The team is joined by GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopolou, Mathilde Pavis, and Eibhlin Vardy
InternKats: Rose Hughes, Ieva Giedrimaite, and Cecilia Sbrolli
SpecialKats: Verónica Rodríguez Arguijo (TechieKat), Hayleigh Bosher (Book Review Editor), and Tian Lu (Asia Correspondent).

Thursday, 22 February 2018

Top 10 issues from submissions before UK Supreme Court in Warner-Lambert v Actavis second medical use battle

The IPKat and team watching last week's Supreme
Court hearing...
Like many across the IP world, the IPKat was glued to his computer screen last week watching the drama unfold in the UK Supreme Court between Warner-Lambert and Actavis/Mylan.  The IPKat's friends, Katie Cambrook, Rachel Mumby and Claire Phipps-Jones of Bristows LLP, attended in person and, with the support of a team of other keen watchers in place each day, have summarized their Top 10 issues coming out of the hearing.  The IPKat expects that the very vocal panel of judges in the form of Lord Mance, Lord Sumption, Lord Reed, Lord Hodge and Lord Briggs will be grappling with these issues and much more in preparing their judgment. For those who missed the action, you can watch the recordings on the UK Supreme Court's website here.  Over to Katie, Rachel and Claire: 
"Last week, the UK Supreme Court held a 4-day hearing in Warner-Lambert v Actavis et al., the latest (perhaps last?) installment in the long-running Lyrica® saga concerning the validity and infringement of Warner-Lambert’s (Pfizer) second medical use patent with Swiss-type claims covering pregabalin for the treatment of pain. The central issues in dispute in this appeal were the role of plausibility in the test for sufficiency of disclosure, the allowability of post-trial amendments, and the direct and indirect infringement of Swiss-type claims. 
As readers may recall (see all previous IPKat posts here), the Court of Appeal had upheld Arnold J’s finding that inter alia claim 3 (to neuropathic pain, the only claim which is the subject of the Supreme Court appeal) of Pfizer’s patent was invalid for lack of sufficiency. The Court of Appeal had held that the data in the patent, which related to animal models of inflammatory pain, rendered it plausible that pregabalin would be effective in treating peripheral neuropathic pain but not central neuropathic pain. Whilst such data may have encouraged the skilled person to test the effectiveness of pregabalin in the treatment of peripheral neuropathic pain (rendering that invention plausible), the same was not true of central neuropathic pain and therefore not of neuropathic pain as a whole, rendering the claim insufficient.
The Court of Appeal also upheld the rejection of Pfizer’s application to amend the claim down to peripheral neuropathic pain after the first instance judgment had been handed down as being an abuse of process. On infringement, the Court of appeal provided obiter guidance, proposing a test for direct infringement based on the manufacturer’s knowledge or reasonable foreseeability of the ultimate intentional use for the patented indication, qualified by a caveat that the element of intention can be negated where the manufacturer has taken all reasonable steps to prevent infringement. On indirect infringement, the Court of Appeal reiterated that what is required is that means are provided which are for putting the invention into effect, but that there is no requirement for a downstream act of manufacture. 
On appeal, the UK Supreme Court panel was composed of Lords Mance, Sumption, Hodge, Reed and Briggs. Tom Mitcheson QC argued Pfizer’s case on plausibility, and Lord Pannick QC took over the case on abuse of process and infringement, with both sharing issues of construction. For Actavis/Mylan, Adrian Speck QC made submissions on plausibility and infringement, with Pushpinder Saini QC dealing with the remaining issues of construction and abuse of process. Michael Silverleaf QC also made submissions on behalf of the Secretary of State for Health. A number of interveners also made written submissions that were occasionally referred to in the course of the hearing.
Our “Top 10” points of interest or questions arising from the submissions before the Supreme Court are as follows:

On plausibility 
1.  Is plausibility a disease that is spreading and which must tackled by the Court before it is too late, as argued by Pfizer? 
2.  Alternatively, should the test for plausibility and obviousness be the same (i.e. require a reasonable expectation of success), or must the patent show a direct effect on the mechanism of the claimed disease, as argued Actavis/Mylan?
On abuse of process
3. Should the patentee have a right to amend following them being made aware of the judicial decision, as is the case before the OD of the EPO and some other national courts? 
4. Should the rules on partially valid patents apply to “partially valid claims”, as argued by Pfizer?
5. Is it disproportionate not to allow amendment post-trial where any prejudice could arguably be adequately dealt with in costs?
On construction
6. Pfizer suggested that the “validating principle” from contract law should be imported into patent law. Is it right to draw an analogy between a patent and a bilateral instrument such as a contract or deed, or a regulation which the court must interpret to ensure its validity? 
On infringement 
7. Does this issue require a judicial rewriting of s60 of the Patents Act, as initially argued by Pfizer?
8. Or is this simply a case of construction of the word “for”? 
9. How important is the label in determining infringement? 
Interveners
10. Is it relevant that patents with Swiss-form claims will disappear from the patent landscape in the future, as argued by the Secretary of State for Health?
At the end of the hearing, the panel thanked counsel for all parties for their submissions and announced that it would take “some time” to prepare the judgment. If last year’s Supreme Court case in Actavis v Eli Lilly is to be taken as a guide, the Court may take around three months to make its judgment available."

UK IPO publishes consultation on implementing Trade Mark Directive 2015 into UK law

UK IPO - loving the public consultations on European
directives at the moment....
Monday was a blockbuster day for the UK Intellectual Property Office (UK IPO) in publishing consultations on implementing EU legislation into national law.  After publishing its consultation for the EU Trade Secrets Directive (see post here), the UKIPO then published its consultation on the implementation of the Trade Mark Directive 2015.  This consultation closes 16 April 2018.  Both were well timed given the calls this week for Brexit to be negotiated over a longer period of time. Tristan Sherliker (Bird & Bird) reports for the IPKat's readers on the Trade Mark Directive consultation (a separate post from another guest Kat on the trade secrets consultation will follow).  Over to Tristan:    

"Background

The IP community will remember that in 2015, the EU legislation governing Community Trade Marks was overhauled.  These are now set out in the new Trade Marks Regulation, which included renaming the harmonised system to the EU Trade Marks system. Alongside this comes the 2015 Trade Marks Directive, which will carry the reforms into Member State national law and must be implemented by 14 January 2019.

Since then, of course, the Brexit vote occurred. It was not initially clear whether the UK would implement the new directive or not. The consultation now makes it explicitly clear that the Directive will be implanted into UK national law in line with the UK’s existing obligations.  However, the consultation is also clear that the revisions to UK law will be “limited only to those that [the IPO] considers necessary”, in particular meaning that they see no need to amend wording to match that of the Directive if the principle of a provision (such as Article 15 on exhaustion) is already adequately covered by the Trade Marks Act 1994 (TMA 1994) or any other UK law.

Key Issues

Here’s a list of some important issues that fall to be discussed and an overview of the questions they raise.  For a full list of issues and impact assessment, it’s best to look at the consultation itself (which is drafted quite clearly and accessibly).
  • Removal of graphical representation requirement – how should it be implemented and what categories of marks does it open up?  Specifically, a call to identify possible new mark types and preferred practicalities. 
  • Interpretation of “competent authorities” under Article 3 
Is the Registrar the only competent authority that needs to be named for the purposes of determining what constitutes a trade mark, or should this include the Appointed Person and the Courts? The current proposal is to limit it to the Registrar, with the (unhappy) possibility that he or she would need to be called as a witness to proceedings. 
  • New grounds for refusal
New grounds of refusal to be included to allow explicitly refusals on absolute grounds, on the basis of any conflict with words protected under other regimes - including geographical indications, traditional terms for wine, TSGs and plant variety rights.
  • Should assessments of acquired distinctive character take into consideration use of trade mark after the application date? 
This is an optional provision.  At the moment, the plan is not to implement it into UK law. Views  and requests for evidence are sought as to whether stakeholders agree with this view.  
  • The possibility of removing s6(3) TMA 1994 (taking into account of expired marks for relative grounds of refusal for 1 year after expiry) 
This also brings with it the question of adapting the test of whether it is ‘just’ to restore a lapsed mark, converting the test to a new factual test of whether the failure to renew is ‘unintentional’. This change would bring the test for restoration into line with patent and design provisions.
  • Protections against registrations in bad faith based on overseas registrations 
The 2015 Directive contains an optional provision that bad faith grounds can be based on an overseas registrations. The consultation asks whether this is already covered by the general power to consider bad faith applications under UK law or rather an explicit provision is necessary.  
  • Comparative advertising – s10(6) TMA 
S 10(6) TMA is considered a ‘home grown’ comparative advertising exception within UK law. In the light of the body of CJEU decisions, is that now redundant and should it be removed?
  • Generic marks and entries in Dictionaries 
A proposed new mechanism that court orders be available to compel dictionaries to make amendments in respect of mis-identified generic terms. A secondary question might be whether there is a need to do so, or whether it already falls within the court’s inherent jurisdiction.
  • Goods in transit and “third countries” 
This arises in the context of goods being detained by customs authorities while in transit to ‘third countries’. The UK IPO remarks that the term ‘third countries’ is unclear, which is particularly understandable in light of Brexit (will the UK be a third country to the EU?).
  • “Industrial property” 
Article 5.4(b)(iv) includes a right of refusal based on other ‘industrial property’ rights. Does this just mean designs and registered designs, or is there some other right to be included as well?
  • How to implement non-use as an infringement defence 
The proposed introduction of non-use as a defence (which can be deployed in the same proceedings as an infringement claim) rather than requiring a defendant to raise different proceedings to challenge use. 
  • No need for TM Proprietors to be joined to licensee proceedings 
Proposal to remove the need for proprietors to be joined to enforcement proceedings brought by licensees, on the basis that it exceeds the wording of the 2015 Directive (which is silent).
  • Should collective marks be owned by everyone? 
Collective marks are those able to be used by all who fall within a defined group of people (according to the rules associated with a particular mark). The 2015 Directive provides that these may be owned by “legal persons governed by public law”. Although this makes sense in certain civil law jurisdictions, it does not seem to have relevance to the UK legal system and it is proposed that this restriction be ignored when transposing the law into the UK.
Closing remarks

Some of these issues are big questions, and others are technical. Either way, given the questions underlying UK-EU relations after Brexit and the international power of brands, this importance of the consultation takes on a new light.  Indeed, it may even, in a small way, help to shape the UK’s TM system on the international stage. It would be encouraging to see a thorough response to assist this purpose."

More than Just a Game (Report 3): Loot boxes and gambling

A box full of kitten loot - not to be confused with "loot boxes"
in the video game context
Now in its fourth year, the More than Just a Game conference organized by Queen Mary University of London brings together academics, practitioners and industry members to discuss the key legal trends in, and issues facing, the gaming and interactive entertainment industries. For the first time, an edition of the conference was held in Paris. KatFriends Daniel Lim, Alex Woolgar and Shohta Ueno (Allen & Overy) report on the proceedings in this third, and final, installment (the first installment can be found here and second installment here):
"Loot Boxes
Andreas Lober explained that “loot boxes” are a form of microtransaction (i.e. in-game real money transaction) which has become increasingly common as part of the business model of video games. Loot boxes are a mechanism whereby players receive in-game items as a prize at random. The prizes vary in quality and are typically drawn from a pool of potential prizes of varying in-game quality and rarity; the likelihood of receiving a prize will generally be inversely proportional to its rarity and in-game value. Loot boxes may be earned through in game actions (e.g. in return for points or currency that can be earned in-game, or via the completion of in-game accomplishments) but can also increasingly be bought with real money. Loot boxes and microtransactions in general provide an on-going source of revenue for publishers and in the case of “free to play” or “freemium” games, together with advertising revenue, often comprise the vast majority of the income from the game. This business model is very popular in the mobile gaming sphere, but has increasingly spread to traditional console and PC games, including where consumers pay a significant upfront sum to purchase the game. 
Outside of gaming circles, loot boxes had not really been brought to the attention of the regulatory authorities.  Then in 2017 the practice hit the headlines as a result of the manner in which the loot box system had been implemented in flagship title Star Wars Battlefront II. In the beta version of that game, loot boxes provided the player with a small chance of winning access to powerful end-game characters such as Luke Skywalker and Darth Vader.  This circumvented the need for players to spend an average of 40 hours of game play to unlock these characters (i.e. the more conventional route).  The feedback from the beta version was that this amounted to a “pay to win” mechanic which rewarded and encouraged the purchase of loot boxes rather than earning rewards through gameplay.  In response, the early access version of the game removed the highest tier reward (including Darth Vader) from the loot boxes. This frustrated one user who had spent $80 to acquire 12,000 Crystals of in-game currency with the intention of purchasing Darth Vader (either directly or via the randomised loot box mechanic).  The user then found out that the character could only be purchased with a different type of in-game currency, Credits.  Credits could only be earned through in-game actions.  No surprise that this user then vented their frustration online, leading to the most downvoted Reddit thread in history.
There are numerous controversies surrounding the issue of loot boxes and microtransactions.  Are they a necessary evil or do they imbalance and harm gameplay/user experience?  Do consumers have a legitimate expectation to be able to play their favourite characters “out of the box” without investing significant gameplay time?  These issues are complex and beyond the scope of this article (although plenty of virtual ink has been spilled on these subjects, see e.g. this brief analysis of the place of microtransactions in the modern gaming economy).
The key legal issue here is whether loot boxes should be considered as gambling. If it is categorised as gambling, a licence would normally be required in most countries.
Position in Germany
Andreas discussed this issue from a German law perspective – under which one needs to look at three elements: stake, prize and luck. With loot boxes there is no way of getting out of the element of "luck". Meanwhile, the "stake" could be regarded as the in-game currency (or actual currency, depending on the logistics of the microtransaction) which one has spent in return for the loot box.
Accordingly the key definitional issue comes down to the "prize" element, namely whether the "prize" can be considered to be money or money’s worth. If the item did not add any value to the gaming experience, such as a skin (which is an item that can modify the appearance of game avatar), does this mean it adds no value outside of the video game? Until now the prevailing view seems to have been that the in-game rewards from loot boxes are not money’s worth and so fall outside the definition of a "prize", with the result that loot boxes are not considered to be gambling. However, it remains to be seen whether this will continue to be the case; for example an article by Desiree Martinelli reported that wagers on skin gambling in 2016 were worth around $7.4bn.
Position in France
Andrea Dufaure discussed the recent views expressed by the French Gambling Authority in relation to loot boxes. She stressed that the Authority did not make any firm comments but rather they tiptoed around the issue by saying: (1) the consumer is not aware that there will be a further charge during the game in addition to the price of the game itself; (2) luck may mean gambling; and (3) the ability to “cash out” winnings (i.e. convert back to real money) can be gambling, but stressed that this is a matter from the French Courts to decide.

She mentioned that in a recent statement the French Secretary of State focused on the impact it might have on the consumers. In particular, he recommended that loot box mechanisms should clearly indicate to the consumers what the odds of winning are within the video game.
Position in the UK
Finally, Paul Gardner from Wiggin mentioned that gambling is something which is not harmonised at the EU level. In the UK, what constitutes gambling is dictated by Gambling Act 2005. The nature of loot boxes mean that they would fall under the definition of ‘gaming’. “Gaming” means playing a game of chance for a prize.  The definition does not require you to play against anyone, nor (unlike Germany) put up a stake - all you need is the element of luck and a prize which is money or money’s worth.
Paul noted that the Gaming Commission has been very interested in skin gambling.  It published a discussion paper in 2016 and a position paper in 2017. So far it seems like the Gaming Commission has not deemed loot boxes to be gambling but it has raised concerns in relation to children being affected by loot boxes.
As the growth of gaming continues, it will be increasingly important that the industry is regulated at an appropriate level and in an appropriate way. Equally, as inventive game designers continue to push the boundaries of technology and creativity (particularly with AI, VR and AR), IP will need to retain the flexibility to continue to protect the investments made in the industry, without stifling further innovation. 
The More the Just a Game Paris edition conference represented a fascinating snapshot into some of the hottest topics in gaming law. Appropriately mirroring the rapid rise in gaming, the conference series is expanding this year to take in sessions in Spain and Germany, as well as returning to its roots in London on 5-6 April for its main edition.  This year it will be focusing on “the impact of Artificial Intelligence on Interactive Entertainment and our Culture, Identities and Freedoms”. Certainly not to be missed by anyone with an interest in games or gaming law!"


More than Just a Game (Report 2): Music, video games, GDPR & technical protective measures

Finding it impossible to participate in real-life sports,
the AmeriKat, and her tiny paws, found solace in the world
of video games
Now in its fourth year, the More than Just a Game conference organized by Queen Mary University of London brings together academics, practitioners and industry members to discuss the key legal trends in, and issues facing, the gaming and interactive entertainment industries. For the first time, an edition of the conference is being held in Paris. KatFriends Daniel Lim, Alex Woolgar and Shohta Ueno (Allen & Overy) report on the proceedings in this second installment (first installment can be found here): 
"Music and video games
The third session chaired by Anne-Sophie and discussing the topic of music and video games, featured the different perspectives of collecting societies, game developers and game publishers – these competing interests were represented on the panel by Thomas Zeggane (Sacem), Benjamin Charbit (SNJV) and Florent Boisneault (Ubisoft), respectively.

Florent kicked off the session by giving an overview of various copyright (and associated rights) which exist in a piece of music and the range of different use rights for which a licence (or multiple licences) may need to be sought (e.g. copying, public performance, etc.). He explained that the different music rights, such as author’s rights and performer’s rights, meant that dealing with music rights in a video games were more complex than (for example) dealing with rights in relation to a book.

Thomas introduced the role of Sacem in the copyright scheme.  Founded 170 years ago, Sacem is a private non-profit organisation managing a wide range of intellectual property rights on behalf of its members in France.  It is the first collective society for the total collection of rights in the world (with revenues of over €1.5bn in 2017).  Thomas explained that organisations, such as Sacem, can and will request that eSport event organisers enter into licences if they suspected the unauthorised use of the rights belonging their members. This is because in France, he explained, there is an obligation to report any unauthorised use of the rights. 
Benjamin then introduced SNJV, an organisation which represents video game developers. He briefly explained the complexities of modern day video game development.  He noted that the current IP licensing regime in France, which requires the application of a proportional compensation scheme, means many video game developers (particularly small independent developers) are deterred from working with French artists due to what are regarded as onerous dealings with the collection societies such as Sacem. 
Thomas was sympathetic to SNJV’s position but emphasised that there are examples of work by French artists being successfully used in a video game such as Rayman, published by Ubisoft.  Florent provided further context to that bespoke agreement, noting that for that project they specifically wanted to use the work of a particular French artist and a large number of agreements were put in place during its development with Sacem. Ubisoft had the bandwidth, experience and resources for such an undertaking, but (in the absence of standard licence that has been specifically and appropriately adapted for video games) negotiating their own agreements would not realistically be a feasible option for independent video game developers with limited resources. 
It was clear from the session that a balance needs to be struck between French IP rights holders and video game developers so that French artists does not lose out to their foreign competitors in this subsection of the industry. 
TPM and GDPR
The final session featured an overview of some of the hot topics in gaming law and was subdivided into three separate subtopics: i) Technical Protective Measures (TPM), ii) GDPR and iii) Loot Boxes (subject to a separate post). Chaired by Alexandre Rudoni (Allen & Overy), the panellists for the session were Alexander Benesch (Nintendo), Andrea Dufaure (Allen & Overy), Willy Duhen (Activision Blizzard), Andreas Lober (Beiten Burkhardt),Paul Gardner (Wiggin) and Andrea Rizzi (Osborne Clarke).
Technical Protective Measures (TPMs)
Speaking from his first hand experience in enforcing copyright and TPMs, Alexander Benesch gave a presentation which explained the current state of the law in respect of TPMs by reference to the leading CJEU case of Nintendo v PC Box (C-355/12) and the various later national decisions that applied the CJEU’s decision. He explained that TPMs are a set of technical measures in place to protect the IPRs of rights holders and may include measures such as scrambling signals and preventing access control to the content from the console. TPMs are recognised under the Copyright Directive as a legitimate preventative measure against piracy.
The Nintendo v PC Box case provided guidance in relation to what constitutes TPMs and whether they apply to video games (in particular, where a combination of software- and hardware-based measures have been implemented) . The key findings of the case were that: (i) video games are considered ‘complex’ works that are protected by more than just copyright in respect of software and therefore fall under the Copyright Directive; and (ii) two questions were to be asked in relation to whether there was infringement by the circumvention of a TPM – (a) whether the TPM is proportional, i.e. are there any other TPM systems that might be less interfering with non-infringing activities of third parties whilst offering comparable protection against infringement?; and (b) what is the predominant purpose of the device used to circumvent the TPM? 
The various national decisions which followed this CJEU decision in Italy, German and Spain reached the same conclusion that Article 6 of the Copyright Directive is applied to the factual matrix. In this case it was established that the predominant use of the circumvention device by PC-Box was for piracy and TPMs implemented by Nintendo was proportional.

Andrea Dufaure added that the French Court of Appeal had come to more or less the same conclusion before the C-355/12 CJEU decision in September 2011. It ruled that video games were complex works and that the copyright provisions would apply. She noted that had the case was put in front of the French Courts after the C-355/12 decision, it would still likely have been decided in the same manner.

GDPR
Willy Duhen from Activision Blizzard’s legal and privacy team started off by commenting that it is a miracle that this regulation has passed given the amount of lobbying around it. He noted that it will be in force in a couple of months’ time and wryly observed that this has led to the sudden appearance of many “experts” in data protection. He went on to comment on few aspects of the GDPR.
GDPR grants consumers more rights over their personal data held by third parties. It allows the consumer to find out what their data is used for and provides the right for the data to be deleted. As a result, businesses are burdened with substantially more onerous obligations when dealing with personal data. GDPR applies to those companies based in the EEA but also covers the companies which target consumers in the EEA – accordingly GDPR is a particular compliance issue for US and other ex-EEA based companies that have lower national standards in relation to the handling of personal information. Not complying with GDPR could mean a substantial amount of penalty up to 4 % of the business’s global turnover – a significant increase in the potential penalty compared to the previous regime and serious concern for companies. To find out more about GDPR see previous posts here.   
Willy focused on the application of GDPR to online gaming businesses and how IP addresses could be considered ‘personal data’ under the GDPR. He questioned whether the IP addresses were really personal data given that IP addresses can be shared between multiple co-habitants and may not necessarily provide information of a specific individual. Similarly, the unique tag identifiers (central to the online gaming networks such as Sony’s PS Network or Apple’s Game Centre) could also be considered as personal data despite the company only having limited information on the consumer such as their User ID. Willy explained that this is a very strict interpretation of the Regulation and one that poses identity verification problems for companies facing requests to deal with that information by a person claiming to be its owner, but in the absence of other identifying information.
Willy then moved to the issue of child consent to the collection and processing of their personal data. He noted that many video games are played by children but that children are not dealt with in the current regulations. Art 8 of GDPR states that if a child is under age of 16 then it requires parental consent but that this default age for lawful consent may be lowered by individual member states down to minimum of 13. Willy said currently the UK ICO is considering setting the age for consent at 13 whereas France has chosen 15. He said such discrepancies may cause some logistical issues for companies and discussed the limitations of a number of methods for obtaining consent from children, such as requiring the input of date of birth, credit card information or a confirmation call by the child’s parents."

Around the IP Blogs!

Another IP-busy week has gone by, giving plenty of inspiration to the IPKat! Let’s peep at what other IP-friendly blogs have said.


Trade Marks
This can’t be comfortable
Solo IP invites its readers to provide feedback regarding Amazon’s new Brand Registry for its sellers. Several questions have been raised: Are graphical marks eligible for registration? What entitlements will the Registry confer on the registered sellers? What about fair use of the trade mark? These questions are quite open, because only Amazon seems to know the answers…

Patents
Patentlyo has more on procedural patent law issues. It offers a counter to Professor Saurabh Vishnubhakat’s recent  opinion about the scope and application of the right of U.S. Patent and Trademark Office (USPTO) to intervene in an appeal before the Patent Trial and Appeal Board (PTAB) pursuant to 35 U.S.C. § 143. The authors argue that the precedent strongly supports the USPTO’s ability to intervene in most, if not all, appeals from the PTAB.

This Kat had enough of Alice in Wonderland
IP Finance reports on a couple of interesting software-related cases, Berkheimer v. HP, and  Aatrix Software v. Green Shades Software, where the U.S. Court of Appeals for the Federal Circuit appears to depart from the U.S. Supreme Court’s Alice v. CLS Bank International decision, which made subject matter eligibility a primary inquiry with respect to patentability. The upshot of these two decisions is that an alleged infringer will likely have a more difficult time in seeking to dismiss an action at an early stage on the ground that there is no eligible subject matter, potentially giving the patentee greater leverage over the opposing party.

Kluwer Patent Blog reports that the final piece of legislation in the process of ratification of the UPCA in the UK (i.e. The Unified Patent Court (Immunities and Privileges) Order) by the Privy Council) has been formally passed, and it is available here. As a next step, the UK Intellectual Property Office will need to collect together the relevant evidence that all legislative steps have been taken to enable ratification, and provide this to the Foreign and Commonwealth Office, which will then check the evidence, prepare the formal instrument, have it signed by the Minister (Boris Johnson MP) and finally lodge it in Brussels. If given priority, this process would normally take a few weeks.

Copyright
Kluwer Copyright Blog reflects on the CJEU referral in a dispute between German online internet news portal “Spiegel Online” and Volker Beck, a member of the German Bundestag on behalf of the Green Party.  The Bundesgerichtshof has asked the CJEU for a preliminary ruling on the balance between copyright exceptions and the fundamental freedoms of information and the media, as well as the exceptions for quotation and reporting of current events in the light of Article 5(3)(d) of the InfoSoc Directive.

Trade Secrets
Trust in IP continues its review (earlier post may be found here) of the rules on trade secrets, software and reverse engineering in light of the Trade Secrets Directive as well as the Software Directive.  The focus of the present piece is on the implementation of the provision on reverse engineering in Finnish legislation and describes an interesting relationship between trade secrets and copyright.

Image credits: Jackie and Ekaterina Smyshnova

Wednesday, 21 February 2018

Never Too Late: if you missed the IPKat last week!

If you didn't have time last week read the IPKat, not to worry: the 183rd edition of Never Too Late is out!!

Patents


In a two-part report, the AmeriKat exfoliates the decision in L'Oreal v RN Ventures [2018] EWHC 173, in which Mr Justice Carr bristles with warnings on Actavis v Lilly claim interpretation, equivalents and prosecution history (Part I and Part II)

Can Wenzhou and cigarette lighters tell us something about why there are IP rights? Kat friend Dr Aloys Hüttermann uses the example of the system created by the Wenzhou cigarette lighters association to explain the essence of patent - and IP - protection.

Following the trend: IPKat and IPCat
Trade marks

Surveying the scene - passing off & surveys ... & the colour purple. GuestKat Rosie talks about the ins and outs and the ups and downs of the survey conducted about the distinctiveness of the Seretide combination asthma inhalers.

Guccy and Deisel - you wouldn’t think so but they are all legit as Copying the counterfeits is apparently a thing. GuestKat Rosie behind the typewriter.


2017 Canadian trademark cases: progressive and regressive through the pen of Kat friend , and inductee into the IP Hall of Fame, Dan Bereskin.


Copyright

Kat Eleonora reports on two recent US decisions on the interplay between linking and copyright protection in Linking under US copyright law: green light to its inclusion in the scope of public display right comes from New York.

From erasing text to erasing problems, the hit-dispute of the Italian Summer 2017 came to an end. In Isgrò and Waters, problem erased, InternKat Cecilia makes a quick recap of the issue.

MarioKat ready for the gaming convention
Data Protection

Guest Kat Nedim tells us that the need to access personal data outweighs personal integrity in Sweden as Stockholm Administrative Court orders ISP to provide customers’ details to Swedish police

(No) privacy by default? German court finds Facebook in breach of data protection law as, when creating a profile, certain settings are activated by default and are in breach of German Data Protection Law. GuestKat Mirko reports.

Miscellaneous

Kat friends Daniel Lim, Alex Woolgar and Shohta Ueno attended the conference More than Just a Game and kindly reported on it for us. In the first instalment of the report More than Just a Game (Report 1): eSports they talk about the eSports industry and its IP implications.

In Blockchain my IP GuestKat Frantzeska explains what blockchain means and what blockchains can do for IP, especially for patents and copyright-protected work.

TechieKat Verónica has compiled a transatlantic compilation on Strategies for Combating Counterfeiting and Piracy, with The USA Perspective and The EU Perspective.

Events

The AmeriKat reminded us of the AIPPI UK Upcoming Event: Professor Bently to debate how far the "zone of exclusivity" of registered IP rights goes. The event will be held on 27 February: don’t miss out on it!




PREVIOUSLY ON NEVER TOO LATE

Never Too Late 182 [week ending 11 February]  BREAKING: in his new Opinion in Louboutin AG Szpunar (confirms and) advises CJEU to rule that a trade mark combining colour and shape may be refused or declared invalid |  The new AG Opinion in Louboutin: is it really bad news for the famous red sole? | Yet another horse – The Polo/Lauren Company L.P. v Royal County of Berkshire Polo Club Ltd| When passing off is enough to successfully oppose a trade mark |  BREAKING: Sky's the limit for CJEU references in Sky v SkyKick trade mark battle |  Influencers and undisclosed sponsored activities: where do we stand? |  Brand Finance 500 … What’s the value of music IP? |  The Céline affair: what moral rights can and can’t do…even in France |  Can Nativity scene characters attract copyright protection under Italian law? | Blackcurrant, public interest and the first ever compulsory licensing application at the Community Plant Variety Office? |  Costs of intermediary injunctions: Sir Richard Arnold's review of a recent publication | Alternative ways for financing and incentivizing research: a Nobel laureate and his colleagues state their case |  Event Report: IP inclusive - Inappropriate Behaviour

Never Too Late 181 [week ending 4 February] Book review: ‘Copyright and Information Privacy: Conflicting Rights in Balance’ | A legislative initiative that merits attention: Mandatory mediation in Greece in trademark, patent and industrial designs infringement disputes | Austria refers Facebook ‘Hate-Speech’ case to the CJEU | Protection of traditional knowledge and cultural expressions: the case of 'Maasai IP' | A spectrum of specificity - Article 3(a) of SPC Regulation | Can ‘public morals’ prevent the use of religious symbols and motifs in advertising? No, says the European Court of Human Rights | BMG v Cox - when does an ISP lose its safe harbour protection? | Embrace my beloved frog, as a guardian.

Never Too Late 180 [week ending 28 January] EPO revokes CRISPR patent – a clear cut case of invalid priority?|Blocking injunctions and their costs: some details of the forthcoming Supreme Court round of Cartier | When does copyright protection arise in works of applied art and industrial models and designs? A new CJEU reference | Trial sequence in SEP litigation - time for a rejig? | Bad faith confirmed for ALEXANDER trade mark application? | Is a circular logo for coffee confusingly similar to the Starbucks’ one? Yes, says the General Court | Fine-tuning the SPC Regulation; a never-ending story?

Never Too Late 179 [week ending 21 January] Scents and trade marks - The EU reform of olfactory marks and advances in odour recognition techniques| French government claims back « France.com » (as trade mark and domain name) | Swedish Patents and Market Court of Appeal requests CJEU to clarify notion of ‘shape, or another characteristic, which gives substantial value to the goods’| New presidency of the Council of the European Union ... new position on the EU copyright reform? | Image rights and the unauthorized use of one's own portrait on cigarette packs| Presentation of information: Is the EPO stretching the line for patentable subject-matter, again? | Prosecution history - as relevant as any inventor evidence?".

Tuesday, 20 February 2018

Around the IP Blogs!

It is time for the IPKat's tour of IP around the web! [Week 5-11 February]

Let's first focus on copyright. Can You Copyright a Pose? In the past, this question has already been dealt with in case-law but Michael Risch (Written Description Blog) analyses a case where the question is not only on the pose itself but the possibility of it occurring in nature. As Madonna would say, “Strike a pose”. 

The French Constitutional Court Rejects Challenge to Image Right in National Monuments, reports the FrenchKat for The 1709 Blog. The provisions of the French Heritage Code were challenged by Wikimedia France and La Quadrature du Net, arguing that those rights should be time-limited. The Constitutional Court did not quite agree.

Make-up: a copyright affair – Argentina says YES! Body: a canvas or not a canvas? An Argentinian Appellate court decided that makeup art should be protected as much as any painting. Reporting on the case is Patricia Covarrubia, IP Tango.

Kat make-up
Sabesh Asokan recently published a JIPLP article on the subject of Demystifying the ‘Honest’ Infringer: Reorienting Our Approach to Online Copyright Infringement using Behavioural Economics, proposing a new approach to Online Infringement.

Now onto patents, The Blog of European Patent Law reports on the RPCR Reform Project, highlighting the main points of the reform.

In a post in IP Finance, Mike Mireles discusses the interesting idea several economists put forward in the paper Who Becomes an Inventor in America? The Importance of Exposure to Innovation in Exposing Children to Innovation More Likely to Lead to Innovation than Financial Incentives? 

Philipp Rastemborski and Tobias Wuttke of EPLAW Patent Blog discuss the Judgment of the Federal Supreme Court, Germany, 24 October 2017, docket no. X ZR 55/16, ‘Drum Unit’, concerning exhaustion of patent rights and the limits of permissible use for drums of used toner cartridges. 
Not the oldest registered trade mark ever but certainly intriguing

And finally, a look on trade marks. Peter Schramm, Kluwer Trademark Blog, reports on the unsurprising outcome of a shape mark dispute in: Switzerland: A drinking bottle is a banal perfume bottle – Really?


Do you know which was the oldest trade mark registered in the world? And how trade mark protection evolved from antiquity to the present times? In an informative piece, Mikołaj Lech of the otherwise Polish language Prawna ochrona znaków towarowych, takes us on a time trip in The oldest registered trademarks in the world.

Monday, 19 February 2018

Has Europe turned into the Eastern District of Texas? New study shows NPE activity has risen 19% year-on-year

Are the rain clouds of US NPE litigation gathering
over Europe and will Brussels act?  
Does Europe have a patent troll problem? It depends on who you ask and if you think trolls, non-practicing entities (NPEs) or patent assertion entities (PAEs), or whatever you call them and however you define them, are a "problem".  No matter what side of the fence you happen to be on, there has not been any empirical evidence to prove or disprove that notion.  Anecdotal evidence has mostly been relied on, but unless you are running a political campaign in 2016, anecdotal evidence can only take you so far. That is about to change...

The AmeriKat is in Brussels this evening for the launch of a new study by Darts-IP at the European Parliament which investigates and analyzes the prevalence and trends of patent litigation by NPEs (the term deployed by the study, see below) in courts across Europe and at the European Patent Office (EPO).

Ever since the proposals about the Unified Patent Court (UPC) really started to solidify in 2012, the potential inclination of some European patent judges in some jurisdictions to grant automatic injunctions was flagged as concern. Without the ability to rely on the safeguard of eBay v MercExchange (i.e, no rule for an automatic injunction for patent infringement), there was worry from certain sectors that the granting of automatic permanent injunctions in the UPC would create a playground for NPEs. The harm being that, with the grant of an automatic injunction, the NPE would have considerable leverage to extract extremely high damages and licence fee rates – despite the NPE not even having a market for which an injunction would have been necessary to protect. With the US patent litigation environment becoming more hostile to NPEs, the concern expanded from just UPC-centric issues to the current landscape of classical patent litigation in national courts across Europe. There was thus a call to re-focus and re-emphasize the principle of proportionality and the specific circumstances of a case when tailoring remedies in patent cases, as set out in Recital 7 and Article 3 of the IP Enforcement Directive.  This was to try and push Europe towards a more eBay environment when granting injunctions.  The European Commission's IP Package published on 29 November 2017 reaffirmed the proportionality principles, but groups like IP2Innovate (see below) wanted to see more development, such as ensuring that the proportionality principle and other safeguards applied to all patents, not just standard essential patents (SEPs).

So are the concerns about Europe becoming the new patent troll playground rooted in reality? It seems so…and there seems to be an American invasion.

Annual growth rate of NPE patent infringement in Europe
Pooling data from their database of 3 million cases and focusing on actions commenced between 1 January 2007 and 31 December 2017, the study (link here) has found as follows:
  • 19% - average annual growth rate of NPE patent infringement in Europe. In 2012, there were 75 NPE actions. In 2016, there were 169 actions. 2017 is estimated to break the record for NPE related cases at 173 (although data is not complete). 
  • 60% - the proportion of cases which originate from NPE entities based in the US since 2013. 
  • According to the report on page 6, the top 5 most active entities are Intellectual Ventures (19.18%), Marathon Patent Group (14.29%), Acacia Research Group (10.20%), Unwired Planet (8.98%) and FORM Holdings (8.16%). 
  • The top 5 most sued companies by NPEs are Vodafone (7.8%), ZTE (7.5%), Huawei (6.9%), Deutsche Telekom (6.5%) and HTC (6.5%). 
  • 80% - the proportion of NPE litigation faced by the top 4 most sued companies in Europe (Vodafone, ZTE, Huawei and Deutsche Telekom), as compared to their non-NPE European patent litigation (see page 7).
  • 23% - the proportion of SMEs who are sued by NPEs. Most companies (77%) sued by NPEs in Europe are large enterprises. 
  • The steeper increase of NPE litigation in the US corresponds to recent legal changes in the US. 
  • Germany - the hotbed of NPE litigation which accounts for 20% of their patent actions. Italy takes second place with 6%, the Netherlands at 5% and the UK and France at 4% each. Germany appears to be favored because of the bifurcated system with faster infringement courts than validity courts and a relatively high infringement win-rate for NPE plaintiffs. 
  • NPEs litigating in Europe comes at a risk. An NPE’s patents are more often successfully invalidated than patents asserted or owned by non-NPEs. 
  • 52% - the likelihood of an NPE in Germany and the UK winning on infringement. The rest of the EU has an infringement win rate of 23% (although there is much less NPE litigation in those jurisdictions, so the data pool is not there to be terribly meaningful). Weirdly, for non-NPE litigation the infringement win rate in Germany is 66%, but in the UK it is less than NPE litigation at 41%. However, validity tells a different story... 
  • 60-65% - the validity loss rate for NPEs in Germany and the UK, compared to 44-45% for non-NPE litigation. 
However, the data is imperfect. This is only data held by Darts-IP and in many countries information about issued cases which settle early is impossible to maintain. Data and scrutiny of data is important. The lack of fulsome data from EU Member States' courts is important not just for this study but for analysis of all substantive and procedural IP subsistence, validity, protection and enforcement. As it is in the business of sharing IP decisions from across the world, the IPKat has been banging this drum for near 15 years now - the EU must make it a priority to ensure that all Member States court information and decisions relating to IP are made easily accessible by the public (subject to confidentiality restrictions of course).  It is noted that this issue was/is being looked at by the Commission as part of their IP Enforcement consultation.

MEP Delvaux (Luxembourg)
Swedish MEP, Max Andersson stated that the study was “just the tip of the iceberg”.  Echoing the IPKat's sentiments he called for more “transparency and more complete data” which he says are needed to find solutions to what he called “the problem of abusive patent litigation”.

MEP Mady Delvaux from Luxembourg was concerned that artificial intelligence (AI), the internet of things (IoT) and the digital economy was being put at risk:
“In order to prevent abuses, we need to make sure that Europe’s patent legal system operates effectively for both litigants and society and supports digital innovation in Europe.”
The AmeriKat expects that there will be comments about the use of the term NPE and how a company is classified as an NPE. The use of the word “troll” is emotive and often unhelpful, so the terms NPE and PAE are used instead. However, classifying whether a company is a NPE and/or a PAE is increasingly difficult as companies transform the ways in which they commercialize their R&D and IP portfolios (i.e. selling products, withdrawing from markets, licensing their IP or a mixture).  Darts-IP considers NPEs to be “independent organizations which own or benefit from patent rights but do not sell or manufacture goods or services associated with them (i.e. non-operating companies) and which have an active (offensive) assertion or litigation role as plaintiffs towards the enforcement of their patent rights).” Darts-IP states that the focus is on “assertion-focused NPEs” and that the definition takes into account the flexible nature of a company’s business.  Still, the assessment is always qualitative to some respect.

IP2Innovate, a group of 65 companies (including corporate members that include Google, Spotify and Intel) that create innovative products in Europe, issued this press release in response to the study. Kevin Prey, Chairman, stated that the study confirmed what they had all expected about the rise of PAE activity in Europe. He called on the European Commission and Member States to
“to move quickly to provide investors and innovators with greater protections, particularly in terms of increased transparency and litigation data. The patent system must support, not hinder, innovation and growth.”
However, the study does not examine the impact of the rise of NPEs/PAEs in Europe, just the frequency of litigation, in which courts and the chances of an infringement and validity success. On a case-by-case basis, patent litigators may well be able to see the commercial impact of NPE litigation, but there needs to be more exploration of and evidence on the economic impact of such activity on Europe’s innovation economy. The longer countries and the legislators wait to act of course the more difficult it will be to change the landscape in the future. But pending that next stage of analysis, it seems clear based on the evidence so far that US NPE patent litigation has crossed the Atlantic to our European shores. Whether history repeats itself is up to the parties, legislators and judges…

The full Darts-IP report can be found here.

Here we go again? Strong brands as a barrier to entry, this time from "The Economist"


It was just one line in a full- page, two-column long article that appeared in the January 6th issue of The Economist. Entitled “Schumpeter|The year of the incumbents: In 2018 conventional firms will give Silicon Valley a run for its money”, the piece argues that long-time corporate worthies, such as IBM, General Motors and Walmart, in adopting e-commerce, AI, and big data, are placed to take advantage of their incumbent position in the marketplace to give Silicon Valley upstarts a commercial run for their money. One such advantage is that the incumbents “own 80% of the commercial world’s data", all the better to exploit AI and big data. And then there are—brands. Yes- brands. In the words of the article, “[e]stablished giants also enjoy barriers to entry, such as strong brands …" [Merpel notes, but without any further explanation] This Kat mused: “Can it be”? With apologies to Michael J. Fox, are we about to experience a “back to the future” moment in our understanding of brands and trademarks?

In the 1930’s and 1940’s, particularly in the U.S., it was popular within economic circles to view trademarks in anti-competitive terms. As Jerre Swann, here, quoting Daniel McClure, has well summarized—
“[b]y successfully differentiating a standardized product from competitors’ products and achieving brand loyalty through advertising, a producer could insulate his market share from price competition … [and] create high barriers to entry.”
But this view of trademarks and brands as an anti-competitive weapon gave way in the 1970’s and 1980’s to the so-called Chicago School approach, which argued that trademarks were in a fact pro-competitive means to lower consumer search costs. A “stronger brand” was more likely to convey valuable consumer information, thereby providing a positive competitive advantage, which was reflected in being able to extract a premium price.

In this Kat's view, a watershed moment that embodied this change in approach took place in the late 1970’s, when the U.S. Federal Trade Commission (FTC), by majority vote, found that the Borden company had maintained monopoly power in the processed lemon juice industry (it products having been sold since the 1930's under the “Real Lemon” trademark), but declined to issue a compulsory license requiring Borden to license its Real Lemon trademark to competitors, stating that--
"In sum, given the competitive climate in the processed lemon juice market, we are not persuaded that a restriction on trademark rights is needed to curb the unlawfully maintained monopoly. Prohibition of abuse of the trademark that led to this case should be sufficient to encourage the entry necessary to result in a competitive market". [Merpel notes that the distinction between abuse and monopoly exploitation is worthy of a separate blogpost.]
In so doing, the FTC overruled the administrative law judge, who had ruled that other manufacturers of the lemon juice product be allowed to sell their competing products under the "Real Lemon" mark for a period of 10 years. Since then, the notion of a strong brand, on its own, as a barrier to entry, seems to have faded into the background, at least until recently. But is it so? Can a strong brand per se really function as an anti-competitive barrier to entry?

This Kat's instincts tell him that the question is more appropriately raised in connection with Silicon Valley-like companies. After all, Amazon would presumably like to be the dominant seller of a major chunk of goods and services, all under its house brand. Under such circumstances, might it not be a reasonable claim that the brand itself serves as a formidable barrier to entry? If the answer is "yes", however, the reason is fundamentally about how to treat network effects, which lies at the heart of the market power enjoyed by these companies. Sure, the strong brands identified with these companies reinforce the force of network effects, but the solution, if there are problems to competition, rest with finding a way to deal with network effects. A strong, even a super strong brand, is the symptom, not the cause, of potential anti-competitive conduct by the brand holder. In any event, traditional incumbents, such as IBM, can hardly be said to be the prime beneficiaries of network effects.

Indeed, this Kat has been exploring just how far a strong brand can take a brand holder, not from the vantage of extracting extra-competitive profits, which is detrimental to social welfare, but with respect to the extent that brands can facilitate innovation. His preliminary thoughts (which will be published later this spring) are that only strong brands might have the market ability to do so, but even there, only under uncertain circumstances. If so, there is an irony here—far from concerns over brands as a barrier to entry, strong brands may not be strong enough to do the job that society would like them to do, namely facilitate innovative activity.

By Neil Wilkof

Photo on upper right by Sn1per and is made available under the Creative Commons CCO 1.0 Universal Public Domain Dedication

Photo on lower left by Andre Karwath aka Aka and is licensed under the Creative Commons Attribution-Share Alike 2.5 Generic (https://creativecommons.org/licenses/by-sa/2.5/deed.en) license

BREAKING: UK IPO launches technical consultation on draft regulations transposing the EU Trade Secrets Directive

The AmeriKat is focused on answering the
UK IPO's trade secrets consultation
by 16 March 2018
Today, the UK Intellectual Property Office has launched a technical consultation on the EU Trade Secrets Directive and the draft regulations to transpose the EUTSD into UK law.  The UK government is seeking stakeholders' views on the approach taken in the regulations.  The website of the consultation can be found here and the consultation document here.  The consultation closes on 16 March 2018 - so less than a month to go!

The UK IPO describes the current status of the law as follows:
"The UK has a robust and well established legal framework that allows for the effective enforcement of trade secrets. Trade secrets are governed in the most part by the common law (case law) of breach of confidence and by contract.  
There is no statutory definition of what constitutes a trade secret in UK law. However, case law has ensured principles of law have been developed that apply in this area.  
As the UK already has a well-developed system of legal protection for trade secrets, the EU Directive does not require substantial changes to be made to UK law. It is our view that the majority of the Directive’s substantive provisions already exist in UK law, either in common law, statute or by means of court rules (for example, the Civil Procedure Rules (CPR), which govern civil proceedings in the High Court and county courts in England and Wales).  
However, we have identified a number of changes that we believe need to be made to ensure that the UK, in each of its jurisdictions, complies with the Directive in a transparent manner. In the main these concern limitation or prescriptive periods, procedural issues for the courts when hearing cases on breach of confidence in relation to trade secrets, and certain remedies."
At Annex A of the consultation document are the draft Regulations which set out the Government's proposals for implementing the EUTSD.  The proposals are summarized as follows:
"The proposed Regulations provide for a statutory definition of the term ‘trade secret’ and set out rules concerning time periods for bringing proceedings. The Regulations include provisions concerning the preservation of confidentiality of trade secrets during and after proceedings have concluded, as well as measures relating to interim orders for delivery up. They also set out time limits within which a claim needs to be brought after an interim order for delivery up has been made. The proposed Regulations include provisions relating to measures which may be imposed on an infringer and set out the factors that need to be considered. The Regulations also provide for compensation to be paid under certain conditions, set out the factors that need to be taken into account when awarding damages, and include measures concerning the publication of information relating to judicial decisions in legal proceedings for breach of confidence."
The AmeriKat is pushed for time just now, but there are several interesting issues that will be subject to a follow up report in the next day.  

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