Marketing Law - A brief guide European and International aspects of Marketing Law

I. Table of Contents

1. Intellectual Property Rights (IPR)
1.1 The Copyright ©
1.2 The Patent
1.3 Design Protection
1.4 The Trademark ™

2. Advertising
2.1 European Legislation on Misleading and Comparative Advertising
2.2 International Codes of Advertising

3. Special Rules in some Contracts
3.1 Distance Contracts
3.2 Contracts negotiated away from business premises
3.3 Package Travel
3.4 Purchase of the right to use immovable property on a timeshare basis
3.5 Consumer Credit

4. Competition - Law
4.1 Theoretical Introduction
4.1.1 Undertakings
4.1.2 The Objective
4.1.3 Exemptions under Article 81 (3)
4.1.3.1 Individual Exemption
4.1.3.2 Block Exemption
4.1.4 Vertical and Horizontal agreements
4.1.4.1 Horizontal agreements
4.1.4.2 Vertical agreements
4.1.4.3 Does it make sense to condemn vertical agreements?
4.1.5 Exclusive Distribution Agreement (EDA)
4.1.6 Exclusive Purchasing Agreements (EPA)
4.2 Competition within the Car Sector in the European Union
4.3 Voices against the expiration

II. Sources

1. Intellectual Property Rights (IPR)

It is not an easy task to create a nice film, wonderful music or a new software. But since it is really easy to copy the created economic value, this work has to be protected in order to keep this innovation process going and provide an incentive for the creation of investment in new works. Therefore a need for legal protection had arisen, which lead to enacting Intellectual Property rights. Many countries have seen the need for this protection. The following work outlines the European and partly the International Legislation of Intellectual Property Rights by first explaining the specific property right and further providing information about European and International legislation. Internationally, IPR are regulated by conventions like the Patent Cooperation Treaty, the Madrid Agreement for the international registration of brands, the Hague Agreement for industrial signs, and the Bern Convention of copy rights. Within the EU, the European Patent Office and the EU Regulation on Trademarks are responsible for the enforcement. Nationally, the national legislation as well as the registration offices take care of those issues. The IPR consist of Copyright, Trademark, Patent, and Design. They all are generally described as intellectual property or intangible property because they are property rights that cannot be touched or felt like personal property (e.g. car) or real property (e.g. land). However, the terms have different meanings and define different things.^[1]

1.1 The Copyright ©

“Copyright is the means by which a person or business makes a living from creativity.” (www.ifpi.org) A Copyright also protects the original way an idea is expressed, not the idea itself. It includes artistic, literary, dramatic or musical works presented in a tangible medium such as a book, photograph or movie. This protection is given to an author's works to prevent unauthorized copying. He can prohibit or authorize its reproduction in various forms, its public performance (play or musical), recordings, its broadcasting and translation to other people. The copyright consists of economic rights, which expire 50 years after the creator's death and the moral rights. This gives the creator the say to make any changes to his authorship of work. The EU - directive of May 2001 deals mainly with three areas for which Member States should provide copyrights: Reproduction, communication and distribution rights, which underlie certain exceptions, e.g. reproduction for teaching purposes or use in court.^[2]

The need for protection has been crucial to the authors in order to honour their contribution to the development of knowledge and entertainment all over the world. This protection should enable the author of publishing his/her work without concerning about unauthorized copies or misuse and furthermore provide incentives to companies or agencies to invest in the authors’ talents or their work. Basically, copyrights exist on one’s work as soon as it is created without any official procedures. Nevertheless many countries run national copyright offices, where works can be identified and distinguished, which of course improves the authors’ chance of substantiation if another party considers the work to be theirs. International norms exist further on, created by the World International Property Organisation (WIPO) Copyright Treaty and the Bern and Paris conventions. The creator or owner can enforce these rights in court in order to stop the trade with pirated goods and receive payments for losses and reputation damages. Since many owners do not have the means to pursue the legal enforcement of their copyrights, the establishment of collective management organizations or societies helps victims of piracy or else in such cases.

Copyrights can be sold to individuals or companies that can better mass market the works. In return the authors receive payments called ‘royalties’ which depend on the actual use of the work. The most used example for this is the music industry where artists receive a certain amount of money for every CD sold. This branch also shows most significantly, how copyrights can influence economy and how piracy can harm a country’s GDP. The Internet has lead to an extraordinary increase of piracy to be observed in recent years. Audiogalaxy, Morpheus, Imesh and other software enables surfers all over the world to share their digital music archive freely. European Union ministers have given their final approval to new EU-wide copyright laws aimed at curbing Internet and hi-tech piracy. The new legislation provides copyright protection for books, music and films on the Internet. It grants copyright owners with the right to use encryption to block duplication and to limit the illegal downloading of audio and video files.^[3]

1.2 The Patent

With the distribution of a patent the owner attains the legally protected monopoly for the economic use of the secured invention. Up to 20 years long he may now exclusively use the invention, demand royalty payments of third parties for usage, license or sell the right. As a return for this nationally guaranteed monopoly the patent application's contents are revealed at the latest after 18 months by the patent office. Thus the invention is made generally accessible and can become a starting point of further technical developments. This assures that the innovation process is carried further to future generations. Additionally market trends can be observed and parallel developments avoided. When a patent expires, the invention enters the public domain.^[4]

Furthermore patents provide incentives to the inventors by offering them recognition and material award. The exclusive right to exploit an invention commercially helps companies to refinance their research and development. In a broader sense, patents assure a continuous improvement in quality of human life. They can furthermore strengthen companies' market positions through forcing their competitors to seek different solutions once their own is protected. Inventions have to be of practical use, represent an element of novelty or a new characteristic in the prior art in order to receive a patent. Many countries reject patents to theories, plant or animal varieties, commercial methods, or methods for medical treatment. Patents are granted by the National Patent Office or regional patent offices. (The European Patent Office for Europe) In addition to that exists a Patent Cooperation Treaty, which allows inventors to apply once but receive a patent for many countries. In case of misuse by third parties, patent owners may take legal actions in court referring to either national legislation or community legislation.

1.3 Design Protection

Design right gives you automatic protection for designs of commercially produced items. This is not a monopoly right, but it does prevent intentional or knowledgeable copying. Design right can be bought, sold or licensed in a similar manner to a patent, registered design or copyright and lasts for ten years. These are split up into two five-year periods. For the first five years the designer is granted exclusive use of the design. The next five years are subject to license, which he/she must grant on request but from which he/she can claim royalties. The designer has the right to take civil court action against violation of his design right.^[5]

To qualify for a design right, your design must be of the shape or configuration of a commercially produced article. The design must be of a real, three-dimensional item (not a picture or pattern, as in a logo), and must not be ordinary. Design features enabling one article to be functionally fitted or aesthetically matched to another article receive no protection. This is a significant change to the law that has only recently come into force. It is also important to note that as with Patents, you must not disclose your idea prior to applying for Design Right. Advantages of design protection are that it adds to the commercial value of the product and increase its marketability. This ensures the owner against unauthorized copying or imitation by third parties. It is also very simple and inexpensive to small and medium sized companies, arts and craftsmen in industrialized and developing countries to receive a design right. Depending on the national law, it might also be protected as a work of art under the copyright law. Designs can be registered WIPO - wide or just nationally. The EU has adopted a Community System of Design Protection in December 2001 that offers protection of 5 - 25 years for registered and three years protection against copying and 3rd party use for unregistered designs.

1.4 The Trademark ™

A trademark is any word, name, symbol, device, colour, slogan, fragrance, package design or combination of such, i.e. a mark that identifies and distinguishes a specific product from others in the market place, i.e. in trade. The term trademark is often used interchangeably to identify a trademark or service mark. Furthermore there exist service marks that are similar to trademarks, but are used for the sales or advertising of services to identify and distinguish one company's services from those of another. An additional distinction to be made is such of trademarks and trade names. A trade name is used to identify a company or a business and serves as the name of the company or the business. In contrast, a trademark or service mark is used to identify the source of the products or services that the company or business sells or provides. For example, if the name is used as a noun, ("You can get the latest mobile phone from Nokia"), it is a trade name; if used as an adjective, ("You can get your Nokia mobile at the Telia store"), it is a trademark. A trademark rewards owners with recognition and profit. Trademark protection also hinders the efforts of unfair competitors to use similar distinctive signs to market inferior or different products or services. Therefore it can be concluded that this system enables people to produce and market goods in the fairest possible conditions, which further on facilitates international trade. Trademark rights may continue indefinitely, as long as the mark is neither abandoned by the trademark owner nor loses its significance in the marketplace as a trademark by becoming a generic term. You have the right to take civil court action against infringement of a trademark. To register a trademark it is necessary to apply at a national or regional trademark office, which verifies the application. The World Intellectual Property Organization offers an international registration of marks through the Madrid agreement and Madrid protocol. If a person has a link (nationality, domicile, establishment) to one of the more than 60 member countries^[6][7] he can obtain an international registration in some or all countries. For the EU region, a Community Trade Mark (CTM) has been established in 1994. It offers the opportunity to protect a trademark in all the countries of the European Union (EU) through filing a single application in one of the EU languages and one of the OHIM (Office for Harmonisation) - languages. The initial registration period is ten years from the date of filing the application. Businesses can take advantage from the trademark for acquiring more market share and increasing their public communication and reputation. Further it can be seen as a capital good, since its owner can license, franchise, merchandise and sponsor it. Another advantage of the CTM is that the use in a single Member State is sufficient to maintain the validity of the CTM registration throughout the EU, and avoid it being vulnerable to cancellation through non-use over a five-year period. The CTM in particular covers a market of 350 million consumers who enjoy some of the highest living standards in the world.

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^[1] Cp. http://www.europa.eu.int

^[2] Cp. http://www.wipo.int, http://www.ifpi.org, http://www.europa.eu.int, www.marketinglaw.co.uk

^[3] Cp. www.bbc.com, www.cnn.com

^[4] Cp. www.hausarbeiten.de, www.european-patent-office.org, www.wipo.int

^[5] Cp. www.patent.com, www.europa.eu.int

^[6] Cp. www.oami.eu.int, www.europa.eu.int, www.trademark.com

^[7] Except for the USA, which run a different system of registering trademarks, called ”Registered” Ò