Intellectual Property

The CJEU Rules on SPCs and Active Ingredients 

The Court of Justice of the European Union (“CJEU”) has in a recent judgment C-631/13 (Arne Forsgren v. Österreichische Patentamt) held that a medicinal product cannot be granted a supplementary protection certificate if the effect of the patented product does not fall within the therapeutic indications covered by the marketing authorization. A supplementary protection certificate ("SPC") is an intellectual property right available for medicines and plant protection products that extends the duration of the patent. The purpose of an SPC is to provide extended protection as a way of recompensing the patentee for the time taken to obtain a marketing authorization, during which commercializing of the medicinal product was not possible. As a rule, it takes several years to develop a medicinal product and to conduct the tests necessary for obtaining a marketing authorization. In the referred case, the patentee had made an application to the Austrian Patent Office for an SPC for Protein D, which is present in a pneumococcal vaccine for pediatric use, Synflorix. In the vaccine, Protein D is a carrier protein conjugated by covalent bonds to several pneumococcal polysaccharide serotypes and adsorbed on aluminum phosphate. However the SPC application was for Protein D per se, not in the conjugated form found in Synflorix. The CJEU held that an SPC may be granted for a compound in ‘separate’ form even when the marketing authorization has been obtained for a medicinal product where the compound is covalently bonded to other ingredients. However, the CJEU held that a carrier protein conjugated with a polysaccharide antigen by means of a covalent bond may only be categorized as an 'active ingredient' if it is established that it produces a pharmacological, immunological or metabolic action of its own and this is covered by the therapeutic indications of the marketing authorization. Consequently, an SPC cannot be granted for an 'active ingredient' whose effect does not fall within the therapeutic indications covered by the marketing authorization.

The Member States Continue to Have a Wide Discretion in Organizing National Collection Systems for Private Copying Levy 

The Court of Justice of the European Union (“CJEU”) gave a ruling in a dispute between Copydan Båndkopi, a Danish collecting society, and Nokia Danmark A/S (“Nokia”) on the interpretation of the private copying exception under Article 5(2)(b) of the Directive on the harmonisation of certain aspects of copyright and related rights in the information society 2001/29 (Case C-463/12). This exception permits the copying of copyright protected works for private use provided that the right holder receives fair compensation for such use. Copydan Båndkopi demanded Nokia to pay retrospectively private copying levy for memory cards imported to Denmark during 2004–2009.  According to the CJEU, the ancillary nature of the function of a media enabling private copying does not have effect on the obligation to pay fair compensation but may affect the quantum of the compensation. The CJEU also adopted a view that member states are allowed to recognize a difference between detachable and non-detachable storage media if the media are not comparable, or the different treatment is otherwise justified. According to the Directive, there is no obligation to pay if the prejudice to the right holder is minimal. Pursuant to the ruling the member states are entitled to define a threshold for minimal harm as long as the principle of equal treatment is applied. The CJEU’s ruling implies that member states continue to have a wide discretion in defining the form of the systems for the collection of private copying levy.

CJEU Rules on Jurisdiction in Cases of Internet Copyright Infringement 

The Court of Justice of the European Union (“CJEU”) ruled on 22 January 2015 that a court in a Member State has jurisdiction to hear an action for damages for copyright infringement if the copyrighted work was placed on a website accessible in the Member State, in which the court is located (C-441/13).  The action for damages arose when the defendant, a German company, allegedly made available photographs taken by the claimant, an Austrian professional photographer, on its website without the  photographer’s permission. The claimant brought proceedings in her home state before the Handelsgericht Wien and invoked Article 5(3) of the Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) to justify the selection.

The Handelsgerich Wien referred a question regarding the interpretation of Article 5(3) to the CJEU. The CJEU ruled that Article 5(3) must be interpreted as meaning that a court in a Member State has jurisdiction to hear an action for damages for copyright infringement resulting from the placing of protected photographs on a website accessible in its territorial jurisdiction. However, that court only has jurisdiction to rule on damages caused in the Member State in which the court has its seat.

CJEU: The Distribution Right is Not Exhausted If the Medium of the Work Is Changed 

The Court of Justice of the European Union (“CJEU”) gave a preliminary ruling in the copyright case ofArt & Allposters International BV v. Stichting Pictoright (C‒419/13) on 22 January 2015. According to the ruling, the change of physical medium of a protected work does not exhaust the distribution right pursuant to Article 4(2) of the Information Society Directive (2001/29/EC). This means that the consent of the copyright holder is necessary for distributing a formerly released work if it has undergone an alteration of its medium and is placed on the market in its new form.  The alteration of medium in this particular case consisted of transferring the ink of an authoritatively released paper poster through a chemical process onto a canvas. The CJEU found such an alteration sufficient to constitute a reproduction of the original work, especially taking into consideration the improved quality of the image and the increased durability of the reproduction. The alteration was thus deemed a copyright infringement on the part of Allposters and the release of the products onto the Community market would have required the consent of the copyright holder. The CJEU also defined the term “reproduction” in order to determine what kind of alterations are sufficient for preventing the exhaustion from taking place. It came to the conclusion that “[w]hat is important is whether the altered object itself, taken as a whole, is, physically, the object that was placed onto the market with the consent of the rightholder”. This gives only limited guidance in situations where the medium is maintained yet at the same time combined with another; for example, when a poster is attached to a backing of another product. The ruling stresses the importance of drafting precise license agreements covering all the necessary physical media on which the work will be distributed. The ruling will undoubtedly be welcomed by copyright holders. It allows owners to control their works, even after they have been released onto the market. 

CJEU: The Use of Databases Falling Outside the Reach of the Database Directive Can Be Limited by Agreements   

On 15 January 2015, the Court of Justice of European Union (“CJEU”) laid down in its ruling C-30/14(Ryanair Ltd v. PR Aviation BV) that the use of a database that is not protected by the Directive on the Legal Protection of Databases (96/9/EC, ”Database Directive”) can be contractually limited by the author of the database.  PR Aviation BV, a Dutch company, operated a website on which consumers could compare low cost airlines’ flight prices, and book and pay for the flights. The data necessary for answering the queries submitted by the individual users was retrieved by automatic means from third party websites – in this particular case – from Ryanair Ltd’s (“Ryanair”) website. To access Ryanair’s website, a user had to accept Ryanair’s general terms and conditions governing the use of the site, where it was specifically mentioned that without Ryanair’s consent, no data could extracted for commercial purposes from the website by software or other automated systems. The Database Directive provides two different forms of protection for databases: Firstly the structure of the database may be protected by a copyright, and further, the actual contents of the database may be protected by a sui generis right, provided that a substantial investment was made to obtaining, verifying, or presenting the data contained in the database.  As the terms of the agreement were not complied with, Ryanair sued PR Aviation BV and claimed that the Dutch company had infringed its copyright and also sui generis right to the database under Dutch laws implementing the Database Directive. Further Ryanair also set forth the claim the PR Aviation BV  had breached the agreement governing the use of Ryanair’s website. 

Ryanair’s claims were dismissed to the extent they were based on the Database Directive in both the Local Court of Utrecht and the Court of Appeal of Amsterdam. After a further appeal, the Netherlands Supreme Court decided to stay the proceedings and refer the case to the CJEU for a preliminary ruling. The question asked from the CJEU was whether the use of a database falling outside of the scope of application of the Database Directive could be contractually limited. The CJEU held that the scope of application of the Database Directive does not extend to databases not protected by copyright or the sui generis right, and thus the use of such databases can be exclusively controlled by contractual clauses. 

Marketing & Consumer

The Swedish Market Court Strikes down Unreasonable Online Terms and Conditions

The Swedish Market Court has in two recent judgments (2015:22015:3) clarified, what terms and conditions for online services and marketing thereof that is allowed. The cases were initiated by the Swedish Consumer Ombudsman against an online dating site. In the first judgment, the site was ordered to provide complete details of the applicable price in marketing campaigns, to clarify the right of withdrawal of such online purchases in its user terms and conditions and to provide a valid e-mail address in its contact details. The main circumstances were that the site had been marketed as only costing 1 SEK for one week’s subscription for a limited period (campaign), but without stating in the marketing material (otherwise than by reference to its user terms and conditions), that a notice period of 60 days applied. Hence, even if giving notice of wanting to terminate the subscription on the first day, the user would need to pay the ordinary price for the remaining notice period after the first week with reduced price. The Market Court concluded that the reference to the user terms and conditions was not sufficient and that the marketing was misleading. In the second judgment, the Market Court assessed the sections of the site’s user terms and conditions, in which it was stated that a 60 days’ notice period applied in case of campaigns and, generally, that giving notice of termination could only be made by logging in to the site and deregistering the account. Since there are no rules specifically applying to whether such user terms and conditions are reasonable or not, not even in the Swedish rules implementing the Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, the Market Court made its assessments based on general rules and principles for consumer protection. Based on such assessment, the Market Court concluded that is unreasonable to have a longer notice period than 30 days in relation to consumers. The Market Court also concluded that it is unreasonable to set any formal requirements for giving notice of termination. Both aspects of the user terms and conditions were therefore prohibited.  In both cases the orders and prohibitions of the Market Court are enforceable by payment of a fine of 1 million SEK for each breach. However, the site had already before the judgments changed its terms and conditions so that a notice of termination could be given by e-mail, letter and telephone or on the site, and that the notice period would never exceed 30 days. 

Finnish Ministry of Justice Working Group Proposes Harsher Penalties for Violations of Consumer Protection Laws

A Ministry of Justice working group, having been set up to review the need to revise the powers of the Consumer Ombudsman, published its report on 27 February 2015. The working group proposed a new Act on penalty payments in consumer matters to be introduced. The working group also recommended amendments to the provisions of the Consumer Protection Act and the Act on the Finnish Competition and Consumer Authority. The purpose of the proposals is to equip the Consumer Ombudsman with more efficient means to stop violations of consumer protection regulations, and to allocate authorities’ resources more efficiently. The working group proposes two key legislative amendments. In the future, the Consumer Ombudsman would have the power to impose a penalty payment on businesses and in some instances even to the management of a company that knowingly or negligently violate consumer protection regulations. The penalty payment could be imposed, for example, for misleading marketing measures and failures to give necessary contractual information to consumers. The quantum of the contemplated penalty for businesses would range between EUR 1,000 and EUR 100,000, however never exceeding ten percent of the business’s preceding year’s turnover. The maximum penalty for individuals would equal to ten percent of the individual’s taxable income earned during the year preceding the violation. 

Additionally the procedure relating to issuing injunctions would be slightly altered. In continuation, a business seeking to contest an injunction set by the Consumer Ombudsman would have to file a case to the Market Court. Currently, such an injunction normally expires if the business opposes the imposition of an injunction directly to the Consumer Ombudsman. If the proposal leads to legislative actions being taken on the parliamentary level, the sanctions that are available under the consumer protection laws would be significantly changed. 

In Brief

The Finnish Supreme Court Lifts the Corporate Veil to Protect Copyright Owners 

The Finnish Supreme Court gave a ruling in a dispute between Säveltäjäin Tekijänoikeustoimisto Teosto r.y. and Verkkokauppa.com Oyj (Verkkokauppa.com) whereby it found Finland-based Verkkokauppa.com and its Estonian-based subsidiary to be jointly and severally liable for failure of the latter to pay private copying levy (KKO 2015:17). After considering aspects related to ownership and control of the companies, the Supreme Court ruled that the essential purpose of the subsidiary was to avoid paying the private copying levy. Therefore, the corporate veil was lifted, and the mother company was held liable for its subsidiary’s actions. It should be noted that Finland recently abandoned its old levy system. The payment of fair compensation to right holders has been made through public funds as of January 2015. 

The Finnish Supreme Court gave a ruling in a dispute between Säveltäjäin Tekijänoikeustoimisto Teosto r.y. and Verkkokauppa.com Oyj (Verkkokauppa.com) whereby it found Finland-based Verkkokauppa.com and its Estonian-based subsidiary to be jointly and severally liable for failure of the latter to pay private copying levy (KKO 2015:17). After considering aspects related to ownership and control of the companies, the Supreme Court ruled that the essential purpose of the subsidiary was to avoid paying the private copying levy. Therefore, the corporate veil was lifted, and the mother company was held liable for its subsidiary’s actions. It should be noted that Finland recently abandoned its old levy system. The payment of fair compensation to right holders has been made through public funds as of January 2015. 

New Guideline on Price Indications in Finland 

The Consumer Ombudsman has updated its guideline on price indications. The updated guideline takes into account the recent regulatory changes, and applies to sale of goods and services. The aim of the document is to compile a user-friendly and informative tool to help businesses to provide accurate price information to consumers. The guideline also contains a handy reference table pointing out which sector specific regulations may apply in different use cases. The information and practical advice given in the guideline are based on legislation, preparatory works and applicable case law. The guideline has been published on the Finnish Competition and Consumer Authority’s website