From March to September 2016 the team is joined by Guest Kats Emma Perot and Mike Mireles.

From April to September 2016 the team is also joined by InternKats Eleanor Wilson and Nick Smallwood.

Monday, 2 May 2016

Never too late: if you missed the IPKat last week

Were you too busy for the IPKat last week? The 94th edition of Never Too Late is here to help out.

** Paint it Vantablack

Is it possible to have the exclusive rights over a colour - the "blackest black ever"? Alberto Bellan introduces Vantablack.


** World IP Day - Anne Frank and Geo-blocking special

Happy World IP Day from IPKat!
The original Dutch version of Anne Frank's Diary is to be published online and the inconsistencies of geo-blocking are in the spotlight.


** Magic Leap lampoons Google Glass

Mark Schweizer presents the best nerdy joke ever seen in a patent filing.


** Arnold J at appellate level - EPO news and a timely decision for World IP Day

Arnold J agrees with the Court of Appeal decision in Richter Gedeon Vegyeszeti Gyar RT v Generics, and a patent directed to a dosage regime for levonorgestrel as a method of emergency contraception remains obvious.


** House Passes Defend Trade Secrets Act

Amerikat Annsley reports on the new federal legal protection for Trade Secrets in the US.


** Publishing and the Machine

Neil Wilkof explores how 'the Machine' has helped and hindered publishing.


** DSM Communication on Platforms leaked!

While we wait for the official Communication later this month, it seems that ISP safe harbours are here to stay and new strategies are being developed for user generated content... watch this space...


** The end of the Google Books legal saga 

The US Supreme Court refuses to grant certiorari in the epic story that is The Authors' Guild v Google Books. Katfriend Shalini Bengani reports. 


** Freedom of Panorama in France

What is the future of the panorama exception -- for the reproduction and representation of architectural works and sculptures, permanently located on public roads, made by physical persons, with the exclusion of uses having direct or indirect commercial character?


** s52 comes into force July 28 2016

Artistic works which have been industrially manufactured are to receive the same duration as any other works from next year.


** Trade Mark infringement leads to 'poultry' profits

Eleonora explains the latest Jack Wills Limited v House of Fraser judgment and the perils of apportioning profit attributable to infringement and cost consequences.




PREVIOUSLY ON NEVER TOO LATE

Never too late 93 [week ending on Sunday 24 April] - No UK judges in the UPC? | Young EPLaw Congress | EU Commission SPC update | Technical teach-ins for judges | Patentability of user-interface designs | Trade Secrets and Copyright Pre-Emption | Austro-Mechana v Amazon C-572/14 | Lay-offs at Intel | Trade Marks and Cadbury | Shakespeare's Cultural Capital | Geo-blocking and competition law


Never too late 92 [week ending Sunday 17 April] - In memoriam of Kay Chapman - American Science's mobile X-ray patent valid - General Court decision on proving use of a trade mark - Life as an IP lawyers: Bratislava, Slovakia - Led Zep: you wouldn't steal a Carouselambra - Much Ado about patents - EU trade secrets directive approved - Royal Charter for Institute of Trade Mark Attorneys - The Rise of the Maintainers - The future of Supplementary Patent Certificates - Innovation & noncompete clauses - Are patent trolls a problem in the ITC? 

Never too late 91 [week ending on Sunday 10 April] The Future of second-medical-use patents, Fordham 2016|AG Opinion in United Video Properties, Inc v Telenet NV, C-57/15|Batman v Superman in commercial context| Trade Secrets and the Bio-Pharmaceutical industry| Panorama and the three step test in the Swedish Supreme Court| Public consultation on the Enforcement Directive| Hyperlinks in GS Media, C-160/15 | Life as an IP Lawyer in São Paulo | | The Internkats | Corn Thins: descriptive? | Tourism and Culture in the Age of Innovation | Lord Neuberger's most difficult case | US Senate passes Trade Secrets Act 

Never too late 90 [week ending on Sunday 3 April] – Book review: "IP and Other Things" by Sir Robin Jacob| Book review:  "Trade Marks Law" by Glen Gibbons| IPKat Post #10,00 | Taser International Inc. v SC Gate 4 Business SRL and Others |Two Book Reviews: European Law Design and The Changing European Patent | Fordham 2016 | Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses 

Sunday, 1 May 2016

Trade mark infringement leads to 'poultry' profits

Account of profits in trade mark infringement and passing off cases? The IPKat is delighted to host a guest contribution by Simon Chapman (Lewis Silkin) on this very topic and on a case (Jack Wills v House of Fraser) in which he and his team have acted for the defendant.

Here's what Simon writes:

"Following Mr Justice Arnold’s finding (Jack Wills Limited v House of Fraser (Stores) Limited [2014] EWHC 110 (Ch)) that retailer House of Fraser was liable for trade mark infringement and passing off after adopting a pigeon logo that was confusing similar to Jack Wills pheasant trade mark, HHJ Pelling gave judgment (Jack Wills Limited v House of Fraser (Stores) Limited [2016] EWHC 626(Ch)) in the account of profits, with the final profit figure being identified in the form of order hearing last week.

Judgments in respect of accounts of profits are rare, primarily on consideration that the parties usually come to an agreement on the level of profit that the defendant has made from its infringement after preliminary disclosure because they wish to avoid the costs of further legal proceedings that can be very expensive. However, following the Court of Appeal’s decision in Hollister Inc v Medik Ostomy Supplies Limited [2012] EWCA Civ1419, some commentators believed that defendants would be unable to deduct general overheads (ie overheads that support the defendant’s business in general, such as rent, management and advertising) from their profits after direct costs (such as VAT and cost of purchasing or manufacturing the infringing items) had been deducted.

And so it was that Jack Wills, the British clothing brand particularly popular with well-heeled twenty-somethings, sought to recover over £650,000, that sum being the entirety of House of Fraser (HoF)’s sales revenues less VAT and cost of manufacture, and without any apportionment of the profits between the infringing use and other factors, such as the design of the garments. On the other hand, HoF claimed that the amount payable was in the region of £50,000 after the deductions of both direct costs, general  overheads and apportionment.

A few days before the hearing, the Court of Appeal handed down its judgment in Design & Display Limited v OOO Abbott and another [2016] EWCA Civ 95. In that case, the Court of Appeal overturned a judgment by HHJ Hacon, ordering that a defendant should be able to deduct general overheads from the profit figure if he has foregone an opportunity to sell non-infringing products. In that case, Lewison LJ agreed with Kitchin LJ’s reliance on an Australian case, Dart Industries Inc v Décor Corp Pty Limited [1994] FSR 567, in which the court had held that “… where a defendant has foregone the opportunity to manufacture and sell alternative products it will ordinarily be appropriate to attribute to the infringing product a proportion of the general overheads which would have sustained the opportunity. On the other hand if no opportunity is forgone and the overheads involved were costs which would have been incurred in any event, then it would not be appropriate to attribute the overheads to the infringing product. Otherwise the defendant would be in a better position than it would have been in if it had not infringed".

Jack Wills had pleaded that a defendant needed to show it was operating at full capacity, or else it could not show that it had foregone an opportunity to sell non-infringing products, i.e. that capacity was a threshold condition. However the Court of Appeal in Design and Display made it absolutely clear (to the extent there ever was any ambiguity) that capacity was not a threshold condition.  HHJ Pelling found that the true test was “whether HoF has demonstrated that (a) the same overheads would have been incurred even if the infringement had not occurred and (b) the sale of infringing products would have been replaced by sale of non-infringing products which would have been sustained by the overheads in fact used to sustain the infringement.

On the facts, HoF satisfied this burden: it showed that it had a consistent range of products year on year; it sold broadly the same number of products each season; and that the infringing products replaced non-infringing garments before subsequently being replaced by non-infringing garments. This was not a case where the defendant had added a new line of infringing items to its existing business.

Jack Wills argued that even if HoF could deduct some overheads it would need to show to the requisite evidential standard that the specific overhead had supported sales of the infringing products. HoF on the other hand argued that the whole business was supported by all of the costs.

With the exception of some small costs the court allowed HoF to deduct all of its general overheads. This had the effect of substantially reducing the amount payable and putting it much more in line with the profit levels of the whole business.

As a further point, there was significant argument over the basis of calculating the applicable percentage of overheads. HoF’s expert witness sought to deduct overheads by reference to sales turnover as HoF did in its management accounts. Jack Wills’ expert witness claimed this was not the best way and that a ‘square-footage’ basis was preferable. Essentially, the judge decided that, except where one particular method is clearly superior, it is a judgment call as to which of the imperfect measures is most appropriate for a particular category of overhead. He then applied each method to the particular category in dispute as he considered most appropriate.

Counting profits:
Benedict's favourite weekend activity
Having arrived at a net profit figure, the court then had to determine the further question of whether to award Jack Wills that or just those profits attributable to the infringement. Jack Wills argued that it was entitled to all of these, but HoF claimed that the garments themselves had value over and above the value of the pigeon logo that had been found to infringe, i.e. there was value in the design, fit, quality and other intangible qualities of the garments and value in the store environment itself. HoF claimed that to require it to pay over 100% of the profit it made, would be to give Jack Wills a windfall and punish it, which is not the purpose of an account of profits. Jack Wills had of course been entitled to elect for damages at the outset instead of profits, but had chosen not to. 

HoF argued that there was no different test to be applied to trade mark cases than is the case in respect of other IP rights; there is value in the product aside from the value of the infringed IP. Further, the evidence was that there was no increase in sales or profitability following the adoption of the infringing logo.

HHJ Pelling was not persuaded that trade mark cases are by their nature different from other IP cases and accordingly, held that 41% of the net profits were attributable to the infringing mark. That figure was based on HoF’s expert witness evidence regarding typical royalties for the use of third party brands.

The amount of profits that HoF was ordered to pay to Jack Wills totaled £53,281, against the £650,000 that had been claimed.

For many IP owners, it is the costs consequences of the judgment that will be the cautionary tale. At the form of order hearing, the court heard that HoF had made several offers to settle the claim and that Jack Wills had failed to beat one made very early on in the account proceedings. The court therefore ordered that Jack Wills should pay HoF’s costs of the account from the expiry of that offer. As such, despite Jack Wills finding itself in the position of having won on liability it will be substantially out of pocket. Claimants will need to keep firmly in mind that the value of IP litigation is primarily in obtaining an injunction and consider very carefully indeed whether to elect for damages or profits after a successful decision on liability." 

Friday, 29 April 2016

s.52 repeal comes into force July 28 2016

Transition period of s.52 expedited
The repeal of s.52 of the Copyright, Designs and Patents Act 1988 (CDPA) has been expedited due to the outcome of a government consultation. s.52 stipulates the term for artistic works which have been industrially manufactured as 25 years from the year that they were first marketed. This repeal was originally meant to have a transitional period of 5 years, coming into effect in April 2020. The length of this transition period was challenged in May 2015, leading to a review of the proposed period. The government decided that the period was in fact excessive, and withdrew the Commencement Order, and conducted a new consultation which ran from 28 October 2015 – 23 December 2015. The government response to the consultation can be viewed here
Transition period expedited from 5 years to 6 months
The repeal will now occur on 28 July 2016, with the transition period ending on 28 January  2017.
From 29 July 2016, no new copies of affected artistic works may be made or imported unless:
  •         The works were contracted before the publication of the consultation document at 16.30 on 28 October 2015
  •          The rights holder has granted permission
  •         An exception to copyright applies under the CDPA 1988
From 28 January 2017, no works created in reliance on s.52 should be dealt with. By this date, unless the work falls within an exception to copyright under the CDPA 1988, the works must be:
  •        Sold or destroyed
  •         Authorised by the rights holder
Guidance is available for affected individuals, organisations and businesses.
What is s.52?
s.52 deals with artistic works which have been industrially manufactured. This section limits copyright protection for these types of artistic works, when more than 50 copies have been made, to 25 years. Under s.52(2) –
(2)After the end of the period of 25 years from the end of the calendar year in which such articles are first marketed, the work may be copied by making articles of any description, or doing anything for the purpose of making articles of any description, and anything may be done in relation to articles so made, without infringing copyright in the work.
The duration of protection is shorter than the term for other artistic works which is 70 years after the death of the creator. This section has been repealed to give industrially manufactured artistic works the same term of protection as other artistic works.
Why was s.52 repealed in the first place?
The decision to repeal s.52 was prompted by the outcome of Case C-169/08 Flos v Semeraro. Following this case, the government considered that s.52 was not compatible with the Copyright Term Directive.  The pertinence of the Copyright Term Directive is debatable in light of Article 17 of the Design Directive, which allows member states to determine the duration of copyright protection of designs protected by copyright. This was discussed on IPKat here.
Which artistic works are likely to be affected?
Under s.4 CDPA 1988, there are three types of artistic works. s.4(c) works of artistic craftsmanship are most likely to industrially manufactured, and affected by the repeal of s.52. There is no formal definition of works of artistic craftsmanship, but the published guidance has produced suggestions (pg 7) as to how the courts will approach this type of work based on the cases of Hensher (George) Ltd v Restawile Upholstery (Lancs) Ltd [1975] RPC 31, HL and Lucasfilm Limited and others v Ainsworth and another [2012] 1 AC 208:
• It is not enough for a work (such as a piece of furniture) to look attractive to qualify as a work of artistic craftsmanship.
 • The phrase “artistic craftsmanship” designates two requirements combined in the same work: artistic quality and craftsmanship.
 • “Craftsmanship” presupposes special training, skill and knowledge for production.
 • “Artistic” means it will have a real artistic or aesthetic quality and must be a work of art or fine art. • Whether an article is artistic must be determined in light of evidence.
 • This could include: evidence of the intentions of the maker, in particular whether or not he had the conscious purpose of creating a work of art; evidence from ordinary members of the public; expert evidence; whether the maker already has works to his name which are acknowledged to be artistic, and the level of aesthetic appeal.
• Determining whether a work is a work of artistic craftsmanship turns on assessing the extent to which the particular work’s artistic expression is unconstrained by functional considerations.
Previously expired works to resume term of protection
Works in which copyright has expired under s.52 will assume the new term of life of the creator plus 70 years. For example, if an industrially manufactured work was created in 2000, copyright protection would have expired in 2025 under s.52. Now, copyright protection will expire 70 years after the death of the creator. If the creator died in 2010, copyright will expire in 2080.
Effects on publications with 2D copies of affected works
Publishers will be required to secure licences when printing 2D copies of affected works of artistic craftsman ship. All existing publications containing such images must be sold before the end of the transition period on 28 January 2017.

Freedom of panorama in France: could even a visit to Père Lachaise become a problem?

Adjusting the camera not
to include any copyright material
Game of Thrones? House of Cards? Forget them.

The battle around what until recently was an area of copyright not many cared knew about, ie freedom of panorama, has now become one of the most eventful sagas ever.


The relevant provision in this sense is Article 5(3)(h) of the InfoSoc Directive, which allows Member States to introduce national exceptions/limitations to the rights harmonised by that directive to permit the "use of works, such as works of architecture or sculpture, made to be located permanently in public places". 

Along with discussion of a new neighoubring right for publishers (whether in the press sector alone or also in other sectors), readers will remember that last month the EU Commission launched a public consultation [running until 15 June 2016] on this very topic [here].

In parallel with policy discourse, also national courts and legislators alike are contributing to the overall debate around freedom of panorama.

Recent case law: that Swedish ruling

On the one hand, earlier this month the Swedish Supreme Court issued a ruling [here, and here for an English translation] in which it held that online publicly accessible databases like Wikipedia cannot rely on the Swedish panorama exception within Article 24(1) of the Swedish Copyright Act. This provision states that:

"Works of fine art may be reproduced in pictorial form 
1. if they are permanently located outdoors on, or at, a public place 
2. if the purpose is to advertise an exhibition or a sale of the works of fine art but only to the extent necessary for the promotion of the exhibition or the sale or 
3. if they form part of a collection, in catalogues, however not in digital form."

The Swedish Supreme Court ruled that the making available of images of artworks through publicly accessible online databases would unreasonably prejudice the rightholders' legitimate interests, in that it would deprive them of potential commercial revenue arising from the exploitation of such dissemination channels.

 To this end, the public interest underlying the non-profit and open nature of Wikimedia's database would not offset the prejudice caused to rightholders.

Oscar Wilde's tomb at Père Lachaise
Recent legislative debate: the French Senate

Moving from courts to parliamentary assemblies, as readers will remember not all Member States have implemented a panorama exception into their own national copyright laws. 

Among those that have not taken advantage of the possibility under Article 5(3)(h) of the InfoSoc Directive there are Italy and for the moment still France.

As reported by Numerama yesterday the French Senate voted in favour of an amendment [which, I understand, to become law has now to be adopted also by the Assemblée Nationale] aimed at introducing into French law a (fairly restrictive) panorama exception [see here for a recap (in French)].

The text of the exception as adopted yesterday would allow "reproductions et représentations d’œuvres architecturales et de sculptures, placées en permanence sur la voie publique, réalisées par des personnes physiques, à l’exclusion de tout usage à caractère directement ou indirectement commercial."

Basically, what will be permitted is [WARNING: Kat-translation!] the reproduction and representation of architectural works and sculptures, permanently located on public roads, made by physical persons, with the exclusion of uses having direct or indirect commercial character.

If adopted in its current form, the French panorama exception would come with significant limitations which - incidentally - do not appear to have any basis in the formulation of Article 5(3)(h) of the InfoSoc Directive [whether this is permissible under EU law is doubtful, as I argued here]

And the most significant limitations do not really appear to relate to the prohibition of commercial uses:
  • First, the panorama exception would only apply to individuals, not also legal persons. As such, taking from the Swedish example, Wikipedia et similia would not be covered by it. 
  • Secondly, the exception would only apply to works located permanently on public roads: what about all those works located permanently elsewhere (eg public parks, stations etc)? 
The French panorama exception in practice: an example

Let's assume that the panorama exception in France is adopted in its current form.

Recently I have been to Paris and returned to the beautiful Père Lachaise cemetery

Among those who rest there, there is Oscar Wilde. His tomb is likely to be eligible for copyright protection in the first place [at the end of the day, it's France, not the UK, so subject-matter categorisation is not really an issue] and be still protected by copyright, since the sculpture who realised it, Jacob Epstein, died in 1959.

If I took a photograph of Wilde's tomb would I be covered by the panorama exception? That's not so certain - I would argue - as it may be doubtful whether a cemetery, with free access yet opening hours, could be regarded as part of the 'voie publique'.

But things could be worse for other subjects, ie Google. Currently Google Street View allows me to see Oscar Wilde's tomb right from my laptop's screen. 


However, this reproduction by Google would be likely regarded as unlawful under the new exception, since Google is certainly not a 'personne physique' falling within the scope of the exception. As such, could this mean that in France Google would have to seek a licence to reproduce images of architectural works and sculptures, no matter where permanently located [this might not be the only image-related headache for Google in France: see here]?

In this example, probably both Google and I could be in trouble. This way, even a harmless visit to Père Lachaise could turn into something that - unlike the place itself - would be anything but peaceful. But what do readers think?

The end of the Google Books legal saga

A few days ago the US Supreme Court refused [here] to grant certiorari in the long-running battle between the Authors Guild and Google over the latter's Books Library Project [Katposts here].

Katfriend Shalini Bengani (Competition Commission of India) explains what happened. 

Here's what Shalini writes:

"Authors Guild has been on a collision course with Google Book for over a decade since they first filed their copyright infringement suit on 20 September 2005, seeking declaratory and injunctive relief and statutory damages on behalf of a purported class. 

The Court of Appeals for the 2nd Circuit [here] in 2015 rejected the Authors Guild’s claim that in his 2013 decision Judge Chin in US District Court for the Southern District of New York [here] had applied an excessively expansive approach to the fair use doctrine.

In a thorough opinion by Judge Leval, the 2nd Circuit explored the facts of Google Books’ digital copying, its search function and limited snippet display of petitioners’ works. The arguments in favour of Google Books project were overwhelming. Therefore, the 2nd Circuit concluded that Google Books is entirely consistent with the purposes of copyright law and fair use in fact, advances the interests of authors. In effect, this means that as users we can continue to benefit by scrounging for books of interest online, and this appears in line with the needs of digital age.


So what is Google Books? Not that you don’t know but just in case......


In response to a search query, Google Books provides the user with a list of books that contain the chosen search term and (in many cases) information about the immediate context in which the term appears. It also informs the user where they can buy or borrow the book.

In 2004 Google entered into bilateral agreements with 11 major research libraries to make digital copies of books in their collections. Those collections included novels, children’s books, and books of poetry, but the “vast majority” of selections were “nonfiction, and most are out of print.” Many of the books are in the public domain, but Google also made digital copies of books that remain in copyright.


For each book, Google made a digital scan and extracted machine-readable text by using optical character recognition technology. By doing so, Google was able to create a comprehensive index of the books’ texts that can be searched by users. All of the files involved in the process are securely stored on servers that are not accessible from the  Internet and are protected by the same security systems that protect Google’s own confidential information.


After entering a query, a user can click on a particular search result to see an “About the Book” page for the chosen book. “About the Book” pages include links that allow the user to buy the book and to find the book in a nearby library when that is possible. Those pages do not contain advertising (other than bookseller information), and Google receives no payment in connection with the “buy the book” links.


For certain titles, Google Books displays up to three short snippets of text—each approximately one eighth of a book page— in response to user queries. Those tiny segments give users some minimal contextual information to help the searcher learn whether the book’s use of that term will be of interest to her. By reviewing snippets containing the searched term, a user can often determine the relevance of a book to his/ her interest in a way not possible with earlier methods such as a card catalog or bibliographic index.


Google Books places several restrictions on snippet view that ensure that the snippets cannot be used as a substitute for buying or borrowing the book itself. No more than three snippets are displayed in response to a search query, even if the same search term appears elsewhere, and Google Books always displays the same snippets in response to a given search term, no matter how many times the search is run. Google also “blacklists” (ie, makes unavailable for snippet view) at least one snippet per page and one page out of ten per book. And there are additional technological restrictions to prevent automated downloading of snippets. These features substantially protects against its serving as an effectively competing substitute for Plaintiffs’ books.


Google Books does not offer snippet view for certain types of books, such as dictionaries, cookbooks, and short poems, where there is a risk that access to a small portion of the book could be a substitute for the book itself. Authors/right holders wary of Google Books have a choice to opt out.


The agreements between Google and each library permit the library to download and retain a digital copy of each book it has submitted for scanning.


Judge Pierre Leval
The decision

The Court of Appeals for the 2nd Circuit analysed Google Books project under the fair use factors articulated in 17 U.S.Code § 107, both separately and in combination, noting that the statute’s four factors are not to be treated in isolation but are to be weighed together, in light of the purposes of copyright. Further it noted that the first and fourth factors warrant greater weight.


First factor: Purpose and Character. The court analyzed whether Google Books supersedes the objects’ of the original creation, or instead adds something new, with a further purpose—that is, whether and to what extent the new work is ‘transformative. The court explained that a transformative use is one that communicates something new and different from the original or expands its utility and accordingly, concluded that Google Books’ search and snippet functions are highly transformative.


Second factor:  Nature of the copyrighted work. On its own, this factor did not influence the court's analysis; the court might have weighed that factor in favor of Google, since most of the works in Google Books are factual, not fiction, but it did not do so.


Third factor: Amount and substantiality of the portion used in relation to the copyrighted work as a whole. The court explained that digital copying of the totality of the original is literally necessary to achieve Google’s transformative purpose of enabling search. If Google were to copy less than the totality of the originals, then its search function could not be able to advise searchers reliably whether their searched term appears in a book. In fact it was noted by the 2nd Circuit that in spite of the plaintiffs’ counsel employing researchers over a period of weeks to do multiple word searches on plaintiffs’ books, in no case were they able to access as much as 16% of the text. Further, it was observed, that Google has constructed the snippet feature in a manner that substantially protects against its serving as an effectively competing substitute for plaintiffs’ books. Moreover, the snippets collected were usually not sequential but scattered randomly throughout the book.


Market assessment
Fourth factor: Effect of the use upon the potential market for or value of the copyrighted work. The  ourt found no evidence of any significant harm to the market for petitioners’ books, since they were unable to show that any amount of searching could yield more than a small fraction of a book’s text. The court explained that the petitioners’ copyright interest in their books does not include an exclusive right to supply information (of the sort provided by Google) about their works.  The  ourt held that although snippet view may from time to time satisfy “the searcher’s need for access to a text,” an occasional lost sale does not constitute “a meaningful or significant effect ‘upon the potential market of the copyrighted work.’ The court noted that in nearly a decade of litigation the Petitioners had failed to introduce evidence of a single lost sale attributable to Google Books.


Finally, the  ourt rejected petitioners’ claims that permitting the libraries to download digital scans of their own books constituted infringement: “Google’s provision of digital copies to participating libraries, authorizing them to make non-infringing uses, is non infringing, and the mere speculative possibility that the libraries might allow use of their copies in an infringing manner does not make Google a contributory infringer. Hence, the Court of Appeals properly rejected petitioners’ assertion that they suffered economic harm because Google Books somehow preempted their right to license their books for search uses. The court clarified that the exclusive right that the petitioners sought to preserve is not one that copyright protects: The copyright that protects Plaintiffs’ works does not include an exclusive derivative right to supply information about their works through query of a digitized copy."


Review under Campbell v Acuff-Rose framework

The court reviewed the purpose and character of Google Books’ uses under Campbells framework. It drew a distinction between providing information about a book and appropriating the content of that book. The Court was of the view that Google Books is a well-intentioned project as  is highly beneficial to all since it augments public knowledge without providing the public with a substantial substitute for matter protected by the plaintiffs’ copyright interests in the original works or derivatives of them. Further, snippet view enables identifying of books of interest to the searcher by way of revealing just enough context surrounding the searched term to help a user evaluate whether the book falls within the scope of his/her interest.


Drawing a parallel with the Campbell case, the court held that a poetic parody may be “new creative expression,” but so is a search tool that tells would-be readers what books are relevant to their interests in light of their own search terms. Petitioners’ contention that no use can be transformative unless it alters the content of the original work did not find any support in the court and it was held that this rigid approach to fair use ignores Campbell’s warning against “simplification with bright-line rules.”


Google Books is nice and everything,
but what better place
to sleep while in the library
than an actual book?
Commercial character is “not conclusive” in a fair use determination

The court was also of the view that the 2nd Circuit rightly concluded that the fact that Google is a commercial business does not outweigh the dramatically transformative character of Google Books. It was rightly explained in the Campbell case that the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.


My take

While I was a law student in India, I was required to search for books in a physical library and the resources therein were few and far between. Searching manually took a lot of time but with Google Books, every student, researcher, lawyer, academician stands to benefit as it brings them to the book at the click of a mouse and also the authors close to their target audience. Therefore, I for one, cannot extol enough the virtues of the Google Books project. 

The goal of Google Books is to make the life of every researcher or avid book reader much easy. The Google Books litigation outcome augers well for the reading/researching population. This case has certainly brought delight  to researchers all over the world but dismay to the Authors Guild."

Thursday, 28 April 2016

BREAKING: DSM Communication on Platforms leaked!

The role and responsibility of online platforms and intermediaries is a key issue in the Digital Single MarketStrategy, which the EU Commission launched last May [see Katposts here, here, here, here and here]. After a number of public consultations, on-line and off-line enthusiasts were anxiously awaiting for the Commission to release a Communication on that very issue by the end of May 2016. A few hours ago, Politico provided for a good remedy against our anxiety by leaking the draft Communication, which bears the lovely title "Online Platforms and the Digital Single Market Opportunities and Challenges for Europe". The draft version is dated 18 April.

The draft Communication addresses a number of DSM initiatives where platforms' liability is involved and shades light upon the general principles that will guide the Commission's reform efforts as regards E-Commerce, AVMS, and IPRED Directives. Overall, the draft Communication describes a strongly pro-competition program that reminds to this Kat the EU he knew when he attended university [i.e., ages ago], when the Commission was perceived as a disruptive Institution aimed at battling status quos, rather than preserving them. Be that as it may, here are the major points that the Communication addresses.  


ISP Safe Harbour is here to stay

During these months, many have pushed for the DSM strategy to significantly amend the liability regime that the E-Commerce Directive provides for Internet Service Providers (ISP) when it comes to user-generated content (UGC) transmitted or stored. A few days ago, the Commission Vice-President for the DSM Mr Andrus Ansip tweeted that it would have not be the case 



In line with Commissioner Ansip's take, the major point of the leaked Communication is that the DSM Strategy won't change the ISP liability regime as we know it. The draft Communication stresses that, whilst "designed at a time when online platforms did not have the scale they have today", the good, old E-Commerce Directive has done a good job in creating a regulatory environment "that has considerably facilitated their scaling-up". Without the shield from liability for UGCs, a crucial element "for the further development of the digital economy in the EU and for the unlocking of investments in platform ecosystems" would be missing, to the detriment of the EU Information Society as a whole.

This is why "the public consultation showed strong support for the existing principles of the e-Commerce Directive", and the EU Commission wishes to maintain it as it is -- apparently without adding new kinds of ISP to the E-Commerce Directive fabulous three (i.e., mere conduit, caching, and hosting), differently from what the public consultation on the E-Commerce envisaged investigating the need to further legal regimes for linking and cloud service providers. 


EU-wide notice-and-take-down procedure postponed

The public consultation on the E-Commerce Directive included a question on the opportunity to harmonise the notice-and-take-down procedure (NTD) EU-wide. As far as this Kat knows, this is not the first time that this happens, as a piece of legislation aimed at harmonise NTD throughout the EU has circulated in Brussels some years ago, before disappearing.  This Kat believes that an EU NTD could actually help to bring certainty and effectiveness in the market of on-line contents, and so does the draft Communication, which acknowledges:


"a need to monitor and improve effective procedures for notice-and-action to ensure the coherence and efficiency of the intermediary liability regime, in a context where there is a risk of fragmentation and incoherence stemming from the multiplicity of reporting mechanisms designed by the platforms themselves or by Member States".

However, the Commission and this Kat must feel different degrees of love towards NTD, as the Commission does not intend to take any action


"before considering launching an initiative, the Commission will assess the impacts of on-going reforms such as the copyright review, the REFIT of the Audio-Visual Media Services Directive and important co-regulatory initiatives such as the EU Internet Forum … The Commission will continue to review the need for formal notice-and-action procedures during the second half of 2016, taking into account the effect of the updated audiovisual media and copyright frameworks on illegal content online".


Sectorial Kat
Voluntary and sectorial self-regulatory actions to address UGC-related problems

The one-size-fits-all strategy does not work for all UGC-related problems:


"[W]ithout jeopardizing online platforms' innovation potential, the Commission considers that specific regulatory action would be more effective through sectorial legislation, on the basis of maximum harmonisation and a problem-driven approach, and without prejudice to the e-Commerce Directive".

Within this sectorial approach, the Commission envisages different actions to contrast different harmful UGCs (those spreading hatred, cyber-bullying, incitement, contents infringing IP, etc.) and to ensure that the value of copyright-protected content available on-line be shared in a fair manner between distributors and right holders.
The way the Commission plans to do so is encouraging "all types of online platforms to take more effective voluntary action to safeguard key societal values" and promoting EU-wide "voluntary self-regulatory actions" among ISPs, which the draft Communication considers "very effective, in particular when subject to a clear set of principles, targeted, and continually improved to keep pace with the challenges as they evolve".  Once again, among those principles the draft Communication mentions the safe harbour, stressing that all sectorial measures will be "fully coherent with the e-Commerce Directive" liability regime for ISPs. For some reasons that this Kat is too basic to get, EDRI is not very happy with that.

Measures to promote self-regulations aimed at protecting minors and tackling online incitement will be issued "in the context of the updated Audiovisual Media Services Directive to be adopted alongside this Communication" [i.e., the 25 of May?]. As to the fair allocation of the value generated by copyright-protected content, the Commission intends to take action "in the next copyright package", that should be adopted later this year.


AVMS and OTTs: don't imitate, deregulate!

Another big news is the general approach that the Commission wishes to adopt in order to create a "level playing field" for traditional and on-line providers in different sectors, Audio Video Media Service (AVMS) included. Since a while, providers subject to the AVMS Directive have been claiming that on-line platforms hosting above-the-network audio-visual content [the so-called Over The Top services, 'OTT'] should comply with their same rules, as the converging environment led them to compete on the internet and in the physical world. In this regard, the draft Communication acknowledges that


"Where the same activities are supplied by different actors, these activities should be regulated in the same way in order to avoid market distortion".

Be that as it may, it also observes that


"comparable activities that are provided under materially different conditions, such as broadcasters controlling content versus online platforms relying on user-generated content, should naturally be treated differently … This modernisation should seek to avoid imposing a disproportionate burden on online platforms business models".

If OTT should not be considered like traditional broadcasters, traditional broadcasters could be made more similar to OTTs, though. In this perspective, the draft Communication suggests that a "level playing field" could be implemented by reducing obligations that traditional AVMS providers have to comply with:
Not so sure it works.


"[I]n areas where competitive pressures have been increased, deregulation of traditional sectors may offer the most beneficial response to achieve a level playing field".

In light of some out-of-time obligations traditional broadcasters have currently to comply with, a substantial deregulation appears to be the smartest solution to fully exploit the disruption that on-line providers have brought in many traditional sectors [like a Katpost on Uber outlined some time ago]:


"Competition from online platforms can provide incentives for traditional market players to innovate and improve their performance, as well as point to a need to simplify and modernise existing regulation".


Transparency, interoperability, fair competition in B2B relations

The public consultations have reported users and businesses' concerns as to the lack of transparency in relation to the collection and storage of both personal and non-personal data. A major deal seems to be that of fake reviews, "where loss of trust can undermine the business model of the platform itself, but also lead to a wider loss of trust, as expressed by many responses to the public consultation".
In this regard, the Commission considers reviewing "the EU consumer and marketing law, including guidance on the Unfair Commercial Practices Directive, as part of its REFIT initiative" by the end of this year, meanwhile calling on


"[I]ndustry to step-up voluntary efforts to prevent trust-diminishing practices, in particular – but not limited – to tackle fake or misleading online reviews".

The draft Communication also addresses the need to ensure the possibility for users to switch providers affordably "and with minimum disruption", allowing them to easily retrieve "all content they have provided or was generated on the basis of their Internet use". The "full implementation of the new General Data Protection Regulation" and pushing forward "the proposed Directive for the supply of digital content" are the tools that the Commission considers more convenient to achieve those objectives.

In view of creating an open and pro-competitive on-line environment, especially "in emerging areas such as virtual reality, smart cities and the Internet of Things", the draft Communication intends to stimulate "the emergence of open online platforms" and to "put forward proposals for effective approaches, including technical standards, to facilitate switching and portability of personal and non-personal data among different online platform and cloud computing services".

From another standpoint, the public consultations revealed that some businesses are concerned about "allegedly unfair trading practices on suppliers". The Commission is gathering further evidence in this regard, and


"by the end of spring 2017, … will determine whether additional EU action is needed beyond self- and co-regulatory efforts that may include dispute resolution mechanisms or the provision of better information or guidance".


What's next?

Next is the official Communication, which is due by [or on] 25 May. If the latter would result to be in line with the leaked draft, we could reasonably expect


-       Some kind of update about the AVMS Directive reform [perhaps the very updated Directive] to be "adopted alongside this Communication". The official version, they mean, due by the end of May;

-       The Copyright package to be issued in the autumn 2016;

-       A multi-stakeholder forum to take place before the end of 2016, assessing self-regulatory measures and common technical standards aimed at tackling illegal contents and ensuring interoperability, fair competition and transparency;

-    Discussions about EU-wide NTD procedure and possible actions re B2B agreements to be postponed to 2017.

Stay tuned!


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