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In the dynamic and often complex world of intellectual property (IP) management, understanding the value of IP assets such as trademarks, softwares, and domain names is paramount. For businesses, these intangible assets are not merely legal rights; they represent substantial economic value that can drive growth and competitive edge. Therefore, effective evaluation and valorization of these assets are crucial for strategic IP management, financing decisions, and maximizing returns.

How we proceed

The evaluation of a trademark involves a comprehensive analysis of its visibility, its market impact, and legal protection. The process includes assessing the trademark’s recognition among target consumers, its association with quality or prestige, and the legal breadth covering geographic scope and product classes. Valorization hinges on financial metrics such as revenue from licensing agreements, market penetration rates, and the potential for expansion into new markets or product lines. Strategic use of trademarks can enhance brand value and create new revenue streams through brand extensions.

For domain names, the focus is on evaluating their effectiveness in driving online traffic (SEA potential) and their alignment with a company’s branding strategy. Key factors such as keyword relevance, memorability, and historical traffic data are crucial. Financially, domain names can be appraised based on comparable sales, potential advertising revenue, and their impact on reducing marketing costs. The strategic acquisition or sale of domain names can significantly affect a company’s digital presence and market reach.

Finally, software assets are appraised through both technical and market-driven lenses. Initially, a qualitative analysis evaluates the software’s functionality, user base, scalability, and technical robustness, which includes an assessment of code quality, cybersecurity measures, and compliance with licensing. A financial valuation may consider direct revenue from sales or licensing, the cost to replace or replicate the software, and a market comparison approach. This comprehensive analysis helps ascertain the software’s contribution to a company’s valuation, taking into account its ability to generate revenue, facilitate business operations, or provide a competitive advantage.

Our expert services

Our firm provides specialized services for the evaluation and valorization of IP assets, ensuring accurate and compliant appraisals. We assist clients in strategic decision-making, leveraging our legal expertise and market insights to enhance the value of IP portfolios. Our team, including an expert accredited at the French Supreme Court (Cour de Cassation), is dedicated to upholding the highest standards of legal integrity and strategic insight.

Whether you are considering a merger, acquisition, or need to assess the IP value for financial reporting, our team is equipped to provide detailed analysis and strategic guidance. By engaging our services, businesses can not only safeguard their IP assets but also optimize their value in line with corporate objectives and market opportunities.

Dreyfus & associés partner with an international network of Intellectual Property attorneys

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A paradigm Shift in AI Governance

The European Union’s Artificial Intelligence Act (EU AI Act) was presented by the Commission in 2021. The European Union’s recent push to regulate artificial intelligence (AI) has sent ripples across the tech world, marking a significant shift in how generative AI models like ChatGPT, Bard, and others will operate.

In a recently negotiated compromise on the European AI Act of December 8, 2023, the focus has sharpened on copyright laws concerning data used in training these AI models.

As the legislation is still under wraps, experts are dissecting the potential impacts based on the EU’s official communications.

Key Obligations for Generative AI Model Creators: Ensuring Transparency and Respect for Copyright

Transparency in Data Usage: The proposed regulation emphasizes the importance of transparency. AI creators must publicly provide a sufficiently detailed summary of the content used for training their algorithms. Though the exact precision of these summaries is yet to be defined, the intent is clear: it aims to identify the rights holders, paving the way for possible compensation negotiations. This move is seen as a win for content creators, including authors, scriptwriters, and media companies, whose work might have been used without direct compensation.

Respect for European Copyright Law: AI enterprises must comply with European copyright laws, a seemingly obvious but vital requirement. This includes adherence to opt-out clauses, allowing rights holders to refuse the use of their content by AI systems. Institutions like the French collective management of author’s rights SACEM have established such clauses.

In depth analysis: Assessing the Impact and Challenges Ahead

Despite the positive outlook, the exact implications remain in the air until the technical meetings conclude. The SACD, among other institutions, expresses cautious optimism but emphasizes the importance of not backtracking on the progress made.

Firstly, while the regulation’s intent to protect copyright holders is commendable, the enforcement and practicality of these rules are somewhat ambiguous. The requirement for a “sufficiently detailed summary” of data used in AI training is vague and could lead to varying interpretations, creating potential loopholes or burdensome compliance processes.

Moreover, the obligation to respect European copyright laws, including opt-out clauses, may be seen as a significant step towards empowering creators. However, this could also impose substantial limitations on the development and scalability of AI technologies, potentially stifling innovation and economic growth. The balance between protecting individual rights and promoting technological advancement seems to be a delicate one, and this regulation might tilt the scales unfavorably for the AI industry.

The tension between transparency and protecting trade secrets is another critical point. Complete transparency of training data could indeed harm businesses, revealing proprietary methods and competitive advantages. The proposed solution of limited disclosure to regulators or trusted entities might mitigate some risks, but it also adds layers of bureaucracy and complexity, possibly slowing down AI development and deployment.

Furthermore, while the regulation is a European initiative, AI is inherently global. The differences in legal and ethical standards across borders might lead to conflicts or compliance challenges for multinational companies. This could inadvertently create a fragmented digital landscape, where AI technologies and their benefits are not evenly distributed.

Lastly, while the regulation aims to protect existing industries and creators from the disruptive impacts of AI, it might also hinder the creative potential and societal benefits that generative AI promises. The cultural and creative sectors could experience a slowdown in innovation if overly restrictive measures are put in place.

The effectiveness and fairness of these measures will depend on their implementation and the continued dialogue among stakeholders. A balanced approach is required to safeguard individual rights and cultural heritage while fostering innovation and global collaboration in the AI domain.

A Nex Era of AI Regulation Begins

As the technical discussions proceed and the final vote nears, stakeholders from all sides are keenly watching, hoping to influence the outcome in their favor. This regulation could set a precedent, not just for Europe, but globally, as countries grapple with the fast-evolving landscape of AI and its widespread implications. The unfolding narrative of the European AI regulation is a testament to the complexities of governing frontier technologies and the need for comprehensive, adaptive, and inclusive policies. The world watches as Europe takes these pioneering steps, setting a precedent for AI governance worldwide.

Introduction

Artificial Intelligence (AI) is increasingly integrated into various sectors, significantly impacting society, economy, and governance.

The European Union is in the process of establishing a comprehensive AI-specific regulation. A proposal, the European Union’s Artificial Intelligence Act (EU AI Act) was presented by the Commission in 2021, aiming to set harmonized rules for AI to ensure safety, compliance with fundamental rights, and environmental sustainability.

On December 8, 2023, the European Parliament and Council reached a significant milestone by agreeing on the EU AI Act. This act is celebrated as a “global first”, marking the EU as the forerunner in the comprehensive legal regulation of AI. This legislative act aims to ensure that AI systems used within the EU are safe, uphold fundamental rights, and adhere to EU values, while also promoting investment and innovation in AI technologies.

This article provides an in-depth look into the EU’s legislative journey and explores the critical components, implications, and future prospects of the European legal framework for AI.

Risk-based Approach to AI Regulation

The legislation is built on a risk-based approach, categorizing AI systems into four levels of risk: unacceptable, high, limited, and minimal/no-risk. These classifications guide the extent and nature of regulatory requirements applied to each system, focusing significantly on unacceptable and high-risk AI systems.

Unacceptable-risk AI systems: This category includes AI applications considered a clear threat to safety, fundamental rights, or EU values. Examples include systems that manipulate human behavior or allow untargeted scraping of biometric data. Such systems are prohibited outright.

High-risk AI systems: This category encompasses AI systems that could potentially cause significant harm in critical areas like infrastructure or law enforcement. They are subject to strict compliance obligations, including risk mitigation and transparency requirements.

Limited-risk AI systems: These AI systems must adhere to minimal transparency obligations. They include technologies like chatbots or certain biometric categorization systems.

Minimal/no-risk AI systems: The majority of AI applications fall into this category, where the risk is deemed negligible. The use of these systems is freely allowed, with encouraged adherence to voluntary codes of conduct.

Safeguards for General-Purpose AI Models

An innovative aspect of the EU AI Act is its approach to regulating general-purpose AI (GPAI) models, which are systems or models that are not designed for one specific task but rather can be used across a wide range of tasks and sectors. They are foundational in nature, often serving as a platform on which other, more task-specific AI systems are built. Examples of general-purpose AI include large language models like GPT-3 or image recognition systems that can be applied to various sectors from healthcare to automotive to entertainment.

After intense debate, the Act introduces obligations for all GPAI models, with additional requirements for those posing systemic risks. This tiered approach aims to balance the need for regulation with the desire to not hinder technological advancement.

Enforcement Framework and Penalties

The Act will be enforced through national competent market surveillance authorities, with coordination at the EU level facilitated by a European AI Office. The European AI Board will serve as a platform for member states to coordinate and advise the Commission. Penalties for non-compliance are substantial and tailored to the severity of the infringement, with more proportionate fines for smaller companies and startups.

Anticipated Impacts and Future Steps

As the EU AI Act nears official adoption and implementation, a two-year grace period will begin for entities to comply, with certain prohibitions and GPAI obligations taking effect earlier. This transitional phase is vital for establishing robust oversight structures and ensuring stakeholders are fully prepared to meet the new regulatory requirements.

Conclusion: A Paradigm Shift in AI Governance

The European Union’s Artificial Intelligence Act represents a significant stride towards responsible and ethical AI development. By enacting a comprehensive, risk-based regulatory framework, the EU aims to protect citizens and uphold democratic values while fostering an environment conducive to innovation and economic growth. The Act’s influence is expected to extend beyond Europe, setting a precedent for global AI governance and encouraging international collaboration in creating a safer AI future. As the EU navigates this uncharted territory, the world watches and learns, ready to adapt and adopt measures that ensure AI benefits all of humanity while mitigating its risks.

The rapid emergence of generative artificial intelligence has significantly impacted the intellectual property law landscape, attracting widespread attention. In France, the existing copyright laws do not explicitly address how they apply to works created by AI.

French copyright law traditionally protects original works, Under French copyright law, protection is granted to original works, regardless of the form in which they are expressed. However, the law provides no specific guidance on how to apply these principles to AI-generated content. As a result, there is some uncertainty as to whether AI-generated works can be protected by copyright.

On September 12, 2023, French legislators from the Assemblée Nationale presented a law proposal to the Presidency specifically designed to clarify copyrights rules related to AI.

In this article, we delve into the key provisions of this bill, offering a critical analysis of its strengths and weaknesses.

Analysis of the law proposal on AI and Copyright of September 12 2023

Preamble of the draft law

The preamble outlines the objective of the law, which is to “protect authors and artists of creation and interpretation based on a humanist principle, in legal harmony with the Intellectual Property Code”.

The preamble gives an example of what a AI generated creation is with the 2016 creation of “The Next Rembrandt” made by a computer and a 3D printer, long after the original artist’s demise. However, we should note that it is a shame that the only example mentioned in the preamble is a creation dated from 2016 (created 7 years before the draft law). More contemporary examples would have been appreciated.

Through collective management, this proposal seeks to ensure fair and equitable remuneration for authors and artists of creation and interpretation, and to ensure the traceability of authors and artists whose work has been used by AI.

Articles of the draft law

The draft law is divided into four articles which act as amendments to existing articles of the Intellectual Property Code (IPC).

1. Preamble to Article L 131-3 of the IPC: Authorizing AI Integration of Copyrighted Works

The first change to article L 131-3 of the IPC – which deals with the transfer of author’s rights – involves adding a new paragraph. This new paragraph states that “the integration by artificial intelligence software of intellectual works protected by copyright, and their exploitation, is subject to the general provisions of the IPC, and therefore to authorization by the authors or right holders”.

Adding such a paragraph to a provision primarily focused on copyright assignment formalities raises questions about its appropriateness.

Moreover, it’s worth noting that the existing reproduction right may already cover aspects related to exploitation and authorization by the author. However, if this inclusion necessitates authorization from the original work’s author, it could become cumbersome in practice. Therefore, collective management, as seen in reprographic reproduction rights in France, might offer a more practical solution.

Finally, this amendment could conflict with the existing European (DIRECTIVE 2019/790 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 April 2019 on copyright and related rights in the Digital Single Market) and French (Article L122-5-3 IPC) provisions regarding the Text and Data Mining exception and limitation.

2. Addition of Nine Paragraphs to Article L 321-2 of the IPC: Authorship and the Role of Collective Management Organizations in AI Generated Work

Article 2 introduces nine new paragraphs into article L 321-2 of the IPC, as regards to the legal actions and roles of collective management organizations. These organizations handle copyrights on behalf of rightsholders in a collective manner.

The first paragraph of this amended article reads: “When the work is created by artificial intelligence without direct human intervention, the only rights holders are the authors or rightsholders of the works that made it possible to conceive the said artificial work”. Subsequent paragraphs aim to facilitate collective management of AI-generated rights and the distribution of corresponding remuneration by collective management organizations.

Once again, the inconsistency in codification is evident. First, the term “work” suggests that AI outputs are indeed copyrighted works (oeuvres).

The phrasing “Without human intervention” is not appropriate since nearly all works involve at least some human intervention.

Finally, this amendment assigns ownership of the work to the authors or rightsholders of the works that enabled the creation of the said artificial work. However, the new paragraph does not specify how the collective management organizations would identify those “authors or rightsholders of the works”. A possible approach could be to view each contributor of input data used in the AI’s training process as a co-author of the resulting work. This perspective acknowledges that every output from the AI is essentially a derivative of all its various inputs.

Thus, to enhance legal clarity, it might be more appropriate to create new articles specifically dedicated to the collective management of works generated by AI.

3. Amendment to Article L 121-2 of the IPC: Transparency and Authorship

Article 3 introduces a new paragraph into article L 121-2 of the IPC, which deals with the exclusive right of publication of a work (droit de divulgation).

This paragraph mandates the inclusion of “work generated by AI” and the insertion of the names of the authors of the works that lead to the creation of such work.

However, this paragraph suggests, once again, that AI works are protected by copyright as it is included in an article dedicated to one of the most important exclusive rights of the authors. In fact, article L 121-2 of the CPI predominantly addresses the authors’ right of disclosure.

More, while this new paragraph aims to distinguish AI-generated from non-AI-generated works, its placement in this article appears inappropriate. Creating a new article dedicated to this matter might offer better clarity.

Furthermore, the requirement to include the names of the authors of the original works raises questions about the existing provisions for protecting authorship rights.

Interestingly, these references seem to parallel the mandatory labeling of “retouched photograph” in commercial advertising, where models’ photographs are used.

4. Amendment to Article L 121-2 of the IPC (Article 4): The new Taxation System for AI Companies

Lastly, the bill concludes with article 4, amending article L 121-2 of the IPC – as regards to publication right – where the aforementioned concerns about codification consistency apply once more.

These three paragraphs introduce a taxation system, to be paid by the AI system-operating companies, to collective management organizations, when the origin of an AI work cannot be determined.

Article 4 notably draws a connection to article L 324-14 of the CPI, which addresses cases where identifying right holders is impossible. In such situations, the amounts collected are treated as non-distributable funds, the allocation of which appears to be guided by collecting societies’ general policies. This proposed law goes a step further by converting these non-distributable funds into a tax designed to promote creative endeavors. As it stands, this paragraph seems to establish a tax that most creators will never benefit from.

More, the risk here is that AI companies will cease to provide services in France.

Final Thoughts: Balancing Act in Adapting Copyright Law for the AI Age

The bill aims to adapt copyright law to the AI era, addressing author remuneration through a collective management system. However, it has notable shortcomings and lacks clarity, particularly regarding how it handles exceptions like parody or pastiche. While it takes steps towards necessary legal reforms, it leaves many questions unanswered and may require additional refinement to be truly effective.

Introduction: The intersection of language and law in EU Trademark Disputes

In a landmark decision on July 26, 2023, the European Union Court underscored the critical role of linguistic analysis in adjudicating cases of brand confusion. This case, involving the nuanced understanding of language in trademark law, sets a precedent in legal circles and offers a comprehensive look at the intricate nature of trademark disputes within the EU’s dynamic linguistic landscape.

Background: The Case of Frutania vs. Frutaria

In 2013, Markus Schneider filed a trademark application for EU figurative trademark “Frutania,” covering various products and services. Frutaria Innovation, SL, holder of the EU figurative mark “Frutaria” registered in 2010, filed an opposition.

In July 2023, the European Union Court acknowledged a risk of confusion between the “Frutania” trademark application and the earlier “Frutaria” mark. The Court indeed emphasized that, in assessing confusion between two EU trademarks, linguistic knowledge must be considered.

Linguistic Considerations: Assessing the Risk of Brand Confusion

A crucial argument in this case involved the definition of the concerned public. The group of consumers considered relevant in assessing the risk of confusion can be challenged, namely the Bulgarian, Croatian, Slovak, Czech, Polish, Slovenian, Hungarian, Estonian, and Finnish populations, for whom the use of the term “frutaria” was arbitrary and therefore distinctive.

The inclusion of the Lusophone and Hispanophone public in this assessment is also questionable. These populations perceived in the earlier “frutaria” mark an evocation of the Spanish term “frutería” (grocery, fruit store). Therefore, the overall and particularly conceptual differences between the “Frutaria” and “Frutania” signs are significant enough to exclude any risk of confusion.

Nevertheless, in its decision, the appeal board indicated that it could not be assumed that consumers in Slavic-speaking countries as well as in Hungary, Estonia, and Finland had sufficient knowledge of Spanish to understand that the term “frutaria” was close to “frutería,” which designated a fruit store.

Legal Precedents and Linguistic Proficiency

Jurisprudence confirms this viewpoint, asserting that mastery of a foreign language cannot be generally presumed (cf. particularly the decision of the European Union Tribunal of September 13, 2010, in the case Inditex/OHIM v. Marín Díaz de Cerio (OFTEN), Case T-292/08 [paragraph 83]).

Although it is generally accepted that most consumers know basic English terms, it seems that this is not the case for the Spanish language. Consequently, the verbal element “frutaria” is distinctive and predominant compared to the simple figurative elements, which are therefore secondary.

In this particular case, the tribunal noted that the Appeal Board had correctly assessed the intrinsic distinctiveness of the earlier mark, taking into account the importance that the word element of the earlier mark could have for the part of the relevant public composed of Bulgarians, Croatians, Slovaks, Czechs, Poles, Slovenians, Hungarians, Estonians, and Finns. Therefore, the tribunal concluded that the Appeal Board had made no error in judgment by focusing its examination of the risk of confusion on this specific part of the relevant public.

Implications: A Refined Approach to EU Trademark Law

The Tribunal, referring to relevant jurisprudence, highlighted that when an earlier mark on which opposition is based is a European Union mark, it is not necessary for the risk of confusion to exist in all Member States and all linguistic areas of the European Union. The unitary nature of the European Union trademark allows it to be invoked against any subsequent trademark application that could potentially infringe on the protection of the first mark, even if the confusion is limited to a specific part of the European Union.

In other words, just because the risk of confusion could be ruled out for Lusophone and Hispanophone countries, based on conceptual differences, does not mean it did not exist for other countries of the European Union.

Conclusion on Linguistic Factors in EU trademarks

The EU Court’s decision in July 2023 marks a pivotal moment in trademark law, weaving linguistic intricacies into the fabric of legal reasoning. As businesses continue to operate in an increasingly globalized market, the significance of linguistic considerations in legal strategies becomes ever more pronounced. This case not only sheds light on the complexities of trademark disputes but also establishes a precedent for incorporating linguistic analysis into legal practice within the European Union and beyond.

Legal Watch: Apple Corporation legal challenges to obtain full trademark rights on the generic “Granny Smith” Apple

In 2017, the Swiss Institute of Intellectual Property (IPI) rejected Apple Corporation’s first trademark application for a novel Apple image. Following the decision, Apple filed multiple appeals for the proposed mark for use in several technological areas. These tech areas include digital and electronic consumer goods, audiovisual, video, new technologies, media, and cinematographic recordings. Apple then appealed to the Federal Administrative Court, which upheld the decision of the IPI and denied Apple’s novel logo, once again. In an attempt to overturn the verdict, Apple went as far as to handle this legal matter internationally to global IP legal professionals and court officials, which yielded mixed results. The Federal Institute for Intellectual Protection (IPI) 2022 decision highlighted how the multinational corporation proposed mark lacked the distinctive character necessary to claim protection. In other words, the image would not sufficiently identify and distinguish the designated goods or services, thus leading to confusion between similar marks. Eventually, in recognition of Apple Corp.’s rigorous efforts, IPI changed its verdict and granted partial rights to limited categories. However, in opposition to the court verdict, Apple filed another appeal in the spring of 2022. Apple aims for complete ownership and legal rights over the Apple image.

Apple Corporation’s novel mark consists of a black-and-white image of an apple similar to the Granny Smith apple. In 1868, the Granny Smith apple was discovered and became the most infamous green and sour apple from the orchard of Ryde, New South Wales, Australia, by farmer Maria Ann Smith (also known as Granny Smith). The Granny Smith Apple is renowned as one of the top five commercially grown fruits in the U.S. and the first variety of apples exported globally for sale in supermarkets. Given the generic nature, the apple image has been identified as a non-specific product in the public domain with no brand name or registered trademark. Throughout history and modern times, the apple served as a versatile icon. The apple image versatility displays through commercial sectors like the arts, retail stores, technology businesses, and entertainment. Due to the apple image’s generic nature, Apple Corporation’s claim creates controversy regarding the permissibility of a generic fruit registered as a tech corporation’s official trademark. Concerning legal matters pertaining to similarities between marks, the risk of confusion for consumers, the negative impact on local farm-growing businesses, and cases of infringement.

Along with certain court officials, Fruit Union Suisse Director Jimmy Mariethoz also expresses concerns about Apple Corp’s degree of action to gain the new Apple mark. In such a case, the corporation and worldwide businesses could result in impending events like forced alteration of logos, re-establishing business identities, and loss in revenue due to legal proceedings and charges. All this global detriment could happen due to one’s corporation’s desire to obtain something that was once a public shared commodity. In an attempt to protect its own apple mark, Fruit Union Suisse continues to voice opposition to this multinational corporation’s unwavering legal pursuit. Fruit Union Suisse is Switzerland’s oldest and largest fruit farmer’s organization. For many years, the association promoted Swiss fruit growers’ commercial interests. In addition, the association maintained its red apple emblem, adorned with a white cross. The association symbol is a representation of the country’s state flag. For the organization, a change of its mark is a decline in commercial operations, stripped of culture and tradition, and an erase of rights and freedoms.

As Apple’s claim for full rights to the image is unsettled, Intellectual Property professionals will closely monitor the court’s decision. The IPI’s decision could result in global economic and legal changes. In light of this new development, changes in the IP global landscape have placed corporations in positions that detail transformative aims to maintain a competitive advantage. Companies’ plans like business expansion, modifying products, and altering logos come with unforeseen results. Occasionally, one must take risks or thorough analysis for decision-making. Thus, there is much to consider in trademark protection and ownership pertaining to common goods. In addition, other apple image brand companies are likely to be significantly impacted. Overall, the visual representation or any advertisements of an apple is potentially affected.

A well-known trademark does not defeat the use of a term in a descriptive manner

According to a decision rendered on December 8, 2022, a WIPO expert ruled on a RIPO complaint filed by B.S.A., a subsidiary of Lactalis Group. The complaint was regarding the famous “PRESIDENT” Camembert, which marketed several cheese types under this trademark. The trademark “PRESIDENT” has been registered in Australia since 1978 by B.SA., in class 29. 

The Disputed Domain Name, <president.com.au>, was registered on June 22, 2006, by Internet Products Sales & Services Pty Ltd. This is a company specializing in domain registration and resale. By registering such a domain name, the company is taking advantage of the likelihood that people may use the domain name to search for information related to “President”. This gives the company the opportunity to generate revenue from pay-per-click links. The disputed name links to a page with pay-per-click links such as “Presidents of the Senate”, “Presidents of America” and “Presidents of a Company”. As a reminder, pay-per-click is a business model where the advertiser compensates the host of an ad based on the number of interactions it has generated. The page also indicates that the domain name “could be for sale”, proposing a form to submit an offer, without indicating a price. In support of its complaint, the Complainant invokes the reputation of its trademark “PRESIDENT” and argues that the Disputed Domain Name was registered with the sole purpose of being resold to it at a high price. 

In the Complainant’s view, the domain name was registered to sell it to the Complainant. The commercial link page prejudices the Complainant. However, there is no evidence that the Respondent targeted the Complainant’s trademark. The fact that it offered a form to redeem the domain name is not sufficient to prove bad faith. The Complainant further argues that the Respondent, which holds a large portfolio of domain names (more than 7,000), had a duty to check registrations for infringement of third-party trademarks. The Panel notes that in the case of domain names consisting of generic terms and used for that purpose, it is difficult to blame the Respondent for not conducting a trademark search. In addition, there is no evidence in the record that the Respondent used the name in connection with the Complainant’s business. The Panelist notes that, despite a substantial domain name portfolio, the Respondent appears to have only registered names composed of dictionary terms between 2006 and 2022. The Respondent was the target of only one successful UDRP complaint. In this case, the Complainant must present even stronger arguments: “Generally speaking, the less unique the complainant’s trademark or name, the more likely it is that the respondent will have rights or a legitimate interest in a corresponding domain name“. It is, however, not enough to establish a respondent’s absence of legitimate interests, rights, or bad faith for a domain name that contains a dictionary word or expression. Thus, the expert considered that although the use of a domain name for a pay-per-click link page is generally not considered to generate rights or legitimate interests, this may be the case when the domain name consists of a dictionary word and is associated in connection with that word. This is because dictionary words often have multiple meanings and can be used to describe a variety of products or services. Thus, the use of a domain name that contains a dictionary word or expression can be legitimate if it is used in connection with the word and is not used solely for the purpose of driving traffic to a pay-per-click link page.

Nevertheless, the Panel decided not to rule on the issue of rights and legitimate interests in light of its observations of bad faith. The Panel notes that the Complainant has not provided any evidence of its reputation or activity in Australia when registering the domain name in 2006. As a result of this decision, it is worth recalling that the UDRP procedure provides that these criteria are cumulative, whereas the UDRP procedure stipulates that registration or use in bad faith is sufficient. The expert’s decision is logical: trademarks should not prevent the use of a term in its descriptive sense. The expert’s solution is thought-provoking and logic leads one to wonder whether his position might have been different if one of the pay-per-click tabs displayed links related to dairy products. Finally, in view of the elements of the file, B.S.A. should have known that its complaint had almost no chance of succeeding. This is especially since the name is old and there is no evidence that B.S.A received a sales proposal from the defendant.

The UDRP is not a suitable forum for resolving cases of possible defamation

This dispute reflects the conflict of thought in today’s societies regarding the support of minors on gender. This decision, released on December 12, 2022, reminds individuals to keep several key conditions in mind when filing UDRP complaints for children and adolescents, such as the UDRP complaint filed by the Little Mermaid Observatory of Ideological Discourses on Children and Adolescents. 

The company “Little Mermaid Observatory of Ideological Discourses on Children and Adolescents” presents itself as an association aiming to “identify any element related to ideologies concerning children and adolescents” and “preserve children and adolescents from the dangers and consequences pertaining to discourses concerning them”. The association operates the website www.observatoirepetitesirene.org where it publishes articles related to gender dysphoria issues. The domain name <observatoirepetitesirene.org> has been registered on March 2, 2021. However, it is not specified for how long it has been used. In support of his complaint, he asserts, on the one hand, his prior domain name, <observatoirepetitesirene.org> and, on the other hand, his French trademark application “OBSERVATOIRE LA PETITE SIRENE” filed on September 12, 2022, and published on October 7, 2022. The trademark was not yet registered at the time the complaint was filed. The Disputed Domain Name, <petitesirene.org>, on the other hand, was registered on June 4, 2022, by the co-president of the association OUTrans, which aims to support transgender people. This domain name refers to a website dealing with the applicant and alerting the association’s objectives. The Complainant argues that the Disputed Domain Name “constitutes a flagrant and intentional error in the spelling of its prior domain name”. However, the name is clearly not typo squatting, as it uses the words “the little mermaid” explicitly and without error. Firstly, “in view of the dates of filing and publication of the trademark application asserted by the Petitioner, taking into account the minimum duration of the procedure before the INPI, even supposing that the trademark application succeeds in being registered, this registration cannot materially take place before the expiration of the deadline in which the Administrative Commission is required to give its decision“. Thus, the Expert also notes that the sign “OBSERVATOIRE LA PETITE SIRENE” cannot confer any rights under a possible trademark, because it is not used in business. The first condition of the UDRP principles cannot, therefore, be fulfilled. In addition, the expert agrees with the defendant’s argument that the expression “the little mermaid” is used allegorically in gender identity questioning. It could therefore not be excluded that the Respondent has a legitimate interest in the domain name.

Following, the Complainant considers itself defame by the Respondent’s comments. The Complainant also argues that the sole purpose of the Disputed Domain Name is to criticize the association, damage its reputation, and cause confusion among consumers. However, if the Respondent openly criticizes the Complainant via the domain name, confusion seems difficult. In addition, the complainant refers to filing a criminal complaint in the French courts against the Respondent for defamation. In response, the Respondent argues that the Complainant has not provided evidence of its ownership of the <observatoirepetitesirene.org> domain name, but more importantly raises a major argument that the disputed trademark is merely filed and not registered, so that the first condition of the UDRP, which requires the identity or similarity of the domain name to a trademark in which the Complainant has rights, cannot be met. In order to motivate the Respondent’s decision, the Panelist recalls that under paragraph 18 of the Rules of Procedure, it is up to the Respondent to decide, in a discretionary manner, to suspend or terminate the administrative proceeding when the Disputed Domain Name is already the subject of a legal proceeding. In this case, it is unclear whether a criminal complaint has been filed. However, the Panelist points out that it is not up to the Complainant to substitute as the criminal judge in assessing whether the disputed site is defamatory or not. The Panel’s opinion is based on the fact that the Respondent has used the domain name in good faith or in bad faith. The Panel is not able to decide unless the Respondent has used the domain name in good faith. Nevertheless, beyond the issue of defamation, the complaint may be dismissed for other reasons, that the expert raises.

Lastly, the Complainant’s position is that the term “petite sirene” is not a direct reference to the Observatory, but “a tribute to the Anglo-Saxon transgender movement that sees the character of the Little Mermaid in Andersen’s fairy tale as an allegory of trans-identity.” The Respondent claims a legitimate interest in the domain name. Moreover, the Respondent specifies that the disputed name is not commercially used. The Respondent argues that the site only has an informative vocation, falling within the freedom of expression. The Respondent indicates the use of the conditional tense on the site, by incorporating elements published in the press. Finally, the Respondent mentioned that the applicant had not proved criminal proceedings. Above all, the expert was not competent to rule on defamation.

In the end, in view of the considerations linked to the proper administration of justice and considering the general interest nature of the debate in question, the Panel declared itself incompetent in favor of the judicial judge and rejected the complaint lodged by the Complainant, without prejudice to the claims of the parties before the judge.

The UDRP does not constitute an alternative to an unsuccessful buyout attempt

The UDRP stands for the Uniform Domain-Name Dispute-Resolution Policy and is a legal process that requires both parties to present evidence and argue their case in an unbiased setting. In the case of SpaceX v. StarGroup, the UDRP was used to decide if a domain name infringed on another’s trademark. The UDRP found that the domain name was not in violation of a trademark. Instead, it was a legitimate use of the name to describe the company’s products and services. This case highlights the fact that the UDRP is a process designed to fairly and effectively resolve domain name disputes. It is not intended to be used for anything else. The complainant “SpaceX” is an American company providing aerospace manufacturing, transportation, and communications services in many countries. Its oldest trademark right on “STARLINK” comes from a European Union trademark registered on May 15, 2018. Since 2020, it has used the trademark “STARLINK” for communication services, notably broadband internet services by satellite. The complainant also owns the domain name <starlink.com>. The complainant invokes several arguments. Namely that the domain name incorporates its “STARLINK” trademark and that the defendant’s goal is to usurp the complainant’s identity via the domain name, a major argument without proof. Between 2017 and 2018, the complainant offered to buy the “STARLINK” trademark from the defendant, which was refused. Furthermore, the complainant argues that they have tried for several years to stop the defendant’s infringement of its “STARLINK” trademark. Indeed, in view of the facts, the company StarGroup seems to be the first to have commercially exploited the term “STARLINK” or at least to have secured this sign as a trademark. 

This “STARLINK” trademark is at the heart of the dispute since the contested domain name is <starlinkmx.com>, with the mark registered on June 8, 2018, by StarGroup. StarGroup, the defendant, operates in the entertainment and telecommunications sector. This company, located in Mexico, owns a family of trademarks around the term “star”: STAR TV, STAR GO, STAR LINE, and STAR GROUP. The company has also filed two “STARLINK” trademarks in Mexico. One of which, registered in November 2015, was canceled following an action brought by the complainant. The second, registered in January 2016 for online entertainment services in class 41, is still in force. The defendant’s arguments shed more light on the situation. He alleges that his “STARLINK” trademark continues with the numerous StarGroup trademarks: STAR GROUP, STAR LINE, and STAR GO. He specifies that his “STARLINK” trademarks are prior to those of the complainant and that the domain name in question is operated in connection with his activity. Finally, the defendant explains that during the action in Mexico, his “STARLINK” trademark was canceled, not because of the complainant’s prior rights, but because the list of services was not specific enough. Given the context, it seems that this was more of a “counter-attack” by the complainant against a competitor who refused to sell its trademark. 

In a decision of September 21, 2022, the UDRP complaint filed by the company Space Exploration Technologies against the company StarGroup was logically rejected given the context of the case. On the one hand, the complainant’s trademarks are registered in the European Union. It does not invoke any Mexican trademarks in its favor. In addition, the complainant provides no evidence that the defendant would seek to deceive Internet users by passing itself off as the complainant. The decision does not mention the complainant’s actions to defend its rights against the defendant (apart from the Mexico circumstance). Finally, why buy the defendant’s trademark if the latter acted fraudulently on the complainant’s rights?

In support of their decision, they note that on the day of registration of the disputed domain name, the Respondent could not have known that the Complainant intended to register or use the trademark “STARLINK”, in Mexico or elsewhere. In our view, this is not entirely correct, since the Respondent had been approached by the Complainant – first anonymously in 2017 and then revealed in May 2018 – to propose, among other things, the purchase of the “STARLINK” trademark. However, this does not mean the Respondent targeted the Complainant by preserving the domain name in question, since this name merely reflects its trademark (which the experts note). Finally, experts note that StarGroup has registered a separate domain name for each of its “STAR” marks. The Respondent registered its “STARLINK” mark in November 2015, proving its intention to commercially exploit this mark, well before the Complainant. Consequently, it is impossible to conclude that the defendant acted in bad faith. Finally, as of 2019, the disputed domain name pointed to a website promoting the sale of satellite data packages, i.e. a year before the public launch of the Complainant’s business under its STARLINK trademark. 

This decision seems consistent with the purpose of the UDRP procedure: its aim is to prevent cybersquatting, not to settle disputes between two players operating in the same market. In this case, the respondent, owner of several trademarks including the word “STAR” and the trademark “STARLINK”, was perfectly entitled to register the domain name <starlinkmx.com>.

Trademark applications are not sufficient to demonstrate prior rights  

On November 10, 2022, a court decision reaffirmed some fundamental UDRP rules: the complainant must prove they own a trademark and that the disputed domain name violates it. This can be a registered trademark (a completed registered or filed trademark application) or an unregistered trademark (which acquired distinctiveness through use in a common law country). However, arguing such rights without backing them up with evidence will, of course, lead nowhere.

In the case at hand, the UDRP complaint was filed by Black Foodie Company. Since April 2015, the complainant has been operating a culinary platform offering recipes, events, and food guides, along with the sale of “goodies” (such as t-shirts, sweatshirts, etc.) at www.blackfoodie.co, in connection with gastronomy seen through Black people. The complainant maintains that its platform reaches millions of people, has won several awards, and enjoys media recognition. The proposed domain name, <blackfoodie.com>registered anonymously on June 17, 2009. The disputed website notably features recipes and information on restaurants owned by Black people (the site was not yet in place at the time of the complaint). The name was later acquired by Braxton Richmond in 2022, CEO of Black Foodie Finder, and registered in 2020. The defendant also operates the domain name <blackchef.com>. Indeed, the defendant alleges that they use the disputed domain name for a website and a mobile application. This is serving as a directory for businesses and culinary events. They also hold a 2020 trademark “BLACK FOODIE FINDER” registered on the Supplementary Register in the United States, demonstrating their legitimate interest in said name. 

However, the complainant does not hold a registered trademark. Due to unclear wording, risk of confusion with prior rights, and the description of the sign, the company’s two US trademark applications have been suspended. The complainant should have known that their complaint had no chance of success, and this was for each of the conditions of the UDRP complaint. The Canadian trademark application also received a provisional refusal concerning its wording. Notably, these three applications are dated from 2021. The complainant boasts, in particular, of having over 220,000 social media followers. However, it is clear from reading the decision that the complainant did not document its arguments, which is both necessary and all the more significant when the invoked sign is descriptive, and the defendant operates under a very similar name for their own activity. They also note that the claimed trademark is inherently descriptive as the terms “black foodie” designate food and Black people. Furthermore, several other websites like www.theblackfoodies.com are used for the same products and services as those of the complainant.

As a result, the expert rejected the complaint because the complainant cannot assert trademark rights. The USPTO’s reasoning is also echoed, which concludes that a trademark “that describes a user or group of targeted users of a product or service is simply descriptive.” The purpose of a trademark is to indicate the origin of products and services. Nevertheless, even if Black Foodie had a registered trademark, it is highly likely that an expert would oppose the complaint. Common law rights remain possible. As the expert recalls, several factors demonstrate these rights: the nature and duration of use; the volume of sales made; the nature and extent of the brand’s promotion; the degree of public knowledge; consumer surveys. 

Securities and Exchange Commission (SEC): Verisign Domain Name Brief : Increased Registration Filings despite pandemic outbreak

In 2022, Verisign, the global provider of domain name registry services, announced new statistical and analytical data on the level of domain name registrations. Despite the 2021-2022 COVID pandemic outbreak, data depicts that domain name registrations were considerably rising. For example, 349.9 million domain name registrations transpired during the closed third quarter of 2022. Specifically, the .com and .net TLDs had a combined total of 174.2 million domain name registrations compared to a decrease of 0.1% and 0.2 million domain name registrations in the second quarter of 2022. Given the surge of registrations, the average price of domain names and registry fees increased. The statistical data provided by Verisign reveals that despite the internal business damage done to small-business and corporations worldwide from the pandemic, such as closure and bankruptcy, due to the rise of remote and work-from-home options in demand, registrations on trademarks and domain names were relevantly rising. 

In addition, new .com and.net domain name registrations totaled about 9.9 million by 2022 compared to 10.7 million domain name registrations at the end of the third quarter of 2021. The top ten ccTLDs, such as .cn, .de, .uk, .nl, .ru, .br, .au, .fr, .eu, and .it, toppled to about 132.4 million domain name registrations at the end of the third quarter of 2022, compared to decrease filings of 1.7 million domain name registrations or 1.3%. CCTLDs are estimated to increase by 5.7 million domain name registrations or 4.5% annually. In further analysis, regular filings such as these support companies by limiting common problems such as material misrepresentations, acts of deception, and limiting fraudulent practices. Following the SEC protocol, regular filing registrations allow small businesses and multinational corporations to enhance their knowledge of identity risk and provide sustaining evidence in defending interests in the face of a legal dispute.

Origins and limitations of  “.brand”

On November 10, 2022, AFNIC addressed the announcement of ICANN’s official ten-year developed <.marque> program during the corporation’s 10th anniversary. The program allows successfully filed ICANN applicants and generally well-established industries or inventors to administer its domain name extension identical to its trademark. The proposed domain name’s beneficial development will strengthen trademark assets, increase Internet users and usage, and improve customer relationships. For example, the French corporation Banque Nationale de Paris et de Paribas (BNP) wanted to cluster its domain names like <.bnpparibas>, identical to its mark. Such actions allowed the corporation to make its trademark “stronger” and gain the trust of new Internet users to promote online banking. Domain name managers of large corporations believe such updates to <.trademark> extension stand out from the traditional <.com> extension. These new updates enhance the company’s legitimate identification and provide additional security for Internet users. Conversely, the <.marque> program lacks visibility and understanding to the general public in variety and top-level domain name extensions. As a result, there is a lack of capacity to support the system of introducing a variety of domain name extensions.

Given the current state of the internet ecosystem, taking such an expensive route will require the community to become informed and prepared for new developments and upcoming challenges.

Nathalie Dreyfus was appointed as an expert in industrial property and trademarks by the French Court of Cassation (French High Court) in December 2022 (specialty E.09.02). This prestigious title recognises her work and the highest level of expertise in this field. To fully understand the significance of this appointment, it is necessary to understand the roles and responsibilities of the Court of Cassation.

The Court of Cassation

The Court of Cassation is France’s highest court, responsible for ruling on appeals filed against decisions made by appeal courts and tribunals. Located in Paris, it consists of six specialised chambers that make decisions regarding disputes based on the underlying law. Its primary mission is to ensure the unity and consistency of case law by controlling the application of the law by lower courts. The Court rules on form rather than substance, which means that it only makes legal decisions and does not re-examine the facts of the case.

Positioned at the apex of the French judicial hierarchy, the Court of Cassation plays a critical role in safeguarding the overall integrity of the nation’s legal system. The decisions it makes are critical to ensuring consistency and legality within the legal system; they are binding on lower courts as precedents, and their weight in the law is substantial.

The Court of Cassation’s decision to appoint Nathalie as an expert in trademark law is a testament to her extensive knowledge and contributions to this area of industrial property law. In this role, she provides expert insight and knowledge on trademark law cases handled by courts, as well as at the request of lawyers or private parties seeking information on trademark law and intellectual property law more broadly. This can involve providing evidential expertise, brand evaluation, or design and model assessment. Nathalie also works as an expert to provide private opinions to trademark owners about potential infringements of their rights, as well as to compare brands, models, or websites. Additionally, she handles domain name and Web 3.0 issues and is frequently asked for her legal and technical opinion on a point of intellectual property law or a particular situation in the field.

The Court of Cassation has acknowledged Nathalie Dreyfus as an expert witness, attributing this recognition to her expansive knowledge and substantial experience in trademark law, design and model law, copyright law, and domain names. Impressively, she is presently the only female expert endorsed by the Court of Cassation under the specialty E.09.02 industrial property and, uniquely, the sole specialist in France focusing on brand-related matters.

Introducing Nathalie Dreyfus

Nathalie Dreyfus, the founder of Dreyfus Law Firm, is an intellectual property law specialist, Industrial Property Consultant, and European Brand Consultant who provides comprehensive advice on all facets of intellectual property law, encompassing the registration, defence, and evaluation of diverse intellectual assets such as trademarks, designs, models, copyrights, patents, appellations of origin, plant varieties, and domain names. Her expertise enables her to provide clients and the industry with comprehensive advice on all aspects of intellectual property law, including the registration, defence, and evaluation of various intellectual assets such as trademarks, designs, models, copyrights, patents, appellations of origin, plant varieties, and domain names. Dreyfus Law Firm has been recognised as a leading authority in its field by some of the most prestigious international law firm rankings.

Nathalie is also well-known for her expertise in the internet and new technologies, specifically phishing, cybersquatting, social networks, domain names, NFTs, Web 3.0, and online sales platforms. She counsels businesses on best practices in compliance and intellectual property, particularly with regard to domain names. She also actively participates as a speaker at numerous seminars and conferences in France and abroad, where she shares her insights and expertise on the aforementioned subjects as well as trademark law. 

The Role and Mission of the Judicial Expert in Trademark Law

Judicial experts play a crucial role in providing specialised opinions and evaluations on technical, scientific, or professional matters related to their area of expertise, and may be requested by the judge during a proceeding or by one of the parties directly. Every year, a number of national lists of experts by specialty are compiled and updated, one of which is compiled by the Court of Cassation and the others by each Court of Appeal. The selection of judicial experts is the responsibility of the Court of Appeals judges, who evaluate applications based on a variety of competence and morality standards.

A judicial expert in trademark law is a qualified and experienced professional who is well-versed in the field’s laws, regulations, and practises. Their responsibilities include providing technical clarifications, interpreting evidence, and forming informed opinions on trademark-related issues such as trademark similarity, trademark validity, and trademark infringement.

To become a judicial expert in France, several requirements must be met. To begin, they must have a certain level of professional expertise and be recognised in a specific field. Second, a solid academic background and relevant professional experience are required. Finally, it is vitally important for them to stay informed about developments and new regulations in their field of expertise.

In conclusion, should you need assistance with trademark protection, intellectual property management, or have any related inquiries, we invite you to contact us at Dreyfus. Nathalie Dreyfus and her team of internationally renowned experts are ready to give you the advice and assistance you require. You can reach us at contact@dreyfus.fr or call (+33) 1 44 70 07 04.

Allow us, the professionals at Dreyfus, to guide you through the complexities of intellectual property law, ensuring your rights and assets are comprehensively protected.

On the 1st, 14th, and 15th of March, the third audit of the European Union Intellectual Property Office (EUIPO), known as the “SQAP audit,” took place concerning trademark cancellations. More recently, on the 14th and 15th of June, the SQAP audit on trademark opposition procedures was held. This serves as an opportunity to review this initiative from the European Union Office for Intellectual Property (EUIPO).

Trademark cancellation: a step towards better rights protection

Forfeiture is an action inherent in trademark law. Forfeiture can be obtained on several grounds, such as lack of serious use, becoming a generic term, or the deceptive nature of the trademark.

The trademark is subject to an obligation of use and exploitation. Naturally, it can subsequently be canceled if it is not subject to this serious use for an uninterrupted period of five years. This ground for forfeiture can be established both five years after registration and during the lifespan of the trademark.

A trademark that becomes the common name in trade for the product or service for which it is registered can be canceled. To avoid this, the holder must fight against any deviant use of their trademark. To do this, they must be able to initiate legal action. Examples of names that have become common are Sopalin, Thermos, Caddy, Perfecto, etc.

Deceptiveness is another reason that can lead to the cancellation of the trademark. This is the case for a trademark that is likely to mislead the consumer about the quality, origin, or nature of the designated product or service. Forfeiture is established upon the request of a third party following deceptive use of the said trademark.

Since April 1, 2020, a new action has been opened to economic actors: the nullity procedure against trademarks. The goal is to enhance and simplify the protection of rights, and this action is subject to no limitation period. A successful action makes it possible to render unexploited trademarks available immediately or to bring down a monopoly on a potentially invalid trademark or one contrary to public order. For its implementation, the action can be based on two distinct causes: relative grounds and absolute grounds.

Absolute grounds can be invoked by anyone who believes that at the time of filing, the applicant was acting in bad faith, that the trademark lacked distinctive character, was contrary to public order, was likely to mislead the public about the nature, quality, or origin of the designated products and services, or even if the trademark is composed of the necessary designation of a product or service.

Only the owner of an earlier right, such as a trade name, trademark, or unregistered right, may use relative grounds. The holder must prove a risk of confusion between the signs.

Trademark opposition: an option for prior rights holders

Whether it is before the INPI (National Institute of Industrial Property), the EUIPO, or even the WIPO (World Intellectual Property Organisation), opposition reiterates the relative grounds for refusing a trademark. A third party’s second trademark application may be subject to opposition from the owner of an earlier trademark. The existence of earlier rights is considered as a relative ground for refusing registration of a European Union trademark. These grounds for refusal are not systematically verified by the Offices. As a result, trademark oppositions are becoming increasingly popular.

The European procedure has served as a model for the French procedure. As a result, it is possible to oppose a European Union trademark and European Union designations in an international trademark. The publication of the trademark in the European Union Trademark Register initiates a three-month period during which it is possible to file an opposition with the opposition division. At the end of this period, the applicant for the subsequent trademark is notified, and a so-called cooling-off period (a period for reflection and amicable resolution of the dispute) is initiated.

The applicant for the trademark opposition action must be able to prove several elements.

On the one hand, they must demonstrate the use of their trademark, specifically indications concerning the location, duration, importance, and nature of the earlier trademark’s use for the products and services for which it is registered and upon which the opposition is based.

They must also be able to prove the identity or similarity of the designated signs, products, or services. The goal of these is to highlight a risk of confusion or association between the two trademarks in the public’s mind.

State of the SQAP audit programme of the EUIPO

The review of all the conditions and requirements of the various procedures carried out within the EUIPO requires a considerable amount of attention for the concerned examiners and specialized lawyers. European initiatives are constantly moving towards harmonization of the mechanisms used, the necessary costs, and the simplification of the procedures practiced. Despite the fact that the Office is keen to improve the transparency of the law at  a community level, there is still a significant gap between the expectations of economic actors and the actual quality of the decisions rendered.

It was thus in 2017 that the European Office launched its project related to stakeholder quality assurance panels, also known as “Stakeholder Quality Assurance Panels” (SQAP). The aim was to bridge the gap between the users’ perception of the decisions made by the EUIPO and their quality, and the Office’s own perception of its decisions. To do this, it decided to invite associations to carry out external audits of its decisions.

These audits can include the review of internal processes, the accuracy of decisions, and compliance with applicable regulations and policies. During an SQAP audit, there could be an evaluation of how decisions are made, an analysis of documentation, interviews with staff, and recommendations for improving the quality of the service.

User panels represent user associations. During the 2023 audits, the following are represented: APRAM (Association of Practitioners of Trademark and Design Law), INTA (International Trademark Association), AIPPI (International Association for the Protection of Intellectual Property), ANIPA (Association of National Institutes of Intellectual Property Consultants), ASIPI (Inter-American Association of Industrial Property), ECTA (European Communities Trade Mark Association), BUSINESSEUROPE, FICPI (International Federation of Intellectual Property Counselors), GRUR (German Association for the Protection of Industrial Property and Copyright), the ICC (International Chamber of Commerce), and MARQUES. The panels verify decisions based on the quality criteria applied by the Office.

The audit unfolds in several stages. During the audit, each auditor first undertakes the individual inspection of the decisions assigned to them. After this, they submit their observations to the committee. As the committee members begin a debate, Office specialists are present to clarify any uncertainty concerning the Office’s procedures. At the end of these exchanges, an audit report containing all the conclusions is drafted and approved by the committee. Following the audit, the Office’s specialists scrutinize the conclusions in order to identify opportunities for improvement and to determine the actions to be taken. The auditors, as well as user groups, are kept informed of the improvements made thanks to SQAP on a regular basis.

Sample Size and Evaluation Criteria

The SQAP audit on cancellation decisions is based on a representative sample of cases selected at random from the EUIPO’s recent decisions. The sample size is large enough to ensure the reliability of the results and reflect the diversity of situations encountered in cancellation procedures. The evaluation criterias are based on the EUIPO’s quality standards, which aim to ensure consistent application of the rules and legal principles.

Audit Results

The results of the SQAP audit on cancellation decisions are classified into three main categories: “excellence,” “compliance,” and “actions needed.”

“Excellence” decisions are those that demonstrate a high level of quality and consistency in the application of legal criteria. These decisions are considered to be examples of good practice and serve as a reference for improving future decisions.

“Compliance” decisions meet the quality standards established by the EUIPO. They are considered satisfactory but may require certain improvements to reach the level of excellence.

“Actions needed” decisions are those that have more significant legal compliance gaps or errors. These decisions are subject to a more detailed analysis to identify the causes of the problems and implement appropriate corrective measures.

The results of the SQAP audit on cancellation and opposition decisions allow for feedback from the represented associations. Consequently, they enable the implementation of corrective actions or the adaptation of EUIPO’s decision-making mode since they allow it to discern the strengths and weaknesses of its processes by identifying the deficiencies within them. Corrective actions are taken to address the problems identified, and best practices are shared with intellectual property agents and users to improve the overall quality of cancellation decisions.EUIPO’s 2023 SQAP Audit

By improving decision-making mechanisms and establishing quality criteria, the establishment and development of this type of audit suggests the possibility of soon witnessing even more satisfying and high-quality decisions.

Dreyfus IPWeb

The digitization of businesses has been significantly propelled by the European “eIDAS” Regulation No. 910/2014, enacted on July 24, 2014. Riding this wave of digital advancement, Dreyfus is thrilled to present its latest eco-friendly initiative, Dreyfus IPWeb. This new platform is a secure, web-based solution, providing clients easy accessibility through any internet browser.

Our clients will be able to monitor the status of their cases online, communicate with our team, and participate in their legal follow-up without negatively impacting the environment thanks to this initiative, which is in line with our commitment to reducing our carbon footprint and our transition towards a “zero paper” approach.   

Enhancing client experience 

Dreyfus IPWeb is transforming the way clients interact with our firm by providing a dynamic and transparent platform for an enhanced user experience. Our clients can now easily manage their cases online, gaining an in-depth understanding akin to that of our attorneys. Furthermore, the platform provides simplified options for submitting instructions, editing documents, and uploading materials directly online, paving the way for efficient communication and effortless collaboration.

Fewer trips, better communication 

The introduction of Dreyfus IPWeb significantly reduces the need for our clients to travel, as they no longer need to visit the firm to drop off or sign documents. Moreover, Dreyfus IPWeb has enhanced communication within our organisation, enabling seamless collaboration between teams. For instance, our team in Paris can work effortlessly with colleagues in Belgrade without anyone needing to hop on a plane. 

A step towards becoming a ‘zero paper’ law firm

By adopting Dreyfus IPWeb, we proudly affirm our unwavering commitment to reducing our carbon footprint and actively supporting the “zero paper” initiative. Our firm commitment is to reduce our carbon footprint through the widespread adoption of digital processes and the significant reduction of paper usage.

Conclusion 

In summary, we are proud to announce the launch of Dreyfus IPWeb, a secure client platform that not only enhances the client experience but seamlessly integrates with our end goal of achieving a “zero paper” workplace. We invite all our clients to discover the advantages of this innovative platform and to join us in this green initiative. Together, we can make a difference and help preserve our planet.

Introduction

A patent gives its owner the exclusive right to prohibit others from manufacturing, using, selling, or offering for sale the invention in the country where the patent is granted, as well as, in some cases, importing the invention (1).

The European Unitary Patent entered into force on Thursday, June 1, 2023, after a decade of delays from the original schedule and a laborious alignment among the various European states. This article will provide an overview of the milestone’s history, implications, and practical implications.

History of a laborious adoption process

The concept of a European patent first appeared in the 1960s. The idea has re-emerged in 1999, and by 2003, a proposal for a unified Jurisdiction had been made. The Unified Patent Court (UPC) Agreement was established ten years later. However, it took another decade for this project to become a reality.

The political and legal context has not helped the situation, especially with Brexit and the UK’s withdrawal of ratification. The UK played a significant role in supporting this crucial project. Indeed, the Agreement originally included provided for several UPC divisions, including one in England, so its withdrawal caused a stalemate. As a result, it will not be possible to bring in Great Britain when the European Unitary Patent is granted, as the country is no longer part of the enhanced cooperation.

Furthermore, obstacles arose in Germany, which deemed the project unconstitutional because it exceeded the scope of the German Constitution. It included rules and articles that took precedence over national laws. This obstacle has now been overcome, and the UPC has established a specialised division in Germany with expertise in life sciences and chemistry.

Despite these challenges, 17 European Union member states had ratified the original Agreement signed in 2013 for the creation of the UPC through enhanced cooperation as of March 2023. The primary objective of this adoption is to make it possible to obtain protection for an innovation in all member countries participating in the enhanced cooperation, by filing a single application with the European Patent Office (EPO).

Countries included in the harmonisation of protection 

Due to the aforementioned delays, it is important to note that the EPO has 39 members. Among these, 25 participate in the enhanced cooperation (2), and 17 are part of the Unitary Patent (3). These 17 countries are: Germany, Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovenia, and Sweden.

Key Features of the European Unitary Patent

The Unitary Patent is based on the European Patent Convention (EPC), with no changes to the pre-grant phase. This refers to the acts performed prior to grant, such as filing, designation, and examination. These acts must still comply with the EPC’s requirements.

To obtain the unitary effect, the applicant checks the corresponding box during the grant and printing payment stage. In this sense, a unitary patent is a European patent granted by the European Patent Office (EPO) for which the holder has applied for registration on the basis of the unitary effect. Therefore, the EPO serves as a one-stop service.

The implementation of the Unitary Patent will do away with the need for time-consuming and expensive national validation processes. Validation and maintenance of European patents previously required separate procedures in each member state, a time-consuming and potentially costly process that scaled directly with the number of countries involved. In comparison to a traditional European patent, the EPO will not charge any additional procedural fees with the unitary patent. As a result, unitary patents are no longer subject to the fragmented system of annual fees. The need for appointing a representative has been removed and replaced by a streamlined process, a single currency, and a single deadline. In addition, expenses and paperwork are minimised because the EPO deals with everything after a grant has been issued.

The unitary patent regulation does not affect the right of member states to grant national patents. It is not intended to replace national or regional patent laws. Patent applicants continue to have the option to obtain either a national patent, a unitary European patent, or a European patent that has effects in one or more contracting states of the EPC.

To encourage innovation, the online register includes information on the legal status of unitary patents, such as licences and transfers. This promotes the transfer of technology and investment in innovation (4).

Unified Patent Court (UPC): Simplifying European Patent Disputes

The patent system is inextricably linked to the formation of the UPC (5). Without exception, the UPC has exclusive jurisdiction over Unitary Patents. 

However, the UPC does not have exclusive jurisdiction over traditional European patents, and national courts retain their jurisdiction. Patent holders can opt out of the UPC’s jurisdiction by using an opt-out system. This is only possible during a 7-year transition period, which can be extended to 14 years, if no proceedings have been initiated before the UPC.

In terms of structure, the UPC consists of a Court of Appeal in Luxembourg and a Registry. Additionally, it has a first-instance court comprising a central division based in Paris, a division in Munich, and several local and regional divisions.

With the establishment of the UPC, there is no longer a need to initiate actions in different countries (6). Previously, national courts and authorities had jurisdiction over patent infringement and validity disputes (7). A patent dispute involving multiple member states necessitated the rights holder taking parallel action in all relevant national courts.

Another goal of the UPC’s creation is to simplify and improve the efficiency of the judicial procedures it handles. Its decisions, as well as the sanctions imposed, have an impact throughout Europe.

However, it will be necessary to wait a few months to assess the developments and consequences in practical community practise…

Dreyfus & Associates, a law firm specializing in industrial property, leverages its expertise to assist clients with any inquiries regarding the new procedure for filing a European Unitary Patent.

References 

1. https://www.dreyfus.fr/expertise/droit-de-la-propriete-industrielle/droit-des-brevets

2. https://www.wipo.int/wipolex/fr/text/309606 et https://www.wipo.int/wipolex/fr/text/309628

3. https://www.epo.org/applying/european/unitary/unitary-patent_fr.html

4. & 5. https://www.epo.org/applying/european/unitary/unitary-patent/start_fr.html#:~:text=en%20extension%2Fvalidation-,Quand%20le%20syst%C3%A8me%20du%20brevet%20unitaire%20commencera-t-il%20%C3%A0,les%20brevets%20europ%C3%A9ens%20%22classiques%22

6. https://www.epo.org/archive/epo/pubs/oj013/05_13/05_2873.pdf

7. https://www.epo.org/archive/epo/pubs/oj013/05_13/05_2873.pdf

WIPO, D2022-3002, October 27, 2022, Fenix International Limited c/o Walters Law Group vs. private registry operator, Privacy Protect, LLC (PrivacyProtect.org), privacy service provided by Withheld for Privacy ehf, Global Domain Privacy Services Inc. (PrivacyGuardian.org), Andrew Rew, Okoth Nigel, Chaker Ben Smida, sofma, John Harbin, Keith Allan, Amar Bizwer, Najib Lakhdhar, Bouabdellah, Jamal McMillan, Atay Rabby Chisty, IVAN KOBETS, MINERAL, maddis jones, Philipp Muller (1).

When you own a highly fabricated brand, it is tempting, for economic reasons and dispute management, to target as many domain names as possible in a UDRP complaint, in order to get a response to the various infringements encountered with a single decision. However, it is important to remain vigilant about the strength of the link between the designated domain names and to demonstrate it precisely so that the consolidation is accepted.

Thus, in a decision of October 27, 2022, the UDRP complaint filed by Fenix International Limited (“Fenix”) seeking to be awarded 14 domain names that are believed to be imitating its ONLY FANS brand was rejected.

The complainant owns the domain name <onlyfans.com> and several “ONLYFANS” trademarks registered in 2019, including European Union and United Kingdom trademarks.

The www.onlyfans.com website has experienced rapid growth in recent years: with more than 180 million registered users, it now ranks 177th in the Alexa Top ranking the most popular websites in the world. It is a platform for posting and subscribing to audiovisual content. Erotic and pornographic content proves successful there.

The disputed domain names, registered after Fenix’s trademarks, have some apparent links to the platform, such as <onlyfans-leaked.com> or <celebrityonlyfans.com>, whilst others reproduce only parts of the brand: the initials “O” and “F”, the term “ONLY” or the term “FAN”.

These domain names point to websites offering services similar to those of the complainant, namely adult video content. The UDRP procedure states that when several disputed domain names appear to have a link, they can be studied through a single procedure.

In order for the acceptance of a complaint targeting multiple defendants, it must be proven that the domain names are subject to common control, whether it be a single person or a group of individuals acting together , and that consolidation serves the interests of each parties, leading to a fair and equitable decision. It is the complainant’s responsibility to provide proof on the issue of common control of the disputed domain names. Therefore, in order to demonstrate this link, the complainant has put forward numerous arguments.

The complainant bases its request for consolidation on several arguments: the disputed domain names direct to websites offering pirated content from its www.onlyfans.com website; the various sites have a general design strongly similar to its official site, whether in terms of header, font, or logos used; they offer the same services and prices; the names are registered through three registration offices; and they have a common structure: some are made up of a generic terms followed by the “ONLY” part of the earlier brand, whilst others interchange these elements.

In addition, the complainant alleges that, given the addresses indicated during the registration of some of the disputed domain names, located in Tunisia, the probability of common control was all the more conceivable. The complainant further states that lots of the contact information was incorrect during the registration of the domain names. However, the expert notes that the mere provision of incorrect information does not prove common control, particularly given the regularity of such occurrences.

Lastly, the complainant mentions that one of the defendants had already been the subject of a UDRP complaint, for which Fenix had been granted its consolidation request.

Two defendants responded to the complainant’s arguments. The holder of the domain name <baddiesonly.tv> explained that the websites have a similar appearance because they are based on a “KYS” script, which provides a typical layout that will be very similar from one site to another. They explained that their domain name was reserved through an agency, so they did not choose the registration office and that nothing connects them to the other domain names, such as the registrant information or the registration date.

A second defendant, holder of the name <hornyfanz.com>, also explains that they have no connection with the holders of the other names targeted by the complaint.

To ground its decision, the expert notes that the complainant has not proven the common control of the different domain names, even though it was their responsibility to substantiate their allegations.

Essentially, the presented annexes only showed websites with adult entertainment content. Therefore, according to the expert, they were not enough to prove that the disputed domain names were linked. In fact, looking at the sites in detail, the expert noticed that they all more or less differ from each other. The expert explains that even if some of the sites could be considered to be very close and therefore under common control, it does not prove that the other invoked names are linked to this group of names.

Moreover, the expert notes that the complainant contradicts themselves by stating at one point that three registration offices are involved when in the amended complaint, they mention five. In any case, this does not show common control between the names.

Furthermore, the combination of the term “ONLY” with another generic term cannot demonstrate common control of the domain names since “ONLY” is also a generic term. To this point, one could argue that the complainant could have argued the fame of their “ONLY FANS” brand in connection with erotic and pornographic content, to argue that the terms “ONLY,” “FANS,” and the initials “OF” can evoke their brand.

Finally, the expert notes that the names were registered over a two-year period and that the defendants all have different email addresses.

All these reasons led the expert to simply reject the complainant’s complaint, while reminding them that the admission of a complaint against multiple defendants is not automatic. The constitution of such a complaint significantly increases the burden of proof on the complainant, which must be taken seriously. In this case, Fenis’ analysis indeed seemed fanciful.

References

1. https://www.wipo.int/amc/en/domains/decisions/pdf/2022/d2022-3002.pdf

Introduction

Artificial intelligence (AI) generally refers to a scientific discipline. According to the European Parliament, artificial intelligence (AI) is a tool that machines use to simulate human-like behaviours such as reasoning, planning, and creativity (1). One key feature of AI is machine learning, which allows it to learn from its own experiences, giving it autonomy.

The introduction and rapid development of generative AI in the legal industry have raised concerns among legal professionals. Currently, these generative AIs are capable of producing creative works based on user instructions and collected data. Given the widespread use of these technologies in professional settings, the legal implications, particularly those relating to copyright law, raise concerns.

The use of generative AI and copyright

The use of generative AIs such as ChatGPT (dialogue generator) or Midjourney (image generator) raises concerns about how copyright law applies to the generated content. It is necessary to establish who is entitled to ownership of the content produced in this manner and whether it qualifies for copyright protection. ChatGPT is an advanced language model developed by OpenAI. It uses a deep learning algorithm known as GPT (Generative Pre-trained Transformer) to generate human-like responses to text inputs.

Should we expect copyright protection for AI-generated works?

The framework for protecting works of mind is laid out in Article L.112-1 of the Intellectual Property Code, which specifies that an item must be a formalised and original intellectual creation in order to be protected.

The Court of Justice of the European Union (CJEU) has evolved the definition of originality over time to reflect advancements in technology and digital media. Taking a more objective approach in the Infopaq (2) case in 2009, the CJEU defined originality as “an intellectual creation that is an expression of the author’s own intellectual creation.” In addition, the CJEU does not rule out the possibility that a work can be considered original even if it was influenced by technical factors during its creation (3).

The CJEU has also confirmed that it is possible to create original works by involving a machine or device in the creative process (4). In this case, it did not involve AI but photography, a domain that was long considered by scholars to not be eligible for copyright protection due to the mechanical nature of the creation process.

Therefore, not all works involving the contribution of AI can be considered original under the current understanding of originality in positive law. To what extent the user has participated in the creative process is a balancing act that must be performed to determine whether or not the work can be considered original.

Several cases illustrate the international dimension of these questions, sometimes reaching different conclusions. For example, in a dispute between Tencent and Shanghai Yingxun Technology (5), the Chinese court ruled in favour of copyright protection for a work generated using an algorithmic programme. This decision supports the extension of copyright protection to works generated by AI. On the contrary, the United States Copyright Office confirmed on February 21, 2023 (6), the absence of copyright protection for images produced using the AI Midjourney, concerning the comic book “Zarya of the Dawn ” by New York artist Kris Kashtanova.

Ownership of AI-generated content

Copyright law protects the intellectual creations of individuals. It grants authors the right to express themselves through their works and recognises their awareness and intent during the creative process. It is clear at this time that AI does not currently have these specific qualities.

AI is not recognised as an author in the current legal framework, and according to existing copyright laws, the attribution of authorship is reserved for humans who can be identified as the creators of the work produced by AI. These individuals are acknowledged as authors based on their influence on the outcome and their active participation in the creative process.

The jurisprudence, both at the European and French levels, has not yet pronounced on the question of who, between the user and/or the AI developer, will hold the rights to an original work created using AI. However, the terms of service of OpenAI (the developer of ChatGPT) state that the rights to the content belong to the users. This contradiction highlights the urgent and definitive need to address these questions.

There are several hypotheses currently under consideration to ensure the adequate protection of AI and its development. These include exploring potential changes to copyright law, such as redefining the originality requirement or even establishing a framework  dedicated specifically for AI. 

The High Committee for Literary and Artistic Property (CSPLA) released a report (7) that examines various viewpoints on copyright ownership while delving into the fields of artificial intelligence and culture. The report explores copyright ownership in relation to artificial intelligence and culture and suggests adopting an English law-based model that establishes specific regulations for “computer-generated works.” The aim is to address the implications of these concepts and provide clarity within copyright frameworks.

Copyright infringements and generated AI content

Since works generated by AI often rely on existing content, there is a possibility that they could constitute infringements of copyright. The absence of mention of the sources used by ChatGPT to generate content illustrates the risk of infringement of third-party rights.

The ongoing legal conflict involving photographer Robert Kneschke and AI entity LAION has raised concerns regarding potential copyright infringements. Kneschke uncovered that some of his photographs were present in LAION’s database and promptly requested their removal. The case has been escalated to the District Court of Hamburg, making the progress of this case worth monitoring.

It is important to note that many AI systems do not provide guarantees regarding the absence of infringement of third-party rights in the generated outputs. As a result, users are advised to refer to the terms of use of the specific AI system to understand the responsibilities and liabilities related to copyright and potential infringement issues.

If the rights holders of the collected data find that their rights are violated, they have the option to pursue legal action based on infringement or unfair competition. This highlights the necessity for a distinct framework governing the use of AI, as demonstrated by OpenAI, which already outlines in its terms of service that users are responsible for their use of the tool and must ensure that it does not infringe upon the rights of third parties.

Risks Related to Result Reliability, Privacy, and Right to Image

The use of AI carries additional risks beyond copyright infringement. The reliability of the generated results can be a concern, as can the potential risks to privacy and the right to an individual’s image. In the case of AI-generated content, such as ChatGPT, the results may contain inaccurate, discriminatory, or unjust information. However, according to the European Parliament, AI-generated content cannot be classified as “Your Money Your Life” (YMYL) content, but verifications should still be performed.

At the same time, the European Union is currently considering legal initiatives to regulate AI systems, such as the European Commission’s proposed AI Act (8) regulation and two directive proposals published on April 21, 2021, and September 28, 2022. These legislative frameworks aim to address the issue of civil liability for AI systems.

AI’s use of personal and confidential information

The malfunction of ChatGPT that resulted in a data leak in March 2023 illustrates the challenges related to data confidentiality. Similarly, a study by security publisher Cyberhaven, as reported by “Le Monde Informatique (9),” raised concerns about the dangers connected with employees using ChatGPT. The study highlighted the risks of data leaks by employees, including sensitive project files, client data, source code, or confidential information.

In order to operate as intended, conversational agents like ChatGPT use and collect data, although they are not specifically designed for personal data collection. The nature of the collected data needs to be examined to determine whether it is protected or not. If the data is protected, the developer of the AI has an obligation to seek permission from the data rights holders.

Some countries adopt a cautious position regarding the processing of personal data by ChatGPT. In Canada, the Office of the Privacy Commissioner has initiated an investigation against OpenAI (10). In Italy, the President of the Italian Data Protection Authority, GPDP, temporarily banned access to ChatGPT on March 31, 2023 (11), accusing it, among other things, of not complying with European regulations and lacking a system to verify the user age. Since then, modifications have been made, and ChatGPT is available again in Italy.

Indeed, OpenAI’s privacy policy does not appear to comply with the requirements of the GDPR and the Data Protection Act, particularly regarding the absence of information about the retention period of processed data.

The National Commission for Informatics and Liberties (CNIL) published guidelines in 2021 to ensure that Chatbots respect individuals’ rights (12). It also issued guidelines and recommendations in 2021 (13) on the use of cookies and other trackers governed by Article 82 of the Data Protection Act (14) (transposition of Article 5.3 of Directive 2002/58/EC “ePrivacy” (15)).

The goal of these recommendations and guidelines is to ensure informed consent from users and provide transparency about trackers. The CNIL also has the power to impose sanctions in cases of non-compliance by relevant actors. It is crucial for the involved parties to ensure adherence to the requirements of the General Data Protection Regulation (GDPR) and the ePrivacy Directive.

These potential legal hurdles must be considered if we are to make ethical and responsible use of this technology, and concerns such as copyright infringement, data collection, and ownership must be carefully considered by all parties involved in the creation and use of AI.

The Current Legal Framework of AI and Future Perspectives

The European Union intends to establish an artificial intelligence regulatory framework. In 2020, the European Parliament passed resolutions on artificial intelligence and its applications (17), and new European proposals aim to ensure the smooth operation of the internal market. The goal is to make the Union a world leader in developing ethical and trustworthy AI that protects ethical principles, such as fundamental rights and Union values.

The European Regulation Proposal: “AI Act”

On April 21, 2021, the European Commission proposed new rules to set uniform rules (18) for the commercial release, deployment, and use of artificial intelligence. The legislative process is long, though, so the project has not yet been put into action.  

The European Parliament, the Council of the European Union, and the European Commission will need to adopt the text in the same terms. For now, the European Parliament has just reached a provisional agreement on the aforementioned regulation on April 27, 2023, which was voted on May 11, 2023. Once adopted, it will take some time before it comes into effect.

The proposed regulation focuses on transparency, accountability, and safety to promote the ethical and responsible development of AI within the European Union. The goal is to ensure trustworthy AI. The proposal includes a risk-based approach:

Unacceptable risks : AI systems that are prohibited because they contradict the values of the Union (e.g., facial recognition AI).

High-risk AI : These AI systems present risks to the health, safety, or fundamental rights of individuals (e.g., biometric identification AI). These systems are subject to strict obligations for developers, providers, and users.

Limited risks : Specific transparency obligations are established for these AI systems towards users. Users must be aware that when using AI systems such as Chatbots, they are interacting with a machine and must make an informed decision to proceed or not. As conversational agents are not categorised as high-risk AI systems, they will not be subject to the strict requirements applicable to high-risk systems.

Negligible risks : The proposal does not require intervention for these AI systems due to their minimal or non-existent risks to the rights or safety of citizens.

As mentioned earlier, the negotiating team of the European Parliament has reached a provisional agreement on the regulation, which includes generative AI (19). In this regard, “general-purpose AI systems,” capable of performing multiple functions, are distinguished from “foundational models,” which are techniques based on a large amount of data and can be used for various tasks. Providers of such models, like OpenAI, would be subject to stricter obligations, including the adoption of risk management strategies and ensuring the quality of their data.

The European Parliament announced in a press release (20) that the Members of the European Parliament have adopted the negotiation mandate project. This project still needs to be approved by the entire Parliament in a vote scheduled for June 12th to 15th.

Furthermore, on September 28, 2022, the European Commission published two directive proposals aimed at establishing rules on liability adapted to AI systems. These directive proposals seek to evolve the law of civil liability for AI systems. However, neither of these proposals specifically addresses issues related to intellectual property infringement or the corresponding liability framework.

Proposal for a Directive on Liability for Defective Products

The European Commission proposes a revision of the directive on liability for defective products (21) to adapt it to technological developments in recent years. The aim is to overhaul Directive 85/374/EEC of July 25, 1985 (22).

This revision proposes several changes, including redefining the concept of a product, reevaluating the concept of damage, imposing requirements on companies to disclose certain information, and altering the burden of proof for victims, including the introduction of specific presumptions and apply to liability for defective products without restriction and cover products stemming from AI or any other product.

Proposal for a Directive on Liability in the Field of AI

The second proposal for an AI directive aims to align the rules of non-contractual civil liability with the field of AI (23). This proposal addresses legal uncertainties identified by the European Commission for businesses, users, and the internal market. Multiple factors present challenges, including the enactment of rules of civil liability, the identification of the party responsible for the damage, the establishment of evidence, and the risk of fragmentation concerning applicable legislation.

The Commission’s cautious approach is demonstrated by provisions that shift the burden of proof in favour of victims of AI-based products or services. As a result, victims will have the same level of protection and may be less discouraged from filing civil liability claims. Thus, civil actions based on fault for damages caused by AI systems can be facilitated.

The risks in terms of liability for the actors involved in these fields are high and require particular attention. The proposed regulation provides for the establishment of a deterrent sanction system. Indeed, any breach of the established rules may be subject to an administrative fine of up to 20 million euros, or 4% of the company’s total annual turnover.

Companies and AI system providers are advised to closely monitor legislative developments and comply with future regulatory requirements to avoid any litigation.

Conclusion

While many options are being considered to establish AI regulations, the contractual aspect should not be overlooked. Contracts can complement or compensate for deficiencies in the forthcoming legislative framework. By leveraging this tool, a comprehensive strategy can be devised to regulate the use of AI, its consequences, the dynamics among various stakeholders, individual responsibilities, and other relevant aspects.

As users of AI systems, it is important to take certain precautions. These include establishing an internal written policy, being well-informed about the terms of use of AI systems, avoiding the disclosure of confidential information during their use, and verifying the reliability of the information provided. The role of general terms and conditions is vital, as they offer valuable information, such as the applicable law and jurisdiction, the extent of the service provider’s liability, indemnification, and disclaimer clauses. As a result, AI providers must prioritise the careful drafting of these terms and conditions.

Further reading

Copyright in front of artificial intelligence

Can an Intellectual Property Lawyer Help Me with Copyright Infringement in the EU ?

References

1. Parlement européen. Intelligence artificielle : définition et utilisation | Actualité. 9 juillet 2020. URL : https://www.europarl.europa.eu/news/fr/headlines/society/20200827STO85804/intelligence-artificielle-definition-et-utilisation 
2. CJCE, 16 juill. 2009, aff. C-5/08, Infopaq
3. CJUE, 11 juin 2020, aff. C-833/18, Brompton
4. CJUE, 1er déc. 2011, aff. C-145/10, Eva-Maria Painer
5. Dreyfus, N. [Chine] Le droit d’auteur à l’épreuve de l’intelligence artificielle. Village de la Justice. 1e décembre 2021. 
6. United States Copyright Office, Zarya of the Daws (Registration #VAu001480196), 21 février 2023.
7. Rapport du CSPLA. Mission intelligence artificielle et culture. 27 février 2020.
8. Proposition de règlement du Parlement européen et du Conseil établissant des règles harmonisées concernant l’intelligence artificielle (législation sur l’intelligence artificielle) et modifiant certains actes législatifs de l’union, Commission européenne, 21 avril 2021, COM/2021/206 final.
9. Coles, C. 11 % of data employees paste into ChatGPT is confidential – Cyberhaven. 21 avril 2023. URL : https://www.cyberhaven.com/blog/4-2-of-workers-have-pasted-company-data-into-chatgpt/ 
10. Commissariat à la protection de la vie privée du Canada. Le Commissariat ouvre une enquête sur ChatGPT. 4 avril 2023. URL : https://www.priv.gc.ca/fr/nouvelles-du-commissariat/nouvelles-et-annonces/2023/an_230404/ 
11. Garante Per la protezione dei dati personali. Intelligenza artificiale : il Garante blocca ChatGPT. Raccolta illecita di dati personali. Assenza di sistemi per la verifica dell’età dei minori. 31 marzo 2023. URL :https://www.garanteprivacy.it/web/guest/home/docweb/-/docweb-display/docweb/9870847 
12. CNIL. Chatbots : les conseils de la CNIL pour respecter les droits des personnes. 19 février 2021. URL :https://www.cnil.fr/fr/chatbots-les-conseils-de-la-cnil-pour-respecter-les-droits-des-personnes#:~:text=Une%20telle%20action%20est%20encadr%C3%A9e,%C3%A0%20l’activation%20du%20chatbot. 
13. CNIL. Lignes directrices et recommandations de la CNIL. URL :https://www.cnil.fr/fr/decisions/lignes-directrices-recommandations-CNIL 
14. Article 82 de la loi n° 78-17 du 6 janvier 1978 relative à l’informatique, aux fichiers et aux libertés, modifiée par Ordonnance n°2018-1125 du 12 décembre 2018 – art. 1
15. Directive 2002/58/CE du Parlement européen et du Conseil du 12 juillet 2002 concernant le traitement des données à caractère personnel et la protection de la vie privée dans le secteur des communications électroniques (directive vie privée et communications électroniques)
16. Règlement (UE) 2016/679 du Parlement européen et du Conseil du 27 avril 2016, relatif à la protection des personnes physiques à l’égard du traitement des données à caractère personnel et à la libre circulation de ces données, et abrogeant la directive 95/46/CE (règlement général sur la protection des données).
17. Résolution du Parlement européen du 20 oct. 2020 (2020/2012(INL)) ; (2020/2015(INI)) ; (2020/2014(INL)) ; Résolution du Parlement européen du 19 mai.2021 (2020/2017(INI)) ; Résolution du Parlement européen du 6 oct. 2021 (2020/2016((INI)) ; Résolution du Parlement européen du 3 mai. 2022 (2020/2266(INI))
18. Proposition de règlement du Parlement européen et du Conseil établissant des règles harmonisées concernant l’intelligence artificielle (législation sur l’intelligence artificielle) et modifiant certains actes législatifs de l’union, Commission européenne, 21 avril 2021, COM/2021/206 final.
19. Sophie Petitjean, Le Parlement enfin prêt à voter sur le règlement pour l’IA, Contexte Numérique, 27 avril 2023. URL : https://www.contexte.com/article/numerique/le-parlement-enfin-pret-a-voter-sur-le-reglement-pour-lia_167920.html  
20. Parlement européen, Un pas de plus vers les premières règles sur l’intelligence artificielle, Actualité, 5 nov. 2023. URL : https://www.europarl.europa.eu/news/fr/press-room/20230505IPR84904/un-pas-de-plus-vers-les-premieres-regles-sur-l-intelligence-artificielle 
21. Proposition de directive du Parlement européen et du Conseil relative à la responsabilité du fait des produits défectueux, COM (2022) 495 final, 28 sept. 2022 
22. Directive 85/374/CEE du Conseil du 25 juillet 1985 relative au rapprochement des dispositions législatives, réglementaires et administratives des États membres en matière de responsabilité du fait des produits défectueux
23. Proposition de directive du Parlement européen et du Conseil, COM (2022) 496 final, 28 sept. 2022 

Customs seizures of counterfeit goods increased significantly in 2022. While French customs intercepted 5.6 million counterfeit items in 2020, seizures increased to 11 million in 2022. On February 23, 2023, the Ministry of Public Accounts stated, “Counterfeiting no longer spares any sector of the economy1.”

Customs seizures are a crucial measure to protect industrial property rights against counterfeits. In addition to financial losses, counterfeit goods can damage a company’s brand image and reputation in the marketplace. Customs, therefore, play a crucial role in preventing the importation of counterfeit goods into their territory.

The customs detention procedure

A procedure with multiple implications

France is a pioneer in customs detention because it was the first EU Member State to classify imported counterfeit goods as illegal goods. Thus, the Longuet law2 codified this particular procedure into French law. According to the Regulation of 12 June 20133, the laws of the European Union also apply. However, items released for free circulation pursuant to the regime of the specific destination and items without commercial character contained in the personal luggage of travellers are not subject to detention.

This is a necessary procedure for strengthening the protection of one’s intellectual property right(s) by allowing customs officers to temporarily block goods suspected of infringing on them. During this detention, the rights holder can request that counterfeit goods be destroyed if certain conditions are met, or even file a legal action.

The prerequisite for filing an intervention request

This is a highly structured and regulated procedure. It begins with the rights holder (or licence beneficiaries under certain conditions) filing a request for customs intervention with the competent customs service in France or the European Union. This allows the market to be monitored and the applicant to be notified in the event of a counterfeit capture. This is a preventive and free (as of the July 29, 20224 decree) step that can be taken even if the applicant is unaware of any infringement of his or her right(s). The customs intervention request is valid for one year and can be renewed with a simple written request. It must include information on authentic goods and common counterfeits, as well as identification of rights and their holders.

On the one hand, the national intervention request allows customs officials to detain goods that have already crossed French borders and have been cleared throughout French territory. The European intervention request, on the other hand, allows customs authorities to detain third-party goods in customs prior to their introduction into European Union territory.

The effectiveness of the detention request stems from its submission to the appropriate customs services. This enables rights protection to be tailored to each vector of counterfeit introduction, such as targeting cells in ports and airports to control commercial freight, brigades to conduct roadside checks on people and vehicles, specialised services for postal checks and express freight, and even Cybercustoms, a service in charge of tracking fraud on the Internet.

The customs seizure procedure

Evaluation of the similarity between authenticity and suspected forgery

Customs officers do not have expertise, but it is their responsibility to identify products that appear to be counterfeit. The customs service that carried out the detention subsequently notifies the applicant. In order to confirm or refute the suspicion of counterfeiting and determine the subsequent course of action, this notification includes photos and the quantities detained. If this set matches, they then proceed to a customs seizure.

A procedure subject to defined deadlines

According to Article 3 of Regulation (EEC) of June 3, 19715, the customs seizure procedure allows goods suspected of counterfeiting to be detained for a maximum of 10 days (3 days for perishable goods), which can be extended by 10 days on a reasoned request. This time frame allows for the goods to be inspected.

Procedure for Simplified Extrajudicial Destruction

The allotted time also allows for the applicant to request a simplified destruction procedure. If applicable, three conditions must be met. First, the applicant must confirm in writing that he agrees to the destruction of the goods under his control. Second, he must be able to ensure the authenticity of the goods by providing detailed expertise. Finally, the presumed counterfeiter (also known as the “holder” of the counterfeit goods) must confirm in writing to customs services within 10 working days of being notified of the detention that he wishes to express himself regarding the destruction of the goods. If no action is taken, it will be assumed that he agrees to this destruction. If he objects, the holder is notified and given an additional 10 working days to take legal action or take probative measures for the same purpose.

The potential legal ramifications of the customs seizure

When a counterfeit is discovered but the simplified destruction procedure is not used, the rights holder has the following options:
Appeal to the territorially competent court to obtain authorization for conservatory measures,
Justify the filing of a complaint with the Public Prosecutor,
Take legal action in criminal or civil court.

For this purpose, the rights holder may request that the customs professional secrecy be partially lifted in order to obtain additional information (names and addresses of the recipient, sender, declarant, and holder of the goods, customs regime, origin of the goods, and destination), provided that this information is used for the purposes specified in Article 21 of the Regulation of June 12, 20136.

What happens in case of unjustified detention?
In the event of an unjustified or abusive detention, the rights holder may be responsible for paying all costs incurred by both customs and the owner of the goods. Furthermore, customs cannot order the rights holder to compensate the owner of the goods if the detention is unjustified. However, whether the detention is justified or not, they can always ask the rights holder to cover the storage costs. In most cases, they do not. Such compensation could only be made at the request of the owner of the goods, through a counterclaim, or through a separate legal procedure. In this case, the owner may seek compensation for his entire loss.

Transit policy

This regime is a World Customs Organisation measure that allows goods to cross customs borders without being subject to customs duties or other taxes. On the one hand, internal transit refers to the movement of goods within the community area that are intended to be marketed in the transit country. As a result, customs officers can seize the goods and hold them for a set period of time while waiting for the rights holder’s opinion. External transit, on the other hand, refers to the movement of goods originating in and destined for third countries to the European Union where they will be marketed from one point on the community territory to another.

This customs regime creates a legal fiction in which the goods in question do not exist in the community territory through which they transit. Despite this “non-existence” on the community territory, it seems necessary, as in the case of community transit, to allow customs authorities to use this detention measure to ensure that goods suspected of infringing intellectual property rights do not fraudulently use the customs regimes considered. However, the CJEU7 has applied the fiction of customs law.

This decision is devastating because it establishes the principle that a third-party good in transit, originating in and destined for a third country, can only be detained for suspicion of counterfeiting if it is intended for sale on the European Union market. Customs officers can thus clearly detain counterfeit goods only if the rights holder provides proof of concrete indications of future placement on the Union market.

Dreyfus & Associates Law Firm: intermediary between rights holders and customs

The landscape of industrial property rights is shifting as e-commerce expands and counterfeiting becomes more sophisticated. The owners of intellectual property must now incorporate customs monitoring into their already extensive brand monitoring efforts. In this sense, the request for customs intervention is a complex operation that establishes and conditions the effectiveness of the seizure measure, which is its logical and technical continuation.

The law firm Dreyfus & Associates offers its expertise to its clients, proposing assistance in exchanges with competent customs services.
We have a network of agents throughout the community area to monitor incoming and outgoing goods movements.

We also have a specialised department at the disposal of its clients for the surveillance of industrial property titles, which can make the request for intervention to customs on behalf of the rights holder.

Finally, Dreyfus & Associates allows its clients to participate in customs officer training to improve the identification of genuine articles and, by extension, counterfeit goods.

References

1. Bilan de la lutte contre les fraudes fiscale, douanière et sociale, 23 February 2023
2. Law n˚ 94-102 of 5 February 1994 on the repression of counterfeiting
3. Regulation (EU) n°608-2013 of 12 June 2013
4. Order of 29 July 2022 repealing the order of 11 December 2018
5. Council Regulation (EEC) No 1182/71 of 3 June 1971
6. Regulation (EU) No 608/2013 of the European Parliament and of the Council of 12 June 2013
7. CJEU, 1 December 2011, C495/09 (Philips/Nokia case)

In response to the digital age’s demand for creativity and innovation, the European Union has recommended a new EU designs framework to address current issues and future challenges.  Through this proposal, they seek to refine existing regulations by adding clarity, enhancing definitions of key terms, and aligning them with individual country laws. If passed, the legislation could foster better protection for designs while simultaneously creating balance between legitimate interests involving intellectual property rights – all in an effort to curb counterfeiting activity worldwide.

An overview of European Design Law: Protecting Creativity and Innovation

Models and designs are integral to product artistry and creativity and can be protected by European law. Article 3 of Regulation 6/2002 outlines all the characteristics that can be used to define a design – including lines, contours, colours, forms and textures. Currently, designs and models must be novel and exhibit some degree of individuality for them to be considered protectable. 

The European law on designs and models is an essential tool for protecting creativity and innovation within the European Union. Not only does it help to encourage innovation and competition by providing adequate protection to creators and businesses, but it also encourages them to invest in the research and development of new products and designs, which ultimately stimulates economic growth and job creation.

Registration of a model or design with the European Union Intellectual Property Office (EUIPO) gives the holder exclusive rights over the ornamental or aesthetic aspects of an object for up to 25 years. The European design regime also provides protection for up to three years for unregistered community designs. 

To benefit from this protection, the design or model must have an individual characteristic. This implies that the general impression that the design or model gives to the informed user must be different from the general impression that pre-existing designs or models give. When assessing this criterion, it is important to take into account the degree of freedom enjoyed by the creator at the time of the creation of the design or model, since this freedom will determine whether the latter achieved a real creative performance or not. Finally, the design or model must also be considered new.

This protection allows the holder to take action against the reproduction and sale of products with an identical appearance.

Furthermore, European design law provides broader and faster protection than national systems. Once registered, a design is protected throughout the EU, obviating the need for separate registration in each member state.

Considering its importance to European economic actors, it has become necessary to adapt this system to current and future trends arising from the digital era.

Context of the changes proposed by the Commission

In November 2022, the Commission presented a proposal that is currently under negotiation. This « EU designs framework » aims to revise the regulation and directive on community designs and models and is set to come into effect by the end of the year, or early 2024.

The objective of the designs framework is to modernise and improve current provisions by removing outdated rules, enhancing legal security, and clarifying design and model rights management. As technology advances and more businesses operate online, it becomes clear that current regulations are limited and must adapt to new forms of creation to protect designers and their digital creations. This directive aims to harmonise national laws and procedures to strengthen interoperability and complement the community design and model system.

Finally, the framework would help to complete the single market for replacement parts by including into the directive a repair clause, which is similar to the one already present in Regulation 6/2002.

Key changes proposed by the Commission

The « EU designs framework’s » primary aim is to provide clarity within protection regulations. This would result in terminological alterations that replace terms such as “Registered Community Designs” with “Registered EU Designs” (REUD) and “Unregistered Community Designs” with “Unregistered EU Designs“.

Another major change introduced by the directive is the removal of protection for unregistered community designs and models at a national level. In addition, it also stipulates that protection for community designs and models only starts when they are registered in the dedicated register.

It requires visibility by conditioning the protection of UDCs on the visible character of the appearance characteristics presented in the community design registration application. During the procedure of submitting a community design, the representations must clearly identify all the details of the design or model deposited.

The Commission also highlights the possibility of combining design protection with copyright protection, as established by European case law.

The proposed changes aim to broaden the definition of designs and models to include movement, transition, or any type of animation of product features as well as the definition of products by introducing a digital component and allowing for anything related to graphic interfaces, if necessary. Accordingly, the proposed framework defines “product” as “any object, including digital products, that can be manufactured or produced in limited quantities, or that can be sold, rented, or made available on the market.”

The Commission defines the boundaries of protection and grants an exception that allows for critical and parodic use of designs and models. Conversely, it deems 3D printing a form of use that requires authorization from the design or model rights holder. Importantly, this is a continually-advancing technology that facilitates the creation of 3D objects via digital files.

In addition, the proposal introduces new provisions. Firstly, it removes the unity-of-class principle, allowing for the submission of several REUD requests in the same application, even when designating multiple classes. Secondly, it makes the repair clause for spare parts permanent. This clause provides a transitional period of 10 years to safeguard the interests of existing design or model holders if the member state allows for design or model protection for spare parts at the time the new directive comes into force. However, it will only have an immediate legal effect on future registrations. The proposed framework also permits right holders to affix a specific symbol Ⓓ, informing the public that the product is registered.

Finally, on a procedural level, the Commission proposes to make optional provisions mandatory in order to increase predictability and coherence with the EU system. « The EU Designs Framework » also establishes a presumption of validity, which should be adopted by all EU Member States. This way, the validity conditions of the title would be presumed to be met in the event of an infringement. It also allows one to request a deferral period of 30 months from the date of filing the application. Ultimately, it stipulates that all member states must provide administrative actions for nullity with respect to registered designs and models in front of national intellectual property offices.

Conclusion

The Commission’s proposal for this directive is justified by a legal framework that has remained unchanged since the late 1990s and early 2000s, before the internet and the rapid growth of technology. As a result, it was necessary to address certain deficiencies and gaps in the protection regime to ensure its adaptation to the digital age and, more generally, its sustainability. This reform could encourage the protection of designs and models and, therefore, applications for registration within the European Union. It will also strengthen and limit protection, with the objective of striking a better balance between legitimate interests. Ultimately, it could potentially (and surely) improve the fight against counterfeiting.

About Dreyfus

We offer our clients a dedicated and unique experience of expertise that is necessary for the exploitation of intangible assets.  We will also endeavor to keep you informed and up-to-date about intellectual property and digital economic issues through our articles and newsletters written by the Dreyfus Legal Team.

This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

The French Public Investment Bank (BPI France) has set up a  program to help SMEs (small and medium-sized enterprises) and ETIs (Ethical Trading Initiatives and mid-sized companies) who are seeking or looking for help in developing and structuring their intangible assets.  These intangible assets include patents, designs, trademarks and software.

What are the terms of the “Intellectual Property Strategy Diagnosis”? How does Dreyfus & Associés intervene in this respect?

The BPI’s “Intellectual Property and Intangible Assets Strategy Diagnosis” is aimed at SMEs and ETIs registered in France with a workforce of less than 2 000 employees.  It is important to note that a  subsidiary of a group with more than 2 000 employees will  not be eligible for this program.

What is the purpose of this program?

The purpose of this offer of support is to finance an analysis and consulting service provided by an Intellectual property Expert for the protection, structuring and development of Intellectual Property. The cost of such an analysis is generally estimated to be between 3 000 and 10 000 euros (excluding VAT), for a duration of three  to ten  days, and it can extend for up to  3 months depending on requirements to be completed. The BPI finances up to 80% of the experts’ services. This program will benefit Startups, SMEs and ETIs due to the low cost that is being offered to allow them to engage with an Intellectual Property Expert who is registered with the BPI.

More specifically, the BPI provides support that includes an inventory of existing intangible assets, the implemented valuation actions, and an analysis of the company’s maturity in conjunction with understanding the challenges of building these intangible assets.

In retrospect, the “Intellectual Property Strategy Diagnosis” allows the company to obtain a comprehensive strategy of recommendations to be adopted for the management and valorization of assets.

What is the role of Dreyfus & associés, Intellectual property experts?

Dreyfus & associés is registered as an Expert Consultant with BPI France. This registration allows firstly Dreyfus & associés to  advise you on the relevance of such a diagnosis. If necessary, the firm establishes a commercial proposal that can position your  company in its context and explains the issues to be addressed during the diagnosis.

In order for you to submit the application to the BPI, your company will have to create an account on the BPI website and then constitute and submit a complete file.

The file needs to include the online application form, the Expert’s proposal (unsigned), the company’s latest tax return, tax and social security certificates dating back to less than three  months, the company’s up-to-date capitalization table and finally, the Declaration of Aid for the use of consulting and support services in the field of innovation.

When the  file is accepted, BPI France will send you an IP Strategy and Intangible Assets Valuation Diagnosis contract to be signed electronically by the company’s legal representative.

At the end of the diagnosis, the Expert will provide the company and BPI France with a final report including a summary of the context, the issues, the development paths and the recommendations. This final report will be made available within 15 working days.

The « IP Strategy Diagnosis » program set up by the BPI is a real opportunity for small and medium-sized companies seeking to develop their intangible assets. It allows them to obtain a complete expertise from qualified and accredited intellectual property experts at a significantly lower cost.

Do not hesitate to contact us for more information.

contact@dreyfus.fr

We offer our clients a dedicated and unique experience of expertise that is necessary for the exploitation of intangible assets.  We will also endeavor to keep you informed and up-to-date about intellectual property and digital economic issues through our articles and newsletters written by the Dreyfus Legal Team.

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When legislations become more  restrictive for companies, compliance requirements tend to be even more stringent. How can you make sure your company complies with the law? What are the risks of not integrating Internet into your compliance plan?

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