From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Friday, 2 December 2016

Next week - UK Supreme Court hears the Brexit case

Next week, there is a once-in-a-lifetime opportunity to become a UK constitutional law expert.  The Supreme Court (which truly is a UK court, not an England-and-Wales court) will hear the appeal on the various legal challenges related to the Brexit process.  This is not of course an intellectual property matter, but please show forbearance as this Kat is enormously excited about it. It is probably the most important legal case in his lifetime, and could well be the case of the century. Many readers will doubtless already be aware of next week's hearing, but others may not be familiar with the arrangements.

As a brief background, the case is not about whether or not the UK will leave the EU.  Rather, it is about who, within the UK constitutional framework, has the power to take the decision to leave the EU referred to in Article 50(1) of the Treaty on European Union, and make the notification under Article 50(2).  Is it the Prime Minister acting alone, or is an Act of Parliament (and possibly the consent of the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly) required?  The case therefore goes right to the heart of the constitutional settlement in the UK, including the rights of the devolved legislatures of Scotland, Wales and Northern Ireland, and the respective powers of the Westminster Parliament on the one hand and the Government, who have executive powers independent of Parliament under what is termed the Royal (or Crown) Prerogative, on the other.

The historic hearing is set for four days from 5 to 8 December and includes as advocates some of the finest legal minds in the country. For the first time, the Supreme Court will sit in its full current composition of 11 judges (handily avoiding both the possibility of a tied decision, and any suspicion that a different composition would have reached a different conclusion).

There is unprecedented and most welcome transparency about the case.  Not only will the case be streamed live from the Supreme Court website (so, unless the technology breaks down, you will be able to view from the comfort of your office, your sofa, or a beach in the Seychelles), but the submissions of the parties have been made available online as well.  These, together with a timetable for the hearing (illustrated below), can all be found on the Supreme Court website.  So you can spend your weekend reading the written arguments, and procrastinate once again on your Christmas shopping, should you wish.



Technically, the case is a little complex, as it involves an appeal of the Brexit case that was heard in London by the Divisional Court of the Queen's bench, which decided against the Government (reported by this Kat here), a referral from Northern Ireland in respect of the case heard in Belfast that decided the points in the Government's favour, various interveners and interested parties either from the original cases, or who were given permission by the Supreme Court to intervene, including both the Scottish and the Welsh Governments.  The hearing will be crammed with QCs from across the country, and the complexity of the background of the cases and the large number of parties result in a 4-day marathon.

This Kat thinks it will be fun, and hopes he is not proved wrong.  He is far too cautious to predict the outcome, which is expected to be known in January.

The proposed new VAT rules on e-publications: do they have any implications for copyright and digital exhaustion?

Trying to understand
newly proposed VAT rules
Can VAT rules have any implications for ... copyright?

Yesterday - as part of its Digital Single Market Strategy - the EU Commission unveiled proposals for new tax rules with the objective of supporting e-commerce and online businesses in the EU.

Among the measures proposed, there is one that may be of interest also from a copyright perspective. 


New VAT rules for e-publications


The Commission proposed in fact to apply the same VAT rate to e-publications, eg e-books and online newspapers, as for their printed equivalents, thus removing provisions that excluded e-publications from the favourable tax treatment allowed for traditional printed publications.


As explained in the relevant proposal, according to the VAT Directive electronically supplied services including electronically supplied publications have to be taxed at the standard VAT rate (minimum 15%). On the other hand, Member States have the option to tax publications on any means of physical support at a reduced VAT rate (minimum 5%) and some Member States were granted the possibility to continue to apply VAT rates lower than the current minimum of 5% (super-reduced rates) including exemptions with the deductibility of the VAT paid at the preceding stage (so called zero rates) to certain printed publications.


Readers may remember that, not long time ago, in the context of actions [European Commission v France, C-479/13, and European Commission v Luxembourg, C-502/13] that the EU Commission had brought against France and Luxembourg over their VAT regime, the Court of Justice of the Union (CJEU) ruled [here  and here] that, unlike analogue publications, Member States [like France and Luxembourg] cannot apply a reduced VAT rate to e-books. The court held in fact that, for the purpose of Article 98(2) of the VAT Directive, an e-book is not a good, but rather an "electronically supplied service" within the meaning of the second subparagraph of Article 98(2) of that directive.

The result [see p 2] of all this has been "a markedly less favourable VAT treatment of e-publications in most Member States": a situation that the new VAT regime is meant to remedy. 

The proposed amendment of Article 98 of the VAT Directive does in fact exclude e-publications from the treatment reserved to "electronically supplied services", although - it would seem - not from their general classification as "electronically supplied services".

What are the copyright implications of all this? Well, it would appear - potentially - that analogue and electronic copies of protected works should be subject - if not to the same classification - at least to the same treatment. 

But in what sense?

VAT-induced exhaustion
Digital exhaustion under the InfoSoc Directive

The scenario that immediately comes to mind - being also unsolved at the level of CJEU jurisprudence (at least for subject-matter other than computer programs) - is that of digital exhaustion.


Readers will promptly recall that in its shocking 2012 decision in UsedSoft, C-128/11 [Katposts here] the CJEU held that Article 4(2) of the Software Directive envisages digital exhaustion in relation to the first sale of digital copies of computer programs.

Following that decision, it has remained uncertain whether the same conclusions can be also extended to works falling under the InfoSoc Directive.

In its 2015 decision in Allposters, C-419/13 [Katposts here] the CJEU appeared to suggest that exhaustion under Article 4(2) of the InfoSoc Directive only applies to the tangible support (corpus mechanicum) of a work, and would not extend to the work incorporated therein (corpus mysticum). Being devoid of any tangible support, this might mean that the right of distribution in a digital copy would never be exhausted. At the time of the Allposters decision I wrote an article [here for a pre-edited version] in which I also referred to the CJEU decision in European Commission v France to come indeed to the conclusion that, albeit rooted within a very specific (analogue) background, in that judgment the CJEU appeared to rule out any possibility of having digital exhaustion under the InfoSoc Directive.

The AG Opinion in VOB

After all I might have been wrong, in the sense that this conclusion might have been premature. 

Although in the recent VOB case [C-174/15 - a reference for a preliminary ruling asking if EU law allows libraries to e-lend works in their collections] both Advocate General (AG) Szpunar in his Opinion [here] and the CJEU in its judgment [here] ruled out that addressing the issue of digital exhaustion under the InfoSoc Directive would be relevant to addressing the questions referred by the Dutch court, that case has something to tell about digital exhaustion under the InfoSoc Directive.

Of particular interest is the AG Opinion.

First, the AG dismissed the idea that Allposters could call "into question [or limit] in any way the conclusions which follow from the Usedsoft judgment." [para 54].

No differences in digital
and analogue publications either
Secondly, the AG rejected the relevance of argument advanced by the French Government [and, yes, also myself in the article mentioned above] that "the differential treatment, for value added tax purposes, of books in a physical medium and books distributed by electronic data transmission ... demonstrates that those two book formats are not equivalent." [para 59] 

The AG noted not only that such approach would be possibly against the principle of tax neutrality, but also recalled that "the Commission has recently published an action plan on VAT [of which yesterday's package is a follow-up] in which it specifically contemplates the alignment of the VAT rate applicable to digital books and newspapers with that applicable to printed books. That approach confirms the stance taken by the Commission, also in the present case, that electronic books and printed books are in substance equivalent." [para 62, emphasis added]

Conclusion

An initiative on VAT rules for e-publications does not, of course, have direct copyright relevance. Nonetheless, the package adopted yesterday is another step into the direction of suggesting the analogue and electronic copies of works could (or, rather, should?) be subject to the same treatment. Such principle of 'equal' treatment might not be limited to the field of VAT rules.

In any case and having said so, one should also recall that the package proposed by the Commission does not remove e-publications from their qualification as electronically supplied services, but rather sets an exception from their treatment as such.

In all this, the uncertainties surrounding digital exhaustion under the InfoSoc Directive remain, although it is not excluded that - when the opportunity arises - the new VAT rules might be invoked by those who advocate the existence of this principle beyond the realm of the Software Directive, ie in the InfoSoc Directive.

Negative decision for anti-HIV therapy patent: Merck Sharpe & Dohme v Shionogi Co Limited

Last week saw another Michaelmas decision from Mr Justice Arnold in the Patents Court in the form of Merck Sharpe and Dohme Limited v Shionogi & Co Limited [2016] EWHC 2989 (Pat).  Alongside the usual analysis of validity and infringement, the case has the attraction of providing guidance on how experts should be cross examined [and more importantly, how they should not be cross-examined, says Merpel]. This follows on from previous guidance on the instruction of experts in Medimmune v Novartis

The IPKat pondering expert XX
Background

The dispute concerned Shionogi's European Patent (UK) No 1 422 218.  Shionogi counterclaimed infringement of the patent by Merck's product raltegravir, which is marketed under the trade mark Isentress.  Raltegravir is an anti-HIV therapy, which treats HIV-1 (the most common type).  It is a 'first in class' drug, being the first antiretroviral integrase inhibitor approved by the US FDA in 2007.  Integrase is an enzyme found in retroviruses.  It is essential for integration of the viral DNA into the host cell DNA.  Integrase inhibitors target the viral integrase and interfere with integration of HIV DNA into the DNA of the infected cell. 

The patent was opposed by Merck at the EPO, but maintained in an amended form.  That decision is under appeal, and the central amendment has therefore been suspended.  In the meantime, Shionogi made an unconditional application to amend the UK designation of the patent in accordance with the claims maintained at the EPO.  It also made two conditional applications to the Patents Court to amend. There are parallel proceedings in Germany and the Netherlands which are ongoing. 
Skilled team

It was common ground that the skilled team would consist of persons with expertise in three areas: medicinal chemistry, biochemistry, and virology.  There was however, a disagreement as to whether the skilled team would have experience in the field of integrase inhibition.  Arnold J concluded that at the priority date (Aug 2002), real research teams in the field to which the patent is directed would have acquired experience with integrase inhibition. 

Cross-examination of expert witnesses in patent cases

At paras 88 - 93 of the judgment, Arnold J took the opportunity to extend his previous guidance concerning the instruction of experts in Medimmune v Novartis [2011] EWHC 1169 (Pat) (see para 99-114) into the realm of cross-examination.

"In my experience too much time is spent by cross-examiners in patent cases on ad hominem attacks [i.e. attacks directed at the person rather than the position they are maintaining] that are unfair to the witness, unhelpful to the court and waste expensive time. It is, of course, both legitimate and helpful to explore such matters as the witness' qualifications and experience, and hence the extent to which the witness has relevant expertise and/or is representative of the skilled person; the basis upon which the witness considers that information was or was not common general knowledge (which may include whether the witness has correctly understood the concept); the witness' approach to issues such as obviousness (which may include whether the witness has fully appreciated the need to avoid hindsight and whether he or she has actually avoided hindsight); and so on. But cross-examiners must refrain from using the fact that the expert has not mentioned something in their report as a stick to beat the witness with unless the cross-examiner has real grounds for suggesting that this reflects on the witness' impartiality, competence or approach to the issues rather than upon the instructions they have been given. (If the witness has been wrongly instructed, that is, of course, a highly relevant matter, but it is a point for submissions rather than criticism of the witness.)

A particular difficulty which often arises in multiple expert cases is the distribution of responsibilities between the experts".... "This difficulty is exacerbated where there is an overlap between the expertises of the experts, as in the present case."...  "In such cases it may well be legitimate and helpful for the cross-examiner to explore the division of responsibility between the experts and the extent to which, collectively, they have approached matters in a manner which reflects the approach of the notional skilled team. What will rarely be legitimate or helpful is to criticise a witness for failing to deal with a point which he or she could have dealt with when it has been addressed by another expert, because this is unlikely to have been a decision made by the witnesses."

Counsel on both sides were criticised for 'unfair' cross-examine of the expert witnesses.

Markush formula in claim 1
Obviousness and insufficiency

The specification explained that the invention related to "an antiviral agent, especially, a compound having an a-hydroxy-a, ß unsaturated ketone as a partial structure and a pharmaceutical composition as an integrase inhibitor containing the same".  Claim 1 contained a Markush formula, and the subsidiary claims related to six-sub-classes of compounds.  The permissible substituents RA, RC, RD, Y and Z were defined in claim 1  (see pargaraphs 57-59 of the judgment for the full - and lengthy - details). Merck's apparently unchallenged expert evidence was that there was a staggeringly vast number of compounds covered by the Markush formula in claim 1 of the Patent - some 1039 compounds.  Perhaps as a consequence of that, and unusually for a patent case of this nature, disclosure on the validity issues appears to have been voluminous.  Both parties had given disclosure in the usual two year window falling either side of the priority date.  Data from a total of 104 compounds from Shionogi and 139 from Merck were disclosed.  Unsurprisingly, there was a sufficiency/obviousness squeeze. 

The Court concluded that at best, a tiny fraction of the class of claimed compounds were plausible (in addition to the small number of compounds for whom data is reported in the patent specification), but this plausibility derived from the skilled team's common general knowledge and not from the patent.  The scope of the monopoly claimed was not justified by the contribution to the art, and accordingly lacked an inventive step.

On insufficiency, later evidence suggested that formula 1 covered large groups of compounds that were unlikely to possess integrase inhibitory activity and be suitable for treating a viral disease.  In addition, the disclosure process had revealed that a significant proportion of the compounds for which there were experimental data either did not possess antiviral activity, or possessed antiviral activity but were unduly toxic. The final nail in the coffin was the fact that the patent presented the skilled team with a vast research project with a high degree of failure, but "claims the results if they happen to succeed, even if (as in the case of raltegravir) such success has nothing to do with the teaching in the patent."  Accordingly, it was not possible to perform the invention across the scope of the claim. 

None of the proposed claim amendments overcame the obstacles on validity.  The patent was found invalid on the basis of obviousness and insufficiency (but not added matter), though it would have been infringed had it been valid. 

Book review: Copyright and E-Learning

When this Kat received an invitation to review a new book on Copyright and E-learning, she knew just the person to review it - Goldsmith librarian Andrew Grey.  Andrew has provided a user's perspective on this second edition:

“unputdownable!”
“from the very first page I was gripped!”
“if you have tears…prepare to shed them now!”

None of these quotes are what you would expect for a book about copyright, and I’m not gonna lie, they are probably not what I would use. But in reviewing “Copyright and E-Learning,” I read a whole book on copyright. It’s often been said that changes to copyright are glacial; yet somehow in the last few years that pace has changed.  The pace of our digital world is certainly galloping ahead and, between the time I was asked to review this book and time I sent it in (first term is always a killer), the world of copyright and digital will have changed again.

Straight through the post comes the 2nd and updated edition (1st edition was in fact reviewed by a library colleague) of Copyright and E-Learning by the Sonny & Cher of Info-Literacy & Copyright, Jane Secker and Chris Morrison. Its arrival quickly stirred me onto update those ‘bloody copyright pages’ on our University website (check back in a month).

As hinted in my intro I, and I expect many, use copyright books when needed. When that awkward question arrives in my inbox, or in person in the office, I hope for a clear contents listing and comprehensive index. Thank you Jane & Chris! Yet this time I read from cover to cover. Yes, I flipped back and forth, consulted index and contents at work, at home, on bus and even in the pub. The book clearly lays out approaches to copyright in the e-learning realm, covering the interlocking pieces of our digitally connected but sometimes fraught world.

In a series of chapters, Jane & Chris explain key points and the background to topics including:
use of digital media (it keeps growing)
born digital (*screams loudly*)
social media (I still laugh at MOOC acronym)
digitisation and scanning (academics love us doing this)
licensing (CC still confuses people)
lecture capture (bit scared)
and, thankfully for me, copyright education and training (it never stops).

While primarily UK focused, the book also includes a brief overview of copyright in other English speaking countries and relevant case studies. I confess I didn’t think I would find the case studies from other countries useful, but they illustrate that everyone is grappling to ‘challenge the notion that copyright exists outside of the control of society.’ And oh how my colleagues would love not to annually collect and report to the CLA, as do our Australian colleagues to their CLA counterpart! Just imagine - we could concentrate on education/training instead of collating, reviewing, groaning, sweating and reporting. Case studies provide an opportunity to peek over the fence. Here the book includes different approaches to copyright education in Further Education, course reading lists, MOOCs (just laughed), electronic reserves, digitisation for reading lists, trials of being a copyright officer (!) and the Copyright Card Game! (I’ve done it and delivered it and it actually works.)

Apart from the main copyright and e-learning theme of the book, the book has a second theme on collaboration.  The book highlights just how important institutions such as JISC (yep) and other educational bodies have been in fostering copyright education and solutions against a background of increasing education-funding cuts and pushbacks from copyright holders.

While I provide copyright guidance at my institution, it is only one small part of my job, as I expect it is for many others. Simple copyright facts and information to gather up and distribute are incredibly useful. The book’s guidelines, tips and tables very much suit my needs. I will be photocopying and putting on my wall, and staff office wall, the table of educational exceptions in CPDA 29. Jane & Chris have done a great job in pulling together a lot of information covering a range of practical issues, and managed to pitch it at both those with some knowledge, and those without, and position it within a valuable dialogue of competing views on how content should be respected and be useful.

“The beat goes on, the beat goes on”

Copyright and E-learning, 2nd edition: A guide for practitioners by Jane Secker with Chris Morrison, Facet Publishing. IBSN 9781783300600 is available here for £49.95 (additional discount for CILIP members.) Rupture factor: Low, 304 pages.

Friday Fantasies

“What a major buzzkill!” was this InternKat’s first response to Claudio Gatti’s “unveiling” of Elena Ferrante’s identity. In The Atlantic, Mira T. Sundara Rajan, who was also a former 1709 Blog author, wrote a lengthy and in-depth post on the journalist’s violation of the author’s moral rights. 

Continue with the UK “Snooper’s Charter” -- after 12+ months of debate, the Investigatory Powers Bill passed through its final stages in the House of Lords on 16 November, granting the government surveillance powers described by US whistle-blower Edward Snowden as “the most extreme … in the history of western democracy.” Mr. Datonomy brought readers his preliminary analysis on the Bill’s background, new developments and practical implications. 

The Center for Law & Economics at ETH Zurich has approximately 20 group members from law, economics, and computer science. At the Center, Professor Stefan Bechtold invites applications for a PhD position in law (law & economics, intellectual property, antitrust, Internet/technology law). Deadline of application is Jan. 31, 2017, do not miss it!

Two outstanding designs, the Flap sound-absorbing panel and the Thule Urban Glide jogging stroller, have been revealed as the winners of the DesignEuropa Awards at a ceremony in Milan on Nov. 30. The Awards, organised by the EUIPO, in partnership with the Italian Patent and Trade Mark Office (UIBM), celebrate excellence in design and design management among Registered Community Design (RCD) holders, whether they are individual right holders, small businesses or large enterprises. 

* The Oxford Intellectual Property Research Centre (OIPRC) and the Oxford India Centre for Sustainable Development (OICSD) held a panel discussion on Nov. 24 about the recent Delhi High Court course-pack decision. A detailed report can be found here

* China on Nov 27 released a guideline on better protection of property rights in an effort to shore up social confidence and promote social justice. It is the first time for China to issue a guideline of state level on protection of property rights. A general report can be found here, and IPKat will bring a more detailed post very soon. Stay tuned.

Photo courtesy of Ms. Ana Barbara Ribeiro Ramalho.

Thursday, 1 December 2016

Fontem see their patent “vaporised” – the dangers of added matter


This Kat is delighted to welcome the blogging debut of his EIP colleague Gareth Holliday, reporting the judgment in Nicocigs v Fontem Holdings & Fontem Ventures [2015] EWHC 2752 (Pat).

Back in May of this year, Nicocigs initiated proceedings to revoke Fontem’s patent (EP(UK)2022349) and also sought a declaration of non-infringement of the patent in relation to their products, to which Fontem filed a counterclaim for infringement.

The case was fuelled by the familial relationship of the ‘349 patent, which claims priority from a Chinese Utility Model (CN2006290805U) filed on 16 May 2006. On 15 May 2007, two separate PCT applications (WO07131449; WO07131450) claiming priority from the utility model were filed, and entered the European phase, becoming EP2022349 and EP2022350 respectively. However, only ‘349 was granted.




It was common ground between all parties that the ‘350 application was identical in all material respects to the priority document, whilst the sibling ‘349 application contained a number of differences, with further amendments introduced during prosecution.

The divergence of the granted ‘349 patent from the application as filed, and the priority document, provided Nicocigs with the ammunition they needed to seek invalidation for added matter, lack of novelty and obviousness. The judge, Mr John Baldwin QC, ultimately found the ‘349 patent to be invalid on all counts. However, in the interests of brevity and focus, we shall be looking at the added matter objections in more detail, and summarising the other findings.

The ‘349 patent related to an electronic cigarette, one which vaporises a liquid containing nicotine to simulate cigarette smoke. The patented product comprised three main components: a battery (3); an atomiser (8); and a liquid storage component (9), all within a shell (a, b).


The user inhales through the mouthpiece (b1, far right hand side), causing air to flow into air inlets (a1), past the atomiser (8) towards the mouthpiece (b1). The pressure change activates the battery (3) which heats the atomiser (8) and vaporises liquid stored in a porous component of the atomiser (8). The user inhales the condensed liquid vapour, and any evaporated liquid is subsequently replenished in the porous component by liquid from the storage component (9).

i) Added Matter

Nicocigs submitted that Fontem had broadened the scope of the ‘349 application during prosecution in order to ensnare existing devices. The key question when addressing added matter was summarised in Richardson-Vicks by R.Jacobs in a single sentence:

"I think the test of added matter is whether a skilled man would, upon looking at the amended specification, learn anything about the invention which he could not learn from the un-amended specification".

To assist matters, a three part test for added matter was formulated in T0331/87 Houdaill. The skilled person must be able to recognise directly and unambiguously that:

  1. the (removed or replaced) feature is not explained as essential in the original disclosure; 
  2. it (the said feature) is not, as such, indispensable for the function of the invention in the light of the technical problem it serves to solve; and 
  3. the replacement or removal requires no real modification of other features to compensate for the change. 

The problem identified by both the ‘349 application and granted patent was the same, that current electronic cigarettes are “complicated in structure with bodies that can be roughly divided into three sections, which have to be connected through via plugging or thread coupling before use”. However, the solutions provided by each were different, and Nicocigs argued that this led to a dramatic change in the nature of the inventions.

The solution taught by the application involves an integrally formed shell housing the connected battery and atomiser assemblies together. A detachable “cigarette bottle assembly” (comprising a hollow shell and a porous/perforated liquid storage component) is mounted in one end of the shell and fits with the atomiser assembly.

The solution disclosed by the granted patent used the word 'shell' to describe a hollow body (which may or may not be integrally formed) with a detachable end. The battery assembly, atomiser assembly and liquid storage component all sit within this shell, with at least the liquid storage component being at the detachable end. However, the patent refers to the cigarette bottle assembly as a 'liquid storage component'; changing its character from a porous component of the cigarette bottle assembly, to a standalone component for storing liquid and enabling the flow of liquid to the porous component of the atomiser.

Mr Baldwin agreed that the granted device differed from that of the application, and that matter had been added to teach the skilled addressee about the new device. The use of the adjective 'porous' to describe the component of the atomiser - and omission of that adjective to describe the liquid storage component - would teach the skilled addressee that the latter component need not be porous where the application taught that it is essential. The skilled person would therefore learn something about the invention which he would not have learned from the application. Therefore, the patent was found to contain added matter, and in breach of A.123(2) EPC.

ii) Novelty and Inventive Step

The ensuing novelty attack argued that the ‘349 patent was anticipated by the ‘350 application, but in order to succeed Nicocigs needed to show that:
a) ‘350 disclosed a product falling within the scope of the ‘349 claims;
b) that ‘350 is eligible to claim priority; and
c) that ‘349 is not entitled to claim priority.
Mr Baldwin found the ‘350 application to disclose a product falling within the scope of claims 1, 8, 12 and 13 of ‘349, the ‘350 application to be entitled to priority, and ‘349 not to be entitled to priority.

In their defence, Fontem argued that if ‘349 was anticipated by ‘350 (condition ‘a’), then all the claimed integers were clearly and unambiguously disclosed and enabled by the priority document (being materially the same as the ‘350 application). Therefore, the granted ‘349 patent must surely be entitled to claim priority. However, Fontem had muddied the concepts of anticipation (does the prior document disclose something which falls within the claim) with priority (does the prior document support the claims across their whole width), and Mr Baldwin agreed that the priority document did not support the full breadth of the granted ‘349 claims, and therefore not entitled to claim priority.

Having met all three conditions, the ‘349 patent was considered anticipated by ‘350.

In addition, Mr Baldwin also found claims 1 and 12 of the ‘349 patent to be obvious in light of both US4947874 (Brooks) and EP0893071 (Takeuchi) separately.

iii) Infringement

In considering infringement, Mr John Baldwin QC found in Fontem’s favour that Nicocigs products infringed claims 1, 12 and 13 of the ‘349 patent, but by then it was too late, and the patent did not survive the barrage of invalidity attacks submitted by the claimant.

Summary

The case serves as a stark warning on the dangers of the added-matter, the monster patent attorneys tell children about at night. Alas added-matter is not an imaginary foe, but a real one, and should be respected (and feared) accordingly. Seemingly innocuous amendments during prosecution can mount up, causing problems, or ultimately invalidation of the patent, later on.



Post-script

In the meantime, we learned yesterday of the EPO Enlarged Board of Appeal decision in G1/15. The priority analysis in Nicocigs v Fontem may no longer be in accordance with the EPO approach to partial priority, but we probably need to see the reasoned decision of the EBA.

Wednesday, 30 November 2016

BREAKING: Antidote found for poisonous priorities

The Enlarged Board of Appeal at the EPO has issued its order in case G 1/15, but not yet its decision. From the order, it appears that poisonous priorities have been neutralised. The Enlarged Board has said:

Under the EPC, entitlement to partial priority may not be refused for a claim encompassing alternative subject-matter by virtue of one or more generic expressions or otherwise (generic "OR"-claim) provided that said alternative subject-matter has been disclosed for the first time, directly, or at least implicitly, unambiguously and in an enabling manner in the priority document. No other substantive conditions or limitations apply in this respect.

A generic "OR"-claim is one that covers multiple alternatives without spelling them out. If such a claim can have partial priority to an earlier application that disclosed one of those alternatives, then the implication is that the publication of the earlier (priority) application cannot deprive the later application of novelty under Article 54(3) EPC.

For more explanation of the issues, see the IPKat's earlier posts here and here, the excellent discussion from Tufty the Cat here, and the article by Malcolm Lawrence beginning on page 23 of in "epi Information" 1/2015, available here.

When the reasoned decision becomes available, the IPKat will let you know.

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

Been away and want to catch up on last week's IP news? No problem! As always, the IPKat is here to bring you a quick summary -- the 123th edition of Never Too Late.

IPKat’s good friend (nothing more) Merpel McKitten cast doubts on the idea to relocate the EPO’s Boards of Appeal to Haar (a municipality on the outskirts of Munich). The official justification for the move seems unconvincing -- not only to Merpel, but also to some BoA members and patent attorneys. Will the relocation truly cause a sequence of “catastrophic effects”, or is the feline simply worried too much? Check out the article and the lengthy yet very readable thread of comments, and afterwards, maybe share your own view? 

Last week, Merpel also reviewed the long, and still ongoing,  “House Ban” in the EPO 2 years ago -- the continued suspension of a BoA member for allegedly disseminating critical opinions about the BoA and for alleged defamation of a member of EPO senior management. This InternKat found Merpel's words to the points, genuine and courageous. Thank you Merpel. 

The AmeriKat, who had been preoccupied of late with a treasure trove of litigation fun, summarised the “need-to-know” about the latest Gilead triumph in appeal. Later, ever-productive Annsley wrote a follow-up post Entitlement to priority: Does Gilead confirm that it is a matterof substance over form? which concerned the consequences of the Gilead decision, and is worth reading for her further insights. 

Sorry for the late delivery of "never too late" this week...
“Is a national law that provides ab initio that a collecting society -- rather than the author of a work -- has the right to authorise the reproduction and communication to the public of such work compatible with EU law?” -- see Eleonora Rosati’s view on the important case Soulier and Doke, C-301/15. Later, she provided a more detailed follow-up analysis: The CJEU decision in Soulier: what does it mean for laws other than the French one on out-of-print books?

Last month a Swedish court was likely the first in Europe to apply the principles that the CJEU set in its landmark decision in GS Media, C-160/15. Eleonora Rosati discussed it in this post. Now, Katfriends Nedim Malovic and Patricia Haddad (Sandart & Partners, Stockholm) also took a look at the decision and shared their opinions with Eleonora. 

Kat friend Jason Rix (Allen & Overy) set out some key principles that IP lawyers might find handy when drafting or reading IP related contracts. “Be the Kat who got the cream”, he heartily wished, “do not let your contract becomes a dog’s dinner instead”. 

* Last but not least, the weekly routines: Monday Miscellany and Around the IP Blogs: Round-up for the latest IP happenings including events, book release and highlighted blog posts. 


Photo courtesy of Ms. Ana Barbara Ribeiro Ramalho.


*** PREVIOUSLY ON NEVER TOO LATE ***

Never Too Late 122 [week ending on Sunday 13 November] | Is depositing better than sequencing? | European Commission on Biotech Directive: tomatoes about to be squashed? The U.S. presidential election of 1876: votes, cannabis and intellectual property|  CJEU upholds duty to reverse-engineer trade marks in Rubik's cube decision, but what about the actual v abstract test?  BREAKING: CJEU says that EU law allows e-lending| Around the Web Blogs| IP Publishers and Editors' Lunch 2016!| Firings will continue until morale improves - Merpel revisits the EPO| 

Never Too Late 121 [week ending on Sunday 6 November] | Sunday Surprises | Firings will continue until morale improves - Merpel revisits the EPO | Will too much of one and not enough of the other spell bad news for innovation? | BREAKING NEWS Brexit - High Court rules Government cannot Invoke Article 50 under Crown Prerogative | Canada's new approach to diagnostic practices prompts division at CIPO

Never Too Late 120 [week ending on Sunday 30 October] | Court of Appeal on Pregabalin - Pfizer still in pain, but Swiss claims re-interpreted again | Procedural fairness and the Penalties Regulation: R(Roche) v Secretary of State for Health | Meet the Trade Mark Judges (Part two) | AG Szpunar says that the notion of "places accessible to the public against payment of an entrance fee" does not apply to hotel rooms | Charlie Chaplin won't come back from the dead, neither will Montis' copyright in the Chaplin chair | Linking to unlicensed content: Swedish court applies GS Media | Urgent crowd sourcing request-- "ugly" clauses in IP agreements | How much attention should the IP community give to non-compete clauses? | Friday Fantasies | Around the IPKat’s Cousins Blogs

Never Too Late 119 [week ending on Sunday 23 October] | Around the IPKat’s Cousins Blogs | With free trade and globalization under attack, can IP licensing come to the rescue? | The new French law targeting “automated image referencing services”: does EU law allow it? | Unauthorised communication to the public in an online environment as a criminal offence in the UK? | Friday Fantasies | Meet the Trade Mark Judges (Part One) | HHJ Hacon amplifies the law on EU trade mark jurisdiction: AMS-Neve v Heritage Audio | Launch of IP Pro Bono scheme | Lundbeck v European Commission - a rotten decision or effective competition law enforcement?

Tuesday, 29 November 2016

Around the IP blogs

A Matter of Interpretation: Libraries Land a ‘Victory’ in CJEU’s Judgment on E-Lending
Kluwer Copyright Blog provides the full story leading up to and including the CJEU’s preliminary ruling in Vereniging Openbare Bibliotheken v. Stichting Leenrecht (10 November 2016, case C174/15), which found that digital lending should not be excluded from the Rental and Lending Rights Directive’s scope in all cases.

Your move Merpel
Chess Tournament Hot News Misappropriation Prelim Denied
Schimmerlegal reports that a preliminary injunction was denied where the Plaintiff alleged that Defendant’s actions constituted ‘hot news misappropriation’ under New York common law. The circumstances of the case where such that the plaintiff organises and webcasts live chess tournaments, the defendant provides a live feed of the games, displayed on a virtual chess board.

Richard Prince May Offer the SDNY Another Chance to Define Transformative Use of a Work
Richard Prince and the Blum and Poe Gallery were sued again on November 16 for copyright infringement of a photograph in the New Portraits exhibition in Eric McNatt v. Richard Prince, 1:16-cv-08896, Southern District of New York (SDNY). Photographer Eric McNatt alleges that Richard Prince reproduced a photograph taken by Plaintiff of Kim Gordon, a founding member and bassist of Sonic Youth, by downloading it from the web, where it had been published with a copyright notice, and uploading it on his own Instagram account. 1709 Blog suggests this is an opportunity for the court to provide some clarity on transformative use.

Nl – Synthon V. Astellas / Supreme Court / Referral Cjeu
The Court of Appeal Arnhem-Leeuwarden asked several preliminary questions to the Supreme Court with regard to the applicable criteria for an exhibition claim based on art. 843a Dutch Code of Civil Procedure (DCCP) in conjunction with art. 1019a DCCP. The case is available in Dutch and luckily EPLAW Blog talks us through the response of the Supreme Court, which included the decision to apply to the European Court of Justice in order to obtain answers to two of the three questions.

Buying Time for Christmas: a guide for UK Trademark Opponents and Applicants
Worried about meeting those trade mark evidence deadlines over the festive period? SOLO IP gives us some helpful tips on applying for an extension and other ways to buy time!

Competition Law in the Pharmaceutical Sector: Aspen Fined for Excessive Pricing in Italy
The Italian Competition Authority (ICA) fined Aspen Pharmacare 5 million Euro for violation of art. 102, letter a) of the Treaty of the Functioning of the European Union (TFEU) when increasing its prices for some of its oncohematological drugs up to 1500%. Aspen has communicated that it will appeal. Trustinip reviews the decision together the previous case law, which gives rise to uncertainties in relation to assessing reasonable costs.

Master-Puzzlers at the Ready
German toy company Simba Toys GmbH & Co. KG appealed a judgement of the General Court relating to EU trademark no. 162784, showing the three-dimensional representation of a Rubik’s cube. The CJEU annulled the decision of the General Court, indicating that the General Court had interpreted the criteria for assessing Article 7(1)(e)(ii) of Regulation No 40/94 (now replaced by Regulation 207/2009) too narrowly. As such, Kluwer Trade Mark Blog explains, the shape of product was considered necessary to obtain a technical function and cannot be registered.

AIPPI Congress Report 5: Antitrust and Pharma - seeking a balance

The IPKat expertly balancing on the
patent law and competition law
tightrope
If you are like the AmeriKat and are thinking back to simpler times, really any time before November, then you are in for a treat. Although this year's AIPPI Congress has come and gone, it is not forgotten.  In the fifth of the reports from the festivities in Milan this September, Daniel Lim (Allen & Overy LLP) reports on the competition panel during the annual Pharma Day - a full day of panel sessions dealing with the complex IP, regulatory, competition and public health issues facing the life sciences industry.  Daniel reports:
"The last (but not least) session on day 4 was entitled “Antitrust and Pharma – seeking a balance”.  The obvious tension between the policy justification behind patents as a monopoly right and the public interest in competition in the market has always required a careful balance between those competing interests.  However, recently that balance in Europe has shifted, with the European Commission and UK CMA imposing huge fines on originators and generics alike for abusive conduct.  The AstraZeneca (Commission decision here, General Court decision here and appeal decision from the CJEU here), Servier and Lundbeck cases and UK GSK case have made the industry sit up and take note, and have arguably been the main factor in the near halving of patent settlements in 2014 compared to previous years.  Italy has been particularly active in pursuing pharmaceutical companies over alleged anticompetitive behaviour.    A useful background on some of the recent cases and interests at play is available on the European Commission’s website here
 Chaired by Duncan Ribbons (Redd Solicitors) and featuring Prof. Michael Carrier (Rutgers University), Commissioner Gabriella Muscolo (Italian Antitrust Authority - Autorità Garante della Concorrenza e del Mercato) and Yoichi Okumura (Takeda Pharmaceutical Company) as panellists, the session discussed the intersection and relationship between competition law and patent law and explored a number of common scenarios in which antitrust authorities may take an interest in the activities of pharmaceutical companies:

·                  “pay for delay” or early generic entry deals;
·                  non-cash value transfers;
·                  originator patent term extension strategies;
·                  secondary patents; and
·                  “product hopping”.
Pay for delay 
The two pay for delay scenarios put forward were:
  • Patentee pays generic significant sum (seemingly relative to 6 months profit from the product) and generic enters market 6 months prior to patent expiry
  •  Patentee does not pay anything and generic enters market one year prior to patent expiry
Professor Carrier stressed that the heart of the issue with such deals from a competition perspective is that the payment in such circumstances gives the originator a period of exclusivity that the strength of the patent protection would not otherwise confer.  
Accordingly, the earliness of the generic entry before patent expiry (or, viewed in another way, the delay in generic entry from the time they would otherwise launch) and the amount of the settlement payment are key factors in the competition analysis.  He noted that in a situation where there is no payment, this will likely be unproblematic, as the settlement could be seen to be premised on the parties’ assessment of the strength of the patent; the problem only arises where the additional exclusivity granted to the originator out of settlement (through delay of generic entry) is considered to be predicated on the payment, not the patent. 
Commissioner Muscolo arguably went even further, saying that, as a matter of principle, any delay of generic entry may attract scrutiny irrespective of whether a transfer of value has taken place, and that the nature of the value transfer (whether monetary or in the form of a licence or other benefit) may not be critical. 
 It was agreed that a key factor in the analysis would be whether the payment amount bore closer relation to the costs of the case or the value of the market for the product.  The former may be ok but the latter may be problematic.  The question posed by Duncan of how this analysis takes into account costs across multiple jurisdictions remained open. 
 Non-cash value transfers 
The panel gave three examples of non-cash value transfers:
  1. licence
  2.  agreement that originator will not launch an authorised generic product
  3.  territorial/cross-border exclusivity arrangements
Professor Carrier introduced each of these examples, noting that licences come in all shapes and sizes, and that similar factors as discussed in relation to pay for delay would be influential – i.e. is there delay in generic entry, and is the exclusivity the originator obtains derived from the settlement or the patent right?
In the US agreement not to launch an authorised generic is common, as the first mover generic has 180 days of generic exclusivity during which only they and the innovator (via an authorised generic product) may compete.  US courts apparently regard such “no authorised generic” agreements as a form of payment, susceptible to competition scrutiny.
As for territorial arrangements, Professor Carrier noted this was the offending conduct in the Servier case, where the generics were offered 7 markets in the EU in exchange for not launching in the rest of the EU. 
Okumura-san offered a very interesting industry perspective in this regard, noting the typical complexity of such settlement agreements and that in his experience generic companies are often very creative in settlement negotiations and often come up with quite unique and unusual strategies for settlement, which rarely fall into just one category of what could be considered to be a value transfer by a competition authority.  Such novel and complex settlement arrangements encompassing different categories may prove challenging to analyse for antitrust issues. 
Misuse of patent system 
Broadly speaking, the panel identified a number of circumstances in which they perceived that conduct permissible under the patent law system could fall foul of competition authorities (either by itself or as part of a broader strategy deemed to be anticompetitive):
  1.   Patent term extension obtained by provision of misleading information
  2.   Patent term extension obtained through a divisional patent as opposed to the parent patent
  3.   Impediment to generic entry by filing of secondary patent “thickets”
  4.   Impediment to generic entry by acquisition of alternative methods of production and formulations not practised by the originator (i.e. to prevent possible design arounds)
Each of these scenarios represent conduct which could be perceived by a competition authority to demonstrate a complex strategy aimed at impeding the entry of generic drugs in the market, and an abuse of a dominant position in the market which violates competition law.  Commissioner Muscolo gave the Italian Pfizer/Ratiopharm case (where SPCs were obtained and sought to be enforced on the basis of a divisional of the key patent) as an example of this (link to Commissioner Muscolo’s handout distributed at the session here and original Italian Antitrust Authority decision here, for any Italian speaking kats).
The tension between the perceptions of competition authorities and originators was put in sharp relief from a comment from the crowd by Bryan Zielinski, Vice President, Patents at Pfizer, who noted that from Pfizer’s perspective all they had sought to do in that case was to correct an oversight of the company they had acquired, which patent law allowed them to do.
Moving to consider secondary patents and patents over alternative methods, Professor Carrier observed that secondary patents are more likely to be found invalid by courts – the implication being that their enforcement may be seen to be less justifiable and more likely to be abusive than for a compound or primary patent.
Okumura-san countered that he did not like the term “secondary patent” as it had negative connotations.  He stressed that all inventions build on the work of the past and are based on other inventions and the state of the art.  From his perspective so-called “secondary patents” are no less inventions in their own right (if valid) and represent useful and important improvements as well, which should be incentivised and must be enforceable. 
Product hopping 
Last but not least Professor Carrier described a possible type of regulatory misuse of power termed “product hopping” – i.e. a practice whereby the originator product is pulled from the market, or switched in favour of a newer (patent protected) product, in order to block generic entry.  He drew a distinction between “hard switching” where the original product and MA would be withdrawn altogether, and “soft switching” in which the original product would remain on the market, but promotional efforts would be diverted to the new product.  He noted that a hard switch would be more likely to be anticompetitive, as would a switch closer in time to likely generic entry.
Okumura-san considered such product line changes to be a business decision.  He gave an example of a blockbuster originally sold to the elderly as a capsule, which was later changed to a new formulation with improved disintegration to aid in swallowing (a tangible benefit and improved product).  It had been earlier noted that there would be no consumer harm if the switch was truly to make an improvement, but the question of what the position would be if such a switch were deliberately timed to impede generic entry was left open.
Conclusion  
The key concerns emerging from the intersection between pharma and antirust at the front of mind of each of the panellists were clear from their closing remarks:
  • Professor Carrier emphasised that exclusion of a generic product from the market due to payment as opposed to the patent would be a problem, as would behaviour which was part of overall conduct intended to delay generic entry.
  •  Commissioner Muscolo remarked that in her eyes competition intervention in the pharmaceutical sector plays a paramount role, and guarantees access to medicine at an affordable level – keeping public healthcare still workable.  She bemoaned “pathological life cycle management”
  •  Okumura-san quoted the USPTO, saying “No IP, no business” and stressing that without appropriate IP protection available, the creation and distribution of new medicines would not be possible.  He noted the need to consider the relationship of the pharmaceutical industry with society.
A PatentKat being made to swallow a competition pill
In this author’s personal view, although the panel did a fine job of outlining and explaining the key scenarios and behaviours which may give rise to antitrust issues, greater emphasis seemed to be placed on the competition policy considerations of each, and little time was devoted to counterarguments from the patent law perspective (particularly when considering patent term extensions, secondary patents and other “product lifecycle management” strategies employed by companies).  Whilst entirely understandable given the competition lawyer heavy composition of the panel, it would have been instructive to have more of a balance of views and consideration of the opposing patent law public policy concerns/real world impact of the activity found to violate competition law. 
Competition arguments have long been in play in the telecommunications field and particularly in respect of standard essential patents.  It is clear that their impact on pharmaceutical patent cases will only continue to grow.  It will be up to courts and legislators to find the right balance between the competing and equally crucial policy interests of public healthcare, incentive for pharmaceutical innovation and fair competition in the cases to come.  Whether the Italian decisions are looked back on as an aberration and the high water mark of antitrust overreach, or ground-breaking decisions heralding the dawning of a brave new world of pharmaceutical patent enforcement, only time will tell."

Subscribe to the IPKat's posts by email here

Just pop your email address into the box and click 'Subscribe':