Austria: Wolf Theiss International IP/IT Newsticker - December 2016

Last Updated: 21 December 2016
Article by Georg Kresbach and Kateřina Kulhánková


Wi-Fi network operators' liability for copyright infringements

On 15 September 2016, the CJEU ruled in the Tobias McFadden case that a vendor offering an open free Wi-Fi network to the public cannot be held liable for copyright infringements committed by users of such a Wi-Fi network. Thus, a copyright holder is not entitled to claim damages from the Wi-Fi network operator on the grounds of such infringements (e.g. music downloads, etc.).

If, however, the Wi-Fi network is used unlawfully, the Wi-Fi operator may be required by court or administrative order to password-protect its network in order to bring an end to or prevent such infringements. Before obtaining the password, users will be required to reveal their identity and thus will be unable to act anonymously. In such cases the copyright holder shall be entitled to claim reimbursement of costs incurred by giving formal notice and initiating court proceedings against the Wi-Fi operator with the aim of ceasing the infringement.

Uber drivers enjoying employee benefits?

The London employment tribunal ruled that two Uber drivers were "workers" within the meaning of the Employment Rights Act 1996, rather than self-employed. It means that the two drivers are entitled to a host of employment rights that are not available to selfemployed contractors (such as paid holidays, minimum wage). Uber announced its intention to appeal.

This sabotage against the "on-demand" freelance workforce is part of a wider trend; the decision could affect thousands of people working across the gig economy. It is to be expected that organizations with similar arrangements are likely to be subject to a greater scrutiny over employment status.

Electronic signatures standardized within EU

Since 1 July 2016, the eIDAS Regulation allows individuals, businesses and public administrations across the EU to carry out convenient, secure and legally valid electronic transactions across borders. eIDAS has created standards according to which electronic signatures, qualified digital certificates, electronic seals, timestamps and other proof for authentication mechanisms enable electronic transactions with the same legal weight as transactions performed on paper.


New law on copyright

In October 2016, the new Copyright Act entered into force in Albania. The Act grants more competence to the copyright collecting agencies to enable them to better protect authors' rights. Moreover, the Act seeks to improve monitoring of copyright infringements and for that purpose imposes further penalties on the infringers, as well as new obligations on importers, exporters, producers, and users of copyright works.

Albanian Directorate on Patents and Trademarks included into the EUIPO

Recently, the Albanian Directorate on Patents and Trademarks (ADPT) has become part of the EUIPO search system by entering all national data on trademarks and industrial designs. Since then, more than 21.8 million searches have been performed from 151 different EU countries.


Labelling of adverts in free newspapers

The Austrian Supreme Court held, with respect to surreptitious advertising in free newspapers, that announcements, recommendations and other paid advertising contained in newspaper articles shall be marked as "advertisement" or the like unless there is no doubt from its overall arrangement that it is advertorial content. There is no legal basis that free advertisement placed in articles shall be labelled accordingly.

Furthermore, in the decision the Court also stated (contrary to the long-standing case law) that the averagely attentive and critical reader does not consider editorial articles in periodical newspapers as being neutral and objective and understands that they generally reflect the personal opinion of the journalist. Therefore, as long as an averagely attentive and critical reader has no doubt that an article published in a free newspaper is advertorial, no explanatory notes or labelling is required even if the article contains advertorial statements of a commercial character by courtesy.


Cybersecurity Strategy

In summer 2016, a national cybersecurity strategy called Cyber Resilient Bulgaria 2020 was adopted in Bulgaria. The Strategy assesses risks raised by digitization, highlights the importance of cybersecurity to individuals, businesses and to national security. The Strategy sets a number of objectives aimed at enhancing cybersecurity – from increasing the use of legally acquired, licensed and maintained software and hardware systems to changes in the legal framework to ensure a timely investigation of cybercrimes and an adequate criminal liability. The Strategy's objective is to improve the skills and technical support of authorities involved in the fight against cybercrimes. An important element thereby is the achievement of a balance between ensuring cybersecurity and safeguarding individuals' rights and freedoms.


Croatia joins Federated European Patent Register

As another step towards integration into the European patent framework, the Croatian State Intellectual Property Office (SIPO) joined the Federated European Patent Register (FEPR) in July 2016. Since then Croatia is one of the European countries sharing information on the legal status of European patents in their validation procedures before national offices.

As part of the FEPR, SIPO enables searches of European patents for which a request for registration was filed with SIPO'S Patent Register since 1 January 2008. The searchable FEPR content includes, among others, information on the status of a patent, registration number, patent holder, patent validity and renewal status.

Croatian "Pirate King" arrested

After the famous torrent website The Pirate Bay was shut down, the Filmovita website became synonymous for hours and hours of free online movies and series streaming in Croatia. Since the content on Filmovita was shared without copyrights, the website ultimately shared The Pirate Bay's destiny - the holder of the pirate site Filmovita was arrested in October 2016.

The media reports that Mr Matej Kalanj, the operator of the pirate website Filmovita, shared content with a market value of HRK 3.9 million (approx. EUR 520,000) through his website. The economic rationale behind the website was trade with advertising space. The so-called "Pirate King" allegedly made HRK 600,000 (approx. EUR 80,000) since 2014 through advertisements. Mr Kalanj faces up to three years of jail for unauthorized use of copyrights and significant damages claims from copyright holders.

Croatian authors worried about tax reform

Croatia's Government announced a tax reform which is expected to enter into force in January 2017. Among the novelties of the reform is the payment of health and pension insurance contributions on author agreements.

The proposed reform has provoked negative reactions from Croatian artists, journalists and others working on the basis of author agreements, as the new reform will reduce their earnings from author agreements by up to 17.5% as compared to the pre-reform regime.

Collective management of copyright and related rights in Croatia not yet aligned with EU laws

Directive 2014/26/EU on collective management of copyright and related rights should have been implemented by EU Member States by 10 April 2016. The Directive provides for improvement of the collective management of copyright and related rights organisations, organisation of alternative dispute resolution procedures for collective management of copyright and related rights disputes and regulation of licensing of rights in musical works for online use.

In Croatia, the Directive is to be implemented by Amendments to the Copyright and related rights act which, however, have not yet entered into force.


Copyright fees unlimited?

The proposed amendment to the Czech Copyright Act aims to repeal the existing limitation of the total amount of fees paid to collective management organisations. The amendment proposes to replace the limit by new collective negotiation about prices between collective management organisations and representatives of users. The goal of the amendment is to establish a legal limitation on increase of fees if the parties cannot come to an agreement. However the biggest issue is that there is no limitation to the collective negotiation, and collective management organisations interpret the repeal as a chance to unlimitedly increase fees.

Broadcasting rights for UEFA Champions League only for O2 TV and Czech TV

The Constitutional Court upheld the validity of an interim measure issued a year ago by the Municipal Court in Prague forbidding providers of cable and satellite stations in the Czech Republic from broadcasting the UEFA Champions League. O2 TV bought the broadcasting rights and therefore has territorial exclusivity for most matches. Other broadcast providers, especially UPC, were broadcasting the matches from abroad and therefore O2 decided to defend its investment by requesting the interim measure. UPC filed a constitutional complaint against the interim measure but was not successful.

End of arbitration clauses?

In recent years, the Czech courts have started invalidating validly concluded arbitration clauses and proclaiming them absolutely void. This affects also domain name disputes which can be (according to the rules of the national domain registry cz.nic) generally settled through arbitration but - according to the courts - such an arbitration clause will not be valid in disputes between entities (and will apply only in disputes vis-a-vis the domain registry).

On a related note, effective as of December 2016, arbitration clauses are banned in credit agreements for consumers; this means that all consumer disputes arising from such agreements can be resolved by regular courts only.

T-Mobile fined for not protecting clients' data

The Czech Personal Data Protection Office imposed a fine on T-Mobile Czech Republic in an amount of CZK 3.5 million (approx. EUR 130,000) for not adopting sufficient measures to protect personal data of its clients contained in an electronic internal database. As a result, the data has been stolen by an employee. When imposing the fine, the Office took into account that T-Mobile subsequently undertook sufficient rules protecting the clients' personal data.

Czech Republic passes restrictive online gambling rules

A new Gambling Act was adopted in the Czech Republic establishing a licensed online gaming framework. The new legislation among others envisages that the Ministry of Finance will create and maintain a list of webpages with unauthorized online games (List). Internet connection providers in the territory of the Czech Republic will be obliged to block webpages included on the List and payment service providers will be forbidden to execute payment transactions to or from any payment accounts contained on the List. In this regard, experts point out that these measures are too reminiscent of censorship of the Internet.

In addition, the law drops the Czech Republic's prohibition on certain foreign-based operators and allows them to obtain online gambling licenses.

Electronic records of sales

From December 2016, the Czech Republic has introduced a system of electronic records of cash sales of goods and services (e-sales). Every cash income of an entrepreneur will be recorded via the internet in the central data repository of the Financial Administration at the time of its payment. A unique code for confirmation will be immediately sent back to the entrepreneur to be printed on a bill/receipt. The bill/receipt with the unique code will be used for the follow-up control confirming that the payment was actually reported to the tax administrator. An appropriate device (such as cashier system, cash register, tablet with a printer) will need to be implemented by entrepreneurs.


Changes of the Hungarian Royalty Regime

From 1 July 2016, Hungary has amended its royalty regime. The new scheme largely follows the requirements of the OECD BEPS Action 5, which allows tax regimes to provide for a preferential rate on IP-related income to the extent it was generated by qualifying expenditure.

Newly, the definition of a royalty is limited to profit arising from the license, sale or in kind contribution of patents, utility model, plant variety, supplementary protection certificate, software subject to copyright protection, or from classification as a medicine for rare diseases ("exclusive rights"). Royalty also includes the profits arising from sales or provision of services relating to exclusive rights. The above changes mean that the royalty definition refers only to the profit relating to exclusive right and not to the consideration (revenue) relating to the IP as defined by the former legislation. Also, unlike the previous definition, the new royalty definition does not cover revenues relating to trademarks, know-how or IP protected by copyright laws other than software.

Rubik's cube in the spotlight Seven Towns, the former owner of the trademark of the world famous Hungarian invention, the Rubik's cube (invented by Ernő Rubik in 1974), has recently lost its case before the ECJ against the plaintiff, Simba Toys. The dispute was initiated in 2006 by Simba Toys requesting the deletion of the trademark of Seven Towns registered with EUIPO. After two consecutive rulings against Simba Toys by both EUIPO and the Court of Appeal of the EU, the ECJ rendered a favourable decision, creating new grounds for Simba Toys to pursue its claims for the design used exclusively by Seven Towns since 1994.

In its ruling, ECJ set out that the trademark for the shape of the Rubik's Cube (originally registered as a three dimensional cube design) does not sufficiently cover the rotating parts of the cube hidden inside the object, as the mechanics found inside a Rubik's Cube define its uniqueness and function at least as much as its appearance. Consequently, at the time of its registration, Seven Towns should have also applied for the protection of the mechanical parts, which in turn would have made the Rubik's Cube much more unique amongst its similarly shaped competitors selling similar puzzles lacking such elaborate parts inside. Furthermore, the ECJ pointed out that the biggest issue with the registered trademark was that Seven Towns defined it as a "three-dimensional puzzle" and thereby covered a much wider range of possible later trademarks to be registered with similar functions. Therefore, ECJ overturned the previous rulings and referred the case back to the first instance.

Increased Scrutiny & Fines by the Data Protection Authority

The Hungarian National Data Protection Agency has noticeably increased its activity during recent months and years, manifesting in a higher number of proceedings and significantly higher fines. As Hungarian authorities are hit by severe budget cutbacks, they are forced more and more to focus on fine-relating activities.

This is also supported by legislation, as the maximum amount of penalties increased to HUF 20 million (approx. EUR 60,000) from the previous HUF 10 million.

A major change in the Hungarian Privacy Act, introduced last year, also introduced binding corporate rules (BCR) into the Hungarian regulatory framework, as well as added an additional burden for data controllers: who are now required to register every single data breach which, previously was an obligation typically required from telecommunication service providers.

The newly added BCRs enable companies to transfer personal data to affiliates established in countries outside the European Economic Region. BCRs, of course, require the prior approval of the National Data Protection Agency, but they are still favourable in comparison to the other option, where every single transfer of personal data requires the prior approval of the NAIH on a case-by-case basis. The approval process is thorough and extensive, but once approved, the added data transfer possibility might just give the edge to those market players who succeeded in its implementation.

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