Quarterly International Ip Law Update

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Quarterly International IP Law Update

David Tseng

Dorsey & Whitney LLP

Mariana Noli

Noli IP Solutions PC

LATIN AMERICA

Colombia: First Criminal Sentence for Copyright Infringement

In May 2018, businessman Jairo Ramon Jurado Mesa became the first person to be criminally convicted in Colombia for defrauding copyrights and related rights. The Criminal Court for the Circuit of Zipaquirá sentenced Mr. Jurado Mesa to 48 months in prison and was fined close to twenty million Colombian pesos, which was approximately seven thousand U.S. dollars.

Back in February 2013, Mr. Jurado Mesa organized a concert called "Vive el Festival de Barranquilla" in Chia, Cundinamarca, where the group El Gran Combo de Puerto Rico covered 12 songs protected by copyright in Colombia.

The Society of Authors and Composers (SAYCO), an organization responsible for collecting royalties in Colombia, argued that they should have received the sum of twenty-three million pesos (approximately eight thousand U.S. dollars) for the use of the 12 works. SAYCO represents approximately 98% of the musical works that are performed in the country, as well as the one responsible for carrying out the collection on behalf of more than 110 sister societies around the world. Specifically, SAYCO has agreements in place with other collective management societies, such as ASCAP (USA), SGAE (SPAIN), BMI (USA), and SBACEM (BRAZIL).

Both Dr. Ricardo Gomez Duran, Legal Director of SAYCO, and Mr. Cesar Ahumada, manager of SAYCO, expressed their satisfaction with the ruling and indicated that the conviction of Mr. Jurado Mesa "set an important precedent" in Colombia. The criminal sentence should serve as a strong encouragement for business executives and organizers of concerts to seek permission from royalty organizations before using protected works, as well as confirm whether specific jurisdictions allow for the criminal enforcement of intellectual property violations.

Argentina: Winds of Change, New Rules for Patents, Trademarks and Designs (2018 Law)

In an effort to harmonize its patent regime with the rest of the world, on January 10, 2018, Decree 27/2018 (hereinafter the "Decree") went into effect amending certain articles ofthe current Argentine Law of Trademarks and Designations (Law No. 22,362), the Law of Patents and Utility Models (Law No. 24,481), and Decree-Law No. 6673/1963.

A review of the recitals of the "Decree" expressed the need to implement an administrative procedure, prior to the judicial involvement, for opposing trademarks in order to increase efficiency. In regards to Utility Models and Designs, the proposed amendments allow users to make multiple applications for registration per file, adopt new technologies in the manner of submitting drawings, and request the postponement of publications. Below is a summary of the most relevant changes:

Trademarks

  • The term by which third-party oppositions have to be settled is reduced to only three (3) months. If there is no settlement within this term, the patent office of Argentina (Instituto Nacional de Propiedad Industrial, or INPI) will decide on the opposition and such decision may be appealed before the Federal Civil and Commercial Court of Appeals;
  • The INPI is now responsible for issuing decisions in trademark cancellation proceedings (both nullity as well as non-use cancellation actions), decisions may be appealed before the Federal Civil and Commercial Court of Appeals;
  • The Decree makes significant changes regarding the use requirements for renewal and cancellations, authorizing the INPI to partially cancel a registration in relation to the products/services for which the trademark has not been used, and it establishes that Trademark owners will need to file a sworn statement of use on the fifth year (and before the expiration of the sixth) informing the products/services in relation to which the trademark has been used.

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Patents

  • There is no longer a need to file the priority document and its translation, as well as Power of Attorney, unless these documents are requested by the INPI and/or the Examiner during the examination stage;
  • The deadline for payment for the substantive examination fee has been reduced from three years to eighteen months.

Industrial Designs

  • The registration procedure has been simplified. It is now possible to file multiple applications in only one filing as well as the filing of divisional applications.
  • The term for renewal of the registration is now six months prior to its expiration, but renewals may be filed six months after the expiration date, subject to the payment of an official fee.
  • The INPI now accepts photographs or digital reproductions to be filed with the application as long as these documents sufficiently identify the object seeking protection.

EUROPE

United Kingdom: UK Supreme Court Holds That ISPs Are Not Responsible for the Costs of Enforcing Website-Blocking Orders

To combat against the sale of counterfeit goods, luxury goods maker Cartier filed suit to enjoin internet service providers (ISPs) based in the UK from allowing access to certain websites selling counterfeit watches and jewelry based on trademark infringement. Back in 2014, Cartier was successful in securing an order to block the counterfeit websites. However, to the dismay of the ISPs, the UK High Court had also required the ISPs to reimburse Cartier for the costs generated in enforcing the order. This led the ISPs to file a series of appeals on this issue of the costs of enforcement.

On June 13, 2018, the UK Supreme Court sided with the ISPs1 and held that the relevant EU directives in this area are silent on the issue of who should bear the costs of enforcing a blocking order: E-Commerce Directive; the Information Society Directive; and the Enforcement Directive. As a result, the UK Supreme Court applied the default principle that innocent intermediaries are entitled to indemnification from the rights holder for the costs of complying with a blocking order.

The UK Supreme Court characterized the ISPs as "mere conduits" and rejected the argument that ISPs should be responsible for the cost based on the fact that the increased traffic and content may be of benefit to the ISPs. The UK Supreme Court acknowledged that there might be situations where ISPs are more than mere conduits and where EU directives would apply. Under this decision, Cartier would be responsible for reasonable costs relating to the implementation of the blocking. This decision appears to stand apart from other ISP website-blocking cases originating out of Europe, and it will be of interest to see whether the legacy of this case will be an outlier or the beginning of a shift of perspective to other jurisdictions.

ASIA

India: Single-Color Trademarks Are Not Protectable

On May 25, 2018, the Delhi High Court issued an opinion in Christian Louboutin SAS v. Abubaker, holding that a single color is not entitled to trademark protection. Louboutin has been the registered owners of the marks related to the red soles of Louboutin shoes in India. Abubaker, along with other shoe retailers, sold shoes that included red soles. In response, Louboutin filed suit seeking to enjoin the retailers on the grounds relating to trademark infringement.

On the issue of whether a single color can be trademarked, the Delhi High Court interpreted the word "mark" to mean a "combination of colors" in adherence to the intent of the legislature. The High Court rejected Louboutin’s reliance on the U.S. Qualitex case, where single colors could be trademarked as long as it served no functional purpose, noting that foreign judgments have no application in regards to the High Court’s interpretation of India’s trademark laws.

Paired with a recent decision from the European Union in February 2018 where marks directed to the red soles were held to be unprotectable because shapes typically cannot be trademarked, Louboutin has suffered a series of setbacks in its efforts to protect a signature element from its high-fashion offerings. This should serve as a cautionary tale for trademark holders involved in international commerce to carefully consider the differences between how each market views the contours of trademark protection.

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China: Huawei v. Samsung – FRAND Litigation in China

In March 2018, the Shenzhen Intermediate court issued a judgment in a dispute relating to standards-essential patents (SEPs) relating to telecommunication standards between Huawei and Samsung.

Generally, the court found that Samsung failed to comply with its obligations to negotiate and offer FRAND terms by engaging in dilatory tactics over a 6-year negotiation period beginning in 2012, such as refusal to engage in technical discussions or tardiness in responding to licensing terms. Further, Samsung had insisted on the bundling of non-SEPs in the same license at the outset of the negotiations which had a direct impact on the speed of the negotiations. Samsung also refused a proposal to arbitrate the dispute and failed to meaningfully cooperate in mediation.

Regarding the calculation of FRAND terms, the court compared the strength of the parties’ patent portfolios. The court compared the number of technical proposals each party had accepted by the standards working group, the number of SEPs owned by each party, the number of SEPs that were found to be invalid in patent litigation between the same parties.

Overall, the court found that the parties’ SEP portfolio were of relatively equal strength, though Huawei’s Chinese SEP portfolio was stronger than Samsung’s. Based on this finding, the court found Samsung’s offer to license to be inconsistent with FRAND because it was three times more than the Huawei’s even though the portfolios were of similar strength. As a result, the court granted an injunction against Samsung’s Chinese affiliates but allowed the parties to continue negotiations to avoid the enforcement of the injunction. Of interest is the court’s decision not to impose a FRAND on both parties, but rather use the threat of an injunction to encourage the parties to resolve the licensing terms amongst themselves. This is atypical of how FRAND litigations are resolved in the United States, and it will be interesting to see if U.S. FRAND litigations follow similar paths in the future.

The views expressed in this article are personal to the author and do not necessarily represent or reflect the views of the authors’ firms, the Executive Committee of the Intellectual Property Law Section, the California Lawyers Association, or any colleagues, organization, or client.

© 2018 David Tseng & Mariana Noli.

David Tseng is an Associate with Dorsey & Whitney LLP. His practice focuses on IP litigation as well as counseling companies on IP issues. Mariana Noli is the owner of Noli IP Solutions PC.

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Notes:

1. See https://www.supremecourt.uk/cases/uksc-2016-0159.html.

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