INTA Special Report: Sir Robin Jacob's Speech

Sir Robin Jacob was the final speaker of the concurrent session ( see previous report here) and opened by stating that

"This is my first time at INTA and I have been told that it involves everyone here exchanging their business cards with everyone else, which by my calculation is 81 million exchanges of cards. I have not brought enough cards."

Sir Robin stated that he cannot give a 100 year perspective on European trade mark law because there has yet to be 100 years of European trade mark law: the Directive was only introduced in 1994, however he was able to comment on UK law. Sir Robin began his substantive speech by giving a short overview of the beginning of trade mark registration in the UK in 1875 and told the audience about the story of the first UK trade mark - that of Bass Beer as a word mark and the more recognisable red triangle. Even back then UK judges were cautious about allowing trade mark and brand owners go too far for registrations. Sir Robin quoted the dicta in Joseph Crosfield & Sons' Application in a case dealing with the registration of PERFECTION for soap

"Wealthy traders are habitually eager to enclose part of the great common of the English language and to exclude the general public of the present day and of the future from access to the enclosure."

This was the general theme of pretty much everything that Sir Robin said during his speech - that the powerful trade mark owners have pushed the boundaries forward over the past several years and the courts are going to start pushing them back. He stated that the wealthy marks, known in chambers as "snob-marks", have been around for hundreds of years and exist today, and these marks try to show off all the time and shout the loudest about others "free-riding" off their esteem. Sir Robin stated that this argument is listened to more by Continental judges than by English ones, which is worrying. He stated that the Continental systems do not seem to have the same suspicious of monopolies than we do in the UK and that they are more comfortable with the fuzzily defined areas of unfair competition (The AmeriKat thinks there should be a drinking game for every time Sir Robin says he hates unfair competition in a speech. One talk she attended by Sir Robin, the AmeriKat would have been on the floor by minute-10). Sir Robin stated that he believed that the Far East is more in favor of competition than that of Europe when it comes to addressing trade mark owner's rights.

Sir Robin concluded his speech by criticizing the L'Oreal v Bellure decision (the AmeriKat agrees) and that this was an unfortunate development in trade mark law in Europe. He stated that

"I think people should be allowed to tell the truth."

So if they say they are a smell-a-like, then why should trade mark law "save" a big brand owner where the consumer is not confused because the defendant has informed the consumer that they are a smell-a-like. A member of the audience took fault with that view, but Sir Robin stated that if someone tells truth in a trade and has not made anything infringing, i.e. making smell-alike perfume is not infringing, then what is the problem? We do not need to protect brands that far, stated Sir Robin.

Probably seeing his time quickly evaporating, Sir Robin starting spilling out other criticisms. He took issue with the terminology used in trade mark law. If we started referring to "protecting a monopoly" than "protecting a brand" people and courts may be more cautious in protecting trade mark rights to such extremes, as that in the L'Oreal case. Also, he said that some of the exhaustion rules in Europe were "stupid", but the Amerikat could not write fast enough to take everything down (did anyone else?). Sir Robin went on:

"Trade marks say something and if they are telling the truth that is okay, but if they are lying they should be strangled."

Sir Robin closed with the following three comments:

1. The impact on technology in this field cannot be predicted and we will not yet be able to understand it.
2. The most important trade marks that matter have always been, are and will always be word marks.
3. From 100 years ago today, there is nothing all that different because trade marks are still performing the same function. [Note: Was this a quick attempt to discuss the functionality doctrine of trade marks and criticism of recent EU case law in this area? Surely not!]

It was a fascinating discussion and spurred a lot of debate following the close of the speeches. One audience member passionately questioned why the panel was so reluctant to refer to trade mark's as property. The panel were in agreement in stating that the use of the word "properly" when referring to IP is not helpful to IP because IP is really only a "bundle of rights". The term "property" also negative in term as it ring-fences rights as "ours" and "not-yours", which is unhelpful PR-wise as well is inaccurate. Miles also stated that if international trade mark systems are to be successful they need to recognize registered marks only in so far as a local use does not pre-date it.

This was the first speech the AmeriKat has seen by Sir Robin since he left he bench earlier this Spring and is very much looking forward to more uncensored commentary on IP law from the bastion of UK intellectual property law

INTA Special Report: A Century of Trade Mark Law

As Day 197 (or so it feels) of INTA 2011 enters the afternoon lull between the early morning breakfasts and the late evening cocktails, the AmeriKat has stolen herself away to her hotel room to report on one of the concurrent sessions - A Century of Trade Mark Law: Looking Back and Looking Forward. The special session was to commemorate the 100th anniversary of The Trademark Reporter and the large number of INTA attendees reflected the esteemed panel.

Miles Alexander of Kilpatrick Townsend & Stockton LLP opened his discussion by quoting the comic strip, Pogo:

"We have met the enemy and he is us"

Miles stated that the criticism of trade mark law is not of trade mark lawyers or the law per se, but the excesses in the trade mark, copyright and patent laws that rightsholders take advantage of and lobby for that go beyond their legitimate interests. From a fundamental level trade mark law, like any law, is a series of maxims along the line of "Thou shall not reap what you did not sow". At the heart of these maxims are a recognition that we consider some sort of conduct in the use of trade marks as "being immoral in our own minds". Courts will thus still recognize what they believe to be inherently wrong conduct when enforcing (or not) trade mark rights. This is something that has lasted the past 100 years. What has changed, however, is that the legislature is beginning to recognize that another form of immoral conduct can come from the rights owners themselves, such as trade mark bullies (see previous AmeriKat report here). Miles also stated that he believed that trade mark is "being tainted by what others in copyright" are experiencing (i.e. large damages awards against individuals).

Miles stated that what has been the more difficult area of practice in recent years is that where clients have a valuable mark being used by another party in circumstance where there is no trade mark use, no dilution and no real trade mark harm but where the use is still potentially damaging to the mark's reputation, it has been challenging to advise clients to let the matter go. This issue was picked up later by Eric Goldman when he spoke about the blurring of use between commercial and non-commercial use which has been exacerbated by the internet and social-media use.

Miles stated that for counterfeiting to ever stop, the law must criminalize the most dangerous areas of counterfeiting where there is a lot of harm being done. The sanctions must be incredibly harsh in order to make a real effect on this. He also stated that the internet "will solve more problems than it will create" because knowledge will help inform brand owners of what is taking place on-line and in the real world. He also stated that social networks will give consumers easily accessible information pertaining to what products are counterfeit goods. Brands will also be able to more easily assess what marks they should register and how consumers view and cognitively assess their brands which will streamline the trade mark registration process. Miles closed his bit my stating something the AmeriKat tells everyone "We are all products". The AmeriKat lost the reasoning why Miles was stating this, but it is still a powerful statement.

Santa Clara University School of Law professor and fellow blogger, Eric Goldman, was up next speaking on the impact on technology on trade marks. He stated that the biggest overarching change was that trade mark owners have lost the ability to control their marks on-line and how consumers receive information on trade marks. Eric stated that back in the day (whenever that is, he says) brands were able to tightly control the marketing channels. There were defined roles of the press and how one communicated and promoted their brand to its consumers. Now, the once-controlled channels have degraded and multiplied. The concept of the press has transformed to that of social-media. The rise of new intermediaries who talk about the brand, and even the consumers themselves (says the AmeriKat), have meant that there is more information about the brand but less control by the brandowner of that information. The "online word-of-mouth" has contributed to this incredibly fast and massive scale impact on the rules of consumer engagement on trade mark owners and their marks.

Eric also stated (as refered to above) that the impact of technology has also resulted in the crumbling distinction between commercial and non-commercial use in trade mark law. US trade mark law is predicated on the constitutional basis of commerce law so trade mark law and use has to be "in commerce" and so, where there is a dispute, the dispute needs to be in relation to how the law should regulate how parties sell and use marks as against each other in commerce. However, where the definition of "in commerce" is not present, trade mark law cannot deal with it although it desperately tries to.

Eric stated that unlike times gone-by, commercial activity is not necessary in order to reach large audiences, i.e. posting a parody video on YouTube or a parody Twitter account. For example, analogue examples of use include Mickey Mouse with a gun and Pillsbury Doughboy in Screw magazine. Now with Twitter we see the BP parody Twitter account. These uses, however, are not trade mark uses in commerce but trade mark owners and the law struggle with this. Eric also gave the example of the tension between trade mark registered rights and private name spaces such as user accounts and domain names. So even though there may be a prior trade mark registration, you may not necessarily be able to get your domain name or a Twitter account. Eric explained that trade mark law struggles each time a "private name space" arises and has to formulate its own rules, as in the case of 1-800 phone numbers.

Eric's final point dealt with what Miles referred to - overzealous enforcement of trade marks by owners. Eric stated that when the concepts of confusion and dilution were established they were established by the courts who were not educated by how consumers process information. Consumers today arguably have more sophisticated channels to process information and thus are more sophisticated in not being confused by trade mark use. However, this increased sophistication of a consumer is not reflected in trade mark law. Trade mark litigators try to "inject social science" by way of consumer surveys "into trade mark adjudications", but as we all know how unfortunate survey evidence can be in trade mark cases in the UK and the US (expensive to produce, cheap to destroy). Eric indicated that there is a need for lawmakers to be educated in the social science of consumers and trade marks before law is made. The AmeriKat could not agree more!

For Sir Robin's following speech, click here.

INTA Special Report: Damages in Europe

After a gruelling 12-hour day at INTA yesterday, the AmeriKat was refreshed this morning with a delicious breakfast frittata in the fabulous company of friends from Reed Smith and one of her partners. The scrumptious egg, latte and sourdough feast fuelled her next two hours in one of the concurrent sessions entitled "Damages in Europe"- a subject dear to any IP litigator's heart. Now standing up at one of INTA's e-access computers (see if you can spy her), she has this report from the latest in the UK, Germany, Netherlands and France. (picture, right: the AmeriKat in the empty egg carton used in her morning's frittata).

Non-EU lawyers may be aware that the Harmonization Directive (originally 89/104 -- now 2008/95) attempted to harmonize trade mark law across the EU and to get rid of the negative effects of a non-uniform system. However the Harmonization Directive did not deal with damages or how damages were to be calculated. By Council Regulation 207/2009 there were still no provisions dealing with trade mark sanctions; the Regulation dealt only with what courts had competency, appeal rules to the now Court of Justice and provisions for injunctions. Although these Directives and Regulations may have harmonized more than was originally expected to be harmonized by the EU system, it was still lacking in dealing with calculations of damages. The Enforcement Directive (2004/48) was introduced to harmonize the means of and remedies in trade mark infringement actions. The recent December 2010 Report from the EU on the application of the Enforcement Directive stated that although solid grounds had been established for damages in trade mark actions, much more could be done (no kidding, says the AmeriKat!). The report also recognized that damages awarded in IP cases were and are still comparatively low and that rightsowners have felt that the low level of damages have not had the desired deterrent effect.

By way of background, Article 13 of the Enforcement Directive states that when the judicial authorities set the damages that appropriate to the harm suffered:

(a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement; or

(b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.

Claus Eckhartt, leader of the session, of Bardehle PagenBerg in Germany gave an overview of the European legislation and stated that proving the losses under Article 13, as with any IP case, can be incredibly difficult for a claimant. The factual basis of proving lost sales and/or unfair profits requires factual evidence and proof of causal links which can be problematic to prove. Claus stated this was especially so in countries like Germany where the standard of proof is high. The term "moral prejudice", i.e tarnishment to goodwill, and as Claus defined it the "abstract loss of consumer confidence" can actually be more detrimental to the brands than any assessment of loss profits. However, he said that "moral prejudice" damages are rarely awarded by European Courts.

Nick Bolter of the London office of Edwards Angell Palmer & Dodge explained that in the UK there are bifurcated proceedings, i.e. two trials - one for liability and one for damages. Nick stated that in the UK damages trials are very rare as often the defendant, having already lost on liability, will come to its senses and sit down to negotiate a damages settlement with the claimant as this would be the most cost effective route. Nick explained that a claimant can be awarded compensatory damages or an account of profits, but that the UK Courts have not awarded punitive damages in trade mark infringement claims (in line with the European courts and the Directive Guidelines). Nick explained that the choice for how a claimant wishes their damages to be assessed is made at an early stage of the damages proceedings. He also noted that claimants can sometimes be faced with clever accounting on the defendants side which make any profits made as a result of the infringement seemingly disappear, and thus the choice for an election can be difficult. Nick referred to the recent Patents County Court cases of the National Guild of Removers dealing with damages (National Guild of Removers v Christopher Silveria [2010] and Simon Jones, 9 February 2011). These were cases of IPKat favorite His Honour Judge Colin Birss QC who was described by Nick as being "extremely experienced IP lawyer and sensitive to IP issues" (the AmeriKat agrees). The judge stated in the former case that the "user principle" (lost royalties) is available in trade mark infringement and passing off cases, whereas previously the "user principle" was only available in patent cases. In the Simon Jones case, the judge increased the royalty rate by two-times the rate that the claimant would have been paid had the defendant approached the claimant before the infringement, because to make it 1:1 to would be unfair and would not recognize the harm caused. (The AmeriKat has to admit that she has not seen this opinion yet, so any comments on this are welcome!). Nick also referred to the Cipriani case which repeated the maximum of all cases - damages are to be determined on a case by case basis because they are so dependent on the facts of the case (yawn!).

Gregor Vos of Klos Morel Vos & Schaap in the Netherlands said that the damages provisions were based on the Benelux Treaty on IP (BTIP) and the Dutch Civil Code (DCC) and were dealt with in full court proceedings. Liability proceedings were usually dealt with by ex parte or summary judgments or additional full court proceedings where necessary. Gregor stated that the BTIP has two methods of assessment - any damage, including lost profit and account of profits - and a fixed amount on royalty (echoing Article 13). Damages under the DCC look at lossess, lost profits and all "reasonable" losses and account of profits. Gregor stated that the BTIP assessment requires bad faith and therefore the DCC assessment is a lower threshold and thus easier to prove. He also questioned whether with the implementation of the Enforcement Directive and TRIPS, if Dutch law under BTIP and DCC is compliant. Gregor stated that the assessment of damages for unlawful profit also includes "immaterial damage" which is an added percentage of the damages that are difficult to calculate. This will usually be between 10-30% extra. Gregor stated that it is impossible to predict whether the court will award 10% or 30% on any given day. In relation to an account of profits, Gregor stated that there is "no accumulation of lost profit and account of profits" since a 2000 copyright decision. He stated that although this was a copyright decision and arguably not relevant to trade mark law, the lower courts have upheld this decision in relation to trade mark cases. Echoing Nick, Gregor also commented on the circumstance when defendants can say that they have made "no profit" and Gregor questioned why defendants would ever infringe if it is so unprofitable. Gregor stated that the meaning of "profit" means the net profit with only direct costs being deducted (BCJ 24 October 2005 Dior/Delhaize).

Rebecca Delorey of Gilbey Delorey in France (picture, right - the AmeriKat adorned in her French tribute dress) stated that the judges in France do not really award damages based on precise calculations. Damages are awarded in the liability trial so there is only one trial, not two. Therefore, along with proving infringement a claimant must also prove damages. Rebecca stated that the judges have full discretion on awards, so although there are no awards for punitive damages, damages awards can seem to be increased to reflect something akin to a recognition for punitive damages. Commercial loss in France can include loss resulting from sales of infringing goods, loss based on the volume of sales by infringer or profits which the IP holder would have realized had they themselves made the sale. Expert evidence can be requested by a judge to assist in determining the damages calculations but it is rare (4 March 2011, Pirelli decision). Commercial damages includes damages as a result of inferior product quality and tarnishment of brand image (DivX case - 12 January 2011). Loss calculated in relation to the profit made by the infringer is seldom refered to in decisions. Lump sums are awarded where they are expressly requested and documented, but they are not frequently requested (23 March 2011 - Danet case). Like in many jurisdictions, Rebecca stated that the damages awarded by courts may not enough to cover legal costs of the claimant.

The speakers then quickly touched on the costs in their respective jurisdictions. In Germany the legal fees (court fees and attorneys fees) are paid by the losing party and are calculated and reimbursed on the basis of a Fee Chart. The specific amount of reimbursement is dependent on the value of the litigation which is in turn calculated based on the annual turnover made of the mark, the reputation of the infringed mark and the extent of infringement. Claus stated that a case of average complexity and duration at first instance could cost around 20,000 to 25,000 Euros and thus the fees to be reimbursed would be about 50-60%. Costs in France are awarded at the discretion of the judge under the loser-pays principle and costs are usually awarded. Where they are not it is usually because the there is a counterclaim. Rebecca stated that the costs for a first instance simple trade mark claim is about 5,000-10,000 Euros, but it is not unusual to see a standard award of 2,500 Euros. The costs are dealt with, as in the Netherlands, by submitting an invoice to the judge but lawyers are reluctant to make their fees and invoices public. Gregor, in explaining the award of costs in the Netherlands referred to a case where a pizza delivery had been included on a lawyer's invoice submitted to the court. In the Netherlands, Gregor stated that there is a fixed costs recoverability system where a complete full trial has a cost cap of 25,000 Euros. Nick explained that costs in the UK are usually agreed by a party, but if not they are assessed by a court who usually awards the winning side between 65-75% of their costs. If a party has behaved particularly bad, an award of indemnity costs can be made which can be up to 100% of the winning-side's costs.

Rebecca closed with touching on the recent decision of the Webshipping case - DHL v Chronopost, 12 April 2011, Case-C-235/09 dealing with the referral from the Cour de Cassation dealing with the territorial scope of injunctions and coercive measures.

The AmeriKat was surprised by how few people were in the audience and even more so how few people had questions in a very uncertain area of the law in Europe. Why is this? Are people too cautious to share horror stories or is there just little to say because damages cases, at least in the UK, are few and far between in IP? Thoughts?