Whether downloadable software is goods or not?

The European Court has ruled in an important case C‑410/19 The Software Incubator Ltd v Computer Associates (UK) Ltd, which targets the issue of whether downloadable software under a perpetual licence is goods or not. The case has the following background:

Computer Associates is a company that markets application service automation software for deploying and managing applications across a data centre (‘the software at issue’). The purpose of that software is to coordinate and implement automatically the deployment of and updates for other applications across the different operational environments in large organisations such as banks and insurance companies, so that the underlying applications are fully integrated with the software operating environment.

Computer Associates granted its customers, by electronic means, licences to use the software at issue in a specified territory for an authorised number of end users.

The grant of the licence for that software was contingent upon compliance with obligations under which the customer was not authorised, in particular, to access any unauthorised portion of the software, to de-compile or modify it, or to rent, assign or transfer it or to grant a sub-license.

It is apparent from the information provided by the referring court that the licence to use the software at issue could be granted either indefinitely or for a limited period of time. In the event of termination of the agreement for material breach attributable to the other party or on account of the latter’s insolvency, that software was to be returned to Computer Associates, deleted or destroyed by the customer. In practice, most licences were, however, granted indefinitely. Computer Associates retained, in that regard, all rights, in particular copyright, title, patent, trademark right and all other proprietary interests in and to the software at issue.

On 25 March 2013, Computer Associates entered into an agreement with The Software Incubator. Under Clause 2.1 of that agreement, the latter company acted on behalf of Computer Associates to approach potential customers within the United Kingdom and Ireland for the purpose of ‘promoting, marketing and selling the [software at issue]’. Under the agreement, The Software Incubator’s obligations were limited to the promotion and marketing of that software. The Software Incubator did not have any authority to transfer property in the software.

By letter dated 9 October 2013, Computer Associates terminated the agreement with The Software Incubator.

The Software Incubator brought an action for damages, on the basis of the provisions of national law implementing Directive 86/653, against Computer Associates before the High Court of Justice (England & Wales), Queen’s Bench Division (United Kingdom). Computer Associates disputed the classification of its relationship with The Software Incubator as a commercial agency contract, contending that the supply of computer software to a customer by electronic means accompanied by the grant of a perpetual licence to use that software did not constitute a ‘sale of goods’ within the meaning of Article 1(2) of that directive.

By decision of 1 July 2016, the High Court of Justice (England & Wales), Queen’s Bench Division, granted The Software Incubator’s application and ordered that that company be awarded 475 000 pounds sterling (GBP) (approximately EUR 531 000) by way of compensation. That court took the view, in that context, that the ‘sale of goods’ within the meaning of Statutory Instruments 1993/3053 referred to an autonomous definition which had to include the supply of software.

Computer Associates lodged an appeal against that judgment before the Court of Appeal (England & Wales) (Civil Division) (United Kingdom). By decision of 19 March 2018, that court held that software supplied to a customer electronically does not constitute ‘goods’ within the meaning of Article 1(2) of Directive 86/653, as interpreted by the Court of Justice. It concluded that The Software Incubator was not a ‘commercial agent’ within the meaning of that provision and dismissed its claim for compensation.

The Software Incubator challenged that decision before the Supreme Court of the United Kingdom.

That court seeks from the Court of Justice an interpretation of Article 1(2) of Directive 86/653 which it needs in order to determine whether the concept of ‘commercial agent’ having authority to negotiate the ‘sale of goods’ applies in the case of a supply of computer software by electronic means to the customer, the use of that software being governed by a licence granted indefinitely.

In those circumstances, the Supreme Court of the United Kingdom decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)  Where a copy of computer software is supplied to a principal’s customers electronically, and not on any tangible medium, does it constitute “goods” within the meaning of that term as it appears in the definition of a commercial agent in Article 1(2) of Council Directive 86/653/EEC of December 1986 on the co-ordination of the laws of Member States relating to self-employed commercial agents (“Directive”)?

(2)  Where computer software is supplied to a principal’s customers by way of the grant to the customer of a perpetual licence to use a copy of the computer software, does that constitute a “sale of goods” within the meaning of that term as it appears in the definition of commercial agent in Article 1(2) of the Directive?’

The Court’s decision:

The concept of ‘sale of goods’ referred to in Article 1(2) of Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents must be interpreted as meaning that it can cover the supply, in return for payment of a fee, of computer software to a customer by electronic means where that supply is accompanied by the grant of a perpetual licence to use that software.

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Whether decompiling software code is illegal?

The European Court has ruled in case  C‑13/20 Top System SA v Белгия which focuses our attention on the question to what extent decompiling software code can be legal.

Top System is a company governed by Belgian law that develops computer programs and provides IT services.

SELOR is the public body, which is responsible in Belgium, for selecting and orienting the future personnel of the authorities’ various public services. Following SELOR’s integration into the service public fPolicy and Support Federal Public Service, the Belgian State replaced that body as the defendant in the main proceedings.

Since 1990, Top System has collaborated with SELOR, on whose behalf it provides IT development and maintenance services.

In order to fulfil its tasks, SELOR has gradually put in place IT tools to enable applications to be submitted and processed online.

At the request of SELOR, Top System developed several applications which contain (i) functionalities originating from its framework software called ‘Top System Framework’ (‘the TSF’) and (ii) functionalities designed to meet SELOR’s specific needs.

SELOR has a user license for the applications developed by Top System.

On 6 February 2008, SELOR and Top System concluded an agreement for the installation and configuration of a new development environment as well as the integration of the sources of SELOR’s applications into, and their migration to, that new environment.

Between June and October 2008, there was an exchange of emails between SELOR and Top System about operating problems affecting certain applications using the TSF.

Having failed to reach agreement with SELOR on the resolution of those problems, on 6 July 2009, Top System brought an action against SELOR and the Belgian State before the Commercial Court, Brussels, Belgium seeking, inter alia, a declaration that SELOR had decompiled the TSF, in breach of Top System’s exclusive rights in that software. Top System also claimed that SELOR and the Belgian State should be ordered to pay it damages for the decompilation of and copying of the source codes from that software, together with compensatory interest, from the estimated date of that decompilation, that is to say, from 18 December 2008 at the latest.

On 26 November 2009, the case was referred to the Court of First Instance, Brussels, Belgium which, by judgment of 19 March 2013, in essence, dismissed Top System’s application.

Top System brought an appeal against that judgment before the referring court, the Court of Appeal, Brussels, Belgium.

Before that court, Top System submits that SELOR unlawfully decompiled the TSF. According to the applicant, under Articles 6 and 7 of the LPO, decompilation can be carried out only with the authorisation of the author, the successor in title of that author, or for interoperability purposes. On the other hand, decompilation is not permitted for the purpose of correcting errors affecting the functioning of the program concerned.

SELOR acknowledges that it decompiled part of the TSF in order to disable a defective function. However, it submits, inter alia, that, under Article 6(1) of the LPO, it was entitled to carry out that decompilation in order to correct certain design errors affecting the TSF, which made it impossible to use that software in accordance with its intended purpose. SELOR also relies on its right, under Article 6(3) of the LPO, to observe, study or test the functioning of the program concerned in order to ascertain the underlying ideas and principles of the relevant TSF functionalities in order to be able to prevent the blockages caused by those errors.

The referring court takes the view that, in order to determine whether SELOR was entitled to carry out that decompilation on the basis of Article 6(1) of the LPO, it is for that court to ascertain whether the decompilation of all or part of a computer program comes within the acts referred to in Article 5(a) and (b) of the LPO.

In those circumstances, the Court of Appeal, Brussels decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Is Article 5(1) of [Directive 91/250] to be interpreted as permitting the lawful purchaser of a computer program to decompile all or part of that program where such decompilation is necessary to enable that person to correct errors affecting the operation of the program, including where the correction consists in disabling a function that is affecting the proper operation of the application of which the program forms a part?

(2) In the event that that question is answered in the affirmative, must the conditions referred to in Article 6 of the directive, or any other conditions, also be satisfied?’

The Court decision is:

1. Article 5(1) of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs must be interpreted as meaning that the lawful purchaser of a computer program is entitled to decompile all or part of that program in order to correct errors affecting its operation, including where the correction consists in disabling a function that is affecting the proper operation of the application of which that program forms a part.

2.  Article 5(1) of Directive 91/250 must be interpreted as meaning that the lawful purchaser of a computer program who wishes to decompile that program in order to correct errors affecting the operation thereof is not required to satisfy the requirements laid down in Article 6 of that directive. However, that purchaser is entitled to carry out such a decompilation only to the extent necessary to effect that correction and in compliance, where appropriate, with the conditions laid down in the contract with the holder of the copyright in that program.

Can I build an IPRs database for free using Asana?

When you are an owner of intellectual property rights such as patents, trademarks, domains, designs, copyrights etc., it’s not enough only to protect them.

In order to maintain their protection and to take advantage of it you need to know all the time what you have and whether there is something you need to do for its protection and use.

The way to achieve this is to build your own database where to store the whole information about your intellectual property assets.

A database for intellectual property represents an organised way of storing information for all IP assets that one company or individual owns.

The database can include different sections depending on the type of the intellectual property. What is typical for it to have, in general, is an easy access to the relevant information and the necessary flexibility for better efficiency.

So how you can build such a database?

The easiest way, although the most expensive, is to buy a specialized software in the form of an intellectual property database which will allow you to store your information. There are many products in that regard but most of them can break the bank.

If you are a startup company, entrepreneur or just a freelancer who owns some intellectual property, such an option could be impossible.

Is there another solution?

Yes there is. You can build your own database using free services such as Google sheets, for instance. However, you can adapt some of the many productivity and project management apps turning them into a database too.

One example in that regard is Asana which can be used as an intellectual property database completely for free. What’s more, because it is a cloud based solution you will have access to your information from everywhere. In addition you will be able to take advantage of some of its options such as collaborating with your team, IP attorney etc.

If you want to learn how to build such a database you can check this new upcoming course from here. There will be free coupons for early birds.

Marvel fights against BlackBerry because of ‘Jarvis’

Marvel filed an opposition against a BlackBerry’s attempt to register a trademark for ‘Jarvis’ in class 42 in the US.

As it is well-known ‘Jarvis’ is a character, an AI software assistant to Toni Stark, another character from the “Iron Man” comics and movies.

Marvel is the owner of an earlier trademark ‘Jarvis’ registered in class 9:

Computer application software that may be downloaded via global computer networks and electronic communication networks for use in connection with mobile
computers, mobile phones, and tablet computers, namely, software for use as a
voice-controlled personal digital assistant.

According to the company, there is a significant chance for consumer confusion between both marks because of the reputation of its trademark which has been gained throughout the years in connection with Marvel movies and different merchandising activities such as Lego own movies, video games, etc.

This case is intriguing by its own. On one hand, we have a registered trademark for a name which is used as a character in comics and movies. On another hand, there is an attempt for registration of the same mark but for another class of real services. The question here is whether the use of a trademark as a character is enough in order to stop such following applications. Yes, merchandising use, especially for video games, is a point in the right direction but it is interesting to what extent a reputation connected to a fictional character for software can be useful to stop identical signs for real software in the real world.

Source: WIPR (Marvel hits out at BlackBerry over ‘Jarvis’ TM)

 

When AI can be protected by patents?

Darren Hau (Marks & Clerk) published an interesting article for Lexology which discusses the topic for patent protection of Artificial Intelligence (AI).

As it is well known, computer programs and mathematical methods are excluded from patent protection because it requires a technical solution of a technical problem.

The main question here is, however, when one software, including AI, meets these requirements, that is to say when it has a concrete technical effect.

The updated EPO “Guidelines for Examination”  gives some tips in that regard.

When it comes to AI inventions, the guidelines provide the following as examples of technical applications:

• control of a specific technical system/process;
• encryption/decryption or signing electronic communications;
• audio/image/video enhancement or analysis;
• speech recognition, e.g. mapping a speech input to a text output;
• etc.

The natural conclusion from an in-depth analysis of these examples is that AI is protectable by patents in a case that it claims are restricted to specific technical purposes or such technical implementations.

The full article can be found here.

What should we know about trademark oppositions?

It is a widespread opinion that protection of a trademark requires its registration before the Country’s Patent Office. Even though this is true it is not the end of the story when it comes to trademark protection. Why?

The main reason for this is the fact that the legislation in most of the countries around the world doesn’t require from Patent Offices to stop every new trademark application even in a case that it is identical or similar to already registered one. This responsibility is given to the trademark owner who can file an opposition against such new marks if and only if he wants to do this.

But if the owner misses out on filling an opposition on time, the new mark will be registered and the following options for its cancellation could be more expensive and time-consuming.

So all in all every trademark holder has two main variants to support its already registered mark:

1. To monitor the Patent Office’s trademark bulletins by himself – it has to be noted here that although everyone can assess identical marks for identical goods and services (a mark X for a good Y is a mark X for a good Y), the situation is much more complex when it comes to similarity, which requires in-depth knowledge regarding trademark legislation and case law.
2. To subscribe for different software decisions which will alert him in case of new identical or similar marks and after that to discuss the results with a trademark attorney.

In any case, it is vital such monitoring to be carried out on a regular base and oppositions to be filed on time in order for the trademark protection to be maintained properly.

A new Madrid Monitoring tool by WIPO

WIPO introduced its new software for searching international trademarks called WIPO Madrid Monitor which will replace, as far as it is known, the current ROMARIN tool.

What’s new in the case of Madrid Monitor?

Generally, the new database is more intuitive, flexible and user-friendly, giving a wide range of details regarding trademarks’ status as well as some improved functions such as:

• Access trademark records using an intuitive search interface
• Compile, save and share search results and strategies
• Track the real-time status of your international trademark registration and related requests (including changes in ownership and renewals)
• Find out where protection has been granted or refused for your trademark
• Register to receive email alerts for changes related to trademarks of interest registered through the Madrid System

More information here.