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Technology Newsletter Issue 4/2015

3 December 2015

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Content of the newsletter:

CJEU Rules on the Likelihood of Confusion of Acronyms in Composite Marks

The Swedish Supreme Court Rules on Jurisdiction in a Trademark Infringement Case Involving an Online Store in Hong Kong

Enforcing a Standard Essential Patent May Be an Abuse of a Dominant Position

The Audiovisual Media Services Directive May Be Applied to Video Clips on a Newspaper’s Website

CJEU Ruling: A Trademark with Acquired Distinctiveness Needs to Be Identifiable Solely on the Basis of the Origin of Goods

Another Step towards Import Substitution of Software in Russian Administrative Bodies

Update on the Ratification of the Unified Patent Court Agreement – Finland to Become the Ninth Member State to Ratify?

The EU Accepts New Rules on Net Neutrality and Roaming Charges

Aftermath of CJEU’s EU–US Safe Harbor Decision: Where Are We Now?

Data Protection: CJEU’s Ruling on Applicable Data Protection Law

The Report on EU Customs Actions in 2014 Has Been Published

 

CJEU Rules on the Likelihood of Confusion of Acronyms in Composite Marks

By Janne Joukas

The Court of Justice of the European Union (the “CJEU”) confirmed in its ruling C-20/14 (BGW Beratungs-Gesellschaft Wirtschaft mbH v Bodo Scholz, 22 October 2015) that a later trademark consisting of a letter sequence to which is added a descriptive combination of words – the initial letters of which correspond to the letters of that sequence – may be confusingly similar to an earlier trademark consisting of the same letter sequence as a dominant element.

Both the earlier and the later mark included the acronym “BGW”. In the later mark, the acronym was followed by descriptive words, the initial letters of which corresponded to the letters of the BGW acronym. By referring to certain earlier CJEU rulings, the Court noted that the assessment of the similarity between two marks must be made by examining each of the marks in question as a whole. In fact, the Court stated that it is only if all the other components of the mark are negligible that the assessment of the similarity may be carried out solely on the basis of the dominant element. Furthermore, the Court found that in the present matter, it will be for the national court to ascertain the overall impression made by the later mark on the relevant public and all factors relevant to the circumstances of the case. In addition, the CJEU held that the national court shall also assess the likelihood of confusion by means of, for example, an analysis of the components of the later mark and of their relative weight in the perception of that public.

 

The Swedish Supreme Court Rules on Jurisdiction in a Trademark Infringement Case Involving an Online Store in Hong Kong

By Tom Jansson

The Supreme Court of Sweden recently ruled that Swedish courts do have jurisdiction to hear a case regarding the sale of infringing goods on the online market place vivamondo.se by a Hong Kong-based company, Vivamondo Limited. To read the decision in full (in Swedish), please click here.

In this case, two Swedish companies sought to prohibit the unauthorised sale, marketing, import, or release on the Swedish market, of goods bearing the trademarks for which they held licenses in Sweden. The companies argued that Vivamondo conducted or participated in unauthorised parallel imports amounting to a trademark infringement.

Vivamondo, which has a branch office in Sweden, argued that all sale and marketing of said products on vivamondo.se take place in Hong Kong – the website is hosted on a server located in Hong Kong and the Swedish branch office is not involved in the activities. Vivamondo, therefore, argued that the claimed infringements had not taken place in Sweden and, consequently, that Swedish courts did not have jurisdiction to hear the case. 

The Swedish Supreme Court did not answer the question of whether the trademarks had in fact been infringed or not, but it did find that Swedish courts have jurisdiction to hear the case, both with respect to national trademarks and community trademarks. The ruling shows an interesting development in Swedish legal practice, which also coincides with recent developments in the EU regarding jurisdiction in online copyright infringement cases. For more information, please see our Technology Newsletter Issue 1/2015.

 

Enforcing a Standard Essential Patent May Be an Abuse of a Dominant Position

By Tom Jansson

The Court of Justice of the European Union (the “CJEU”) recently clarified the circumstances under which the enforcement of a standard essential patent may constitute abuse of a dominant position in violation of EU antitrust rules. In fact, the CJEU found that if the holder of the patent has irrevocably committed to license the patent to third parties on fair, reasonable, and non-discriminatory (“FRAND”) terms, the holder does not violate its dominant position by seeking an injunction, “as long as:

– prior to bringing that action, the proprietor has, first, alerted the alleged infringer of the infringement complained about by designating that patent and specifying the way in which it has been infringed, and, secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, presented to that infringer a specific, written offer for a licence on such terms, specifying, in particular, the royalty and the way in which it is to be calculated, and

– where the alleged infringer continues to use the patent in question, the alleged infringer has not diligently responded to that offer, in accordance with recognised commercial practices in the field and in good faith, this being a matter which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.”

The CJEU’s ruling in this case (C‑170/13, Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH), was issued on 16 July 2015. Please also see our Technology Newsletter Issue 2/2014 for an earlier report on this topic.

 

The Audiovisual Media Services Directive May Be Applied to Video Clips on a Newspaper’s Website

By Emilia Uusitalo

The Court of Justice of the European Union (the “CJEU”) recently ruled on the applicability of the Audiovisual Media Services Directive (2010/13/EU) to the video clips on a newspaper’s website in its case C-347/144 New Media Online GmbH v. Bundeskommunikationssenat.

The ruling was based on the Audiovisual Media Services Directive’s rule according to which the Directive and the national laws harmonised by it shall be applied to all “audiovisual media services” as defined in the Directive. For the Directive to become applicable, i.e. for a service to be an “audiovisual media service”, the service needs to be considered a “programme”. In addition, it must be under the editorial responsibility of a media service provider, and the principal purpose of the service needs to be the provision of programmes.

In said case, the Austrian Administrative Court had asked the CJEU for a ruling on 1) whether a video clip service on the website of a newspaper may be considered a programme as defined in the Directive, and 2) whether the Directive may be interpreted so that the principal purpose of the service would be the provision of programmes if the video clip service is available on a newspaper website.

The CJEU found that even though the Directive sets forth that a programme shall be of ”the form and content of which are comparable to the form and content of television broadcasting”, the fact that the videos are short, unlike traditional television programmes, does not rule out their classification as a ”programme”. Furthermore, the CJEU noted that “videos at issue in the main proceedings are aimed at a mass audience and are likely to have a clear impact on that audience”, as is set out in the Directive. Thus, the CJEU ruled that the concept of ”programme” must be interpreted as including, under the subdomain of a website of a newspaper, the provision of videos of short duration consisting of local news bulletins, sports, and entertainment clips.

For the second question, the CJEU noted that any audiovisual elements of an online newspaper must not be considered audiovisual services when being incidental and serving only to complement the provision of written press articles. However, the “principal purpose” of a website does not depend on whether the audiovisual service is related to the principal activity of an operator or an activity which is ancillary for that operator. Therefore, the CJEU ruled that “on a proper interpretation of Article 1(1)(a)(i) of the Directive, assessment of the principal purpose of a service making videos available offered in the electronic version of a newspaper must focus on whether that service as such has content and form which is independent of that of the journalistic activity of the operator of the website at issue, and is not merely an indissociable complement to that activity, in particular as a result of the links between the audiovisual offer and the offer in text form”. The CJEU referred this assessment back to the national court for consideration.

The ruling of the CJEU means that videos of short duration on the website of a newspaper may be considered “programmes”. However, the question on whether the Directive shall be applied to these programmes is for the national court to consider on the basis of the videos’ independence on the website. In addition, this interpretation means that when fulfilling the above-mentioned criteria, the videos shall be in compliance with the rules of the Directive, for example they shall not be discriminatory or encourage behaviour harmful to the environment. Furthermore, there may be additional provisions in national laws regulating the “audiovisual media services”, for instance in this case such services were subject to a reporting obligation under the Austrian legislation. In Finland, the relevant sections for this CJEU ruling on the Audiovisual Media Services Directive are found in the Information Society Code (Fin: Tietoyhteiskuntakaari 917/2014, as amended).

 

CJEU Ruling: A Trademark with Acquired Distinctiveness Needs to Be Identifiable Solely on the Basis of the Origin of Goods

By Emilia Uusitalo

In its recent decision in the case of Société des Produits Nestlé SA v Cadbury UK Ltd (C-215/14), the Court of Justice of the European Union (the “CJEU”) handed down a ruling on the acquired distinctiveness of a trademark. In the case, Société des Produits Nestlé SA had applied for the registration of a 3D trademark for the shape of its four-finger chocolate bar, which differed from the actual product only in that it omitted the embossed words “Kit Kat” appearing on the chocolate.

In its decision, the CJEU concluded that when determining whether a mark has acquired a distinctive character, the fact that certain persons do recognise the mark and associate it with the applicant’s goods, may not be enough. Instead, the CJEU was of the opinion that the relevant class of persons must “perceive the goods or services designated exclusively by the mark applied for, as opposed to any other mark which might also be present, as originating from a particular company”. The CJEU’s ruling was based on the Trademark Directive (2008/95/EY) and its Article 3, which regulates the grounds for the refusal or invalidity of a trademark. According to Article 3(3) of the Directive, the registration of an indistinctive trademark may not be refused if it has acquired a distinctive character following the use that has been made of it. What the CJEU’s decision means in practice is that for a trademark to be registerable by reason of it having acquired a distinctive character, the relevant persons would need to recognise the mark when it is presented on its own, without any help or co-existence of any other mark of the same origin.

It was further pointed out in the CJEU’s decision that, the examiner of the trademark application had found that the shape of the Kit Kat bar had three features. However, according to the examiner, all three features had in fact characteristics of the grounds for refusal of registration set out in Article 3(1)(e), i.e. the shape which results from the nature of the goods themselves; which is necessary to obtain a technical result; or which gives substantial value to the goods. According to the CJEU, the said necessity to “obtain a technical result” refers only to the goods’ function, and not to the manner in which the goods are manufactured.

However, the CJEU concluded that if any of these three grounds for refusal of registration are “fully applicable” to the shape at issue, there is an obstacle for the trademark registration, regardless of the possible acquired distinctiveness under Article 3(3).

 

Another Step towards Import Substitution of Software in Russian Administrative Bodies

By Pavel Falileev

Recently, Russian Prime Minister signed a Decree* prohibiting the use of non-Russian software by public administrative bodies. From 1 January 2016, public administrative bodies will be required to purchase software only from a special register of approved domestic software. The goal is to support Russia’s domestic IT market and, ultimately, to reduce the dominant position of foreign (predominately US) software in Russia’s software market. State authorities will be able to acquire foreign software only if there are no equivalent domestic options available in Russia or the existing equivalent software is lacking necessary features.

A register of domestic software programs (the “Register”) will be created under the Federal Law “On Amending Federal Law on Information, Information Technologies and Protection of Information” effective from 1 January 2016.

The exclusive rights to the software included in the Register must belong to the state, a municipality, a Russian non-profit organization, or a company with at least one Russian beneficiary holding over 50% of the share capital of the company. To be included in the register, the software must meet a certain list of requirements, such as, the total amount of license fees and other royalties paid to foreign entities or domestic entities managed from abroad cannot exceed 30% of gross receipts received by the software owner from annual sales of the software.

The Russian Ministry of Telecom and Mass Communications (the “Ministry”) will be responsible for the Register’s formation and maintenance.

According to the Ministry’s data, the proportion of imported client and mobile operating systems (OS) is close to 95%, server OS – 75%, and database management system – 86%. The Russian government plans to reduce these figures by 2025 to 50% and, due to the changes, the use of Russian domestic software in the IT market is expected to significantly increase.

It is important to note that domestic developments in the abovementioned segments will enjoy special support from the State.

We believe the import substitution of software will have an impact on foreign software companies, mainly U.S companies, which sell their software in Russia. The Bloomberg report from June 2015 says leading technology players are already having a harder time conducting their operations in Russia. Although local software companies are expected to benefit from this government action, it could potentially be an obstacle for global technology players in the Russian IT market.

*The exact content, number and title of the Decree is not available yet.

 

Update on the Ratification of the Unified Patent Court Agreement – Finland to Become the Ninth Member State to Ratify?

By Panu Siitonen

Since our latest update on the ratification process (Technology Newsletter 2/2015), two new Member States, Luxembourg and Portugal, have deposited their instrument of ratification of the Agreement on a Unified Patent Court (the “Agreement”). Hence, eight Member States have currently ratified the Agreement, including Austria, Belgium, Denmark, France, Luxembourg, Malta, Portugal, and Sweden.

Finland is one step closer to ratifying the Agreement, as the Government Bill concerning the ratification was presented on 28 September 2015. Should the Government Bill be approved, the date of the ratification and the deposit of the instrument of ratification will be decided later on by virtue of a separate decree.

In addition to Finland’s anticipated ratification, the following development takes the Member States participating in the enhanced cooperation regime one step closer to the launch of a new system: a Protocol to the Agreement was signed by the representatives of the Member States on 1 October 2015 allowing some parts of the Agreement to be applied early. This includes decisions on the practical set up of the Unified Patent Court, such as the recruitment of judges and testing of IT systems. It will also be used for the early registration of opt-outs. The preparatory committee aims to complete its work by June 2016 with a view to the Unified Patent Court becoming operational at the beginning of 2017.

As reported earlier, in order to become effective, the Agreement must be ratified by at least 13 Member States, including France, Germany, and the United Kingdom.

 

The EU Accepts New Rules on Net Neutrality and Roaming Charges

By Anssi Suominen
The European Commission (the “Commission”) proposed a new strategy to create a single market for telecoms when it adopted a legislative package for a “Connected Continent: Building a Telecoms Single Market” on 11 September 2013. The legislative package was aimed at building a connected, competitive continent and enabling sustainable digital jobs and industries, and one of the main elements was to implement consistent net neutrality regulation across Europe. Now on 27 October 2015, more than two years later, the European Parliament voted in favour of the first EU-wide neutrality rules: enhanced protection for open internet and no more roaming charges as of June 2017.

According to the neutrality rules, every European must be able to have access to the open internet and all content and service providers must be able to provide their services via a high-quality open internet. One of the advantages of the new regime is that it improves transparency for consumers as the operators will have to inform their subscribers about the guaranteed internet speeds and the remedies available in case those speeds are not reached. After the rules enter into force, blocking and throttling the internet will be illegal and users will be free to use, for example, apps providing voice calls and video chats without providers blocking them. In addition, all traffic will be treated equally, which allows reasonable day-to-day traffic management in accordance with justified technical requirements. This means, among other things, that no prioritisation of traffic in the internet access service will be allowed. Furthermore, one of the most positive news for Europeans is that roaming charges will eventually be abolished.

The new system will be introduced gradually through measures including a mix of legislative and non-legislative initiatives, which will be completed by an overhaul of EU telecoms rules in 2016. Furthermore, the first milestone will be reached in April 2016 when roaming charges will significantly decrease. The full benefits of the new system will, however, be available in June 2017 when the charges for roaming will be abolished altogether and using internet on mobile phone while traveling in the EU will be available at the rates one pays nationally.

 

Aftermath of CJEU’s EU–US Safe Harbor Decision: Where Are We Now?

By Erkko Korhonen
Following the recent decision by the Court of Justice of the European Union (the “CJEU”), according to which the Safe Harbor arrangement for the transfer of personal data from Europe to the U.S. is invalid, various data protection commentators across the EU Member States and across the pond in the U.S have considered the potential consequences of the ruling. Please refer to our previous Legal Updates for information on the content of the decision as well as on the WP29’s initial view on the decision.

Now, after the dust has settled, it is a good time to take a look at where we stand at the moment and to address certain questions which have puzzled both the data protection community and businesses affected by the Safe Harbor decision.

Q: Is There Any Actual “Grace Period” for the Enforcement?

A: The ruling by the CJEU itself does not contain any “grace period”, implementation period, or other similar period during which the businesses would be able to put in place alternative measures to transfer data to the US without a fear of enforcement actions.

The WP29 has in its statement of 16 October 2015 given some form of “grace period” until the end of January 2016. However, it seems that the main purpose of the “grace period” is not to put a definite stay on the enforcement actions, but instead to provide i) the WP29 time to continue its analysis of the impact of the CJEU judgment on other transfer tools (EC Model Clauses and Binding Corporate Rules) and ii) institutions in the EU and US time to put in place a new arrangement allowing transfers from the EU to the U.S (so called Safe Harbor 2.0). Having said that, despite the grace period, the businesses cannot be considered to be safe from the enforcement action, mostly due to the following reasons: a) WP29’s statement does not preclude the possibility of private actions taken by national Data Protection Authorities (DPA) on the basis of complaints by private individuals, b) WP29 does not have the authority and power to bind national or EU legislators, and c) the local DPAs are not legally bound by the WP29’s statement, but instead have, pursuant to Article 28 of the Data Protection Directive, the power to engage in legal proceedings where the national provisions adopted pursuant to the Directive have been violated.

However, it is likely that at least the majority of the local DPAs will follow the WP29’s guidance. We would advise the businesses to closely monitor the situation to see if any guidance is given by their local DPA. To date, the Finnish DPA (the Data Protection Ombudsman) has only provided general guidelines on its website.

Q: Can We Just Sit Back and Wait for Safe Harbor 2.0 before Implementing Alternative Transfer Methods?

A: No. There are no guarantees if and/or when the Safe Harbor 2.0 is to be implemented. Transfer to the Safe Harbor-certified recipients in the US without using any alternative measures (EC Model Clauses, data subject consent, BCR) is no longer permitted following the CJEU's decision. Although, according to a statement by EU Commission, EU has reached an agreement “in principle” with the United States, there are still a number of points, on which the Commission is expecting “more clarifications from its U.S. counterparts”. As “the devil is in detail”, it is too early to predict when the parties are likely to reach the final agreement. And if they do, the agreement on Safe Harbor 2.0 may end up being challenged like its deceased predecessor.

Meanwhile, it is advisable to consider proper alternative measures, for example in light of the answers to the following questions:

  • What data you are transferring to the US?
  • Are the data transfers frequent or one-time transfers (for example, for one-time transfers data subjects’ consent may be a good alternative)?
  • Who are the recipients of data in the US (external vendors / service providers or intra-group companies)?
  • Have the data been transferred in reliance on Safe Harbor?
  • What are the contractual provisions with the recipient on the transfers to the US (e.g. do they allow you to require conclusion of EC Standard Contractual Clauses)?

Based on the consideration, suitable measures should be taken in order to ensure compliance. The European Commission has on 6 November 2015 provided its position paper on alternative transfer tools. According to the Commission, businesses may, for now, use and rely on the following alternative transfer tools: i) EC Standard Contractual Clauses and other contractual solutions that “satisfactorily compensate for the absence of a general level of adequate protection, by including the essential elements of protection which are missing in any given particular situation.”, ii) Binding Corporate Rules for intra-group transfers, or iii) applicable alternative derogations set forth in Article 26(1) of Directive 95/46/EC. Such derogations include, for example, circumstances where the transfer is necessary: a) for the performance of a contract or the implementation of precontractual measures taken in response to the data subject’s request; b) for the conclusion or performance of a contract concluded in the interest of the data subject between the data controller or a third party; or c) for the establishment, exercise, or defence of legal claims. The transfer may also be based on the data subject’s free and informed consent. However, the Commission emphasises that these derogations should be narrowly interpreted.
 

Data Protection: CJEU’s Ruling on Applicable Data Protection Law

By Erkko Korhonen

On 1 October 2015, the Court of Justice of the European Union (the “CJEU”) rendered its decision in the so-called Weltimmo Case (C-230/14) clarifying the meaning of an “establishment” under the EU Data Protection Directive and answering the question of what is regarded as applicable national law in cases where the data controller operates in several EU Member States.

The case concerned a Slovakian-based company, Weltimmo, which operates a website for dealing Hungarian properties in the Hungarian language. For that purpose, Weltimmo also processed the personal data of Hungarian advertisers advertising on Weltimmo’s website. Weltimmo had become the subject of a complaint to the Hungarian Data Protection Authority (the “Hungarian DPA”) following its decision to forward the personal data of advertisers to debt collection agencies. Weltimmo contested the authority of the Hungarian DPA saying that the Hungarian DPA was not competent to adjudicate on the complaint as Weltimmo did not have any establishment in Hungary within the meaning of Article 4(1)(a) of the EU Data Protection Directive (46/95/EC). According to said article Member States shall apply national law where the “processing is carried out in the context of the activities of an establishment of the controller on the territory of the Member State”, and consequently the main question for the CJEU to consider was what are the circumstances under which a company can be considered to have an “establishment” in a Member State.

In its decision, the CJEU took a broad view on what constitutes an “establishment”. It held that the definition of an establishment must be flexible and that it would extend to any real and effective activity — even a minimal one — exercised through stable arrangements in a Member State in question. As Weltimmo was running a property dealing website in Hungary for properties located in Hungary and written in the Hungarian language, the CJEU concluded that Weltimmo was in fact pursuing a real and effective activity in Hungary. As regards a “stable arrangement”, the CJEU held that the mere presence of just one representative would be sufficient to constitute a stable arrangement (Weltimmo had a single representative with an address and bank account in Hungary).

The key finding of the decision is that a mere place of registration of a company is not decisive when determining the applicable national data protection law. Consequently, rather minimal activities in a Member State may constitute an establishment within the meaning of the EU Data Protection Directive. This is of particular importance to EU companies that conduct business (for example online) in several EU Member States through a main establishment in one EU Member State. Although the upcoming EU General Data Protection Regulation (the “GDPR”) and the “one-stop-shop” provisions contained therein (please see our Technology Newsletter Issue 3/2015 for the latest update on the GDPR) may eventually have an effect on the applicability of this decision, for the time being, the companies operating in the EU should take this decision into consideration in their operations.
 

The Report on EU Customs Actions in 2014 Has Been Published

By Tom Jansson
The annual report on EU customs actions shows an increased number of infringing goods being detained at the external borders of the EU. One of the findings highlighted in the report is the effects of the new procedure applied in the destruction of small consignments, which was introduced at the beginning of 2014. In fact, the report states that the new procedure has led to an increased number of detentions, which suggests that the procedure has been successful in ensuring the swift destruction of small consignments of infringing goods and in reducing administrative burdens.

The report shows that cigarettes, toys, and medicines top the list of infringing goods when examining the overall amount of goods detained, while luxury goods such as watches, clothing, perfumes, and cosmetics represent the top categories based on domestic retail value.
The vast majority of infringing goods, including cigarettes, toys, luxury watches, perfumes, and clothing, were sent from China, while Hong Kong, the United Arab Emirates, Turkey, and India also appear in the top 10, similarly to previous years. Additionally, Peru and Malaysia appear on the list due to a large detention of infringing fruit and several detentions of mobile phone accessories.

According to the report, Panama appears to be the main country of provenance for alcoholic beverages and Morocco for other beverages. Furthermore, the report names Thailand as the main country of origin for ink cartridges and toners, and Hong Kong for body care items, mobile phones, CDs/DVDs, and tobacco products.

 

Disclaimer: Hannes Snellman Technology Newsletter is intended for information purposes only. It should not be relied upon as legal advice nor should it be used as a basis for any action or final decision without specifically verifying the applicability and relevant issues on their merits in each individual case.

 

Hannes Snellman Attorneys Ltd