Of Rags and Richemont: Chloé goes to court

Chloé's legal team give a whole new meaning
to the concept of making an appearance in Court

As a great believer in the old-fashioned virtues of spelling, punctuation and grammar, and as a great supporter of the much-neglected comma (note for some of our younger readers: that's the thing which looks like ' ), this Kat has always had a soft spot for a publication which, though now generally perceived as WWD.com, is really Women's Wear Daily. Muck it up and you can easily be left with Women Swear Daily which, as Merpel will tell you, is not the same thing at all.

Anyway, it was a chance encounter with Women's Wear Daily that bought a slightly unusual event to the Kat's attention. Richemont (or Compagnie Financière Richemont S.A., if you want to be formal), is a company that is built on some fairly luxurious brands: Dunhill, Baume et Mercier, Cartier, Chloé, Montblanc, Piaget S.A. and Van Cleef & Arpels float easily into the mind.   As a company, Richemont is a little unusual.  In a world of aggressive corporate beasts that strut and stomp and generally breathe plumes of flame at anyone whom they deem to be an inconvenience to their businesses and a threat to their IP portfolio, Richemont's profile is more that of an amiable herbivore, prepared to resolve its problems peacefully without first pressing the destruct button.  Evidence of this can be found in the relative infrequency with which Richemont's name, and that of its brands, crops up in the law reports, as well as the slightly shocking notion espoused by the luxury house that online and offline traders shared the same planet, it being better for brand owners to work closely with auction hosts like eBay rather than waste their energies and resources in trying to hit them over the head -- a policy which Richemont has pursued over the past decade.

Yet there are limits to even Richemont's patience.  As WWD reported yesterday, Chloé and three of her friends have been moved to commence proceedings in the District Court for the Central District of California against Pakistan's Tradekey.com and its parent, Saudi-based Sawabeh Information Services Co., alleging that they have knowingly engaged in the sale of counterfeit replicas of Richemont products through the activities of unauthorized sellers, manufacturers, suppliers and distributors.  This is no David v Goliath dispute: Tradekey is believed to be the second-largest business-to-business global marketplace e-commerce site after Alibaba.

So why is it good to talk to eBay but sue Tradekey? WWD explains why Richemont opted for something more robust than a fireside chat over tea and muffins:

"According to the plaintiffs, who waged a yearlong investigation, Tradekey not only helps manage listings by counterfeiters, editing postings and removing the term “replica” from their title, but it also provides search engine optimization services to its members, who sell counterfeit goods. ..."

It's also the case that, while eBay is more consumer-facing and also operates the Verified Rights Owner (VeRO) programme for IP-driven businesses to report sites that sell infringements, while Tradekey is more business-to-business and its mechanism for dealing with vendors of infringing goods is somewhat low-profile.

Quite a bit of homework has gone into this action, WWD reports. Richemont's investigation was led by Rob [any relation of Sherlock?] Holmes (IPCybercrime.com), who tried out the GoldKey and SilverKey membership schemes for Tradekey's sellers:

"After paying $3,000 to become a GoldKey member, Holmes was contacted by a TradeKey representative who helped him promote his sell offer listings using certain keywords that would enhance his chances of being at the top of searches looking for fake Chloé bags, for example.
One of his Chloé ads stated: “We work directly with the #1 factory in China for perfect mirror quality fake Chloé Paddington handbags.” Another one more blatantly added: “The quality is mirror image and looks just like the real thing!” 

Holmes said in his declaration to the court that his Tradekey representative told him that, by using the company’s search engine optimization (SEO) savvy, some listings could pull in buyers from Google. The rep even boasted that Tradekey hired a former Google employee to help with its SEO work".

The launch of this action has brought some speedy results.  The first was a response from Tradekey's US attorneys that the case was “seriously flawed".  The second was a complaint that Tradekey was never given notice, nor had it received any request, that the infringing listings be removed. The third was a statement that

“It [Tradekey] has terminated thousands of listings — generally in no more than 24 hours after receiving notice — and has implemented expedited takedown procedures for bulk notices, a process utilized by many leading brands".

The IPKat will be watching the outcome of this matter with great interest.  Merpel too: she says, actively promoting the sale of fakes and then agreeing to stop only when asked to do so is a bit like actively hitting someone over the head and then agreeing to stop only when asked to do so, isn't it?

Reporting sellers of fakes to Tradekey? Click here

Letter from AmeriKat II - Tiffany v eBay (False Advertising)

False Advertising

Under section 43(a) of the Lanham Act an individual is prohibited from

"in commercial advertising or promotion, misrepresenting the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services or commercial activities."

A claim of false advertising may be based on at at least one of two theories (Time Warner Cable v DIRECTV (2007)):

1. that the challenged ad is literally false


2. that the ad, while not literally false, is nevertheless likely to mislead or confuse consumers

The claimant must demonstrate that the false or misleading representation involved an inherent or material quality of the product and that the injuries to be redressed are the result of "public deception" (Johnson & Johnson v Smithkline Beecham (1992)). Where an ad is literally false, the court has the power enjoin the use without reference to the impact of the ad on the buying public (McNeil-PCC v Bristol-Myers Squibb)(1991)). For Tiffany to succeed in a likelihood-of-confusion case where the ad is not literally false, they have to prove that the ads tend to mislead or confuse consumers and demonstrate that "a statistically significant part of the commercial audience holds the false belief allegedly communicated by the challenged advertisement" (Johnson & Johnson (above)).

eBay advertised the sale of Tiffany goods on its website by providing hyper-links to "Tiffany", Tiffany & Co under $150", "Tiffany & Co.", Tiffany Rings" and "Tiffany &Co. under $50." They also purchased sponsored-link ads on various search engines to promote the availability of Tiffany items on its site, including ads that stated "Tiffany on eBay. Find Tiffany items at low prices..." Tiffany alleged that because eBay advertised the sale of Tiffany goods on its website and that many of those goods were counterfeit, eBay should be liable for false advertising. The district court rejected this argument because first, the ads were not literally false because authentic Tiffany merchandise was also sold on eBay's website, despite counterfeit products also being available for purchase. Second, they stated that the ads not misleading either for three reasons:

1. eBay's use of Tiffany's mark was protected, nominative fair use


2. Tiffany has not proved that eBay had specific knowledge as to the illicit nature of individual listings. This finding by the district court implied that specific knowledge was necessary to sustain a false advertising claim.


3. To the extent that the ad was false, that falsity was the result of and the responsibility of the vendors, not eBay.

The Court of Appeals agreed with the district court on only one issue - that the ads did not satisfy the first category of being literally false. On the second category of ads, the court must determine whether extrinsic evidence indicates that the ads were misleading or confusion. The appeals court stated that the district court's three step reasoning process did not seem to reflect this determination, taking each in turn:

1. Just because eBay's use may have been nominative fair use does not mean that the use was not also in a misleading ad.


2. eBay's knowledge of infringing activity does not have an relevance on whether the ads were misleading "in so far as they implied the genuineness of Tiffany goods on eBay's site."


3. eBay affirmatively advertised goods sold through its site as Tiffany merchandise by hyperlinks and purchases of sponsored ads. This is the case irrespective of the counterfeit goods being supplied by the vendors, not eBay.

The court of appeals stated that the law prohibits an ad that implies that all of the goods offered on eBay's site are genuine, when in fact, as is the case with Tiffany's goods, a "sizeable proportion of them are not." This does not stop service providers like eBay from advertising goods. The court stated that a disclaimer citing that that not all of the goods on the site are genuine Tiffany products might suffice. They decided to remand the case back to the district court to reconsider the claim in light of what Circuit Court of Appeals said about the district court's 3-issue determination.

Tiffany will still have a difficult time in providing sufficient evidence that indicates that the ads were misleading or confusing to consumers. Readers may recall that the other survey evidence produced by Tiffany during the summary judgment stage that indicated at about 71% of 'Tiffany' goods on eBay were counterfeit. This survey evidence was "methodologically flawed and of questionable value" and "provided limited evidence as to the total percentage of counterfeit goods available on eBay." Tiffany will have a massively high hurdle to surmount in ensuring that their evidence produced regarding the misleading or confusion nature of the ads does not fail where their other survey evidence did. Additionally how many consumers would really be mislead into thinking that an eBay ad stating "Tiffany on eBay (one such potential consumer - picture right). Find Tiffany items at low prices..." means that "all goods purporting to be Tiffany on eBay are genuine"? And how would Tiffany go about producing evidence that shows that which are not methodologically flawed? How could you phrase a question to a consumer that showed could show this evidence? Any statisticians out there with any thoughts?

Tiffany's CEO Michael J Kowalski said in a statement that Tiffany is "disappointed" with the ruling and may appeal to the US Supreme Court.

The AmeriKat thanks the IPKat's friend and esteemed trade mark blogger, Martin Schwimmer for alerting the Kat to the ruling.

Letter from AmeriKat I - Tiffany v eBay (Trade Mark Infringement)

The AmeriKat is on Kat duties this weekend and so to that end she has been dosing herself up on caffeine ready for any breaking IP news. In days gone by, the Easter weekend would present the AmeriKat with opportunities to dye eggs a variety of pastel shades (picture right) and eat copious amounts of chocolate while watching Fred and Judy in Easter Parade. The "Holy Grail" of the AmeriKat's kittenhood Easter basket was the almighty peanut-butter chocolate bunny. One bite of an ear off this bunny meant one's weekly calorie intake was satisfied. Nowadays, however, the AmeriKat has grander Easter basket present illusions. Something like this little 18K gold and diamond sparkling egg from Tiffany & Co would do quite nicely - and with far fewer calories than the bunny!

E-Bay may continue breakfasting on Tiffanys, rules 2nd Circuit Court of Appeals

Tiffany & Co may be feeling less sparkling than their pendant this week following the Court of Appeals for the 2nd Circuit ruling in the eBay case. In 2004 Tiffany issued proceedings against eBay for facilitating and advertising sale of counterfeit Tiffany goods and therefore such acts constituted trade mark infringement, dilution and false advertising. In July 2008, District Judge Sullivan concluded at summary judgment that eBay did not engage in trade mark infringement, false advertising or trade mark dilution despite counterfeit Tiffany merchandise being sold through its site. Tiffany appealed and this past week the Circuit Court of Appeals affirmed the ruling in relation to trade mark infringement and dilution but remanded the case for further determination in respect of Tiffany's claim of false advertising. For convenience the AmeriKat has divided the case between two posts: one dealing with the trade mark infringement aspects and one dealing with the false advertising claim.

Direct Trade Mark Infringement

Tiffany alleged that eBay used Tiffany's mark when purchasing sponsored links and selling products under Tiffany's mark on their website. However, Judge Sullivan found that the doctrine of nominative fair use protected eBay's use of Tiffany's mark. The doctrine allows eBay to use Tiffany's mark to identify their goods as long as there is no likelihood of confusion about the source of the product (Merk & Co. v Mediplan Health (2006)). The use has to be reasonably necessary to identify the product and eBay's use must do nothing that would suggest sponsorship or endorsement by Tiffany (New Kids on the Block v News Am Publishing (1992)). The 2nd Circuit Court of Appeals agreed with the district court that eBay used the mark to describe accurately the genuine Tiffany goods offered for sale on its website and its uses of the mark did not suggest an affiliation of Tiffany with eBay or endorse the sale of its products on the site.

In respect of goods that were being sold on eBay under the mark that were not genuine Tiffany argued that eBay was liable for direct trade mark infringement because they knew that there was "a substantial problem with the sale of counterfeit Tiffany silver jewellery." The Court of Appeals held that eBay's knowledge that counterfeit wares were offered on its website was only relevant to the issue of contributory trade mark infringement and to the issue of eBay's liability to false advertising, but it does not go to eBay's liability for direct trade mark infringement. In support, the court pointed to the fact that eBay removed listings that Tiffany pointed out were counterfeit and that to impose liability for direct infringement on eBay would "unduly inhibit the lawful resale of genuine Tiffany goods." The court referred to this quote from Poymer in support:

"As a general rule, trade mark law does not reach the sale of genuine goods bearing a true mark even though the sale is not authorized by the mark owner." (Polymer Tech Corp v Mimran (1992)).

Contributory Trade Mark Infringement

The more difficult issue the appeals court recognized was whether eBay was liable for contributory trade mark infringement for facilitating the infringing conduct of the counterfeiting vendors. Contributory trade mark infringement is a common law doctrine which tests a defendant's conduct by determining whether eBay intentionally induced vendors to infringe Tiffany's mark or knew or had reason to know that vendors were engaging in trade mark infringement but still allowed vendors to continue trading regardless (Inwood Laboratories v Ives Laboratories (1982)). The Inwood test applies to a service providers, like eBay, if he or she exercises sufficient control over the infringing conduct (Lockheed Martin Corp v Network Solutions (1999) and Polymer II (1994)). However, the appeals court recognized that the limited case law leaves the law of contributory trade mark infringement "ill-defined".

Tiffany did not argue the first strand of the Inwood test - that eBay induced the sale of counterfeit Tiffany goods on its website. It did, however, argue the second strand - that eBay continued to supply its services to sellers of counterfeit goods in circumstances where eBay knew or had reason to know that the vendors were selling counterfeit Tiffany products.

The district court rejected this argument because at the point of eBay knowing of a particular counterfeit listing, eBay promptly removed the content. The Circuit Court affirmed this decision in respect of the terminated listings. Tiffany however argued fervently that eBay knew or had reason to know that there were counterfeit Tiffany goods being sold ubiquitously on its website by virtue of their demand letters and other information provided about particular sellers of counterfeit goods. Tiffany argued that this evidence and information provided to eBay established eBay's knowledge of the widespread sale of counterfeit Tiffany products and therefore, in continuing to make its services available to infringing vendors was contributory liable. The district court rejected this argument because despite eBay having "generalized notice that some portion of the Tiffany goods sold on its website might by counterfeit" such generalized knowledge is insufficient under the Inwood test to impose such a substantial affirmative duty on eBay to police all vendors. This is because the Inwood test refers to a continued supply of services to 'one' whom it knows sells infringing products. Therefore to satisfy the test Tiffany would have to prove knowledge of particular instances of infringement, not general knowledge of infringement. Tiffany's broad interpretation of Inwood, said the Court of Appeals, was not supported by the Supreme Court's dicta of the test in Sony Corp. v Universal (1984). There the Supreme Court stated that the Inwood test was a "narrow standard" that required knowledge of "identified individuals" engaging in infringing conduct. The Court of Appeals thus found that eBay was not liable for contributory trade mark infringement.

Trade Mark Dilution

US federal and New York state law allow Tiffany, as an owner of a famous mark, to stop a person from using the Tiffany mark in commerce in a way that is likely to cause dilution by blurring or dilution by tarnishment of the mark. For a run-through of trade mark dilution see this Amerikat post. The district court rejected Tiffany's dilution by blurring argument because they found that eBay had never used the Tiffany mark in an

"effort to create an association with its own product, but instead, used the marks directly to advertise and identify the availability of authentic Tiffany merchandise" on its site.

For the same reasoning, the court found that the tarnishment claim failed. The Court of Appeals affirmed this decision:

"Tiffany argues that counterfeiting dilutes the value of its product. Perhaps. But insofar as eBay did not itself sell the goods at issue, it did not itself engage in dilution."

eBay told: "pay €1.7million" in LVMH dispute

The Guardian has just reported ("Illegal perfume sales cost eBay £1.5m in fines") that a Parisian court has ordered eBay to pay more than £1.5m for breaching an injunction that banned its users from trading in goods made by French luxury conglomerate Louis Vuitton.

Right: vintage 1950s Max Factor Sophisti-Cat perfume

The court has apparently ascertained that the online auction host had not done enough to prevent the trade of goods made by LVMH, which owns brands such as Louis Vuitton, Moet Hennessy, Givenchy and Christian Dior. The article adds:

"The auction website had been banned from letting such sales take place following a 2008 court case [This ruling, translated into English, will appear in the February 2010 issue of the European Trade Mark Reports, unless the IPKat can get its release accelerated] but the court found that there had since been more than 1,300 incidents in which users advertised cosmetics and perfume made by the company.

LVMH said the award was a victory in its fight to retain the right to "selective distribution" - control over which outlets are able to sell its goods.

"This decision constitutes an important step in the fight against unlawful practices," said the company. "Selective distribution ensures the security and quality of products for consumers. It generates numerous jobs and contributes to the ongoing worldwide success of European luxury goods brands." [Selective distribution is one of those areas where the tectonic plates of IP protection and competition policy grind against each other]

In the belief that its high-value brands will be hurt if they can be resold online, LVMH has been waging an ongoing battle against internet retailers such as eBay for several years.

Last year it registered a significant victory in which the auction website was ordered to pay £30m in damages.

That ruling took place after it emerged that fake goods using LVMH's brands were being sold on eBay, but the ruling extended to preventing the sale of any of the company's goods on the site - regardless of whether they were pirated or not.

In a statement, eBay said the fine was "disproportionate" and that it would be appealing the decision in higher courts, since it believes that the injunction constitutes an unfair restriction of trade.

"Today's outcome hurts consumers by preventing them from buying and selling authentic items online," said Alex von Schirmeister, the general manager of eBay in France. "The injunction is an abuse of 'selective distribution'. It effectively enforces restrictive distribution contracts, which is anti-competitive."

The French conglomerate has also taken action against Google, which it says is acting illegally by selling search advertising using the company's trade marks". [Despite some rumours to the contrary, there is still no evidence that the Court of Justice of the European Communities, which is currently considering a number of questions arising out of this dispute, will give its ruling before the end of the year.]

What's not clear to the IPKat is whether the decision represents a triumph for Louis Vuitton because of its outcome or a disappointment for luxury brand owners given the relatively small size of the award in contrast to the turnover in deals involving luxury goods. The Kat is however sure that the saga will not stop at this point: both in terms of profits and principles there's far too much at stake. Merpel says, on behalf of all cats I'm thinking of bringing a class action against all the perfume manufacturers who make perfume out of cats.

See also reports from the BBC, Times Online, Bloomberg

Art for Cats online auction here

Government U-turn on downloaders; parallel imports blames for pharma shortages

Government revives downloader cut-off proposal

The IPKat has learned from the BBC that the Department for Business Innovation and Skills is to consult on whether the forthcoming Digital Economy Bill should include a requirement that ISPs cut off persistent downloaders. Although Lord Carter's Digital Britain report recommended that Ofcom should explore the issue thoroughly before such a measure was taken, this would take until 2012. The Government feels that this the threats posed by online infringement could mean that this would be too long to wait. To take account of the change in position, the Digital Britain consulation period has been extended to 29 September.

The IPKat isn't hugely impressed. What's the point of commissioning such a report if you're going to brief against its measured recommendations? And wouldn't it have been more sensible to have put this proposal forward at the beginning of the consulation period, rather than halfway through?

BIS press release here.

Parallel imports lead to UK drug shortages

Also from the BBC, the news that a survey by Chemist and Druggist magazine has revealed that 90% of pharmacies have experienced difficulties in obtaining stocks of branded medicines. Some patients have suffered health problem as a result (either physical problems, or caused by anxiety when the correct drug cannot be obtained). A good deal of the blame has been placed on parallel imports into other countries of medicines intended for the UK market.

The IPKat wonders if this is another effect of the credit crunch, with the weakish pound making the UK a good place to source goods for export. He wonders if a similar phenomenon is apparent is other products. The problem though is a serious one. He has a dim and distant recollection of an ECJ case saying that sales of parallel imported goods could be stopped on competition grounds where parallel trade leads to a shortage on the exporting market, but he never thought that the UK would be affected in this way.

Digital Britain Interim Report

Today BERR and the Department for Culture, Media and Sport published Lord Carter's Digital Britain Interim Report (the final report is in the late spring).

Not surprisingly, one of the issues on the agenda was illegal downloading and use of peer-to-peer services.

The IPKat thought that the background commentary was pretty well balanced. Copyright on the internet is a problem, the commentary acknowledged, but the 'blame' (if that's the right word) wasn't just placed on those pesky downloaders. Instead, it was acknowledged that things happen quicker in the digital world, and that content providers have to meet the expectations of their consumers that content should be available quickly and easily through the development of new business models. To take one quote:

Copyright is vital for our content and communications industries. It is the framework through which people can protect their creations and seek reward. Our aim, in the rapidly changing digital world is a framework that is effective and enforceable, both nationally and across borders. But it must be one which also allows for innovation in platforms, devices and applications that make use of content and that respond to consumers’ desire to access content in the time and manner they want, allowing them to use it how they want, and at a price they are willing to pay.

However, the IPKat wasn't so happy about all of the report's 3 planned actions in this area:

ACTION 11 By the time the final Digital Britain report is published the Government will have explored with interested parties the potential for a Rights Agency to bring industry together to agree how to provide incentives for legal use of copyright material; work together to prevent unlawful use by consumers which infringes civil copyright law; and enable technical copyright-support solutions that work for both consumers and content creators. The Government also welcomes other suggestions on how these objectives should be achieved.

[IPKat comment: providing incentives for legal use seems to be code for innovative new business models. What are these innovative new business models the Kat would like to know.?The only things which are mentioned are iTunes and DRM (but then, the Kat supposes that working out the new models is the job of this agency).]

ACTION 12 Before the full Digital Britain Report is published we will explore with both distributors and rights-holders their willingness to fund, through a modest and proportionate contribution, such a new approach to civil enforcement of copyright within the legal frameworks applying to electronic commerce, copyright, data protection and privacy to facilitate and co-ordinate an industry response to this challenge. It will be important to ensure that this approach covers the need for innovative legitimate services to meet consumer demand, and education and information activity to educate consumers in fair and appropriate uses of copyrighted material as well as enforcement and prevention work.

[IPKat comment: this is very bad news. Developing innovative new business models may not be the job of Government, but civil enforcement most definitely IS.]

ACTION 13 Our response to the consultation on peer-to-peer file sharing [available from BERR] sets out our intention to legislate, requiring ISPs to notify alleged infringers of rights (subject to reasonable levels of proof from rights- holders) that their conduct is unlawful. We also intend to require ISPs to collect anonymised information on serious repeat infringers (derived from their notification activities), to be made available to rights-holders together with personal details on receipt of a court order. We intend to consult on this approach shortly, setting out our proposals in detail.

[IPKat comment: this sounds like it will place a significant burden on ISPs, for relatively little reward in terms of respect for copyright the IPKat suspects].

What do David Lammy, ISPs and a bar of soap have in common?

The IPKat read with interest a Times interview with David Lammy, Minister for Intellectual Property, Higher Education and Skills (though it’s not too clear where the interview stops and the commentary starts).

It appears that the interview as timed to coincide with Lord Carter’s Digital Britain report, though that’s not coming out now until later in the week. However, at risk of giving at least part of the game away, Mr Lammy suggested that plans to force ISPs to cut the internet access of serial downloaders may have stalled. He pointed instead to the memorandum of understanding signed last July by ISPs and the music industry, which included ISPs sending out letters to those caught illegally downloading.

Mr Lammy noted:

“[Y]ounger people not quite buying into the system…We can't have a system where we're talking about arresting teenagers in their bedrooms. People can rent a room in an hotel and leave with a bar of soap - there's a big difference between leaving with a bar of soap and leaving with the television.”

An unnamed 'senior figure’ from the music industry noted:

“The relative cost of stealing a bar of soap from an hotel might be small, but if it came to seven million people nicking the soap each year, which is what we have in the music industry, I'm sure that hotel chain would do something about it.”

The IPKat is having trouble getting his head round Mr Lammy’s analogy. Surely it is theft to take bars of soap from hotel rooms, unless of course it’s one that you’ve started to use, but hotels turn a blind eye. Or perhaps the Kat is wrong, and there’s some sort of implied consent to the soap being taken – after all, the hotels have put it there in the knowledge that it is likely to be taken. Can some kind criminal lawyer help the IPKat’s poor brain?

What the IPKat is sure about though is that the music industry response just doesn’t work. The IPKat is sure that 7 million people do take soap from hotel rooms across the industry every year. The respondent is skewing the analogy by treating the music industry as one collective entity but dividing hotels into individual chains.

The Kat also notes the suggest in the article that Lord Carter may call from a levy on internet access to be paid to the music industry. The IPKat’s not too happy about this – what about the millions of people who don’t use the internet for downloading music and films, or those who already pay the music industry by sourcing legal downloads? Why should they pay?

UK ISPs ordered to hand over file sharers' details

The IPKat noticed this article (also noted here and here), which reports that computer game developer Topware Interactive (previously reported by the IPKat in relation to a recent related patents court decision here) have now managed to get a further high court order to force UK ISPs to reveal the identities of thousands of people believed to be involved in internet file sharing.

This development, although apparently a surprise to ISPs, comes as no surprise to the IPKat, who saw no reason why such a move couldn't have been done before, an obvious target for such a move being music file sharing (see previous posts here, here, here, here and here).   What the IPKat didn't expect is that the computer games industry would steal a march on the music industry and go ahead with taking action against individual file sharers.  He wonders what will happen now, and how many alleged infringers will have the nerve to resist the settlement offer. 

An interesting comment made here is that the games involved in this action are allegedly mostly second rate, and didn't sell many copies.  Is this a justification for going after people found copying these games, to make poor games pay? Does it matter? The IPKat thought that copyright infringement was the same regardless of the quality of the material, but this view is apparently not universally shared. 

BMI/ISP agreement; costs in the PCC

What have the BMI and ISPs agreed?

Yesterday the IPKat (in slightly sleepy state) was greeted with the news that British Music Rights (BMI) and the 6 leading UK ISPs (Tiscali, Virgin Media, BT, Orange, Carphone Warehouse and Sky) had reached an agreement on tackling illegal downloaders of copyright content. The IPKat thought it was a little odd that no one really seemed to be saying much on what the parties were actually agreeing to do, and then he went about his business.

It seems that the IPKat wasn't the only one who was confused. Today PC Pro reports that Carphone Warehouse has said that it will neither cut off their customers' internet access, nor will it divulge customer details without a court order. Instead, a Carphone Warehouse spokesman said:

"What we have agreed to do is to write to our customers and advise them there's been an alleged infringement. We're very clear that we don't know if that's the case or not, we've just been told there has been and we want to advise them of that".

The IPKat is rather suspicious of voluntary codes of practice like this one. It's one thing if an industry is agreeing to self-regulate. It's quite another if an industry is agreeing to self-regulate for the benefit of another industry, but the people who are really bearing the brunt of this are the ultimate consumers. The IPKat also wonders, what's in it for the ISPs here?


The desk drawer worth £100,000

Over to a costs cases in the Patents County Court. Anglia Autoflow Ltd v Wrightfield Ltd was a copyright case concerning ownership of a bespoke piece of software. The case was eventually abandoned by the claimant after a DVD came to light which showed early development stages of the defendant's software which indicated that it had been independently created. The said DVD was found by an employee of the defendant well into the litigation in his desk while he was looking for something else.

HHJ Fysh QC SC found that the defendant had failed to make a reasonable search since 'his material was where one would expect it to be; it was not hidden away in some unexpected place. Moreover the file suffix ('.cxp') is the suffix for an Omron programme and the earlier version could I think, have been found in response to a search under 'Okeford', 'Faccenda', 'Easyload' or '.cxp'. The file name itself, I would have thought, would have been indicative of potentially relevant material for disclosure.' Additionally, the defendant had been rather 'cavalier' in preparing for the litigation, and had made (possibly by inadvertence) a number of misleading statements. Both of these factors justified a reduction in costs payable by the claimant of 20% (a claimant that abandons a case would normally be liable for 100%).

The thing that struck the IPKat though was the quantum of costs involved. Although the program cost the claimant £10k, the costs incurred in this case were almost £1million. The IPKat (perhaps naively) thought that the PCC was meant to be a less costly venue for IP litigation.

Confused Kat in search of AdWord, Keyword help

Hoping to do some writing on the subject, IPKat team member Jeremy has been pondering the legal position of trade mark owners, internet traders, internet service providers and name purchasers in a situation where a purchaser buys, for use as an adword or keyword, a term that is registered by another person as a trade mark. It seems to him that there are quite a few decisions popping up these days from courts around Europe and there is no consistency in them in terms of application of legal principles to the facts. This has now led to the making of a reference to the European Court of Justice on a number of topical questions.

Jeremy thinks it would be interesting to chart national case law in Europe so far and wonders if his readers can tell him if anyone has already compiled a country-by-country scoreboard. If no-one has yet done this, Jeremy will be quite happy to have a go at this himself, since it's a useful research resource that he'd be willing to share with his colleagues. So, if you can point him in the direction of this data, he'd be hugely grateful. If not, please email him -- using the term Key as your email subject title-- and let him know of cases in your jurisdiction.