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.

Friday, 27 February 2015

The next celebrity zoo animal? Polar bear Knut's little half-brother is looking for a name...

This Kat is spending part of her coveted lunch time to write on one of her dearest topics (see earlier IPKat posts here): the late polar bear Knut - arguably the "first celebrity zoo animal" - and centre of numerous alluring trade mark issues and intriguing trade mark disputes.

Our readers may recall Knut's rise to stardom and his evolution into a lifestyle "brand", from cuddly cub to famous celebrity zoo animal with a massive marketing machine until his untimely death at the age of four at Berlin zoo in March 2010. German media now reports that a polar bear cub born at the zoo of Rostock, northeastern Germany, in December 2014 may be the next polar bear "superstar". US based news outlet CNN already called the cub "adorable", so that international fame might indeed be in reach...

Knut - in his heyday
History appears to be repeating itself in other ways too: Rostock zoo has decided to involve the general public in naming the cub and is asking for suggestions to be emailed to the zoo's press department until 10 March 2015.  Only condition, it needs to be a "nordic sounding" name, such as Knut or Lars.

Now, it seems like it was only yesterday when I was writing my tongue in cheek article "Knut, Flocke, and Co: the bear facts revealed"; JIPLP 2008, pages 764-774, (still available in full here).  In that article I wrote about the dangers of so-called ‘public naming campaigns’ and how not taking trade mark protection seriously at an early stage when marketing the birth of high-profile zoo animals can result in serious problems.  Infamously, Knut's name, which had also been determined by a public naming campaign, had been leaked to the media before Berlin zoo had filed for trade mark protection.  Let's hope Rostock zoo has learnt a lesson and has its IP in place before going public with the "nordic" name.  By the way, I propose to give the cub the lovely Scandinavian name Birger....

Groundless threats to sue for IP infringement: the end of an era?

According to a UK government media release yesterday,

How cats respond to threats
(per Charles Darwin, here)
 
The UK Government will improve protection to make sure businesses are not exposed to unnecessary and baseless accusations ... in response to the Law Commission’s Report. Protection against groundless threats of infringement proceedings will be retained for patents, trade marks, registered and unregistered design right. A number of new reforms will also be introduced. These are:
  • making sure that the threats provisions are much clearer [indeed, the fact that they are drafted in such convoluted terms, which differ as between IP rights, is a real headache.  This Kat has also never received a convincing answer to the question whether a statement posted on a website that indicates that the manufacture or sale of a particular product will be treated as an infringement might constitute a groundless threat. Suggestions?] 
  • making it easier for parties to make good faith attempts to settle an IP infringement dispute before litigation [but surely, if the parties are making good faith attempts to settle infringement disputes, there already exist ways of doing this without making groundless threats to sue?]
  • stopping legal advisers from being subject to threats and accusations, when the dispute is between the parties that they represent. [This is a pity, says Merpel, who never tires of reading L'Oréal (UK) Ltd & Another v Johnson & Johnson & Another [2000] EWHC Ch 129 in which Mr Justice "Lightning" Lightman held a relatively amicable solicitor's letter to be a threat. Lightman J's characterisation of the letter can be found below]
Threats of legal action for IP infringement can cause significant commercial damage to small businesses. They are costly and disruptive, drive customers away and stop business from selling goods and services. ...”
Says Hogan Lovells' Alastair Shaw,
"At present in trade mark and design cases there is often a certain amount of shadow-boxing before the full extent of the alleged wrongdoing becomes clear to the likely defendant, by which time positions on both sides can become entrenched. There may be some doubts about whether the position will be improved in practice for legal representatives if the Government follows through on its proposal that they must show that they were acting on instructions to exempt them from liability for threats [Hmm. This Kat quite likes the idea of lawyers being able to show that they are acting under instruction, particularly if they bill him for the work they've done ...]. But, overall, the Government's responses should be seen as a very positive move".
Merpel has an idea. why not have a system of graduated threats?

**********************************************

The Government response to the Law Commission’s Report (Law Com No.346) “Patents, Trade Marks and Design Rights: Groundless Threats" (26 February 2015) is here

The Law Commission's Groundless Threats web page is here

Mr Justice Lightman's summary of the letter in question reads like this, at para 16:
"The Letter is the work of a master of Delphic utterances who uses all his skills to say everything and nothing and to convey an enigmatic message which has the same effect on the recipient as a threat or adverse claim whilst disclaiming to be either. He goes beyond merely reserving his clients' rights: he makes clear that no decision has yet been made to sue, but likewise makes clear that others who used the Words on their packaging after pressure from the Defendants succumbed to that pressure and desisted; that the Defendants thought that the Claimants had unfairly sought to benefit from the Defendants' goodwill; that the Defendants had six years to commence legal proceedings; and that the Defendants would afford no comfort in respect of the possibility of such proceedings".

Are smartphone patent wars in China on the horizon?

For those Kat readers who look favourably at the smartphone wars of the last few years, you may be heartened to know that similar patent wars may erupt as well in the Chinese mobile industry, and more quickly that you would think, if one is to believe the observations made in an article that appeared on February 13, 2015 on reuters.com. Entitled “Qualcomm deal sparks China smartphone skirmishes”, the article focuses on how ZTE Corporation, the giant telecommunications equipment manufacturer, is ramping up to take advantage of the new legal environment that has resulted from the settlement that Qualcomm reached on February 9 with the Chinese National Development and Reform Commission (NDRC) over claims that the company’s licensing practices had violated the country’s Anti-Monopoly Law. This Kat will not review all of the various provisions that comprise this intricate agreement (Kat readers who wish to do so are urged to consider tthis article that appeared on Forbes.com).

Rather, we will focus on one key provision, whereby Qualcomm had to end its practice of cross-licensing agreements that had the effect of giving smaller customers of the company free access of the patent portfolio belonging to more established Qualcomm customers. The upshot is that ZTE and similarly-situated Chinese companies, such as Huawei Technologies, which are reported to hold substantial essential patents for wireless technology, may well began to aggressively seek royalty payments, as well a court enforcement of its patent rights, from other companies engaged in the smartphone space. Of particular interest is the suggestion that ZTE may be targeting upstart handset companies for legal action and, in particular, it may go after Xiaomi, the high-flying Chinese handset manufacturer. What is striking about this possibility is how the Reuters article describes a legal and business environment that sounds more and more like the US and other developed markets. Consider the following:
1. In facing the real possibility that companies such as ZTE will be more aggressive in seeking to monetise and enforce their IP rights, the secretary general of the Mobile China Alliance stated that “[f]or the first time, the settlement is forcing domestic manufacturers to recognize the value of IP and consider how to use it strategically, which companies do in the West.”

2. The president of Xiaomi, while not commenting specifically on a possible dispute with ZTE, observed that increased threats and litigation is typical for a high-flying start-up. He went on: “This is true of any company, not just Chinese companies”. In response, the company is working on boosting its relatively small patent portfolio—“We’ve been focusing on building up our own IP. It’s going to take some time.”

3. For its part, ZTE stated that the Qualcomm settlement “is positive for the development of intellectual property rights in China, and will help promote fair competition for technology innovators.” One possible way to do so was suggested in the article. Thus, ZTE is reported to be exploring how to make royalties a material part of its IP activities (“They’re taking this extremely seriously”.)

4. There is a recognition that this change may drive some smaller mobile phones (heretofore the beneficiary of what the free-licensing regime) from the market in the face of increased costs for research, litigation and licensing. Those that survive cam be expected to engage in increased patenting activity.
While all of this sounds so “Western” in approach, one wonders whether the developing reality may be more nuanced that that. In a word, how will the Chinese government fit in? This Kat has been considering what the emerging contours of Chinese IP policy might look like (here and here); the Qualcomm settlement itself can bee seen in the context of broader Chinese IP policy . Indeed, the article itself offers a tantalizing suggestion that any potential smartphone war may not be free of governmental influence, writing that while
“legal jostling will intensify, … there will not likely be an immediate eruption of high-profile court battles. ‘It would be extremely costly and messy for ZTE to take Xiaomi to court, especially as a Beijing company with ties to power,’“ 
quoting the secretary general of the Mobile China Alliance. Moreover, one wonders how Chinese policy makers will come down on the debate of whether it is good, or bad, to drive out young mobile companies, and whether governmental policy might be brought to bear. Stay tuned.

How to pronounce Xiaomi here

Blind faith not enough when proving bad faith: a case of Colourblindness

If the COLOURBLIND case (Pangyrus Ltd v OHIM, RSVP Design Ltd, Case T-257/11) had been a movie, it would have secured a nomination for its intricate screenplay, in the spirit of the recent Academy Awards. At the root of this Community trade mark (CTM) dispute -- a complex plot of corporate issues, incorporations, mergers and dissolutions -- were questions relating to subjective intention and the objective utilization of the Pangyrus's UK unregistered trade mark COLOURBLIND, invoked in invalidity proceedings against the CTM for the same word.


This dispute hinged on the difficulties in determining (i) who owned the unregistered Colourblind mark, created and used since 1991 to identify learning toolbox software created by RSVP's design director Geoff Cox, and, consequently, (ii) whether the COLOURBLIND CTM was legitimately filed, as Pangyrus claimed to own the rights in the unregistered trade mark in the view of its relationship with Mr Cox.

Three companies asserted rights over the disputed sign: Pangyrus (the applicant for invalidity and the appellant before the General Court, which was in principle Cox's company, through which he marketed the Colourblind product [apparently in Cox’s own name before founding Pangyrus] since 1993; Future Factory, one of the companies in which Cox was a shareholder together with a Mr Peacock: in 1998 Future Factory merged with Pangyrus, giving birth to the Cordyn Group, in which both Cox and Peacock had shares; and RSVP, a company founded by Cox, after resigning from Future Factory and Pangyrus in 2003.

Following Cox's resignations, he formally assigned all rights in the unregistered Colourblind mark to RSVP, which successfully applied to register COLOURBLIND as a CTM the same year. Six years later Pangyrus, believing that it owned the Colourblind unregistered mark, filed an invalidity action based both on relative grounds under Article 8(4) of Regulation 207/2009 (use of an earlier unregistered mark of more than local significance) and bad faith under Article 52(1)(b) of the same Regulation. The Cancellation Division upheld the action, but the Board of Appeal reversed that decision in a decision that the General Court has now upheld.

The Board of Appeal had determine whether the unregistered mark was (i) used in the course of trade, (ii) of more than mere local significance, (iii) before the CTM application was filed and (iv) capable of preventing use of the CTM in the UK under the law of passing off. 

As regards the first ground, Pangyrus relied on the common-law tort of passing off, in that, together with Future Factory, Pangyrus created the goodwill in COLOURBLIND and that RSVP had misrepresented its product by selling it under the same mark, threatening to cause real damage.  Regarding the passing-off point, a good place to start is the dictum of Mr Justice Arnold in Och-Ziff Management Europe Ltd & Another v Och Capital LLP & Another [2010] EWHC 2599 (Ch), that 
“the basis of passing-off is a misrepresentation causing damage to the claimant’s goodwill and there are few a priori limits on what the misrepresentation may be or how the damage may arise: the case in which the defendant’s goods are sold as and for the goods of the claimant is now recognised as no more than a special instance of a more general rule”.
Pangyrus however failed to establish its entitlement to the unregistered mark through its use before the CTM was filed. On the facts, Future Factory was the sole supplier of Colourblind products and Pangyrus could not show a significant use of the unregistered mark. Nor was Pangyrus able to demonstrate that it granted Future Factory either an express or an implicit licence to use Colourblind: it was thus the latter which built up the goodwill in relation to the Colourblind sign. The General Court upheld this conclusion.


According to the Court, Mr Cox was indisputably the creator of the COLOURBLIND product and the sole user in his own name of the unregistered mark prior to Pangyrus' incorporation. In evidential terms, invoices relating to the sale of the product only referred to trade mark use by Future Factory. The argument that the corporate structure allowed Pangyrus to retrieve an implied licence from Future Factory was rejected; the invalidity action only could have been brought by the unregistered mark's proprietor, this being the natural or legal person using the mark.

The Board of Appeal also dismissed the argument that RSVP acted in bad faith at the filing of the application, according to Article 52(1)(b), in that no formal agreement between Cox and Pangyrus on the unregistered Colourblind mark existed at the time of their partnership and that there was no proof of that the mark had been transferred from Pangyrus to Cox. Said the Board, bad faith must be assessed in the light of dishonest conduct and be measured under objective standards, since subjective intentions could not on their own have any bearing in such determination. It followed that the alleged 'common understanding' or Pangyrus's 'belief' that it could rely on its ownership of the unregistered mark following the end of Pangyrus's collaboration with Cox could not stand. In any event, such evidence as Pangyrus did submit -- the merger agreement of 1998, a letter addressed to the national tax authority and the Future Facory's business plan at the time of the partnership -- did not support a finding of bad faith, either because it did not concern the ownership of the unregistered mark or because it referred to corporate structural issues and said nothing about the transfer or the licence of the unregistered mark to Pangyrus.

On the subject of bad faith, the General Court had quite a bit to say. It referred to the Court of Justice of the European Union (CJEU) in Chocoladefabriken Lindt & Sprüngli (Case C-529/07), pointing out that instances in which bad faith is found are only examples of circumstances from which a finding of bad faith can be reached following an examination of the facts and circumstances of each case, taking account of matters such as the origin of the contested sign, the nature of its use since its creation, the commercial logic behind its filing and all events that led to the application being filed. 


In this case, said the Court, when applying for the mark Cox was a well-informed person; he knew of the use of the sign first by Pangyrus and, after the merger, by Future Factory, as he had been involved in both companies' activities from 1993 to 2003. However, such awareness could not count as bad faith. As for Cox's own intentions, according to the Court, he did not want to stop Pangyrus using the Colourblind sign, but nor was there any common understanding that the mark belonged to Pangyrus.

So where does this decision leave us? We know that bad faith is easier to allege than it is to prove, and the fact that one party feels personally aggrieved by his perception of the conduct of the other party often provides the motivation to challenge a trade mark application or registration even when evidence is scant or of little persuasive value. Anyone raising bad faith as a ground must be warned, though, that it is ultimately a court that must be persuaded; it is not enough to persuade oneself.

Test yourself for colour-blindness here
Treatment for colour-blindness here
Are cats colour-blind here

Thursday, 26 February 2015

Warner-Lambert v Actavis Mark 3: a "lyrical" solution to a painful patent dispute

On 21 January fellow Kat Darren posted "No pain for Actavis - Warner-Lambert fail to stop launch of generic pregabalin" (here).  This blogpost reported the Patents Court ruling of Mr Justice Arnold in Warner-Lambert Company, LLC v Actavis Group Ptc EHF & Others [2015] EWHC 72 (Pat). In short, Warner-Lambert (part of the Pfizer group) had a patent for pregabalin, which it sold as a treatment for epilepsy, generalised anxiety disorder ("GAD") and neuropathic pain under the romantic-sounding trade mark LYRICA. While the original product patent expired, leaving competitors free to make and sell their own pregabalin, Warner- Lambert received a "second medical use" patent claiming the use of pregabalin or a pharmaceutically acceptable salt of it for the preparation of a pharmaceutical composition for treating pain, and use according to Claim 1 where the pain for which it is prescribed is neuropathic pain. A generic pharmaceutical company marketing pregabalin for that purpose (but for no other) would infringe this indication.

What normally happens here is that the generic company can launch a product with a "skinny label", this being edited product leaflet that mentions only the permitted indications. However, in reality, since prescriptions do not mention the indication for which a drug is prescribed, neither a pharmacist nor a generic manufacturer will know the reason why pregabalin was prescribed. This poses huge practical problems for Warner-Lambert when pondering how best to enforce its patent rights. Refusing interim injunctive relief, Arnold J noted:
" ... the best solution to the problem which arises in this case is to try to ensure that prescribing doctors prescribe pregabalin for the treatment of pain by reference to the brand name Lyrica rather than by reference to the generic name pregabalin. That will ensure that pharmacists only dispense Lyrica when presented with prescriptions for pregabalin which are (at least so far as the prescriber is concerned) for pain without requiring the pharmacist to know the indication for which pregabalin has been prescribed.
The parties were back in court again pretty soon, as Darren's follow-up post explains. In "Warner-Lambert v Actavis Mark 2, still at first instance: more on Swiss claims, Skinny Labels, and no Strikeout" (here), posted on Friday 6 February. This time, at [2015] EWHC 223 (Pat), Actavis sought to strike out Warner-Lambert's action while Warner-Lambert applied to amend its particulars to as to plead a case of subjective intention.  Arnold J refused to strike out the infringement action and to allow amendment of the particulars of claim in what he described as a "developing area of the law".

Today's news was broken to this Kat by a couple of comments posted by anonymous readers.  One read
"Today was the showstopper! Pfizer sought and got a High Court Order against the NHS [that's the National Health Service] requiring it to issue central guidance that when pregabalin is prescribed for pain the prescription must say LYRICA. This is a big first in the enforcement of a second medical use patent. Very innovative Court application by Pfizer based on the NHS being an intermediary or conduit and relying on jurisprudence from trade mark and ISP cases eg Cartier [this being another Arnold J decision, extending relief through blocking injunctions against ISPs from copyright infringements to trade mark infringements: judgment here, Eleonora's Katpost here]. So, there will be no pain for anyone now- the position is clear and simple!"
Another said:
"After today the IPKat can change its headline " Pfizer gets the best pain relief imaginable" - an Order from the High Court that NHSE must issue central guidance that prescribers must prescribe LYRICA when using pregabalin for pain and for those prescriptions pharmacists must dispense LYRICA. That's a super neat solution and is far better than any preliminary injunction against one or more generics. Pretty impressive strategy by Pfizer!"
Darren will surely be adding to this topic when the opportunity arises.

BREAKING NEWS: CJEU says that Member States are free to determine who must pay droit de suite royalty

Copyright has increasingly become linked to de-materialisation of both works and their exploitation channels, so it is kind of re-assuring to find cases that are still about the analogue world. 

This morning the Court of Justice of the European Union (CJEU) issued in fact its decision [not yet available on the Curia website] in Case C-41/14 Christie's France, a reference for a preliminary ruling from France seeking clarification as regards that peculiar creature of EU copyright known as artist's resale right, or droit de suite [Merpel explains that this phrase does not mean right to a (hotel) suite, but rather the "right to follow" the sale of one's own artwork] within Directive 2001/84/EC (the Resale Right Directive)

As this very blog reported a few months ago, despite its appearance as a case concerned with a specialist (and possibly pretty niche) area of copyright, Christie's France is yet another CJEU decision dealing with the relationship between IP rights and contract law [to this end readers will promptly recall the very recent judgment in Ryanair, here].

Background

Article 1 of the Resale Right Directive sets an obligation for Member States to provide for the benefit of the author of an original work of art an inalienable, unwaivable resale right. This consists of the right to receive a royalty based on the sale price obtained for any resale of the work, subsequent to the first transfer of the work by the author. 

It's not droit to a suite ...
Article 1(4) further states that:

"The royalty shall be payable by the seller. Member States may provide that one of the natural or legal persons referred to in paragraph 2 [sellers, buyers or intermediaries art market professionals, such as salesrooms, art galleries and, in general, any dealers in works of art] other than [that's the important bit] the seller shall alone be liable or shall share liability with the seller for payment of the royalty."

Christie's France decided to change its terms and conditions so that the buyer, and not the seller, became liable to pay the royalty. The issue thus became: can a contract derogate from the seller’s obligation to pay the royalty as is enshrined in the Directive? 

The Syndicat National des Antiquaires (SNA) did not think so: it actually took the view that, in placing the onus of the resale royalty on the buyer, Christie’s France’s general conditions amounted to unfair competition. 

Thus litigation ensued, and the Court of Cassation decided to stay the proceedings and seek guidance from the CJEU.

The following is the question that the French court referred to the CJEU:

"Must the rule laid down by Article 1(4) of Directive 2001/84/EC ... on the resale right for the benefit of the author of an original work of art, which makes the seller responsible for payment of the royalty, be interpreted as meaning that the seller is required definitively to bear the cost thereof without any derogation by agreement's being possible?"

The CJEU decision

As stated in the relevant press release, this morning the CJEU held that "[t]he cost of the royalty that has to be paid to the author on any resale of a work of art by an art market professional may be borne, definitively, by the seller or the buyer".

.... but rather the droit
to follow resale of artworks
According to the Court,

"[T]he Member States alone may determine the person liable for the royalty. Although Directive 2001/84 provides that the person by whom the royalty is payable is, in principle, the seller, it none the less allows for a derogation from that rule and thus leaves the Member States at liberty to specify another person from among the professional persons referred to in the Directive who, alone or with the seller, will assume liability for the payment of the royalty. The person who has been designated in that way by national law as the person by whom the royalty is payable may agree with any other person, including the buyer, that that other person will definitively bear, in whole or in part, the cost of the royalty, provided that acontractual arrangement of that kind does not affect the obligations and liability which the person by whom the royalty is payable has towards the author ... [S]uch a derogation is in keeping with the Directive’s objective of bringing to an end distortions of competition in the art market, since the harmonisation concerned is limited to those domestic provisions which have the most direct impact on the functioning of the internal market. For the purpose of achieving that objective, thus circumscribed, it is necessary to make provision as to the person liable for payment of the royalty and as to the rules for establishing the amount of the royalty. However, such provision is not necessary with regard to the question as to who, definitively, will bear the cost of the royalty.
The Court does not exclude the possibility that such a derogation may to some extent have a distorting effect on the functioning of the internal market. However, such an effect is only indirect since it arises as a result of contractual arrangements that are independent of the payment of the royalty to the author, for which the person by whom the royalty is payable remains liable."


A more detailed analysis will follow as soon as the judgment becomes available, so: stay tuned!

Dutch Minister trumps Court of Appeal ruling, reasserts EPO immunity

Is this the EPO ...?
"Opstelten: uitspraak rechter geldt niet voor Europese instelling" is the title of an article in this morning's edition of Dutch newspaper de Volkskrant, which brings tidings of the latest twist in the battle over the European Patent Office's governance. You can read it here in the original Dutch or run it through the online translation service of your choice.

The bottom line, as summarised in an EPO staff communication, is this:
"The president has just received an official notification from the Dutch government which has decided to undertake some first actions to ensure that the judgement is not executable". 
The gist of the article in de Volkskrant is that the Dutch Minister of Justice Ivo Opstelten has made a decision on the basis of the EPO's immunity from execution of court orders under international law, an immunity which the Court had previously lifted.  Whether the minister is correct, either in terms of law or in terms of policy, appears to be open to question.

This moggy, having struggled to comprehend the English version of the article is grateful to Bart van Wezenbeek (European Patent Attorney and Senior Associate, V.O.) for the following:
I have not been able to find the official statement of Opstelten and it is also unclear whether Opstelten would have said this as an announcement from the government, from the ministry or on personal title in an interview. In the news item two legal scholars are quoted who criticize the statement: Hans Engels is quoted to say that “Legally he may be correct, but in view of our constitutional system, this appears to be very strange. It is remarkable that this kind of powers reside with a minister. And I do not express myself in a positive way here”. Further, prof. Cedric Reyngaert (Univ. Utrecht) is quoted: “In fact he is eroding the power of the court. International organization will continue to put themselves above the law, although that already is a problem. Opstelten finds his basis in some law of the ’70s. That should be applied dynamically, but he is taking a very conservative view”.
In a further development, this moggy understands that the President and the head of the Administrative Council have invited the Enlarged Board and the Association of Members of the Boards of Appeal (AMBA) committee to meet on 10 March.  She very much hopes that something good and constructive will come from this but fears that, as so often happens, hope will not triumph over experience.

At this point the opinions of the patent fraternity become less helpful than those of specialists in international law and Dutch constitutional law. If readers can ask any of them for an expert input, that would be most helpful.

Failure! What failure? Things to do with patent filing figures

Was it only yesterday that this Kat, in his Wednesday Whimsies, posted a link to the UK Intellectual Property Office's The Patent Guide A handbook for analysing and interpreting patent data, which states:

"At present there are clear differences in perspective between professional patent experts, researchers undertaking patent analysis and the audience for this research, which includes governments, the press, businesses and individuals. Such differences increase the possibility for incorrect analysis or inappropriate interpretation of analysis. Decisions based upon this could be incorrect and potentially harmful".
Funnily enough today the European Patent Office publishes some patent data on which this Kat's friends at the Chartered Institute of Patent Attorneys have already pounced, producing the following media release.  Note the headline assertion that British business is failing to protect innovation, then read on.  The media release reads, in relevant part:
EUROPEAN FIGURES SHOW THAT BRITISH BUSINESS
IS FAILING TO PROTECT INNOVATION

Figures released today ... by the European Patent Office show that, while UK patent filings have increased since last year, domestic businesses are falling behind the rest of Europe in protecting and exploiting their intellectual property.

 
The EPO released its annual report today which shows that UK filings have increased 4.8% compared to 1.2% average growth across Europe. This was the highest growth in UK filings since 2011.

 
However, the figures also show that of the seven leading European economies, only Italy is below Britain, both in terms of patent filings per $US billion of non-service Gross Domestic Product and per head of population (see graphs).

Leading patent attorney Matt Dixon said, on behalf of CIPA: “British businesses need to wake up and realise that patents ... are a key part of everyday innovation strategy. Without protection for their products, British businesses leave themselves wide open to competition from lower cost economies, such as China, who can simply copy technology with impunity. In an innovation economy, where 80% of a business’ assets are intangible, companies cannot afford to fail to protect the fruits of their product development. 

“The UK is only slightly better than Italy in the rate of European patent filing per head of population and way behind Germany, France, Sweden, Switzerland and the Netherlands. 

“Even if account  is taken of the UK’s significant service sector, where less patenting would be expected, the picture remains the same; Britain has fallen behind other European countries.” 
This Kat wonders how such a depressing conclusion can be drawn from the data in question and he hopes that readers may be able to assist him, either by showing him how it can be done or by showing that it can't.  He struggles to understand why either the number of patent filings per $US billion of non-service Gross Domestic Product or the number of patent filings per head of population should reflect a failure to protect innovation, especially when
  • the patent system only covers some forms of innovation but not others, 
  • innovations in, for example, processes which cannot be reverse-engineered may be better exploited commercially by not filing for a patent,
  • there exist other intellectual property rights which, when deployed individually or in combination with one another may provide better, longer or cheaper forms of protection,
  • the number of patent filings may reflect norms of professional advice which vary as between countries
to name but a few factors that may be of relevance.  This Kat hopes that he will receive responses from economists and statisticians -- and in particular from members of the IPO's Informatics team, whose big chance this is to prove themselves.

Wednesday, 25 February 2015

A test-drive for the Unified Patent Court: Part III

This post returns to the subject of patents in Europe, but in a very different context from that which has been exercising so many of our readers of late. Here the IPKat hosts the third in the series of posts from London-based law firm Bristows (where guest Kat Tom works) on its real-time experiment in litigating before the proposed Unified Patent Court (UPC).

This series is masterminded by Alan Johnson and Alexandria Palamountain and the first two reports are "A test-drive for the Unified Patent Court" (June 2014, here) and "A test-drive for the Unified Patent Court: Part II" (October 2014, here). And now ...
The story so far 
Getting dogs to obey is easy; getting litigants
to obey case management may not be ...
Following fairly typical pre-action correspondence with the patentee threatening infringement proceedings, the action kicked off in April last year with a pre-emptive application by the potential defendant to revoke the patent in the London branch of the Central Division.  In response, the patentee made an objection under Rule 19.1(a) of the 17th edition of the Draft Rules, that is a preliminary objection to the jurisdiction and competence of the Court.  While the application looked “ambitious”, Judge-Rapporteur Rieu (a Solicitor and Member of the Paris Bar working at Bristows) did not simply dismiss the application, but used her case management powers to order the claimant to produce evidence to it had implicitly referred so that the defendant could know the full case it had to meet before serving its defence, and extended time for service of the defence commensurately.  This was something of a surprise to the claimant (and probably the defendant too), but when one looks closely at the case management powers in the UPC Rules, they are incredibly wide.

Next steps 
The claimant was given a reasonably tight deadline to provide its further evidence, and as so often happens in real life, one fact witness who had seemed helpful decided not to cooperate and refused to sign a witness statement.  However, it served an expert report and one of the two witness statements required by Judge Rieu’s order.  As a result of the further investigation with the witnesses (and the gap caused by the uncooperative witness) the claimant also modified its Statement of Case.  Neither the defendant nor the Court (so far at least) has taken any objection to this, and the defendant then duly filed its defence within the revised time limit.  One might have expected it also to have counterclaimed for infringement, but it did not.  Instead, it allowed the defence, reply and rejoinder to be served before bringing a separate action for infringement in the London local division, adding a second patent into suit. 
Too much bifurcation
can take a heavy toll ...
This move by the patentee is perfectly permissible under Article 33 of the Unified Patent Court Agreement (UPCA) which specifically permits patentee defendants to central division UPC actions to being local (or regional) division infringement proceedings instead of counterclaiming for infringement in the central division.  However, what could be the motivation?  For reasons not immediately apparent, the patentee seemed to want de facto bifurcated proceedings, even though (in contrast to the German experience) the validity hearing would be before the infringement hearing.  Might the patentee have been concerned to construe its claims narrowly to secure a finding of validity?  Or did it have in mind some tactic to do with Rule 70 which then comes into play?  This requires that the President of the Court of First Instance is informed of the existence of the two sets of proceedings and that, if a counterclaim for revocation is included in the infringement action, the central division action must stay its revocation proceedings pending a decision by the local division as to how to proceed.  
This would suggest that the progress of the action would lie in the hands of the infringer.  If it pleaded invalidity as a defence (which requires it to counterclaim for revocation) its revocation action would be stayed and the trial date lost.  Against that, if it did not plead invalidity, but only non-infringement as a defence, this would avoid postponement of the revocation case in the central division but create a second set of proceedings and further expense and uncertainty. 
However, instead of letting matters take their course, the Court took the initiative.  It invoked its powers under r.340 and summoned the parties to discuss joinder of the two actions.  The hearing took place on 16 February, involving the judicial panels of both divisions. 
At the hearing all was revealed as to why the patentee had not counterclaimed for infringement, but had instead brought its separate local division action.  It said that it believed that the central division did not have jurisdiction to hear an infringement action concerning the second patent which had been infringed only in the UK and was not the subject of the revocation action; and. since it had wanted the two infringement cases heard together, it considered it had no choice but to start the local division action -- although this did not explain the delay in bringing its local division action which it attributed to the time taken to collect the necessary evidence.

The alleged infringer thought it too early in the local division proceedings to join the two actions together.  It cited the provision in R.340 that Article 33 should be respected and drew attention to the rules (70.3 and 37) which relate to how local division actions should proceed in circumstances such as this where there is a pre-existing revocation action.  It noted that, under these rules, there was to be no decision about how to handle the case (as regards bifurcation) until after close of pleadings.  It also expressed concern that its revocation action should not be derailed by joinder of the two actions.  Neither did it want to have its ability to prepare its response to the infringement claim prejudiced by having time limits shortened so that the infringement part of the case could catch up with the revocation case which was otherwise heading to an interim conference in April and an oral hearing in July. 
The court decided that it had the power under R.340 to join actions together at any time when they concerned the same patent (as here), albeit another patent in addition.  It noted that the only requirement was that the actions were both "pending".  It considered the option of allowing two sets of related proceedings to continue in parallel to be undesirable, especially given that the central division proceedings would mandatorily have to be stayed if there was a counterclaim for revocation in the local division action.  
Implicitly criticising rule 70, it reasoned that it need not wait to see what happened, knowing that there could then be a significant delay.  It equally thought that the only way delay could be avoided without joinder was to permit the two actions to continue in parallel which it thought a waste of court resources, as well as dragging out the dispute as a whole.  It did not think respecting Article 33 required it to wait to see if Rules 37 and.70.3 needed to be applied. 
In view of this, the court decided to conjoin the proceedings and set a timetable which meant that the dates proposed for the interim conference and oral hearing could maintained.  To do so, it abridged the court time limits for pleadings in the new conjoined action, and permitted the alleged infringer as much time as possible for its steps (primarily to serve its defence), leaving the patentee with a very tight time limit (just one week) for its reply and defence to counterclaim. 
The court decided that the requirement to respect Article 33 would be met by having the local division hear the conjoined action.  It reasoned that the object of Article 33 was to give primacy to local and regional divisions at the expense of the central division.

In the light of this, the shape of the action is now a traditional action for infringement with revocation counterclaim, despite the previous procedural manoeuvres of the parties.  Whether in the real system the court would be as proactive as this -- particularly as this involves different court divisions cooperating -- remains to be seen.  Also, the timings only just permitted the court to take this course. 

There was no available artwork for
"ducking the question", but we found
this one for "questioning the duck"
So, under R.340, did these judges make the right decision?  Does the power under the rule permit joinder at any time?  Does it include a power to join actions which involve the same patent, but also a different patent?  And what does respecting Article 33 really mean?  But perhaps the most interesting aspect of this latest instalment is to highlight an uncertainty as to the scope of R.49.2(b) (“The defence to revocation [actions in the central division] may include ... a Counterclaim for infringement”).  Is a patentee sued for revocation in the central division limited to a counterclaim for infringement of just that patent, or can it include another patent in its counterclaim if it wishes?  This would certainly be the most efficient use of party and court resources, but do the rules permit it?  On this the Bristows court took the diplomatic course of ducking the question ...
The next stage is the interim conference scheduled for 14 April.  The Kats' friends at Bristows have promised to keep us all posted.

At this stage it does all seem very daunting, partly because of the unfamiliarity of the proposed new system and partly because of the wide range of options that appear to result from its remarkable flexibility. For litigants and their professional representatives this will mean careful planning, a mastery of game theory and, at least initially, some labour-intensive thinking, says Merpel.

Wednesday whimsies

EPO and a Kat's reproach. A little over 24 hours ago, the IPKat's faithful friend and colleague Merpel posted the news that the UK's Intellectual  Property Office (IPO) had issued a statement concerning the current situation in the European Patent Office. The IPO indicated its interest and gave contact details for anyone who wanted to ask it any questions.  Since then nearly 15,000 readers have received that blogpost by email or visited it directly, and getting on for 50 readers' comments have been posted -- many of them highly critical of the IPO or just plain rude.  To date, however, only three people (bless them) have taken the trouble to contact the IPO, two of these being from outside the UK.  This Kat finds the level of response highly disappointing, also noting that no comment suggests that any other national offices have publicly indicated that they are taking any interest and that they are willing to speak to stakeholders.  He suggests that a better and more constructive approach to take is to engage with national offices on a mature level and to encourage them to understand the current menu of problems as well as you, our readers, do.  This may not bring immediate benefits; indeed it may not bring any benefits at all -- but it is surely more likely to do so than to expect governments and their representatives to discern the truth by piecing together lengthy strings of blog comments.  Bottom line: if your national IPO listens, speak to it. If it doesn't, try to find out why. And thanks once again, UKIPO, for at least making the effort to say something [and can we please hear a bit more, adds Merpel, preferably from a Minister].


Patents and statistics: a guide.  This Kat has just got the link to The Patent Guide A handbook for analysing and interpreting patent data, an e-pamphlet from the UK Intellectual Property Office's Informatics team [Merpel explains: "Informatics" is a hybrid word formed from "Information", because it's useful, and "Rheumatics", because it can be a real pain].  According to the team:
The study of patents has been approached with increased enthusiasm in recent times. At present there are clear differences in perspective between professional patent experts, researchers undertaking patent analysis and the audience for this research, which includes governments, the press, businesses and individuals. Such differences increase the possibility for incorrect analysis or inappropriate interpretation of analysis. Decisions based upon this could be incorrect and potentially harmful.

This handbook has been created to improve shared understanding between patent experts and those undertaking or using patent research.
Ostensibly 28 sides long, its operative part is a good deal shorter, so check which pages you really want before you print it out.  Future editions are already being planned, which propose to embrace analysis and interpretation of statistics on other intellectual property rights (IPRs). If you want to discuss the content of this handbook or suggest future content, this is your big chance: you can email the Informatics team at informatics@ipo.gov.uk.


Around the weblogs. There's plenty going on in the Benelux region these days. Apart from the decision of the Gerechtshof den Haag in the now notorious matter of the European Patent Office and human rights [Merpel's wondering if any other IP blogs are regularly covering these developments; her favourite ones aren't], the MARQUES blogs Class 46 and Class 99 have been picking up on some hot stuff. On Class 46 veteran Katfriend Gino van Roeyen comments on a Benelux office trade mark ruling in an opposition involving traditional Zeeland dress and Denise Verdoold explains why IUS is no use as a trade mark for legal services in Belgium, while Class 99's Hidde Koenraad reports on incremental developments over earlier designs as viewed by The Hague's interim relief court.  Mark Anderson, on IP Draughts, speculates as to what will happen to the market for reproduction 'designer' chairs once the UK has brought them all back into copyright protection.  Finally, IP Finance's Rob Harrison updates us on the battle over Nespresso's coffee capsules in Germany -- this Kat had no idea that the market for these things was so large, or of the possibility that as many as 1,700 patents might govern them.


Scents and sensibilities II.  Following this morning's post ("Scents and sensibilities: how far can copyright stretch?", here) on the BLACA-IPKat Sensory Copyright event, this Kat has now received the PowerPoint presentations both from Eleonora (here) and from Tobias (here).  On the right you can see Eleonora and Tobias holding samples of HEKSENKAAS, the product on which the Dutch judiciary will soon have to pronounce as to the copyright-protectability of its taste.  The product is reported to be a combination of cream cheese, mayonaise, leek and garlic, so you might want to experiment with it in the privacy of your own kitchens. Meanwhile, if you want to get a taste of Dutch jurisprudence on the subject of taste protection, here's a link to an English translation of the decision in Kecofa v Lancôme.

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