Private copying levies, copyrights, clouds and Advocate General’s opinion

The Advocate Genaral of the European Court G.Hogan has issued his opinion on the case C‑433/20 Austro-Mechana Gesellschaft zur Wahrnehmung mechanisch-musikalischer Urheberrechte Gesellschaft mbH v Strato AG.

In a nutshell the case concerns the question whether private copying in a cloud environment requires separate copying levy. The dispute has the following background:

Austro-Mechana is a copyright collecting society which protects, in a fiduciary capacity, the rights of use and the rights to remuneration in respect of works of music (with and without lyrics) in its own name but in the interest of and on behalf of the beneficiaries of those rights. The interests protected by collecting societies such as Austro-Mechana include, in particular, the statutory rights to remuneration provided for in Paragraph 42b(1) of the UrhG, that is, the right to remuneration in respect of the exploitation of the right of reproduction on storage media.

Austro-Mechana brought an action before the Commercial Court, Vienna, Austria against Strato, a company established in Germany, which provides a service under the name ‘HiDrive’. The service in question is described by its supplier as a ‘virtual cloud storage solution which is as quick and simple to use as an (external) hard disk’. Strato claims that its storage solution ‘offers enough space to store photos, music and films in one central location’.

Austro-Mechana sought an order allowing it to invoice for, and subsequently take payment in settlement of, the remuneration owed by Strato under Paragraph 42b(1) of the UrhG for exploitation of the right of reproduction on storage media. It contends that given that the form of words used in Paragraph 42b(1) of the UrhG is itself deliberately framed in general terms, remuneration for exploitation of the right of reproduction on storage media is payable even in the case where storage media of any kind are, in the course of a commercial activity, ‘placed on the market’ – by whatever means and in whatever form – within national territory, including in situations involving the provision of cloud-based storage space. It says that the descriptive words ‘place on the market’ do not refer to physical distribution but deliberately leave scope for the inclusion of all processes that have the effect of making storage space available to users in national territory for the purposes of reproduction for (personal or) private use. In addition, Paragraph 42b(3) of the UrhG makes it clear that it is immaterial whether the storage media placed on the market originate in national territory or in other countries.

Strato contested the application. It claimed that the applicable version of the UrhG does not provide for remuneration for cloud services and that the legislature, being cognisant of the technical possibilities available, made a deliberate choice not to take up that option. According to Strato, cloud services and physical storage media are not comparable. An interpretation that includes cloud services is not possible as storage media is not placed on the market; storage space is simply made available. Strato claimed that it does not sell or lease physical storage media to Austria but merely offers online storage space on its servers hosted in Germany. Strato also stated that it has already indirectly paid the copyright fee for its servers in Germany (as a component of the price charged by the manufacturer/importer). In addition, Austrian users had already paid a copyright fee for the devices without which content cannot even be uploaded to the cloud in the first place. The imposition of an additional charge by way of remuneration for exploitation of the right of reproduction on storage media, for cloud storage, would, according to Strato, have the effect of doubling or even tripling the obligation to pay a fee.

The Commercial Court, Vienna dismissed the action. It held essentially, that holders of copyright and related rights (‘rightholders’) are entitled to equitable remuneration in the case where storage media (from a location in national territory or another country) are, in the course of a commercial activity, placed on the market in the national territory, if an object requiring protection is by its nature likely to be reproduced for personal or private use by being recorded on a storage medium (in a manner permitted in accordance with Paragraph 42(2) to (7) of the UrhG), that is to say, in relation to storage media of any kind that are suitable for making such reproductions.

The Commercial Court, Vienna stated that Paragraph 42b(1) of the UrhG, which expressly refers to ‘storage media of any kind’, includes – internal and external – computer hard disks. It also stated that cloud services exist in the most diverse forms. The core of any such service is the assurance that the user has a certain storage capacity, but this does not include the right for the user to have his or her content stored on a particular server or on particular servers, his or her entitlement being limited to being able to access his or her storage capacity ‘somewhere in the [supplier’s] cloud’. According to that court, Strato does not therefore provide its customers with storage media but makes storage capacity available – as a service – online. It noted that in the course of the procedure for peer review of the draft of the Urh-Nov, (8) an express call was made for account to be taken of cloud storage and proposed forms of words were put forward for that purpose. However, the legislature deliberately chose not to include such a provision.

Austro-Mechana appealed against that judgment before the referring court. The referring court considers that the question whether Article 5(2)(b) of Directive 2001/29 covers the storage of copyright-protected content in the cloud is not entirely clear. In that regard, the referring court notes that in the judgment of 29 November 2017, VCAST (C‑265/16, EU:C:2017:913; ‘the VCAST judgment), the Court stated that the storage of protected content in a cloud is to be treated as an exploitation of rights in which the author alone may engage.

In the light of the above considerations, the Higher Regional Court, Vienna decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:

‘(1) Is the expression “on any medium” in Article 5(2)(b) of Directive [2001/29] to be interpreted as meaning that it also includes servers owned by third parties which make available to natural persons (customers) for private use (and for ends that are neither directly nor indirectly commercial) storage space on … those servers which those customers use for reproduction by storage (“cloud computing”)?

(2) If so: is the provision cited in Question 1 to be interpreted as meaning that it is applicable to national legislation under which the author is entitled to equitable remuneration (remuneration for exploitation of the right of reproduction on storage media), in the case:

–  where a work (which has been broadcast, made available to the public or recorded on a storage medium produced for commercial purposes) is by its nature likely to be reproduced for personal or private use by being stored “on a storage medium of any kind which is suitable for such reproduction and, in the course of a commercial activity, is placed on the market in national territory”,

–  and where the storage method used in that context is that described in Question 1?’

The Advocate’s opinion:

The terms ‘reproductions on any medium’ in Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society includes reproduction based on cloud computing services provided by a third party.

A separate levy or fee is not payable in respect of the reproduction by a natural person for their own personal purposes based on cloud computing services provided by a third party provided that the levies paid in respect of devices/media in the Member State in question also reflects the harm caused to the rightholder by such reproduction. If a Member State has, in fact, elected to provide for a levy system in respect of devices/media, the referring court is in principle entitled to assume that this in itself constitutes ‘fair compensation’ in the sense of Article 5(2)(b) of Directive 2001/29, unless the rightholder (or their representative) can clearly demonstrate that such payment would in the circumstances of the case at hand be inadequate.

Which are the most innovative economies in 2021?

WIPO published its annual Global Innovation Index for 2021 where the level of innovations of most than 130 countries is evaluated.

This year the most innovative nation is Switzerland followed by Sweden, the US, the UK and South Korea.

Top three of the most innovative countries by region is as follow:

Bulgaria, as an EU Member State, is at 35th position in this index, but more interestingly is the fact that the country is second in the list, after China, from the group of countries with an upper middle-income level that have performance above expectations.

The Global Innovation Index is very indicative how well developed and competitive the relevant countries are. It is no surprising that the most developed countries are at the top of the list.

The good news for Bulgaria is that the country is in the first group of countries with positive perspective for future development in the innovation area.

One of the reason for this is that the software industry in Bulgaria has been growing year after year with an impressive pace (the growth for 2020 is about 20% compared with 2019 despite the pandemic). The other reason is that more and more foreign companies open R&D departments.

An additional progress in the Index, however, will require better connection between the business, scientific organizations and universities as well as better access to startup financing.

One key thing in order graphic designers to be more successful

Graphic design has become a trendy area for professional development nowadays.

With the advent of the so-called gig economy, being a graphic designer can be a real advantage. On one hand, this job offers you the chance to work remotely which is another trend especially in the light of the Covid pandemic.

On the other hand, graphic design works are in demand in particular in their digital form because all businesses are online now and they need more and more good representation in an attempt to attract consumer’s attention.

So all of this is good but to be successful in a very competitive environment graphic designers should know how to protect their valuable works and how to do business with them.

One key moment in that regard is at least a basic knowledge about copyright law. 

Why?

Because copyright law provides you with all rights to control how one graphic design is used, by whom, where, and whether you receive remuneration for such use. 

Probably you think that copyright law is far too complex. Yes, it is to some extent but nevertheless, there are some basics things that if one designer knows in advance he or she will be in a better position to benefit from the created graphic designs. 

In an attempt to help, I’ve built a new Skillshare class where you can learn all copyright basics related to graphic designs in a friendly way with examples.

If you are interested, here you can find a referral link, it gives you access to the course and 1-month free access to all Skillshare classes if you sign up.

Brief IP news

  1. Who’s IP is it? The AI Inventor or the AI’s Inventor? For more information here.     
  2. Building High-Quality Patent Portfolios in the United States and Europe: Part III – Examiner Interviews. For more information here.  
  3. High-growth technology business forum – Licensing, 30 September 2021. For more information here.

Source: Intellectual Property Center at the UNWE. More information can be found here.

Why graphic designers should understand copyright rights

Nowadays graphic design has become extremely popular both from a creative and business point of view.

With the advent of new modern technologies and the internet as a whole, the graphic design field has attracted a lot of attention and interest.

Doing business with graphic designs, apart from the necessary creative skills, requires specific knowledge related to the available copyright protection too.

Nowadays it is really important for every graphic designer to know at least the bare minimum for copyright law in order to protect his or her designs successfully.

Why is copyright so important for graphic designs?

There are two main reasons.

First of all, copyright is a legal framework that protects every artistic work, including designs, against unauthorized use.

Copyright gives every designer a tool to control the way his/her work is used and to prevent all sorts of infringing activities.

This is crucial because without such control it would be near impossible for designers to make their living because everyone would be able to use their designs for free.

The second reason is that copyright gives designers a ground for doing business with their works. That is to say, copyright stipulates particular rules that allow business transactions with copyrighted designs.

To know all of this can be a huge advantage in your attempt to build a solid and successful career as a graphic designer.

I tried to cover all of this in my Skillshare class where you can learn:

  • how to deal with copyright rights over graphic designs;
  • what copyrights over designs exist,
  • what the requirements for copyright protection are;
  • what the term of protection of a graphic design is;
  • what fair use of designs is;
  • how copyrights over designs are inherited;

In case you are interested in you can check the class from here

If you like it I will appreciate a kind review 🙂

Thank you!

Revocation of a trademark for non-use – Italian perspective

The Court of Milan has ruled in a trademark dispute for revocation based on non-use of a sign.

The case concerns an Italian trademark “AQUA NUNTIA” registered in 2012 and equal European trademark registered in 2012. Both signs, own by an individual, target class 03 – perfumes.

Two Italian companies started to offer perfumes under brand “AQVA NVNTIA”. The owner of the earlier signs initiated lawsuits for trademark infringements. And as a logical consequence both companies filed applications for revocation of the marks based on lack of real market use.

The EUIPO revoked the European trademark.

The Italian Court did this for the Italian mark too. The owner submitted evidence for some preparation for the use of the marks such as researching perfume partners, printing brochures, registration of a domain name etc.

The Court dismissed this evidence as insufficient. The key element in order a trademark use to be proved is the consumers knowledge about the mark. The fact that some traders or distributers know about the brand is not enough for real market use in Italy.

The owner tried to warrant the lack of trademark use with her health problems throughout the years but the Court dismissed this too. The reason is that one mark can be used by third parties when this is authorized by the owner through a license. From that perspective options for use of the marks were available.

Source: Bird & Bird LLP – Federico Manstretta for Lexology.

One crucial thing before filing a trademark in order not to waste your money and time

When you have your own business sooner or later you will start thinking about your branding and how to protect it from unfair use by competitors.

All of this is normal because when one business takes off, gaining some traction and achieving some success, other market participants will try to take advantage of its reputation and recognizability amongst the consumers. 

From that perspective, every business owner should be prepared with a proper trademark protection strategy.

Building a good brand name is not an easy task. From one side, such a name should follow so many marketing requirements, from the other the name should be unique, that is to say, it must not be registered as a trademark by someone else.

This, in particular, is essential. If your brand is already registered with the Patent Office of the country where you are operating as a business, this means that you can become a trademark infringer even without suspecting this.

It can be a trap because in such cases a lawsuit can be really expensive and in the end, you probably will need to change your beloved brand.

What is the solution in such situations? Well, it is a simple one, just check the official trademark database of your state Patent Office. This will show you whether there are earlier marks or not.

What do you need to know when you conduct such searches?

In brief, the things that can be bear in mind are:

  1. Every trademark is valid only for the goods and services for which it is registered. This means that when you compare two marks they have to share common G&S. If this is the case it could create a problem. All goods and services are grouped in classes called Nice Classes. You can classify your G&S using this free tool TMCLASS.
  2. Trademark protection scope covers not only other identical signs but similar too. For example, a trademark INEX for bicycles can stop a later mark INIX for bicycles.
  3. Assessment of identical marks is relatively easy. Both marks should be absolutely identical in every aspect. They have to be for identical G&S too.
  4. Assessment of similar marks, however, could be tricky. This requires in-depth legal knowledge and understanding of the case law in the relevant country.

It is advisable, such searches to be done through the brand-building process because this will allow you to make modifications to the brand before launching and filing a trademark application. It can save you a lot of money and time. 

In case you want to learn how to do trademark searches in the US, Canada, the UK, Ireland, Australia, and New Zealand you can check this Udemy Complete course on trademark search.