Author: Eleonora Rosati

Brands and ecommerce platforms: a tainted relationship?

What has happened to online ecommerce platforms? Over the past few months news reports have multiplied – or, perhaps, their underlying issues have acquired greater visibility – that brand owners have been increasingly voicing criticisms against, sued, or discontinued sales on ecommerce sites. In particular, after the criticisms made against Alibaba, it seems that Amazon is now making the headlines.

Let’s have a quick look at what has happened over the past few months.

Court actions

First, there have been legal proceedings being brought by trade mark owners, claiming a direct responsibility of Amazon in the sale of counterfeits or invoking a right to prevent sales on such platform.

An example of the former is the lawsuit filed by Daimler against Amazon in late 2017 in the US District Court for the Western District of Washington at Seattle. The well-known German car manufacturer argues that Amazon is directly responsible for the “offer for sale, sale and distribution of wheels which blatantly copy issued design patents in various distinctive and artistic wheel designs owned by Daimler” under the Lanham Act (§ 1051 ff), the US Patent Act (§ 1 ff), and Washington State statutory and common law.

As explained on Forbes here, this is not the first time that a trade mark owner is seeking to have the direct liability of Amazon established. However, back in 2015 a 9-member jury in the same court that has now been asked to rule on the lawsuit filed by Daimler held that Amazon was not liable for the sale of counterfeit Milo & Gabby (now JoliMoli) animal-shaped pillows.

If the case brought by Daimler ended with a finding of liability for Amazon, that would likely have a significant impact on the liability of platforms allowing third-party listings, and set a different approach to platform liability in the US.

As readers knows, the particular issues surrounding platform liability have been at the centre of attention also in Europe.

Reference in the online trade mark realm goes instinctively to the landmark decision of the Court of Justice of the European Union (CJEU) in eBay, C-324/09, in which the highest EU court clarified that the safe harbour for hosting providers within Article 14 of the E-Commerce Directive does not apply to “an information society service [which is] aware of facts or circumstances on the basis of which a diligent economic operator should have identified the illegality in question and acted in accordance with Article 14(1)(b) of Directive 2000/31.” [para 120]

More recently, the CJEU appears to have pushed the liability of platforms even further than the realm of safe harbours (hence, scenarios of secondary liability) by holding that a platform may be even directly (primarily) liable for third-party infringements. It has done so in the copyright context, especially in the recent Filmspeler decision [here] and – even more clearly – in the Ziggo ruling [here].

If we remain in the EU context, the issue of platform liability is not the only aspect that has been touched upon in relation to ecommerce platforms. Readers will in fact remember the recent judgment in Coty Prestige, C-230/16 [here], in which the CJEU tackled the compatibility with EU competition rules of selective distribution agreements for luxury brands, including clauses that would prevent resellers from distributing branded products via Amazon. The CJEU provided an interpretation of relevant EU provisions that allows – at certain conditions – trade mark holders from preventing distribution of their goods via platforms of this kind.

Discontinued sales

In parallel with court actions, other brands have recently announced their intention to discontinue sales on Amazon, over issues of counterfeiting and allegedly excessive discounts.

In a timeframe of just a few weeks, this has been for instance the case of Birkenstock and Italian publisher E/O, respectively.

Shoe producer Birkenstock announced that as of 1 January 2018 it would terminate its business relations with Amazon, on grounds that

“there have been a series of violations of the law on the Marketplace platform operated by Amazon which the platform operator has failed to prevent of its own accord. On a number of occasions, BIRKENSTOCK lodged a complaint that counterfeit products of poor quality which infringed BIRKENSTOCK’s trademark rights and misled the consumers regarding the origins of goods were being made available on the platform.

Putting the issue of legal obligations aside, BIRKENSTOCK is of the opinion that an integral part of a trusting business relationship is that, upon being first notified as the operator of the Marketplace platform of such a breach of the law, Amazon would, of its own accord, do everything within its power to prevent this type of and similar infringements. To this day, no binding statement has been made to the effect that no more counterfeit BIRKENSTOCK products would be offered for sale through the platform.”

A couple of weeks ago also E/O [the Italian publisher of Elena Ferrante’s books, amongst others] announced that it would no longer sell on Amazon, on consideration that the discounts requested by the ecommerce provider would be excessive. It is not the first time that a complaint of this kind is made by the publishing industry.

What’s next?

In all this, what does the future hold?

On the one hand, it appears that brand owners’ complaints may result in the adoption of new approaches towards responsibilization and liability of online platforms.

This could occur not just at the court level, but also by means of initiatives of policy- and law-makers. In Europe, for instance, the issue of platform liability, notice-and-stay down obligations (including filtering), as well improved enforcement tools are currently central items to the agenda of the EU Commission and legislature. In the first half of 2018 it is expected that the Commission will unveil further legislative proposals in this area, under the umbrella of its Digital Single Market Strategy.

On the other hand, platforms like Amazon may not rely just on partnerships with brand owners or the making available third-party offerings but, rather, increasingly invest on the making available of their own offerings. In this sense, the trend in fashion seems to be already reality. As noted by The Fashion Law, Amazon has in fact been working on and launched a number of in-house collections that have been already finding success among consumers, “particularly in light of the current retail environment, when brand loyalty is low, consumers are overly price/value conscious, and branding is simply not as significant a player as it used to be.”

In this sense, the general trend seems to be towards a configuration of platforms’ activity as no longer – or just – passive hosts of third-party offerings but, rather, active providers of own offerings. What should the legal treatment of this evolving and evolved scenario be? While the functioning of the internet must be safeguarded [as was also recently stressed by the German Federal Court of Justice, here and here] the questions that lie ahead and require a response are whether new rules are needed, existing rules should be applied differently … or what else?

[This post was originally published on The IPKat on 4 January 2018]

The features required for a TV format to be protected by copyright

Sebastian Vogg

What is it required for a TV format to be protected by copyright under UK law? The High Court of England and Wales answered this question in its recent decision in Banner Universal Motion Pictures Limited v Endemol Shine Group Limited, Friday TV AB and NBC Universal Global Networks UK Limited [2017] EWHC 2600 (Ch) (19 October 2017).

Southampton Law School visiting student Sebastian Vogg explains it all.

Here’s what Sebastian writes:

“In its decision of 19 October 2017, the High Court of England and Wales dismissed the claim of Banner Universal Motion Pictures Limited (‘BUMP’) for subsistence and infringement of copyright of the television game show format ‘Minute Winner’ because it was lacking the features required to be qualified as a dramatic work within the meaning of sections 1(1)(a) and 3(1) of the Copyright Designs and Patents Act 1988 (‘CDPA’).

Background

Mr Banner, the founder of the claiming company BUMP, devised a television game show format called Minute Winner. The information concerning this format was written down in a document (‘the Minute Winner Document’) and allegedly disclosed to the defendants by Mr Banner in circumstances that gave rise to an obligation of confidence.

According to BUMP, the defendants misused this information by broadcasting a game show called ‘Minute to Win It’ eight years later without Mr. Banner’s consent. BUMP claimed that this show was derived in substantial part from the Minute Winner format. The plaintiff argued that the Minute Winner Document was protected by copyright as a dramatic work and that the defendant’s unauthorized use amounted to copyright infringement. The format was not alleged to be a literary work, because dramatic and literary works are mutually exclusive categories. Hence, it is not possible to claim that a work falls within the scope of both categories. BUMP also claimed for breach of confidence and passing off. It should be mentioned that Mr. Banner had already tried similar claims before the Swedish courts and could not succeed.

Analysis

The Court had to decide upon the defendant’s appeal for summary determination of the claim and/or for it to be struck out, among others, because the contents of the Minute Winner Document did not qualify for protection as a copyright work. In terms of the summary determination, according to Part 24 (2) Civil Court Rules, the Court had to answer the question if there was a real prospect of succeeding. To do so, the Court had to assert if there was a real prospect of qualifying the format contained in the Minute Winner Document as a dramatic work.

The Court first determined what a dramatic work is. The CDPA provides no definition of dramatic work but in Norowzian v Arks Limited (No 2) [2000] EMLR 67 (at 73) it was held that a dramatic work is ‘a work of action (…) which is capable of being performed before an audience’. It should be borne in mind that no episode of the Minute Winner had ever been produced. Therefore, the question was if a television format is separately capable of being performed. The Court considered, among others, the decision of the Privy Council of New Zealand in Green v Broadcasting Corporation of New Zealand [1989] RPC 700 (‘Green’) as leading authority. In this decision, the format of a talent television show was not qualified as a dramatic work because it was lacking sufficient certainty of subject matter and unity to be capable of being performed (Green, at 40).

In the present case, the Court held that the relevant authorities indicate that qualifying a television format as dramatic work is, principally, at least arguable. The fact that there are spontaneous elements and changing events in every show, derived from the format, was not necessarily seen as a barrier to copyright protection.

In consideration of former authorities, the Court listed two minimum requirements for copyright protection. Firstly, the format must contain a number of clearly identified features which, taken together, distinguish the show from others of a similar type. Secondly, those distinguishing features must be connected with each other in a coherent framework which can be repeatedly applied so as to enable the show to be reproduced in recognisable form. So, if a show was produced by using the Minute Winner format, it must have been possible to distinguish the outcome from any other game show. As well, it must have been possible to recognise all episodes derived from this format as belonging to one concept.

The features of the format in the present case were basically: the title Minute Winner, the catchphrase ‘one minute to win (something)’, and the idea to give people the chance to win prizes by fulfilling tasks within one minute. Four examples of possible tasks and prizes were listed in the Minute Winner Document. The Court qualified these features as not capable of making a show distinguishable because they were part of the basic concept of almost every television game show. Furthermore, it was held that there was a lack of determining where the show should take place, how the contestants should be chosen, what type of one-minute tasks should be played, how long the show should take, and what kind of prizes should be winnable. Due to the lack of such elements, the Court couldn’t see any recognisable or repeatable structure of the format. According to the Court, the four examples of the document were too inconsistent to derive any structure of the show from them.

Therefore, the format had no realistic chance to be qualified as a dramatic work. For the case that this conclusion was wrong, the Court also held that the Minute Winner format and the show broadcasted by the defendants were different in almost all aspects and that there would have been no infringement anyway. The claims for breach of confidence and for passing off were also dismissed. The former mainly for reasons of jurisdiction rules, the latter due to BUMP’s missing goodwill.

Implications of the decision

In Green (at 25-45) there was some scepticism that a television show format could be qualified as a dramatic work. Anyway, it did not say that it was generally impossible. The possibility to qualify a format as a dramatic work was indicated in Meakin v BBC [2010] EWHC 2065 (Ch) (para 31) where it was assumed that copyright subsisted in specific television show formats. In the present case, the Court explicitly held that it can be possible for such a format to be protected by copyright as a dramatic work.

The arguments why the Minute Winner Document was not a dramatic work demonstrate which requirements could increase the chance of a format to be qualified as copyright protected. It seems hard for a Court to deny the copyright protection of such a format in a future case if it fulfils the requirements that were missed in the Minute Winner format. According to the present decision, criteria to take the threshold of the minimum requirements for copyright protection are: giving exact information about the possible contestants, the winnable prizes, the duration of the show, the kind of games, and where these games take place.

Like in Green (at 40) the Court explained its reluctance to qualify the format as a dramatic work with the argument that copyright creates a monopoly. This demonstrates again that the features of a format should be described as precisely as possible. The more exact these features are described, the less a monopoly would affect the rest of the world and the less it could be an argument against granting copyright protection. The Court held that BUMP could not claim a monopoly on games being played against the clock for one minute. In contrast, there could hardly be seen any problem if people were, for example, just kept from playing certain games, in certain places, to win certain prizes in a television show.

The Court pointed out, that there would have been no infringement anyway, because the format and the show broadcasted by the defendants were different in almost all aspects. One could say that this statement is kind of paradox because the Court first qualified the features of the format as not distinguishable and then used these features to make a precise distinction between the format and the defendant’s show. Of course, this conclusion was just made for the case that the Court was wrong in not qualifying the format as a dramatic work. But the mere possibility of reaching this conclusion implies that the features are distinguishable. A similar problem was, in terms of Green, already mentioned in David Rose, ‘Format rights: a never-ending drama (or not)’ (1999) 10(6) Ent. L.R. 170 (page 171).

The present decision brings no radical change in the assessment of television formats in terms of copyright law. But it probably provides a useful guideline how to draft a format that is likely to be qualified as being protected. The Court also emphasized that the relevant assessment is heavily fact-specific. Thus, if someone devises a format by following this guideline and lodges a similar claim in the future, there could be a different outcome than in the present case.”

The VCAST decision: how to turn a private copying case into a case about communication/making available to the public

A few months after Advocate General (AG) Szpunar released his Opinion in VCAST, C-265/16 [here], the Court of Justice of the European Union (CJEU) has now released its decision in this case.

This was a reference from Italy (Turin Court of First Instance) that one would have thought [as the questions were indeed about it!] to concern the understanding and application of the private copying exception within Article 5(2)(b) of the InfoSoc Directive to cloud-based video-recording services.

Well, although the AG Opinion is indeed about this, the CJEU judgment is not.

The Court, in fact, made the case about the right of communication/making available to the public within Article 3 of the InfoSoc Directive.

Let’s start then and see why VCAST is not really – or at least is no longer – a case about the private copying exception.

Background

The facts of the case are rather simple: basically, the Italian litigation revolves around the lawfulness of a cloud-based recording service, provided by VCAST, that allows its customers to make copies of terrestrial TV programmes broadcasts including, among other things, those of RTI.

Importantly, the possibility to make such recording is granted irrespective of whether customers can lawfully access the programmes terrestrially, ie offline. A clear instance is, as well explained by the AG in his Opinion, that for RTI programmes it is generally required that the user happens to be on the Italian territory.

Under Italian law it would appear that VCAST activity might be lawful, although the CJEU did not consider this a given. Nonetheless, the Court deemed it helpful to base its analysis on the assumption that Italian private copying exception applies to VCAST’s activities.

The question became therefore whether a national law of this kind is compliant with what Article 5(2)(b) of the InfoSoc Directive (read in combination with the three-step test in Article 5(5) therein) provides.

Private copying … but is VCAST’s service only about the making of copies?

After recalling that exceptions should be interpreted strictly, the Court confirmed the finding of the AG – which follows from the seminal Padawan decision – that for the private copying exception to apply it is not required that the beneficiary is the one who directly makes the copy of the copyright work at issue.

However – and this is the interesting part of the Court’s analysis – VCAST’s activity is not about reproductions or, at least, is not just about reproductions. Hence, the discussion around the private copying exception is not the whole story.

More fundamentally, in fact, VCAST does not only organize the recording of TV programmes for its customers but, instead, makes them available to them in the first place. It follows that VCAST’s activity cannot be assessed exclusively under the binary distinction reproduction/private copying. It is also necessary to take into account the making available part and, with it, Article 3 of the InfoSoc Directive.

What does all this lead to?

“[A]lthough the private copy exception means that the rightholder must abstain from exercising his exclusive right to authorise or prohibit private copies made by natural persons under the conditions provided for in Article 5(2)(b) of Directive 2001/29, the requirement for a strict interpretation of that exception implies that that rightholder is not deprived of his right to prohibit or authorise access to the works or the subject matter of which those same natural persons wish to make private copies.

It follows from Article 3 of Directive 2001/29 that any communication to the public, including the making available of a protected work or subject matter, requires the rightholder’s consent, given that, as is apparent from recital 23 of that directive, the right of communication of works to the public should be understood in a broad sense covering any transmission or retransmission of a work to the public by wire or wireless means, including broadcasting.” [39-40]

So, again, communication/making available to the public

The Court thus moved on to recall the requirements for an act of communication (or, rather, making available in this case) to the public [the judgment refers extensively to Reha Training, which – despite being a Grand Chamber ruling – has been quite neglected in decisions like GS Media, Filmspeler and Ziggo].

Interestingly, the CJEU stated that to have an ‘act of communication’ a transmission of a copyright work is required. The Court noted that there would be a transmission made by the broadcasting organisation, on the one hand, and a transmission made by VCAST, on the other hand. Both are done using a different means of transmission for the protected works, and are intended for different publics.

The result?

“without the rightholder’s consent, the making of copies of works by means of a service such as that at issue in the main proceedings could undermine the rights of that rightholder.

Accordingly, such a remote recording service cannot fall within the scope of Article 5(2)(b) of Directive 2001/29.” [51-52]

This means that VCAST’s service cannot be provided without the prior authorization of the relevant rightholders, in that its activity also amounts to communication/making available to the public within Article 3 of the InfoSoc Directive.

Comment

The outcome of the VCAST case is not surprising, nor is the fact that the CJEU answered the questions referred by the national judge rephrasing them and considering issues other than those raised.

More generally, the decision highlights once again the absolute centrality of the right of communication/making available to the public, especially in the online environment.

While cloud-based video recording services per se are not to be regarded as unlawful, certainly the CJEU decision sets precise boundaries for designing a service that would be compatible with EU law.

The first condition, stressed in particular by the AG, is that users of a cloud-based recording service must have lawful access to the terrestrial programmes that they wish to record in the first place.

The second condition is that the provider of a video-recording service cannot elude the authorization of the relevant rightholders when what it wishes to provide is a service that allows the recording of content by making it available for recording in the first place. But is this a probatio diabolica? Possibly. If so, then cloud-based video recording services would likely need to be licensed to operate under EU copyright law without the risk of infringing third-party rights.

[Originally published on The IPKat on 29 November 2017]

The author: Dr Eleonora Rosati is an Associate Professor in Intellectual Property Law. Find out more here.

Florence court prohibits unauthorized commercial use of David’s image

Earlier this week the Florence Court of First Instance (Tribunale di Firenze) issued an important and interesting decision [not yet available], which has been widely reported by newspapers in Italy [eg here, here, here, here] and abroad [eg here].

The Avvocatura dello Stato, this being the body responsible for advising and representing the Italian state (including in legal proceedings), sued a company, Visit Today, before the Florence Court of First Instance, seeking to obtain a decision that would prohibit this from selling unofficial tickets for the Galleria dell’Accademia in Florence, also using brochures and materials depicting what is probably the most famous guest of this beautiful museum: Michelangelo’s David.

The Florence court sided with Avvocatura dello Stato, and prohibited Visit Today from using the David’s image for commercial purposes.

On what grounds?

I have received several messages asking what the possible grounds for a decision of this kind would be, since copyright protection in this artwork has clearly lapsed … well, at least economic rights.

It is in fact worth recalling that in Italy moral rights protection is perpetual and also the State [or rather, the Head of Italian Government: see Article 23 of the Copyright Act] can enforce an author’s own moral rights. Similarly to other droit d’auteur jurisdictions, Italian courts have interpreted moral rights provisions generously, with the result that the scope of the right of integrity is rather broad.

This said, the main ground for the decision appears to have been [as I mentioned, the decision has not been published yet] the Italian Cultural Heritage Code, also known as Codice Urbani [see here for a recent discussion of Italian freedom of panorama and its relationship with the Code; see also here for an analysis of the decision].

Article 106 of the Code sets the general principle that for cultural heritage items subject to their own control, the State, the various Italian regions and local public bodies may allow individual applicants to use such items for purposes compatible with their own cultural value.

This means that for-profit uses of cultural heritage under the responsibility of Italian public administration are not generally free: instead, they are subject to preventive authorization.

Articles 107 and 108 of the Code provide that the competent public administration may allow third-party uses of an item – including an artwork – belonging to Italian cultural heritage, subject to the payment of royalties to be determined on the basis of – among other things – the type of use requested and the possible economic gain that the user would obtain from the use of the item.

This said, authorization is not required in each and every case. Article 108(3-bis) clarifies in fact that non-profit uses of cultural heritage items for purposes of study, research, freedom of expression or creative expression, and promotion of the knowledge of culturalheritage do not require authorization.

A surprising decision? Not really

The Florence court’s decision, therefore, is not surprising. It is not the first time, in fact, that improper and unauthorized commercial use of Italian cultural heritage has been at the centre of litigation or … threats of litigation. With specific regard to Michelangelo’s David, readers will for instance remember the rather recent case of the ‘armed David’ [here].

Similarly, lawyers who advise clients in the advertising business regularly remind them that the Cultural Heritage Code may prevent them from using works that, otherwise, would be in the public domain from a copyright standpoint.

What is at stake

When visiting Italian cities like Florence, Rome, and Venice it is very frequent to see long queues outside museums and monuments. Invariably frequent is also the sight of vendors (known as ‘bagarini‘) offering tickets – at prices higher than the official ones – to people standing in the queue, alleging great bargains and promising to let them skip the queue (admittedly a rather attractive perspective when you are queuing under the sun and facing a temperature of 38°C).

However, visitors are also often victims of scams.

The reason why the Avvocatura dello Stato brought the present proceedings was indeed also to set a ‘precedent’ and reduce, and possibly eliminate, the problem of bagarini.

Commenting on the Florence decision, Italian Minister of Culture stated that the decision is a good step in the direction of repressing the unauthorized sale – including over the internet – of tickets for Italian cultural heritage sites and the improper use of cultural heritage items. Headded that this decision “is an important step forward for the protection of consumers and the protection of masterpieces held in Italian museums.” The Cultural Heritage Ministry – he added – will continue to monitor improper uses and take action in all cases that infringe relevant provisions in the Cultural Heritage Code.

Although the decision is of course limited to the defendant’s activities, according to the director of Galleria dell’Accademia, Cecilie Hollberg, the outcome will serve as a model for all the museums that face the problem of unofficial ticket vendors who sell tickets at a higher price, thus scamming wannabe visitors.

[Originally published on The IPKat on 25 November 2017]

The author: Dr Eleonora Rosati is an Associate Professor in Intellectual Property Law. Find out more here.