KLAUS TO THE MARK; SUI GENERIS RIGHTS AGAIN

Watch that trade mark!

The IPKat has been reading the little note in Butterworths' All England Direct service on Fields v Klaus Kobec Ltd and another 2006 EWHC 350 (Ch), a Chancery Division decision of Richard Sheldon QC, sitting last Friday as a Deputy Judge.

Fields (a jeweller) and the second defendant arranged to sell wristwatches which Fields designed and which were made by GS Ltd. A company, KKIL, was incorporated on 6 December 1995 for that very purpose. In August 1996 Fields registered the word trade mark KLAUS KOBEC as a UK trade mark, with Fields. Another company (Klaus Kobec Ltd - the first defendant), was incorporated in January 1997 and, on 1 May 1997, it took over all the assets and liabilities of KKIL. In August 2001 Fields registered KLAUS KOBEC as a Community trade mark.

In October 2004 KKL placed direct orders for watches branded KLAUS KOBEC, but from a maker other than GS Ltd. Following that, Fields terminated KKL’s licence to use the mark and to carry on business under the company name, with effect from 25 December 2004. Fields then sued the second defendant, the sole director of KKL, contending that his UK and Community trade marks had been infringed by (i) the use before 25 December 2004 of the mark in relation to watches not manufactured by GS Ltd or sourced directly from Fields himself and (ii) the use of the mark in relation to watches after 25 December 2004, whoever made them. The second defendant, relying on two statutory defences, argued that (i) KKL was the owner of an earlier right in and attaching to the mark and (ii) its use of the mark constituted use of its own name.

Richard Sheldon QC held, in favour of Fields, that the statutory defence of use of an earlier right had not been made out.

* by the date Fields had registered the UK trade mark, KKIL had generated insufficient goodwill in the mark to support an action for passing off. In any event, KKIL’s use of the mark had not predated Fields' use of the mark.

* as for the own-name defence, the question of what constituted honest practices required the person relying on it to act in a manner that was objectively fair in relation to the legitimate interests of the trade mark owner. In this case, KKL's continued of the ‘klauskobec.com’ domain name after christmas 2004 was not, in all the circumstances, in accordance with honest practices in industrial or commercial matters since KKL continued to use the site after Fields withdrew his consent.

* it was also clear that the second defendant personally controlled and procured the continued use by KKL of the website after Christmas 2004.

The IPKat wonders why this rather interesting trade mark issue came before Richard Sheldon QC, a perfectly worthy deputy judge but who, as can be seen (click here and search for him), has no visible track record or experience in intellectual property matters. Are there no IP barristers who are fit for the job? When we keep telling non-Brits that one of the advantages of litigating IP disputes in the UK is that you get skilled specialist judges, we're not being quite honest, are we? Merpel says, at least the judge boasts a working knowledge of French, which is more than you can muster.


Anyone out there organised, corporate, extraordinary - and wants to sign something?

The IPKat has received the following comment, which has been prepared by Jonathan Band (Policy Bandwidth):

COMMENTS ON DATABASE DIRECTIVE POLICY OPTIONS

The undersigned organizations and entities appreciate the opportunity to comment on the policy options outlined in the December 12, 2005 DG Internal Market and Services Working Paper on the Directive on the Legal Protection of Databases. We represent the interests of technology and financial services companies; libraries, scientists, scholars, and educational institutions; and consumers. We both produce databases and use databases compiled by others. For the past decade, we have opposed the adoption of overly protective database legislation in the United States. For the reasons set forth below, the sui generis right should be withdrawn.

The authors of the Working Paper are to be commended for their frank criticism of the “sui generis” right. The Working Paper candidly concedes that the “sui generis” right required by the Directive has not had its intended effect: it “has had no proven impact on the production of databases.” Working Paper at 20. The Working Paper acknowledges that “[i]nterpreting the precise scope of the the ‘sui generis’ right has proved difficult,” and that the “’sui generis’ provisions have … created considerable legal uncertainty….” Id. at 15. Further, the Working Paper observes that “the complexity of the ‘sui generis’ regime may have caused confusion among certain users, in particular the academic and scientific community.” Id. at 22.

Alarmingly, in the years since the adoption of the Directive, the European share of the global database market has decreased relative to that of the United States, and the ratio of European to U.S. database production has decreased from 1:2 to 1:3. Id. The Working Paper wrestles with a seeming paradox: During the period in which the intellectual property protection for databases in the EU exceeded the protection available in the United States, the European share of the global database market decreased relative to that of the United States. This market data runs contrary to the widely-held assumption that “more and more layers of IP protection means more innovation and growth ….” Working Paper at 24. Indeed, this data seems to suggest that increasing intellectual property protection beyond a certain point actually provides a disincentive for innovation and creativity.

Judge Alex Kozinski of the U.S. Court of Appeals for the Ninth Circuit once observed that
[o]verprotecting intellectual property is as harmful as underprotecting it. Creativity is impossible without a rich public domain. Nothing today, likely nothing since we tamed fire, is genuinely new: Culture, like science and technology, grows by accretion, each new creator building on the works of those who came before. Overprotection stifles the very creative forces it's supposed to nurture. White v. Samsung Electronics, 989 F.2d 1512 (9th Cir.)(Kozinski, J., dissenting), cert. denied, 113 S. Ct. 2443 (1993).

Judge Kozinski stressed that “intellectual property rights aren't free: They're imposed at the expense of future creators and of the public at large.” For this reason, “intellectual property law is full of careful balances between what's set aside for the owner and what's left in the public domain for the rest of us….” The limits on intellectual property rights let the public use something created by someone else, but they “are necessary to maintain a free environment in which creative genius can flourish.”

One of the critical balances in intellectual property law is that copyright protection in a database extends only to the original selection and arrangement of the facts in the database, but not to facts themselves. This principle of copyright law is recognized in the U.S. Supreme Court’s decision in Feist v. Rural Telephone, 111 S. Ct. 1282 (1991); in Chapter II of the European Union’s Database Directive; in Article 10.2 of GATT-TRIPS; and Article 5 of the WIPO Copyright Treaty. The exclusion of copyright protection for raw facts reflects an awareness that facts are the building-blocks of knowledge. If a publisher could exert a property right in facts, that publisher could prevent the use of those facts not only in new information products, but also in research in all fields of human endeavor. This, of course, would undermine the purpose of intellectual property: promoting, in the words of the U.S. Constitution, the progress of science and the useful arts.

The “sui generis” right runs contrary to this policy by coming “precariously close to protecting basic information.” Working Paper at 24. By preventing competitors from reusing information in new database products, the sui generis right restricts the development of innovative databases. Because the sui generis right overprotects databases, it is no surprise that the European database industry has lost market share to the United States industry, where facts remain in the public domain.

The 2004 decisions of the European Court of Justice withholding the sui generis right from databases consisting of facts “created” by the publisher certainly reduce the reach of the sui generis right. However, as the Working Paper notes, “other industries like the publishers of directories, listings or maps, remain protected as long as they do not ‘create’ their own data but obtain these data from others.” Working Paper at 13. Thus, many databases in Europe remain off limits as the source of information for new products.

Since the sui generis right places European companies at such a competitive disadvantage to U.S. database companies, one might expect the undersigned U.S. based entities to hope that the Commission decides to leave the sui generis right unchanged. However, many of the undersigned entities engage in operations in Europe, and thus have been adversely affected by the sui generis right. Moreover, U.S. users have been harmed by the slow growth of databases based on European information, particularly in the fields of finance and science.

Finally, the existence of the sui generis right in Europe gives impetus to the efforts of the small number of publishers that seek the adoption of overly protective database legislation in the United States. These publishers typically are sole source providers that seek to control all downstream uses of the information contained in their databases. These publishers claim that in order for them to benefit from the reciprocity provision of the Database Directive, the United States Congress must enact legislation establishing sui generis rights in the United States. Since 1996 Congress has resisted these demands, but the House of Representatives passed overly protective database legislation twice in 1998, and the House Judiciary Committee has endorsed such legislation on two other occasions. So long as the sui generis right exists in Europe, we will have to combat the enactment of similar legislation in the United States.

Accordingly, we respectfully suggest that both database developers and users in both the European Union and the United States would benefit from the withdrawal of the “sui generis” right.

Jonathan Band wants signatures and writes: "I'm looking for companies, institutions, associations, and law professors -- not ordinary individuals". So if you qualify and are suitably motivated, email Jonathan through the link above. The IPKat, who is still quite undecided on the sui generis issue, is pleased that there is some serious debate and analysis at last, since he remembers how the sui generis right was foist upon an unsuspecting Euro-world by the European Commission. Merpel, however, is still wondering why law professors are not 'ordinary individuals' ...