May 2011 

This month we look at the CJ's interpretation of the terms 'use in the course of trade' in an area of 'more than mere local significance’ in Anheuser-Busch Inc v Budĕjovický Budvar národní podnik, we report on the territorial effect of an injunction in DHL Express France SAS v Chronopost SA, we report on the Court of Appeal's decision in Vestergaard Frandsen S/A & Ots v Bestnet Europe Ltd & Ots relating to breach of confidence and look at the decision in Yell Ltd v Giboin & Ots in which the Patents County Court considered whether websites alleged to be infringing and passing off Yell's YELLOW PAGES trade marks were 'directed to the UK'.

To be taken to your case of interest please click on the below: <top> 

• Ferrero SpA v OHIM; Tirol Milch reg. GmbH Innsbruck
• Intesa Sanpaolo SpA v OHIM; MIP Metro Group Intellectual Property GmbH & Co KG
• Fuller & Thaler Asset Management Inc. v OHIM
• Sociedad Agricola Requingua Ltda v OHIM; Consejo Regulador de la Denominación de Origen Toro
• Smart Technologies ULC v OHIM
• United States Polo Association v OHIM; Textiles CMG, SA
• Alder Capital Ltd v OHIM; Gimv Nederland BV
• Lancôme parfums et beauté & Cie v OHIM; Focus Magazin Verlag GmbH
• Gruber v OHIM
• Euro-Information- Européenne de traitement de l’information v OHIM
• Heinrich Deichmann-Schuhe GmbH & Co v OHIM
• Bodegas y Viñedos Puerta de
  Labastida SL v OHIM; Unión de Cosecheros de Labastida S. Coop. Ltda
• Tubesca v OHIM; Tubos del Mediterràneo SA
• Air France v OHIM
• Zitro IP Sàrl v OHIM; Show Ball Informàtica Ltda
• Anheuser-Busch Inc v Budĕjovický Budvar národní podnik
• Safariland LLC v OHIM; DEF-TEC Defense Technology GmbH  
• Génesis Seguros Generales Sociedad Anónima de Seguros y Reaseguros v Boys Toys S.A. y Administración del Estado
• Frisdranken Industrie Winters BV v Red Bull GmbH
• DHL Express France SAS v Chronopost SA
• Yell Ltd v Louis Giboin, Zagg Ltd & Zagg Global Ltd
• Virgin Enterprises Ltd (“VEL”) v Michael Casey
• A & E Television Networks LLC & Anr v Discovery Communications Europe
• Scarlet Extended SA v Société Belge des auteurs compositeurs et éditeurs
• Vestergaard Frandsen S/A & Ots v Bestnet Europe Ltd & Ots

Decisions of the GC (formerly CFI) and CJ (formerly ECJ) 

Decisions not yet in English

Meaning of ‘use in the course of trade’ in an area of ‘more than mere local significance’

Anheuser-Busch Inc v Budĕjovický Budvar národní podnik (CJ Grand Chamber; C-96/09; 29.03.11)

The CJ partially upheld an appeal by Anheuser-Busch from the GC’s decision (reported in the CIPA Journal, October 2010) allowing an opposition by Budĕjovický Budvar to its application to register BUD as a CTM.

Budĕjovický Budvar opposed the CTM application for BUD on the basis of Article 8(4) relying on its appellation of origin for ‘bud’. 

The CJ gave guidance on the terms in Article 8(4) ‘in the course of trade’ and ‘more than mere local significance’.

In the course of trade
The CJ rejected Anheuser-Busch’s submission that the GC had erred in interpreting the meaning of ‘in the course of trade’ by not requiring ‘genuine’ use (by analogy with Articles 43(2) and (3) concerning earlier trade marks cited in oppositions). The CJ affirmed the GC’s decision that ‘use in the course of trade’ required use for a commercial activity with a view to economic advantage, not as a purely private matter, and that there was not a requirement of ‘genuine use’. As such, deliveries made by Budĕjovický Budvar without charge were examples of use in the course of trade as they were made with a view to an economic advantage.

More than mere local significance
The CJ did, however, agree with Anheuser-Busch’s submission that the GC had misinterpreted the meaning of ‘more than mere local significance’. The GC held that Article 8(4) referred to the significance of the sign concerned and not the significance of its use, and that the significance of the sign must be understood as the geographical protection of its protection, which must not merely be local.

The CJ held that the purpose of Article 8(4) was to limit conflicts between signs by stopping an earlier right which was not sufficiently definite (i.e. important and significant) in the course of trade from preventing registration of a new CTM. As such, the significance of the sign cannot be a function of the mere geographical extent of its protection. It followed that, in order to be capable of preventing a new CTM registration, the sign must actually be used in a sufficiently significant manner in the course of trade and its geographical extent must not merely be local. In order to ascertain whether that is the case, the CJ said that account must be taken of the use of the sign as a distinctive element vis-à-vis its addressees, namely purchasers, consumers as well as suppliers and competitors.

The CJ further held that the GC had erred when it concluded that the relevant territory for establishing use in the course of trade could extend to territories of Member States other than that in which the right was relied on for the purposes of Article 8(4). It was only the territory in which the sign was protected, whether the whole or part of it, that the applicable law confers on the sign exclusive rights which may enter into conflict with a CTM.

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Agent-principal relationship in oppositions

Safariland LLC v OHIM; DEF-TEC Defense Technology GmbH (GC; T-262/09; 13.04.11)

DEF-TEC concluded a distribution agreement with Defense Technology Corporation of America (the ‘Wyoming company’). The president of the Wyoming company expressly waived all the rights it held in two of its trade marks in Europe and consented to DEF-TEC registering those marks in Europe. Later that year Safariland purchased the assets of the Wyoming company covering the trade name, the marks registered in the US and the defence spray product range.

DEF-TEC subsequently applied to register as a CTM a figurative mark containing the term FIRST DEFENSE AEROSOL PEPPER PROJECTOR for various goods in Classes 5, 8 and 13.

Safariland opposed the application under Article 8(3), taking the view that DEF-TEC was its agent and that it had applied, without Safariland’s consent, for a sign very similar to US marks owned by Safariland. OHIM allowed the opposition for some of the goods applied for and the BoA upheld this decision. However, the GC annulled the BoA’s decision, holding, in particular, that the BoA wrongly took the view that the express waiver did not contain clear, specific and unconditional consent authorising DEF-TEC to file the application for the mark in question and therefore did not consider whether the consent had survived Safariland’s asset purchase (reported in the CIPA Journal, September 2006).

On re-examination, the BoA concluded that there was no agent-principal relationship between Safariland and DEF-TEC and dismissed the opposition. Safariland appealed to the GC, which dismissed the appeal in its entirety, holding, inter alia, the following:

• The BoA did not breach Article 65(6) by examining the existence of an agent-principal relationship. The BoA was under a duty to examine all the conditions required by Article 8(3), including the condition relating to the existence of an agent-principal relationship, upon which the condition of consent was necessarily predicated.
• The BoA was correct to find that an agent-principal relationship did not exist and therefore the condition required by Article 8(3) was not satisfied. Safariland had not furnished any evidence showing the existence of such a relationship. A seller-customer relationship was not sufficient. Furthermore, simply demonstrating that Safariland carried out the activities of the Wyoming company under the same name so as to give the impression that it was the same company was not sufficient to prove a principal-agent type relationship between Safariland and DEF-TEC. As a result Article 8(3) was not applicable.

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Filing dates for CTMs

Génesis Seguros Generales Sociedad Anónima de Seguros y Reaseguros v Boys Toys S.A. y Administración del Estado; (AG Jääskinen for the CJ; C-190/10; 31.03.11) (Decision not yet available in English)

In the AG’s view, Article 27 concerning the filing date of a CTM only takes into account the day upon which a CTM application is filed, and not the hour and minute at which such an application is filed.

At 11.52 and 12.13, respectively, on 12 December 2003, Génesis filed two electronic CTM applications at OHIM for RIZO and RIZO, EL RIZO (the “CTM Applications”). At 17.45 on that same date, a third party filed a Spanish national trade mark application at the Spanish Patents and Trade Marks Office (the “Spanish Office”) for RIZO’s (the “Spanish Application”). Génesis relied on the CTM Applications to oppose the Spanish Application before the Spanish Office, but the opposition failed as the CTM Applications were not found to be ‘earlier marks’ vis-à-vis the Spanish Application. On appeal, the Tribunal Supremo in Spain referred to the CJ the question of whether the hour and minute of a CTM application should be taken into account when considering the filing date of a CTM under Article 27 in relation to a national trade mark application filed on the same day (where the relevant national legislation deems the time of filing to be relevant, as in Spain).

In the AG’s opinion, the hour and minute of filing should not be so taken into account. This was supported by the wording of the Paris Convention, the wording of Article 27, the nature of European Regulations (which are autonomous and do not require reference to national legislation for their interpretation) and the existence of various practical difficulties which would follow if the situation were otherwise.

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Liability for trade mark infringement of undertakings commissioned to fill packaging

Frisdranken Industrie Winters BV v Red Bull GmbH (AG Kokott for the CJ; C‑119/10; 14.04.11)

The AG was of the opinion that the mere ‘filling’ of packaging which bears a sign is not to be regarded as using that sign in the course of trade within the meaning of Article 5  where that filling is a service provided to, and on the instructions of, a third party.

Smart Drinks Ltd of the British Virgin Islands supplied Frisdranken with empty cans and ingredients for beverages and commissioned Frisdranken to fill and seal the cans. At first instance, a Dutch court found a likelihood of confusion between the marks used on the cans and Red Bull’s trade marks from the perspective of the average consumer in Benelux. As a result Frisdranken was found to infringe Red Bull’s trade marks. Frisdranken appealed this decision to the Hoge Raad, which submitted a number of questions to the CJ.

The first question submitted by the Hoge Raad was whether the mere filling of packaging which bears a sign is to be regarded as use of that sign in the course of trade within the meaning of Article 5 where that filling is a service provided to, and on the instructions of, a third party. The AG was of the opinion that such a service did not constitute trade mark use. In this case, only the commissioner (Smart Drinks) used the mark in its own external commercial communications. Consumers would therefore only form a link between Smart Drinks and the sign. The AG was of the opinion that a finding of liability in such cases would create a disproportionate burden on undertakings employed to fill packaging as they would be required to examine each commission for possible trade mark infringements. The AG was of the opinion that the answer to this question would be the same in relation to both Article 5(1)(a) and 5(1)(b).

The second question submitted by the Hoge Raad was whether, if the answer to the first question was in the affirmative, use of the sign can then also be prohibited in Benelux under Article 5 if the goods bearing the sign were destined exclusively for export to countries outside (i) the Benelux area; or (ii) the EU and could not be seen by the public in those areas. Despite the negative answer of the AG to the first question, the issue was considered since fillers of packaging (such as Frisdranken) may be the subject of injunctions as intermediaries where the commissioners themselves (such as Smart Drinks) were found liable for trade mark infringement. The AG was of the opinion that such use could be prohibited, and that such a prohibition was justified as, despite the fact that such goods were intended for exports, there was a risk that such goods could in fact be marketed in Benelux or the EU.

The third question submitted by the Hoge Raad was whether, when considering trade mark infringement in the scenario set out in the second question, the relevant criteria should be judged from the perspective of the relevant consumer in Benelux/the EU, or from some other perspective, such as the relevant consumer of the country to which the goods are to be exported. The AG was of the opinion that in light of the answer to the second question and the territorial nature of trade mark rights, the relevant consumer was one within the territorial limit of protection of the relevant trade mark.

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Territorial effect of an order of an injunction

DHL Express France SAS v Chronopost SA (CJ (Grand Chamber); C-235/09; 12.04.11)

Chronopost, the proprietor of the French national mark and CTM for WEBSHIPPING for amongst other things, services related to logistics, telecommunications and parcels, brought infringement proceedings in France against DHL for using the signs ‘Web Shipping’ and ‘Webshipping’ in relation to an express mail management service available via the internet. The first instance Court in France, a designated CTM Court, found infringement of the French trade mark but did not rule on the CTM. 

The first instance judgment was appealed and the Cour d’appel de Paris ruled that DHL infringed both the French national mark and the CTM. It ordered a periodic penalty payment if DHL did not comply with the infringement prohibition. DHL made a further appeal which was dismissed but Chronopost brought a cross-appeal: the appeal Court’s judgment did not expressly extend the periodic penalty payment to the whole of the EU; accordingly it had to be construed as applying only to France. This, submitted Chronopost, infringed Articles 1 and 102. The Cour de cassation decided to stay proceedings and refer a number of questions relating to these Articles to the CJ.

Under Article 102(1) a CTM Court is obliged, unless there are special reasons not to do so, to issue an order prohibiting infringement of the CTM and to take measures in accordance with its national law to ensure compliance with this prohibition. Article 102(2) provides that in all other respects the CTM Court shall apply the law of the Member State in which the infringement occurred. 

The first question referred asked whether Article 102 could be interpreted as meaning that the prohibition issued by a CTM Court had effect as a matter of law throughout the entire EU. The CJ held that it was clear the action in question had been brought in accordance with Article 97(1) to (4) so the CTM Court’s jurisdiction extended to the entire area of the EU. As a rule, the exclusive rights of a CTM proprietor extend with uniform protection and effect throughout the EU. In order to ensure such uniform protection, a prohibition against future infringement or threatened infringement issued by a competent CTM Court had to therefore generally extend to the entire area of the EU.

The CJ did state that there were possible exceptions where the territorial scope of the prohibition should be restricted. A CTM proprietor’s exclusive rights were reserved to cases when a third party’s use of the sign affected or was liable to affect a trade mark’s functions. The exclusive right - including its territorial scope - did not extend any further: if the acts of infringement or threatened infringement of a CTM were limited to a single Member State or part of the EU’s territory, for example because use of the sign in issue neither affected nor was liable to affect the functions of the CTM outside those regions due to linguistic reasons, then the territorial scope of the issued prohibition should be limited. 

Due to the CJ’s answer to the first question, the second question did not need to be considered. The third and fourth questions were then examined together. These asked whether Article 102(1) had to be interpreted as meaning that a coercive measure ordered by a CTM Court by applying its national law had effect in other Member States to which the territorial scope of the prohibition extended and, if not, whether a similar or different coercive measure could be ordered by that CTM Court by applying the national law of the Member State to whose territory the scope of the prohibition extended.

The CJ recalled that, pursuant to Nokia (C-316/05 reported in CIPA Journal, January 2007), a CTM Court must select such coercive measures as will ensure that the prohibition issued is complied with.  It can only ensure that the objective for which they were issued is complied with if the measures have effect in the same territory as that in which the prohibition order itself has effect. The court also noted that Article 3 of the Enforcement Directive (2004/48/EC) obliged Member States to provide for effective, proportionate and dissuasive measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights.

The CJ ruled that to have effect in the territory of another Member State, a court in that other Member State had to, under the provisions of Chapter III of Regulation 44/2001, recognise and enforce that measure in accordance with the rules and procedures laid down by its national law.  However, if that other Member State did not provide for the ordered coercive measure or similar, then it had to attain the objective pursued by the coercive measure by recourse to the relevant provisions of its national law that would ensure the original prohibition issued was complied with in an equivalent manner.

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YELLOW PAGES trade marks were infringed online where the infringing websites were ‘directed to the UK’

Yell Ltd v Louis Giboin, Zagg Ltd & Zagg Global Ltd* (Judge Birss; [2011] EWPCC 009; 04.04.11)

Judge Birss held that the defendants’ websites infringed and passed off Yell’s YELLOW PAGES trade marks in the UK. The Judge found that the average consumers of the services in issue within the UK would regard the websites as being directed towards them because the sites offered services which could be bought in the UK and which were linked to the UK.

Yell was the company behind the well known Yellow Pages directories in the UK.  It also operated an online directory service at yell.com. Yell owned two UK trade marks: the word mark YELLOW PAGES for services in Class 35, and the following device mark (the “walking fingers mark”) registered for various goods and services in Classes 9, 16, 35, 36, 37, 38, 39, 41, 42, 43 and 45:

Mr Giboin was a director of Zagg and Zagg Global. Yell issued proceedings for trade mark infringement and passing off in respect of the defendants’ websites which operated a database and business directory service relating to transport companies and services, as well as advertising and publicity services. Both websites used the sign YELLOW PAGES and the domain name of one of the websites was www.transport-yellow-pages.com. Both websites also used the following walking fingers device in a truck motif:

As regards trade mark infringement, the Judge considered that the advertising services supplied via both websites were identical to the services for which the YELLOW PAGES and walking fingers marks were registered. The business directory service and database were not similar to the services within the specification of the YELLOW PAGES mark, but were identical to those within the specification of the walking fingers mark.

The addition of “transport” in the sign TRANSPORT YELLOW PAGES would not go unnoticed by the average consumer and the sign was therefore not identical to the YELLOW PAGES mark.  There was no infringement under Section 10(1). However, the sign did infringe the YELLOW PAGES mark under Section 10(2). The truck logo and TRANSPORT YELLOW PAGES sign also infringed Yell’s walking fingers mark under Section 10(2). Both of Yell’s marks were infringed under Section 10(3); the use of the marks on the defendants’ websites took unfair advantage of the distinctive character of the marks because it misappropriated the cachet attached to it in the mind of UK consumers.

The Judge rejected Mr Giboin’s submission that the YELLOW PAGES and walking fingers logo were generic. Although this may have been the case in other countries, the Judge considered that just because a term was generic in one territory, it did not mean that by definition it was generic in another. The question was always a matter of fact in any given territory.

The Judge found that the defendants’ websites were passing off. The YELLOW PAGES and walking fingers marks were well-known brands in the UK and their association with a UK directory service extended to the internet from the point of view of the UK public.  The use of the marks on the websites made a misrepresentation which was likely to lead to deception and confusion on the part of members of the UK public, who would associate the sites with Yell.

Judge Birss did, however, hold that his findings of trade mark infringement and passing off were dependent upon him finding that the infringing use was carried out in the UK. Although a number of circumstances had to be considered, the fundamental question was whether or not the average consumer within the UK would regard the websites as being aimed and directed at him. What mattered was how the site looked and functioned when someone in the UK interacted with it. As the directory service was a UK directory service, the businesses advertised on it were offering services which were linked to the UK, and the services which could be bought via the sites could be bought from the UK, the Judge concluded that the signs were being used in the UK. The websites therefore infringed Yell’s trade marks and the defendants were engaged in passing off.

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Virgin’s opposition to CARBON VIRGIN dismissed

Virgin Enterprises Ltd (“VEL”) v Michael Casey* (Norris J; [2011] EWHC (Ch) 1036; 20.04.11)

Norris J dismissed VEL’s appeal from the decision of the Hearing Officer to dismiss VEL’s opposition to Mr Casey’s application to register the word mark CARBON VIRGIN for advertising, accountancy, auctioneering, trade fairs, opinion polling and data processing services in Class 35. VEL opposed the mark on the basis of its earlier marks which included “VIRGIN” under Sections 5(2)(a), 5(2)(b), 5(3) and 5(4) but the Hearing Officer rejected the opposition on every ground. VEL appealed the Hearing Officer’s findings in relation to Sections 5(2)(b) and 5(3).

Section 5(2)(b)
The Hearing Officer found that there was a reasonable level of visual and aural similarity between the marks but only a low level of conceptual similarity since the word “VIRGIN” had a subtly different meaning in each mark: VIRGIN used alone suggested a person who had never had sex whilst the concept communicated by the compound expression CARBON VIRGIN was of someone who was naïve or inexperienced in a particular context. Norris J found that there was no error of principle in this analysis. Nor was there any substance in VEL’s submission that the Hearing Officer had determined the conceptual meaning of the marks without reference to the services for which they were registered. The Hearing Officer had plainly considered the services for which the marks were registered in his analysis in relation to Section 5(2)(a) and there was no reason to think that the understanding that this was the correct approach deserted him when he came to consider Section 5(2)(b). The Hearing Officer plainly understood the connection between the concept embodied in a mark and the service in respect of which that mark was used since he said of the argument that “CARBON VIRGIN” would create in the mind of the average consumer a figure of the Virgin Mary made of graphite “when used in respect of the relevant services this meaning is much less likely to be identified in the minds of the consumer…”. The Hearing Officer had not treated conceptual similarity as determinative; rather he had considered all the factors and reached a conclusion which betrayed no error of law. The weight to be given to each factor was pre-eminently a matter for the Hearing Officer and could not be challenged on appeal.

The Hearing Officer held that there was no likelihood of confusion between the marks as the different concepts were sufficient to differentiate the marks in the mind of the average consumer. Likewise, having rejected VEL’s argument that CARBON was descriptive and the distinctive element of Mr Casey’s mark was the word VIRGIN, he held that there was no likelihood of direct confusion between the marks. VEL contended that this constituted an error since it appeared that the Hearing Officer thought that there could only be direct confusion where the marks were identical. Norris J rejected this argument, it being clear that the Hearing Officer was expressly considering marks which were not identical and yet still asking himself about the likelihood of confusion of the average consumer of the relevant service. Nor did the Hearing Officer’s reasoning run counter to the principle laid down in Medion v Thompson [2002] ETMR 13 that it should not be a condition of a finding of likelihood of confusion that the overall impression produced by a composite sign be dominated by the part of it which was represented by the earlier mark. To run counter to this principle the Hearing Officer would have had to have said that in view of his decision that “CARBON” was not purely descriptive, it must follow that in the composite expression “VIRGIN” was not dominant in the overall impression and as such there was no possibility of confusion; this is not what he said.

Section 5(3)
VEL contended that the Hearing Officer had misapprehended the nature of the link required by Section 5(3) as being economic link to VEL rather than a link to the earlier mark and not its proprietor. Norris J held that the Hearing Officer had correctly directed himself having specifically referred to Adidas-Salomon (C-408/01), Intel (C-252/07) and L’Oreal (Case C-487/07). Nevertheless, VEL contended, even if the Hearing Officer had correctly directed himself, his conclusion demonstrated that he must have misapplied the test because the existence of visual and aural similarities particularly in the inherently distinctive common element would clearly serve to establish a link that would bring the VEL marks to the mind of the average consumer.  Norris J held that this argument was very close to VEL appropriating the word “virgin” for its exclusive use in connection with its products and services. Furthermore, questions of the existence of a link and unfair advantage were matters to be properly substantiated by evidence of exploitation or free-riding or an attempt to trade upon the reputation of a famous mark. Appropriate evidence to this effect was not before the Hearing Officer and he was therefore entitled to find that the necessary link was not proved. 

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Surveys in trade mark and passing off cases

A & E Television Networks LLC & Anr v Discovery Communications Europe (Mann J; [2011] EWHC 1038 (Ch); 20.04.11)

In an application for permission to conduct a survey in an action for trade mark infringement and passing off, Mann J held that it was open to the court or an opposing party to contribute and/or object to the form of the survey. Applicants should be prepared to take such considerations into account and modify the survey accordingly.  However, if an applicant insisted on using a particular form of survey, then the question was whether it could be demonstrated sufficiently clearly to be flawed, misleading, insufficiently probative, and/or disproportionate.

Trainee solicitors could be used to conduct a survey provided they did not have any involvement in the dispute. However, if the claimants became entitled to recover the costs of the survey or any part of it, they would not be able to recover any more than what would have been the costs of a reasonably priced and respected market research organisation.

A survey carried out prior to the commencement of proceedings would not be automatically disqualified on the basis that permission had not been obtained first. However, it was not proper to provide an advance indication that witness statements of particular but unidentified witnesses, who had been identified as a result of that survey, would be admissible.

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COPYRIGHT

Measures ordering ISPs to install systems for the filtering and blocking of electronic communications

Scarlet Extended SA v Société Belge des auteurs compositeurs et éditeurs (Sabam) (AG Cruz Villalón for the CJ; C-70/10; 14.04.11) (Decision not yet in English)

The AG gave his opinion on a case referred to the CJ by the Court of Appeal of Brussels following the appeal by Scarlet, an ISP, against an order imposed on it to install a filtering and blocking system for copyright infringing content following a court finding that Scarlet’s services had been used for copyright infringement, particularly through the use of peer-to-peer networks. 

The order was made on the provision in Belgian law implementing Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society according to which Belgian courts may, in order to put an end to copyright infringements, order injunctions against intermediaries whose services are used by third parties to perpetrate such infringements.

The question referred to the CJ was essentially whether the Belgian court was precluded under EU law from requiring that ISPs install such a filtering and blocking system, which was to be installed at the ISP’s own expense and for an unlimited period, for filtering infringing content.

According to the AG, the installation by ISPs of general filtering and blocking systems on their network resulted in a restriction on the right of respect for privacy of communications, the right of protection of personal data and freedom of information protected under the Charter of Fundamental Rights of the European Union. As a result, under the Charter and the case law developed by the European Court of Human Rights such restrictions must be founded on a specific legal basis which is accessible, clear and predictable. According to the AG, it could not be considered that the obligation on an ISP to install a general filtering and blocking system, at its own expense, was expressly laid down in clear, precise and predictable terms in Belgian law.

The AG consequently proposed that the CJ should hold that in this case EU law precluded a national court from requiring an ISP to install such filtering and blocking systems on the basis of the current Belgian law.

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 BREACH OF CONFIDENCE

Vestergaard Frandsen S/A & Ots v Bestnet Europe Ltd & Ots* (Jacob & Jackson LJJ, Sir John Chadwick; [2011] EWCA Civ 424; 20.04.11)

The Court of Appeal dismissed all appeals from the decision of Arnold J that the defendants were in breach of confidence in relation to their NetProtect product. An appeal on the personal liability of one defendant, Mrs Sig, was allowed.

Vestergaard produced insecticidal fabrics, for example for use as mosquito nets.  Much of the technology was comprised in a database called Fence and Arnold J held that it constituted Vestergaard’s trade secrets. Arnold J held that the individual defendants had access to Fence whilst employed by or acting as consultant for Vestergaard prior to their setting up Bestnet. Bestnet produced a mosquito net known as NetProtect which Arnold J held had been developed using the Vestergaard technology contained in Fence. Arnold J held that the use and processing of certain additives in the NetProtect fabric enabled retention and efficacy of the insecticides within the fabric. These additives and processing were set out in Fence. Following judgment, a patent application of Vestergaard was published suggesting that the proportion of high and low density polyethylene chains in the plastic used to make the fabric were at least as important as the additives in producing a successfully insecticidal fabric. The Court of Appeal remitted back to Arnold J issues as to whether this patent application showed that use of Fence would not assist in formulating Bestnet’s product. Arnold J answered in the negative.

Bestnet appealed on the basis that the use of the same additives in their material did not justify the conclusions that they had misused Vestergaard’s confidential information.  Bestnet also submitted that Arnold J’s conclusions as to the issues arising from the patent application were wrong. The Court of Appeal dismissed the appeals on both issues. The defendants had access to Fence during the formulation of their product and some of the defendants had lied to cover their tracks. Arnold J had ample evidence to justify his conclusion that Bestnet had used Fence to develop its product. As to the second appeal, the Court of Appeal did not accept that Arnold J had no evidence on which to base his conclusions as to the patent application.

Arnold J had granted an injunction restraining the defendants from using their earlier version of NetProtect, which was produced using a recipe known as WHOPES I.  However, Arnold J refused to injunct the defendants’ later version of NetProtect, which was produced using a recipe known as WHOPES II. Arnold J held that although WHOPES II had been developed from WHOPES I which had been developed using Fence, Bestnet had sufficiently further developed the recipe itself so as to render the granting of an injunction against its use disproportionate. Vestergaard appealed but the Court of Appeal refused to interfere with Arnold J’s decision, it being a matter for the judge’s discretion. Vestergaard could not show WHOPES I was so closely derived from Fence that WHOPES II, developed from it, ought to be prohibited without further consideration. The Court of Appeal explicitly agreed with Arnold J that the IP Enforcement Directive required any injunction to be proportionate to the infringement concerned.

The Court upheld the appeal of Mrs Sig, one of the defendant employees. She had behaved reprehensibly but had not herself had knowledge of the confidential information or that it had been used to develop NetProtect. Therefore, it was not correct to impute personal liability to her for breach of confidence. This was not the same situation as a person who did have the secret knowledge but was unaware that he or she should not make use of that knowledge: she did not have the knowledge at all.

 

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Katharine Stephens and Zoe Fuller

Reporters’ note: We are grateful to our colleagues at Bird & Bird LLP for their assistance with the preparation of this report: Benjamin Woodfield, Benoit Van Asbroeck, Emma Drake, Hilary Atherton, Nick Aries, Nick Boydell, Tim Harris and Tom Snaith.

The reported cases marked * can be found at http://www.bailii.org/databases.html#ew and the CJ’s decision can be found at http://curia.europa.eu/jcms/jcms/j_6/home