The Future Lawyer Weekly Briefing- w/c 13th September

 Calling All Chanel And Intellectual Property Fans: This Piece Of Legal News Is For You!

Briefing by Shaznee Seraj

I mean, let’s be honest here. The French couturier needs no introduction. The iconic Chanel Boy has been plastered all over social media, dangling off the arm of the oh-so-chic neighbours’ of yours or it has been on your vision board since you were 16 that says, ‘will work for a Chanel bag.’ That sentence alone has awoken the 16-year-old in me. However, in this article, we will be looking at Chanel’s IP claims over its infamous No.5 perfume bottle which has been introduced nearly a century ago.

No.5 – the low down

Chanel is seeking to register the shape of the bottle of its No.5 fragrance as a trademark in the United States. Just as with any other trademark claim, it comes with a challenge. Chanel has been trying to trademark ‘a rectangular shaped container with bevelled sides, a thinner neck and on top a horizontal rectangular faceted shape.’ [1] At this point, I am convinced that an IP lawyer has a lush collection of vocabulary. However, despite the somewhat elaborative description (to a layman), an examining attorney has rejected to register the mark. If you are aware of trademark law, you’d instantly know that is a tricky process because, to do so, it has to be “inherently distinctive”. In this claim, it was argued that the ‘shape of the perfume bottle and the bottle stopper is a basic shape that is common in the fields of cosmetics, fragrances and perfumery’ – which to a large extent, I agree.

Sabrina Tomlinson, the USPTO examining attorney quoted that ‘large, well-known retailers such as Macy’s, Sephora and Ulta, that carry many comparable and well-known cosmetics and perfumery brands that use the same rectangular-shaped container with bevelled sides as the base of the perfume bottle.’

The next point to note is that the mark is not capable of creating a commercial because the French giant has no distinctive words with the rectangular-shaped perfume bottle container. Hence, without additional evidence of distinctiveness, the USPTO rejected the registration.

Chanel may provide evidence of ‘distinctiveness’ in the form of verified statements of long-term use (I mean, it has been marketed for nearly 100 years now), examples of advertising, affidavits and declarations of consumers, and customer surveys.’

What do we think?

That said, this is not the first time we have seen cases like this. Chanel attempted to register a trademark on its No.5 bottle in Lithuania early this year which, unsurprisingly, failed. Correspondingly, it failed on the lack of ‘distinctiveness’.[2] However, as seen in point 2 above, the consumer survey offered by Chanel targeted specifically France and not Lithuania. As noted by the registering officer, this is a crucial point as the Court in the Lithuanian case found that the remainder of the evidence, including marketing data and materials, was “insufficient for proving a distinctive character” for a three-dimension mark for packaging.

[1] https://www.thefashionlaw.com/chanel-is-aiming-to-register-the-shape-of-its-no-5-fragrance-bottle-as-a-trademark/

[2] https://intellectualpropertyplanet.wordpress.com/2022/02/07/chanel-failed-to-register-its-no-5-perfume-bottle-as-a-trademark-in-lithuania/

The Digital Markets Act: The EU Reigning In On Big Tech’s

Anti-Competitive Practices

Briefing by Idil Delmas

An overview

The European Union is preparing to launch a historic piece of antitrust legislation to regulate big tech companies. The Digital Markets Act (DMA) zeroes in on ‘gatekeeper’ platforms with a robust economic presence and a broad user base; in other words, Meta, Google, Amazon, Apple and Microsoft.

Small tech businesses and start-ups depend on gatekeeper platforms to promote and sustain their businesses. However, these very platforms frequently offer competing services. It is perhaps no surprise that certain products or services that directly rival those provided by gatekeeper platforms will fail to show up on the latter’s search engine or be unfairly ranked against gatekeeper rival services.

That was the issue in the infamous ECJ case in 2017, where it was revealed that Google was favouring its shopping service, Google Shopping, over competitors, leading to several price comparison services going bankrupt. This activity, called self-preferencing, is only one of the many anti-competitive activities that big tech companies engage in.

The ‘gatekeepers’ use their monopoly positions to reinforce asymmetries in bargaining power, collect personal data from users, and thwart platform interoperability. Currently, Google is involved in several competition lawsuits and is under formal investigation regarding the self-favouring of its advertising technology services. Statements of objection have also been issued against Amazon for using third-party data and against Apple for promoting its music streaming service over competitors in the App Store.

The DMA seeks to tackle these abuses head front. It will allow business users to see the data collected by gatekeepers, sign deals, and promote themselves outside the gatekeeper platform. Ordinary users can remove pre-installed software and apps, ending the practice of ‘side-lining’. Furthermore, gatekeepers will no longer be allowed to rank their products and services more highly than those of third parties.

Online businesses will thus find themselves in a better position, as the rules are geared towards making the online market fairer and more transparent.

The fines for noncompliance can reach up to 10% of the gatekeeper’s global annual turnover and 20% if the violations are repeated. There are also periodic penalty payments of up to 5% of the company’s global daily turnover. These fines are heftier than those contained in the GDPR and the Digital Services Act (DSA), the DMA’s twin piece of legislation, which focuses on consumer protection and privacy rights rather than antitrust issues.

Enforcement will be conducted through cooperation between the European Commission’s Directorates General for Competition (DG COMP) and Communications Networks, Content and Technology (DG CNECT). The Commission estimates that at least 80 officials will be recruited between 2021 and 2027.

Certain commentators lament that national competition authorities won’t have a sufficiently active role in the enforcement of the DMA, but the Act allows them to conduct the first investigative actions and market investigations. They will also continue prosecuting big tech companies for EU competition law violations.

Nonetheless, the Commission is designated as the official ‘enforcer’ of the DMA and has the final word regarding enforcement, which may lead to inconsistencies if there is a lack of harmonization between the Member States. Fortunately, all Member States apply EU competition law, so potential irregularities between them should be limited.

Societal implications

Underlining the DMA is a new logic regarding antitrust regulation. By setting out the prima facie anti-competitive behaviours, the DMA relieves the Commission from building a case against every suspected breach of competition law.

The regulatory regime is thus moving from an ex-post system to an ex-ante one – a promising shift, especially as EU policymakers are hoping the DMA might become a model template for other jurisdictions worldwide.

Some scholars believe the ex-ante approach may excessively restrict practices that are not inherently economically harmful, but this is doubtful since the DMA only targets big tech companies. It has been repeatedly proven that they take advantage of the information asymmetries they benefit from as digital monopolies.

Furthermore, enforcing competition rules benefits civil society, as consumers can make better and more informed choices about their purchases. Margrethe Vestager, the EU Commissioner for Competition, has said that with the increasingly important role online spaces are taking in our lives, these spaces must become democratic. One of the instruments in achieving this goal and ensuring big tech companies comply with the rule of law is antitrust regulation.

Implications for law firms

For law firms in the United Kingdom, the DMA signifies a potential increase in claims from national competition authorities and private competition actions brought by clients who are domiciled or have offices in Europe. The UK has been delaying the necessary reforms for digital market regulations, which increases the risk that tech start-ups will move to Europe instead.

Nonetheless, the arrival of the DMA seems to have stirred the country into creating the Digital Markets Unit (DMU), a new CMU branch that will dedicate itself to overseeing the digital market competition. It will be interesting to see how staunch a defender of digital competition this new team will be.

*The DMA was formally adopted by the European Parliament on the 5^th of July 2022 and will soon be published in the Official Journal of the European Union.

Sources:

‘The Digital Markets Act: ensuring fair and open digital markets’, European Commission website <https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en#what-does-this-mean-for-gatekeepers>

‘EU wins €2.4 bn Google Shopping case’, Javier Espinoza, Financial Times, the 10th of November 2021< https://www.ft.com/content/3e8e45e6-54b4-4b0f-8bda-69ab1389eabd>

‘EU announced Big Tech crackdown, demands interoperability between platforms’, Jon Brodkin, Ars Technica, the 25th of March 2022

<https://arstechnica.com/tech-policy/2022/03/eu-to-regulate-gatekeepers-in-crackdown-on-google-apple-amazon-facebook/>

‘The EU Digital Markets Act is here! The DMA, a landmark law for the digital space’, Deloitte blog <https://www2.deloitte.com/nl/nl/pages/risk/articles/digital-markets-act.html>

‘Digital Markets Act: a fair framework for the online world?’, Linda Holková Lubyová, Charles University in Prague Faculty of Law Research Paper No.2022/1/3, the 26th of February 2022 < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4046130>

‘Antitrust: Commission opens investigation into possible anti-competitive conduct by Google in the online advertising technology sector’, Press release from the European Commission, the 22nd of June 2021< https://ec.europa.eu/commission/presscorner/detail/es/ip_21_3143>

‘Antitrust: Commission sends Statement of Objections to Apple on App Store rules for music streaming providers’, the 30th of April 2021, Press release from the European Commission< https://ec.europa.eu/commission/presscorner/detail/en/ip_21_2061>

‘The European Parliament approves the final text of the Digital Markets Act’, Sharon Malhi et. al. from Freshfields Bruckhaus Deringer, Lexology, the 6th of July 2022 <https://www.lexology.com/library/detail.aspx?g=ed5c3ded-d2a1-4ff2-bdfd-dbddf1446f0d>

‘Can the UK keep up with Europe on digital competition?’, Zach Meyers, Centre for European Reform,< The DMA has been formally adopted by the European Parliament the 5^th of July 2022, and is soon to be published in the Official Journal of the European Union.>

‘The UK competition regulatory regime for digital markets: overview’, Aniko Adam and Shruti Hiremath, Clifford Chance, Practical Law, the 26th of July 2022, < The DMA has been formally adopted by the European Parliament the 5^th of July 2022, and is soon to be published in the Official Journal of the European Union.>

Further research:

‘The DMA’, episode released on the 21^st of April 2022 on the podcast Borderlines, which is run by the Berkeley Law faculty, and hosted by Katerina Limos from the Miller Institute for Global Challenges and the Law.