Sunday, 31 July 2011

Online reporting of suspicious food products and misleading food product information - new consumer protection method adopted in Germany

In the last post I mentioned new safety measures that the European Commission is planning to take in order to assure that food producers fully and truthfully inform consumers about the products they are offering for sale. It turns out that the European Commission is not alone in its concerns about food product claims and that national consumer organizations and authorities are already undertaking actions that are to increase consumer protection in this area.

In Germany, for example, a new website has been created in the past weeks: that consumers may use in order to report food products that they think had been labelled incorrectly as to their ingredients and their origins. The website is financed by the German Ministry of Agriculture and Consumer Affairs and controlled by the Germany's main consumer advocacy group, Verbraucherzentrale. You might wonder how reliable the complaints posted by consumers on this website can be - after all, there are always people who will be convinced that a given food product is a fraud, regardless the evidence to the contrary. What makes this website more beneficial to consumers is that the claims and complaints posted by consumers are being recorded by a group of experts. Their task is to check whether these complaints are plausible and if yes, then they are undertaking to contact responsible food companies to offer them an opportunity to change their product or label. It's this expert group that then publishes the complaint as either one that reports a fraudulent information about a particular food product, or one that has contributed to modifying the product (or product information) conform to food safety rules. 

This new method of consumer protection seems to be tailor-fitted to what consumers really need. Why? Well, a consumer does not have to go to court or address authorities any longer, in what is often a time-demanding, filled with formalities procedure. Now, he may just fill a form online from a safety of his own house and in this way let the authorities know that a certain food producer does not play by the rules. I hope that this German initiative will spread to other European countries, as well.

Want to read more about it? Read an article on the functioning of this website: Consumer protection website targets fraudulent labeling.

Thursday, 28 July 2011

Eat carrots to see better! - authorized health claim or grandma's myth?

I wasn't aware until today that the European Commission was busy trying to sort out through many health claims (44,000 health claims were submitted for a review) made about food products, trying to find out which of them have scientific support and should therefore be authorized as valid health claims on the European market and which of them were misleading consumers. 
A health claim is any statement made about a relationship between food and health (e.g. "this chewing gum will let you lose weight", "if you eat this fish, you will be smarter", "if you drink this milk, you will grow taller"). 

The goal of the European Commission is to authorize these health claims that have scientific support AND can be easily understood by consumers, so that European consumers may easily know whether food products that claim to have beneficial impact on their health actually have such effect. This will hopefully lead to consumers choosing a healthier diet, when they are no longer misled by food producers' promises like e.g. cereals being the healthiest breakfast choice. EFSA (European Food Safety Authority) is the agency responsible for evaluating all health claims and with its cooperation the European Commission is aiming at presenting by the end of this year a list of permitted health claims on food products. This in order to finally enforce the Regulation 1924/2006 of the European Parliament and of the Council of 20 December 2006 on nutrition and health claims made on foods.

Everything you ever wanted to know about health claims - here.
Press release of the EC on progress on Claims Regulation - here.

Monday, 25 July 2011

Cross-border debt recovery to be made easier for consumers and SMEs

What caught my interest today was news that are not pertaining to the core of the consumer law, but then I think that many subjects can be connected to the legal situation of consumers and we should not be too traditional in looking at consumer law, since we might miss lots of interesting relations and new insights. Of course, there is also this little fact of there not always being news to report on that are connected to the core of consumer law and my wish to keep this blog active. ;)

For some time now there have been voices raised in the legal academic world comparing the situation of SMEs (small and medium enterprises) to the position of consumers and asking why we are not offering the same protection to the SMEs as we do for consumers. After all, consumer laws were introduced in order to protect the 'weaker' contractual parties, i.e. consumers. But if we look at businesses entering into contracts we might quite clearly see that one business is not alike the other. Especially these companies that employ only a few people, have a small revenue, etc. may be seen as 'weaker' parties when they conclude contracts with big suppliers, distributors, producers. If the aim of legal systems is to protect weaker contractual parties and to restore the balance between contractual parties, would it not make sense to start either adjusting consumer laws to apply to SMEs or adopting new laws that would regulate SMEs situation?

Well, the new Consumer Rights Directive had a chance to extend (a bit) the protection granted by it to parties who purchase goods/services not only for their private use, but mainly for their private use. This broad definition of a 'consumer' was introduced by the European Parliament and was complying to the popular demand of granting consumer protection to more parties than it does now. However, the final (so far) version of the Consumer Rights Directive (from 23 June 2011) restored the narrow definition of a notion 'consumer'. Opportunity lost.

Well, today the European Commission notified that they intend to introduce a new regulation that would protect mostly interests of the SMEs (but you should not miss the fact that it would apply to consumers, as well!). This regulation would regulate cross-border debts. Imagine purchasing a good online from a trader in another country, paying for it, but never receiving the good. The thought of having to figure out how to claim their money back stops many consumers from concluding such online transactions, just in case something went wrong... The situation might be even more drastic when we are talking about an SME, i.e. a small, local shop that delivered its goods to a big distributor located in another country and at a certain time it stopped receiving payments for delivered goods. The amount of money that would be owed in this case would be much higher and might be crucial for the survival of this local business. From the estimations of the European Commission around 1 million SMEs have problems with cross-border debts and up to 600 million euro each year in debt is unnecessarily written off because businesses find it too daunting to pursue expensive (costs of translating documents and hiring lawyers), confusing and complicated (different national requirements) lawsuits in other countries.

The new regulation would establish a new European Account Preservation Order that would allow cross-border creditors (not only SMEs, even though the focus with this regulation is on them, but also consumer-creditors) to preserve the amount owed in a debtor's bank account. What would it change in practice? It would prevent debtors from removing their assets from a bank account during the time it takes to obtain and enforce a judgement on the merits of the case. This means that the debtor will not be allowed to empty or liquidate the bank account. Moreover, the same rules would apply to all Member States which would limit the legal costs that need to be made in order to recover the debt. Finally, the European procedure would exist alongside available national procedures, with the creditor having a choice which legal action to take. The only downside is that it would be an interim procedure, which means that creditors would not receive their money until they obtained a final judgement on the case in accordance with national law or e.g. by using European Small Claims Procedure. This new regulation will therefore not provide immediate financial release to the creditors, it would rather serve to safeguard their rights for the future. Interestingly, the debtor would not be notified of this procedure which means that such an order to block an amount of money on the debtor's account would have a necessary 'surprise element'.

Viviane Reding said on this subject:
I want to make recovering cross-border debts as easy as recovering debts domestically," said EU Justice Commissioner Viviane Reding. "Companies lose around 2.6% of their turnover a year to bad debts. This is a weakness of our single market which we must remedy swiftly and energetically! Businesses need a simple solution – an account preservation order effective Europe-wide – so that the money stays where it is until a court has taken a decision on the repayment of the funds. In these difficult economic times, companies need quick answers. Every euro counts, especially for small businesses.” 

Press release on the introduction of the new regulation may be found here. FAQ on the new regulation (with examples when it might apply) may be found here. Statement on Commissioner's Reding website might be found here, together with a video. Finally, here you may find a European Business Test Panel on Commercial Disputes and Cross Border Debt Recovery.

Sunday, 24 July 2011

Online protection of copyrights

Since the subject of protection of intellectual property rights online came up recently on this blog (see a note on L'Oreal v eBay case), I thought I'd follow up on a similar subject. Did you ever wonder how eBay is supposed to make sure that consumers (and traders) are not placing fake L'Oreal products on eBay's website? Since you are reading this blog post I can assume that you are familiar with at least some information on how the internet works. Our knowledge of all intricacies of the online world differs from person to person, though. Personally, I could not quite imagine a programme that would be able to help eBay out, taking into account thousands of people that use their website every day and who could spam it with illegal content. Until I've discovered how another website that also gets hundreds/thousands of people a day to post content on it (YouTube), controls its content and complies with legal requirements. I've recently watched this TED video ("How YouTube thinks about copyright"), in which Margaret Gould Stewart explained how YouTube operates when people post videos on it and how it is possible to protect copyrights on it. I found it fascinating, both as a consumer and as a lawyer, so I decided to share it.

Friday, 22 July 2011

How many calories/vitamines/etc. are in...? - new Regulation on Food Information

This is a busy period of the year at the universities (last exams, grading thesis, etc.), despite many students thinking that we are holiday-ing the whole summer. Still, I feel a bit guilty about not updating this blog in the past two weeks. I will try to compensate in the next few weeks, although it might be difficult to find news regarding European consumer law, due to the holiday period of the CJEU and other institutions.

One thing that I am late reporting and commenting on is the adoption of a Regulation on Food Information for consumers on the 6th of July 2011 (press release of the Commissioner John Dalli may be read here; consolidated version of the Regulation may be found here). This is not a mainstream subject of consumer protection, since I guess it is not as sexy as air passengers' rights or online auctions, but it still applies to everyday transactions that consumers undertake. How so? Well, whenever we do our groceries, go to restaurants etc. and we are in doubts whether to buy a certain product or not, we often look at the information that was placed on its labels. Unfortunately, often the information we want to find (being a woman, I can risk using a stereotype as an example: number of calories per 100 grams) either is not placed on the label at all or gets lost among other less important to us information. This new Regulation will make the consumers' lives easier by obliging producers and traders to make sure that: the information is not given in a very small font (so that consumers can easily read it), the information contains mandatory nutrition information (no more wondering what kind of meat may we find in a sausage, e.g.), the information contains mandatory information on allergens (interestingly this will apply also to foods sold in restaurants), the information on country-of-origin labelling for meat from pig, sheep, goat and poultry (I wonder why cow is not included on this list?).

What is missing in this Regulation that could have put consumers in an even better position? E.g. an obligation to place this mandatory nutrition information on the front of packages. Consumers will still have to pick up the product and turn it around if they are interested in this information. Also, interestingly, alcohol is not seen as a food product to which this nutrition labelling requirements will apply.

Monday, 18 July 2011

CJEU Case C 324/09 L’Oreal v eBay: The end of online auction intermediary liability as we know it.

A nuclear bomb has just exploded in the online auction world that could possibly change the business model adopted by eBay and other Online Auction Intermediaries (AOI) forever. On the 12th July 2011, the Court of Justice of the European Union published its decision concerning the case opposing L’Oreal to eBay (CJEU Case C-324/09).

The liability of eBay has been tested in many European and US courts and until now, the received wisdom was that while eBay could do more to protect IP owners and consumers and eradicate the sale of fake goods on its sites, the law (i.e. the Electronic Commerce Directive 2000/31) was simply not forcing them to do so. This decision from the CJEU is now likely to change all this. The position taken by the court follows in the footsteps of the Google decision (Joined cases C-236/08 and C-238/08) and is unequivocally for a restrictive interpretation of article 14 of the Electronic Commerce Directive, the provision limiting the liability of intermediaries hosting third party content. The Court also clearly sides in favour of Intellectual Property Rights owners, by allowing the use of article 11 of the Enforcement Directive 2004/48 to prevent future infringements of IP right via online auction sales (albeit with some restrictions as we will see below). This may be marking the end of AOI liability as we thought we knew it. This decision is also likely to have an effect on other types of ISPs. It is expected that following the decision of the CJEU, eBay and other competitors will have to shape up and tighten controls on their sites or face many unpleasant consequences.

The decision may be good news for consumers throughout Europe, since tighter controls may mean better piece of mind while buying items on the online auction giant's website. But it also may have unwanted consequences, such as driving costs up and forcing higher commissions being charged, ultimately disturbing the business model that had seen millions flock to the site in search of a bargain. We will for now abandon discussions on the economic impact of the decision to concentrate on the content of the CJEU decision and what is likely to change for ISPs and more particularly Online Auction Intermediaries, since while eBay dominates the market place, it is not the only online auction provider to be affected by the decision.

The referred questions
The decision concerned a number of questions referred to the CJEU by the High Court of England and Wales in the case opposing L'Oreal to eBay. The referral questions concerned the interpretation of:
- Articles 5 and 7 of the Trade Mark Directive and articles 9 and 13 of the Community Trade Mark Regulation on the rights conferred by a trade mark and their exhaustion;
- Article 14 of the Electronic Commerce Directive (ECD thereafter) on the liability of hosts;
- Article 11 of the Enforcement of Intellectual Property Right Directive (EIPRD thereafter) on the ability of national courts to grant injunctions against intermediaries.
The decision is thorny and raises many issues we do not yet feel we had enough time to digest. (We plan to publish a fully fledged commentary soon!) But here is our short reaction to the reading of the decision concerning the questions on article 14 ECD and article 11 EIPRD (namely prejudicial questions 9 and 10 ), leaving to intellectual property experts to react more fully on the intellectual property issues raised by the case, namely:
- The commercialisation on eBay of dramming bottles when those are not normally intended for sale to consumers;
- The possibility for the trade mark owner to oppose further commercialisation of cosmetics products without their original packaging;
- The use of trademarks in the purchase of keywords on search engines to advertise the services of the online auction platform;
- The possibility for trademarks owners to oppose the commercialisation of products not put on the market in the EEA in cases where the advert for such products can be deemed to be targeted at consumers in the territory of the Community.

The Decision of the ECJ on article 14 ECD and the liability of intermediariesOn this point, the CJEU decided the following:

"Article 14(1) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) must be interpreted as applying to the operator of an online marketplace where that operator has not played an active role allowing it to have knowledge or control of the data stored.

The operator plays such a role when it provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting them.

Where the operator of the online marketplace has not played an active role within the meaning of the preceding paragraph and the service provided falls, as a consequence, within the scope of Article 14(1) of Directive 2000/31, the operator none the less cannot, in a case which may result in an order to pay damages, rely on the exemption from liability provided for in that provision if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question were unlawful and, in the event of it being so aware, failed to act expeditiously in accordance with Article 14(1)(b) of Directive 2000/31."
What this means in my view is that the CJEU rejected the proposition made by Advocate General Jääskinen to disregard the “Neutrality Test” adopted in Google for a more adequate standard. Instead the Court focussed on the "active role" (as opposed to neutral role) the intermediary plays and placed a low threshold of involvement to trigger liability. Indeed the court mentions assistance in optimising the presentation of adverts and promotion as an active role. This may mean that any web 2.0 operator is now at risk of being seen as active because they all provide some form of assistance in shaping content and promote the site (including its illegal uses as well as legitimate ones). Note however that the CJEU left it to the national court to make the determination on eBay's role, i.e. determining if eBay plays an active or a passive role.

Should the High Court of England and Wales conclude that the role is passive, then eBay will only avoid liability if it reacts promptly to acquiring knowledge about the illegal content or activities.
Here the CJEU seem to raise the bar for claims concerning damages. It is not “actual knowledge” that can trigger liability in those cases. It will be sufficient to be aware of or circumstances on the basis of which a diligent economic operator should have realised that the offers were unlawful. However, the reading of the analysis of the Court is rather confusing.

Indeed, the Court gives an indicative list of situations that would be covered, including uncovering the activity on its own initiative and being notified of the existence of the activity or information by a third party. The question then turns on whether or not a diligent operator will seek out illegal activity on its own accord or only rely on notifications. Turning to notifications, the CJEU explains that as a general rule a notification is a factor to take into account in determining, in the light of the information so transmitted to the operator, whether the latter was actually aware of facts or circumstances on the basis of which a diligent economic operator should have identified the illegality. The CJEU acknowledges that it cannot be a presumption as there can be situations where the notification turns out to be insufficiently precise or inadequately substantiated. So, a notification may therefore be needed and will have two main characteristics:
- be sufficiently precise and
- be adequately substantiated.
If this is the case, then ignoring it will result in the economic operator being branded “not diligent” and thus not benefiting from the exemption of liability. But it is unclear what can be branded as sufficiently precise or adequately substantiated and the court does not provide details in this area. (i.e. in this case, would the letter L’Oreal sent to eBay pass this test, or can only precise notices and take down procedures under the Vero programme be relied on?)

In our view the test to escape liability for not only IP rights infringements, but any other illegal activity as an intermediary has become significantly more onerous than it may have thought to have been in the past because two new factors to consider have come to the fore in this decision: neutrality (active role) and the notion of a diligent economic operator.
Further, it is now confirmed that injunctions to prevent further future IP infringements can be granted, increasing again the burden on online auction intermediaries to police their websites.

The Decision of the ECJ on article 11 EIPRD and the granting of injunctions to prevent future IP infringements

The CJEU decided on this point:

“The third sentence of Article 11 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade.”
What this means is the injunctions can be granted against online auction intermediary to put a stop to infringements as well as prevent their continuation in future. In effect member States must ensure that such procedures are available to their national courts. Such system was already being used in Germany where in a number of cases against eBay the court imposed an obligation to filter sales to avoid further infringements (see the trilogy of Internet Auction cases: I- Cases I ZR 04/01 [2005] ETMR 25, II- I ZR35/04 [2007] ETMR 70 and III- I ZR 73/05).

The main issue is of course to be able to define the contours of such injunction aimed at preventing the continuation of an infringement of intellectual property right. Those will be carved out of national law.

The CJEU did briefly discuss the potential overlap and contradiction with article 15 ECD which prohibits a general obligation to monitor site activities. It seems here that those injunctions cannot lead to imposing measures that require “active monitoring of all the data of each of its customers in order to prevent any future infringement”. Any general monitoring would also be contrary Directive 2004/48 itself, since all measures must be fair, proportionate and not excessively costly. In addition, the measure must not create barriers to legitimate trade. As a result, an IP owner could not hope for a blanket injunction banning the sale of its product on the site outright, but could seek that the website is asked to monitor similar sales made by the same seller or for a seller account to be closed in order to prevent the same seller, to further infringe rights in respect of the same trademark. Furthermore the court explained that to prevent future infringements, online auction sites may be ordered to take measures to make it easier to identify IP infringers.


Now that the bomb has exploded in the online auction world, it will take months for the ripples of the explosion to reach all shores. In the UK, the High Court, now need, armed with the answers to its preliminary questions, to decide on the facts of the case and render its judgement. Whether it follows the CJEU’s view closely is very likely but not certain. We have already seen in the UK, in the case of Arsenal, how judges could ignore CJEU’s guidance.
However, the only certainty at this point is that this decision does mark the end of ISP’s liability as we knew it. From now on, much of the intricacies of article 14 that had remained unexplained until now (starting with Google) have started to take shape. It appears that electronic commerce has entered a new phase, one where intermediaries, whose activities were at first encouraged by the existence of an exemption of liability, have now to behave much more responsibly in the web 2.0 towards third parties’ activities on their sites.

Friday, 8 July 2011

Air Passenger Rights Day 2011

Yesterday European Consumer Centres' were celebrating Air Passenger Rights Day 2011. Under a motto "Pack a little consumer know-how, Europe offers you free help and advice" at 27 airports (in 23 countries) free advice was given to consumers regarding cases of their flights' cancellations, delays and baggage loss. The ECC Network helps consumers to claim their rights in case the airline they were flying with was registered in another Member State.

Press release on this action may be found here.
Photos from the event may be found here.

Thursday, 7 July 2011

Roam, roam, roam your phone... - new proposal for Regulation on roaming

As mentioned in the previous post, yesterday the European Commission presented its proposal for a long-term solution to the continued high cost of using mobile phones while travelling abroad, i.e. high roaming charges. What's the solution? Introduction of the Regulation that would allow consumers to separately contract for roaming services, independently from their national mobile services, while still using the same mobile phone number. Since this instrument would be directly binding in the Member States, consumers within EU should be able as of 1 July 2014 (proposed date of the introduction of the Regulation) to look for cheaper roaming services than what their national service provider is offering. That could boost competition (the lack of competition on the roaming market is seen as a main obstacle right now to setting fair prices) and make the market prices for roaming drop, accordingly to actual costs paid by mobile phone operators. Without activating operators to compete with each other within EU, the Commission may only temporarily reduce prices which has been done by the current Regulation of 2007 and which has not led to the expected effects. Still, in the meantime setting a cap on charges made to consumers is not a bad idea. That is what will happen until the 1st of July 2014: the roaming prices will be capped: roaming consumers would pay no more than 24 cents per minute to make a call, a maximum of 10 cents per minute to receive a call, a maximum of 10 cents to send a text message and a maximum of 50 cents per MB to download data or browse the Internet.

Another interesting consequences of the Regulation might be granting mobile phone operators rights to use networks of other operators in other Member States, to encourage the competition.

More information may be found here and here. Text of the proposal may be found here.

Wednesday, 6 July 2011

New roaming proposal

Today at 12.30 there will be a live press conference of Neelie Kroes, EC Vice-President in charge of Digital Agenda, who will present a new roaming proposal to benefit mobile phone users across Europe.

You may watch it live here but if you don't have time for that, don't worry, we will bring you a summary thereof shortly. More data on roaming policies may be found here.