Richard Willoughby April 14 2003 Overview (April 2003) Howrey LLP | Intellectual Property - European Union Richard Willoughby Intellectual Property Trademarks Designs Patents Copyright The European Union has exercised its jurisdiction for intellectual property in an uneven way, currently providing for EU-wide trademarks and design rights, but with only limited progress on an EU-wide patent. The European Union exercises its law-making power predominantly in two ways. Directives are issued to the member states requiring them to alter their national laws to achieve minimum uniform standards; this is called harmonization. Directives have no direct effect and require implementation by member states, which often results in national variations and subtleties. Regulations are directly effective and create single, EU-wide law. Regulations have created the Community trademark and the Community design right, and the proposed Community patent will be introduced by regulation. This Overview discusses: the ongoing success of the Community trademark, including some recent decisions of the European Court of Justice (ECJ); the introduction of EU-wide registered and unregistered rights in ornamental and industrial designs; important, but slow, progress on a Community patent; and implementation of the Directive on Copyright and Related Rights in the Information Society.TrademarksThe continuing success of the Community trademark The Community trademark continues to be a convenient and cost-effective form of trademark protection for business in Europe. Since its introduction in 1996 over 282,000 Community trademark applications have been filed. As the largest users, 25% of applications filed were by trademark owners in the United States, followed by Germany (16%) and the United Kingdom (13%). The benefits of Community trademarks over national trademark registrations include the following: The cost of filing a Community trademark application covering 15 countries is roughly equivalent to filing applications in three member states; A Community trademark is administratively easier for owners (as opposed to juggling 13 national applications in up to 11 languages); and The Community trademark applies throughout all 15 member states, allowing an owner to seek EU-wide injunctions. When Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia join the European Union on May 1 2004, enlarging it from 15 to 25 member countries comprising 455 million inhabitants, existing Community trademarks will be automatically extended to these new member states. No additional fees or translations will be necessary. Recent court decisions The ECJ is the highest court in Europe for trademark questions. Its findings are therefore binding on the Office for Harmonization in the Internal Market (OHIM) and on the trademark offices and courts of all member states. In 2002 the ECJ handed down several important decisions on European trademark law.BABY-DRY, COMPANYLINE and DOUBLEMINT The decision of the ECJ on September 20 2001 to allow registration of the mark BABY-DRY for use with nappies was hailed by few and criticized by many. The finding that BABY-DRY was a "lexical invention bestowing distinctive power on the mark" increased considerably the number of highly descriptive word marks that were registerable, despite their descriptiveness. Shortly after BABY-DRY, the ECJ considered the mark COMPANYLINE for services in the field of insurance and financial affairs, and determined that it could not be registered due to descriptiveness concerns. In confirming the decision of the European Court of First Instance, the ECJ stated that coupling the words 'company' and 'line' - both of which are customary in English-speaking countries - without any graphic or semantic modification did not make them capable of distinguishing the applicant's services from those of another undertaking. The COMPANYLINE decision appears to take a welcome step back from the broad flexibility on distinctive character allowed in BABY-DRY. As 2003 progresses and the ECJ rules on the pending DOUBLEMINT Case (among others), the line defining distinctiveness will hopefully become clearer.Arsenal v Reed For the last 30 years, Matthew Reed has sold unofficial football merchandise outside the famous Arsenal football ground in London. The litigation which followed Arsenal's attempts to stop Reed has assisted in defining whether use 'as a trademark' is required for trademark infringement in the European Union.The ECJ was asked to rule on two questions of law: (i) whether use of a trademark, other than use to indicate origin, is a defence to trademark infringement; and (ii) whether use of a mark as a badge of support, loyalty or affiliation to the trademark owner is sufficient of a connection to establish infringement. The ECJ's decision of November 12 2002 re-affirmed the function of a trademark: to guarantee to consumers the identity of the origin of the goods. The ECJ held that use as a badge of support was trademark use, because the mark identified the origin of the goods.Non-traditional trademarks OHIM's registration of THE SMELL OF FRESH CUT GRASS with respect to tennis balls gave trademark owners some hope of a liberal approach to non-traditional trademarks. The ECJ has retreated from that position in Sieckmann v OHIM (December 12 2002), holding that smell marks cannot be registered in Europe. The ECJ is considering sound marks and marks comprised of a single colour. Both are likely to be rejected, at least in part. DesignsThe Community Design Regulation (EC 6/2002 of December 12 2001) came into force on March 6 2002, introducing EU-wide protection for registered and unregistered industrial and ornamental designs. OHIM began accepting applications for registered designs on January 2 2003.There are as yet no court decisions on the new regime at a European level.Background Elements of product design and ornamentation (loosely similar to the US design patent) have long been protected by national law in individual EU countries. The EU Design Directive (98/71/EC) required harmonization of each member state's registered design laws by October 28 2001. While harmonization gives a level of consistency across Europe, a company seeking registered protection for its designs in Europe would be required to register in 13 jurisdictions. Despite harmonization, the level of protection still differs between countries and, in case of infringement, actions would be necessary on a country-by-country basis.The new EU-wide design right takes two forms: (i) an unregistered Community design, which arises automatically and will protect the design from copying for up to three years; and (ii) a registered Community design, which arises by registration with OHIM and can last for up to 25 years. Registered and unregistered rights will differ only in the scope of protection provided and the length of time that protection lasts.What is protected? The Community design right protects the appearance of the whole or a part of a product resulting from its features: the lines, contours, colours, shape, texture and/or materials of the product itself or its ornamentation. This includes packaging, trade dress and get-up, symbols, logos, icons and fonts.To be afforded protection, a design must be new and have individual character. A design will be new if it differs in material details from designs previously made available to the public. A design will have individual character if "the overall impression it produces on the informed user differs from the overall impression produced on such a user by any design previously made available to the public". It has been suggested that this is a 'déjà vu' test: looking at the 'new' design, does an ordinary user of the product (and not an expert) get a sense of déjà vu? Early court decisions will hopefully clarify how this test will be applied.Registered Community designs Registered Community designs will be registered through OHIM in a similar way to a Community trademark. The system provides for a 12-month grace period: businesses will have 12 months during which to market a new product to determine whether it is worth the costs of design registration.Once accepted, an application will be published in the Community Design Bulletin and a certificate of registration issued. There is no provision for oppositions by prior right holders. Those wishing to set aside a registered Community design may file an application for a declaration of invalidity after registration. Invalidity applications will be determined by OHIM, with an appeal to the OHIM Board of Appeal. Invalidity can also be determined as part of enforcement proceedings.Registered Community design protection will last for an initial period of five years from the date the application was filed and will be renewable for further periods of five years up to a total of 25 years.The owner of a registered Community design will have the exclusive right to use the design in the European Union and will be able to prevent unauthorized third parties from using the design, including making, offering for sale, putting on the market, importing, exporting or using a product which incorporates the design.Unregistered Community designs A qualifying design will automatically be protected in the European Union without the need for registration or payment of fees when the product incorporating the design is made available to the public within the last three years.Unregistered Community designs can only be used to prevent another person from copying the design. They do not protect against another person independently producing an identical or similar design. Unregistered Community designs will therefore be useful for short-lived fashion products, especially clothing and footwear, where protection for three years is adequate and the expense of registering the designs of many lines of short-lived products cannot be justified.Enforcement Both registered Community designs and unregistered Community designs will be enforceable throughout the 15 countries of the European Union through nominated Community design courts. If a design is invalid or unenforceable in, say, Greece (eg, because of a pre-existing right), then it will be invalid or unenforceable throughout Europe.Sanctions will include injunctions and seizure of offending products, and the materials and tools used to make them. Community design courts will be able to issue Europe-wide injunctions.Comment The new Europe-wide design regime provides many benefits, including the following: Businesses will have a broader scope for innovative protection, including for packaging and get-up of products, fonts and logos; There is a single cost-effective application for registration, which will grant rights (enforceable in one court action) in 15 European countries; Registered Community designs will not be restricted to nominated goods and/or services - they will apply to use of the design on any product. This may be a more cost-effective approach than multi-class trademark registrations in some cases; On enlargement of the European Union, the new Community design rights will automatically expand into the new member states; and Registered Community designs will be available for signs that may not be registerable as trademarks without proof of acquired distinctiveness. A registered design provides a window of protection of up to 25 years during which to establish acquired distinctiveness, which can later be used to register a trademark (with indefinite protection).Designers should be aware that the regulation defines 'make available to the public' as including anywhere in the world, where the design could reasonably be expected to come to the attention of people in the relevant field in Europe. This means that new designs made available outside Europe - for example at a car show in the United States - could lead to rights arising in Europe. Registered protection for the European Union should therefore be considered at the time of launch of any new product.PatentsThe last year has seen developments at EU level on the continuing progress of the proposed Community Patent Regulation, the Biotech Directive (98/44/EC) and proposals for a directive on the patentability of computer implemented inventions.Community Patent Regulation It has been a tough year for the European Commission's proposal on an EU-wide patent right, but recent events are cause for optimism.The origin of the proposal for a unitary patent right stretches back as far as the 1975 Community Patent Convention, and possibly earlier. The 1975 convention was bogged down because of a lack of agreement over language, among other things, and never ratified. It also came around the time of the European Patent Convention, and was thus perhaps simply too much at the one time. In the meantime, the European Patent Convention has proved to be a great success in terms of patent numbers, although in recent years criticisms of the cost and legal uncertainty of the rights it produces have grown.Partly as a result of this, the idea for a unitary EU-wide patent right was revived with some force by the European Commission in a Green Paper in 1997. The European Council's statement at the 2000 Lisbon Summit that a Community patent was a key part of the European Union's drive towards economic parity or better with the United States by 2010 marked the beginning of a concerted drive to get a proposal adopted. During the course of 2002 the various EU bodies have looked at, commented on and tinkered with the proposed regime for the Community patent. The controversial areas have remained language and jurisdictional arrangements.During 2002 the proposal was discussed in various meetings of European Council sub-committees, in an attempt to reach a common political approach on the key and most contentious issues. Resolution of the language issue was reached relatively quickly on the basis of a compromise that, while not ideal, is probably workable. It is also more costly than had been hoped for, but the price may be worth paying provided the Community patent delivers on the other key issue - legal certainty.By August 2002 the European Commission produced a working document detailing suggested jurisdictional arrangements for enforcement of Community patents. This proposed a centralized Community Patents Court attached to the European Court of First Instance in Luxembourg. Regional chambers of the Community Patents Court would be a possibility, but only if the workload of the court was such that this was necessary. This proposal was discussed at subsequent meetings of the Working Parties on Intellectual Property and the ECJ, and then at a series of meetings of the Competitiveness Council in the latter part of 2002.The Competitiveness Council failed to reach agreement on a common political approach for the jurisdictional issue. Some nations, particularly Germany, were not prepared to accept a single common jurisdiction at first instance, preferring instead that national courts have jurisdiction at first instance. For reasons of procedural and legal variation and uncertainty, this proposal was unacceptable to the European Commission, which made its position very clear in press releases following each meeting of the Competitiveness Council. It went so far as to threaten to withdraw the proposal if a sensible agreement on jurisdiction could not be reached by the time of the full council meeting in Spring 2003. Thus, if nations insisted on national jurisdiction at first instance, then the proposal would die. Fortunately, an eleventh-hour agreement was reached at the meeting of the Competitiveness Council on March 3 2003. What has been agreed by way of common political approach is as follows: The EPO will be the granting body for Community patents; Applications must be filed in an official EU language. If that language is not an official European Patent Convention language (ie, French, German or English), then a translation will be prepared at the cost of the "system". Upon grant, translations of the claims must be filed in the remaining European Patent Convention languages. Within a reasonable period thereafter, the patentee must file translations of the claims only into all remaining official EU languages; National courts will have jurisdiction until 2010, by which time the Community Patents Court must be in place; From 2010, all disputes under Community patents will be heard by a special chamber at the European Court of First Instance in Luxembourg (the Community Patents Court); The Community Patents Court may "roam" and conduct hearings in member states, as appropriate; The court will comprise judges, to be appointed by the European Council, having regard to their patent law expertise and linguistic ability; Technical experts will assist the judges; The language of the proceedings will be the EU official language of the domicile of the defendant, or some other EU language chosen by the defendant or agreed by the parties. Witnesses and parties in person may be heard in their own EU language, with translation into the language of the proceedings; and Appeal will lie to the European Court of First Instance itself.There are many details to work out and the approach adopted leaves some interesting questions to be answered (eg, what happens if the language of a witness is not an EU language?). However, it does represent a workable compromise and has undoubtedly saved the Community patent. The concession to allow a transition to central jurisdiction by 2010 - such that national courts have jurisdiction before then - is in practice cosmetic. It is unlikely that the first Community patents will be granted much before 2010.The next key steps will be: to prepare a draft regulation; for the EPO to convene a diplomatic conference to revise the European Patent Convention to address the Community patent and the accession to the convention of the European Union itself; ratification of a revised European Patent Convention; and establishment of the Community Patents Court and its proceduresApart from the final point, which will take some time, there is some urgency arising from the intended accession to the European Union of up to 10 further states, currently set for May 1 2004. There is much work to do over the coming year.Implementation of the Biotech Directive In 1998 the European Council and Parliament adopted the Biotech Directive (98/44/EC). This was intended to promote and enable the development of the biotech industry in the European Union at a time when there were discrepancies between the laws of member states. These resulted in European industry being at a competitive disadvantage to US and Japanese businesses, which were able to obtain protection for such inventions in their own markets.The Biotech Directive was unpopular in a number of member states and even faced a legal challenge from the Netherlands. This failed, and the due date for implementation - July 30 2000 - is long since past. Only six states - Denmark, Finland, Greece, Ireland, Spain and the United Kingdom - have implemented it. In order to accelerate the implementation procedure, in December 2002 the European Commission officially requested the remaining member states to implement the Biotech Directive. This forms the second stage of infringement proceedings under Article 226 of the EC Treaty (the first stage, formal notification, took place in November 2000). The final stage would be a reference to the European Court of Justice, although this is a last resort.Computer-implemented inventions In February 2002 the European Commission published a proposal for a directive on the patentability of computer-implemented inventions. The impetus for the proposal began in 1997 with the commission's Green Paper on the Community Patent, which cited the importance of the software and IT industries and identified as a negative influence uncertainty surrounding the patentability of computer-implemented inventions. Such inventions have been de facto patentable in the EPO for some years, although national courts have taken divergent views. A consultation paper followed, with responses divided on the issue - the 'open' software Community preferred limited patentability, while larger companies favoured a more liberal approach.The proposal itself attempted to codify into EU law the more liberal approach of the EPO while reflecting a more restrictive approach in some respects. Importantly, the proposal included the current EPO requirement that there be a non-obvious 'technical' contribution to the art.Equally importantly, it proposed not to allow patent claims to computer programs per se, something which had become available in the EPO on the basis that to preclude doing so would be to have undue regard to the form of the claims rather than the substance of the invention. If claims to programs per se are unallowable, it will make enforcement against distributors and/or resellers of infringing software very difficult because that would require reliance on a claim for contributory infringement, something not available in many circumstances.In March 2000 the proposal was put to the Economic and Social Committee for consultation. In September the committee produced its opinion, which was hostile to the idea of overturning the current position, in particular the role of copyright in protecting software, without further consultation with all interested groups. The opinion seemed to gloss over or even miss the fact that there are currently thousands of patents in existence in EU member states, granted by the EPO, precisely for software or software-related inventions. The proposed directive has some way to go and, similarly to the Biotech Directive, may face a rocky road. The next step is a plenary vote in the European Parliament in April 2003.CopyrightDespite the success of the Community trademark and the enthusiastic reception of the new EU-wide design rights, there is no unitary copyright law covering all the European Union. International conventions such as the Berne Convention for the Protection of Literary and Artistic Works mean that copyright law is, to some extent, already harmonized across not only the 15 member states of the EU, but also much of the world. This harmonization of national laws is supplemented within the European Union by a number of directives designed further to harmonize national laws relating to certain aspects of copyright in EU member states. These directives include: the Computer Programs Directive (91/250/EEC); the Rental Right Directive (92/100/EEC); the Satellite and Cable Directive (93/83/EEC); the Copyright Term Directive (93/98/EEC); the Database Directive (96/9/EC); the Directive on Copyright and Related Rights in the Information Society (2001/29/EC); and the Resale Right Directive (2001/84/EC).Directive on Copyright and Related Rights in the Information Society There were few significant developments in EU copyright law during 2002. The Directive on Copyright and Related Rights in the Information Society required EU member states to pass legislation implementing its provisions by December 22 2002. While some member states have yet to implement the directive, it is anticipated that most member states will do so within the next few months. The European Commission has already expressed its intention to take action against those member states that fail to implement the directive.The directive harmonizes rights in certain key areas related to the Internet, e-commerce and digital technology in general. The impetus for the directive comes from the European Commission's desire to implement two treaties of the World Intellectual Property Organization: the Copyright Treaty and the Performances and Phonograms Treaty.In particular, the directive: harmonizes the rights of authors, performers, phonogram producers, film producers and broadcasters to authorize or prohibit the reproduction (whether permanent or temporary) of their works (including performances, phonograms, films and broadcasts); harmonizes the rights of authors to authorize or prohibit any communication, distribution or making available to the public of their works by wire or wireless means; specifies an exhaustive list of optional exceptions to these rights (eg, private, non-commercial use, fair criticism, news reporting and incidental inclusion); and imposes obligations on member states to protect technological measures employed by right owners to prevent unauthorized use of their works.While the directive does not represent a significant change to existing national copyright laws in the 15 EU member states, it does provide an additional degree of protection for copyright owners, particularly in relation to the exploitation of copyright works on the Internet. The harmonization of national laws also provides greater consistency as to how these laws will be applied across all 15 member states of the European Union which, in turn, gives copyright owners greater certainty when they consider the protection and exploitation of their copyright works within the European Union.For further information on this topic, please contact Richard Willoughby or David Stone at Howrey Simon Arnold & White by telephone (+44 20 7628 3303) or by fax (+44 20 7065 6650) or by email ([email protected] or [email protected]).