Since 2022 it is estimated that up to 90% of market share value is made of intangible assets … and yet the notion of “intangibles” remains elusive. Their valuation is always an uncertain exercise (as a matter of fact there is no one method to calculate its value). A WIPO initiative is actively working on defining a method which can transform intellectual property assets into concrete financial tools but even as this process is being tackled in earnest, the contours of intellectual property as we knew it are blurring.

Indeed, valuable intangible “constructs/ works/ outputs” are being generated at great speed without these fitting the definitions of our traditional IP tools. Naturally, AI generated outputs are taking this phenomenon to a whole new level.

Over the years, more and more “sui generis” rights have seen the light of day seeking to capture and protect intangible value that our traditional IP tools cannot (I). But should we not seek a broader protection for unoriginal yet valuable works? And if so, based on what criteria? (II).

I. Sui generis IP rights

Initially, copyright was seen as the “go to” protection for works which were difficult to classify under registered rights and notably patents -by way of example, software or database contents. The criteria of originality had to be met … but the threshold of originality has risen year after year and many works deemed unoriginal are left to fend on unfair competition, passing off, parasitic behaviour, etc…

In reaction, the legislator has stepped in, and we have witnessed the multiplication of sui generis rights – usually devised by local legislators and sometimes taken up more widely in a more or less harmonized way. The few examples listed below illustrate the eclectic nature of these rights which “pop up” here and there:

• • Among the most established is the sui generis protection awarded to databases (in Europe since 1996). According to the EU intellectual property help desk:
    “The sui generis right protects, as an intangible asset, the results of the financial and/or professional investment carried out towards the methodical and systematic classification of independent data. This right is not a right over the information stored in the database and does not constitute an extension of the copyright protection which may apply to the contents of the database”.
    The notions of originality, novelty or inventive activity are irrelevant – what matters is the value created by the intellectual effort invested to create a database structure and architecture.
  • Other less known sui generis rights touch on pack shot photographs which fail to pass the test of originality and yet represent an important investment and value in a world of online commerce where the quality of pack shots of products is the necessary vehicle to convert visits into sales. In France, a protection based on unfair competition has been acknowledged by the Courts with all the difficulties of having to establish such unfair competition (TJ Rennes, 2e ch. civ., 6 mai 2024, n° 22/01433). In Germany, Austria and Switzerland, a sui generis right on such photographs has solved the problem. Again, the criterion of originality is set aside to focus the “technical effort” and on the commercial value of these works (1).
  • More extraordinary are the sui generis rights which extract works of art or monuments from the public domain into which they had fallen. The Italian law thus provides that the use of a monument or work of art for commercial purposes is subject to a royalty payment (2) . A similar text exists in France although few monuments have been declared as protected in the associated decree (3). In this case, once again, it is the commercial value of these monuments which is protected and justifies a remuneration.
  • A recent law in Ukraine entered into force in on January 1, 2023, could pave the way to a broader adoption of sui generis right on AI generated works. The Ukrainian law includes “copyright related rights” on “non original works” created by software /AI. To warrant protection, they must “differ” from other works of a similar type and must be created without the participation of humans. Rights to such works arise at the moment of their creation and belong to the natural person who is the owner of the tangible rights to the software that created the non-original work.

Although the nature of these rights is very different, they all grapple with the difficulty of satisfying the notions of creativity, novelty or inventive activity which justified the limitation of free trade when traditional intellectual property rights were introduced.

II. Looking for a new definition to encompass valuable unoriginal works

If the limitation of free trade by traditional IP rights was justified by the economic value brought by creators and inventors, sui generis rights have de facto acknowledged that there are other types of works which bring value and should be protected. While the notion of “commercial value” is already referenced in trade secret protection (A) the Ukrainian law introduces something a little “different” worth considering (B)

A. From Trade Secrets to Trade Value?

Under most laws, the notion of trade secrets and their protection relies on the accumulation of three elements, the key to which is secrecy.

To be protected, a trade secret must be:

• commercially valuable because it is secret,
• be known only to a limited group of persons, and
• be subject to reasonable steps taken by the rightful holder of the information to keep it secret, including the use of confidentiality agreements for business partners and employees.

The burden of proof is on the owner of these trade secrets. Without a strict culture of IP protection within a company, this protection is so difficult to prove and enforce that plaintiffs may be tempted to skew the evidence in their favour, as recently illustrated in a trade secret misappropriation case opposing l’Oréal to Metricolor.

The sui generis rights which have multiplied in recent years focus their rationale on the “commerial value” of the protected item. Just as originality is not longer a condition for protection – nor is secrecy. Will we see the birth of a more general protection of “intangibles” based on their commerical value alone ? How will that notion be defined?

B. Works protected for their Distincitve character and Commercial Value ?

The Ukrainian law introduces another notion – that of “difference to what exists”. This notion could slide towards that of distinctivity, central to tradmark law. Of course, one would not want to define the notion using the EUIPO’s increasing reference to “memorability” but rather concentrate on how the output distinguishes itself with respect to what already exists, thus adding a criteria to that of commercial value.

Combining difference/ differenatiation / distinctivity with commercial value may provide the foundations for a new economic right which would provide a basis to evaluate the intangible assets of a company with more objective criteria all the while facilitating their enforcement . Rather than multiply sui generis rights randomly, a wider notion would leave the judges to their role of interpretation on a case by case basis, gradually building a more refined framework to the protection sought.

CONCLUSION

As we enter this new era of works/constructs/outputs which cannot be captured by our traditional IP Rights, trade secrets are the fall back reference and protection but this “ QUIET IP” imposes secrecy and deprives the world of access to commercially valuable developments – is this ultimately what we want?

If the rationale behind protecting creative or innnovative works was that their accessibility benefited the rest of the world, might we not apply the same reasoning to “distinctive works of commercial value” ? Should we not consider bringing this QUIET IP to the fore ?

Me OLIVIA DHORDAIN
Avocate
18th July 2024

(1) Under German law non original photographs Lichtbildschutz’ benfit from a specific under Section 72 of the UrhG. Only a de minimis “personal intellectual effort” (ein Mindestmaß an persönlicher geistiger Leistung) or a “mere technical effort” (rein technische Leistung) is required to benefit from this protection. Swiss law took inspiration from the German and Austrian laws to adopt a similar sui generis right.

(2) Article 107(1) of the Italian Code of Cultural Heritage and Landscape, “the Ministry, the Region and other territorial government bodies may permit the reproduction as well as the instrumental and temporary use of the cultural properties committed to their care, save as provided for by the provisions in paragraph 2 and those concerning copyright

(3) l’article L.621-42 du Code du patrimoine provides that “use for commercial purposes of the image of the buildings that make up the national domains, on any medium, is subject to the prior authorisation of the manager of the relevant part of the national domain. This authorisation may take the form of a unilateral act or a contract, with or without financial conditions. The fee takes into account the benefits of any kind accruing to the holder of the authorisation. ..” So far only an eclectic and limited list of monuments are subject to this payment fee: Domaine de Chambord (Loir-et-Cher) ; Domaine du Louvre et des Tuileries (Paris) ; Domaine de Pau (Pyrénées-Atlantiques) ; Château d’Angers (Maine-et-Loire) ; Palais de l’Elysée (Paris) ; Palais du Rhin (Bas-Rhin).