Three-year statutory limi­tation period in patent ownership disputes

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To date, it has been disputed in the literature whether a statutory limitation period of only three years or of 30 years applies to claims for the assignment of a patent application filed by an applicant not entitled to the invention. Munich Regional Court (Landgericht München I) is the first German court to determine a limitation period of only three years, which could have a significant impact on the strategic approach to alleged co-inventors.

If a patent application is filed by an applicant not entitled to the invention, the correct owner (usually the inventor or co-inventor) has a valid claim for assignment of the application or the granted patents (claim for patent ownership).

The statutory limitation period applicable to claims for patent ownership has rarely been a decisive factor in legal practice, since both Section 8 German Patent Act, governing ownership claims to national patents, as well as the corresponding provisions governing ownership claims to European patents, provide for a specific limitation period of only two years from the date of the publication of the grant of protection for the respective patent. Upon expiration of this two-year period, claims for ownership to the patent can only be asserted if the correct owner can prove that the applicant, who was not entitled to the invention, was acting in bad faith at the time of the grant of protection.

It has been disputed in literature whether the claims for patent ownership are further subject to a 30-year limitation period applicable for ownership claims in property law or the regular three-year statutory limitation period, regardless of the date of the grant of the patent. By the decision of the Munich Regional Court (Landgericht München I) of November 21, 2018 (21 O 11279/17) a German court has for the first time taken a position on this question.

In its decision, the Munich Regional Court examines at length the arguments in favour of the applicability of the 30-year statutory limitation period and comes to the conclusion that only the regular three-year limitation period applies. Although the court’s arguments are well-founded, it remains to be seen how other courts, especially higher courts, position themselves in this matter.

The decision of the Munich Regional Court is of considerable strategic relevance for legal practice. Based on the judgment, grossly negligent lack of knowledge of the circumstances giving rise to an ownership claim is sufficient for the limitation period to commence. However, the court did not explicitly state whether grossly negligent lack of knowledge on the part of the entitled party can always be assumed from the time of publication of the patent application. Had it been the case, a patent vindication claim raised later than three years after the date of publication of a patent application could in theory be objected to by raising the statutory limitation argument. In any case, as soon as the entitled party learns about the patent application one way or another, the courts could likely assume that the limitation period has commenced.

Following the decision of the Regional Court Munich it is therefore recommendable for inventors to put a stronger focus to potential patent applications by non-entitled parties and, if necessary, to consider taking immediate legal steps. Respectively, it is advisable for applicants to consider informing any potential (co-)inventors of a successful application in due time, even if their role as (co-)inventors is not recognized, in order to unequivocally initiate the three-year statutory limitation period.

Back to the higher thres­hold? – The CJEU decision Cofemel

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Of all things, the notion of “a work” is not legally defined in any of the many EU directives on copyright, even though the term appears repeatedly in these directives.  However, in recent years the European Court of Justice (CJEU) seems to have discovered this term for itself as an “autonomous concept of Union law” which must be interpreted and applied uniformly throughout the Union. For German jurisprudence, the Cofemel decision of the CJEU might result in concluding a full circle, as it points back into the direction the BGH once came from with its theory of a higher threshold for copyright protection in matters of applied art.

The European Concept of the (Copyright Protected) Work Continues to Take Shape: The CJEU decision C-683/17 – Cofemel

Of all things, the notion of “a work” is not legally defined in any of the many EU directives on copyright, even though the term appears repeatedly in these directives, as in Article 3(1) and Article 4(1) of the InfoSoc Directive (2001/29/EC). However, in recent years the European Court of Justice (CJEU) seems to have discovered this term for itself and sees it as an “autonomous concept of Union law” which must be interpreted and applied uniformly throughout the Union (para. 29 of the judgment C-683/17 – Cofemel).

The Path toward a European Concept of “Work”

So far, it had always been borderline phenomena for the CJEU to assess, so that it basically worked its way from the edge to the middle of the concept . The first judgment on this subject, C-5/08 – Infopaq, of 2009, concerned the protectability of an 11-word extract from a protected work (which the CJEU affirmed). In Case C-145/10 – Painer, of 2011, the CJEU then for the first time dealt in more detail with the concept of the scope of creative freedom, namely on the subject of portrait photography. This requirement of originality, whereby an author expresses his creative abilities in an independent manner by making free and creative choices, was then further elaborated in Case C-604/10 – Football DataCo. Such originality be always excluded where technical considerations, rules or constraints determine a design, which leave no room for artistic freedom.

Case C310/17 – Levola Hengelo – of 2018 dealt with the interesting question of whether the taste of a cheese could enjoy copyright protection. The protectability ultimately failed because in the case of the taste of a foodstuff, unlike, for example, a literary, pictorial, cinematic or musical work, identification is essentially based on taste sensations and experiences which are subjective and changeable. Here, the CJEU lacked the intersubjective concretizability of the object of protection. Nevertheless, the CJEU did not refrain from briefly summarizing the creative requirements for a work in this case. Accordingly, two conditions must be fulfilled cumulatively:

“First, the subject matter concerned must be original in the sense that it is the author’s own intellectual creation (…). (para. 36)

Secondly, only something which is the expression of the author’s own intellectual creation may be classified as a ‘work’ within the meaning of Directive 2001/29 (…).” (para. 37)

Does the BGH’s “Geburtstagszug” judgement collide with the Cofemel decision of the CJEU?

In its decision in Case C-683/17 – Cofemel of 12 September 2019, the CJEU is building on the basis outlined above. It concerns clothing models, i.e. the field of applied arts. For decades, in Germany a higher threshold for copyright protection used to be applied to such works in order to prevent competing copyright and design protection. Under the pressure of the European development of design law, the Federal Court of Justice (BGH) gave up this special path as early as 2014 in its decision I ZR 143/12 – Geburtstagszug (GRUR 2014, 175).  The CJEU now expressly confirms this in para. 45 of the Cofemel decision. The principle of a cumulative protection as a design, on the one hand, and as copyright protected work, on the other, applies.

In the aforementioned decision, the BGH concluded its remarks in para. 41 as follows:

“Even though  no higher requirements are to be placed on the level of originality of a work of applied art than in the case of works of art that are free of purpose, it must be taken into account, when assessing whether such a work achieves the level of design/originality required for copyright protection, that the aesthetic effect of the design can only justify copyright protection if it is not due to the intended purpose of use but is based on an artistic achievement (…). An author’s own intellectual creation presupposes that there is a scope for creative freedom and that it is used by the author to express his or her creative spirit in an original way (…) Furthermore, it must be noted that a low level of originality, although it constitutes copyright protection, leads to a correspondingly narrow scope of protection of the work in question.”

The CJEU now seems to contradict this in its Cofemel decision. According to the CJEU in para. 55 of the judgment, the fact that designs such as the clothing designs at issue generate, over and above their practical purpose, a specific and aesthetically significant visual effect is not such as to justify those designs being classified as “works” within the meaning of Directive 2001/29. That reflects the ‘anti-subjective’ argument put forward in the Levola decision on the taste of cheese.

Pursuant to the CJEU, the decisive factor is rather solely the above-mentioned definition of the autonomous concept of a work under Union law with its two cumulatively required elements, namely “own intellectual creation” and “creative work not determined exclusively by specifications or technology” (para. 29 to 31 of the judgment).

The future irrelevance of an aesthetic effect as a requirement for protection does not mean, however, that the cited position of the BGH would have to be revised, for it too was already based on the CJEU’s new concept of work. That the aesthetic effect of an object justifies protection does not seem to be postulated by the BGH – despite the misleading expression in the quoted passage. It mentions the aesthetic effect rather in the sense that it is the desired consequence of the individual exercising of artistic freedom (resembling the CJEU position in para. 54 of its decision).

In para. 35 of the ruling, the CJEU then says something else which at first glance seems to contradict the position of the BGH: if an object fulfils the requirements of the autonomous concept of a work, the scope of this protection does not depend on the degree of creative freedom of its author and is therefore, even in the case of an object with little freedom of design, not less than the protection which is granted to all works covered by the Directive. Had not the BGH ruled that a low level of creative freedom meant a correspondingly narrow scope of protection?

Here too, however, the BGH had already taken the boundary line drawn by the CJEU into account, since it does not reduce the material scope of protection, but merely emphasizes that in an area in which a lot is predetermined, i.e. in which individuality has only a limited scope within the specifications, all others working according to the same specifications will also achieve similar results.

Thus the creator of a four-wheeled pram – as the BGH and CJEU are to be understood in the same way – may not prohibit other creators from designing four-wheeled prams, provided that their four-wheeled prams stand out from each other as individual designs.

The remaining question is about the level of expression of creative freedom required for a design to be qualified for copyright protection in view of the parallel EU design protection. The CJEU expresses itself somewhat sibylline here when it says in para. 50f.: ” For its part, the protection attached to copyright, the duration of which is significantly greater, is reserved to subject matter that merits being classified as works. For these reasons (…) the grant of protection, under copyright, to subject matter that is protected as a design must not have the consequence that the respective objectives and effectiveness of those two forms of protection are undermined.” From that it follows that, although the protection of registered designs and the protection as copyrighted works may, under EU law, be granted cumulatively to the same subject matter, that concurrent protection can be envisaged only in certain situations.

One conclusion to be drawn from this could be that no too low requirements must be placed on the concept of “one’s own intellectual creation” in order to prevent design protection from being completely overlapped by copyright protection. This question, which is enormously important for practice, will almost certainly occupy the national courts and eventually lead up to the CJEU once again.

Outlook

So far, in view of the open wording of § 2 German Copyright Act (UrhG), the concept of a copyright protectable work has not led to any conflict between European case law and German statutory law. Yet the development of European case law has more than once forced the BGH to revise the interpretation of law that had often been established for decades.

For the BGH, the Cofemel decision of the CJEU might result in concluding a full circle, as it points back into the direction the BGH once came from with its theory of a higher threshold for copyright protection in matters of applied art.

New administrative invali­dation proceedings in German trademark law as of May 2020

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As part of the implementation of the EU trademark law reform as of 1 May 2020 German trademark registrations might be challenged in full administrative invalidation procedures due to earlier rights as well as for revocation. This mirrors already existing proceedings on the level of the EU Trademark Regulation. It offers a further, rather cost economic option next to the respective action before the civil courts and broadens the strategic considerations in trademark conflicts. German trademark registrations are likely to be far more under attack, namely directly before the German PTO.

New options for objections to registered trademarks in Germany: administrative invalidation and revocation proceedings as of 01 May 2020

The German Trademark Law Modernization Act (MaMoG) essentially came into force on January 14, 2019. It implemented the EU trademark law reform, technically EU Directive 2015/2436 into the German Trademark Act (see B&B Bulletin article of 15 January 2019). With a delay – but largely within the term for implementation-, namely as of 1 May 2020, a highly practice-relevant core aspect of the implementation will come into force: namely a full administrative  invalidation procedure due to earlier rights as well as a full revocation procedure, extending the competence of the German Patent and Trade Mark Office (German PTO).

Extended range of attacks against trademark registrations

As a result of the new provisions, a new option is given for attacking registered trademarks: apart from exclusively bringing an actions before the civil courts, older rights (relative grounds for invalidity) and revocation due to lack of genuine use can also be completely invoked at an administrative level before the German PTO.

Thus, applicants might safe costs in terms of procedural economy as well as to make use of the professional competence of the registration authority. The MaMoG now offers the full trias to have registered trademarks cancelled in purely administrative proceedings – not only as until now on the basis of absolute grounds for invalidity (lack of registrability) but also for revocation (not only as formal preliminary proceedings) and due to conflicting earlier rights. Thus, the German trademark law is adapted to the systematics on the level of the European Trade Mark Regulation.

New administrative invalidation proceedings due to conflicting earlier rights

The proprietor of one or more earlier rights (within the meaning of Sections 9 to 13 of the German Trade Mark Act, i.e. on a broader basis than in opposition proceedings, for example also due to rights to names, copyright or design rights) can now for the first time obtain a declaration of invalidity and cancellation of a registered German trade mark in proceedings before the German PTO. The same applies to the withdrawal of protection of a part of an International Registration which designates Germany.

From a practical point of view, the following must be observed:

  • The adversarial part of the proceedings will only be carried out if  the owner of the registered trade mark objects to the declaration of invalidity within two months of notification of the application for the declaration of invalidity; otherwise, the German PTO will declare the trade mark invalid and cancel it with effect ab initio (ex tunc).
  • Relationship to opposition proceedings: official invalidity proceedings are admissible despite pending opposition proceedings, even on the basis of the same earlier right.
  • In contrast to opposition proceedings, in invalidity proceedings, the „moving period of use“ continues to exist; therefore, if the grace period for use expires during the invalidity proceedings, proof of use of the earlier mark during the five years preceding the decision must be provided, if the proprietor of the challenged mark objects.

Full revocation proceedings before the German PTO

Upon request, the registration of a trade mark is revoked and cancelled, primarily if it has not been used within a period of five years. In the absence of an opposition, the trademark is cancelled – normally with effect for the future (ex-nunc). However, if the trademark owner objects within two months after notification of the application for revocation, the adversarial part of the proceedings will, as new provision, be continued before the German PTO – upon payment of a follow-up fee by the applicant.

Consequently, the applicant – in contrast to the previous law – is no longer obliged to pursue his application before the civil courts in an action for revocation.

Special procedural aspects for both options

  • Alternative but not cumulative option: Civil law action and corresponding requests for invalidity or for revocation before the German PTO exclude each other for the same subject matter in dispute.
  • An appeal against the decision of the German PTO may be filed with the Federal Patent Court.
  • Already the written request for invalidation or revocation must be substantiated and evidence must be indicated (unlike for filing an opposition).
  • Hearings shall be held in official proceedings at the request of one of the parties or if deemed relevant.
  • Upon request, the providing of a security for the costs of the proceedings may be required from an applicant outside the EU/EEA.

Increased need for consultancy – far-reaching strategic decisions

Especially for owners of older rights, the options for taking action against younger trademarks increase. The strategic considerations – also relevant for negotiations on an amicable settlement – are complex. Only the following aspects can be touched upon:

Lower cost threshold for administrative proceedings, but no reimbursement

The proceedings before the German PTO are far less expensive than the corresponding legal action before the civil courts. This aspect alone will increase the number of attacks on registered trademarks for revocation and invalidation based on earlier conflicting rights on an administrative level. On the other hand and unlike in case of a successful lawsuit, there is normally no reimbursement of costs in the relevant administrative proceedings.

Reduced burden of proof concerning genuine use in administrative proceedings

An affidavit continues to be accepted as main element of the formally increased threshold to prove (instead of the showing of a plausibility) genuine use of a trademark – at least before the German PTO – in administrative proceedings. In contrast, the stricter full proof applies in legal proceedings.

Provocation of the administrative revocation proceedings in case of opposition

As is the case at the level of European Union trade marks, an owner of earlier trade mark(s) will have to consider more in detail the consequences of the filing of an opposition. Should his prior trademark have fallen out of the grace period of non-use, it might not only become subject to the plea of non-use in the context of the opposition proceedings. There is now the much more far reaching threat of total loss of such prior mark via the inexpensive counter-attack in an official revocation procedure.

All in all, the new low-cost administrative trademark cancellation procedures, while maintaining the corresponding legal action, lead to expanded strategic options, a corresponding need for advice and certainly to an increase in attacks on registered trademarks.

International jurisdiction for infringement of an EU trade mark by advertising on the Internet

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With its judgment in Case C-172/18 (AMS Neve Ltd and Others v Heritage Audio SL and Others), the Court of Justice of the European Union (CJEU) significantly strengthened the legal position of EU trade mark owners. In the case of an infringement of an EU trade mark on the Internet, also courts of the Member State, in which consumers or traders to whom the infringing advertising and offers for sale are directed are located, have jurisdiction. Often, this now allows the owner of an EU trade mark to take legal action in his home country against infringements on the Internet. At least with respect to Germany, this means that the legal situation is changing considerably.

In the underlying facts of the case, the plaintiffs, who come from the United Kingdom, had sued for infringement of their EU trade mark in connection with the advertising and sale of audio equipment via the Internet in England. The defendants were domiciled in Spain and sold their products via their online shop operated from there. The Court of First Instance had dismissed the action due to the lack of international jurisdiction of the English court. The Court of Appeal decided to suspend the proceedings. Inter alia, it referred the following question to the CJEU for a preliminary ruling: ‘In circumstances where an undertaking is established and domiciled in Member State A and has taken steps in that territory to advertise and offer for sale goods under a sign identical to an EU trade mark on a website targeted at traders and consumers in Member State B: Does an EU trade mark court in Member State B have jurisdiction to hear a claim for infringement of the EU trade mark in respect of the advertisement and offer for sale of the goods in that territory?‘

In principle, the CJEU has answered this question in the affirmative. According to the Court, an infringing act is in principle committed in the territory where the consumers or traders, to whom the advertising and offers for sale are directed, are located. Courts of that Member State therefore have international jurisdiction. It is irrelevant whether the operator of the website is established in another Member State of the European Union and has placed the trade mark infringing offer on the Internet from there. It is also irrelevant whether the server is located in another territory or whether the goods which are the subject of advertising and offer for sale are located in another territory. In the opinion of the CJEU, any other view would entail the risk of circumventing the tort jurisdiction laid down in Article 125 (5) of the European Union Trade Mark Regulation (EUTMR), which would ultimately undermine the effectiveness of the European trade mark law. 

The CJEU’s decision deserves approval in every respect. With its ruling, the CJEU provides clarity and strengthens the position of EU trade mark owners. The enforcement of rights will be made considerably easier. The ruling de facto revises the ‚Parfümmarken‘ decision of the German Federal Supreme Court (BGH) from 2017, which was strongly criticized in Germany. At the time, the BGH had taken the completely opposite view in a very similar case. In the case of cross-border offers on the Internet, the BGH had considered the place where the process of publishing the infringing content was initiated to be decisive. By its interpretation, the German Federal Surpreme Court had de facto abolished Art. 125 (5) EUTMR. From now on, this will no longer be able to endure, and German courts will have to follow the outlined guideslines of the CJEU. 

Brexit is there

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On January 31, 2020, 11 p.m. GMT, the UK has left the European Union. However, with no changes for businesses and consumers as of now. The Withdrawal Agreement includes a transitional period until December 31, 2020 within which EU laws fully continue to apply in and towards the UK.

It is generally possible to jointly extent this transitional period. EU bodies and the UK will use the transitional period to conclude an agreement to regulate their future relations.

We will continue to keep you updated regarding your rights and options following Brexit. For the time being, we may refer to our previous newsletters and client communications on our homepage, see here.

Post-election Brexit update on trade marks and designs

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1. What is the current situation?

Brexit is approaching but the Agreement remains to be ratified and transformed into UK laws.

On October 28, 2019 another extension has been agreed until January 31, 2020 the latest. Until then, the UK remains full member of the EU with all rights and obligations. There are no immediate changes for right owners at this time.

It was not possible to finalize the political compromise reached on October 17, 2019 between EU and UK towards a final positive vote in UK Parliament. The extension also related to the General Election which was now held in the UK on December 12 2019. On substance, we will thus likely see furhter progress only after the election and assenbmbly of the Parliament probably by early January 2020.

On substance, we will thus likely see further progress only after the election and assembly of the Parliament, probably by January 2020.

2. What are the consequences of Brexit for trade marks and designs?

With Brexit, all European Union trademarks and Community Designs will cease to have effect in the UK. This will likewise apply to the equivalents under International Registrations.

Further background can be found in previous newsletters relating to Brexit.

Mechanisms and comprehensive statutory framework have been set up to reduce negative effects for right owners.

a) European Union Trademarks

All registrations not finally expired will be cloned on the UK register, by automatic data transfer from EUIPO, without examination, free of charge and fully identical to the EU right.

Pending applications will cause a 9 months` period to re-file in the UK register. Such applications will be identical to the EU right but will be examined by the UK Office and cause standard fees.

b) Registered Community Designs

All registrations not finally expired will be cloned. Pending applications cause the same 9 months` period to re-file. Applications with deferred publication will be granted a deferred publication in the UK register for 12 months from re-filing.

Unregistered Community Desings will continue as Continuing Unregistered Design in the UK for the remaining period of protection. There will be an additional Supplementary Unregistered Design but it is limited to the UK in territorial scope.

c) International Registrations

Trademarks and Designs designating the EU will be cloned or cause a right to re-file, both, however, only as a national UK rights. By incurring further costs and accepting another examination process, it is possible to replace this national right and reintegrate it into the International Register by subsequent designation.

3. Is there immediate need for action?

No. The solutions found shall apply with or without Agreement. But: Clones and Re-filings can double the portfolio when the EU level of protection shall be maintained.

It is thus sensible to review the portfolio soon and decide at an early stage which parts of the portfolio are useful or required for the UK. We will send a full report about relevant IP rights as represented by us.

Redundant rights can be abandoned (opt-out), re-filings can be provisionally instructed (opt-in) and relevant priority and renewal deadlines are addressed separately.

No new local representative will be needed. We will be entitled to represent the clones and re-filings at the UK Register which we currently represent at EU level. It is the goal of the United Kingdom to cause no further disruption to right owners in this regard. We are accepted as address for service and will be able to competently represent interests in a number of proceedings.

4. How about further information?

IP-related contracts, exhaustion and channels of distribution, and other less pressing issues will be subject of further newsletters.

Brexit and Data Protection Law – if the UK becomes a third country without a deal

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In case of an unregulated hard Brexit, the European Data Protection Law would also come down with full force: The United Kingdom would become, from one day to the next, a “normal” third country and would also be treated as such by the EU Data Protection Law. The transfer of personal data from the EU to the United Kingdom would only be legitimate if and as long as specific conditions are met.

The EU General Data Protection Regulation (GDPR) establishes a uniform level of data protection throughout the European Union which allows free data exchange within the EU: Since the same Data Protection Law (in principle) equally applies in all EU Member States, personal data may be transferred within the Union across the internal frontiers without any special requirements or conditions, as they are equally well protected in all Member States via the GDPR.

Data transfer to third Countries only under special conditions

As soon as the United Kingdom leaves the European Union, it will become a third country from one day to the next. Under the GDPR, personal data may be transferred to a third country only if specific conditions are met, as described below.

If the Brexit is unregulated, i.e. without any special agreement between the Union and the Kingdom, the aforesaid also applies to the UK – immediately and directly, as of 29 March 2019 at 00:00 CET, without any grace period, as provided for in Art. 71 of the Draft Agreement of 14 November 2018 which was rejected by the House of Commons on 15 January 2019: It was planned therein that the GDPR should continue to apply to the UK until the end of 2020. For the time thereafter, a national UK Data Protection Law was to be established to provide essentially the same level of data protection in the UK as within the European Union.

What does that mean for companies established in the EU?

In terms of data protection, an unregulated Brexit particularly affects the “remainers” in the EU, namely, the EU-based companies that wish to exchange data with UK-based companies. The EU companies are then so-called “data exporters”, and they therefore have to set the stage for data transfer that is compliant with EU data protection law. If the requirements are not met, data must not be transferred to the third country. If data are transferred nevertheless, the EU-based companies are committing a data protection violation. It is therefore in the direct interest of EU-based companies to comply with the GDPR requirements for transfers to third countries.

The goal of special provisions of the GDPR for exporting data to third countries is the best possible protection of personal data and the persons to whom they relate in the third country. Data transfer to a third country is permitted only if

  • the European Commission has decided, by means of an adequacy decision, that the third country ensures an adequate level of protection,
  • or appropriate safeguards have been provided
  • or the transfer can be justified by one of the derogations set forth in the GDPR.

In detail:

  • Adequacy decision of the Commission

    With regard to some third countries, the European Commission did confirm that an adequate level of data protection does exist in these countries. These include, inter alia, Canada, Japan, Switzerland and Israel., Personal data may be transferred to these countries without establishing additional safeguards.
    With regard to the UK, however, there is no such decision, and it is unlikely that such a decision will be taken in the near future. In a notification of 14 November 2018, the Commission in this regard simply stated:
    “(…) the adoption of an adequacy decision is not part of the Commission’s contingency planning.”

  • Providing “appropriate safeguards

    ”The export of data to third countries may take place if the data exporter provides “appropriate safeguards” to ensure an adequate level of data protection. In particular, this includes the use of the so-called “Model Clauses” which were previously approved by the Commission. These Model Clauses are currently still applicable in principle, in modified form, but are not unchallenged. In fact, they are currently under review in the context of proceedings pending before the European Court of Justice. It cannot be ruled out that these Clauses may suffer the same fate as the Safe Harbour Agreement, which was declared invalid by the ECJ.
    “Appropriate safeguards” also include binding corporate rules (BCR) within groups of undertakings, which, however, must be approved beforehand by the supervisory authorities.

  • Derogations for specific situations

    The GDPR provides a number of “derogations for specific situations” in which a transfer of data to a third country is permitted even without an adequacy decision and without “appropriate safeguards”. This includes, in particular, the case where the data subject has explicitly consented to the proposed transfer after having been informed of the possible risks of such transfers. Personal data, as another example, may also be transferred to a third country if this transfer is necessary for the performance of a contract concluded with the data subject or concluded in his/her interest.
    Whether the data transfer is covered by one of the derogations must always be carefully examined on a case-by-case basis.

It is important to keep in mind that ensuring compliance of the third country transfer alone is not sufficient; in addition, the obligation to provide information must be fulfilled. The data subjects must be given information about the intention to transfer personal data to a third country and also about how the adequate level of data protection will be ensured.

What does that mean for UK-based companies?

The GDPR is European Union Law and applies directly in all EU Member States. One would think that the GDPR therefore does not have any relevance for UK-based companies after the UK’s withdrawal from the EU. But this is not the case: Companies established in third countries are also fully subject to the rules of the GDPR if they offer goods or services to individuals in the Union and in this context process personal data of persons residing there. For example, a British online shop that offers and sells goods to the EU, is subject, without restrictions, to the rules of the EU Data Protection Law. The same applies where the behavior of individuals residing in the European Union is monitored out of the third country (e.g. via web tracking).

For such UK companies, the unregulated Brexit therefore means that they are subject to the strict EU data protection regulations due to their activities in the EU, but (being companies in a third country) no longer benefit from the principle of the free transfer of data.

Do not forget assessment Stage 1

The question whether and under what conditions the transfer of data to a third country is compliant with the GDPR concerns Stage 2 of the assessment of whether the personal data may be transferred from one body to another. Irrespective of whether the recipient of the data is located inside or outside the EU, companies must first assess whether or not the data transfer to a third party is GDPR-compliant at all, which requires applying a specific legal basis.

Conclusion

In particular, EU-based companies that intend to transfer personal data to the United Kingdom must be prepared for an unregulated Brexit. It must always be assessed on which legal basis the transfer of personal data to the UK can take place as of the Brexit reference date, and appropriate measures must be taken to ensure an adequate level of data protection.

Update Brexit and trade marks – Madrid System set aside for International Registrations

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The UK Government has laid to Parliament on 31 January 2019 additional draft regulations for Brexit (The Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019). Further to the documents regarding European Union Trade Marks – see our Special Bulletin of 18 January 2019 – the Government now, among others, addresses International Registrations designating the European Union.

The concept stays the same: International Registrations are cloned onto the national register and are treated as UK trade marks. They will be called comparable trade marks (IR). Remember: Cloned EUTM will be called comparable trade marks (EU).

British Government has thus chosen to leave the Madrid System as administered by WIPO. So far, rumors went that EU designations could continue as UK designations within one and the same International Registration; this concept is called „continuation of effect“ and has been seen in history (when Montenegro departed from Serbia-Montenegro). Now it is clear that a strictly national solution is preferred.

As soon as practically possible after Exit Day, „registered“ EU designations will be cloned automatically and free of charge with application date, priority, seniority, and all goods and services onto the national register, just like EUTMs will be cloned. „Registered“ means that the EU designation received the grant according to Art. 189 (2) EUTMR so that there is no (longer a) refusal of protection pending. Opting-out is possible as long as third party interests do not stand opposed. With expiry of the International Registration within six months after Exit Day, the Office will contact right owners by setting a grace period of renewal without surcharge of another six months. Infringement proceedings will continue with the cloned trade mark. A new grace period of non-use will not be granted.

For „pending“ EU designations, there will be a fresh application period of nine months. Exit Day is not relevant here but either the day of international registration at WIPO or the day of subsequent designation, each relating to the EU designation. The clone will run through normal examination at the Office, at standard fees. According to this system cloning will not be permissible if and to the extent the pending EU designation has been refused protection by EUIPO prior to Exit Day, and such refusal is not subsequently lifted.

Brexit and trade marks – what’s next?

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The political situation remains exceedingly difficult. However, as we have at hand the UK government’s surprisingly comprehensive and distinct proposals for the future fate of European Union Trademarks following Brexit, we can present these in a special bulletin. With all due caution, these proposals will very likely be final, also in case of a no deal scenario.

In a nutshell: European Union Trademarks will be cloned, and contracts, proceedings, rights and pleas in relation therewith will continue to have effect in the United Kingdom. A piece of legislative art, a bit coarse indeed but at long last, offering desired ideas and answers.

„The Noes have it!“

On 15 January 2019 the draft Withdrawal Agreement failed to succeed in Parliament. General Elections are unlikely an option because PM Theresa May just survived the vote of no confidence on 16 January 2019. At the same time, the EU seems to exclude re-negotiating the deal. In such deadlock situation, it is time to prepare for a no deal scenario and a hard Brexit. This represents standing recommendations from both EU Commission, national governments and relevant NGOs.

What are we up to in circumstances of a hard Brexit?

The UK will leave the Single Market and the Customs Union. The body of current EU law will first be transformed identically into UK law, following the European Union Withdrawal Act 2018 which received Royal Assent on 16 June 2018. Subsequently, it may be adopted to new requirements.

This will not apply for IP rights of pan-European scope. Following Brexit, they will lose effect in the United Kingdom, if and to the extent there is no transformation of whatever nature to inure to the benefit of right owners. This hiatus will hold true for pending proceedings, contracts and questions of genuine use or infringement.

Will trade mark owners be safe?

As things currently stand, we have to distinguish between European Union Trademarks (EUTMs) on the one hand and International Registrations designating the EU on the other. Only EUTMs are covered by the draft Statutory Instrument currently laid in Parliament, the Trade Marks (Amendment etc.) (EU Exit) Regulations 2018.

This instrument comes with detailed and comprehensive provisions, offering answers to questions raised by counsel and owners ever since the Referendum in June 2016.

Following the rules of scrutiny of such secondary legislation under the Withdrawal Act 2018 (Schedule 7 thereto), amendments to the draft are almost impossible so that the provisions made are likely final. The most important specifications are as follows:

How does the regime look like?

Registered EUTMs will be cloned. With exit day, they will receive a UK counterpart, automatically and at no cost, and it will have exactly the same parameters – application date, priority or seniority, goods and services (in the official English version published by EUIPO); it all remains the same in a mere technical delivery process. They will, however, not be called UK marks, the little snappy title will be „comparable trade mark (EU)“ and they will have to enter onto the Register as soon as reasonably practicable after exit day. Hopefully, there will be little delay only.

The same mechanism will apply for Collective Marks and Certification Marks.

Terms and fees for renewal will be those applicable for UK marks, with one important exception: During a period of six months following exit day, UKIPO will, with expiry, send renewal reminders to the owners (not EU representatives) granting permission to renew the trade mark within 6 months upon receipt of such notice.

Genuine use or reputation of the mark in the EU before exit day will remain valid in the UK. After five years of non-use, the cloned trade mark will be subject to cancellation. Periods of use can be partly before and after exit day, with the consequence that the period after exit will require use in the UK. There will be no all new grace period of non-use, though.

Contracts, agreements and licenses will be presumed valid for the cloned right and in the UK, unless expressed will of the parties suggests differently. Securities granted in EUTMs will be valid against the cloned trade mark, too.

Pending court proceedings in the UK on the basis of an EUTM will continue with the cloned right swapped in but cannot any longer justify EU-wide court orders, particularly injunctions. Binding and final judgements of EUTM Courts will remain valid and enforceable in the UK. But, it goes only this way; where UK courts have granted EU-wide orders, these will likely be enforced only upon recognition in the Member State or under the rules of international agreements, absent provision in EU law to the contrary. Also, cases pending at UKIPO, especially oppositions, are not addressed by the present draft!

Right owners without interest in such cloned right may opt-out with the UKIPO at any time, unless the cloned right has been put to use in the UK after exit day, or has been made subject of agreement (including transfer of right) or security after exit day; if so, opting out is not permissible.

EU Trademark applications pending at exit day will be processed as UK trade mark applications only upon request by the owner and will run the ordinary course of examination at UKIPO. The request has to be filed within 9 months following exit day, and the then UK trade mark application attracts the ordinary fees. Only under such circumstances, the application date, priority and seniority date of the EU application will survive.

The concept of exhaustion of rights based on EU trade marks continues to have effect beyond exit day. An exhaustion that occurred before exit day in the EU continues thereafter in the UK. There is further provision that rights remain exhausted in the UK, when the product has been first put on the market in the EU or in the UK after exit day. Similar shall apply to Community designs and essentially to copyrights, see draft of The Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018. However, no provision could be made that trade mark rights remain exhausted in the EU, when the product is first put on the market in the UK after exit day. This will remain for the EU legislator to define, or the Brexit parties to jointly agree.

These draft Regulations go well beyond what is included in the Withdrawal Agreement but questions and gaps to fill in remain:

Action required?

The Statutory Instrument does not at all address International Registrations designating the EU. There is express political will to find a comparable solution for this category of right with some 200.000 live trade marks but not more; there is no working paper or draft. Stay tuned! For those with a vivid interest in the UK, some deliberation with trade mark counsel is strongly suggested, to avoid any significant gap following exit day.

Pending cases at EUIPO against EUTMs do not prevent the registration to be cloned or an UK application with the same particulars be filed at UKIPO, resulting in potentially repeated or parallel proceedings at UKIPO, at least doubling the cost.

Currently, for register operations only an address for service within the European Economic Area is required by UKIPO, not a local address or representative. This is not very likely to survive for cloned rights so that time may be short to coordinate future administration of the portfolio.

What is due next?

IP right holders should review and analyze their portfolio to see which IP rights are particularly relevant to their business in the United Kingdom. Particularly relevant IP rights may encompass, for example, those with significant revenue or those expressly licensed for the territory of the United Kingdom. To the extent that such important intellectual property rights are not yet covered by the Regulations and thus a gap in protection may emerge, it may be worthwhile revising the filing strategy going forward, including for the applications that will require re-filing in the UK.

Right owners should also check on those IP rights that represent no relevant interest in the UK. Opting out might thus be prepared to prevent additional redundant administrative burden in the long run. Consider, however, the potential strategic benefits of having this cloned right with your counsel first. On top, opting out is not always permissible and therefore, particular attention should be paid to IP-related contracts and agreements of any kind.
When you are a licensee, make sure that your are on the same page with the licensor about the geographic coverage of the license and the licensed rights.

Are preventive duties on hosting service providers in line with EU law? Some comments from a legal perspective on Art. 13 Draft DSM Directive and “upload filters”

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The debate on Art. 13 Draft DSM Directive has gained speed, after the Commission’s initial 2016 proposal was supplemented by the Council’s proposal of May 25, 2018, and after the European Parliament’s JURI Committee on June 20, 2018 also voted on an own proposal for Art. 13 Draft DSM Directive. The plenary vote is due in July 2018. While the language of the proposals by the Commission, Council and Parliament offer differences, all three proposals seem to share the common standpoint that active role hosting providers should have a duty to prevent the availability of unauthorized copyright content.

The contrasting view by some politicians, e.g. MEP Ms. Reda create the impression that such a duty, including by means of applying Automatic Content Recognition technologies would be something new and not already part of the existing EU law. A look from a legal standpoint shows that this impression would not be correct. Rather, so far EU law and the respective case law has allowed the imposition of a duty to prevent the availability of unauthorized copyright content for hosting providers under certain requirements. This includes neutral non-active hosting providers.

Duties of care for passive hosting providers

Art. 15 E-Commerce Directive (ECD) provides for a prohibition on imposing general monitoring duties upon internet providers. This is in particular true for passive hosting providers, which may – due to their non-active role – rely on the liability privileges of Art. 14 ECD. The CJEU understood Art. 14 as applying only to mere technical, automatic and passive operators providing data processing services to their customers (CJEU of 23 March 2010, joined cases C-236 / 08 to C-238 / 08 para. 114 – Google and Google France; CJEU of 12 July 2011, C-324 / 09 para. 113 – L’Oréal / eBay).

Art. 15 ECD plays an important role in particular in determining the scope of injunction claims, which remain applicable even if Art. 14 ECD applies. In contrast to Arts 12 to 14 ECD, Art. 15 ECD applies to injunction claims, in particular to injunction claims which are raised pursuant to Art. 8(3) Copyright Directive in the field of copyright, and pursuant to Art. 11 third sentence Enforcement Directive for other IP rights. Pursuant to Art. 8(3) Copyright Directive and Art. 11 third sentence Enforcement Directive, right holders can ask providers to take measures to prevent future rights infringements. The Articles do not proscribe or prohibit any measure to achieve the goal.host

In this regard, Art. 15 ECD helps to balance the fundamental rights at stake by the internet provider, its users and the right holders (CJEU of 14 April 2011, C-70 / 10, para. 69 et seq. – Scarlet / SABAM; CJEU of 16 February 2012, C-360 / 10, para. 39 et seq. – SABAM / Netlog; CJEU of 15 September 2016, C-484 / 14, para. 87 – McFadden / Sony Music). For example, the CJEU has found that an injunction imposed on a hosting provider requiring it to install a filtering system obliging the hosting provider to actively monitor all the data relating to all of its service users, in order to prevent any future infringement of intellectual property rights is incompatible with Art. 15 ECD (CJEU of 16 February 2012, C-360 / 10, para. 38 et seq. – SABAM / Netlog).

But as Art. 15 ECD is an open provision which requires a careful balancing of rights, it does not stand in the way of more specific monitoring duties, in particular by hosting providers. For example, file hosters have been obliged by German and Italian courts to apply word filters, after having been notified about a specific title of a copyright work, made available without authorization by a user. This interpretation of Art. 15 seems convincing. As the filtering is confined to a specific title, it is not in conflict with the prohibition of general monitoring duties by internet providers. Recital 47 ECD in particular mentions that “monitoring obligations in a specific case” are not prohibited by Art. 15 ECD.

Nevertheless, a clear delineation between prohibited general monitoring obligations and allowed specific monitoring obligations has not yet been established, in the absence of relevant CJEU case law. Confusingly, the French Federal Supreme Court (Cour de Cassation) has rejected stay down obligations for hosting providers as conflicting with the prohibition of general monitoring duties (Cour de Cassation Arrêt no. 831, 11-13.669, 12 July 2012 – Google France / Bach films; Cour de Cassation Arrêt no. 828 of 12 July 2012 – Google France / Bach films.).

It does not seem convincing to maintain that stay down and a duty to prevent the availability of specific works are always stopped by the prohibition of general monitoring duties pursuant to Art. 15 ECD. In the end, it is a question of the technical solution used by the provider. For example, if the measures relate only to files of a certain type and thus only prevent the availability of such files, one cannot talk of general monitoring. If one would apply Art. 15 ECD in all cases that involve any processing of data, no room would be left for specific monitoring duties. What also speaks in favour of the freedom to establish specific monitoring duties to ensure prevention of infringements, is the recognition of a balancing of rights by the CJEU specifically for Art. 15 ECD. If any and all prevention duties for hosting providers were prohibited by Art. 15 ECD, this would preclude any kind of duties of care for hosting providers and would reduce the duties of hosting providers to a mere takedown. Such mere takedown duties would not be in line with EU law.

Rather, the CJEU has in several cases recognised prevention duties of hosting providers (CJEU of 12 July 2011, C-324 / 09 para. 131 – L‘Oréal / eBay; CJEU of 16 February 2012, C-360 / 10 para. 29 – SABAM / Netlog.). In particular for hosting providers after they were notified of a clear rights infringement, Art. 8 (3) Copyright Directive establishes duties beyond mere takedown, also for stay down and for prevention of similar clear rights infringements of the same kind. This is at least the established case law of the German Federal Supreme Court. In its L’Oréal / eBay decision, the CJEU confirmed the German case law for the sister provision Art. 11 3rd sentence Enforcement Directive. According to the court, the prevention duty included the duty to ensure that an online market place takes measures “which contribute, not only to bringing to an end infringements of these rights by users of the market place, but also to preventing further infringements of that kind”. (CJEU of 12 July 2011, C-324 / 09 paras. 127, 128 to 134 – L‘Oréal / eBay). In particular, according to the German case law, such (specific) prevention duties by hosting providers can include the application of word filters with regard to the works notified to the provider.

In the case of unjustified notices, it should also be noted that here too EU law already provides for a solution. E.g. for access providers the CJEU has confirmed a right of action for internet users where they face an unjustified blocking of information through website blocking (CJEU of 27 March 2014, C-314 / 12 para. 57 – UPC Telekabel Wien). This decision concerned Art. 8 (3) Copyright Directive and more specifically the weighing of the fundamental rights at stake. Art. 8 (3) also applies to hosting providers. As a consequence, and also in the case of unjustified blocking of information by hosting providers already under the existing regime of Art. 8 (3) Copyright Directive, the rules provide for a right of action for the uploader.

As a result, reasonable and specific duties to prevent the availability of copyright works for neutral and passive hosting service providers seem possible under the current regime.

The case of active hosting providers

That said, prevention duties (which may include upload filtering for specific content) for active hosting providers should not fall behind this current status of law for passive providers. Rather, it logically follows from CJEU case law that active hosting providers deserve even a stricter liability regime than neutral hosters.

CJEU Ziggo / Brein (“The PirateBay”) concerned a website blocking claim raised against a Dutch access provider under Art. 8(3) Copyright Directive. In this context, the CJEU analysed the website The Pirate Bay, which is an online index for digital content, facilitating peer-to-peer file sharing among users of the BitTorrent protocol. The court held it to be a sufficient intervention in a communication that The PirateBay offered an index classifying the works under different categories, based on the type of works, genre and popularity, and the operators of The PirateBay checking that the work has been placed in the appropriate category. Also, the operators deleted obsolete or false Torrent files and actively filtered some content (CJEU of 14 June 2017, C-610 / 15, para. 38 – Ziggo / Brein).

The role of The Pirate Bay as a platform to connect users of the BitTorrent protocol for infringing activity was evaluated by the CJEU as primary liability for communication to the public. Moreover, it appears that the criteria for primary liability (as established by the CJEU in The Pirate Bay) for communication to the public run parallel with the requirements for an “active role”, which excludes hosting providers from the liability privilege of Art. 14 ECD. This would also guarantee a sound interface without gaps between the EU liability rule for communication to the public and the liability privilege of Art. 14 ECD.

Therefore, according to the CJEU case law, active hosting service providers are, due to their very nature, under a stricter, primary, copyright liability through their (active or deliberate) intervention in the making available of works on their platform. It follows that in order to avoid liability, active hosting service providers must take effective measures to prevent the unauthorised availability of works on the services. It would be a bizarre conclusion that primarily liable service providers would have lesser duties than those already applied to passive hosting service providers (see above).

It may be of interest in this respect that the German Federal Supreme Court (BGH) has also applied the requirements for filtering duties for providers which are within Art. 15 ECD to providers outside it. According to the opinion of the BGH, search engines are not within the reach of Art. 15 ECD. But the prohibition to impose general filtering obligations upon them applies. Nevertheless, specific filtering duties may be imposed on search engines. In particular, after a notification by the right holder, work specific word filtering duties and also work specific audiovisual filtering duties (if proportionate) may be imposed on the search engine (BGH of September 21, 2017, file no. I ZR 11 / 16: “Vorschaubilder III” (“Thumbnails III”).

It would therefore appear perfectly feasible and within the framework of the existing EU law to impose more extensive duties to prevent the availability of copyright content on active hosting service providers, subject to a careful balancing of legitimate interests and rights. Active hosting providers with an in principle legal business model may in particular face specific filtering duties. Depending on the business model, such filtering duties may be extended. For example a borderline business model attracting infringements could face more general filtering duties.

Result: A duty to prevent the availability of protected works is a necessary part of copyright liability law

CJEU and national case law show that reasonable duties of care for hosting service providers, including the duty to prevent the availability of copyright works, are an integral part of copyright liability already. They have been applied for years without “breaking the internet”. But such “preventive” duties have to be applied with a differentiated approach:

  • Duties of Passive hosting providers should be assessed against Art 15 of the ECD, and in particular the prohibition against “general” monitoring.
  • Active hosting service providers fall under a stricter regime. But the scope of duties depends on the legitimate interests at stake. For some active role hosters specific monitoring will apply, but in other cases they must do more. One example would be services deploying a business model based on the unauthorized availability of copyrighted works uploaded by their users. In order to avoid copyright liability such services should take effective measures to prevent the availability of works on their services.

This article was first published in the Kluwer Copyright Blog (http://copyrightblog.kluweriplaw.com/2018/06/28/preventive-duties-hosting-service-providers-line-eu-law-comments-legal-perspective-art-13-draft-dsm-directive-upload-filters/).