Tag Archives: Piracy

Criminal conviction for storage for commercial purposes of goods infringing copyright, even in storage facilities separate from the place of sale

Source: Pixabay

The judgment of the CJUE (Case C-572/17) of 19 December was issued within the context of a request for a preliminary ruling from the Swedish Supreme Court in criminal proceedings brought by the Public Prosecutor’s Office of this Court against Mr. Imran Syed concerning the infringement of trade marks and infringements of copyright in literary and artistic works. 

Mr Syed ran a retail shop in Stockholm (Sweden) in which he sold clothes and accessories with rock music motifs. In addition to offering the items for sale in that shop, Mr Syed stored such goods in a storage facility adjacent to the shop and in another storage facility located in Bandhagen, a suburb of Stockholm. It is established that Mr Syed’s shop was regularly restocked with merchandise from those storage facilities.

The issue arising was whether goods stored by someone in a warehouse and bearing a protected motif could be considered as being on sale whenever there are identical goods on sale in a retail establishment run by such person.

In this judgment the CJUE recalls that such an act can constitute an infringement of the exclusive distribution right (Article 4(1) of Directive 2001/29) even if that act is not followed by the transfer of ownership to a purchaser of the protected work or a copy thereof (expressly citing its judgment of 13 May 2015, Dimensione Direct Sales and Labianca, C‑516/13). Therefore, an act prior to the actual sale of a work or a copy thereof protected by copyright, which takes place without the rightholder’s consent and with the objective of making such a sale, may infringe the distribution right. Although carrying out the sale is not a necessary element for the purpose of establishing an infringement of the right of distribution, it must nonetheless be proven that the goods concerned are actually intended to be distributed to the public without the rightholder’s consent, inter alia by their being offered for sale in a Member State where the work at issue is protected.

The fact that a person, selling goods bearing copyrighted motifs in a shop without the rightholder’s authorisation, stores identical goods, may be an indication that the stored goods are also intended to be sold in that shop and that, accordingly, that storage may constitute an act prior to a sale being made, which is liable to infringe that rightholder’s distribution right.

Although the distance between the storage facility and the place of sale may constitute evidence that can be used in seeking to establish that the goods concerned are intended to be sold in that place of sale, that evidence cannot, on its own, be decisive. It may, on the other hand, be taken into account in a concrete analysis of all the factors likely to be relevant, such as, for example, the regular restocking of the shop with goods from the storage facilities at issue, accounting elements, the volume of sales and orders as compared with the volume of stored goods, or current contracts of sale.

The judgment finally rules that the storage by a retailer of goods bearing a motif protected by copyright on the territory of the Member State where the goods are stored may constitute an infringement of the exclusive distribution right when that retailer offers for sale, in a shop without the authorisation of the copyright holder, goods identical to those which he is storing, provided that the stored goods are actually intended for sale on the territory of the Member State in which that motif is protected. The distance between the place of storage and the place of sale cannot, on its own, be a decisive element in determining whether the stored goods are intended for sale in the territory of that Member State.

Once more, with this judgment the CJUE imposes order regarding the problem of copyright-infringing acts or means, prior to the sale of goods, that regrettably and painfully affect creators far too frequently.

  Author: Juan José Caselles

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Fashion Law: Counterfeiting in the fashion sector (VII)

ELZABURU has had the pleasure of working together with the publisher Thomson-Reuters Aranzadi on Fashion Law, a pioneering work in Spain on the subject of fashion law, which was presented on 16 April.

In these short weekly summaries, the professionals at ELZABURU who participated in the work offer us a brief outline of their contributions:

Counterfeiting in the fashion sector

For some years now we have been witness to the ongoing integration of national economies (Spain’s included) into a single global economy. The many opportunities this opens up to producers, companies, and consumers often go hand in hand with the market’s flexibility being turned to the advantage of international criminal gangs to place illicit goods in far-away destinations.

The broad extent of crimes against intellectual property in Spain is due, in no small part, to the mild penalties these activities have traditionally elicited and to a widespread lack of awareness both by society as a whole and even by judicial authorities.

Like other production and consumption sectors, the fashion industry too has not been spared the scourge of counterfeiting.

One fashion counterfeiting statistic of great concern is that in 2015, 46 % of all goods detained by Customs in the EU were fashion-related items, more specifically, athletic shoes, handbags, purses, watches, and clothing.

In 2016 Spanish police forces seized nearly 800,000 fashion-related articles in Spain, namely, footwear, jewellery, watches, leather goods, accessories, perfumery, cosmetics, and textile goods.

Online selling has opened up to the fashion industry both a new distribution channel and a way to attract consumers, but counterfeiters have put the anonymity offered by the web, the vast numbers of potential buyers, and the multinational nature of the Internet to good use in running their criminal businesses.

A quick Internet search on “fake bags” plus the name of any luxury brand returns hundreds of thousands of hits.

This attests to the vast tendrils of counterfeiting that have broadly infiltrated fashion e-commerce, certainly posing a challenge to law enforcement and to protecting the rights of brand-owners, who bear the actual brunt of the economic impact in the form of, for instance, reduced earnings, fewer jobs, and damage to brand image and reputation.

Still, it is not all bad news in this sector. A series of reforms to the law in Spain have ushered in significant changes in the definition of offences against intellectual property that will have a positive effect on the fight against counterfeiting.

The main example of recent changes to the law is the long-awaited scaling of penalties to the severity of the conduct carried out by infringers (importing, wholesaling, street vending, etc.), which opens up the possibility of dealing with offences against industrial property more fairly and more proportionately.

Author: Tránsito Ruiz 

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Blog entries in the series Fashion Law:

1.Trademark protection in the fashion sector (23.04.2018)

2.Design protection in the fashion sector (30.04.2018)

3.Patent protection in the fashion sector (07.05.2018)

4.Protection of fashion through copyright (21.05.2018)

5. Image rights in the fashion sector (28.05.2018)

6.Fashion Law. Data Fashion (04.06.2018)

7.Counterfeiting in the fashion sector (11.06.2018)

8.Exhaustion of rights in the fashion sector (18.06.2018)

9.Corporate reputation in the fashion sector (25.06.2018)

10. Protection of the commercial imagen of a fashion brand (04.07.2018)

11. Websites, Apps & Social Networks (13.07.2018)

12. Valuation of intangible assets (17.07.2018)

13. Licensing (06.09.2018)

OECD Alert to Governments in report entitled “Governance Frameworks to Counter Illicit Trade”

On March 1, 2018, the OECD published the report “Governance Frameworks to Counter Illicit Trade”.

In this report, the OECD has introduced a new phase in its efforts to help countries fight against piracy and to protect the market, consumers and businesses. The reasons for these increased efforts are, among others, inconsistent penalties, lack of control over small shipments and a lack of information and coordination across borders and in free trade areas.

This means that criminal networks traffic billions of dollars’ worth of fake goods each year. The OECD report shows that, on average, 2.5% of internationally trade goods are counterfeit, rising to almost 7% for IT and communications products.

The victims of these fraudulent practices are not just trademark or patent holders, but also consumers and governments themselves. In the words of Marcos Bonturi, Director of Public Governance at the OECD: “trade in fake and prohibited products can be dangerous for consumers and costly for companies and governments. This affects industries in all OECD countries and increasingly from emerging markets as well. Tackling policy gaps can start to increase the risks and lower rewards of illicit trade for criminals.”

The OECD study shows how criminal networks avoid detention and enforcement “thanks to” miscommunication and a lack of cross-border coordination.

The report also explores how the use of postal and courier services and online sales is increasing, making it easier to trade in illicit small shipments.

This is a major warning to Governments on the need to cooperate with one another in the fight against the international trade in counterfeit goods.

  Author: Juan J. Caselles and Alberto Gallo

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European Commission recommends new measures against illegal content online

The dissemination of illegal content online damages citizens’ confidence in the Internet and could pose security threats. Although progress has been made in Europe as regards citizens’ protection online, platforms need to double their efforts to remove illegal content from the Internet more swiftly and effectively. Voluntary measures taken by the sector, as encouraged by the Commission, have already paid off: the EU Internet Forum to eliminate terrorist content from the Internet; the Code of Conduct on countering illegal online hate speech; and the Memoranda of Understanding on the sale of counterfeit goods. Nevertheless, there is still room for more effective action.

Background:

In its Communication of September 2017 on tackling illegal content online, the European Commission promised to monitor progress and assess whether additional measures were needed in order to ensure the swift and proactive detection and removal of illegal content online, including possible legislative measures to complement the existing regulatory framework.

Development: The Commission Recommendation of 1 March 2018

Before determining whether it will be necessary to take legislative action, the Commission has just published its Recommendation of 1 March 2018 on measures  to effectively tackle illegal content online. It consists of a set of operational measures, accompanied by the necessary safeguards, to be taken by companies and Member States. The recommended measures apply to all forms of illegal content, i.e., terrorist content, incitement to hatred and violence, child sexual abuse material, counterfeit products and copyright infringement.

Basically, procedures have been reinforced in order to more effectively remove illegal content by means of the following operational measures:

  1. Clearer “notice and action” procedures. Companies must establish simple, transparent rules for reporting illegal content, including fast-track procedures for “trusted flaggers”. In order to prevent lawful content from accidentally being removed, content providers will be notified of removal decisions and will be able to challenge decisions.
  2. More effective tools and proactive technology. Companies will have to design clear notification systems for users. They will need to have proactive tools to detect and take down illegal content, particularly in the case of terrorist content and content that requires no assessment of the relevant context in order for it to be deemed illegal, such as child sexual abuse material or counterfeit goods.
  3. More solid safeguards to guarantee fundamental rights. In order to ensure that there are solid grounds for removing content, companies must put in place effective and appropriate safeguards, including a human review step, at all times respecting fundamental rights, freedom of expression and data protection laws.
  4. Paying special attention to small businesses. The sector must, by means of voluntary agreements, cooperate and share experiences, best practices and technological solutions, particularly regarding automated detection tools. This shared responsibility will be particularly beneficial to small platforms, which have fewer resources and less technical know-how.
  5. Closer cooperation with the authorities. Where there is evidence which points to a serious offence or suspicions that there is illegal content which poses a threat to human life or security, companies must immediately notify the Security Forces. The Member States are invited to establish the pertinent legal obligations.

Next Steps:

The Commission will follow up on the measures that are adopted in compliance with this Recommendation, determining whether supplementary measures, including legislative action, are required.

In close cooperation with the interested parties, the Commission will continue its analysis with the launch of a public consultation (feedback period ends on 30 March 2018). It will also ask the Member States and companies to provide the pertinent information on terrorist content (within a period of 3 months) and on other illegal content (within 6 months).

We will therefore have to be prepared to cooperate with the Commission in relation to illegal content in the field of copyright and industrial property.

Author: Juan J. Caselles

Visit our website: http://www.elzaburu.es/en

European counterfeit and piracy Watch-List

Time period commences for stakeholders to report infringing marketplaces to be included in future European Counterfeit and Piracy Watch-List

Based on a similar initiative in the US, where a list of infringing markets has been drawn up, the European Commission has just launched a consultation that it will use to draw up a list of its own, namely, the Counterfeit and Piracy Watch-List.

The creation of this Watch-List falls within the framework of the strategies and initiatives being implemented by the Commission in order to tackle the challenges that have arisen in the field of IPR protection in the EU.

In that regard, a recent study carried out by the European Union Intellectual Property Office (EUIPO) and the OECD shows that up to 5% of all annual imports into the EU are counterfeit or pirated products.

These fraudulent practices cause rightholders to suffer serious losses and pose a grave threat to investment, innovation and employment in European industry.

The European Commission has launched a new project aimed at identifying physical and, in particular, online marketplaces located outside the EU which engage in counterfeiting and piracy.

The list in question will act as a comprehensive database of the most problematic marketplaces, based on input provided by stakeholders. The Commission will thoroughly verify the information that is contributed in order to confirm that protected IPR have indeed been infringed. Contributors may remain anonymous if they so wish.

The purpose of the Watch-List will be three-fold:

  1. It will make consumers aware of the safety, health and environmental risks posed by acquiring fraudulent goods and services.
  2. The authorities and rightholders will be able to take the appropriate measures to reduce the availability of IPR infringing goods or services.
  3. The owners and operators of the marketplaces concerned will be urged to adopt business models that rely on the licensed distribution of legitimate content and products.

The European Commission has given stakeholders until 31 March 2018 to contribute to the identification of online or physical marketplaces that infringe IPR.

This presents us with a great opportunity to publicly reveal the ever increasing number of infringements that are being committed, particularly online.

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