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The EU AI Act and Its Implications for Global Business

Written by Dreyfus14/10/2024

Rapid artificial intelligence (AI) technology development has created the need for clear and harmonized regulation to ensure ethical use, safety, and innovation. The European Union’s AI Act (EU AI Act) is poised to become the world’s first comprehensive legal framework regulating AI, impacting not only European businesses but global industries operating within or interacting with the EU market. This article delves into the key aspects of the EU AI Act and its far-reaching implications for global business operations.

 

Overview of the EU AI Act

The Scope of the AI Act. The EU AI Act categorizes AI systems into different risk levels—unacceptable, high, limited, low, and minimal—each requiring varying degrees of regulatory scrutiny. The legislation primarily targets high-risk AI systems that significantly impact people’s safety, rights, and freedoms. These include AI applications in healthcare, transportation, and critical infrastructure sectors.

Compliance Requirements for High-Risk AI Systems. Under the AI Act, businesses must adhere to stringent compliance requirements for high-risk AI systems. These compliance requirements include conducting conformity assessments, ensuring robust risk management systems, and maintaining transparency and accountability throughout the AI lifecycle. Companies must also prepare for regular monitoring and audits, which designated authorities across EU member states will enforce.

 

Implications for Global Businesses

Direct Impact on AI Developers and Providers. Any company developing or providing AI systems based within or outside the EU must comply with the EU AI Act if its products are used within the Union. This extraterritorial reach of the regulation means that global businesses, particularly those in tech-heavy industries, must prioritize legal compliance to avoid penalties, including fines of up to 6% of their global annual turnover.

Increased Costs of Compliance and Innovation. The need for AI system conformity assessments, data governance policies, and risk management frameworks can significantly improve operational costs. For non-EU businesses, navigating the complex compliance landscape may require engaging local legal and technical experts, further driving up costs. However, these compliance measures also encourage responsible AI development and consumer trust, potentially opening new markets for companies able to demonstrate adherence to ethical AI standards.

 

Strategic Considerations for Businesses

Risk Mitigation and Liability. Understanding the liability risks associated with AI implementation under the EU AI Act is critical for global businesses. Companies must proactively establish comprehensive risk management processes to mitigate the legal and financial risks tied to AI systems that are deemed high-risk. Compliance can help reduce liability exposure and enhance operational security.

Competitive Advantages of Early Compliance. While compliance with the EU AI Act may initially seem burdensome, businesses that invest in early compliance efforts stand to gain significant competitive advantages. These include improved consumer trust, better market positioning in Europe, and reduced risk of facing regulatory penalties. Additionally, businesses that adhere to the Act’s principles will likely see enhanced brand reputation globally as ethical AI becomes a growing concern for consumers and regulators worldwide.

 

Broader Global Impact of the EU AI Act

Influence on Other Jurisdictions. As the EU AI Act sets a global precedent, other jurisdictions, including the U.S., China, and the UK, are expected to follow suit with their own AI regulations. This cascading effect may lead to the global harmonization of AI laws, pushing businesses to simultaneously adapt their AI strategies in multiple markets.

The Role of AI in International Trade. AI has become integral to various industries, and its regulation will affect international trade agreements, especially those involving digital products and services. Global companies must prepare for AI-related clauses to appear in trade negotiations, with compliance with the EU AI Act becoming a critical element of future international agreements.

 

Conclusion

The EU AI Act represents a landmark regulatory effort that will have significant implications for global businesses. While the compliance requirements are rigorous, they offer opportunities for companies to lead in the AI space by embracing ethical AI practices. The key for businesses is to view this regulatory shift not as a burden but as a pathway to building trust and ensuring sustainable growth in the ever-evolving world of artificial intelligence.

 

Our expertise in intellectual property enables us to guide companies through the regulatory challenges related to artificial intelligence. The European AI Act imposes strict requirements for compliance, transparency, and risk management, particularly for high-risk AI systems. With our deep understanding of intellectual property and emerging technologies, we help our clients navigate this complex framework, protecting their innovations while ensuring they meet the new standards.

 

Dreyfus Law Firm partners with an international network of lawyers specializing in Intellectual Property.

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What are the benefits of IP litigation and how can you make the most of it?

Written by Dreyfus13/03/2023

litigation, Lady of Justice, Justitia, statueIntellectual property (IP) litigation is an important tool for protecting and enforcing rights in IP assets, such as patents, trademarks, and copyrights. When an IP owner’s rights are infringed or someone else is using their IP without permission, the owner may have the right to take legal action against the offender. IP litigation can help the owner to protect their valuable IP assets, as well as their reputation and market position.

 

The benefits of IP litigation include:

 

1. Protection of IP Rights IP litigation is an effective way to protect your IP assets from infringement. It allows you to enforce your IP rights and stop unauthorized use of your IP, while also deterring future infringers. By filing a lawsuit, you can also seek damages or other relief to make up for any losses caused by the infringement.

 

2. Strengthening of IP Rights Through the process of IP litigation, you can also strengthen your IP rights. This is because the court may issue an injunction that requires the infringing party to stop using your IP or to pay you for any profits they made from using your IP. This can help to bolster your IP rights and make it more difficult for others to infringe on them in the future.

 

3. Deterrence of Unlawful Use The threat of IP litigation can also act as a deterrent to others who may be considering using your IP without permission. By demonstrating that you are willing to take legal action to protect your IP rights, you can create a deterrent effect that can help to discourage others from infringing on your IP.

 

4. Valuable Legal Remedies IP litigation can also provide you with valuable legal remedies that can help you to recover the costs of defending your IP rights. In some cases, you may be able to recover damages or other relief to compensate you for any losses caused by the infringement.

 

In addition to these benefits, IP litigation can also provide you with a sense of satisfaction that you are protecting your IP rights and standing up for what is right. It can be a powerful way to make sure that your IP is respected and protected. So how can you make the most of IP litigation? Here are a few tips:

 

1. Understand Your IP Rights The first step to making the most of IP litigation is to understand your IP rights. You should be familiar with the different types of IP protection and what rights they provide, as well as any related laws or regulations. This will help you to identify potential infringements and determine whether or not you have the right to take legal action.

 

2. Seek Professional Advice It is also important to seek professional advice when it comes to IP litigation. An experienced IP lawyer can provide you with guidance on your legal rights and remedies, as well as help you to pursue a successful legal action.

 

3. Take Action Quickly Acting quickly is key when it comes to IP litigation. You should take action as soon as you become aware of a potential infringement, as the longer you wait, the more difficult it may be to prove your case.

 

4. Gather Evidence The more evidence you have to support your case, the stronger it will be. This means gathering evidence such as documents, emails, and other records that show the infringement occurred.

 

By following these tips, you can make the most of IP litigation and protect your valuable IP rights.

 

 

 

 

 

We offer our clients a dedicated and unique experience of expertise that is necessary for the exploitation of intangible assets.  We will also endeavor to keep you informed and up-to-date about intellectual property and digital economic issues through our articles and newsletters written by the Dreyfus Legal Team.

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How does the Chinese Hangzhou Internet Tribunal decision set the pace for copyright protection on NFTs platforms?

Written by Dreyfus08/11/2022

NFT HANGzouNFTs, or non-fungible token is one the biggest digital revolutions of our century. An NFT is a digital token operating on a blockchain.

 Because it is non-fungible, an NFT guarantees someone’s property over a digital artwork. When it is combined with an artwork, an NFT can be considered as a certificate of authenticity.

 

Although an NFT is a revolution within the digital world, some issues may be raised. In fact, what about artists’ copyrights in this digital environment? How can artists’ copyrights be protected within NFT platforms? Can an NFT platform be held liable for copyright infringement? There are many proposals for reasonable responses called forth by intellectual property attorneys.

Copyright law is meant to protect artists’ rights over their artistic or literary artworks. Particularly, copyright law protects books, musical artworks, paintings but also database.

Everybody can sell or buy digital artworks on a blockchain. Therefore, what about platforms’ liability? If every one of us can sell or buy artworks, there is absolutely no guarantee that the artworks has been put on the platform by its author. As such, it is fairly common that an artwork put on a blockchain infringes the author’s copyrights. In such case, it is crucial that the author defends for their rights in collaboration with the intellectual property attorneys.

The answer to know whether an NFT platform can be held liable for copyright infringement has been raised in the case  Shenzhen Qice Diechu Culture Creation Co. Ltd v. Hangzhou Yuanyuzhou Technology Co., Ltd a.k.a “Chubby tiger having its shot”.

In this case, Ma Qianli, the author of the cartoon at stake gave to Shenzhen Qice Diechu Culture Creation an exclusive license to use his copyright over the “Chubby tiger having its shot” artwork. Defendant, Hangzhou, owns an NFT platform. This latter authorized a third party to sell NFT derivative products of the “Chubby tiger having its shot” artwork. Shenzhen then brought a lawsuit for copyright infringement against the NFT platform.

This decision is important for two reasons. Firstly, it is the first decision where copyright infringement is involved on an NFT platform in China. Secondly, the action is brought against an NFT platform.

The first question raised by this case deals with NFT platforms liability. By definition, a blockchain is decentralized. That means that nobody nor any entity checks the identity of a person.

Therefore, NFT platforms do not check the paternity of an artwork linked to an NFT. A person can sell or buy NFT-artworks and it is not even the author nor a licensee. Hence, counterfeit artworks can freely circulate on NFT platforms, infringing artists/creators’ copyrights.

Because it is difficult to sanction platforms when a content is illicit or infringe someone’s copyright, it is rare for authors to assert their rights on the Web 3.0.

In this case, defendant raises some arguments to avoid liability. First of all, defendant mentions that his platform is a third-party platform. Artworks are downloaded by the platform’s users. This latter cannot be held liable for its users’ activities. Thus, the platform put the concerned NFT on its address form. Therefore, it fulfilled its notification/deletion obligation. At last, a platform cannot divulgate which blockchain has been used nor where the NFT is.

The Internet Tribunal refuses the arguments raised by defendant. In fact, it considers that the platform at stake is a professional platform. Consequently, the Tribunal highlighted a major distinction between NFT platforms. Here, the platform is considered as being a professional NFT platform. The underlying idea is that as soon as a platform is qualified as professional, its liability can be engaged for copyright infringement.

Even though the Tribunal does not when  an NFT platform is a professional, it can still be deduced. In fact, the platform at sake is qualified as professional because it proposed transactional services. Consequently, it is a professional NFT platform when it invoices certain percentages fees for each transaction.

Because a transaction has been made and because the platform obtained a financial gain, the platform must fulfil higher obligations when it comes to copyright protection. For example, a professional platform must proceed with preliminary examination regarding the digital artworks’ property that are sold or bought on their platforms. This activity may be efficiently conducted in collaboration an intellectual property attorney.

The Tribunal here considers that the platform failed its duty of care. In this regard, when an NFT platform is professional, it must put in place reasonable measures to check the artworks’ property once they are put on a blockchain by asking to the seller/artist to prove the artworks’ copyright.

The first Chinese NFT copyright infringement was made against a platform since the appellant could not obtain the name of the seller. Claimant, during the proceeding, asked for the seller’s identity in order to sue him for copyright infringement. Consequently, this case is not over yet.

Nevertheless, this case set the pace as for NFT platforms. This decision can be seen as a warning for every NFT platforms which will have to be careful regarding each NFT digital artworks sold or bought on their platforms.

 

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Copyright in front of artificial intelligence

Written by Dreyfus13/12/2021

IA et droit d'auteurFollowing a decision by the Shenzhen Nashan People’s Court in China, a work generated by an algorithmic program has been deemed eligible for copyright protection.

 

1. An infringement action of a work produced by an automated program

 

Tencent, a company specializing in internet services and online advertising, published on its website a financial report article written by an algorithm-based intelligent writing system and data set, called « Tencent Robot Dreamwriter ».

After noticing that the article was reproduced without permission on a website operated by Shanghai Yingxun Technology, Tencent filed an infringement action against the said company.

However, the underlying and main issue in this dispute is whether a work generated with the help of artificial intelligence can adequately benefit from copyright protection.

The issue has been a constant source of controversy on an international scale for several years, and the Beijing Internet Court ruled in 2019 that only legal subjects expressly specified by Chinese copyright law should be considered as appropriate authors of works. Therefore, algorithmic programs are excluded. The court had also investigated on the process of generating the artificial intelligence at issue.

 

 

2. A precarious apprehension of creations generated by artificial intelligence

 

According to Revised Issues Paper on Intellectual Property Policy and Artificial Intelligence of May 21, 2020 prepared by the WIPO Secretariat, a distinction should be made between « AI generated », which does not require human intervention and which can modify its behavior during an operation in accordance with the application of various factors and « AI assisted », which conversely requires material human intervention and/or direction.

Regarding the European Union, the Delvaux Report adopted in February 2017 by the European Parliament proposed to grant a « sui generis » intellectual property protection to works created by artificial intelligence and to reflect on the criteria of proper intellectual creation applicable to copyrightable works created by computers or robots.

3. Towards an evolution of copyright in the field of artificial intelligence

 

The case opposing Tencent to Shanghai Yingxun Technology is the first litigation to support copyright protection for a work generated by an algorithmic program.

During the proceeding, Tencent explained the entire process of the “creative team” used to generate and publish the article with the assistance of the “Dreamwriter” robot.

The court carried out a reasoning based in particular on two points of assessment.

Firstly, attention was classically paid to the form of expression, the content and structure of the article that have been judged original.

Then, the court turned to the generation process of the article. In this regard, it focused on the presence of factors indicating the creator’s individual selections, judgment and required skills, recognizing that the creation process differed from the ordinary process of creating written works.

This court decision tends to favor, eminently, a possible extension of copyright protection to works generated by artificial intelligence on an international scale. However, reflections on the criteria that could be specifically retained in order to appreciate the benefit of the protection of these works coming from a creative process that has been excluded until now, will continue to feed, and even prolong, the debate.

In order to offer our clients a unique expertise, necessary for the exploitation of intangible assets, we keep you informed about intellectual property and digital economy issues through articles written by Dreyfus’ legal team.

 

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What are the new provisions of the April 17, 2019 European Directive on copyright?

Written by Dreyfus03/09/2021

author rightsAside from including related rights for press publishers and press agencies, and rebalancing relations between rights holders and content sharing platforms, the April 17, 2019 Directive strengthens the position of authors vis-à-vis assignees. These last provisions about copyright have just been transposed into French law.

 

The transposition marks a significant step forward in protecting creators and cultural organizations in the digital age. While cultural pieces of work are becoming more and more accessible online, this provision reaffirms the importance of copyright.

 

Copyright begets fair remuneration of artists and creative enterprises in the member states of the European Union. The Directive’s purpose is to establish a global framework, where intellectual creators, authors, content editors, service providers and users will all be able to benefit from clearer, modernized and adapted rules of the digital era. As such, the Directive aims to ensure that online press publishers and authors/artists receive better renumeration – especially when leading platforms such as Google News or Youtube use their work. The adoption of this Directive is the result of negotiations that lasted more than two years.

 

What are the new provisions of the Directive?

The Directive aims at modernizing the European Union copyright law, taking into account the increase in digital and cross-border uses of protected content. This directive mainly provides:

 1) measures to adapt certain exceptions and limitations to the digital and cross-border environment, among which are exceptions concerning:

– text and data mining (TDM exception),

– the use of works in digital and cross-border teaching activities, in particular the accessibility needs of people with disabilities, and

– conservation of cultural heritage;

2) measures to improve licensing practices and ensure more extensive access to content, which consist of harmonized rules facilitating:

– the exploitation of works that are not commercially available,

– the extension of collective licensing contracts by collective management organizations to rightsholders who have neither authorized nor excluded the application of these mechanisms to their works,

– the negotiation of agreements to make works available on video-on-demand platforms (VoD platforms), and

– entry into the public domain reproduction of works of visual art at the end of the initial term of protection; and

3) measures to ensure fair market practices with respect to copyright, liability of content sharing platforms, and contracts for the remuneration of authors and performers.

Similarly, Article 15 of the said Directive creates a new neighbouring right for press publishers. Remember, neighbouring rights are exclusive rights, more recent than copyright, and are exercised independently of the latter. They were born from the need to make the auxiliaries of creation benefit from making their works available to the public. Finally, article 17 (ex-article 13) created a liability regime adapted for internet content sharing platforms, while establishing a new exception for the monopoly of rightsholders.

 

What are the new obligations of content-sharing platforms?

The targeted main players (Title IV of the Directive) are platforms for mass sharing of copyright and related rights protected content – such as such as Google, YouTube, Dailymotion, or Facebook. The Directive more precisely defines it as:

 

“The provider of an information-focused service, whose main objective or one of its main objectives is to store and give the public access to a significant quantity of copyrighted works  or other protected subject matter  that has been uploaded by its users, which it organizes and promotes for profit.”

 

There are cumulative criteria that determine their obligations. Platforms that have been active for less than three years and have an annual turnover of fewer than 10 million euros will be subject to reduced obligations. On the other hand, platforms exceeding this limit will be subject to a proactive obligation provided for by the Directive regarding works distributed without authorization. The Directive excludes from the liability regime non-profit online encyclopedias such as Wikipedia, non-profit educational and scientific directories, open-source software platforms, online marketplaces like Amazon, Cdiscount or eBay, and individual cloud storage services with no direct access to the public. With regard to the regime applicable to content sharing platforms falling within the above-mentioned scope, the most important thing is to have the rightsholders’ authorization, which allows copyrighted work to be available to the public through, for example, a license agreement.

 

Can platforms be exonerated from liability?

Platforms may be exonerated from liability if it meets the following three cumulative conditions:

– That it has “made its best efforts” to obtain permission from the rightsholder to release the work to the public,

– That it has “made its best efforts” “in accordance with high industry standards of professional diligence” to ensure the unavailability of the copyrighted work once the unauthorized communication of it has been reported by the rightsholder by means of “relevant and necessary information,“

– That it acted promptly to withdraw or block access to the work upon receipt of “sufficiently motivated” notification from the rightsholder.

 

Finally, the platforms must be transparent towards rightsholders about the measures taken within their area of responsibility. This Directive gives certain platforms greater responsibility for the content they publish. Meanwhile, the liability system for online selling platforms, where counterfeits abound, will not change. Their status as host or publisher will always determine their liability regime.

In France, in addition to the debates surrounding compliance with the Intellectual Property Code, it will be interesting to see to the court’s decisions in the months to come.

We are a law firm with a unique expertise in the exploitation of intangible assets. We keep you updated on issues related to intellectual property and the digital economy through articles written by the Dreyfus legal team.

 

 

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Transposition of the AVMS Directive in France: what impact on the audio-visual sector?

Written by Dreyfus29/07/2021

Zapping sur une plateforme de vidéo à la demande Directive (EU) No. 2018/1808 of the European Parliament and of the Council, adopted on November 14, 2018 and amending Directive 2010/13/EU (AVMS Directive), has (finally) been transposed into French law, via the Order of  December 21, 2020. This directive is part of a context of international competition on the one hand and profound transformation of the audio-visual and the evolution of demand on the other hand.

Redefinition of the essential concepts of the 2010 European Directive

The Order deals with essential concepts that one needs to fathom to understand the issues at stake. First of all, what are audio-visual media services (AVMS)? There are two types:

  • Linear television services (traditional services);
  • Non-linear services, e.audio-visual content-on-demand services or media-on-demand services (MOS). These SMAD services allow the customer to choose both when and what they wish to watch.

The Order also calls into question certain principles, such as the old principle of media chronology resulting from a 1960 legislation. This legislation coordinated the diffusion of films, after their release in cinemas, to optimise their profitability.

Modernisation and adaptation of the rules to the transformation of audiovisual services

The Order transposing the Directive has implemented several measures aiming to ensure the effective contribution by market players and to protect both the minors and the public.

The system of financing national cinematographic and audio-visual creations has indeed been completely revised by the Directive. From now on, the country of origin principle applies: each EU Member State may exercise its production contribution regime to foreign VOD (Video On Demand) channels and platforms offering a service on the territory of that Member State. 

While this principle is a leading point of the reform, the AVMS Directive also acknowledges the profound changes in multimedia by extending audio-visual regulation to video-sharing platforms, social networks and live video platforms. This way, Brussels wishes to protect minors against certain harmful content and harmonise the legal framework of the European audio-visual sector.

Reform of the 1986 Act and safeguarding the French cultural exception

France wanted to implement the directive and collaborate in the European project while defending the French cultural exception. The Order is mainly concerned with reinforcing the rules of transparency for service publishers and with establishing more complete objectives, such as the inclusion of the system of funding for production (particularly independent production) over time, but also the guarantee that French broadcasters and global platforms are on an equal footing.

Article 19 of the Order, therefore, now requires “publishers of television services and on-demand audio-visual media services aimed at French territory” “when they are not established in France and do not fall under the jurisdiction of France”, to financially contribute in the same way as French publishers do.

Article 28 substantially reforms the principle of media chronology and now allows the industry players to negotiate an agreement with the professional organisations within six months to reduce broadcasting delays.

Extension of the powers of the CSA and protection of minors

As platforms are now part of the regulatory landscape, the CSA has seen its competencies and powers broadened and, in particular, has been assigned two new essential missions: the accessibility of AVMS programmes, and the protection, in particular of minors, against content that is violent, incites hatred or constitutes a criminal offence. The CSA will then have jurisdiction if the head office or a subsidiary of the platform is established in France.

Furthermore, the CSA is also in charge of ensuring that publishers have issued guidelines of best practice (particularly regarding food advertising to which minors could be exposed) and highlighting audio-visual services of general interest on new audio-visual platforms.

In addition, the Order completes Article 15 of the 1986 Act by prohibiting in programmes not only incitement to hatred and violence but also a provocation to commit acts of terrorism, while entrusting the CSA with the task of ensuring that these provisions are respected.

 

If the Oder is already a significant step forward, the implementing decrees are just as important. In particular, on June 23, 2021, the audio-visual media services on-demand decree (or SMAD decree n°2010-1379 of November 12, 2010) was published in the French Journal Officiel, which probably represents the most valuable step in the project to modernise the financing of French and European audio-visual services. Among other things, SMADs will have to devote at least 20% of their turnover in France to finance the production of European or original French cinematographic and audio-visual works.

 

Finally,  negotiations are underway between TV channels and producers’ representatives about reviewing a second decree known as “DTT” (Digital Terrestrian Television decree No. 2010-747 of July 2, 2020), which defines the production obligations of TV channels. The points discussed concern particularly the sharing of copyright on works between producers and TV channels and the lasting of these rights.

 

We are a law firm with a unique expertise in the exploitation of intangible assets. We keep you updated on issues related to intellectual property and the digital economy through articles written by the Dreyfus legal team.

 

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Fragrance and Intellectual Property: which protection?

Written by Dreyfus27/07/2021

 Fragrance is nowadays a very important economic interest whether in art, luxury or marketing industry.

Faced with such interests, how does intellectual property try to protect it

 

The olfactory work: an intellectual work bearing the mind of the author?

 

The Intellectual Property Code aims, in a non-exhaustive way, the traditional forms of artistic expression (literary, graphic, musical creation, etc.), as long as they satisfy the conditions of originality and tangible form introduced by French law.

Beyond these traditional forms of artworks, case law studied a certain number of creations to determine whether they could be qualified as “intellectual work», such as recipes for example. Among them, olfactory work has been the subject of many discussions. In a world where materiality is omniscient, the fragrance tries, not without difficulty, to find a place in the “Panthéon des œuvres d’art”.

According to perfumers and other “aficionados”, fragrance is an art. However, the French Court de Cassation does not share the same opinion, remaining recalcitrant to the idea of elevating it to the rank of intellectual work and consequently, to grant the perfumer the author status.

Perfume fades, but this should not systematically exclude it from the copyright sphere. Indeed, the fragrance is by nature fluctuating, perishable. Yet, intellectual property does not, as a matter of principle, exclude ephemeral works from copyright protection.

The French Cour de Cassation assumes that the fragrance of a perfume which proceeds from the simple implementation of know-how, does not constitute within the meaning of articles L112-1 and L112-2 of Intellectual Property Code a creation of an expression form which can benefit from the copyright.

In other words, the Court assimilates this process of perfume creation to a simple implementation of a know-how, not protectable by French copyright, and rejects the identification of a form of creation through the sense of smell.

By taking this position, the French Cour de Cassation met with resistance from trial judges and doctrine (TGI Bobigny, 28 nov. 2006 ; CA Paris, 14 fevr. 2007 ; CA Aix-en-Provence, 10 dec. 2010).

Several judgments, on the contrary considered the fragrance as an olfactory form of creation whose originality cannot be denied. The judges also considered the fragrance originality through the novelty of its smell, the association of its scents. Faced with this craze, the Cour de Cassation reviewed its position on the matter but without opening the door to the protection for olfactory creations, considering that: copyright protects creations in their sensitive form, as long as it is identifiable with sufficient precision to allow its communication (Cass. Com., 10 déc. 2013, n° 11-19872).

The protection of fragrances by copyright remains a controversial debate. Only a reversal of case law could settle the issue in favour of perfumers, a position more than expected given the increasingly difficult protection of manufacturing secrets.

Today, it is only on the grounds of parasitism and unfair competition that the perfumer can rely on in case of unauthorized reproduction of the fragrance, as shown by the Lancôme decision. However, those grounds remain less advantageous than the infringement action, as it will be up to the plaintiff to prove the existence of a fault.

 

 

The fragrance: a protection by trademark law?

 

In the scope of industrial property, the fragrance can be apprehended and protected as a trademark.

Indeed, a fragrance can be registered as an olfactory trademark before the Intellectual Property French Office (INPI). Since olfactory memories are the longest to last, according to most scientists, more and more companies want to awaken this sense for the consumer by associating a pleasant smell with their products.

For a long time, this registration of an olfactory trademark was a problem since it could not be represented graphically. Since March 23, 2016, the “Trademark Package” removed this requirement in favour of the olfactory trademark.

Henceforth, the trademark may be protected as soon as it can be represented in any appropriate form through available technology. However, in practice, the registration of olfactive trademarks remains unusual because of its complexity.

Even if the graphic representation required has been deleted, it is still complex to represent the essence of a smell – a chemical formula cannot characterize a perfume.  Furthermore, the trademark must be sufficiently distinctive to allow the consumer to identify the commercial origin of the goods and services covered by the smell; distinctiveness still difficult to demonstrate.

In parallel with trademark law, patent law can also be used to protect a smell, provided that it is new, industrially applicable and provides a solution to a concrete problem; conditions that are not necessarily easier to meet.

 

To conclude, fragrance protection is subject to many debates and difficulties. However, it is not impossible and some legal actors do not cease to claim this protection.

The importance of the olfactory cognitive memory, or the complexity and originality of the creation process, are the keywords defending the fragrance, subject of great legal attention.

 

 

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How to develop a reliable and flexible compliance strategy for intellectual property professionals?

Written by Dreyfus13/04/2021

With the rise of the digital age, setting up a reliable and effective compliance strategy as well as mobilizing the skills of professionals have become key factors in the company’s performance, particularly in the field of intellectual property. With the rise of the digital age, setting up a reliable and effective compliance strategy as well as mobilizing the skills of professionals have become key factors in the company’s performance, particularly in the field of ​​intellectual property.

From the outset, it seems important to remember that compliance includes all the processes intended to ensure that a company, its managers and its employees comply with the legal and ethical standards applicable to them.

FromLAW No. 2016-1691 of 9 December 2016 on transparency, the fight against corruption and the modernization of economic life.  on anti-corruption measures to the implementation of the Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (GDPR) of April 27, 2016, and including the duty of vigilance of parent companies and ordering companies (law of March 27, 2017) or the prevention of cyber risk (implementing decree of May 25, 2018 of the NIS directive), an undeniable operational impact on companies and their managers can be observed.

Likewise, the challenges and risks of intellectual property have increased in the virtual world. Domain names as well as social networks are likely to be the targets of multiple attacks.

The key challenges of compliance with regards to intellectual property risks (I) raise questions both about the practical consequences of compliance in all aspects of intellectual property the role of the “compliance officer” in this framework (II) and the role of the “compliance officer” in this framework (III).

The challenges of intellectual property compliance

The environment as well as legal decisions revolve around the long-term development of the company and justify the establishment of real legal engineering within companies whose intellectual property is decisive. This is the key challenge of compliance, which is both a framework for thinking and a method of solving problems, involving a large number of tools and components oriented by company strategy.

Legal, regulatory and fiscal constraints are increasingly stringent and make companies bear increased responsibility in case of negligence, or even simple inaction. In particular, the regulatory framework sets out increased requirements regarding the protection of consumers and personal data.

In the field of intellectual property, domain names are key assets to contemplate when analyzing the risks and drafting compliance plans. While they are a major asset, essential to the very functioning of the business (for example, for e-mail servers, they are also risk vectors: phishing, fraud, identity theft, forged e-mail …

Online fraud can lead to loss of turnover, endangerment of consumers, and if so, risks of civil or criminal liabilities of directors for non-compliance with enforceable laws and regulations. impact the stock market price, thus causing loss of customers.

It is therefore very important to put in place the appropriate strategies to anticipate dangers, react effectively in the event of a breach and ultimately protect the company.

The practical consequences of compliance in all aspects of intellectual and digital property

Compliance has an immediate impact on all aspects of intellectual property. Also, while the legislation is more and more restrictive for companies and intellectual property professionals, compliance requirements are reinforced. How to bring your company into compliance with the laws? What are the risks of not including the Internet in your compliance plan?

Beyond its legal meaning of compliance with the requirements of laws, regulations, Codes or even directives, compliance aims to protect the company and intellectual property professionals against any non-compliance with internal and external standards and its values. Intellectual property frauds are growing and becoming increasingly complex in the digital era, which requires taking action to mitigate risks for the company business, including in terms of compliance. Its objective is to avoid adverse consequences for the company and its managers, both financial and civil or criminal liability, or damage to image and reputation. It is ultimately part of a desire for lasting growth in all aspects of intellectual property, both in France and internationally.

To cope with these new standards, companies must put in place a governance policy capable of minimizing their exposure to risk vis-à-vis their customers, their shareholders, but also regulatory authorities.

To begin with, it is essential to identify the risks through the relevant audits.

Then, it is important to assess those risks and map them. The risk management policy shall be defined accordingly.

In particular, a policy for the management of Intellectual Property related risks calls for a virtually systematic surveillance system of trademarks among domain names.

 

The role of the “compliance officer”

The compliance officer must protect the company from any risk of non-compliance, and therefore ensure that the organization adopts good conduct in business practice, respects the rules of ethics and finally, complies with the various laws, regulations, or even European directives. It must therefore undertake a proactive approach, organize and implement the means necessary to comply with the regulations.

Likewise, it is important to anticipate risks: once they have been defined and supervised, the mission of the compliance officer being to protect the group and its reputation, he will have to analyze the rules and standards according to the context, the activity, and the business sector.

According to a study “Who are compliance professionals?” published on March 27, 2019 and carried out by the firm Fed Legal, 92% of compliance officers have a legal background. They are operational professionals who have a strategic vision as well as a multiplicity of soft skills, in particular an ability to persuade and an interest for teaching. In addition, 60% of compliance officers belong to legal services in which there are many recruitments, both in large and small companies.

When a company is questioned, the consequences are at the same time financial, commercial and human: the company reputation will suffer greatly. The compliance officer thus takes care of protecting his company from the financial, legal and reputational risks that it  incurs in the event that it does not comply with laws, regulations, conventions, or quite simply a certain code of ethics or professional conduct.

Dreyfus can assist you in the management of your trademarks portfolios in all countries of the world.  Please feel free to contact us.

 

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The impact of counterfeiting on consumers and businesses

Written by Dreyfus23/12/2020

 Published in June 2020, EUIPO’s “2020 Status on IPR Infringement” report shows that e-commerce has fostered the phenomenon of counterfeiting. The majority of counterfeit products come from Asia. These products are reconditionned in smaller boxes in countries such as Albania, Ukraine or Morocco.

The Covid-19 pandemic has not diminished this trend. On the contrary, the online shopping has increased the trend as stated in the “2020 Consumer Buying Behavior Report” of the company Intelligence Node tracing consumer’s behaviour.

Due to the forced closure of stores, consumers increased their online purchases. Thus, the counterfeiting phenomenon expanded, as well. According to this report, most consumers are attracted by a cheaper price, but they are completely unaware that they are buying a counterfeit product.

The report shows that:

– More than 50% of internet buyers search Google, Amazon and other marketplaces before buying. They look for the product description, features, price and possible discounts.

This is what can lead them to choose websites promoting counterfeit products, since:

– 70% of buyers opt for counterfeiting for price reasons.

– 82% of the buyers had indicated that they would continue to buy online even when the stores reopen.

In addition, a survey published by the French consumer association UFC- Que Choisir, on October 22nd, 2020, showed that online frauds, on an online purchase, are not always reimbursed by banks. Only one out of three frauds per year was reimbursed last year. The bank generally blamed the consumer for negligence.

The new DSP2 Directive (European Payment Services Directive 2nd version) requires that the transaction must be confirmed by the bank through a “strong authentication” system, when making an online purchase. The French authorities have given a deadline for the first quarter of 2021 for all the banks to be compliant.

In light of these elements, companies must actively protect their intellectual property rights, including property on the Internet, to avoid the drop in sales and the loss of customers.  Indeed, it is known that consumers who are victims of a scam will tend to turn away from the company whose products or services have been counterfeited.

An effective defence of the brand on the Internet is carried out through a strategy that includes prior searches and surveillance. The prior search provides a snapshot of the current situation of the trademark on the Internet (existing infringements, potential prior art in certain countries, etc.). The surveillance allows the detection of all domain name registrations reproducing or imitating the trademark, from the moment the surveillance is set up. It keeps in check any potential infringement as soon as it is detected.

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Audiovisual works: the protection of program titles by trademark law

Written by Dreyfus02/09/2019

Companies which specialise in the audiovisual sector often require protection for their program titles through trademark law. If granted, this protection obviously offers considerable advantages for the company, but it is necessary to take into consideration some limits to it.

 

  • The advantages of trademark protection

First, the term of protection of a title by trademark law. Trademark law initially grants protection for 10 years, but this term is renewable indefinitely (Art L712-1 CPI). Thus, provided the owner submits a renewal application within the time limit, the trademark can be protected indefinitely. Copyright, on the other hand, can grant protection up to 70 years after the death of the author of the work, but the ‘guarantees’ of protection may be less obvious than trademark law because there is no register of copyright.

On the other hand, while copyright imposes a condition of originality (Art.L711-2 CPI), trademark law requires a distinctive character (Art L711-2 CPI). Thus, if the title of TV show or audiovisual program is distinctive and acts as an indicator of origin, it may be protected. In contrast, for copyright, it is necessary to prove originality, which is more difficult to prove. Since copyright is not subject to registration, the condition of originality must always be demonstrated in the course of a dispute. Thus, copyright protection is never certain.

 

A title may be protected by trademark law if it does not directly designate the goods and services for which registration is sought. Thus, if the title is arbitrary, there is nothing to prevent the title from benefiting from this protection. Finally, it should be borne in mind that trademark protection is not an impediment to copyright protection; it is thus possible to combine both protections.

 

  • The limits of trademark protection

 

Some limitations to the protection of audiovisual programs’ titles by trademark law should nevertheless be noted. The protection conferred by trademark law grants a monopoly on the use of the registered terms (Art L-713-1 CPI) and therefore the right to oppose use by third parties. However, in order to do so, it is necessary to prove :

 

  • The use of the sign by a third party “as a trademark”

 

First, it must be proven that the use of the title by a third party was “as a trademark”. To illustrate this concept, we can refer to the judgment rendered about the series “Le Bureau des Légendes”. In this case, the Paris Court of First Instance (TGI) dismissed the infringement action brought against a book, using the title, devoted to the study of the series. The purpose here was not to offer goods and services designated in the registration, but simply to refer to the series as such (TGI Paris, réf., April 16, 2018, n°18/53176). Use as a trademark would have been in the context of the sale of derivative products in connection with the series.

 

  • A commercial use of the sign

 

Secondly, in order to oppose the use of a sign, the owner must provide proof of commercial use. This means that it is not sufficient to prove merely a reference to the title. The use must take place in the course of business and not only for illustrative purposes. There must be a genuine commercial link between the sign and the use made by a third party.

 

  • A risk of confusion in the mind of the public

 

Finally, the risk of confusion in the public mind must be shown. The use of the sign must raise doubts as to the origin of the goods and services offered. A trademark is intended to guarantee in particular the origin of the goods and service. Thus, the use of the sign by a third party must infringe this guarantee of origin, severing the direct link between the sign and its owner.

 

For instance, the judges considered that there was no likelihood of confusion between Canal+’s trademark “LE ZAPPING” and the trademark “LE Z#PPING DE LA TELE”. In view of the evidence provided, and the overall impression, there was no likelihood of confusion. The phonetic and visual differences of the two signs were sufficient to eliminate this risk (CA Versailles, 12th ch., July 3, 2018, n°18/02091).

 

However, the principle of speciality of the trademark may be used against  the owner of a trademark. Since a trademark is registered for specific categories of goods or services, the owner can only oppose the use of the sign for identical or similar goods or services. Thus, if a sign is used for a completely different area of activities, the owner will not be able to oppose this use of the sign. This was the case for Canal +, concerning its mark “LE ZAPPING”. The notoriety of this brand was certainly recognized by the Court, but only in the field of television broadcasts. Thus, it was not possible for Canal + to oppose the filing of a similar trademark for other categories of goods and services than those designated in registration of the trademark “LE ZAPPING”.

 

  • Conclusion

 

Trademark law grants additional protection to a title of an audiovisual program. It complements the protection that copyright can grant, in a more certain way through the requirement of registration. The point of filing a sign representing the title of an audiovisual work is therefore to acquire double protection, on both grounds. Admittedly, the conditions to be met in order to be able to bring an infringement action under trademark law may be difficult to achieve. Nevertheless, trademark law offers more means of action, and therefore of compensation for damage in the event of unjustified use by third parties.

Dreyfus law firm, expert in trademark law, will assist you in the management of your trademark portfolio.

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