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Presumption of employment contract in the field of sports sponsoring: an extensive application of the provisions of the Labor Code on modelling.

By a decision of June 23rd, 2022, the Second Civil Chamber of the Court of cassation rejected the appeal lodged by company SPEEDO against the decision of the Court of appeal which had requalified the sponsoring contracts entered into with swimmers as employment contracts subject to URSSAF contributions.

The origin of the case was a control by the URSSAF (Organization for the Payment of Social Security and Family Benefit Contributions). The Organization considered that such contracts, by which the swimmers had to promote SPEEDO products, in particular by wearing swimsuits of the brand during competitions, belonged to modelling services, subject to a presumption of salaried status.

Before the Judges, company SPEEDO unsuccessfully tried to reverse this presumption by demonstrating the lack of subordination link between it and the swimmers. Confirming the decision of the Court of appeal, the Court of cassation indicated, in a radical way, that “the presentation to the public of a product by an athlete during various events, and in particular sports exhibitions, whether with or without competition, falls within the scope of application of the presumption [of salaried status]” set up by Articles L. 7123-2 et seq. of the Labor Code.

The same Second Civil Chamber of the Court of cassation had already rendered a decision in favor of the qualification of sponsoring contracts as employment contracts on May 12th, 2021 (decision UHLSPORT). This tendency of the Court to extensively apply the notion of subordination link, criterion of employment contract, to the sponsoring contract is questionable, as it does not correspond to the main nature of the contractual relationship between the athlete and his/her sponsor. It is also likely to entail significant economic consequences. The forthcoming decision of the Court of appeal to which the UHLSPORT case is referred back, will therefore be particularly interesting to consider the possible ways to overcome the presumption.

Breach of a software license agreement: the Court of cassation overturns the appeal decision and confirms admissibility of the infringement action

The question of the applicable liability regime, whether contractual or tortious, in case of a breach of a software license agreement has been debated for several years.

On October 5th, 2022, by overturning a decision of the Court of appeal of Paris of March 19th, 2021, the First Civil Chamber of the Court of cassation reaffirmed admissibility of a tortious infringement action in this case (Entr’ouvert/Orange, decision No.705 FS-B).

The Court of appeal had ruled in favor of the contractual liability regime, on the grounds that the company author of the licensed software was seeking compensation for the damage resulting from the licensee’s failure to perform its contractual obligations, and not from a breach of an obligation external to the license agreement.

The Court of cassation recalls that “Directive [2004/48] and Directive [2009/24] must be interpreted as meaning that the breach of a clause in a computer program license agreement, relating to the intellectual property rights of the owner of the author’s rights in that program, falls within the concept of “infringement of intellectual property rights” within the meaning of directive 2004/48 and that, consequently, said owner must be able to benefit from the guarantees provided for by the latter directive, regardless of the liability regime applicable under national law”, expressly referring to the judgment handed down by the Court of Justice of the European Union on December 18th, 2019 (IT Development SAS/Free Mobile SAS, case C-666/18).

In the case at hand, the Court of cassation notes that such guarantees are not ensured by the contractual liability regime, in particular in that it deprives the author of the software from the specific tools provided for by the Intellectual Property Code such as seizure for infringement, summary proceedings, the right to information, or the method of calculation of damages in intellectual property matters.

In this case of “infringement of its author’s rights, the owner, which does not benefit from the guarantees provided for in Articles 7 and 13 of directive 2004/48 if it acts on the ground of contractual liability, as admissible to act in infringement”.

The Court of cassation thus reaffirms its position, in line with that of the CJEU.

Particular vigilance regarding the free assignment of intellectual property rights

Courts are regularly required to rule on the validity of assignments of intellectual property rights, in particular trademarks, made free of charge.

Recently, in a judgment dated February 8th, 2022, the Judicial Court of Paris held that the gratuitous assignment of intellectual property rights is a donation that must be made before a notary to avoid nullity (Judicial Court of Paris, February 8th, 2022, No.19/14142). This judgment has not been appealed and several authors have questioned its practical scope. Is it an individual case or a real change?

Assignments of intellectual property rights made for free or for a symbolic price may be encountered, for example, in the case of intra-group transfers or transfers by partners, employees or service providers to a company.

Beyond the question of nullity of the deed as decided in the above-mentioned judgment, an assignment of intellectual property rights made for free or for a symbolic price may raise potential risks to which attention should be paid.

Such an assignment for free or for a symbolic price may mainly present tax risks relating first to the varying taxation regime. As a reminder, the assignment for consideration entails payment of registration fees and possibly of VAT.

In addition, the tax authorities may carry out an adjustment under the qualification of abnormal management act, defined by the Council of State as “the act by which a company decides to impoverish itself for purposes unrelated to its interest” (Council of State, 3rd, 8th, 9th and 10th chambers combined, December 21st,2018, 402006).

“Caution” must remain the key word.

Is France moving, like some of its neighbors, towards a tender system for the reimbursement of medicines?

In the last draft of law for financing social security, the government planned to set up a national tender system for the selection of medicines reimbursed by social security in the future.

In essence, this system of “periodic referencing of certain medicines” would mean that only certain medicines would be selected for a given therapeutic class, and medicines not selected could be delisted in the future.

The objective of “efficiency of health insurance expenditure” is clear; the aim is to make savings, particularly in relation to very expensive innovative therapies, by taking into account their therapeutic effectiveness data.

This type of system, which already exists in Great Britain and the Netherlands, immediately triggered a wave of criticism from the pharmaceutical industry, as it is not without consequences for the market.

The main fear is that the cheapest players on the market will be favored, particularly Indian and Chinese players who benefit from lower production costs. Indeed, even if other criteria should be used in the selection of reimbursed medicines, such as “sustainable development objectives” or “security of supply guaranteed by the location of production sites“, the selling price remains one of the decisive criteria in the call for tender. This would therefore put the French industry at risk and expose the country to more frequent supply disruptions, as has been seen in the Netherlands for example.

Generic companies, the profitability of which is lower than that of originator companies, are particularly threatened by this measure since each therapeutic class would theoretically be limited to 2 or 3 generics. The loss of markets suffered by the latter could lead to job losses as well as an increase in the price of their medicines due to the decrease in their production volume.

Pharmacies are also threatened by this measure since they receive discounts from generic manufacturers. The disappearance of certain generics from the selection of reimbursable medicines would mean the loss of this resource for pharmacies, which are already calling for state compensation to ensure their survival.

In the face of fierce criticism from the sector, the government announced on October 17th that it was also abandoning the idea of a simple experiment, preferring instead to consult with all stakeholders with the aim of relocating medicine production in France and Europe.

Report of the CSPLA on NFTs, or the outline of a legal framework

In July 2022, the “Conseil Supérieur de la Propriété Littéraire et Artistique” (CSPLA – Higher council for Literary and Artistic Property) issued a report on NFTs. Such report is the result of several months of multi-sector consultation and aims to “identify the main points of the technical and legal framework for NFTs and the issues at stake for the various cultural sectors”.

If legal professionals have already questioned the legal status of NFTs, this report, which aims to “secure the legal framework in order to free up uses”, is the first large-scale institutional approach of the subject.

To do this, it first tries to give NFTs a legal definition, in order to then consider the regime that could be applicable to them.

The NFT (“jeton non fongible” in French) is defined as a “token registered on the blockchain and associated with a “smart contract”, which refers to a digital file (image, sound, video…)”.

The report goes on to identify various legal issues, among which the applicability of specific provisions of intellectual property law to NFTs.

The Intellectual Property Code, for example, provides for strict formal requirements and conditions of remuneration in the case of assignment or licensing of author’s rights. The use of NFTs as tools for the transmission of such author’s rights should therefore be adapted to allow compliance with these provisions.

Above all, the report contains recommendations aimed at anticipating the difficulties linked to the use of NFTs, particularly in terms of defense against infringement: determination of the competent courts, of applicable law, identification of the parties or even localization of the act of infringement, to which the law will necessarily have to adapt. Similarly, the report raises the question of how to stop the act of infringement when the NFT is inscribed in a blockchain, one of the interests of which being its immutable character.

Nevertheless, only the development of NFTs on the market will confirm whether the lines outlined by this report are adapted to this new object.

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