ELZABURU Blog - Industrial and Intellectual Property

Author Archives: Elzaburu

New CJEU judgment on the distinctive character of the Kit Kat shape

The long-running conflict between Nestlé and Cadbury (now Mondelez) with regard to registration of the Kit Kat shape mark as characteristic for chocolates is still bringing us interesting rulings by the courts on the question of the acquisition of distinctive character by trade marks through use.

   

Recapitulating, first came the refusal of the trade mark in the United Kingdom, which resulted in a referral for a preliminary ruling, addressed by the Court of Justice of the European Union in its judgment of 16 September 2015 (Case C-215/14). Counter to what many had expected, that decision did not move the British High Court of Justice to find in favour of registering Nestlé’s trade mark. Quite the opposite, in his judgment of 20 January 2016 Mr. Justice Arnold’s interpretation was that the CJEU had held that the association between the image of the confection and the Kit Kat chocolate bar by a large majority of people surveyed did not suffice to consider that the shape had acquired distinctiveness as a trade mark. In his opinion, it would have been necessary to show that consumers perceived the product as having a given undertaking as its business origin on the basis of the sign in question alone, without considering any other marks that may also be present. As a result, the refusal of the British trade mark was ultimately upheld.

On the other hand, Nestlé had succeeded in registering the shape of the Kit Kat chocolate bar as a three-dimensional European Union trade mark in 2006. The following year Cadbury filed a request asking the EUIPO to invalidate the registration on grounds that the sign was devoid of distinctive character. The EUIPO’s Board of Appeal held that even though the sign was initially devoid of distinctiveness, Nestlé had proven that it had acquired distinctive character through use. That decision was set aside by the General Court by its judgment of 15 December 2016 on grounds that the findings of the Board of Appeal did not address the acquisition of distinctiveness by the mark in part of the European Union (specifically, in Belgium, Ireland, Greece, and Portugal).

In essence, the issue in dispute was the geographical extent of the evidence of acquisition of distinctive character through use. While Nestlé and the EUIPO maintained that it sufficed to show that the mark had acquired distinctiveness in a significant portion of the European Union, the General Court ruled that this had to be shown in the entire territory of the EU, not just in a substantial part or in the greater part of that territory.

On appeal, by its judgment of 25 July 2018 (Joined Cases C-84/17 P, C-85/17 P, and C-95/17 P), the Court of Justice upheld the General Court’s decision. The CJEU found that Article 7.3 European Union Trade Mark Regulation requires proving distinctiveness in the European Union to have been acquired wherever the sign was not distinctive ab initioWhere this is the case throughout the European Union, the proof needs to encompass the territory of the EU as a whole; evidence dealing with a substantial part of the EU does not suffice.

The Court has clarified, though, that the evidence does not have to consist of separate evidence for each individual EU Member State but that evidence may instead be produced globally for various Member States combined. However, the evidence, whether individual or global, must cover the entire territory of the European Union. In consequence, the Board of Appeal’s decision was vitiated by an error in law in failing to adjudicate on the acquisition of distinctive character by Nestlé’s trade mark in Belgium, Ireland, Greece, and Portugal.

The Court of Justice has set a very high bar for evidence. It should be noted that both the EUIPO and the General Court had deemed Nestlé to have proven acquisition of distinctive character in 10 EU Member States, including the largest ones (Germany, Spain, France, Italy, and the United Kingdom). It would thus seem that owners who, in the event of a challenge, wish to rely on the acquisition of distinctive character through use to defend the validity of their European Union trade marks had best be prepared to embark on a laborious and costly process of compiling evidence.

Author: Carlos Morán 

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

S.O.S. Security incident

Since 25 May, we receive news and notifications every day of security breaches at top-level companies resulting in the mass exposure of customer data.

The reality, as unlikely as it may seem, is that the number of security breaches has not increased since the application date of the Data Protection Regulation (GDPR) of 27 April 2016. It is in fact the case that, up to now, there has been no obligation under our legislation to report security violations except in the case of providers of publicly available electronic communications services, while the GDPR now extends this obligation to any company processing data.

A security incident is the destruction, loss or alteration of personal data due to internal or external causes, which may be accidental or intentional. With regard to such an eventuality, the most important things for any company to bear in mind should be to (i) define a procedure for management of security breaches; (ii) have the tools available to assess the risk of such an incident occurring; and (iii) know whether it should be reported to the supervisory authorities and to data subjects depending on the characteristics of the incident and the risk for data subjects.

Notification to the supervisory authority, as established under the GDPR, is required whenever the incident may result in a risk to data subjects and the notification must be made within 72 hours of becoming aware (having actual evidence) of the incident. It is also required to notify the data subjects affected whenever such an incident could result in a high risk for them and provided that said notification does not compromise the outcome of a pending investigation, in which case the communication may be made at a later stage, all under the control of the supervisory authority.

Additionally, it is crucial to respond quickly in an effort to mitigate the consequences of the incident, by adopting security measures that prevent access to data or amendment or reading of the same.

The only effective formula for avoiding this deluge of legal obligations is prevention. All possible measures must be taken to avoid security breaches, prevent unauthorised reading and amendment of data, and establish a procedure for responding to incidents of this kind.

The European Data Protection Board, formerly the Article 29 Working Party, prepared a guide on notification of security breaches which deals with many of the issues that had given rise to doubts. Moreover, on 19 June 2018 the Spanish Data Protection Agency published a guide for management and notification of security breaches with directives for detection and management of security breaches and evaluating notification of the same.

Author: Martín Bello y Cristina Espín

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

Somalia. How to protect your trademarks in Africa’s most failed state

In recent years, some clients have expressed an interest in registering their trademarks in Somalia. The unrest and extreme difficulties in this country in the Horn of Africa, and the permanent closure of its Trademark Office almost three decades ago, have made this impossible.

However, although there is no law governing trademarks, trademark owners can adopt precautionary measures against unauthorized use of their trademarks by third parties, by publishing Cautionary Notices in one of the country’s major newspapers. Trademark owners are thus able to notify and warn third parties of their ownership of the marks and establish some evidence of their rights.

While not many companies or clients are interested in seeking protection in Somalia, some companies have begun making preparations by publishing Cautionary Notices.

 

Author: Cristina Arroyo 

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

Fashion Law. Valuation of intangible assets (XII)

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:

Valuation of intangible assets

As time goes on, intellectual assets are accounting for an ever greater share of the value of fashion companies, and the most valuable companies worldwide are those holding trade marks, patents, or designs valued in the many millions.

Valuation of intangible assets in the fashion sector poses a challenge because of the incorporeal nature of these assets, since they consist of a number of features that are hard to evaluate using traditional methods of appraising property, better suited to tangible assets.

Knowing how to value a company’s intangible assets is as important as knowing how to value a company’s tangible assets, since the former may contribute very significantly to a company’s value.

Valuations of this kind may be needed for many different reasons: accounting of a company’s intangible assets for legal and tax purposes, contributing assets to a company, licensing the assets, compensation in contentious proceedings, use of assets as a security interest, and other operations.

Valuation of intangible assets can also be relevant in the context of corporate due diligence or audits. Valuation approaches ordinarily involve the following steps: identifying the intangible assets to be appraised, ascertaining what rights are held in them, verifying their status and checking to see whether they are subject to any third-party rights, and, finally, performing the actual valuation of the intangible assets themselves.

Professionals practicing in different fields should take part in the valuation with a view to producing an estimate as close as possible to the true value in light of existing circumstances.

There are two main approaches, both of which need to be taken into account when appraising intangible assets: the quantitative approach (numerical and economic data) and the qualitative approach (quality and external factors).

The reason for performing the valuation must be clearly established before valuation is undertaken in order to be able to select the approach or approaches to be used. Basically, the main approaches are:

  • Cost approach: the cost needed to create or replace the asset.
  • Income approach: the present value of the profits anticipated over the lifetime of the right.
  • Market approach: the price other buyers have paid for similar rights in the marketplace.

Where different types of intangible assets are to be appraised, these approaches may be differently suited to each type, and sometimes one or another may be more advisable depending on the circumstances in each case.

Author: Cristina Espín

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

 

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)

Fashion Law. Fashion 4.0: Websites, Apps & Social Networks (XI)

ELZABURU has had the pleasure of working together with the publisher Thomson-ReutersAranzadi 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:

Fashion 4.0. Websites, Apps & Social Networks: protection and Defence

The digital age has had a profound effect the world of fashion, transforming the way it designs, sells or communicates. No one can now operate solely through traditional channels and must reach out to consumers via online media.

Therefore, it is crucial to limit the risks and protect the intangible assets of the business.

In this regard, holding the exclusive rights to a domain identifying the business is extremely important, particularly with a view to preventing its use by third parties. To obtain exclusive rights, the domain must be registered before the corresponding body, depending on the domain of interest, which may be national (.es, .us, .uk, etc.) or generic (.com, .net, .biz, etc.).

The content, appearance and layout of a website can also be protected. Any original content included on the website (images, text, videos, illustrations, etc.) are protected by the Copyright Act. This protection also extends to the content uploaded to social networks, as it is considered equivalent to that included on corporate websites. Similarly, websites from which data and information are extracted or compiled can be protected as databases, either as a work or as a sui generis database right, provided that the investment made by the owner is duly accredited, the latter form being the more usual.

All this must be supported by a contractual protection strategy, with website use policies being an ideal tool to restrict the reuse of the intangible assets of the business.

The protection of mobile apps has a similar structure to that of websites with regard to their content, the main difference being that an app may additionally be protected as a computer programme or software, in accordance with the provisions of the Copyright Act.

Finally, it is important not to overlook the registration of those trademarks used to identify the business on online platforms.

The reality is that this digital revolution is constantly evolving, posing new challenges and strategies focussed on improving the customer’s experience, in adapting physical shops to new technologies, experimenting with chatbots, customising garments through technical developments in the materials used, as in the case of sportswear, whose technical features are adapted to the requirements of top-level athletes, or the design of clothing whose colours depending on the weather conditions, while adapting business models in line with new sustainability objectives or targeted improvements in environmental conditions, for instance, through the use of renewable energies in the manufacture of garments or that of new, low-impact means of production.

Author: Martín Bello Castro

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

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)

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