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Technology Newsletter 12/2013

17 December 2013

Domain Names: New gTLDs - Facebook Victorious in the First Ever URS Case

The complainant Facebook Inc. won the first ever Uniform Rapid Suspension (URS) case against Radoslav of Presov regarding the domain name facebok.pw. The URS is a part of the new generic top-level domain system (gTLD) launched by Internet Corporation for Assigned Names and Numbers (ICANN) in 2012. Before the introduction of the new system there have only been 22 gTLDs, such as .com, .net, .org and .gov, but now ICANN received up to 1409 applications for new gTLDs. By the time ICANN completes the new gTLD approval process, the number of gTLDs will probably increase substantially.

To promote the protection of the trademark holders’ rights within the new system, ICANN has developed specific services for the trademark holders. The most important novelties are the Trademark Clearinghouse (please see HS Technology Newsletter 09/2013) and the URS process. Unlike the Trademark Clearinghouse, which offers its sunrise and claims services only for a certain time period after a new gTLD comes into operation, the URS process has no time limits but it can be used whenever a violation of the trademark rights is brought to the trademark holder’s knowledge.

As a trademark enforcement tool, the URS is a kind of “little brother” of the existing Uniform Domain-Name Dispute Resolution Policy (UDRP) system. The URS is a rights protection mechanism for new gTLDs intended to facilitate the rapid suspension of domain names in clear-cut trademark infringement cases. In comparison to the UDPR, the URS is intended to provide a quicker and cheaper way to close an infringing domain name in clear infringement cases. The main difference is that in a successful URS process the domain name will be temporarily closed and it cannot be moved to the trademark right holder. However, the domain name will be closed quickly, and the whole process may be completed in less than one month.

The URS was designed for new gTLDs, but the .pw registry decided to adopt it too and consequently it became the first TLD to adopt the URS mechanism. Facebook became the first URS complainant ever by submitting a complaint requesting that the “facebok.pw” domain be suspended. In order to be successful in the URS process, the complainant must provide clear and convincing evidence that i) the domain name is identical or confusingly similar to a word mark with demonstrable evidence of use; ii) the registrant of the domain name has no legitimate right or interest to the domain name and iii) the domain name was registered and is being used in bad faith. In its case, Facebook was able to provide such clear and convincing evidence of all three elements to the examiner of the case. The respondent had 14 days to reply, but did not provide a response in accordance with the URS rules of procedure and the examiner ordered the domain name to be suspended for the duration of the registration. The whole process started by Facebook’s submission of complaint on 21 August 2013. The actual proceedings commenced on 11 September 2013 and the decision was rendered on 27 September 2013. Based on the turnaround time, it seems that the promises of a fast and inexpensive process will actually hold water.


To Be or Not to Be - Graphically Represented?

According to the current Trademark Directive (2008/95/EC) a trademark may consist of any signs capable of being represented graphically. Although the same requirement is included in the Finnish Trademark Act, the trademark law reform working group proposes that the law, in order to clarify the Finnish Trademark Act, should include an explicit definition of a trademark in which the said requirement is included.

At the same time, the Commission has proposed changes to the aforementioned directive and suggests that the requirement of “graphic representability” should be abandoned as out of date. The Commission is of the opinion that the said requirement creates a great deal of legal uncertainty around the representation of certain non-traditional trademarks, such as mere sounds. In accordance with the Commission’s proposal a trademark could also consist of a sign which would be capable of being represented in a manner which enables the competent authorities and the public to determine the precise subject of the protection afforded to its proprietor.

The meaning of “determination of precise subject of the protection” would be decided in future case law. When assessing the suggestion to abandon the requirement of graphic representability, it would be good to stop and reflect on whether there are justified grounds to such deletion and whether this is an appropriate way to extend the range of registrable marks. As it should be possible to gain protection for an unregistrable mark by establishing the mark, it would seem a sufficient safeguard. Moreover, as the determination of the scope of protection of a mark that would not qualify to be registered under the current provisions would presumably be very challenging, one can justifiably ask whether the requirement of “determination of precise subject of the protection” would be an improvement to the current state in any manner whatsoever.

This suggestion made by the Commission has not gone without criticism and therefore the new proposal may still be essentially altered. As the requirement of graphic representability is already included in the Finnish Trademark Act, an inclusion of a separate definition of a trademark would not seem appropriate before the status of the Commission’s proposal is clear and final on this point.


Changes Proposed to Intellectual Property Law in Russia

A draft law on the amendments to Part 4 of the Russian Civil Code (on the legal regulation of intellectual property) is currently under consideration of the Russian State Duma. The proposed changes include the following:

1. The draft law proposes a new method to dispose exclusive rights to intellectual property, prescribing that the right holder can make an application allowing any person to use respective intellectual property object free of charge on certain conditions prescribed by the application and within a specified time period. It is proposed that such an application should be published on the official website of Rospatent. Through this measure the obligation to enter into license agreements in such cases could be avoided more easily.

2. It is proposed that the prohibition of royalty-free assigning of exclusive rights to intellectual property and the providing of exclusive licenses between commercial organisations be clearly stipulated in the Russian Civil Code.

3. The draft law introduces the concept of the Information agent and establishes the grounds of its liability for breach of intellectual property rights on the Internet. An Information broker is considered an Internet provider.

If an Information agent transmits material on the Internet, the Information agent shall not be considered liable provided that:

- the said material has not been changed after its receipt, except for changes made to ensure the transfer of the material;

- the Information agent neither knew nor should have known that the use of the corresponding result of the intellectual activity or the means of the individualisation by the person initiating the transfer of material containing such a IP, is illegal.

The Information agent providing the possibility of placing material on the Internet is exempt from liability for infringement of intellectual property rights, which have occurred as a result of the placement of material on the Internet by a third party or an order given by a third party, under the following conditions:

- the Information agent neither knew nor should have known that the use of the corresponding result of the intellectual activity or the means of individualisation contained in such material, is illegal;

- the Information agent who has received a written application from the IP owner regarding the abuse of the intellectual property rights as a result of the placement of such material on the Internet, has taken all necessary and reasonable measures (prescribed by law on information) to eliminate the consequences of the infringement of the intellectual property rights.


New Customs Enforcement Regulation Attempts to Strengthen IP Enforcement at EU Borders

For the last 10 years, the EU Customs Regulation No 1383/2003 of 22 July 2003 (the “Current Regulation”) has provided an opportunity for intellectual property right-holders to request assistance from the EU customs authorities to defend their intellectual property rights at the outer EU borders. The request for assistance is made by lodging an application for action either nationally in one Member State or in multiple Member States.

In order to strengthen the enforcement of intellectual property rights, as well as to ensure appropriate legal certainty, the EU Regulation No. 608/2013 (the “New Regulation”) has been adopted. The New Regulation, which repeals and replaces the Current Regulation, is applicable in all Member States as of 1 January 2014. The New Regulation provides for several changes.

Under both the Current and the New Regulation, the customs authorities may suspend the release of goods if there are sufficient grounds for suspecting that the goods infringe an intellectual property right. In such case, the customs authorities must inform the right-holder and the declarant or the holder of the goods of the suspension. The right-holder then has 10 working days to inform the customs authorities that proceedings have been initiated to determine whether its rights have been infringed under national law. If this is not the case, the customs authorities will release the goods.

Simplified Procedure

Under Article 11 of the Current Regulation each Member State had the option to decide whether to implement the simplified procedure, whereby goods could be destroyed without there being any need to determine if an intellectual property right had been infringed. Thus, the customs authorities could destroy goods suspected to be counterfeit or pirated, provided that the right-holder agreed to the destruction and the right-holder provided the authorities with a written agreement from the declarant or the holder of the goods confirming the destruction of the goods.

The New Regulation makes the simplified procedure compulsory for all Member States and adds to it that the right-holder no longer needs to provide the customs authorities with the written agreement of the declarant or the holder of the goods. Instead, the declarant or the holder of the goods must confirm in writing his agreement or opposition to the destruction of the goods directly to the customs authorities.

If the declarant or the holder of the goods does not explicitly oppose to the destruction, the Current Regulation presumes that the declarant or the holder of the goods agrees with the destruction. This provision, which has undergone extensive interpretation throughout the EU, has somewhat been changed. Now, if the declarant or the holder of the goods does not explicitly oppose to the destruction, the customs authorities “may deem the declarant or the holder of the goods to have confirmed his agreement to the destruction of those goods”.

It is still uncertain how the New Regulation will be construed in the various Member States and whether the customs authorities will regard the absence of an explicit opposition as an implied consent. However, The Danish customs authority has confirmed that they will in fact do so.

Small Consignments

The New Regulation further introduces a new procedure whereby small consignments (containing three units or less or having a gross weight of less than two kilograms) of goods suspected to be counterfeit or pirated, may be destroyed without the right-holders having to give their consent separately in each case.

Under this small consignment procedure, the customs authorities will inform the declarant or the holder of the goods, but not the right-holder, of the customs authority’s suspension of the goods and the intention to destroy the goods. The declarant or the holder of the goods is given 10 days to express his point of view. If the declarant or the holder of the goods has not expressly agreed to the destruction of the goods nor notified his opposition thereto to the customs authorities, the customs authorities may (as indicated above) deem the declarant or the holder of the goods to have confirmed his agreement to the destruction of the goods.

If the declarant or the holder of the goods has not confirmed his agreement to the destruction of the goods and where the declarant or the holder of the goods has not been deemed to have confirmed such agreement, the customs authorities will initiate a normal custom procedure and inform the right-holder of the suspension.

It is up to each right-holder to decide whether or not to use the small consignment procedure, as this must be indicated in the new application for action form.

Even though the small consignment procedure may seem attractive, as it will save legal fees for right-holders, several right-holders and legal practitioners have already pointed out that a potential downside to the small consignment procedure is that the right-holders will not in general be informed of the names and addresses of the small consignment recipients, and also not be given pictures of the goods or receive identification information on the exporting companies. In addition, if the only consequence for the infringer is the destruction of the counterfeit goods it might incentive the infringer to repeat import in several smaller packages.

Applications and Extensions

Under the New Regulation all currently binding applications for action by the customs authorities granted in accordance with the Current Regulation will remain valid and in force for the period specified in the applicable decisions of the customs authorities. The original application for action may, however, not be further extended. The New Regulation requires that right-holders file new applications for action to the customs authorities when the existing applications expire.


Swedish National Patent Applications to Be Considered and Granted in English

The Swedish regulation regarding national patent applications requires that the patent application be drafted in Swedish, in accordance with the Swedish Patent Act (1967:837). The consequence of this is that an excessive translation process into Swedish is necessary. Furthermore, a patent application in Sweden may result in high costs for the applicant.

The Government suggests in a proposal that a national patent application should be acceptable both in English and in Swedish. The proposal aims to reduce the high translation costs for the applicant, especially for the science-intensive companies having English as their group language and for the companies who intend to apply for a patent in other countries, in the same language. The new regulation is proposed to enter into force on 1 July 2014.


Update on EU Data Protection Reform

LIBE, the lead European Parliamentary Committee, voted in October 2013 on the draft proposals regarding the upcoming Regulation and Directive. The proposals were backed by a great majority of LIBE (49 votes in favour, 1 against and 3 abstentions). As a result of the outcome of the LIBE voting, negotiations between the European Parliament, the Commission and the Council can take place.

When comparing the original Commission proposal for the Regulation published in the beginning of 2012 to the latest version of the proposal voted on by LIBE, the following examples reveal that some amendments have been made to certain key sections of the proposals during the legislative process:

  • Higher administrative sanctions: the amount of the fines imposed by national data protection authorities in case of breach of the law have been raised from a prospective EUR 1,000,000 or 2% (Commission’s proposal) to EUR 100,000,000 or 5% (European Parliament text) of the annual worldwide turnover of a company.
  • Territorial scope widened: The Parliament’s text further broadened the scope of the Regulation by stating that the Regulation shall apply to the processing of personal data irrespective of whether the processing takes place in the Union or not. Therefore, the indisputable purpose is that non-European companies will have to comply with the Regulation if they operate in the European market.
  • Right to be forgotten reinforced: According to the Parliament’s text citizens are allowed to obtain, from third parties (to whom the data have been passed), the erasure of any links to, or copy or replication of that data. In addition, the citizens may also have a right to erasure where a court or a regulatory authority located in the Union has ruled as final that the data concerned must be erased.

A setback was faced on 6 December when the European Union justice ministers attempted to reach an agreement on the proposal. At their meeting in Brussels, the ministers failed to agree on the concept of a one-stop-shop. Many countries held different views inter alia (i) on the grounds defining the country whose data protection authority would take the lead role in each case, and (ii) on the role and powers of the proposed European Data Protection Board. According to the EU’s Justice Commissioner, Viviane Reding, it was a disappointing day as some of the issues agreed upon in October were effectively reopened.

As both the European Parliament and the Council must agree on the Regulation before it can come into force, it remains to be seen if there will be further obstacles around the corner. According to the latest information, it is expected that the original timetable will not be met (i.e. adoption prior to the European Parliament elections in May 2014). Instead, the adoption of the reform is likely to take place in 2015.


Data Protection: WP29 Provides Guidance on Obtaining Consent for Cookies

EU’s Article 29 Working Party (WP29) has on 2 October 2013 adopted the Working Document 02/2013 providing guidance on obtaining consent for cookies. In 2012 WP29 already adopted the Opinion on Cookie Consent Exemption (please see HS Technology Newsletter 10/2012).

Since the adoption of the amended e-Privacy Directive 2002/58/EC in 2009 requiring a prior consent for the collection and processing of cookies, a range of practical implementations have been developed by websites in order to obtain consent for the use of cookies or similar tracking technologies used for various purposes. According to the WP29, the website operator is free to use different means for achieving consent as long as this consent can be deemed valid under EU legislation.

In line with its opinion on consent (15/2011), defining the main elements for consent, WP29 has further elaborated mechanisms for satisfying all these elements with respect to cookies consent:

1. Specific information. To be valid, consent must be specific and based on appropriate information. In other words, blanket consent without specifying the exact purpose of the processing is not acceptable. The mechanism with respect to cookies should provide for a clear, comprehensive and visible notice on the use of cookies, at the time and place where consent is sought, for example, on the webpage where a user begins a browsing session. Necessary information would be the purpose(s) of the cookies and, if relevant, an indication of possible cookies from third parties or third party access to data collected by the cookies on the website. Information such as the retention period (i.e. the cookie expiry date), typical values, details of third-party cookies and other technical information should also be included to fully inform users.

2. Timing. As a general rule, consent has to be given before the processing starts. Therefore, to achieve compliance across all EU Member States consent should be sought before cookies are set or read.

3. Active choice. Consent must be unambiguous. Thus, the procedure to seek and to give consent must leave no doubt as to the data subject's intention. There are in principle no limits as to the form consent can take. However, for consent to be valid it should be an active indication of the user’s wishes. The minimum expression of an indication could be any kind of signal, sufficiently clear to be capable of indicating a data subject's wishes. The users may signify their consent, either by clicking on a button or link or by ticking a box in or close to the space where information is presented (if the action is taken in conjunction with provided information on the use of cookies) or by any other active behaviour from which a website operator can unambiguously conclude it means specific and informed consent. It must be made sure, that the choice expressed with active behaviour is actually based on clear information that cookies will be set due to this action. The information should be presented in such a way that the user is most likely to acknowledge it as such (and not mistake it for advertising, for example). Therefore ensuring that the button, link or box which indicates that the active behaviour is within or close to the location where information is presented, is essential in order to be confident that the user can refer the action to the information prompted.

4. Freely given. Consent can only be valid if the data subject is able to exercise a real choice, and there is no risk of deception, intimidation, coercion or significant negative consequences if he/she does not consent. The user should have an opportunity to freely choose between the option to accept some or all cookies or to decline all or some cookies and to retain the possibility to change the cookie settings in the future. Users should also be offered a real choice regarding tracking cookies. Such tracking cookies are generally used to follow individual behaviour across websites, create profiles based on that behaviour, infer interests, and take decisions affecting people individually. When tracking cookies are being used to single out people in this way, they are likely to be personal data. For the processing of the personal data that goes together with the reading and setting of tracking cookies the data controller needs to obtain the unambiguous consent of the user.


School Forced to Stop Using Cloud Services

A school in Sollentuna (Sweden) which is using the cloud service Google Apps for Education is forced to either enter into an agreement with the cloud service supplier Google, which complies with the regulation in the Swedish Personal Data Act (1998:204), or otherwise stop using the cloud service.

The Swedish Data Inspection Board has inspected the school in Sollentuna called Rudbecksskolan, which is using the cloud service Google Apps for Education in its work. All teachers and students must create a user account at Google in order to gain access to the tools that are necessary for the schoolwork.

The Board noted that the school has not signed a specific personal data agreement with Google. The existing agreement lacks instructions and restrictions regarding the way in which Google is allowed to use the personal data that is available for it in the service. The agreement is also inadequate as regards the security measures which Google is obliged to regard in the aim of protecting the available personal data. Therefore, the Swedish Data Inspection Board imposed an obligation on the school to, as soon as possible, enter into a specific personal data agreement with Google that regulates the way in which Google must handle the personal data information, or otherwise stop using the cloud service in its operation.


Finnish Consumer Ombudsman Issued Guidelines for Blog Advertising

Marketing of products and services in individual blogs has increased substantially during the past few years. More and more professional bloggers get paid or other compensation for writing about different goods or services.

The Finnish Consumer Ombudsman has recently published guidelines on blog marketing. The guidelines are directed to companies who cooperate with the bloggers and for the professional bloggers who are paid to write or who have their own companies to whose activities the blog is related.

The guidelines are based on Section 4 of Chapter 2 of the Consumer Protection Act that requires all marketing to be recognisable. According to the section, marketing shall clearly indicate its commercial purpose and the party on whose behalf the marketing is carried out. The said provision applies to all marketing, regardless of the tools used. This means that also bloggers must remember the recognisability rules of advertising when writing their blogs; hidden advertising is forbidden also in blogs.

The Consumer Ombudsman reminds that companies are responsible for making sure that all consumer protection rules are taken into consideration when marketing the goods. Therefore, it is the company who must instruct the blogger to apply the recognisability rules when writing about the company’s product. Companies must thus advise the bloggers to openly tell about the cooperation and the benefits they get from the company in question.

The Consumer Ombudsman advises that a hobbyist blogger is not directly bound by consumer legislation, but the company cooperating with such blogger is always bound by the said law. Any blogger, who recommends the goods given by a company, is actually doing marketing for the company, even if the blogger is not obligated to advertise them. Therefore, to avoid confusion, the company should advise the blogger to openly tell about the cooperation or the gratuitous benefits in the posting.


Consumer Protection Regarding Distance Agreements to be Strengthened

The Swedish Government suggests, in a proposal, that the consumer protection regarding distance agreements and agreements concluded outside business premises should be strengthened in accordance with Directive 2011/83/EU of the European Parliament and the Council of 25 October 2011 on consumer rights. The proposal aims to adjust the Swedish regulations regarding distance agreements, for example the Consumer Sales Act (1990:932).

The proposal provides that the consumer should be able to revoke a contract that was entered into outside business premises, for instance in public places such as beaches and streets. Furthermore, the proposal establishes clear regulations regarding the disclosure requirements imposed on traders at the conclusion of such agreements as well as distance agreements. The proposal will also protect the consumer from being bound by an agreement on the trader’s website, unless the consumer has expressly agreed to pay for the goods or the services. To conclude, the proposal will have a great impact on consumer contracts in general and strengthen the consumer protection as regards distance agreements.

The new regulation is proposed to enter into force on 13 June 2014.


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.