For the half-year to 30 June 2015, the IPKat's regular team is supplemented by contributions from guest bloggers Suleman Ali, Tom Ohta and Valentina Torelli.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Monday, 27 April 2015

No toleration for Novartis - rivastigmine patch patent declared invalid

It has been all quiet on the pharma patent front since the beginning of March (when the epic series of first instance decisions on Swiss form claims came to and end: see here, here, here and here), and so this moggy was delighted when there fell into his paws the decision of Mr Justice Arnold in Novartis v Focus, Actavis, Teva [2015] EWHC 1068 (Pat).

The case concerns a transdermal patch for rivastigmine, which is acetylcholinesterase (AChE) inhibitor used in the treatment of Alzheimer's disease.  In the original oral dosage form, problems with side effects such as nausea, vomiting and diarrhoea meant that the drug had to be initially administered at a sub-therapeutic dose (starting dose), and then titrated up to a therapeutically effective dose as the side effects became tolerated in the patient.  The use of a transdermal patch according to the patent allowed the starting dose to be much higher, with tolerable side effects.

The patent concerned was EP 2292219, which was one of a chain of divisionals derived from WO 2007/064407.

The claim is of an interesting form (integers added as in the judgment):
[1] Rivastigmine for use in a method of preventing, treating or delaying progression of dementia or Alzheimer’s disease,
[2] wherein the rivastigmine is administered in a TTS and
[3] the starting dose is that of a bilayer TTS of 5 cm2 with a loaded dose of 9 mg rivastigmine,
[4] wherein one layer: has a weight per unit area of 60 g/m2 and the following composition:
- rivastigmine free base 30.0 wt %
- Durotak® 387-2353 (polyacrylate adhesive) 49.9 wt %
- Plastoid® B (acrylate copolymer) 20.0 wt %
- Vitamin E 0.1 wt %
[5] and wherein said layer is provided with a silicone adhesive layer having a weight per unit area of 30 g/m2 according to the following composition:
- Bio-PSA® Q7-4302 (silicone adhesive) 98.9 wt %
- Silicone oil 1.0 wt %
- Vitamin E 0.1 wt %.
Although the defendants argued to the contrary, the Judge accepted that the claim was not to the use as a starting dose of the specific patch defined in [3], [4] and [5], but any transdermal patch (Transdermal therapeutic system or TTS) that would deliver the same dose, because of the wording "the starting dose is that of".  The claim on this construction interested this Kat, because it effectively claims "the dose obtainable from this specific patch", or "any dose that is the same as the dose from this specific patch".  This echoes considerations of "product-by-process" claims (where the patent claims the product of a specific process, and anything else that is the "same", or "obtainable" by the same process) - about which he wrote here and here.

In this particular case, however, this construction of the claim gave rise to no difficulties for the judge, and the finding of infringement was pretty much inevitable, not least since the defendants' products were generic versions of the Novartis patches.  But validity was much more interesting, and on this Novartis lost on two of the main issues - added matter and obviousness, although they prevailed on insufficiency.

The added matter aspect is the most interesting.  The patent derived from a PCT application that was originally mainly directed to a (presented as inventive) TTS comprising a backing layer, a reservoir layer containing at least one active ingredient and a polymer, an adhesive layer comprising a silicone polymer and a tackifier.  The only reference to starting dose was as follows:
The TTS of the invention allows, e.g., the manufacture of once a day pharmaceutical forms for patients who have to take more than one dose of an active agent per day, e.g., at specific times, so that their treatment is simplified.  With such compositions tolerability of rivastigmine may be improved, and this may allow a higher starting dose and a reduced number of dose titration steps.
A [sic] increased tolerability of rivastigmine provided by the compositions may be observed in standard animal tests and in clinical trials.
Therefore, although a TTS as defined in integers [3], [4] and [5] of the patent claim was disclosed in the PCT application, there was no indication that this should be used specifically as the starting dose for treatment of Alzheimer's disease.  Accordingly the Defendants attacked the patent for added matter in three ways, all of which were accepted by Arnold J:
First, the skilled team is informed for the first time that the invention lies in the selection of a particular starting dose for rivastigmine administered via a TTS for the treatment of AD. Secondly, the skilled team is informed for the first time that the dose delivered by the 5 cm2 TTS #2 should be used as the starting dose. Thirdly, the skilled team is informed for the first time that this starting dose may be obtained using a TTS which does not have the structural and compositional features disclosed in the Application.
In relation to the third of these points, Arnold J observed:
What the Patent tells the skilled team for the first time is that it is the starting dose delivered by the TTS that matters, not the structure or composition of the TTS, whereas previously the structure and composition of the TTS was presented as the core of the invention.
So the patent was held invalid for added matter.

On obviousness, the attack was based on US 6335031, which the judge found disclosed a patch of the same structure and composition as that claimed, and differed only in unit size (but from which it would have been straightforward to produce the patch needed for the claimed invention by halving the size).  However, US 6335031 did not disclose the starting dose; but it did say that the size of the patch:
may be determined by routine bioavailability tests comparing the blood levels of active agents after administration of compound A in a composition according to the invention to intact skin and blood levels of Compound A observed after oral administration of a therapeutically effective dose of the compound [emphasis added].
(In US 6335031 rivastigmine is called Compound A)

Novartis contended that this would be interpreted analogously to the practice for oral rivastigmine as nevertheless requiring initial treatment at a sub-therapeutic dose.  The Defendants argued that the skilled person would try what the passage quoted above said and start at the dose lowest therapeutic oral dose of rivastigmine.  They also argued that the skilled team would know that a patch would deliver rivastigmine with a smoothed out plasma profile compared with the oral dosage form and so with less fluctuation of the drug concentration in the patient, which was believed according to a number of prior art reviews to be the cause of the side effects found with oral administration.

The judge accepted that the skilled team, for the reasons put forward by the defendants, would try the claimed dose as the starting dose in a small scale clinical trial and would have had a sufficient expectation of success to warrant trial.  He noted that:
while it is true that US301 does not in terms instruct the skilled team to omit the sub-therapeutic dose, it cannot be inventive to do exactly what it does say
And so the patent was found to be obvious.

For a full decision on validity and infringement, this is rather a short judgment at 42 pages and 150 paragraphs.  And the operative part is very concise - much of the length is the explanation of the disclosure of the PCT application, the patent, and the prior art including the Summary of Product Characteristics of rivastigmine.

In the meantime, the patent is under opposition at the EPO by no fewer than 13 opponents (although Merpel notes that Sir Richard wrote "less").  Oral Proceedings are scheduled for 15 to 17 December 2015, and the preliminary opinion of the Opposition Division is that the patent is invalid on grounds of insufficiency and added matter.

Merpel is impressed that Novartis got the added matter issues past the Examining Division of the EPO in the first place.

Never too late: if you missed the IPKat last week ...

This week we celebrate the 43rd weekly listing of the previous week's Katposts, once again cunningly contrived and collated by our friend and ally Alberto Bellan.  For the benefit of newcomers to this weblog, of which there have been many in recent weeks, we should explain that the function of these weekly posts is to give readers a chance to tell at a glance what items they may have missed and, if any of those items takes their fancy, a chance to click through to them via hyperlinks from their titles.

Jeremy lets his Kat readership know all about C5's annual Pharmaceutical Patent Term Extensions Forum, a two-day event subtitled "Maximising pharmaceutical patent lifecycles to foster innovation and growth".  This event takes place at The Hotel Excelsior, Munich, from 22 to 23 June.

"I would like one of those new unitary patents.  I hear they will be only a fraction of the cost of the old ones". So starts a hypothetical but not-so-unreal conversation between a client and his patent attorney, subtly crafted by Darren in dialogue form.

The Court of Justice of the European Union (CJEU) has issued a provisional full version of its 2014 Report, which covers the work of the Court of Justice, the General Court and the Civil Service Tribunal, and provides yummy information for IP aficionados. Eleonora looks it over.

Birgit reports on a recent German Federal Supreme Court (Bundesgerichtshof) decision on the legality of a trade mark parody that 'in its overall impression' was based on an earlier well-known trade mark.

Eleonora reflects on the draft EU Digital Single Market (DSM) Strategy and its supporting Evidence, which Politico leaked a few days ago.

Some weeks ago, the IPKat posted “The EU patent package: a dangerous precedent? A call for sanity”, herea motion supported by more than 50 academics and practitioners. Wouter Pors (Bird & Bird, The Hague), not entirely agreeing with the motion, posted his reply here. The drafters of the motion have now prepared a detailed reply to Wouter's comments, which is handily summarised in this post.

Wondering what might be the fate of the European Commission's proposals for trade mark reform? The EU Council and the European Parliament are, at least in theory, supportive, according to the media release that Jeremy mentions in this post.

Andy Johnstone (who also contributes to the forums) responds to the Katpost "The CJEU 'new public' criterion? National judges should not apply it, says Prof Jan Rosen" (here), which Eleonora published last week.  

The Office for Harmonisation in the Internal Market is to be re-branded as the "European Union Intellectual Property Office" [for real, see Katpost here!]. Any suggestions, asks Jeremy?

Valentina explains two parallel judgments of the General Court, dealing with lack of distinctive character and secondary meaning under EU trade mark law.

What happened in last week's among trade unions, EPO President, and Administrative Council Chairman? Find out in this Jeremy's post.

Starting from a Boldrin/Levine's piece against patent, Neil reflects upon the actual effects of the first-mover advantage, on which those authors heavily rely.

Last September this blog reported [here and hereon the decision of the CJEU in TU Darmstadt v Ulmer, C-117/13, a reference from the Bundesgerichtshof (German Federal Court of Justice) seeking clarification as to the interpretation of relevant exceptions in the InfoSoc Directive that allow, among others, publicly accessible libraries to digitise works in their collections and make them available for users to view at dedicated terminals. Following the CJEU's judgment, the Bundesgerichtshof has now issued its decision in this case, reports Eleonora.



Never too late 42 [week ending on Sunday 19 April] – WIPO Roving Seminars in Israel | Foster v Svenson, or "of taking pictures of your neighbours" | Trade marks and social networks | Jan Rosen on CJEU's public criterion to assess whether linking amounts communication to the public | EU Commission's misinformation about UPC | Dior v (Sirous) Dior | Lyricists and copyright | Banking secrecy v IP rights in AG's opinion for Coty Germany, C-580/13 | Le Monde on the EPO | Bundesgerichtshof's addresses short musical sequences in rap songs. 
Never too late 41 [week ending on Sunday 12 April] – Nagoya Protocol for dummies | The IPKat and his friends | Actial Farmaceutica Lda v Claudio de Simone | Article 5(5) of the EU's Trade Mark Directive 2008/95 | Article 16(3) of our beloved TRIPS | Italy v Spain in copyright enforcement online. 

Never too late 40 [week ending on Sunday 5 April] – OHIM and national res judicata in Case T 378/13 Apple and Pear Australia Ltd and Star Fruits Diffusion v OHIM |Scrabble v Scramble is not a game in JW Spear & Sons Ltd & Others v Zynga Inc | Nagoya UK and EU implementing regulations | Again on making available and communication in CJEU's decision C More | Brown epilators in Albania | More food for thought regarding EPO's G2/12 Tomatoes II and G3/12 Broccoli II | ASOS v ASSOS: the Court of Appeal, England and Wales' version | New reference to the CJEU on e-lending and digital exhaustion comes from the lovely Hague | CIPA recruiting for IP volunteers | UPC mock trial | Ukrainian not so posh to Porche | Lincoln Continental's back |Links to leaks in a new reference to the CJEU | IP Hall of Fame purrs. 

Never too late 39 [week ending Sunday 29 March] – Merpel writes to the EPO AC | CJEU and hyperlinks | New gTLD regime | AG on TM reputation and genuine use in Case C‑125/14 Iron & Smith Kft v Unilever NV | AMBA speaks | Digital exhaustion | CJEU on linking to live shows in Case C-279/13 C More Entertainment| EPO Enlarged Board on amendments’ clarity in G 3/14 | EPO on patentability in cases G 2/12 (Tomatoes II) and G 2/13 (Broccoli II) | EPO responds to staff union | TVCatchup back to the CJEU | Translations and prior art | District Court of Hague on patented red radishes | GC on polo trade marks in Case T 581/13 Royal County of Berkshire Polo Club v OHIM - Lifestyle Equities (Royal County of Berkshire POLO CLUB) | Trade mark trolls in Cuba. 

Practically perfect in every way? Well it's not bad for a Distance Learning Course in Copyright

Behind every distance learning
course, there's a great postman

(not forgetting the cat)
Almost exactly one year ago, in "Stay close, but keep your distance? No paradox really ...", this Kat posted a short piece about the advantages and attractions of the distance learning programmes in copyright law run by his friends at King's College London. It struck him then that the course on offer was a jolly good one, and he said so. Since then, this Kat has gratified to discover that his opinion of this Diploma/Masters course is shared by others. The organisers report that the 2013/4 iteration of these King's courses was rated under the Higher Education Academy's PTES (Postgraduate Taught Experience Survey) and received an overall satisfaction rating from its students of no less than 100%. Ignoring the fact that this perfect score is almost as good as the IPKat's own popularity ratings, the 100% stands well above the average PTES rating of 83% for the 24 leading universities in the Russell Group.

Well, someone thinks so ...
If you missed the fun last year, the King's crew of leading copyright practitioners and academics, unchanged, is back in harness and ready to teach the 2015/2016 version of the course. It's called "UK, EU & US Copyright Law" and it leads to either a Postgraduate Diploma or a Masters Degree (MA) from King's itself. The faculty includes some very special people and, while Mary Poppins is not among them, they do seem to have put together a practically perfect way of teaching copyright to people who want to make the effort to learn. Incidentally, King's College is not that far from the Prince Edward Theatre in London's West End, where the stage version of Mary Poppins ran, hugely successfully, for three years.

The programme spans some 8 months, starting on 1 October 2015 and ending with an examination at King’s in May 2016. While the relevant course materials are delivered straight to your doorstep, there are also prospects for combining face-to-face contact with a bit of socialising via three entirely optional London-based weekend seminars. If you want to take a closer look at the package on offer, and/or register for it, just click here.

Merpel adds: while the King's courses are clearly a popular one with those who register for them, it would be good to know whether distance courses of this nature merely satisfy the interest or curiosity of those who register for them or whether they confer any benefit or advantage on those who gain a Diploma or Masters' degree at the end of their studies.  And do prospective employers appreciate them? It would be great to hear from anyone who has done a postgraduate distance learning course in in any area of IP, whether this one or any other one, as to how helpful they found the experience. Likewise, if you are in the business of employing people who may have them. Comments, please!

Why things are as they are in patent law: forgotten principles and histories, and the role of complexity

In my previous post ‘Subject Matter Relationships: the need for strictness, complexity and fuzziness’ (here) I considered the different tests that are used to compare subject matter for priority, added matter and infringement. That post generated many interesting comments from readers which led to me think about why things are as they are.

Here are two of those comments:

‘When you lack the discipline to make any single court decision binding, you necessarily create the possibility of the "rule of law" completely arbitrary and vacillating from one decision to the next.

It is easy to see that such a vacillating and uncontrolled driver is simply no way to set the path for what examiners (already a bit wayward given that they will tend to put their interpretation on decisions) can use as "takeaways" from court decisions.’ 
So case law must be consistent, presumably centred on certain principles.
‘Of course in the patent world there is no such thing as an absolute. While the EPO does claim to use a novelty test, the guidelines do indeed stress that an explicit disclosure is not necessary, and, especially in priority questions there is a body of case-law that talks about having the same idea, i.e. again not quite explicit disclosure. Thus it's not quite as black and white. But then, nobody said this job was easy.

I think a good part of the problem is the US history of disclosure mainly being aimed at "possession of the invention" rather than the "able to be carried out" in EPO history. Rather then [Sic] two pairs of lenses, perhaps we could talk about meeting in the middle, but coming from different sides?’
Was this the framework to decide
patentability that eluded Bilski?
So perhaps history acts as a guiding principle as to how we approach patent laws and legal tests.

What went wrong in Bilski? Was it a failure to develop new principles?

In the US case of Bilski [noted briefly on the IPKat here] the Federal Circuit and the Supreme Court disagreed on the minimal requirements for a ‘method’ claim. The Federal Circuit decided that the ‘machine or transformation’ test should always be met and the Supreme Court said that was too strict a test.

I recently came across a paper by Peter Menell (here) which gave an interesting perspective on Bilski, viewing it as a missed opportunity to lay out a framework for determining the patentability of business methods. The paper accuses the Supreme Court of ‘superficial textualism’ in the way it carried out its analysis, and it says:
‘The solution lies in recognizing that patentable subject matter cannot evolve to meet the new challenges of the information age without integrating 18th, 19th, and 20th century sources of patentable subject law into a flexible and evolving body of common law that is sensitive to history, statutory evolution, constitutional constraints, and understanding of modern science and technology.’ 
So according to this paper US patent law has failed to evolve in a way where Bilski could have been decided on principles derivable from centuries of jurisprudence. The ‘machine or transformation’ test is ultimately very simplistic and does not take into account that many inventions cannot be classified or analysed in this way. The Supreme Court was clearly aware of that, but perhaps did not feel it had the expertise to define an appropriate new test. Both Courts seem to have failed to extend existing patent principles in a way which would be relevant to assessing the patentability of new business methods.

Does complex technology mean we can no longer apply historical lessons?

Complex technology
requires complex
patentability tests
This Kat is a practitioner in the field of biotech/pharma patents. Much of my time is taken up in understanding how patentability tests are applied to complex technology. As an example if one considers how inventive step was assessed in Teva UK Limited & Teva Pharmaceuticals Limited v Leo Pharma A/S & Leo Laboratories Limited [2014] EWHC 3096 (Pat) (see Katpost here) one sees that for a pharmaceutical formulation the following criteria may be relevant:
* obvious to try 
* reasonable expectation of success 
* prejudice 
* inventive selection 
* the Technograph test (Technograph v Mills & Rockley [1972] RPC 346) 
* synergy
Mr Justice Birss discussed some of these criteria in more detail than the parties, who perhaps had started to suffer ‘test fatigue’.

In Human Genome Sciences Inc v Eli Lilly and Company [2011] UKSC 51 (see Katpost here) the UK Supreme Court identified 15 different principles from EPO case law on the patentability of new genes.

If the patentability of complex technologies is going to be determined by the application of many different tests, then perhaps it is simply not possible to have a historical perspective, and perhaps it is difficult to derive over-arching principles to guide the development of patent law.

Which principles are we now following in Europe?

The second comment I have quoted above takes the view that added matter is assessed in the US based on the principle of ‘possession of the invention’. Clearly we don’t follow that principle in Europe. Here added matter is more centred on the actual text that has been provided in the specification. However that may not be the best reflection of the purpose behind the added matter test which limits the extent to which the Applicant can improve its position after filing and provides certainty for third parties.

The first comment I quoted mentions the possibility of the ‘rule of law’ being ‘arbitrary’ in the sense of case law changing from one decision to the next. Clearly there need to be ‘fixed’ tests in case law. However how do we know that case law is going in the best direction? It seems to this Kat that the facts of an important case or the events of the day can determine how the law develops, without any overarching principle being followed.

Patent law is clearly highly functional. It allows Patent Offices to process a high volume of cases concerning many diverse inventions, and in this Kat’s opinion provides a good level of certainty for users of the patent system. However this Kat wonders whether patent law has failed to consider properly the principles that should guide development of patent law.

How should economics affect patent law?

Even if you are filing an embroidered
patent application you need to ensure lots
fallback positions for amendments
The patent system necessarily has economic underpinnings. It is a tool to promote innovation which in turn helps the economic system. However in their everyday workings Patent Offices and courts pay little attention to the economic effect of their policies and decisions. Their concern is to deal with the immediate issues in front of them, rather than worry about the wider implications of what they do. As a practitioner I see how that happens, and how difficult it would be to do anything differently.

However this Kat does wonder whether the patent system appreciates how it impacts the technology sectors that it serves. In the biotech sector patentability tests are becoming ever more complex and unpredictable. In an EPO opposition 30 to 50 documents can be cited by opponents attacking inventive step. The problem solution approach normally copes admirably under these conditions, but such proceedings too often seem to be deciding the fate of huge amounts of research based on a fortuitous interpretation of a paragraph in the patent specification or in the prior art. Many years of patent law jurisprudence seems to have led to a system where valuable patents are lost simply because the specification did not recite a narrower range or a higher temperature. Surely this is not how it was meant to be?

Friday, 24 April 2015

Friday fantasies

Forthcoming events. As usual, the IPKat's list of impending conferences, seminars, lectures and other IP attractions has been given its weekly spring-clean and update, so don't forget to check it out. Latest on the list is the "Meet the Judges" seminar that takes place in Dublin, Ireland, on Friday 5 June.  It's organised by European trade mark organisation MARQUES and features more judges than you can shake your wig at.  It's ideal for trade mark litigators, particularly if they fancy combining their professional pleasures with a weekend break on the banks of the River Liffey ...

Don't forget to celebrate this Sunday -- it's World Intellectual Property Day 2015 (though our good friends in all sorts of places have started their celebrations a few days early).  This year's theme is "Get up, Stand up. For Music".  Merpel thinks this is a strange slogan and assumes that it sounds better or more meaningful in whichever language it was originally conceived before it was translated into English.  The IPKat doesn't think it's strange at all.  It's obviously an allusion to the custom and practice of that great intellectual property-based money-spinner, the Olympic Games, where there is a great deal of getting up and standing up for music ...

Dreaming of a 3D printer?
Don't forget the Notice ...
Around the weblogs. The 1709 Blog welcomes a new team member in Andy Johnstone, who will be known to many readers of this blog as one of its most frequent comment-posters on copyright-related matters.  Andy has already posted his first item, on ownership of IP created by students.  The same blog also features a piece by Marie-Andrée Weiss on a bill to fix IP infringement notices on all Californian 3D printers.  On PatLit, David Berry reports on some good news for US patent attorneys, whose pay packets must be feeling considerably heavier now that a year has passed since the US Supreme Court gave its ruling on attorney fees in Octane, here. Still on the subject of patents, Penny Gilbert writes a guest piece on The SPC Blog on prospects for patent term extensions for veterinary vaccines in light of the EFTA Court ruling in Pharmaq v Intervet, while the same blog records a most unusual event these days -- an action concerning supplementary protection certificates which the trial judge refuses to send to the Court of Justice of the European Union for a preliminary ruling (Viiv v Teva, here).

The INTA is coming ... and this Kat, together with a colleague or two, will be there. For those who don't like acronyms and initials, this is a bit of a fake one since the "N" doesn't stand for anything.  INTA is the International Trademark Association and its 137th Meeting takes place in San Diego, Southern California early next month. The IP blogosphere has taken cognisance of this event, which will attract some 9,000-plus trade mark and other IP folk: SOLO IP's Barbara Cookson has already had a good moan, quite justifiably, at this year's policy regarding badging and guest tickets, while Katfriend Daniel Greenberg of Lexsynergy -- which will be exhibiting at the Meeting, writes "Instead of handing out cheap breakable gifts [Merpel, who has a wonderful collection of mouse mats from INTA, wonders how you break them. Do you put them in the freezer till they go brittle and then snap them?] we are giving away domain names (.lawyer and .attorney) to lawyers that visit our booth with no strings attached" [So, if you are a straight-laced lawyer, please note: untying your laces is not enough: you have to detach them in their entirety].

Competition, licensing and TRIPS: a new title.  This Kat has just learned that the International Centre for Trade and Sustainable Development (ICTSD), together with the United Nations Conference on Trade and Development (UNCTAD), have published a new paper on Trade-Related Aspects of Intellectual Property Rights (TRIPS). With the long and difficult-to-memorise title of Competition Analyses of Licensing Agreements: Considerations for Developing Countries under TRIPS,  the paper -- written by Hiroko Yamane (National Graduate Institute for Policy Studies, GRIPS, Tokyo) -- tackles the interface between intellectual property rights and competition policy, looking particularly at the relevant provisions of TRIPS Agreement, in particular Article 40 and the considerable discretion which is available for TRIPS implementation in national law.  Further details are available here. This Kat hasn't had a chance to look at it yet, but the topic appeals to him and he hopes that it will live up to his expectations.

German Federal Court says that libraries have a right to digitise their collections

Last September this blog reported [here and hereon the decision of the Court of Justice of the European Union (CJEU) in TU Darmstadt v Ulmer, C-117/13, a reference from the Bundesgerichtshof (German Federal Court of Justice) seeking clarification as to the interpretation of relevant exceptions in the InfoSoc Directive - these being Article 5(2)(c) and Article 5(3)(n) - that allow, amongst others, publicly accessible libraries to digitise works in their collections and make them available for users to view at dedicated terminals.

Among other things the CJEU ruled that, while the exception in Article 5(3)(n) relates to Articles 2 and 3 of the InfoSoc Directive, this provision limits the use of works to their ‘communication or making available’. An establishment that gives access to a work contained in its collection to a ‘public’, namely all of the individual members of the public using the dedicated terminals installed on its premises for the purpose of research or private study, communicates that work for the purposes of Article 3(1). The exception in Article 5(3)(n) would be meaningless if such an establishment did not also have an ancillary right to digitise the work in question. 

Such right would exist under Article 5(2)(c) the InfoSoc Directive 2001/29, provided that ‘specific acts of reproduction’ are involved. This means that, as a general rule and also in compliance with the three-step test in Article 5(5) of the same directive, the establishment in question may not digitise its entire collection. 

Katfriend Nils Rauer (Hogan Lovells) represented TU Darmstadt in the German litigation, and has contacted this Kat to let the readers of this blog know that, following the CJEU judgment, the Bundesgerichtshof has now issued its decision [not yet available] in this case, ruling completely in favour of TU Darmstadt. 

According to the press release issued by Hogan Lovells:
"Since 2009, German libraries and German publishers have been arguing about the scope and reach of Sec. 52b of the German Copyright Act (UrhG). The said section holds a statutory limitation of copyright allowing privileged institutions (public libraries, museums, and archives) to make available to individual members of the public works physically contained in their collections. The dispute went up all the way to the Court of Justice of the European Union (CJEU) which rendered its preliminary ruling in September 2014 ...
An important example of how
the right to digitise may be exercised
The judges decided 100% I favour of TU Darmstadt and dismissed the publisher's complaint. In consequence, public libraries may now digitise their physical collections and may make available to their users the digitized works through terminals located in the respective reading rooms. They may do so irrespectively of whether the publisher offers a digital version of the book or not. Further, the library users may not only read the digitized works, they may also print out parts thereof or save those parts to USB sticks. Such reproduction, however, must stay within the boundaries of private or academic use according to Sec. 53 UrhG. In return, the publishers are entitled to receive fair compensation.
The current German decision needs to be seen against the background of Article 5(3)(n) of theInfoSoc. The said provision allows the Members States to provide for very specific exemption or limitations to the concept of copyright. Privileged institutions may be empowered to make works (and other subject-matter not subject to purchase or licensing terms which are contained in their collections) available, for the purpose of research or private study, to individual members of the public by dedicated terminals on their premises. The German legislator made use of this right and implemented section 52 b UrhG with effect of 1 January 2008. Due to the somewhat unfortunate language the legislator used, debates amongst publishers and librarians commenced immediately. The litigious dispute that eventually led to the current decision started in 2009.
The publishers' first concern was that the law in question does not refer to a right of digital reproduction of physical works. They put forward that exceptions and limitations are to be interpreted narrowly. Accordingly, one should read an implied right to digitize into Sec. 52 b UrhG. The German Federal Court now takes a different view on this. Without a permission to digitize, the exception aimed at would run empty. Thus, the libraries must have the right to transform their physical collections into digital data.
The publishers further argued that privileged institutions should not be entitled to rely on a statutory limitation if the respective work could be obtained via a license form the publisher on fair terms. Again, the judges ruled in favour of TU Darmstadt. They refer to the wording of the InfoSoc Directive and point out that only in cases where license arrangements already exist can they take priority over the statutory law.
A different type of 'dedicated terminal'
A further major concern on the publishers' side was the question of what the library users may actually do with the work displayed at the library terminal. They argued that read-only access was feasible. TU Darmstadt responded that thorough academic research requires the possibility to print out and/or save the relevant parts of the book. Reference was made to the fact that Article 5 (2) (b) of the InfoSoc Directive does not differentiate between analogue and digital reproduction. The German Federal Court once more followed the university's line of argument. The judges state that the library user may rely on Sec. 53 UrhG when using the library terminal. Thus printouts and digital copies are allowed within the boundaries of private and academic studies.
Now that the German Federal Court ruled in favour of TU Darmstadt, it may be assumed that a great member of libraries will start offering respective terminals. Given that Sec. 52 b UrhG is now furnished with a clear and transparent scope and reach, adequate legal security allows for such development. However, publishers and libraries still need to sit together and to agree on what may be deemed an adequate compensation for the publishers. The details of the respective copyright levies should be fixed on short notice in order to safeguard full compliance with EU law." 

The case against patents: what does first-mover advantage tell us?

For Kat readers who may not be aware, for more than a decade a professional literature has developed that is challenging the justification for maintaining a patent system, at least in its current form. Perhaps the most notable scholars engaged in this endeavor are Professors Michele Boldrin and David K. Levine, both of the Washington University in St. Louis. The long form of their arguments is set out in their 2008 book, Against Intellectual Monopoly. Various short forms of the positon are scattered across numerous articles. The arguments made by Boldrin and Levine have engendered much commentary, both pro and con. As a window to their position, let us consider their 2013 article, "The Case against Patents", published in the Journal of Economic Perspectives, and their arguments why first-mover advantage is often preferable to patent protection as a competition strategy. First-mover advantage refers to a person who is the first entrant into a product market and where, in addition to being the first to enter, enjoys advantages in the technology involved, preferred access to key resources (such as information or a supply chain) and a barrier to entry in the form of high switching costs for others that might wish to compete. Here is what Boldrin and Levine have to say about first-mover advantage:
"In most industries, the first-mover advantage and the competitive rents it induces are substantial without patents. The smartphone industry—laden as it is with patent litigation—is a case in point. Apple derived enormous profits in this market before it faced any substantial competition….While it is hard to prove this delayed imitation also would have occurred in the absence of patents, intuition suggests—and our formal model in Boldrin and Levine predicts—that there is little reason to assert patent rights while the first-mover advantage is still active. Apple did not initially try to use patents to prevent the Android phones from coming into its market and the subsequent 'patents fight' has been taking pace largely after 2010; these facts are consistent with a substantial first-mover advantage."
This Kat notes that there is a certain frustration in considering these observations since they are not supported by any footnotes (references are set out in alphabetical order at the end of the paper). In light of that limitation, this Kat would make the following observations:
1. Relying on anecdotal information regarding the ultimate hi-tech success story is a far from convincing way to prove the robustness of the proposition across industries. Apple's competitive advantage is also due to the so-called hardware-software-applications ecosystem supporting the iPhone, some of which was anchored in patent protection, as well as the strength of the Apple brand. There is very little that enables the reader to choose between the Apple anecdote as the exception that proves the rule, the rule that proves the exception, or the exception that proves the exception.

2. First-mover advantage is related to the issue of patent versus trade secret protection. Sometimes first-move advantage is "chosen" because the person has no reasonable patent option, sometimes it is chosen because of patent costs, sometimes it is chosen in the belief that early market entry and market share and branding can be successful. At the very least, the authors would have been well advised to consider the various patent/trade secret decision trees.

3. The authors state that, since it is hard to prove that patents did not matter as long as Apple enjoyed first-mover advantage, they will rely on their intuition and their earlier model. This will not do. If the proposition is "hard to prove", then it seems to this Kat that the researchers should resist publishing conclusions until they have found a way to do so. Relying on intuition and a formal model does little to provide the level of empirical support that seems necessary to promote the position.
As for more quantitative support, they refer to a 2000 study by Cohen, Nelson and Walsh, "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms (or Not)", NBER Working Paper 7552. They report:
"Here, over 50 percent of [R&D] managers indicate lead time (first-mover advantage) is important to earning a return on innovation; outside the pharmaceutical and medical instruments industry, less than 35% of managers indicate that patents are important."
Here, as well, this Kat has several comments:
1. There is no indication of the relative degree of success between companies that prefer first mover-advantage to those who do not. Perhaps patents are correlated with over-sized profits; perhaps they are not (and vice versa); we are not told.

2. The two prongs summarizing the findings are not entirely clear. Saying that first-mover advantage is important for earning a return on innovation does not exclude patents as an important factor as well, while concluding that patents "are not important" is an exclusionary assertion. As it stands, the two parts need to be reconciled to understand the ultimate thrust of the research results.
The authors, in their customary fashion, take substantial and broad-stroke swipes at the patent system. Their arguments are worthy of attention. As such, they owe readers a clearer and more detailed exposition.

Thursday, 23 April 2015

One small step for man, a giant leap for mankind?

Surprise, surprise!
It has been a quiet day so far, and Merpel was busy taking a nap in the sun when the following media release came in from the European Patent Office (EPO). This Kat has decided to reproduce it in full for the benefit of his readers, who have been wondering what happened at yesterday's historical meeting (the context of which is apparent from the text below).  Not having been at the meeting, this Kat can make no comment other than to express relief both that it has happened and that a further meeting has been diarised.  There was a time when he thought there was a better chance of the Earth facing an invasion from litle green men from the Moon than of this meeting of unlike minds in Munich taking place; he is pleased that this was not the case.

The media release reads like this:
Trade unions join round table with EPO President and Administrative Council Chairman

Munich, 23 April 2015 – At a round table meeting jointly initiated by the Chairman of the Administrative Council, Jesper Kongstad, and EPO President Benoît Battistelli, the SUEPO and FFPE entered into a process which could eventually lead to their formal recognition as trade unions at the Office for the first time in EPO history. The meeting’s aim was to re-launch social dialogue to overcome disputes that have arisen over the inner reform agenda of the EPO.

All parties agreed to continue the process and create a working group to discuss further details already in the coming days. The next round table meeting has been scheduled for 28 May 2015 with the intention to review the findings of the working group, and to consider next steps.

“It wasn’t an easy meeting, but sitting at one table has been an important first move and marked the beginning of a constructive process”, Kongstad said. “We are pleased that the meeting took place in an open atmosphere, and that agreement could be reached that social dialogue is in the best interest of the EPO”, President Battistelli explained.

The EPO is an international organisation established by an international treaty ratified by its 38 member states which creates a legal framework for the Office compliant with the best international standards and practices. That framework is not governed by the provisions of the national laws of the member states, including those where the EPO has offices. As the treaty does not hold provisions on trade unions, the effort to recognise them is a new initiative leading well beyond the currently existing legal framework of the EPO.

General Court says "checkmate" to Louis Vuitton's patterns

Two parallel judgments of the General Court in the Louis Vuitton (LV) cases, T-359/12 and T-360/12, are a welcome example of clarity and completeness, destined to influence case-law on the invalidity of a Community trade mark (CTM) for lack of distinctive character, according to Articles 51(1)(a) and 7(1)(b) of Regulation 207/2009, as well as acquired distinctiveness through use, in respect to Articles 7(3) and 52(2) of the same Regulation.

In each of these cases the invalidity applicant, Nanu-Nana, challenged LV’s figurative CTMs, consisting of a chequerboard pattern, characterised by weft and warp structures, as represented below: one was in brown and beige (T-359/12), the other in light and dark grey (T-360/12). LV applied for to register the respective signs in 1996 and 2008, obtaining registration in 1998 and 2008 for various goods in Class 18 (leather goods, bags, cases, travel sets etc).

In 2009 Nanu-Nana lodged its invalidity claims at OHIM, based on several absolute grounds of refusal. It asserted that LV's patterns could not be registered as trade marks since they were descriptive and lacked distinctive character (Article 7(1)(b)(c)), were customary in the bona fine and established practice of trade (Article 7(1)(d)), consisted exclusively of a shape giving substantial value to the goods (Article 7(1)(e)(iii) and were contrary to public policy or to the accepted principles of morality. It also added that the marks were filed in bad faith according to Article 52(1)(b) of Regulation 207/2009.

Both the Cancellation Division and the Board of Appeal took the view that the marks at hand should be cancelled because they were not distinctive: they consisted of a pattern which would be applied to the surface of goods belonging to Class 18 as decoration rather than as commercial origin identifiers; nor did such patterns depart from the norms or the customs of the relevant sector.

The Board of Appeal also focused on the weft and warp structure composing the marks and explained that it could not count as a feature identifying the source of the products. The fact that it had been copied by competitors or infringers did not mean that the public could distinguish LV’s goods in the relevant market on the basis of it. No other distinguishing element was apparent within the contested marks which would have led to them having a different fate, given that they would anyway be used in combination with LV’s logo and house mark.

Another popular checkered pattern ...
In any event, both the Cancellation Division and the Board of Appeal agreed that the evidence submitted by LV did not show that its marks had acquired distinctive character through their use in a substantial part of the EU, comprising Denmark, Portugal, Finland and Sweden in the case of the brown and beige pattern, and Estonia, Latvia, Lithuania, Malta, Poland, Slovenia, the Slovak Republic and Bulgaria in respect of the other pattern. That was so, whether viewed from either at the time of the marks’ filing, according to Article 7(3), or after their registrations, according to Article 52(2).

In both cases the General Court confirmed the earlier decisions, and dismissed LV’s actions. In doing so, the Court provided substantive guidance on the assessment of invalidity of three dimensional and figurative marks -- even though Nanu-Nana limited its invalidity arguments before the Court to only the lack of distinctive character.
The main points of the General Court’s reasoning is as follows:

(a)   Lack of inherent distinctive character

The Court applied the case-law on the assessment of inherent distinctiveness of 3D and figurative marks which coincide with the appearance of the products, according to which consumers perceive those signs as commercial origin identifiers with some difficulty if they do not bear any graphic or word elements, unless they depart from the norms and customs of the sector. That was not the case for the LV's chequered board patterns: they were too basic, too common and lacked any specific character. Moreover, they had a long-standing link with goods in Class 18, where they had always been used for decorative purposes.

Did the Board of Appeal infringe the rules governing the burden of proof by considering it a well-known fact that the chequered board pattern was a basic and banal figurative feature? The General Court said no. At the outset, a registered CTM enjoys a presumption of validity, and it is for the invalidity applicant to put forwards the facts challenging the mark. However, the Board of Appeal is not prevented from considering well-known facts emerging during the invalidity proceeding, which are related to the arguments and evidence provided by the invalidity applicant.

(b)   Lack of proof of acquired distinctiveness

The starting point is that a CTM must have (inherent or acquired) distinctiveness throughout the EU given the unitary character of CTMs. It follows that a CTM cannot be registered if it is not distinctive in part of the EU. However, CTMs can acquire distinctive character through use either at the time of filing (Article 7(3)) or after registration in order for them not to be vulnerable to a validity challenge (Article 52(2)).

The General Court held that the Board of Appeal correctly made the overall assessment of the evidence provided by LV which, however, could not lead to the conclusion that its marks had acquired distinctive character because of the use made of them, in the relevant periods of time and in all the territory in which the marks were not deemed to be inherently distinctive -- in these cases the entire EU. Indeed, unless LV could have proved the contrary, the assessment of their distinctiveness was to be the same in the entire EU, and both were deemed to lack distinctive character ab initio in all Member States. Therefore, since LV could not present evidence of its CTMs’ acquired distinctiveness in some Member States, the mark were to be declared null and void.  

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