How did a sharp drop in Ethereum gas fees illustrate the real interest of the general public in NFTs ?

Written by Dreyfus11/08/2022

Just like the Internet at the end of the last century, NFT domain names have seemed to gain popularity among the general public as many people are considering investing in various blockchains. As a new tech tool, the fees that accompany the registration of a domain name on certain platforms can pose a major obstacle for any project to register a Web3.0 domain name. A sudden drop in Ethereum ‘Gas’ fees on the first weekend of July illustrated the public’s enthusiasm for Web 3.0.

What is the place of domain names in Web 3.0?

Transactions on blockchains are now seen as a potential solution to the middlemen of common real-world transactions, who take a commission for every money transfer. NFT marketplaces such as Opensea have recently become more popular for places to trade and sell NFT domain names.

Transactions on Web 3.0 still have a cost. In fact, miners are being paid for their role in validating transactions that circulate within the blockchain. This validation process requires solving complex mathematical problems, and the miner who solves it first is rewarded with a remuneration based on the transaction fees (called Gas fee) paid by the users responsible for the transaction. Thus, before an NFT domain name can be used, first it must be transferred to the blockchain and it is during this transfer that the transaction fee must be paid to the blockchain operator.

A long-standing problem with the Ethereum ecosystem, and its main obstacle to attracting the general public, is often attributed to extremely high transaction fees. Notably, in January 2021, Ethereum’s Gas fees jumped due to the enthusiasm around NFTs and decentralised finance. For example, between January 2021 and May 2022, the average Gas cost required by Ethereum was around $40 per transaction, with a peak of $196 recorded on May 1^st, 2022. As a result, many users had chosen to abandon Ethereum in favour of blockchains with significantly lower fees such as Solana or Avalanche.

What about the latest notable events on the Ethereum blockchain?

In the first week of July, an unexpected phenomenon was observed on the Ethereum platform: the dashboard of the Ethereum Name Service, the decentralised autonomous organisation that runs the service, showed an increase of almost 200% in .eth domain name registrations between the 2nd and 3rd of July. The following week, the ENS platform recorded more than 100,000 registrations. This astonishing increase illustrates the growing interest of the general public in Web 3.0 registrations. The ENS platform had already been gaining popularity since April, when holders of certain categories of domain names started to form clubs. One example is the formation of the 10K club for owners of ENS domains consisting of numbers between 0 and 9999. As a result, in May, a record was reached with 365,652 new Ethereum domain name registrations, and the 122,000 new registrations in June brought in some $6.6 million.

Alongside this surge in domain name registrations, the second largest sale on the ENS platform was recorded on July 3rd, for the domain name “000.eth” which sold for ETH 300 (around $320,000 at the time of sale). These events had a strong impact as they rocketed Ethereum to the top of the seven-day NFT sales chart on news tracking site Dapp Radar. In addition, social media interactions related to ENS also spiked. According to the crypto-currency social tracking platform, Lunar Crush, engagements with the keyword increased by 108.4% in seven days.

So, what is the explanation for the surge in domain name registrations on the platform?

Just like on Web2.0, owners of “.eth” domain names have to pay a fee on a regular basis, and in addition to this fee, they also pay a Gas fee. So, naturally, when the latter fall, the number of new registrations increases. Experts have claimed that the explosion in demand for ENS domain names is mainly due to the drastic drop in Gas fees seen over the weekend of July 2nd and 3rd, whose value wavered between from $1.67 to $1.97,the lowest levels in over a year.

The question then arises as to the explanation behind this sudden drop in transaction fees on the Ethereum network. The answer is mainly related to the equally large drop in daily transactions. In fact, according to Cointelegraph, daily NFT sales also reached their lowest level in over a year on Saturday. Globally, the NFT ecosystem recorded its worst performance during the month of June 2022, with an overall number of daily sales around 20,000 for an estimated value of $13.8 million.

Any events to watch for regarding the Ethereum blockchain?

The Merge is the name given to a highly anticipated event on the Ethereum blockchain. In fact, on September 19th, the Proof of Work (PoW) model will be replaced by the Proof of Stake, (PoS) which will then become the only way to verify transactions on the Ethereum protocol. The Merge will be one of the most important steps in the history of blockchain technology, because once it is operational, this new process will reduce the energy consumption of node validation operations by 99%, going against one of the main criticisms it has received for being environmentally unfriendly.

In fact, these two main consensus protocols dominate blockchains and ensure synchronisation between all nodes in the network. With Proof-of-Work, miners have to solve a complex mathematical problem requiring significant computing power in order to confirm a transaction. In contrast, Proof-of-Stake is a much less expensive consensus, requiring no energy expenditure and no special hardware. Validating a block simply involves nodes pledging a large amount of cryptocurrency. The larger the amount, the more likely a node will be chosen to update a blockchain’s registry.

Ultimately, this change in the process of validating transactions on the platform could have a significant positive effect on Gas fees. If Gas fees continue to fall, it is likely that the general public will be more inclined to develop a Web 3.0 business and register domain names on blockchains, particularly to extend the protection of various brands.

To find out more about branding processes in Web3 and the issues surrounding this mechanism click here !

How are intellectual property and compliance related?

Compliance describes the practice of acting in accordance with a set of laws, regulations, global standards and specific internal policies. As regulatory compliance protects and directs a business’s resources and reputation, intellectual property has become an integral part of the assets worthy of protection. A 11.7% increase in trademark filings at the which is a strong testament to the growing significance of intellectual property. Furthermore, with the digitalisation of business models and assets, these codes of conduct should encompass intellectual property protection as external threats such as counterfeiting and cyber-attacks become ever-more rampant. It was estimated that the value of counterfeiting goods amounted to 2.5% of world trade in 2019, along with a 22% surge in domain name disputes in 2021. According to the European Union’s Cybersecurity Agency (Enisa), the number of cyber-attacks against critical sectors and institutions in Europe has doubled (304 incidents recorded) since the beginning of the pandemic.

The interconnection between the two fields had not always been apparent. Initially, the interactions between intellectual property and compliance departments were rather limited. It was common practice to operate each department separately and to focus on matters concerning their own subject. This isolation was later broken by the Vinci case, which led the way to radical changes in the co-working of the two sectors.

The Vinci case concerned the domain name ‘vinci.group’ for the French concessions and construction company Vinci and another fraudulent domain name which was registered. Although Vinci’s monitoring services detected this fraudulent domain name, due to it being inactive for over three weeks, they did not pursue any actions against it. Once it became active, it was associated with a fake website leading Vinci’s customers to believe it was legitimate. Using a fake email address, the fraudsters sent press releases alerting the customers that the performance and revision of the previous year’s account releases were subject to inaccuracy and fraud. As a result, Vinci’s share price fell by 18%.

This highlights how a company’s reputation and financial well-being can be damaged due to the fraudulent use of a domain name. Since then, market regulators have set up guidelines to mitigate domain name risks to avoid similar situations. The Vinci case illustrates the importance of compliance and intellectual property departments working hand in hand – the ultimate goal being efficient risk management. Such a joint effort facilitates the implementation of preventive

measures and timely retaliation to suspected intellectual property infringements.

As such, companies, regardless of their sectors of expertise, should put in place a compliance program for the identification, protection and maintenance of their intellectual property rights. Such a program should be fully comprehensive, taking into consideration all potential risks, especially those concerning intellectual property. As intellectual property takes on increasing importance, it constitutes substantially heightened risks related to other crimes as well. For instance, money laundering is a common consequence of a primary domain name offence. Criminals camouflage their illicit proceeds through the violation of intellectual property ownership by exploiting its commercially viable and flexible nature. While intangible assets have to be appraised to be accounted for as company capital, the assessments of their economic value are often arbitrary. This creates a loophole which enables infringers to transfer to façade companies abroad to round trip dirty money back to its source masqueraded as legitimate earnings. In this sense, the prevention of the primary intellectual property infringement could likely limit the manifestation of any further illegal activity.

Who is at risk?

Banks, particularly online banking, and insurance firms are most likely to be exposed to such risks. As a matter of fact, any industry that engages in e-commerce can be at risk on Web 2.0 and 3.0. As for counterfeiting, the luxury industry falls victim to intellectual property infringement. Recently, the EUI jointly published a report on intellectual property crime & threat assessment, in which a study estimated that 5.8% of all EU imports in 2019 were pirated and counterfeited goods. These luxury fashion brand counterfeits were worth around EUR 119 billion.

Apart from major corporates, everybody is exposed to such risks as well. The degree of exposure depends on different factors, such as the nature of underlying activities, the size of the organisation, the geographical location and the jurisdictions applied. In a nutshell, companies should direct their efforts towards properly comprehending their intellectual property risks and include them in their compliance setup. It is vital for companies’ intellectual property departments to take the lead and show the compliance departments the risks related to intellectual property, specifically those on the internet.

Impact of Web 3.0 on Intellectual Property and Compliance

Over the past few years, the Web 3.0 decentralisation revolution has emerged from obscurity and gained growing acceptance even in the most conservative of practices. One notable example is the enforcement of contracts. Powered by blockchain technology, a smart contract automatically implements itself once the predetermined conditions come to fruition. The irreversible and autonomous nature of smart contracts could translate to vast applications in the realms of intellectual property. Rather than documenting intellectual property registries in the traditional database, the entire life cycle of an intellectual property right could be recorded effectively in a distributed, immutable ledger. It displays clear, authoritative evidence of the use of intellectual property rights and creatorship, which often comes in handy whenever disputes or revocation proceedings arise. These ledgers also allow for provenance authentication, with which consumers and businesses alike could verify genuine products and distinguish them from counterfeits.

However, as with many new technologies, these benefits do come with risks. The resilience of a smart contract heavily depends upon the coding prowess of its developer and whether due diligence was carried out for these protocols. In 2021, one of the most high-profile heists was pulled off when hackers stole $613 million from Poly Network by exploiting a vulnerability in their smart contracts. As blockchains keep transactions out of reach of governments and courts, the distribution of unauthorized, copyrighted materials to encrypted servers could go untraced and unpunished. Even if these illegalities come to light, an injunction would hardly be enforceable since these programs exist on thousands of machines dispersed everywhere around the world.

Despite the rapidly increasing reliance on Web 3.0 technologies, legislations have yet to stipulate a solid legal framework which provides legal certainty in commercial activities. With traditional intermediaries obliterated, there has to be sufficient legal supervision to ensure the compliance of agreements as in conventional contracts. For this reason, a solid technical team is needed in order to work with the legal department to draft a comprehensive compliance plan. An intellectual property compliance program could effectively prevent commitments to activities which undermine or conflict the company’s intellectual property interests. The construction of a compliance framework around Web 3.0 could be complex, yet also immensely valuable.

Additionally, a three-step process is recommended for the protection and enforcement of intellectual property rights for companies; (I) develop audits (II) carry out prior rights searches and (III) put in place a solid monitoring system. This includes the monitoring of blockchain domain names and virtual lands in the metaverse and marketplaces.

Though Web 3.0 could appear challenging and intimidating, one major advantage of blockchain is the traceability of all transactions. Take blockchain domain names as an example. Though it is hard to find the holder of a fraudulent domain name, it is not impossible. Fraudulent domain names can be tracked down through the same blockchain, and a ‘cease and desist’ letter can be sent to try to arrange a transfer, withdrawal or purchase of the blockchain domain.

Web 3.0: a challenge or an opportunity?

It’s both. Web 3.0 offers powerful functionalities relevant to intellectual property rights, for example, the traceability of artistic owners through blockchain technology. Decentralisation is definitely the future of law in terms of ownership rights over virtual assets and personal data, and its protection. Regulation is still needed in order to provide similar protection as in the real world. Web 3.0 should be seen as a double-edged sword where users cannot seek its benefits without being ready to meet its risks and challenges.

Hence, I recommend a three-step strategy to avoid situations like the one encountered in the Vinci case.

First, to conduct prior research among domain names to get an idea of the current situation: identify the legitimate domain names and the fraudulent domain names.

Second, to conduct an audit. The audit allows us to set up the right strategy tailored to the company’s needs. We can then assess the risks and map them out for companies. We also help to put in place a crisis management policy to tackle fake news.

Third, to set up a daily monitoring on domain names and worldwide. This is important because it helps us to identify immediately relevant domain names, analyse them, and assess the level of risk to plan out the right actions.

Finally, I advise a collaboration between intellectual property and compliance departments to tackle the risks. For example, by identifying the key people to contact and having a process in place to secure proofs of a fraud or infringement.

We can also take immediate actions. How do we do so? We start with a technical IP/IT study of the situation. We then set up the right strategy. For example, a request of disclosure of registrant data, blocking a domain, taking down a website and removing e-mail servers. If the domain name is of interest to the company, we initiate action to obtain the amicable transfer of the domain name or we file ADR complaints such as UDRP.

At Dreyfus.io, our experts help with any possible infringements and disputes related to your copyrights, trademarks and NFT projects. Our team would be happy to assist you and answer your questions.

IP Compliance: Key Risks and Solutions in the Real and Virtual Worlds

Guests

Nathalie Dreyfus Founding Partner of Dreyfus & PartnersParis, France

Nathalie Sabek Head of Compliance, Financial Security, and Know Your Customer Policy, BNP ParibasParis, France

Written by Dreyfus02/08/2022

Social media platforms allow their users to create unique usernames which become part of their virtual identity, allowing them to share content and network with other platform users. These accounts become an integral part of our virtual life so many would say they are, in fact, one’s intangible property.

A. Can we know for sure who has right to ownership?

There are different types of social media accounts – personal and business – and although, in most cases they are easily distinguishable, sometimes the lines are blurred especially when employees of companies take on marketing roles.

Personal accounts are straightforward, as long as you read the fine print. You go on vacation, snap a photo and update your status on how your well-deserved vacation is going by uploading it to Instagram or Facebook, a platform you may use to connect with your friends and family. You are the only one who has access to your unique log in details such as username and password, hence a private account.

‘Business’ accounts run by a company’s employees are more complicated, regarding ownership and access to, what would otherwise be, private information. So, who owns business social media accounts accessed and controlled by employees? There are various factors which contribute to making that decision. Ideally, you want to ensure that other platform users recognise the username and associate it with the business, not the employee, like a trademark. The subject of content is still a grey area – is it the intellectual property of the employee or the company itself?

B. The hardships of distinguishing ownership in Hayley Paige v JLM Couture

The former question was the focal topic of discussion in the U.S. case of Hayley Paige Gutman v JLM Couture, where the parties disputed ownership rights of the hybrid Instagram account. Referring to the account as ‘hybrid’ due to the nature of the arguments presented by the parties.

This case was filed as a result of an alleged misuse of the account after Gutman advertised third party products without the approval of her employer, JLM Couture. The defendant, Gutman, argued that due to the style of the posts on her Instagram handle @misshayleypaige, the account was of a private and personal nature, created in personal capacity, even though she has used the account to promote her bridal collection designed for her parent company, JLM Couture.

The appellant, JLM Couture, counter proposed the account being a business account due to the significant percentage (95%) of the content consisting of marketing for the brand, Hayley Paige. The decision favoured the arguments of JLM Couture, stating that Gutman was under a contractual obligation to give her employer access to the account in question since she has signed a contract allowing the company to reserve the right of ownership over any marketing platform and contents published under the name of Hayley Paige or any derivative thereof in relation to her branding. Eventually, multiple negotiations and a restraining order (against Gutman) later, it was agreed that Gutman’s social media account was primarily used for marketing purposes, regardless of the odd personal content here and there, and JLM Couture had the contractual right to access it.

The economic value of a business social media account is often greater than a personal one, especially those which have a large following. Companies rely on these social media platform followings to grow the image and reputation of their establishment. Often, when there are blurred lines regarding the ownership of social media accounts, employees can easily damage a company’s imagine. For instance, in the case of PhoneDog v Kravitz, after the termination of Kravitz’s employment, he used the Twitter account originally created to advertise the services of PhoneDog during his employment, to advertise the services of its competitor. The appellant sued for misappropriation of the account and disclosure of trade secrets. The parties settled and Kravitz continued to use the Twitter account, but the appellant endured financial loss and, without a doubt, a loss of clientele.

A business’ right to ownership of social media accounts used for marketing purposes should be made clear, not only to avoid legal disputes such as those mentioned above but also to protect the integrity and image of the company. Employment contracts should contain social media clauses stating that any content produced and published on the social media account under the management of the business belongs exclusively to the business. So, a business social media account constitutes virtual property so why should you risk losing it?

Who really owns a social media account?

The user is the account holder, but the platform retains ownership of the infrastructure. The terms of use generally state that access can be restricted or removed at any time.
➡ A social media account is an intangible asset, governed by contractual terms.

Can a social media account be transferred or sold?

In principle, selling or transferring a personal account is prohibited by most platforms’ terms. However, in a professional context (influencer, brand), monetization or transfer may be allowed under contractual arrangements.

What happens if there is a dispute over a social media account?

In the event of a dispute (employer/employee, co-founders, heirs), courts analyze management, usage history, and intent to determine ownership. Including specific clauses in contracts or policies is strongly advised.

Written by Dreyfus08/06/2022

Don’t be fooled, although the argument of the family of trademarks can certainly be used to avoid the cancellation of a trademark for non-use, it can also work against you. This is partly the lesson taught by a decision rendered on December 17, 2021 by the Paris Court of Appeal (Paris Court of Appeal, Pôle 5, ch. 2, n° RG 20/17286), judging a summary judgment on appeal.

This decision also provided an opportunity to clarify a crucial and not uncommon point of law: the licensee’s standing to sue for infringement in the event of a referral to the interim relief judge.

Facts and procedure. – The first applicant, a natural person named Soraya, is the owner of the European Union word trademark SORAYA covering a swimwear and beachwear creation and distribution activity. She is also the owner of French and European Union semi-figurative trademarks composed of the name SORAYA.

These trademarks are exploited through a company, the second applicant, of which the owner of the trademarks is herself the manager and sole partner. The summary proceedings were brought on behalf of both the operating company and the trademark owner. A contract conferring an exclusive concession was previously concluded between the trademark owner and the company.

After becoming aware of the existence of a company called Soraya Beachwear Ltd. located in Switzerland, the licensee applied to the interim relief judge to obtain a temporary restraining order against it. The latter company operates a website selling swimwear and beachwear on line <sorayabeachwear.com>, as well as an Instagram account related to this site. Also named Soraya, the founder of the challenged company chose to use her first name to designate her collections.

Following the dismissal of their claims, the applicants appealed the summary judgment order.

Admissibility of the licensee to act in summary proceedings alongside the owner. – One of the contributions of this judgment is the interpretation made by the Paris Court of Appeal of Articles L. 716-4-2 of the Intellectual Property Code and 25 4° of the EU Regulation 2017/1001, relating to the standing of a licensee.

Under French law, there are cases in which a licensee may bring a “civil action for infringement”, notably with the consent of the owner or as a beneficiary of an exclusive right of use, provided the owner has not taken the initiative to act within a reasonable period of time after formal notice.

In any event, the Intellectual Property Code and the above-mentioned European regulation both provide that a licensee is entitled to intervene in the infringement proceedings brought by the holder of the IP rights.

There is no doubt in this case that the operating company must be considered as the beneficiary of an exclusive right of use on the invoked European Union word trademark since the exclusive trademark license, submitted to the debate, bestows on the company the status of licensee.

However, it was not a question relating to the intervention the company in the proceedings, but rather of an action being brought jointly by the company and the trademark owner. There seemed to be a confusion between the filing of a joint action, which requires the consent of the owner when the licensee initiates the action, on the one hand, and the intervention of a third party in proceedings initiated by another party, on the other hand. Indeed, it is expressly mentioned that the company “acted in summary proceedings jointly” with the trademark owner before the President of the judicial court. In bringing this action, the licensee seeks to obtain “compensation for the damage that it has suffered”, as provided for in the law rules relating to the intervention of the licensee.

One of the decision’s highlights is the fact that the license agreement was not registered, which is a condition for its enforceability against third parties. It was however ruled that the lack of publicity of the agreement did not hinder the licensee status acquired by virtue of a validly concluded agreement.

The appeal decision therefore deemed admissible the applicants’ action and reversed the interim order on this count.

It should be noted, however, that in the case of a ‘simple’ licensee (who enjoys a non-exclusive license), the solution held by judges not the same. Indeed, under the terms of a previous decision (TGI Paris, ord. ref, July 21, 2011, No. 11/55158, Sté Lyl c/ Michel Attali), the summary proceedings judge stated the inadmissibility to act of the simple licensee: “only a person with standing to bring an infringement action may refer the matter to the summary proceedings judge in accordance with the provisions of Article L. 716-6 (…), this is not the case of the non-exclusive licensee who is only admissible to intervene in an infringement proceeding initiated by another party in order to obtain compensation for the damage that is specific to him, by application of article L. 716-5 of the Intellectual Property Code”.

In addition to verifying standing, the summary judgment judge, when not confronted with a manifest nullity of the title invoked, limits itself to assessing the existence or imminence of an infringement of the petitioners’ rights.

Lack of use of the invoked trademark. – The procedure to be followed by the interim relief judge was specified in a decision of June 28, 2011 (TGI Paris, ord. ref, June 28, 2011): “The interim relief judge must therefore rule on the challenges raised before him to oppose the measures requested, and these challenges may concern the validity of the title itself ; It is then up to the judge to assess the seriousness or otherwise of the challenge and to evaluate the proportion that exists between the challenge made by the defendants and the imminent infringement alleged by the plaintiffs and to decide, in view of the risks incurred on both sides, whether or not to prohibit the marketing of the products, to order their withdrawal and to award an advance”.

In this case, the infringement of the applicants’ rights could seemingly be characterized by the use of the identical name SORAYA to cover strictly identical products and services, namely swimwear and beachwear, as well as the related commercial services.

The applicants, in order to claim infringement, relied solely on one of their trademarks: a European Union word trademark composed exclusively of the first name SORAYA. However, in order to be successful in the proceedings, the applicants had to be able to demonstrate genuine use of the trademark in question.

As a reminder, a trademark is subject to genuine use if, within a continuous period of 5 years, it is be used in accordance with its essential function, which is to guarantee the origin of the goods and services for which it is duly registered (Regulation (EU) 2017/1001 of 14-6-2017 art. 58, 1-a).

The applicants, in communicating the evidence intended to demonstrate the serious use of the trademark, seemed to rely on a certain reputation, which they did not explicitly argue. Instead, they testified to a simple “well-known use” of the trademark, induced in part by their long-standing partnership with the Miss France election. However, the argument that did not work in their favor was that “the exploitation of the derived trademarks that were the subject of subsequent registrations did not in any way diminish the use of the historical trademark SORAYA. In addition, in order to justify the serious use of the trademark, the applicants communicated documents with a certain date, but for the complex SORAYA signs and not for the SORAYA word trademark. Moreover, among the plethora of documents submitted in support of genuine use of the trademark, several of them did not have a definite date, which makes it impossible to determine whether the trademark was actually used during the five-year reference period for which genuine use must be proven. However, this period was not communicated by the opposing party’s appeal. Therefore, in this respect, the first instance court judges referred to the period specified in the last pleadings addressed to the summary proceedings judge.

With respect to the various trademarks derived from the trademark in question, which are mostly semi-figurative trademarks, the judges will consider them as a family of trademarks.

This qualification of family of trademarks must be retained, according to consistent caselaw, for trademarks commonly held by one and the same owner and including the same distinctive element. Although the contours of this concept are insufficiently understood, it should allow a trademark owner and operator to avoid the sanction of cancellation for failure to use a trademark, whether registered or not.

A recent decision rendered by the European Union Court of First Instance (EUTA) testified to the appropriateness of this concept in relation to several trademarks containing the element “Mc”/”Mac” and owned by the American company McDonald’s. In 2016, McDonald’s won the case by asserting the following 12 trademarks in the European Union: McDONALD’S, McFISH, McTOAST, McMUFFIN, McRIB, McFLURRY, McNUGGETS, McCHICKEN, EGG McMUFFIN, McFEAST, BIG MAC, PITAMAC. The qualification of “family of trademarks” was thus retained to cancel a “MacCoffe” trademark.

Nevertheless, what is worth remembering following the SORAYA decision is that the first instance court judges will consider that the use of a family of trademarks cannot be successfully invoked “when the aim is to establish the use of a sufficient number of trademarks of the same “family””. In this sense, the use of one trademark cannot be invoked to justify the use of another trademark. In other words, the fact that the applicants used the semi-figurative trademarks independently, which are also different from the EU word trademark, does not allow them to rely on the concept of use of a family of trademarks.

Practical considerations from the decision:

– The exclusive licensee, together with the owner of the trademark, is entitled to bring an action in summary proceedings for the prosecution of alleged infringements;

– The licensee has standing to act even if the contract under which he derives his rights has not been subjected to publicity formalities;

– The assessment of the genuine use of a European Union trademark is carried out with regard to a reference period of 5 years, which is in principle specified by the party claiming the lack of such use, both in the writings addressed to the judge of the summary proceedings and to the Court of Appeal;

– The use of a substantial number of trademarks derived from the invoked trademark, and presumably constituting a series/family of trademarks, does not necessarily prove a substantial use that will defeat the legitimate use of similar trademarks.

“Gender washing & Greenwashing: Mother Nature, emblem of the instrumentalisation of societal and environmental struggles by tomorrow’s enterpreneurship?”

If you want to know more about intellectual property issues and discover a rich and experienced vision on the subject, you can also read the article Nathalie Dreyfus wrote for “Women’s IP world Annual”.

ABOUT THIS TOPIC…

♦Online Trademark Protection

Written by Dreyfus16/05/2022

In a major development for the global Intellectual Property ecosystem, China joined the Hague System for the International Registration of Industrial Designs on 5 February 2022. This accession will enter into force on 5 May 2022. Following Belarus and Jamaica, the world’s second largest economy has just joined this Union which aims to facilitate the international registration of designs.

Joining a system to facilitate access to design protection

The Hague System was set up to facilitate the protection of industrial designs internationally, through a simplified filing system with a single office: The World Intellectual Property Organization (WIPO). Currently, 76 contracting parties are members of the system, bringing together 93 countries, including France, the European Union, the US, but also many countries in Africa, Asia and Eastern Europe. Given the importance of the appearance of a product, many countries have ratified the Hague Agreement in recent years. China has become the 77th contracting party to the Agreement.

Registering designs with WIPO allows them to be protected in the chosen countries – provided they have actually joined the Hague system – by paying a fee for each requested country. It is therefore not, strictly speaking, an international protection, as each title remains valid only in the concerned territory. Similarly, all acts relating to the protection of the design (registration, renewal) will be carried out in a single procedure.

The consequences of such accession

From now on, all Chinese designers will be able to benefit from the international design system. It is faster and less costly, and limits formalities by providing for a single filing covering up to 100 designs. As for foreign designers, they will have an easier access to the Chinese market, the world’s largest design application market. In 2020, the Chinese Intellectual Property Office received applications containing some 770,362 designs, which represents about 55% of global design applications. By comparison, there were “only” 113,196 EUIPO design filings.

However, the sole registration of a design with WIPO does not guarantee its protection in all the countries requested. WIPO then notifies the offices of all the designated States for an examination specific to each legislation. It is therefore necessary to pay particular attention to the conditions for protection. For example, in France: novelty, specific character and visibility of the design!

In order to file an application for design protection, French legislation provides for a grace period of 12 months following the first disclosure of the design. China, on the other hand, requires absolute novelty. It will therefore be necessary to pay attention to the specific protection conditions in certain countries in order to optimize the protection of a design internationally.

China’s accession to the Hague Agreement is therefore a real step forward in the homogenization of design registration. China has thus become the 77th contracting party to the Hague Agreement and gives hope that other highly innovative States will soon join in.

1. Assessment of the likelihood of confusion in light of the overall impression given by the signs

Since the “SABEL BV v. Puma AG” judgment handed down on November 11, 1997 by the Court of Justice of the European Communities, a new approach to the assessment of the similarity between two signs has been put forward. This approach is more global, notably by studying the three following criteria: visual aspect, aural aspect and conceptual aspect. As a result, the Office conducts a step-by-step analysis of these criteria between the earlier mark and the application for registration of the contested mark.

First of all, on the visual aspect, the Office found a very low degree of similarity insofar as the two signs “have in common only the letter L” and “partially coincide in the stylization of the two letters”. In addition, although the stylization and colours used in the two signs are the same, consumers will perceive these elements as being merely decorative. The judges especially note a difference between the two signs by the addition of the words “LOVES” and “VITTORIO” and the letter “N” in the contested sign.

Likewise, in terms of aural similarity, the judges found only a slight degree of similarity in the pronunciation of the letter “L”. Finally, the Office stated that the two signs are conceptually different.

Thus, the Office concludes that the few similarities between the two signs are not sufficient to cause a likelihood of confusion for the consumer with an average level of attention and that they will distinguish the origin and the source of each sign. Moreover, the relevant public will perceive the sign as a whole, in particular by the addition of the terms “LOVES” and “VITTORIO” as well as the letters “L” and “N”, and will not limit itself to the same stylisation.

However, it must be noted that there is a visual similarity that could lead the relevant public not to perceive the difference between the letters “LV” and “LN” in a clear and precise manner, especially since the added term is “VITTORIO”.

Moreover, in view of the identical goods covered by the two signs, it seems somewhat surprising that the judges did not take this into account, given that according to the “Canon Kabushiki Kaisha and Metro-Goldwyn-Mayer Inc.” judgment handed down on September 29, 1998 by the Court of Justice of the European Communities, a low degree of similarity between the signs can be compensated by a high degree of similarity between the designated goods or services.

2. The unfortunate exclusion of the reputation of the earlier mark

At first glance, this decision may seem surprising in the sense that the earlier mark “LV” is a mark that supposedly enjoys a strong reputation.

Indeed, this reputation could probably have led the judges to grant the opposition request to the application for the registration of the contested mark, if the latter ” unduly [took] advantage of the distinctive character”; “or the reputation of the earlier mark”; “or [was] detrimental to them”.

However, this exclusion of the reputation of the mark is fully justified insofar as the Office renders its decision by limiting itself to the evidence and arguments provided by the opponent. However, the opponent did not provide evidence of the mark’s reputation, in accordance with Article 7(2)(f) of the European Trade Mark Delegated Regulation

It is therefore essential before the filing of any opposition to analyse the similarity between the signs and the goods and services between your trademark and the disputed trademark application, and particularly to provide all relevant evidence demonstrating the intensive use of the trademark or its reputation.

This decision highlights the importance of the evidence provided during a procedure relating to the relative grounds for refusal of registration of a trademark application, evidence that could undoubtedly have allowed a different turn of events.

Intellectual Property

How did a sharp drop in Ethereum gas fees illustrate the real interest of the general public in NFTs ?

SEE ALSO…