IP/IT update

In Case C- 314/12 UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbH at the end of March, the CJEU held that an internet service provider may be ordered to block its customers’ access to a copyright-infringing website.

This issues arises regularly before the courts in relation to the internet. Is a website or ISP a mere conduit/a passive wall with no liability, just as BT would not be liable if someone used a telephone to make rude comments to another person, or are they responsible for the illegal act committed using their systems?

In this case, Constantin Film Verleih, a
German company, which holds the rights to
Vicky the Viking and Pandorum, and Wega Filmproduktionsgesellschaft, an Austrian company, which holds the rights to The White Ribbon became aware that their films could be viewed or downloaded from website kinox.to without its consent.

At the request of those companies, the Austrian courts prohibited UPC Telekabel Wien, an internet service provider, from providing its customers with access to that site. The CJEU held that companies such as UPC Telekabel, which allows customers to access protected subject matter made available to the public on the internet by a third party, is an intermediary whose services are used to infringe a copyright. It was not necessary under the EU copyright directive for there to be a direct relationship between the infringer and the intermediary and did it have to be proved that they could access the material from that site.

In other news, the UK Intellectual Property Office has responded to the EU consultation on copyright law which closed on 5 March 2014.

It is rare that five new statutory instruments
on copyright appear at once. Those listed below amend the exceptions to copyright under the Copyright, Designs and Patents Act 1988 and
new regulations are due to come into force on
1 June 2014.

• The Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014.
• The Copyright and Rights in Performances (Quotation and Parody) Regulations 2014.
• The Copyright and Rights in Performances (Disability) Regulations 2014.
• The Copyright and Rights in Performances (Research, Education, Libraries and Archives) Regulations 2014.
• The Copyright and Rights in Performances (Public Administration) Regulations 2014.

These changes are a good thing and clarify the law in this field. In particular, they should mean that small excerpts from copyright works can more easily be used.

They have been issued following the Hargreaves review into IP. These regulations broaden the provisions in section 30 of the existing law to permit quotation from a work not only for the purpose of criticism or review, but for any purpose, as long as it is a ‘fair dealing’.

This will allow other minor uses of quotations, such as academic citation and use in examination papers, which do not undermine the commercial exploitation of copyright works.

Technology transfer

The new EU technology transfer block exemption regulation 316/2014 and accompanying
IP guidelines have been adopted by the European Commission and came into force on 1 May 2014. Existing IP licensers/licensees have 12 months from that date to amend existing contracts to comply with the new regulation.

Now is a good time for solicitors to alert their clients to the changes and advise on the best course of action. Of course, if a clause is now void, which previously was valid in an existing licence for some clients, this will be good news; most contracts have a ‘severance’ clause in any event.
No one needs to panic as most of the new regulation is the same as the one it replaced.

The regulation contains a hard-core list of prohibited clauses, such as price restrictions and excluded restrictions, which are void. The regulation applies to know-how, patent and software copyright licences and exempts them from competition law: article 101 TFEU (and the Competition Act 1998), where the agreement falls within the terms of the regulation including that the market shares are under 30 per cent on both sides (for agreements between non-competitors) under article 3 of the regulation. There are no changes to market-share thresholds in the new regulation.

The main changes from the previous regulation 772/2004 are:

• The two-year period when passive and active sales could be prevented for technology licences is abolished. It makes the law in this regulation the same as for vertical/distribution/franchising agreements under the equivalent regulation 330/2010.
• There is a new test to decide if an agreement that relates to purchase or sale of raw materials or equipment comes under the regulation. The old test was if those elements were ‘less important’ than the technology licensing. Now the test is whether those aspects are ‘directly related’ to the production or sale of the products made using the licensed technology, which should be an easier test to apply in practice.
• ‘No challenge’ clauses to the validity of the licensed rights are totally forbidden even if the clause simply says that the agreement will terminate if there is a challenge (except in exclusive licences where termination in the event of challenge is allowed) (article 5(1)(b)).
• The distinction between ‘severable’ and non severable improvements to the technology licensed has gone. The regulation prohibits “any direct or indirect obligation on the licensee to grant an exclusive licence or to assign rights, in whole or in part, to the licenser or to a third party designated by the licenser in respect of its own improvements to, or its own new applications of, the licensed technology” (article 5(1)(a)), although it may be possible to justify some such restrictions in particular cases in practice.

There are also some minor changes in the IP guidelines, which accompany the regulations,
in relation to patent pools and settlement of
IP litigation agreements.

Practitioners should update office precedents of patent, know how and software licences now
to comply with the guidelines, ensure staff know about the changes, and alert clients with existing licences. Most licences can probably be left unchanged even if it does mean a no-challenge clause in an existing licence is void.

However, those who used the two-year right
to stop passive and active sales may well want
to revise their agreement. In my experience, such a two-year period was not often used and most licences then and now simply prohibited the licensee from actively marketing outside its territory within the EEA rather than imposing
any absolute export ban.

Copycat packaging

The Department for Business issued its Call for evidence: review of the enforcement provisions of the Consumer Protection from Unfair Trading Regulations 2008 in respect of copycat packaging
in April. The government has now decided to review the case for granting businesses a civil injunctive power in relation to copycat packaging under the regulations (CPR). The terms of reference for the review by officials are to the consultation document.

‘Copycat packaging’ refers to the practice of designing the packaging of a product (or its ‘trade dress’ or ‘get up’), not a registered trade mark, to give it the general ‘look and feel’ of a competing well-known brand (typically the market leader). Copycat packaging is distinct from counterfeiting as usually it does not involve copying trade
marks. Some other states protect against this
by a law against unfair competition.

Schedule 1 to the CPR lists commercial practices that are, in all circumstances, considered unfair (and hence prohibited). They include, at paragraph 13, promoting a product similar to another product made by a particular manufacturer in such a manner as to deliberately mislead the consumer into believing that the product is made by that same manufacturer when it is not.

Last year, the Intellectual Property Office commissioned some independent research,
The impact of lookalikes: similar packaging and
fast moving consumer goods, from the Intellectual Property Institute. The report is available online. The consultation document is also online and responses are due by 19 May 2014. SJ

Susan Singleton is a solicitor at Singletons

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