End of “You have won!” advertising, Purely Creative Ltd, C-428/11

The UK Office of Fair Trading accused 5 companies and 3 persons of using the false impression that I' summarise as “You have won” for the promotion of their businesses (§ 2). Paragraph 31 of Annex I to the Unfair Commercial Practices Directive 2005/29/EC bans the following commercial strategy:

“Creating false impression that the consumer has already won […] a prize or other equivalent benefit, when in fact […] taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.”

However the ECJ went even further. It declared that this prohibition is of “absolute nature” (§ 34), which means that even if the trader proposes several options how to get the prize (a car), one of which is completely free (go to the factory and take it yourself), the presence of paid options (we will send it) breaches the Directive (§§ 38, 39). The judges replied that in such situations the offer should be limited to the geographic area around the factory (§ 40). The spirit of “objective of ensuring a high level of consumer protection” also confirmed this interpretation (§ 48).

ECHR bans advertising of UFO contactors, MRS, 16354/06

On 13/07/2012 by a majority of 9 votes to 8 the European Court of Human Rights supported the decision of Swiss authorities to ban a poster campaign of the Swiss Raelian Movement (Mouvement raëlien suisse) promoting contacts with extra-terrestials. Mr. Claude Vorilhon (Raël) who allegedly entered into a direct contact with extra-terrestrials (Elohim) from an Unidentified Flying Object in 1973 founded the Movement in 1975. It unites UFO contactors, as well as people interested in inter-galactic relations.

The prohibited 97 cm by 69 cm poster was showing extra-terrestrials’ faces, a pyramid and a flying saucer, had slogans “The Message from the Extra-Terrestrials” and “Science at last replaces religion”, as well as a reference to the website http://www.rael.org (§ 14).

The Strasbourg judicial majority supported the ban on the UFO contactors’ poster in 2 steps:

1. The Court declared that the nature of the poster is not political but rather commercial, which means that the State’s margin of appreciation is broader (§ 62). The minority of 8 judges counter-argued that the Movement did not try to sell anything but rather to spread its world vision, which means that the poster is non-commercial or philosophical. The Movement position is that this interpretation allows the State to justify a systematic refusal and oppose expression of non-majority ideas in public on a permanent basis (§ 34).
2. The ECtRH declared that such reasons as support of human cloning, geniocracy (society governed by intellectual elite), and the fact that certain members of the Movement had been accused of paedophilia, "taken together" may “reasonably entitle” the national authorities to ban the poster. Although, he majority of judges admitted that “taken separately” these 3 facts “might not be capable of justifying” the ban (§ 72). The UFO contactors argued that they had not been participating in any human cloning but simply expressing their favourable opinion about it, and that geniocracy was not a real political project but a mere utopia (§ 36). The minority of 8 judges pointed that no cases of paedophilia had been proven, and that otherwise the Movement as such would already be banned.

The Movement expressed its intent to continue the litigation before the UN HRC.

Freedom to redistribute software, UsedSoft, C-128/11

 
On 03/07/2012 the Grand Chamber of the European Court of Justice interpreted in case UsedSoft GmbH, C-128/11, that a software copyrights holder (Oracle International Corp.) cannot oppose redistribution of the software by a buyer of the license (§ 80).
 

The copyrights holder Oracle supported by French, Irish and Italian Governments argued that the contractual terms prohibit further transfer of the software, requiring each new user to enter into a direct contractual relationship with the copyrights holder (§§ 77 and 82). The Grand Chamber found that this view would render ineffective the exhaustion of the copyrights holder’s distribution right (§ 83). This right becomes exhausted at the moment of selling the license to the very first user.

Oracle maintained that it sells only one license and not an unlimited number. The judges replied that the original acquirer of the license must delete her copy of the software when decides to redistribute it (§ 78). Oracle argued that it is impossible to verify whether she would delete her copy. The ECJ replied that the copyrights holder remains free to search for a technical solution (§ 79).

ECtHR refuses to apply ECJ judgment because it was unforeseeable, Ioviţoni, 57583/10

Romania introduced a pollution tax for the first registration of a car. In this manner, if you buy a second hand car in Romania (i.e. the car has already been registered in Romania), you do not pay any pollution tax. However when you bring a second hand car from another EU State (like Germany), you must pay the pollution tax. On 07/04/2011 the European Court of Justice found in case Tatu, C-402/09, that this was indirect trade discrimination against sellers from other EU States contrary to Article 110 TFEU (§ 33).

In 2010, previously to the ECJ judgment, commercial company Holtzver SRL and others tried to get the pollution tax back, but the Romanian Appellate Courts dismissed their actions (§§ 9, 13). The victims of trade discrimination could not file a claim directly to the ECJ. Therefore, the company wished to prove the breach of property rights before the European Court of Human Rights.

The ECtHR declared the applications inadmissible, since the ECJ judgment “had not been evident” (§ 49).

ECHR strengthens European companies’ bargain power in relations with small third-world companies, Granos organicos nacionales, 19508/07

Small Peruvian company Granos organicos nationales SA exporting bananas tried to sue 2 German import companies for a breach of contract. The third-world company and its shareholders were insolvent, and applied for legal aid (§ 8). The German Courts refused to provide the aid, since the company was not from the European Economic Area (§ 9), and the ECHR found this grounded.

The Peruvian banana company argued that there is no restriction for foreign companies to profit from legal aid in Peru. In Germany, in addition to the court fees, the Peruvian company has to pay guarantee for legal costs of € 90 020 to each of the two defendant European companies, and cover its own legal costs (§ 40). The denial of legal aid would, therefore, lead the third-world counterparts into bankruptcy (§ 35). There is no precise Peruvian case law however, since issuing a civil claim costs only € 120 in Peru, which is not a problem even for an insolvent European company (§ 42). Moreover, there is no defendant’s legal costs guarantee rule in Peru.

The ECHR held that Germany doesn’t have an obligation to provide legal aid to insolvent Peruvian companies, since the Peruvian company is unable to show case law proving the right of European companies to legal aid in Peru. Therefore there is no reciprocity, and the German restriction is proportional (§ 49).

ECHR: Interim measure of providing adequate medical treatment, Tymoshenko v Ukraine

Last week (15/03/2012) the European Court of Human Rights decided to indicate interim measures to the Ukrainian Government under Article 39 of the Convention in case Tymoshenko, 49872/11. The Court ordered to provide adequate medical treatment to twice former Ukrainian Prime Minister Yulia Tymoshenko. The facts of indicating interim measures and giving this case priority clearly before a formal exhaution of domestic remedies show the successful perspective of the application.

Twice former Prime Minister was in perfect health until arrest on 05/08/2011. On 15/08/2011 she fell ill. In October Tymoshenko lost capacity of walking. According to her defense, she was poisonned.

The charismatic female Prime Minister was found guilty in an illegal order for the signing of a contract concerning gas imports from Russia in 2009 that produced a damage of $ 189.5 million to the State company Naftogaz, and imprisonned for 7 years with a 3 year ban on holding public office by the Kiev Appellate Court on 23/12/2011. The defence of Tymoshenko maintains that the judicial attack was provoked by elimination of the intermediary Swiss company RosUkrEnergo from the Ukrainian-Russian gaz agreements.

In observing the legal strategy of Yulia Tymoshenko, one may observe however a number of mistakes similar to the case of Khodorkovsky.

ECJ: contractual clause prohibiting Internet trade is illegal, Pierre Fabre, C-439/09

Pierre Fabre Dermo-Cosmétique SAS manufactures and markets cosmetics and personal care products under brands Avène, Galénic, Ducray and Klorane. Their general contractual clause imposed an obligation on distributors was that the products have to be sold in a “physical space” in the presence of a person with a diploma in pharmacy, which de facto excluded internet trade (§§ 13-14).

Pierre Fabre tried to justify the clause with an intention to provide a personalized advice in order to ensure “cosmetovigilance” (§§ 17, 25), avoiding the risks of counterfeiting and free-riding between authorized pharmacies (§ 23), need to maintain the prestigious image of the products (§ 45). The French Competition Authority decided that the real aim of the clause is to prevent selling the goods to non-authorised distributors, to reduce considerably the ability of an authorized distributor to sell the contractual products to consumers outside its contractual territory, and to restrict competition (§§ 19, 38). Pierre Fabre got a fine of € 17 000.

The ECJ adjudicated that the reasons given by Pierre Fabre did not have a legitimate aim for restricting competition (§§ 44, 46).

ECtHR: freedom of expression allows a journalist to say that a wine is “shit”, Uj, 23954/10

Hungarian Supreme Court made a reprimand to journalist Péter Uj for characterizing wine produced by T.Zrt  as “shit”, i.e defamation violating the right to good reputation (§§ 8-9). He wrote: “hundreds of thousands of Hungarians drink this shit with pride, even devotion” (§ 6), and the ECtHR understood him.

The ECtHR concluded that this reprimand had been unnecessary in a democratic society, that there was no pressing social need (§ 19) to sanction the wine expert. The judges focused on the purpose of the word “shit” that was not to insult but to serve merely as a stylistic decoration (§ 20), since calling a low quality wine “shit” is a common practice (§ 24). In this context, “shit” is not defamation but a value judgment raising awareness about the disadvantages of the economic policy (§ 23).

ECJ extends the applicability of EU law to foreign Internet intentions, L’Oréal v eBay, C-324/09

While analyzing applicability of EU law, we are used to structure the deduction according to location, time, person, and matter.  This time, the Grand Chamber of the ECJ made a new development: in order to say whether EU trademark law is applicable to Internet trade, one must answer whether the seller intended to attract EU consumers (§§ 61-62).

eBay International AG was attacked by L’Oréal SA for providing online market place for the goods covered with the trademarks of the latter (including advertising them through Google).  Those goods were sold by sellers established outside the EU, and were not forwarded to the EU territory. The UK, Italy, Portugal, Poland and, of course, the Commission supported L’Oréal.

Towards a ban on the US zeroing approach to anti-dumping policy, WT/DS382/R

After a number of contradictory adjudications (legal-illegal-legal, and a definite unknowability), the World Trade Organization (WTO) Panel made a more conclusive step towards prohibiting the US zeroing approach to anti-dumping policy in case USA - Orange juice, WT/DS382/R.

Zeroing is an administrative practice of punishing companies for dumping in a situation where this particular dumping could be compensated with a comparison of prices in other cases, with the picture taken as a whole.

The Panel interpreted that, on balance, zeroing is incompatible with the principle of fair comparison (§ 7.153). The US Administration argued that no legal provision had previewed how to aggregate multiple price comparisons (§ 7.137).

The EU, Japan and certain other WTO Members supported 2 Brazilian orange juice producers Cutrale SA and Fischer SA in this dispute.

Economic Court of the CIS imposes customs and quantity limits on returning defected goods to the producer, 01-1/07-09

Article 3(1) of the Agreement on the Creation of the Free Trade Area (ACFTA) of the Commonwealth of Independent States (CIS) regulates the freedom of trade without customs and quantity limits among the 10-12 CIS States.

The Economic Court of the CIS interpreted that the freedom of trade without customs and quantity limits is not applicable to a case of returning defected goods to the State of production, and gave the following reasons:

1) The freedom of trade without customs and quantity limits is applicable to goods transported from the State of production, not from the receiving State (page 3, § 4).
2) “Import and/or export” means a direction of goods from the producer to the consumer, and not vice versa (page 4, § 4).
3) Contrary to Article 1(1) GATT that previews certain advantages in respect of export and import or activities “related to them”, Article 3(1) ACFTA does not contain such words (page 4, § 6).
4) In 5 of 10-12 CIS States, the returned goods will not be subjected to customs and quantity limits (page 5, § 2).

The case 01-1/07-09 was started on the initiative of the Executive Committee of the CIS, and the Court agreed with the opinion of the Adviser General who, by the way, has a wonderful blog http://yukevich.blog.tut.by .

It is interesting to note that a number of Russians legal scholars consider the CIS law as “European law” (together with the EU law and the ECHR law).