1. Riga Graduate School of Law 27 March 2015 EU Trademark and Copyright Reform Prof. Martin Senftleben VU University Amsterdam Bird & Bird, The Hague

2. Contents Copyright reform –overview –hyperlinking –exceptions and limitations Trademark reform –overview –double identity rule –exceptions and limitations

3. Copyright Reform

4. Overview licenses for online services territorial scope of making available online two rights involved in digital transmission linking and browsing registration of works term of protection mandatory nature of exceptions need for new types of exceptions open fair use provision EU Copyright Code (Regulation)

5. Hyperlinking

12. Infringement? National precedents

13. publisher of ‘Handelsblatt’ and DM –invokes copyright to articles –offers articles on own internet platform www.paperboy.de –search engine for news on current topics –searches and indexes contents of several hundred news providers –search result contains deeplinks and short text fragments taken from articles BGH, 17 July 2003, case I ZR 259/00, ‘Paperboy’

14. ‘Ohne die Inanspruchnahme von Suchdiensten und deren Einsatz von Hyperlinks (gerade in der Form von Deep-Links) wäre die sinnvolle Nutzung der unübersehbaren Informationsfülle im World Wide Web praktisch ausgeschlossen.’ (p. 25) hyperlinking is essential to safeguarding freedom of information without hyperlinking no functioning internet

15. BGH, 17 July 2003, case I ZR 259/00, ‘Paperboy’ ‘Wer einen Hyperlink auf eine vom Berechtigten öffentlich zugänglich gemachte Webseite mit einem urheberrechtlich geschützten Werk setzt, begeht damit keine urheberrechtliche Nutzungshandlung, sondern verweist lediglich auf das Werk in einer Weise, die Nutzern den bereits eröffneten Zugang erleichtert.‘ (p. 20) only reference to material that has already been made available

16. BGH, 17 July 2003, case I ZR 259/00, ‘Paperboy’ ‘Nicht er, sondern derjenige, der das Werk in das Internet gestellt hat, entscheidet darüber, ob das Werk der Öffentlichkeit zugänglich bleibt. Wird die Webseite mit dem geschützten Werk nach dem Setzen des Hyperlinks gelöscht, geht dieser ins Leere.‘ (p. 20) no control over material no relevant act of making available reproduction carried out by users

17. Infringement? CJEU precedents

19. intervention by a different organisation global assessment of new public –hotel rooms, lobby etc. –fast succession of persons profit motive: contribution to hotel services =relevant act of secondary communication to the public CJEU, 7 December 2006, case C-306/05, SGAE/Rafael Hoteles

21. intervention by a different organisation but new public only de minimis –small number of persons –listening to different phonograms no direct profit motive ≠relevant act of secondary communication to the public CJEU, 15 March 2012, case C-135/10, SCF/Marco Del Corso

22. intervention = making the work available to a group without access public = indeterminate number of potential recipients Relevant factors profit motive not decisive, but can be taken into account

23. Finally: Svensson

25. Svensson and other journalists –wrote articles for Götenborgs-Posten –published in the newspaper and on freely available website –assert copyright against use of links Retriever –is a news aggregator –exploits a website with lists of links to articles on other websites, including Svensson’s articles CJEU, 13 February 2014, case C-466/12, Svensson

26. comparable with traditional hyperlinks mere reference no control act of secondary communication to the public other organisation broader public Available options

27. intervention? ‘In the circumstances of this case, it must be observed that the provision, on a website, of clickable links to protected works published without any access restrictions on another site, affords users of the first site direct access to those works.’ (para. 18) thus: relevant intervention, the work is made available first criterion is fulfilled CJEU, 13 February 2014, case C-466/12, Svensson

28. new public? ‘…where all the users of another site to whom the works at issue have been communicated by means of a clickable link could access those works directly on the site on which they were initially communicated, without the involvement of the manager of that other site, the users of the site managed by the latter must be deemed…’ CJEU, 13 February 2014, case C-466/12, Svensson

29. ‘…to be potential recipients of the initial communication and, therefore, as being part of the public taken into account by the copyright holders when they authorised the initial communication.’ (para. 27) thus: no new public, making available has no independent relevance second criterion not fulfilled CJEU, 13 February 2014, case C-466/12, Svensson

30. universal rule for all kinds of hyperlinks? ‘Such a finding cannot be called in question were the referring court to find, although this is not clear from the documents before the Court, that when Internet users click on the link at issue, the work appears in such a way as to give the impression that it is appearing on the site on which that link is found, whereas in fact that work comes from another site.’ (para. 29) CJEU, 13 February 2014, case C-466/12, Svensson

31. A closer look at the ‘new public’ criterion

32. ‘Thus, such a transmission is made to a public different from the public at which the original act of communication of the work is directed, that is, to a new public.’ (para. 40) unclear whether this is a subjective or rather objective criterion –subjective: intentions of copyright holder –objective: comparison of groups of recipients CJEU, 7 December 2006, case C-306/05, Rafael Hoteles

33. ‘…a new public, that is to say, a public which was not taken into account by the authors of the protected works within the framework of an authorisation given to another person.’ (para. 72) in this case: subjective criterion inquiry into intentions of the copyright holder seems decisive CJEU, 13 October 2011, cases C-431/09 and C-432/09, Airfield

34. ‘…a new public which was not considered by the authors concerned when they authorised the broadcast in question.’ (para. 38) again: subjective criterion inquiry into intentions of the copyright holder seems decisive CJEU, 7 March 2013, case C-607/11, TVCatchup

35. ‘…to be potential recipients of the initial communication and, therefore, as being part of the public taken into account by the copyright holders when they authorised the initial communication.’ (para. 27) assumption of intention to reach entire internet community still subjective? CJEU, 13 February 2014, case C-466/12, Svensson

36. from subjective: which public had the copyright holder in mind? to objective: Is there any difference between the initial and the hyperlink public? Important shift

37. illegal source not covered: which public had the copyright holder in mind? illegal source covered: Is there any difference between the initial and the hyperlink public? Why important?

38. Links to illegal content

39. BestWater makes advertising film. This film is illegally uploaded to YouTube. Competitors use framing to include the film in their website. CJEU, 21 October 2014, case C-348/13, BestWater

40. subjective or objective assessment of framed link to illegal content? ‘…für ein neues Publikum wiedergegeben wird, d. h. für ein Publikum, an das die Inhaber des Urheber- rechts nicht gedacht hatten, als sie die ursprüngliche öffentliche Wiedergabe erlaubten.’ (para. 14) subjective criterion as a starting point but no discussion of illegal publication on YouTube CJEU, 21 October 2014, case C-348/13, BestWater

41. unclear why the Court assumes permission ‘Denn sofern und soweit dieses Werk auf der Website, auf die der Internetlink verweist, frei zugänglich ist, ist davon auszugehen, dass die Inhaber des Urheberrechts, als sie diese Wiedergabe erlaubt haben, an alle Internetnutzer als Publikum gedacht haben.’ (para. 18) missed opportunity to clarify the issue of links to illegal content CJEU, 21 October 2014, case C-348/13, BestWater

42. Pending cases

43. SE: C More Entertainment –case C-279/13 –decision expected on 26 March 2015 –new insights? NL: Geen Stijl Media –case before Dutch Supreme Court –prejudicial questions about to be asked –would concern hyperlinks to illegal content

44. Concluding remarks

45. copyright holder content aggregators consumers positive/negative impact on source website? general or specific content aggregator? impact on freedom of information? Complex phenomenon

46. one size fits all? Complex phenomenon

47. copyright intervention by different organisation new public profit motive unfair competition law undermining another’s advertisement model taking unfair advantage (free riding) misleading consumers Copyright appropriate at all?

48. Exceptions and limitations

49. Current EU legal framework

50. broad exclusive rights exhaustive enumeration of exceptions three-step test EU acquis (InfoSoc Directive)

51. ‘ The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’ Art. 5(5) InfoSoc Directive

52. ‘…that, according to settled case-law, the provisions of a directive which derogate from a general principle established by that directive must be interpreted strictly […]. This holds true for the exemption provided for in Article 5(1) of Directive 2001/29, which is a derogation from the general principle established by that directive, namely the requirement of authorisation from the rightholder for any reproduction of a protected work.’ (para. 56-57) CJEU, Infopaq

53. ‘This is all the more so given that the exemption must be interpreted in the light of Article 5(5) of Directive 2001/29, under which that exemption is to be applied only in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’ (para. 58) CJEU, Infopaq

54. Worst case scenario

55. Anglo-America open limitations factor analysis case-by-case approach (judge) flexibility quick reactions to new developments Continental Europe specific limitations fixed requirements closed catalogue of limitations (legislator) legal certainty slow reactions to new developments Comparison: legal traditions

56. European Union closed catalogue controled by open factors no flexibility no legal certainty very slow reactions to new developments = worst case scenario structural problem not only if three-step test in national law (+) (France) but also if three-step test in national law (-) (The Netherlands) EU legal framework

57. Yes, absolutely. Civil law judges capable of applying open-ended limitation?

58. Unnecessarily restrictive

59. ‘W hen applying exceptions and limitations provided for in this Directive, they should be exercised in accordance with international obligations. Such exceptions and limitations may not be applied in a way which prejudices the legitimate interests of the rightholder or which conflicts with the normal exploitation of his work or other subject-matter.’ Recital 44 InfoSoc Directive

60. flexible international acquis Three-step test as a straitjacket?

61. Article 9(2) BC Article 13 TRIPS Article 10 WCT Family picture

62. ‘It is understood that the provisions of Article 10 permit Contracting Parties to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable under the Berne Convention.’ ‘Similarly, these provisions should be understood to permit Contracting Parties to devise new exceptions and limitations that are appropriate in the digital network environment.’ Agreed Statement Art. 10 WCT

63. Impact on EU single market

64. copyright holder content aggregators consumers insufficient room for new business models and information services less freedom of expression and information Missed opportunities

66. No productive system competition different solution strategies in different countries –right of quotation (Netherlands) –implied consent (Germany) –safe harbour analogy (France) –abuse of rights (Spain) instead of shared set of assessment criteria –different national interpretations possible –until CJEU identifies the correct approach

69. Trademark Reform

70. Overview departure from graphic representability sufficiently clear and precise indication of goods and services double identity protection private orderings of counterfeit goods seizure of goods in transit referential use defence trademark transactions OHIM finances cooperation of trademark offices

71. Double identity rule

72. Art. 5(1)(a) TMD …to prevent all third parties not having his consent from using in the course of trade: a)any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;…

73. Really absolute? ECJ, 12 November 2002, case C-206/01, Arsenal/Reed ‘It follows that the exclusive right under Article 5(1)(a) of the Directive was conferred in order to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfil its functions.’ (para. 51)

74. Traditional focus on origin function ECJ, 12 November 2002, case C-206/01, Arsenal/Reed ‘The exercise of that right must therefore be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods.’ (para. 51)

75. identical signsidentical goods or services adverse effect on one of the protected trademark functions Identity

76. ‘These functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services, but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising.’ (para. 58) recognition of further protected functions, in particular goodwill functions CJEU, June 18, 2009, case C-487/07, L’Oréal/Bellure

78. Art. 5(1) TMD (mandatory) consumer protection only a few specific exceptions Art. 5(2) TMD (optional) protection of investment flexible ‘due cause’ defense exclusive link with a sign creation of a brand image advertising quality control Critique: imbalanced system

79. Commission Proposal

80. Art. 10(2)(a) Draft TMD …to prevent all third parties not having his consent from using in the course of trade any sign in relation to goods or services where: a) the sign which is identical with the trade mark and is used in relation to goods or services which are identical with those for which the trade mark is registered and where such use affects or is liable to affect the function of the trade mark to guarantee to consumers the origin of the goods or services;…

81. APRAM, p. 7 Instead of providing legal certainty, this provision generates great uncertainty and further limits the protection of trade marks. Such a provision would result in the recognition of international exhaustion (which is in contradiction with articles 15 of the Directive and 13 of the Regulation under which exhaustion of rights is limited to the territory of the Union). Indeed, in the case of parallel imports, the owner of the trade mark will no longer be able to prevent such parallel imports as the function of origin will not be affected.

82. INTA, p. 15-16 INTA opposes these provisions, which could cause uncertainty in a number of situations including: […] Parallel import cases where original goods have been sold with the consent of the trademark owner only outside the EU […] Trademark owners could no longer enforce their rights against such goods entering the EU and circulating within the EU, since the origin function in these cases is not affected (as the goods stem from the trademark owner).

83. International exhaustion?

84. Essential origin function ECJ, 12 November 2002, case C-206/01, Arsenal/Reed ‘The exercise of that right must therefore be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods.’ (para. 51)

85. So did we always have international exhaustion without ever realizing it?

86. And even if Commission Proposal is rejected… we are now aware that the origin function is not affected in case of parallel imports from outside the EEA but it is also difficult to see why other protected functions would be adversely affected… …so will we have international exhaustion anyway (what we already had before but never realized?)

87. Or do genuine goods from outside the EEA differ from genuine goods within the EEA?

88. More realistic scenario

89. Art. 15(1) Draft TMD ‘ The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the [European Economic Area] under that trade mark by the proprietor or with his consent.’ CJEU will understand that regional exhaustion is intended proposed new EU legislation leaves no doubt about that

90. But then…

91. Adoption of Commission Proposal preferable …to prevent all third parties not having his consent from using in the course of trade any sign in relation to goods or services where: a) the sign which is identical with the trade mark and is used in relation to goods or services which are identical with those for which the trade mark is registered and where such use affects or is liable to affect the function of the trade mark to guarantee to consumers the origin of the goods or services;…

92. Art. 5(1) TMD protection against confusion only a few specific exceptions Art. 5(2) TMD protection against dilution flexible ‘due cause’ defence exclusive link with a sign creation of a brand image advertising quality control Clear and balanced division of tasks

93. Exceptions and limitations

94. proprietorcompetitor consumer ensuring honest commercial practices consumer protection and information contribution to a functioning market Market transparency

95. EU Charter of Fundamental Rights Art. 17(2): right to property ‘Intellectual property shall be protected.’ Art. 11(1): freedom of expression and information ‘…shall include freedom to hold opinions and to receive and impart information and ideas…’ Art. 16: freedom to conduct a business ‘…in accordance with Union law and national laws and practices is recognised.’

96. ‘Nevertheless, whatever the protection afforded to innovation and investment, it is never absolute. It must always be balanced against other interests, in the same way as trade mark protection itself is balanced against them. I believe that the present cases call for such a balance as regards freedom of expression and freedom of commerce.’ (para. 102) CJEU, Google/Louis Vuitton, Opinion AG Poiares Maduro

97. Not only protection…

98. CJEU, L’Oréal/Bellure

99. …but also freedoms

100. ECJ, 17 March 2005, case C-228/03, Gillette/LA-Laboratories

101. rationale underlying the limitation ‘…in order to provide the public with comprehensible and complete information as to the intended purpose of the product which it markets, that is to say as to its compatibility with the product which bears those trade marks.’ (para. 34)

102. O2: –registered bubbles as a trademark Hutchison: –shows in advertising for telecom services black- and-white pictures of moving bubbles –compares prices of telecom services –not perceived as a source identifier by the public CJEU, June 12, 2008, case C-533/06, O2/Hutchison

103. ECJ, 4 November 1997, case C-337/95, Dior/Evora

104. Marks & Spencer –selects the trademark ‘Interflora’ and variants as search terms –sponsored search result: ‘M & S Flowers Online www.marksandspencer.com/flowers Gorgeous fresh flowers & plants Order by 5 pm for next day delivery’ CJEU, 22 September 2011, case C-323/09, Interflora/Marks & Spencer

105. Sustainable system needed

106. …same colours and letter type, but written as ‘E$$O’ Due cause defence

107. Art. 5(1) TMD (mandatory) consumer protection only a few specific exceptions Art. 5(2) TMD (optional) protection of investment flexible ‘due cause’ defense exclusive link with a sign creation of a brand image advertising quality control General application

108. not only with regard to marks with a reputation (Art. 10(2)(c) TMD; Art. 9(2)(c) CTMR) but with regard to all types of trademark claims (Art. 14(1) TMD; Art. 12(1) CTMR) General application

109. The end. Thank you! For publications, search for ‘senftleben’ on ssrn.com contact: m.r.f.senftleben@vu.nl