Module 6 - Basical knowledge on  intellectual property protection in social enterprises The SENSES project co-funded by the European Union funds (ERDF and IPA) For more information check the official website: http://www.interreg-danube.eu/senses

1. Module 6.
INTELLECTUAL PROPERTY
for social enterprises
Dr. György Kovács
On behalf of IFKA Public Benefit Non-Profit Ltd. for the
Development of Industry - HUNGARY
2018
Project co-funded by the European Union funds (ERDF and IPA)

2. What is IP and why is it important
for social enterprises?
• IP is to reward creators
• Provide an incentive
• Thereby it contributes to create growth and jobs
• Increase competitiveness
• If you protect your intellectual property, its easier to
find business partners!
Project co-funded by the European Union
funds (ERDF and IPA)

3. Role of IP
• More than a third of jobs in Europe (77 million)
depend either directly or indirectly on sectors making
intensive use of IP
• These are quality jobs where remuneration is 40%
above the other sectors. This premium is even higher in
copyright intensive sectors (+69%)
• Most operators of these IP intensive sectors combine
different IP rights, showing that we can not completely
treat in isolation of the various IP rights
Project co-funded by the European Union
funds (ERDF and IPA)

4. Main IP forms
• Trademark
• Patent
• Design
• Utility model
• Copyright
• Sui generis software protection?
• Trade secrets are NOT IP rights
Project co-funded by the European Union
funds (ERDF and IPA)

5. 4Project co-funded by the European Union
funds (ERDF and IPA)

6. National Legislation
• Act on copyright and neighboring rights
• Act on patents
• Act on trademarks and geographical indicators
• Act on designs
• Act on industrial designs
• Act on e-commerce
Project co-funded by the European Union
funds (ERDF and IPA)

7. EU Law and International
Agreements
• TEU (Treaty on the European Union), TFEU (Treaty
on the Functioning of the European Union),
Fundamental Rights Charter
• Regulations, directives
• Paris Union Treaty (1883)
• Bern Union Treaty (1886)
• WIPO Copyright Treaty
• WTO – TRIPS Agreements
Project co-funded by the European Union
funds (ERDF and IPA)

8. Trademarks
Graphical sign, which can distinguish goods or services from
other goods and services (e.g. word, composition of words,
letter, number; graphics, picture; any form, e.g. form of
goods; color, color composition, hologram; sound; smell?)
• Establishing trademark protection, its content and
protection period
• Limits of trademark protection
• Trademark license agreements
• Trademark infringement, Litigation
• International trademark, Community trademarkProject co-funded by the European Union
funds (ERDF and IPA)

9. Functions of Trademarks
• Distinctive function;
• Identification function;
• Quality indicator (e.g. certifying or indicating the
origin) function
• Marketing tool function;
• Important function in technology and know-how
transfer, licensing;
Project co-funded by the European Union
funds (ERDF and IPA)

10. Creation of trademark protection,
content, subject matter
Protection is created at the time of registration, with
retroactive effect to the time of filing;
10 years, renewable
Territorial protection
Can a trademark overlap with other rights?
Project co-funded by the European Union
funds (ERDF and IPA)

11. Trademark filing
• Drawing or word
• List of goods
• Claim
• Payment of fees
Project co-funded by the European Union
funds (ERDF and IPA)

12. Refusal grounds
Unconditional refusal grounds:
No distinctive function – because it is e.g. descriptive
(except later acquired distinctive function?) – if a
word is descriptive, how can it be registered as a
trademark?
Violates public policy, public morals, confusing or filed
in bad faith or it contains state or church symbols
Project co-funded by the European Union
funds (ERDF and IPA)

13. Refusal grounds (2)
Relative grounds:
Compared to earlier filed trademarks - if it is identical
or confusing with the earlier trademark in similar class
of goods (examples?) – except: lack of use
Actual use (if violates legal provisions)
Famous (well-known) trademarks (Coca Cola, Ford,
Apple?) similarity in different product classes
If it would violate personality rights or industrial
property rights
Trade mark – company name – trade name – domain
name
Project co-funded by the European Union
funds (ERDF and IPA)

14. Content of trademark protection
Provides exclusivity to
a) manufacture;
b) use;
c) advertise
d) sell
e) distribute the branded products /services.
Project co-funded by the European Union
funds (ERDF and IPA)

15. Exhaustion of rights
(i) If the goods or services has been put on the
internal market with either by the trademark owner
himself/herself or with his/her express consent – no
further claim for importing or trading with that
product;
(ii) Except: if the conditions of the goods have been
altered, deteriorated etc.
Project co-funded by the European Union
funds (ERDF and IPA)

16. License agreement
License agreement – the trademark licensor grants license for
the use of the trademark and receives license fee;
The content of the license agreement is otherwise free to be
determined by the parties;
Licensor warrants that no third party has a right with regard the
intellectual property which would limit or block the use of the
trademark – LEGAL WARRANTY;
The licensor is entitled to verify the quality of the product or the
service provided with the trademark – VERIFICATION RIGHT;
Unless provided differently by the parties, the license agreement
extends to all classes and services of the trademark, without
territorial or time limitation, to all kinds of or extent of use;
The use agreement provides exclusive right only exceptionally;
Not transferrable, unless expressly provided differently;
Project co-funded by the European Union
funds (ERDF and IPA)

17. Termination of trademark
protection
a) expiry,
b) resigning,
c) deletion,
d) failure to use the trademark,
e) loss of distinctive character (due to the failure of the
right holder),
f) termination of the right holder without successor.
Project co-funded by the European Union
funds (ERDF and IPA)

18. IPR enforcement
Use of a trademark without license.
Lot of sub-questions in the practice – what is use? Who can commit trademark
infringement? How to effectively deal with trademark infringement?
Legal remedies of the right holder against infringer:
a) judicial declaration of the infringement;
b) to stop the infringement and to refrain from further infringements;
c) right holder can ask the court that it orders that the infringer provides information
about the extent of infringement (services and goods), supply chain, participants in
the supply chain;
d) may demand that the infringer provide additional remedy by public declaration or
other means;
e) to seize the whole income of the infringer arouse from the infringement;
f) may ask to seize, hand over to a specific person, recall from channels of commerce
or the destruction of infringing goods, packaging materials, tools and materials used
for the infringement;
Additional claim for damages is also possible.
Start criminal proceeding.
Project co-funded by the European Union
funds (ERDF and IPA)

19. IPR enforcement 2
Notice letter (compare: German practice of
Abmahnungsbriefe)
notice and take down action for online infringement
(liability of intermediaries, ISPs – US Federal
Millenium Copyright Act)
Interim injunction / Preliminary evidence -
Procedures before national IPOs
Court proceeding
Project co-funded by the European Union
funds (ERDF and IPA)

20. Litigation
In Hungary specialised courts are dealing with trademark
infringements;
Injunctive relief is an effective remedy which may be submitted
to the court even before the submission of the actual action –
court will decide in a non contentious procedure - injunction gap?
Preliminary evidence can be requested before the start of the
actual trial in order to secure evidence.
Customs authorities may be requested to seize infringing goods
and stop them to enter into the channels of commerce;
Problem with actions with bad faith, e.g. on the basis of
applications or “weak” or secondary patents;
Project co-funded by the European Union
funds (ERDF and IPA)

21. Community trademark turns
into an EU TM
Protection in 28 Member States – „one stop shop”
registration in Alicante at the EUIPO;
EU trademark courts are the national courts competent
in IP matters;
EU IPO Appellate Board– CJEU shapes the case law;
Project co-funded by the European Union
funds (ERDF and IPA)

22. EU TM reform
1) Regulation 2015/2424 (23 March 2016), Directive 2015/2436 (14 January 2019)
EUIPO, EUTMR, EUTM;
2) Made easier to register sounds or smells, since graphical representation is not
anymore required;
3) TM classification has to be set precisely and specifically (based on C-307/10, IP
Translator case);
4) Absolute grounds for refusal or invalidity are: if a sign is nothing more than the
shape or other characteristic which e.g. results from the nature of the goods.
Further absolute grounds: designation of origin, geographical indications,
traditional terms for wine, traditional specialties guaranteed and plant varieties;
5) Relative grounds for refusal or invalidity are designation of origin, geographical
indication; marks with reputation – opposition can be based on reputation claim,
where use would take unfair advantage of, or would be detrimental to, the
distinctive character or repute of the earlier mark;
Project co-funded by the European Union
funds (ERDF and IPA)

23. EU TM reform
6) Infringement: company names, goods in transit, preparatory
acts/packaging;
7) Defences: TM use only for reference, own name defence (only for natural
persons), non-use defence;
8) Transferring TMs – via transfer agreement, can be sold separately from a
business, but if no specific agreement, deemed to be sold together;
9) Harmonized right of licensees to litigate TM infringement, only if TM owner
consents, except exclusive licensees;
10) There is a possibility to file only for one class for EUR 850, or two classes
for EUR 900, three classes would be EUR 1050;
Project co-funded by the European Union
funds (ERDF and IPA)

24. Designs
• Requirements: novelty, individual character, graphic
representation
• Provides exclusivity for manufacturing, putting the
product on the market, marketing,
importing/exporting
• Protection for 5 years
• Can be renewed in blocks of 5 years
• Maximum duration 25 years
• What is a Registered Community Design and what is
an Unregistered Community Design?
Project co-funded by the European Union
funds (ERDF and IPA)

25. Copyright
Copyright protection period, subject;
Content of copyright protection, free use, license
agreement;
Limits of copyright – exceptions, doctrine of fair use,
private use, free use
Neighbouring rights (performers rights, recording
companies, film makers, broadcasters rights)
Softwares, databases etc.
Films and audio-visual rights;
Collective right management;
Project co-funded by the European Union
funds (ERDF and IPA)

26. What is copyright?
• Unique, original, personal character (but not novelty) -
Monopoly or exclusive right?
• Does not depend on quality – that can be a question of taste;
• Does not depend on registration (TRIPS), however in some
countries you can register which has different effects;
• Starts when the work is created – for lifetime + 70 years;
• On the personal side it protects the right to ownership,
integrity and to publish – when and where? Any alteration,
translation requires the consent of the owner;
• Does not protect: legislation, case law, facts, folclor etc;
Project co-funded by the European Union
funds (ERDF and IPA)

27. Content of copyright
• Beyond personal rights there are pecuniary rights,
non transferrable, right owners can grant license;
• Pecuniary rights contain the right to grant license to
copy, distribute, publish, broadcast, transform;
• License agreement;
• Merchandising;
Project co-funded by the European Union
funds (ERDF and IPA)

28. Patents
• (i) Novelty, (ii) Industrial applicability, (iii) Based on
inventive step, (iv) Technical character;
• Provides with incentive to create, but also it should
provide the possibility for the society to learn the
invention and to benefit from it;
• Can be modelled on the originator – generic
dispute; Find a right balance between incentives of
the creator and cost sensitivity;
Project co-funded by the European Union
funds (ERDF and IPA)

29. No patent for
• Software;
• Design;
• Idea, Plan, Surgical procedure
• Public order or public moral;
Project co-funded by the European Union
funds (ERDF and IPA)

30. Supplementary Patent Certificate
• sui generis, based on EU regulation;
• to prolong patent protection in pharmaceuticals as a
reward for longer marketing authorisation procedures;
• Period: maximum 5 years, but not more than 15 years
from the date of the market authorisation;
Project co-funded by the European Union
funds (ERDF and IPA)

31. Compulsory licensing
• If the inventor did not start to use the invention within
4 years from application or 3 years from registration;
• In case of pending inventions – if substantive
economical benefit is expected;
Project co-funded by the European Union
funds (ERDF and IPA)

32. Unitary patent system
(Future plan with Hungarian and German concerns)
One stop shop system for all participating MS (member
states);
Languages: EN, DE, FR;
Litigation: Unified Patent Court – to be expected.
Court's seat will be Paris, pharmaceutical cases in Paris,
education of judges in Budapest. Appeal court will be
located in Luxembourg. Ljubljana and Lisbon will
provide location for arbitration tribunals.
Project co-funded by the European Union
funds (ERDF and IPA)

33. Trade Secrets
• What are they? „business confidential information”,
„proprietary know-how”, concern information not
generally known that companies, researchers, inventors
and creators treat as confidential in order to gain or
preserve a competitive advantage
• Examples: - the manufacturing process of Michelin tires
- Google’s search algorithm
• Trade Secrets are not IPRs, but are at the origin of every
patent and cover a broader subject matter than IPRs
Project co-funded by the European Union
funds (ERDF and IPA)

34. Utility model
• Requirements: novelty, originality, industrial
applicability and inventive step;
• Protection for 10 years;
• Annual payments;
• Typically protects an (internal) technical structure
• „Small patent”
Project co-funded by the European Union
funds (ERDF and IPA)

35. IPR vs Single Market?
• IP means exclusive right to market
• Often right to prevent import – thereby dividing
the single market
• Single Market / Custom Union did not allow that
MS impede intra EU trade
• Neither private parties via licensing arrangements
could do that
• Except: justified prohibitions
Project co-funded by the European Union
funds (ERDF and IPA)

36. What is a “justified prohibition”?
• Industrial or commercial property
• Judicial solution – teleological
• Existence – exercise of IPR
• What is appropriate exercise of IPR?
Project co-funded by the European Union
funds (ERDF and IPA)

37. Consten - Grundig decision
(no. 56 and 58/64)
• Agreement restricting parallel import is prohibited;
• But: exclusive distribution agreement not necessarily
infringing cartel prohibition;
• AND: inter-state commerce shall not be decided into
parts;
• Horizontal – vertical cartels;
Project co-funded by the European Union
funds (ERDF and IPA)

38. Consten - Grundig decision (2)
• The impact on the commerce on the common market
can not be simply measured by quantitative measures
but by the violation of the requirements necessary
for the fulfilment of the internal market (e.g. price
competition);
• The restriction of the exercise of the trademark law,
does not effect the recognition of the existence of
such law;
Project co-funded by the European Union
funds (ERDF and IPA)

39. Kovacs@IFKA.HU
Kovacs.Gyorgy@JAK.PPKE.HU
Thank you
for your attention
Project co-funded by the European Union
funds (ERDF and IPA)