CJEU – Back on the burden of proof of the exhaustion of trademark rights

In a decision rendered on January 18th, 2024, the Court of Justice of the European Union (CJEU) came back on the question of the burden of proof in relation to the exhaustion of trademark rights.
In this case, Hewlett Packard (HP), owner of the HP European Union trademarks, accused Senetic of trademark infringement resulting from the introduction into the European Economic Area (EEA) of products bearing said trademarks without its authorization.
In practice, HP markets, through a selective distribution network, computer equipment products bearing serial numbers enabling HP to know for which market the products were intended. However, the serial number is not a marking enabling third parties to know whether the products were intended for the EEA market.
HP brought an action before the Polish Courts to stop the alleged infringement of its trademarks. As a defense, Senetic invoked the exhaustion of HP’s trademark rights in respect of those products, which had allegedly previously been placed on the EEA market by HP or with its consent.
Referred to by the Polish Court for a preliminary ruling, the CJEU had to determine whether the burden of proving the exhaustion of rights rests solely on the defendant in an infringement action where the products at issue, which are part of a selective distribution network, do not bear any marking enabling third parties to identify the market on which they are intended to be marketed, and where the defendant has been assured by the sellers that they can be legally marketed in the EEA, the trademark owner having refused to carry out this verification itself.
In the light of its prior Van Doren case law, the CJEU has reaffirmed that although the burden of proving the exhaustion of rights lies in principle with the defendant who relies on this argument, it must be adjusted where such defendant demonstrates that it is likely to enable the trademark owner to partition national markets, thereby encouraging the maintenance of price differences between States.
The CJEU noted, on the one hand, that placing the burden of proof on the defendant exposes it to the difficulty of providing evidence due to the absence of product marking and the reluctance of suppliers to reveal their source of supply. On the other hand, even if the defendant were to prove that the products came from the owner’s selective distribution network, the owner could prevent any future possibility of obtaining supplies from the member of its distribution network that had breached its contractual obligations.
Consequently, the CJEU ruled that in the case of products belonging to a selective distribution network, which do not bear any marking relating to their marketing conditions, the burden of proof of the exhaustion of the right conferred by an EU trademark must be adjusted. The owner will now have the burden of proving that he has put or authorized the first putting into circulation of copies of the goods concerned outside the territory of the EU or the EEA. If this evidence is provided, it will be for the defendant in the infringement action to establish that these same specific products were subsequently imported into the EEA by the trademark owner or with its consent.
With this decision, the CJEU suggests an operational solution for trademark owners, encouraging them to mark their products explicitly in order to control their circulation and, for third parties, to have information relating to the marketing territory.
CJEU, January 18th, 2024, C-367/21, Hewlett Packard / Senetic
 

Supplementary protection certificate: the application of the two-step test to determine whether the product covered by a SPC is protected by a valid basic patent is not necessary when each compound in the combination is expressly covered by at least one claim of the basic patent.

In a decision rendered on January 12th, 2024, the Court of Appeal of Paris clarified the conditions for applying the two-step test resulting from European case law to determine whether the product covered by a supplementary protection certificate (SPC) is protected by a valid basic patent, and ruled on the interpretation of Article 3c) of EC Regulation No.469/2009.
The dispute opposed laboratory Merck, holder of a patent for new anti-diabetic drugs, against generic laboratories Mylan and Viatris.
Merck held two SPCs, one for sitagliptin as the sole active ingredient, and the other for a combination of sitagliptin and metformin. Merck noted that Mylan and Viatris had obtained two marketing authorizations for a combination of sitagliptin and metformin, and had taken steps to market this product in two dosages on the French market.
Taking the view that the marketing of these generic products infringed its SPC for the sitagliptin/metformin combination, still in force, Merck applied to the interim relief Judge for a ban on the marketing of the Mylan product until expiry of the SPC.
Mylan and Viatris appealed the interim order rendered against them, challenging the validity of the opposed SPC, in particular on the grounds that the product was not protected by a valid basic patent within the meaning of Article 3a) of EC Regulation No.469/2009, and asked the Court of Appeal to apply the two-step test. Derived from the decisions of the CJEU in the Teva/Gilead and Royalty Pharma cases, this test is based on two cumulative conditions: firstly, that the product must, for a person skilled in the art, in the light of the description and drawings of the basic patent, fall within the invention covered by that patent, and secondly, that it must be possible for a person skilled in the art to specifically identify the product in the light of all the elements disclosed by said patent and on the basis of the state of the art at the date of filing or priority of said patent.
The Court recalled, in the light of European case law, that this two-step test is necessary only where the product which is the subject of the SPC is not expressly mentioned in the claims of the basic patent. In the present case, the Court noted that each compound of the combination was individually and expressly covered by at least one claim of the basic patent, as was the combination of those active ingredients. In these circumstances, a person skilled in the art could identify the combination both from the claims of the patent and from its descriptive part. The two-step test was therefore unnecessary.
The Court of Appeal also stated that Article 3c) of EC Regulation No.469/2009, which states that the product must not have already been the subject of a SPC, should be interpreted as referring to ““a certificate” and not to applications filed or under examination, and therefore a SPC granted”. In this case, while the SPC for sitagliptin alone had been applied for before the SPC for the sitagliptin/metformin combination, the latter had been granted before the former. Mylan and Viatris challenged the validity of the SPC for the sitagliptin/metformin combination in the light of Merck’s earlier SPC application for sitagliptin. The Court held that an earlier application for a certificate, but for which the SPC was granted subsequently, is not capable of calling into question a granted SPC.
Thus, in the absence of any serious challenge by Mylan and Viatris as to the validity of the opposing SPC, the Court of Appeal upheld the interim order.
Court of Appeal of Paris, January 12th, 2024, No.22/16673

The exclusive representation contract between an influencer and a communication agency is not an employment contract

In a decision rendered on February 23rd, 2024, the Court of Appeal of Paris upheld the first instance decision which had rejected for requalification of the representation contract entered into with a communication agency into an employment contract.
In this case, an influencer was summoned by his agency for giving notice of early termination of his contract. Taking the view that his contract had to be requalified as an employment contract, the influencer raised a plea of lack of jurisdiction in favor of the Labour Tribunal. He requested application of the status of model and, subsidiarily, that of performer.
Under the contract, the agency was responsible for managing the influencer’s participation in Instagram and TikTok campaigns, defining the direction of his professional career and the terms of his contracts, representing the influencer in negotiations and acting as a business provider. In return, the agency received a commission of 30% of the gross sales achieved, while the influencer could ask the agency to pay monthly advances on these sales.
The Court of Appeal validated jurisdiction of the Commercial Court and ruled out the application of the rules relating to the status of model and performer, which are presumed to be employment contracts even in the absence of a subordinate relationship.
To exclude the status of model, the Court emphasized that the influencer had complete freedom of choice as to the selection and staging of the campaigns proposed to him by the agency and indicated that “these stagings were not limited to a reproduction of his image or to posing as a model, within the meaning of Article L. 7123-2 of the Labour Code”.
The Court also ruled out requalification into a performer, considering that the influencer “had no predefined role to play or text to say in the videos, but created the scenes himself in order to promote the products”.
Finally, the Court confirmed that the activity covered by the contract did indeed qualify as a commercial act, thereby justifying jurisdiction of the Commercial Court.
Court of Appeal of Paris, February 23rd, 2024, No.23/10389

Rigoni’s “Nocciolata, it’s without palm oil” advertisement featuring an orang-outan does not constitute indirect disparagement of Ferrero.

In a decision rendered on December 8th, 2023, the Court of Appeal of Paris dismissed Ferrero’s claims of indirect disparagement and parasitism against Rigoni.
The advertisement in question featured a child eating “Nocciolata” spread next to a plush toy representing an orang-outan, with the slogan: “Nocciolata, it’s without palm oil”.
Considering that the advertisement referred to the controversy surrounding the use of palm oil in the production of “Nutella” spread, Ferrero sued Rigoni for disparagement and parasitism.
The Court of Appeal of Paris confirmed the judgment of the Commercial Court of Paris and dismissed all Ferrero’s claims.
Although 5% of the people questioned in a survey carried out for Rigoni mentioned the Nutella product after viewing the advertisement, the Court nevertheless found that the consumer had not made any link between the advertisement and Nutella.
In the Court’s view, the mere reference to the absence of palm oil in the Nocciolata product, even in conjunction with a stuffed orang-outan, was not such as to stigmatize spreads containing palm oil, and hence to discredit Ferrero’s Nutella product.
On parasitism, the Court of Appeal held that while it was undisputed that the Nutella spread was one of Ferrero’s flagship products, it had not been established that, by broadcasting the advertisement in question, which presented a product that was free of palm oil, organic and environmentally friendly, Rigoni had sought to follow in Ferrero’s footsteps without cost.
Court of Appeal of Paris, December 8th, 2023, No.22/04756

Towards a European standard for fair and transparent music streaming?

On January 17th, 2024, members of the European parliament adopted a resolution calling for a new legal framework to ensure fairness and sustainability in the music streaming sector.
While the European Parliament recognizes that digital music platforms and music sharing services are the main means of access, accounting for 67% of global sales in the music sector, it also notes the absence of rules currently applicable to music streaming services. The inequitable nature of the current remuneration system for authors and performers and the lack of transparency of the artificial intelligence systems used are also criticized.
First of all, the Parliament notes the need to revise the “pre-digital royalty rates” still in force today. In addition, the current “payola” schemes allows record companies to pay broadcasters to put forward certain tracks by certain artists. Under this system, authors and performers are led to accept lower or zero income in exchange for greater visibility.
Alongside a reform of the remuneration system, the Parliament raises the issue of the need for action to promote European musical works among the “overwhelming amount” of content available on music streaming platforms. Quotas of European musical works could be introduced to highlight “less popular styles and less common languages”.
Finally, the Parliament deplores the lack of transparency in the artificial intelligence systems currently in use. In this respect, the proposal would seek, on the one hand, to combat unfair practices involving the manipulation of audience figures, by establishing transparency obligations for platforms with regard to their algorithms and recommendation tools. The Parliament is also calling for better information for listeners, for instance by introducing a label informing the public when the songs they are listening to have been generated by artificial intelligence. This public information is aimed in particular at combating the development of “deepfakes” on music streaming platforms.