Guest post: How the Digital Single Market will affect brand owners
The EU Digital Single Market could have a significant impact on IP owners. Chris Oldknow and Toe Su Aung look at how a ban on geo-blocking could have an impact on sales of brands online
Did you #AskAnsip? Is #Digital4EU for you? You have until March 24, May 8 or early September to shape proposals for the #DigitalSingleMarket.
You could be forgiven for thinking that the “Digital Single Market” was just about eliminating mobile roaming charges, watching football or copyright reform. These are the most prominent features of the initiative, but by no means where it begins and ends. The stakeholder event in Brussels on February 24 (#Digital4EU) made clear that this is in fact aimed at completing the European single market, with digital as the imperative demanding this transformation. As ever, some simple phrases and ideas carry powerful consequences.
Geo-blocking and consumer access
In fact there will be several areas where businesses need to consider the implications for their IP quite carefully, and how their corporate structures and business models in Europe may need to change. For now let’s focus on two of these simple but powerful ideas:
A prohibition on geo-blocking
Consumer access to pricing and promotions across all member states
Commissioner Ansip (pictured below with Robert Madelin) has consistently attacked geo-blocking and is committed to banning it within the EU. In his speech on 24th he set out his case again:
Far too often, consumers find themselves redirected to a national website, or blocked. I know this from my own experience. You probably do as well... In the offline world, this would be called discrimination. In the online world, it happens every day...I want to pay – but I am not allowed to. I lose out, they lose out... There should be no exceptions. Everyone should be treated the same.
The focus has been on access to audiovisual content services such as iPlayer and Netflix and on copyright licensing issues. Access to pricing and promotions in shopping across borders is regularly raised as well, but none of these issues has ever been discussed in the context of trade marks or on-line sale of brands.
Web traffic is routinely diverted to localised sites based on location and language. Some companies allow users to manually change this, while others prevent access to sites targeted at other locations. This might not to be a deliberate effort to deny me access to a German special offer, just an over-zealous piece of code aimed at localising my experience. Redirecting customer browsers to local versions of sites could well fall foul of an overbroad regulation of geoblocking.
How brands are affected
Any brand investing in a redesigned web presence, perhaps based around a newly acquired TLD, needs to think about how a pan-European site might have to function in this future.
In fact, given the increasing personalisation of advertising and sales, and the pervasive use of geolocation in digital services, consumers may find it harder than ever to find the pricing and promotions offered to other citizens because this is done directly to each consumer. Brands and retailers should consider what non-discrimination might mean for their business and give input to the Commission and member states.
How will these policies accommodate identical national trade marks in different ownership or territorially licensed community marks? This is pretty close to the copyright issue. Passive cross-border sales are nothing new, but that concept is going to be stretched as sales through international e-commerce platforms or located via search and comparison tools increasingly bring these arrangements into conflict or coexistence. Faced with a highly litigious split of rights, might a company want to protect itself by rejecting traffic from some territories, only to be faced with customer claims of unlawful blocking?
Existing businesses need to consider that the way their current subsidiaries are established may well need to change as well. Paying bonuses based on national sales and proving marketing money for local promotions will become increasingly at odds with single market objectives and create compliance risks. Operationally this is the corollary to the Commission plan to enable a start up to set up a single entity to trade across Europe.
Other areas for action where IP is worth considering include the reconsideration of vertically restrained supply chains and the retooling European industry with digital technologies (Industry 4.0). 3D printing is the most commonly cited example of this, but the performance data flowing back to machine producers will contain know-how that was previously contained within factory walls. Safe harbours for startups and incentives for sharing economy business models are other powerful ideas which can bring great benefits but need wide business input as they are developed.
What should you do now?
"Post your views – research papers, blogs, screenshots, just a few lines – whatever you feel is most relevant and appropriate."
Timelines set by the European Commission are extremely ambitious. Ansip will present to the college of Commissioners on March 24. A communication is intended to be issued in early May followed by legislative proposals in September. Brand owners need to identify the positive impact of these plans on their business as well as any unforeseen consequences and make their views heard in capitals and in Brussels.
The web and Twitter are being used as consultation tools. A dedicated Digital4EU website has been created for gathering views to feed into the final DSM strategy. As Ansip himself says: "Post your views – research papers, blogs, screenshots, just a few lines – whatever you feel is most relevant and appropriate."
The authors are directors and co-founders of Elipe Limited, IP and digital policy consultants. They tweet at @elipetweets