International Commercial Law Blog

The EU Court of Justice sets aside the judgment of the General Court and annuls the EUIPO decision which confirmed registration of the shape of the Rubik’s Cube as an EU trade mark

Rubik's cubeIn examining whether registration ought to be refused on the ground that that shape involved a technical solution, EUIPO and the General Court should also have taken into account non-visible functional elements represented by that shape, such as its rotating capability.

At the request of Seven Towers, a UK company which manages, inter alia, intellectual property rights relating to the ‘Rubik’s Cube’, the European Union Intellectual Property Office (EUIPO) registered in 1999, as a three-dimensional EU trade mark, the cubic shape in respect of “three-dimensional puzzles”.

In 2006, Simba Toys, a German toy manufacturer, applied to EUIPO to have the three-dimensional mark cancelled on the ground, inter alia, that it involved a technical solution consisting of its rotating capability, since such a solution may be protected only by patent and not as a trade mark.

EUIPO dismissed its application and Simba Toys thereupon brought an action before the General Court in which it sought annulment of EUIPO’s decision.

By its judgment of 25 November 2014 (see Case T-450/09 Simba Toys GmbH & Co. KG v OHIM), the General Court dismissed the action brought by Simba Toys on the ground that the cubic shape in question did not involve a technical function such as to preclude it from being protected as a trade mark. In particular, the General Court took the view that the technical solution characterising the Rubik’s Cube did not result from the characteristics of that shape but, at most, from an internal and invisible mechanism of the cube.

Simba Toys appealed to the Court of Justice against the judgment of the General Court.

By today’s judgment, the Court points out that Regulation No 40/94 on the Community trade mark, which is applicable in the present case, seeks to prevent trade mark law from granting an undertaking a monopoly on technical solutions or functional characteristics of a product. In that regard, the Court confirms that the essential characteristics of the shape at issue are the cubic form and a grid structure on each surface of that cube (see The Lego brick is not registrable as a Community trademark).

Next, with regard to the question as to whether registration of the shape in question as an EU trade mark is liable to confer on Seven Towns a monopoly on a technical solution, the Court highlights that it is necessary to examine whether that shape is necessary in order to obtain a technical result.

Contrary to what the General Court found, the Court of Justice notes that, in the context of the present examination, the essential characteristics of the cubic shape in issue must be assessed in the light of the technical function of the actual goods represented. In particular, it was for the General Court also to take into consideration non-visible elements of the graphic representation of that shape, such as the rotating capability of the individual elements in a three- dimensional “Rubik’s Cube”-type puzzle. In that context, the General Court ought to have defined the technical function of the product concerned and have taken this into account in its examination.

Moreover, the Court takes the view that the fact that Seven Towers requested registration of the contested sign for “three-dimensional puzzles” in general, without restricting itself to those that have a rotating capability, cannot preclude account from being taken of the technical function of the actual goods represented by the cubic form in question, and makes it even necessary, since the decision on that request is liable to affect all manufacturers of three-dimensional puzzles with cube–shaped elements.

In those circumstances, the Court sets aside the judgment of the General Court and annuls the EUIPO decision which confirmed registration of the shape in question as an EU trade mark. It will be a matter for EUIPO to adopt a new decision taking into account the findings set out by the Court in the present judgment.

ICC Court amends its Rules to enhance transparency and efficiency

ICC LogoThe International Court of Arbitration of the International Chamber of Commerce (the ICC Court) has announced important amendments to the ICC Rules of Arbitration (the Rules) with the aim of further increasing the efficiency and transparency of ICC arbitrations.

The revised rules will apply from 1 March 2017. They provide that expedited procedure rules will automatically apply to all arbitrations with amounts in dispute below US$2 million and to cases involving higher amounts on an opt-in basis.

Under the Expedited Procedure Rules, the ICC Court will normally appoint a sole arbitrator, irrespective of any contrary term of the arbitration agreement. Awards must be made in 6 months from the case management conference, with extensions granted only in limited and justified circumstances.

Under the Rules there will be no Terms of Reference and the tribunal will have discretion to decide the case on documents only, with no hearing, no requests to produce documents and no examination of witnesses. The quality control on awards – performed by the ICC Court and its Secretariat through the scrutiny of the award – will however be maintained at its long-established highest level. Finally, a scale providing for significantly reduced fees will apply under the Expedited Procedure Rules.

ICC Court President Alexis Mourre said: “This is an entirely new offer to our users. Disputes will now be resolved on a very expeditious and cost-effective manner, providing an effective answer to the legitimate concerns of the business community as to time and costs. These new rules will not only be effective for disputes of a limited value, but also for larger cases if the parties so agree.”

Disputes will now be resolved on a very expeditious and cost-effective manner, providing an effective answer to the legitimate concerns of the business community as to time and costs.

The ICC Court has also introduced a number of other changes to its Rules. They comprise a cutback, from two months to one month, of the time-limit for the establishment of Terms of Reference, in order to streamline the initial phases of the proceedings.

The Rules have also been amended to the effect of allowing the ICC Court to provide reasons for its decisions made on challenges, as well as for other decisions, such as prima facie jurisdictional decisions and consolidations, without having to seek consent of all parties, as under the previous Rules. Mr Mourre said: “Any party will now be in a position to ask the ICC Court to provide reasons for its decisions. This is an increased measure of transparency and accountability to our users.”

The amendments to the Rules were proposed in May by the ICC Court and the Governing Body for Dispute Resolution Services, laid before the ICC Commission on Arbitration and ADR at its Washington session on 17 September 2016, and finally approved by the ICC Executive Board in Bangkok on 20 October 2016.

A copy of the updated rules can be downloaded here.

The refusal to recognise hallmarks for precious metals affixed by a Member State assay office infringes EU law

The Commission brought an action before the Court of Justice against the Czech Republic for failure to fulfil obligations, on the ground that the Czech Republic refuses to recognise the hallmarks for precious metals affixed by WaarborgHolland, an independent assay office in the Netherlands. The Commission complains that the Czech Republic requires precious metals hallmarked by WaarborgHolland and imported into the Czech Republic to be marked with an additional Czech hallmark.

The Czech Republic, supported by France, claims that the refusal of recognition is justified by the fact that some of the WaarborgHolland hallmarks are affixed to precious metals by its branches outside the EU. According to the Czech Republic, hallmarks affixed in a third country need not be recognised by the Member States. Further, the Czech Republic says that since the WaarborgHolland hallmarks are identical, it is not possible to distinguish those affixed outside the EU from those affixed in the territory of the EU and it is therefore obliged to refuse recognition of all hallmarks from that assay office.

In its Judgment in Case C-525/14 the Court of Justice observes that the Czech Republic’s practice of requiring a fresh hallmarking of precious metals which have been hallmarked and marketed1 in a Member State, or hallmarked in a third country in accordance with Netherlands legislation and put into free circulation in the EU, constitutes a restriction of the free movement of goods.

On the question whether the restriction may be justified on consumer protection grounds, the Court finds that a Member State may in principle, under EU law and outside the cases governed by an international agreement, consider that hallmarks affixed in the territory of third countries do not offer a level of protection of consumers equivalent to that guaranteed by hallmarks affixed by independent bodies in the territory of the Member States.

However, Member States cannot rely on that justification if the results of the control carried out in the Member State of export meet the requirements of the Member State of import. That is so with the precious metals hallmarked by WaarborgHolland in a third country, put into free circulation in the EU and, before being exported to the Czech Republic, marketed in a Member State which, like the Czech Republic, does not allow its own assay office or offices, or other bodies authorised to affix hallmarks in its territory, to affix their hallmarks in a third country. In that case, the control exercised by that Member State when the precious metals are marketed in its territory satisfies the requirements of the Czech Republic, since the two Member States are pursuing equivalent levels of consumer protection.

The Court finds, moreover, that the Member State of import also may not prevent the marketing in its territory of precious metals imported from other Member States, where they have been both hallmarked by an independent body and marketed in a Member State.

Consequently, as regards the above cases, the Court finds that the Czech Republic’s refusal to recognise the WaarborgHolland hallmarks cannot be justified, and the failure of that Member State to fulfil its obligations is made out.

On the other hand, the results of the control exercised by the Member State of export do not satisfy the consumer protection requirements of the Czech Republic where precious metals which have been hallmarked by WaarborgHolland in the territory of a third country and put into free circulation in the EU are exported to the Czech Republic without first having been marketed in a Member State. The same applies with respect to such goods which, after being put into free circulation, have been marketed in a Member State which does not require hallmarking by an independent body or in a Member State which, like the Netherlands, requires such hallmarking but allows it to be done in the territory of third countries.

The Court points out, however, that the Czech practice complained of concerns precious metals bearing WaarborgHolland hallmarks generally, not only precious metals hallmarked in the territory of third countries, and does not distinguish according to the circumstances in which the precious metals are exported to the Czech Republic. The Court observes that such a practice is not proportionate to the objective of consumer protection. Thus it would be possible to require from the importer into the Czech Republic documentation to show the place where the hallmark in question was affixed and, as the case may be, the place where the precious metals concerned were put into free circulation and marketed in the EU, which would be a measure less prejudicial to the free movement of goods.

In those circumstances, the Court concludes that, even in the cases in which the practice complained of may be justified, its disproportionate nature likewise means that the failure of the Czech Republic to fulfil its obligations is made out.

European Commission launches EU-U.S. Privacy Shield

privacy_shield

On 2 February 2016 the European Commission and the U.S. Government reached a political agreement on a new framework for transatlantic exchanges of personal data for commercial purposes: the EU-U.S. Privacy Shield (see IP/16/216). The Commission presented the draft decision texts on 29 February 2016. Following the opinion of the article 29 working party (data protection authorities) of 13 April and the European Parliament resolution of 26 May, the Commission finalised the adoption procedure on 12 July 2016.

The EU-U.S. Privacy Shield Framework was designed by the U.S. Department of Commerce and European Commission to provide companies on both sides of the Atlantic with a mechanism to comply with EU data protection requirements when transferring personal data from the European Union to the United States in support of transatlantic commerce. On July 12, the European Commission deemed the Privacy Shield Framework adequate to enable data transfers under EU law.

The Privacy Shield program, which is administered by the International Trade Administration (ITA) within the U.S. Department of Commerce, enables U.S.-based organisations to join the Privacy Shield Framework in order to benefit from the adequacy determination. To join the Privacy Shield Framework, a U.S.-based organization will be required to self-certify to the Department of Commerce and publicly commit to comply with the Framework’s requirements. While joining the Privacy Shield Framework is voluntary, once an eligible organisation makes the public commitment to comply with the Framework’s requirements, the commitment will become enforceable under U.S. law. All organizations interested in joining the Privacy Shield Framework should review its requirements in their entirety.

The new framework protects the fundamental rights of anyone in the EU whose personal data is transferred to the United States as well as bringing legal clarity for businesses relying on transatlantic data transfers.

The EU-U.S. Privacy Shield is based on the following principles:

  • Strong obligations on companies handling data: under the new arrangement, the U.S. Department of Commerce will conduct regular updates and reviews of participating companies, to ensure that companies follow the rules they submitted themselves to. If companies do not comply in practice they face sanctions and removal from the list. The tightening of conditions for the onward transfers of data to third parties will guarantee the same level of protection in case of a transfer from a Privacy Shield company.
  • Clear safeguards and transparency obligations on U.S. government access: the US has given the EU assurance that the access of public authorities for law enforcement and national security is subject to clear limitations, safeguards and oversight mechanisms. Everyone in the EU will, also for the first time, benefit from redress mechanisms in this area. The U.S. has ruled out indiscriminate mass surveillance on personal data transferred to the US under the EU-U.S. Privacy Shield arrangement. The Office of the Director of National Intelligence further clarified that bulk collection of data could only be used under specific preconditions and needs to be as targeted and focused as possible. It details the safeguards in place for the use of data under such exceptional circumstances. The U.S. Secretary of State has established a redress possibility in the area of national intelligence for Europeans through an Ombudsperson mechanism within the Department of State.
  • Effective protection of individual rights: any citizen who considers that their data has been misused under the Privacy Shield scheme will benefit from several accessible and affordable dispute resolution mechanisms. Ideally, the complaint will be resolved by the company itself; or free of charge Alternative Dispute resolution (ADR) solutions will be offered. Individuals can also go to their national Data Protection Authorities, who will work with the Federal Trade Commission to ensure that complaints by EU citizens are investigated and resolved. If a case is not resolved by any of the other means, as a last resort there will be an arbitration mechanism. Redress possibility in the area of national security for EU citizens’ will be handled by an Ombudsperson independent from the US intelligence services.
  • Annual joint review mechanism: the mechanism will monitor the functioning of the Privacy Shield, including the commitments and assurance as regards access to data for law enforcement and national security purposes. The European Commission and the U.S. Department of Commerce will conduct the review and associate national intelligence experts from the U.S. and European Data Protection Authorities. The Commission will draw on all other sources of information available and will issue a public report to the European Parliament and the Council.

Since presenting the draft Privacy Shield in February, the Commission has drawn on the opinions of the European data protection authorities (Art. 29 working party) and the European Data Protection Supervisor, and the resolution of the European Parliament to include a number of additional clarifications and improvements. The European Commission and the U.S. notably agreed on additional clarifications on bulk collection of data, strengthening the Ombudsperson mechanism, and more explicit obligations on companies as regards limits on retention and onward transfers.

The “adequacy decision” will be notified today to the Member States and thereby enter into force immediately. On the U.S. side, the Privacy Shield framework will be published in the Federal Register, the equivalent to our Official Journal. The U.S. Department of Commerce will start operating the Privacy Shield. Once companies have had an opportunity to review the framework and update their compliance, companies will be able to certify with the Commerce Department starting August 1. In parallel, the Commission will publish a short guide for citizens explaining the available remedies in case an individual considers that his personal data has been used without taking into account the data protection rules.

The EU-U.S. Privacy Shield reflects the requirements set out by the European Court of Justice in its ruling on 6 October 2015, which declared the old Safe Harbour framework invalid.

The Court of Justice declares that the Commission’s US Safe Harbour Decision is invalid

US EU Safe HarborIn today’s Judgment in Case C-362/14 Maximillian Schrems v Data Protection Commissioner the Court rules that whilst the Court of Justice alone has jurisdiction to declare an EU act invalid, where a claim is lodged with the national supervisory authorities they may, even where the Commission has adopted a decision finding that a third country affords an adequate level of protection of personal data, examine whether the transfer of a person’s data to the third country complies with the requirements of the EU legislation on the protection of that data and, in the same way as the person concerned, bring the matter before the national courts, in order that the national courts make a reference for a preliminary ruling for the purpose of examination of that decision’s validity

The Data Protection Directive (1) provides that the transfer of personal data to a third country may, in principle, take place only if that third country ensures an adequate level of protection of the data. The directive also provides that the Commission may find that a third country ensures an adequate level of protection by reason of its domestic law or its international commitments. Finally, the directive provides that each Member State is to designate one or more public authorities responsible for monitoring the application within its territory of the national provisions adopted on the basis of the directive (“national supervisory authorities”).

Maximillian Schrems, an Austrian citizen, has been a Facebook user since 2008. As is the case with other subscribers residing in the EU, some or all of the data provided by Mr Schrems to Facebook is transferred from Facebook’s Irish subsidiary to servers located in the United States, where it is processed. Mr Schrems lodged a complaint with the Irish supervisory authority (the “Data Protection Commissioner”), taking the view that, in the light of the revelations made in 2013 by Edward Snowden concerning the activities of the United States intelligence services, in particular the National Security Agency (the “NSA”), the law and practice of the United States do not offer sufficient protection against surveillance by the public authorities of the data transferred to that country. The Irish authority rejected the complaint, on the ground, in particular, that in a decision of 26 July 2000 (2) the Commission considered that, under the “safe harbour” scheme (3), the United States ensures an adequate level of protection of the personal data transferred (the “Safe Harbour Decision”).

The High Court of Ireland, before which the case has been brought, wishes to ascertain whether that Commission decision has the effect of preventing a national supervisory authority from investigating a complaint alleging that the third country does not ensure an adequate level of protection and, where appropriate, from suspending the contested transfer of data.

In its Judgment, the Court of Justice holds that the existence of a Commission decision finding that a third country ensures an adequate level of protection of the personal data transferred cannot eliminate or even reduce the powers available to the national supervisory authorities under the Charter of Fundamental Rights of the European Union and the directive. The Court stresses in this regard the right, guaranteed by the Charter, to the protection of personal data and the task with which the national supervisory authorities are entrusted under the Charter.

The Court states, first of all, that no provision of the directive prevents oversight by the national supervisory authorities of transfers of personal data to third countries which have been the subject of a Commission decision. Thus, even if the Commission has adopted a decision, the national supervisory authorities, when dealing with a claim, must be able to examine, with complete independence, whether the transfer of a person’s data to a third country complies with the requirements laid down by the directive. Nevertheless, the Court points out that it alone has jurisdiction to declare that an EU act, such as a Commission decision, is invalid. Consequently, where a national authority or the person who has brought the matter before the national authority considers that a Commission decision is invalid, that authority or person must be able to bring proceedings before the national courts so that they may refer the case to the Court of Justice if they too have doubts as to the validity of the Commission decision. It is thus ultimately the Court of Justice which has the task of deciding whether or not a Commission decision is valid.

The Court then investigates whether the Safe Harbour Decision is invalid. In this connection, the Court states that the Commission was required to find that the United States in fact ensures, by reason of its domestic law or its international commitments, a level of protection of fundamental rights essentially equivalent to that guaranteed within the EU under the directive read in the light of the Charter. The Court observes that the Commission did not make such a finding, but merely examined the safe harbour scheme.

Without needing to establish whether that scheme ensures a level of protection essentially equivalent to that guaranteed within the EU, the Court observes that the scheme is applicable solely to the United States undertakings which adhere to it, and United States public authorities are not themselves subject to it. Furthermore, national security, public interest and law enforcement requirements of the United States prevail over the safe harbour scheme, so that United States undertakings are bound to disregard, without limitation, the protective rules laid down by that scheme where they conflict with such requirements. The United States safe harbour scheme thus enables interference, by United States public authorities, with the fundamental rights of persons, and the Commission decision does not refer either to the existence, in the United States, of rules intended to limit any such interference or to the existence of effective legal protection against the interference.

The Court considers that that analysis of the scheme is borne out by two Commission communications (4) according to which the United States authorities were able to access the personal data transferred from the Member States to the United States and process it in a way incompatible, in particular, with the purposes for which it was transferred, beyond what was strictly necessary and proportionate to the protection of national security. Also, the Commission noted that the persons concerned had no administrative or judicial means of redress enabling, in particular, the data relating to them to be accessed and, as the case may be, rectified or erased.

As regards a level of protection essentially equivalent to the fundamental rights and freedoms guaranteed within the EU, the Court finds that, under EU law, legislation is not limited to what is strictly necessary where it authorises, on a generalised basis, storage of all the personal data of all the persons whose data is transferred from the EU to the United States without any differentiation, limitation or exception being made in the light of the objective pursued and without an objective criterion being laid down for determining the limits of the access of the public authorities to the data and of its subsequent use. The Court adds that legislation permitting the public authorities to have access on a generalised basis to the content of electronic communications must be regarded as compromising the essence of the fundamental right to respect for private life.

Likewise, the Court observes that legislation not providing for any possibility for an individual to pursue legal remedies in order to have access to personal data relating to him, or to obtain the rectification or erasure of such data, compromises the essence of the fundamental right to effective judicial protection, the existence of such a possibility being inherent in the existence of the rule of law.

Finally, the Court finds that the Safe Harbour Decision denies the national supervisory authorities their powers where a person calls into question whether the decision is compatible with the protection of the privacy and of the fundamental rights and freedoms of individuals. The Court holds that the Commission did not have competence to restrict the national supervisory authorities’ powers in that way.

For all those reasons, the Court declares the Safe Harbour Decision invalid. This judgment has the consequence that the Irish supervisory authority is required to examine Mr Schrems’ complaint with all due diligence and, at the conclusion of its investigation, is to decide whether, pursuant to the directive, transfer of the data of Facebook’s European subscribers to the United States should be suspended on the ground that that country does not afford an adequate level of protection of personal data.

(1) Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (OJ 1995 L 281, p. 31).

(2) Commission Decision 2000/520/EC of 26 July 2000 pursuant to Directive 95/46/EC of the European Parliament and of the Council on the adequacy of the protection provided by the safe harbour privacy principles and related frequently asked questions issued by the US Department of Commerce (OJ 2000 L 215, p. 7).

(3) The safe harbour scheme includes a series of principles concerning the protection of personal data to which United States undertakings may subscribe voluntarily.

(4) Communication from the Commission to the European Parliament and the Council entitled “Rebuilding Trust in EU-US Data Flows” (COM(2013) 846 final, 27 November 2013) and Communication from the Commission to the European Parliament and the Council on the Functioning of the Safe Harbour from the Perspective of EU Citizens and Companies Established in the EU (COM(2013) 847 final, 27 November 2013).

European Union approves the Convention of 30 June 2005 on Choice of Court Agreements

H.E. Mr Maris Klišans, Ambassador of the Republic of Latvia, signed and deposited the instrument of approval of the 2005 Choice of Court Convention on behalf of the European Union, as the Republic of Latvia currently holds the rotating presidency of the Council of the European Union. The approval of the 2005 Choice of Court Convention by the European Union will trigger the Convention’s entry into force on Thursday 1 October 2015. Twenty-eight States (all EU Member States except Denmark — as well as Mexico, which was the first State to accede to the Convention on 26 September 2007) will then be bound by the Convention.

This is the third out of four instruments of the Hague Conference (after the 2007 Hague Convention and Protocol on Maintenance) to which the European Union becomes a party as a Regional Economic Integration Organisation. In addition, the Apostille, Child Abduction, and Intercountry Adoption Conventions are also in force in all EU Member States.

The Convention promotes trade by clarifying the rules governing international trade disputes, where the parties involved have chosen a competent court. In detail, the Convention provides clarity on: jurisdiction rules, which court is competent and on the recognition and enforcement of judgments given by courts in the countries which apply the Convention. In practice, this will ensure that EU companies have more legal certainty when doing business with firms outside the EU: they will be able to trust that their choice of court to deal with a dispute will be respected by the courts of the countries that have ratified the Convention, and that the judgment given by the chosen court will be recognised and enforced in the countries which apply it.

The Hague Convention of 30 June 2005 on Choice of Court Agreements is aimed at ensuring the effectiveness of choice of court agreements (also known as “forum selection clauses“) between parties to international commercial transactions. By doing so, the Convention provides greater certainty to businesses engaging in cross-border activities and therefore creates a legal environment more amenable to international trade and investment.

The Choice of Courts Convention was drawn up by a group of countries and trading blocks such as the EU, the US, Canada, Japan, China, Russia, all of them members of the Hague Conference on Private International Law that develops multilateral legal instruments. The Convention therefore has the potential to become a worldwide legal basis for the recognition and enforcement of judgments resulting from a choice of court agreement between the EU and these countries. It was signed by the EU in 2009.

The reform of the so-called Brussels I Regulation paved the way for the ratification of the Choice of Courts Convention. This regulation determines which national court has jurisdiction in cross-border cases involving EU firms and how court judgments issued in one EU country are recognised and enforced in another. The reform of these EU-internal rules will ensure coherence with the Convention.

The General Court confirms that there exists a likelihood of confusion between the figurative and word sign Skype and the word mark Sky

SkypeIn 2004 and 2005 Skype applied to the Office for Harmonisation in the Internal Market (OHIM) for registration of the figurative and word signs SKYPE as a Community trade mark for audiovisual goods, telephony and photography goods and computer services relating to software or to the creation or hosting of websites.

In 2005 and 2006, British Sky Broadcasting Group, now Sky Plc and Sky IP International, filed a notice of opposition, pleading the likelihood of confusion with its earlier Community word mark SKY, filed in 2003 for identical goods and services.

By decisions of 2012 and 2013, OHIM upheld the opposition, considering, in essence, that there existed a likelihood of confusion of the signs at issue on account, in particular, of their average degree of visual, phonetic and conceptual similarity and that the conditions for establishing a reduction of that likelihood had not been satisfied. Skype seeks annulment of those decisions before the General Court.

In its Judgment in Cases T-423/12, T-183/13 and T-184/13, the Court has dismissed Skype’s actions and by so doing confirmed that there exists a likelihood of confusion between the figurative and word sign SKYPE and the word mark SKY.

As regards the visual, phonetic and conceptual similarity of the signs at issue, the Court has confirmed that the pronunciation of the vowel “y” is no shorter in the word “skype” than it is in the word “sky”. In addition, the word “sky”, part of the basic vocabulary of the English language, remains clearly identifiable in the word “skype”, in spite of the fact that the latter is written as only one word. Last, the element “sky” in the word “skype” can perfectly well be identified by the relevant public, even if the remaining element “pe” has no specific meaning.

Moreover, the fact that, in the figurative sign applied for, the word element “skype” is surrounded by a jagged border in the shape of a cloud or a bubble does not affect the average degree of visual, phonetic and conceptual similarity. Visually, the figurative element does no more than highlight the word element and is, therefore, perceived as a mere border. Phonetically, the figurative element in the shape of a border cannot produce any phonetic impression, this latter remaining determined solely by the word element. Conceptually, the figurative element conveys no concept, except perhaps that of a cloud, which would further increase the likelihood of the element “sky” being recognised within the word element “skype”, for clouds are to be found “in the sky” and thus may readily be associated with the word “sky”.
So far as concerns the argument that the “skype” signs are highly distinctive because they are known by the public, the Court declares that, even if the term “skype” had acquired a meaning of its own for identifying the telecommunications services provided by the company Skype, it would be a generic, and consequently descriptive, term for services of that kind.

Lastly, the Court confirms that account cannot be taken of the peaceful coexistence of the signs at issue as a factor that could reduce the likelihood of confusion, the conditions in that connection not being satisfied. The peaceful coexistence of those signs in the United Kingdom concerns only one isolated, highly specific service (namely, peer-to-peer communications services) and cannot, therefore, lessen the likelihood of confusion in respect of the many other goods and services covered by the signs. In addition, that coexistence has not lasted long enough to give grounds for the assumption that it was based on the absence of any likelihood of confusion in the mind of the relevant public.

Expo of Ideas: from the Charter of Milan to the United Nations

Expo 2015The Charter of Milan is an act of commitment that Italy will propose to the world via Expo Milano 2015. The discussion, moving from the main theme of the exhibition itself “Feeding the Planet, Energy for Life”, focused on the big global questions relating to food.

The Preamble of the Charter reads as follows: “We, women and men, citizens of this planet, endorse this document, entitled the Milan Charter. In so doing, we make clear commitments concerning the right to food, which we believe should be treated as a fundamental human right. We consider a lack of access to sufficient, safe and nutritious food, clean water and energy to be a violation of human dignity. We believe that only our collective action as citizens, together with civil society, businesses and local, national and international institutions, will make it possible to overcome the major challenges related to food: combating undernutrition, malnutrition and waste, promoting equitable access to natural resources and ensuring sustainable management of production processes.

In particular, the Charter is an act of commitment to sustainability and can be signed by whoever wishes to – citizens, institutions, enterprises, associations, academia and international organizations – during the six-month expo, and then will be delivered to the Secretary of the United Nations, Ban Ki-Moon, thus connecting Expo 2015 with the end of the long consultation path called “Millennium Development Goals”. This initiative promoted by the United Nations is a blueprint leading to a global pact between rich and poor countries, founded on mutual respect and commitment. Started in 2000, this initiative will come to its completion on 2015, with the definition of eight goals.

For further information and to read, sign and share the Charter of Milan, see Charter of Milan

An insurance contract must set out transparently, in plain, intelligible language, the functioning of the insurance arrangements

The Unfair Terms in Consumer Contracts Directive (see Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts) provides that consumers are not bound by unfair clauses that are set out in a contract concluded with a seller or supplier. However, according to that directive, the assessment of the unfair nature of the terms concerns neither the definition of the main subject-matter of the contract nor the adequacy of the price and remuneration, on the one hand, as against the services or goods supplied in exchange, on the other, provided that those terms are drafted in plain, intelligible language.

In 1998, Jean-Claude Van Hove concluded two mortgage loan contracts with a bank. At the time of concluding those loan contracts, he signed a “group insurance contract” with CNP Assurances in order to guarantee, in particular, 75% cover of the loan repayments in the event of total incapacity for work. Following an accident at work, Mr Van Hove was found to have a permanent partial incapacity rate of 72% within the meaning of French social security law. The doctor appointed by the insurance company concluded that Mr Van Hove’s state of health, although no longer compatible with him returning to his former post, allowed him to carry on appropriate employment on a part-time basis. The company therefore refused to continue to cover the loan repayments in respect of Mr Van Hove’s incapacity.

Mr Van Hove brought legal proceedings seeking recognition that the terms of the contract are unfair as regards the definition of total incapacity for work and the conditions under which repayments are covered by the insurance. According to Mr Van Hove, the term relating to total incapacity for work causes a significant imbalance to the detriment of the consumer, especially as its definition is worded in such a way as to be unintelligible to a lay consumer. CNP Assurances considers that the term at issue cannot constitute an unfair term because it concerns the very subject-matter of the contract. Moreover, it contends that the definition of total incapacity for work is clear and precise, even if the criteria which are taken into account for the purposes of fixing the functional incapacity rate are different to those used by the social security authorities. In those circumstances, the French court seised of the dispute (the tribunal de grande instance de Nîmes) asks the Court of Justice if it is possible to assess whether the term in question is unfair

In Judgment in Case C-96/14 Jean-Claude Van Hove v CNP Assurances SA, the Court states, referring to the nineteenth recital in the preamble to the directive, that, in insurance contracts, terms which clearly define or circumscribe the insured risk and the insurer’s liability shall not be subject to an assessment of unfair character, since those restrictions are taken into account in calculating the premium paid by the consumer. Thus, it cannot be ruled out that the term at issue concerns the very subject-matter of the contract, in so far as it seems to circumscribe the insured risk and the insurer’s liability while laying down the essential obligations of the insurance contract. The Court leaves it to the national court to determine this point, indicating that it falls to that court, having regard to the nature, general scheme and the terms of the contract taken as a whole, as well as its legal and factual context, to determine whether the term lays down an essential component of the contractual framework of which it forms part.

As regards the question whether the term at issue is drafted in plain, intelligible language, the Court points out that the requirement of transparency of contractual terms, laid down by the directive, cannot be reduced merely to their being formally and grammatically intelligible, but that that requirement is to be interpreted broadly. In the present case, the Court does not rule out that the scope of the term defining the concept of total incapacity for work was not understood by the consumer. Thus, it may be that, in the absence of a transparent explanation of the specific functioning of the insurance arrangements relating to the cover of loan payments in the context of the contract as a whole, Mr Van Hove was not in a position to evaluate, on the basis of precise, intelligible criteria, the economic consequences for him which derive from it. It is again is for the national court to make a finding on that point.

According to the Court, the fact that the insurance contract forms part of a contractual framework with the loan contracts could be also relevant in that context. Thus, the consumer cannot be required to have the same vigilance regarding the extent of the risks covered by that insurance contract as he would if he had concluded the insurance contract and the loan contracts separately.

The Court therefore declares that terms that relate to the main subject-matter of an insurance contract may be regarded as being drafted in plain, intelligible language if they are not only grammatically intelligible to the consumer, but also set out transparently the specific functioning of the insurance arrangements, taking into account the contractual framework of which they form part, so that that consumer is in a position to evaluate, on the basis of precise, intelligible criteria, the economic consequences for him which derive from it. If not, the national court may assess the possible unfairness of the term at issue.

Approval of the Principles on Choice of Law in International Commercial Contracts

On 19 March 2015, the Members of the Hague Conference on Private International Law formally approved the Principles on Choice of Law in International Commercial Contracts. The Principles, which also comprise a comprehensive Commentary, were developed by the Working Group on the Choice of Law in International Contracts (chaired by Professor Daniel Girsberger, Switzerland) and unanimously approved by the Members of the Hague Conference.

The Principles affirm party autonomy as a basis for the choice of law in international contracts and they strengthen legal certainty and predictability in international commercial transactions. The Principles will thus be important to facilitating reform and harmonisation initiatives concerning the rules applicable to international trade.

For more information on the Principles, see HCCH | Choice of Law in International Contracts.

New IVASS Regulation on simplification measures for contractual relationships

Following the public consultation launched on 18 March 2014, IVASS published the Regulation No. 8 of 3 March 2015 concerning measures to simplify the administration of contractual relationships between insurance undertakings, intermediaries and clients. The Regulation implements Article 22, paragraph 15-bis of Law Decree No. 179 of 18 October 2012, as converted into law which required IVASS to enact measures aimed at reducing the paper format requirements and promoting the use of digital documentation. Below are the main relevant provisions set out by the new Regulation.

Italian and EU insurance undertakings and intermediaries are required to foster the use of advanced electronic signature, qualified electronic signature and digital signature for the execution of the insurance agreements.

Furthermore, with an aim at promoting the use of traceable means of payment, insurance undertakings and intermediaries must allow clients to pay insurance premiums by means of electronic payment instruments.

In addition, before the execution of the agreement or the signing of the proposal, insurance undertakings and intermediaries may obtain the client’s consent – also through voice recordings or email – to the electronic transmission of the relevant documentation during both the pre-contractual and contractual phase of the relationship with the client.

Insurance undertakings and intermediaries must adopt a documentation management system aimed at avoiding requests to clients of documentation which is not necessary or which has been already obtained in relation to previous relationships with the same client.

Italian insurance undertakings and intermediaries must obtain a certified e-mail account (“Posta Elettronica Certificata” or “PEC”) and indicate the PEC address in any communication addressed to the public and on their website. However, it is worth noting that this obligation already apply, upon registering with the Companies’ Register, to companies (Law Decree 185/08, converted into Law no. 2 of 28 January 2009) and sole traders (art. 5 of Law Decree no. 179 of 18 October 2012).

Insurance undertakings and intermediaries will have 6 months from the entry into force of the Regulation (which shall occur 30 days from publication in the Italian Official Gazette) to comply with the new provisions regarding the PEC address and the establishment of the above-mentioned documentation management systems.

The Regulations apply to the promotion, distribution and management by companies and intermediaries of life and non-life insurance contracts. Instead the distribution of insurance products pursuant to the IVASS Regulation No. 34 of 19 March 2010 would remain excluded from the scope of the Regulation.

The Principality of Monaco cannot benefit from the protection of the trade mark MONACO in the EU in respect of certain goods and services

The word “monaco” designates the origin or geographical destination of the goods and services concerned and is devoid of distinctive character.

In 2010, the government of the Principality of Monaco was granted, by the World Intellectual Property Organisation (WIPO), an international registration covering the territory of the EU. That registration, which was based on the word mark “monaco”, was transferred to the Office for Harmonisation in the Internal Market (OHIM) to be processed.

In 2013, OHIM refused protection of the trade mark in the EU in respect of some of the goods and services applied for (i.e.: magnetic data carriers, paper and cardboard goods not included in other classes, printed matter, photographs, transport, travel arrangement, entertainment, sporting activities and temporary accommodation).

OHIM based its refusal on the descriptive character of the mark, in so far as the word ‘monaco’ designates the territory of the same name and could, therefore, be understood in any of the EU’s official languages as designating the origin or geographical destination of the goods and services concerned. OHIM further considered that the mark at issue was clearly devoid of distinctive character. Les Marques de l’État de Monaco (MEM), a Monegasque public-limited company which succeeded the government of the Principality of Monaco as the proprietor of the trade mark, contests OHIM’s decision before the General Court and seeks the annulment of that decision.

In its Judgment in Case T-197/13, Monaco v OHIM, the General Court (Eight Chamber) dismisses the application and upholds OHIM’s decision.

The General Court points out, first of all, that under EU law any legal entity, including a public law entity, may apply to benefit from the protection of the Community trade mark. This is, of course, true for companies based in the territory of a State which is not a member of the EU, but also for the non-member States themselves, since those States are, within the meaning of EU law, public law entities. As a result, when the Principality of Monaco formulated its request to have the EU designated for the international registration of the trade mark at issue, it placed itself within the scope of application of EU law and, therefore, one of the absolute grounds for refusal could be relied upon against it. In other words, the Principality of Monaco sought to benefit from the application of EU law and, therefore, became subject to its rules, without being able to rely on its entitlement in principle to be the proprietor of the trade mark “monaco”.

Moreover, the General Court observes that the word “monaco” corresponds to the name of a globally-known principality, not least due to the renown of its royal family, its organisation of a Formula 1 Grand Prix and its organisation of a circus festival. Knowledge of the Principality of Monaco is even more established amongst EU citizens, notably on account of its borders with a Member State (France), its proximity to another Member State (Italy) and its use of the same currency as 19 of the 28 Member States, the Euro. There is therefore no doubt that the word “monaco” will evoke, regardless of the linguistic background of the relevant public, the geographic territory of the same name. In addition, the General Court notes that OHIM correctly defined the relevant public (namely citizens of the EU) and correctly attributed to that public, in respect of the goods and services concerned, either an average or high degree of attentiveness.

According to the General Court rulings, OHIM was also correct to find that the word “monaco” could be used, in trade, to designate origin, geographical destination or the place of supply of services, so that the trade mark has, in respect of the goods and services concerned, a descriptive character. Furthermore, as a descriptive mark is necessarily devoid of distinctive character, the General Court holds that the trade mark “monaco” is devoid of distinctive character.

ISO 27018 sets data protection standards for the cloud

In July 2014, the International Organization for Standardization (“ISO”) and International Electrotechnical Commission (“IEC”) published ISO/IEC 27018 (ISO 27018), a code of practice that sets forth standards and guidelines pertaining to the protection of data consisting of “personally identifiable information” processed by public cloud service providers.

ISO/IEC 27018 is the first International Standard that focuses on protection of personal data in the cloud. Although only a few months old, the new standard should finally give cloud users confidence that their service provider is well-placed to keep data private and secure.

ISO/IEC 27018 specifies certain minimum types of security measures that cloud providers should adopt, if applicable, including encryption and access controls. The cloud standard also requires cloud providers to implement security awareness policies and make relevant staff aware of the potential consequences (for staff, the cloud provider and the customer) of breaching privacy and security rules.

As the first-ever standard that deals with the protection of personal data for the cloud, ISO/IEC 27018 has the following key objectives:

  1. Help cloud service providers that process personally identifiable information to address applicable legal obligations as well as customer expectations
  2. Enable transparency so customers can choose well-governed cloud services
  3. Facilitate the creation of contracts for cloud services
  4. Provide cloud customers with a mechanism to ensure cloud providers’ compliance with legal and other obligation

ISO/IEC 27018 provides a practical basis to induce confidence in the cloud industry. At the same time, the public cloud industry will have clear guidance in order to meet some of the legal and regulatory concerns of its clients.

ISO/IEC 27018:2014 establishes commonly accepted control objectives, controls and guidelines for implementing measures to protect “personally identifiable information” in accordance with the privacy principles in ISO/IEC 29100 for the public cloud computing environment.

In particular, ISO/IEC 27018:2014 specifies guidelines based on ISO/IEC 27002, taking into consideration the regulatory requirements for the protection of “personally identifiable information” which might be applicable within the context of the information security risk environment(s) of a provider of public cloud services.

ISO/IEC 27018:2014 is applicable to all types and sizes of organizations, including public and private companies, government entities, and not-for-profit organizations, which provide information processing services as “personally identifiable information” processors via cloud computing under contract to other organizations.

The guidelines in ISO/IEC 27018:2014 might also be relevant to organizations acting as “personally identifiable information” controllers; however, “personally identifiable information” controllers can be subject to additional “personally identifiable information” protection legislation, regulations and obligations, not applying to “personally identifiable information” processors. ISO/IEC 27018:2014 is not intended to cover such additional obligations.

As a guiding principle, ISO/IEC 27018 standards and guidelines facilitate the retention by the cloud service customer of authority to determine the scope of any use and handling of its “personally identifiable information”. The following controls and implementation guidelines set forth in ISO/IEC 27018 as generally applicable to cloud service providers processing “personally identifiable information”:

  1. Customer and end user control rights:
    1. A cloud service customer should have the means to enable the individual to whom “personally identifiable information” relates to access, correct and/or erase such “personally identifiable information”;
    2. “personally identifiable information” should not be processed for any purpose except pursuant to the instructions of the cloud service customer;
    3. “personally identifiable information” should not be used for marketing or advertising purposes without the customer’s consent;
    4. Temporary files and documents associated with “personally identifiable information” processing should be erased or destroyed by a cloud services provider within a specified period;
  2. Restrictions on disclosure to or access of 3rd parties to “personally identifiable information”:
    1. Law enforcement requests for disclosure of “personally identifiable information” must be disclosed to a cloud service customer (unless such disclosure is prohibited by law);
    2. Other requests for disclosure of “personally identifiable information” should be rejected except to the extent authorized by a cloud service customer;
    3. Data relating to disclosures of “personally identifiable information” to third parties should be recorded;
    4. Subcontractors should be disclosed in advance by a “personally identifiable information” processor;
    5. Unauthorized access to “personally identifiable information” or processing equipment or facilities resulting in the loss, disclosure or alteration of “personally identifiable information” should be disclosed to a cloud service customer;
    6. Anyone (including cloud service provider employees) associated with the processing of “personally identifiable information” should be subject to a confidentiality obligation;
  3. Treatment of Media Containing “personally identifiable information”:
    1. A number of additional restrictions should be maintained for information security purposes, with respect to, inter alia, the creation of hard copy materials displaying “personally identifiable information”, data recovery or restoration efforts, “personally identifiable information” stored on transportable media, transmission of “personally identifiable information” over public networks, and user IDs for access to stored “personally identifiable information”.

Registration of the shape of the Rubik’s Cube as a Community trade mark is valid

The graphic representation of that cube does not involve a technical solution which would prevent it from being protected as a mark.

At the request of Seven Towns Ltd, a UK company which manages inter alia intellectual property rights relating to the ‘Rubik’s Cube’, the EU’s Trademark Office (OHIM) registered, in 1999, the shape of that cube in respect of “three-dimensional puzzles” as a three-dimensional Community trade mark.

Rubik’s CubeIn 2006, Simba Toys GmbH & Co. KG, a German toy manufacturer, applied to OHIM to have the three-dimensional mark cancelled on the ground inter alia that it involves a technical solution consisting of its rotating capability, since such a solution may be protected only by patent and not as a mark. OHIM dismissed its application and Simba Toys therefore brought an action before the General Court for annulment of OHIM’s decision.

In its Judgment in Case T-450/09, Simba Toys GmbH & Co. KG v OHIM, the General Court (Sixth Chamber) dismisses the action brought by Simba Toys.

In the first place, the Court finds that the essential characteristics of the contested mark are, first, the cube per se and, second, the grid structure which appears on each of its surfaces. According to the Court, the bold black lines which form part of that structure and which appear on the three representations of the cube by criss-crossing the inside of those representations are not suggestive of any rotating capability of the individual elements of the cube and therefore do not fulfil any technical function.

The rotating capability of the vertical and horizontal lattices of the Rubik’s Cube does not result either from the black lines or the grid structure, but from an internal mechanism of the cube which is invisible on its graphic representations. Consequently, the registration of the shape of the Rubik’s cube as a Community trade mark cannot be refused on the ground that that shape incorporates a technical function.

In the second place, the Court finds that the mark in question does not allow its proprietor to prohibit third parties from marketing all types of three-dimensional puzzles that have a rotating capability. The Court states that the proprietor’s marketing monopoly is limited to three- dimensional puzzles that have the shape of a cube the surfaces of which bear a grid structure.

In the third place, the Court finds that the cubic grid structure of the mark in question differs considerably from the representations of other three-dimensional puzzles available on the market. That structure therefore has distinctive character which enables consumers to identify the producer of the goods in respect of which the mark is registered.

Consultation on the Insurance Block Exemption Regulation

The Insurance Block Exemption Regulation (“IBER”) is a sector-specific legal instrument that allows (re)insurers to benefit from an exemption to the prohibition of anti-competitive arrangements laid down in Article 101 (1) of the Treaty on the Functioning of the European Union (TFEU). At present, the exemption covers two types of agreements between (re)insurance undertakings:

  1. Agreements with respect to joint compilations, joint tables and studies; and
  2. Common coverage of certain types of risks (co (re)insurance pools).

The insurance sector is one of three sectors that still benefits from a block exemption regulation, since the concept of the direct applicability of the exemption of Article 101 (3) TFEU was introduced with Council Regulation 1/2003. The IBER expires on 31 March 2017 and the Commission will consider whether any parts of it would merit a renewal. In this regard, the Commission is required to submit a report on the functioning and the future of the IBER to the European Parliament and the Council by March 2016. The Commission is therefore gathering views and market information to carry out its assessment.

To that purpose the Commission has drawn a Questionnaire and invited all stakeholders to submit all relevant information on the functioning of the IBER, as well as their views on whether the Commission should renew any of the IBER provisions in a new block exemption regulation. Input from stakeholders will be a key element for the Commission’s assessment. The Commission welcomes comments in particular from (re)insurance undertakings, industry associations, insurance intermediaries, public authorities, consumer organisations and customers, as well as competition practitioners, researchers and think tanks. Comments from other stakeholders who have direct experience with the application of the IBER are also welcome.

The return of the Italian mandatory mediation procedure

On 24 October 2012, the Italian Constitutional Court declared invalid the provision of Legislative Decree n. 28 dated 4 March 2010 which had implemented the mandatory mediation procedure for the resolution of certain disputes.

Article 87 of the Italian Decree Law No. 69 of 21 June 2013 reintroduced the mandatory mediation for cross-border and domestic disputes, which had been covered by Italian Legislative Decree No. 28 of 4 March 2010.

The mediation procedure includes disputes on insurance matters (with the exception of motor third party liability litigation), medical and hospital liability.

Furthermore, among other changes it has been introduced Section 185 bis into the Italian Code of Civil Procedure, which requires the Court to “(…) formulate a proposal for amicable settlement or arrangement to the parties (…)”, also specifying that “(…) the rejection of the proposal made by the Court, without a justified reason, shall constitute conduct that may be considered (…) for the purposes of the ruling”.

The new provisions concerning the mandatory mediation shall enter into force on 21 September 2013.

EU to review regime for personal data transfers to the US

The Safe-Harbour provision, in place since the early years of the tech boom in the late 1990s, allows US companies to satisfy EU rules by signing up to a self-reporting scheme, supervised by the US federal trade commission. It is based on the principle that US data privacy standards are equivalent to those in Europe.

Viviane Reding, the commissioner overseeing data protection, told that her office had begun an assessment of the “Safe Harbour” used by Google and Facebook, as well as thousands of smaller US tech companies.

The Safe Harbor agreement between the EU and US is under review as it may be a “loophole” for data transfers to take place at a lower standard of data protection than EU law permits, the European Commission has said.

The European Union has therefore launched a commission to review the U.S. Department of Commerce’s Safe Harbor agreement. The review comes in the wake of PRISM, the US National Security Agency’s data collection program. Safe Harbor is a voluntary program for U.S.-based companies with operations in the EU to transfer personal data across EU borders.

The EU, indeed, argues that the Safe Harbor program may be using “loopholes” to skirt EU data privacy rules. The International Trade Association (ITA), acknowledges the “criticisms,” but disagrees, saying that the program operates within its framework. Safe Harbor is based on the EU Data Protection Directive, and, as noted by the ITA, is limited when national security or defense matters are in question.

EU officials would like to review Safe Harbor for compatibility with new EU laws on data protection. While the U.S. is open to discussions on Safe Harbor, it is not likely that they will tighten any restrictions on it.

At issue is the reach of the draft EU legislation. It would require non-European companies to comply with EU laws in full when serving European customers – something that US officials argue is extraterritorial. It would also allow Brussels to fine companies that did not comply up to 2 per cent of their total annual turnover.

A landmark in a long battle over European Union privacy laws

Advocate General’s Opinion in Case C-131/12 Google Spain SL, Google Inc. v Agencia Española de Protección de Datos, Mario Costeja González considers that search engine service providers are not responsible, on the basis of the Data Protection Directive, for personal data appearing on web pages they process.

In early 1998, a newspaper widely circulated in Spain published in its printed edition two announcements concerning a real-estate auction connected with attachment proceedings prompted by social security debts. A person was mentioned as the owner. At a later date an electronic version of the newspaper was made available online by its publisher.

In November 2009 this person contacted the publisher of the newspaper asserting that, when his name and surnames were entered in the Google search engine, a reference appeared linking to pages of the newspaper with these announcements. He argued that the proceedings had been concluded and resolved many years earlier and were now of no relevance. The publisher replied that erasure of his data was not appropriate, given that the publication was effected by order of the Spanish Ministry of Labour and Social Affairs.

In February 2010, he contacted Google Spain and requested that the search results show no links to the newspaper when his name and surnames were entered into Google search engine. Google Spain forwarded the request to Google Inc., whose registered office is in California, United States, taking the view that the latter was the undertaking providing the internet search service.

Thereafter he lodged a complaint with the Agencia Española de Protección de Datos (Spanish Data Protection Agency, AEPD) against the publisher and Google. By a decision on 30 July 2010, the Director of the AEPD upheld the complaint against Google Spain and Google Inc., calling on them to withdraw the data from their index and to render future access to them impossible. The complaint against the publisher was rejected, however, because publication of the data in the press was legally justified. Google Inc. and Google Spain have brought two appeals before the Audiencia Nacional (National High Court, Spain), seeking annulment of the AEPD decision. In this context, this Spanish court has referred a series of questions to the Court of Justice.

In today’s Opinion, Advocate General Niilo Jääskinen addresses first the question of the territorial scope of the application of national data protection legislation. The primary factor that gives rise to its application is the processing of personal data carried out in the context of the activities of an establishment of the controller (according to the Data Protection Directive, the “controller” is the person or body which alone or jointly with others determines the purposes and means of the processing of personal data) on the territory of the Member State. However, Google claims that no processing of personal data relating to its search engine takes place in Spain. Google Spain acts merely as commercial representative of Google for its advertising functions. In this capacity it has taken responsibility for the processing of personal data relating to its Spanish advertising customers.

The Advocate General considers that this question should be examined taking into account the business model of internet search engine providers. This normally relies on keyword advertising which is the source of income and the reason for the provision of a free information location tool. The entity in charge of keyword advertising is linked to the internet search engine. This entity needs a presence on national advertising markets and that is why Google has established subsidiaries in many Member States. Hence, in his view, it must be considered that an establishment processes personal data if it is linked to a service involved in selling targeted advertising to inhabitants of a Member State, even if the technical data processing operations are situated in other Member States or third countries. Therefore, Mr Jääskinen proposes that the Court declare that processing of personal data takes place within the context of a controller’s establishment and, therefore, that national data protection legislation is applicable to a search engine provider when it sets up in a Member State, for the promotion and sale of advertising space on the search engine, an office which orientates its activity towards the inhabitants of that State.

Secondly, as for the legal position of Google as an internet search engine provider, Mr Jääskinen recalls that, when the Directive was adopted in 1995, the Internet and search engines were new phenomena and their current development was not foreseen by the Community legislator. He takes the view that Google is not generally to be considered as a “controller” of the personal data appearing on web pages it processes, who, according to the Directive, would be responsible for compliance with data protection rules. In effect, provision of an information location tool does not imply any control over the content included on third party web pages. It does not even enable the internet search engine provider to distinguish between personal data in the sense of the Directive, which relates to an identifiable living natural person, and other data. In his opinion, the internet search engine provider cannot in law or in fact fulfil the obligations of the controller provided in the Directive in relation to personal data on source web pages hosted on third party servers.

Therefore, a national data protection authority cannot require an internet search engine service provider to withdraw information from its index except in cases where this service provider has not complied with the exclusion codes or where a request emanating from a website regarding an update of cache memory has not been complied with. This scenario does not seem pertinent in the present case. A possible “notice and take down procedure” concerning links to source web pages with illegal or inappropriate content is a matter for national civil liability law based on grounds other than data protection.

Thirdly, the Directive does not establish a general “right to be forgotten”. Such a right cannot therefore be invoked against search engine service providers on the basis of the Directive, even when it is interpreted in accordance with the Charter of Fundamental Rights of the European Union (in particular, the rights of respect for private and family life under Article 7 and protection of personal data under Article 8 versus freedom of expression and information under Article 11 and freedom to conduct a business under Article 16).

The rights to rectification, erasure and blocking of data provided in the Directive concern data whose processing does not comply with the provisions of the Directive, in particular because of the incomplete or inaccurate nature of the data. This does not seem to be the case in the current proceedings.

The Directive also grants any person the right to object at any time, on compelling legitimate grounds relating to his particular situation, to the processing of data relating to him, save as otherwise provided by national legislation. However, the Advocate General considers that a subjective preference alone does not amount to a compelling legitimate ground and thus the Directive does not entitle a person to restrict or terminate dissemination of personal data that he considers to be harmful or contrary to his interests.

It is possible that the secondary liability of the search engine service providers under national law may lead to duties amounting to blocking access to third party websites with illegal content such as web pages infringing intellectual property rights or displaying libellous or criminal information. In contrast, requesting search engine service providers to suppress legitimate and legal information that has entered the public domain would entail an interference with the freedom of expression of the publisher of the web page. In his view, it would amount to censorship of his published content by a private party.

ICC releases revised International Code of Direct Selling

Since 1937, when the first Code of Advertising Practice was issued, ICC has produced, and successively revised, global sets of ethical rules, covering all main marketing disciplines. The ICC Code of Direct Selling forms part of that comprehensive ICC normative system.

In 2006 many of the marketing codes were consolidated into one document, the Consolidated ICC Code of Advertising and Marketing Communication Practice, revised in 2011. As direct selling is primarily a method of distribution, the Direct Selling Code remains a stand-alone document; however, by reference it is clearly linked to the Consolidated Code, which is the recognized global reference point for responsible marketing communications.

The ICC Code of Direct Selling was first published in 1978 and followed the already then well-established ICC policy of promoting high standards of ethics in marketing via self-regulatory codes, intended to complement the existing frameworks of national and international law.

Like its predecessor (2007), this edition has been developed in close co-operation with the World Federation of Direct Selling Associations (WFDSA). That has ensured the Code is based on the best available expertise, and kept apace with changes in practice and direct selling techniques. The WFDSA has also adopted a world code of conduct applicable exclusively to members of direct selling associations. There is conformity in substance between the ICC Code and the industry code. The ICC Code is to be followed by all involved in direct selling.

Direct selling, as defined by the ICC Code, “refers to the selling of products directly to consumers, generally in their homes or the homes of others, at their workplace and other places away from permanent retail locations, where the direct seller may explain or demonstrate products.

The Direct Selling Code is an instrument for self-discipline, but may also be used by the courts as a reference document within the framework of applicable legislation. The ICC Code is also able to fill in the gap in countries which have not created direct selling laws.

The Direct Selling Code spells out responsible conduct towards consumers, such as the credo not to exploit a consumer’s age, that product demonstrations should be complete with regard to price and also covers recruitment practices in the direct selling industry.

Recent changes include a section on referral selling stipulating that consumers should not be induced to make a purchase based on the assumption of a reduced price for customer referrals. The ICC Code also requires that direct selling companies communicate the contents of the Code with their direct sellers and that compliance with the standards of the Code should be a condition for membership in the company’s distribution system. In keeping with the principle of truthfulness, the ICC Code specifies that “descriptions, claims, illustrations or other elements relating to verifiable facts should be capable of substantiation.

See the ICC International Code of Direct Selling

See the Consolidated ICC Code of Advertising and Marketing Communications Practice

UNCITRAL publishes its endorsement of the UNIDROIT Principles of International Commercial Contracts 2010

The United Nations Commission on International Trade Law (UNCITRAL) has published the Report on its forty-fifth session (25 June – 6 July 2012) at which it decided to endorse the UNIDROIT Principles of International Commercial Contracts 2010.

See Report of the United Nations Commission on International Trade Law, forty-fifth session (25 June-6 July 2012)

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