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).

UN HRC registers case Paksas v. Lithuania, 2155/2012

On 06/06/2012 the United Nations Human Rights Committee registered the case of my client Rolandas Paksas, impeached President of Lithuania, versus Lithuania. The President was impeached on 06/04/2004. On 25/05/2004 the Lithuanian Constitutional Court prohibited him to stand for elections for life. This lifelong prohibition also covers the right to be nominated Prime Minister or minister (he is twice former Prime Minister).

We partially won this case before the European Court of Human Rights on 06/01/2011, but the Strasbourg judges interpreted that the European Convention of Human Rights covers only the right to stand for parliamentary elections. Moreover, they did not find a violation of presumption of innocence and of the principle of impartiality during the national proceedings. Therefore, the former President took a decision to continue before the UN HRC.

ECtHR: fixing structutal problems annuls previous violations of human rights, Altunay, 42936/07

Mr Mehmet Altunay acquired land of 603 m2 for agricultural purposes in Turkey in 1999 (§ 3). However in 2007 the Turkish Court of Cassation annulled the title to property: the administration made a mistake in recognising him this property, since it was a State forest. He didn’t receive any compensation and filed an application to the European Court of Human Rights. In 2009 the Turkish Court of Cassation amended its case law in recognising the right to compensation.

Mr Altunay argued that the fact of violation shall be determined at the time the respective facts took place, i.e. as it was in 2007. The Strasbourg judges dismissed the action in explaining that fixing a structural problem annuls all previous violations of human rights (§ 33), and proposed him to apply for compensation at home. The ECtHR reasoning is very practical: too many applications.

Ombudsman: European Commission may change the interpretation of financial rules applicable to its grant receivers during the execution of contract, 286/2011/RT

A small Romanian enterprise that had received 2 grants for projects under the 7^th Framework Programme for Research and Technological Development filed a complaint against the European Commission to the European Ombudsman. The enterprise argued that the Commission had replaced the 2007 Financial Guidelines with the 2010 Financial Guidelines during the execution of the projects. The new version of the Guidelines required fulfillment of cumulative criteria for eligibility of staff costs, which led, after audit, to the necessity to recover a part of the grants (§ 25).

The Ombudsman replied that the 2010 version “simply clarified the conditions” that existed at the moment of signing the contracts (§ 34). It was stated in the 2007 version that “this Guide has been conceived as an evolving document which, it is intended, will be updated regularly (in principle every 6 months) […]” (§ 36). Thus, no maladministration was found.

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).

ECJ liberates software functionality and programming language from copyrights, SAS Institute, C-406/10

The SAS Institute Inc. sued the World Programming Ltd. in the UK for infringing its copyright in analytical software. World Programming copied the manuals for the SAS System when creating the “World Programming System” (§ 27). However the Grand Chamber of the European Court of Justice found yesterday that software functionality and programming language are not literary or artistic works, and therefore not covered with copyrights.

The judges made a policy argument in writing that functionality copyrights would make it possible to monopolise ideas to the detriment of technological progress and industrial development (§ 40). The Grand Chamber referred to point 3.7 of the explanatory memorandum to the Proposal for Directive 91/250 stating that only the individual expression of the work should be protected, and leaving other authors the latitude to create even identical programs provided that they refrain from copying (§ 41).

The SAS Institute tried to use the proportionality remedy in arguing that the copyright should be protected at least to some degree having regard to the nature or extent of the copied functionality, to the skills, judgment and labour which had been expended, and to the level of detail reproduced (§ 28). However this attack was dismissed as such.

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).

ECJ upholds freezing of the Melli Bank funds, C-380/09 P

On 03/03/2008 the United Nations Security Council issued Resolution 1803 (2008) calling on “all States to exercise vigilance over [...] Bank Melli [...] in order to avoid such activities contributing to the proliferation sensitive nuclear activities, or to the development of nuclear weapon delivery systems” (§ 17). On 23/06/2008, under Common Position 2008/479/CFSP the EU Council froze the Melli Bank plc funds. The latter is owned by the Melli Bank Iran (بانک ملی ایران‎) that is owned by the Iranian Government (§ 19).

The Melli Bank raised a number of points of law before the EU General Court and, on appeal C-380/09 P, before the ECJ:

1. The Melli Bank maintained that the grammatical structure of legal acts requires giving specific and individualized reasons for freezing its funds (§§ 34-35). The UK based Melli Bank did not participate in nuclear proliferation. The ECJ replied that the fact that the EU Council has the discretion as to by whom the entity is “owned” does not mean that the EU Council also has discretion to assess whether that entity plays a part in nuclear proliferation (§ 42).
2. The Melli Bank pointed that the UN Resolution calls to “exercise vigilance” and not “freeying of funds”. Thus, the EU measure is disproportional (§ 47). The ECJ replied that the UN and the EU are “distinct legal orders” (§ 54), and that the EU freezing serves the “terms and objectives” of the UN vigilance (§ 55). Finally, it cannot be inferred from the UN Resolution that there is no need to freeze the funds (§ 57).
3. The Bank proposed that the proportional measures could be of prior authorization and supervision by an independent agent and of total prohibition of transactions with Iran. The ECJ replied that this argument was mentioned for the first time at the hearing, and therefore could not be taken into consideration (§ 59).
4. According to the Melli Bank the EU General Court changed the burden of proof by requiring the Bank to demonstrate that measures alternative to freezing would be entirely effective (§ 47). The judges reply that a “lack of evidence” does not fall to be reviewed by the ECJ (§ 59).
5. The Melli Bank argues that the competition law entitles it to make submissions to the EU institutions while consideration of the measures (§ 67), that freezing of funds is comparable to criminal penalty, and therefore there is a breach of the presumption of innocence (§ 69). The ECJ interprets that the fact of being “owned” by Iran is a sufficient ground, and it is not “necessary to carry out further review”.

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.

EU General Court: a “private investor” may accept loss

I like finding patterns of “private investor” behavior in State aid cases. This mythical creature remains unpredictable, and therefore every example of her character is extremely interesting. The EU General Court adjudicated on 02/03/2012 that in certain circumstances a State acting as a “private investor” in State aid matters can accept loss, and annulled the respective provisions of the Commission’s Decision.

The Dutch Government decided to back the ING Bank during the global financial crisis in 2008. The Government subscribed to ING securities for € 10 billion, provided guarantees for ING liabilities amounting to € 11 billion, and took other measures (§ 8). The European Commission authorized the aid, however then the ING and the Netherlands amended the terms of repayment making it more favorable for the Bank.

The Commission insisted that the new repayment conditions meant a loss between € 1.5 and 1.9 billion for the State (§ 84). The EU General Court’s answer is that the Dutch Government behaved as a “private investor”, since (§ 125):

1. The new conditions allowed the Government to be repaid earlier.
2. When the amendment occurred it obtained a greater certainty of being repaid in a “satisfactory manner”.

ECHR: inadequate protection from natural disasters breaches property rights, Kolyadenko et al., 17423/05

There was a flood in August 2001 in the Vladivostok City, Russian coast of the Sea of Japan. The level of water reached 1.20 – 1.50 meters. The ECHR held the Russian Government responsible for the violation of the property rights, and of the right to home (Аrticle 8 of the Convention) due to the destruction of houses by the flood. Failure to maintain the channel of the Pionerskaya River in a proper state of repair by public authorities influenced the damage of property (§ 213).

The Government maintained that there was no evidence that the damage to the homes and possessions could have been avoided if the channel had been cleaned up, and that it was a natural disaster in the form of exceptionally heavy rain (§ 206). The European Court took a report of the Vladivostok Administration dated 04 07 2001 as a proof of State's guilt (§ 21).

EU General Court: a divestment of subsidiary does not automatically justify State aid, T-115/09, Electrolux v Commission

The EU General Court annulled the Decision 2009/484/EC of the European Commission authorizing France to provide State aid of € 31 million to Fagor France SA operating at the electrical household appliance market. Competitors Electrolux AB and Whirlpool Europe BV sued the Commission.

Both France and the Commission agreed that it is a restructuring aid, which is necessary to avoid undue distortions of competition in the sense of points 38-40 of the Guidelines on State aid for rescuing and restructuring firms in difficulty (§ 44). Fagor France SA divested its subsidiary Brandt Components to the Austrian group ATB for € 2-5 million, lost a part of the washing machine components market, and needed an aid. Brandt Components represented turnover of € 25-45 million or 2-5 % of Fagor France turnover in 2003, and employed 250-500 employees of 5-10 % of mother company’s workforce (§ 47).

The EU General Court held that the divestment does not justify the State aid, since:

1. It took place 2,5 years before the restructuring (§ 51).
2. The Commission herself mentioned once that the sale of Brandt Components did not have a “real effect” on the washing machine market (§ 53).
3. The fact that the sale was neither a write-off nor a closure does not mean that this divestment could be considered as a compensatory measure for the restructuring aid (§ 54).

The Commission’s Decision was annulled as a manifest error of assessment (§ 5).

UN HRC moves towards annulment of the citizenship requirement for property restitution, Klein, 1847/2008

No doubt, this is the most common kind of property litigations in Eastern Europe. On 08/12/2011 the UN Human Rights Committee found a violation of Article 26 (non-discrimination) of the Covenant of Civil and Political Rights by the Czech Republic, since they had forbade foreign citizens restitution of their property lost during the Soviet era. Miroslav and Eva Klain lost their Czechoslovak citizenship in 1978 due to the naturalisation in the USA. Their Czech property was confiscated but could be restituted on the condition of obtaining the Czech nationality.


The Czech Government argued that citizenship is a "reasonable and objective" criterion (§ 4.4) but the judges replied that it is "arbitrary and discriminatory", because individuals who are equally victims of prior State confiscations find themselves in completely different situations on the mere ground of the passport.

The case is also important, since the Committee has explained (§ 7.6) that the judicial deadline to file a communication is 5 years after the final internal instance, or 3 years after another mechanism of international settlement (where applicable).

ECHR lowers the private life protection standard, von Hannover v Germany (no.2), 40660/08

On 07/02/2012 Her Royal Highness Princess Caroline von Hannover, Hereditary Princess of Monaco, and her husband lost proceedings against paparazzi before the European Court of Human Rights. The issue was raised by publishing photos of the Princess from her private skiing holiday at the resort of St. Moritz.

The most interesting for me in this case is the lowering of the private life standard. If previously the paparazzi would have to prove that the published photos “contribute to a debate of general interest”. This time we see a new wording: “contribute, at least to some degree, to a debate of general interest” (§ 118). Do you see the difference? In practical terms it means that, since the respective German press article suggested that Prince Rainier of Monaco was ill but his daughter Princess Caroline did not care about him enough and went on holidays, it “contributed, at least to some degree, to a debate of general interest”. Thus, according to the ECHR, the photos were not published for the entertainment purposes.

The Princess pointed that she did not exercise any political or official function, and therefore her private life should enjoy protection (§ 85). This was an argument leading to success in her previous case von Hannover (no.1). However this time the judges regarded her and her husband as “public figures” (§ 120).

The Princess argued that such a judgment would make the paparazzi free to abuse the notion of “general interest”, but the judges replied that they do not really care about future possibilities. Basically, let’s think about future in the future – they wrote (§ 119).

From the legal strategy perspective, the paparazzi performed well in mobilizing 5 NGOs for filing their observations (§§ 90, 92-93), which with no doubt had an influence on the judges.

The real sense of VIAGRA, T-332/10

On 25/01/2012 Pfizer Inc. from New York owning trademark VIAGRA won the case against Polish company VIAGUARA SA who tried to register its name as a community trademark for drinks.

The EU General Court held that trademarks VIAGRA and VIAGUARA have "strong similarity" (§ 42). The Polish company argued that there is a huge difference between the pharmaceutical product for stimulation of erection (class 5) and drinks (classes 32 and 33) - they are in different classes, and Pfizer Inc. never tried to move to the class of drinks (§§ 44-45).

The judges replied that the "association" between the trademarks remains "possible", since VIAGRA has a huge recognition that extends the limits of the public interested in pharmaceutical erection (§ 52). Thus the real sense of VIAGRA may cover the class of drinks.

ECJ bans patents on transplantation of embryo cells, Brüstle, C-34/10

Professor Olivier Brüstle got the German patent related to neural precursor cells and the processes for their production from embryonic stem cells for therapeutic purposes, but was attacked by Greenpeace and finally lost proceedings before the Grand Chamber of the ECJ.

Professor Brüstle tried to argue that, in fact, he does not work with “embryo”, but the ECJ replied that “embryo” is an autonomous concept of the EU law and gave it the widest sense possible – thus, covering any human ovum after fertilisation, any non-fertilised human ovum into which the cell nucleus from a mature human cell has been transplanted and any non-fertilised human ovum whose division and further development have been stimulated by parthenogenesis (§§ 26, 38).

Professor Brüstle then argued that he does not use embryos for “industrial or commercial purposes” but for “purposes of scientific research” only. The ECJ replied that the word “patent” implies its industrial or commercial application (§§ 41-42). Therefore, according to the Grand Chamber, “industrial or commercial purposes” cover “scientific” ones (§ 46).

Thus, the transplantation of embryo cells became unpatentable.

ECtHR: contradictions between judgments of 2 national supreme courts must be tolerated, Şahin v Turkey, 13279/05

On 16/05/2011, a Turkish military plane crashed on return from an anti-terrorist operation in Iraq (§ 10). Families of 14 victims addressed the Ankara Administrative Court/Turkish Administrative Court and got pensions due to the death of relatives during an anti-terrorist operation (§ 64). However the Şahin family appeared before the 4th Chamber of the Ankara Administrative Court that found that the case shall be forwarded to the Turkish Supreme Military Administrative Court. The latter concluded that this was not a death during an anti-terrorist operation (§ 65). Yesterday, on 20/10/2011, the Grand Chamber of the ECtHR found on appeal that this case law contradiction must be tolerated, that it does not violate the right to fair trial.

The Şahin family tried to argue that this contradiction violates the principle of the consistency of the law, and the principle of legal certainty (§§ 40-41). The 10 v 7 ECtHR majority replied that this conflict of the Turkish Administrative Court and the Military Administrative Court must be tolerated, that it does not undermine legal certainty, that the principle of good administration of justice cannot impose a strict requirement of case law consistency, that one must respect the autonomy and independence of the 2 Turkish Courts, that it is not the ECtHR role to intervene simply due to a conflict of judgments (§§ 83-84, 88).

The minority of 7 judges held that the conflict of judgments gives an impression of “arbitrariness”, that this is contrary to the legal certainty, that consistency is necessary to preserve public confidence in the administration of justice (§§ 3-4, 6 of the dissenting opinion).

I like this kind of cases because it shows the extent of unknowability we live in, and supports the general Critical Legal Studies perspective on indeterminacy of law in slightly more complex cases.

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 supports squatters, Rhino v Switzerland, 48848/07

About 100 squatters (mostly art students) occupied 3 buildings in the center of Geneva in 1988, and established the squat association “Rhino” (acronym for “Retour des habitants dans les immeubles non occupés” or “Return of inhabitants to non occupied buildings” in English). On 10/05/2007 the Swiss Federal Tribunal prohibited the association due its “illegal aims”, i.e. “subtract the buildings that they occupy from the market and speculation” (§ 45), and on 23/07/2007 police expelled the squatters (§ 28). However on 11/10/2011 the European Court of Human Rights adjudicated that the liquidation of the squatters association violated the freedom of association (Article 11 of the Convention).

The Swiss Government argued that the liquidation of the squatters association was necessary, since they had illegal aims and were implementing those aims with illegal actions (occupying buildings). It was necessary to forbid the association in order to re-establish the rights of the owners of the buildings. The ECtHR replied that there is no link between the protection of property rights and the liquidation of the association (§ 63).

The Court dismissed the argument that the dissolution was necessary in order to preserve public order (§ 64). Chairwoman of the squat association M. Kerchenbaum, secretary M. Pier and treasurer O. Connolly were awarded € 65 651 for pecuniary damage and € 21 949 to cover the lawyers.

Wikileaks proves that MEP Uspaskich is persecuted for political reasons

The European Parliament never saw such a striking case of political persecution as that of Viktor Uspaskich, Member of the EP, Chairman of the Lithuanian Labour Party. His political party was accused of non-payment of certain taxes, and last year the European Parliament waived his immunity. However the question is now re-opened due to the disclosure of secret notes of the US Embassy in Vilnius by Wikileaks:

1. It is stated in the 1st secret document that the State Secretary of the Lithuanian Government told to USA diplomats that it was the Government who “engineered the departure” (or expel) of Mr Uspaskich from Lithuania. It also follows that he also confessed that the real reason of the attack by the State was quite different from the formal one: the suspicion of Ministers that he might be related to Russian secret services. However there is no even a single proof of such a relationship. Therefore, he is formally accused of something else. As a Lithuanian, I would add that we, Lithuanians, have a general cultural-historic tradition to accuse Russians of all possible problems.
2. The 2nd secret document discloses that the Defense Minister of Lithuania told to the US Ambassador that the aim of the Governing Political Party was to remove the opposition leader Uspaskich from the post of head of the Labour Party and to put there someone else. By the way, the 2nd and 3rd Chairmen of the Party signed the final fiscal declarations for 2004 and 2005. Uspaskich (1st chronological Chairman) did not sign them. However nor the 2nd, neither the 3rd leader of the Party are even suspected of anything. Doesn’t it go in line with this secret document?

The scope and danger of this political persecution is much wider than any of the persecutions in cases Blumenfeld, 1-123/84, Amadei, A2-0034/86, Gaibisso, A2-0101/86, Valenzi, A2-0220/86 and A2-0221/86, Herklotz, 1-321/81, Marciani, A5-0422/03, or Brok, A7-0047/2011. The Committee of Legal Affaires of the European Parliament will consider this issue on Monday.

ECHR: Standard of “increased prudence” in a retrospective application of criminal law, Soros v France, 50425/06

Today George Soros lost his case in Strasbourg. In 1998 his investment fund Quantum Fund acquired 160 000 shares of the French bank Société Générale, and sold them several days later. This looked as a participation in a takeover attempt. The operation brought the profit of $ 2.28 million ($ 1.1 million at the French market, §§ 10-11). However in 2007 the Paris Appellate Court convicted Soros of buying shares based on insider information (Mr. P), and imposed a fine of € 940 507.22 (§ 30).

George Soros argued before the European Court of Human Rights that the French judgment had violated Article 7 of the Convention (nulla poena sine lege). The classic understanding of “insider trading” was that it is a use of “privileged information” by a person employed by the respective company or otherwise contractually related (§ 54). Does this conception cover Mr. Soros? The report of the French Commission of Stock Exchange Operations stated that it had been impossible to appraise whether the French law had forbade this kind of operations at the respective time (§ 14). However later the French law was amended in a manner making that operation clearly illegal.

The ECHR majority (4 versus 3) ruled on introduction of additional tests.

1. The 4 judges stated that he had “to doubt” about that operation, since previously the French first instance tribunals had ruled that an insider employed by a company could not use privileged information for such a personal benefit (§§ 56-58). Note: this question never went to appeal or cassation stage.
2. They qualified George Soros as “institutional investor”, and since he was this kind of person, he had to bring a “proof of increased prudence” (§ 59).

The minority opinion of 3 judges insists that the criminal law interpretation must be strict. The very fact that after the operation the French Government had to amend the written law shows that it was not precise at the respective time. The minority underlines the difference between “unavoidable imprecision” and “avoidable imprecision” of criminal law, and proposes to use this as a judiciary test.

Competition law policy of the ECHR

ECHR adjudicated that the competition law must be assimilated with the criminal law for the purposes of the European Convention of Human Rights in case A. Menarini Diagnostics SRL v Italy, 43509/08, § 44. This Florence company was subjected to a fine of € 6 million by the Italian competition authorities for a participation in a cartel fixing prices and dividing the market of tests for diagnosis of diabetes.

A. Menarini Diagnostics insisted on violation of the right to court, i.e. the right to a full review of the competition authority decision: as the Administrative Tribunal of Latium had recognized, the judicial control of competition cases is “weak”, “it is prohibited to the judge to exercise an in-depth control”, the judge cannot substitute its appraisal to that of the competition authority, the judge can only apply the legal norms identified by the competition authority, cannot modify the elements of the investigation and the very decision. The judicial control is limited to the verification of legality, of the logic and coherence of the decision (§ 52).

Nonetheless, the ECHR considers that the Italian Courts have a full jurisdiction in competition cases, since they can examine the elements of proof, verify whether the administration used the powers in an appropriate manner (§ 63), verify the reasonableness and proportionality of the choices within a decision, verify the technical things (§ 64), and change the sanction (§ 65).

ECHR: company tax litigation is a criminal and property case

Moldovan company Agurdino SRL producing chemical products was ordered to pay Value-Added Tax of € 126 000, and a fine of € 101 000. The Moldovan Supreme Court of Justice found in favour of the company, since it was operating in the Expo-Business- Chişinău Free Economic Zone, and therefore hadn’t been obliged to pay VAT (§§ 6-7). However then the Moldovan Parliament adopted an Act on Interpretation of the Act on the Free Economic Zone (§ 8). On the basis of this Act, the Supreme Court of Justice re-opened the case and ordered the Agurdino SRL to pay the money (§ 11).

Since the fine of € 101 000 has the purpose to deter re-offending rather than merely imposing a pecuniary compensation, the tax litigation must be qualified as “criminal” (§ 23). The money that could be kept after the first Supreme Court of Justice judgment is covered with the category of “possession” (§ 40).

The ECHR qualified re-opening the file after issuing a legislative interpretation as “appeal in disguise” violating the principle of legal certainty and property rights.

ECJ: in the absence of “complementary elements”, controlling 98 % of shares does not presume liability of the mother company, Elf Aquitaine, C-521/09 P

The ECJ annulled the decision of the European Commission ordering mother company Elf Aquitaine SA to pay the fine of € 45 million jointly with its daughter company Arkema SA for a participation in cartel AMCA at the monochloroacetic acid market. The EU General Court held the mother company liable due to the fact that it controls 98 % of the daughter’s shares (§ 158). The ECJ set aside this judgment and dismissed the conclusions of its own Attorney General.

Elf Aquitaine argued that she is a “pure holding” without operational functions, the daughter company never got any instructions from the mother company, the daughter company did not inform the mother company, the daughter company was financially autonomous and could act without any authorization, and the daughter company was perceived as autonomous by the third parties (§ 160).

The ECJ adjudicated that the right to motivation required the European Commission to bring “complementary elements” showing an interference of the mother company into the commercial behavior of the daughter company.

EU General Court: USSR coat of arms may not be registered as a trademark, Couture Tech Ltd., T-232/10

UK company Couture Tech Ltd. tried to register Soviet coat of arms as a trademark. The EU General Court refused because this symbol is prohibited in Hungary, Latvia and Czech Republic, and therefore is contrary to public policy and morality (§ 60).

Couture Tech argued that, unlike the swastika, the political connotation of the USSR coat of arms has been diffused and transformed into a provocative one, connected with the concept of the avant-garde, so that the trademark applied for had acquired “a new distinctiveness” (§ 46).

The EU General Court replied that it is still perceived as a political symbol (§ 64).

“Incontrovertible and direct proof” standard prevents oil company YUKOS from getting the desired victory, YUKOS, 14902/04

Russian oil company YUKOS led by businessman and politician Mikhail Khodorkovsky bankrupted in 2007 due to the fiscal debt of € 16 billion for 2000-2003. The Parliamentary Assembly of the Council of Europe fully supported YUKOS and declared this persecution political. However on 20/09/2011 YUKOS failed to prove the same before the European Court of Human Rights.

YUKOS argued that the circumstances of the tax assessment and enforcement, the prosecution of Mr Khodorkovsky and other owners and officials of the company, as well as the statements of the highest State officials show the intention of the Russian Government to destroy the company and to take control of its assets (Article 18 of the Convention, § 661).

The ECHR recognized a violation in the speed with which the Russian courts had conducted the tax assessment for 2000, and in defining the penalties. However the position of YUKOS concerning Article 18 was destroyed in 2 steps:

1. Article 18 (principle prohibiting application of restrictive measures for purposes other than the public ones) is applicable only where the restrictions are permitted under the Convention. In this manner the Court cut off the violations where the restrictions had not been permitted.
2. The Court applied the “incontrovertible and direct proof” standard. The statement of the highest State officials do not meet this standard – especially taken in their respective context – for the purpose of proving that the aim of Russian authorities was to destroy the company for political reasons (§ 665).

This result was foreseeable after the judgment in case Khodorkovsky. The same YUKOS arguments could have more chances under the classic Article 6(1) on fair and impartial trial.

Transfer of responsibility from mother to daughter company, Koninklijke Grolsch, T-234/07

The EU General Court annulled the anti-competitive agreement fine of € 31 658 000 imposed on Koninklijke Grolsch NV, since it was not directly involved in the agreement with other major Dutch beer producers Heineken, InBev, and Bavaria. It was its filial Grolsche Bierbrouwerij Nederland.

Contrary to the reply of Koninklijke Grolsch to the European Commission’s communication (§ 45), individuals P.P.S., R.S., H.O.B., P.M., K.H., L.S. were not employed by Koninklijke Grolsch, but by Grolsche Bierbrouwerij Nederland (§ 47). Thus, the judges say that they did not act on behalf of Koninklijke Grolsch.

According to the EU General Court, the notes of Mr. J.T., President of Administrative Council of Koninklijke Grolsch, on the invitation to a meeting with coordination of prices agenda dated 08/01/1999, and his 2 telephone conversations with directors of Heineken around 05/07/1999, do not prove the participation of Koninklijke Grolsch in the cartel agreement (§§ 61, 63). Previously Mr. J.T. had participated in the agreement only as a Director General of Grolsche Bierbrouwerij Nederland.

Documents of InBev company mention the participation of the “group Grolsch” in the cartel but do not indicate Koninklijke Grolsch as such (§ 56).

At the level of legal strategy, this case shows the way for transferring liability to a filial.

ECHR: possession right covers any kind of money

The judgment 25575/08 provides a new interesting light on all cases involving money litigation. Moldovan individual enterprise Dragostea Copiilor-Petrovschi-Nagornii owned a secondary school in Chişinău. In 2001 the Rascani District Court ordered the enterprise to pay $ 78 400 to Mr M. (§ 5). This Order was executable for 3 years but Mr M. made a formal enforcement request only some 5 years later. Therefore, on 18/07/2007 Chişinău Court of Appeal dismissed M’s action due to the missed deadline (§ 8). From this point, the ECHR starts to consider $ 78 400 as “possession” of the individual enterprise (§ 40).

However on 13/07/2007 the Department for the Execution of Judgments wrote him a letter recognizing that his enforcement warrant had been registered within the 3 year deadline. The Moldovan Supreme Court of Justice allowed Mr M.’s appeal, since this letter could have been obtained later than 18/07/2007 (§ 13). Nonetheless, the ECHR replied that such a position does not preserve a “fair balance”, and is contrary to Article 1 of Protocol no. 1 to the Convention.

This case leads us to re-think lots of other litigations involving money.

ECHR: the son of French President de Gaule could not insult Harki, since they are not defined, Boumaraf, 32820/08

Mr. Philippe de Gaulle, while making a comment on his book about his father Charles de Gaulle, implied that 100 000 Harki were traitors – at least as Mr. Amar Boumaraf understood this. The Harki are usually understood as Muslim Algerians who served as auxiliaries in the French Army during the Algerian War from 1954 to 1962.

Initially the question was whether the Harki are a “sufficiently limited group”. There are three judgments (15/10/1985, 06/12/1994, 12/09/2000) of the French Court of Cassation recognizing the existence of this group. Before the ECHR, the question was transformed into whether these three judgments are a “well-established jurisprudence”. The ECHR replied that despite a clear definition of the Harki in the judgment dated 12/09/2000, it “alone” cannot create a “well-established jurisprudence”.

ECJ: European immunity of an MEP does not cover defamation, Patriciello, C-163/10

A Member of the European Parliament (MEP) has two kinds of immunity: the one guaranteed by the EU law in cases related to her opinions, and in other cases it is provided or not by national law. Italian MEP Aldo Patriciello has publicly declared that a police officer falsified the time concerned when booking several drivers whose vehicles were parked in contravention of road traffic laws. Thus, he made a “false accusation of a public official with aggravating circumstances” according to the prosecution (§ 11).

On 05/05/2009 the European Parliament decided to defend the immunity of Mr. Patriciello in arguing that this declaration is a political opinion expressing the right of the citizens to have an easy access to a hospital, which had an important impact on the daily life of his constituents. The MEP did not act for his own interest, and did not intend to insult the policewoman (§ 12).

However according to the ECJ this kind of opinion accusing the police officer did not have a “direct and obvious” connection with “parliamentary duties” (§§ 35-36). It must be underlined that this interpretation is applicable to the immunity directly provided by the EU law, but not to that existing under national law.

Extracting fraud investigation documents from the OLAF, Tillack, 943/2007/PB

Fraud is an old problem of the EU. After the memorandum of whistleblower Paul van Buitenen dated 07/03/2002, and inaction of the OLAF (Office of Anti-Fraud Fight), journalist Hans-Martin Tillack published 2 articles on the subject in Stern. The OLAF decided to punish the journalist. He was accused of handing over € 8000 for certain investigation documents to an OLAF official. The OLAF requested the German prosecution to open an investigation, but Germans closed it (§ 3).

The complainant in case 943/2007/PB requested the OLAF to disclose the name of the OLAF official who signed the letter to the German prosecution, as well as the letter itself, to disclose the instructions to the relevant OLAF staff who negotiated starting the “swift action” against journalist Tillack with the Hamburg prosecution, as well as to disclose other documents on possible fraud within the European Commission.

The complainant filed the same request twice but the OLAF ignored it. Only after filing a complaint to the European Ombudsman the OLAF disclosed the name of its official who initiated the persecution of the journalist (§ 40), as well as provided a partial access to the documents.

The Ombudsman explained that the institution must give valid reasons enabling the applicant to decide whether the non-disclosure is grounded, and not limit itself with a simple statement that “it carried out a concrete and specific examination” (§ 58).

"The Economist" establishes hegemony over other languages

Spanish trademark "El Economista" lost appellate proceedings to the UK trademark "The Economist" before the OHIM on 05/08/2011.


The Board of Appeal concluded that the trademarks are "visually similar at least to an average degree", since both contain the word "ECONOMIST", "THE" and "EL" have a common letter "E", and the Spanish letter "A" is at the end (marginality)(§ 28). Thus, the Board did not give any meaning to the colors (orange v black style), and to the fact that colors distinguish "ECO" from "NOMISTA" in the Spanish version.


According to the Board, the letters "ECONOMIST" are pronounced in the same manner, and it means that the aural similarity is "above average" (§ 29). Thus, the fact that in English we make accent on "CO", and in Spanish on "MI", did not had a value.


According to the Board of Appeal, both trademarks are conceptually "similar" (§ 30), and the fact that these are different languages is not a decisive factor.

In certain cases this decision will delete linguistic borders among Germanic, Romanic, and possibly also Slavic and Baltic languages.


EFTA Court orders opening a formal State aid investigation procedure against the will of the European Commission, Konkurrenten, E-14/10

I like this judgment of 22/08/2011, since it shows how a competitor may successfully attack a decision of the EFTA Surveillance Authority or the European Commission (both had the same view here) not to open the formal investigation procedure.


From 1997 to 2004 bus enterprise SA Oslo Sporveier owned by the Oslo City got an aid of NOK 1.124 billion (€ 144.4 million, §§ 17-18). Competitor bus company Konkurrenten.no SA lodged a complaint, and in 4 years received a Surveillance Authority decision not to open the procedure. The EFTA Court considered that it was not clear whether this aid had not been excessive for the purpose of compensating the operation of non-profitable scheduled bus services, and whether the aid had been kept separate from any other commercial activities carried out by Oslo Sporveier, such as operating tour buses (§ 77).


The Surveillance Authority supported by the European Commission tried to convince the Court that it was an existing aid, and therefore compatible with the EEA law. They argued that the difficulty in this kind of calculation was ignorable, since in general the aid had been "existing".