 FSupp2d 640, which considered whether the first sale doctrine defense applies to the resale of a digital music file in the marketplace ReDigi. The Court ruled that the first sale doctrine defense did not apply in this case because it only covers material items; and ReDigi was “distributing reproductions of the copyrighted code embedded in new material objects”, rather than distributing any material object.

From a European perspective, Prof. Burkfirst highlighted the outcome of the case UsedSoft GmbH v Oracle International Corp. case, C-128/11, ECLI:EU:C:2012:407, which involved the resale of “used” licenses for the Oracle’s downloadable software in the market UsedSoft. The Court ruled that under the Software Directive, there is digital exhaustion when “the copyright holder … [in] authori[zing] … the downloading of that copy from the internet onto a data carrier, has also conferred … a right to use that copy for an unlimited period … in return for payment of a fee intended to enable the rightholder to obtain a remuneration corresponding to the economic value of that copy of this work...”. The Court also stated that the Software Directive is lex specialis in relation to the provisions of the InfoSoc Directive.

The second case discussed by Prof. Burk was Art & AllPosters International BV v Stichting Pictoright, C-419/13, ECLI:EU:C:2015:27, which involved the sale of canvas reproduced images protected by copyright, which were transferred from posters without consent from the IPR owners. The Court ruled that exhaustion under the InfoSoc Directive does not apply if “a reproduction of a protected work, after having been marketed in the European Union with the copyright holder’s consent, has undergone an alteration of its medium … and is placed on the market again in its new form”. The Court also stated that exhaustion applies to the tangible object containing the work. 

Prof. Burk then discussed Vereniging Openbare Bibliotheken [VOB] v Stichting Leenrecht, C-174/15, ECLI:EU:C:2016:856, which involved whether public libraries are allowed to lend a digital copy of a book under the Rental and Lending Rights Directive. The Court ruled that the lending of a digital copy of a book is covered by the Rental and Lending Rights Directive when such copy is placed on the server of a public library. Only one copy may be downloaded during the period for which the copy is being loaned; the user is allowed to download it onto his computer only during such period and cannot use it after the period has expired. The Court also stated that public lending is “different in nature from a sale … since the lending right remains one of the prerogatives of the author notwithstanding the sale of the physical medium containing the work”. 

Prof. Burk observed that the outcomes of these three cases might suggest that exhaustion applies in a different way, depending under which Directive the work is protected: if the work is protected under the Software Directive and requirements for exhaustion are fulfilled, digital exhaustion applies. If the work is protected under the InfoSoc Directive, exhaustion is linked to the sale of the physical object containing the work. Nevertheless, Prof. Burk remarked that the existence of digital exhaustion under the InfoSoc Directive still remains unresolved.


Copyright Protection and Fair Use: 
The Evolution of Institutions Governing Music-file Sharing in 1997-2017 America

Dr. Kunbei Zhang (Chongqing Technology and Business University) and Prof. Aernout Schmidt (Leiden University) presented the outcomes of their research that focused on the USA, in which they analyzed how environmental factors (e.g., scientific, economic and social) have impacted on the legal system with respect to the fair use defense.

The methodology applied was the implementation of agent-based model simulations, which consist of “computational models for simulating the actions and interactions of autonomous agents with a view to assessing their effects on the system as a whole”.

A database of fair-use case law from 1990 to 2017 served as the foundation for postulating certain hypotheses, whereby these data are inputted into the model to perform simulations under different parameters and then to assess the results.

The parameters used consisted of four approaches and four categories. The approaches were scientific, considering innovation as the facilitator of infringing behavior; economic, considering the collapse of the traditional music industry and the rise of streaming services; social, considering sharing as both cooperation and theft; and legal, considering judicial decisions and rules governing copyright issues. Meanwhile, the categories focused on the reactions to the innovations and consisted of adopting, adapting, excluding and fighting as behaviors.

Simulations were performed from the vantage of three different moments in the history of music: the emergence of CD’s, music file-sharing, and streaming. Dr. Zhang and Prof. Schmidt then analyzed the results, concluding, inter alia, that legal scholars have overestimated the influence of the law on file-share users behavior.

In this regard, they highlighted that, before the Napster case, there was excitement about the advantages of file-sharing, but mass infringement of copyright then ensued. They observed that, on the basis of the results of the model simulations, changes made to at least some of the parameters involved would not have altered the ultimate result; e.g., the same outcome would have occurred even if the law in effect had been different.

Dr. Zhang and Prof. Schmidt also concluded that the legal system (with respect to the fair use defense) during the 1990-2017 period, both shapes and is being shaped by environmental factors, which are essentially dynamic. For this reason, it is necessary to take into account that the cycle times for these developments is not static. They also remarked that the results can be used as a baseline for a more empirically-based conversation about the formulation of legal policy.

Stay tuned for the third part of TILTing perspectives 2017!

*First picture is courtesy of Martin Husovec (@hutko).

Monday, 14 August 2017

Italian Supreme Court issues groundbreaking decision on punitive damages, opening the door for IP claims

The AmeriKat was used to a punishing schedule,
but punishing IP damages in Italy? 
Punitive damages.  Those two words seldom roll off an IP litigator's lips.  Our damages are primarily compensatory (although the CJEU in  January's decision OTK v SFP (Case-367/15) has another view).  However, those were the subject of a big decision from the Grand Chamber of the Italian Court of Cassation (Cass. Civ., SS.UU., 05.07.2017, No. 16601).   Kat friend Roberto A Jacchia (De Berti Jacchia Franchini Folani) in Milan reports on the decision and what it means for Italian litigants and the interpretation of the IP Enforcement Directive.
"It is common ground that punitive damages – which are of American origin and exist in a number of common law legal systems – are awarded in civil lawsuits in addition to the damages actually suffered by the injured party (compensatory damages), in case of conduct characterized by malice or gross negligence. Their function is to punish the wrongdoer, as well as deter him, and society at large, from engaging in the wrongful conduct in the future. Whilst punitive damages were traditionally not admitted in Italy, where civil liability revolves around the notion of compensatory damages aimed at reinstating the victim’s position before the commission of the tort, the Supreme Court now affirmed the principle that punitive damages are per se not incompatible with the fundamentals of the system.

Cass. Civ., SS.UU., 05.07.2017, No. 16601 is a landmark judgment.  It is the first time the Court of Cassation ruled in favour of the possibility to recognize and enforce, in Italy, foreign judgments awarding compensation in the form of punitive damages. By its decision, the Grand Chamber rejected a petition filed by the defendant in the previous instance before the Court of Appeal of Venice, thus upholding the recognition and enforceability of three Florida judgments awarding compensation for bodily injury caused by a motorbike accident occurred in the US and involving the Italian manufacturer of a crash helmet and its distributor, which were comprised of punitive damages. 
The Court conducted a comprehensive case-law review, taking the lead from Cass. 1183/2007 and Cass. 1781/2012, outlining the traditional position of the mono-functional nature of civil liability which is aimed at the restoration of the patrimonial integrity of the injured party. The Grand Chamber considered this analysis outdated and worth revisiting.  It recalled its own decision SS.UU. 9100/2015 in which the sanctioning (punishing) function of compensation was held to no longer be in absolute conflict with the general principles of the Italian legal system. The Grand Chamber thus held that, in addition to the predominant and primary compensatory function, the multi-functional nature of civil liability allows room for elements of both deterrence and punishment.
Corte Suprema di Cassazione (aka Italian Supreme Court)
The Court then supplied an extensive exemplification of instances of so-called ultra-compensatory damages already present in domestic statutory provisions, with deterring and/or sanctioning functions in relation to the seriousness of the conduct or the extent of the harm caused.
In the field of intellectual property in particular, the Court mentioned Article 158 of the Copyright Act (Law 22 April 1941, no. 633) on the compensation for damages that can be claimed by a person injured by the unauthorized exploitation of an intellectual work, as well as the analogous Article 125 of the Code of Industrial Property (Legislative Decree 10 February 2005, no. 30) on the compensation for damages by way of disgorgement of the profits earned by the infringer, as allowed by Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights (Enforcement Directive).
The Grand Chamber’s reconstruction appears consistent with the recent case law of the Court of Justice on Article 13 of the Enforcement Directive. In particular, the Liffers judgment (17.03.2016, Case C-99/15) had highlighted that the damages awarded to the holder of an infringed IP right should take account of all appropriate aspects, including any moral prejudice suffered by him, thus, going beyond a strictly compensatory approach. Besides, in its judgment of 25.01.2017 (Case C-367/15, Stowarzyszenie Oławska Telewizja Kablowa), the Court of Justice ruled that a national provision whereby the holder of an infringed IP right may, without having to prove the actual loss or specific causal nexus, demand payment of a sum corresponding to twice the appropriate fee that would have been due if permission had been given by the right holder, was not precluded by EU law.

Turning to the Court of Cassation’s decision, significant references were made to certain relevant rulings of the Italian Constitutional Court: Corte Cost. 303/2011, which attributed an express sanctioning value to the determination of damages in some contexts of labour law; Corte Cost. 238/2014, which highlighted the multifunctional nature of civil liability, in response to the need for greater effectiveness; and Corte Cost. 152/2016, which emphasized the non-compensatory nature of the special liability for abuse of process under Article 96 of the Code of Civil Procedure. Thereafter, the reasoning of the Court focused on whether foreign judgments awarding punitive damages are compatible with Italian public order. Under Italian law (pursuant to Article 64 of Law no. 218/1995, the Private International Law Act), the Court of Appeal held that to grant the recognition and enforceability of a foreign judgment it must verify its compatibility with public order, traditionally defined as the set of fundamental principles characterizing the ethical and social structure of the national community at a certain point in time. In this regard, the Grand Chamber dwelt on the profound evolution undergone by the notion of public order over the years.  In doing so, it identified it with the broader concept of international public order, which is comprised of the recognition and protection of fundamental rights common to different legal systems, first and foremost at a supranational level. 
Jumping over the hurdles of the principle of damages...
Thus, public order encompasses the architecture of fundamental rights which is shared by the international community, in particular at the European level (as mainly enshrined in the Charter of Fundamental Rights of the European Union).  The Court furthermore specified that any foreign judgment “exporting” rights and obligations not governed by (and unknown to) the domestic legal system, even if not precluded by European law, must nonetheless comply with the Constitution and the primary legislation implementing the constitutional system. Ultimately, the foreign legal entity that “knocks at the door” of the Italian jurisdiction (in this case, punitive damages) may be held contrary to public order only if it is in total contradiction with the texture of values and legal rights that are relevant for the purposes of its recognition (which was held not to be the case with respect to punitive damages).

Having thus overcome the hurdles of the very nature of non-compensatory awards and of public order, the Court moved on to the conditions that non-compensatory damages must fulfill in order to be safely “imported” into our legal system. These are
  • the principle of legality, whereby a foreign award comprised of punitive elements must be based upon an identifiable source of statutory law;
  • the principle of typicality, which requires an accurate characterization of the instances in which punitive damages may be award;
  • the principle of predictability, requiring the specification of quantitative limits or criteria of the awardable compensation; and 
  • the principle of proportionality between compensatory damages and punitive damages, as well as between punitive damages and wrongful conduct, in order to appropriately identify the breadth and borders of the sanctioning/punishing element.

To sum up, the ruling of the Grand Chamber marks a turning point in the evolution of the civil liability paradigm in Italy. However, this does not mean that the Italian Courts ruling on claims for non-contractual or contractual damages will be allowed to increase the compensation arrived at according to the ordinary rules by adding a punitive element in their discretion. This would be contrary to Article 23 of the Constitution which links the imposition of patrimonial obligations to a statutory enabling provision. All in all, the door to punitive damages is not wide open, but it is doubtless more than ajar for IP litigants."

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