There have been questions surrounding the legality of videogame console ‘modchips’ for many years. We may be about to see some authoritative answers for the first time as a number of cases come before the EU Courts. Two cases, stemming from legal actions instigated by Nintendo in Italy (Case C-355/12) and Germany (Case C-458/13), have been referred to the Court of Justice of the EU for preliminary references. AG Sharpston delivered her Opinion in the first of those cases, Nintendo v PC Box Srl, on 19th September 2013.
Before I look at the Opinion in detail I’ll set out a few background issues – on the technical background of modchips for the lawyers, and their legal background for the technicians. For the last few videogame console generations there have been on-going skirmishes between the console manufacturers who use technical ‘locks’ in their console hardware and software to stop console owners running ‘unauthorised’ software. Unless each game disc or cartridge carries the correct encrypted key it will not run on the console. For the manufacturer this has two benefits; it means that pirate copies of their software will not function on standard hardware, and also that software publishers must get a licence, after paying an appropriate fee, to make their software available to the public. Modchips are pieces of hardware which effectively disable those ‘locks’ allowing pirated software, and legitimate, but unlicensed, ‘homebrew’ software to run on consoles. EU Law protects copyright holders efforts to protect their work through ‘technological protection measures’ (TPMs); such as these encrypted codes or other forms of DRM. All EU Member States are to give adequate legal protection against ‘circumvention of any effective technological measures’, by Art 6(1) of Directive 2001/29. Art 6(2) of the Directive requires MS to give legal protection against the manufacture or sale etc. of any device which (a) has the purpose of circumventing a TPM, (b) has a limited commercially significant purpose other than such, or (c) is primarily designed to do so. We don’t have time for a for a detailed examination of the issues with the Directive in this piece but you can read a lengthy comment on the UK’s implementation and case law which I wrote with David Booton in 2012. Continue reading
There has been debate about the legality of minimum per-unit (MPU) alcohol pricing in the UK, since the SNP-led Scottish Government first suggested adopting such a measure back in 2009. I contributed to the debate on several previous occasions, but now there is a little more substance to be discussed after the Outer House of the Court of Session, on 3 May 2013, handed down its judgment in The Scotch Whisky Association and Ors, Re Judicial Review of the Alcohol (Minimum Pricing)(Scotland) Act 2012  CSOH 70. The judgment answers some of the questions posed, but, sadly, it leaves yet more unanswered. I doubt this will be the last that we see of minimum alcohol pricing before the courts.
The SWA petitioned the court challenging the legality of the Alcohol (Minimum Pricing)(Scotland) Act 2012 and a proposed Order under that Act which would have set the minimum price at 50p per unit. Under that Order the minimum price for a product would be set using the formula: MPU x strength x volume in litres x 100. For one of my favourite red wines this would mean a minimum price of £5.62 per bottle (£0.50 x 15% x 0.75 x 100). For a can of Stella Artois the minimum price would be £1.14 (£0.50 x 5.2% x 0.44 x 100). Continue reading
In October 2012 Christopher Brown posted an interesting blog on AG Kokott’s opinion in Case C-226/11 Expedia. The full judgment was delivered on 13 December 2012 and it seems appropriate to look at whether the Court followed the same line; or whether there was an ‘appreciable’ difference.
In brief the case was a preliminary ruling reference from the French Cour de cassation asking whether a National Competition Authority (NCA), or presumably a domestic court, could impose penalties in relation to an agreement or anticompetitive practice which fell within the terms of the European Commission’s de minimus Notice. The question arose in the context of proceedings brought by the Autorité de la concurrence (the French NCA) against a joint venture ‘Agence VSC’ between SNCF (the French Rail operator) and Expedia (the online travel company) which was to operate travel agency services. There was no dispute before the Cour de cassation that the agreement had the object of distorting competition, potentially contrary to Article 101 TFEU, but there was argument that the agreement fell below the market share thresholds set out in the Commission’s de minimus Notice.
The Court’s judgment and the AG’s Opinion both cover two main issues: the impact of the Commission Notice on the enforcement activity of an NCA, and the whether an ‘object’ agreement under Article 101 TFEU also has to have an ‘appreciable’ effect on competition before it can be considered to be an infringement. Continue reading
Since the original post, on 28 March 2012, it has become clear that drinks industry organisations are likely to use litigation to challenge any attempt by to introduce minimum alcohol pricing in either Scotland or England.
While competition law is still likely to be a factor in such litigation it has also become apparent that there are specific provisions in some sectors which will probably play an important role in any proceedings. Where an individual sector or industry is subject to detailed European regulation the general Treaty provisions are less likely to be decisive.
An example of this in relation to minimum pricing was seen in Case C-197/08 Commission v France. In this case the French Government were attempting to set a minimum price for tobacco products at 95% of the average price. This was challenged, not as being contrary to the free movement or competition provisions, but as being proscribed by Art 9(1) of Directive 95/59/EC on taxes which affect the consumption of manufactured tobacco. Art 9(1) sets out that manufacturers, of tobacco products, ‘shall be free to determine the maximum retail selling price for each of their products’. The French scheme was deemed to be incompatible with Art 9(1) as it undermined the competition, on the basis of costs, which the Directive was designed to protect [37-38]. The Court made it clear that the France could seek to protect health by increasing the duty on all tobacco products .
Angus MacCulloch (Lancaster University Law School)
& Albert Sánchez Graells (Law School, University of Hull)
The Court of Justice of the EU delivered a controversial judgment on the 3rd July 2012 in Case C-128/11 UsedSoft v Oracle. The case will have a significant impact on a number of developing business models in digital software distribution. The case also highlights to growing tensions in the IP world between those who see greater restrictions as necessary to protect against the ease of digital copyright infringement and those who wish to maintain the ‘traditional’ balance between right-holders and the consumer/public. The two authors hold rather different views and we shall attempt to express both positions.
UsedSoft v Oracle
The case stems from a dispute between UsedSoft, a company specialising the sale of ‘pre-owned’ software licenses, and Oracle, a software company that sold licences and software online. Oracle’s EULA (End User Licence Agreement) barred any transfer of the licence to a third party, but UsedSoft would sell a licence which was no longer being used by one of Oracle’s direct customers onto third parties. Pre-owned software markets are common, and lucrative, in relation to software sold via optical media but are heavily restricted when software is sold directly via digital distribution. Software publishers are increasingly turning to digital distribution as it reduces costs (by reducing packaging and distribution costs and cutting out the retailers’ margin) and allows them to eliminate secondary markets, and therefore increase primary sales, through the EULA. That benefit may be reduced in the EU following this judgment.
British Boxing has never been a place for the feint hearted and it looks to be entering into a new era of internal strife. The announcement that Frank Warren intends to promote a bout between disgraced heavyweights David Haye & Derek Chisora in July 2012 has resulted in threats of disciplinary and legal action.
Fight fans’ interest in a showdown between the two men was whetted by an unscheduled, and unseemly, brawl at a post-fight press conference after Chisora’s defeat by Vitali Klitschko. Boxing has never been slow to capitalise on pre-fight antagonism between boxers and this feud looked too good a commercial prospect to miss. The main problem for any promoter was the fact that neither boxer has a license issued by British boxing’s governing body; the British Boxing Board of Control (BBBC). Haye’s licence lapsed after he announced his retirement in 2011, and Chisora’s licence was indefinitely ‘withdrawn’ after the events surrounding the Klitschko fight.
Frank Warren’s approach to this problem was to look to the EU for a solution. The fight is to go ahead in July sanctioned by the Luxembourg Boxing Federation. The BBBC response to this challenge to their control over boxing in the UK was immediate. They published a Notice stating that any involvement by a UK boxing licence holder in the Luxembourg backed fight would be deemed to be a ‘repudiation’ of the BBBC’s Constitution and would be considered a ‘termination’ of their membership and licence. Any attempt to remove Warren’s BBBC licence, or any other person involved in servicing or supporting the fight, could well result in legal action.
The announcement regarding minimum alcohol pricing on Friday 22nd March was unusual in a number of respects. The UK Govt does not usually make significant announcements on Friday, as most MPs are away from Westminster on constituency business, but it also indicated a reversal of their previous policy. Plans for the introduction of a minimum price per unit are already well advanced in Scotland but the Westminster Govt is a more recent convert. As soon as the proposal was announced it was clear the implementation of the policy was likely to come under legal challenge from the drinks industry. The Telegraph, The Guardian and the Daily Mail all indicate that the drinks industry had ‘legal advice’ that the minimum pricing would be contrary to EU Law.
But does this claim stand up to scrutiny, or is this simply the familiar use, or abuse, of EU law as a non-specific political bogeyman?
The media reporting lays the basis of these claims at the door of the EU competition rules, but the wording also suggests a health justification of the sort seen in the Treaty’s free movement provisions. I’ll consider both of those possibilities.