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.

Thursday, 28 May 2015

Warner-Lambert v Actavis; the Court of Appeal has its say on second medical use claims in the UK

The IPKat is delighted to receive from a Katfriend this brief summary of an important decision handed down this morning. More detailed consideration may follow in due course.

IPKat readers who have followed this saga will know that earlier this year Mr Justice Arnold gave the first detailed consideration of what a Swiss-form claim means, see blog post here and here.  Today the Court of Appeal handed down its decision in the latest of this ongoing litigation involving Warner-Lambert's blockbuster Lyrica product.

As a brief refresher, in Warner-Lambert Company, LLC v Actavis Group Ptc EHF & Others [2015] EWHC 72 (Pat) Arnold J construed the Swiss form claim as requiring the infringer (for example a generic producer) to “subjectively intend” the medicine to be used for the patented indication. Under this test the patentee would not be able to succeed on infringement unless it could show that the generic company had aimed at or targeted the patented use in some way.  In his subsequent judgment dated 6 February 2015, Arnold J ordered that Warner-Lambert’s claim for indirect infringement under section 60(2) of the Patents Act be struck out.

In a judgment handed down today Warner-Lambert Company, LLC v Actavis Group Ptc EHF & Others [2015] EWCA Civ 556 the Court of Appeal (led by Lord Justice Floyd) has put forward a wider test for the infringement of second medical use patents.  On direct infringement under section 60(1)(c) of the Patents Act, Lord Justice Floyd departed from Arnold J’s subjective intent test which amounted in effect to requiring that the patentee prove that it is the generic’s “wish or desire” to sell some medicine for the patented indication.  Floyd LJ concluded that it was sufficient for infringement that the producer knows (including constructive knowledge) or can reasonably foresee that the medicine would ultimately be intentionally used for pain.  Floyd LJ commented that on his construction of the claim “it is plain that Warner-Lambert have an arguable case of infringement”.  Infringement will now be considered at the trial at the end of June.  On indirect infringement under section 60(2) of the Patents Act, the Court also allowed Warner-Lambert’s appeal against the striking out of that claim.

The Court of Appeal did however decline Warner-Lambert’s proposed interim relief.  Warner-Lambert had sought (1) that a contractual condition be included in any agreement entered into by Actavis with any pharmacy or with any intermediary for the supply to a pharmacy of its generic pregabalin product that the pharmacy use reasonable endeavours to ensure generic pregabalin would not be supplied or dispensed to patients who have been prescribed pregabalin for pain; (2) that Actavis inform Warner-Lambert’s solicitors of the name of any intermediary they intended to supply their product to; and (3) that Actavis’ generic pregabalin product be supplied in bulk packaging bearing a notice stating legibly 'This product should not be dispensed for pain.' The Court of Appeal commented that, even if infringement is found at trial, “it does not follow that unqualified relief will follow as of right”.  This case has already seen the grant of a novel order addressed to NHS England requiring it to give central guidance to prescribers and dispensers. No doubt other developments will follow.

FIFA and brand integrity: an idea

Great mark: shame
about the slogan ...
Even the most fervent football-agnostic must by now have spotted that all is not well in the wonderful world of the Fédération Internationale de Football Association, otherwise known as FIFA. Indeed, a Google search of the terms FIFA + corruption yielded over 29 million hits.  This weblog has not been uniformly impressed with FIFA's intellectual property activities over the years (see eg "Fifa scandal: the sponsors awaken", here; "FIFA's unfair catenaccio on World Cup's IP", here; "Ferrero v FIFA (in the World Cup trade mark dispute) -- 1:0 says the German BGH", here; "Put those vuvuzelas away, here comes FIFA", here; "Pants off in Anti-Ambush Marketing Frenzy", here; "Ferrero 5 Fifa 0 -- but will there be a replay?", here; "World Cup 2018: a dilemma for some sponsors?", here; "Global IP: the British are (almost, sort of) best", here).

Did Nike just do it? The company is said to be
cooperating fully with the US authorities
The popularity of the product offered by FIFA -- football tournaments, recordings, memorabilia etc -- is so great that no amount of toxicity of the FIFA brand image appears capable of denting it.  Whether the same can be said for FIFA's major sponsors over the years, which include Nike, Coca-Cola, Visa and McDonalds, Gazprom, Hyandai, Kia and Adidas, remains to be seen.  Consumer brands such as Nike and Coca-Cola have more to gain from association with wholesome causes -- and more to lose from unwholesome ones -- than enterprises such as Gazprom whose clientele is unlikely to switch to another brand of fuel supplier on a whim or a matter of moral scruples.

"I know nothing ...!"
The current spate of arrests of FIFA dignitaries and officials for a range of corruption offences spanning some 20 twenty years, offences of which FIFA President Sepp ("I know nothing") Blatter denies all knowledge, set this Kat thinking.  Bribery and corruption appear to be endemic within FIFA, and indeed within much of the world within which we live.  Why not therefore come to terms with the inevitable?

A simple scheme would provide for the registration of all bribes and inducements received by FIFA office-holders and functionaries.  It would work as follows:
  • A centralised register of bribes would be administered, naturally, by FIFA itself;
  • Recipients would be allowed to retain the benefit of all bribes and inducements received, so long as they were registered within three months of being promised or received, whichever the earlier;
  • Required registration details would include the name of the donor, the organisation if any on behalf of which the bribe or inducement was made, the sum involved, the currency of payment and whether payment was made gross or net of tax deductions;
  • The objective to be secured by making the bribe or inducement should be declared, together with information concerning the making of bribes or inducements to other recipients in connection with the same objective, if known;
  • In the case of non-pecuniary inducements (holidays, hospitality, sexual favours etc), recipients would be required to provide either an estimate of their cash value or, where that should not be possible, an indication of personal gratification on a scale of 0 to 10;
  • It should be clearly stated whether the bribe or inducement is required to be refunded in the event that the objective to be achieved is not met (note: this does not apply to the non-pecuniary inducements listed above);
  • Recipients should state whether the bribe or inducement received is final in its effect or whether it may be superseded by a subsequent bribe or inducement.
This scheme would not only make the bidding for World Cup venues and other entitlements more transparent but would also open it up to more competitive bidding. In addition, recipients of bribes and inducements would no longer have to go around in an embarrassing state of denial, and everyone -- including FIFA Presidents -- would be taken, by virtue of the fact of registration, to have constructive notice of all amounts declared and the purposes for which they were given and received.

Further reading:
"The FIFA corporate sponsor corruption dashboard" on Quartz, here 
"Visa, Nike involved in FIFA corruption scandal 'brand wagon'", on DNA India, here
"Nike Confirms It’s ‘Cooperating’ in FIFA Corruption Inquiry", Brandchannel, here
2018 Fifa World Cup Russia here

The European Inventor Award - what is the EPO doing?

Many things can motivate a blogger to set aside what they are doing and begin to pen a blogpost.  It may be excitement about a judgment that has just come out, enthusiasm about a new legal development, or interest piqued by a news item.  Sometimes, it is grumpiness.  This is one such time.

The IPKat is a keen user of various social media, and anyone using applications such as Twitter to follow developments in the world of intellectual property cannot fail to have been bombarded, as has the IPKat, by items about the European Inventor Award 2015.  There is an extensive section on the website of the European Patent Office about this event, going back to 2006.  Merpel notes that this is in stark contrast to the tiny section, as she posted earlier this week, about the Unitary Patent.

The IPKat wants to know what on earth the EPO is doing lavishing such resources on such an event.

Article 4(3) of the European Patent Convention states that:
The task of the Organisation shall be to grant European patents. This shall be carried out by the European Patent Office supervised by the Administrative Council. 
Ultra vires = no no
Whatever the European Inventor Award is, it is certainly not "to grant European patents".  So this Kat's first gripe is that the event seems completely ultra vires in respect of what the EPO is actually supposed to be doing.  National patent offices may have a wider mandate to foster innovation, to promote intellectual property generally, and to raise the profile of patenting, but the EPO most emphatically does not.  At best, it is a distraction, and an apparently costly one at that, from the EPO's legally defined role.

"Maybe this year I'll manage it ..."
But this Kat thinks that it is worse than that.  The European Inventor Award is about ranking inventions.  Publicly proclaiming that one invention (the winner) has more merit than others (the runners up and those that were not even nominated).  This is actually contrary to the EPO's role as a body that grants patents, in which role (its only legally ceded role) it is bound to judge any invention against the objective standards of novelty and inventive step, irrespective of merit with respect to any other invention.  Others are free to opine that one invention is "better" or has more worth than another, but the EPO should be quite disinterested in this.  Its involvement with such an event tarnishes its objectivity.

The European Patent Office does many laudable things that do relate to its task assigned by Treaty of granting European patents.  The development of electronic registers, online access to prosecution files, development of patent databases and search tools, and pioneering work on online filing systems.  And of course training in respect of all of these.  These activities are to be lauded and welcomed.

The European Inventor Award is at best an expensive distraction, and at worse a dangerous compromise of principle.

As ever, the IPKat welcomes comments from our readers, and to this end a poll has been arranged on the sidebar to coincide with this post, where readers can express their own view of the European Inventor Award.  The IPKat looks forward to hearing your views.

Wednesday, 27 May 2015

Supreme Court closes the door on good-faith invalidity defence in Cisco's patent troll saga

Because the AmeriKat does not believe
she is doing anything wrong, does this give her a defence
to destroying a toilet paper roll?  
Does your belief that you are not doing something wrong, give you a defence to conduct that is in fact wrong?   This question is likely still haunting Cisco following yesterday's US Supreme Court defeat in Commil USA, LLC v Cisco Systems, Inc (2015).

In a 6-2 vote (Justice Breyer was recused), the highest court in the United States overturned the decision of the US Court of Appeals for the Federal Circuit (CAFC) that held that the Cisco could run the "good faith" defence against Commil's claims that Cisco directly infringed its patent for a method of implementing short-range wireless networks and had induced others to infringe by selling the infringing equipment for them to use.  After two trials, Cisco was found liable for both direct and induced infringement.  The question before the Supreme Court concerned the inducement element.  Cisco had argued in defence to inducement that it had a good-faith belief that Commil's patent was invalid.  However, the District Court held Cisco's supporting evidence to be inadmissable.  The CAFC held that the District Court had erred in excluding Cisco's evidence.

The Background

Cisco took issue with two of the District Court's rulings.  The first related to the District Court's instruction to the jury in the second case that dealt with Cisco's alleged inducement.  The jury was instructed that it could find inducement if:  
“Cisco actually intended to cause the acts that constitute . . . direct infringement and that Cisco knew or should have known that its actions would induce actual infringement.” 
On this basis, in finding Cisco liable for induced patent infringement, the jury awarded Commil $63.7 million in damages.  
Cisco looks forward to the retrial.

After the verdict in the second trial which dealt with inducement, the Supreme Court delivered its decision in Global-Tech Appliances Inc v SEB SA (2011).  That case held that in an action for induced infringement it is necessary for the claimant to show that the alleged inducer knew of the patent in question and knew that induced acts were infringing (note the added emphasis on knowledge).  Cisco therefore argued that the jury instruction was incorrect because nowhere did it state that knowledge of the inducement was the standard.  Cisco appealed to the CAFC who concluded that the District Court erred in its instruction.  In instructing the jury that Cisco could be liable if it "knew or should have known" that its customers infringed, it had left the door open for the jury to find infringement "based on mere negligence where knowledge is required".  A new trial is now required with a corrected instruction on knowledge to the jury.  

The CAFC's second, related ruling excluded Cisco's evidence that it has a good-faith belief that Commil's patent was invalid.  In siding with Cisco, the CAFC held that "evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement." That is to say, how can a defendant ever be said to know that it has caused acts of induced patent infringement if a defendant does not believe there is even a valid patent that can be infringed? If the defendant thinks there is no harm to be done, how can the defendant be held to know that it has caused harm?  The CAFC also considered that there was "no principled distinction between a good-faith belief of invalidity and a good-faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent." 

However, this holding was not without it's critics in the CAFC.  Judge Newman, to whom the AmeriKat had the pleasure of listening at last year's Fordham (see post here), dissented.  In her view, a defendant's good-faith belief that a patent is invalid is not a defence to induced infringement.  "Whether there is infringement in fact, " she wrote "does not depend on the belief of the accused infringer that it might succeed in invalidating the patent."  

The Question

Whether a good-faith belief in invalidity is a defence to induced infringement?  

The Answer

The US Supreme Court
No.  After Justice Kennedy trotted through the Court's 2011 decision in Global-Tech (in which he was the lone dissenter), the Court explained their opinion in four parts.  First, infringement and invalidity are separate matters under patent law.  Indeed, issues of infringement and validity appear in separate parts of the Patents Act.  The defences of non-infringement and invalidity are two separate defences.  As Newman J wrote in her dissenting opinion "validity and infringement are distinct issues, bearing different burdens, different presumptions, and different evidence."   The key element to the question as to whether a defendant is liable for induced infringement is infringement - not validity.  Under section 271(b), the statute requires that the defendant "actively induce[d] infringement" which requires intent to "bring about the desired result", being infringement.  Belief regarding validity has no role to play whether there was intention to bring about infringement. Invalidity, after all, is not a defence to infringement.  Invalidity is a defence to liability.  Therefore belief as to invalidity "cannot negate the scienter required for induced infringement." To hold otherwise, would conflate the issues of infringement and validity.  

Second, to allow such a defense would also undermine the "common core of thought and truth" that a patent is presumed valid. This presumption makes it possible for a patentee to commence a claim without first having to prove that his patent is valid.   If belief in invalidity were a defence to induced infringement, the presumption would be undermined to such a degree that a defendant could prevail if he proved that he reasonably believed that the patent was invalid.  The reasonable belief standard would fly in the face of the "clear and convincing" standard of proof established by Congress that defendants must meet to rebut the presumption of validity (see the AmeriKat's posts on Microsoft v i4i).  

Third, such a defence would also have negative consequences in that it could render "litigation more burdensome for everyone involved".  The availability of such a defence could incentive every potential inducer to advance a theory of invalidity, the veracity of which would be more difficult for the court to assess than questions of infringement.  This could result in accused inducers finding it "easier to prevail on a defence regarding the belief of invalidity than non-infringement.  In addition the need to respond to the defence will increase discovery costs and multiply the issues the jury must resolve.  Indeed, the jury would be put to the difficult task of separating the defendant's belief regarding validity from the actual issue of validity."

Finally, in its reasoning, the Supreme Court also placed weight on the practical reasons why not to create a defence based on a good-faith belief in invalidity.  Practically, if the defendant really has a belief that the patent is invalid then there are procedural avenues open to them.  They can prove that the patent is invalid as an affirmative defence,  file a declaratory judgment requesting the court to declare the patent invalid (MedImmune v Genetech (2007)), seek inter partes review at the Patent Trial and Appeal Board or seek ex parte rexamination at the Patent and Trademark Office.  

The Scalia Dissent

A welcome opponent to bifurcation?
Justice Scalia thinks infringing
an invalid patent is nonsense.  
"It follows, as night the day, that only valid patents can be infringed.  To talk of infringing an invalid patent is to talk nonsense."  Although readers could be forgiven in thinking that such colorful dicta came from the mouth of our beloved Sir Robin Jacob, it actually came from Justice Scalia in his dissent ["This is where the comparisons between the two stop," Merpel hastens to add].  

In what reads like an angry professor marking an incompetent, but arrogant, student's exam paper Justice Scalia (who was joined by Chief Justice John Roberts) picks apart each of the Court's arguments.  His own reasoning goes like this:
1.  Induced infringement requires knowledge that the induced acts constitute patent infringement (see Global-Tech).
2.  Only valid patents can be infringed.
3.  Anyone with a good-faith belief in a patent's invalidity, necessarily believes the patent cannot be infringed.
4.  It is impossible for anyone who believes the patent cannot be infringed to induce actions that he knows will infringe it.
5.  A good faith belief that a patent is invalid is therefore a defence to induced infringement of that patent.  
Justice Scalia considered that the fact that infringement and validity are dealt with separately under the Patents Act was irrelevant.  "Saying that infringement cannot exist without a valid patent does not “conflate the issues of infringement and validity,” ... any more than saying that water cannot exist without oxygen “conflates” water and oxygen. Recognizing that infringement requires validity is entirely consistent with the “long-accepted truth . . . that infringement and invalidity are separate matters under patent law.”"  Further, permitting a good-faith invalidity defence would not undermine the statutory presumption of validity.  All it would do would be to permit an alleged inducer the possibility to avoid liability for a third party's infringement of a valid patent.  It would not undermine the patent's presumed validity (the AmeriKat recommends listening to the opening questions from Chief Justice Roberts regarding the percentage of patents that are upheld as valid here saying that 60% of patents being found to be valid is not much of a presumption of validity).  

In saying that “invalidity is not a defense to infringement, it is a defense to liability.” the Court was merely making "an assertion, not an argument."  Justice Scalia reiterated that infringing a patent means invalidating the patentee’s right of exclusivity:  "An invalid patent confers no such right. How is it possible to interfere with rights that do not exist? The Court has no answer." 

Scalia considered the Court's weakest argument to be its reliance on "practical reasons" not to create a defence based on a good-faith belief in invalidity.  He concluded:
"Ours is not a common-law court. Erie R. Co. v. Tompkins, 304 U. S. 64, 78 (1938). We do not, or at least should not, create defenses to statutory liability—and that is not what this dissent purports to do. Our task is to interpret the Patent Act, and to decide whether it makes a good-faith belief in a patent’s invalidity a defense to induced infringement. Since, as we said in Global-Tech, supra, the Act makes knowledge of infringement a requirement for induced-infringement liability; and since there can be no infringement (and hence no knowledge of infringement) of an invalid patent; goodfaith belief in invalidity is a defense."

The Troll Issue

Patent for a troll, does not make a patent troll.  
Commentators have picked up on the identity of the patentee - a troll/patent assertion entity/non-practicing entity/etc  - as being the headline grabber in  this case, if only to paint a picture of General Counsel throughout Silicon Valley being on the edge of their seats awaiting this decision.  However, the Court's comments in this respect were limited.  The Court said that they were well aware of the industry that had developed in which patents were being used primarily for obtaining licensing fees.  Such conduct can create a "harmful tax on innovation".   However, because no issue of frivolity had been raised by the parties in this case the Supreme Court did not comment further, except to reinforce the power that the district courts have in dissuading frivolous cases.  The Court stated that:
"If frivolous cases are filed in federal court, it is within the power of the court to sanction attorneys for bringing such suits. Fed. Rule Civ. Proc. 11. It is also within the district court’s discretion to award attorney’s fees to prevailing parties in “exceptional cases.” 35 U. S. C. §285; see also Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572U. S. ___, ___–___ (2014) (slip op., at 7–8). These safeguards, combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation expressed throughout the Patent Act between infringement and validity. This dichotomy means that belief in invalidity is no defense to a claim of induced infringement. "
Justice Scalia, however, viewed the Court's holding as increasing the "in terrorem power of patent trolls" and viewed the Court's comments about district courts authority in this respect as seemingly acknowledging the consequences of its opinion.  

What does this mean?  

Key message:  Be proactive in invalidating patents,
not reactive in saying you thought the patent
was invalid.  
So what is the importance of this case?  One of Cisco's lawyers, Seth Waxman, is reported as saying that the decision "simply eliminates one of many defenses available to Cisco, which looks forward to retrial of the case."   Commil's counsel, Mark Werbner, said that it restored "common sense to patent litigation."  The AmeriKat considers that this decision shows the Supreme Court actively encouraging would-be infringers/inducers to proactively invalidate patents, especially those wielded by patent trolls, through avenues already available to them.  Given the options already available to challenge the validity of patents, the Court will be reluctant to create short-cuts for defendants to escape liability from infringement of patents that already benefit from a presumption of validity.  It also acts as another loud and clear message to the district courts, following a year of such messages, that they have the authority to discourage the patent troll industry from benefiting from the threat of patent litigation.  

All that being said, many commentators are left at a loss as to the Supreme Court's reasoning, much for the same reasons that Justice Scalia expressed in his dissent.  Given that Global-Tech was all about the knowledge of the inducer, is the court's reasoning satisfactory?  How can an inducer who does not believe that a patent is valid, have the knowledge that what it is inducing amounts to patent infringement?  Infringement and validity merely being in separate parts of the Patents Act seems too convenient an answer for some, including Justice Scalia.  The answer may be as simple as what Judge Newman was getting at - belief is not the same as fact.  

Unless the Supreme Court rexamines this questions again, which seems unlikely, the state of affairs is this:  Even if you actually believe the patent is invalid, you can still be liable for inducing infringement unless you prove that the patent is, in fact, invalid.  

To listen to the oral arguments before the Supreme Court, please click here.  

The EPO confirms use of external investigation firms

According to a comment received on her earlier post, Merpel understands that the European Patent Office has responded by means of the following internal Communiqué to the concern about reports that Control Risks (who describe themselves as "an independent, global risk consultancy specialising in helping organisations manage political, integrity and security risks in complex and hostile environments") has been commissioned by the EPO to investigate staff members:
Investigative Unit and external firms
Regarding questions raised in recent publications and blogs [Merpel has the feeling that they mean her ...] 
Dear colleagues, 
Some recent publication and blogs have questioned the participation of an external firm in EPO activities related to the Investigative Unit. I want to clarify that because the EPO Investigative Unit is rather small in terms of staffing, we need to be able to contract external companies to support our fact finding enquiries. This is one reason why an external firm can be chosen in regard to an investigation, operating within the regulatory framework of the EPO, under the full supervision of the Investigative Unit. 
The European Patent Office cannot comment on specific internal investigation cases. This lack of comment is to protect the integrity of any such case and protect the interest of all parties concerned. However I would like to remind the Office has a duty of care to its employees including to investigate allegations of harassment against them by other employees. Investigations can only take place following specific allegations, made by EPO staff or external parties, and these investigations are independently and objectively carried out by the Investigative Unit, under its sole responsibility. 
The investigation process of the EPO follows the best international standards and allows persons to be heard, to respond and to defend themselves against any allegations, before any conclusion of misconduct would be reported to the employee's appointing authority. Only in any case where a serious misconduct is confirmed by the Investigative Unit, a disciplinary case could be instigated where the subject has a further right to be heard before a disciplinary committee and before any subsequent decision on a sanction would be taken. 
In 2014, the Investigative Unit received 68 allegations of misconduct (-23% compared to 2013), 50% being already rejected as insufficiently specified.

John Martin
PD Internal Audit and Oversight‎
Merpel welcomes this response, but regrets that it was made only internally, when the concern raised was much more widespread, and wonders what the EPO Communications department is up to.  She notes that, although it is only stated that an "external firm" has been engaged, the Communiqué appears in essence to confirm the original reports concerning Control Risks.

The response does gloss over a few salient facts that have been mentioned in posts and comments in this blog and Merpel wonders if the EPO would like to address these. For example:

1. The "appointing authority" to whom the Investigative Unit presents its report is the President*. It is he who instigates a disciplinary procedure "where the subject has a further right to be heard before a disciplinary committee". True enough, and very laudable ... except the recommendation of that disciplinary committee then goes back to the President who can (and, we are told, frequently does) ignore the outcome of the process. If the disciplinary committee system is even-handed and to be trusted, why are its recommendations ignored?  Indeed, how do the rules even permit this?

* though not for Board of Appeal members and the most senior management.

2. The Investigative Unit is used not only to follow up on complaints between staff members, but also frequently to investigate subjects whom the President has identified to them - it has been mentioned in comments on this blog that this includes a certain member of the Boards of Appeal, and a member of the Central Staff Committee who had the temerity to try to organise a survey on how EPO staff viewed the President's controversial "social reform" programme. Merpel imagines that such investigations have a decidedly sedative effect on other employees who were thinking of sticking their heads above the parapet, or even from serving on the Central Staff Committee.

3. The "best international standards" followed by the Investigative Unit don't include allowing the employee to be represented by a lawyer. Perhaps readers think that "lawyering up" at an early stage is an over-reaction, but consider that the employee may face dismissal without any of the safeguards of labour law available in the EU or other member states. The targets of investigation are severely restricted from even disclosing that they are being investigated, and apparently have an active duty to cooperate, so no "right to silence"; and the Investigative Unit (and by extension, Control Risks) has the power to invade the privacy of the subject to an extent that would cause uproar if it happened in a national patent office or in any private enterprise operating within the EU.

As ever, Merpel welcomes comments, but begs to remind readers of the following:
Henceforth, in respect of all EPO-related blogposts, no comment will be posted if it is merely ascribed to "Anonymous".  Any reader wishing to conceal his or her identity must adopt a pseudonym (which should not be obscene and should not be the name, or the mis-spelling of the name, of a real person).  The pseudonym need not be an actual login name, as long as it is stated clearly at the beginning and/or end of the comment itself. This way, it will be easier for people who post later comments to identify and remember the earlier comment-poster and to recall the discussion string.  Where, as has already happened on occasion, a string carries over from one blogpost to a later one on the same or a related subject, readers will be encouraged to use the same pseudonym for the sake of continuity.

Senz and Sensibility: what the informed user of an umbrella sees

Design in Case T-22/13
In Joined Cases T-22/13 and T-23/13 Senz Technologies v OHIM - Impliva (Parapluies) the General Court decided on an application to invalidate two of Senz's Community designs consisting of the appearance of umbrellas as represented on the right.

Impliva challenged the registrations on absolute grounds, under Article 52 in combination with Article 25(1)(b) of Regulation 6/2002 on Community designs, on the ground that the contested designs produced the same overall impression as the umbrella covered by an earlier American design patent, registered in 1996, and therefore lacked individual character.

The Cancellation Division upheld the invalidity claim as did the Board of Appeal, which considered that the design holder should know the prior art in the field of umbrellas, especially the one contained in the US patent register, one of the most important in the world (as an aside, the United States and Japan recently acceded to the Hague System for the International Registration of Industrial Designs, extending its coverage to 64 countries). In addition, since United States is the most important trading partner for the EU, those who specialise in umbrella trade should be expected to consult the USPTO register.

Design in Case T-23/13
In respect of the parameters for assessing distinctive character, the Board of Appeal concluded that the freedom of the designer was limited when applied to the shape or size of an umbrella. Moreover, the informed user wishing to buy an umbrella would pay attention to its basic structure and not to the details, even when paying a high level of attention. In this case the Board of Appeal held that the parties' respective designs produced the same overall impression, in that both the patent and the designs have a beak-like shape while ‘the distribution of the ribs the proportion of the canopies and the spacing are similar’; importantly, they also shared an asymmetrical shape given by the off-centre shaft).

Senz Technologies argued before the General Court that the Board of Appeal wrongly assessed the disclosure in the US design patent according to Article 7(1) of Regulation 6/2002. Said Senz, its designs had individual character insofar as they sought to produce a different overall impression on the informed user to that conveyed by any prior art, as provided by Article 6 of Regulation 6/2002.

US patent 5505221
Annulling the decision of the Board of Appeal, the General Court first held that the registration of an earlier design patent, covering the shape of an umbrella, was a sufficient reason for accepting that some prior art had been disclosed within the specialised circles of the umbrella sector in the EU, as required by the law. This was even more so because the contested designs involved highly wind-resistant umbrellas for which protection encompassed both their aesthetic and technical requirements. It followed that the informed designer must know about patent systems and check patent registries before placing the umbrellas in the market.

US patent 5505221
Said the General Court, Senz failed to substantiate its arguments with evidence and its arguments did not serve the purpose of contrasting the disclosure of the prior patent. First, it did not prove that even EU IP lawyers would disregard the registration of design patents in the USA. Secondly, it did not furnish proof that the circles specialised in the umbrella sector would include only individual designers or small companies which could not afford prior art searches outside the EU. Thirdly, even though no advertising or marketing materials existed for the US umbrella since it was never manufactured, specialised umbrella makers still might have become aware of it through patent searches. Finally, Senz could not demonstrate that the United States was a small trader regarding the umbrella sector in the EU, so to reduce its importance when taking account of relevant prior art.

US patent 5505221
Senz had better luck with its second plea, since the General Court agreed that, notwithstanding the prior art, the two contested designs did after all have individual character of the two contested design. While the Court confirmed the Board of Appeal's definition of the informed user and agreed that the freedom of the designer was limited, it concluded that the different overall impression produced by the patent against those created by Senz's designs was due to the umbrellas' canopies: the patent disclosed a flat surface in the middle and curved lateral contours forming a regular octagon, while the designs had a pyramidal and quasi-pyramidal shape with bent lateral contours forming an irregular octagon. The General Court emphasised that the asymmetrical shape shared by the US patent and Senz's designs could not  offset the perception of their differences in the mind of the informed user. To this end, contrary to OHIM's submission, case-law of the saturation of the state of art did not not assist in reaching that conclusion.

The off-centre shaft in respect of the umbrella's canopy was not a dominant feature within the comparison of three asymmetrical umbrellas, said the General Court, which also declined to give greater importance to the underneath perspective of the umbrellas, in that design right protects the appearance of a product as it is reproduced and not its non-visible perspective. Finally, the fact that the umbrellas incorporating the designs also fulfil the technical function of being particularly wind-resistant did not exclude the possibility of protecting them in so far as the General Court has found they had individual character.

Romantic umbrella here
Make your own umbrella here

Tuesday, 26 May 2015

A call for financial transparency from the European Patent Office

Having been returned to blogging duty, Merpel has turned her attention to the finances of the European Patent Office.  She wrote about this last year, examining the 2013 financial report of the EPO, and concluded that it was not possible to establish with any confidence, or in any degree of detail, what the true financial position actually is.

It still doesn't add up ...
In the meantime, Merpel has been considering the revised proposal for renewal fees for the Unitary Patent from the European Patent Office, reported by the IPKat here.  These proposals are striking, in that they consider in some detail in Annex 3 the effect of various renewal fee proposals for the Unitary Patent, taken together with some assumptions about the level of uptake of the Unitary Patent - happily referred to as "penetration" - that is, the proportion of European patents for which unitary effect is expected to be requested, upon the renewal fee income of the EPO.

However, the Unitary Patent Regulation states in Article 12(1) that the level of renewal fees should be
" ... sufficient, together with the fees to be paid to the European Patent Organisation during the pre-grant stage, to ensure a balanced budget of the European Patent Organisation".
It does not state that the level of renewal fees should be sufficient to maintain a specified level of renewal fee income compared with the current situation. Article 42 of the European Patent Convention provides in similar terms that "The budget of the Organisation shall be balanced."

Now, "balanced" is a concept that requires to look at both the income and the outgoings of the EPO. Merpel is given to understand that the EPO generates an operating budget surplus year on year of the order of hundreds of millions of Euros: €281m in 2011, €311m  in 2012, €338m in 2013 and €364m in 2014.  Now these numbers may not be entirely accurate, and Merpel realises that it depends what accounting rules are used to process and report the numbers.  These figures are however hard to reconcile with the published accounts of the EPO.

The big imponderable seems to be the Pensions Reserve Fund.  This is the money that the EPO puts aside to fund the retirement pensions of employees, once it can no longer afford to pay them out of current income which, Merpel understands, is currently the case.  How much money the EPO needs to squirrel away depends on actuarial assumptions on the future pensions liability, and on the expected returns on the assets that already exist -- which are enormous at over €6 billion.  Merpel, who much prefers chasing squirrels to squirrelling anything away, cannot disentangle all of this.

But the point is that she should not have to.  If the EPO is supposed to present a balanced budget to justify the renewal fees that it wants, then it should explain openly and clearly to the European Union and to EPO users what its budgetary constraints actually are.  No explanation of why the proposed renewal fees levels are needed has emanated from the EPO.

This lack of financial transparency makes it also impossible to judge the obsessive message repeatedly coming from the EPO that there needs to be a huge leap in efficiency and productivity.  This increased productivity is being enforced by escalating production targets for examiners, directives to refuse various categories of leave, having non-examining project work done in extra time remunerated by bonuses (reported here), applying more stringent conditions to part-time working, and implementing regressive sick leave provisions (reported here).  But nowhere is the EPO explaining why this leap in production is needed.  Why not?

If transparency is good enough for
cats, it's surely enough for the EPO
And while she is on the subject of transparency, Merpel would also criticise the lack of transparency over the development of the renewal fee proposals.  Why has the EPO not published its two proposals itself, but instead left them to be found hosted by bloggers and law firms?  The same goes for the submissions in response to the proposals.  Merpel is aware of submissions from the IPO, BusinessEurope, the EPI, Eurochambres and member states (and there may be others).  Merpel has not seen any of them published; the Kluwer blog says that it has seen two of them and reports excerpts, but why are they not published where they can be readily accessed by the very many people who are concerned about the matter?  The section of the EPO's website dealing with the Unitary Patent is remarkably sparse given the EPO's pivotal role in the system, as the entity that both grants the European patent and registers its unitary effect.

If the EPO is arguing financial necessity both for its internal reforms to career structure to increase productivity, and for the level of renewal fees, then only a clear exposition of its financial position will suffice for the users and others affected by the European patent system.

So, what do we want?  Transparency about the EPO finances and the effect of Unitary Patent renewal fees on this.  And we would like it now, please.

3D printing and the law: three recent studies and some recommendations

3D Cherries ...
If you think that Bournemouth is just a rather old-fashioned traditional British seaside town, it's time to think again.  Not only has the local football team ("the Cherries") secured promotion to English football's Premier League next season, which means that it will have the thrill of playing the likes of Manchester United, Arsenal, Tottenham Hotspur and Chelsea at least twice before being relegated, but its local university has also hosted some useful thinking on the subject of 3D printing -- a topic that will be on everyone's minds long after the football team's exploits have faded into the past.  The following information, supplied by Dinusha Mendis (referenced below), explains:
3D Printing: some research results from the UK

Centre for Intellectual Property Policy and Management (CIPPM) researchers Dinusha Mendis and Davide Secchi, together with Phil Reeves (Stratasys, formerly Econolyst), recently published three reports on the intellectual property implications of 3D printing resulting from a project commissioned by the UK Intellectual Property Office (UKIPO). Dinusha (CIPPM Co-Director) led the project for the UKIPO and  all three Reports can be accessed here. 


In 2012 the Big Innovation Centre Report, Three Dimensional Policy: Why Britain needs a policy framework for 3D Printing, provided a number of recommendations, one of which was to review the IP implications of 3D printing. In 2013, the UKIPO highlighted the lack of empirical evidence relating to 3D printing and the difficulty in determining whether this emerging technology will have an impact on IP laws.  The aim of the current project was therefore to respond to this limited research.  In doing so, the Studies adopted a legal, quantitative and qualitative approach.

The Studies

Some platforms are more
popular than others ...
Study I, A Legal and Empirical Study of Online Platforms and an Analysis of User Behaviour (here), explores 17 online platforms dedicated to 3D printing. It provides a legal and empirical overview of how online platforms operate, aiming to give a clearer understanding of ‘how’ the sharing of 3D design files on online sharing platforms happens, together with the parameters for sharing, e.g. terms and conditions, applicable rules and regulations, together with restrictions and bounds that apply to user behaviour and file-sharing.  It evaluates the extent of this phenomenon among users, including factor such as price, downloads, licences, type of physical objects which are shared, as well as the implications for IP law – especially for sharing and the copyright implications relating to software.  As such, Study I presents new findings on the current status of 3D printing relating to online platforms.

The potential for printing
3D spare parts is immense
Study II, The Current Status and Impact of 3D Printing Within the Industrial Sector: An Analysis of Six Case Studies (here), explores the status, impact and adoption of 3D printing in the Replacement Parts, Customised Goods and High Value Small Status Goods Industries. To map the impact of 3D printing technology on the UK’s economic and legal landscape, Study II presents six case studies which consider the current and future consequence of 3D printing.  The first two address issues relating to Replacement Parts and consider how 3D printing will affect the supply of aftermarket parts to the consumer.  Two case studies on Customised Goods address how 3D printing enables unique products to be tailored to consumers’ needs, and the IP challenges that arise from this. The final two case studies, on High Value Small Status Goods, looks at the impact of 3D printing on consumer products that have a low functional purpose, such as collectible figurines or sculptures.

The third publication, an Executive Summary (here), brings together the findings and conclusions from the two Studies and provides recommendations.

The Studies conclude that there is no urgency to legislate at present as 3D printing is not yet a mass phenomenon, warning that a premature call for legislative and judicial action could stifle the public interest in “fostering creativity and innovation and the right of manufacturers and content creators to protect their livelihoods”.

However, as 3D printing continues to grow, it is important to address the IP issues arising in this area in order to cultivate a climate better suited to tackling impending IP issues more successfully, and in a manner which takes into account the interests of all stakeholders. As such, the Studies make some important recommendations to Government, the Industry and Intermediaries (online platforms) about how to regulate 3D printing without resorting to legislation.

Recommendations and conclusions

Recommendations to Government include the setting up of a Working Group to review the technology and its IP status, particularly in relation to the software (Computer-Aided Design (CAD) Files) and the traceability of spare parts. The Reports also suggest that the Government should adopt a ‘wait-and-see’ approach.

The cartridge ran out half
through the print job ...
The Studies conclude that 65% of users engaged in the activities of 3D printing on online platforms do not take licences with regard to their work, leaving their creations vulnerable and open to infringement while losing the ability to claim authorship. The Study therefore recommends that online platforms provide more awareness and understanding of the different types of licences. The Study suggests that this aim can be achieved by explaining the nuances relating to each licence in clear and simple language, rather than simply ‘encouraging’ the user to adopt a particular type of licence. Further, online platforms can assign the most appropriate licence as a default with ‘opt-out’ as an option.

Finally, in relation to Industry, the Study recommends the adoption of new business models and provides a number of suggestions in this regard. The Reports also suggest the licensing of CAD files more widely, thereby opening up doors to a range of outlets selling 3D CAD files. This will avoid locking the manufacturer into an agreement through a system such as a ‘one-stop-shop’ for (spare) parts. Although a one-stop-shop may take away the costs of manufacture, transportation and storage while reducing potential infringement of IP laws, it can lead to a monopoly-situation, which should be avoided.

Monday, 25 May 2015

Monday miscellany

Forthcoming events.  Do please remember to check out the IPKat's Forthcoming Events list for lectures, seminars, conferences and other opportunities to get out and about, meet people and use IP as a perfect ice-breaker for those otherwise stressful conversations with strangers.  The page is here, at your disposal. Enjoy!

On the subject of forthcoming events, the IPKat never misses a chance to rub noses with other Kats of note, so his tail started twitching when he heard that the IP Ball 2015 has been announced: its theme is a celebration of the 150th anniversary of Alice in Wonderland.  What Kat would turn down the chance to party with the Cheshire Kat himself? Happening on 18 July 2015, in support of Great Ormond Street Hospital, with a drinks reception at 6 pm, a three-course dinner at 7 pm, and music and madness to follow, this Kat can't wait to don his DJ [though he may have to, since he'd have to diet for about three months to have a chance of squeezing into it] and share a milk bottle with the King of Grin himself. Tickets are £105 per person or £100 for CIPA student members.  Just email with your name, your guest's name and your CIPA student number (if applicable) to get your claws on them.  Deadline for purchase is 5 July 2015, which leaves you plenty of time to primp and preen so as to be the most beautiful Kat at the ball! For more information visit  

From respected IP scholar and Katfriend Jacques de Werra (Law School, University of Geneva) comes news of an exciting international conference which he is organizing on June 17 and 18 on "Jurisdiction & Dispute Resolution in the Internet Era: Governance and Good Practices". This is part of the programme of the Internet l@w summer school). Though the footprint of the full programme runs wider than just IP, there is plenty for the IP purist to enjoy, such as jurisdiction in internet-related IP cases and FRAND patent disputes. For further details, just click through to the conference website here. Online registration can be achieved by clicking here.

Mei Eden: the Hebrew version
of the logo has the rainbow
running from right to left
Around the weblogs 1. Writing on the IP Factor weblog, the eponymous Michael Factor diverts his attention from patents to a fascinating piece of litigation in which the French custodians of the geographical indication Champagne won a major victory in Israel against Mei Eden, a local producer of mineral water which was marketed under the slogan "Nature's Champagne". The bottom line, it seems, is that you may not be able to to improve on nature, but you can at least get legal relief against it. Another compellingly fascinating post can be found on The IP Breakdown and it's by Rick Sanders. The title is "MCA Explainer: Why Chilling Effects Can Display Takedown Notices Complete with Pirate URLs" and, if you think the title's long, you should only see the blogpost which is virtually of law journal length. For all that, it reflects on the operation of Chilling Effects, for good or ill, and asks some uncomfortable questions about the world of DMCA takedown notices.  Returning from Barcelona, where he attended the the inaugural meeting of BioLawEurope, IP Draughts' mastermind Mark Anderson penned "You can’t always get what you want (from your lawyer)", reminds us there is a difference between "networking", which is a genteel euphemism for marketing oneself to total strangers, and creating a network, that is to say a grouping of like-minded practitioners who recognise their limitations and the ability of each to enhance the professional services of the others.

Around the weblogs 2. In "Of Copyright and Spiders", the 1709 Blog's Andy Johnstone explains why UK copyright could not be used as a basis for restraining the release of certain of Prince Charles's letters to the public, here. On the same weblog, one-time guest Kat Marie-Andrée Weiss asks the surprising question "Is Peggy Guggenheim’s Collection a Work of Art Protected by French Copyright?" and, remaining in France, Asim Singh ponders the prospects of a new approach to conflicts between pre-existing works and derivative works. Moving to the IP Finance blog, Keith Mallinson returns to one of his favourite subjects -- FRAND licences and the free market -- in "Masterminds Discuss Fair Play, Equitable Rewards and Market Success in Patents and Standards".

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

Here, thanks to the unstinting efforts of our noble friend Alberto Bellan, the Kats are proud to present to you the 47th weekly round-up of the previous week's substantive Katposts. For those readers who have been experiencing a late May or Early Summer public holiday, this service is, we hope, both useful and logical, and should help you fill the knowledge gap with a minimum of inconvenience and discomfort.  Anyway, here's what Alberto has to say about those posts you might have missed:

David reports that Nicolas Sarkozy's party UMP has resolved to rename itself "Les Républicains". In response, other citizens of la République française seem to have taken legal action claiming "violation of the Constitution and the 1883 Paris Convention". Très chic.

* Hassan hassle? CJEU asked to rule on effect of non-registration of Community trade mark transaction

Is a non-registered licensee of a registered Community trade mark allowed to start infringement action against a registered licensee or against a non-registered infringer? Confused? Then read this post by Jeremy's for a quick comment on this brand-new reference to the Court of Justice of the European Union (CJEU).

* A test-drive for the Unified Patent Court: Part IV

Bristows' Alan Johnson and Alexandria Palamountain have already delighted the IPKat's patent-litigating readership with three earlier reports regarding the magical world of the Unified Patent Court (UPC) system, given a reality check [here,  here  and  here].  Now it's time for the fourth.

* Horological Horror Show for Swatch, while Panavision has a Ball

Valentina reports on the General Court of the European Union's decision in Case C-71/14, which saw the well-known SWATCH trade mark opposing to a mark application for 'SWATCHBALL'.

* A "transcendental moment" for "a very positive spirit", be it whiskey or Tequila

Jeremy breaks the news of radical developmeny concerning the Lisbon treaty on appellations of origin and geographical indications. 

* EPO revises proposals for renewal fees for Unitary Patents -- but does it really make any difference?

Merpel and the Kats are great fans of the debate upon the level of renewal fees for the Unitary Patent [see, eg, here]. Also, they feel so lucky to have many Katfriends at hand, helping them to follow the intricate sequence of proposals on that matter. This time, Darren hosts a post by Bernard McDonald, technical assisant at Gill, Jennings & Every, who reports on the issuance of the revised proposal.

* Colourless Copaxone in the clear: Teva's synthesis patents held to be (mostly) valid

The never-ending litigation between Synthon and Teva over Copaxone (glatiramer acetate) has already given us interesting and striking decisions from the Patents Court  [also here], the Court of Appeal in England, and also the US Supreme Court The parties have been back in court to fight over other patents, resulting in the decision Synthon B.V. v Teva Pharmaceutical Industries Ltd [2015] EWHC 1395 (Pat), which came out last week and which Darren reports in timely fashion.

* When functionality cuts deep, it can be hard to handle: Yoshida appeal dismissed

Valentina's back again to pen on General Court's decision in Joined Cases C337/12 P to C340/12 P Pi-Design AG, Bodum France SAS and Bodum Logistics A/S v OHIM, Yoshida Metal Industry Co. Ltd [on which see the IPKat's earlier post here]a trade mark dispute concerning a Community trade mark resembling a knife-handle.

* Do you value an invitation to the UPC court fees consultation event?

"CIPA, The IP Federation and the IPO will be hosting awareness-raising events for individuals and businesses to gain a better understanding the background of the UPC consultation, the details of the various elements contained within it and how best to get your views across", Annsley reports. 

* Disturbing news from Eponia: staff union under fire

Merpel has been having a quiet May, but has been rudely awoken from her frolics in the amiable grass of Lincoln's Inn Fields (her preferred place for Spring gambolling) by disturbing news from the European Patent Office.

* Does a patent professional need to raise the trade secret option with the client?

To what extent does an attorney who is engaged in patent matters have any duty or obligation to raise the trade secret option to a client and to counsel how the client might behave to protect is trade secret? If the patent professional is a licensed patent attorney but not a licensed lawyer, is he/she prohibited from providing legal advice on the trade secret aspects of a client’s invention? Delicious food for thought, kindly provided by our Neil.

* When the biter gets bit: Cross-undertakings in damages

The question of how a court will calculate damages upon lifting an interim injunction, when a cross-undertaking has been given by a right holder when obtaining that injunction, is a very relevant factor to the holder of an IP right. Right on these points, Katfriends in Wragge Lawrence Graham & Co., Paul Inman and Ailsa Carter, have summarised last week's decision from the Court of Appeal in AstraZeneca AB & Another v KRKA dd Novo Mesto & Another [2015] EWCA Civ 484.

* F1 ends up in hot water - no similarity to F1H2O

In Case T-55/13 the General Court of the European Union deals with Formula One Licensing BV's opposition against Idea Marketing SA’s Community trade mark application for 'F1H2O'. Valentina tells all.



Never too late 46 [week ending on Sunday 17 May] – Whyte & MacKay Ltd v Origin Wine UK Ltd and Dolce Co Invest Inc | "Three aspects of information: Current issues in trade secrets, client confidentiality and privilege" -- a new event | CJEU upon distribution right in Dimensione Direct Sales srl and Michele Labianca v Knoll International SpA| UK Supreme Court on Mere reputation and passing-off | 14 million kat-thanks | Actual confusion at INTA | Italy's twist on UP Package | Moral authorship over promotional spot in Italy.

Never too late 45 [week ending on Sunday 10 May] – INTA 2015 and the Kat | IP and Competition Law | Sky v Skype | CJEU v Spain| Digital Single Market Strategy | IPCom v HTC | European Qualifying Examination appealed | UPC fees | CJEU and 3-D marks | EPO Oral Proceedings.

Never too late 44  [week ending on Sunday 3 May] – Forgotten principles and histories, and the role of complexity in patent law | King's College copyright distance learning Course | Spain, Berne, and the non-discrimination principle | Novartis v Focus, Actavis, Teva | SUEPO keeps demonstrating | Popcorn's blocking injunction | Unprecedented pre-action disclosure application in Arnoldian Big Bus  v Ticketogo | World IP Day | EPO's sick leave policy compared | Google wants your patent | "BE HAPPY" trade mark | UK Green Party's Manifesto on copyright law.

Never too late 43 [week ending on Sunday 26 April] – C5's annual Pharmaceutical Patent Term Extensions Forum | UPC: patent attorney and client discuss | CJEU’s 2014 report | PUMA v PUDEL | Leaked Digital Single Market Strategy | Again, the EU Patent Package and alleged dangers| EU TM reform | Is Svensson’s new public ok? | OHIM’s rebranding | LV’s pattern as trade mark | EPO and trade unions | Patent and first-mover advantage | Libraries’ right to digitise their collection in Germany.

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