Posts by: Thorbjørn Swanstrøm | (10) posts

The Prelature of the Holy Cross and Opus Dei is the impressive name of an organisation most of us only know as Opus Dei through the Dan Brown novel The Da Vinci Code. Here it was portrayed as a sinister conspirational organisation but the reality is far less conspicuous and commercial.

Opus Dei has recently been involved in a rather unusual and secular trademark dispute in Denmark.

The name OPUS DEI – meaning the work of God – is a registered trademark, and Opus Dei – as any diligent rights’ owner – are monitoring any new applications that may be confusingly similar.

A Danish developer of board games had conceived the idea for a new game where the players get tasks within religion or philosophy. The game was called Opus Dei: Existence ofter Religion. As part of the marketing the developer also registered Internet domains in Denmark and the UK.

Opus Dei, having a registered Community trademark, contacted the developer and requested that he ceased with using the name, transferred the domains and paid a large compensation. And from then on the case escalated.

As in all trademark disputes there are a number of hoops the court need to take into consideration: is Opus Dei a concept (i.e. does the ordinary consumer know and recognize it as such?), does it have trademark protection and for what, does the other trademark constitute an identical or confusingly similar mark – and will consumers think so? In this matter the trademarks are identical. This generally means that the goods and services need to be distinctively apart.

Friday last week the Maritime- and Commercial Court in Copenhagen passed its ruling: There is no risk of confusion as the “goods” offered by the parties – the Danish games developer and the Catholic organization – are distinctly different, even though the marks are identical.

In a case such as this one it shows that the legal test for protection and extension of the protection is absolutely secular. It also shows the weaknesses of having a broadly formulated list of goods for your trademarks. OPUS DEI is registered i.a. for goods made of paper, cardboard, printed material, educational material and playing cards in one of the classes. There is little doubt that Opus Dei could have had far better protection – but overall, the rationale from the court is correct: for any trademark to have enhanced protection it will take quite a lot. Also note, that Opus Dei probably have a massive problem in as much as the playing cards mentioned in the trademark registration are not commercially exploited. This means that the mark is vulnerable to extinction for this product due to non use.

An interesting case and a case with a lot of teachings both for applicants and owners of rights, be it commercial or sacred.

Thorbjørn Swanstrøm, Attorney at Law

He has his own style and he sticks to it.

The potbellied, glistening, jolly man with the white beard in his red robe with white fur trimmings is the universally recognized symbol of the festive season. 

But it is commercialization in its purest form. In 1931 the Coca-Cola Company wanted to boost sales over winter, then a season where sales of soft drinks were weak.

The original Saint Nicholas was a Byzantine Bishop in Myra in today’s Turkey. He gained a reputation for secret gift-giving, such as putting a coin in the shoes of the needy. After his death he was made a saint and he is the patron saint of merchants and sailors. Therefore, a sea faring nation like Denmark typically has lots of churches dedicated to him.

Through the ages Saint Nicholas, Nikolaus etc. has been depicted wearing a bishop’s cloak and a mitre. And a halo. He is a saint after all. His name day is 6 December (19 December in the Julian calendar) and as many things concerning religion it seamlessly fused with Christmas. He was eventually referred to as Father Christmas, Jultomten, Julenissen, Babbo natale, Père Noël, der Weihnachtsmann, Sinterklaas – which in North America has become Santa Claus. 

For Coca-Cola winter was a period with low sales of soft drinks. In 1931 they decided to launch an advertising campaign in order to change this. This campaign took to the hearts of consumers and it lasted of over 30 years – thoroughly cementing our perception of what Santa Claus/Father Christmas looks like. 

So when people moan that Christmas has become more and more commercial they are absolutely right. In the shape we normally think of Santa Claus it is Coca-Cola’s doing. But we should perhaps bear in mind that this is a result of the evolving of a historical figure and lots of myths and local customs.

…and finally: did you know that Santa too needs qualified IP-advise? Through many years Awapatent has managed IP-matters for the Santa Claus of Greenland Foundation which makes sure that the thousands of children who annually send their wishes to Santa also get a reply … from Santa. We are not, though, responsible for the presents.

Thorbjørn Swanstrøm, Attorney at Law

I recently wrote about a pending court case regarding an imported counterfeit Rolex watch. The importer, a private person, was well aware that the watch was counterfeit and the import was for private use. Customs ceased the watch and the Maritime- and Commercial Court (High Court) took the novel stand that the watch was barred from release as it would have infringed the rights of Rolex, had it been manufactured in Denmark.

In Danish IP legislation an infringement only exists in the commercial sphere. It is permissible for private people to own counterfeits and even personally import these. Whether a private person may import for personal use via shipment is still not quite settled in law. Therefore, the court’s expanded interpretation of the Customs Regulation is indeed noteworthy. Is the court really taking us to a new and exciting level?

Happily for legal practitioners the decision was appealed to the Supreme Court. Danish courts are traditionally (too?) reluctant in asking the European Court of Justice (ECJ) preliminary questions on the interpretation of EU-legislation. In this matter the Supreme Court has recently decided to ask the ECJ. We can therefore expect an answer from the ECJ at the end of 2013.

If the ECJ confirms the Maritime- and Commercial Court’s interpretation this will mean a significant strengthening of brand owners’ rights and a parting from long-established legal interpretation on this field. It may even mean a need to revise Danish national legislation.

I will also take the opportunity to crudely bang my own drum and refer to my blog post about fake goods in transit. Although not identical this was about related questions. In the two ECJ cases referred (Philips and Nokia) the ECJ answered questions on whether or not fake goods in transit could be ceased and destroyed. A part of these cases was the lack of detailed labeling or uncertainty as to the final destination of the goods. In this Danish matter regarding Rolex there is no question about the final destination of the fake watch. Therefore, we must expect the ECJ to rule on the question on whether or not commercially produced fake goods can be ceased and destroyed when (legally?) imported for strict private use.

Thorbjørn Swanstrøm, Attorney at Law

At Awapatent we are dedicated people: to our clients and to IP, Intellectual Property. This dedication means that we not only pride ourselves on giving the best advice and see ourselves as our clients’ partners, but being experienced in tailoring IP-strategies for our clients we regularly encounter the question on how to stem the tide of counterfeits, where to set the bar and how to best get value for money.

We also have an opinion on IP. IP legislation is not static. It evolves and – in an ideal world – should mirror the values of society. As advisors we also voice our opinions and comments to the debate.  

In the wake of this it seems that a debate has indeed stirred something in – or at least put focus on – the area of private “holiday-imports” of counterfeits: the fake watch / sun glasses / clothes / bags / shoes from the local market on your holiday.

For some years now many DVD movies have commenced with a “scare-off trailer” against copying like “You wouldn’t steal a car…?” It is doubtful that these scare tactics have much – if any – effect. Various copy prone businesses, for example the music business, have tried this unsuccessfully over the last decades. As the recent article in Danish national newspaper Berlingske shows, you cannot hope to change the pattern if people do not themselves see the value in the brand or product – and indeed are aware of the organized crime or drug dealing business that often is behind counterfeit products.

Here’s a thought: think long term. Do not scare off your potential costumers but focus on value and perhaps ethics. Your products can stand for themselves but do you remember this aspect in the implied value that should surround the product?  Have you incorporated this in your IP-strategy? If you cast a look at the music industry it has certainly not been successful in stopping counterfeits or illegal downloads. This in spite of vast sums spent on this. So you should also look at your competitors if they are using scare tactics: does it work, do you get value for your money?

Thorbjørn Swanstrøm, Attorney at Law

“…He wanted a genuine Rolex but they are expensive. So he wanted to make sure that he actually enjoyed wearing one before making the investment. In order to find out he bought the counterfeit watch…”

This very moving quote is from the questioning of the defendant in a recent case in the Maritime and Commercial High Court of Denmark.

As an IP-advisor, one of the tools I urge my clients to use is customs surveillance. It is cheap and easy and often ensures that counterfeit goods do not enter into circulation on the market. Contrary to many other EU-countries, Denmark allows copies if they are for private use. You are, for example, allowed to personally bring home counterfeit goods from a copy market abroad. However, you are not allowed to resell or redistribute the goods.

While the fairness of this rule may be debatable it poses significant difficulties in practice: when is an imported counterfeit for private use? And how many items may you import?

In this case the defendant had purchased a Rolex GMT-Master II watch knowing perfectly well it was a fake. The price of € 8,000 for the genuine article is modest; the fake is around € 450.

Despite the quite accessible rules in the EU-regulation on Customs surveillance it is obvious that the enforcement of the IP-rules requests that there is an actual infringement. On the face of it the Regulation gives Customs the right to bar the delivery of a shipment. No particular size of the shipment is required; in principle any size will do. How does this compare with the Danish rules on the right of private people to own counterfeits? Or purchase these abroad?

Obviously, in this case the Rolex watch is counterfeit and the importer knew this, the shipper did not give any impression that the watch was genuine and the price corroborated this. All parties and the Court agreed on this. So, could the defendant claim that this was exempt due to the right for individuals to own counterfeits for private use? And were Customs correct in seizing a shipment of just one item? A shipment that was obviously for private use.

With a steady hand the Maritime and Commercial Court passed a ruling that this counterfeit product should not be released to the importer, that Customs were right in seizing the shipment and that the defendant had infringed Rolex’s rights.

This is a novelty in Danish Law; the court’s decision is based on the rule on hypothetical manufacture, i.e. could the goods legally be manufactured in Denmark (even though they are not). The court explicitly stated that the exception does not extend to shipments from countries outside the EU. 

This ruling means that there is no longer any difference between shipments for businesses or private individuals. The contents of the exemption are now that this only applies to personal, physical import in you travelling luggage. And provided it is strictly and evidently for private personal use.

This is a significant strengthening of the rights of the brand owners – no question about that. And a consequence of this will also be that legal goods, imported legally but not intended for the Danish market can be barred. This is significant and a break with legal tradition in this field.

The case has been appealed to the Supreme Court and it will be very interesting to see if the Supreme Court agrees to this new principle on hypothetical manufacture or not. Should the Supreme Court follow the appealed ruling, this will be a novelty in Danish Law and a significant strengthening of IP-protection. I shall not fail, dear readers, to follow this case and duly report it when the Supreme Court rules on this.

Thorbjørn Swanstrøm, Attorney at Law

The subject of our latest annual trademark and marketing conference, Årets Mærkedag, was Brand Grooming. The skill of maintaining your brand and still be able to evolve it without losing your customers or built-up goodwill.

We heard how especially established brands have to tread carefully when keeping a brand and its identity up-to-date and how newly established brands have to get things right from the beginning.

One thing is theory, another practice.

NetFlix is probably fairly unknown here in Europe. In North America it has been a fast rising star. Netflix’ product is the rental of DVD by post. You would also receive personalized recommendations. The business has developed into on-demand streaming too. The idea is that you pay a monthly flat fee as a subscription. You then receive the rental DVDs by mail and return them to Netflix or download the films. Netflix became hugely successful and beat out Blockbuster because it rode the technological wave of the Internet and DVDs successfully. It did this by building a business model around web-based browsing of selections, prompt delivery, on-line recommendation systems and exploitation of “the tail of the distribution” by stocking DVDs that appeal to a small percentage of the viewing population.

In last autumn NetFlix decided to split the business in two: the streaming service would continue as NetFlix and the rental service would be called Qwikster. It would still be the same company but customers would now have to subscribe to two different kinds of service. Probably nothing uncommon or even strange when we are talking business development, actually it seems quite a reasonable move. Netflix even had substantive research showing that the change made sense.

Before this, Netflix had raised the prices from $9.99 per month to $15.99. There was an outcry from the consumers and a mass exodus.

Within two months NetFlix lost almost a million customers and its shares plummeted. NetFlix quickly killed off Qwikster and went back to the good old ways, trying to reassure the market and their customers. To this day Netflix has regained neither costumers nor share value.

So, apart from the significant price hike, what went wrong? Consumers form strong bonds with brands and expect consistency from them.  Brands are promises built on a trusting relationship and if they abruptly veer in another direction you will risk goodwill and to lose you loyal customers.

For guidance, they could have looked to Coca-Cola who once made a monumental branding blunder that still haunts the company.  It is the case study of trying to change what works. In 1985, Coca-Cola announced the launch of New Coke. It flopped massively, evidenced by the company being flooded by calls and letters disapproving of the decision. The known Coca-Cola was then reintroduced as “Classic.” 

Last year, Gap attempted to refresh their logo doing away with the old blue box. In this case, the consumer outcry was not over price or distribution but over something as simple as the typeface of the new logo. After only one week of brand disparagement, the company rescinded the new and went back to the previous blue.

Maybe this shows that the predilections of your customers are not something you can measure or assess; you need to know it intuitively. This also emphasizes that the changes you make to your business and/or brand have to be made carefully; the more iconic your brand and the more loyal your customers, the more carefully you may have to tread. And not the least: be aware that decisions that were made under one set of circumstances may not be good under another – even if you have customer surveys to back things up.

Thorbjørn Swanstrøm, Attorney at Law at Awapatent

You are, or you represent, a holder of rights. You become aware that some goods which you consider counterfeit have entered the EU on their way to, say, Canada. The goods are only in transit at a port or an airport before they continue their onward journey.

What do you do? You want to stop the goods but they are only in transit, i.e. not destined for the European market.

Recently, the European Court of Justice (ECJ) has tried to shed some light on this. The court ruled in two joint cases:

Philips: in the port of Antwerp Belgian Customs inspected a shipment without a clearly stated destination. The cargo was from Shanghai and contained electrical shavers, similar in appearance to Philishave. Customs detained the goods and Philips brought action against the manufacturer based on Philips’ registered design rights in Belgium.

Nokia: UK Customs inspected a shipment of mobile phones and accessories for mobile phones at Heathrow Airport. The shipment came from Hong Kong and was on its way to Columbia. The goods were deemed fake by Nokia, but Customs refused to detain the shipment as the goods were in transit. Nokia brought this before the courts.

So, can the right holders, Nokia and Philips, enforce their rights against these goods? Or are they off bounds as they are not on the market in the EU?

The ECJ pondered this question for ages. Firstly, the ECJ confirmed that goods from outside the EU do not infringe IP rights in the EU when they are in transit. The exception is of course if there is marketing underway, directed against European consumers or if Customs suspects something fishy – which can later be verified. Secondly, the ECJ states that if it is 100 per cent clear that the goods are destined for a non-EU country, like Columbia, they cannot be considered counterfeit in the legal sense – (not very fortunate for the consumers in the destination market and a curious lack of consequence for IP right owners’ enforcement possibilities and costs of enforcing their rights). Thirdly – and finally – the CECJ says that any goods may still be seized by Customs if the goods violate other codes, for example if the goods pose a risk to health or safety.

Personally, I am not terribly happy with this ruling. The ECJ’s business is to interpret and that it has done. It is not to blame for the law. But – current law aside – it seems bizarrely without consequence that the EU as a champion of the protection of IP rights is not stretching this protection to the goods themselves, only to the domestic market. Counterfeit goods will damage the rights holder in Columbia too. Instead of being able to stop obvious counterfeits en route, the rights holder is now referred to spend further funds taking legal action in Columbia. This drives up the costs for enforcing the IP rights.

The ECJ has placed a huge burden on the shoulders of Customs and the rights holders. It is up to Customs and the owners to investigate and document whether the goods are actually meant for the European market. This seems out of proportion if we are dealing with clearly counterfeit goods. The same goes for the resources and time needed for such investigations.

The European Commission is currently reviewing the regulations. If the Commission is serious about protecting IP-rights it should also focus on the products. If you want to stop fake goods you will also have to make it financially difficult for the pirates. One way is not to provide cheap and easy transport routes through EU airports and cargo ports or, indeed, IP infringement immunity for the goods.

And the two cases at hand? Well, Philips is happy. The consignment did not have a clear destination and Belgian Customs and the ECJ considered this fishy enough to let Philips enforce their rights successfully. In the Nokia case there were no such extra insecurity relating to the shipment; UK Customs therefore were right in denying Nokia the right of enforcing their rights. Nokia will therefore face some unhappy customers in Columbia and possibly an unfortunate blow to its good-will there.

Thorbjørn Swanstrøm, Attorney at Law

Look at the Clouds! It is Lightning - or is it a Silver Lining?

Outsourcing is no new invention. However, now it has taken to the skies; Apple will launch iCloud, Amazon’s music player is cloud based, and in the US on-demand-services has taken off with successful businesses such as Netflix, Hulu, Amazon, Flickr etc. This week someone predicted the death of the PC! Google has just launched their PC with no software. Everything is now on-line “in the cloud” with no need to store or install software or any information.

So, seen from an IP protection perspective is everything just excitement and glee? Looking in the crystal ball the future may hold bright skies with clouds containing all your business information, day-to-day communication and files. A bit like web based mail. Yet everybody knows what happens, when a mail service breaks down: you have no access and you are dependent on the provider (ISP) to solve your problem. And what happens with you IP-protected stuff? Are you sure that your documents, writings, works of art, trademarks, patent information and all confidential material which you are in the process of securing, is safe? And who bears the responsibility if there is a breach of security – and is it a responsibility that will cover your loss and damage (and perhaps that of your client, not to mention your customers’ loss in confidence in you and your business) sufficiently?

Ultimately, Cloud service is just another word for storage and distribution of computing services and programmes. As convenient as this may be, it also puts a very big emphasis on the relation between you and the ISP; you and your business are wholly dependent on the security of the service, response times, loss of data prevention and recovery and liability. Especially when your ISP is located in another jurisdiction it will be crucial to determine and establish where disputes may be resolved; do you have to go to a court in another country? Further, there is no uniform regulation of ISPs; most will have and change their own rules of contract and change them regularly. As an example one just has to bear in mind how often Facebook has changed their rules for using their service and how the users of Facebook have complained.

Cloud services are probably going to be something that eases the lives of most people and businesses. But as there are no common rules, and as there often are cross-border-relations and no IP-legislation covering responsibilities and rights to stored information, it will be crucial to ensure that your contractual relations with the ISP cover this. Before you enter into any alluring cloud services it will be a good idea to make sure that you are not left with a bit of cloud between your hands if things go wrong.

Thorbjørn Swanstrøm, Attorney at Law, Awapatent

Danish courts are traditionally reluctant to ask preliminary questions on the interpretation of EU-legislation. Recently, the Supreme Court has done so, and quite comprehensively. During the 1990′s there were countless cases all over Europe regarding repackaging of products, especially medicines and printer toner cartridges, after parallel imports from one state to another. This case is a new product area: composite gas bottles and it does not contain aspects of parallel imports.

Put shortly, company A sold gas in composite bottles with a distinct shape. These bottles were trademark registered but A was not the proprietor of the registration, only the exclusive licensee.

The bottles with contents were sold to the consumers. Upon refilling the empty bottle the consumer would return the bottle to A and receive a new, full one or the bottle would be refilled. Competitor B was in the same line of business and refilled bottles as well. The bottles from A were also refilled by B and a sticker was affixed which indicated that it had been refilled by B.

The Central Court (formerly the European Court of Justice, ECJ) is yet to pass its ruling but the Advocate General has given her opinion. Traditionally, the Court will most likely follow this opinion.

The suggested ruling is that A, as proprietor of the trademarked bottle cannot prevent B from refilling their bottle provided that it is clearly stated that the refilled bottle does not contain gas from A (the affixed sticker) and provided that the bottle has been put on the market legally by A. So in this case A is not going to get the backing of the Central Court, nor the Danish Supreme Court; B has most likely not infringed A’s registered trademarks.

This case shows that you have to be diligent in all links of the sales chain; a trademark registration does not necessarily give the owner complete control over the entire retail chain. However, if the packaging had been well known, say, a Coca Cola bottle or a distinct and well known perfume bottle, would the outcome then have been the same? Probably not. This would give raise to consumer confusion and you cannot avoid this provided the container that your competitor sells his products in is well known. The shape in itself is decoded by the consumer as being e.g. Coca Cola – long before any stickers are read.

The gas seller A would probably be in the clear had he not sold the bottles to the consumers but instead licensed the use to the consumers. Then the bottles would still be A’s property and out of bounds for B.

Even though repackaging has been debated and ruled on endlessly over the last twenty years this shows that the area still can stir emotions. I will report back here on the blog once this gassy drama comes to an end.

Thorbjørn Swanstrøm, Attorney at Law, Awapatent

Recent statistics on the outcomes of reported IP litigations in the most important courts in China are encouraging:

The total number of trademark-related cases in 2009 handled by the Chinese courts was 6,906, up almost 11 per cent from 2008. 2008 was up by 79 per cent in relation to 2007.

Administratively, the numbers are on an equally steep climb. In 2009 there were an impressive 37,002 cases handled by the Chinese Intellectual Property Office (SIPO). This follows a substantial injection of funds whereby the backlog of cases has been reduced from a good 11-13 years to 1-1½ years. There is no question that there is still room for improvement. Still, seen from my point of view it is a dramatic improvement and one that promises well for the future. A backlog of 1-1½ years is better than what we encounter in many countries.

It is important to remember that these statistics relate just to reported cases, so they may not tell the whole picture. In fact, if anything, they may underplay the extent to which foreign parties are successful.

There is, however, one overshadowing problem: enforcement. It has been hard to get favourable decisions enforced. This also means that decisions do not act as a deterrent.

In the past year China has had more than its share of embarrassing – and in some cases fatal – domestic cases, especially when it comes to drugs and additives. We remember the counterfeit diabetes medicine, the blood thinner Heparin to which an unlawful and dangerous chemical was added, and – not the least – the scandal about powdered baby milk where Melamine had been added. These cases originated in China and the victims were also Chinese; in a very unpleasant way they stress the fact that trademark abuse and counterfeit products are not just belts, sunglasses and watches.

There is hardly a question that consumerism in China is on the rise and that this will equally reflect on IP. China is no longer just a provider of cheap labour and cheap goods to consumers in the West; China is a nation of increasingly demanding consumers – and the counterfeit cases to match will follow in the foot paths of the consumers.

So where does this leave us for the moment? Well, the statistics are very persuasive: China has allocated more resources to the IP authorities. One can hope that the sad drug piracy cases will also ensure that enforcement will get equal attention.

Thorbjørn Swanstrøm, Attorney at Law, Awapatent