Intellectual Property

The Finnish Supreme Court: Unauthorized Copying of Employer's Databases and Files Constituted a Copyright Offence 

The Finnish Supreme Court has recently given a decision on unauthorized copying of databases and files (KKO:2015:42). A former employee of a company had, during the notice period just before termination of the employment, copied databases and hundreds of other files in breach of the Copyright Act (404/1961, as amended) from the employer's information systems with the intention to make profit. In fact, after termination of the employment, the former employee had incorporated an own company for the same field of business. The Supreme Court held that the said copying violated the former employer's exclusive rights in the catalogues, tables, programs and databases, in which a large number of information was compiled and the compilation of which had required substantial investment. The unauthorized copying was also conductive to cause substantial harm or damage to the former employer, because the newly established company and the former employer were rivals. The Supreme Court convicted the former employee of copyright offence under Chapter 49, section 1 of the Criminal Code (39/1889, as amended) due to unauthorized copying of the databases and files in violation of section 49 of the Copyright Act.

When considering the sanction, the Supreme Court noted that the unlawfully copied databases and files were of essential importance to the former employer's business and meant for its internal use only. Development of the databases had required considerable effort. Such factors were taken into account in considering harmfulness of the act. This, as well as the former employee's managerial position and awareness of the significance of the information were considered as aggravating factors. On the other hand, the Supreme Court noted that the copies were stored only on the former employee's home computer and were not used after such storage. While it was not relevant for the essential elements of the copyright offence whether the employee had actually used the copyrighted property or not, these factors did constitute mitigating circumstances. Finally, the defendant was sentenced to 60 day-fines, which, due to delay in the legal proceedings, was brought down to 40 day-fines.

The CJEU: Clarification on Enforcement of Standard Essential Patents and Abuse of Dominant Position

The Court of Justice of the European Union (”CJEU”) gave on 16 July 2015 a preliminary ruling on the conditions under which enforcement of a standard essential patent might violate the EU competition law. According to the ruling in Huawei Technologies Co. Ltd v. ZTE Corp.ZTE Deutschland GmbH (C-170/13), an injunction in favor of a holder of a standard essential patent subject to fair, reasonable and non-discriminatory terms (FRAND terms) may in certain circumstances constitute prohibited abuse of dominant position under the Article 102 of the Treaty on Functioning of the European Union (TFEU).

Huawei Technologies had notified the European Telecommunications Standards Institute (ETSI) that it holds a standard essential patent and undertook to grant licenses under the said patent to third parties on FRAND terms. ZTE Corporation used Huawei's patent, and the companies had engaged in discussions concerning the alleged patent infringement and conclusion of a patent license on FRAND terms. Huawei had requested a reasonable royalty for use of the patent from ZTE, but ZTE had insisted on obtaining a cross-license. As the parties failed to reach an agreement, Huawei brought an action before the Landgericht Düsseldorf seeking an injunction prohibiting the infringement, an order for the rendering of accounts, the recall of products and an award of damages. The German court referred certain key questions regarding potential abuse of dominant position based on enforcement of standard essential patents to the CJEU for a preliminary ruling.

The CJEU held that a holder of a standard essential patent subject to FRAND terms does not abuse its dominant position by seeking an injunction prohibiting the infringement or a recall of the products provided that (1) the patent holder has notified the alleged infringer of the infringement prior to bringing the action; (2) the patent holder has provided the alleged infringer with a written offer for a license on FRAND terms, including the royalty and the related calculation methodology, after the alleged infringer has expressed willingness to conclude a license agreement; and (3) the alleged infringer does not respond to the offer within a reasonable timeframe and in good faith. The CJEU held also that the Article 102 of the TFEU does not prevent holder of a standard essential patent in a dominant position from seeking damages or a rendering of accounts, since those actions do not have a direct impact on appearance of standard compliant products on markets.

The Swedish Supreme Court: Orders to Present Information May Cover Also Other Types and Sizes of Products Than Those Subject to the Infringement 

The Swedish Supreme Court ruled (Ö 2172:13) on 13 July 2015 that where a probable cause for trademark infringement has been shown, an order to present information may cover, in addition to the product subject to the alleged infringement, also other copies and types of products.

Coty Germany GmbH ("Coty") manufactured and sold perfumes on the European market. Coty had also an exclusive right to market and sell products within the European Economic Area ("EEA") under the trademark Davidoff Cool Water, a figure mark registered for perfume. After Coty had begun to suspect that Parfym Sverige AB ("Parfym Sverige") used the trademark by importing perfumes on the European market without Coty's authorization, upon Coty's request the District Court ordered Parfym Sverige to provide information on suppliers and prices of all imported Davidoff products.

The Court of Appeal held that Coty, due to the principle of proportionality and because the Swedish Trademark Act only allows orders to present information on the infringing products, could only get information regarding a specific batch of 30 bottles of the perfumes. Since Parfym Sverige had already provided information on this batch, Coty's request for an order to present further information was rejected. The Supreme Court only granted leave to appeal on question regarding the scope of order to present information.

According to the Supreme Court, the possibility under Swedish law to issue an order to present information, originally based on the Directive 2004/48/EC on the enforcement of intellectual property rights, is relatively extensive. While the Directive sets the minimum threshold of protection for holders of intellectual property rights, national laws may provide higher level of protection. Under the Swedish Trademark Act, an order to present information may be issued when the claimant has shown a probable cause for infringement for the purpose of obtaining information from the alleged infringer on the origin and distribution network of products subject to the infringement. The Supreme Court therefore stated that the Swedish Trademark Act should be applied so that when a proprietor has shown probable cause for the alleged infringement, the order to present information may cover, in addition to the products subject to the alleged infringement, also other types of the infringing product. As the infringement concerned perfume (EdT) in 30 ml bottles sold under the trademark Davidoff Cool Water with the addition "Woman", this product, for which probable cause for infringement was shown, should also include other types of perfume than EdT and other sizes of perfume bottles, concerning of whichParfym Sverige was finally ordered to present information.

Market Court in Finland: SUOMEN PAKASTETUIN JÄÄTELÖ Acceptable Slogan for Ice Cream

The Finnish Market Court has on 30 April 2015 decided (decision MAO: 304/15) that the slogan trademark "SUOMEN PAKASTETUIN JÄÄTELÖ" by Sociètè des Produits Nestlè S.A. (later "Applicant") may be registered for "ice cream" in class 30. The phrase "SUOMEN PAKASTETUIN JÄÄTELÖ" is a word play of the words "pakastaa" (in English "to freeze") and the word "rakastaa" (in English "to love"). Thus the whole phrase "SUOMEN PAKASTETUIN JÄÄTELÖ" means "the most frozen ice cream in Finland" but has a hint to the meaning of the most loved ice cream in Finland ("Suomen rakastetuin jäätelö").

The dispute first took place as an opposition proceeding in the Trademark Office and was then appealed to the Market Court of Finland by the opponent. The opponent's (and later appellant's) claims were inter alia that the trademark "SUOMEN PAKASTETUIN JÄÄTELÖ" lacked distinctiveness for ice cream as the trademark is a slogan which actually is a claim or statement in the standard language - which as a whole gives to the consumer an idea of the kind, quality and purpose of use of the goods. The opponent was of the opinion that accepting registration of the trademark would give an unfair position to the trademark holder in relation to other similar trademark owners.

The Market Court stated that a trademark is to be considered non-distinctive should even one of its possible meanings express the qualities of the product and the reference to freezing may in itself be seen to refer to the qualities of the ice cream. However, the phrase in the form "pakastetuin" (engl. the most frozen) is not in use in the marketing of the concerned industry and the average consumer is not accustomed to comparing ice creams based on which one of them is the most frozen. This leads to the fact that the average consumer does not recognize the word "pakastetuin" to refer to the characteristics of the product. Further, the phrase does not directly or specifically describe ice cream or their qualities and also the wordplay element is present. The Market Court additionally pointed out that there has been no proof that the phrase "SUOMEN PAKASTETUIN JÄÄTELÖ" would be a commonly used phrase in the industry. In conclusion, the Market Court decided that the trademark "SUOMEN PAKASTETUIN JÄÄTELÖ" distinguishes the goods of the applicant from those of others and the trademark is thus distinctive. The decision is final.

Marketing & Consumer

The CJEU: Advertising Can Be Interpreted as Distribution to the Public 

The Court of Justice of the European Union ("CJEU") ruled on the interpretation of Article 4(1) of the Copyright Directive (2001/29/EC) in a dispute between Dimensione Direct Sales Srl ("Dimensione") and Knoll International SpA ("Knoll") (Case C-516/13). Under the Article 4(1) of the Copyright Directive, authors of copyrighted works shall have the exclusive right to distribute the original work, including its copies to the public by sale or otherwise. The question brought before the CJEU was whether the Article 4(1) allows the copyright holder to prevent an offer for sale or an advertisement of the original or its copy, even if it is not shown that the said offer or advertisement actually lead to purchase of the protected work. The CJEU held that advertising can indeed be interpreted as distribution to the public. Distribution to the public is one of the exclusive rights of a copyright holder and therefore also marketing of products protected by copyright may constitute an IPR infringement. This applies irrespective of whether or not any purchases take place.

Designer furniture distributor Dimensione had advertised furniture similar to the designs of the high-value furniture manufacturer Knoll on its website. Knoll sought to prohibit the furniture's offering for sale in Germany, claiming that Dimensione's marketing infringes its distribution rights. According to previous case law of the CJEU, distribution to the public has occurred when a contract of sale and dispatch has been concluded. However, the CJEU held that distribution to the public is characterized by a series acts, which may cover also steps prior to conclusion of a contract of sale. The CJEU went on to say that distribution has taken place if a binding offer of a contract of sale is made, because the objective of such acts is to make a sale of the object. These acts also include marketing of goods, even if advertisements are non-binding.

The CJEU concluded that infringement of distribution right may occur if consumers are invited, by targeted advertising, to acquire a copy of a protected work. The advertising need not give rise to any purchases, as the invitation to purchase is enough to constitute a copyright infringement. Article 4(1) of Copyright Directive thus allows a copyright holder to prevent offers of sale or targeted advertisements of the protected work or its copies.

The Consumer Disputes Board in Finland Rules on Concert Case

As background, the Consumer Disputes Board is an independent expert body appointed by the Ministry of Justice. It consists of representatives from both sides of consumer relations and is designed to function as an easy-to-access impartial operator between consumers and businesses. With its preliminary decisions and recommendations, the Board aligns and steers the interpretation of consumer agreements. In 2014 the Board decided on 4850 matters of which approximately three fourths were related to housing and travel. Other significant subjects of disputes include insurances, food supplements and weight-loss products along with telecommunications.

In July 2015 the Consumer Disputes Board published a recommendation with interpretative value. The Chuck Berry concert organized in Helsinki in 2013 attracted a lot of media attention for the artist was visibly ill and tired and could not perform properly. Multiple consumers contacted the Consumer Disputes Board and other consumer authorities informing that the organizer of the concert and the ticket seller had denied their liability for the success of the concert and demanding refund for the tickets and compensation for damage.

The Board held that even though the subjective experience of a ticket purchaser is not a sufficient ground for a claim for compensation, a departure from the expected quality of a concert must not be so significant that it changes the characteristics of the concert from what the ticket purchaser has had reasonable cause to presume. The artist being ill at the time of the performance was regarded a contractual defect for which the concert organizer is liable.

However, as the artist could perform and there were other artists performing at the same concert, the organizer was recommended to refund only half of the price of the tickets to the ticket purchasers. The Board stated also that there are no contractual relations between a performing artist and ticket purchasers, and that a ticket seller only answers for his own work as a dealer.

The Swedish Market Court: Clarification on the Prohibition of Long Contract Terms

The Swedish Market Court has recently held that consumer contracts regarding security services, including tracking and blocking services with a contract term exceeding twelve months are unfair to consumers and thus prohibited (MD 2015:5).

The Consumer Ombudsman brought an action before the Market Court against the Swedish companymySafety AB ("mySafety"), as a result of the Ombudsman having received numerous complaints from consumers regarding, inter alia, lengthy contract terms and automatic renewal terms of the contracts formySafety's services. The duration of contract terms applied by mySafety on its services extended in some contracts even to 24-36 months. The Market Court stated that tracking and blocking services may very well be of importance to the consumer. The Market Court noted that when evaluating the duration of the contract term, it is important to take into account the fact that consumers may, in other situations, relatively easily take actions covered by the services. Hence, it must, according to the Market Court, be considered as an advantage for the consumer to be able to re-assess the need for the services and to be able to change supplier, without being bound by a long contract term. While mySafety raised arguments about the significance of the company's security services to the consumer and the security that the consumers would risk if they lost access to the services, those arguments did not lead to the conclusion that the applied contract terms should be considered fair.

Since the long contract term was considered to favor mySafety at the expense of the consumers and lead to an unacceptable imbalance between the parties, the Market Court held that an initial contract term of more than twelve months is unfair and accordingly, prohibited mySafety, under a penalty of fine from applying an initial contract term exceeding twelve months.

In Brief

Cyber-Crime Legislation Amended in Finland

The Finnish Parliament approved the Government Bill HE 232/2014 on amending the provisions regarding cyber-crimes in the Criminal Code (39/1889). New legislation implements the European Union directive on attacks against information systems (2013/40/EC).

While the Criminal Code already substantially complied with the requirement of the Directive, identity theft is now sanctioned as an independent crime although an offender impersonating another person could previously be convicted of other offences. Victim of identity theft may also be a legal person as specifically stated in the Government Bill. Other amendments of the Criminal Code concern endangerment of data processing, damage to data, message interception, interference in a computer system and computer break-in. The amendments entered into force on 4 September 2015.