Copyright in relation to e-books

The copyright protection of authors is being increasingly challenged by the continuing digitalization of the book market. The emergence of the e-book has caused a very IP-relevant question: Is the consumer allowed to re-sell the e-book he purchased?

When it comes to physical works such as hard copy books, European copyright legislation clearly states that once a work has been sold within the EEA, with the consent of the owner, this item can freely be resold to third parties. However, the copying and distribution of digital works is more easy, cost-free and difficult to control. Accordingly, there are many arguments as to why the exhaustion of rights should not apply in the same degree to intangible items.

Despite hereof, the CJEU stated in the UsedSoft/Oracle judgment (C-128/11) of 2012 that the rules on exhaustion does indeed also apply to intangible copies of computer software, as long as the first sale of these was accompanied by a user license agreement. The outcome makes sense as a license agreement does at least limit the possibility of buyers performing unlimited copying and second hand sale.

E-books are typically not sold with licenses, and despite the above decision from the CJEU it therefore remained unanswered whether such could be treated as other software and be legally distributed to third parties after the first sale, without the consent of the copyright owner.

In July 2014, the Amsterdam District Court, somewhat surprisingly found that this was indeed the case. The Dutch website www.tomkabinet.nl provided consumers with the opportunity of re-selling their used e-books for half price of the original e-book. The Dutch publisher union NUV tried to stop this website, as they found such re-sale infringing. However, although the Dutch court agreed this was a grey area, they found that it would be too drastic a measure to close the website, and instead encouraged NUV to refer this question to the CJEU in order to have them decide whether the rights are also exhausted when it comes to sale of intangible items that are not accompanied by licensing agreements.

It will be very interesting to know, whether the CJEU finds such second sale of e-books without accompanying licensing agreements legal and, if so, how copyright owners can be sure that no illegal reproduction of copies is taking place. Obviously, digital security measures are already being taken in order to prevent the copying of e-books. But these are far from bullet-proof, and without actual licensing agreements, it seems very difficult for copyright owners to trace illegal copies and distinct them from the legal originals.

However, the difficulties in controlling the market do not seem to bother the CJEU as demonstrated by a very recent decision of 11 September 2014 (C-117/13), concerning the digitization of books by libraries. The CJEU stated that libraries pursuant to article 5(3)(n) of the Infosoc Directive are allowed to digitize work contained in their collections, and offer them on their publicly accessible databases, regardless of whether a specific licensing agreement has been offered to the library by the right holder. Furthermore, member states may permit users to print out on paper or store on a USB stick the books digitized by the library, as long as a fair compensation is paid to the right holders. Accordingly, things do not seem to become easier for copyright holders to written works.

Anders Michael Poulsen, Attorney at Law, LL.M.

Revisions to the Korean Trademark Act

The aim of the revisions, which were implemented in June this year, is to reinforce the position of trademark owners, which the following examples will indicate.

The article handling the protection of well known trademarks has become clearer. Now it is clearly stated in the Trademark Act that applications for trademarks which are likely to cause confusion with, or harm the distinctiveness of, well known trademarks will be refused.

Further, the issue of unfair competition is addressed in the Trademark Act. If a brand owner is using or is planning to use their mark and a trademark applicant is aware of this, e.g. through a partnership, business transactions, employment, business contract/transaction or the like, and despite this files an application for an identical or similar mark for identical or similar goods, the application will be refused.

The Trademark Act is now also referring to the Korean Unfair Competition Prevention Act (Unfair Competition Act) in which amendments also has taken place. The Unfair Competition Act is amended and indicates that any act that infringes another person’s commercial profits through the use of the fruits of that person’s efforts without due cause against fair trading practice or efforts, for the sake of own benefit, constitutes an unfair act.

The Trademark Act now indicates that any use of a registered mark which is hit by the above article of the Unfair Competition Act is prohibited, unless the trademark holder obtains the consent of the other party involved. Any use of such registered trademark without consent of the other party will be vulnerable to cancellation.

By comparison, a similar article against unfair competition has earlier this spring also been added to the new Chinese Trademark Act.

Finally, the protection of non-distinctive due to actual use has been enhanced, since the standards for determine the establishment of a secondary meaning of non-distinctive marks through actual use are lowered. Thus, if the applicant of a mark lacking distinctiveness can establish a certain level of renown of the mark through use it will be possible for the application to pass. A long this lines the distinctiveness of marks consisting of only two letters will also be recognized.

Altogether, the above amendments to the Korean Trademark Act open up further possibilities for trademark holders to safeguard their registrations and also opens up for a possibility to register trademarks that previously would have been difficult to register.

At last, a few words regarding proposed revisions to the Japanese Trademark Act.

The aim is to enlarge the scope of protection for additional types of trademarks. Hence, it is suggested that inter alia colour marks, sound marks, hologram marks, position marks and moving marks (the above examples are particularly mentioned) and the like will be possible to register under the Japanese Trademark Act.

The above examples are not exhaustive and there is an opening that other marks, such as sent and taste marks could be considered for protection in the future via stipulations in the JPTO Examination Guidelines.

Also the Japanese revisions are in line with changes in the Chinese Trademark Act, where inter alia sound and colour marks now are recognized.

The revisions to the Japanese Trademark Act are expected to come into force during 2015.

On the whole, the above indicates that major Asian economies are embarking on the same route as the west, moving towards a bit more flexible system with a wider range of possibilities to protect different types of trademarks as well as offering more tools to protect trademark registrations.

Peter Hermansson, Attorney at Law

Open innovation – time to dispense with intellectual property rights?

First of all: open innovation – what exactly is it? It would be almost wrong to discuss open innovation(OI) without mentioning the man who coined the term.

Professor Henry Chesbrough (Haas School of Business, University of California, Berkeley) created the term open innovation back in 2003 to describe the conscious input and output of knowledge in order to accelerate internal innovation and to expand markets for the external application of internal innovations. This could involve companies and organisations inviting other parties to join their innovation processes rather than relying solely on their own R&D departments and other in-house resources. These companies and organisations have come to realise that they are not capable of possessing absolutely all necessary expertise in-house and that R&D and time-to-market can be sped up by working with others.

But what’s new here? Companies had been co-operating with each other, with customers and suppliers, licensed both in and out, and established joint ventures long before the concept of OI came into being. What has emerged in recent years is a growing realisation among organisations that they need to be humble enough to concede that they do not always know where to find the best expertise and/or partners in order to solve their challenges. And so they have started to approach “anyone”.

This shift is particularly conspicuous where companies conduct their OI processes as online competitions, by far the most common form of OI. The company (the “problem-setter”) is able to identify expertise and new partners without ever having met these potential “contributors” to the OI process and to the solution to the problem. This makes for a topic-based OI process, which means that the topic of the problem is known, while the potential contributors, or entrepreneurs as they are usually called in this context, are not defined. Completely open innovation occurs if the problem, too, remains undefined, i.e. we know we need help, but we don’t quite know what we need help with. This is perhaps where the greatest potential can be found.

How should we approach intellectual property rights during the OI process? What does the word open mean in this context? Open to whom? Many of those working with OI seem to believe that OI allows you to completely disregard everything to do with intellectual property rights. One of the reasons for this misconception is presumably that another misconception has arisen, whereby it is thought that open source is not subject to intellectual property rights and then applying this notion to OI as well. Well, the meaning of open in the context of OI is first and foremost that the problem-setter opens its doors to the world by suggesting a collaboration.

Once the step has been taken to open up, there are a number of factors to consider. For example, how do you deal with the so-called “background information” that both the problem-setter and contributors bring into the process? What should they share with each other? What should they do about know-how? What should be considered business secrets? The consequences of inviting “anyone” is of course that absolutely anyone can become a contributor – which is the most significant distinction between OI and traditional partnerships. New types of collaborators emerge, and new questions subsequently arise. The competitive element also attracts a great number of individuals. Are these individuals at liberty to contribute? Or are they bound by other contracts and/or employment terms in respect of the innovations that they contribute to the OI process in question?

IP contamination is another major concern. What would happen if, say, one of the contributions contains the same invention that the problem-setter has in the pipeline but has yet to patent or protect in some other way? A big business faces a significant risk of being accused of theft from the individual if it chooses to proceed with the invention/product at a later stage.

In order to protect intellectual property created during the process, it would be sensible to set out rules for how to do this before the process starts. Not in detail, as this may restrain the process, but in general terms so that the parties know how to act, how ownership rights will be defined, and not least so that the parties do not create obstacles early on in the process that may prevent them from acquiring IP rights at a later stage. So the important thing is to think ahead about the way in which “foreground information” – that is the flow of information occurring during the actual process – is handled by the parties involved.

If a decision is made not to acquire intellectual property protection and to define the word open as meaning that nothing created during the OI process should be “locked in” by intellectual property rights, it is still important to ensure that no party outside the sphere, a third party, is able to lock in what has been created. Attention must also be paid to third party rights and to the entity’s own freedom to operate in order to avoid unnecessary infringements on another’s intellectual property rights.

The benefits of inviting new expertise and new collaborations can be phenomenal, as it allows existing challenges to be solved and peripheral innovations to be taken to new markets. The key is to think ahead in order to minimise the risks and maximise the benefits of open innovation.

Cecilia Svantesson, Patent attorney