The idea behind the patent system is simple: invention is a “public good” because it is expensive to invent but cheap to copy those inventions.
Commercialisation of IP – Law-7023 B
Answer ONE of the following questions:
Cauliflower Films Inc is a film studio that produces Hollywood blockbusters and series. Its most successful series is the espionage drama ‘No time to cry’. To distribute ‘No time to cry’, Cauliflower has entered exclusive licensing agreements with pay-TV channels established in several Member States of the European Union (EU). Under these agreements, Cauliflower grants the TV channels the exclusive right to broadcast the new episodes of ‘No time to cry’ in their respective Member States (‘the licensed territories’). The licensing agreement also contains clauses requiring the broadcasters to adopt measures ensuring that consumers established outside those Member States cannot receive ‘No time to cry’ through the Internet or via satellite. In the UK, Cauliflower has appointed the pay-TV channel Cloud TV as its exclusive licensee. Cauliflower has concluded an identical agreement with the TV broadcaster Souvlis TV for the broadcasting of ‘No time to cry’ in Greece.
The UEA grad bar ‘Fiasco’ organises a monthly series night, where it shows the newest episode of ‘No time to cry’. To avoid Cloud TV‘s high subscription fees, the grad bar has purchased an online subscription from the Greek pay-TV broadcaster Souvlis TV which broadcasts ‘No time to cry’ in original language with Greek subtitles. The grad bar accesses Souvlis’ services by using a Virtual Private Network (VPN) in order to circumvent geo-blocking measures adopted by Souvlis TV in compliance with its obligations under the licensing agreement. As it became aware of Fiasco’s film events, Cloud TV brings a legal action for copyright infringement against Fiasco.
Critically discuss whether Cloud TV’s legal action is likely to succeed and the arguments the Fiasco grad bar could put forward in its defence under copyright and EU competition law. Substantiate your arguments with concrete examples from the relevant case law, the European Commission’s practice and academic literature.
‘The idea behind the patent system is simple: invention is a “public good” because it is expensive to invent but cheap to copy those inventions. If we don’t do something to encourage invention by rewarding inventors, everyone will want to be an imitator, not an inventor. At the same time, patents represent a significant departure from the norm of market competition. A patent gives its owner a legal right not only to prevent others from copying her idea but even the right to stop independent inventors from continuing to use ideas they developed themselves. So patents can not only encourage innovation, they can also interfere with it.’
Torwich FC is a professional football club based in the city of Torwich, Denmark. Traditionally, Torwich has an orange-blue parrot as its logo. Alongside with its parrot logo, Torwich FC has also registered the club name ‘Torwich FC’ as trademarks for the production and sale of sportswear and all type of sports merchandise (e.g., scarfs, socks, underwear, bed linen, mugs) in Denmark and a number of other Member States of the European Union (EU). In Denmark, Torwich FC sells its sportswear and merchandise through its own shops.
1. The Trademark Proprietor entrusts the Licensee with the exclusive right to produce and sell sportswear and sports merchandise bearing Torwich FC’s registered trademarks in the Member State where it is established (‘the licensed territory’).
2. The Licensee is prohibited from promoting and selling sportswear and sports merchandise bearing Torwich’s trademarks through outlets outside the licensed territory and agrees not to respond to unsolicited orders from consumers established outside the licensed territory.
3. The Licensee undertakes not to sell sportswear bearing Torwich’s trademarks over the Internet.
4. The Licensee refrains from using or bidding on Torwich’s trademarks as keywords in Google AdWords for the purpose of online search advertising.
After having registered its trademarks in Slovakia in 2019, Torwich FC is contacted by the Slovakian professional football club Spartak Torwec. The latter’s logo, as well as its club name ‘Spartak Torwec’ have been registered as trademarks in Slovakia since 1957. Spartak Torwec opposes the registration of Torwich FC’s trademarks in Slovakia, as it fears confusion between both clubs’ football sportswear and merchandise. It is especially worried about the phonetic similarity between the two club names. Spartak Torwec has notified Torwich FC about its concerns and proposes an agreement to address these issues. The agreement provides that Spartak Torwec does not oppose the registration and use of Torwich’s trademarks in Slovakia subject to the following limitations:
(1) Torwich FC ensures that consumers established in Slovakia can only buy its sportswear and sport merchandising through its online www.shop torwich-fc.eu. Torwich FC sportswear and sport merchandising is not made available to consumers in Slovakia through physical shops.
(2) Torwich FC commits not to advertise its sportswear and sports merchandise in Slovakia.
(3) Torwich FC agrees not to challenge the validity of Spartak Torwec’s trademarks for 15 years regardeless of whether Torwec uses them commercially.
Assess whether the clauses of both agreements are benign trademark licensing and delimitation clauses or if they are in breach of Article 101 TFEU, and if so, under which circumstances. Critically discuss the underlying economic rationale of both agreements and their respective clauses from an IP and competition law perspective. Substantiate your arguments by referring to the relevant case law, European Commission decisions, academic articles and legal guidelines in your answer
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