Nestlé may have been successful in trade marking its slogan…but it appears the four-fingered chocolate bar is not distinctive enough to warrant protection of its shape.
The Court of Justice of the EU (“CJEU”), in a Judgment dated 25th July, upheld the General Court’s previous decision in 2016, wherein it annulled the earlier decision of the European Union Intellectual Property Office (“IPO”) which had erred in law when it found that the chocolate bar had acquired “distinctive character”. The CJEU held that a trade mark can only be protected as an EU trade mark if it can be demonstrated that it has acquired “distinctive character” across all EU member states. This high threshold may have implications on other EU trade marks that may be unable to provide evidence of “distinctive character” across all member states.
The matter will now return to the IPO, 16 years later, for a determination on whether to uphold its initial decision that the trade mark is valid.
It took years for Nestlé to register the slogan “Have a Break” as a trade mark, finally succeeding in 2006…is this a re-run?
There are no caps on the price of chocolate it appears as both Nestlé and Mondelēz have been ordered to pay their own legal bills.
On 6 July 2018 the High Court held in United States v Dempsey [2018] EWHC 1724 (Admin) that making a false statement to an agent of the US Federal Bureau of Investigation (“FBI”) in the context of suspected international terrorism was an extradition offence. The decision is important in that it clarifies the scope of the English common law offence of perverting the course of public justice.
Dempsey, a US citizen (“the Respondent”), was interviewed by the FBI at Rome airport in 2013, following time spent in Syria. The Respondent provided untruthful answers regarding the purpose of his travel to Syria. Following a second interview with an FBI agent at Rome airport in January 2014, the Respondent admitted that he had lied in the previous interview and that he had in fact fought against the Syrian government. As a result, he was indicted by a Grand Jury in the state of California, and a warrant for his arrest was subsequently issued. The US government requested the Respondent’s extradition from the UK, where he had arrived in September 2014. A District Judge came to the decision that the Respondent did not commit a serious enough offence to warrant being extradited to the US for further prosecution.
However, the High Court came to the opposite conclusion to that of the District Judge. The mere fact of lying to a police officer or other investigator may not of itself disclose the offence of perverting the course of justice. English law required that the action perverted, or tended to pervert, or was intended to pervert the course of public justice. The court found that the Respondent’s lies had the tendency “to put the FBI on to the wrong track”, and the FBI’s investigation was liable to be diverted as a result. The court noted that the offence with which the Respondent had been indicted in the US was not precisely the same as the common law offence. However, the court held that the requirements of the English common law offence included the elements of the US offence, and therefore the Respondent was being pursued for an extradition offence.
Summary
The First-tier Tribunal (Tax Chamber)’s recent decision in Gerrard Gordon; Gary Connell; Nicola Martino; Ian Hills v The Commissioners for Her Majesty’s Revenue & Customs [2018] UKFTT 307 (TC) held that a transfer from a pension scheme to a pension scheme which was held out to be a Qualified Recognised Overseas Pension Scheme (“QROPS”) could give rise to unauthorised payment charges and surcharges under s208 and s209 Finance Act 2004 where it was subsequently found that the scheme did not meet the conditions. The decision also considered the requirements for an officer to make a discovery under s29 Tax Management Act 1970 and when a discovery would become “stale”.
The facts
All four appellants had left the UK. They all transferred their registered UK pensions to an overseas scheme in Latvia in the tax year 2009/10 and received the value of their pension scheme into their bank accounts less fees shortly afterwards. The scheme was excluded by HMRC on 24 August 2010, after the appellants had transferred their pension schemes.
No unauthorised payment charges or surcharges were declared by the appellants on their tax returns for 2009/10. HMRC corresponded with one taxpayer following receipt of the returns; he had a clear conclusion to his case by January 2012 but HMRC did not issue a discovery assessment. The other taxpayers were not contacted by HMRC until 2013 and discovery assessments were issued around the end of the 2014 tax year.
The decision
The Tribunal found that the appellants had not proved that the scheme was a QROPS and therefore the pension transfers were unauthorised transfers. The Tribunal dismissed their arguments that the FA2004 regime, which they regarded as a taxation regime, breached the fundamental freedoms of the TFEU because UK pension schemes were treated in the same manner. The Tribunal also dismissed the submissions that the law breached Article 1 Protocol 1 of the Human Rights Act.
However, this was all moot. The Tribunal decided that it was more likely than not that a discovery had been made by an officer of HMRC by mid-2011 following the provision of information by the transferring pension schemes in January 2011. The Tribunal held that three years, or two if necessary in one case, was too long for a discovery to retain its “essential newness”. HMRC failed to persuade the tribunal that a discovery was not made until later. The assessments raised in 2014 were therefore invalid as the discoveries had become “stale” and the appeals allowed.
Practical implications
The decision emphasises that a “discovery” does not need to be a new piece of information. It is sufficient that it newly appears to an HMRC officer that there has been an under-assessment to tax; new information, a change of view, a change of opinion, or even a correction of an oversight all count. However, HMRC then have to act quickly; taxpayers facing discovery assessments should seek to determine whether a discovery has been made at all and, if it has, whether HMRC have delayed on acting long enough that they are no longer entitled to raise an assessment.
Originating as an extension of French copyright law in the 1920s, an artist’s resale rights, or droit de suite, is now a common feature of an artist’s moral right across Europe. Such right affords artists royalty payments upon subsequent sales of original works of art. In stark contrast, however, the US codified what is known as the First Sale Doctrine, whereby the copyright holder’s right to control reproductions and displays of an artwork does not extend to the original work itself, thus limiting absolute ownership and pre-empting the artist from having an interest in the resale of such work. This doctrine was codified in the federal Copyright Act 1976 (FCA).
Only one year later, in 1977, California attempted to challenge the First Sale Doctrine by enacting the California Resale Royalties Act (CRRA) which granted artists an unwaivable right to 5% of the proceeds of any resale of their artwork in specified circumstances, such right being akin to that afforded to artists across Europe.
In 2011, several artists and their successors sought recovery of these royalties from Sotheby’s, Christie’s and eBay. After a seven-year legal battle, with the Ninth Circuit Court of Appeals (“Ninth Circuit”) having already limited the resale right to sales only within California in 2015, the case came to the Ninth Circuit once more. In its recent ruling, the Ninth Circuit has limited such rights even further by holding that the FCA pre-empts them in their entirety. However, the predecessor to the FCA (the Copyright Act 1909) did not pre-empt such rights. The court found that the artists did have a right, but it was limited to a one-year period: from 1 January 1977 when the CRRA came into force until 1 January 1978 when the FCA became effective.
This decision highlights the distinctions between the US and the European attitudes towards royalties, despite the US becoming a signatory to the Berne Convention, which recognises an artist’s right to an interest in subsequent sales of artworks, back in 1989.
It is thought that the royalty right provided by the CRRA has been neglected by many of California’s galleries and auction houses. However, this decision will affect those artists who have been actively collecting their royalties, and throws into question any past or future attempts by either the federal government or other states to enact legislation granting royalty rights across the US.
Since 27 October 2017 – when an investigation was opened – the Competition and Markets Authority (CMA) has been monitoring online hotel booking sites following concerns that such sites may breach consumer legislation, notably the Consumer Protection from Unfair Trading Regulations 2008, and Part 2 of the Consumer Rights Act 2015. On 28 June 2018 the CMA announced that it is launching enforcement action against a number of websites.
Among the potential breaches identified by the CMA is the extent to which search results may be influenced by the amount of commission that a hotel pays to the respective website, which can have a detrimental effect on consumer choice. In addition, the CMA has identified pressure selling as another area of concern. The CMA describes pressure selling as “[creating] a false impression of room availability” or “[rushing] customers into making a booking decision”. The CMA also sets out to scrutinise the discount claims which many sites make, specifically whether the discount claims offer a fair comparison based on genuine and comparable room pricing. Finally, the CMA has also identified the issue of potential hidden costs, which means that the prices initially shown to customers may be lower than the grand total presented once the customer has reserved a holiday.
The CMA has additionally consulted the Advertising Standards Authority (ASA) to determine whether sites may be misleading customers by using phrases such as “best price guaranteed” or “lowest price”. The CMA plans to address the above concerns by “securing legally binding commitments” from the particular websites found to have committed breaches or, if necessary, take them to court.
The Court of Justice of the European Union (“CJEU”) found in the Fidelity Funds case (C-480-/16) that Danish legislation regarding withholding tax on dividends distributed to non-resident investment funds is not compatible with EU free movement of capital.
The taxpayers, investment funds (“UCITS”) registered in the UK and Luxembourg, reclaimed withholding tax paid on dividends received from Danish companies. Danish law provided for tax to be charged on dividends paid by a Danish company to a foreign UCITS, but not on dividends paid to a Danish UCITS. The CJEU held that this difference in treatment amounted to a restriction on the free movement of capital.
The difference in treatment related to objectively comparable situations. The purpose of the Danish legislation was twofold: first, to prevent double taxation of the UCITS and its investors; and secondly, to defer taxation to the level of the investors. On the double taxation point, the CJEU found that resident and non-resident UCITS were in a comparable position as Danish law imposed tax on the income received by non-resident UCITS, the same as for resident UCITS. On the second point, the court found that Danish and non-Danish UCITS were again comparable. The fact that Danish UCITS were subject to a minimum distribution requirement and a corresponding obligation for the fund to act as withholding agent on its investors’ behalf – a condition not applicable to non-Danish UCITS – was not a decisive difference between the two types of UCITS. It was the substantive conditions of the power to tax investors’ income that was decisive, not the method of taxation used. Denmark had the power to tax resident investors on dividends distributed by non-resident UCITS. The fact that Denmark could not tax non-resident investors on dividends distributed by non-resident UCITS was consistent with the logic of moving the level of taxation from the vehicle to the investor. Moreover, the restriction was not justified by overriding interests relating to the balanced allocation of taxing powers or fiscal coherence.
This article appears in the JHA June 2018 Tax Newsletter, which also features:
The CJEU concluded in Hornbach-Baumarkt v Finanzamt Landau (C-382/16) that German legislation taxing a guarantee given without corresponding consideration for loans incurred by non-resident subsidiaries is not in breach of the freedom of establishment.
Hornbach, a German company, gave its Dutch subsidiaries a guarantee for their loans, but did not charge them any consideration. The German tax authorities took the view that unrelated third parties would have agreed on remuneration for the guarantees, and decided to increase the income of Hornbach by the presumed remuneration amount and tax it accordingly.
The CJEU held that this approach was a restriction on the freedom of establishment as the deemed profit increase and corresponding tax charge would not have been applied if the loan guarantee had been given for a German company. However, the CJEU further held that this restriction was justified based on the need to maintain the balanced allocation of power to tax between Member States. Allowing companies resident in a Member State to transfer their profits (in the form of unusual or gratuitous advantages) to companies in other Member States and with which they had a relationship of interdependence may undermine such balanced allocation. This was the case in the present scenario, and the German legislation permitted the exercise of the power to tax. Nonetheless, the CJEU noted there was potentially a commercial justification in the present case for granting a guarantee gratuitously, since Hornbach was a shareholder in the Dutch borrowers. The CJEU added that it was for the referring court to determine whether Hornbach could provide a satisfactory commercial justification for the gratuitous guarantee.
This article appears in the JHA June 2018 Tax Newsletter, which also features:
In A/S Bevola and Jens W. Trock ApS v Skatteministeriet (C-650/16) the CJEU applied its findings in Marks & Spencer (C-446/03) to the losses of a foreign permanent establishment, and confirmed that such losses can be deducted from the profits of a parent company based in a different Member State.
A/S Bevola, a Danish incorporated company, had incurred losses in its Finnish establishment which it wanted to deduct from its taxable income in Denmark, but this was refused by the Danish tax authorities. The question before the CJEU was whether Danish law breached freedom of establishment by not allowing the deduction of losses of a non-Danish permanent establishment.
The CJEU held that there was a difference in treatment between a Danish company with a foreign permanent establishment and one with a Danish permanent establishment. This difference in treatment amounted to a restriction on the freedom of establishment as the two situations were objectively comparable. The court observed that the decision in Marks & Spencer on the losses of foreign subsidiaries was also applicable to the definitive losses of permanent establishments. It was contrary to EU law to exclude the possibility for a resident parent company of deducting losses incurred by its non-resident subsidiary, where the subsidiary had exhausted the possibilities of having those losses taken into account in its state of establishment.
This article appears in the JHA June 2018 Tax Newsletter, which also features:
The European Commission has been pushing forward proposals for a new law which could significantly limit the use of copyrighted material online. The proposed law is part of a larger set of reforms aimed at creating a Digital Single Market in the EU.
Article 13 of the draft Directive on Copyright in the Digital Single Market – approved by the European Parliament on 20 June – has come under particular scrutiny due to its potential impact on freedom of speech. The law would require websites to monitor all content (including that which is user-generated) and “take measures to ensure the functioning of agreements concluded with rightholders”. Such measures may well mean the implementation of strict copyright checks – such as content recognition and automatic filtering technologies – across social media platforms such as Facebook and Reddit.
Various media sources have decried the outlawing of memes as a potential effect of the new law on social media. Memes can be created by anyone and frequently employ either text, images or videos extracted from copyrighted material which is then deployed in the context of a contemporary problem or issue. Memes have become ubiquitous across social media platforms and are used, for instance, as powerful political satire: after all, an image can vividly express something either without, or using fewer, words. Under the new Article 13, the individual whose original copyright material it is may have grounds for complaint against a social media platform that allows it to be used without his or her permission.
The new law has already sparked a lively debate, with many high-profile figures such as World Wide Web inventor Tim Berners-Lee and Wikipedia co-founder Jimmy Wales signing an open letter to the European Parliament. They argue that Article 13 presents an “imminent threat” to the future of the internet and potentially violates the European Charter of Fundamental Rights. UN Special Rapporteur and UCI law professor David Kaye also argues that the law would violate the freedom of speech, while also acknowledging the need for regulation and copyright protection.
In Article 13 the EU has crafted an ambitious legislative agenda for the Internet. The real test will be the interpretation of what constitute appropriate measures to protect rightholders, and how these measures will be implemented across the entire spectrum of social media platforms, from tech giants to SMEs and start-ups.
On 12 June 2018 the Court of Justice of the European Union (CJEU) issued its decision in Case C-163/16 Christian Louboutin v Van Haren Schoenen BV, ruling that a mark consisting of a colour applied to the sole of a high-heeled shoe, is not covered by the prohibition of the registration of shapes. The mark does not consist ‘exclusively of the shape’.
Over 5 years ago, Christian Louboutin registered a trademark in Benelux for ‘footwear’ and ‘high-heeled shoes’ which is described as consisting “of the colour red (Pantone 18 1663TP) applied to the sole of a shoe as shown (the contour of the shoe is not part of the trade mark but is intended to show the positioning of the mark)”. Shortly after registration, Louboutin initiated a claim for trademark infringement against Van Haren, a company selling women’s shoes with similar red soles in the Netherlands. In response to such claim, Van Haren alleged that Louboutin’s trademark was invalid as it fell into one of the grounds in which registration of a trademark might be refused or declared invalid under the EU Trademark directive, particularly that the sign consisted exclusively of a shape that gives substantial value to the goods. After hearing such claim, the Netherlands court referred a question to the CJEU, asking whether the concept of ‘shape’, within the meaning of the directive, is “limited to the three-dimensional properties of the goods, such as its contours, measurements and volume […], or does it include other (non-three-dimensional) properties of the goods, such as their colour?”.
Following an opinion of Advocate General Szpunar (AG Szpunar) in 28 February 2017, the question was transferred to the Grand Chamber in September 2017, and subsequently AG Szpunar gave a second opinion in February 2018 following the reopening of the oral procedure and a further hearing. In this second opinion, AG Szpunar opined that a mark combining colour and shape may be refused or declared invalid under the directive, adding that the analysis must relate exclusively to the intrinsic value of the shape and take no account of attractiveness of the goods flowing from the reputation of the mark or its proprietor. This view, although not binding on the CJEU, led to a number of misleading and negative media reports suggesting that Louboutin was going to lose its trademark protection. Louboutin responded by taking the rare step of commenting on a not yet final legal matter and arguing that the opinion “supports trademark protection for our famous red sole, rather than threatening it.”
In its very short and concise decision, the CJEU, acknowledging that the directive provides no definition of ‘shape’, focussed instead on its meaning in everyday language, such that a colour per se, without an outline may not constitute a shape. Further, they took the view that a mark cannot be a shape “in the case where the registration of the mark did not seek to protect that shape but sought solely to protect the application of a colour to a specific part of that product.”
Given the negative media attention bought about by the earlier opinion of AG Szpunar, Louboutin were quick to welcome the CJEU’s decision with a statement proclaiming that “the protection of Christian Louboutin’s red sole trademark is strengthened by the European Court of Justice” and suggesting that “the red colour applied on the sole of a woman’s high heel shoe is a position mark, as Maison Christian Louboutin has maintained for many years.”
Whilst the decision is a step in the right direction for Louboutin, the outcome is yet to be finalised with the ultimate decision as to whether the trademark is or is not invalid now being passed back to the hands of the court in the Netherlands.
