Smells Like Copyright Spirit

Kurt Cobain’s ghost is haunting Europe. Following a recent decision by a court in Düsseldorf, millions of guitars have suddenly become potential subjects of copyright disputes.

During his career, Nirvana’s legendary frontman smashed countless Fender guitars on stage, inadvertently helping to turn the Fender Stratocaster into one of the most recognizable symbols in rock music. Few would have expected, however, that decades later it would not be a musician but a team of lawyers writing a new chapter in the Stratocaster’s story.

A regional court in Düsseldorf recently issued a decision that has attracted considerable attention within the musical instrument industry. The court accepted Fender’s argument that the Stratocaster body shape, first introduced in 1954, may qualify for copyright protection. This could pave the way for Fender to take action across the European Union against manufacturers and distributors using the iconic Stratocaster design.

The significance of the decision is difficult to overstate. The Stratocaster is not a rare collector’s item or a piece displayed in an art gallery. It is one of the fundamental shapes of the electric guitar, used by hundreds of manufacturers around the world over the past seventy years. This naturally raises an important question: how can such a widely adopted product shape still enjoy copyright protection today?

Design Protection and Copyright Are Not the Same Thing

To answer that question, it is important to distinguish between design protection and copyright.

Design protection exists specifically to grant exclusive rights over the appearance of a product for a limited period. In the European Union, registered design rights may last for up to twenty-five years.

Copyright, by contrast, arises automatically without registration and may remain in force until seventy years after the author’s death.

This distinction matters because if the shape of a utilitarian product can qualify for copyright protection, the resulting exclusivity may extend far beyond the period originally contemplated by design law.

It is therefore no surprise that previous attempts to monopolize product shapes have often failed.

One notable example involved the iconic Volkswagen Beetle. An heir of Erwin Komenda sought to enforce copyright claims over the vehicle’s design, but the German courts found insufficient evidence both of individual authorship and of a sufficiently original creative contribution attributable to a single designer.

A similar rationale emerged in the well-known LEGO cases. European courts consistently emphasized that intellectual property rights should not be used to secure perpetual exclusivity over technical solutions or industry standards.

Fender itself was unsuccessful in the United States when it attempted to register the body shapes of the Stratocaster, Telecaster, and Precision Bass as trademarks. The U.S. Patent and Trademark Office concluded that the shapes had become so widespread that consumers no longer associated them exclusively with Fender.

Against that background, the recent German decision came as a surprise to many observers.

A Shift in EU Copyright Jurisprudence

Over the last several years, the Court of Justice of the European Union (CJEU) has gradually expanded the possibility of copyright protection for utilitarian objects.

The most prominent example is the Cofemel case (C-683/17), in which the Court held that copyright protection does not require exceptional artistic merit or aesthetic value. It is sufficient that the work constitutes the author’s own intellectual creation and reflects creative choices.

The essence of the ruling can be summarized in a single sentence: originality matters, not artistic quality.

Subsequent judgments confirmed that furniture, clothing, and other industrial products may also qualify for copyright protection where their design reflects sufficient creative freedom.

Fender’s legal strategy was built upon this evolving body of European case law.

The Key Tactical Element: Not Only the Law, but the Opponent

The defendant in the Düsseldorf case was not a major guitar manufacturer but a Chinese seller offering Stratocaster-style guitars to European consumers through AliExpress.

One of the most significant aspects of the case was the defendant’s failure to mount a substantive defense. Under German procedural law, this does not automatically guarantee success for the claimant. The court must still assess whether the legal arguments are well founded. However, the factual background is largely established on the basis of the claimant’s submissions.

As a result, Fender achieved this outcome in proceedings where its arguments were not subjected to detailed adversarial scrutiny.

The court accepted that the Stratocaster’s design was not merely the result of technical necessity but rather the product of Leo Fender’s creative choices. Copyright protection therefore extended not only to the guitar’s outline but to the overall combination of its distinctive design features.

What Was Missing from the Case?

The decision has sparked considerable debate within the guitar industry.

Critics argue that the Stratocaster did not emerge in a vacuum. They frequently point to Paul Bigsby’s early solid-body guitars and other instruments that predated Fender’s designs.

Another recurring argument is that the Stratocaster shape has become part of the common visual language of electric guitars over the past seventy years. This raises the question of whether such a widely adopted design can still embody the level of individual creative expression required for copyright protection.

Critics also emphasize that many of the guitar’s defining features serve functional purposes. The double cutaway facilitates access to higher frets, while the body contours and proportions were developed largely for ergonomic reasons.

These issues, however, were not examined in depth during the Düsseldorf proceedings.

Can Judges Decide What Constitutes Art?

Perhaps the most interesting aspect of the Fender case has little to do with guitars at all.

How far can copyright protection extend into the realm of functional products? Should courts determine whether the shape of a guitar body, a chair, or even a car qualifies as an original creative work deserving copyright protection?

Recent developments in European law increasingly suggest that such protection may be available. The Fender case demonstrates the potentially significant practical consequences of that approach.

What Happens Next?

The decision does not create binding precedent across the European Union. Nevertheless, it sends a powerful signal to the market.

Fender has already begun sending cease-and-desist letters and is expected to pursue alleged infringements more aggressively. For many businesses, the mere prospect of costly litigation may be enough to encourage design modifications or a reduction of their European market presence.

One possible response for smaller manufacturers is to rethink and reinterpret existing designs. Ironically, Kurt Cobain himself provides an example of this approach. His later-famous Jag-Stang model was created by combining design elements from the Jaguar and Mustang into a new configuration.

The larger question remains unanswered. What will happen when Fender faces not a passive defendant but a major international manufacturer equipped with substantial legal and technical resources?

Such litigation would likely bring to the forefront many of the arguments that received little attention in Düsseldorf: the design’s widespread adoption, its historical predecessors, the role of functional features, and the limits of originality itself.

More Than a Copyright Issue

Fender’s victory may have implications extending beyond copyright law into competition policy.

Over the last seventy years, the Stratocaster shape has become one of the defining forms of the electric guitar market. If Fender succeeds in enforcing its position across Europe, cheaper copies and alternatives could gradually disappear from the market.

Of course, there is nothing inherently anti-competitive about enforcing valid intellectual property rights. The broader question is where the line should be drawn between protecting creative works and preserving free competition.

According to critics, this is the true significance of the Fender dispute.

The real issue is not whether a Chinese seller may offer guitars on AliExpress, but how long an iconic product shape can remain subject to exclusive rights.

In that sense, the Düsseldorf ruling has already delivered an important victory for Fender. Whether that victory proves durable, or whether a future fully contested case will reshape the legal landscape, is likely to be determined in the years ahead.

Until then, guitar manufacturers and distributors will be watching closely to see how far Fender is willing to go in defending its iconic design and hoping they will not need to invoke the spirit of Kurt Cobain to bid farewell to Stratocaster-style guitars in Europe.

This article is an opinion piece offering a professional interpretation of an evolving area of law and reflects the author’s own conclusions.

The image accompanying this article is an AI-generated illustration depicting Kurt Cobain smashing a guitar. It is used solely for illustrative purposes and is not directly connected to the legal dispute discussed in the article.

 

The deadline for NIS2 adoption is fast approaching!

In recent years, the European Union has placed special emphasis on cybersecurity. In 2022, three pieces of legislation were adopted to strengthen the defense of organizations against cyberattacks. The Dora regulation prepares the financial sector for resilience, while the CER directive concerns the resilience of critical organizations, and the NIS2 directive outlines measures to ensure high-level cybersecurity.

Why is this important for certain organizations? Because the NIS2 directive, along with Act XXIII of 2023 on cybersecurity certification and supervision, which implements it, imposes numerous obligations on organizations that fall under its scope, along with the threat of severe sanctions.

The law establishes a dual criteria system for its scope, defining both so called high-risk and particularly high-risk sectors. Additionally, a certain minimum size is required for an organization to fall under its scope. Sectors classified as particularly high-risk include energy, transportation, healthcare, water utilities, and telecommunications, while high-risk sectors include postal and courier services, food production, product manufacturing, and chemical production and manufacturing. Companies in the above sectors with over 50 employees or annual net revenues exceeding 10 million euros fall under the regulation’s scope. Additionally, their suppliers must also comply with the requirements.

According to the law, affected organizations must register with the Regulated Activities Supervisory Authority, appoint a person who’s responsible for information system security within the organization, and classify their IT systems into security classes as defined by the law. Although the final version of the legislation, which details the tasks for each class, has not yet been adopted, the draft indicates that affected organizations will have to complete hundreds of tasks to ensure compliance.

Organizations must complete a self-identification by June 30, 2024, to determine whether the relevant legislation applies to them or not. If it does, they must register with the Authority and classify their IT systems into security classes. The NIS2 directive sets an October 18, 2024 deadline for organizations to apply the required protective measures for NIS2 compliance and to pay the supervisory fee to the competent authority by this date. By December 31, 2024, firms must contract an auditing firm to verify compliance, which must be completed by December 31, 2025.

The stakes are high. Without compliance, affected organizations are more both more vulnerable to cyberattacks and also face significant penalties: up to 10,000,000 EUR or 2% of total annual worldwide turnover for particularly high-risk sector organizations, and up to 7,000,000 EUR or 1.4% of the previous year’s turnover for high-risk sector organizations. Furthermore, a new sanction option allows the suspension of both the organization and its senior executives from the relevant activities in severe cases.

Don’t wait any longer. Contact our office at +36 1 700 4750, or send an email to nis2@rvdpartners.com. Our team of experienced legal and IT security experts is ready to help you successfully implement the NIS2 directive. Prepare for future challenges with us and ensure the cybersecurity of your business or organization!

Earth heat – is a hot topic

Hungary’s Recovery and Resistance Plan, put into social debate by the government, Chapter REPowerEU (the “Draft”) also contains ideas for geothermal energy in order to ensure the share of geothermal energy in the country’s energy mix, especially in district heating.

The “Reform 12 – in the Draft Development of the Geothermal Regulatory Framework” intends to improve the legal framework primarily from a research / mining point of view, based on the experience gained in the meantime, while the Draft “Investment 11: In the utilization of ground heat” part intends to provide variable intensity support to reduce the risk of drilling for geothermal production, on the one hand, and a preferential credit line for ground-based equipment and power plant construction for the utilization of earth heat, on the other.

The neuralgic point is that although the Draft supports the investments, it does not take into account that after the completion of the investment, the district heat producer can sell its product at an official price, operating under regulated market conditions, where, in today’s circumstances, there is a return that is not even modest, with a profit factor of 4.5% on the gross asset required by law, so this is not an attractive area for investors at all today.

The current situation in the energy market, which is not very rosy anyway, has a benefit that it would now be worthwhile, even for fiscal reasons, to encourage the extraction of geothermal energy more strongly than before, as it could take some of the natural gas’ place, which 4 times more expensive in district heat production than before. The question can therefore also be asked which is the more fiscally rational decision, with a better focus on energy sovereignty: to maintain support for expensive, foreign exchange-accounted and uncertain import natural gas use, or would it be better to spend on domestic, weather-independent, decarbonisation-friendly geothermal heat, that can be produced significantly cheaper than heat from natural gas and in HUF, through district heating regulation?

Obviously, this issue is poetic, as the Draft also states that the increase in geothermal energy „is in line with the National Energy and Climate Plan, which set a target of 50% of the share of natural gas reduction in district heating production.” However, in this case, it is not enough to support the implementation of the investments at some level, because this does not provide the investor with sufficient benefits. In short, in a regulated district heating market, a market-like return must be ensured for this area to be attractive, however, in addition to current natural gas prices, this would be much more worthwhile for the state than ever before, as the total cost of geothermal energy has been a tenth in the last heating period, the total cost of district heating from natural gas. And there is no need to think about big things about changing the regulation either, as it would be enough to change the statutory profit factor specifically for geothermal district heat producers, for example, that the profit factor is variable per year and exceeds the weighted average yield on long-term government securities (10 and 15 years) denominated in EUR at a given balance sheet date with the normal business risk premium (6 percentage points). This would result in the benefits available on the regulated market already being attractive, but no extra profit could be made.

I also dare to risk that ensuring a return at market level in this regulated market is only necessary but not sufficient to allow investment to start because it has not yet been mentioned, how many additional conditions (drill, availability of specialist) also depends on the implementation of the investments. However, we can safely say that if a geothermal investment is not able to benefit the investor from the outset through official district heating prices, that investment will not be realized, even though it is, that, at the moment, the earth heat that can increase our energy sovereignty is also the cheapest, a lucky combination that could easily achieve a win-win situation in terms of business interest and the public good. The value of energy sovereignty is invaluable, it is worth all the money in the first place, and if, in addition, we even generate fiscal savings with the help of geothermal energy, we cannot put the little it costs in a better place.

Whistleblowing

In 2019, the EU adopted the Whistleblowing Directive, which entered into force on 17 December 2021. Based on this Directive, Parliament has adopted the new law on public interest complaints, abuse reporting and rules on abuse reporting. Companies with more than 250 employees have 60 days from the date of the law’s publishing to set up an abuse reporting system. Companies employing 50-249 people have until 17 December 2023 to comply. Compliance with the obligations related to the abuse reporting system, including the investigation of individual reports, will be monitored by the labor supervisory authority. The establishment of an abuse reporting system is mandatory for businesses in certain higher risk areas, regardless of the number of employees, in particular:

  • Credit institutions and insurance companies
  • Merchants accepting cash payments of HUF three million or more
  • Dealers in specified works of art and antiques
  • Operators of ships and aircrafts
  • Service providers within the meaning of the Act on the Prevention and Combating of Money Laundering and Terrorist Financing (e.g. auditors, accountants, tax advisers, lawyers, registered seat service providers)

The system may be operated by an internal, but not instructed, impartial person or organization, but in exceptional cases it may also be operated by a trusted abuse-report protection lawyer or other external body. Reporting may be done in writing or orally and, with some specific exceptions (e.g., anonymous whistleblowing), the report must be investigated thoroughly as soon as possible. The investigation must involve the whistleblower, who may also be represented by legal counsel. The whistleblower shall be informed in writing of the investigation of the report, the outcome of the investigation and the planned measures as a result. The operation of the system must ensure adequate protection of personal data. In addition to the GDPR, the act also contains provisions on the rules for data processing and data transfer. Clear and easily accessible information should be provided on the operation of the abuse reporting system, the reporting procedure and other procedures provided for in the act. The whistleblower should also be informed of the requirements for the protection of personal data.

The NIS2 Directive on cybersecurity

On 23 May 2023, Act XXIII of 2023 on cybersecurity certification and cybersecurity supervision entered into force, based on the NIS2 Directive, which was published by the EU on 27 December 2022. The aim of the legislation, which implements the Directive – for the time being only partially – is to require companies to comply with high IT security standards and to establish a system of authorities to certify and monitor this compliance. Full implementation of the Directive is due by 17 October 2024.

The issue is particularly topical as cyber-attacks by cybercriminals have become more frequent, sophisticated and lucrative, most strikingly in the wake of the recent widespread and successful ransomware attacks that have affected several of our own clients. In addition, the coronavirus pandemic has accelerated digitalisation in almost all sectors, but simultaneously, this has brought new threats, more security incidents and new dependencies. In addition, the Russia-Ukraine conflict is also taking place in cyberspace, which has also highlighted many vulnerabilities within the EU.

If a company fails to comply with the directive, the maximum fine that can be imposed is EUR 10,000,000 or up to 2% of the company’s global annual turnover, whichever is higher. It is important to underline that under the directive, even the management can be held liable and, in serious cases, managers can be temporarily prohibited from future management activities if the organisation concerned does not comply with the cybersecurity requirements of NIS2.

Who is concerned by NIS2?

Primarily, medium and large enterprises are affected, more specifically organisations with at least 50 employees or an annual net turnover of 10 million euros.

Regardless of their size, businesses in the following priority sectors in particular must comply with NIS2 requirements:

  • energy (electricity, district heating and cooling, oil, gas, hydrogen)
  • transport
  • banking and financial services and the infrastructure providers for these services
  • health care
  • drinking water services
  • Wastewater management
  • digital infrastructure providers (e.g., internet service providers, DNS providers, cloud providers)

What to do?

Compliance with NIS2 can be certified and audited by organisations accredited by the competent authority and verified by said authority. However, whether for certification or for an audit, it is advisable to prepare in-house, in particular by:

  • Implementing an information security management system (ISMS) or reviewing the existing system based on a risk analysis.
  • Implementing proactive security measures (incident prevention, incident management).
  • Implementing an incident management protocol to mitigate the impact of an incident should it occur.
  • Introduction of business continuity management (BCM) or review of existing systems (e.g., management of backup systems and disaster recovery and crisis management).
  • Appointing an Information Technology Security Officer (ITPO).
  • Identification of possible GDPR interfaces in the event of an incident involving personal data and completion of data management documentation (e.g., processes) as necessary.
  • Implementing measures to ensure supply chain security (including aspects related to the security of relationships between individual organizations and their direct suppliers or service providers).

Smells Like Copyright Spirit

Kurt Cobain’s ghost is haunting Europe. Following a recent decision by a court in Düsseldorf, millions of guitars have suddenly become potential subjects of copyright disputes. During his career, Nirvana’s legendary frontman smashed countless Fender guitars on stage,...

When the Court Says: It Is Not Always the Investor’s Fault

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Hungarian Golden Visa – Guest Investor Program in Hungary

Hungary’s 2024 Golden Visa grants a 10-year renewable residence permit with Schengen access for investors who invest at least €250,000 in a designated real estate fund.

The deadline for NIS2 adoption is fast approaching!

In recent years, the European Union has placed special emphasis on cybersecurity. In 2022, three pieces of legislation were adopted to strengthen the defense of organizations against cyberattacks. The Dora regulation prepares the financial sector for resilience, while...

Earth heat – is a hot topic

Hungary's Recovery and Resistance Plan, put into social debate by the government, Chapter REPowerEU (the “Draft”) also contains ideas for geothermal energy in order to ensure the share of geothermal energy in the country's energy mix, especially in district heating....

Whistleblowing

In 2019, the EU adopted the Whistleblowing Directive, which entered into force on 17 December 2021. Based on this Directive, Parliament has adopted the new law on public interest complaints, abuse reporting and rules on abuse reporting. Companies with more than 250...

The NIS2 Directive on cybersecurity

On 23 May 2023, Act XXIII of 2023 on cybersecurity certification and cybersecurity supervision entered into force, based on the NIS2 Directive, which was published by the EU on 27 December 2022. The aim of the legislation, which implements the Directive – for the time...

Changes in labor law from 1 January 2023

The new changes to labor law, which came into effect on 1 January 2023, are based on EU Directive 2019/1152 on transparent and predictable working conditions in the European Union and EU Directive 2019/1158 on work-life balance for parents and carers. The changes to...

AI and intellectual property law

Artificial Intelligence (AI) is rapidly transforming many industries, including intellectual property. As AI becomes more capable of creating original works, it raises complex legal questions about ownership and protection of these creations. One of the most...

What changes have legal persons undergone in the past year?

As end of the year is approaching, we have summarized below this year’s amendments relevant to legal entities. As of 1 January 2022, the rules for legal entities have undergone some relevant changes. These amendments to the third book of Act V of 2013 on the Civil...

Changes in labor law from 1 January 2023

The new changes to labor law, which came into effect on 1 January 2023, are based on EU Directive 2019/1152 on transparent and predictable working conditions in the European Union and EU Directive 2019/1158 on work-life balance for parents and carers. The changes to the Labor Code are presented below.

As of the beginning of the year, in employment claims based on a breach of the prohibition of the abuse of rights, the claimant is the one who must prove the underlying fact, circumstance and prejudice. While the right holder (the other party) proves that there is no causal link between the fact, circumstance and prejudice proposed by the claimant.

In addition, the amendment extends the deadline for filing statements, which can now be duly filed even if they are posted no later than the last day of the deadline.

With regard to employment contracts, according to the amendment, unless otherwise agreed upon, the employment relationship shall in all cases be deemed to be of indefinite duration and the place of work shall, as a general rule, be the place where the employee habitually works, unless stated otherwise.

A major change is in the employer’s obligation to inform the employee, whereby the employer has less time to inform the employee from the beginning of the employment relationship – 7 days instead of 15 days. In addition, the information to be given to the employee has been extended to include the following: the rules relating to the termination of employment; the employer’s training policy; and the name of the authority to which the employer pays public charges. In addition, if the employee is expected to work abroad for more than 15 days, the employer has further obligations to inform the employee.

The amendment extended the rules on the amendment of the employment contract, under which employees with children may request a change in the place of work, working hours, remote-work or part-time work up to the age of 8 of the child. The employee must provide reasons for the request in writing and indicate the date of the change that constitutes the legal basis. The employer must respond to this request in writing within 15 days, giving reasons if it refuses. If the employer’s refusal is unlawful or the statement is not made, the court may reproduce the employer’s statement.

The amendment requires employers to provide the reason, at the request of the employee, for terminating the employment relationship of an employee who is exempt from the obligation to work. This applies if the employee is absent for (i) personal care of a relative or a person living in a shared household for serious health reasons; or (ii) paternity leave; (iii) parental leave; or (iv) unpaid leave to care for a child; or (v) the employee’s request to terminate their employment contract due to a change in the employment contract.

The amendment has extended the prohibitions on termination of employment, under which an employer may not terminate an employment relationship during paternity leave, parental leave or when the employee is absent for serious health reasons to care for a relative or to provide personal care for a person living in the same household.

Under the amended law, in the event of termination of employment, the employer shall issue a certificate – in addition to the previously required certificates – on paternity and parental leave, indicating the leave previously granted.

The January amendment to the Labor Code extends the court’s powers to decide when the employment relationship can be restored, at the request of the employee. A new possibility is introduced if the termination was in breach of the prohibition of the abuse of rights.

Under the amendment, employers must specify in writing and publish the starting and finishing dates of the allocated working-hours period and the duration of the work-time required.

The amendment introduces changes for certain categories of employees (e.g. pregnant workers, workers with children up to 3 years old, workers raising children alone, young workers). Thanks to the amendment, there are certain prohibitions for employers for these groups of workers, for example, no extraordinary work or night work can be assigned. As an exception, if the child is over 3 years old and with the consent of the worker, the law allows for such assignments.

The amendment introduced new regulations to paternity leave. Instead of the previous 5 working days, fathers will be able to take 10 working days off until the end of the second month after the birth or finalization of the adoption process. For the first 5 days of paternity leave, the father will be entitled to 100% of the absentee-wage, while for the second 5 days only 40% of the absentee-wage will be paid. Importantly, the full cost of the first 5 days’ absentee-wage will be recoverable from the Treasury, while the cost of the second 5 days will be borne by the employer. In addition, all employees will be entitled to 44 working days of parental leave up to age 3 of the child, subject to a 1-year employment relationship. Parental leave is granted at the rate of 10% of the absentee-wage. These leaves are not affected if the employee’s employment started or ended during the year.

The amendment also affects the rules on the granting of leave, under which an employer may postpone the granting of leave for up to 60 days, except for paternity leave, in cases of exceptional economic interest or for a reason directly and seriously affecting the employer’s operations. In such cases, employers must state their reasons in writing.

The amendment also changes the rules on remuneration in the absence of work. Employees are entitled to 70% of the absentee-wage for the duration of their sick leave. If the employee with the employer’s consent is released from their obligation to be on call, they will be paid according to their mutual agreement. Alternatively, if the employee is entitled to supplementary wage on the basis of their working hours, they are also entitled to a supplementary wage in addition to the absentee-wage.

If a fixed-term contract is renewed or if a fixed-term contract is terminated and a new employment relationship is established for the same scope of employment within 6 months of the termination, a probationary period may not be established by the partties. Furthermore, in the case of an employment contract of a maximum of 12 months, the duration of the probationary period shall be fixed on a pro rata basis. In such a case, a fractional day of half a day shall be considered a full working day.

In case of labor disputes, the statement of claim, in accordance with the new employee’s claim integrated by the amendment, must be submitted within 30 days of receipt of the employer’s statement regarding request for a change to the employment contract or upon receipt of the employers’ statement for a request to state the reasons for a refusal or upon failure to comply with such request on the deadline for such statement.

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