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News blog12 January 2024European Innovation Council and SMEs Executive Agency

German Court Fines Netflix for Patent Infringement - EUIPO Board of Appeal Rules Over PRADA’s Triangle pattern distinctiveness

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German Court Fines Netflix for Patent Infringement

In a recent ruling on 22 December, the Munich District Court fined Netflix €7.05 million for ongoing infringement of a patent owned by Broadcom Inc. (specifically European Patent 2575366). This patent covers essential features of a critical technology for Netflix's Ultra HD content streaming.

This legal dispute is not the first between the two companies. Since 2018, Broadcom has been involved in patent disputes with Netflix, accusing it of infringing various patents in the US, Germany and the Netherlands through its video streaming service. On 14 September 2023, the Munich Court ordered Netflix to cease and desist from patent infringement in German territory. Nevertheless, Netflix persisted in its illegal activities, leading to the substantial fine.

The penalty amounts to €150,000 for each of the 47 days that Netflix continued to infringe Broadcom's patent. Alternatively, 15 days of imprisonment for Netflix executives for each day of infringement was considered, highlighting the seriousness of the platform's repeated and defiant behaviour. This alternative penalty is allowed under Section 890 of the German Code of Civil Procedure, which provides for fines of up to €250,000 and/or imprisonment of up to six months for the board members of the infringing party.

It is worth noting that Netflix still has the opportunity to challenge the fine imposed by exercising its right to appeal the Munich District Court's ruling. Meanwhile, Broadcom also intends to seek additional sanctions.

The outcome of this case remains uncertain, but it undoubtedly adds a new chapter to the long-running legal battle between the two companies. In previous cases, Netflix has emerged unscathed from similar accusations of patent infringement. Looking back to July 2022, Realtime, another patent holding company, ended up paying around €365,000 in legal fees to Netflix. This fine was incurred because Realtime switched courts to avoid an adverse ruling. This ruling is in addition to the events of October 2022, when a California court jury acquitted Netflix of patent infringement on one claim, but found non-wilful infringement on another, and awarded GoTV Streaming a lump sum of €2.29 million in damages.

 

The EUIPO Board of Appeal considers that PRADA’s Triangle pattern lacks distinctiveness to be a trade mark.

In the fashion universe, PRADA's "iconic triangle" is an undisputed symbol, at least that is what PRADA claims. In its decision, R 827/2023-2, of 19 December 2023, the Second Board of Appeal of the EUIPO partially refused the registration of the triangular mark applied for by PRADA S.A. for a wide range of goods and services.

In April 2022, PRADA applied for registration of its black and white triangular pattern for a wide range of goods and services covering various classes of the Nice Classification. From non-medical cosmetics (class 3), precious metals (class 14), leather goods (class 18), furniture (class 20), textiles (class 24), clothing and footwear (class 25) to advertising and business management (class 35).

In June 2022, the Office filed an objection under Article 7(1)(b) of the EUTMR for some of the goods and services applied for. It considered that the trade mark applied for was devoid of any distinctive character because the average consumer would perceive the very simple pattern as a mere decorative design which is very common for the goods for which the trade mark was applied for and their packaging, rather than as a trademark.

PRADA appealed the decision, putting forward a number of arguments in favour of maintaining the application for registration.

  • The pattern in question is a very specific pattern constituted of sets of regularly repeated elements which create a perception for the consumer and create a global impression that is sufficiently distinctive.
  • As regards the simplicity of its design, PRADA argued that even if a design is "simple" or " ordinary", it may be registered as a trade mark provided that it is capable of identifying the goods and/or services for which registration is sought, identifying them as originating from a particular company and, consequently, distinguishing those goods and/or services from those of other competing companies. Furthermore, the EUIPO has already accepted the registration of trade marks constituted of similar upside-down isosceles triangles.
  • It also argued that the registrability of a mark must be examined in relation to each of the goods and/or services, or at least each of the categories of goods and/or services, for which registration has been refused, and that this had not been done in the present case and the practices of the various sectors were necessarily different and that the examiner's 'general' conclusion was unfounded. For example, the use of patterns as signs of origin of a product is an established practice in the fashion industry.

The Board of Appeal started by reminding that the refusal to register trade marks without distinctive character is based on the public interest linked to the essential function of the trade mark: to ensure that the consumer can clearly identify the origin of the goods or services.

For a mark to have distinctive character, it must be capable of acting as a sign to identify the product and distinguish it from those of other undertakings. This distinctiveness is assessed by taking into account the perception of the average consumer, which varies according to the category of goods or services. In the case of three-dimensional marks, it is recognised that the public's perception may be different. In that regard, the Board of Appeals reminded that the average consumer is not likely to make assumptions about the origin of a product on the basis of its shape or packaging alone, without any graphic or word element. Moreover, only a mark which departs significantly from the norm or customs of the sector in question is not devoid of distinctive character.

In this case, the Board held that the PRADA pattern, due to its simplicity and similarity to traditional patterns, does not differ significantly from industry norms, especially for goods and services where other patterns are common. The triangle-shaped pattern at issue is a basic and commonplace figurative pattern, since it is composed of a regular succession of triangles of the same size which are juxtaposed and differentiated by alternating different colours. The pattern thus does not contain any notable variation in relation to the conventional representation of triangle-shaped pattern and is the same as the traditional form of such a pattern.

Regarding PRADA’s argument that the examiner had failed to differentiate the assessment of distinctiveness with regards to the different goods and services for which the trade mark was applied, the Board noted that for all of the goods in question, the PRADA pattern could cover their surface and thus correspond to their outward appearance  and the relevant public would perceive it as an attractive detail of the products in question, or as a banal decorative element, rather than as an indication of their commercial origin.

The Board rejected PRADA’s other argument that its pattern was very specific and could therefore be considered distinctive, on the basis of examples presented by the trade mark examiner of very similar patterns being used on products sold online, showing that this pattern was not “peculiar” or “uncommon” enough to act as a sign of origin.

Finally, the Board concluded that due to the very low level of inherent distinctiveness of the sign, the absence of verbal elements or other elements that could allow the pattern to be perceived as an indicator of commercial origin, the overall impression created by the simple disposition of juxtaposed triangles following a pattern, as in the mark applied for, was devoid of any distinctive character for all the goods and services in question. For these reasons, PRADA’s appeal was rejected.

Details

Publication date
12 January 2024
Author
European Innovation Council and SMEs Executive Agency