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Technology Newsletter 12/2011

9 December 2011

Agreement on Copyright - Better Be Precise

The Finnish Supreme Court (“SC”) has assessed certain provisions of the Finnish Copyright Act in its recent precedent rendered on 4 November 2011 (KKO:2011:92). The case related to two agreements: an agreement between a translator (“A”) and a publishing company, and an agreement between the publishing company and another company (“B”).

The publishing company received from A, on the basis of the translation agreement, the exclusive right to copy and publish a literary work as a hard-cover book under its own trade name. All other copyright relating to the translation remained with A, and hence, any other possible use was to be agreed separately. After the publication of the book, the publishing company made an agreement with B. On the basis of this latter agreement, the publishing company assigned to B the exclusive right to have manufactured and market the translated work as a paperback. The work translated by A was published as a paperback version.

The SC ruled that the latter agreement between the publishing company and B included provisions according to which the translation’s copyright was assigned to B. According to the Copyright Act, a party to whom a copyright has been assigned may not assign the copyright to others, unless agreed otherwise. As no agreement on the further assignment had been made between A and the publishing company, the SC confirmed that the publishing company had breached the former agreement. Hence, as the publishing company breached the translation agreement and B used A’s copyright without proper authorization, the companies were liable to pay reasonable compensation to A.

As the Copyright Act contains specific provisions on the possible further assignment of copyright by the receiver of said right and the obligation to pay reasonable compensation due to unauthorized use (also when one acts in good faith and with care), one should be precise when agreeing on the scope of the copyright to ensure that the licensor or assignor has the necessary rights to be entitled to do so.


The Finnish Court Ordered a Communications Service Provider to Prevent its Customers’ Access to the Illegal Web Service The Pirate Bay

The Helsinki District Court (“the Court”) rendered on 26 October 2011 an interim injunction against a Finnish communications service provider Elisa Oyj (“Elisa”). In its decision the Court ordered Elisa to prevent its customers from accessing the illegal torrent site, The Pirate Bay, by removing its domain names from Elisa’s servers and by blocking the traffic to the IP addresses used by The Pirate Bay. The Court also imposed a conditional fine of EUR 100.000 on Elisa.

The interim injunction was sought by the Finnish National Group of the International Federation of the Phonographic Industry (“IFPI Finland”) representing four major international record companies. According to IFPI Finland, a major part of the users of The Pirate Bay are Elisa’s customers, and Elisa would be the only operator in Finland that could prevent their use of the foreign web service The Pirate Bay. Elisa objected to the claims by stating that the prevention would be technically impossible to execute, as it would require supervision of the users’ identification data and the prevention could not be targeted to the infringers only.

The Court did not consider that the prevention would be technically impossible to execute or that the injunction would be unreasonable for Elisa or Elisa’s customers; however, the measures ordered to Elisa were to be adequately detailed. The Court based its decision on the provision deriving from Directive 2000/31/EC, according to which a court or administrative authority shall have the possibility to require the service provider to terminate or prevent a copyright infringement, and the service provider is obligated to take the necessary actions to implement such order.

The Court of Justice of the European Union (“the CJEU”) took a somewhat different approach than the Court. Approximately a month after the decision of the Court, the CJEU rendered a judgment on 24 November 2011 in the matter Scarlet Extended SA v. Société belge des auteurs, compositeurs et éditeurs SCRL, according to which judgment the order to the service provider to install a system for filtering electronic communications in order to prevent file sharing which infringes copyrights would be contrary to the provisions of the EU law. According to the CJEU, the injunction requiring the installation of the filtering system involves monitoring all the electronic communications made through the network of the service provider, the monitoring has no limitation in time and it is directed at all future infringements and future works to be created. In addition, the filtering system would infringe the protection of the users’ privacy. Therefore, the CJEU considered that an order to install the filtering system does not respect the requirement of a fair balance between the protection of the intellectual property rights enjoyed by copyright holders and the freedom to conduct business enjoyed by service providers. Thus, the provisions of the EC directives would prevent the courts from ordering the service providers to install such filtering systems.

The final result of the dispute in Finland is soon to be seen, as the Court will probably consider the actual legal action in the matter in the near future. Elisa will also appeal the interim injunction to the Helsinki Court of Appeals. Finnish courts must comply with the decision rendered by the CJEU but nevertheless, Elisa should comply with the current decision of the Court until further notice of the court.


Trademarks: EU General Court Lays Down Guidelines on the “Genuine Use” of Trademarks

The general principle on use of a trademark is that it will be revoked if it has not been put to genuine use within the EU for a continuous five year period in connection with the goods or services with which it is registered, and there are no proper reasons for its non-use. The rationale for the requirement that a trademark must be the subject of genuine use in order to be protected under EU law is that OHIM’s register cannot be compared to a strategic and static depository granting an inactive proprietor a legal monopoly over a sign or trademark for an unlimited period. The General Court has, in its recent judgment, assessed the concept of “genuine use” of a trademark in a case regarding the revocation of a trademark. The case (T-434/09) concerned the “CENTROTHERM” trademark, which was revoked by the Cancellation Division of the OHIM in 2007 on the basis that the evidence adduced by the applicant, e.g., the sworn statement of the company’s manager, four invoices and fourteen digital photographs, was insufficient to demonstrate genuine use of the mark. The Court stated that genuine use of a trademark cannot be proven by means of probabilities or suppositions but must be demonstrated by solid and objective evidence of effective and sufficient use of the trademark on the relevant market. The General Court held that ‘genuine use’ should mean use in accordance with the essential function of a trademark; namely, to guarantee the identity of the goods or services for which it is registered, in order to create or preserve an outlet in the market for those goods or services. Genuine use did not mean token use for the sole purpose of preserving the rights conferred by the registration, and genuine use had to be use of the trademark publicly and outwardly.


Case Commentary: Oliver Brüstle v Greenpeace E.V.

The German Federal Court of Justice (“Bundesgerichtshof”) requested clarification from the European Court of Justice (the “ECJ”) on its interpretation of Article 6.2.c of Directive 98/44/EC (the “Directive”) in the case Greenpeace e.V. v Brüstle. In the case, Greenpeace e.V. (‘Greenpeace’) was seeking the annulment of German Patent No. DE 19756864, held by Mr Brüstle, which relates to neural precursor cells and the processes for their production from human embryonic stem cells (“hESC”) and their use for therapeutic purposes.

Questions referred for a Preliminary Ruling

Bundesgerichtshof decided to refer among others, the following questions to the ECJ for a preliminary ruling: Firstly, Bundesgerichtshof asked what is exactly meant by the term “human embryos” in Article 6.2.c and what is meant by the expression “uses of human embryos for industrial or commercial purposes”? Secondly, Bundesgerichtshof wanted to know if the definition includes any commercial exploitation under Article 6.1, especially for the purposes of scientific research. Thirdly, Bundesgerichtshof asked for clarification on the issue of whether or not technical teaching is unpatentable pursuant to Article 6.2.c of the Directive, even if the use of human embryos does not form part of the technical teaching claimed with the patent, but is instead a necessary precondition for the application of that teaching either because the patent concerns a product whose production necessitates the prior destruction of human embryos or because the patent concerns a process for which such a product is needed as base material.

Judgement of the Grand Chamber

The Grand Chamber of the ECJ issued a ruling on 18 October 2011 that was in-line with the Advocate General’s Opinion. Firstly, the ECJ stated that article 6.2.c. of the Directive “must be interpreted as meaning that any human ovum after fertilisation, any non-fertilised human ovum into which the cell nucleus from a mature human cell has been transplanted, and any non-fertilised human ovum whose division and further development have been stimulated by parthenogenesis constitute a ‘human embryo’. It should be noted that the ECJ has left the referring court a margin of appreciation to ascertain in light of scientific developments, whether a stem cell obtained from a human embryo at the blastocyst stage constitutes a ‘human embryo’ under Article 6.2.c. Secondly, the ECJ found that “[t]he exclusion from patentability concerning the use of human embryos for industrial or commercial purposes set out in Article 6.2.c of Directive 98/44 also covers the use of human embryos for purposes of scientific research, only use for therapeutic or diagnostic purposes which are applied to the human embryo and are useful to it being patentable.” Thirdly, the ECJ concluded that “[t]he Article 6.2.c of Directive 98/44 excludes an invention from patentability where the technical teaching which is the subject-matter of the patent application requires the prior destruction of human embryos or their use as base material, whatever the stage at which that takes place and even if the description of the technical teaching claimed does not refer to the use of human embryos.”

Possible Implications for hESC Research in Europe

The recent Brüstle v Greenpeace case has already raised a lot of debate amongst scientists conducting stem cell research and other policy makers in the biotechnological field. Generally speaking, many scientists find this judgment highly undesirable because they think it may lead to disastrous effects for those who are trying to translate stem cell science into effective regenerative medicines. Undeniably, the judgment considerably restricts the patentability of cell products with an embryonic origin, making it especially difficult to ensure patent protection for cell lines that are directly or even indirectly derived from an embryonic origin.

The debate around the case has illustrated that the status of a human embryo is both an ethical and a legal issue, and it is highly important to clarity how it is defined because it has far-reaching consequences on the permissibility of certain type of research and the patentability of inventions arising out of such research. Thus far, many European states have not succeeded in incorporating the term “embryo” in their legislation or have not provided a definition of what an embryo is, or they have left out certain embryos, such as those created by somatic cell nuclear transfer or those which are not viable outside the scope of the legal definition. Hence, on the one hand, this case is significant because it harmonises the patenting practices with respect to the interpretation of article 6.2.c of the Directive within the EU and fills the gaps in national laws, providing binding interpretation guidelines for national courts within the EU. On the other hand, the margin of appreciation on important value-choice questions of the national courts has been significantly narrowed, and it can be questioned whether this judgment truly reflects common European ethics.


Finland - Marketing Lotteries Can Be Limited to Consumers Who Make Purchases

The Finnish Consumer Protection Act’s provisions on marketing lotteries have been amended. Companies are now allowed to hold marketing lotteries without offering consumers the possibility to participate in the lotteries without making a purchase, i.e. a free method of entry.


The Finnish Supreme Court Draws Lines Regarding Comparative Advertising

The Finnish Supreme Court has recently ruled on a dispute between Valio and Unilever concerning comparative advertising (KKO 2011:88). Valio, a Finnish producer of dairy products, had used expressions such as “add taste, not water” and “use genuine cooking cream” in combination with “those so-called-creams are actually equal to water” in its advertising campaigns for cooking cream. Valio’s intention was presumably to underline that its dairy products contain actual cream, whereas some of its competitors’ corresponding products do not.

The Finnish Market Court tried the case in 2010 and prohibited Valio from continuing to use or renew the expressions referred to above, insofar as they create the impression that the word “water” refers to vegetable fat-based mixtures. Valio appealed to the Supreme Court and requested that the Market Court’s ruling be amended with regards to the prohibition of using the expressions “use genuine cream” and “add taste, not water”.

The Supreme Court partially upheld the Market Court’s decision and confirmed that the use of the expressions constituted comparative advertising. According to the Finnish Unfair Business Practices Act, comparative advertising is defined as advertising where a competitor or a commodity marketed by a competitor can be directly or indirectly recognized. A reasonably well-informed consumer can, based on the advertising, recognize the competing vegetable fat mixtures marketed by Unilever, even though Unilever and its product cannot be directly identified, stated the Supreme Court.

The Supreme Court found, as did the Market Court, that the expression “add taste, not water” in combination with the other expressions was likely to create the overall image for the average consumer that Valio’s competitors’ vegetable fat-based mixtures used for cooking were inferior to Valio’s cream-based products. Since it is merely a question of taste whether one prefers cream-based products over vegetable fat-based mixtures, the Supreme Court ruled that the expression is derogatory to Valio’s competitors, and hence, the Supreme Court upheld the Market Court’s prohibition from using the expression.

However, the Supreme Court found that the use of the expression “use genuine cooking cream” was not misleading or derogatory and that it merely truthfully emphasised the essential characteristics of the product. The use of the expression is hence, allowed and it is regarded to fulfill the criteria of legal comparative advertising.

The stated Supreme Court ruling clarified, at least to some extent, the very strict Finnish interpretations and rules regarding comparative advertising and will surely serve as a guideline for future interpretations of the thin line between legal and illegal comparative advertising.


Can Generic Medicinal Products be Parallel Imported and Marketed By Using a Non-Related Party´s Marketing Authorization

In order to market a medicinal product in a European member state, marketing authorization (“MA”) is required. When the medicinal product is imported from one European member state to another European member state, the importer is allowed to base the MA application on the national MA of another medicinal product through a simplified procedure by demonstrating a link between the already marketed medicinal products and the imported ones. For many years it has been required for the applicant to demonstrate such a link through evidence that the manufacturers of the medicinal products were companies of the same group or, alternatively, that the medicinal products were obtained from a common licensor. The importer had been required to demonstrate “common origin”, which has made parallel import of generic medicinal products de facto impossible. Since generic products are rarely obtained from the same source as an original product, the “common origin” could not be proven.

Case law from the European Court of Justice (“ECJ”) has caused national medicine agencies, in this case the Danish agency, to reconsider the meaning and extent of the “common origin” requirement. Original producers and parallel importers are anxiously awaiting an announcement on what legal position to expect going forward, as MA applications are being shelved awaiting a precedent case.

1. Kohlpharma

In April 2004, the ECJ answered preliminary questions on the requirement of “common origin”, which was raised by the German courts in the case named Kohlpharma. The Kohlpharma case concerned a German parallel importer, who wanted to import a generic medicinal product from an Italian manufacturer. The product was based on an active ingredient imported from a Hungarian ingredients producer. The Italian product had never before been marketed in Germany, wherefore the importer applied for an MA by referring to a German original medicinal product with the same composition, based on the identical active ingredient. The application was rejected by the German medicine agency, which argued that the medicinal products did not have “common origin”. The reasoning being that the Italian and German manufactures were unrelated, as they did not belong to the same group, and they did not have a direct licensing agreement. The decision was appealed to the courts.

Upon having been presented with preliminary questions on the subject, the ECJ concluded in 2004 that an MA application cannot be rejected solely on the grounds that two medicinal products do not have “common origin” when the following conditions are satisfied:

  • an application for an MA for a medicinal product is submitted with reference to a medicinal product that has already been authorized,
  • the medicinal product which is the subject of the MA is imported from a member state in which it obtained an MA, and
  • the assessment of safety and efficacy carried out for the medicinal product which is already authorized can be used in the application for an MA for the second medicinal product without any risk to public health.

The ECJ’s reasoning was in line with Commission Communication on Parallel Imports (COM/2003/0839) from 2003 that listed the following two conditions:

  • The imported product must have been granted an MA in the member State of exportation, and
  • The imported product must be sufficiently similar to the product that has already received an MA in the member State of importation

By “sufficiently similar”, the Commission Communication described that the two medicinal products did not have to be identical in all respects but they should, however, have been manufactured according to the same formula, using the same active ingredient and have the same therapeutic effects.

In 2004, the ECJ did not elaborate on the term “sufficient similarity” and the required degree of similarity, as the ECJ simply confirmed to be “the assessment of safety and efficacy carried out for the medicinal product which is already authorized can be used in the application for a marketing authorization for a second medicinal product without any risk to public health”.

2. The impact of the Kohlpharma case in Denmark

Even though the active ingredient used in the Kohlpharma case was obtained from the same source, i.e., it had a de facto common origin, the ambiguous phrasing of the Kohlpharma case and lack of clarification with regards to the term “sufficiently similar” suggests that the preliminary answer could be interpreted in more than one way. Some might even conclude that medicinal products manufactured by unrelated companies with active ingredients obtained from different sources could be imported and marketed on the basis of another party’s MA using the simplified MA procedures, as long as the medicinal products do not cause any risk to public health.

As time passes, national medicine agencies, in this case the Danish Medicine Agencies, have not yet considered or implemented the impact of the Kohlphama case or the Commission Communication conditions. Currently, several Danish parallel importers are anxiously awaiting decisions on MA applications that have been forced to wait, some as long as since March this year. Usually such applications are processed and answered within 60 days. The parallel importers are awaiting the outcome of a precedent case currently being processed in the Danish Ministry of Health. Once a decision in the precedent case has been rendered, it is expected that a new Danish legal position on parallel importing of generic medicine is established following one of the below models:

1. “The Classic Model”, where the composition of the medicinal products must be identical and the manufacturers of the medicinal products must be group related or have obtained the medicinal product from a common licensor,

2. “The Mediocre Model”, where the composition of the medicinal products must be identical and the manufacturer of the end products are identical,

3. “The Kohlpharma Model”, where the composition and active ingredient manufacturer must be identical, or

4. “The Far-Reaching Model”, where the only requirement will be that the active ingredients are similar and do not cause a risk to public health.

Based on the legal standpoint of the Kohlpharma case and the Commission Communication, one should expect from a legal point of view that the Danish Medicine Agency and the Danish Ministry of Health will implement guidelines following model 2 or 3, allowing for a wider access to parallel imports of generic medicine. But, as the Danish authorities have historically argued for importance of public health, the outcome may be different.

As the treatment of the precedent case is kept in secrecy, the parallel importers, the original producers and the advisors of both parties are currently left in the dark to see on what grounds parallel import of generics may be allowed or still be de-facto prohibited in Denmark.


Internet: Court of Justice of the European Union Rules on Jurisdiction and Choice of Law in Cases on the Infringement of Personality Rights through the Internet

The Brussels I Regulation provides that, in matters related to torts, delicts or quasi-delicts, an individual may be sued in another member state in court where the harmful event occurred or may occur, as opposed to the general rule that persons domiciled in a member state shall principally be sued before the courts of that state. The Court of Justice of the European Union ruled in joined cases C-509/09 and C-161/10 that victims of infringements of personality rights through the internet may bring actions before the member state’s courts in which they reside for any damage caused within the European Union. Placing online content on an Internet website is distinguished from the regional distribution of printed matter because it can be instantly viewed by an indefinite number of Internet users worldwide. Thus, such universal distribution through the Internet increases the seriousness of the infringements of personality rights and, in addition, makes it extremely difficult to determine the places in which the damage resulting from those infringements has occurred. Similarly, an individual whose rights have been infringed may also bring an action for any damage caused before the courts of the member state in which the publisher of the online content is established. However, notwithstanding the foregoing, instead of an action for liability in respect of all the damage caused in all locations, the victim may always bring an action before the courts of each Member State in the territory of which the online content is or has been accessible. In that case, in the same way as damage caused by printed matter, those courts have jurisdiction to deal with cases only in relation to damage which occurred within the territory of the State in which they are situated. However, it should further be noted that the provider of an electronic commerce service may not be made subject to stricter requirements than those provided for by the law of the Member State in which that service provider is established.


Recent Amendments to the Russian Federal Law on Personal Data

Significant amendments were entered into the Russian Federal Law on Personal Data on 1 July 2011. The amendments were made in order to conform the requirements of Russian Law to European requirements, in particular, EC Directive 95/46/ЕС. The definitions of personal data and processing of personal data and other relevant provisions were materially changed.

The main amendments are as follows:

  • The volume of data processed should comply with the purposes of its processing. It is prohibited to collect and process excessive amounts of data.
  • Requirements for delegating personal data processing to third parties have been established for data controllers. Approval must be obtained from the data subject, and the data controller must enter into a relevant agreement with the third party, requiring it to preserve the confidentiality of the personal data, ensure its protection during processing, and comply with the requirements on personal data protection. In this case, the entity processing the personal data at the data controller's instructions does not have to obtain approval from the data subjects to process their personal data. The data controller remains liable to the data subject.
  • The data subject may give consent to process his or her personal data in any form. However, the data controller must prove it received consent. Consent may be given by the data subject’s representative.
  • For cross-border personal data transfers, it now depends on whether the foreign countries are party to the Council of Europe Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data. In addition, the competent authority will shortly approve a list of countries not party to the above Convention that still ensure the proper protection of rights of the data subjects.
  • In the event of the infringement of personal data protection requirements, a person whose rights have been affected during the processing of his or her personal data may also claim compensation for moral damage.


Russian Court Practice on Parallel Imports: Longines vs. Bestwatch.ru (A Russian Online Store)

On 7 November 2011, the State Commercial (Arbitrazh) Court of Saint Petersburg and Leningrad Oblast found the Russian online store bestwatch.ru guilty under a statement of claim from Longines Watch Co., Francillon Ltd (Switzerland) of breaching the claimant’s rights to the Longines trademark and awarded record-high compensation in Russia for cases on parallel imports - RUB 3,000,000 (up to this point, courts have recovered tens of thousands, or in the best case scenario, hundreds of thousands of Russian rubles).

As of the date this material was written, the explanatory section of the court’s decision had not yet been published. However, it can be concluded from the information published in the mass media that Longines (Switzerland) accused bestwatch.ru of selling watches imported into Russia without permission to do so from the trademark owner (Longines). Under the Civil Code of the Russian Federation, a trademark owner may not prevent the use of its trademark for goods introduced into circulation in the Russian Federation by the trademark owner itself or with the trademark owner’s consent. According to available information, the claimant specified in court that the watches for sale on bestwatch.ru were not intended to be sold in Russia and that the trademark owner did not introduce them into circulation in the Russian Federation or give consent to do so; therefore, selling watches with the LONGINES trademark in the Russian Federation was unlawful.

According to the published declaration portion of the court ruling, Limited Liability Company BESTWATCH.RU was prohibited from introducing goods with the LONGINES trademark into circulation in the Russian Federation unless consent was received from Longines Watch Co., Francillon Ltd., including for their import, storage for sale, offer of sale, and sale.

This court ruling undoubtedly confirms a positive trend in Russian exclusive right protection enforcement and increases Russia’s attractiveness for foreign investors, although bestwatch.ru may still appeal the decision made by the State Commercial (Arbitrazh) Court of Saint Petersburg and Leningrad Oblast to a court of appeal.