Dreyfus

340 000 USD is the amount of damages claimed by the PhoneDog Company to a former employee who kept his account on the well-known social network Twitter after he quitted. The blogger Noah Kravitz used his account in order to post professional as well as personal tweets. 17 000 subscribers, also dubbed “followers”, were following daily PhoneDog_Noah’s posts. Said followers, according to the PhoneDog Company, are deemed to be a customer list comparable to a trade secret. Were all followers customers of PhoneDog or mere third-parties whom presence was alien to the activities conducted by the Company? Here lie the hurdles of this Complaint which was filed by the mobile phone Company before the United States District Court of the Northern District of California. The blogger argues that the Company gave him its endorsement and that he was allowed to retain the Twitter account provided he would post sporadically on the behalf of PhoneDog. Since then, the blogger modified his account into @noahkravitz.

The Court should assess if a list of followers may become the property of a company when the followers are aggregated in the course of employment. Miscellaneous commentators highlight that the mobile phone company must bring proof that followers are a trade secret which is highly controversial. The company contends that it spends a huge amount of money on the protection of its intellectual property rights. Astoundingly, the Complaint of PhoneDog has been lodged right after the blogger decided to sue his former company in order to obtain 15% of the revenue derived from the Twitter account.

The well-known blogger developed a relevant argumentation and claims firstly that followers thanks to their free will can decide to follow someone and that no pressure of any kind can be exerted on them. Moreover, aforementioned followers are not PhoneDog’s property as the terms and use of Twitter make it clear, it is Twitter which has the exclusive property of the accounts opened by subscribers. Lastly, Noah Kravitz raises a salient point. Followers cannot be deemed to be a trade secret as there are visible by each and everyone of us on the website, they are inherently public.

The issue which comes up in this case is that it is hard to delineate the property of each subscriber as far as social networks are concerned. Arguably, it is a sharp question to draw a distinction between the property on the content and the property of the account. The growing importance of bloggers within the Web 2.0 economy leads some companies to recruit bloggers who are famous on the web in order to lure customers. We cannot but think at Samsung Electronics which uses this method of recruitment in an incremental way. Theoretically speaking, in the US, when an activity is completed during the course of the employment said activity is deemed to be the property of the employer. Notwithstanding, when an account is opened on a social network platform in the sole goal to be a platform where the employee expresses himself on the vacuity of daily life and gives his point of view on some products owned by the Company for which he works, there is a grey zone which occurs.

The question of ownership of Twitter accounts which are kept by employees who change work have not be handled so far by any Court in the US. Notwithstanding, similar cases happened here and there. We cannot but highlight the situation of the international BBC correspondent Laura Kuenssberg who kept her Twitter account when she was employed later by ITV. Furthermore, it is the first time that a case can delineate the property of Twitter accounts which are used during the course of employment.
In the present case the Court must assess accurately the context which motivated the creation of the Twitter account. If said account was opened under the umbrella of PhoneDog the Court will probably issue a decision in favor of the mobile phone company. Conversely, if the account preexisted the employment of Noah Kravitz the property on the account will be more doubtful. An irenic solution will be to determine as soon as the contract of work is concluded between the parties where the property stands. Whatever the Court will issue, the bulk of commentators says that this decision is likely to be a precedent.

Click here to download the pdf version of this document

On June 20, 2011, the Internet Corporation for Assigned Names and Numbers (ICANN) approved the implementation of new generic Top Level Domains (gTLDs) (1) in addition to traditional domain names such as “.com”, “.org” or “.net”. In order to expand the market place, the ICANN program plans to allow applications for new domain name endings in almost any word.

Kurt PRITZ, ICANN’s Senior Vice President for Stakeholder Relations, testified on December 8, 2011 before the U.S. Senate Committee on Commerce, Science & Transportation that this will increase competition, choice and innovation (2). However, it seems that many questions remain unanswered regarding the protection of the rights such as trademark rights.

According to the numerous vociferous oppositions addressed to ICANN, it seems that its program for further TLD needs to be improved (3). Among the opponents, it is worth noting the Association of National Advertisers’ (ANA) initiative. Indeed, Robert LIODICE, CEO of ANA recently proposed “a way forward which could bring together the parties” (4).

Thus, “to address in a positive way critical concerns that have been aired and acknowledged in a public and transparent fashion over the course of the past five months”, the ANA notably suggest that the following notifications be observed:

– “All commercial stakeholders concerned about protecting their brands will be given the opportunity to have those brands registered, without cost, on a temporary “Do Not Sell” list to be maintained by ICANN during the first application round”.
– “Any interested party which does not want to have its brands on the “Do Not Sell” list and would rather apply for a TLD would be free to do so”.
As the beginning for introducing new TLDs is scheduled on January 12, 2012, ANA urged that its proposition be accepted immediately.
To be continued…

(1) ICANN Board Resolution 2011.06.20.01, at http://www.icann.org/en/minutes/resolutions-20jun11-en.htm
(2) PRITZ Kurt, Hearing on Expansion of Top Level Domains before the U.S. Senate Committee on Commerce, Science & Transportation, December 8, 2012, at
http://republicans.energycommerce.house.gov/Media/file/Hearings/Telecom/121411/Pritz.pdf
(3) CADNA, U.S. Senate Holds Hearing on ICANN’s New gTLD Program, CADNA Sees Hearing as Springboard for Reform of New gTLD Policy, December 8, 2011, at http://www.prnewswire.com/news-releases/cadna-sees-senate-hearing-as-springboard-for-reform-of-new-gtld-policy-135272028.html
(4) ANA, Open Letter to the Board of Directors, Internet Corporation for Assigned Names and Numbers, January 9, 2012, at http://www.ana.net/content/show/id/22757

Click here to download the pdf version of this document

On March 2011, EU Patent system gets the go-ahead, and the enhanced cooperation procedure will be used. Said procedure allows groups of Member States to integrate policies further, even where others Member States do not agree. In short, it permits to avoid deadlock. Spain and Italy have chosen not to participate in the system because Italian and Spanish are not recognized as official languages. It seems that Italy, but also Spain might slowly abandon its resistance.

The EU patent package includes an EU regulation covering the Unitary Patent, its language regime and an international agreement on the Unified Patent Court. An EU patent will permit to obtain simpler, cheaper and more expedient patent for companies and individuals to get EU-wide protection for their inventions. EU patent will promote small and medium-sized enterprises (SMEs) innovation. Nowadays, it’s ten times more expensive to obtain national patent than a US patent. Thus, the agreement is a major step for EU industry’s competitiveness.

According to the Polish Presidency of the Council, “the compromise was broadly accepted in substance – but further work is still needed”. After the Competitiveness council in Brussels on December 5, 2011, only the seat of the Central Division of the Unitary Patent Court needs to be decided. Three candidates compete for the seat of this main litigation court: Paris, the UK and Germany. The seat of the second Instance Court of Appeal will be in Luxembourg. Lisbon and Ljubljana are set for the seat of Arbitration and mediation center.

The legal Affairs Committee validated on the agreement on December 20, 2011. Next step before the agreement comes into force, it must be endorsed by the full Parliament, possibly during the plenary session in February.

To be follow…

Click here to download the pdf version of this document

A pharmaceutical laboratory which copies one of his competitor’s product’s packaging for a same market place not only commits unfair competition act but also free riding. As the Paris Court of Appeal said: “this breaks the equality between the various competitors, distorts normal market, causing a disturbance to business”.

After underlining the importance of the user’s information and the need to look for the risk of confusion, the Court reminds that a well-based unfair competition action is valued via evidence arrays. However, the Court of Appeal partially invalided the judgment of first instance which considered that the competitor didn’t commit free riding. Indeed, according to the Paris Court of Appeal: “the appellant, substantially drawing from his competitor’s product’s packaging […] appropriated an individual economic value and the result of research and specific design work, providing a competitive advantage”.

So, free riding is invoked in France even if the two laboratories are competitors on the same market place. Copying a product’s packaging really constitutes unfair competition but it seems useless to consider the free riding theory which is a sanction of taking over others’ reputation without any potentially common market.

Click here to download the pdf version of this document

December 6, 2011 marks a turning point for the domain names with the extension “.fr”. Indeed, the French Association for Internet Naming in Cooperation (AFNIC) issued the holder of a domain name with new registration rules for French extensions. The new naming policy for French network information center (1) published on November 25, 2011, entered into force yesterday.

Those eligible for registration or renewal of a domain name with an extension “.fr” before, are not the same today.

Indeed, only natural persons residing or having their corporate seat or principal place of business in the territory of one member States of the European Union, or the territory of Iceland, Liechtenstein, Norway, or Switzerland will now be eligible for registration of a domain name with the extension “.fr”.

Therefore these new conditions restrict the access of people living outside the European Union or countries covered by the new naming policy for French network information center. However, persons who already held domain names with the extension “.fr”, will be eligible for renewal of their domain names.

An initial assessment conducted on December 6, 2011 at 1:30 pm, counted 3500 records from 70 registrars. The domain names’ owners are divided up into France at 62% (Reunion Island at 9%, Germany at 13%, the UK at 6%, Belgium at 3%, Italy at 2% (2) …

Click here to download the pdf version of this document

(1) AFNIC, Charte de nommage de l’Association Française de Nommage Internet en Coopération, Règles d’enregistrement des extensions françaises, http://www.afnic.fr/medias/documents/AFNIC-charte_2012_.pdf
(2) Premier bilan de l’ouverture à l’Europe des .fr, wf, .re, .yt, .pm, .tf, http://www.afnic.fr/fr/l-afnic-en bref/actualites/actualites-generales/5439/show/premier-bilan-de-l-ouverture-a-l-europe-des-fr-wf-re-yt-pm-tf.html

We have the pleasure to announce the publication of the book « Trademarks and Internet » by Nathalie Dreyfus. This book offers an analysis of the evolution of French and International laws related to the protection and the defense of trademarks on the Internet in both Web 1.0 and Web 2.0 levels. It is available as from December 8, 2011.

After discovering on October 11, 2011 that their administrative rights on their Facebook page did no longer exist, the German drug maker Merck KGaA began legal action against Facebook.

The German firm has since filed a petition (1) to allow pre-action disclosure with the Supreme Court of the state of New York. Merck KGaA intends to demand details as to why Facebook will not allow them to use the “facebook.com/merk” username for their Facebook page: “Facebook is an important marketing device, the page is of great value to Merck” (2).

If any clear information had been provided about what happened, the said webpage is now used by the German firm’s US rival Merck & Co. In spite of Merck KGaA entering into an agreement with Facebook for its exclusive use in March of last year, the page on the social-networking site is filled with content related to the U.S. compagny. The Merck KGaA counsel exposes that: “Merck is considering causes of action for breach of contract, tortuous interference with prospective business advantage, and/or conversion. Merck requires pre-action disclosure from Facebook to determine the nature of the misconduct, to frame the pleadings, and to identify the proper defendant or defendants” .

This action based on an apparent takeover of a Facebook page is enlightening in two major ways. First, it confirms that social media usernames are today as important as domain names or trademarks. Second, this calls attention to a legal blur in this area: UDRP (Uniform Dispute Resolution Policy) rules don’t apply to social media URLs yet. Indeed, the decision to declare that a username would have been usurped or not will only lie on Facebook.
It is worth noting that the two Mercks became separate companies under the Treaty of Versailles, as part of Germany’s reparations after World War 1, each owning rights on the Merck’s trademark in different geographic areas.
To be continued…

(1) New York State Supreme Court, New York Country (Manhattan), Index Number Search: 11113215-2011
(2) Ibid

Click here to download the pdf version of this document

New type of outsourcing of computing resources which enables to access, via Internet and by means of a simple web browser, multiple services, the Cloud computing constitutes a major economic stake but also raises new questions, notably regarding personal data protection.

The debate launched by the French data protection authority (CNIL) is to define the concept of Cloud computing. In this respect, the CNIL believes that any definition should be based on the features specific to Cloud Computing.

The CNIL is also concerned with the qualification of stake holders. Although the service provider is usually qualified of a subcontractor or data processor, the CNIL wonders if, in some cases, both the client and the service provider should be jointly qualified data controllers. For instance, the CNIL refers to the necessary assessment of the extent to which the service provider controls the data.

The question of the identification of the applicable law is addressed to stakeholders. Especially, regarding the criterion of the “processing means”, the CNIL whishes to know which other criteria would enable the determination of applicable law.

The CNIL also addresses the issue of instruments which could provide a framework to regulate data transfers to non-EU third countries failing to provide any adequate protection. In this regard, the CNIL suggests the use of Binding Corporate Rules, especially in the field of subcontracting, which is bound to know a great development in the next few years.

Beyond the problematic of the personal data transfers, the CNIL raises questions about security, especially confidentiality and reversibility, and wonders how those requirements should be materialized in contracts. It also addresses the issue of risk assessment before switching over to Cloud computing.

The replies to the call for contributions are expected for November 27, 2011. There is no doubt the CNIL is bound to play a critical role in the interaction between Cloud computing and personal data protection.

Click here to download the pdf version of this document

Manwin Licensing International company just sued the ICANN and ICM Registry for antitrust violations. ICM Registry is the sole operator of the .XXX registry. In its complaint filed on November 16, 2011, Manwin denounced their union which would have the effect of eliminating competitive bidding and reducing the market for .XXX registry services. Manwin also evokes the hostage-taking of trademarks owners who had to make defensive registrations to fight against cybersquatting. It would affect both competition and consumers. In addition, without any other authorized operators of the .XXX registry, the price for “defensive registration” is high set and the profit for those registrations is expected to be $200 millions in annual.

Click here to download the pdf version of this document

Following a decision from the French Competition Authority sanctioning Pierre Fabre Dermo-Cosmétique on October 29, 2008, the later lodged an appeal. The Court of Appeal of Paris addressed a reference for a preliminary ruling to the ECJ to know whether a total and absolute prohibition on selling contract products on the Internet, imposed on selected distributors within the framework of a selective distribution network, constitutes an infringement of Competition law of the European Union. Pierre Fabre Dermo-cosmétique manufactures and markets cosmetics and personal care products. In the agreements with distributors, a clause required sales to be made exclusively in a physical space, in which a qualified pharmacist must be present.

On October 13, 2011, the ECJ (1) confirmed the French Competition Authority decision.

First of all, the ECJ stated that a clause in a selective distribution contract banning the distributors of the company Pierre Fabre Dermo-cosmétique from selling its products online amounts to a restriction on competition by object (2), unless that clause is objectively justified, in particularly regarding to the properties of the products at issue. From there, the ECJ held that the clause requiring sales of cosmetics and personal care products to be made in a physical space where a qualified pharmacist must be present is not objectively justified in the context of the sale of non-prescription medicines.

Then, such a ban may be the object of an exemption. As to whether a selective distribution contract may benefit from the vertical block exemption (3), the ECJ held that the provisions of the vertical block exemption could not apply to a selective distribution agreement which contained a clause prohibiting de facto the use of the internet as a method of marketing the contractual products. However, such contract may benefit from the individual exemption (article 101.3 of the TFEU) provided that the conditions of that provision are met. This element will be decided upon by referring French Court of Appeal. Its decision is expected in the course of the first semester of 2012.

(1) ECJ, 13 oct. 2011, aff. C 439/09, Pierre Fabre Dermo-Cosmétique c/ Président de l’Autorité de la concurrence e.a.
(2) Art 101 of the TFEU (Treaty of the Functioning of the EU of 1st December 2009
(3) Commission Regulation (EC) No 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices (OJ 1999 L 336, p.21).

Click here to download the pdf version of this document