21 February 2012

Injunctions against ISPs Part III: Dramatico Entertainment Ltd and Others v British Sky Broadcasting Ltd. and Others

After disappointments with Scarlet and Netlog, the withdrawal of SOPA and PIPA and Her Majesty's Government's acceptance of the Hargreaves Report, Big Copyright had something to cheer about.  In Dramatico Entertainment Ltd and Others v British Sky Broadcasting Ltd and Others [2012] EWHC 268 (Ch) (20 Feb 2012) Mr. Justice Arnold concluded that both users and operators of The Pirate Bay ("TPB") infringe the copyrights of the claimant record companies in the UK. TPB weren't there, of course.   As the judge noted at paragraph [12] of his judgment, one of the founders of TPB was believed to be in Cambodia but the others have scattered to the four winds. All attempts to serve them with Swedish proceedings have come to nought. Not surprising as they have all been convicted of offences there.

Not only were TPB missing from Dramatico but so too were the internet service providers ("ISPs") against whom orders under s.97A of the Copyright, Designs and Patents Act 1988 were sought. That is the section that implements art 8 (3) of the Copyright and Related Rights Directive (Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society OJ L 167, 22.6.2001, p.10) which I have discussed extensively in "Injunctions against ISPs" on 6 Nov 2011, "Injunctions against ISPs Part II: the CJEU's Judgment in Scarlet" of 11 Dec 2011 and finally "SABAM v Netlog - the Ghost of Denning stalks the corridors of Luxembourg" of 18 Feb 2012. Mr. Justice Henderson had ordered  the trial of two preliminary issues, namely whether on the evidence before the Court, (i) users and (ii) the operators of TPB infringe the Claimants' copyrights in the UK. The remaining issues raised by the claim were left to be dealt with at a second hearing if the claimants prevailed on either or both of the preliminary issues. In the particular circumstances of the present case, Mr. Justice Arnold accepted that this was a sensible way in which to proceed, but he wished to make it clear that he did not regard it as essential for claims of this nature to be dealt with in two stages.  The ISPs took the view that those issues were not its fight and chose to stay away which the judge regarded as understandable.   Even though it was something of a walkover, it still appears to have required a silk and two juniors to persuade the judge that TPB and its users had infringed the recording industry's copyrights.

The judge quoted extensively from the claimants' expert's report as to how TPB's technology worked and concluded at paragraph [20] of his judgment that:
"the key part of the Bittorrent protocol is the creation and distribution of torrent files associated with particular content files. The torrent files do not themselves contain any material from the associated content files. Rather, they enable the identification, and hence the uploading and downloading, of the relevant content files. Thus they serve a somewhat similar function to the NZB files described in 20C Fox v Newzbin at paragraphs [29] to [31] (summarised in 20C Fox v BT at [32])."
As in Newzbin, the claimants claimed that TPB had infringed their copyright by authorizing copying and secondly as joint tortfeasors with the downloaders who used their service.  Not surprisingly, the judge held that they were right.

Interestingly, the judgment mentioned some other s.97A injunctions against Newzbin2.   One granted by Mr. Justice Vos against British Sky Broadcasting on 12 Dec 2011 and another made by Mr. Justice Arnold against TalkTalk on 9 Feb 2012. Nobody seems to have mentioned the Scarlet or Netlog decisions but then nobody had an interest in doing so and it was arguably not necessary for Mr. Justice Arnold's decision,.

If anyone wants to discuss this topic with me they should call me on 0800 862 0055 or contact me through Facebook, Linkedin, twitter or Xing, or through my contact page.

Other Views
Zach Whittaker "Sleepwalking into censorship: Pirate Bay faces UK web block" 20 Feb 2012 ZDNet London Calling

18 February 2012

SABAM v Netlog - the Ghost of Denning stalks the corridors of Luxembourg

Netlog is a social network based in Gand in Belgium. According to the "About Netlog" page on its website it is available to 95 million users throughout Europe in 40 languages. It claims to be "page view market leader" (whatever that may mean) in  Belgium, Italy, Austria, Switzerland, Romania and Turkey and number 2 in France, Germany, the Netherlands and Portugal. I am ashamed to say until I read the decision of the Court of Justice of European Union in C-360/10, Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA (SABAM) v Netlog NV [2012] EUECJ C-360/10 I had never heard of this important continental institution but, hey, I'm South British so what do I know.

Apparently
"On Netlog, you can create your own web page with a blog, pictures, videos, events, playlists and much more to share with your friends. It is thus the ultimate tool to connect and communicate with your social network. Massive Media NV has developed a unique localization technology ensuring that all content is geotargeted and personalized to each member’s profile."
And according to the Belgian collecting society SABAM, Netlog can also "make use, by means of their profile, of the musical and audio-visual works in SABAM's repertoire, making those works available to the public in such a way that other users of that network can have access to them without SABAM's consent and without Netlog paying it any fee." In other worlds file sharing.

In Feb 2009 SABAM suggested that Netlog might like to make a payment for the use of its repertoire. Nothing came of that suggestion so SABAM demanded an undertaking from Netlog to stop using the repertoire on 2 June 2009.  When Netlog failed to give such an undertaking SABAM applied to the President of the Brussels Court of First Instance for an interim injunction to restrain Netlog from  making available musical or audio-visual works from SABAM's repertoire under art 87 (1) of the Law of 30 June 1994 on copyright and related rights.  That article implements art 8 (3) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society ("Copyright and Related Rights Directive").  The equivalent provision of the UK Copyright, Designs and Patents Act 1988 as amended is s.97A. Netlog replied that such an injunction would be  would be tantamount to imposing a general obligation to monitor, which is prohibited by the Belgian statute that transposes art 15 (1) of the electronic commerce directive ( Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market) into national law.  It would also impose intolerable burdens on an internet service provider and possibly require the processing of personal data.

Faced with these arguments and in particular the apparent conflict between art 8 (3) of Directive 2001/29/EC and art 15 (1) of Directive 2000/31/EC the President referred the following question to the Court of Justice of the European Union ("CJEU") under art 267 of the Treaty on the Functioning of the European Union:
'Do Directives 2001/29 and 2004/48, in conjunction with Directives 95/46, 2000/31 and 2002/58, construed in particular in the light of Articles 8 and 10 of the European Convention on the Protection of Human Rights and Fundamental Freedoms [signed in Rome on 4 November 1950], permit Member States to authorise a national court, before which substantive proceedings have been brought and on the basis merely of a statutory provision stating that "[the national courts] may also issue an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right", to order a hosting service provider to introduce, for all its customers, in abstracto and as a preventive measure, at its own cost and for an unlimited period, a system for filtering most of the information which is stored on its servers in order to identify on its servers electronic files containing musical, cinematographic or audio-visual work in respect of which SABAM claims to hold rights, and subsequently to block the exchange of such files?'
The CJEU re-formulated this question as follows in paragraph [26] of its judgment: 
"By its question, the referring court asks, in essence, whether Directives 2000/31, 2001/29, 2004/48, 95/46 and 2002/58, read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, are to be interpreted as precluding a national court from issuing an injunction against a hosting service provider which requires it to install a system for filtering:
- information which is stored on its servers by its service users;
- which applies indiscriminately to all of those users;
- as a preventative measure;
- exclusively at its expense; and
- for an unlimited period,
which is capable of identifying electronic files containing musical, cinematographic or audio-visual work in respect of which the applicant for the injunction claims to hold intellectual property rights, with a view to preventing those works from being made available to the public in breach of copyright ('the contested filtering system')."
Its answer to that question was a resounding "no":
"Directives:
- 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce);
- 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society; and
- 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights,
read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding a national court from issuing an injunction against a hosting service provider which requires it to install a system for filtering:
- information which is stored on its servers by its service users;
- which applies indiscriminately to all of those users;
- as a preventative measure;
- exclusively at its expense; and
- for an unlimited period,
which is capable of identifying electronic files containing musical, cinematographic or audio-visual work in respect of which the applicant for the injunction claims to hold intellectual property rights, with a view to preventing those works from being made available to the public in breach of copyright."
That answer was very similar to the guidance that the CJEU gave in C-70/10 Scarlet Extended SA v SABAM [2011] EUECJ C-70/10 (24 Nov 2011) which I discussed in my article "Injunctions against ISPs Part II: the CJEU's Judgment in Scarlet" on 11 Dec 2011.

While recognizing that copyright infringement was a bad thing and that national courts had been given powers to prevent such infringements including injunctions against intermediaries, the Court observed at paragraph [31] that "the rules established by the Member States, and likewise their application by the national courts, must observe the limitations arising from Directives 2001/29 and 2004/48 and from the sources of law to which those directives refer (see Scarlet Extended, paragraph 33)." Thus, in accordance with recital 16 in the preamble to Directive 2001/29 and art 2 (3) (a) of Directive 2004/48, those rules may not affect the provisions of Directive 2000/31 and, more specifically, arts 12 to 15 thereof (see Scarlet paragraph [34]). In particular, those rules must respect art 15 (1) of the electronic commerce directive which prohibits national authorities from adopting measures that would require a hosting service to carry out general monitoring of the information that it stores (Scarlet paragraph [35]).

In Netlog the collecting society sought to impose a filtering obligation which would require
"- first, that the hosting service provider identify, within all of the files stored on its servers by all its service users, the files which are likely to contain works in respect of which holders of intellectual-property rights claim to hold rights;
- next, that it determine which of those files are being stored and made available to the public unlawfully; and
- lastly, that it prevent files that it considers to be unlawful from being made available."
That would amount to a monitoring obligation that the Court had already rejected in Scarlet.

However the main reason for the Court's decision was that the protection of copyright (which was a property right guaranteed by the Charter of Fundamental Rights of the European Union had to be balanced against other fundamental rights:
"41 The protection of the right to intellectual property is indeed enshrined in Article 17(2) of the Charter of Fundamental Rights of the European Union ('the Charter'). There is, however, nothing whatsoever in the wording of that provision or in the Court's case-law to suggest that that right is inviolable and must for that reason be absolutely protected (Scarlet Extended, paragraph 43).
42 As paragraphs 62 to 68 of the judgment in Case C-275/06 Promusicae [2008] ECR I-271 make clear, the protection of the fundamental right to property, which includes the rights linked to intellectual property, must be balanced against the protection of other fundamental rights.
43 More specifically, it follows from paragraph 68 of that judgment that, in the context of measures adopted to protect copyright holders, national authorities and courts must strike a fair balance between the protection of copyright and the protection of the fundamental rights of individuals who are affected by such measures.
44 Accordingly, in circumstances such as those in the main proceedings, national authorities and courts must, in particular, strike a fair balance between the protection of the intellectual property right enjoyed by copyright holders and that of the freedom to conduct a business enjoyed by operators such as hosting service providers pursuant to Article 16 of the Charter (see Scarlet Extended, paragraph 46).
45 In the main proceedings, the injunction requiring the installation of the contested filtering system involves monitoring all or most of the information stored by the hosting service provider concerned, in the interests of those rightholders. Moreover, that monitoring has no limitation in time, is directed at all future infringements and is intended to protect not only existing works, but also works that have not yet been created at the time when the system is introduced.
46 Accordingly, such an injunction would result in a serious infringement of the freedom of the hosting service provider to conduct its business since it would require that hosting service provider to install a complicated, costly, permanent computer system at its own expense, which would also be contrary to the conditions laid down in Article 3(1) of Directive 2004/48, which requires that measures to ensure the respect of intellectual-property rights should not be unnecessarily complicated or costly (see, by analogy, Scarlet Extended, paragraph 48).
47 In those circumstances, it must be held that the injunction to install the contested filtering system is to be regarded as not respecting the requirement that a fair balance be struck between, on the one hand, the protection of the intellectual-property right enjoyed by copyright holders, and, on the other hand, that of the freedom to conduct business enjoyed by operators such as hosting service providers (see, by analogy, Scarlet Extended, paragraph 49).
48 Moreover, the effects of that injunction would not be limited to the hosting service provider, as the contested filtering system may also infringe the fundamental rights of that hosting service provider's service users, namely their right to protection of their personal data and their freedom to receive or impart information, which are rights safeguarded by Articles 8 and 11 of the Charter respectively.
49 Indeed, the injunction requiring installation of the contested filtering system would involve the identification, systematic analysis and processing of information connected with the profiles created on the social network by its users. The information connected with those profiles is protected personal data because, in principle, it allows those users to be identified (see, by analogy, Scarlet Extended, paragraph 51).
50 Moreover, that injunction could potentially undermine freedom of information, since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications. Indeed, it is not contested that the reply to the question whether a transmission is lawful also depends on the application of statutory exceptions to copyright which vary from one Member State to another. In addition, in some Member States certain works fall within the public domain or may be posted online free of charge by the authors concerned (see, by analogy, Scarlet Extended, paragraph 52).
51 Consequently, it must be held that, in adopting the injunction requiring the hosting service provider to install the contested filtering system, the national court concerned would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the freedom to receive or impart information, on the other (see, by analogy, Scarlet Extended, paragraph 53).
52 In the light of the foregoing, the answer to the question referred is that Directives 2000/31, 2001/29 and 2004/48, read together and construed in the light of the requirements stemming from the protection of the applicable fundamental rights, must be interpreted as precluding an injunction made against a hosting service provider which requires it to install the contested filtering system."
I could not resist  a muffled hurrah. This is a judgment worthy of Tom Denning.

Big Copyright does not like that decision.  SABAM's reaction  to Scarlet had been a press release headed "Authors worried about the decision by the Court of Justice of the European Union as to the general filtering of works on Scarlet's network". Its reaction to Netlog was one of resignation. In its press release of 16 Feb 2012 it said
"SABAM takes note of this ruling without surprise. Indeed, given the similarity of the issues submitted to the Court, it was to be expected that the latter would adopt the same position as regards a general filtering measure."
This decision comes just weeks after SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act) were kicked into the long grass in the USA. There is a general feeling on both sides of the Atlantic that the demands of copyright and related rights owners had increased, were increasing and ought to be diminished.  There was a time before the internet when it cost a lot of money to make a film, produce a record or run a newspaper. Not any more. An awayday from the Great Wen to the National Media Museum in the magnificent Borealian cultural powerhouse of Bradford almost any day of the week will be rewarded by a chance to view excellent films made on a low budget from around the world. The arguments for legal protection of the old ways of making and distributing entertainment strike me as very similar to the arguments for continuing investment bankers' bonuses in an age of austerity.  As Professor Hargreaves noted, what the film, recording and publishing industries need are new business models to take account of new technologies.

As readers of this blog know, I have a special interest in injunctions against ISPs and other intermediaries having been in both of the s.97A cases that have come before our courts.  If anyone wants to discuss this topic with me they should call me on 0800 862 0055 or contact me through Facebook, Linkedin, twitter or Xing, or through my contact page.

16 February 2012

What is Intellectual Property? Coogan v News Group

"So what is intellectual property?" That is a question that I have been asked many times. By accountants and bank managers, clerks of factory chambers, instructing solicitors and even by fellow members of the Bar. Well now the Court of Appeal has provided an answer of sorts.   In  Coogan v News Group Newspapers Ltd and Another [2012] EWCA Civ 48 (1 Feb 2012) the question was whether mobile telephone voice mail messages were "intellectual property" for the purpose of s.72 of the Senior Courts Act 1981 and the Court of Appeal held that they were.

The question arose in the context of the privilege against self-incrimination. Unlike the United States which safeguards this privilege by the Fifth Amendment of its Constitution, it subsists at common law (see Blunt v Park Lane Hotel Ltd [1942] 2 KB 253) and is reinforced by s.14 of the Civil Evidence Act 1968. But there are loads of exceptions to this rule as the Master of the Rolls noted at paragraph [16] of his judgment in Coogan:
"section 31 of the Theft Act 1981 and section 13 of the Fraud Act 2006 each remove the right to claim PSI in connection with offences under the Act in which they are respectively contained; section 98 of the Children Act 1989 removes the right in relation to evidence on applications relating to the care, supervision or protection of a child; sections 43A and 44 of the Insurance Companies Act 1982, section 433 of the Insolvency Act 1986 and section 434 of the Companies Act 1985 (as amended in each case by section 59 of, and schedule 3 to, the Youth Justice and Criminal Evidence Act 1999) remove PSI in relation to certain statutory company investigations; and section 2 of the Criminal Justice Act 1987 and para 5 of schedule 6 to the Terrorism Act 2000 also remove the right in certain circumstances."
And s.72 (1) and (2) of the Senior Courts Act 1981 provide yet another.

The reason for s.72 of the 1981 Act is that search orders (which used to be called Anton Piller orders and in many countries still are) and freezing injunctions usually require respondents to provide information on oath.  For instance, paragraphs 18 and 19 of the model search order in the Annex to Practice Direction 25A - Interim Injunction provides:
"18. The Respondent must immediately inform the Applicant’s Solicitors (in the presence of the Supervising Solicitor) so far as he is aware –
(a)  where all the listed items are;
(b)  the name and address of everyone who has supplied him, or offered to supply him, with listed items;
(c)  the name and address of everyone to whom he has supplied, or offered to supply, listed items; and
(d)  full details of the dates and quantities of every such supply and offer.
19.Within [ ] working days after being served with this order the Respondent must swear and serve an affidavit setting out the above information."
Similarly, paragraphs 9 and 10 of the model freezing injunction in the same Annex require:
9. (1) Unless paragraph (2) applies, the Respondent must [immediately] [within hours of service of this order] and to the best of his ability inform the applicant’s solicitors of all his assets [in England and Wales] [worldwide] [exceeding £ in value] whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets.
(2) If the provision of any of this information is likely to incriminate the respondent, he may be entitled to refuse to provide it, but is recommended to take legal advice before refusing to provide the information. Wrongful refusal to provide the information is contempt of court and may render the Respondent liable to be imprisoned, fined or have his assets seized.
10. Within [ ] working days after being served with this order, the Respondent must swear and serve on the Applicant’s solicitors an affidavit setting out the above information.
It will be noted that there are slight differences between the wording of the corresponding provisions of the search order and freezing injunction and that is because s.72 nearly always applies in cases where a search order is sought but not necessarily where there is a freezing injunction.

The provisions of s.72 that the Court of Appeal considered were as follows:
"(1) In any proceedings to which this subsection applies a person shall not be excused, by reason that to do so would tend to expose that person … to proceedings for a related offence … :
(a)   from answering any question put to that person in the first-mentioned proceedings; or
(b)   from complying with any order made in those proceedings.
(2) Subsection (1) applies to the following civil proceedings in the High Court, namely:
(a)  proceedings for infringement of rights pertaining to any intellectual property or for passing off;
(b)  proceedings brought to obtain disclosure of information relating to any infringement of such rights or to any passing off;
(c)  proceedings brought to prevent any apprehended infringement of such rights or any apprehended passing off.
(3) …. [N]o statement or admission made by a person:
(a)   in answering a question put to him in any proceedings to which subsection (1) applies; or
(b)   in complying with any order made in any such proceedings,
shall, in proceedings for any related offence ... , be admissible in evidence against that person …........................................
(5) In this section:
"intellectual property" means any patent, trade mark, copyright, design right, registered design, technical or commercial information or other intellectual property;
"related offence", in relation to any proceedings to which subsection (1) applies, means:
(a)  in the case of proceedings within subsection (2)(a) or (b):
(i) any offence committed by or in the course of the infringement or passing off to which those proceedings relate; or
(ii) any offence not within sub-paragraph (i) committed in connection with that infringement or passing off, being an offence involving fraud or dishonesty;
(b) in the case of proceedings within subsection (2)(c), any offence revealed by the facts on which the plaintiff relies in those proceedings."
In separate proceedings brought by the comedian Stephen Coogan (Gray v News Group Newspapers Ltd & Another [2011] EWHC 349 (Ch), [2011] 2 All ER 725, [2011] 2 WLR 1401) and Max Clifford's personal assistant (Phillips v Newsgroup Newspapers Ltd and Others [2010] EWHC 2952 (Ch) (17 Nov 2010) against News Group Newspapers for phone hacking, the claimants sought orders requiring the private investigator Glenn Mulcaire to state on oath who had ordered the interception of their mobile messages.  In each case, Mr. Mulcaire raised the privilege against self-incrimination.   In each case that plea was answered by the argument that this was an intellectual property claim to which the privilege against incrimination did not apply.  In both cases, the judge below agreed with the claimants.  News Group and Mr. Mulcaire appealed both decisions.

The points raised in both appeals were that:
"i) Information obtained by Mr Mulcaire from intercepting the voice messages of Ms Phillips and/or Mr Coogan was not 'intellectual property' and therefore section 72 cannot apply;
ii) If the information in question was 'intellectual property':
(a) Mr Mulcaire would, if he were required to provide all the information ordered by Mann J, and some of the information ordered by Vos J, be at risk of being prosecuted for an offence which is not a 'related offence', so section 72 does not apply;
(b) Section 72 is inconsistent with Article 6 of the European Convention on Human Rights ('the Convention'), and the court should accordingly make a declaration of incompatibility."
A very strong Court of Appeal (Lord Judge LCJ, Lord Neuberger MR and the Vice-President of the Court of Appesl) decided against Newsgroup and Mr. Mulcaire on both grounds. 

As to the first point, their lordships noted that S.72 (5) already included "technical or commercial information" within the definition of intellectual property. The question was whether personal information could be so defined.  The Court agreed with the defendant that information (confidential or otherwise) was not property and in many instances not particularly intellectual but it fell nevertheless within the ambit of the words "or other intellectual property".  As the Master of the Rolls explained:
"49.......It seems to me clear that, under the law as it had been developed well before the 1998 Act came into force, personal information which was of sufficient significance to attract the notice of the courts, which had been, for instance, left on a person's telephone answering machine, and was clearly intended to be confidential as between the caller and that person, would have attracted protection under the law of confidential information. While 'trivial tittle tattle' (Coco v Clarke [1969] RPC 41, 48) would not, information of a personal private information would in principle have been protected by the law of confidence (at least if it was not in public knowledge) – see the cases referred to in para 48 above, a view supported by the reasoning and conclusion in Francome v Mirror Group Newspapers Ltd [1984] 1 WLR 892.
50. Further, following Lord Goff's authoritative observations in Attorney-General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 281, it is clear that, if information had come into a person's hands by happenstance, and that person should have appreciated that it was confidential, he will be bound by the confidence. A fortiori where the person intentionally obtains the information knowing that he was not intended to receive it, and even more so where he uses unlawful means to obtain it – see again Francome [1984] 1 WLR 892. While it may nonetheless have been arguable (if, in the view of many people, illogical) that, prior to the 1998 Act coming into force, that principle would not have applied to personal confidential information (in the light of Kaye [1991] FSR 62), such an argument is no longer maintainable in the light of Article 8 and Campbell v MGN Ltd [2004] UKHL 22, [2004] 2 AC 457.
51. There are also practical reasons why 'intellectual property' in section 72(5) should include personal confidential information if it also includes commercial confidential information. It would be surprising if PSI could be invoked by a defendant in relation to a breach of confidence claim which related to personal information, but not where the nature and circumstances of the claim were identical, save that it related to commercial information. Although the statutory provisions which remove PSI appear somewhat piecemeal, that is no reason for concluding that a particular provision should be interpreted so as to lead to an arbitrary result.
52. Further, the same information could be commercial in one person's hands and personal in the hands of another. A good example may be found in Douglas [2006] QB 125, where wedding photographs were held to be the subject of a personal confidential claim by the happy couple, but of a commercial confidential claim by the magazine to whom they had sold the exclusive publication rights – and see in the House of Lords per Lord Hoffmann at [2009] 1 AC 1, para 118. Equally, as Cornish (op cit) points out at para 8-39, 'some people want privacy largely so that they can turn it to their own financial advantage'. If commercial information, but not personal, information is within section 72, then the applicability of the section could, in some cases, turn on how the claim is pleaded – a most unattractive result."
The Court of Appeal also rejected the second argument that the exception to the privilege against self-incrimination has to be interpreted very narrowly so that it would not apply to a case where the respondent is at risk of being prosecuted for an offence that extends beyond the breach of confidence or other intellectual property infringement.

Finally, there was nothing in the European Convention of Human Rights that precluded restrictions on the privilege against self-incrimination per se as the Court of Human Rights had ruled in cases on the point.

I am conscious that this is an overlong post on a short though interesting and important point.  Should anyone want to discuss it with me in detail, they  should call me on 0800 862 0055 or contact me through Facebook, Linkedintwitter  or Xing, or through my contact page.

07 February 2012

Community Trade Marks: Specsavers v ASDA

Specsavers (Specsavers International Healthcare Ltd., Specsavers BV, Specsavers Optical Group Ltd and Specsavers Optical Superstores Ltd) are a group of companies which offer glasses, contact lenses and the like at competitive prices.

Specsavers' Trade Marks
Specsavers have registered the following Community trade marks:

(1) 1321298 and 3418928
The word mark SPECSAVERS
("the word mark");

(2) 449256 and 1321348







("the shaded logo mark");

(3) 5608385








("the unshaded logo mark"); and

(4) 1358589







("the wordless logo mark")

The Claim
Specsavers brought an action for trade mark infringement and passing off against the supermarket chain ASDA (Asda Stores Ltd.) for the use of the following marketing materials:

(1) the ASDA Opticians' logo






as used in posters:




















(2) the following bill board:










and

(3) this leaflet:













ASDA's Counterclaims
ASDA denied infringement and passing off and counterclaimed for revocation of the wordless mark on the ground of non-use.

It also had a counterclaim for breach of confidence because a document containing ASDA's plans to re-launch its in-store opticians somehow fell into Specsavers' hands. Spesavers circulated it among their senior executives who devised a spoiler campaign to coincide with ASDA's launch.  Specsavers admitted breach of confidence before trial.  The only significance was that it disqualified Specsavers from moralizing too heavily  as the trial judge Mr. Justice Mann said at paragraph [4] of his judgment in Specsavers International Healthcare Ltd. and Others v Asda Stores Ltd. [2010] EWHC 2035 (Ch) (30 July 2010), [2011] FSR 1. I shall resist conjuring an image of canine cannibalism though ailurophile bloggers might not.

The Trial
The trial judge found that the strapline "Be a real spec saver at ASDA" infringed the word mark under art 9 (1) (c) of the Community Trade Mark Regulation (Council Regulation (EC) No 207/2009 of 26 Feb 2009 on the Community trade mark) but otherwise threw out the claim.  He also revoked the wordless logo mark for non-use.

The Appeal
Specsavers appealed to the Court of Appeal.  ASDA cross-appealed against the judge's finding of infringement of the word mark in respect of the "Be a real spec saver at ASDA" strapline.

The appeal was heard by a very strong court consisting of Lord Justice Kitchin, Sir John Thomas, the President of the Queen's Bench Division and Lady Justice Black (see Specsavers International Healthcare Ltd and Others v Asda Stores Ltd [2012] EWCA Civ 24 (31 Jan 2012)). The Court found that:
(1) the strapline "Spec savings at ASDA" infringed the word mark and the shaded and unshaded logo marks under art 9 (1) (c); and
(2)  the Asda logo infringed the shaded and unshaded logo marks under the same provision..

The Court dismissed Specsavers' appeal in respect of the allegations that ASDA's straplines and logo infringed the word mark and shaded and unshaded logo marks under art 9 (1) (b) as well as ASDA's cross appeal.

They also referred the following questions to the Court of Justice of the European Union ("CJEU"):
"A. Where a trader has separate registrations of Community trade marks for
(i) a graphic device mark;
(ii) a word mark;
and uses the two together, is such use capable of amounting to use of the graphic device mark for the purposes of Article 15 of Regulation 40/94? If yes, how is the question of use of the graphic mark to be assessed?
B. Does it make a difference if:
(i) the word mark is superimposed over the graphic device?
(ii) the trader also has the combined mark comprising graphic device and word mark registered as a Community trade mark?
C. Does the answer to A or B depend upon whether the graphic device and the words are perceived by the average consumer as (i) being separate signs; or (ii) each having an independent distinctive role? If so, how?
D. Where a Community trade mark is not registered in colour, but the proprietor has used it extensively in a particular colour or combination of colours such that it has become associated in the mind of a significant portion of the public (in a part but not the whole of the Community) with that colour or combination of colours, is the colour or colours in which the defendant uses the sign complained of relevant in the global assessment of (i) likelihood of confusion under Article 9(1)(b) or (ii) unfair advantage under Article 9(1)(c) of Regulation 40/94? If so, how?
E. If so, is it relevant as part of the global assessment that the defendant itself is associated in the mind of a significant portion of the public with the colour or particular combination of colours which it is using for the sign complained of?"
The Issues
At trial, Mr. Justice Mann had found that ASDA had created deliberately the materials to which Specsavers objected for use in a marketing campaign to undercut Specsavers. As Lord Justice Kitchin noted at paragraph [19] of his judgment:
"These ideas were developed in early 2009 and, on 1 April, a presentation was made to Mr Bendel. His message to the team was clear, that they should focus on Specsavers. As the judge found, Mr Bendel told Mr Langrish-Dixon that if Asda was to offer better value than Specsavers then they should "shout about it" and let customers know where they could get the best value. Mr Bendel decided that the team should concentrate on price, and not the other pillars and, as the judge recorded at [28], an internal e-mail noted after the meeting:
'We should market the truth - if we are cheaper than Specsavers and our range is as good then that's what we should market.'
From this point, the judge held, the plans for the campaign had an eye on Specsavers."
The questions or the Court were whether Mr. Justice Mann had been right to conclude that ASDA's advertising fell short of infringement under art 9 (1) (b) and that only the strap line "Be a real spec saver" overstepped the mark with art 9 (1) (c).

The Art 9 (1) (b) Point
Art 9 (1) (b) of the CTM Regulation provides:
".................. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
.............................................................
(b) any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark."
This provision is very similar to s.10 (2) of the Trade Marks Act 1994 and, of course, s.5 (2) of the same statute.

In all of those provisions the key considerations is the likelihood of confusing including the likelihood of association with the complainant's mark. The Court of Justice of the European Union has addressed this issue in a number of cases which Lord Justice Kitchin catalogued at paragraph [51] of his judgment.  Over the years, the hearing officers of the Trade Marks Registry of the Intellectual Property Office have developed a set of guidelines for dealing with oppositions under s.5 (2) and applications for declarations of invalidity under s.47 (2) (a) which have been derived from these decisions. Lord Justice Kitchin endorsed the hearing officers' guidelines at paragraph [52]: 
"(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;
(b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;
(c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
(d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;
(e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;
(f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;
(g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;
(h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;
(i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;
(j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;
(k) if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion."
There was no dispute that Mr. Justice Mann had considered those guidelines but Specsavers argued that he had not applied them correctly.

First, they argued that the judge had fallen into error by not simply comparing the words "spec saver" and "Spec savings" with the mark SPECSAVERS. Had he done that a finding of infringement under art 9 (1) (b) would have been inevitable. The Court rejected that argument.  Such a comparison may have sufficed under the 1938 Act but the CJEU had held in Case C-533/06 O2 Holdings Ltd, O2 (UK) Ltd v Hutchison 3G Ltd [2008] ECR I-4231 that "Art.5(1)(b) of Directive 89/104 is to be interpreted as meaning that the proprietor of a registered trade mark is not entitled to prevent the use, by a third party, in a comparative advertisement, of a sign similar to that mark in relation to goods or services identical with, or similar to, those for which that mark is registered where such use does not give rise to a likelihood of confusion on the part of the public". Lord Justice Kitchin concluded at paragraph [87] that the general position is now clear:
"In assessing the likelihood of confusion arising from the use of a sign the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer's mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context."
Mr. Justice Mann had addressed the issue correctly as the average consumer would see the signs "spec saver" and "Spec savings" in the context of the straplines and, indeed, the posters and other materials on which they were used as a whole..

The Court was more sympathetic to Specsavers' second point which related to the device marks.   Specsavers submitted that the judge fell into error in not attaching any particular significance to ASDA's use of a similar colour. The Court considered that the law on this issue was not clear and that its resolution would require a reference to the CJEU. Although such a reference was not necessary for deciding the appeal in respect of the word and shaded logo and unshaded logo marks, it was necessary for the resolution of the appeal in relation to the wordless logo mark.  As for the word and shaded and unshaded logo marks the Court upheld Mr. Justice Mann's decision because the differences in design and the context in which those devices appeared could not reasonably have caused confusion on the part of a circumspect consumer.

Specsavers' third complaint was that the judge fell into error as a matter of principle in failing to take account of the cumulative effect of the straplines and the Asda logo.  At paragraph [115] of his judgment, Lord Justice Kitchin drew a distinction between a defendant who takes a conscious decision to "live dangerously" and one who intends to cause deception and deliberately seeks to take the benefit of another trader's goodwill:
"It has long been established that if it is shown that a defendant has deliberately sought to take the benefit of a claimant's goodwill for himself the court will not "be astute to say that he cannot succeed in doing that which he is straining every nerve to do": see Slazenger & Sons v Feltham & Co (1889) 6 RPC 531 at p.538 per Lindley LJ. A trader who has taken the decision to live dangerously is in a different position, however. He has appreciated the risk of confusion and has endeavoured to adopt a sign which is a safe distance away. All must depend upon the facts of the particular case. Further, it must be kept firmly in mind that the ultimate question whether or not the similarity between the trade mark and the sign is such that there exists a likelihood of confusion is one for the court to determine in the light of its global assessment of all material factors, of which the intention of the defendant, as a person who knows the market in which he is offering his goods or services, is only one."
In the Court of Appeal's view the trial judge had carried out such global assessment correctly. Mr. Justice Mann had considered that the evidence of ASDA's "living dangerously" did not, in the circumstances of this case, amount to evidence of an intention to confuse. ASDA had no wish for consumers to confuse one business for the other and so the judge held its intention and conduct could not be relied upon as evidence of a propensity to confuse. The Lords Justices were entirely satisfied that the judge was entitled to reach this conclusion in the light of the evidence as a whole.

For all of these reasons, the appeal on the art 9 (1) (b) point failed.

The Art 9 (1) (c) Point
Art 9 (1) (c) of the CTM provides:
"....................... The proprietor shall beand  entitled to prevent all third parties not having his consent from using in the course of trade:
.........................................
(c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark."
For many years it was thought that this provision applied only where the goods or services for which the mark was registered were dissimilar from those used under the offending sign (see paragraph [54] of Simon Thorley QC's judgment in Pfizer Ltd. and another v Eurofood Link (UK) Ltd. 10 Dec 1999 (unreported)). Indeed, s.10 (3) of the Trade Marks Act 1994 which implemented the corresponding provision of the Trade Marks Directive contained the words originally contained a paragraph (b) which contained the words "is used in relation to goods or services which are not similar to those for which the trade mark is registered." These words were deleted by reg. 7 (2) of The Trade Marks (Proof of Use, etc.) Regulations 2004 (S1 2004 No 946) following the CJEU's decision in C292/200 Davidoff & Cie. and Another v Gofkid Ltd [2003] EUECJ C-292/00, [2003] ECR I-00389, [2003] ECR I-389. 

Once the requirement of dissimilarity was removed, the question of the degree of similarity that is required between the registered mark and the infringing sign arose.  That was answered by the CJEU in C408/01 Adidas-Salomon AG and another v Fitnessworld Training Ltd.  [2003] ECR I-12537, [2004] FSR 21, [2003] EUECJ C-408/01, [2003] ECR I-2537, [2004] 1 CMLR 14, [2004] 2 WLR 1095, [2004] Ch 120, [2004] CEC 3, [2004] ETMR 10 and C252/07 Intel Corp. Inc. v CMP United Kingdom Ltd.   [2009] Bus LR 1079, [2009] ETMR 13, [2009] RPC 15, [2008] EUECJ C-252/07, [2008] ECR I-8823. As Lord Justice Kitchin explained:
"[121] The fact that, for the average consumer, who is reasonably well informed and reasonably circumspect, the sign would call the registered mark to mind is tantamount to the existence of such a link: Case C-252/07 Intel Corporation Inc v CPM United Kingdom Ltd [2008] ECR I-8823 at [60].
[122] In addition, it must be shown that the use of the sign without due cause takes or would take advantage of, or is or would be detrimental to, the distinctive character or repute of the registered mark. Thus the three types of injury against which Article 9(1)(c) ensures protection are first, detriment to the distinctive character of the registered mark; second, detriment to the repute of the mark; and third, unfair advantage being taken of the distinctive character or repute of the mark: Intel Corporation at [27].
[123] Importantly, in the absence of such a link in the mind of the public, the use of the sign is not likely to cause one of these three types of injury. But nor is the existence of such a link sufficient, in itself, to establish that there is such an injury: Intel Corporation at [31]-[32]; and [67]-[71]."
The complaint against ASDA was that of "free riding", that is to say taking unfair advantage of the distinctive character or repute of the Specsavers mark.  After reviewing C87/07 L'Oréal SA and others v Bellure NV and others [2010] Bus LR 303, [2009] EUECJ C-487/07, [2010] RPC 1, [2009] ECR I-5185, [2009] ETMR 55 the learned Lord Justice concluded at paragraph [141] that "a proprietor of a trade mark with a reputation is not necessarily entitled to prohibit the use by a competitor of his mark in relation to goods for which it is registered even though the mark has been adopted with the intention and for the purpose of taking advantage of its distinctive character and repute, the competitor will derive a real advantage from his use of the mark, and the competitor will not pay any compensation in respect of that use." Consideration, he added, must be given to whether the use is without due cause. The use of a trade mark as a keyword in order to advertise goods that are an alternative to, but not mere imitations of, the proprietor's goods in a way which does not cause dilution or tarnishing or affect the functions of the trade mark is fair competition and cannot be prohibited.

In its cross-appeal ASDA challenged the trial judge's finding that "Be a real spec saver at ASDA" infringed the word mark on the ground that he had applied rules derived from a case on cheap knock-offs to a situation where ASDA was merely alluding to Specsaver's trade mark in order to prompt consumers to compare ASDA's glasses with Specsavers'. If ASDA could not do that how could there ever be comparative advertising?  The problem with that argument was that ASDA did not comply with any of the conditions of the Comparative Advertising Directive.  The cross-appeal was therefore dismissed.

The Court allowed Specsavers' appeal on the "Spec savings at ASDA" strap line for two reasons.  First, the judge had not compared the aural, visual and conceptual similarities between the word mark and the words "Spec savings" in the strap line:
"But in my judgment the judge fell into error in concluding that the one was some significant distance from the other and in this regard I believe he focused unduly at [174] on the differences between the first and second straplines. Had the judge considered, as he was bound to do, the visual, aural and conceptual similarities between the sign "Spec savings" and the mark "Specsavers" he would have found that they are very similar to each other. Visually they are closely related, to the ear one can easily be taken for the other and conceptually they convey the ideas of spectacles and value. Despite the context of the second strapline as a whole which, I accept, would dispel the likelihood of confusion as to origin, I believe that the average consumer seeing this strapline would make a connection with Specsavers. I am confirmed in this view by the fact that this was Asda's intention. As the judge himself found in the passages to which I have referred at [49] to [50] above, the second strapline contained a reference to Specsavers; the reference was intentional; and Asda was attempting to convey its price message, that is to say it offered better value than Specsavers. These findings were amply supported by the evidence before the judge as to the conception and development of the whole campaign."
Secondly, the trial judge had been wrong to find that there was no "unfair advantage" without "due cause".  As Lord Justice Kitchin put it at paragraph [154]:
"Once it is recognised that the use of the second strapline did create a link with Specsavers it seems to me to be clear that it also used the concept of Specsavers as a value provider and that such use inevitably gave Asda a marketing advantage. Was this advantage unfair and obtained without due cause? I believe it was. This is not a case of legitimate comparative advertising or of one trader simply offering alternatives to the goods or services of another trader through something akin to the Adwords service. Asda intended to benefit from the power of attraction attaching to the Specsavers brand and to exploit, without paying any compensation, Specsavers' marketing efforts by conveying to consumers that Asda offered real value in the form of spectacle savings. I believe that a finding of infringement of the Word marks under Article 9(1)(c) should have followed; as should a finding of infringement of the Shaded and Unshaded logo marks, each of which includes the word Specsavers."
Applying the same test, the Court found that the ASDA logo infringed Specsavers' shaded and unshaded logo marks:
"In assessing whether the use of the Asda logo has taken unfair advantage of the distinctive character or repute of the Specsavers Shaded and Unshaded logo marks it is of course necessary to carry out a global assessment. So I must also have regard to all relevant circumstances, including the significant reputation attaching to Specsavers' marks, the fact that the goods are identical and the fact that it was Asda's intention to target this campaign at Specsavers and to convey the message that Asda offered good, if not better, value. Taking all these matters into account I am satisfied that the use of the Asda logo (in both its forms) as part of the campaign including the straplines was such as to create a link with Specsavers Shaded and Unshaded logo marks in the mind of the average consumer; that this link did confer an advantage upon Asda; and that this advantage was unfair and without due cause. As in the case of the straplines, the use of the Asda logo permitted Asda to benefit from the power of attraction, reputation and the prestige attaching to Specsavers and its Shaded and Unshaded logo marks and to exploit without paying compensation the marketing efforts which Specsavers has made."
The Court declined to make a finding on whether the wordless logo mark had been infringed until after it had received some guidance from the CJEU as to whether use of a mark as a component of another mark counts for the purposes of art 15 of the CTM Regulations.

The Non-use Point
On that point there are two apparently conflicting decisions from the CJEU:
The contest in which the point arose was that the wordless logo mark had only been used on its own in a board game called "Eyedentity" where players have to associate logos with brand names.  That had not impressed Mr Justice Mann and it did not impress the Court of Appeal.   However, the wordless logo mark had been a component of the unshaded and arguably shaded logo marks,.

Conclusion
The importance of this case lies in Lord Justice Kitchin's elegant formulation of the principles for determining liability under 9 (1) (c) of the Directive or s.10 (3) of the Trade Marks Act.   Essentially, these are as follows:
(1)   Is the similarity between the registered mark and the allegedly infringing sign such as to create a link in the minds of consumers between the sign and mark?
(2)  If so, is any advantage derived from such link?
(3)  If so, was such advantage unfair?
(4)  If so, was it without due cause.
Though only obiter, it would appear that compliance with the conditions for the Comparative Advertising Directive would meet the fairness and due cause requirements.

Further Information
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