1 Spotlight Trademarks Patent Copyright IP Enforcement Trade Secrets Other IP and related issues March 2016 Eyes are on the European Union as the long awaited trademark reform package was approved by the European Parliament at the end of 2015. The new Community Trademark Regulation (CTM) will come into force on 23 March 2016 and brings with it significant implications for trademark owners and their portfolios. It is intended that these reforms will modernize and streamline trademark laws in Europe making them fit for the digital era giving trademark owners certainty around the scope of their rights. Elsewhere in the brand protection world: The US Federal Appellate Court struck down the ban on disparaging trademarks for being unconstitutional, abandoning decades of USPTO practice whereby a mark could be refused registration on the basis that it disparages others. Alerts from France and Turkey take note of developments in the area of trademarks in comparative advertising, while new rules in Russia establish trade dress protection. In other IP areas: • The pilot Brazil-US Patent Prosecution Highway program started on 11 January 2016. • In an unprecedented ruling in Russia, the Moscow City Court confirmed that preliminary blocking injunctions are available against websites that infringe rights relating to website designs. • Amendments to Australia's Copyright Act have been proposed, including changes to harmonize copyright terms, broaden 'safe harbor' provisions to cover a broader range of entities. • Reforms are also afoot in the area of trade secrets in the EU - the final vote on the draft Directive on the Protection of Trade Secrets and Know-how is expected in April 2016. Read on for more. Baker & McKenzie Global IP Practice Group 2 Spotlight on EU Trademark reform Will your EU registrations be invalidated by the new law? The long-awaited reform package to the European trademark system is here. The new Trademark Directive (EU) 2015/2436 and the amended Trademark Regulation (EU) 2015/2424 were published in the Official Journal of the EU on 23 and 24 December 2015. The aim of the reform is to provide brand owners with a more efficient, cost effective and harmonized trademark system across all Member States. The Regulation will come into force on 23 March 2016. The Member States will have 3 years to implement the changes incorporated in the new Directive into their national laws. Directive (EU) 2015/2436 will repeal the current Directive with effect from 15 January 2019. Importantly, the EU Trademark reforms provide a 6 month window for trademark owners to secure full specification coverage for qualifying CTMs that include Class headings. If no declaration is made during this period, OHIM will treat the CTM as registered only for the goods and services covered by the literal meaning of the class heading, which could result in a restriction of trademark rights. How will this affect brand owners? Trademark owners should consider: • Filing applications in multiple Classes before 23 March 2016 to take advantage of the current fee structure which is lower for multi-class applications; • Reviewing the scope of protection of marks filed before 22 June 2012 that use Class headings to ensure that they provide adequate protection; • Reviewing the additional rights to stop counterfeit goods in transit and update their anticounterfeiting strategy if needed; • Reviewing whether they have any non-traditional marks that can be protected under the new legislation. Key changes Some of the changes implemented by the reform are: Classification. The new legislation addresses the current inconsistency in relation to trademarks registered using the International Nice Classification Class headings. Historically, marks registered with Class headings were deemed to cover all goods and services in the relevant Class. Since 22 June 2012, specifications using Class headings have been interpreted literally, meaning owners only get protection for the literal meaning of the words in the Class heading (the difference between the historical "covers all" practice and the current "means what is says" practice). Owners of registered trademarks with Class headings filed before 22 June 2012 will be given a 6 month period between 23 March to 24 September 2016 to make a declaration to ensure the specification provides the coverage originally intended. Owners will be able to make a Declaration to effectively add specific goods or services to their specification that would otherwise not be covered by the literal meaning of the Class heading under the current "means what it says" practice. Trademark owners will need to identify which of their CTMs have exact Class headings in the specification and review them to decide whether a Declaration claiming additional coverage is required. If no action is taken before 24 September 2016, registered trademarks with Class headings filed before 22 June 2012 will be deemed to cover only the goods and services listed in Class headings, not the entire class. This could significantly narrow the protection afforded by the trademark. Trademark owners are encouraged to 3 review their portfolio and take action as necessary. Terminology. Community Trademarks, or CTMs, will be referred to as European Union Trademarks. The Community Trademark Registry (currently The Office for Harmonization in the Internal Market or OHIM) will become the European Union Intellectual Property Office (EUIPO). These new names are thought to be clearer and more self-explanatory. Filing and renewal fees. Currently, official application fees are the same for applications in up to three Classes of goods and services. The new "one-Class-per-fee" system will allow applicants to file a trademark in one Class only for a reduced fee (€850 instead of the current fee of €900) with an additional fee for each additional Class. This will make the system more accessible to smaller enterprises and help to prevent cluttering of the Register from applications covering goods or services that the applicants do not intend to use in relation to their trademark. The renewal fees will also be reduced. Graphic representation. The current requirement to represent a trademark "graphically" will no longer apply, provided that a trademark can be represented in a manner which allows third parties to easily and clearly determine the protected subject matter of the mark. This increases the prospects of registering non-conventional trademarks, such as holograms and motion trademarks. Counterfeit goods in transit. Owners of registered EU trademarks will benefit from stronger protection against infringing goods in transit in the EU. Counterfeit goods passing through the EU will now be infringing in the EU, unless the importer of the goods can show that the trademark owner would not be entitled to prohibit the sale of the goods in the country of final destination. Summary of other changes • The special grounds for objection to shape marks are extended to all non-traditional marks, which can now be rejected if they: o protect a technical function o add substantial value to the goods or services o are derived from the nature of the goods • The own name defense will be restricted to natural persons, meaning that it will no longer apply to company or trading names • New grounds of refusal where the sign conflicts with designations of origin and geographical indications will be introduced • Trademark owners may prevent use of their trademark by competitors if it breaches the EU Comparative Advertising Directive (2006/114/EC) • All Member States will be required to implement administrative revocation and invalidity proceedings, rather than restricting these to Court proceedings. For more information, please contact Nadine Archer and Vlotina Liakatou, Baker & McKenzie, London. Also see the client alert by Rembert Niebel and Markus Hecht, Baker & McKenzie, Frankfurt and the client alert written by Lorenzo de Martinis, Roberto Ramponi, Lorenza Mosna, Camilla Caravati and Revital Cohen, Baker & McKenzie, Milan. 4 Trademarks Canada - Federal Court of Appeal confirms that use of a competitor’s trademarks as meta tags for a website does not amount to trademark infringement, depreciation of goodwill, or passing off On 18 December 2015, the Federal Court of Appeal held in Red Label Vacations Inc. v 411 Travel Buys Ltd that using a competitor’s trademarks as meta tags for a website did not amount to, among other things, trademark infringement, depreciation of goodwill, or passing off. The defendant in this case copied meta tags from the plaintiff’s website when it created its own website. This resulted in defendant's website being included in search results when users enter search terms that contain the marks of the plaintiff. The court found that there was no trademark infringement because the defendant did not visibly use plaintiff's trademarks on its website and so it (a) did not associate its services with the plaintiff’s trademarks, and (b) did not ‘use’ the plaintiff's trademarks, as defined by the Trademarks Act, for the purposes of distinguishing or identifying its services from those of others. The court further agreed that there could be no depreciation of goodwill since the plaintiff's trademarks were not used by the defendant on its website in connection with its goods or services. Finally, the court found that the likelihood of confusion, an essential element for establishing a passing off claim, cannot occur while users are searching for a website because those users can still choose their desired website from which to purchase goods and services. Rather, likelihood of confusion can only occur after consumers have actually viewed a particular website at which point, they are able to back out of that website if it is not what they are looking for, and instead go to the website of their choosing. For more information please see the client alert written by Christopher Aide, Jim Holloway, Essien Udokang and Andrew Chien, Baker & McKenzie, Toronto. Malaysia - Federal Court affirms a wide scope of activities for trademark use On 8 October 2015, the Federal Court of Malaysia affirmed in the case of Mesuma Sports Sdn Bhd v National Sports Council Malaysia; Trade Marks Registrar of Malaysia (Interested Party), the Court of Appeal's wide interpretation of "use in the course of trade" in establishing trademark rights. In this case, the appellant was a company appointed to manufacture and supply sports clothing bearing a "tiger stripes design" for the respondent, a non-profit statutory body. This manufacturer registered a mark similar to the trademark under the Malaysian Trade Marks Act ("Act") and claimed to be the first user of the trademark in the course of trade. At first instance, the plaintiff obtained judgment that the trademark had been registered wrongfully on the basis that it was the first user of the trademark. The Court of Appeal upheld this and the case was subsequently elevated to the Federal Court. The Federal Court focused on the question of who can rightfully claim to be the proprietor of the trademark, on the basis of "use in the course of trade" - the manufacturer of products bearing the mark or the non-profit entity which engaged it? The Federal Court endorsed the wide interpretation of "use in the course of trade" and held that such use includes non-profit activity and the respondent's acts of appointing manufacturers to make and supply sports apparel bearing the subject trademark. The Federal Court ruled that the plaintiff respondent was the first user of the trademark. For more information on this decision please see the client alert written by Chew Kherk Ying and Adeline Lew, Baker & McKenzie, Kuala Lumpur. 5 United States - Federal Appellate Court strikes down ban on disparaging trademarks as unconstitutional On 22 December 2015, the United States Court of Appeals for the Federal Circuit ruled that the portion of Section 2(a) – barring registration of “disparaging” trademarks is unconstitutional and amounts to a violation of a brand owner’s First Amendment right to free speech. See In re Tam, No. 20141203 (Fed. Cir. Dec. 22, 2015). In its majority opinion, the en banc panel held that “[t]he government cannot refuse to register disparaging marks because it disapproves of the expressive message conveyed by the marks.” In doing so, the Federal Circuit abandoned nearly seventy years of U.S. Patent & Trademark Office (“USPTO”) practice whereby a mark could be refused registration on the basis that it disparages others. For more information on this ruling, please see the client alert written by Lisa Rosaya and Joshua Wolkoff, Baker & McKenzie, New York. Trademarks and Advertising France - Using a competitor advertising idea may be considered as an act of unfair competition The French Supreme Court has recently confirmed the decision of the Court of Appeal which ruled that the use of a competitor advertising idea, under certain circumstances, may amount to an act of unfair competition when it creates a risk of confusion (Supreme Court 24 November 2015). In the case at stake, a fruit juice and dessert manufacturer, which promotes its orange juices with an ad featuring an orange fruit labelled with its trademark, brought a lawsuit against one of its main competitor, because of the use of a similar conceptual idea in a TV ad. It claimed that the use of such visual amounted to unfair competition and created a risk of confusion in the mind of the consumers. The action was grounded on unfair competition against its competitor and there was no claim of infringement of intellectual property rights. On 18 February 2014, the Versailles Court of Appeal ruled that the defendant committed unfair competition acts by using an ad showing an orange, labelled with its trademark, to promote fruit juices, prohibited such use and sentenced the defendant to the payment of EUR 80,000 as damages. On 25 November 2015, the French Supreme court subsequently upheld the decision of the Court of Appeal and confirmed that the use of a conceptual similar advertising idea amounts to an act of unfair competition when it creates a risk of confusion in the mind of the consumers. For more information on this decision please see the client alert written by Virginie Ulmann and Nathalie Marchand, Baker & McKenzie, Paris. Turkey - Effectivity of comparative advertising reforms that would allow advertisers to refer to competitors by trademark or name postponed In our previous client alert of October 2015, we announced the upcoming reforms that would have, for the first time in Turkey, allowed advertisers to suggest the superiority of their products and services using direct references to a competitor's trademark or name beginning from 10 January 2016. However, in the Regulation on the Amendment of the Regulation on Commercial Advertisements and Unfair Commercial Practices published on 25 December 2015, the government announced that it has postponed the effective date until 31 December 2016. This postponement is in response to concerns that more detailed guidelines are needed for 6 comparative advertising. For more information, please read the client alert written by Mine Guner and Can Sozer Baker & McKenzie, Istanbul. Patent Brazil - Patent Prosecution Highway: BPTO regulates the agreement signed with the United States for expediting grant of patents The Brazilian Patent and Trademark Office (BPTO) has made public Ordinance No. 154/2015 in the first Industrial Property Review of 2016, The Ordinance regulates administrative proceedings related to the Patent Prosecution Highway (PPH). The pilot program established between the BPTO and the United States Patent and Trademark Office (USPTO) aims to reduce the current backlog in the prosecution of patent applications. The program prioritizes the examination of Brazilian patent applications which are part of the same family of applications received the notice of allowance from the USPTO. The pilot program was initiated on 11 January 2016, and only benefitted Brazil patent applications filed after January 2013, with subject matter strictly related to the oil, gas, and petrochemical industries (IPC B01, B063, C09k8, C10, E02, E021, F15, F16, F17 e G01). The USPTO has not made any similar restrictions as to the area of technology patent applications which may benefit from the program. For more information please see the client alert written by Marcela Trigo, Flavia Vasconcelos, Andre Alvarez and Felipe Zaltman, Baker & McKenzie, Rio de Janeiro. United States - Supreme Court to consider PTAB claim construction standard and availability of judicial review for institution decisions On 15 January 2016, the Supreme Court granted a writ of certiorari in Cuozzo Speed Technologies v. Lee, giving the Court its first opportunity to weigh in on the trial process of the relatively new Patent Trial and Appeal (“PTAB”) review proceedings. The Court will review (1) whether “broadest reasonable interpretation” (“BRI”) is the appropriate claim construction standard in an inter partes review; and (2) whether an institution decision is judicially reviewable. Both issues have a profound impact on patent owners and patent challengers in these proceedings. The Court’s decision is expected as early as July 2016. For more information please see the client alert written by Brian McCormack and Mackenzie Martin, Baker & McKenzie, Dallas. Copyright Australia - Copyright amendments proposed In 2015, the Productivity Commission (Commission) commenced an inquiry into Australia's copyright and intellectual property arrangements. Although the Commission's report has not yet been released, the Federal Government is proposing amendments to the Copyright Act 1968 (Cth) (Act) that it believes will align with any recommendations the Commission may make. The Exposure Draft of the Copyright Amendment (Disability Access and Other Measures) Bill 7 2016 (Bill) contains a range of amendments that are mostly designed to simplify the Act and better facilitate the access and use of copyright material by the disability sector, libraries, archives and educational and cultural institutions. For example, the existing statutory licenses for institutions that assist persons with an intellectual or print disability would be streamlined into a single exception requiring such institutions to seek to purchase material before a copy can be made in an appropriate format. There would no longer be a requirement that certain institutions be declared to be an institution assisting persons with a print or intellectual disability. The exception would cover educational institutions who principally provide assistance to persons with a disability. There are also proposed amendments aimed at improving the ability of institutions and libraries to engage in preservation copying. For educational institutions, these would simplify existing statutory licenses for the use of copyright material and provide that copyright is not infringed where certain conditions are complied with. The amendments will also enable exams to be conducted online by altering the exam copying exception. In addition, the amendments seek to harmonize copyright terms by providing a new general protection period of life plus 70 years irrespective of whether the work is published or unpublished, and a period from the date of making plus 70 years for works by unknown authors. For materials first published by the Crown, the period will be 50 years from the year in which the material is made. Finally, the proposed changes also broaden the Act's 'safe harbor' provisions to cover a broader range of entities, including search engines, cloud storage services, universities and libraries. For more information, please contact Adrian Lawrence or Andrew Stewart, Baker & McKenzie, Sydney. IP Enforcement Russia - New rules establish trade dress protection; Court confirms that preliminary blocking injunctions are available against websites with copied designs • Effective from 5 January 2016, Russian unfair competition laws will begin to protect businesses from copying and imitation of product designs, product names, trade dress as a whole (including design of retail stores), as well as other items used to distinguish a company or its products. Previously, such protection was less available and existed on a significantly lower scale. Enforcement of these trade dress rights would be generally possible through an administrative procedure conducted by the Russian antimonopoly authorities. Unauthorized use of trade dress may result in the issuance of compliance orders and administrative fines. • In May 2015, Russia extended the rules allowing the use of preliminary blocking injunctions against websites hosting any type of copyright infringing content (except for photographs). This remedy had previously applied only to websites showing unauthorized copies of films. These measures will significantly facilitate the combatting of online piracy for right holders. In February 2016 the Moscow City Court issued a first-of-its kind ruling confirming that the above preliminary blocking injunctions are also available against websites that infringe rights relating to website designs. If followed by successful court practice, these measures will significantly facilitate brand owner’s activities against ‘rogue’ websites that sell infringing 8 goods or offer unauthorized services with the use of or imitating the original brand's website designs. For further information, please contact Denis Khabarov or Darya Ermolina, Baker & McKenzie, Moscow. Trade Secrets European Union: Compromise of the draft Directive on the Protection of Trade Secrets and Know-how achieved, final vote expected in April 2016 On 18 December 2015, the judicial committee of the European Parliament and the European Council agreed on a final text of the proposed directive on the protection of undisclosed knowhow and business information (trade secrets) against their unlawful acquisition, use and disclosure. The latest draft is a final compromise which cannot be changed anymore without jeopardizing the entire draft directive. It is therefore expected that the Directive will now be accepted “as is”. The draft directive would introduce a European Union wide definition of “trade secret” and also provide minimum standards on trade secret protection and legal remedies. It addresses the current unsatisfactory situation posed by the different national regimes and levels of protection within the European Union. Its aim is to improve legal protection of trade secret holders and thereby enhance the competitiveness of European businesses and research bodies and ultimately increase the European Union’s competitiveness in the global economy. The draft directive is now put to a final vote by the European Parliament which is expected to happen in April 2016. Once the directive is in force, Member States will have two years to adapt the directive into national legislation. The current draft regulation can be found on the website of the Council of the European Union. We will provide a full analysis of the directive once it is in force. For more information please contact Rembert Niebel or Andreas Jauch, Baker & McKenzie, Frankfurt. Other IP and related issues Russia - Restriction on public procurement of foreign software Effective from 1 January 2016, Russia generally have restricted authorities from procuring software that does not formally ‘originate’ from Russia and was not registered as such in the newly established Registry of Russian Software. To comply with these new restrictions, a number of Russian companies have acquired foreign software technologies and filed applications to register their derivative software products as Russian software. Currently, the government is also considering extending the same restrictions or adopting other 9 similar measures to state-owned and state-controlled companies. For further information, please contact Denis Khabarov, Baker & McKenzie, Moscow.