English court gets sniffy about being led by the nose

UK Trade Mark 777757

The recent Court of Appeal case of L’Oréal SA & Ors v. Bellure NV & Ors [2010] EWCA Civ 535 is probably the best, recent example of an English court attempting to tweak the nose of the Court of Justice of the European Union (formerly European Court of Justice)(CJEU) that you are likely to find. In its ruling the Court of Appeal acknowledged that it is bound by the European Communities Act 1972 to give effect to judgements of the CJEU and applied the CJEU ruling in Case C-487/07, a referral to the CJEU from the Court of Appeal at an earlier hearing on the case.  However, the leading judgement of Jacobs LJ does an excellent job of showing how unfair and perverse the ruling of the CJEU is when applied to the facts of the case. 

The case involved a small Belgian producer of smell-alike perfumes and its UK distributors, who sold the cheap versions of well-known designer brands to low-end retailers in bottles and packaging that were not identical but were generally similar to the brands’ packaging.  However, the defendants advertised the cheap perfumes in comparative lists which indicated by designer brands which perfume the cheap version smelled like.

 The brands brought various passing off and trademark infringement claims against the defendants.  Certain questions relating to the interpretation of the relevant parts of the Trade Marks Directive were referred to the CJEU for a preliminary ruling, and as a result the CJEU determined that use of a registered trademark in a price and smell comparison list could be a trademark infringement and that stating in comparative advertising that a product of service was an imitation or replica of a trademarked product can be prevented by the trademark owner.

 There are some notable passages in the judgement that show where Jacobs’ sympathies lay:  

Does trade mark law prevent the defendants from telling the truth?  Even though their perfumes are lawful and do smell like the corresponding famous brands, does trade mark law nonetheless muzzle the defendants so that they cannot say so?

I have come the conclusion that the [CJEU]’s ruling is that the defendants are indeed muzzled.

There is no good reason to dilute the [right of traders to make honest statements about their products] in cases where the speaker’s motive for telling the truth is his own commercial gain.

The [CJEU]’s decision in this case means that poor consumers are the losers. Only the poor would dream of buying the defendant’s products.  The real thing is beyond their wildest dreams. Yet they are denied their right to receive information which would give them a little bit of pleasure; the ability to buy a product for a euro or so which they know smells like a famous perfume.

If a trader cannot (when it is truly the case) say: “my goods are the same as Brand X (a famous registered mark) but half the price”, I think there is a real danger that important areas of trade will not be open to proper competition.” 

We have to agree with Jacobs LJ.  We would find it extremely difficult to advise a manufacturer or distributor of an imitation or replica product or service on how to advertise its products or services in comparison with a registered trade mark product or service.  The CJEU does not make it clear what it means by “unfair advantage” in the relevant provisions, nor what is meant by the CJEU’s opinion that “riding on the coat-tails” of a trademark is prohibited.  Is it even possible to cite a registered trademark in a comparative advertisement after the CJEU ruling?

This is not what the Trade Mark Directive or Comparative Advertising Directive should be about.

Once bitten; twice shy?

Humberside Police will forever be remembered in data protection circles for being the police force that blamed the Data Protection Act 1998 for its policy of deleting information relating to allegations about the commission of criminal offences, including those of the Soham murderer Ian Huntley (aka Ian Nixon).  Huntley was thus able to secure a position as a school caretaker despite the fact that he had been investigated in the past for sexual offences (one act of indecent assault, four acts or underage sex and three rapes – he had even been charged with rape, but the case was dropped by the Crown Prosecution Service for lack of evidence) and burglary.  His only recorded conviction was for riding a motorcycle without a licence or insurance.

The pendulum has clearly swung the other way, as Humberside and four other constabularies were the subject of separate enforcement notices from the Information Commissioner for retaining records of convictions that were spent under the terms of the Rehabilitation of Offenders Act 1974.  The constabularies appealed to the Information Tribunal.  The decision of the Information Tribunal was to uphold the Information Commissioner’s enforcement notices.  The constabularies appealed to the Court of Appeal, where they were successful. The Court of Appeal judgement has recently been published.

The Court of Appeal decided that the Information Commissioner and Information Tribunal had misconstrued the data protection principles to determine that as the records were not necessary for the “core” police purpose of the detection of crime, they should be deleted.  It was for the data controller to determine the purposes for which personal data was processed, including determining the necessary retention period for data to meet those purposes.  The only restriction in the Data Protection Act 1998 was that those purposes had to be fair and lawful, which included being communicated to the data subject (and included on the data controller’s notification/registration).

It is clear that there is continuing unease about retention of criminal records or other information by police forces, which first became evident in the cases involving indefinite retention of DNA and fingerprint information on persons who have not been charged.  This practice has been ruled to be against an individual’s right to privacy under Article 8 of the European Convention on Human Rights by the European Court of Human Rights in Strasburg (see the S and Marper -v- United Kingdom).

Whilst the constabularies are correct to apply their own judgement to the appropriate retention period for criminal records, this is a sensitive area that calls for legislative intervention. After a consultation on the retention of DNA database records, the Home Office reported in November 2009 that it is considering a limit of six years for the retention of DNA data for innocent persons, but there has been no Home Office response to the Court of Appeal case on the retention of other police records.

Help me, Obi-Wan Jacobi; you're my only hope!

A long time ago in a galaxy far, far away… well, in 1976 California, Lucasfilm began developing Star Wars.  The iconic Imperial stormtrooper helmets and uniforms were made by Andrew Ainsworth and his company Shepperton Design Studios Limited in England.  He kept the moulds for the vacuum-forming of the plastic parts.  In 2004 he began selling stormtrooper helmets, including helmets to a value of approximately $14,500 to some US customers.

As a result, a copyright infringement, unfair competition and trade mark infringement action was brought by Lucasfilm Limited and the associated rights holders (together, “Lucasfilm”) against Ainsworth in a District Court in California.  That action succeeded, with Lucasfilm awarded $5m damages for copyright infringement, $5m for trade mark infringement and unfair competition, together with an additional $10m compensatory damages.

Lucasfilm sought to have the US judgement enforced in the UK, as well as bringing a UK copyright infringement action.  In a High Court judgement given on 31 July 2008, Lucasfilm largely failed. They appealed. Lord Justice Jacob gave the Court of Appeal judgement yesterday. It should not be a surprise to Star Wars fans that the lone crusader overcame the might of the Lucasfilm “Empire”, but how did the Court of Appeal save the “plucky Brit” from certain bankruptcy and ruin?

UK Copyright

Part of the Lucasfilm claim was that the helmets were a sculpture.  A sculpture is an “artistic work” within the meaning of s.4(1)(a) of the Copyright, Designs and Patents Act 1988, which, by s.4(2)(b), includes a cast or model made for purposes of sculpture.  If Lucasfilm were able to show that the prototype helmet was a sculpture, then copyright in it would have been protected for 70 years from the death of the author/sculptor (s.12(2)).  If the helmet was not a sculpture, then protection of the drawings of the helmet in which Lucasfilm held the copyright would only be for a period of 15 years from the first marketing of reproductions, a period that has expired.  How the period of protection ends up being 15 years is set out in the High Court judgement; it is largely the result of transitional provisions in the 1988 Act, so that the 15 years protection in s.10 of the Copyright Act 1956 applies.  If the helmets had been reproduced after the effective date of the relevant provision in the 1988 Act, s.52 (1 August 1989), then the protection period would have been 25 years.

The Court of Appeal upheld the High Court judgement that the prototype helmet was not a sculpture.  

The Court of Appeal upheld the application of the s.51 defence by the High Court, which permits the making or copying of an article to a copyright design document for anything other than an artistic work or typeface.  It also upheld the application of the s.52 defence, which allows anyone to copy an article after a set period from when the article has been subject to mass production under an industrial process and marketed by a copyright owner (or licensee).  In applying the defence of s.52, it was noted that Lucasfilm had licensed the reproduction of the helmet design in toy stormtroopers, so that the defence applied. 

Lucasfilm’s UK copyright actions therefore failed.

US Copyright

It was clear that the Court of Appeal was not minded to allow Lucasfilm to enforce US copyright in the UK.  Having determined that it was not bound by any binding authority, the Court of Appeal decided that foreign, non-EU (or Lugano Convention) copyrights are non-justiciable in England and that the application of forum non conveniens did not apply to international copyright cases.  This part of the judgement was well argued, as it is one of the points in the judgement that is more likely to be appealed to the Supreme Court by Lucasfilm. 

It was also clear that the UK courts were not sympathetic to the plea by Lucasfilm to enforce the US copyright judgement, particularly as the damages awarded under the US system were massively out of step with what a UK court would award.  This came down to the fact that Andrew Ainsworth had no physical presence in the US, and his website offering the sale of the helmets, although priced in £ and US$ with shipping charges for the US (and Canada), was not determined to be directed at the US, even though there was some advertising of it in the US.  This is an interesting finding for all internet and web-related cases.  The Court of Appeal was not persuaded that owning and operating a website meant that the website owner has a presence in another jurisdiction.

Possible Appeal

As has been noted in other blogs, Star Wars features have tended to come in threes.  Given that we’ve had a High Court Star Wars I and Court of Appeal Star Wars II, we only need the Supreme Court appeal to make the set.  Given the importance of the legal principles raised in the judgements, and the willingness of Lucasfilm to defend its rights in all aspects of the Star Wars films by whatever means, it is to be expected that there will be a Star Wars III.