Ireland IP & Technology Law Blog : Dublin Lawyers & Attorneys for Intellectual Property, Communications & Information Technology Law in Ireland, U.S. & England

The European Commission published today a package of legislative proposals in a bid to ensure that all EU consumers can resolve disputes with traders without recourse to the courts. The proposal envisages that the European Parliament and the EU Council will adopt a Directive which requires Member States to ensure that competent alternative dispute resolution entities (“ADR entities”)will be available throughout EU to which consumers may refer any contractual dispute with a trader.

The package also includes a proposal for a Regulation to establish an EU-wide online platform to facilitate the resolution of disputes related to the cross-border online sale of goods or provision of services between a consumer and a trader. It is proposed that this online platform will automatically send the consumer’s complaint to the competent national ADR entity and facilitate the resolution of the dispute within 30 days.

In support of the new proposals, John Dalli, the Commissioner for Health and Consumers stated “Once adopted, the proposals that I am putting forward today, will help European consumers to use easy, quick and inexpensive ways to sort out their problems, wherever and however they purchase a product or service in the EU”.

The European Parliament and the EU Council have committed to adopting the package by the end of 2012 and it is anticipated that Member States will have taken measures to ensure competent ADR entities are in place by mid 2014, with the single EU-wide platform for online dispute resolution becoming fully operational six months later.

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Recent developments at domestic and European level in the area of consumer law aim to overhaul the current framework, to strengthen consumer rights and to provide a more user-friendly system for consumers.

Irish developments

At domestic level, the Sales Law Review Group (SLRG) recommended in their Report which was issued today, that a new Irish Consumer Contract Rights Act be enacted to incorporate the main statutory provisions applicable to consumer contracts, including the provisions of the new Consumer Rights Directive (see below for details), the Directive on Consumer Sales and Guarantees, the Directive on Unfair Contract Terms, and relevant provisions of the Sale of Goods Acts 1893 and 1980 and other enactments. Provisions relating to other non-core aspects of consumer contracts of sale should be dealt with, together with all of the provisions applicable to commercial contracts, in a new Sale and Supply of Goods and Supply of Services Act.

The SLRG also recommended the following:

• A ban on excessive payment fees – it will not be permissible for a seller to charge payment fees greater than the cost of processing the payment
• A ban on additional charges on consumers by means of ‘pre-ticked boxes’ – additional charges will only be permitted where express consent is given
• Curbs on “small print”, possibly by requiring minimum font sizes and mandatory font colour such as black
• A requirement that receipts be issued in consumer transactions
• A rule that consumers would have the right to reject faulty goods within 30 days, replacing the complex and uncertain rules that currently apply
• A rule that goods must be of satisfactory quality
• Significant pro-consumer improvements in laws relating to services, including a rule that sellers cannot exclude certain terms in consumer contracts and strengthened guarantees as to the quality of a service provided to a consumer
• Improvements in the rules governing distance and off-premises selling. These will apply most notably to internet purchases, and will include an increase from 7 to 14 days in the time period in which consumers can withdraw from a contract

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A recent ruling by the European Court of Justice (ECJ) on 12 July 2011 in the L'Oreal v. eBay case is an interesting one as it goes some way toward clarifying the law with regard to IP infringement control in the area of e-commerce.

L’Oreal claimed that eBay was liable for trademark infringements committed on its website, not only by permitting counterfeit products to be sold through its platform but also by virtue of promoting these products.

eBay refuted this contention, arguing that it merely provides a contact facility between sellers and buyers, and that it cannot be held responsible for their actions. eBay also claimed to have made a concerted effort to minimise the amount of IP infringements that take place on its site by investing considerable resources in terms of personnel and finances, in an effort to insure maximum protection of the rights of trademark owners.

In its judgement, the ECJ clarified a number of important issues. They held:-

• that the proprietor of a trade mark may rely on his exclusive right as against an individual who sells trade-marked goods online only when those sales took place in the context of commercial activity;
• that a trade mark proprietor is entitled to prevent an online marketplace operator from advertising for sale, goods bearing its trade mark using a keyword which is identical to the trade mark, where that advertising does not enable reasonably well informed and observant internet users to ascertain (easily) whether the goods concerned originate from the proprietor of the trade mark or from a linked business or a third party;
• where a seller on an online marketplace infringes trademarks, the marketplace operator will be deemed to have played an active role and thus will be liable where it provides assistance to the seller such as optimising the presentation of the online offers for sale or promoting those offers. Even where it does not play such an active role, the ECJ held an operator may still be liable where it was aware of facts that  a diligent operator should have realised meant that the offers in question were unlawful; and
• injunctions could be obtained against marketplace operators requiring that operator to take measures to prevent future infringement of those rights.
 

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The ECJ has ruled that Lego’s 2 x 4 red brick logo is not registrable as a Community Trade Mark due to the fact that all the essential characteristics of the Lego brick perform a technical function.

OHIM, the European Trade Mark Office, originally cancelled the registration of Lego’s famous red brick back in 1999 after Lego competitor Mega Brands requested its cancellation. Mega Brands argued that European trade mark law precluded the registration of "any shape which performs a function from trade mark protection". Lego appealed the decision to the Court of First Instance and then further to the European Court of Justice.

It appears that the ECJ was influenced in its ruling by the public interest consideration in ensuring that companies cannot use trade mark law to secure a monopoly over technical solutions. The ECJ decision indicates that obtaining a Community Trade Mark for product shapes could potentially be problematic for businesses.

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The first Interactive Advertising Bureau, Ireland (IAB) and PwC adspend study has revealed that:

• online advertising in Ireland approached the €100m threshold in 2009; and
• the online advertising sector achieved 10% of Irish adspend in 2009.

The study shows the importance of the Irish online advertising industry, and its resilience during recent economic conditions.  The growth in online advertising in Ireland also reflects the fact that more Irish people are now online. A report published this month by the Commission for Communications Regulation (ComReg) shows that PC and/or laptop ownership continues to grow in Ireland and that over three quarters of Irish adults use the internet for personal use.

With 75% of the participants in the IAB/PwC study predicting growth or strong growth in 2010, the outlook for the Irish online advertising industry is very positive.

For more information on the IAB/PwC adspend study, click here, and click here to be directed to the link to the ComReg study.

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The European Commission has recently adopted the new Vertical Restraints Block Exemption Regulation and Guidelines (VRBE).  These rules came into force on 1 June 2010 but provide for a one year transitional period for existing agreements. They will remain in force for a period of 12 years. The new VRBE reflects developments in the past 10 years, most notably the growth of the internet as a tool for online sales.

The regulation exempts a wide range of vertical agreements from the prohibition on agreements that restrict competition. It does not apply to agreements containing ‘hardcore restrictions’ whose ‘object is to segment markets to the detriment of consumers’.

The new rules address the question of online sales. The guidelines provide examples of restrictions online that would be considered ‘hardcore’ restrictions. These include agreements requiring a distributor to:

(a)        prevent customers located in another territory from viewing its website or automatically rerouting its customers;

(b)        terminate a transaction over the internet once credit card data reveals an address that is not within the distributor’s territory;

(c)        limit the proportion of overall sales made over the  internet - this does not exclude a supplier requiring a buyer to sell at least a certain amount of products offline in order to ensure an efficient operation of its brick and mortar shop; and

(d)        pay a higher price for products intended to be resold by the distributor online, than for products intended to be resold offline.

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IDA Ireland, Ireland’s inward investment promotion agency, has recently announced a number of significant technology investments into Ireland:

• MFG.com to establish EMEA Operations Centre in Drogheda: MFG.com is the largest online sourcing marketplace in the world. Commenting on the decision to locate in Ireland, Steffan Bachmann, General Manager, Europe, said that “Drogheda was a natural choice for our EMEA expansion, given the flexible, highly qualified workforce and the increasingly competitive, pro-business environment.”
• Space Firm AMPAC-ISP launches European headquarters in Dublin: rocket engines will be developed and built at the new AC-ISP space technology development and manufacturing centre in Dublin. Launching the headquarters, Mr O’Keefe, the Minister for Enterprise, Trade and Innovation, said it would be a 'space technology development centre of excellence'.
• ENERCON establishes technical services operations in Kerry: the announcement by ENERCON, one of the world’s largest manufacturers of wind turbines, will see the company create an Irish headquarters in order to service Ireland and the UK.
• Web Localisation Company to establish European Headquarters in Kerry: Straker has developed a technology and services platform that massively simplifies the process of web localisation, and is an emerging leader in this area. David Sowerby, Director, Straker Europe, said, ‘we looked at a number of options for our European headquarters, but with Ireland widely recognized as the centre for Localisation globally it was one of the first locations we considered.”

Click here to download details of IDA Ireland investment and job announcements of the year to date.  This shows that, despite the deep recession, Ireland reamins a favoured location for foreign companies looking to establish a European headquarters.

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Referral marketing is attractive to marketers but just because others are doing it does not mean that you should.  You could be committing a criminal offence under Irish data protection legislation if you send marketing messages by email or SMS to people referred to you by your customers.  The reason for this is that under data protection legislation you may not send marketing messages by electronic means to a person unless they have agreed to receive those messages.   Unfortunately for those of you in the marketing business, it is not possible for one customer to opt-in to marketing communications on behalf of another.  The Irish Data Protection Commissioner views this type of marketing as an unsolicited communication which could be deemed to be an offence under Irish Law.

…under Irish data protection legislation you may not send marketing messages by electronic means to a person unless they have agreed to receive those messages.

So the next time you ask your customers to refer a friend - be careful - because you might yourself end up being referred to the Data Protection Commissioner through a complaint that you have breached the code.

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You may recall that in January of last year Eircom agreed to implement a “three strikes and you’re out” policy as part of an out of court settlement with IRMA.  Eircom agreed to work with the “Big Four” music labels in Ireland – Universal, Warner, Sony and EMI – to help them pursue illegal downloaders and uploaders.  Under the system Eircom customers downloading music from peer-to-peer services were to receive two warnings after which they would be disconnected if they continued to engage in the activity.  The settlement agreement set a precedent and it was expected that all other ISPs in the Irish market would be compelled to follow suit.

However, recent developments at home and in Europe now call into question the effectiveness of the agreement.

Eircom and IRMA have requested the High Court to rule on whether implementing the “three strikes” rule contravenes data protection law.  A negative ruling by the High Court is likely to make the enforcement of the agreement very difficult.  

Further afield, in May 2009, the French Parliament passed legislation that introduced measures to combat music piracy, including a “three strikes” regime for persistent copyright infringers that would result in the perpetrator losing their internet connection. However, the French Constitutional Court subsequently held the provision to be unconstitutional. The court held that the legislation went directly against a decision in the European Parliament, whereby disconnecting alleged copyright infringers would violate the fundamental rights and freedoms of internet users.

More recently, the EU has adopted a telecoms directive that guarantees citizen access to the Internet and which requires due process and effective judicial protection for persons whose access to the Internet is denied.  Commissioner Viviane Reading has stated that “Three-strikes-laws, which could cut off internet access without a prior fair and impartial procedure or without effective and timely judicial review, will certainly not become part of European law”.

These developments pose seriousness challenges to the three strikes regime agreed between IRMA and Eircom.

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