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Stanford – ViennaTransatlantic Technology Law ForumA joint initiative ofStanford Law School and the University of Vienna School of LawTransatlantic Antitrust and IPRDevelopmentsBimonthly NewsletterIssue No. 2/2015 (April 29, 2015)Contributors: Gabriel M. Lentner, Gabriele Accardo,Marie-Andrée Weiss, Nikolaos TheodorakisEditor-in-chief: Juha Vesala

2ContentsANTITRUST . 5United States . 5US DOJ announces first criminal prosecution into online price fixing. 5European Union . 6European Commission sends formal charges to Google on comparison shopping services andopens separate investigation on Android . 6Commissioner Vestager announces proposal for e-commerce sector inquiry . 12Online hotel booking investigations in Europe at a cross-road: waiting for Godot? . 14Italian competition authority investigates Italian Stock Exchange practices . 18Swiss Competition Commission approves merger of local.ch and search.ch . 20INTELLECTUAL PROPERTY .21United States . 213C is fair use, too . 21Supreme Court holds that TTAB’s decisions have preclusive effect on courts . 24European Union . 28Case C-463/12 Copydan Båndkopi v. Nokia Danmark A/S . 28EU Court rules on hyperlinks to live broadcasts on the Internet . 31European Court of Justice: reduced VAT rate cannot be applied to supply of e-books . 33Transatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

3About the contributorsGabriel M. Lentner is a Research and Teaching Fellow at the Danube University Krems forEuropean and International Business Law. He is a PhD Candidate in International Law and aLecturer in Law at the University of Vienna School of Law. Gabriel graduated from theUniversity of Vienna School of Law with a diploma of specialization in International Law andInternational Relations. He received a diploma with highest distinction in European Studiesfrom the University of Vienna in 2010 and a diploma in Law & Logic from Harvard LawSchool and the European University Institute in Florence in 2013. His main research interestlies in International Investment and EU Law as well as Public International Law. His presentresearch focuses on the protection of intellectual property rights through internationalinvestment agreements.Gabriele Accardo is a lawyer and scholar who, after nearly twelve years of professional andacademic experience, has developed a strong expertise in competition law and othercomplex areas of law that deal with business and innovation. In the early stages of his careerhe spent ten years in Brussels (until 2011), where he practiced EU and competition law attwo leading international firms, Lovells and WilmerHale. Currently, he practices law in Rome,Italy. In 2009, his passion for research on international technology laws brought him to startcollaborating as a Research Fellow at the TTLF. He recently co-founded Innoventually, astart-up that acts as the one-stop-shop for assisting public and private entities and individualsin the creation, management, protection, promotion, development and monetization ofinnovative solutions. Gabriele is a non-governmental advisor to the Italian CompetitionAuthority in the ICN (Merger working group), and Director for Italy of the EuropeanMediterranean Competition Forum.Marie-Andrée Weiss is an attorney admitted in New York, with admission pending in France.Before becoming an attorney, she worked several years in the fashion and cosmeticsindustry in New York as a buyer and a director of sales and marketing. She graduated fromthe University of Strasbourg in France with a M.A. in art history, a J.D. in business law, anLL.M. in criminal law, and an LL.M. in multimedia law. She also graduated from the BenjaminN. Cardozo School of Law in New York City with an LL.M. in intellectual property law. She isan attorney in New York and her solo practice focuses on intellectual property, privacy, dataprotection and social media law. As a TTLF Fellow her fields of research are freedom ofspeech on social media sites and the use of consumers’ likenesses in marketing andadvertising.Nikolaos Theodorakis is a Lecturer and Fellow at the University of Oxford, and an EdmondJ. Safra Network Fellow at Harvard University. Dr. Theodorakis also advises on internationaltrade law cases with the Sidley Austin LLP office in Brussels. He holds an LLB from theTransatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

4University of Athens, an MPhil from the University of Cambridge, an LLM from UniversityCollege London, and a PhD from the University of Cambridge. His PhD thesis focused onissues of Corporate Compliance, Liability and Regulation. Prior to joining Oxford, Nikolaostaught and conducted research at the University of Cambridge, Harvard Law School, andColumbia Law School. He has worked for the U.S. Committee on Capital MarketsRegulation, the Library of Congress, and the UK Sentencing Council, Ministry of Justice.Nikolaos has received fellowships and awards from, inter alia, the ESRC, the BritishAcademy, the Greek Parliament, the Greek State Scholarships Foundation, the EUBursaries, and the Corfield foundation. His research agenda currently revolves around threepillars: liberalization of trade in technology-related industries; effective regulatory regimes forantitrust law vis-à-vis banking institutions and corporations; and the nexus between opendata and foreign direct investment. Dr. Theodorakis has been a TTLF Fellow since April2015.Transatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

5AntitrustUnited StatesUS DOJ announcesfirst criminalprosecution intoonline price fixingBy Gabriele AccardoOn April 6, 2015, the US Department ofJustice’s Antitrust Division announced thefirst criminal prosecution of a conspiracyspecifically targeting e-commerce. Thecase arose from an ongoing federalantitrust investigation into price fixing in theonline wall décor industry.Mr. David Topkins, a former executive of ane-commerce seller of posters, prints andframed art, has agreed to plead guilty toconspiring to fix the prices of posters soldonline, and to pay a fine of 20,000. Hisplea agreement requires court approval.Price fixing in violation of Section 1 of theSherman Act carries a maximum sentenceof 10 years and a fine of 1 million forindividuals, which makes the case evenmore exceptional in that, despite the veryserious offence (price fixing), Mr. Topkinswould dodge prison time.to discuss (that is fix, increase, maintainand stabilize) the prices of the agreedupon posters sold online through AmazonMarketplace, from as early as September2013 until in or about January 2014.Amazon was not charged in the case.Toimplementtheanticompetitiveagreement, Mr. Topkins and his coconspirators adopted specific pricingalgorithms with the goal of coordinatingchanges to their respective prices andwrote computer code that instructedalgorithm-based software to set prices inline with the agreement. Similar algorithmbased pricing software is common in onlinemarketplaces, but its use is not indicativeof any wrongdoing absent this sort ofcoordination.Although there is little informationavailable, the case appears to show thatthe companies concerned used the“traditional tool-box” of anticompetitivebehavior, such as contacts and exchangeof information, etc.According to the Department of Justice,this case arose from an ongoing federalantitrust investigation into price fixing in theonline wall décor industry, so we shouldexpect more of the same in the comingmonths. Watch this space.According to the charges, Mr. Topkins andhisco-conspiratorsparticipatedinconversations and communications withrepresentatives of other poster-selling firmTransatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

6Antitrustsmart mobile devices.European UnionI. The alleged abuse in the Internetsearch marketEuropeanCommission sendsformal charges toGoogle oncomparison shoppingservices and opensseparate investigationon AndroidBy Gabriele AccardoOn 15 April 2015, the EuropeanCommission sent a statement of objectionsto Google, alleging that the company isabusing its dominant position in theInternet search market, in breach of Article102 of the Treaty on the Functioning of theEuropean Union (“TFEU”), by systematically favouring its own comparison shoppingproduct “Google Shopping” in its generalsearch results pages.In parallel, the Commission launched aseparate formal investigation concerningthe mobile operating system Android. Theinvestigation will focus on whether Googlehasenteredintoanti-competitiveagreements or abused a possible dominantposition, in breach of Article 101 TFEUand/or 102 TFEU, in the field of operatingsystems, applications and services forThis investigation does not come as asurprise.In fact, during the past four years, Googlehas been in talks with the EuropeanCommission to address four set ofcompetition issues, including the wayGoogle displays specialized searchservices vis-à-vis its own products (seeNewsletter 1/2014, Newsletter 5-6/2013,Newsletter No. 2/2013, Newsletter 2/2010,for additional background). While thepresent investigation focuses on Google’sfavouring its comparison shopping product,the Commission continues to investigateGoogle’s conduct with regards to theallegedly more favourable treatment ofother specialized search services, as wellas Google's conduct in three other areas ofconcern: copying of rivals’ web content(AKA “scraping”), advertising exclusivityand undue restrictions on advertisers.In February 2014, Google was very closeto a settlement, having offered acomprehensive package of remedies to theCommission.However, while complainants made theirvoices louder, the mandate of the previousCommission was about to expire, so itsoon became clear that the newCommissioner in charge for Competitionwould take over the case.In recent months, darkBrussels began to gather.Transatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forumcloudsover

7Last 27 November 2014 the EuropeanParliamentpassedanon-bindingresolution, which called on the Commissionto “properly enforce the EU competitionrules in order to prevent excessive marketconcentration and abuse of dominantposition and to monitor competition withregard to bundled content and services.”While the appetite of politicians to getinvolved in the Commission’s own turf maybe understandable, that resolution leftmany perplexed nonetheless.Yet, even more striking were certainpassages of the public speech that EUCommissioner for Digital Economy andSociety gave just a day before theCommission sent charges to Google.Commissioner Oettinger hinted at someforms of regulatory actions allegedlyneeded to fill, amongst others, the gapbetween EU and US Internet platforms.That speech was not mere propaganda. Infact, a leaked Commission’s draftdocument “A Digital Single Market Strategyfor Europe” stated that “The market powerof some online platforms in the digitaleconomy raises a number of issues thatwarrant further analysis. The Commissionwill carry out a comprehensive investigation and consultation on the role ofplatforms, including the growth of theSharing Economy. The Commission’sanalysis will cover i.a. issues like thosearising from the lack of transparency in thesearch results (involving paid for linksand/or advertisement) and the wayPlatforms use the information they acquire,possible issues relating to fair remuneration of rights-holders and limits on theability of individuals and business to movefrom one platform to another [update afterGoogle decision]”. Even a distractedreader may wonder whether that “updateafter Google decision”, should simply readthat either way Google shall adapt itsbusiness model to much more stringentrequirements. The final version of theDigital Single Market Strategy for Europeand its accompanying Commission StaffWorking Document have been releasedafter this issue of the Newsletter had beencompleted, so these will be addressed inthe next issue.And let’s not forget another leakeddocument of last March, albeit the leakcame from the other side of the Atlantic. Asit may be recalled, the Wall Street Journalpublished the staff report (actually, thedocument only included every other pageof the report) from the US FTC’s bureau ofcompetition recommending the FTC tobring a lawsuit against Google. The leakraised lots of eyebrows because, in early2013, contrary to the staff recommendation, the FTC’s commissioners votedunanimously (5-0) to end the investigationinto allegations of search bias after Googleagreed to some voluntary changes to itspractices. In that respect, the statement bythe FTC reads “The totality of the evidenceindicates that, in the main, Google adoptedthe design changes that the Commissioninvestigated to improve the quality of itssearch results, and that any negativeimpact on actual or potential competitorswas incidental to that purpose. While someof Google’s rivals may have lost sales dueto an improvement in Google’s product,these types of adverse effects on particularcompetitors from vigorous rivalry are acommon byproduct of “competition on theTransatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

8merits” and the competitive process thatthe law encourages.” Specifically, theCommissioners held that “Product designis an important dimension of competitionand condemning legitimate productimprovements risks harming consumers.Reasonable minds may differ as to thebest way to design a search results pageand the best way to allocate space amongorganic links, paid advertisements, andother features. And reasonable searchalgorithms may differ as to how best torank any given website. ChallengingGoogle’s product design decisions in thiscase would require the Commission – or acourt – to second-guess a firm’s productdesigndecisionswhereplausibleprocompetitive justifications have beenoffered, and where those justifications aresupported by ample evidence.”Interestingly, in its press release, theCommission acknowledged the closecooperation in this matter with theEuropeanCommission’sDirectorateGeneral for Competition. In the wake of therecent developments, it is not clearwhether that sense of cooperation stillexists,orwhethertheEuropeanCommission has had an after-thoughtabout cooperating with the FTC.Against this background, ations are independent from politicsand commercial interests, noting that oneout of four individual companies thatcomplained in this case is a US company,and that US companies also play a majorrole in complaining business associations.While there is no doubt that CommissionerVestager is independent from politicalpressure, too many actors appear veryinterested to jump onto the stage. The riskof confusion is real, let alone the risk thatgood and much needed measures toachieve the Digital Single Market in Europeget mixed with or, worse, traded for farreaching regulatory measures in a sectorthat has thrived, and can only thrive,thanks to innovation, not regulation.The preliminary conclusions in the SOThe grievances concerning Google’salleged abuse in the Internet searchmarket are well known.In essence, the statement of objectionsalleges that Google treats its own “GoogleShopping” service more favourably in itsgeneral search results, compared to rivalcomparison shopping services. Thisartificially diverts traffic from these rivalservices stifling innovation and hinderingtheir ability to compete to the detriment ofconsumers,More specifically, the Commission’spreliminary conclusions are: Since 2008, Google has systematicallypositioned and prominently displayedits comparison shopping service in itsgeneral search results pages, irrespective of its merits. Google does not apply to its owncomparison shopping service thesystem of penalties applied to competing services, which can lead to thelowering of the rank in which theyappear in Google’s general searchTransatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

9results pages. Froogle, Google’s first comparisonshopping service, did not benefit fromany favourable treatment, and performed poorly, whereas its subsequentcomparison shopping services “GoogleProduct Search” and “Google Shopping” experienced higher rates ofgrowth as a result of the allegedabusive conduct, to the detriment ofrival comparison shopping services. Users do not necessarily see the mostrelevant comparison shopping resultsin response to their queries. Incentivesto innovate from rivals are lowered asthey know that however good theirproduct, they will not benefit from thesame prominence as Google’s product.In brief, as those who still go shopping atsupermarkets may understand, this is nodifferent than what supermarket chains dowith their private labels. While supermarkets also know a lot about our tastes(guess what customer loyalty cards aremade for), the main difference is that shelfspace in supermarket alleys is ratherscarce, whereas virtual space on Googlesearch pages is not. One may wonderthoughwhetheranotherimportantdifference is that Internet users areconsidered somewhat lazier when theybrowse the Internet than when the sameindividuals go shopping and browse theshelves in search of their favorite cola.A remedy Google can’t refuse (to offer)?Allegedly without the aim of seeking tointerfere with either the algorithms Googleapplies or how it designs its search resultspages, the Commission takes thepreliminary view that in order to remedy theallegedly abusive conduct, Google shouldtreat its own comparison shopping serviceand those of rivals in the same way.Accordingly, the Commission expects thatwhen Google shows comparison shoppingservices in response to a user’s query, themost relevant service or services would beselected to appear in Google’s searchresults pages.It is hard to imagine that the Commission’swishes would not interfere with thealgorithms applied by Google or theproduct design, an approach that clearlyclashes with that of the Federal TradeCommission, briefly illustrated above.Under Article 9 of Regulation 1/2003Google may still offer commitments, albeitof a different nature than those offered lastyear (see Newsletter 1/2014).But if Google is not willing to offersomething more substantial than it did in2014, under Article 7 of Regulation 1/2003,with the decision finding an infringement ofthe EU competition rules, the Commissionmay impose any behavioural or structuralremedies which are proportionate to theinfringement committed and necessary tobring the infringement effectively to an end.In such cases, the Commission can alsoimpose a fine of up to 10% of theworldwide turnover of the undertakingconcerned.The difference between a prohibitiondecision under Article 7 and a commitmentTransatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

10decision pursuant to Article 9 of Regulation1/2003 is that the former contains a findingof an infringement (and may come with afine) while the latter makes thecommitments binding without concludingon whether there was or still is aninfringement.and tablet manufacturers to exclusivelypre-install Google’s own applications orservices, in particular Google’s searchengine; Whether Google is hindering the abilityof manufacturers of smartphones ortablets, who want to use the Androidoperating system, from being able touse and develop other open-sourceversions of Android (so-called “Androidforks”); Whether Google has illegally hinderedthe development and market access ofrival applications and services by tyingor bundling certain Google productswith other apps and services.II. The investigation concerning themobile operating system AndroidThesecondinvestigationconcernsGoogle’s mobile operating system Android,the leading operating system for smartmobile devices in the European EconomicArea.Other mobile operating systems includeApple’s iOS (which is proprietary to Appleand runs only on iPhones and iPads) andWindows Phone (which is used onMicrosoft’s and other manufacturers’smartphones and tablets).Android is an open-source mobileoperating system that can be freely usedand developed by anyone. The majority ofsmartphone and tablet manufacturers,however, use the Android operating systemin combination with a range of Google’sproprietary applications and services. Inorder to obtain the right to install theseapplications and services on their Androidmanufacturers need to enter into certainagreements with Google.In brief, the Commission will assess if, byentering into anticompetitive agreementsand/or by abusing a possible dominantposition, Google has illegally hindered thedevelopment and market access of rivalmobileoperatingsystems,mobilecommunication applications and servicesin breach of either Article 101 TFEU and/orArticle 102 TFEU.While there are some similarities with theMicrosoft case concerning the PCoperating system market, it is still too earlyto say whether the conclusion will be thesame.Some interim thoughtsThe investigation will focus on the followingthree allegations: Whether Google has illegally hinderedthe development and market access ofrival mobile applications or services byrequiring or incentivizing smartphoneThe last four years have seen Googleunder the spotlight in different Europeanvenues, often portrayed as a villain or the800-pound gorilla in the room.What is striking, however, is that theTransatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

11debate in Europe has not done much tochange the way we (Europeans) see andreward innovation, and more generally“merit”. Arguably, this is at the root of abunch of problems that some in Brusselsor in other European capitals believe canbe solved with more regulation.In a recent interview, US PresidentObama, answering a question concerningthe investigations that Google and otherUS Internet companies face in Europe,somewhat provocatively said “We haveowned the Internet. Our companies havecreated it, expanded it, perfected it in waysthat they [European companies] can’tcompete. And oftentimes what is portrayedas high-minded positions on issuessometimes is just designed to carve outsome of their commercial interests.”President Obama’s statement, howeverexaggerated, should be taken as anencouragement to do more to supportinnovation: it is true that US companies areat the forefront of innovation, especially inthe Internet space, but it is not true thatEuropean companies are mere followersthat cannot compete but for theintervention of regulatory measures.Transatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

12AntitrustEuropean UnionCommissionerVestager announcesproposal for ecommerce sectorinquiryBy Gabriele AccardoOn March 26, 2015, CompetitionCommissionerMargretheVestagerannounced the imminent launch of acompetition inquiry in the e-commercesector. After this issue of the Newsletterhad been completed, the Commissionannounced (see also the Memo) thelaunch of the E-commerce Sector Inquiry,which will be addressed in the next issue.The sector inquiry will focus on private—and in particular contractual—barriers tocross-border e-commerce in digital contentand goods, since significant cross-borderbarriers to e-commerce still exist within theEU.on Vertical Restraints in 2010 (seeNewsletter3/2010,foradditionalbackground). The review made clear that,in principle, every distributor must beallowed to use the Internet to sell itsproducts, whereas consumers must beallowed to look for the best deals onlinewherever they want.While Commissioner Vestager noted thatthese rules are there to give legal certaintyto companies and make sure that the lawis applied in the same way throughoutEurope, she also acknowledged that onlinebusiness and markets move quickly andthe Vertical Guidelines can only provide ageneral framework.While there are a number of ongoinginvestigations (licensing contracts betweenUS film studios and European broadcasters; online restrictions in the consumerelectronic market; and geo-blockingmeasures concerning certain video gamessold online), the varied nature and scope ofthese investigations means that anyinsights will be incomplete and sectorspecific.Knowledge gained through the sectorinquiry will not only contribute to enforcingcompetition law in the e-commerce sectorbut also to various legislative initiativeswhich the Commission plans to launch toboost the Digital Single Market.In order to obtain thorough marketknowledge, the Commission will seekinformation from, among others, holders ofcontent rights, broadcasters, manufacturers, merchants of goods sold online, andthe companies that run online platformssuch as price-comparison and marketplacewebsites. Commissioner Vestager hasstated that a possible target date forpreliminary findings is mid-2016.The Commission updated the BlockExemption Regulation and the GuidelinesIn the past, the Commission has conductedcompetition inquiries in various sectors,Transatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

13including energy, financial services andpharmaceuticals. As a result of suchinquiries, the Commission has carried out anumber of individual investigations.Transatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

14Antitrustadditional background).European UnionOnline hotel bookinginvestigations inEurope at a crossroad: waiting forGodot?By Gabriele AccardoOn April 21, 2015 the French, Swedish andItalian competition authorities jointlyannounced they have accepted—andmade legally binding—the commitments(see FRA, ITA, SWE) offered byBooking.com, thus closing their respectiveinvestigations into the online hotel bookingplatform. The three authorities had alsoopened proceedings against Expedia.These proceedings are still pending.The investigations concerned the clausesin the contracts between Booking.com andhotels that obliged hotels to offerBooking.com the same or better roomprices and conditions as the hotels madeavailable on all online and offlinedistribution channels (so-called “MostFavored Nation” or “MFN” clauses),including, for instance other Online TravelAgencies (“OTAs”) as well as hotels’ directsales channels (see, Newsletter 1/2015, p.17 Newsletter 3/2014, p.12 Newsletter1/2014, p.15, Newsletter 5-6/2013, p.9 and11, Newsletter No. 4-5/2012, p. 15, forSuch MFN clauses were deemed in breachof both national and EU competition rules,byrestrictingcompetitionbetweenBooking.com and other OTAs andhindering new booking platforms fromentering the market.The commitments offered by Booking.comconsist of reductions in the scope of theMFN clauses.Price parity vis-à-vis other OTAs. First,Booking.com committed to abandon theparity requirement in respect of priceswhich hotel make available to other OTAs.This would enable hotels to offer differentroom prices and/or better commercialconditions to different OTAs, and allocatethem larger quotas of rooms.Price parity vis-à-vis hotels direct sales.Secondly, hotels may also offer prices at alower rate than those displayed on theBooking.com website via their offline saleschannels (on-site bookings, by telephone,fax, email, instant messaging, physicalsales outlets of travel agencies, etc.) aslong as these prices are not published onthe hotel’s website. They may also offerprices at a lower rate than those displayedon the Booking.com website to customerswho are members of loyalty programs.However, hotels would still have to offerthe same or better room prices toBooking.com as are offered to the generalpublic on the hotel’s own online bookingchannels. Nonetheless, hotels’ websitesaccessible by the general public maydisplay qualitative information regardingTransatlantic Antitrust and IPR Developments, Issue 2/2015Stanford-Vienna Transatlantic Technology Law Forum

15the prices offered via their offline channels,such as “attractive prices”, “good prices”,etc. Furthermore, hotels will be allowed tosend emails and SMS messages toconsumers informing them of the pricesoffered via their offline channels, as well asto reach out to previous customers andoffer them special discounts.Other conditions. In addition, hotels mayreserve a greater number of rooms to theirdirect online or offline sales channels thanare allocated to Booking.com. Hotels willalso be completely free to o

Newsletter 1/2014, Newsletter 5-6/2013, Newsletter No. 2/2013, Newsletter 2/2010, for additional background). While the present investigation focuses on Google's favouring its comparison shopping product, the Commission continues to investigate Google's conduct with regards to the allegedly more favourable treatment of

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