UK: Custodial sentence for online infringement to be increased to 10 years

The UK government has announced its intention to increase the maximum custodial sentence for online copyright infringement from two years to ten years.  This will match the current maximum sentence for copyright infringement in physical goods.

Maximum sentence

The government first consulted on this proposal in July 2015.  The overwhelming majority of respondents were against an increase in the maximum custodial sentence, saying that online infringement could not be equated with other serious offences carrying the same maximum sentence, including firearms offences, rioting and child cruelty.  Despite this, the government intends to press ahead with its plans and introduce legislation amending S107(4A) and S198(5A) of the Copyright Designs and Patents Act 1988 (CDPA), which set out the penalties available for online copyright infringement.  The government’s position is that “online offences should be treated no less seriously than their physical counterparts.  Harmonising these will provide a deterrent effect to criminals and, where criminality continues, provide for tangible punitive action.”  The government intends to introduce the amending legislation “at the earliest legislative opportunity”.  The government’s thinking in this area and the plans for new legislation are set out in this document.

That the government intends to go ahead with the proposed increase in the maximum custodial sentence, despite strong opposition in the consultation process, demonstrates how keen it is to stamp out online infringement and protect the creative industries, which add an estimated £84.1 billion to the UK economy each year.  It is worth noting that the new increased sentence will apply not only to businesses that have online infringement at the core of their profit-making model, but also anyone who shares a copyright work online (including a private individual outside the scope of commercial activity) knowing that they should not be doing so.  This would catch individuals engaged in uploading unauthorised copies of films, books or music to dedicated file sharing websites.

For more information on protecting copyright online, please feel free to call Florian Traub.

 

How would a Brexit affect IP rights?

With the UK’s referendum on membership of the EU now just a month away, the focus is on what the likely impact of a Brexit would be.  We have prepared an article summarising the impact a Brexit would have on the protection and enforcement of intellectual property rights in the UK.  This will be relevant for any holder of IP rights that cover the UK, wherever they are based in the world.  Click here to read the article.

For more information, please feel free to call Florian Traub or Andrew Clay.

Weekly Data Privacy Alert – 17 May 2016

Please click here to read the latest data privacy alert from the Squire Patton Boggs Data Protection & Cybersecurity team. This week’s alert covers news from:

EU

  • New Rules Give Europol More Power to Fight Cybercrime

France

  • The CNIL Prioritises Its Topics of Investigation

UK

  • Nuisance Callers Face Tighter Controls
  • Judicial Review into the Legality of UK Government’s “Thematic Warrants”

US

  • FTC and FCC Investigate the Mobile Device Industry’s Security Updates Protocols

For more information on any of these items, or data privacy issues generally, please feel free to call any of the following individuals:

EU: Indemnifying commercial agents – “new customers” can include existing customers, the CJEU rules

In a recent ruling, the Court of Justice of the European Union (CJEU) has interpreted the scope of the indemnity provisions in the Commercial Agents Directive.  The ruling will be of interest to businesses that appoint commercial agents as it extends the circumstances in which they may be required to indemnify the agent on termination of the agency relationship.

Background 

The Commercial Agents Directive is a piece of EU legislation dating back to 1986.  Its primary purpose is to protect commercial agents as being the perceived weaker party in the principal/agent relationship.  Amongst other things, the Directive requires, in certain circumstances, a principal to indemnify or compensate an agent on termination of the agency.  An indemnity is capped at one year’s commission and is often, therefore, the preferable alternative for a principal.  A compensation payment is uncapped and aims to compensate the agent for the loss of the value of the agency (the amount that a hypothetical purchaser would be willing to pay for the agency as at the date of termination).  Compensation is the default position unless the parties have expressly provided for payment of an indemnity in the agency agreement.  The parties cannot contract out of the agent’s entitlement to one of these payments. 

The issue

The issue before the CJEU was the interpretation of Article 17(2)(a) of the Commercial Agents Directive.  This provides (emphasis added):

2.(a)  The commercial agent shall be entitled to an indemnity if and to the extent that:

  • he has brought the principal new customers
  • or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers, and
  • the payment of this indemnity is equitable having regard to all the circumstances and, in particular, the commission lost by the commercial agent on the business transacted with such customers.

Facts

In this case, Ms Karaszkiewicz (Ms K) was a commercial agent of Marchon, the principal.  Marchon was a wholesaler of spectacle frames.  The key issue was that each agent of Marchon was appointed to sell only some of the spectacle frames within its range – not the entire range.  Ms K, for example, sold the brands A and B.  Another agent would sell two or three different brands within Marchon’s range.  And another agent, different brands again within the range.  Marchon gave Ms K a list of opticians with whom it already had business relationships with regard to other brands of frames and Ms K negotiated with those opticians the sale of the frames assigned to her.

On termination of the commercial agency, Ms K sought an indemnity from Marchon on the basis that she had brought in “new customers” within Article 17. The CJEU was asked to rule on whether “new customers” meant brand new customers that had never had a business relationship with the principal before or could include customers that already had a business relationship with the principal in respect of some of its goods where the agent had subsequently sold different goods to those customers from within the principal’s range.

The ruling

The CJEU held that the latter interpretation was the correct one.  This was in order to give effect to the objective of the Directive which was to protect commercial agents.  Although Ms K was negotiating with existing customers of Marchon, she had been required to establish with them a business relationship specific to the brands assigned to her.  It did not matter that it was, arguably, easier for an agent to sell goods to customers who already had a business relationship with the principal.  Even if that was the case, this could be taken into account by a court in its analysis of whether payment of an indemnity was “equitable” under Article 17.

Comment

This is a broad interpretation of the indemnity provisions of the Commercial Agents Directive and will extend the circumstances in which an agent will be entitled to be indemnified.  EU member states have implemented the Directive into their national law.  In relation to agents in the UK, Article 17(3)(a) of the Regulations implementing the Directive is identical to Article 17(2)(a) of the Directive and so will be interpreted by the UK courts in the same way, following CJEU precedent.  This may not be the case, of course, in other EU member states where their national implementing legislation differs from the Directive.  This could mean that agents with authority to negotiate the sale or purchase of services, or even distributors, may be entitled to an indemnity on termination of the contractual relationship.  Accordingly, local law should always be considered in respect of a termination in the EU.

To discuss the implications of this case for principals or agents, or commercial agency more generally, please feel free to call Carlton Daniel.

 

 

ITC Designates Newly-Instituted Section 337 Investigation For Fast-Track Hearing On Section 101 Issues

3d render of hitting judge hammer with added motion blurThe United States International Trade Commission (“ITC”) is an independent, quasi-judicial Federal agency with investigative responsibilities on matters of trade.  Among other things, the ITC adjudicates complaints filed by private parties involving imports that allegedly infringe intellectual property rights under the authority of Section 337 of the Tariff Act.  If imports are deemed to violate Section 337, an exclusion order will be issued to U.S. Customs and Border Protection, which will exclude those products from entry into the United States.

During these Section 337 investigations, the ITC may face the issue of whether claims asserted in a patent recite patent-eligible subject matter under 35 U.S.C. § 101.  In a significant development at the ITC on these Section 101 issues, the ITC has ordered an early hearing in Certain Portable Electronic Devices and Components Thereof, Inv. No. 337-TA-994, as to whether the asserted claims of the sole patent-in-suit recite patent-eligible subject matter.  According to the complaint, this case involves devices allegedly using the complainants’ patented methods for accessing “media tracks stored on the portable electronic device by navigating through a hierarchical categorization [such as artist name].”

This order is only the third Section 337 investigation designated under the ITC’s Pilot Program for early case disposition.  Both of the previously fast-tracked hearings involved non-patent issues.  The ITC’s fast-tracking of a Section 101 issue in Portable Electronic Devices may signal new uses for the Pilot Program.

Please read our full blog on The Trade Practitioner for more information.

 

 

Obama Signs Federal Trade Secrets Bill Into Law

Washington, DC at the White House

President Barack Obama signed the Defend Trade Secrets Act (DTSA) into law yesterday, May 11, 2016. As we previously reported, the Senate unanimously passed the bill on April 4, and the House overwhelmingly passed it on April 27. The President has long supported the legislation to bring greater harmonization to trade secrets enforcement, following an extended bipartisan effort to create a new federal system of trade secrets that commenced in 2012.

The DTSA creates a federal civil cause of action – and federal subject matter jurisdiction – for trade secret misappropriation for any act that “occurs on or after the date of the enactment” of the law and that affects interstate or foreign commerce. Plaintiffs now have the opportunity to obtain injunctive relief and monetary damages and, in appropriate matters, ex parte seizures of misappropriated trade secrets.

Meanwhile, the European Union’s Trade Secrets Directive was passed by the European Parliament on April 14, with final approval is expected this month. The Directive aims to standardize trade secrets protection across the European Union and must be implemented in Member States within the next two years.

Weekly Data Privacy Alert – 9 May 2016

Please click here to read the latest data privacy alert from the Squire Patton Boggs Data Protection & Cybersecurity team. This week’s alert covers news from:

EU

  • Publication of the New EU General Data Protection Regulation
  • EU Passenger Name Record Directive Adopted by the Council
  • Amendments to the Privacy and Electronic Communications Regulations

Germany

  • Higher Regional Court of Cologne: Internet Contact Forms Require Privacy Statement
  • Bundesrat Debates Right of Action for Data Protection Authorities for Implementing the Safe Harbor Decision

UK

  • Elizabeth Denham Appointed as the New Information Commissioner

For more information on any of these items, or data privacy issues generally, please feel free to call any of the following individuals:

Patent Claim for Rapid Display of Geospatial Data is Abstract, but Patent-Eligible under Alice Test

Mobile GPS navigation concept. Smartphone on map of the city,In order for subject-matter to be eligible for patent protection, the claimed invention must be directed to one of the four statutory categories under 35 U.S.C. 101:  process, machine, manufacture, or composition of matter.  When a patent claims an abstract concept, the claim is often struck down by courts as failing to meet this patent-eligibility test.  However, in ART+COM Innovationpool GmbH v. Google Inc., the Delaware District Court reached a different result when it denied Google’s motion that the claimed invention related to accessing geospatial data was not patent-eligible.  Although the Court decided that an abstract concept was present, it nonetheless found that an inventive concept was claimed. The Court’s opinion is noteworthy, as it raises questions about treatment of prior art under the Alice test for patent-eligibility and the differences between an inventive concept and patentability over prior art under 35 U.S.C. §§ 102, 103.

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UK: Repeal of Section 52 CDPA – the days of replica goods are numbered

The UK government has confirmed that section 52 of the Copyright Designs and Patents Act 1988 will be repealed with effect from 28 July 2016.  By this date, businesses that trade in replica goods in reliance on s52 will need to have depleted their stocks and adapted their business model.

Section 52

Section 52 provides that when a work protected by artistic copyright has been exploited industrially (by making and selling more than 50 copies) the copyright term is automatically reduced from the usual life of the author plus 70 years to just 25 years from the date of first marketing.  By way of example, an artist creates a painting.  As an artistic work, the painting is protected by copyright for the life of the artist plus 70 years.  However, if the artist decides to licence the painting to be reproduced on T shirts, 1000 of which are manufactured and sold in the UK, then the duration of protection for the original painting will be reduced to 25 years, running from the end of the year in which the T-shirts were first marketed.

The UK is one of only a handful of EU member states that reduces the term of protection for artistic works when they are exploited industrially.  Prompted by an influential ruling of the Court of Justice of the European Union, the UK government felt that s52 was incompatible with the EU Copyright Term Directive and decided to repeal it.  Accordingly, from 28 July 2016, all artistic works (whether industrially exploited or not) will have copyright protection for the life of the author plus 70 years.

Repeal

S52 will be repealed by section 74 of the Enterprise and Regulatory Reform Act 2013.  Section 74 will be brought into force by the Enterprise and Regulatory Reform Act 2013 (Commencement No. 10 and Saving Provisions) Order 2016.  The repeal will not have retrospective effect.  Instead, artistic works that have been industrially exploited and are still within the 25 year term, will revert to the usual life plus 70 years term on 28 July.  Artistic works whose 25 year term of copyright has expired will resume the remainder of the life plus 70 years term at the point at which the old 25 year term expired.  Government guidance gives the following example to illustrate this point:

W created an artistic work in 1980.  In the same year, W manufactured 51 copies and sold them.  W died in 2010.  Under s52, the work would be protected by copyright until 2005 (25 years from 1980).  Following repeal, the work will be protected until 2080 (life of the author, running from 2005 to 2010, plus 70 years). 

sofa

Impact

Authors of artistic works will benefit from the repeal of s52 in terms of a prolonged period of royalty payments.  However, any business that currently relies on s52 to copy industrially exploited artistic works when the 25 year term of copyright protection has expired will be adversely affected by the repeal.  This could be a business that manufactures and sells replica goods, such as furniture, ceramics, lighting products or jewellery, in the UK.  Following the repeal of s52, this will be copyright infringement.  These businesses will need to design their own original products or, if they wish to continue copying third party artistic works, seek a licence from the copyright owner or investigate if an exception to copyright applies that they can rely on.  In most cases, significant adaptation of their business model will be unavoidable.lmap

Publishers wanting to use industrially exploited photographs or other images in their publications will be similarly impacted.

Transitional arrangements

Following the repeal of s52 on 28 July 2016, new or existing replica products will be infringing copies.  Transitional arrangements have been agreed, therefore, to give anyone that has previously relied on s52 time to make adjustments to their business and, in particular, to deplete existing stock.  The transitional arrangements are as follows:

  • From 28 July 2016, you may not make, or import into the UK, new copies of artistic works unless they were contracted for before 4.30pm on 28 October 2015, in which case you may continue to do this until 27 January 2017 (inclusive);
  • From 28 January 2017, you must not deal with any copies of artistic works made in reliance on s52 (eg. sell them).  By this date, all copies must be depleted (sold or destroyed).
  • From 28 January 2017, copies of artistic works must not be communicated to the public by electronic transmission.  For example, images on websites must be removed.

This transitional period is significantly shorter than the five years originally agreed (and subsequently challenged as being excessively long).  Businesses that have not yet taken steps to ensure that their business model will fit within a post-repeal copyright regime need to do so now.

Further guidance is available here and here.

For more information on the impact of the repeal of s52, or copyright issues generally, please feel free to call Florian Traub.

EU General Data Protection Regulation’s Two Year Compliance Period Starts May 24, 2016

laptop-keyFollowing  four years of discussions, on May 4, 2016, the Official Journal of the European Union published the EU General Data Protection Regulation (“GDPR”). The GDPR, which will enter into force on May 24, 2016, will replace the data protection directive, Directive 95/46/EC, from 1995.  Companies will then have until May 25, 2018, when the GDPR takes effect, to take all the steps necessary to ensure compliance with the new 260-page data protection law, containing 99 Articles, and 173 Recitals.  While companies might believe the two year grace period is a long one, they should not postpone taking preparatory steps.  The scope of the changes is substantial and companies would be well-advised to start preparing for them now.

Please watch this space for additional information or more importantly, steps your organization may take to become compliant with the GDPR.

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