Sony asks top EU court to enforce copyright law against cheat software that changes variables in PlayStation memory, not program code

The last time this blog talked about an IP enforcement case to which Sony was a party was 12 years ago when hundreds of thousands of PlayStations were seized in the Netherlands over a patent infringement allegation by LG Electronics. More recently, Sony has been mentioned as the only vocal complainer over Microsoft's acquisition of Activision Blizzard King (most recent blog post, tweet about latest court filing by Microsoft, Twitter thread flagging errors in GamesIndustry.biz article previously identified by two of my followers, tweet about likely Chinese approval, tweet about European game developers' support, Microsoft's president's latest tweet about Nintendo deal).

Now Sony is the plaintiff in the most interesting software copyright case that has been referred to the European Court of Justice since SAS (decided in 2012). On Thursday, the Bundesgerichtshof (Federal Court of Justice of Germany) announced (in German) its decision to make a request for preliminary ruling--briefly called preliminary reference--to the European Court of Justice (ECJ). Yesterday, Graf von Westphalen--the law firm that represents the defendant, Datel Group--issued a press release as well (in German, too), from which I learned the names of the parties, which the court itself was not allowed to reveal.

In the IP law community, this case will, however, be widely referred to as Sony v. Datel. And the question is whether cheat software--that allows video gamers to make faster progress or unlock features in games through technical manipulation--infringes copyright law.

These are the questions referred to the top EU court (in German, plus my unofficial translation):

1. Wird in den Schutzbereich eines Computerprogramms nach Art. 1 Abs. 1 bis 3 der Richtlinie 2009/24/EG eingegriffen, wenn nicht der Objekt- oder Quellcode eines Computerprogramms oder dessen Vervielfältigung verändert wird, sondern ein gleichzeitig mit dem geschützten Computerprogramm ablaufendes anderes Programm den Inhalt von Variablen verändert, die das geschützte Computerprogramm im Arbeitsspeicher angelegt hat und im Ablauf des Programms verwendet?

2. Liegt eine Umarbeitung im Sinne von Art. 4 Abs. 1 Buchst. b der Richtlinie 2009/24/EG vor, wenn nicht der Objekt- oder Quellcode eines Computerprogramms oder dessen Vervielfältigung verändert wird, sondern ein gleichzeitig mit dem geschützten Computerprogramm ablaufendes anderes Programm den Inhalt von Variablen verändert, die das geschützte Computerprogramm im Arbeitsspeicher angelegt hat und im Ablauf des Programms verwendet?

Unofficial translation by FOSS Patents:

1. Is the object of [copyright] protection of a computer program under Art. 1 (1) to (3) of EU directive 2009/24/EC ["the Software Directive"] encroached if neither the object code nor the source code of a computer program or a copy thereof is altered, but a different computer program running separately with the protected computer program modifies the values of variables stored in memory by the protected computer program and used by it in the execution of the program?

2. Is it an alteration within the meaning of Art. 4 (1) (b) of the Software Directive if [what follows now is the same conditional subclause as in question 1] neither the object code nor the source code of a computer program or a copy thereof is altered, but a different computer program running separately with the protected computer program modifies the values of variables stored in memory by the protected computer program and used by it in the execution of the program?

To understand the technical background of the dispute, it's helpful to look at how long this litigation has been pending: well over a decade. In January 2012, the Hamburg Regional Court sided with Sony, but was overruled in October 2021 by the Hamburg Higher Regional Court. This is an unusually long time almost ten years between the two decisions, and from the publicly available information I cannot deduce the reason for the delay. Anyway, the case was then appealed further (by Sony) to the Federal Court of Justice (case no. I ZR 157/21, caption: Action Replay).

The Wikipedia page about Datel indicates that the company has a long history of making cheat devices and was sued by Sony as early as in the 1990s. I suspect that the case that has now been put before the ECJ involves a product called Lite Blue Tool, which according to Wikipedia "caused a Sony PlayStation Portable (PSP) to enter into Jigkick or Factory programming mode, allowing the execution of the boot code from a removable storage."

It is extremely difficult to execute unauthorized code on today's PlayStations. It's like with the iPhone: one has to "jailbreak" (or "mod") the device.

Those practical hurdles don't render the legal question here irrelevant. Cheat programs that manipulate games are hated by the industry and by honest players.

I don't want to be a hypocrite: I did something similar in the 1980s on Commodore home computers. There was a BASIC command named POKE that made it possible to modify the value stored in memory (POKE address, value). Plenty of cheat codes were known at the time, and for a couple of games I looked into the program code (using what was called a monitor--a program that displays machine language code in a more legible form) to find out where, for instance, the number of lives was stored so I could just increase it from, say, 3 to 255 (maximum value of a byte). And back then it was even done prior to execution (those were single-tasking devices), meaning that what we altered was the copyrighted work that we had downloaded.

While I understand Sony's desire to combat cheating with copyright law, it may not be the best vehicle. It would take DMCA-style legislation (even going beyond the DMCA in my opinion), but the ECJ may just decide to legislate from the bench as it did when it held website operators liable for copyright infringements on third-party websites they link to (good for right holders) or when it declared a programming language unprotectable regardless of the level of creativity (SAS Institute v. World Programming) (bad for right holders).

Copyright has always been a suboptimal--but still pretty useful--means of protecting computer programs. In practice, it's really a mix now of various intellectual property rights that software makers rely on: copyright, patents, trade secrets (particularly in the age of cloud computing), and trademarks.

Copyright is meant to protect creative expression, such as art and literature. The fact that it extends not only to source code (which comes with legible variable and function names) but also to object code (which is derived from source code, but typically stripped of such clearly expressive elements) is a bit of a stretch, but justifiable because it's still the same structure, sequence, and organization as the source code. However, technical functionality--whatever happens at runtime--is the prerogative of patent law. Art. 1 of the EU Software Directive says that it "shall protect computer programs, by copyright, as literary works within the meaning of the Berne Convention for the Protection of Literary and Artistic Works" and "[p]rotection ... shall apply to the expression in any form of a computer program." The directive clearly says:

"Ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protected by copyright under this Directive."

Art. 4 of the EU Software Directive relates to restricted acts, meaning acts for which one has to be the creator or needs a license from the creator. Of the three types of restricted acts, the first (reproduction) and third (distribution) are not at issue. It's the one in the middle that matters:

"(b) the translation, adaptation, arrangement and any other alteration of a computer program and the reproduction of the results thereof, without prejudice to the rights of the person who alters the program;"

The passage that could help Sony here is "any other alteration of a computer program"--though we are talking about an alteration of an in-memory value as opposed to the protected program code, and the final part protects "the rights of the person who alters the program" (which could include the right to just change values stored in memory after you've paid for the device and the software).

If the ECJ focuses on the effect, Sony has a strong case: if, for example, a runner game puts obstacles in the way of a gamer and a cheat program just writes zeroes into the memory section where the data points for those obstacles (type of obstacle and location) are placed, you get the same effect as if you removed the obstacles by altering the program code that displays them, checks for collisions, or penalizes players for hitting them: the obstacles don't appear or at least don't affect the player. But we're talking about runtime technical effects while copyright is about design time and more static than patent law. I believe the appeals court in Hamburg was right when it held that it would have to take something more than just modifying variables in memory to perform a copyright infringement in the sense of an alteration of a copyrighted work itself. But there is no court above the ECJ, and like in the link liability case I mentioned further above, it may again take an expansive view on the scope of copyright protection.

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Former Advocate General and impeached judge embarrasses top EU court as he bashes his successor's 'Super League' antitrust opinion at Concurrences, Clifford Chance event in Brussels

In most circumstances, a former Advocate General (AG) of the European Court of Justice (ECJ) hits a new low for speaking out publicly against one of his successor's opinions at a time when the judges are deliberating. Such conduct is as distasteful as it is disrespectful, and it was troubling to watch a Concurrences event yesterday that was co-sponsored by Clifford Chance, Compass Lexecon, and one of their mutual clients for that very purpose. But the scandal-ridden career of former Belgian politician, ECJ AG, and ECJ judge Melchior Wathelet sr. has its own coordinate system.

The European Parliament broke "new constitutional ground" when it impeached Mr. Wathelet in the form of a legally non-binding resolution calling for his resignation. The man had encouraged the early release of convicted perverts such as Marc Dutroux, who not entirely unforeseeably went on to murder at least four girls. According to German newsweekly Der Spiegel, he was "embroiled in virtually every Belgian political scandal" besides the Dutroux case, one of which involved toxic waste and a donation by the perpetrators to Mr. Wathelet, who even heaped praise on them.

Mr. Wathelet bookended yesterday's event at the Brussels Plaza hotel with an opening keynote (which went way over time) and his final reflections. In the end he declared himself "pessimistic" that the top EU court would concur with him and the other--less controversial, but also far lower-profile--speakers. The whole multi-hour event was nothing but a thinly-veiled call from Brussels on the Luxembourg-based 15 judges of the Grand Chamber to reject the (actually well-reasoned and balanced) opinion AG Athanasios Rantos handed down in the European Superleague Company v. UEFA case last month.

Without a single exception--which is out of character for Concurrences--speaker after speaker after speaker had only one message: "Don't adopt the AG opinion, or the sky will fall." For the avoidance of doubt, the two journalists who merely moderated the panels--Carmen Perales from PaRR and Bloomberg's Irene García Pérez--cannot be blamed. The Friday the 13th conference was all about propaganda and venting frustration.

The key sponsor was A22, a marketing firm that would like to commercialize a breakaway soccer tournament named European Super League should it ever rear its unpopular head again. At this point, only three professional teams (Real Madrid, FC Barcelona, and Italy's Juventus FC) are supporting A22. Those clubs, partly directly and partly indirectly, are clients of Clifford Chance as well as Compass Lexecon, an economic advocacy firm that also does a lot of work on standard-essential patents. For Clifford Chance, whom I wish luck with the EU antitrust complaints they brought on Spotify's and Epic Games' behalf against Apple, it must be very frustrating to be on the losing track in a case that gets so much media attention. The budget is small (reportedly only a couple million dollars) compared to those tech cases, but no "industry" gets the general public more interested in Europe (and even beyond) than top-flight soccer.

Not only Mr. Wathelet but also a little-known Dutch law professor couldn't hide his skepticism when he said that "if the Court adopts the AG opinion, it may be the end of the Super League project." Somehow A22 and Clifford Chance must have forgotten to brief him: in their spin-doctoring efforts, they claim that the AG opinion favors their cause. But they are inconsistent at any rate as they stress the possibility of the ECJ reaching different conclusions: if the AG opinion was great for them, they'd advocate its adoption.

It is undeniably true that the judges make the decision. Statistically, most judgments are either entirely or materially consistent with the AG opinion. In this case--as I brought up at a recent Madrid conference I attended via Teams--the AG opinion is not just one key player's views: more than 20 EU and European Economic Area Member States, the EU Council (where the governments of the EU Member States cast their votes), the European Parliament, and the European Commission took such positions as well. So far, the so-called Super League has convinced only one Spanish trade judge to the effect of a preliminary injunction and this preliminary reference to the ECJ--and after the case was reassigned to another judge, the PI was lifted, partly for reasons that have now been validated by AG Rantos.

One of the points yesterday's panelists--more accurately, propagandists--were trying to drive home was that those 20+ Member States don't count because it's all just politics. However, the Super League lobbied those governments with help from its lawyers as well as Flint. To no avail, though; apart from Luxembourg, where one of the Super League entities is registered. I wouldn't underestimate the competence of government officials who work on sports policy day in, day out. They know more about the subject than the former German TV exec who is now running A22, the lawyers from Clifford Chance, the hired guns from Compass Lexecon, and the lobbyists from Flint.

Compass Lexecon incredibly makes the conclusory assertion that Super League-style concentration of wealth would benefit smaller clubs, and points to "solidarity" that would be totally voluntary as opposed to structural. It's amazing what they are prepared to say with a straight face, as they must know that the soccer ecosystem is unanimously opposed to the agenda of the three clubs behind this litigation.

Dutch outlier MEP Antonius "Toine" Manders stressed the separation of powers yesterday and said that only in a soccer context, politicians become so involved in litigation. He doesn't see the log in his eye: he personally attended the ECJ hearing in July and gave interviews. He doesn't normally do that either, nor has he been tasked with judicial oversight. Mr. Manders has repeatedly managed to get elected to the European Parliament on different ballots, but has never been put in a position of power. Since I met him a long time ago, I can see why he is ineligible for higher office.

By contrast, a rival event held the previous day featured former Polish professional soccer player and now-MEP Tomasz Frankowski (in the form of a recorded video), who recalled where the vast majority of the European Parliament stands.

The Concurrences event, however, was not only one-sided but also low-quality on average in terms of the background and reputation of the speakers. Take German economist Oliver Budzinski: he was introduced as someone who also does research on Big Tech antitrust matters. In that context, which I follow closely, I had never once heard of him. I asked around, and a top-notch antitrust litigator told me that Mr. Budzinski "does not play a role" in that regulatory context. I looked up some of his papers, including his opposition (potentially due to close ties with Google and/or Amazon) to the EU Digital Markets Act. It makes no sense to me that someone who didn't want stricter antitrust rules for the world's most powerful monopolists simultaneously demands rigid enforcement of existing rules against non-profits.

One attendee asked the panel why a group of 12 private entities (referring to the clubs who founded the Super League, though only three are still actively involved) would be in a better position to "safeguard" soccer values than UEFA, the existing European body. Mr. Budzinski's nonsensical answer was that UEFA, too, is a private (as opposed to governmental) entity. The question was not private vs. public, but inclusion. UEFA has 55 national member associations representing huge numbers of clubs (for instance, Germany alone has more than 30,000 of them). In Europe, there are approximately 50,000 professional soccer players, while the Super League as originally envisioned would have employed fewer than 1,000 of them.

At the LaLiga / Sports and Citizenship conference on Thursday, which I mentioned before, various speakers acknowledged that there is room for improvement in the current system. No one suggested nationalization (that was just Mr. Budzinski's way to restate the question). But a broadbased pyramid of organizations is inherently more representative of the ecosystem as a whole than a cartel of a small number of entities.

Then there was an Italian professor whose slides (overloaded with text, and with multiple typos) would not even make a 10th-grader proud.

An exception among the academics there was Oxford professor Stephen Weatherill because he enjoys a greater reputation than the others combined. But he is not necessarily in favor of the Super League: instead, he'd prefer an EU legislative initiative to reconcile Art. 165 TFEU (the EU's constitutional recognition of the specific nature of sport) with Art. 101 (cartels) and Art. 102 (monopoly abuse). He appears to be concerned that the AG opinion would obviate the need for legislation, though I believe busy European governments and lawmakers consider that fact a plus.

I asked why he thought the ECJ would legislate from the bench (I'm restating it in a shorter form here) when the legislative intent was actually to protect exactly the European Sport Model as it existed when the Lisbon Treaty (with the new Art. 165) was adopted in 2007. Professor Weatherill made a remark according to which legislative intent shouldn't be given much weight. But my point was not about whether legislative intent is the ultimate authority. The ECJ simply has to reconcile conventional competition law with a sports-specific statute. Professor Weatherill and a couple of other speakers faulted AG Rantos for recognizing the constitutional status of the European Sport Model as the EU institutions and 20+ Member States described it in connection with the European Superleague Company case (see the European Commission's 2022 Study on the European sport model (PDF)).

It is not ultra vires for the ECJ to define how a sports-specific statute impacts the interpretation and application of conventional antitrust and cartel rules. And in doing so, why shouldn't the ECJ take heed of what the legislative powers that be had in mind when they adopted the statute and (consistently) when they gave their input in connection with this case?

Professor Weatherill's answer focused on something else, however. He said that if one wanted to turn to the legislative history, it was that sports bodies were seeking an exemption from antitrust rules. Instead, the statute as it stands today was adopted. That argument doesn't convince me: in most cases, one group of stakeholders may not get everything it asks for, but if it gets something very significant, that doesn't mean it lost.

Professor Weatherill sidestepped the actual question. His point was that the AG went too far by reading the European Sport Model into Art. 165 TFEU. But what other model than the one that European lawmakers had in mind then and seek to protect now should the statute be about? When there is such widespread consensus--apart from the speakers at yesterday's event with their minority views--the AG is, in my view, right as a matter of legal policy and cannot be accused of proposing to legislate from the bench.

The ECJ has not set a ruling date. We'll see how long it takes, and what comes out of it. Yesterday's event was inconducive to Concurrences' reputation as a neutral debate organizer and may have been counterproductive for the purposes of A22, its backers, and its advisers. The bankruptcy of their arguments was on display, as was their frustration that their efforts have so far failed to get traction. The ECJ may not be amused that a former AG and judge (whose impeachment was a disgrace for the institution) tries to influence deliberations in an inappropriate form, "courtesy" of Clifford Chance and Compass Lexecon...

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Advocate General Rantos issues opinion in Super League ECJ case, deems soccer bodies' rules compatible with EU competition law

The European Court of Justice has just issued a press release (PDF) on the Advocate General's opinion in the European Superleague Company case (case no. C-333/21). It is the highest-profile antitrust case pending before Europe's top court by some measure. For instance, more than 20 EU and European Economic Area member states intervened at the July hearing in support of the European Sports Model that UEFA (the European soccer federation) and FIFA (the world soccer body that is organizing the ongoing World Cup) are defending--more than in any other case in the Court's history.

The so-called European Super League is--or was--an attempt to form a European-level breakaway league. It fell apart within about 48 hours of its botched launch in April 2021 due to resistance by fans, but three clubs--Real Madrid (a client of mine more than 15 years back), FC Barcelona, and Juventus FC--are still pursuing their vision. They obtained a preliminary injunction in Spain against sanctions that UEFA and/or FIFA might impose on clubs or players participating in their envisioned breakaway league, which was lifted a few months later. Within days of the complaint, and prior to counsel for any party other than the plaintiff side having entered an appearance, a Spanish trade judge referred the matter to the European Court of Justice in the form of a preliminary reference (i.e., asking the top EU court for guidance on how to interpret EU competition law in this context).

The European Commission supported the traditional European Sports Model against this legal attack through its written observations and various official statements, including a public statement after the renewal of a cooperation agremeent that an MEP close to one of the Super League clubs wrongly criticized.

At the July hearing, Advocate General Athanasios Rantos' first question to the breakaway side (represented by Clifford Chance and a sports-specialized lawyer) was why they claimed to be able to do a much better job at running a soccer competition but at the same time insisted on access to domestic leagues (such as Spain's La Liga) run by the existing pyramid of sports bodies. Clifford Chance made an essential facility type of argument, which came down to cherrypicking and failed to convince.

What is know now is that AG Rantos has answered every single one of the six referral questions in favor of UEFA and FIFA, finding no fault in their system of sanctions that are imposed unless a new competition is preauthorized by them. AG Rantos' opinion--which is not binding on the 15 judges of the Court's Grand Chamber, but has a high statistical likelihood of being more or less adopted--appears to give considerable weight to the specific nature ("specificity") of sport, which is recognized by Article 165 of the EU Treaty. I discussed the relevance of Art. 165 to the application of EU competition rules to the professional sports sector in a LinkedIn post shortly before the Luxembourg hearing.

According to AG Rantos, sports bodies are within their rights to require preauthorization of competitions, provided that certain criteria are met (objective, transparent and non-discriminatory rules). The "European Super League" has yet to formally request preauthorization. What AG Rantos recognizes in principle is that UEFA's and FIFA's rules that the "Super League" is challenging pursue legitimate objectives and are necessary, inherent, and proportionate to the pursuit of those objectives.

This is an across-the-board victory for UEFA and FIFA at this stage of proceeding. It is a bit of a procedural oddity that the latter declined to appear in the Spanish court, but very much did show up at the ECJ hearing. Be that as it may, UEFA has consistently defended its perspective, it has the support of a vast majority of EU Member States (and, therefore, the EU Council) and of the European Parliament, and is backed by the European Commission, especially by Vice President Schinas, who is in charge of Education and Culture, which includes sports policy.

While I want Clifford Chance to succeed with its EU antitrust complaints against Apple (where they represent Spotify and Epic Games) and Google, I find it odd that such a reputable firm would speak out publicly on this case--such as at a recent Madrid conference--while the AG was working on his opinion and with the judges not even having begun their deliberations yet. It's unorthodox at best and disrespectful at worst. There's a right way and a wrong way to excude confidence during the pendency of a case.

The leaders of the three hold-out clubs and the CEO of their marketing firm (A22 Sports Management) argued that the European Court of Justice could only find in their favor. They are now facing an uphill battle as the Advocate General assigned to this case fundamentally disagrees with them. The leaders of those clubs may have listened to the wrong advisers. And one of those clubs--Juventus FC from the Northern Italian city of Turin--is now in trouble over charges of false accounting, which resulted in the resignation of the entire board of directory of the publicly traded company that owns the team. It is rather rich for them to claim that they could do a better job at Financial Fair Play than the existing sports bodies.

I'm generally in favor of strong competition enforcement, but the rule of law is an equation that has two sides. The boundaries of competition law--and especially any carve-outs such as the specificity of sport that are the result of democratic rulemaking processes--must not be disregarded. The positions espoused by the "Super League" and Clifford Chance are ignorant. You can't treat a non-profit soccer body like the world's richest corporations with their gatekeeping power over digital markets when the unique nature of sport and its societal dimension are explicitly recognized by the EU's de facto constitution. Selective ignorance gets you nowhere in antitrust law.

In the U.S., there is no statutory equivalent to Art. 165 TFEU. That's why I absolutely agree with the key lesson from NCAA v. Alston, which is that only procompetitive justifications can be considered under a rule of reason. Just yesterday I shared observations on a certain divergence of U.S. and EU antitrust laws. Today--while not yet a final ruling--is another example. I applaud AG Rantos for having properly taken into consideration the European statutory framework, just like I believe the U.S. judges who ruled against the NCAA reached the appropriate conclusions under the Sherman Act.

It would now make a lot of sense for the "Super League" to negotiate a settlement enabling its founder clubs to rejoin the soccer family on an amicable basis. Given that Clifford Chance has plenty of other fee-earning opportunities, especially those way bigger tech competition cases they are working on, they shouldn't have a conflict of interest and just tell their clients that they are on the wrong track.

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Google confirms EU and UK antitrust investigations of Google Play Store business practices in Alphabet shareholder report and will appeal recent Google Android ruling by EU General Court

Foo Yun Chee, Reuters' Brussels-based EU antitrust expert,

1. just reported that a Google spokesperson told her about the company's firm intent to appeal to the European Court of Justice (ECJ) the recent judgment by the EU General Court (EUGC; the lower division of the Court of Justice of the EU (CJEU)), which for the largest part affirmed the European Commission's Google Android decision, and

2. in the same article quoted from a shareholder report by Google parent Alphabet that contains an official confirmation of formal EU and UK antitrust investigations into the company's Google Play Store practices.

As for the first part, the deadline is December 1, 2022. The pleas will be published by the CJEU in due course. At this point, Google can raise only questions of law. To the extent that the EUGC affirmed the Commission's factual determinations, they are now final for the purposes of that case. The most important finding from my perspective as an app developer was that the Google Play Store and Apple's App Store don't really compete because users rarely switch.

The second part--an ongoing Google Play Store antitrust investigation by the EC's Directorate-General for Competition (DG COMP)--is not entirely surprising because Politico already reported in early August on questionnaires that the Commission had sent out to stakeholders. I commented on that revelation at the time. What we know now is that this is not just a preliminary investigation but a full-blown one--and that something similar is going on in the UK. On page 28 of the quarterly report Alphabet filed two days ago, one can find the following information:

"In May 2022, the EC and the [Competition & Markets Authority (CMA) of the United Kingdom] each opened a formal investigation into Google Play’s business practices."

The next sentence suggests to me that a Korea Communications Commission investigation into Google Play Billing, which became known in August, also started in May:

"Korean regulators are investigating Google Play's billing practices, most recently opening a formal review in May 2022 of Google's compliance with the new app store billing regulations."

The shareholder report states Google's position that "these complaints are without merit." While vowing to "defend [themselves] vigorously," they say they "continue to cooperate with federal and state regulators in the U.S., the EC, and other regulators around the world." They could obviously be--and other defendants to antitrust investigations have indeed been--more cooperative, but Google may be willing to go just a little bit further than Apple when it comes to addressing regulatory concerns.

For example, The Protocol's Janko Roettgers today reported that Amazon announced the release of two TV sets running Amazon's Fire TV software in Europe this fall, and attributes this, potentially, to regulatory pressure as a ruling by the Competition Commission of India (CCI) discussed how Google prevented Amazon's Fire OS (operating system) from succeeding in the marketplace, particularly by precluding device makers from making fully Android-licensed devices and products running "forks" (Android derivatives) at the same time. This week the CCI followed up with a second ruling that focused on app developers' rights on the Google Play Store, and once again included some interesting quotes from Amazon's answers to the CCI's questions.

The first Indian antitrust decision (which came down about a week ago) already ordered remedies designed to protect OEMs (device makers), end users, and app developers; the second one, which followed this week, is specifically about app developer concerns. Similarly, but with more time in between, there are now two Android cases in the EU as well, with the first one focusing on the terms Google imposes on OEMs and the new investigation apparently (given that it's about the Google Play Store) addressing the issues facing app developers who are dependent on Google's Android app store.

In retrospect it is now even clearer why Google announced some new European in-app payment rules in August. The official reason was a plan to comply with the Digital Markets Act (DMA), but that one won't really require Google to change much until early 2024. In actuality, it was about that ongoing DG COMP investigation, but as I explained in the post I just linked to, that announcement by Google doesn't really solve any problem.

The Google Play Store is at issue in various jurisdictions. In the United States, 36 U.S. states, Epic Games, Match Group, and some consumer plaintiffs are suing Google over its Google Play terms and practices. Google is currently opposing an amendment to Epic Games' and Match Group's complaints that would add an allegation of a per se antitrust violation (in EU terminology that would be called "restriction of competition by object").

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After ECJ ruling on availability of preliminary injunctions in patent infringement cases, PIs are presently far more likely to be granted in Munich than in Dusseldorf

This is a caselaw update further to my April 28, 2022 post, European Court of Justice opens floodgates to preliminary patent injunctions in major victory for Munich I Regional Court's patent-specialized judges. As the German law firm of Loeffel Abrar noted on Twitter, my prediction that Munich would henceforth be Ground Zero for preliminary injunctions against patent infringement is playing out so far.

In a September 29 ruling, the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann) of the Munich I Regional Court laid out a perfectly logical application of the above-mentioned ECJ ruling to German patent PI cases. You can find the full text of the decision, including the syllabus ("Leitsätze"), in German on a website operated by the State of Bavaria. Rather than a verbatim translation, I'll just paraphrase in a condensed form the four key principles:

1. The starting point of a patent PI analysis is a presumption of validity of any European patent based on the mere fact that it was issued. The alleged infringer bears the burden of making a showing to the contrary.

2. That burden is normally met if a defendant presents a validity forum's preliminary opinion or final decision deeming the patent invalid. In principle, this also applies to prelimininary or final invalidity opinions from domestic or foreign proceedings concerning parallel patents claiming priority to the same original application.

3. After a convincing showing by a defendant that the asserted patent is more likely than not to be invalidated, the burden shifts to the moving party, which has to make a showing that the (preliminary or final) decision presented by the defendant is erroneous ("diagnosis") and will be reversed ("prognosis").

4. Doubts concerning the validity of an asserted patent will normally be relevant only if the patent is challenged by means of an opposition or nullity complaint or, in cases in which the preliminary injunction hearing takes place very shortly after the defendant was put on notice of the infringement allegation, if an opposition or nullity complaint is undoubtedly foreseeable. Furthermore, the defendant has to provide its invalidity contentions in writing in a self-sufficient, intelligible, complete, coherent, and legally convincing form.

The only expression here that may be easily misunderstood is "more likely than not." That is the verbatim translation of "überwiegende Wahrscheinlichkeit"--which German patent infringement courts, however, apply in a way that is closer to (if not even more exacting a standard than) clear and convincing evidence, as opposed to a mere preponderance of the evidence.

At any rate, the Munich court's take is consistent with para. 41 of the ECJ ruling in Phoenix v. Harting:

"In that context, it must be borne in mind that filed European patents enjoy a presumption of validity from the date of publication of their grant. Thus, as from that date, those patents enjoy the full scope of the protection guaranteed, inter alia, by Directive 2004/48 [...]"

A few days ago, Juve Patent reported on the Dusseldorf Regional Court's denial of PIs in three parallel cases brought by Biogen against generic drug manufacturers. Those decisions have been appealed.

According to Juve Patent, "[i]n view of the EPO’s decision on the parent patent [which was revoked by an opposition panel, and that decision was affirmed by an appellate panel], Düsseldorf Regional Court also considered the validity of divisional patent EP 873 insufficiently secured to justify handing down a preliminary injunction." That decision per se would actually be consistent with the second part of the Munich court's approach summarized further above.

But there is a major divergence in the form of a dictum. The Dusseldorf court wrote:

"Selbst dann, wenn man die Ausführungen des EuGH in seiner Entscheidung [Phoenix v. Harting], wonach für europäische Patente ab dem Zeitpunkt der Veröffentlichung ihrer Erteilung eine Vermutung der Gültigkeit bestehe (EuGH, GRUR 2022, 811, Rn. 41), derart begreifen möchte, dass damit eine Vermutung im rechtlichen Sinne gemeint ist – woran die Kammer Zweifel hat –, [...]."

That passage translates as follows:

"Even if one were to interpret the ECJ ruling in Phoenix v. Harting as establishing a presumption of validity for European patents from the moment of the publication of their issuance [...] in the sense that it is a legal presumption of validity--which this [Dusseldorf] Court doubts-[...]" (emphases added)

Well, Flat-Earthers also "doubt" something, but that doesn't mean they have reasonable doubt.

What would a non-legal presumption of validity look like? I don't drink alcohol or smoke anything, so my imagination unfortunately isn't up to this challenge.

The term is pretty common in U.S. patent law. There's a presumption of validity (which in district court has to be overcome by clear and convincing evidence), and there can even be an enhanced presumption of validity if additional circumstances are present.

The Munich stance makes a lot more sense than that Dusseldorf dictum. The only way to read Phoenix v. Harting is that national courts must not require parties moving for patent PIs to earn their presumption of validity: they deserve it based on the EPO's decision to grant the patent, period. Whatever happens thereafter may change the picture, as the Munich court makes clear. But the ECJ deemed it contrary to EU law to require something more than the issuance of a patent in the first place.

Obviously, we need to see how it plays out at the appellate stage. Simply put, if only one of the appeals courts (Munich, Karlsruhe (for Mannheim), Dusseldorf, Hamburg, or even one in a less popular venue such as Berlin) adopts the Munich I Regional Court's approach (in my opinion, they all should), all patentees can just file their PI motions there and don't have to care about the other appellate circuits. Theoretically, even a patent PI case could reach the Federal Court of Justice, but it would require the parties to keep litigating way beyond the final adjuciation of the PI motion. Not going to happen anytime soon, and quite possibly never going to happen. It's another question what will happen at the UPC, but presumption of validity means presumption of validity means presumption of validity.

In all fairness, there is a policy argument that the high post-grand invalidation rate of European patents warrants some caution at the PI stage, from a balancing point of view. However, the ECJ in Phoenix v. Harting didn't take that into consideration at all. That is a failure of the lobbying departments and organizations of companies who frequently have to defend against patent infringement claims. Those organizations proved their worthlessness in connection with German patent injunction reform as I explained again a few days ago. If they weren't as uncapable as they are, they'd have lobbied the governments of many EU member states to make submissions to the ECJ that would have made an impact. Now it's too late.

I also wouldn't adopt the take on the ECJ decision that a lawyer espoused at a recent conference. In particular, I disagree with any suggestion that the Munich court's preliminary reference question was unhelpful. It's better to ignore that, especially as it comes from someone who's suffered some major defeats--not only, but particularly--in Munich lately and has recently been on the receiving end of a patent PI motion.

So far, my view that Munich is a great choice for patent PIs has been validated. While the Dusseldorf Regional Court has at least refrained from taking an outlier position on the proportionality defense to patent injunctions, and has become a lot faster than it was a few years ago, it's still not the best venue for patent holders in such fields as smartphones and connected vehicles, for which Munich is the go-to venue, followed by Mannheim. Most Dusseldorf plaintiffs are small and medium-sized companies. Many patent litigators who are based in Dusseldorf want to maintain the importance of their home venue, but the Dusseldorf judges don't make it particularly easy to justify that forum choice to clients.

Dusseldorf is a wild card, Munich is pretty predictable, and I would like to see patentees give Mannheim a try if they have enough patents-in-suit to hedge their bets.

[Update] After my post I became aware of the following Bardehle Pagenberg video on the subject:

[/Update]

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Franco-Italian MEP and his EU-level party wrongly accuse European Commission of compromising judicial independence: European 'Super League' case

On Friday, Nokia proudly announced that the European Commission has chosen it to "lead the next phase of Europe's 6G flagship project" named Hexa-X. Imagine for a moment that some Member of the European Parliament would have immediately criticized the Commission, given that various litigations involving Nokia (a couple of which I've discussed on this blog) are currently pending, and would have suggested that the Commission decision unduly interferes with the judicial process. No one in their right mind would seriously want to hamstring the Commission's digital policy efforts.

The equivalent of that has just happened with respect to sports. Emotions often rise high in Europe (as they do elsewhere) around soccer, and the most controversial item in the history of EU sports policy has been--and due to a pending court case continues to be--the failed attempt to form a breakaway league called the "European Super League" in 2021. Shortly before the hearing the European Court of Justice held in mid-July, I discussed how the EC's Directorate-General for Competition (DG COMP) might be able to defend its International Skating Union decision (which was affirmed by the EU General Court, but appealed further to the ECJ) while supporting the European Sports Model in European Superleague Company v. UEFA.

Three months after the hearing and two months before Advocate General Athanasios Rantos will hand down his opinion, the European Commission has now drawn the ire of Sandro Gozi, a Member of the European Parliament who served in the Italian parliament and executive government, but in 2019 was elected to the European Parliament on a French ticket. Whether that makes him the EU equivalent of a carpetbagger is an interesting question, but not the issue here. It is, however, worth noting that Mr. Gozi's Twitter profile prominently displays his allegiance to Juventus FC, Italy's most popular soccer club:

Based in the Piedmontese capital of Turin, "Juve"--nicknamed La Vecchia Signora, "the Old Lady"--is majority-owned by the Agnelli family, one of the largest shareholders in the (now Avanci-licensed) Stellantis automotive group. Juventus is one of only three clubs who still insist that the "Super League" was a great idea and its merits were not understood by the rest of the world.

On Friday, Spanish sports daily AS (where I learned a significant part of my Spanish) reported on a "schism" in the EU--total hyperbole as I'll explain in a moment--over a new cooperation agreement between the European Commission and European soccer body UEFA. Mr. Gozi has formally demanded an explanation from the Commission, asking questions that are as rhetorical as they are accusatory. He implies that the Commission is compromising judicial independence at a time when the ECJ has taken the "Super League" case under adviseement.

The AS.com article was then shared on Twitter by an EU-level party, the European Democratic Party (EDP), as whose Secretary General Mr. Gozi has been serving since last year:

Cisma en la UE por pactar con UEFA contra la Superliga https://t.co/MFA22KcPNr via @diarioas

— European Democrats (@PDE_EDP) October 7, 2022

The European Democratic Party (EDP) is an EU-level group of national parties. Most--but not all--of its 13 MEPs are members of the Renew Europe group in the European Parliament, which resulted from a de facto merger between the Alliance of Liberals and Democrats for Europe (ALDE) group with French president Emmanuel Macron's République en marche. However, Mr. Macron's movement is not a member organization of the EDP; Mr. Gozi was elected on a different French party's ticket.

Even if we give Mr. Gozi the benefit of the doubt and assume that he had the backing of the entire EDP for that initiative, the fact that a very small party (13 out of the EP's 751 seats) raises a question hardly constitutes a "schism" as AS describes it. Otherwise Brexit would have amounted to the bloc's dissolution.

The Commission has important duties to carry out and cannot put everything on hold because of someone bringing a lawsuit somewhere.

The "Super League" case started in April 2021, and a few weeks later, a Spanish trade judge sua sponte referred half a dozen questions to the ECJ. He was within his rights to do so, but that doesn't mean the Commission has to wait for anybody.

As Commission Vice President Margaritis Schinas explained on Thursday, "UEFA and the European Commission will ensure that UEFA's competitions remain a success story embedded in our European Sport Model." The Commission's press release noted that "[s]tructured around key EU priorities such as climate action, equality for all and social inclusion, the agreement marks an intensification of the long-standing collaboration between the European Commission, UEFA and national European football associations towards using European football as a force for positive change across Europe" (emphasis added). There was a meeting of the minds between the EU Commission and UEFA, which took the shape of "a joint commitment to promoting solidarity between different levels in sport, in particular between professional and grassroots football, the ongoing development of the women's game, fairness, integrity, financial sustainability, competitive balance, gender equality and good governance."

Those are laudable policy goals. But Mr. Gozi is apparently not amused, so he formally posed two written questions to the Commission:

1. Why was the new Arrangement [sic] between EC and UEFA adopted only in June 2022, and not immediately after the expiration of the previous Arrangement? Why was the Arrangement signed only on 6 October, four months after its adoption?

2. Why did the Commission deem appropriate to sign a new arrangement while a proceeding is still pending before the CJEU? Did the Commission contemplate the possibility that this agreement could prejudice the independence and impartiality it should have as a guardian of the Treaties intervening in the preliminary ruling proceeding?

The first question relates to none of his business: the Commission is free to let cooperation agreements expire and renew them at a later stage, whatever the reason (such as delays in the negotiation process) may be. The second question is nonsensical for multiple reasons:

• Whatever the ECJ will decide, it won't outlaw UEFA.

• Certain Commission decisions are reviewable by the ECJ, but the preliminary-ruling procedure in the "Super League" case is not about the Commission's cooperation agreements. It's about the application of EU competition law.

• The Commission actually made its policy positions known to the Court. It filed written observations and participated in the oral hearing. And that's simply one of its statutory tasks.

• The Commission cannot compromise judicial independence because it doesn't appoint the judges. As the EU Council explained again in a recent press release, "[t]he judges and advocates-general are appointed by common accord of the governments of the member states after consultation of a panel responsible for giving an opinion on prospective candidates' suitability to perform the duties concerned." (emphasis added)

  21 member states of the European Economic Area delivered oral argument in July. All of them supported UEFA against the "Super League" and stated their policy reasons. Only two countries had submitted written observations in plaintiff's favor: Luxembourg, which didn't participate in the hearing, and the Czech Republic, which changed its stance between its written submission and the oral hearing.

Mr. Gozi's parliamentary questions are just fake outrage. He presumably knows that he won't discourage the Commission from doing its job. The only plausible purpose of his "questions" is reflected by the exaggerated headline of that AS.com article: he wants the court of law and the court of public opinion to believe that the EU institutions aren't really behind the European Sports Model as embodied by UEFA and its member associations.

But the political picture could hardly be more favorable to UEFA:

• In November 2021, the European Parliament adopted a resolution (with a very broad majority: 597 yeas, 36 nays, 55 abstentions) opposing breakway competitions like the "Super League."

  Mr. Gozi appears to be bearing a grudge over that. But as the Secretary General of a party with "Democratic" in its name, he should be a good democrat and accept that outcome.

• That same month, the EU Council (where the governments of the Member States cast their votes) also threw its weight behind the European Sports Model.

• And in early 2022, the Parliamentary Assembly of the Council of Europe (which is not an EU institution) adopted a similar resolution.

Speaking to the press after the signing ceremony on Thursday, Vice President Schinas showed on what great terms he is with UEFA President Aleksander Čeferin. The two even publicly addressed each other on a first-name basis. By contrast, Mr. Schinas took a side swipe at Real Madrid's president Florentino Pérez, who had said a few days before that the NFL was commercially outperforming European football (based on a Forbes ranking of team valuations and a single revenue source: a broadcasting rights deal). Such an apples-to-oranges comparison, coupled with a selective focus, comes down to demagoguery and doesn't impress the Commission. Mr. Schinas said UEFA's soccer competitions were doing a lot better than some people suggest. Sports-specialized economists looking at the whole picture (not just at the top level of a sport) would likely agree. Also, the European Super League's launch in 2021--everything fell apart within about two days--didn't inspire confidence that Mr. Pérez and his allies and subordinates have the ability to outexecute UEFA.

I'd like to talk in more detail about the fundamental differences between U.S. and European spectator's sports, but in this context I will focus on an important legal aspect: legitimate sports-related and societal objectives can justify certain restrictions under European competition law (provided that the measures employed are necessary and inherent as well as proportionate to the pursuit of the legitimate objectie) while the Supreme Court of the United States made it clear in NCAA v. Alston that procompetitive justifications are given weight under the rule of reason if they actually are procompetitive as one would narrowly define the term. The Supreme Court cited two of its earlier decision. In National Soc. of Professional Engineers v. United States, justifications that weren't procompetitive in a strict sense (ensuring quality work and protecting public safety) were deemed "nothing less than a frontal assault on the basic policy of the Sherman Act." In FTC v. Superior Court Trial Lawyers Assn., the defendant's "social justifications proffered for [its] restraint of trade" did not make the challenged conduct "any less unlawful." Epic Games also cites those holdings in its appeal against Apple, which will be heard next week.

In other words, UEFA is in a much stronger position than the NCAA ever was (apart from the fact patterns also being disparate) because of the way EU antitrust law is applied to rules, decisions, and other actions by sports bodies. All that Mr. Gozi and his club can do is disagree with the Commission, a broad majority of his peers in the European Parliament, and the governments of almost all EU Member States, such as that of the country in which he was elected.

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Plot is thickening that Apple, Google, and possibly other gatekeepers will seek to derail, defang, or delay Digital Markets Act and Digital Services Act in court

Yesterday, Handelsblatt (Germany's leading financial newspaper) reported on something that Politico already covered on August 10: law firms are preparing what could be an avalanche of lawsuits challenging the European Union's Digital Markets Act (DMA) and Digital Services Act (DSA) in court.

Six weeks apart, the two media reports corroborate each other. A common element is that both articles quote Gerard de Graaf, who runs the EU's liaison office in San Francisco and told reporters that the European Commission sometimes faces 15, 20 or 25 lawyers when it meets the major digital gatekeepers that the new legislation is intended to keep in check.

Handelsblatt quotes an unnamed Big Tech lawyer--it is not 100% clear but sounds like the source is outside counsel to Apple or Google--as saying that "everything's ready to go, we just need board approval."

The designation of what platforms confer gatekeeper power upon their operators is going to be the first obvious opportunity for Big Tech to challenge the law. Companies can't sue over the mere fact that the law is passed. In some countries it would be possible to have courts review the constitutionality of new legislation (and I wouldn't rule out that some companies may challenge the DMA and DSA in the constitutional courts of key EU member states, or that they would challenge national implementation rules, which could be draconian in some places). At the EU level, companies can only challenge specific Commission decisions affecting them. The initial designation decisions will be critical. Andreas Schwab MEP, the European Parliament's rapporteur on the DMA, told this blog that map services should be treated like other search engines, and I agree, but Google presumably won't. That's just one example of a Commission decision that might be appealed.

The term ex ante regulation is often used to set the DMA's approach to gatekeepers apart from traditional antitrust enforcement. This should not be misunderstood as meaning that the new legislation would prevent gatekeepers from emerging in the first place. It's just about a streamlined process. Traditional antitrust law is slow, and the burden on enforcers weighs heavy. If it takes years to make and defend a decision against a certain form of abusive conduct, but the defendant can then modify its business model and implement a new approach within a matter of weeks or months, the whole process may have to start all over again, while market realities (such as competitors being driven out of a market) are created and may become irreversible.

Compared to its U.S. counterparts (FTC and DOJ-ATR), the European Commission's Directorate-General for Competition (DG COMP) already has two major advantages even prior to the DMA and DSA entering into force:

• EU antitrust law tends to be stricter.

• While the FTC and the DOJ have to sue an infringer and prove everything in court (almost) like a private plaintiff, European Commission decisions are like a first-instance decision and do get some degree of deference. The standard of review is more like whether the Commission followed proper procedures (due-process rights were particularly important in the Qualcomm case, and the Commission didn't appeal further, which I also felt wouldn't have been a good use of resources) and had a reasonable basis for reaching its findings of fact. One could have a lengthy debate over what standard of review in the U.S. would be comparable to that applied in an EU General Court review of a DG COMP ruling, but it's probably somewhere between the "arbitrary and capricious" and "substantial evidence" standards. And once the EUGC has spoken, there is no more opportunity to challenge factual findings--which is going to complicate a Google appeal of last week's Google Android judgment.

  One problem I see in the U.S. is that extremely complex, high-stakes antitrust cases are decided at the district court level by a single judge (with or without a jury). Those judges are extremely busy as they preside over a wide range of cases (even criminal cases)--so busy that, for example, there are almost 300 typos and similar errors in the Epic Games v. Apple judgment. They sometimes make mistakes that I believe would be much less likely to happen if big cases were put before panels of three judges, simply because six eyes see more than two. Again, Epic v. Apple serves as an example. It may be a bit of an outlier because that judge, despite understanding some of the issues (such as Appel not caring about developers and Apple's currency conversion dictate being too inflexible) very well, got other parts terribly wrong, even saying absurd things such as that Apple would have a different market share in smartphone operating systems than in smartphones, and unfairly accused Epic of wanting a free ride when the opposite is demonstrably true. In that case, it benefited an antitrust defendant, though I expect at least a partial reversal and remand. In other cases, it resulted in district court judgments holding defendants liable for something that wasn't go to withstand review.

The Commission is bracing for those court challenges, and we may all have to live with the delays they may cause. Of course, we all want the rule of law, and that's why we have to await and see what issues those lawsuits raise. The Commission is, of course, confident that despite its lawyers being outnumbered, they can win. And indeed, government lawyers are virtually always at a resource disadvantage when going after large enterprises. It's the same in the U.S., and nevertheless governments win very often.

For the avoidance of doubt, I want the DMA to open up certain markets such as iOS and Android app distribution as soon as possible. And when Apple's and Google's lawsuits over DMA-related decisions are finally filed and their legal theories become known, they may very well be meritless, which would raise the question of whether all they want to achieve is delay. But for now we don't know, and that's why we have to wait.

The Handelsblatt article I linked to at the start of this post also mentions that Apple and Google are scaling up their EU lobbying efforts, with Apple almost doubling its spend last year over the year before. Apple deservedly got bad press this week for its astroturfing in Washington and Brussels.

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DG COMP's foresight enables EU Commission to come out on winning side in both sports antitrust cases heard by ECJ next week: European Superleague Company v. UEFA and International Skating Union v. European Commission

This blog's focus will remain on tech antitrust and IP cases. With only a few days to go until the European Court of Justice hearing that will presumably draw more media attention than any other in the ECJ's 70-year history, and in light of the interesting role the European Commission plays in that context, an exception is warranted. Normally, however, I write about sports antitrust matters on LinkedIn:

• Translation of Madrid Commercial Court's order of April 20, 2022, lifting the preliminary injunction in the Super League case

• European Court of Justice to referee longest pro football match ever on July 11 & 12

On Monday and Tuesday, the ECJ will host a sports-related antitrust double-header (click on the image to enlarge):

• Monday, July 11, 9:30 AM CEST: case no. C-124/21 P, International Skating Union v. Commission

  This is a further appeal from the EU General Court, which in December 2020 affirmed the most important part of a DG COMP decision: AT.40208, holding the International Skating Union's (ISU) in violation of Art. 101 TFEU because it threatened athletes (who would otherwise have contemplated participating in a non-authorized speed skating contest in Dubai) with long-term sanctions, such as being excluded from the Olympic Games.

• 2:30 PM CEST and continuing the following day: case no. C-333/21, European Superleague Company [v. UEFA & FIFA]

  This is the high-profile case I meant. The "European Super League" was announced in April last year as an attempt to form a breakaway football (soccer) competition, hoping to displace the UEFA Champions League. But resistance from fans and politicians was so overwhelming that it all fell apart within a couple of days. Three teams (Real Madrid (this year's winner of the Champions League), FC Barcelona, and Turin's Juventus FC) are still pursuing their "project" through litigation, hoping to be able to get other clubs interested in the event of an outcome favoring their plan. Shortly after the rebel clubs brought--through a company they control--an antitrust case with the Madrid Commercial Court No. 17, a trade judge asked the top EU court for a preliminary ruling on six questions relating to the interpretation of EU law in this context.

Both cases will be heard by the Grand Chamber (the President plus 14 other judges). This back-to-back scheduling is no coincidence: there is a certain overlap--either case is about the antitrust implications of sanctions against those participating in a sports contest not authorized by a traditional sports body--but the differences are far greater than the similarities. The Court is obviously aware of the potential for conflicting rulings, yet that risk is easily manageable.

At first sight one might think that the Commission is taking contradictory positions or applying dual standards as it

• clearly throws its weight behind UEFA's position (UEFA is Europe's football governing body), defends the European Sports Model, and rejects the "Super League" proposal

• while still defending its finding of an Art. 101 violation in ISU.

The Commission defends the rights of athletes participating in a non-authorized sports tournaments in ISU, and at the same time opposes the breakaway "Super League". Odd as it may seem, there are perfectly valid reasons. The Commission may indeed get its way in both cases.

Those two cases do overlap to a limited extent, but above all, they are "false friends."

With respect to my doubts about the merits and prospects of the "Super League" case, may I refer you to one of my LinkedIn articles. The focus here is just on the Commission's role and DG COMP's foresightful course of action.

When the Commission was investigating and then writing its decision in the ISU matter, it already knew that the shoe might seemingly be on the other foot next time around. The threat of a soccer breakway league had been lingering since at least the late 1990s. In 1998, 14 major teams founded the G-14 organization to present a united front vis-à-vis UEFA, which was a thinly veiled threat of taking matters into their own hands and setting up their own European soccer competition--unless certain demands would be met. For the next 20+ years, the threat resurfaced in different forms and on different occasions, but until last year, it was idle and never carried out: solutions were found through negotiations.

In 2007, I worked on a soccer antitrust matter a the EU. My client was Real Madrid, and FC Barcelona and AC Milan were our informal allies with respect to broadcasting rights. I won that battle for them all. The EU policy makers I was talking to at that time--EU Commission officials as well as Members of the European Parliament--were profoundly concerned about the possibility of a breakaway. 14 years later, those fears would be validated--and there was a sigh of relief after the "Super League" had gone down the tubes.

DG COMP believed that the International Skating Union had gone too far, but carefully sought to avoid unintended consequences. They wanted to go after the ISU but not act as a trailblazer for a breakaway soccer league, not knowing if or when--but full well aware that--it might happen at some point.

It doesn't really take much to distinguish the two cases for factual, legal, and policy reasons.

What the ISU didn't allow--a third-party off-season event--is actually done by soccer teams every year, particularly every summer. Real Madrid announced a 2022 summer tour with matches against FC Barcelona in Las Vegas, Mexico's Club América at Oracle Park in San Francisco, and Juventus FC at the Rose Bowl (L.A.). UEFA and world soccer body FIFA won't sanction them for playing those games--but the ISU potentially destroyed the careers of certain athletes for participating in a Dubai contest for a few days during a long break between seasons.

Art. 165 TFEU emphasizes the "specific nature of sport." It must be taken into consideration when applying EU competition law, too (as the ECJ recognized more than a decade ago). It doesn't make sense to treat (non-profit) sports bodies with their pyramidal structure like, for instance, digital gatekeepers. Sports bodies are not above the law, but the law must be applied reasonably--which sometimes means deferentially--to the professional sports sector.

Also, there's a lot less money involved in other European sports than in football, but the outcome of the "Super League" case would impact the entire sector.

It's about proportionality. Sports bodies do have a mandate to protect the integrity of their sports and their competitions--that's also the Commission's position. Now, on a case-by-case basis the question is whether a particular rule or other measure pursues a legitimate objective (which, again, the integrity of a sport is, as is the balance of competitions) and whether the rule or measure is inherent to the pursuit of that objective and proportionate to it. It's the FRAND (fair, reasonable, and non-discriminatory) formula in that field.

DG COMP determined that the International Skating Union made disproportionate threats, considering that the Dubai race didn't have the potential to undermine the integrity of the sport or of the ISU's own competitions that take place at a different time of the year. That's a completely different set of facts from the "Super League" case.

Footnote 376 of DG COMP's ISU decision distinguished speed skating from soccer:

"The ISU notes that the Commission has in principle in UEFA Champions League accepted that at least for certain sports and in certain cases some form of cooperation amongst the participants is essential to ensure the good organisation of sport (ISU's response to the SO of 16.01.2017, paragraph 86). However, that decision concerned the organisation of a competition in (professional) football, in which the requirements are different compared to speed skating, namely insofar as football players participate, throughout the year, in a great number of national and international club competitions as well as national team competitions. Such considerations do not apply in the same manner to speed skating, which is a winter sport with a long off-season going approximately from March to October every year. Moreover, in that decision the Commission considered that certain arrangements between competing undertakings (in this case, cooperation amongst football clubs to organise and commercially exploit a football league) are restrictions of competition that can be individually exempted pursuant to Article 101(3) of the Treaty. The Commission therefore did not generally exempt all sports organisational rules from the scope of application of Union competition law." (emphasis added)

It would be a highly plausible outcome if the Court of Justice explained in European Superleague Company certain circumstances in which a sports body lawfully levies sanctions on those participating in a non-authorized competition (safe harbor) while, in International Skating Union, drawing the line where restrictions are disproportionate and, therefore, contravene EU competition law.

Apart from those factual differences, we're also talking about fundamental differences from a procedural and legal perspective:

• In European Superleague it's about guidance on the interpretation of EU law, at a stage where the Spanish court from which the preliminary reference originated has only held a pretrial conference. The ISU case, however, is at a stage where the appellant can only raise questions of law as all factual disputes were previously resolved by the EUGC based on a Commission decision. Given the limited scope of review at this final stage, it's even possible that the ECJ could feel forced to affirm the EUGC despite potentially having a divergent opinion on some relevant facts.

  That is, by the way, the reason why it will be difficult for the Commission to appeal the EUGC's recent Qualcomm judgment.

• The questions raised by the Spanish trade judge (who by the way is not presiding over the case anymore) in the Super League case last year are abstract, and the answer to each of them will most likely be: "It depends." In the ISU case, however, there is a specific finding of a violation of competition rules to be adjudicated.

• The ISU's second plea relates to gambling, which is not at issue in the "Super League" case.

• The Commission based its ISU decision entirely on Art. 101 because of a lower hurdle for proving a restraint of competition (in that case, by object, i.e., without having to prove particular effects). The preliminary reference in European Superleague involves Art. 101 as well as Art. 102.

The Commission is more likely than not to be in good shape on Monday in the ISU case. In the "Super League" case, both sides will likely face some tough questioning from the judges, but I believe the ECJ will not allow itself to be weaponized against the European Sports Model. The Commission can win both cases, the first one (ISU) as a party, the second one ("Super League") as a political ally of UEFA. And it has the right of initiative: it could propose legislation to reconcile conventional EU competition law (particularly Art. 101 & 102) with Art. 165, which recognizes the specific nature of sport.

I'm going to be watching the webcast on the Court's website, and I look forward to tweets from those attending the hearing in person, such as Lewis Crofts of MLex.

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Implementers must 'promptly' seek standard-essential patent license to avoid being deemed unwilling licensees and enjoined: Munich I Regional Court

Subsequently to this post, I'll report on the latest injunction that standard-essential patent (SEP) licensing firm VoiceAge EVS has obtained against smartphone maker HMD (Nokia trademark licensee). I originally didn't intend to write about today's VoiceAge EVS v. Xiaomi trials, which I attended purely for research purposes, but something was said there that is relevant far beyond that particular dispute as it relates to the willing licensee standard in the world's #1 SEP litigation hotspot, the Landgericht München I (Munich I Regional Court).

A couple of VoiceAge EVS v. Xiaomi cases are pending before the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judge Dr. Hubertus Schacht and Judge Benjamin Kuttenkeuler, the judge rapporteur in the cases heard today). In accordance with the court's new "lead case" program for multi-patent SEP disputes, the Seventh Civil Chamber held a VoiceAge EVS v. Xiaomi FRAND hearing about a month ago. Today, Xiaomi's counsel in that dispute, Noerr's Dr. Ralph Nack, moved for a preliminary reference to the European Court of Justice in order to clarify

• which party (SEP holder or implementer) has to act first and

• whether a SEP holder must negotiate with an implementer for a certain period prior to seeking an injunction.

Judge Dr. Zigann gave that motion short shrift because the question is not whether an infringement notice is needed: the Munich court recognizes that the ECJ established that requirement in Huawei v. ZTE. There is only a factual dispute in VoiceAge EVS v. Xiaomi as to whether such notice was properly given. As to the second part, Judge Zigann believes that Huawei v. ZTE and Germany's Sisvel v. Haier I and II decisions provide sufficient clarity.

What's interesting here, however, is how Dr. Nack sought to justify his motion. He quoted Judge Dr. Zigann form the late-April FRAND hearing as having stated that implementers must "promptly" seek a license to the SEPs they implement lest they be deemed unwilling licensees and, as a result, enjoined. The German word Judge Dr. Zigann used (according to Dr. Nack's uncontradicted quote) was "zackig"--it's a colloquial term that means to act swiftly, without hesitation, like lightning.

While Xiaomi's concern over implementers potentially having to move first by seeking a license (which was actually the legal standard in Germany under Orange-Book-Standard, a decision by the Federal Court of Justice that predated Huawei v. ZTE) has been alleviated, it nevertheless sounds like implementers will pay a high price in Munich for not going out of their way to obtain a license on FRAND terms once they've received an infringement notice. And with every new SEP injunction the court enters, such as in IP Bridge v. Ford last week, implementers around the globe (provided they do business in Germany, which most of them do) are reminded of their obligations.

I felt I had a duty to inform you all of this standard.

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European Court of Justice opens floodgates to preliminary patent injunctions in major victory for Munich I Regional Court's patent-specialized judges

Today the European Court of Justice (ECJ), the upper division of the Court of Justice of the EU (CJEU), handed down what may be its most consequential patent-related decision ever (or, at a minimum, after Huawei v. ZTE, its seminal decision on FRAND-encumbered standard-essential patents). It is presently available only in German (the language of the proceedings) and French (the court's primary working language). The gist is that preliminary injuntions over patents will now be more readily available than before, even if a patent is not battle-tested in the sense of having survived an opposition or nullity proceeding.

Companies that often get sued over patents will think or say: "Bummer!"

What makes this decision even more important is that it will govern the grant or denial of preliminary patent injunctions by the Unified Patent Court (UPC), which is expected to be no less (in my view, even more) patentee-friendly than Germany's patent courts.

Before I elaborate on this, I wish to extend my congratulations to the three judges who, on behalf of the court's 21st Civil Chamber, masterfully crafted the request for preliminary ruling (also called a "preliminary reference") that gave rise to today's ECJ decision:

• Presiding Judge Tobias Pichlmaier (who has since moved on to the court's antitrust-specialized 37th Civil Chamber),

• Judge Dr. Anne-Kristin Fricke (who has since been appointed the court's 44th Civil Chamber's Presiding Judge), and

• Judge Dr. Hubertus Schacht.

Early last year, the lower Munich court decided to leapfrog its appeals court, the Munich Higher Regional Court, which like its counterparts in the other major circuits for German patent infringement litigation (Karlsruhe, which is the appeals court for patent cases originating from Mannheim, and Dusseldorf) imposed a rather exacting requirement: a patent-in-suit had to be affirmed in an adversarial proceeding (i.e., a nullity case before the Federal Patent Court of Germany or an opposition proceeding before the European Patent Office or the German Patent & Trademark Office, whichever office had granted the patent in question) in order to be able to underly a preliminary injunction. Not just that: if a new challenge to a patent raised invalidity contentions (such as by presenting new prior art) that had not been previously addressed, the fact that the patentee had managed to fend off a different challenge didn't count in this new situation.

Judges Pichlmaier, Dr. Fricke, and Dr. Schacht got exactly the outcome they wanted. They had strategically phrased their question in such a way that the ECJ couldn't have answered in any other way unless there had been qualms over whether it is proportionate to allow preliminary patent injunctions over battle-untested patents when considering the high invalidation rate in adversarial proceedings. But even if the court had wanted to take that position (for which there is no indication anyway), I believe it couldn't really have promulgated a per se rule like that. What would have been achievable if those advocating weaker patent enforcement rules had done a better job would have been for the court to acknowledge that high invalidation rates--even though the law isn't a matter of statistics--may go into the proportionality analysis.

The abject failure of efforts to reform German patent remedies law is demonstrated by today's decision, which cites § 139(1) of the German Patent Act (PatG), but does not even go on to quote or discuss a potential proportionality defense.

The ECJ ruling is lopsided: the court's emphasis is overwhelmingly on the need to protect right holders, with the interests of defendants being taken into consideration only to the extent that collateral must be provided in order to enforce.

The court's reading of the EU's IPR Enforcement Directive and its purpose is particularly clear in paragraph 38, which I will now translate as follows:

"Therefore, Directive 2004/48 merely sets forth a minimum standard for the enforcement of intellectual property rights, which does not preclude Member States from enacting measures affording stronger protection (Judgment of January 25, 2017, Stowarzyszenie Oławska Telewizja Kablowa, C‑367/15, EU:C:2017:36, para. 23 and the case law cited therein)."

The decision stresses on more than one occasion that the purpose of the Enforcement Directive is to ensure a high level of protection of intellectual property rights throughout the bloc.

The ruling culminates in the following short-form answer to the Munich I Regional Court's question (this is now my translation):

"Art. 9(1) of Directive 2004/48/EC of the European Parliament and the Council of April 29, 2004 on the enforcement of intellectual property rights is to be interpreted to the effect that it disallows national jurisprudence according to which the grant of a preliminary injunction over the infringement of a patent is generally denied if the patent-in-suit has not been affirmed, at a minimum, in an opposition or nullity proceeding of first instance."

What's going to happen now?

This is a clear signal from the top EU court to the national courts in its 27 Member States as well as additional countries that are members of the European Economic Area--and even to the UK, which is no longer bound by ECJ case law but whose judges must have been watching with great interest--that patentees should have better access to preliminary injunctions.

Munich is now going to be Ground Zero for preliminary patent PIs, simply because the judges of the Munich I Regional Court's patent divisions (not only the ones who ordered the preliminary reference) have a certain judicial philosophy that has just been validated by the ECJ. But the ruling applies EU-wide.

An aggressive but far from unjustifiable reading of the decision is that if a court anywhere in the EU concludes at the preliminary-injunction stage that a patent is likely valid and infringed, a PI should issue--and defendants are not entitled to more than a bond or a deposit that ensures they can be made whole in the event they can later establish wrongful enforcement. The reason why this reading would be pretty reasonable is that the ECJ states very clearly that the purpose of the EU's IPR Enforcement Directive is to enable right holders to quickly shut down any infringing actions.

It is, however, too early to predict how exactly the case law will evolve in Germany and other EU Member States. The per se requirement of a patent having been affirmed in an adversarial proceeding is history, but this doesn't mean that courts might not still decide to exercise some restraint when granting patent PIs. It also remains to be seen how this will play out in connection with standard-essential patents (SEPs), though the German Sisvel v. Haier approach to Huawei v. ZTE could be applied to PI decisions as well.

In the short term, it's a given that patent holders seeking to enforce their rights will now be emboldened and encouraged to request PIs, especially but not only in Munich.

In the mid term, we will see patent PIs that will be enforceable in all UPC Member States at the same time. Those PIs will put enormous pressure on infringers to settle.

In the long term, only a revision of the EU's IPR Enforcement Directive could result in a trend reversal. But after that miserable failure of an attempt to "reform" Germany's patent injunction statute and considering that the same organizations didn't really do anything that could have effectively influenced the decision that finally came down today, I don't see legislative action weakening patent enforcement anytime soon.

For the net licensors among this blog's readers, today's ECJ decision is fantastic news. And it comes only two days after World Intellectual Property Day.

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