Sunstein Kann Murphy & Timbers LLP

May 2009 IP Update

European Developments:

Copyright Term Extended

Trademark Rights Strengthened

opyright in Musical Performances. On April 23, 2009, the European Parliament adopted a legislative resolution that extends the term of copyright protection for new music recordings from 50 years to 70 years. The 70-year term represents a compromise from the 95-year term proposed by the European Commission. This change in the law must now be translated into local legislation by the member nations of the EU in order to become effective. Member states have two years to accomplish this task.

The legislation establishes a 20% set-aside of sales revenue to be paid to session musicians, a ban on deductions from revenue for the purpose of computing royalties due to performers, and a “use it or lose it” provision that requires record labels to commercialize the recording or have the rights to do so revert to the performer. This last provision has been criticized because the reversion right would not arise until 50 years after the performance.

Trademarks for Luxury Goods. The European Court of Justice issued a judgment on April 23, 2009 in a case involving the resale of luxury goods bearing the Dior label at a discount store. The store had purchased the goods from a distributor whose distribution agreement with Dior prohibited sales to discount stores.

The Court was asked to consider whether such a provision in a distribution agreement was enforceable, and whether the owner of the Dior trademark could assert its trademark rights directly against the discount store to prevent it from selling Dior garments. The discount store argued that Dior’s rights with respect to the goods had been exhausted when they were sold to the distributor.

The ECJ ruling contains this remarkable passage:

25. Since luxury goods are high-class goods, the aura of luxury emanating from them is essential in that it enables consumers to distinguish them from similar goods.

26. Therefore, an impairment to that aura of luxury is likely to affect the actual quality of those goods.

Building upon this base, the ECJ decided that Dior could not only assert contract rights against the distributor, but trademark rights against the discount store.

As is the case generally in European law, the opinion is carefully hedged and capable of being interpreted differently in different European countries. Nonetheless, it is a victory for owners of luxury brands, and a blow to discount retailers.

	Articles Our Newsletters Press Room Speaking Engagements Other Useful IP Links	May 2009 IP Update European Developments: Copyright Term Extended Trademark Rights Strengthened By Thomas C. Carey C opyright in Musical Performances. On April 23, 2009, the European Parliament adopted a legislative resolution that extends the term of copyright protection for new music recordings from 50 years to 70 years. The 70-year term represents a compromise from the 95-year term proposed by the European Commission. This change in the law must now be translated into local legislation by the member nations of the EU in order to become effective. Member states have two years to accomplish this task. The legislation establishes a 20% set-aside of sales revenue to be paid to session musicians, a ban on deductions from revenue for the purpose of computing royalties due to performers, and a “use it or lose it” provision that requires record labels to commercialize the recording or have the rights to do so revert to the performer. This last provision has been criticized because the reversion right would not arise until 50 years after the performance. Trademarks for Luxury Goods. The European Court of Justice issued a judgment on April 23, 2009 in a case involving the resale of luxury goods bearing the Dior label at a discount store. The store had purchased the goods from a distributor whose distribution agreement with Dior prohibited sales to discount stores. The Court was asked to consider whether such a provision in a distribution agreement was enforceable, and whether the owner of the Dior trademark could assert its trademark rights directly against the discount store to prevent it from selling Dior garments. The discount store argued that Dior’s rights with respect to the goods had been exhausted when they were sold to the distributor. The ECJ ruling contains this remarkable passage: 25. Since luxury goods are high-class goods, the aura of luxury emanating from them is essential in that it enables consumers to distinguish them from similar goods. 26. Therefore, an impairment to that aura of luxury is likely to affect the actual quality of those goods. Building upon this base, the ECJ decided that Dior could not only assert contract rights against the distributor, but trademark rights against the discount store. As is the case generally in European law, the opinion is carefully hedged and capable of being interpreted differently in different European countries. Nonetheless, it is a victory for owners of luxury brands, and a blow to discount retailers.