For the half-year to 31 December 2015, the IPKat's regular team is supplemented by contributions from guest bloggers Jani Ihalainen, Nikos Prentoulis and Mark Schweizer.

Birgit Clark is on Sabbatical till the end of the year

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

Monday, 27 July 2015

Kimble v Marvel Entertainment: when post-expiry patent royalties meet stare decisis

This Kat for a number of years taught a course on legal aspects of IP transactions. Consistently, the most challenging case to convey to students was the U.S. Supreme Court decision of Brulotte v Thys Co. (379 U.S. 29 (1964)), which fixed a bright-line rule that a patentee cannot charge royalties for the use of its invention after the expiry of the patent. The Court held that because such an agreement had the effect of extending "the patent liability beyond the period", such an agreement was held "unlawful per se". I always found this decision difficult to explain, because it straddled in an unsatisfying way a consideration of patents as an IP right, competition law concerns regarding the potentially anticompetitive effects of exercising a patent and commercial arrangements for the pricing and timing of royalty payments. Against this backdrop and after the passing of a half century, this Kat hoped that the U.S. Supreme Court, in revisiting the issue in the case of Kimble v Marvel Entertainment, LLC (as reported by AmeriKat on June 30th), would provide some clarity. Alas, it did not. In so not doing, permit this Kat some further thoughts on this most frustrating of Supreme Court IP-related rules.

To recall, the Kimble court, in considering the ongoing obligation of Marvel to a royalty with respect to the Spider-Man toy, chose not to abandon the bright-line rule fixed in Brulotte in favour of a case-by-case analysis based on the "rule of reason" approach used in antitrust (what the Americans call competition law) cases. In a 6-3 decision, the majority opinion, authored by Justice Kagan, framed the case as a question of stare decisis, namely the principle "that today's Court should stand by yesterday's decisions" unless there is "a special justification—over and above the belief 'that the case was wrongly decided'." The opinion quoted the oft-noted words of Justice Brandeis, written in a dissenting opinion no less, that is usually "important that the applicable rule of law be settled than it be settled right." The upshot of the majority ruling is to leave the Brulotte rule in place.

To which Justice Alito, for the dissent, wrote a stinging rebuke:

"[The Brulotte] decision was not based on anything that can plausibly be regarded as an interpretation of the terms of the Patents Act. It was based on an economic theory—and one that has been debunked. The decision interferes with the ability of parties to negotiate licensing agreements that reflect the true value of a patent, and it disrupts contractual expectations. Stare decisis does not require us to retain this baseless and damaging precedent."
He continued:
"Brulotte was thus a bald act of policymaking. It was not simply a case of incorrect statutory interpretation. It was not really statutory interpretation at all." "Not only was Brulotte based on policymaking, it was based on a policy that is difficult to defend. Indeed, in the intervening 50 years, its reasoning has been soundly refuted."
What comes to mind to this Kat in reading the majority and dissenting opinions in the Kimble case is the image of judicial ships passing at night, so much so that one has to remind himself that both are addressing the same case. Partially because this Kat is sympathetic to the position articulated by the dissent, partially because he recalls his frustration in seeking to explain the Brulotte decision to students (and clients), he is especially disappointed with the majority opinion. In a word, this Kat has the sense that no set of facts or arguments could have constituted the "special circumstances" required to overcome stare decisis in this situation. Consider the main points in their decision.
1. The Court should be especially wary in overturning a precedent when the precedent is based on construing a statute; there always exists the possibility to take one's objections to Congress.
2. Indeed, Congress has rebuffed several opportunities to overturn Brulotte.
3. Since property and contract issues are also implicated, there is even a greater reluctance to overturn a precedent, given reliance on the principle in day-by-day affairs.
4. There has been no change to the patent laws with respect to the issue under consideration.
5. The Brulotte rule is simple to understand and easy to apply.
6. Since this case is about the patent laws and not the antitrust laws, even if the Brulotte case relied on misconceived economics (especially anti-competitive tying arrangements), it is for Congress to rectify it.
7. Moreover, Kimble's arguments that the Brulotte decision is bad policy, suppresses technological innovation and harms parties from reaching agreements that best enable them to commercialize their inventions, are not supported by empirical evidence and, in any event, are the purview of Congress and not the Court.
Kat readers are invited to read the opinion and reach their own conclusions—this Kat standing behind his impression that nothing could have changed the mind of the majority, despite the wide dissatisfaction with both the rationale and implementation of the Brulotte rule. And so the question is how do we account for this? Perhaps some insight can be gotten from a consideration of the unusual composition of the majority opinion, comprised of the four so-called liberal Justices, Breyer, Ginsburg, Sotomayor and Kagan, joined by arch-conservative Justice Scalia and perennial swing vote Justice Kennedy. In considering this composition, it seems to this Kat that three different considerations were at work. For the four liberal justices, their position can be understood as giving expression to the longstanding liberal fear of "over-extending" IP rights, especially patents, given the anticompetitive effects that in their view lurk in the exercise of patent rights. Indeed, the Brulotte decision, with its strong strand of antitrust-like considerations, reflected this approach back in 1964. While the hostility to patents that characterized the Warren Court of those days has subsided, it has not disappeared and the concern over patent trolls has reinvigorated this tendency. Cutting back on Brulotte would have run counter to this orientation.

As for the position of (this Kat's law professor of a time long ago) Justice Scalia, the impetus seems to derive from Justice Scalia's deeply rooted judicial conservatism rather than any concern with the scope of IP rights and their exploitation (or how the Brulotte rule has worked in practice). What is interesting is how he split ranks from the other three so-called conservative justices, Chief Justice Roberts, and Justices Thomas and Alito, who focused on what they viewed as the deeply flawed and anachronistic foundations that undergird the Brulotte decision. Justice Scalia seems to ignore these factors in favour of doctrinal considerations, which brought him to the same result as his liberal colleagues. Justice Kennedy has been distinguished by his relative lack of ideology as the guiding principle in his decision-making. On this basis, it would seem that he was simply convinced, under the facts of the case, that there was no compelling reason to overturn the Brulotte rule.

Thus not only does the Kimble majority make for strange judicial bedfellows, but it points to the role of ideology when the matter at issue goes beyond the traditional realm of patent law and seeks to embrace concerns such antitrust and contract law as well. To the extent that future patent cases before the Supreme Court will increasingly implicate such additional legal matters, we can expect further split decisions resting on strong differences in underlying orientation, leading to constant shifts in the composition of the majority and minority opinions.

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

Here once again, Katfriend Alberto Bellan has delicately selected and summarised last week's substantive Katposts for the benefit of anyone who missed the action last week through holidays or pressure of work and/or who now needs a quick catch-up.  The popularity of this feature during the summer vacation season cannot be underestimated: last week, with the holiday season in full swing, well over a thousand good souls visited Alberto's Never Too Late summary, a substantial hike over visits during the more serious, less holiday-prone months.  Anyway this, Alberto's 56th weekly summary, reads as follows:
A few weeks ago Green J issued a judgment concerning the recently-introduced UK exception for personal copies for private use, concluding that it does not currently envisage a fair compensation requirement [here]. Now he issues the follow-up order commented in this post, addressing the effects of his judgment and the chance of a new reference to the Court of Justice of the European Union (CJEU). Eleonora explains.

* Letter from AmeriKat: US patent litigation boom, Netflix's Rovi win, Triumphant Tory and Ford trade secrets

Record numbers of US patent actions, an update on Netflix v Rovi, and a millionaire's compensation awarded to fashion designer Tory Burch are just some of the issues addressed in this letter from Annsley.

* Read the fine print: IP Statistics

“IP statistics are thrown about on a regular basis without sufficient caveats, out of context and, in some cases, stats are so poorly calculated they should never leave the back of the envelope”, says Nicola. How come?

* India's claims to Traditional Knowledge washed up and spat out

Last week (and even before then, here and here), Darren has expressed concerns that many cited examples of alleged expropriation of Traditional Knowledge simply do not stand up to scrutiny.  As former Kat David Pearce (Tufty) explains in this post, another example has recently arisen: it concerns allegations of misuse of Traditional Knowledge from India relating to various herbs.

* Law Down Under: New Censorship Bill Passed in Australia

As Jani explains, the Australian Parliament has just passed the Copyright Amendment (Online Infringement) Bill 2015, which aims to give the Australian courts more tools to combat online copyright infringement. While the provisions owe something to the UK (and some other European) Copyright Laws, it goes well-beyond them.

* Gone with the wind: Wobben’s patent found invalid and not infringed

Darren writes up Wobben Properties GmbH v Siemens PLC & Others [2015] EWHC 2114 (Pat), a decision of Birss J concerning validity and infringement of a patent covering a “Method of Operating a Wind Power Station”.

* Hosepipe Ban to Continue - Blue Gentian patent upheld in appeal

And here’s Darren again, this time reporting on the Court of Appeal decision in Blue Gentian v Tristar Products (earlier covered on the IPKat here), which discusses, among other things, misconstruction of a prior art document.

* Copyright reform through competition law? The Commission’s statement of objections in the pay TV investigation

Is geo-blocking [here] really a copyright issue? Or is it rather a competition law one?  Following the EU Commission’s statement of objections to Sky UK and the ‘Big Six’ Hollywood majorsEleonora hosts this contribution by fellow blogger (Chillin' CompetitionPablo Ibanez-Colomo (London School of Economics), who explain what’s going on.

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

PREVIOUSLY, ON NEVER TOO LATE 

Never too late 55 [week ending on Sunday 12 July] Traditional Knowledge and indigenous people | Traditional Knowledge in Canada | Traditional Knowledge and unbalanced dialogues | E-mail addresses as trade secrets | CJEU on essential patents in Case C-170/13 Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH | CJEU on disclosure of infringers’ bank data in Coty Germany GmbH v Stadtsparkasse Magdeburg Infocit - Prestação de Serviços, Comércio Geral e Indústria, Lda v OHIM | Moral ambiguity of trade secrets | CJEU on limits of TM exclusive right in TOP Logistics BV, Van Caem International BV v Bacardi & Company Ltd, Bacardi International Ltd | Non-traditional trade marks in Japan.

Never too late 54 [week ending on Sunday 5 July] - Google v Oracle and Microsoft/Kyocera settlement | GC and Nagoya | Life Science IP Summit 2015 | (Kat)onomics of patents | Case T-15/13 Group Nivelles v OHIM | Case T‑521/13 Alpinestars Research Srl v OHIM v Kean Tung Cho and Ling-Yuan Wang Yu | Smith & Nephew Plc v ConvaTec Technologies Inc | Multi Time Machine, Inc., v Amazon.com, Inc.; Amazon Services, LLC | EU reform on freedom of panorama and (Google) News ancillary right | 3-D Printing choked by IP? | Pro-Football Inc v Amanda Blackhorse et al. | Condoms made in Germany | the Beckhams’ IP.

Never too late 53 [week ending on Sunday 28 June] - EU trade marks in Arabic in Case C 147/14 | Is UberPop a transport service? The floor goes to the CJEU | Is Michael Jordan’s ”Jumpman” logo a copyright infringement? | Plant variety in Case C‑242/14 | US Supreme Court on Spiderman patent | Hospira v Genentech saga | Are EU policy-makers fighting the right copyright battles? | The IPKat and his friends | GO Outdoors Ltd v Skechers USA Inc II | Allfiled UK Ltd v Eltis & 16 Others | OAEE 'victims' mark in Greece | Icons, flags and the Hazzards of intellectual property toxicity | Why Finland is not Silicon Valley | The Sofa Workshop Ltd v Sofaworks Ltd The Ukulele Orchestra of Great Britain v Clausen & Another (t/a the United Kingdom Ukulele Orchestra) | Sony/ATV Music Publishing LLC & Another v WPMC Ltd & Another | The London Taxi Corporation Ltd v Frazer-Nash Research Ltd & Ecotive Ltd.

Never too late 52 [week ending on Sunday 21 June] - EU TM reform | Motivate Publishing FZ LLC and another v Hello Ltd | EPO’s Inventor of the Year: poll results | New network for new IP people | Delfi v Estonia | UPC fees | Smith & Nephew Plc v ConvaTec Technologies Inc Canary Wharf Group Ltd v Comptroller General of Patents, Designs and Trade Marks Actavis v Lilly | Council of Europe v EPO | Freedom of Panorama | TM reputation and brain scan | Case management decisions in the Lyrica case.

Swiss Supreme Court: document delivery service for scientific articles

This decision of the Swiss Federal Supreme Court is not the most recent, but may be interesting in connection with the discussion on private copying exception in the UK.

Switzerland knows a fairly substantial private copying exception. Art. 19 Copyright Act namely excepts the following uses from the exclusive rights of the copyright owner:
(1) Published works may be used for private use. Private use means:a. any personal use of a work or use within a circle of persons closely connected to each other, such as relatives or friends; b. [...] c.  the copying of a work in enterprises, public administrations, institutions, commissions and similar bodies for internal information or documentation.
(2) Persons entitled to make copies of a work for private use may also have them made by third parties subject to paragraph 3; [...].
(3) The following are not permitted outside the private sphere defined in paragraph 1 letter a: a. the complete or substantial copying of a work obtainable commercially; [...]

Based on art. 19(a) and (c), the Federal Institute of Technology in Zurich (ETH) offers a document delivery service for scientific articles. For small fee (approx. EUR 12 for private individuals and EUR 18 for commercial entities), it scans an individual article from any volume in its collection and sends the PDF per email to the requester (sorry, not available outside of Switzerland and Austria). In 2011, about 40,000 copies were made and sent to requesters. Unsurprisingly, the large scientific publishers Elsevier, Springer and Thieme did not like this, and they brought suit against ETH before the Commercial Court of Zurich. 

The Commercial Court found that the copying as such was permissible, but not the sending by email. On appeal, the Federal Supreme Court came to a different conclusion. It held that since the ETH was a third party in the sense of art. 19(2) Copyright Act, the restrictions of art. 19(3)(a) applied in any case where a third party made the copies, even for private use in the “inner circle” according to art. 19(1)(a). The key question was therefore whether ETH was copying “a [complete] work obtainable commercially”. The publishers argued that the individual articles were available for download from their electronic archives, and hence the individual article was “commercially obtainable”, and ETH copied the complete work.

The Supreme Court disagreed. It gave a number of reasons for its conclusion that it was the printed volume containing the individual article which was the “work obtainable commercially”. The two most important reasons given were that for the person copying from the printed volume, it was not evident whether the individual articles were available online, and it was hence not possible to ascertain whether there was a right to make the copy. Even more importantly, and probably carrying the day for ETH, was the insight that if making individual articles available online was sufficient to pre-empt the private copying exception for individual scientific articles, it was largely in the hands of the publishers whether this right had any meaningful application in the 21st century. This, said the Supreme Court, was against the balance struck between the interests of the copyright owners and the users.

Finally, sending the legally made copy by email to the end-user was encompassed in the exception. “Making a copy” included the right to grant access to the copy, including by email (this is different under European law, see Consideration (40) of the Copyright Directive 2001/29, and OLG Munich of 10 May 2007 on the harmonised German law, which only permits the analogue – postal or fascimile – delivery of individual scientific articles).

The Supreme Court also held that the exception permitting copying individual scientific articles from printed volumes and sending the scans by email passed the three-step balancing test according to art. 9(2) Revised Berne Convention. The publishers had not shown that they lost any revenue, and were compensated by a private copying levy (which amounts, for ETH, apparently to about EUR 12,000/year – substantially less than the revenues generated from the delivery service. Lest you want to cry for the publishers, ETH spends about EUR 9 million per year on subscriptions to scientific publications).

This Kat observes that the decision will leave all parties dissatisfied: ETH is forced to make copies from printed volumes, although it is also subscribed to the electronic databases containing these articles. This is highly inefficient (although probably creating some jobs for cash-strapped students). The publishers, on the other hand, failed to stop the document delivery service. Copyright continues to struggle with the realities of the 21st century (yes, says Merpel, and that’s part of the reason why open access is the future of scientific publishing).    


Is French law on out-of-print works compatible with EU law? A new CJEU reference

Books may also become permanently
unavailable when Kats appropriate them as beds
Can collecting societies authorise the reproduction and communication to the public of out-of-print works without an express prior mandate from relevant rightholders?

This question is not merely academic, as IPKat readers - in particular those based in France - may be aware that in 2012 France adopted a law allowing the digital exploitation of unavailable books of the 20th century. 

Among other things, this law provides for the appointment of a central collecting society that is in charge of granting licences in respect of orphan and out-of-print books, setting licence fees, collecting and keeping the revenues of unlocated rightholders for ten years. 

Unlike the UK licensing scheme [discussed here] and the Orphan Works Directive [discussed here], under this French law the search for relevant rightholders is to be carried out by the appointed collecting society. 

Libraries are allowed to use works for free after ten years from their inclusion in an orphan work database managed by the Bibliothéque Nationale de France. In any case, libraries would only be able to show orphan books to their subscribers. 

This legislative initiative was mainly aimed at permitting use of out-of-commerce works. As such, in this Kat's opinion it could be considered compatible with the Orphan Works Directive, since this expressly allows Member States “to address larger mass digitisation issues, such as in the case of so-called 'out-of-commerce' works” (Recital 4).

But can the same be said also in relation to other EU directives?

The French Council of State is in fact unsure whether a law that authorises a collecting society to allow the exploitation of works without prior permission from relevant rightholders (who can subsequently opt out of the system) is compatible with Directive 2001/29/EC (the InfoSoc Directive), or whether is instead tantamount to an undue limitation to authors' rights.

As such, last May the Council of State decided to seek guidance from the Court of Justice of the European Union and refer the following question:

Do the provisions… of Directive 2001/29/EC of 22 May 2001, preclude legislation… that gives approved collecting societies the right to authorise the reproduction and the representation in digital form of ‘out-of-print books’, while allowing the authors of those books, or their successors in title, to oppose or put an end to that practice, on the conditions that it lays down?

The case has now been numbered as C-301/15 and further details can be found on the website of the UK Intellectual Property Office, which also invites comments to be emailed to policy@ipo.gov.uk by 07 August 2015.

Friday, 24 July 2015

Friday fantasies

... unless you pay
Pay to opt-out: is it legal?  Yesterday PatLit carried a short note referring to a post by European patent package-watcher Ingve Stjerna, in which he asked whether there was any legal basis on which litigants who chose not to use the Unified Patent Court (UPC) would have to pay a fee in order not to use it but to use a national court with concurrent judicial competence. Today the same blog discovered that Benedikt Migdal (Bristows) has been asking much the same question in a piece on his firm's UPC blog.  This Kat thinks that the case made by Ingve and Benedikt is worth serious consideration and he hopes that the European Union's Member States and the Commission will address it.  Merpel thinks this is wishful thinking ...



Still on patents. AMBA -- the Association of the Members of the Boards of Appeal of the European Patent Office (EPO) -- has just launched an online questionnaire on reforms of the Boards of Appeal of the EPO. The questions are in the left hand column and follow the categories of the EPO's own questionnaire, but have a wider scope and are more closely directed towards exploring the effects of structural changes on the Boards' independence. The right hand column on the questionnaire screen contains relevant explanatory information [there is a lot of info there, and not everybody will need it or indeed be interested in it, which is why AMBA have tidied it away in collapsible sections]. AMBA's own proposal for reform [you can find it in AMBA's Report on the Reform of the Boards of Appeal] is similar to that of the epi [that's the body representing practitioners before the EPO] in that it involves a council for the judiciary, but a number of differences can be seen from the comparison table in the information section in the introduction. Do please participate if you can!


Parliament resolves, CEIPI roars. This Kat has just received a 23-page document from his friends at CEIPI in Strasbourg, this being the "Reaction of CEIPI to the Resolution on the Implementation of Directive 2001/29/EC on the Harmonisation of Copyright in the Information Society adopted by the European Parliament on the 9th July 2015". Once the various Kats have had a chance to review it properly, you may be reading more about this document.  Meanwhile, this Kat brings you a sneak preview of its rousing finale:
Creating a common digital space was a far
tougher job than was first imagined
 
Ordinary Europeans do not perceive the European project though ambitious political declarations but through their everyday life reality. If “an ever closer union among the peoples of Europe”106 is to be achieved in the XXI century, it cannot be done while digital curtains are maintained. It is hoped that European and national leaders will have the courage to create a common digital space, as no member state can change this by a unilateral action. Now it is the turn for the European Commission to make an ambitious proposal drawing on the Parliament’s Resolution. 
In the meantime, if you have read it and would like to give the benefit of your thoughts to CEIPI's Director General Christophe Geiger, do please email him here. And if you'd like to peruse a Kat's-eye view of what the European Parliament was up to on 9 July, Eleonora's post here is worth a read.



An illuminating read?  This Kat's feelings about the long-outdated, stale, tired and boring metaphor of the light-bulb as a visual metaphor for invention, innovation or intellectual property as a whole are well-known.  Accordingly, when he received his copy of The Economist Guide to Intellectual Property: What it is, How to protect it, How to exploit it, by Stephen Johnson, his heart sank.  Fortunately, once he got past the front cover, things started looking up. This is a short, intelligently-written set of guidance for decision-makers and risk-takers in business who spend time and expend energy and emotional capital in dealing with their corporate intangible assets without actually being IP lawyers themselves, readers who often have to navigate the uncertain terrain of markets in which you have to keep eye simultaneously on your own and your competitors' IP.  It's a good read by a seasoned IP expert (the author, after three decades in private practice, is now Chief IP Officer of a leading US mental health charity, One Mind.  Details of this book can be found on the publisher's website here.



Short and sweet. Innovation, Competition And Collaboration, is a new title from Edward Elgar Publishing.  Edited by Dana Beldiman (Professor, Bucerius Law School, Hamburg, and Professor-in-Residence, UC Hastings College of the Law, San Francisco), it is one of the shorter titles to emanate from that prolific publishing house in recent times, with just ten chapters spanning a little over 200 pages, but the quality of the contributors and their respective chapters more than compensates for that slightly sinking feeling that some people who pay for their own books get after they've divided the price by the number of pages they've received in return. The authors include many well-established analysts of IP issues, whether drawn from practice (in this case veteran commentator Thomas Vinje, now with Clifford Chance in Brussels) or from academe (Annette Kur, Ansgar Ohly Séverine Dusollier, Gustavo Ghidini and Jacques de Werra are in the line-up). To find out more about this title, just click here.

Copyright reform through competition law? The Commission’s statement of objections in the pay TV investigation

Geo-blocking: does it make you roar or yawn? 
Is geo-blocking, ie something that the Commission considers a priority for copyright reform at the EU level [here], really a copyright issue? Or is it rather a competition law one?

The IPKat is delighted to host an extremely thoughtful contribution by competition law scholar and fellow blogger (Chillin' CompetitionPablo Ibanez-Colomo (London School of Economics) on some key developments occurred yesterday.

Here's what Pablo writes:

"The moment of truth for the Pay TV investigation has arrived. 

Yesterday, the Commission sent a statement of objections to Sky UK and the ‘Big Six’ Hollywood majors. It has come to the preliminary conclusion that the territorial restrictions introduced in the agreements between the pay TV operator and the studios are restrictive of competition, and this insofar as they give absolute territorial protection to broadcasters (both to Sky and to licensees based elsewhere in the EU). 

As a result of these agreements, the Commission argues, Sky is prevented from providing its services (online and via satellite) to end-users based in Member States other than the UK. Some of the views stated in the press release are remarkable and will no doubt give rise to considerable controversy in the coming months.

Exhaustion through competition law? 

The Commission suggests in the press release that Sky should be entitled to provide its online pay TV services outside the UK (at least in principle). The fact that it may hold a license to offer content only in that Member State does not seem to make a difference in this regard. 

This position is extraordinary.

It means that a TV operator having been granted a licence to broadcast content online in one Member State should be entitled to broadcast the same content in the whole of the EU. 

As I see it, it comes dangerously close to saying that the exhaustion doctrine applies to broadcasts. 

It's usually impossible
to take Merpel by surprise ...
According to the Commission, online content should circulate within the EU as freely as DVDs so long as it is offered by the right holder or with its consent.

The view advanced by the Commission in the statement of objections (at least in light of the press release) is at odds with Article 3 of the InfoSoc Directive, which states very clearly that the right of communication to the public is not subject to exhaustion. 

The Commission indeed suggests the opposite, in the sense that it claims that the licensee in one Member State is not entitled to prevent licensees based elsewhere from offering, online, the same content in its territory.

In this regard, the question is, I guess, whether it is possible to limit the scope of an intellectual property right through competition law. One can say in this regard, at the very least, that there are no precedents for such a move. EU courts have always been clear in stating that EU competition law does not question the existence of intellectual property rights, but only their exercise.

Is the extension of the exhaustion doctrine through Article 101 TFEU enforcement not tantamount to questioning the very existence of the right of communication to the public?

The scope of Murphy and Coditel II

The statement of objections seems to be based on a relatively expansive interpretation of Murphy [here]. The Court of Justice of the European Union held in that case that an export prohibition regarding decoding devices is restrictive of competition by object under Article 101(1) TFEU and does not meet the conditions of Article 101(3) TFEU. 

I have written elsewhere that Murphy is not easy to interpret. In particular, it is not immediately obvious to reconcile with Coditel II, which remains good law. The difficulty is that, in the latter case, the Court held that an exclusive territorial licence is not as such restrictive of competition.

In any event, it seems clear to me that merely prohibiting, by means of an agreement, an operator from broadcasting content in the territory allocated to another licensee is not contrary to Article 101(1) TFEU. 

Paragraph 137 in Murphy seems unambiguous to me in this regard. Not only does it confirm that Coditel II has not been overruled, but it states that "the mere fact that the right holder has granted to a sole licensee the exclusive right to broadcast protected subject-matter from a Member State, and consequently to prohibit its transmission by others, during a specified period is not sufficient to justify the finding that such an agreement has an anti-competitive object".

... except when
competition law gets into IP business
The Commission now seems to be of the view that even clauses that restrict the ability of broadcasters to offer online content in a territory other than the one for which they hold the licence (the press release refers to geo-blocking) are contrary to Article 101(1) TFEU by their very nature. It would be interesting to see how this position is substantiated by the authority. It is without any doubt the key legal issue in the case.

Copyright reform through competition law?

It is impossible to ignore that the statement of objections comes at a time when copyright reforms are being discussed. 

The press release itself refers to some initiatives by the Commission which seek to promote cross-border access to copyright-protected works. The proposed reforms overlap with the concerns raised in the statement of objections and would have exactly the same consequences for end-users. 

Is cross-border access to content a competition law issue or a copyright one, then? Why apply Article 101 TFEU to a policy objectively that would be more logically achieved via legislation?

I find it extremely difficult to draw neat boundaries between disciplines. I am always wary of claims that EU competition law is being applied beyond its proper scope. One thing is clear, however. If the Commission goes ahead with the theories sketched in the press release, it would be redefining, via Article 101 TFEU enforcement, the scope of the right of communication to the public and the reach of the exhaustion doctrine. 

Proper or improper, this, as explained above, is surely unprecedented in EU competition law."

Thursday, 23 July 2015

Thursday thingies

ertert. "The first EU-wide interactive website dedicated to young people and Intellectual Property is launched today", announce the IPKat's friends at the Office for Harmonisation in the Internal Market (OHIM). It's called Ideas Powered [OHIM does not appeared to have registered this name as a Community trade mark, notes Merpel] and it comes courtesy of the European Observatory on Infringements of Intellectual Property Rights. According to OHIM's media release:
"The site brings together contributions from young designers, composers, entrepreneurs and artists from all across the EU to show how IP underpins and supports innovation and creativity. [It] also includes a video competition which invites young people to submit their views on how Intellectual Property matters to them.

Today’s release follows on from a 2013 study carried out by OHIM into how EU citizens – including young people – perceive Intellectual Property. The results showed that eight out of ten 15-24 year olds in the EU believe that buying counterfeit products has a negative economic effect, and two thirds agree that illegal downloading is a threat to the economy and jobs. However, 50% still justify buying counterfeits as an act of protest or a smart purchase and 57% think illegally accessing copyright-protected content for personal use is acceptable" [well, if you will ask them ...].
Ideas Powered is a bit more fun than the regular OHIM website, and easier to find your way round. The style of the website is might best be described as a rather self-conscious "this is about as funky as we can be, considering that we're EU bureaucrats" sort of style and this Kat thinks that some good folk have been second-guessing what might just appeal to all those protesting but basically fair 15 to 24 year-olds at whom it's directed. You can also enjoy Ideas Powered on Facebook and Twitter [oh goodness, murmurs Merpel, I've just realised that it's called Ideas Powered because its initial letters are 'IP' ...].
 


Forthcoming events.  During the long summer days which we enjoy in the Northern Hemisphere, you may find that things are getting a bit quiet. Lawyers find that their clients have gone on vacation; courts close as their terms end; students bask in the blissful state of post-examination relaxation and infringers wander off to spend their ill-gotten gains. So now's the time to take some time to check the IPKat's Forthcoming Events page and see if there's anything that takes your fancy.


New eZine on the block. Oxford University Press, publisher of the Journal of Intellectual Property Law & Practice (JIPLP, the IPKat's favourite IP journal since so many members of the blog team are involved with it), excitedly announces the launch of a new Intellectual Property law eZine. This eZine offers more than 50 pages of free content, videos, podcasts and blogs. You can sample its delights by clicking here.


Churchill's opinion of the
French basketball team?
Around the weblogs. A guest post on the MARQUES Class 46 weblog by Clara Cabecerans summarises the main changes introduced into European IP litigation by the new General Court Rules of Procedure [nb they are already in force, as of 1 July]. These rules govern appeals from the Office for Harmonisation in the Internal Market's Board of Appeal in Community trade mark and registered Community design cases. The same blog has a perceptive note by Christian Tenkhoff on the General Court's inconsistent treatment of laudatory terms, prompted by its recent decision regarding the mark HOT.  On Afro-IP Caroline Ncube gives an account of the Battle of the Fairhavens and explains how passing off can fill in the gaps in South African domain name ADR rules. Writing on SOLO IP, Barbara Cookson explains why Russian oligarchs are especially welcome in the IP courts of England and Wales. Finally, the late Sir Winston Churchill found himself at the heart of a truly French piece of moral rights litigation after his statue was unceremoniously garbed in a French basketball jersey and then photographed without the sculptor's permission: here's a neat account on the 1709 Blog by Marie-Andree Weiss.

Hosepipe Ban to Continue - Blue Gentian patent upheld in appeal

The IPKat previously reported (here) the High Court decision in Blue Gentian v Tristar Products; a decision perhaps most notable for its brevity.  The recent Court of Appeal decision (here) in the same case is even shorter, concluding that Birss J “carried out a thorough evaluation of the evidence before him and … made careful findings. He has made no error of principle. In my judgment there is no basis for this court to interfere with the conclusions to which he has come”, and unanimously upholding the patent for the XHose expandable hose.  This might be some consolation to Mr Justice Birss, having recently been told by the Court of Appeal that he had misinterpreted the meaning of the number 1 (see the IPKat's posts here and here)!

In the first instance in this case, Tristar did not contest that their actions would infringe the patent were it to be valid, but alleged that it was invalid because it lacked novelty or was obvious in the light of two prior art publications.  On appeal, novelty was not at issue, with Tristar only arguing that Birss J had erred when assessing inventive step.

It is established UK law that inventive step is “a kind of jury question” and that “where the application of a legal standard such as… obviousness involves no question of principle but is simply a matter of degree, an appellate court should be very cautious in differing from the judge’s evaluation” (Lord Hoffman in Biogen v Medeva UKHL).  In this case, Tristar argued that Birss had indeed made a fundamental error in approaching the allegations of obviousness in that:

Merpel's distrust of hosepipes is not unfounded
 i) in relation to the first prior art document, he wrongly construed the document and that his errors of construction led him to conclude, wrongly, that their obviousness attack should be rejected as reliant upon hindsight; and
ii) in relation to the second, he again wrongly construed the document and relied upon evidence from Blue Gentian's expert, Mr Sinclair, which he should not have accepted.
Whilst mis-construction of a prior art document is of course a principle in which one could err, and despite the fact that Tristar made submissions which were “attractively…developed” by their counsel, Lord Justice Kitchin, (Lord Justice Tomlinson and Lady Justice Hallett concurring) found in Blue Gentian’s favour.  The Court of Appeal found that Birss J's analysis of the prior art and his reliance on the expert evidence was factually and legally sound and affirmed the High Court decision.

Perhaps more interesting is that the patent has fared differently in litigation in different jurisdictions; the Court of Appeal in Canada rejected an appeal from the judgment of Mr Justice Hughes who had found the patent obvious over the same prior art before Birss J (first instance here and appeal here).  In Australia the patent had been found valid (see here) and the judgment from the Australian Court of Appeal is awaited.

Gone with the wind: Wobben’s patent found invalid and not infringed

Wobben hold a European patent that relates to a “Method of Operating a Wind Power Station”, with a priority date of 1 September 1995. They contend that a particular feature of Siemens’ wind turbine technology, which has been installed in the UK, infringes their patent, with an estimated value of this action being (a whopping) £13 million. Unsurprisingly, Siemens deny any infringement and contend that the patent is invalid.

Mr Justice Birss held that the patent is invalid, and even if it was valid it would not be infringed. The decision, Wobben Properties GmbH v Siemens PLC & Ors [2015] EWHC 2114 (Pat), is not available on BAILII yet but can be read here.

How did wind turbines work in 1995?

The main external features of a wind turbine are the blades (1), tower (17) and nacelle. The nacelle is pivotally mounted to the top of the tower and houses most of the turbine equipment, such as a generator, gearbox, brake and wind sensors.  The circular area that the blades cover when rotating is known as the rotor area, and in normal winds this area is maximised by turning the nacelle about the top of the tower so that blades face in to the wind.

The generators are designed to have a maximum rated power, which in 1995 was around 300-600kW (today this can be as high as 6MW). Exceeding this rated power can lead to overheating and other nasty things, so when it’s blowing a hoolie the power captured by the turbine has to be limited.

In 1995 there were three known approaches to prevent the rated power being exceeded:
  • turn the turbine so that it does not face in to the wind, reducing the effective rotor area. 
  • adjust the angle of the individual blades to reduce aerodynamic lift and so limit the power captured. 
  • use the generator controls to limit the amount of mechanical power converted in to electrical energy.
In high winds (above 25 m/s), a point can be reached where it is better to shut down the turbine, so as not to expose it to potentially damaging dynamic loading.

The Inventive Concept

This Kat welcomes that Mr Justice Birss states that “there is no need to spend time identifying an inventive concept over and above the words of the claim”. This first step (“The first step is to identify the inventive concept embodied in the patent in suit”) of the structured approach to assessing inventive step in Pozzoli Spa v BDMO SA & Anor [2007] EWCA Civ 588 has always seemed to this Kat like a distracting red herring, since the “inventive concept” ought to be the invention as defined in the claims.  But oddly Birss J then went on nevertheless to state an inventive concept:  “The heart of the invention is the concept of running a VSVP turbine in high winds so as to reduce both speed and power in dependence on the rise in wind speed.”  This has resonances of what the patent itself says in the introduction: “The object on which the invention is based is to increase the yield of a wind turbine and nevertheless limit the load on the turbine at higher wind velocities.”

A set of amended claims as applied for by Wobben were allowed, so that claim 1 recited:
Method of operating a wind turbine for the production of electricity in an electrical network with pitch control, in which the power of the wind turbine as well the operating speed of the rotor is continuously reduced when a wind velocity is reached which is in danger of overloading the wind turbine, in dependence on the rise in the wind velocity”.
The idea is to operate at higher wind speeds above the shutdown wind speed so as to extend the operating window and potentially increase power yield. This (i) extends the power characteristic at greater wind velocities and improving the power yield and (ii) improves the network compatibility of the wind turbine.

The Alleged Infringement

The feature of the Siemens turbine in question is High Wind Ride Through (HWRT); a wind turbine will gradually reduce power output when wind speeds are particularly high, rather that shutting down completely, as was conventional in 1995 when the patent was filed. HWRT is turned on when wind speed reaches a certain threshold and results in a more stable power output at high wind speeds by pitching the blades out of the wind as soon as the rated power output is reached and by limiting rotational speed in proportion to the increase in wind speed and turbulence intensity.

A Pitch Reference is a value representing the desired pitch angle of the blades so as to achieve a target rotation speed.  The pitch control system adjusts the pitch of the blades in accordance with the Pitch Reference.

For blade rotation speed, an algorithm continually calculates a value for the filtered moving average of absolute acceleration experienced by the rotor.  A speed limit is set by reference to this value.

Judgement

Novelty

Siemens relied upon JP 56-150999 (Shozaburo). Upon first inspection, Figure 3 of this document appears to show a continuous reduction in speed and power in dependence upon a rise in wind speed, as required by claim 1 of Wobben’s patent.

However, as argued by Wobben, if the document is read as a whole, it is found that region 24 illustrates the process of shutting down the turbine when the cut out speed 29 is reached and, although the axis refers to wind speed, it is in fact concerned with changes in speed and power over the time during shut down and not behaviour with changing wind speed. There is no mention in the description that rotational speed was increased again as wind speed dropped back to speed 29.

Mr Justice Birss concluded that Shozaburo discloses a system in which the turbine shuts down at the cut out wind speed using a time dependent process. Wobben’s patent was therefore novel over Shozaburo.

They say a picture paints a thousand words – just make sure you’ve read and properly understood those words before you go to court!

Inventive Step

Siemens relied on the article “Probabilities of sudden drop in power from a wind turbine cluster” written by E.A. Bossanyi and published in September 1982. Bossanyi models different control strategies that might mitigate the impact on the grid of fluctuations in the power output of wind farms (clusters).

In particular, Bossanyi suggests “the use of a windmill whose output can be reduced gradually to zero as the wind speed increases”, which “reduces severe ramping of the cluster output as well as being advantageous to the individual windmill”.

Bossanyi models only a constant speed turbine, as was common at the time of writing in 1982, and so only refers to a reduction in power to cause the turbine to stop. Wobben’s claim 1 however requires a reduction in both the power of the turbine and the operating speed of the rotor, because by 1995 the industry was focussed on variable speed variable power (VSVP) turbines. The question then was whether it would have been obvious to apply the teaching of Bossanyi to the newer VSVP turbines.

Siemens submitted that in applying Bossanyi to a VSVP turbine in 1995, it would be obvious to at least consider reducing rotor speed as well as reducing power in the operation above the usual shut down wind speed because that would obviously reduce loads and fatigue. Wobben disagreed, claiming that Bossanyi’s data does not make a convincing case to do what is proposed, and that it was not obvious to reduce rotor speed when using a VSVP turbine.

Mr Justice Birss agreed with Siemens that it would be entirely obvious to consider Bossanyi’s teaching to a VSVP turbine. While it could be applied by reducing the torque in the generator, Birss J held that it was obvious to instead reduce rotor speed because the skilled person would be considering loading and fatigue of the blades in high winds.

Wodden’s claims were found to be obvious over Bossanyi.

Infringement

Birss J conceded that there was no real dispute that the way HWRT controls power is in accordance with claim 1, because Pitch Reference is effectively a measure of wind speed, so power is reduces as wind speed rises. However, the claim required that power and rotational speed are reduced in dependence on the rise in wind speed.

Consideration was therefore given to the way HWRT controls rotational speed. The speed of the rotor is calculated from the generator speed, and is differentiated to give a rotor acceleration or deceleration. The absolute difference between each reading is then converted to give a rotor acceleration in units rpm/s. This value is then subject to a low-pass filter to give a “filtered rotor acceleration”.

Siemens claimed that this was not infringement because rotor speed is reduced in response to the acceleration or deceleration of the rotor, rather than wind speed. So, a high speed, but smooth wind will not result in acceleration of the rotor, so the rotational speed of the rotor will not be reduced. Whereas, a low speed but turbulent wind would cause rotor accelerations, so the rotational speed would be reduced.

On the balance of evidence, the judge found that the filtered rotor acceleration used by HWRT is not a measure of wind speed; it is not an increase in wind speed itself which causes the effect but an increase in the change in wind speed which causes speed reduction.

Conclusion

The patent is invalid.  Even if it was valid it would not be infringed.

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