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May 18, 2015
This is our summary of some of the key legal developments across a range of sectors covering the period 8 to 14 May 2015.
It is intended for reference purposes only and does not constitute definitive advice. Links to the original source materials are included where there are no restrictions in terms of access. References may also be made to sources that require separate registration or subscription. A link to a source does not necessarily imply endorsement of the source or the material provided through the link. For further information on any of the matters discussed in this summary please contact Alexander Ross. If you have any comments, queries or suggestions please contact us at comments. All suggestions and comments are most welcome.
Court of Justice of European Union finds that the exclusive right to distribute copyright works under Article 4(1) of the Copyright Directive (2001/29/EC) includes the right to advertise for sale.
Coalition for a Digital Economy (Coadec) signs joint letter urging European Commission to ensure that Digital Single Market project encourages innovation and reduces barriers to growth.
European Commission launches e-commerce sector inquiry.
European Commission launches consultation on cross-border parcel delivery.
PhonepayPlus publishes Terms of Reference for the Review of its Investigations, Procedures and Sanctions, under Part 4 of its Code of Practice.
Data protection regulators launch global enforcement sweep of children’s websites and apps.
Ofcom updates British Sign Language obligations for smaller TV channels.
Fair Internet for Performers Campaign calls on European legislature to “make the Internet a fair environment for performers”.
ENPA welcomes European Commission President Juncker’s announcement of future EU proposal to reduce VAT rates on digital press.
Supreme Court upholds Court of Appeal decision that BSkyB’s use of “NOW TV” in relation to internet TV service in the UK did not amount to passing off of Starbuck’s internet TV service operating in Hong Kong also under “NOW TV” brand.
ASA publishes advice for marketers on use of strong language.
Court of Justice of European Union finds that the exclusive right to distribute copyright works under Article 4(1) of the Copyright Directive (2001/29/EC) includes the right to advertise for sale.
Knoll International SpA manufactured high-value furniture and sold it worldwide. It was authorised to assert the exclusive copyright, held by its parent company, in certain designs protected in Germany.
Dimensione Direct Sales Srl was a private limited company that distributed designer furniture by direct sale in Europe and online.
In 2005 and 2006, Dimensione advertised furniture similar to Knoll’s protected designs on its German website and in various German daily newspapers and magazines and in an advertising brochure. The ad stated as follows:
“Buy your furniture from Italy, but pay nothing until collection or delivery by a forwarding agent authorised to take payment (service arranged on request)”.
Knoll alleged that Dimensione’s products were counterfeit versions of its protected designs and issued copyright infringement proceedings against Dimensione in the German courts seeking an order prohibiting Dimensione from offering the furniture for sale in Germany. Knoll argued that, by advertising copies of the protected designs in Germany, Dimensione had infringed its rights and those of its parent company under German copyright law.
The German Regional Court in Hamburg found in favour of Knoll. The Higher Regional Court dismissed Dimensione’s appeal. Dimensione appealed to the Bundesgerichtshof (the Federal Court of Justice).
The Bundesgerichtshof noted that the outcome of the appeal depended on the interpretation of Article 4(1) of the Copyright Directive (2001/29/EC) and, in particular, whether the distribution right under Article 4(1) included the right to offer for sale to the public the original or a copy of a copyright work. Accordingly, it asked the CJEU whether Article 4(1) meant that the holder of an exclusive right to distribute a copyright work could prevent an advertisement for the sale of the original or a copy of that work even if it had not been established that the advertisement had resulted in the purchase of the work by a buyer in the EU.
CJEU case law showed that “distribution to the public” was characterised by a series of acts starting with the conclusion of a contract of sale to the performance thereof by delivery to the buyer. The trader was therefore responsible for any act carried out by him or on his behalf that resulted in “distribution to the public” in a Member State where the goods distributed were protected by copyright.
Therefore, actions leading up to the conclusion of a contract of sale could also fall within the concept of “distribution” and be reserved, exclusively, to the copyright holder. An advertisement, by its nature, constituted one such action, as did an invitation to submit an offer to buy.
The CJEU has also held in the past that copies of EU copyright goods coming from a non-Member State may infringe copyright where it is proved that they were intended to be put on sale in the EU. Proof includes the goods being sold to a customer in the EU or offered for sale or advertised to EU customers and applies online as well as offline.
Therefore, the CJEU found, the distribution right under Article 4(1) could be infringed where a trader, who is not the copyright holder, offers for sale protected works or copies thereof via an advertisement on his website or in the press to consumers located in the Member State in which those works are protected. It was irrelevant whether or not the advertising resulted in the transfer of ownership of the protected work or a copy thereof to the purchaser. (Case C-516/13 Dimensione Direct Sales Srl v Knoll International SpA 13 May 2015 (unreported) – to access the judgment in full, go to the curia search form, type in the case number and follow the link).
Coalition for a Digital Economy (Coadec) signs joint letter urging European Commission to ensure that Digital Single Market project encourages innovation and reduces barriers to growth.
As reported in last week’s N2K, the European Commission has now published its Strategy for a Digital Single Market.
Coadec, a non-profit organisation that campaigns for policies to support digital startups in the UK, is one of fifteen signatories from across the EU to a letter to the Commission, which was arranged by Allied for Startups, a worldwide network of organisations focused on improving the policy environment for startups.
The letter calls for action on consumer rights, data protection, copyright, and tax and company law, including the introduction of simple, online processes for: i) registering a web domain; ii) forming a company; iii) paying VAT; iv) hiring resources; and v) managing small equity investments.
The letter urges the Commission to avoid adding new burdens for entrepreneurs, and to take tough choices: “The package should be aimed at reducing the regulatory burden to allow high growth companies to thrive, rather than levelling up across the continent. This will require some tough choices that may upend some existing business models, but regulations should always be about protecting consumers from harms, not incumbents from competition”, the letter states.
Melissa Blaustein, founder of Allied for Startups, said: “When startup communities from 13 member states unite with one voice, the Commission must pay attention. It’s vital for the future success of the European digital economy that policymakers listen to innovators and put startups at the heart of the Digital Single Market”. To read the letter in full, click here.
European Commission launches e-commerce sector inquiry.
The European Commission has launched an antitrust competition inquiry into the e-commerce sector in the European Union. The inquiry, which was announced by Commissioner Vestager in March, will allow the Commission to identify possible competition concerns affecting European e-commerce markets. It complements actions contained in the Digital Single Market Strategy, the launch of which was reported in last week’s N2K.
The sector inquiry will focus particularly on potential barriers to cross-border online trade in goods and services where e-commerce is most widespread, such as electronics, clothing and shoes, as well as digital content. Knowledge gained through the sector inquiry will contribute to better enforcement of competition law in the e-commerce sector, the Commission says.
The Commission’s Digital Single Market Strategy identifies a number of regulatory barriers that hinder cross-border e-commerce. It proposes to address these and create a zone where citizens and businesses can seamlessly carry out transactions online under conditions of free competition, irrespective of their nationality or place of residence.
The Commission says that some businesses may be establishing barriers to cross-border online trade on purpose, with a view to fragmenting the EU’s Single Market along national borders and preventing competition. Those barriers may include contractual restrictions in distribution agreements that prevent retailers from selling goods or services purchased online or cross-border to customers located in another EU country. The Commission’s competition sector inquiry will gather market information in order to understand better the nature, prevalence and effects of these and similar barriers and to assess them in light of EU antitrust rules.
If, after analysing the results, the Commission identifies specific competition concerns, it may carry out investigations to ensure compliance with EU rules on restrictive business practices and abuse of dominant market positions.
In the coming weeks, the Commission will send requests for information to a range of stakeholders throughout the EU. The companies concerned may include, for example, manufacturers and wholesalers as well as e-commerce retailers. Under EU antitrust rules the Commission can require companies and trade associations to supply information, documents or statements as part of a sector inquiry.
The Commission expects to publish a preliminary report for consultation in mid-2016. The final report is expected in the first quarter of 2017. To read the Commission’s press release in full, click here.
European Commission launches consultation on cross-border parcel delivery.
The Commission’s Strategy for a Digital Single Market, as reported in last week’s N2K, singled out parcel delivery as one of the main priorities for the development of a Digital Single Market in the EU. Accordingly, the Commission has launched a public consultation to consult all interested parties on the main issues and possible areas of improvement for cross-border delivery services when sending packets and parcels across the EU.
E-commerce deliveries to consumers continue to drive growth in the European parcels market. At the same time, consumers and e-retailers have increasingly high expectations of delivery services when buying online. However, a lack of delivery features and high prices are obstacles for both e-retailers and consumers, hindering their further participation in e-commerce growth, particularly across borders. The Commission has identified the following challenges as action points: lack of transparency of information, excessive costs for low volume shipping, lack of convenient services for the final consumer, and lack of interoperability between the different operators typically involved in cross-border delivery.
The scope of the consultation covers packets (mail items up to 2Kg that would fit in a letter box) and parcels (mail items under 20Kg) for delivery within Europe. For the purpose of the consultation, Europe includes EU and EEA countries and the consultation covers shipments from online retailer to end consumer, but not shipments to other businesses.
This consultation document is aimed at individuals, companies (including SMEs), public authorities and associations interested in cross-border parcel delivery in Europe. The consultation closes on 29 July 2015. To access the consultation documentation, click here.
PhonepayPlus publishes Terms of Reference for the Review of its Investigations, Procedures and Sanctions, under Part 4 of its Code of Practice.
As PhonepayPlus announced in March when it published its draft 13th Code of Practice, it is undertaking a review of the investigations, adjudications and appeals procedures (Part 4) of the Code together with its Investigations and Sanctions Procedures. As part of this review, the regulator says that it will be taking into account feedback from the industry on its proposed changes to certain aspects of Part 4 in last year’s consultation on the proposed 13th Code. It will also be considering further the Emergency Procedure provisions in the Code.
This review is already under way. While the review may recommend changes to the provisions currently found in Part 4 of the Code, those changes will not be made before the 13th Code takes effect. PhonepayPlus says that any proposed Code changes will be developed and then fully consulted on in a separate Code amendment project once the conclusions and recommendations of the review are known. The regulator says that it will ensure that stakeholder views are sought and reflected throughout the review. To access the Terms of Reference, click here.
Data protection regulators launch global enforcement sweep of children’s websites and apps.
As part of an international project coordinated by the Global Privacy Enforcement Network, the Information Commissioner’s Office has begun a review of websites and apps used by children. The focus of the sweep, which follows previous reports on website privacy policies and how apps collect personal data, was chosen after privacy enforcement authorities identified a growing number of websites and mobile apps targeted at, or popular among, children.
The ICO will look at 50 websites and apps, in particular at what information they collect from children, how that is explained, and what parental permission is sought. The websites and apps will include those specifically targeted at children, as well as those frequently used by children.
The same approach will be taken by 28 other privacy enforcement authorities from around the world, with a view to publishing a combined report in the autumn. The ICO will also consider action against any website or app that it finds to be breaking the Data Protection Act 1998. To read the ICO’s press release dated 11 May 2015, click here.
Ofcom updates British Sign Language obligations for smaller TV channels.
Since 2007, channels with an audience TV viewing share between 0.05% and 1% (“relevant channels”) have been required to show 30 minutes of programmes each month presented in British Sign Language (BSL).
As an alternative, channels can choose to contribute a minimum of £20,000 a year to other arrangements that help make sign-presented TV programmes available. Most choose to support the British Sign Language Broadcasting Trust (BSLBT), which funds sign-presented content shown on the Community Channel and Film 4.
From January 2016, broadcasters’ obligations will rise incrementally. There will be gradual increases to the amount of sign-presented programmes on relevant channels, reaching 75 minutes per month.
Alternatively, channels can continue to support alternative arrangements, such as the BSLBT. Minimum contributions will be rebased to reflect inflation. As with the obligation to provide sign-presented programmes, the amount of the minimum contribution will rise in real terms.
Expenditure on access service requirements remains subject to a cap of 1% of turnover. Ofcom considers that this limit ensures broadcasters are not subject to disproportionate costs when meeting their access service requirements.
Channels with an audience share of 1% or more and the public service channels continue to be required to provide signing on a proportion of their programmes, rising over ten years from 1% to 5%. To read Ofcom’s statement on changes to signing arrangements, click here.
Fair Internet for Performers Campaign calls on European legislature to “make the Internet a fair environment for performers”.
In connection with the launch of the European Commission’s Digital Single Market Strategy, the Campaign has called on the European Commission, the Parliament and the Council to take action as a matter of priority to ensure that performers get a fair share of online revenues through a new, unwaivable remuneration right for legal on-demand uses of their work. This right would be collected from digital platforms that make the performances available on demand and subject to mandatory collective management.
The Campaign says that current legislation makes it “easy for businesses to deny performers fair remuneration for the legal exploitation of their work online”.
According to the Campaign, the vast majority of performers receive no remuneration or, at best, a “derisory” single all-inclusive fee. In the Campaign’s view, EU legislation, which aims to protect performers, has therefore failed. “The European legislator must ensure that its on-going reform process addresses this situation and creates a sustainable cultural and creative industry where performers are remunerated for the online exploitation of their performances”, the Campaign says.
Fran Healy of UK band Travis said: “The opportunity to make streaming payments equitable for the artists who record and perform the songs we all love is one giant step towards a savvier, more sustainable music industry”. To read the press release on the Musicians’ Union’s website in full, click here.
ENPA welcomes European Commission President Juncker’s announcement of future EU proposal to reduce VAT rates on digital press.
ENPA, the association representing newspapers and news media in Europe, has welcomed the announcement from the President of the European Commission, Jean-Claude Juncker, regarding a future EU proposal to reduce VAT on digital press.
In a keynote speech at an event organised by the German Federation of Newspaper Publishers, President Juncker underlined that the Commission would put forward a proposal in the first half of 2016 to give Member States the option of applying reduced rates of VAT to the digital press. ENPA says that this “important” statement has “confirmed the political will of the European Commission to take action as regards the rates of VAT applicable to press and books in the digital environment”.
ENPA supports this “long awaited progress” in the debate for lower VAT rates on digital press and calls on all Member States to “give their unconditional support to such a change”. To read ENPA’s press release in full, click here.
Supreme Court upholds Court of Appeal decision that BSkyB’s use of “NOW TV” in relation to internet TV service in the UK did not amount to passing off of Starbuck’s internet TV service operating in Hong Kong also under “NOW TV” brand.
When BSkyB announced it was to launch a new internet TV service in the UK under the name NOW TV, Starbucks (HK) Ltd (together with two other companies all of which were part of the same Hong Kong-based group of broadcasting, media and telecommunications companies) issued trade mark infringement and passing off proceedings against BSkyB in respect of Starbucks’ Community trade mark for NOW (registered for telecommunications and broadcasting services) and the group’s various TV services operating under the NOW sign in Hong Kong.
The High Court found in favour of BSkyB and Starbucks appealed the decision. The Court of Appeal dismissed Starbuck’s appeal in relation to both the registered trade mark infringement and passing off proceedings. Starbucks appealed the passing off decision to the Supreme Court.
The Supreme Court noted that, in the UK, the courts have consistently held that it is necessary for a claimant to have actual goodwill, in the sense of a customer base, in this jurisdiction before it can satisfy this requirement for the law of passing off. Where the claimant’s business is abroad, people who are in the jurisdiction, but who are not customers of the claimant in the jurisdiction, will not suffice, even if they are customers of the claimant when they go abroad.
Goodwill in the context of passing off is territorial in nature and an English court has to consider the factual position in the UK. It is clear that mere reputation is not enough; the claimant must have significant goodwill in the form of customers in the jurisdiction. However, it is not necessary to have an establishment or office in this country.
Starbucks’ appeal was dismissed because its business was based in Hong Kong and it had no customers, and therefore no goodwill, in the UK. The people in the UK who had access to Starbucks’ NOW TV programmes via the websites were not Starbucks’ customers in the UK because there was no payment involved and the availability of the TV service was intended to promote Starbucks’ Hong Kong business. As such, the service amounted to advertising in the UK, which was insufficient to maintain a claim in passing off. (Starbucks (HK) Limited v British Sky Broadcasting Group PLC [2015] UKSC 31 (13 May 2015) – to read the judgment in full, click here).
ASA publishes advice for marketers on use of strong language.
The ASA notes that, although not a commonly used technique, some advertisers choose to use “bolder” language, often through a play-on-words or, more rarely, a direct profanity. While the Advertising Codes do not prohibit swearing, the ASA says that it is important to remember that what might be considered funny or offensive can vary depending on an ad’s wording, particularly the tone and context in which it is used as well as the place it appears.
The ASA reminds marketers that ads must not contain anything that is likely to cause serious or widespread offence. Significantly however, the rules also recognise that ads may be distasteful without necessarily being a problem.
It is not just whether an advertiser has fun with puns or uses a double entendre, the ASA says. The context of an ad and the name of the product itself might also be considered offensive.
The ASA explains that when it responds to complaints about swearing in ads, it has to consider carefully whether an ad is likely to offend against prevailing standards in society, part of which includes assessing whether an ad is inappropriate or harmful to children, for instance by encouraging anti-social behaviour.
Being creative and pushing the boundaries with the use of language in an ad is not out of the question, the ASA says. Used in context and targeted carefully, strong language does not automatically mean an ad breaks the rules.
The ASA concludes: “We’re not here to stifle creativity or to stop advertisers being irreverent but we urge them to consider public sensitivities before using language that might not be to everyone’s taste”. To read the ASA’s advice in full and for links to relevant ASA decisions in this area, click here.
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