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Jurisdiction with respect to internet-related Intellectual Property rights infringement

Ed.: I wrote this paper last year (28/10/2017) in the context of an LL.M. program I’ve attended.

 

  1. Introduction

The purpose of this paper is to determine the jurisdiction in Intellectual Property rights cross border infringement. In order to properly address this topic, I choose two cases that both involve the transnational features, due to the presence of internet, and IP rights infringement: Hejduk v. EnergieAgentur for copyright law, L’Oréal SA v. eBay International SA for trademark law.

Before addressing in details the two cases, let me briefly explain what is jurisdiction. The meanings of the term “jurisdiction” can change according to the circumstances. It is both the power of a court to adjudicate on a dispute, and both the territorial space within this court may properly exercise its power. The term can also be used to determine the power or authority of a state in a specific field, such as civil law or criminal law. To sum up, jurisdiction defines what a state can do and what a state does.

With respect to internet-based dispute, we have to take into account that internet has demolished the distances and the national borders, but it has also given life to new legal problems. When someone accesses the Internet from his own home and creates a website accessible from all the world, does he have to comply with all the laws of the world? The answer is provided by the jurisdictional principles, which take into account of “where” Internet event takes place, and what it means that the online activity has an “effect” within a state or nation[1].

  1. The cross-border copyright infringement in Hejduk v. EnergieAgentur

The first thing to note with respect to copyright is that there is no Unified Copyright Court in Europe neither in other regions or states. So, when it comes to disputes about unlawful use of a photo on social network for example, or unauthorised streaming of football matches, or downloading a pirated copy of a movie, that dispute has to be brought before domestic courts. From this the issue arises as to which courts have jurisdiction among the courts of the several countries that may be involved with the dispute. And if we consider that nowadays intellectual property disputes are – very often – internet-related, then the countries involved may be many. The issue is made all the more complex if we think that – turning to domestic laws – no single statue deals with copyright jurisdiction[2].

Let’s try to contextualize the problem through the analysis of an important case[3].

Pez Hejduk is an Austrian photographer. She took pictures of buildings designed by architect George W. Reinberg specialising in ecological and solar architecture. She authorised Mr Reinberg to display pictures on the occasion of a conference organised by Energieagentur.NRW, a German-established company. Once Mrs Hejduk found her pictures available to be downloaded and on display on the website of EnergieAgentur (www.energieagentur.nrw.de) without any statement of authorship or any form of prior consent obtained by EnergieAgentur, she filed infringement claim before Austrian court (Handelsgericht in Vienna) seeking 4.050 Euros in damages. The defendant challenged the jurisdiction of Austrian court arguing that, since the company is established in Germany and that its website is not directed at Austria since it uses a .de top-level domain, the competence to hear this case would be of German courts.

The Handelsgericht Wien decided to stay the proceedings seeking guidance from the ECJ. The question referred was about the Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000, more precisely if it had to be interpreted “as meaning that, in a dispute concerning an infringement of rights related to copyright which is alleged to have been committed in that a photograph was kept accessible on a website, the website being operated under the top-level domain of a Member State other than that in which the proprietor of the right is domiciled, there is jurisdiction only:

–    in the Member State in which the alleged infringer is established; and

–    in the Member State(s) to which the website, according to its content, is directed?

The Advocate General (hereafter AG) observed that this case is very particular, and therefore is different from the Pinckney case[4]. The latter concerned unauthorised reproduction and online distribution of musical CDs. While Hedjuk case has “very different characteristics from those of the online sale of a product“, in that “it concerns a divulgation that can hardly be considered as occurring in a specific place that can be defined according to a territoriality criterion. On the contrary, the damage becomes «dematerialised», ie it becomes diffused and therefore is «delocalised», thus making it more difficult to determine the place where it occurred pursuant to Article 5(3)“.

The AG proposed that, under ex article 5(3) Brussels I (art 7(2) Brussels I Recast), jurisdiction could be granted only to the courts of the state where the “causal event” took place. Therefore, the place of a harmful event under Article 7(2) of the Brussels I Regulation (Recast) can only be the place from where the defendant began infringing activity[5].

Therefore, the AG suggested that, “in the event of «delocalised» damages over the internet concerning copyright economic rights, the best option is to exclude the possibility to sue before the courts of the Member State where the damage occurred and reserve instead the competence, at least that based on Article 5(3) …, to the judges of the Member State in which the causal event occurred. Furthermore, this option does not exclude at all jurisdiction based on Article 2 of the Regulation“.

This “causal event” rule could provide – on the one hand – a legal certainty for online service providers, which could be sued only where they acted and often it is their domicile. On the other hand, this rule would provoke disadvantages to right holders and may reduce the enforceability of copyright online. In a scenario like this, they couldn’t sue foreign infringers in their own jurisdiction, and furthermore they couldn’t be able to get remedies in any other country, including their home country even if the damage is felt there[6].

Surprisingly, The ECJ rejected AG Cruz Villalon’s proposed ‘causal event’ criterion. The latter is “defined as the event which gives rise to the alleged damage […]”, that in the present case is the activation of the process for the technical display of photographs on website which took place where EnergieAgentur has its seat, i.e. Germany. So, this criterion “[…] is not relevant for the purpose of attributing jurisdiction to the court before which a case such as that in the main proceedings has been brought“.

The Court confirmed the ‘accessibility approach’ – already stated in the Pinckney case – ruling that, under ex article 5(3) Brussels I, the court of the place where the infringing content can be accessed has jurisdiction to hear the case but it can grant only damages that are limited to that territory. Even if the Court ruled this way the doubt whether the access approach helps to attain the goal of “sound administration of justice and the efficacious conduct of proceedings” still remains. On this point, the AG noted that, where the work is merely accessible for viewing and downloading in a country, it is impossible to estimate the exact damage that occurs in that country. Then, it is highly probable that the Court will underestimate the damage or overestimate it, crossing the limits of court jurisdiction[7].

Even with these criticisms, the choice of the Court to establish jurisdiction of a local court based on mere access to the website in that country is not an isolated one: this ruling is justified by other previous CJEU rulings on jurisdiction issues online: i.e. eDate Advertising[8] and the Wintersteiger case[9].

The main issues of to the ‘accessibility approach’ involve the risk of forum shopping by right holders and the reduction of legal certainty for online service providers. There two key tools which could moderate those risks discouraging right holders from bringing cases in countries with mere access to the illegal content. First, the targeting approach could be applied to allocate the online activity at the level of substantive law. Secondly, as the CJEU has clarified, courts in the place of mere access have jurisdiction to grant territorial remedies only[10].

Despite this decision is not per se ground breaking, it is surely interesting from a wider perspective. The CJEU with this ruling built up an international intellectual property framework.

In the Wintersteiger case, where the issue was an infringement of a national trademark via internet, the Court declined to localise the place of the damage where the website can be accessed holding – instead – that the place of the damage is where the national trademark is registered and the entire damage may be claimed there. The interpretation of Art. 7 No. 2 / former Art. 5 No. 3 Brussels I Regulation in cases involving copyright infringements is therefore a different one. Since copyright is protected in every Member State according to the relevant national law without registration, here the Court established the jurisdictional rule that the mere accessibility of a website is sufficient to establish jurisdiction according to the second part of Art. 7 No. 2 / former Art. 5 No. 3 Brussels I Regulation.

  1. The cross-border trademark infringement in L’Oréal SA v. eBay International AS

It is interesting to notice that – with regard to trademark law – there is always have been the presumption that businesses would have been conducted in a territorial delimited space[11]. With the internet, these background assumptions are now outdated, because it “is not a physical or tangible entity, but rather a gigantic net that interconnects an infinite number of narrower groups of information nets connected between them”[12]. It is commonly known as a net of nets that demolish distances and borders. Anyway, trademark cross-border infringements have become much more frequent. And therefore, since the cross-border element is present may be some issues also with regard to jurisdiction.

L’Oréal, a French cosmetics company, owns several national trademarks in the UK, as well as community trademarks within the European Union.

On May 22, 2007, L’Oréal sent a letter to eBay, regarding many unauthorized sales of its trademark goods via eBay’s European websites. It is common practice for the online marketplaces to make buyers and sellers accepting its user agreement that prohibits selling counterfeit goods. The giant marketplace also offers a program called “Verified Rights Owner”, that helps the members in detecting and removing counterfeit good from eBay’s website. It is important to say that – according to the court documents – L’Oréal has not participated in the program.

After an unsatisfied response from eBay, L’Oréal brought infringement actions against the company in various EU States, including the UK High Court of Justice, Chancery Division. The manufacture claimed that eBay was liable for the use of its trademarks, which were displayed on eBay’s European websites and on the paid sponsored links of internet search engines, such as Google. These advertisements were generally triggered by the use of keywords corresponding to the trademarks registered by L’Oréal. In addition, the latter also objected that online auction site eBay did not do enough to prevent those sale.

To summarize, L’Oréal’s position was that eBay should be liable for counterfeit and parallel imported goods sold via its website, and that eBay should do more to prevent the sale of such trade mark infringing goods.

The High Court referred a number of questions to the ECJ, but two of them are key to properly address the jurisdictional problems.

The first question faced by the CJEU is whether for the owner of a trade mark registered in a Member State of the EU or of a Community trade mark to be able to prohibit the offer for sale on an online marketplace of infringing goods which have not been marketed in the EEA (or In the case of a Community trade mark in the EU), It is sufficient that such offer is targeted at EEA or EU consumers; or must the owner give evidence that the products in question will be effectively marketed in the territory covered by the trade mark registration?

The court held that trade mark infringement under art. 5 of the Trade Mark Directive and art. 9 of the Trade Mark Regulation occurs as soon as the offer for sale of the relevant good located in a non-EEA or EU country is targeted at EEA or EU consumers. Then the Court asked itself how can we know if an online marketplace is targeting EEA or EU consumers? And the answer was that the national courts are entitled to assess on a case-by-case basis if there is any relevant element upon which it can be concluded that the offer for sale of the relevant goods is directed to EEA or EU consumers.

In other words, L’Oréal had the right to act for preventing the offer for sale of trade-marked goods intended for sale in third States through an online marketplace accessible from the territory covered by the trade mark, as soon as it appears that this offer for sale targets consumers within that same territory. Therefore, it is up to the national courts to determine any relevant factors to come to such a conclusion. Lastly, in this case the criterion of the accessibility of the website is not relevant. But the game changing elements are the description of the areas to which the seller is willing to dispatch the goods and the use of a “.uk” domain name.

This reasoning is not so different from the one that was dealt with in Pammer and Hotel Alpenhof[13] in which the Court set out a list of criteria useful to verify if the activity of the company is directed to a Member State’s market.

With regard to the second jurisdictional question, the ECJ was asked to determine whether injunctions against operators of websites – online marketplace are included – through which IPRs have been violated can be obtained in order to prevent future infringements, and not only to stop an ongoing violation.

The issue probably arose from the unclear wording of art. 11 Enforcement Directive. A clarification from the CJEU was therefore needed. The CJEU went beyond a literal interpretation of art.11 and held that national courts should be always allowed to grant measures that contribute not just to stop an already existing infringement committed through the online marketplace, but also to prevent future violations.

In other words, the court held, injunctions aimed at avoiding future infringements should be available not only against direct infringers but also against intermediaries whose services are used by third parties. Therefore, the IP right holder have the right to be protected by the injunction under art. 11 of the Enforcement Directive. And the national courts have jurisdiction upon those requests, meaning that they can order the operator of an online marketplace to take measures with the aim of ending ongoing infringements and preventing future ones.

The Court explained also the main features of these injunctions. The latter must be effective, dissuasive and proportionate in order to avoid any kind of barriers to legitimate trade.

Although we didn’t examine the whole ruling, however we can conclude that the judgement does favour brand owners. It will have implications for all online marketplace which allow third parties to sell branded goods. Operators which target EEA or EU consumers cannot avoid a trade mark infringement action by locating outside the trade mark jurisdiction their servers and “infringing” products. Furthermore, they cannot even avoid the injunction – under art. 11 of the Enforcement Directive – that until this ruling was not applicable to prevent, but only to stop an infringement. On the other hand, brand owner should not get too carried away with this judgment because there are still a number of things that they have to take into account: online marketplace operators are not obliged to monitor their marketplaces for infringements, therefore brand owners should continue to monitor online marketplaces to detect potential infringements in order to report them; brand owner’s right to be granted an injunction it’s not so wide after all, since legitimate sales will still be permitted.

  1. Conclusion

In conclusion, we could say that an “international copyright, international patent law or international trademark law” do not exist[14]. The legal framework in which the jurisdictional problems take place is highly segregated and territorial. So, right holders have often an interest in avoiding a clash between countries that could lead to the unpleasant situation where the same case is brought before each Member State court concerned. If there is one IP right, it is suitable to have a single case scenario. Therefore, the parties will look for the most efficient and adequate jurisdiction that can deal with what is often a complex cross border infringement scenario[15]. As long as the uncertainty upon the interpretation of the rules of jurisdiction will last, they will be used as an instrument to achieve the best result.

[1] Rosenblatt Betsy, Principles of Jurisdiction, available here: https://cyber.harvard.edu/property99/domain/Betsy.html

[2] Romano Gian Paolo, Jurisdiction with respect to internet-related copyright litigation, 6 July 2017, Geneva, WIPO-UNIGE Summer school.

[3] CJEU case C-441/13, Pez Hejduk v EnergieAgentur NRW GmbH, EU:C:2015:28, available here: http://curia.europa.eu/juris/document/document.jsf?docid=161611&doclang=EN

[4] CJEU case C170/12, Peter Pinckney v KDG Mediatech AG, EU:C:2013:635, available here: http://curia.europa.eu/juris/celex.jsf?celex=62012CJ0170&lang1=it&type=TXT&ancre=

[5] Matulionyte, Rita, Enforcing Copyright Infringements Online: In Search of Balanced Private International Law Rules (September 10, 2015). Journal of Intellectual Property, Information Technology and ECommerce Law, 2015 Forthcoming, available at SSRN: https://ssrn.com/abstract=2658950

[6] See Matulionyte, above n. 5.

[7] See Matulionyte, above n. 5.

[8] Joint Cases C-509/09 and C-161/10, eDate Advertising and Martinez, EU:C:2011:685, available here: http://curia.europa.eu/juris/celex.jsf?celex=62009CJ0509&lang1=it&type=TXT&ancre=

[9] CJEU Case C-523/10, Wintersteiger AG v Products 4U Sondermaschinenbau GmbH, EU:C:2012:220, available here: https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010CJ0523:EN:HTML

[10] See Matulionyte, above n.5.

[11] Kohl Uta, Jurisdiction and the Internet: Regulatory Competence Over Online Activity, 2007, Cambridge University Press.

[12] Reno v. American Civil Liberties Union, 521 U.S. 844 (1997), available here: https://www.courtlistener.com/opinion/118147/reno-v-american-civil-liberties-union/

[13] CJEU Case C-144/09, Pammer v. Karl Schlütter GmbH & Co. KG, C-585/08 and Hotel Alpenhof v. Mr. Heller, available here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62008CA0585

[14] Torremans Paul, Jurisdiction for cross-border intellectual property infringement cases in Europe, 2016, Common Market Law Review, 53 (6). pp. 1625-1645.

[15] See Torremans, above n. 14.

Simone Cedrola

Laureto in Giurisprudenza presso l'Università Federico II di Napoli nel luglio 2017 con una tesi in Procedura Civile. Collaboro con Ius in itinere fin dall'inizio (giugno 2016). Dapprima nell'area di Diritto Penale scrivendo principalmente di cybercrime e diritto penale dell'informatica. Poi, nel settembre 2017, sono diventato responsabile dell'area IP & IT e parte attiva del direttivo. Sono Vice direttore della Rivista, mantenendo sempre il mio ruolo di responsabile dell'area IP & IT. Gestisco inoltre i social media e tutta la parte tecnica del sito. Nel settembre 2018 ho ottenuto a pieni voti e con lode il titolo di LL.M. in Law of Internet Technology presso l'Università Bocconi. Da giugno 2018 a giugno 2019 ho lavorato da Google come Legal Trainee. Attualmente lavoro come Associate Lawyer nello studio legale Hogan Lovells e come Legal Secondee da Google (dal 2019). Per info o per collaborare: simone.cedrola@iusinitinere.it

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