The European Union’s Artificial Intelligence Act (EU AI Act) was presented by the Commission in 2021. The European Union’s recent push to regulate artificial intelligence (AI) has sent ripples across the tech world, marking a significant shift in how generative AI models like ChatGPT, Bard, and others will operate.
In a recently negotiated compromise on the European AI Act of December 8, 2023, the focus has sharpened on copyright laws concerning data used in training these AI models.
As the legislation is still under wraps, experts are dissecting the potential impacts based on the EU’s official communications.
Key Obligations for Generative AI Model Creators: Ensuring Transparency and Respect for Copyright
Transparency in Data Usage: The proposed regulation emphasizes the importance of transparency. AI creators must publicly provide a sufficiently detailed summary of the content used for training their algorithms. Though the exact precision of these summaries is yet to be defined, the intent is clear: it aims to identify the rights holders, paving the way for possible compensation negotiations. This move is seen as a win for content creators, including authors, scriptwriters, and media companies, whose work might have been used without direct compensation.
Respect for European Copyright Law: AI enterprises must comply with European copyright laws, a seemingly obvious but vital requirement. This includes adherence to opt-out clauses, allowing rights holders to refuse the use of their content by AI systems. Institutions like the French collective management of author’s rights SACEM have established such clauses.
In depth analysis: Assessing the Impact and Challenges Ahead
Despite the positive outlook, the exact implications remain in the air until the technical meetings conclude. The SACD, among other institutions, expresses cautious optimism but emphasizes the importance of not backtracking on the progress made.
Firstly, while the regulation’s intent to protect copyright holders is commendable, the enforcement and practicality of these rules are somewhat ambiguous. The requirement for a “sufficiently detailed summary” of data used in AI training is vague and could lead to varying interpretations, creating potential loopholes or burdensome compliance processes.
Moreover, the obligation to respect European copyright laws, including opt-out clauses, may be seen as a significant step towards empowering creators. However, this could also impose substantial limitations on the development and scalability of AI technologies, potentially stifling innovation and economic growth. The balance between protecting individual rights and promoting technological advancement seems to be a delicate one, and this regulation might tilt the scales unfavorably for the AI industry.
The tension between transparency and protecting trade secrets is another critical point. Complete transparency of training data could indeed harm businesses, revealing proprietary methods and competitive advantages. The proposed solution of limited disclosure to regulators or trusted entities might mitigate some risks, but it also adds layers of bureaucracy and complexity, possibly slowing down AI development and deployment.
Furthermore, while the regulation is a European initiative, AI is inherently global. The differences in legal and ethical standards across borders might lead to conflicts or compliance challenges for multinational companies. This could inadvertently create a fragmented digital landscape, where AI technologies and their benefits are not evenly distributed.
Lastly, while the regulation aims to protect existing industries and creators from the disruptive impacts of AI, it might also hinder the creative potential and societal benefits that generative AI promises. The cultural and creative sectors could experience a slowdown in innovation if overly restrictive measures are put in place.
The effectiveness and fairness of these measures will depend on their implementation and the continued dialogue among stakeholders. A balanced approach is required to safeguard individual rights and cultural heritage while fostering innovation and global collaboration in the AI domain.
A Nex Era of AI Regulation Begins
As the technical discussions proceed and the final vote nears, stakeholders from all sides are keenly watching, hoping to influence the outcome in their favor. This regulation could set a precedent, not just for Europe, but globally, as countries grapple with the fast-evolving landscape of AI and its widespread implications. The unfolding narrative of the European AI regulation is a testament to the complexities of governing frontier technologies and the need for comprehensive, adaptive, and inclusive policies. The world watches as Europe takes these pioneering steps, setting a precedent for AI governance worldwide.
Artificial Intelligence (AI) is increasingly integrated into various sectors, significantly impacting society, economy, and governance.
The European Union is in the process of establishing a comprehensive AI-specific regulation. A proposal, the European Union’s Artificial Intelligence Act (EU AI Act) was presented by the Commission in 2021, aiming to set harmonized rules for AI to ensure safety, compliance with fundamental rights, and environmental sustainability.
On December 8, 2023, the European Parliament and Council reached a significant milestone by agreeing on the EU AI Act. This act is celebrated as a “global first”, marking the EU as the forerunner in the comprehensive legal regulation of AI. This legislative act aims to ensure that AI systems used within the EU are safe, uphold fundamental rights, and adhere to EU values, while also promoting investment and innovation in AI technologies.
This article provides an in-depth look into the EU’s legislative journey and explores the critical components, implications, and future prospects of the European legal framework for AI.
Risk-based Approach to AI Regulation
The legislation is built on a risk-based approach, categorizing AI systems into four levels of risk: unacceptable, high, limited, and minimal/no-risk. These classifications guide the extent and nature of regulatory requirements applied to each system, focusing significantly on unacceptable and high-risk AI systems.
Unacceptable-risk AI systems: This category includes AI applications considered a clear threat to safety, fundamental rights, or EU values. Examples include systems that manipulate human behavior or allow untargeted scraping of biometric data. Such systems are prohibited outright.
High-risk AI systems: This category encompasses AI systems that could potentially cause significant harm in critical areas like infrastructure or law enforcement. They are subject to strict compliance obligations, including risk mitigation and transparency requirements.
Limited-risk AI systems: These AI systems must adhere to minimal transparency obligations. They include technologies like chatbots or certain biometric categorization systems.
Minimal/no-risk AI systems: The majority of AI applications fall into this category, where the risk is deemed negligible. The use of these systems is freely allowed, with encouraged adherence to voluntary codes of conduct.
Safeguards for General-Purpose AI Models
An innovative aspect of the EU AI Act is its approach to regulating general-purpose AI (GPAI) models, which are systems or models that are not designed for one specific task but rather can be used across a wide range of tasks and sectors. They are foundational in nature, often serving as a platform on which other, more task-specific AI systems are built. Examples of general-purpose AI include large language models like GPT-3 or image recognition systems that can be applied to various sectors from healthcare to automotive to entertainment.
After intense debate, the Act introduces obligations for all GPAI models, with additional requirements for those posing systemic risks. This tiered approach aims to balance the need for regulation with the desire to not hinder technological advancement.
Enforcement Framework and Penalties
The Act will be enforced through national competent market surveillance authorities, with coordination at the EU level facilitated by a European AI Office. The European AI Board will serve as a platform for member states to coordinate and advise the Commission. Penalties for non-compliance are substantial and tailored to the severity of the infringement, with more proportionate fines for smaller companies and startups.
Anticipated Impacts and Future Steps
As the EU AI Act nears official adoption and implementation, a two-year grace period will begin for entities to comply, with certain prohibitions and GPAI obligations taking effect earlier. This transitional phase is vital for establishing robust oversight structures and ensuring stakeholders are fully prepared to meet the new regulatory requirements.
Conclusion: A Paradigm Shift in AI Governance
The European Union’s Artificial Intelligence Act represents a significant stride towards responsible and ethical AI development. By enacting a comprehensive, risk-based regulatory framework, the EU aims to protect citizens and uphold democratic values while fostering an environment conducive to innovation and economic growth. The Act’s influence is expected to extend beyond Europe, setting a precedent for global AI governance and encouraging international collaboration in creating a safer AI future. As the EU navigates this uncharted territory, the world watches and learns, ready to adapt and adopt measures that ensure AI benefits all of humanity while mitigating its risks.
The rapid emergence of generative artificial intelligence has significantly impacted the intellectual property law landscape, attracting widespread attention. In France, the existing copyright laws do not explicitly address how they apply to works created by AI.
French copyright law traditionally protects original works, Under French copyright law, protection is granted to original works, regardless of the form in which they are expressed. However, the law provides no specific guidance on how to apply these principles to AI-generated content. As a result, there is some uncertainty as to whether AI-generated works can be protected by copyright.
On September 12, 2023, French legislators from the Assemblée Nationale presented a law proposal to the Presidency specifically designed to clarify copyrights rules related to AI.
In this article, we delve into the key provisions of this bill, offering a critical analysis of its strengths and weaknesses.
Analysis of the law proposal on AI and Copyright of September 12 2023
Preamble of the draft law
The preamble outlines the objective of the law, which is to “protect authors and artists of creation and interpretation based on a humanist principle, in legal harmony with the Intellectual Property Code”.
The preamble gives an example of what a AI generated creation is with the 2016 creation of “The Next Rembrandt” made by a computer and a 3D printer, long after the original artist’s demise. However, we should note that it is a shame that the only example mentioned in the preamble is a creation dated from 2016 (created 7 years before the draft law). More contemporary examples would have been appreciated.
Through collective management, this proposal seeks to ensure fair and equitable remuneration for authors and artists of creation and interpretation, and to ensure the traceability of authors and artists whose work has been used by AI.
Articles of the draft law
The draft law is divided into four articles which act as amendments to existing articles of the Intellectual Property Code (IPC).
Preamble to Article L 131-3 of the IPC: Authorizing AI Integration of Copyrighted Works
The first change to article L 131-3 of the IPC – which deals with the transfer of author’s rights – involves adding a new paragraph. This new paragraph states that “the integration by artificial intelligence software of intellectual works protected by copyright, and their exploitation, is subject to the general provisions of the IPC, and therefore to authorization by the authors or right holders”.
Adding such a paragraph to a provision primarily focused on copyright assignment formalities raises questions about its appropriateness.
Moreover, it’s worth noting that the existing reproduction right may already cover aspects related to exploitation and authorization by the author. However, if this inclusion necessitates authorization from the original work’s author, it could become cumbersome in practice. Therefore, collective management, as seen in reprographic reproduction rights in France, might offer a more practical solution.
Finally, this amendment could conflict with the existing European (DIRECTIVE 2019/790 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 April 2019 on copyright and related rights in the Digital Single Market) and French (Article L122-5-3 IPC) provisions regarding the Text and Data Mining exception and limitation.
Addition of Nine Paragraphs to Article L 321-2 of the IPC: Authorship and the Role of Collective Management Organizations in AI Generated Work
Article 2 introduces nine new paragraphs into article L 321-2 of the IPC, as regards to the legal actions and roles of collective management organizations. These organizations handle copyrights on behalf of rightsholders in a collective manner.
The first paragraph of this amended article reads: “When the work is created by artificial intelligence without direct human intervention, the only rights holders are the authors or rightsholders of the works that made it possible to conceive the said artificial work”. Subsequent paragraphs aim to facilitate collective management of AI-generated rights and the distribution of corresponding remuneration by collective management organizations.
Once again, the inconsistency in codification is evident. First, the term “work” suggests that AI outputs are indeed copyrighted works (oeuvres).
The phrasing “Without human intervention” is not appropriate since nearly all works involve at least some human intervention.
Finally, this amendment assigns ownership of the work to the authors or rightsholders of the works that enabled the creation of the said artificial work. However, the new paragraph does not specify how the collective management organizations would identify those “authors or rightsholders of the works”. A possible approach could be to view each contributor of input data used in the AI’s training process as a co-author of the resulting work. This perspective acknowledges that every output from the AI is essentially a derivative of all its various inputs.
Thus, to enhance legal clarity, it might be more appropriate to create new articles specifically dedicated to the collective management of works generated by AI.
Amendment to Article L 121-2 of the IPC: Transparency and Authorship
Article 3 introduces a new paragraph into article L 121-2 of the IPC, which deals with the exclusive right of publication of a work (droit de divulgation).
This paragraph mandates the inclusion of “work generated by AI” and the insertion of the names of the authors of the works that lead to the creation of such work.
However, this paragraph suggests, once again, that AI works are protected by copyright as it is included in an article dedicated to one of the most important exclusive rights of the authors. In fact, article L 121-2 of the CPI predominantly addresses the authors’ right of disclosure.
More, while this new paragraph aims to distinguish AI-generated from non-AI-generated works, its placement in this article appears inappropriate. Creating a new article dedicated to this matter might offer better clarity.
Furthermore, the requirement to include the names of the authors of the original works raises questions about the existing provisions for protecting authorship rights.
Interestingly, these references seem to parallel the mandatory labeling of “retouched photograph” in commercial advertising, where models’ photographs are used.
Amendment to Article L 121-2 of the IPC (Article 4): The new Taxation System for AI Companies
Lastly, the bill concludes with article 4, amending article L 121-2 of the IPC – as regards to publication right – where the aforementioned concerns about codification consistency apply once more.
These three paragraphs introduce a taxation system, to be paid by the AI system-operating companies, to collective management organizations, when the origin of an AI work cannot be determined.
Article 4 notably draws a connection to article L 324-14 of the CPI, which addresses cases where identifying right holders is impossible. In such situations, the amounts collected are treated as non-distributable funds, the allocation of which appears to be guided by collecting societies’ general policies. This proposed law goes a step further by converting these non-distributable funds into a tax designed to promote creative endeavors. As it stands, this paragraph seems to establish a tax that most creators will never benefit from.
More, the risk here is that AI companies will cease to provide services in France.
Final Thoughts: Balancing Act in Adapting Copyright Law for the AI Age
The bill aims to adapt copyright law to the AI era, addressing author remuneration through a collective management system. However, it has notable shortcomings and lacks clarity, particularly regarding how it handles exceptions like parody or pastiche. While it takes steps towards necessary legal reforms, it leaves many questions unanswered and may require additional refinement to be truly effective.
Web 3.0 and the metaverse represent a new era in the evolution of the Internet, marking a transition from a static, information-centered web to a dynamic and immersive space. These technologies not only push the limits of online interaction but also redefine how we perceive and engage with the digital world. The metaverse, in particular, offers a parallel universe where individuals can interact, work, play, and experience environments in virtual settings. This technological advancement comes with new ways of conceptualizing ownership, identity, and community in the digital world.
At the heart of the metaverse economy are NFTs (Non-Fungible Tokens) and cryptocurrencies, redefining ownership and value in the digital space. NFTs, in particular, have become synonymous with digital ownership, enabling the purchase, sale, and collection of artworks, multimedia content, and even virtual land. Meanwhile, cryptocurrencies offer a secure and decentralized transaction method, essential in a world where physical borders are increasingly irrelevant. Together, these technologies facilitate a dynamic and constantly evolving digital market, propelling the metaverse beyond a mere leisure space into a viable commercial platform.
Emerging Intellectual Property Challenges in the Metaverse
Navigating Copyright Protection In the Metaverse
In the metaverse, copyright issues take on a new dimension. The ease with which digital content can be copied and modified raises concerns about copyright protection.
Existing copyright and image rights legislation applies in the metaverse. This means that when a company creates an NFT incorporating music, for example, for an event in the metaverse, the company must obtain the copyright for this music. Creating NFTs without the necessary rights could result in liabilities for the creator and potentially infringe the rights of those who market them.
Although there is not yet an apparent practice for determining responsibilities in the metaverse, it is likely that there will be in the near future. Those who own NFTs that violate third-party intellectual property rights could lose this ownership (or even the NFT itself could lose value, as the market will know that such an intangible asset has inherent liability).
Additionally, creators and businesses operating in the metaverse must navigate a complex legal framework. They must ensure that their creations do not infringe on others’ copyrights and, at the same time, protect their own works against counterfeiting and unauthorized use. This task is made even more difficult as copyright laws vary considerably from country to country.
Trademark Challenges in the Virtual Spaces
The reality created by the metaverse has opened new business opportunities for companies by breaking down territorial barriers, increasing brand reach to previously inaccessible consumers, and consequently expanding sales and services in both the physical and virtual worlds. While bringing a new market with new connections and possibilities, the metaverse also creates new legal situations that must be carefully evaluated.
When registering a trademark, it is necessary to indicate the category of products or services for which the trademark registration is requested. Trademark law only protects signs as they guarantee the origin of a product or service, not the signs themselves. Therefore, the principle of specificity is fundamental.
However, the metaverse is a virtual environment where physical goods, such as clothing or bags, do not circulate. This raises the question of whether the owner of a trademark registered for products in the category of bags, for example, could exercise their rights in the metaverse environment even though they have not registered their trademark for products covering the class of NFTs, perceived as lines of code.
Some believe that the classification of products and services is insufficient to guarantee trademark protection in the metaverse. In reality, case law (notably the metabirkin case) suggests that a consumer purchasing a clothing item in the form of an NFT (lines of code), which closely resembles a well-known earlier brand in the textile market, will logically assume that the physical world brand has expanded into the digital world.
The mere possibility of characterizing a risk of confusion in the consumer’s mind between NFTs and earlier trademarks demonstrates that an unregistered brand for virtual products could still be protected in the metaverse. However, this argument should be nuanced, as in this hypothesis, the brand in question was a renowned brand.
Instead of risking your brand’s protection by relying solely on reputation, a more conservative legal strategy is recommended, involving obtaining trademark registrations for the digital environment.
Protecting Design And Technological Innovations
The rapid evolution of immersive reality technologies, blockchain, artificial intelligence, interconnectivity, among others, are key to the metaverse bringing about the social revolution it has promised in the coming years. Those close to technological developments will be better positioned to benefit from these advances and identify opportunities in this new world.
In addition to technological innovation, the metaverse allows for numerous advances in aesthetic innovation. A product with an innovative design has relevant appeal and economic value, and it can reach other dimensions in this immersive experience, where forms and colors can be explored without the limitations of the physical world.
Technological innovations in the metaverse can thus be protected by patents, a legal instrument that guarantees an exclusive right over new technology. The main objective is to support technological evolution, as with market exclusivity, the patent holder can recover the investment applied in research and development and reinvest the amount in new developments, thus generating a self-sustaining cycle of innovation. Patents are also a source of technological information, and their content can serve as a basis for other innovations to develop. Consequently, patents can stimulate the development of new technologies that will improve the metaverse in the coming years.
On the other hand, aesthetic innovations can be protected by industrial design registrations. Monetizing a product with a remarkable design in the metaverse or even the layout of applications will be strengthened with adequate legal protection, capable of preventing inappropriate use by third parties.
Contractual Considerations and Licensing In the Metaverse
Given that the metaverse is an entirely decentralized platform without a single owner or dominant operator, how can we ensure that licenses are fair and transparent? The internet has brought challenges in this regard, particularly concerning the legitimacy of contracting, the limits of protection, the place of operation, and the determination of responsibilities.
Fiscal Implications and Taxation
From a fiscal perspective, assessing the nature of transactions in the metaverse will determine the applicable treatment, jurisdiction, applicable rates, and possibly compensatory planning with other transactions.
However, is a transaction in the metaverse a sale or a license? Is it a national or international transaction? Does it fall under consumer law or B2B law?
Regarding Existing Contracts
In the case of existing ongoing license contracts, will it be necessary to execute contractual modifications to accommodate the metaverse? Will clauses such as licensed objects, time limits, territoriality, ownership limits, collaboration in creation, and forms of remuneration need to be revised in the new contractual environment of the metaverse?
These are questions that must be studied on a case-by-case basis, without legislative or regulatory definitions of the metaverse. This makes the licensing of Intellectual Property assets a major challenge and an excellent opportunity for the virtual world.
While the metaverse offers opportunities for creative developers, businesses, and individuals, it can also present a complicated legal effort for commercial management in this new environment. In the field of intellectual property asset licensing, the metaverse is a dynamic environment that leads us to question whether contractual practices are in line with rights already guaranteed to holders. Obtaining effective legal advice will help individuals and businesses navigate these nuances.
Challenges of the Metaverse for Intellectual Property Lawyers and Industrial Property Advisors (CPI)
The metaverse redefines how we interact with technology, each other, and the digital world in general. This rapidly evolving virtual space poses new challenges for intellectual property law specialists and industrial property advisory firms, who play a crucial role in navigating the legal complexities of this environment.
Role of Intellectual Property Law Firms and Industrial Property Advisory Firms in Navigating the Metaverse Legally
Experts in industrial property rights and intellectual property law are on the front line to help companies navigate the complex legal framework of the metaverse. With the emergence of new forms of digital property, such as NFTs, and the popularization of augmented and virtual reality, issues of copyright, trademarks, patents, and image rights are becoming increasingly pressing.
These experts must not only understand the technical aspects of these new technologies but also anticipate legislative developments and the legal implications they entail. They are obligated to provide strategic advice to protect their clients’ creations and innovations in this new domain, while respecting the rights of others.
Intellectual property specialists help their clients understand the importance of registering and protecting their intellectual property rights from the outset of their venture into the metaverse. This includes registering trademarks, protecting copyright on digital works, managing designs & models, and handling patents for innovative technologies.
For example, in trademark law, it is necessary to ensure that the client has properly registered their trademark for virtual products to better defend themselves in a counterfeiting dispute or to prevent a competitor from registering the trademark for virtual products before them. In copyright law, the intellectual property law expert must ensure that the client has intellectual property rights for digital use, particularly to avoid an infringement action from the right holder.
Proactive monitoring of IP violations and the implementation of protective measures are also crucial. This may involve monitoring metaverse platforms to detect and act against unauthorized or counterfeit uses of IP assets.
Advice for Companies Wishing to Invest in the Metaverse
For companies eager to dive into the metaverse, collaboration with specialized intellectual property firms is essential. These firms can provide advice on how to effectively protect their digital assets, manage risks related to intellectual property, and navigate constantly evolving regulations.
Companies must be aware that traditional business practices may not apply as is in the metaverse. Therefore, brand and marketing strategies must be adapted to align with the unique characteristics of this virtual space.
Securing Innovation and Ownership: Navigating the Future of Intellectual Property in the Metaverse
In conclusion, as the metaverse continues to expand its virtual horizons, it brings forth unprecedented challenges and opportunities in the realm of intellectual property. It necessitates a proactive, informed, and adaptive approach from creators, businesses, and legal professionals.
As they navigate this intricate new world, understanding and safeguarding intellectual property rights is paramount to fostering innovation, maintaining competitive advantage, and ensuring a fair, thriving digital economy.
By staying ahead of evolving legal frameworks, embracing new protective strategies, and fostering collaborative relationships with specialized IP firms, stakeholders can not only mitigate risks but also harness the full potential of the metaverse. As we step into this new era, the intersection of technology, law, and creativity will become increasingly complex yet undeniably exciting, shaping the future of digital interaction and ownership.
For expert guidance and strategic solutions tailored to your unique needs in the Metaverse and Intellectual Property matters, contact the Dreyfus law firm team today. Let us help you navigate this new digital frontier with confidence and security.
Introduction: The intersection of language and law in EU Trademark Disputes
In a landmark decision on July 26, 2023, the European Union Court underscored the critical role of linguistic analysis in adjudicating cases of brand confusion. This case, involving the nuanced understanding of language in trademark law, sets a precedent in legal circles and offers a comprehensive look at the intricate nature of trademark disputes within the EU’s dynamic linguistic landscape.
Background: The Case of Frutania vs. Frutaria
In 2013, Markus Schneider filed a trademark application for EU figurative trademark “Frutania,” covering various products and services. Frutaria Innovation, SL, holder of the EU figurative mark “Frutaria” registered in 2010, filed an opposition.
In July 2023, the European Union Court acknowledged a risk of confusion between the “Frutania” trademark application and the earlier “Frutaria” mark. The Court indeed emphasized that, in assessing confusion between two EU trademarks, linguistic knowledge must be considered.
Linguistic Considerations: Assessing the Risk of Brand Confusion
A crucial argument in this case involved the definition of the concerned public. The group of consumers considered relevant in assessing the risk of confusion can be challenged, namely the Bulgarian, Croatian, Slovak, Czech, Polish, Slovenian, Hungarian, Estonian, and Finnish populations, for whom the use of the term “frutaria” was arbitrary and therefore distinctive.
The inclusion of the Lusophone and Hispanophone public in this assessment is also questionable. These populations perceived in the earlier “frutaria” mark an evocation of the Spanish term “frutería” (grocery, fruit store). Therefore, the overall and particularly conceptual differences between the “Frutaria” and “Frutania” signs are significant enough to exclude any risk of confusion.
Nevertheless, in its decision, the appeal board indicated that it could not be assumed that consumers in Slavic-speaking countries as well as in Hungary, Estonia, and Finland had sufficient knowledge of Spanish to understand that the term “frutaria” was close to “frutería,” which designated a fruit store.
Legal Precedents and Linguistic Proficiency
Jurisprudence confirms this viewpoint, asserting that mastery of a foreign language cannot be generally presumed (cf. particularly the decision of the European Union Tribunal of September 13, 2010, in the case Inditex/OHIM v. Marín Díaz de Cerio (OFTEN), Case T-292/08 [paragraph 83]).
Although it is generally accepted that most consumers know basic English terms, it seems that this is not the case for the Spanish language. Consequently, the verbal element “frutaria” is distinctive and predominant compared to the simple figurative elements, which are therefore secondary.
In this particular case, the tribunal noted that the Appeal Board had correctly assessed the intrinsic distinctiveness of the earlier mark, taking into account the importance that the word element of the earlier mark could have for the part of the relevant public composed of Bulgarians, Croatians, Slovaks, Czechs, Poles, Slovenians, Hungarians, Estonians, and Finns. Therefore, the tribunal concluded that the Appeal Board had made no error in judgment by focusing its examination of the risk of confusion on this specific part of the relevant public.
Implications: A Refined Approach to EU Trademark Law
The Tribunal, referring to relevant jurisprudence, highlighted that when an earlier mark on which opposition is based is a European Union mark, it is not necessary for the risk of confusion to exist in all Member States and all linguistic areas of the European Union. The unitary nature of the European Union trademark allows it to be invoked against any subsequent trademark application that could potentially infringe on the protection of the first mark, even if the confusion is limited to a specific part of the European Union.
In other words, just because the risk of confusion could be ruled out for Lusophone and Hispanophone countries, based on conceptual differences, does not mean it did not exist for other countries of the European Union.
Conclusion on Linguistic Factors in EU trademarks
The EU Court’s decision in July 2023 marks a pivotal moment in trademark law, weaving linguistic intricacies into the fabric of legal reasoning. As businesses continue to operate in an increasingly globalized market, the significance of linguistic considerations in legal strategies becomes ever more pronounced. This case not only sheds light on the complexities of trademark disputes but also establishes a precedent for incorporating linguistic analysis into legal practice within the European Union and beyond.
The history of Birkenstock dates back to 1774 when Johann Adam Birkenstock opened his first shoemaker’s shop in Frankfurt. In 1897, the Birkenstock company was founded with the aim of creating comfortable shoes for workers and people with foot problems. The brand’s popularity grew in Germany and expanded internationally in the 1960s. Today, Birkenstock is synonymous with comfort and foot wellness. The Birkenstock sandal has become an icon of fashion and comfort, thanks to its cork and latex footbed that is moulded to the contours of the foot.
The brand’s outer sole pattern, which features a wave-like design, has become iconic and has been the subject of several legal decisions in German and European courts. Birkenstock has sought to protect this pattern as a trademark.
Background:
In 2016, Birkenstock obtained position trademark protection in Germany for a distinctive pattern on the sole of its shoes (registration number 3020150531693).
– A position trademark is a type of trademark that is characterised by its specific position on a product or its packaging, rather than by traditional word or figurative elements.
A third party applied to the German Patent and Trademark Office to cancel the trademark, claiming that it lacked distinctiveness and clarity for goods without soles.
– Distinctiveness refers to a trademark’s ability to distinguish itself from similar goods or services on the market.
The German Patent and Trademark Office declared Birkenstock’s trademark invalid for lack of distinctiveness.
Birkenstock appealed against this decision to the German Patent and Trademark Court (Case No. 28 W (pat) 24/18).
The German Patent and Trademark Court dismissed Birkenstock’s appeal on the basis of existing case law on design trademarks. The court confirmed that the mark lacks distinctiveness for goods with soles or related to soles as well as for goods not related to soles.
– A trademark must be sufficiently unique to enable consumers to associate it with a particular commercial source. It is this distinctiveness that gives a trademark its value and legal protection.
Alongside these proceedings in Germany, a similar decision was made at the European Union level. The General Court of the European Union confirmed the cancellation of Birkenstock’s trademark for the entire European Union (Case T-365/20).
Ultimately, Birkenstock’s position trademark was declared non-distinctive for the relevant goods in both Germany and the European Union.
However, if Birkenstock’s orthopaedic shoe does not gain consensus, it remains a fashion icon eligible for copyright protection. The company has already obtained protection for its ‘Madrid’ model. Birkenstock still has options to safeguard its intellectual property assets.
Why was Birkenstock’s position trademark rejected?
The issue of the distinctiveness of this trademark was examined by the German Patent and Trademark Court, which confirmed the lack of distinctiveness.
In assessing distinctiveness, the court reiterated the consistent case law on trademarks: the criteria for assessing distinctiveness are the same for all types of trademarks.
However, the German Office emphasises that signs consisting solely of the shape or three-dimensional representation of goods are not necessarily seen by the public in the same way as traditional verbal or figurative trademarks, which are independent of the appearance of the marked goods.
If goods or their packaging lack figurative or verbal elements, the average consumer will not usually infer commercial origin from their shape. Therefore, a trademark only has inherent distinctiveness if it significantly departs from the standards or practices of the relevant sector and fulfils its essential function of identifying commercial origin.
When evaluating whether a product design is considered common by the public, it is important to focus primarily on the relevant sector. Designs from adjacent sectors may also be considered if, under specific circumstances, the relevant public may shift its perception to the relevant sector.
The Court applied these criteria to Birkenstock’s trademark.
– The judges found that soles often have a profile for better grip, whether for work, leisure or sport. The Court referred to various sole designs available prior to the filing date. Based on these earlier designs, the Court held that the contested trademark was merely a variant of soles with criss-crossing and wavy lines.
– Birkenstock argued that its design gave the impression of bones. The Court rejected this argument because the relevant public would not see the pattern as resembling bones.
– Therefore, the trademark was found to be devoid of any distinctive character in respect of goods which have or are (part of) a sole.
The example of Birkenstock highlights the challenge of securing trademark protection for the appearance of goods in Europe. To be considered distinctive, patterns that constitute a trademark must be unique, unusual, or have gained recognition and a well-known character through extensive use. As pattern trademarks gain popularity and companies seek to safeguard them, courts may need to clarify the criteria for distinctiveness of these types of trademarks. The decision in the Birkenstock case issued by the CJEU may impact the assessment of other trademarks.
Our site uses cookies to offer you the best service and to produce statistics, and measure the website's audience. You can change your preferences at any time by clicking on the "Customise my choices" section.
When browsing the Website, Internet users leave digital traces. This information is collected by a connection indicator called "cookie".
Dreyfus uses cookies for statistical analysis purposes to offer you the best experience on its Website.
In compliance with the applicable regulations and with your prior consent, Dreyfus may collect information relating to your terminal or the networks from which you access the Website.
The cookies associated with our Website are intended to store only information relating to your navigation on the Website. This information can be directly read or modified during your subsequent visits and searches on the Website.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Dreyfus is concerned about protecting your privacy and the Personal Data ("Data"; "Personal Data") it collects and processes for you.
Hence, Dreyfus complies every day with the European Union legislation regarding Data protection and particularly the European General Data Protection Regulation Number 2016/679 of 27 April 2016 (GDPR).
This Privacy Policy is aimed at informing you clearly and comprehensively about how Dreyfus, as Data Controller, collects and uses your Personal Data. In addition, the purpose of this Policy is to inform you about the means at your disposal to control this use and exercise your rights related to the said processing, collection and use of your Personal Data.
This Privacy Policy describes how Dreyfus collects and processes your Personal Data. The collection happens when you visit our Website, when you exchange with Dreyfus by e-mail or post, when exercising our Intellectual Property Attorney and representative roles, when we interact with our clients and fellow practitioners, or on any other occasion when you provide your Personal Data to Dreyfus, in particular when you register for our professional events.
The history of Birkenstock dates back to 1774 when Johann Adam Birkenstock opened his first shoemaker’s shop in Frankfurt. In 1897, the Birkenstock company was founded with the aim of creating comfortable shoes for workers and people with foot problems. The brand’s popularity grew in Germany and expanded internationally in the 1960s. Today, Birkenstock is synonymous with comfort and foot wellness. The Birkenstock sandal has become an icon of fashion and comfort, thanks to its cork and latex footbed that is moulded to the contours of the foot.
