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Interview in the journal Neue Juristische Wochen­schrift (NJW) – Germany’s publishers take on Google

1. December 2016/in Issue December 2016 Copyright

It seems they will not be friends, Germany’s publishers and Google. In February, they met before the Regional Court of Berlin. Market abuse is the accusation made by 41 publishers against the search engine operator. At the end of the day, the publishers were on the losing side – and that despite the legislator equipping them with an ancillary copyright three years ago. The question is, however: how effective is that right if they are up against an enormously powerful search engine operator which is virtually able to dictate its conditions to publishers for the use of their journalistic content? That is what NJW wanted to know from Prof. Dr. Jan Bernd Nordemann, attorney at law specialising in, amongst other fields, copyright law and media law, who without representing publishers in court wrote an expert opinion for the small and mediumsized publishers involved in the proceedings before the Regional Court of Berlin.

NJW: Prof. Nordemann, press publishers have had an ancillary copyright for almost three years now. What does this right cover?

Nordemann: The ancillary copyright affords press publishers the exclusive right “to decide how, when and by whom the press content they produce is made available to the public”. This concerns primarily a use of press content on the internet. One group which the legislator had in mind in this respect was aggregators of news content, especially internet search engines. Internet search engines regularly make press content available to the public on the internet in that they display press content in their search results, at least in the form of extracts or thumbnails. The only exceptions are where “individual words” or “the smallest text extracts” are used, in which case the ancillary copyright would not apply. What precisely that means is a topic of much debate amongst us lawyers. The Board of Arbitration at the German Patent and Trade Mark Office was of the opinion, in a first landmark decision in September 2015, that the relevant threshold was seven words. This threshold would mean, for example, that Google’s search results would be covered by the ancillary copyright and Google would thus require authorisation to use the respective content, in particular insofar as the normal display of text extracts and thumbnails in the list of search results returned by Google are concerned.

NJW: Why do publishers need an additional protection right in addition to copyright?

Nordemann: Digitalisation has led to massive upheaval in the media industry. Press publishers are a good example of this. In the digital world, they have had to adapt their traditional business model. New opportunities for using, exploiting and monetising press content have emerged. When introducing the ancillary copyright, the German legislator wanted to protect press publishers against systematic access to publishers’ output free of charge, especially by search engines. Copyright would possibly not quite suffice in this context: according to the opinion of the Board of Arbitration, the ancillary copyright ensures, for example, that all press content which does not fall below the “seven word threshold” is protected. In the case of copyright, ascertaining what is protected is much more complex: a clear, quantitative threshold cannot be used as a basis, instead a distinction is drawn along qualitative lines as per Sec. 2 (2) German Copyright Act. Only personal intellectual creations are protected as text under copyright law. The CJEU once stated, in its Infopaq decision, that even just eleven words could be protected by copyright. However, that is only a “could” decision, which is further dependent on whether those eleven words also constitute a personal intellectual creation. The ancillary copyright has therefore created a much more reliable threshold above which any relevant use is said to begin. This in turn means that the ancillary copyright lends itself much more readily to mass monetisation, for example through a collecting society.

NJW: Nevertheless, Germany’s publishers recently lost a case against Google which concerned, amongst other things, precisely this ancillary copyright. What was that case about exactly?

Nordemann: The situation regarding the assertion of ancillary copyrights by press publishers is somewhat complicated. Many press publishers placed their rights with the collecting society, VG Media. VG Media set tariffs for the use of ancillary copyrights in the area of digital media, in particular by search engines. Those tariffs were then checked by the board of arbitration. The relevant decision is the one I mentioned earlier. As Google correctly assumed – as the board of arbitration later confirmed – that continuing to display search results would constitute a relevant use of the ancillary copyright and that consequently payment would be due to VG Media, Google approached the press publishers as the original rightholders. Google first demanded that the press publishers who had placed their rights with VG Media declare that they consented to their content being included in Google News free of charge (so-called “opt-in system level 1”). However, Google apparently did not pursue that system any further. Instead, Google later sent additional letters to the VG Media press publishers demanding that they declare their consent to snippets and preview images being made available to the public in Google search results for free. If consent was not forthcoming, Google announced, the press publishers’ content would not be completely removed from the search results but that they would at least completely refrain from displaying snippets and preview images (so-called “opt-in system level 2”), whilst the content of other press publishers would continue to be displayed, as before, with snippets and preview images in the search results. Faced with a potentially serious loss of traffic, all press publishers for whom VG Media administers the respective ancillary copyrights ultimately granted consent not only to “opt-in system level 1” but also to “opt-in system level 2”.

NJW: Why did the press publishers choose to take the antitrust law route?

Nordemann: In my opinion, that is indeed the correct legal remedy. Google was only able to insist that the publishers grant consent free of charge to the use of their ancillary copyrights because Google holds a dominant market position. In the case of an abuse of a dominant market position, however, antitrust law provides for claims, in particular claims for injunctive relief as are now being asserted in court proceedings. I cannot currently see any other grounds for action. In particular, search engines are not subject to any special regulation of market power under copyright law.

NJW: Does this not constitute somewhat contradictory behaviour on the part of the publishers as they first granted Google the right to use their content free of charge before then attempting to prohibit that company from abusing its market power by way of an action for injunctive relief?

Nordemann: I do not see that as being a contradiction. Google accounts for over 90% of all searches in Germany, thus it clearly has a dominant market position in respect of searches in Germany. A dominant market position is assumed, under the German Act Against Restraints of Competition (Sec. 18 (4) GWB) from as little as 40% market share – Google has over twice that. In fact, this can be described as a virtual monopoly. The virtual monopoly in search then also provides a dominant market position on the other affected markets, in particular on the relevant market for booking search related advertising and on the so-called indexing market, namely the market on which Google requests the listing of websites for its search engine. It is on this indexing market that Google encounters the press publishers who grant Google consent to use.

If they now have an unavoidable market partner in Google and that partner threatens them with restricted listing, in my opinion it is immediately understandable that the publishers would acquiesce to that request. That does not mean, however, that the request is lawful. It is precisely this which can be examined under antitrust law.

NJW: The court did not see any abuse of market position on the part of Google. Are you convinced?

Nordemann: The Regional Court did indeed assume a prevailing interest of Google in continuing to operate its business model in which there is no space for paying for the use of press content. According to the court, the equilibrium of the balanced system within which search engines operate would be disrupted by any obligation to pay remuneration to press publishers for indexing press content.

That may seem plausible at first glance, however it is not convincing upon further scrutiny. Google’s interest in continuing its business model of free-of-charge indexing of websites has now been pierced by the decision of the legislator only to allow that indexing generally with the consent of the proprietor of the ancillary copyright. This general decision on the part of the legislator must be afforded considerable weight when ascertaining whether an abuse of market power has occurred. No matter how controversial the ancillary copyright was politically and what one’s own political opinion of it is: the German legislator introduced the new right with the clear objective of enabling press publishers to monetise search machine use. With its introduction of the ancillary copyright, the German legislator thus specifically expressed a clear rejection of the free-of-charge display of press content in search engines.

In my opinion, one should not be allowed to deny Google the option of taking the business decision not to display any press content in search results or to reduce what is displayed so that it no longer falls within the ancillary copyright. In my opinion, however, Google cannot be permitted simply to force the publishers to grant consent to use free of charge. That is not in the interests of competition, namely keeping markets open, a factor which is always a key criteria considered when ascertaining an abuse of market power. By forcing publishers to grant consent free of charge, Google denies its competitors the chance of licensing the ancillary copyright and using it to its fullest extent in order to obtain a competitive advantage over Google. In fact, this consent free of charge even represents a competitive disadvantage for competing search engines because Google’s competitors do not possess enough market power to be able to demand free-of-charge consent from the publishers. In addition, it must be said in respect of the abuse of exploitation, that absolute rights generally may not be ceded free of charge.

NJW: What does that say about the significance of ancillary copyright?

Nordemann: The case before the Regional Court of Berlin shows that the German legislator has generally achieved its goal of creating an absolute right for press publishers which enables them to make the use of press content in the form of result lists or thumbnails by search engines monetisable. The fact that Google has been able to avoid this monetisation for now can only be attributed to the special market power which Google holds. In my opinion, antitrust law cannot allow the situation to continue as it is. Google’s current practice will also lead – as already mentioned – to an impediment of competing search engines.

NJW: Where do we go from here?

Nordemann: The case is going before the antitrust senate of the Court of Appeal in Berlin (“Kammergericht”). It is expected that the losing party will then take the case to the German Federal Court of Justice. The proceedings before the Board of Arbitration already mentioned will also proceed through the various legal stages. The ancillary copyright will have to prove itself. If one wants to take the legislator’s intention seriously, the result will likely be that Google will either pay the same fair amount as competing search engines or will no longer be able to use press content in a manner which has an ancillary copyright relevance. We can certainly expect an interesting few years ahead of us in clarifying the situation.

/wp-content/uploads/2022/04/boehmert_logo.svg 0 0 Petra Hettenkofer /wp-content/uploads/2022/04/boehmert_logo.svg Petra Hettenkofer2016-12-01 12:28:162022-08-24 11:20:35Interview in the journal Neue Juristische Wochen­schrift (NJW) – Germany’s publishers take on Google

CJEU: On the liability of operators of physical market places

1. December 2016/in Issue December 2016 Trade Marks

In its decision of July 7, 2016 (file no. C-494/15), the CJEU continued its case law on online-market places (L´Oreal./.ebay, file no: C-324/09) and applied it to so-called offline-market places. The Court of Justice clarified that – just like the operators of online-market places – the landlords of physical market places can be claimed upon to eliminate the trademark infringement of the dealer and to take corresponding measures to prevent further infringements, as long as the order is reasonable.

The plaintiffs were several manufacturers and distributors of trademark products who discovered that counterfeits of their products were being sold in market halls in Prague. They filed a motion with the Czech courts to order the operator of the Prague market halls to cease concluding or renewing rental contracts for the sales area with those individuals who committed trademark infringements. The manufacturers were of the opinion that the so-called Enforcement Directive 2004/48 EC also enables action against the operator of a physical market place.

As the Czech courts of lower instance rejected the suit, the Nejvyšší soud (Higher Court) submitted to the CJEU the question whether the operator of a physical market place can be obliged to stop the trademark infringement committed by the dealers and to take measures to prevent new infringements. The CJEU has now affirmed both questions and has qualified the operator of a physical marketplace as a “middle man” in terms of Art. 11 sec. 3 Enforcement Directive. As the operator rents out sales space and, thereby, enables third parties to sell counterfeit products, trademark owners can file legal claims against him as a middle man. In this connection it is irrelevant whether the sales platform being provided relates to an online or a physical market, as the Enforcement Directive is not limited to electronic trade.

As a consequence, according to the CJEU in continuation of the decision in 2011 on online market places in the matter of L’Oreal./.ebay, the operators of physical market places can also be forced to stop trademark infringements committed by their tenants, in other words the dealers, and to take measures to prevent new infringements. The respective measures must not only be effective and deterring, they must also always be reasonable. They may not create barriers for legal trade.

With its current decision, the CJEU has strengthened the position of the rights owner and has handed them an instrument comparable to the “landlord liability” which is practised in other countries, e.g. China, USA and Australia. Right owners now have the possibility to prevent the sale of counterfeit products of their trademarks and designs, in that they can not only take action directly against the dealers but can also file claims against the landlords of the market stalls. In view of the often costly and difficult traceability of mobile vendors at weekly markets or dealers in wholesale markets, this is a particular advantage as access to the markets can be permanently denied to such dealers.

Claiming against the landlords also seems to be appropriate, as they are in the best position to put an end to violations of rights quickly and effectively. Excessive monitoring and examination obligations of the landlords are not, however, an explicit consequence of the decision of the CJEU. Determining the scope of the monitoring and examination obligations remains at the discretion of the national courts. Although the CJEU gives indications on defining reasonable examination obligations in its L’Oreal./.ebay decision, it would seem that the technically automated control measures which are possible with electronic market places are not implementable with physical market places. Corresponding to the notice-and-takedown-procedure which is commonplace online, control obligations will only be triggered in the offline market upon knowledge of a rights infringement.

/wp-content/uploads/2022/04/boehmert_logo.svg 0 0 Petra Hettenkofer /wp-content/uploads/2022/04/boehmert_logo.svg Petra Hettenkofer2016-12-01 12:28:092022-08-24 11:22:15CJEU: On the liability of operators of physical market places

Change of policy by the CJEU: Application for par­tial renewal of European Union trademark does not contain an implicit partial renunciation

1. December 2016/in Issue December 2016 Trade Marks

With its decision of 22 June 2016, the CJEU, the highest European instance in trade mark matters, corrected the previously constant practice of partial renewals of European Union trade marks (EUTM) in favour of the trade mark proprietor. In the actual case in question, and contrary to the lower instances, the CJEU allowed Nissan as owner of a trade mark which was initially only renewed for some of the goods covered by the mark, to subsequently renew the mark in question for the remaining goods at a later date, but still within the six-month grace period after the renewal date. Therefore, the owner of a EUTM can file successive requests for partial renewal.

In the case concerned, Nissan initially only partly renewed its EUTM registration 002 188 118, Word/Device: CVTC. After the usual confirmation of EUIPO of the partial renewal and the notice of the cancellation of the remaining goods, Nissan – still within the six-month grace period – then applied for the renewal of the goods of class 9. After the refusal of EUIPO, Nissan was also unsuccessful before the EUIPO Board of Appeal and the General Court (GC). Although the GC rejected the official practice supported by the Board of Appeal which claims that Nissan had implicitly renounced the non-renewed classes with the only partial renewal request (Art. 50 EUTMR), the GC still held that a successive renewal is inadmissible. Referring to the English version of Art. 47 III 3 EUTMR, the Court viewed the possibility of filing a request for renewal after the end of the original deadline to be dependent on the condition that no renewal request was filed during this deadline.

In contrast, the CJEU has cleared the way for a successive renewal of a EUTM within the grace period:

  • In principle, providing for the possibility of continuously requesting renewal of a EUTM registration and the additional grace period reflects the economic importance of the protection conferred by EU trade marks to facilitate the retention by the proprietors of those trademarks of their exclusive rights.
  • Further language versions of Art. 47 III 1 EUTMR suggest that the EU legislature made the submission of a request for renewal of a EUTM during the further period conditional only upon the payment of an additional fee and not that a request for renewal has not already been filed; therefore, Art. 47 EUTMR does not give rise to a ban on requests for renewal which are filed at staggered intervals and which refer to different goods or services classes.
  • Reasons of legal certainty, linked to the erga omnes effect of registering a request for partial renewal of an EUTM from the day following the date on which the existing registration of that mark expires, do not preclude the successive requests for renewal. The EUIPO is under no obligation to register a request for partial renewal prior to the expiry of the further period. Moreover, instead of removing certain classes of goods or services from the register, EUIPO could take information measures that would enable both the right of proprietors of EUTMs and the right of third parties to be safeguarded.

The decision affects a constellation which occurs more frequently in practice than thought at first glance: a trade mark owner initially only renews a part of its EUTM. Afterwards – but still within the six-month grace period – he decides on a more comprehensive renewal of the remaining part of the trade mark or of parts of it. According to the previous practice, a request for only a partial renewal of an EUTM was seen as implicit and definitive surrender of its remaining rights. Consequently, the partial renewal led to a definite loss of trade mark rights. A “readjustment” was, thereby, excluded.

The clarification of the CJEU proprietor is as legally convincing as it is to be welcomed by trade mark proprietors. The CJEU has, thereby, put paid to the Office’s practice which curtailed the property rights of trade mark owners by way of a highly dubious interpretation as an implicit partial surrender. This disregard was presumably due to a practical convenience of the EUIPO in favour of a speedy registration of the partial renewal. It remains to be seen how the EUIPO – from a practical point of view – implements the statement of the CJEU that the Office was under no obligation to process renewal requests prior to the expiration of the grace period. This might lead to a delay of the processing of the renewal request until after the grace period. In any case, third parties – for example during the course of trademark clearance searches – have to pay more attention to the issue of the recordal of an only partially renewed EUTM.

/wp-content/uploads/2022/04/boehmert_logo.svg 0 0 Petra Hettenkofer /wp-content/uploads/2022/04/boehmert_logo.svg Petra Hettenkofer2016-12-01 12:28:012022-08-24 11:32:17Change of policy by the CJEU: Application for par­tial renewal of European Union trademark does not contain an implicit partial renunciation

Reform of EU Copyright Law – Proposals by the European Commission for a digital single market

1. December 2016/in Issue December 2016 Copyright

“Copyright is everywhere”: In the digital knowledge and entertainment society of today, copyright law controls the distribution and use of content. Jean-Claude Juncker, President of the European Union has also recognised this. When Jean-Claude Juncker announced his five priorities for the 2014 election to the office of President, his stated first priority was copyright law. He realised that the potential of digital technologies that know no borders must be fully exploited. “To do so, we will need to have the courage to break down national silos in telecoms regulation, in copyright and data protection legislation”. The goal: the creation of a “Digital Single Market” (DSM) within the EU.

On 14 September 2016, the European Commission presented proposals for a copyright law reform. The object of these proposals is not just an improved digital distribution of copyright protected content. The intention is also to produce a “fairer and sustainable marketplace” for creators, the cultural and creative industries and the press.

1. More choice and easier access to content

The Commission took a first step towards the better integration of the digital markets within the EU back in December 2015 when it presented a proposal on the portability of online content services. That proposal would allow Europeans to take their online content, which they use legally in their home country, for example via subscription models, with them on temporary stays abroad, on trips, for example.

The European Commission subsequently, on 14 September 2016, submitted further proposals for easier access across borders:

  • For broadcasting companies, the clearance of rights for EU-wide broadcasting of their programmes on the internet will be simplified significantly. This also includes the catch-up services of these broadcasting organisations, such as the ZDF Mediathek in Germany. In future, the country of origin principle will apply meaning that broadcasting organisations will only have to clear the necessary rights in their home country.
  • Moreover the territoriality of copyright law will be softened to the benefit of IP TV providers (e.g. Deutsche Telekom’s IPTV Entertain). They will now have the ability to obtain a licence for the simultaneous, unmodified and complete retransmission of channels originally broadcast elsewhere in the EU via collecting societies. In particular, providers of packages of channels will be able, under the new rules, to make a select package of TV channels available to the entire EU via IP TV. These licensing options shall not, however, be available for platforms which operate through the open internet, for example Zattoo.
  • These proposals are only consistent with regard to the realisation of a Digital Single Market. It remains to be seen, however, whether there is an actual corresponding demand for a Digital Single Market. The softening of the territoriality principle can also make legitimate price differentiation by rights holders more difficult or even impossible. For example premium content in professional football: the consumer prices outside the country where the league is located could increase while the consumer prices within that country remain stable.
  • In addition, the Commission also proposes a facilitation of access for museums, archives and other facilities through a new Copyright Directive. They should retain the ability to digitise out-of-commerce works (books or films) and make them available across borders.

2. “Improving copyright rules on research, education and inclusion of
disabled people”

Under this heading the European Commission proposes a new exception for the use of materials in digital form to illustrate teaching, in education facilities and in online courses, which shall also apply across borders.

Moreover, the intention is to make it easier for researchers across the EU to use text and data mining technologies to evaluate larger quantities of data. In addition, a new mandatory exception will enable cultural heritage institutions to preserve works digitally. Finally, the Commission proposes further legislation for the implementation of the so called Marrakesh VIP Treaty, an international copyright agreement which aims to facilitate access to published works for persons who are blind, visually impaired or have other reading difficulties.

3. “A fairer and sustainable marketplace for creators and press”

The European Commission does not content itself merely with proposing for provisions for the improved integration of the Digital Single Market. Rather, rules for a “fairer and more sustainable market for creators, the creative industries and the press” are also presented.

The proposal for a Directive initially foresees the reinforcement of the position of right holders in negotiations with video platforms which publish user generated content and therefore play an active role in the distribution of the content. The most important example in the area of video platforms is YouTube.

Moreover, the proposal of the Commission includes a new ancillary copyright (related right) for press publishers. It will be similar to the existing ancillary copyright at European level afforded to film producers, phonogram producers or broadcasters. This would be designed to ensure that press publishers are better able to monetise their content on the internet. An ancillary copyright of this type for press publishers – in a somewhat limited scope – already exists at a German level, and the political debate surrounding the introduction of the ancillary copyright in Germany would lead one to expect that the development proposals will engender much discussion at an EU level. Therefore, in this respect, the Commission will have to consider the experiences with the ancillary copyright in Germany: in Germany, the ancillary copyright is unable to have an effect as Google, due to its market power on the search engine market in Germany, circumvents it by obtaining, upon request, free licences from press publishers.

Moreover, it is worth mentioning that the draft directive obliges players who exploit copyrighted content to inform authors and performing artists about the profits which they have earned with the author’s works or the performances of the performing artist. In addition, a mechanism will be introduced which will grant authors and performing artists an inalienable right to additional remuneration if the previously agreed remuneration is disproportionately low in light of the success of the work. This is based on, among other things, the German right to additional remuneration in bestsellers cases (Sec. 32a German Copyright Act). This is worth noting, therefore, in particular because it is the first time that European copyright law has included a regulation of general copyright contract law at a European level.

4. Conclusion and Outlook

The draft regulations and directives of the European Commission do not only contain the various rules designed to enable improved access to copyright protected works and performances across national borders within the EU. The European Commission is also taking the opportunity to regulate the markets for copyright protected works and performances. Until now the harmonisation of European copyright law has always been driven forward by the Commission using so-called directives. Directives must be transposed by the member states into national law. The Commission is now also using the instrument of the directive. At the same time, however, access to copyright protected content in particular will soon be regulated in two regulations. Regulations do not have to be transposed into national law but are rather immediately directly applicable in all member states. This shows the direction that the European Commission is taking as far as copyright law is concerned. Copyright law in Europe is moving towards a uniform set of rules in the form of a Regulation. The end result may be unified European copyright legislation and the end of national copyright law in Europe.

/wp-content/uploads/2022/04/boehmert_logo.svg 0 0 Petra Hettenkofer /wp-content/uploads/2022/04/boehmert_logo.svg Petra Hettenkofer2016-12-01 02:03:512022-08-24 11:25:54Reform of EU Copyright Law – Proposals by the European Commission for a digital single market

2 International Conference “3D Printing & IP Rights” with speech by Prof J. B. Nordemann.

1. December 2016/in Events

On 01 December 2016, the Forum Institut for Management GmbH will hold its second international conference “3D printing & IP Rights: Impacts – Issues – Insights”. BOEHMERT & BOEHMERT partner and lawyer Prof. Dr. Jan B. Nordemann will speak here on the subject of “3D Printing: Copyright and Trademarks” and explain the current state of 3D printing in view of copyright in trade mark law and show protection strategies for rightholders. The conference will take place in Munich. Further information and registration.

/wp-content/uploads/2022/04/boehmert_logo.svg 0 0 Petra Hettenkofer /wp-content/uploads/2022/04/boehmert_logo.svg Petra Hettenkofer2016-12-01 00:00:002016-12-01 00:00:002 International Conference “3D Printing & IP Rights” with speech by Prof J. B. Nordemann.
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