Case Study Happy Holidays &

SpicyRaja.com

Ichay & Mullenex AvocatsDiane MULLENEX, Avocat associé, Solicitor

England & Wales

Annabelle RICHARD, Avocat, Attorney at law - New York Bar

Intervention ENSAM - 6 janvier 2010

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I. INTELLECTUAL PROPERTY LAW

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INTRODUCTION

Intellectual property law deals with all rights associated with creative work, commercial reputation and goodwill.

It includes everything which can be described as a product of the intellect, namely literary and artistic works, films, computer programs, inventions, designs, trademarks, know-how…

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Intellectual Property law includes several forms of rights applicable to various types of creations :

• copyright,• rights in performance,• patents, • design,• trademarks.

INTRODUCTION(continued)

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Inasmuch as our case study is related to new technologies, the question is to know what type of rights come into play.

Most creations in relation with new technologies include hardware and/or software.

Hardware creations may generally be protected by a patent. Whereas software are protected by copyright (as a form of literary work).

We will concentrate our study on softwares.

INTRODUCTION(continued)

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INTRODUCTION(continued)

One could think that the best protection for a software would be the registration of a patent.

Conditions to be granted a patent:• the invention must be new ;• it must involve an inventive activity ;• it must be open to industrial application.

There are a range of creations which are deemed « unpatentable » because they are too abstract and without direct immediate industrial application.

Examples: discoveries, scientific theories or mathematical formulas and processes, literary, dramatic, musical or artistic works, etc.

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Why softwares may not be patented ?

• There is generally no direct immediate industrial application for a software. • Softwares result from a mathematical formula/process and as a result are not patentable.

As a consequence, the patent law protection has been rejected for softwares. Softwares are considered as literary works and therefore awarded the protection of copyright law.

Consequently, we shall concentrate this review on copyright law.

INTRODUCTION(continued)

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WHAT IS A « WORK » ?

There are various types of works which are protected by copyright law:

• literary, artistic, musical and dramatic works ;• other works such as sound recordings, films and broadcasts.

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The mere creation gives rise to copyright.

There is no requirement of prior registration as for patents or trademarks for example.

Copyright only protects the expression of an idea, the tangible form of the idea.

It does not protect ideas, concepts, principles, processes or methods of operation, which have no definite form.

WHAT IS A COPYRIGHT ?

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One of the main requirement to be granted protection by copyright law is for a creation to be original.

The genre, the purpose and the expression form are not taken into consideration.

Originality does not necessarily mean the work must be new, innovative or meritorious.

The work shall be marked by the author’s personality and the evidence of its creativity. For example, the work should not be a copy from another work.

Originality is a prerequisite for the protection of softwares as for any other work.

WHAT IS A COPYRIGHT ? (continued)

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Copyright is a property right.

The author of a work is usually the first owner of the copyright on its creation.

Copyright gives the owner the exclusive right to use the work, which includes for example the right to make a copy, to broadcast or give a public performance.

The copyright owner has no monopoly over the use of its works but shall perceive royalties for it. For certain types of works such as softwares, the copyright owner may hold control over its work.

SCOPE OF THE COPYRIGHT

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Regarding softwares, copyright forbids mainly two conducts:

1) Copy.2) Alterations.

However, there are few legal exceptions:

1)Safeguard copy.2)Any use that is consistent with fair use of

the software (in accordance with its purpose): reproduction, translation, adaptation, changes. The prerequisite is to have a licence to use the software.

3)Study of software functioning.4)Decompilation is authorized whenever

necessary to allow interoperability.

SCOPE OF THE COPYRIGHT (cont’d)

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Copyright gives rise to two forms of rights :

1) The patrimonial rights in the work (for example the right to control reproduction and performance).

2) The moral rights in the work (for example paternity of the work). They are inalianable and may not be assigned by the author.Please note that moral rights are very important under French law whereas they are vastly disregarded under common law.

SCOPE OF THE COPYRIGHT (cont’d)

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• Under French law, copyright protection lasts for the lifetime of the author plus 70 years, regardless of the type of work when author is an individual. When the author is a company the protection shall last for 70 years.

• Under Common law, copyright protection lasts generally for the lifetime of the author plus 70 years when the author is an individual, but there are numerous exceptions. US law specifies that when the author is a company, the protection shall last for 120 years from creation or 95 years from the first publication whichever comes first.

DURATION OF THE COPYRIGHT

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WHAT IS A WORK OF JOINT AUTHORSHIP ?

A work of joint authorship is a work which results from the efforts of more than one person. The work is made from their respective contributions.

Examples :

- When several persons collaborate together in the writing of a work of literature, a piece of music, a painting, etc.

- When a team of computer programmers and systems analysts together produce a computer program.

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Under French law :

The « joint authors » will automatically become the « joint owners » of the copyright in the work.

It means that the exploitation of the work cannot be decided without requiring the permission of each owner. The rule is the unanimity.

Nevertheless, each owner may exploit separately its contribution if it is not prejudicial to the exploitation of the work of joint authorship and if there is no contrary agreement.

WHAT IS A WORK OF JOINT AUTHORSHIP ?

(cont’d)

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Under US law :

The « joint authors » will automatically become the « joint owners » of the copyright in the work. But contrary to the situation under French law, they will own the copyright as « tenants in commons ».

Each owner’s rights are separate from the others even if the copyright is assigned to several persons.

As a consequence, each owner may assign its rights to another person without requiring the permission of the other owners.

WHAT IS A WORK OF JOINT AUTHORSHIP ?

(cont’d)

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WHAT IS A « SECONDARY » WORK ?

A « secondary » work is a new work in which is incorporated a pre-existent work.

Examples: translations, compilations, when someone undertakes to write a new software to emulate the functions and operations carried out by existing software, etc.

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However, copyright restricts the possibility to alter a software.

It is prohibited to disassemble the object code of a program in order to modify, alter or otherwise change the said program, unless you are licensed to do so or the copyright holder.

Therefore, software, as secondary work, will generally be the result of an agreement between the owner of the copyright on the original work and the author of the secondary work.

Such agreement shall rule the attribution of rights to each party.

WHAT IS A « SECONDARY » WORK ? (cont’d)

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WHAT IS A « WORK CREATED BY AN EMPLOYEE » ?

The situation is different under French and US law.

Under French law, the ownership of the copyright on a work created by an employee in the course of its employment is not automatically assigned to the employer.

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The employer may become the owner of the work provided that:

• The employment agreement includes an IP assignment clause under which all rights in works created by the employee in the course of its employment shall be assigned to the employer.

• The employee and the employer enter into an assignment agreement on a specific work.

WHAT IS A « WORK CREATED BY AN

EMPLOYEE » ? (cont’d)

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However, there is an exception with regards to softwares created by an employee in the course of its employment.

The ownership of the copyright on the software is automatically assigned to the employer. Such mechanism is similar to patent law.

The moral rights, however, remain the property of the employee. However, they are limited to a paternity right.

This exception shall apply provided that the software has been created by the employee in the course of its employment.

WHAT IS A « WORK CREATED BY AN

EMPLOYEE » ? (cont’d)

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Under US law, copyright related to works created by employees in the course of their employment, are automatically assigned to the employer regardless of the type of work, unless there is an agreement to the contrary.

WHAT IS A « WORK CREATED BY AN

EMPLOYEE » ? (cont’d)

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II. DATA PROTECTION IN THE EUROPEAN UNION

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LEVELS OF EU DATA PROTECTION LAW

• EU Data Protection Directive.

• National law in each of the (27) EU Member States.

• In each Member State, an agency known as a Data Protection Authority (“DPA”), which interprets and enforces the law in that nation.

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THE DATA PROTECTION DIRECTIVE

• The EU Data Protection Directive requires minimum data protection national laws in all 27 Member States.

• National laws have now been promulgated most.

• Directive requires that personal data must be:– processed fairly and lawfully ;

– collected for a specified purpose and not processed inconsistently with that purpose ;

– adequate, relevant and not excessive ;

– accurate and up to date ;

– kept no longer than necessary.

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WHAT IS “PERSONAL DATA” ?

• “… information relating to an identified or identifiable natural person.”

• “identifiable person” – “can be identified, directly or indirectly … by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity.”

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EXAMPLES OF PERSONAL DATA

• Name.• Physical address.• E-mail address.• Phone number.• Date of birth.• Marital status.• Salary.• Tax ID number.

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WHAT IS “PROCESSING” OF PERSONAL DATA ?

• Directive regulates “processing” of data.

• “Processing” -- Any operation performed on personal data.

• Examples: collection, recording, organization, storage, alteration, retrieval, consultation, use, disclosure, combination, blocking, or destruction.

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WHAT IS “PROCESSING” OF PERSONAL DATA

(cont’d)• Processing of personal data is permitted only

if:

– data subject gave unambiguous consent ;

– necessary for performance of contract with data subject ;

– necessary for controller’s compliance with law ;

– necessary to protect vital interest of data subject ;

– necessary for the public interest ;

– necessary for controller’s or third party’s legitimate interests, unless overridden by fundamental rights of data subject.

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SPECIAL CATEGORIES OF DATA

• Subject to exceptions, absent explicit consent, no processing of personal data revealing:

– race or ethnic origin,– political opinion,– religious or philosophical belief,– trade union membership,– health or sex life.

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A HOT TOPIC : CROSS-BORDER DATA

TRANSFER

• Commerce has become more global.

• Doing business internationally often requires data transmission from one nation to another.

• An increasing number of data protection laws prohibit cross-border transfer, except in narrowly defined situations.

• Problem is greatest for multinationals (“MNs”), but is important even for many small companies doing business only in the US.

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EU CROSS-BORDER TRANSFER RESTRICTIONS

• EU Directive Article 25 – Cross-border transfer of data for processing is permitted only to nations whose laws provide “adequate” data protection.

• So far, EU says only these major nations have adequate laws:– Switzerland,– Canada,– Argentina,– Guernsey,– Isle of Man.

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EU CROSS-BORDER TRANSFER RESTRICTIONS

(continued)•EU “Derogations” (exceptions):

– unambiguous consent of data subject ;– necessary to perform contract between data subject and controller ;

– necessary to perform controller/third party contract in interest of data subject ;

– necessary for public interest ;– needed to protect vital interests of data subject ;

– controller adduces adequate safeguards (e.g., as in contract).

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CROSS-BORDER TRANSFER RESTRICTIONS

(continued)

• Nations other than those in the EU have cross-border restrictions.– Most stringent may be South Korea.

• Some nations have no restrictions on cross-border transfer other than those imposed on transfer generally, e.g., Canada.

• US has no cross-border restrictions, nor do China and Japan.

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THREE MAJOR “METHODS”

• Three primary methods are now in use in use for transfer of personal data from EU to US:

– standard exporter/importer agreement ;

– consent of data subjects ;

– “Safe harbor”.

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Ichay & Mullenex Avocats

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01.42.89.19.80

mullenex@ima-avocats.comrichard@ima-avocats.com