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Background and Origins

On June 9, 2023, France enacted Law No. 2023-451, a pioneering piece of legislation aimed at regulating the commercial practices of influencers and protecting social media users. This law represents a significant step in regulating commercial influence and combating the abuses by influencers on various digital platforms.

Definitions and Objectives

In recent years, the sector of commercial influence has seen exponential growth but also significant deviations, ranging from the promotion of dangerous products to deceptive commercial practices. The Directorate General for Competition, Consumer Affairs, and Fraud Prevention (DGCCRF) conducted several investigations revealing increasing deceptive commercial practices. Simultaneously, the Professional Advertising Regulatory Authority (ARPP) had already established good practice rules and created an Observatory for Responsible Influence in 2019. However, these measures proved insufficient, prompting legislators to intervene more rigorously to regulate commercial influence and combat its abuses.

This new legislation is noteworthy for its role in regulating concepts increasingly integrated into our daily lives. Article 1 of the law precisely defines the term “influencer” as follows: “Individuals or legal entities who, for a fee, use their notoriety with their audience to communicate electronically to the public content aimed at directly or indirectly promoting goods, services, or a cause engage in the activity of commercial influence”. Additionally, the activity of influencer agents is now regulated by Article 7, which defines them as intermediaries representing influencers or facilitating their relations with advertisers while ensuring the compliance of their activities with the regulations in force.

In France, where the number of influencers is estimated at around 150,000, the behaviours of some have highlighted the need for stringent regulation to protect consumers, especially the younger one, who are highly susceptible to these new forms of advertising. With this context, the law mandates that platforms hosting influencer content identify and remove illegal materials while ensuring the transparency of commercial posts.

Influencers must now establish written contracts with advertisers, explicitly specifying the terms of their collaboration to ensure clarity and protection. Moreover, the law requires increased transparency: any publication must clearly indicate whether it is an “advertisement” or a “commercial collaboration” to avoid any confusion among consumers, in accordance with Article L. 121-3 of the Consumer Code.

Additionally, this legislation continues the efforts of the October 29, 2020, law by enhancing the protection of all sector actors, including minor influencers. Dedicated measures aim to secure the activity of child influencers on all digital platforms such as Instagram, Snapchat, TikTok, and extend the provisions initially provided for minor YouTubers by the October 19, 2020, law. Thus, these young influencers now benefit from the protections of the Labor Code. Their parents or legal guardians are required to sign contracts with advertisers, and a portion of the income generated is reserved for their future in the form of a nest egg.

Violations of these rules can result in severe penalties, including imprisonment of up to two years and fines of up to 300,000 euros. The law also establishes joint liability between the influencer, the advertiser, and their agent, ensuring that victims of abusive commercial practices can obtain effective redress.

Assessment After Several Months of Implementation of French Law No. 2023-451

Since its implementation, French Law No. 2023-451 has resulted in numerous sanctions against influencers for deceptive commercial practices. In response, online platforms have enhanced their monitoring policies to align with the new legislative standards.

Nevertheless, this law has encountered criticism from many content creators, who view it as an overly stringent government intervention. They contend that the swift enactment of this legislation may stifle creativity and innovation within the influencer marketing industry.

In response to these criticisms, a code of conduct for influencers has been developed. Although useful, this guide does not fully meet the legal requirements of Law No. 2023-451 and does not have the same legal standing as the legislation itself. However, it plays an important educational role by raising awareness among influencers about transparency and consumer protection issues. It also provides detailed explanations and practical tools, such as contract templates and compliance checklists.

In addition, the European Commission has expressed reservations about this law, suggesting that it may conflict with the Digital Services Act (DSA) and that it did not follow the notification procedure required by the Commission. As a result, the DDADUE law was promulgated on 22 April 2024 with the aim of revising the basic articles of the influencer legislation. This reform aims to align French legislation with European standards, including the E-Commerce Directive and the DSA, in order to ensure consistent regulation within the European Union.

Conclusion

Law no. 2023-451 represents a major step forward in the regulation of the commercial influence sector in France. While criticisms remain, the need to protect consumers and ensure greater transparency in the practices of influencers justifies these stringent measures. Future adjustments, in particular through the DDADUE law, will better harmonise French regulation with European standards and ensure uniform consumer protection across the European Union. Despite the criticism, the need to protect consumers and promote transparency in influencers’ advertising practices justifies the adoption of strict measures. Nevertheless, this regulation raises questions about its compliance with European directives, particularly with regard to freedom of expression and digital innovation.

The legal debate surrounding deceptive trade marks has taken on new significance with a preliminary question recently referred to the Court of Justice of the European Union (CJEU). This question focuses on the precise definition of a deceptive trade mark, particularly when the misleading information pertains not to the characteristics of the products or services but to the company itself.

Background of the Case

The case involves the French company Fauré Le Page, initially known for selling weapons and ammunition, as well as leather accessories. Founded in 1716 in Paris, the original Maison Fauré Le Page ceased operations in 1992, after which all its assets were transferred to its sole shareholder, the Saillard company. In 1989, Saillard filed an application for the French trade mark “Fauré Le Page,” covering products such as firearms and their parts, as well as leather and imitation leather goods.

In 2009, this trade mark was sold to a new entity, Fauré Le Page Paris, established that same year. This company subsequently filed, in 2011, two applications for French trade marks, both containing the words “Fauré Le Page Paris 1717” and covering various leather goods. However, these trade marks were contested by the company Goyard ST-Honoré, which sought their cancellation on the grounds that they were misleading, based on the old Trade Mark Directive (Directive 2008/95/EC, replaced by Directive (EU) 2015/2436).

Legal Framework

European trade mark legislation, particularly Article 4(1)(g) of the Trade Mark Directive (Directive (EU) 2015/2436), stipulates that a trade mark may be refused registration or annulled if it is “of such a nature as to deceive the public, particularly as to the nature, quality, or geographical origin of the goods or services.” Additionally, Article 20(b) of the same directive provides for the revocation of a trade mark if, after its registration, it becomes deceptive due to the use made of it by its proprietor or with the proprietor’s consent.

The main issue is whether a trade mark can be considered deceptive when it conveys false information not about the characteristics of the products or services, but about the attributes of the company itself, such as its founding date or age.

The Decision of the Court of Appeal and the question asked by the French Supreme Court (Cour de Cassation) to the CJUE

The Court of Appeal of Paris ruled that the “Paris 1717” trade marks was invalid. It found that the mention “Paris 1717” referred to the location and date of establishment of the company, which could mislead the public into believing in the continuity of the company’s operations since that date and the supposed transfer of know-how from the original Maison Fauré Le Page to Fauré Le Page Paris. This judgment was based on the fact that the original company had ceased its activities in 1992, while the new entity was founded in 2009.

However, Fauré Le Page Paris appealed this decision to the Cour de Cassation, arguing that Article 4(1)(g) of the Trademark Directive required deception regarding the characteristics of the products and services, not the qualities of the trade mark owner, such as the company’s founding year.

The Preliminary Question to the CJEU

Faced with this interpretation of the law, the Cour de Cassation decided to refer a preliminary question to the CJEU. It asks whether a trade mark can be considered deceptive when the false information concerns the age, reliability, and know-how of the manufacturer, rather than the characteristics of the goods themselves. Specifically, it poses two questions to the CJEU:

1. Should Article 4(1)(g) of Trademark Directive be interpreted to mean that a reference to a fictitious date in a trade mark, conveying false information about the age, reliability, and know-how of the manufacturer, is sufficient to establish the existence of actual deception or a serious risk of deceiving consumers?

2. If the answer to the first question is negative, should that article be interpreted to mean that a trade mark can be considered deceptive if there is a likelihood that consumers will believe that the trade mark owner has been producing these goods for centuries, thereby conferring a prestigious image on them, when this is not the case?

The outcome of this case could have significant implications for companies using historical references in their branding strategy. If the CJEU concludes that such a practice is deceptive, it could broaden the grounds for annulment of trade marks to include false information about the company itself, not just the products or services.

There is already precedent in European case law. For example, in the W. F. Gözze Frottierweberei and Gözze case (C-689/15), the CJEU ruled that for a trade mark to be deceptive, it must, by itself, create a risk of deceiving consumers, regardless of the use made of it after registration.

Furthermore, if the preliminary question had been posed under Article 20(b) of TMD3, which focuses on deceptive use of the trade mark after registration, the answer might be different. This article does not limit deception to the characteristics of the goods or services but could include misleading information about the company.

In any case, if the geographical origin of goods and services can be considered an important characteristic under Article 4(1)(g) of the Trademark Directive, why not the founding date of the company? Both are intangible properties, but they can significantly impact the perceived quality of goods and services and consumers’ purchasing decisions.

Future Implications

The decision the CJEU makes in this case will be crucial. It could redefine the legal criteria surrounding the notion of a deceptive trade mark, with potential repercussions for branding strategies, particularly in the luxury sector, where history and heritage play a key role. Companies may need to reassess their branding strategies to ensure that any historical or prestigious references are not perceived as misleading by consumers.

It is essential for companies to take a proactive approach to trade mark management, ensuring that the historical or prestigious information they use does not mislead consumers. The CJEU’s decision could also have an impact beyond Europe, influencing trade mark practices globally.

This case highlights the increasing importance of protecting consumers against misleading commercial practices and underscores the need for companies to maintain full transparency in their brand communication.

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In a context where environmental awareness is continuously growing, the demand for eco-friendly products is intensifying. This trend has led to a proliferation of brand names suggesting eco-friendliness. However, it has become difficult for the public to distinguish between brands genuinely committed to environmental efforts and those merely using “green” vocabulary to deceive consumers.

Indeed, in its impact assessment report accompanying the proposal for a Directive amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and better information, the European Commission’s Regulatory Scrutiny Board (RSB) noted that over 53.3% of environmental claims analyzed within the EU were found to be vague, misleading, or unfounded, while 42% lacked any tangible evidence. This is why the European Union has taken firm measures to regulate these practices.

The Rise of “Green” Trademarks

More and more consumers are prioritizing eco-friendly products. This growth in demand has pushed brands to reposition themselves, emphasizing their environmental commitments.

Brands have responded to this demand by choosing brand names using environmentally oriented vocabulary and incorporating green colors into their logos. Expressions like “green,” “sustainable,” “eco-friendly,” “natural,” or “biodegradable” are frequently used. This marketing approach, aiming to evoke a positive image and meet growing consumer expectations, is also found in logos incorporating leaves, trees, the planet, or green or blue colors to reinforce this image.

In 2021, a study carried out by the EUIPO through the European Observatory on Infringements of Intellectual Property Rights examined the increasing frequency with which goods and services specification of EUTMs reflect issues related to environmental protection and sustainability. An algorithm was developed to search among the more than 65 million terms contained in EU trademark (EUTM) applications filed over the years to identify those containing at least one “green” term. More than two million EU trademark applications filed with the EUIPO since it began operation in 1996 were considered.

The study shows that the number of “green” EUTM filings has increased significantly since the office began its activities in 1996, both in absolute terms and as a proportion of all EUTM filings.

Green EUTM Filing, 1996-2020 (EUIPO)                   Green EUTM filings as a share of all EUTM filings, 1996-2020 (EUIPO)     

However, trademark registration applications that specifically include direct environmental claims can be refused. These refusals are usually based on the descriptive nature of the mark, although there may also be another reason related to the misleading nature of the trademark.

Therefore, the use of unjustified green trademark will lead to accusations of greenwashing.

Indeed, with the explosion of green marketing, greenwashing practices have also multiplied, attracting the attention of regulators, legislators, and potential litigants such as competitors, customers, or consumer protection organizations.

Greenwashing

Greenwashing is the use of ecological terms or symbols without them corresponding to actual practices. The goal is to give a falsely eco-friendly image to attract consumers. Brands that engage in greenwashing seek to capitalize on the growing market for eco-friendly products without genuinely investing in environmentally friendly practices.

In this context, the European legislator has intervened again with Directive 2024/825 of February 28, 2024, amending Directives 2005/29/EC and 2011/83/EU on unfair commercial practices. This directive is in line with the European Green Deal and the European Circular Economy Action Plan. It aims to “enable consumers to make better-informed business decisions to promote sustainable consumption, eliminate practices that harm the sustainable economy, and divert consumers from sustainable consumption choices.” It creates an action plan for the green transition, targeting greenwashing with three principles. Firstly, brands must be able to prove all their environmental claims. Secondly, the claims must be validated by an independent body. Finally, consumers must receive clear and reliable information. Member States have a 24-month period to transpose the directive into their national laws from March 6, 2024.

France had already introduced provisions to specifically sanction greenwashing statements from January 1, 2023, with Decrees No. 2022-538 and 2022-539 of April 13, 2022, prohibiting advertisements stating that a product or service is carbon-neutral unless a report explaining how carbon neutrality is achieved is published and updated annually.

Greenwashing statements could already be sanctioned on the ground of unfair competition and misleading commercial practices since Law No. 2021-1104 of August 22, 2021, on Climate and Resilience. The new law gives an environmental dimension to the definition of misleading commercial practices.

Conclusion

The proliferation of “green” trademarks names is a natural response to the growing demand for environmentally friendly products. However, greenwashing practices threaten trust in eco-friendly initiatives. To avoid pitfalls and create credible green trademarks, it is essential to follow a transparent strategy, comply with environmental standards, and involve competent experts. The protection of eco-friendly brands and the fight against misleading practices also require increased consumer vigilance and support from lawyers and intellectual property attorneys specializing in this field.

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September 27, 2023, Paris Court of Appeal Case No. 21/12348

On September 27, 2023, the Paris Court of Appeal rendered a pivotal decision concerning copyright law in the realm of interior design and applied arts. At the heart of the case was the “Lyre” lamp, a unique creation by sculptor Philippe Cuny, which ignited a legal battle against architect Carlo Rampazzi for copyright infringement.

The “Lyre” Lamp’s case

In this case, Carlo Rampazzi, an interior designer, commissioned Philippe Cuny, a sculptor specializing in mirrors and lighting fixtures, to create several models of a “Lyre” lamp. Architect Carlo Rampazzi then published photos of the “Lyre” lamp on social media without obtaining prior authorization from the creator and without mentioning his name. Consequently, the creator, Philippe Cuny, sued the architect before the Paris Judicial Court for copyright infringement.

In May 2021, the Paris Judicial Court ruled in favor of Philippe Cuny, the creator of the lamp, condemning Carlo Rampazzi for copyright infringement.

Carlo Rampazzi appealed this decision to the Paris Court of Appeal. On September 27, 2023, the Paris Court of Appeal confirmed the lower court’s decision. The Court ruled on the originality of the lamp and then on the infringement, thereby rejecting the accessory theory raised by architect Carlo Rampazzi. The judges of the Court of Appeal reiterate that it is possible to combine design rights and copyright, provided that originality is demonstrated. It also recalls the consistent position of jurisprudence on the accessory theory according to which, firstly, the work must be presented in the background, not constituting a main subject, and secondly, the exploitation of the work must be unintentional.

The “Lyre” Lamp is protected by copyright

The Court first examined the question of whether the “Lyre” lamp was protected by copyright. As Philippe Cuny’s authorship was not disputed, the Court directly addressed the copyright protection of the “Lyre” lamp model.

The Court recalled that all applied art works must be original to be protected by copyright. Originality, distinct from novelty, is the manifestation of the author’s creative abilities, reflecting the imprint of their personality, to make ‘free and creative choices’.

Copyright protection will only be denied for a design if its form is exclusively dictated by the function of the product.

On the criterion of originality, the Court of Appeal concluded that the “Lyre” lamp met the originality criteria due to its distinctive features such as its asymmetrical harp shape, airy and sensual appearance, and its ability to evoke different images and emotions. Moreover, the Court noted that Mr. Cuny successfully reconciled the technical constraints of a lamp with a very personal representation, which evidenced the originality of his work.

The exclusion of the Accessory Theory

To avoid a conviction for infringement on the basis of unauthorized use (breach of the author’s reproduction right) and without mentioning the author’s name (breach of the right to paternity), architect Carlo Rampazzi invoked the accessory theory. This limitation to copyright is based on the European Directive of May 22, 2001, on the harmonization of certain aspects of copyright and related rights in the information society.

Constant jurisprudence considers that the so-called fortuitous inclusion exception applies when two cumulative conditions are met: the work must be presented in the background, not being the main subject, and the exploitation of the work must be unintentional.

In examining the contentious photographs, the Court of Appeal concluded that the “Lyre” lamp was deliberately highlighted and not accidental, thus excluding the application of this exception. In one of the photographs, the lamp was placed in the foreground with a setting that emphasized the object, while in another, although located in the background, it was still very visible in all its features and significant in the composition of the scene. The Court of Appeal specifies that in this case, it matters little that the lamps were modified and that they were ‘neither the object nor the goal of the communication’.

Therefore, the accessory theory could not validly be invoked for this case

Conclusion: A Precedent for Protection and Respect in Design

The Paris Court of Appeal’s ruling not only vindicated Philippe Cuny’s rights but also set a robust precedent for respecting intellectual property in the design and architectural sectors.

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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.

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.

EUIPO, R 275/2023-4, September 13, 2023, TVAR VIRTUÁLNÍ STŘELNÉ ZBRANĚ (fig.)

The fourth Board of Appeal of the European Union Intellectual Property Office (EUIPO) addressed an important issue for those interested in trademark protection in virtual worlds in a recent decision on September 13, 2023 

The decision concerned an application for registration of a European Union trademark in classes 9, 35, and 41 filed by Colt CZ Group SE (Colt), a Czech holding company that acquired Colt’s Manufacturing Company LLC, a well-known American firearm manufacturer.

Colt filed a trademark application for a virtual firearm in February 2022 for virtual products and services related to online firearms. However, in December 2022, the EUIPO examiner rejected the application, arguing that the trademark lacked the required distinctiveness.

The reasons for the examiner’s rejection were as follows:

• Without distinctiveness, the trademark resembled a common representation of a virtual firearm, and the target audience would perceive it as such.
• The fact that some members of the public may be knowledgeable about firearms had no bearing on the assessment of distinctiveness.

As a result, the trademark lacked distinctiveness.

Colt appealed the decision, arguing that the trademark was unique and recognizable, notably thanks to the verbal element “CZ BREN 2” and the complexity of the virtual weapon’s shape represented.

The Board of Appeal began by emphasising that the distinctiveness of a trademark must be evaluated in light of the requested products and services, as well as public perception.

Concerning the relevant audience, the Board determined that it consisted primarily of the general public.

Regarding the distinctiveness of the trademark, the Board examined two particular elements: the verbal element “CZ BREN 2” and the visual representation of the virtual firearm.

Because of its size and lack of contrast with the background, the verbal element “CZ BREN 2” was deemed insignificant, making it difficult to identify for a significant proportion of the public.

The visual representation of the virtual firearm was deemed commonplace and conforming to industry standards, not deviating significantly from consumers’ expectations for virtual firearms. 

In conclusion, the Board upheld the examiner’s decision that the trademark was not distinctive because it did not allow the public to identify the commercial source of the questioned products and services.

This decision emphasises the importance of distinctiveness in trademarks’ registration in the context of virtual worlds and clarifies how the target audience, as well as verbal and visual elements, are considered in this assessment.

It highlights an important point: even if a product or service in the real world is specialized or requires particular expertise (such as firearms), the targeted audience for the virtual equivalent of that product or service may be much broader and less specialized in terms of knowledge.

Introduction

The International Trademark Association (“INTA”) provided a comprehensive and clear definition of “Domain Name Abuse” on May 16, 2023. Prior to this date, the definition of “Domain Name Abuse” was imprecise in the private sector, government, and universities. INTA defines it as “any activity that makes, or intends to make, use of domain names, the Domain Name System protocol, or any digital identifiers that are similar in form or function to domain names to carry out deceptive, malicious, or illegal activity.”

This new definition will therefore enable prior trademark owners to protect their rights when their trademarks are targeted by criminals.

Understanding Domain Name Abuse

Abuse occurs when bad actors commit fraud and steal from consumers, businesses, or even governmental bodies, all while infringing on the rights of prior trademark holders. It manifests through the malicious use of domain name systems, notably via phishing, spamming, distributing malicious software, or engaging in fraudulent activities like cybersquatting, typosquatting, dotsquatting, domain hijacking, shadowing, and domain name impersonation.

Implications for Trademark Holders and Consumers

Abuse is a hazardous practice for both victims (consumers, businesses, government agencies) and prior trademark holders. In fact, bad-faith actors maliciously register domain names by replicating pre-existing trademarks or domain names that have been legitimately registered and renewed. To lend credibility to these dubious websites, these malicious domain holders will replicate the products and services offered by the legitimate owner, as well as their email correspondence, mailing address, and even the brand image of companies.

Domain name abuse thereby infringes upon the rights of legitimate trademark holders and creates a significant risk of confusion for users.

Previous Definitions: Gaps and Limitations

In January 2022, the European Commission published the European Union study on the abuse of domain names, which was quickly followed in March 2023 by the United States, with an active commitment to securing critical infrastructures, particularly domain name systems, as part of its National Cybersecurity Strategy. The prevalence of domain name abuse compelled various nations to take necessary action; however, these were frequently limited and ambiguous.

Although many definitions existed prior to INTA’s report, many of them failed to adequately address important intellectual property concerns like counterfeiting and privacy. 

One example is the definition given by the European Commission in January 2022. According to the European Commission, abuse would be “any activity using domain names or the DNS protocol to conduct harmful or illegal activities.”

In clause 11 of the registry agreement, ICANN, the Internet Corporation for Assigned Names and Numbers, asserts that domain name abuse includes “malware, phishing, trademark or copyright infringements, deceptive or fraudulent practises, counterfeiting, or any other activity contrary to prevailing legislation…”

Finally, the Voluntary Framework on Domain Name Abuse defines them as “malware, botnets, phishing, pharming, or SPAM disseminating malware, botnets, phishing, pharming, or SPAM disseminating malware, botnets, phishing, or pharming.”

These definitions largely represent what the technical community recognizes as abuse. Indeed, confining domain name abuse to “technical breaches” failed to anticipate the tangible legal challenges of these practices.

Similarly, mentioning “harmful or illegal activities” without defining their scope did not provide adequate legal guidance regarding intellectual property. 

It was therefore critical to develop a comprehensive, concise, and understandable definition of domain name abuse in order to best protect victims of these infringements and trademark holders.

INTA’s Comprehensive Definition of Domain Name Abuse

Given the increasing instances of attacks on domain names and cyber risks, INTA felt the need to step in and provide a clear technical and legal definition that incorporates issues of intellectual property and emerging technologies.

Domain name abuse, is now defined as “any activity that makes, or intends to make, use of domain names, the Domain Name System protocol, or any digital identifiers that are similar in form or function to domain names to carry out deceptive, malicious, or illegal activity”

The inclusion of the term “similar in form or function to domain names” allows INTA to make the necessary connection with intellectual property. Indeed, the function of a trademark is to assure the origin of a product or service. However, domain name abuse misleads internet users about the origin of brands, creating a significant risk of confusion through techniques such as cybersquatting, typosquatting, and dotsquatting.

Conclusion on the new definition of Domain Name Abuse.

The new definition of domain name system abuse now helps trademark owners and the general public. It calls for ongoing vigilance and cooperation between organisations such as INTA and ICANN to ensure a clear understanding of the issues surrounding this concept.

To find out more read our articles on Domain name right : bona fide offer of goods or services, AFNIC’s New Mediation Procedure: Fast and Free Dispute Resolution for Domain Name Holders or visit INTA’s website.

A lot of work is currently being done to define domain name abuse or domain name Infringements. Domain abuse is the use or intent to use of domain names, the DNS domain name system protocol, or any digital identifier with a shape or function similar to domain names, for deceptive, malicious, or illegal purposes.

But where do we stand in the fight against domain name infringement?

Focus on the Attack Vector:  a form of Domain Name Abuse

The form of damage corresponds to the attack vectors. Domain name abuse is becoming more common, manifesting itself on websites, via search engines, or in email inboxes via phishing attempts.

In 2023, holders of contentious domain names are increasingly using certain “modern” domain name infringements vectors. Among them are domain name infringements via SMS, QR codes, or even sponsored ads.

In the case of SMS, the infringement takes advantage of flaws in communication protocols. A URL link pointing to a malicious website is frequently attached to the SMS.

QR codes, on the other hand, function as URL shorteners and can direct users to potentially harmful websites. These QR codes are increasingly being printed in paper format on fake notices of passage or fines.

Finally, sponsored advertisements are extremely popular. Malicious sites often appear at the top of Google searches in the form of advertising inserts. The lack of a precise visual indicator often prompts internet users to click on these ads without being wary of the content they contain.

These new attack vectors highlight the creativity and determination of malicious actors. These novel forms are accompanied by substantive innovations. In actuality, the landscape of infringements is also expanding.

An overview of Domain Name Infringements

There are various types of infringements. Cybersquatting, phishing, and fake institutional websites are well-known practices. Others, more recent, require a thorough examination.

A New Form of Cybersquatting: Robot Cybersquatting

Cybersquatting, the act of registering brand-related domain names with the intent to profit from the brand’s reputation, disrupt its visibility, or sell it back to its rightful owner, isn’t new. However, its methods are becoming more sophisticated.

Bots, particularly in China, now constantly monitor domain names. They swiftly register domains once they become available, especially if they are related to legitimate brands. These “vacuum” bots snap up domains that lapse into the public domain for any reason. While this tactic existed in the past, it’s seeing a resurgence, especially in China.

The ‘Fake Shop’ Trend

The so-called “fake shop” is a new 2023 trend. Some fraudulent websites register domain names by linking a previous brand to a country name. These fake shops are counterfeit sites that deliver no product or service. They are near-perfect, semi-automated duplications of previously registered brand sites. The similarity of these contentious sites with legitimate ones creates almost inevitable confusion for consumers. In an effort to sidestep some alternative dispute resolution procedures, such as the UDRP (Uniform Domain Name Dispute Resolution Policy), by replacing trademarks within the domain name by a generic term, this new domain name infringement trend is more difficult to combat.

Click Fraud

Another trend for 2023 is “click fraud.” Click fraud is a type of fraud that occurs online within pay-per-click advertising. Website owners are paid based on the number of visitors who click on the ads in this advertising. Click fraud typically occurs on a large scale, with multiple links targeted and clicked multiple times, rather than just once. Malicious actors will obtain expired domain names or typosquat domain names that appear legitimate in order to entice users to click.

Identity Theft and Fake Merchant Sites

Identity theft and the creation of fake merchant sites are frequently seasonal, which means that fraudsters create contentious sites during tax or local fee collection periods, or during festive periods such as Christmas, Mother’s Day, or Valentine’s Day. This strategy targets both the B2B and B2C markets.

The fake merchant site is created in the name of a company whose official details are usurped. The credibility of these fake sites lies in the accuracy of the information concerning the merchant, such as the Siren, Siret, and VAT numbers, and in the usurpation of the company’s Whois data. This tactic is commonly used when legitimate businesses lack an online presence. Consumers who do not have access to the legitimate company’s official website believe the contentious site is authentic. To

Furthermore, fraudsters create fake Yellow Pages accounts, or official sites such as “Google My Business” or “societe.com,” and even fake reviews. The consequence of this practice is hefty as, beyond infringing on intellectual property rights and usurping companies’ identities, fraudsters scam consumers by never delivering the purchased products. This domain name abuse is severe since there’s both a monetary and personal data theft of the deceived consumers.

Identity Theft and Fake Orders

This practice consists in obtaining an undue merchandise delivery, in other words, diverting a product’s delivery. The perpetrators send an email that appears to be from a brand or company and requests large purchase quotes from sellers or distributors. Then they request payment for these purchases.

This method is especially dangerous since it can involve large amounts of money. Numerous elements give the appearance of an official site, lending credibility to identity theft. Fraudsters access official signatures and stamps from freely available online general assemblies, as well as recent financial statements, at least partially. Only the phone numbers and email are linked to the scammer.

Email Interception and Fake Bank Details

The most recent domain name infringement trend consists in redirecting a legitimate bank transfer to a third-party account. It is classified as a high-level attack because it primarily involves real estate and banking transactions.

The perpetrator begins by hacking the victim’s email. They monitor exchanges until they find an interesting transaction, identify related order discussions, and intercept a legitimate email during these exchanges. Then, they replace the legitimate email with a falsified one, modify the attached bank details, and send the email to the correspondent. Scammers use forged emails that look exactly like legitimate emails. Because of multiple exchanges in the victim’s email, the victim frequently misses the subtle email change, resulting in transactions that benefit the perpetrator.

Final thoughts

Consumers, companies, and owners of intellectual property are all affected by the recent rise in domain name infringement. Malicious actors can commit more difficult-to-detect domain name abuses thanks to increasingly sophisticated and cunning attack vectors combined with computer tool mastery. It is critical to exercise extreme caution when using the internet, emails, SMS, and even paper mail. The best way for businesses to protect themselves, their leaders, and their customers is to keep an eye on their domain names and put in place a policy and plan of action that takes this into account. Today, we talk about compliance strategy and domain names. If you have any questions, please do not be hesitant to get in touch with us.

To find out more, read our article New AFNIC Mediation Procedure: Fast and Free Dispute Resolution for Domain Name Holders

Generative artificial intelligence (AI) is a type of artificial intelligence system that can generate text, images, and other media.

The process of creating content with generative AI can be roughly divided into two steps:

– The initial source of inspiration is termed as the “input”. The generic creation is based on this initial data, either retrieved from data labelled by the user/creator of the AI or from data autonomously found by the AI, to subsequently produce an “output” or result.

 – From the initial data (input), the AI generates a model, infers rules, and then applies these rules. This is the output.

As a result, generative artificial intelligence raises concerns about the protection of both upstream content and downstream output.

Upstream protection for content processed by generative AI

In the upstream, intellectual property rights may be infringed upon if data is copied by AI and then used without permission. Indeed, there is a reproduction of copyrighted content (texts, images, sounds) to feed AI databases.

These contents, however, are protected by intellectual property rights. To legally feed AIs without prior authorization, the European legislator created an exception for “text and data mining,” which suspends the exploitation monopoly under copyright and related rights for data mining purposes. This relates to Articles 3 and 4 of Directive 2019/790 of the European Parliament and Council on copyright and related rights in the digital single market, which was adopted on April 17, 2019.

Data mining involves collecting data to transform them. There is a mining operation, which means algorithmic processing in order to interpret results. Nonetheless, these mining operations violate intellectual and artistic property rights.

Text and data mining can also lead to acts protected by copyright, sui generis rights on databases, or both, especially regarding the reproduction of works or other protected items, the extraction of content from a database, or both, which is the case when data is standardised during the text and data mining process.

The Directive 2019/790 establishes two mandatory exceptions for copying, i.e., two exceptions on reproducing content protected by literary and artistic property rights overall (texts, sounds, images, for all copyrights, related rights, and sui generis rights).

– Article 3 is a mandatory academic exception, benefiting research bodies and cultural heritage institutions performing mining for scientific research purposes, which right holders can’t oppose.

– Article 4, on the other hand, is an exception for all uses, regardless of the purpose (including commercial), provided that the copyright holder has not expressed opposition. In this case, the right holders can oppose even though the exception is mandatory. This may seem contradictory, but in reality, it’s the only possible balance between the rights of intellectual property right holders and the rights of those reproducing the data.

While data mining is currently allowed, the debate on the protection of content used upstream by generative AI to produce content is not over. Appeals are multiplying. For instance, in Europe, right holders are mobilising through “position papers” since the context between the drafting of Directive 2019/790 in 2018 and the time when generative AIs are booming in 2023 is very different. Compensation for intellectual property rights holders for the exception on data mining is now part of the considerations of intellectual property specialists working on the topic.

Protection of Content Generated by Generative AI

While robots were once considered passive tools, advances in artificial intelligence research have raised concerns about their role in the creative process. Indeed, these advancements sometimes attribute a significant role to them in content creation, raising questions about the protection of content generated by generative AI.

Under copyright law, the principle remains indifferent to merit (CJEU 1st March 2012, Football Dataco Ltd et al. vs. Yahoo! UK Ltd et al., Case C-604/10). Yet, it remains contentious to assert that generative AI can be the author of a work it produces.

This brings up the question: Is the appearance of a work tied to a regime? Should we accept protection for works generated by AI?

The European Parliament’s report from 27th January 2017 on recommendations for civil law rules on robotics suggested that copyright criteria should be adapted to accommodate these new AI-generated creations.

What’s crucial here is distinguishing between creations assisted by generative AI and those autonomously generated by AI.

If generative AI is used as a tool assisting creation, there’s no debate. The work is protected by copyright, with the affiliated rights belonging to the human creator. In this scenario, the work clearly reflects the personality of its human creator.

But what about the opposite scenario? Do we lean towards copyright or other paths (common law, special law)?

In 2018, the Superior Council of Literary and Artistic Property conducted an economic and legal analysis of the options.

The idea of AI as an author is ruled out today. To qualify as a work under the European Union law, it must meet specific conditions:

– There must be a human author.
– The work must be original.

Given these conditions, today’s perceived autonomy of AI is exaggerated as human involvement is essential. The idea of creating an “electronic personality” is rejected, as it might disrupt existing legal categories, leading to a legal chimaera. Without a human entity, the work can’t fulfil the originality criterion, which in France refers to the “imprint of the author’s personality” and similarly in the European Union, denotes an “intellectual creation unique to its author”, both necessitating a human presence.

The link to a human author in copyright law seems to be an international requirement
suggested by the Berne Convention.

If literary and artistic property rights are chosen, determining which specific rights apply (copyright, sui generis rights) becomes essential. Also, the definition of the author (indirect author, work without an author?) must be clarified.

Some argue no protection is required, and the “opt out” would fall under the “common by design” regime.

While awaiting legislation specific to works produced by generative AI, it’s worth noting emerging case law in this field. Notably, the US District Court for the District of Columbia’s decision in Thaler vs. Perlmutter on 18th August 2023, which ruled that copyright doesn’t apply to creations made by AI tools, even if they’re trained by human intelligence.

Such discussions on highly current topics raise genuine legal questions. The rise of new technologies requires the legislature’s keen attention and continuous updates to stay relevant. It’ll be fascinating to see future measures and laws adopted to further regulate these smart new inventions.

To find out more about generative AI, read our article Generative AI: Balancing Innovation and Intellectual Property Rights Protection or visit WIPO Magazine and Blog Modérateur.