Introduction
Technology has now gained a foothold in the world of trade mark law, as it has in many other areas. This article discusses the enhanced position of brand owners under the upcoming DSA, and the upcoming regulation of influencers on video-sharing platforms such as YouTube and TikTok. Lastly, it discusses a few noteworthy court decisions from the past year.
Increasing Online Brand Protection with the Upcoming Digital Services Act
Brand protection in online marketplaces
Most brand owners prosper from their use of large platforms, particularly online marketplaces such as Amazon, eBay, Alibaba, Zalando and (on a Dutch level) bol.com. These online marketplaces not only offer unmatched opportunities in displaying products, but nowadays also play an increasingly active role in packaging, storing, delivery and advertisement of the products. As such, they are moving away from their traditional role as neutral intermediaries.
Meanwhile, many challenges have arisen in the face of the growing prominence of online marketplaces – for example, infringing products. It requires an effective monitoring and enforcement strategy to properly address these challenges. In this light, the EU's legal landscape is on the verge of a major change through the new Digital Services Act (DSA); a final agreement on its precise contents is expected later in 2022.
The current situation
Currently, brand owners with registered trade marks who wish to take down infringing products from an online marketplace are reliant on the (outdated) E-Commerce Directive, adopted in 2000. It uses a safe harbour approach, exempting, in this instance, the online marketplace from liability in terms of unlawful content.
Under the E-Commerce Directive, internet service providers (ISPs) are exempted from liability as to the unlawful content on their platform if they comply with the conditions imposed on their respective involvement with the content (ie, mere conduit, caching or hosting). The online marketplaces will nearly always qualify as performing hosting activities with respect to the content.
As "host", the online marketplace is shielded from liability so long as it does not have "actual knowledge" of the infringing products, and acts expeditiously to remove or disable access to information of such products when it obtains actual knowledge – so-called "notice and take down" (Article 14). The online marketplace, however, has no general obligation to monitor its platform for infringing products or otherwise unlawful content, or to actively seek facts or circumstances indicating illegal activity (Article 15).
Conversely, the "Good Samaritan" online marketplace, that undertakes good faith efforts to remove illegal content in a proactive manner but fails to do so, is not protected from liability under the E-Commerce Directive.
Whereas online marketplaces are currently rewarded for acting passively, brand owners are left to fend for themselves and perform the impossible task of searching all online marketplaces for infringing products and notifying the marketplaces to activate (often opaque) takedown procedures in order to protect their trade marks.
Explanation of the DSA: what will change
The DSA sets out to (i) address the passive and indulgent safe harbour approach, and (ii) increase the transparency of the takedown procedures.
Although the liability exemption will survive the enactment of the DSA, evidence alluding to a more active role for online marketplaces is the proposed "Good Samaritan clause" (Article 6 DSA). This clause states that online marketplaces that carry out “voluntary own-initiative investigations” will not lose their exemption from liability in doing so.
However, these investigations may not result in an active role of such a kind that the online marketplace would acquire knowledge of, or control over, the content it hosts. If that does happen, the online marketplace will lose its exemption from liability. Consequently, online marketplace owners will be more encouraged to proactively help brand owners in tracking down infringers.
Furthermore, the DSA aims to increase the transparency of takedown procedures – for example, through:
Trusted flaggers shall be certified by Digital Service Coordinators from the EU member states. In case of IP rights, IP rights holder associations or industry organisations could be certified as such (recital 46). Accordingly, brand owners could unify in order to collectively ensure speedy takedown procedures.
Conversely, to accommodate the affected sellers whose products have been removed (unjustly), the DSA:
Upon emerging victorious, the seller must be compensated by the online marketplace, while the seller has no such obligation. Thus, brand owners on the other side of the fence (ie, those accused of infringing another’s trade mark) will also have their fair share of redress options.
Similarly to the General Data Protection Regulation (GDPR), the DSA is expected to apply to online marketplaces also operating out of the EU, so long as they have a substantial connection with the EU.
Summary
Brand owners are increasingly dependent on online marketplaces: not only do they use the marketplaces to showcase their products, but the marketplaces are also becoming more involved in the selling process. With the marketplaces shifting from a neutral to an active role, the EU legislators have identified the gaps in the outmoded E-Commerce Directive. The DSA proposal is set up to address the issues in the current legislation, which indulges the online marketplace to act passively regarding unlawful content on its platform. Simultaneously, it recognises the position of the affected seller whose products may have (unjustly) been removed from the platform. Finally, the DSA is expected – in some instances – to apply even across the EU borders.
Status of the DSA: when will it be enforced?
On 25 November 2021, it was announced that the Council of the European Union reached an agreement on the proposed draft of the DSA. Next, the European Parliament will discuss the contents of this draft. They aim to reach a final agreement in 2022, after which the DSA can quickly enter into force everywhere in the EU.
Advertisement by Influencers
Today, virtually anyone with purported expert-level knowledge and/or social influence in their field, can be seen as an online influencer. This is due to the incredible ascent of social media platforms such as Instagram, YouTube and Snapchat. The possibilities for an individual to share their vision, ideas and other messages with their followers are almost endless.
Influencer messages can have a significant impact on a broad audience. This was demonstrated in the Netherlands by the record-breaking broadcast of the BOOS documentary This is the Voice, which revealed various scandals taking place during the production of a talent show called The Voice of Holland. It is safe to say that This is the Voice was the leading topic of water-cooler conversation that week, with a viewership of approximately 9.6 million out of a total Dutch population of 17.1 million.
However, it can be challenging for viewers/followers to distinguish genuine messages by influencers from those of a commercial nature (eg, advertisement of products). Given their large audience, influencers can be very effective not only in creating online engagement for brand owners, but also in manipulating the transactional behaviour of the audience.
Consequently, the emergence of influencers has created regulatory challenges. In 2018, the revised European Audiovisual Media Services Directive 2018 (AVMS Directive 2018) entered into force with the purpose of addressing these challenges. What follows is a wide array of national implementations by the member states. This article seeks to discern the changed position of influencers.
The AVMS Directive
Originally, the Audiovisual Media Services Directive 2010 (AVMS Directive 2010) focused on more "traditional" TV broadcasts and video-on-demand (VOD) services (eg, Netflix and Amazon Prime). The focus of the AVMS Directive 2018 has expanded to video-sharing platforms (VSPs) (eg, YouTube and TikTok) and influencers under the old VOD definition.
Consequently, influencers may be subject to top-down regulation (ie, by governmental authorities) and through self-regulating codes of conduct and terms of use imposed on them by the VSPs. Such self-regulating codes often cover the use of trade marks in commercials and in sponsoring, including in-programme sponsoring. In this respect, influencers in the Netherlands are already bound by two self-regulating instruments, namely the Dutch Advertising Code (de Nederlandse Reclame Code) and the Advertising Code Social Media & Influencer Marketing (Reclamecode Social Media & Influencer Marketing, or RSM). Both codes provide rules on the message expressed through the advertisements, such as prohibition on misleading advertisement and the requirements on recognisability of a commercial message. Albeit, the Advertising Code Commission (de Reclame Commissie), which monitors compliance with both codes, cannot impose enforcement measures.
As a consequence, VSPs are required to uphold significantly higher standards of transparency towards their users, the effects of which may trickle down on influencers. Collectively, the directives set forth a minimum set of common rules covering certain aspects, such as advertising, the protection of minors and transparency.
Influencers as VOD
Nevertheless, the broad and ambiguous definition of a VOD gives rise to the question of whether every influencer could qualify as a VOD. The AVMS Directive 2018 left it up to the national regulators to flesh out the particular conditions under which an influencer’s channel qualifies as a VOD and the subsequent obligations attached to that classification. The Dutch Media Authority (Commissariaat voor de Media) is likely the first within the EU to provide guidance in its Concept Policy Rule on the Classification of VODs 2021 (Beleidsregel classificatie cmoa 2021).
Upcoming implementation in the Netherlands
Thus far, the Dutch Media Authority has developed three cumulative criteria to qualify as the creator of content on the influencer’s channel:
However, it remains at the discretion of the Dutch Media Authority to disqualify the influencer as a content creator in cases where it is abundantly clear that the person in question should not be seen as a such – for example, where it pertains to a hobby influencer.
A content creator must adhere to the obligations imposed on a VOD (eg, transparency in regard to advertisement) under the AVMS Directives 2010 and 2018, as implemented by the Dutch Media Act (Mediawet 2008). A failure to comply with such obligations could result in fines of up to EUR225,000 from the Dutch Media Authority.
Summary
Where the influence of social media platforms is impactful, the same can be said for their users. The messages of influencers often have a significant impact on their followers, and this influence can be hazardous where it pertains to opaque commercial messages. Brand owners need to be prepared for that fact that the use of their trade marks by influencers on social media will be regulated.
Other Trends and Developments
Lipstick can be registered as a 3D trade mark
Court of Justice of the European Union, 14 July 2021; ECLI:EU:T:2021:443 (Guerlain v EUIPO).
Guerlain, the French perfume, cosmetics and skincare house, had submitted an application for a three-dimensional EU trade mark for its lipstick product. However, the European Union Intellectual Property Office (EUIPO), and subsequently its Board of Appeal, held that the mark was devoid of distinctive character, being too close to the common shape of lipsticks.
Guerlain disagreed and argued, in its appeal before the Court of Justice of the European Union (General Court), that the product is visually substantially different from typical lipsticks shapes, having a unique (raised and embossed oval) shape, including a hinge to reveal a mirror.
The General Court ruled on the distinctive character of this lipstick. The assessment of the distinctive character of a 3D trade mark does not differ from other kinds of marks. The General Court compared Guerlain’s lipstick against the common round lipstick shape and parallel pipe-shaped lipsticks. The General Court held that the shape of Guerlain’s lipstick is uncommon and different from any other lipstick existing on the market. Therefore, it ruled that the relevant consumer would be able to distinguish Guerlain’s lipstick as it departs from the norms and customs of the sector.
In sum, the General Court rules in favour of Guerlain and thus the application was allowed. This ruling is encouraging to those who wish to apply for a 3D trade mark, which is typically difficult to obtain.
Dutch snack bar, Wendy’s, prevails in legal battle against its American fast food namesake
Court of Appeal 's-Hertogenbosch, 2 November 2021; ECLI:NL:GHSHE:2021:3295 (Quality is our Recipe v Wendy’s).
Among the American fast food chains that were able to cross the Atlantic Ocean, Wendy’s have been notably absent from the European landscape. Despite the US franchise’s adamant attempts, it continues to fail in its attempts to set foot ashore in Europe. The reason for this is the Dutch snack bar "Wendy’s Fish & Chips" in the city of Goes.
In 1995, Wendy’s Fish & Chips registered its name as a trade mark for the Benelux area, which consists of the Netherlands, Belgium and Luxembourg. However, with the formation of the European Union, the rights to use this trade mark were expanded to cover all of the EU’s member states. Saliently, the Dutch eating establishment has no intention of expanding its business in other Benelux countries, let alone other EU member states.
This has led to some dismay from the American Wendy’s, that is therefore impeded from establishing itself in the EU member states. Since 2000, the American Wendy’s has undertaken numerous attempts to have its Dutch namesake’s trade mark cancelled. The American Wendy’s argues that the snack bar’s use of this Benelux trade mark is geographically limited, and therefore it does not meet the trade mark law’s requirement of genuine use.
On 3 November 2021, the Court of Appeal (het gerechtshof) ‘s-Hertogenbosch ruled on the question of whether the Dutch Wendy’s use of the trade mark complies with the requirement of use “in a genuine way”? In its ruling, the Court of Appeal confirmed the District Court (de rechtbank) Zeeland-West-Brabant’s judgment that the snack bar uses the trade mark in a genuine way. The Court held that, in order to attain genuine use, it is not necessary for the snack bar to have multiple establishments or promote its business throughout the Benelux countries or the EU. Conversely to the District Court, the Court of Appeal found that the snack bar’s trade mark rights did not extend to other products (eg, t-shirts, tickets and paper bags) in the market which is characterised by the presence of the American Wendy’s.
Moreover, in the latest episode of this feud, it appears that the story of David and Goliath has transformed into that of Icarus flying too close to the sun. The Dutch eating establishment sued the American Wendy’s for trade mark infringement, because of their companies being incorporated under Dutch law with the same name. However, this time, the District Court of Amsterdam ruled in favour of the American Wendy’s, holding that the activities of the companies in question were insufficiently related to the Dutch eatery to establish a likelihood of confusion. As such, it rejected the claim of EUR6.5 million as penalty payment for trade mark infringement.
AC Milan’s logo is likely to be confused with prior registered "MILAN" for stationery and office supplies
Court of Justice of the European Union, 10 November 2021; ECLI:EU:T:2021:773 (ACM 1899 AC MILAN).
AC Milan, the Italian football club, applied for an international registration for the sign representing the crest of the football club designating the European Union for stationery and office supplies. InterES Handels und Dienstleistungs Gesellschaft mbH & Co KG (InterES), holding the EU trade mark "MILAN" for stationery and office supplies, opposed the EU designation. InterES asserted that AC Milan’s mark would confuse the public.
The General Court now confirms there is a likelihood of confusion between the AC Milan’s sign and InterES’ MILAN in terms of stationery and office supplies. It finds that the earlier MILAN has been put to genuine use in Germany and that there is a high degree of aural similarity between the conflicting signs. Remarkable in this case is the fact that, in the General Court’s view, the attention of the public will not be focused on the additional figurative element of the AC Milan logo. Moreover, it holds that only the reputation of the earlier mark, and not that of the mark applied for, must be considered. The General Court upholds the opposition by InterES, which means that the international registration for the AC Milan logo is precluded from designation within the EU for stationery and office supplies.
Sony’s figurative trade mark "GT Racing" does not clearly consist of the letters "G" and "T"
Court of Justice of the European Union, 1 September 2021; ECLI:EU:T:2021:530 (Sony v EUIPO).
Mr Wai Leong Wong had applied to register "GT RACING" as an EU trade mark for leather and imitations of leather and for goods made of these materials. Sony Interactive Entertainment (Sony) filed an opposition against this application, based on its figurative EU trade marks and non-EU trade marks, predominantly regarding computer and video games and other electronic goods.
Chiefly, Sony claimed that the earlier trade marks had a reputation in the EU. The Opposition Division rejected the entirety of the opposition, and the appeal was dismissed by the Board of Appeal – in particular, since the earlier trade mark was figurative and devoid of any meaning to the relevant public with regard to the goods and services addressed in Mr Wong’s application. Furthermore, the signs were visually different, and could not be compared either auditorily or conceptually.
Sony then filed a further appeal to the General Court, claiming that the relevant public would recognise the figurative elements of the mark as representing the letters G and T.
The General Court confirmed the earlier ruling, adding that the relevant consumers would have to make “significant efforts” to identify the letters as G and T. In addition, it finds that the goods covered by the earlier trade mark are different from those addressed by the new application.
Ultimately, this judgment challenges brand owners to balance the mark’s distinctiveness and recognisability by the public.
The letters "Ø” and "ϕ” would be too similar in the eyes of the French consumer
Court of Justice of the European Union, 14 July 2021; ECLI:EU:T:2021:442 (Cole Haan v Samsøe & Samsøe).
On 1 November 2017, Cole Haan LLC filed an application for an EU trade mark for the following sign: "Ø". Samsøe & Samsøe Holding A/S filed an opposition, because of a 2013 registered trade mark ‘ϕ’ for the same type of products (ie, suitcases, bags and clothing). The letter ‘Ø’ is part of the alphabet used in the Danish language, whereas the letter ‘ϕ’ comes from the Cyrillic alphabet. The EUIPO upheld the opposition in its entirety. This decision was appealed against by Cole Haan LLC to the General Court.
The General Court ruled on whether there is a likelihood of confusion on the part of the "relevant public", which was here defined as French-speaking EU consumers, who – typically – do not speak/read Danish, Bulgarian or Greek (the last two countries using alphabets which include "ϕ"). Even though Cole Haan LLC claimed that customers would still recognise the applied-for mark as a letter of the alphabet in the “Scandinavian languages”, the General Court held that based on the visual comparison the signs are highly similar and for the same type of products.
The lesson of this ruling to brand owners is to pay special attention to the spoken languages of the relevant public.
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