Intellectual Property Matters – September 2016
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Website blocking orders to prevent trade mark infringement
The Court of Appeal has held [1] that blocking orders affecting internet service providers (ISPs) […]
The Court of Appeal has held [1] that blocking orders affecting internet service providers (ISPs) can be used to protect trade mark proprietors. In a landmark judgment delivered on 17 October last year, [2] Arnold J had ordered the defendant ISPs to block, or at least impede, access to particular websites which advertised and offered counterfeit goods bearing the claimants’ marks. This is believed to be the first occasion on which an application for a website-blocking order has been granted against an ISP in order to prevent trade mark infringement, as opposed to copyright infringement where such orders have been granted before.
The claimants are producers and retailers of luxury goods and the proprietors of well-known jewellery and watch brands, including Cartier. The websites in question advertised and sold counterfeit replicas, sometimes making clear the goods were replicas, sometimes not. The websites targeted UK consumers.
The claimants sought orders in the same format as orders previously granted in copyright cases. The Court’s jurisdiction in the copyright cases derives from section 97A of the Copyright, Designs and Patents Act 1988, which implements Article 8(3) of the Information Society Directive [3]. This says: “the High Court … shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.” There is no comparable provision in respect of trade marks, and the defendant ISPs argued that for this reason the High Court did not have the jurisdiction to make the order sought.
Arnold J took the view that the High Court did have jurisdiction to grant the blocking order. He held it had jurisdiction by virtue of section 37(1) of the Senior Courts Act 1988, which says: “the High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to be just and convenient to do so.”
The Court of Appeal agreed, confirming that the UK courts have the jurisdiction to grant the website-blocking orders. It reasoned that the UK courts were obliged to apply national law, so far as possible, to achieve the purpose of Article 11 of the Enforcement Directive [4], which states: “Member States shall also ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right”. The Court of Appeal went on to confirm that section 37(1) of the Senior Courts Act could be applied to this end.
The Court of Appeal also set out the threshold requirements to be met before the Court will grant an order for a website blocking injunction:
- the ISPs must be intermediaries;
- the operators of the target websites must be infringing the trade marks;
- the operators of the target websites must be using the ISPs’ services to infringe; and
- the ISPs must have knowledge of this.
With regard to “knowledge”, this must be actual; the ISP in question must have been notified of the infringing use. In this case, the ISPs had been notified ahead of the application by way of an email attaching schedules of the trade marks and records detailing the test purchases made from the infringing websites, and by the application for the orders themselves.
The Court of Appeal confirmed that the injunction must (1) be necessary; (2) be effective; (3) be dissuasive; (4) not be unnecessarily complicated or costly; (5) avoid legitimate barriers to trade; (6) be fair and equitable and strike a fair balance between the applicable fundamental rights; and (7) be proportionate.
Perhaps the most contentious question before the Court of Appeal was as to who should bear the burden of the costs of implementing the blocking order. The ISPs argued that this should be borne by the rightholders. The Court disagreed (although Briggs LJ dissented, stating that in his opinion the rightholder should bear the cost), explaining that “intermediaries make profits from the services which the operators of target websites use to infringe the intellectual property rights of the rightholders, and the costs of implementing the order can therefore be regarded as a cost of carrying on the business”.
The judgment develops the existing law but the development is a logical one, bringing the position in respect of trade marks into line with the copyright position. The concern for ISPs is that the case may open the floodgates to applications from trade mark owners seeking blocking orders to infringing websites and of the costs implications that this will entail.
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[1] Cartier International AG and another v British Sky Broadcasting Ltd and another [2016] EWCA Civ 658
[2] [2014] EWHC 3354 (Ch)
[3] Directive 2001/29/EC
[4] Directive 2004/48/EC

Lindsay Lohan and the right to publicity
Karen Gravano (of Mob Wives fame) and Lindsay Lohan have failed in their lawsuit [1] […]
Karen Gravano (of Mob Wives fame) and Lindsay Lohan have failed in their lawsuit [1] in which they claimed that Grand Theft Auto V had misappropriated their images in violation of New York law.
For those unfamiliar with the game, the judgment offers a summary: “players control one of several main characters at various points in the game, engaging in approximately 80 main story missions as well as many optional random events.” The plaintiffs claimed that, during certain optional random events, the player encounters characters that are depictions of the plaintiffs.
The “right to publicity”, by which individuals can sue if their name, likeness or other identity attribute(s) are used in products, varies from state to state. Unfortunately for the two plaintiffs in this case, the New York state law is rather more constrained than the law in some other states. In the state of New York, the “right to publicity” is restricted to “name, portrait, or picture” and not to other attributes. Furthermore, the New York right applies in respect of use in advertising products only and not to entertainment products.
The Manhattan Appellate Court held that the claims must fail because the defendants had not used the plaintiffs’ respective names, portraits or pictures. Regarding Lohan’s claim, for example, the Court said: “as to Lohan’s claim that an avatar in the video game is she and that her image is used in various images, defendants also never referred to Lohan by name or used her actual name in the video game, never used Lohan herself as an actor for the video game, and never used a photograph of Lohan.”
In any event, the game did not fall within the statutory definition of “advertising” or “trade”. (Interestingly, the Court described the game as a “work of fiction or satire”.)
The Court also dismissed Lohan’s argument that her image was used improperly to advertise the game as the images were “not of Lohan herself, but merely the avatar in the game that Lohan claims is a depiction of her”.
We discussed the concept of the image right in UK law in the context of José Mourinho’s appointment as Manchester United manager in our last newsletter.
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[1] Gravano v Take-Two Interactive Software, Inc and Lohan v Take-Two Interactive Software, Inc

VeRO and groundless threats
The decision of the Intellectual Property Enterprise Court in T&A Textiles and Hosiery Ltd v […]
The decision of the Intellectual Property Enterprise Court in T&A Textiles and Hosiery Ltd v Hala Textile UK Ltd and Others [1] is a wake-up call for those who complain of an infringement of intellectual property rights under eBay’s Verified Rights Owner (VeRO) system without first giving proper consideration as to whether the complaint is well founded.
Both parties designed and manufactured bed linen. The claimant maintained that bed linen sold by the defendant infringed its copyright (in respect of the design on the products) and its registered design (in respect of a packaging label). The defendant disputed the claims and also counterclaimed that the sending of letters to third parties and to eBay under the VeRO system constituted “groundless threats”. Under UK law, the recipient of a groundless threat has the right to claim against the person making the threat. (The law on groundless threats is in the process of being overhauled with draft legislation contained in the Intellectual Property (Unjustified Threats) Bill, which is currently working its way through Parliament.
The claims for infringement were dismissed. The Court found that the alleged infringing designs had been imported prior to the creation of the claimant’s drawings (which defeated the copyright claim) and also that the claimant’s registered design was invalid as the defendant’s allegedly infringing packaging had been made available to the public prior to registration of the claimant’s design.
The Court found that the letters sent by the claimant to third parties constituted groundless threats. On the question of whether the letters sent to eBay under its VeRO system were groundless threats, the Court was a little more guarded. Its provisional view was that the initial notice to eBay was a groundless threat and that a subsequent letter to eBay was a clear threat, even though written in the context of a complaint under the VeRO system.
The case emphasises the need for right owners to consider the law on groundless threats when using the VeRO programme.
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[1] [2015] EWHC 2888 (IPEC).

Physical marketplaces and the duty of the operator to stop trade mark infringement by pitch holders
In the groundbreaking case of L’Oréal v eBay [1], the European Court of Justice ruled […]
In the groundbreaking case of L’Oréal v eBay [1], the European Court of Justice ruled that eBay could be held liable to account for trade mark infringing activity that had taken place in its online marketplace. The Court held that eBay (and other online marketplace providers) cannot rely on the “hosting” defence where they have played an active role in the promotion or sale of trade marked goods or gained knowledge of facts or circumstances that should have put them on notice that the offers of sale were unlawful and they failed to act expeditiously to remove them. Since that ruling, injunctions have been available for brand owners against infringing activity in online marketplaces.
The Court of Justice of the European Union (CJEU) (by which name the European Court of Justice has since become known) has recently considered the application of the L’Oréal v eBay ruling in the context of the physical, as opposed to the online, marketplace.
In this case [2], Tommy Hilfiger and others applied for an injunction to stop Delta Center, the tenant of ‘Pražská tržnice’ (Prague Market Halls), from letting stalls at the market to traders who were selling counterfeits. The application was brought under Article 11 of the Enforcement Directive [3], which allows trade mark proprietors to bring an action against intermediaries whose services are used by a third party to infringe their trade mark.
The Czech Supreme Court referred to the CJEU the question of whether it was possible, and if so on what basis, to order the operator of a physical marketplace to take measures to stop pitch holders from committing trade mark infringement.
The CJEU ruled that an operator that provides a service to third parties relating to the letting or subletting of pitches in a marketplace, and which thus offers the possibility to those third parties of selling counterfeits in that marketplace, was an intermediary for the purposes of Article 11 of the Directive. It was immaterial for the purposes of Article 11 whether the infringing trader in question was operating in an online or a physical marketplace: the considerations laid down in L’Oréal v eBay applied to the physical as well as the online environment.
Accordingly, the operator of a physical marketplace can be compelled to take steps to stop trade mark infringements by pitch holders. The Court stated that the principles applicable to any such injunction are the same as those applicable in the physical environment, namely that the injunction must be, at the same time, effective and dissuasive yet also equitable and proportionate. Further, the terms of the injunction must not require the intermediary to exercise general and permanent oversight over its customers. However, the intermediary may be compelled to take measures which contribute to avoiding new infringements of the same nature by the same market trader. The Court also stated that the injunction must ensure a fair balance between the protection of intellectual property and the absence of obstacles to trade – which may offer some “wiggle room” for marketplace operators, who will not welcome this ruling.
The case has been referred back to the Czech Supreme Court for that court to apply the ruling to the facts.
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[1] Case C-234/09
[2] Case C-494/15
[3] Directive 2004/48/EC

The test for enhanced patent damages in the US
A recent US Supreme Court ruling suggests the start of a possible trend towards enhanced […]
A recent US Supreme Court ruling suggests the start of a possible trend towards enhanced patent damages.
The applicable statutory provision on enhanced patent damages [1] states that “the court may increase the damages up to three times the amount found or assessed”. There is, however, little statutory guidance to assist the courts in the exercise of this discretion. The so-called “Seagate” test (named after the leading case on the point) established by the Federal Circuit was two-fold: first, the patent owner needed to establish by “clear and convincing evidence that the infringer acted despite an objectively high likelihood that the actions constituted infringement of a valid patent” and, secondly, the patent had to demonstrate that the risk of infringement was “either known or so obvious that it should have been known to the accused infringer”.
In Halo Electronic, Inc. v Pulse Electronics, Inc. et al [2] the Supreme Court considered the existing Seagate test and found it wanting. It was, in the words of the Court, “unduly rigid, and … impermissibly encumbers the statutory grant of discretion to district courts”. The Court explained that “awards of enhanced damages under the US Patent Act over the past 180 years establish that they are not to be meted out in a typical infringement case, but are instead designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior”. However, the discretion afforded the courts had become unduly fettered by adherence to the Seagate test.
The relaxation of the test for awarding triple damages may herald more awards of this type in the future although the Court was careful to state that they would not be applicable in a run of the mill infringement case.
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[1] 35 USC § 284
[2] together with Stryker Corp et al v Zimmer, Inc. et al

“Stairway to Heaven” did not infringe copyright
We have reported previously on the copyright litigation concerning the Led Zeppelin song, “Stairway to […]
We have reported previously on the copyright litigation concerning the Led Zeppelin song, “Stairway to Heaven”. The dispute has now been resolved by a jury which decided in favour of Led Zeppelin.
The suit, it will be recalled, was initiated by the trustee of the late Randy Wolfe, a member of the band Spirit, who claimed that Led Zeppelin had copied the opening riffs of “Stairway to Heaven” from Spirit’s song “Taurus”. The claimant’s lawyers adduced evidence that the two bands had crossed paths early in their musical careers and also expert evidence highlighting the similarity of the two sets of chords. Led Zeppelin’s Robert Plant and Jimmy Page accepted that the bands’ paths might indeed have crossed but denied any copying. The jury agreed finding that the two songs were not sufficiently similar to support a finding of copyright infringement.
Another music-related copyright dispute that we have previously reported on relates to the song “Happy Birthday”. Last September, the US District Court of the Central District of California ruled that copyright in the song – allegedly the highest grossing song of all time – was not owned by the music publisher Warner/Chappell but belonged instead in the public domain. A US federal judge has now approved a settlement bringing the dispute to an end.
Next up could well be “This Land is your Land”. A lawsuit was filed in the US District Court for the Southern District of New York in June claiming that the song belongs to the public domain rather than the publishing company, The Richmond Organization and its subsidiary, Ludlow Music, which collects licensing fees for use of the song. The song was written by Woody Guthrie in 1940 and the song was published with a copyright notice in 1945. Lawyers for the claimant maintain, among other things, that the copyright notice was never renewed with the consequence that the song entered the public domain in 1973, as the then applicable law required copyright notices to be renewed after 28 years. We will keep you updated as matters progress.

The ITC and the Chuck Taylor sneaker
In 2014, Converse filed an application with the International Trade Commission (ITC) seeking a general […]
In 2014, Converse filed an application with the International Trade Commission (ITC) seeking a general exclusion order in relation to its trade mark rights in features of its Chuck Taylor sneaker.
Converse has previously instituted multiple infringement proceedings against a number of manufacturers and retailers to protect its trade marks in respect of the sneaker. The rationale for an application to the ITC is that the ITC has the power to rule that a trade mark is entitled to protection and to place the trade mark on a list of goods that are excluded from entry to the United States at US border crossings, unless the use of the mark is authorised by the proprietor. Accordingly, filing a complaint with the ITC is an attractive remedy for proprietors like Converse who continuously face counterfeits imported from foreign countries.
The application to the ITC has, however, been met with mixed fortunes. In particular, the ITC ruled that the mark that protected the toe cap, toe bumper and midsole stripes lacked “secondary meaning”. In other words, the public did not associate those design features with Converse. Competitors had been using similar designs for decades. Converse continues to own a federal trade mark registration in respect of these features of the sneaker but the status of that mark is now open to question following the ITC ruling. The effect of the ruling is that it will be harder for Converse to claim exclusive rights to design elements such as the toe cap and toe bumper. Unsurprisingly, the ruling has been welcomed by retailers who have been previously sued by Converse for trade mark infringement.
The ITC ruling was not all bad news for Converse. The iconic diamond-patterned outsole on the sneaker was entitled to protection as the ITC held that this did have secondary meaning, i.e. ordinary purchasers would associate that design with Converse.
Converse has stated that it intends to appeal the decision.

The registrability of laudatory marks
The General Court has rejected an appeal against a decision of the EU Intellectual Property […]
The General Court has rejected an appeal against a decision of the EU Intellectual Property Office which refused an application to register the figurative mark MARK 1 for cigarettes, cigars and related goods. [1]
The Court concluded that the sign had a clear laudatory and promotional meaning for the goods concerned, suggesting to the relevant public the idea of the “number one brand”. Consumers would not perceive any indication of commercial origin, rather they would simply see promotional information. As such, the mark was not registrable.
The Court explained that the fact that a mark had a laudatory connotation did not of itself mean that the mark was not registrable; it could be registrable in such a case provided also that it served as an indication of origin. However, in the opinion of the Court, the MARK 1 sign did not do this sufficiently.
The Court also considered that the visual presentation of the sign lacked distinctive character.
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[1] Case T-23/15 GRE Grand River Enterprises Deutschland GmbH v EUIPO