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

Tuesday, 25 October 2016

Charlie Chaplin won't come back from the dead, neither will Montis' copyright in the Chaplin chair

Montis' Chaplin chair
In the early 1980s, Mr Gerard van den Berg designed two chairs he named "Charly" and "Chaplin" (see images, but only briefly, otherwise your eyes might start to bleed). In 1988, he registered them as models under the Uniform Benelux Law on Designs and Models. In 1990 he assigned his copyrights in the chair designs to Montis Design BV. Now, at that time, the Uniform Law on Designs an Models contained a quite bizarre provision in its Article 21. It provided that designs could benefit both from the protection as registered models and from protection under copyright law if they have "outstanding artistic character", but
Cancellation of the filing of a design or model of outstanding artistic character or the extinction of the exclusive right derived from the filing of such a design or model entails the simultaneous extinction of the copyright relating to that design or model, provided that the two rights belong to the same person; that extinction will not however take place if the proprietor of that design or model submits, in accordance with Article 24, a special declaration seeking to maintain his Copyright.
In other words, to benefit from copyright protection, the author or his successor needed to file an explicit declaration (and pay a fee), generally before the five year term of protection as registered model expired. Montis and Mr van den Berg failed to file such declaration, and therefore both design and copyright protection in the Charly and Chaplin chair designs lapsed in the Benelux in 1993.

Needless to say, Article 21(3) Uniform Law on Designs and Models is contrary to Article 5(2) Revised Berne Convention, which provides that copyright must not be subject to any formality. Since Article 9(1) TRIPS Agreement requires that members of the WTO comply with Articles 1 to 21 of the Berne Convention, the Benelux countries were also in violation of the TRIPS Agreement. Having realized this, the governments of Belgium, the Netherlands and Luxembourg deleted Article 21(3) from the Uniform Law in 2003.
Montis' Charly chair

Problem for Montis, of course, was that at that time, its copyrights in the Charly and Chaplin chair designs in the Benelux had already lapsed for failure to file the maintenance declaration. So it sought to revive them. One argument was that the Term Directive (93/98/EEC) required that works be protected for life of the author plus 70 years, and "the terms of protection provided for in this [Term] Directive shall apply to all works and subject matter which are protected in at least one Member State, on [1 July 1995], pursuant to national provisions on copyright or related rights or which meet the criteria for protection under Directive 92/100/EEC". Directive 92/100/EEC (replaced by Directive 2006/115/EC) is, however, explicitly not applicable to buildings and to works of applied art (cf. Article 2(3)).

So Montis claimed that its copyright should be held to have been restored following the adoption of Directive 93/98, essentially because their extinction for lack of compliance with a formality was a violation of the Berne Convention and TRIPS Agreement. The Benelux Gerechtshof (Benelux Court of Justice) decided to refer to the Court of Justice the following question for a preliminary ruling:
Is the term of protection referred to in Article 10, in conjunction with Article 13(1), of Directive 93/98 applicable to copyright that was originally protected by national copyright law but which lapsed before 1 July 1995 on the ground that a formal requirement had not been satisfied (or was not satisfied in due time), more specifically because a maintenance declaration, as referred to in Article 21(3) of [the Uniform Law] had not been filed …?
Now that's a work of outstanding artistic
character. I needed some eye bleach.
In its judgment of 20 October 2016 in case C‑169/15 the Court of Justice said no, basically. It observed that the use, in Article 10(2) Term Directive, of the present indicative tense in the wording of the two alternative conditions for the application of the terms of protection provided for in that directive, reveals that the aim was that legal effect should be given to the situation as existing precisely on 1 July 1995 and not on a date earlier than or later than that date. Consequently, if, because of the extinction of copyright pursuant to specific national legislation, prior to the date laid down in Article 13(1) Term Directive, that copyright was no longer protected on that date, under Article 10(2) Term Directive, the terms of protection laid down by that directive do not apply to the work concerned.

While it does indeed follow from Article 9(1) TRIPS Agreement that the European Union must comply with, inter alia, Article 5(2) Berne Convention, the TRIPS Agreement had entered into force only on 1 January 1995, in other words after both the date when Term Directive 93/98 was adopted and the date when that directive entered into force. In addition, under Article 65(1) TRIPS Agreement, the European Union was not obliged to apply the provisions of that agreement before 1 January 1996. There was therefore no obligation to restore lapsed copyrights and no need to interpret Article 10(2) Term Directive in the way suggested by Montis.

It should be obvious that the holding of this decision is rather narrow, as (deleted) Article 21 Uniform Law on Designs and Models is rather unusual. I am not aware of any other European country with a similar provision. Also note that Montis' best argument probably was the chair designs were protected under copyright law on 1 July 1995 in at least one Member State other than a Benelux country. It did make this argument, but too late according to the Hoge Raad der Nederlanden (see para. 26) and was not heard. Now, I don't mind hearing about these chairs, but if I ever have to see them again, I'm going to vomit.

AG Szpunar says that the notion of "places accessible to the public against payment of an entrance fee" does not apply to hotel rooms

AG Szpunar
Under the Rental and Lending Rights Directive, among other things, broadcasting organisations have the exclusive right to authorise or prohibit the communication to the public of their broadcasts in places accessible to the public against payment of an entrance fee. 

More specifically, Article 8(3) of that directive provides that:

"Member States shall provide for broadcasting organisations the exclusive right to authorise or prohibit the rebroadcasting of their broadcasts by wireless means, as well as the communication to the public of their broadcasts if such communication is made in places accessible to the public against payment of an entrance fee."

Are hotel rooms included in the notion of "places accessible to the public against payment of an entrance fee"?

This is the issue on which the Handelsgericht Wien (Commercial Court, Vienna) is seeking guidance from the Court of Justice of the European Union (CJEU) in Verwertungsgesellschaft Rundfunk GmbH v Hettegger Hotel Edelweiss GmbH, C-641/15.

This morning Advocate General (AG) Szpunar in his Opinion answered the question in the negative, holding that "the communication of a television or radio signal through television sets installed in hotel rooms does not constitute communication to the public of the broadcasts of broadcasting organisations in a place accessible to the public against payment of an entrance fee within the meaning of that provision."


This reference for a preliminary ruling has been made in the context of litigation between the operator of a hotel in Grossarl [whose rooms, unsurprisingly, are furnished with TV sets which enable broadcasts from a variety of broadcasters to be received by means of a communal aerial belonging to the hotel] and an Austrian collecting society, over the former's refusal to pay relevant fees pursuant to the national implementation of Article 8(3) of the Rental and Lending Rights Directive.

According to the hotel operator, hotel rooms are not places accessible to the public against payment of an entrance fee within the meaning of the provisions transposing Article 8(3) of the Rental and Lending Rights Directive. 

The Commercial Court, Vienna, was not sure about the correct interpretation of Article 8(3) of that directive, and so asked the CJEU the following:

"Is the condition of “against [payment] of an entrance fee” laid down in Article 8(3) of Directive [2006/115] satisfied where;
–      through the TV set made available in each room of a hotel, the hotel operator provides access to the signal for various television and radio channels (“hotel room TV”), and
–      for use of the room (including hotel room TV), the hotel operator charges a fee per room per night (room rate) which also includes use of the TV set and the television and radio channels to which access is thereby provided?"
Hotel life: not all about TV
The AG Opinion

In order to address the question referred by the Austrian court, AG Szpunar addressed in turn the notions of 'communication to the public' and ‘places accessible to the public against payment of an entrance fee’. 

While holding the view that the provision of a TV or radio signal by means of TV sets installed in hotel rooms must be regarded as falling within the notion of ‘communication to the public’, the AG concluded for the inapplicability of Article 8(3) of the Rental and Lending Rights Directive to the case at hand.

The notion of 'communication to the public'

The AG noted that the CJEU has already ruled that installing TV sets in hotel rooms and providing a television signal via them constitutes communication to the public within the meaning of both Article 3(1) of the InfoSoc Directive [Rafael Hoteles] and Article 8(2) of the Rental and Lending Rights Directive [PPI (Ireland), noted here].

However the object and scope of protection laid down in those provisions is different from that in Article 8(3) of the Rental and Lending Rights Directive. In particular, for a broadcast to exist it requires an airing and thus a form of communication to the public. Therefore, unlike in the case of works or performances or recordings thereof, communication to the public is not only one of the forms of using broadcasts but also an inherent element of the actual object of protection [para 15].

Despite the particular nature of radio and TV broadcasts, the AG rejected the idea [para 16] that the term 'communication to the public' in the context of providing a signal for TV sets installed in hotel rooms should be given a different meaning. He thus concluded the provision of a TV or radio signal by means of TV sets installed in hotel rooms must be regarded as communication to the public of broadcasts from broadcasting organisations within the meaning of Article 8(3) of the Rental and Lending Rights Directive.

This said, he noted however [para 17] that "the EU legislature limited the exclusive right of broadcasting organisations to cases of communication to the public in places accessible to the public against payment of an entrance fee."

The notion of ‘places accessible to the public against payment of an entrance fee’

Turning to the consideration whether hotel rooms are to be regarded as ‘places accessible to the public against payment of an entrance fee’, the AG stated that the answer could be in the affirmative ... but only if one considered "the actual expression ‘places accessible to the public against payment of an entrance fee’, in isolation from the drafting history, purpose and role of Article 8(3) of [the Rental and Lending Rights Directive] in the system of copyright and related rights" [para 19].

History and rationale of the provision

If one takes instead into account the drafting history of the Rental and Lending Rights Directive, the conclusion is rather different.

The AG recalled [para 22] that Article 8(3) was modelled on Article 13(d) of the Rome Convention and intended to have the same scope. In the Rome Convention the notion of ‘places accessible to the public against payment of an entrance fee’ is that of places "where a fee is levied precisely for the possibility of viewing a television broadcast communicated to the public at that place" [para 24]The reason is that Article 13(d) in the Rome Convention was linked to the practice, which was common in an earlier period of television development, of organising collective showings of television broadcasts, entry to which was subject to a fee. Accordingly, [para 25] when we not are dealing with a fee directly linked to the possibility of viewing a television broadcast, and fees are merely being levied for other services, such as catering services, that situation does not fall within the scope of the term ‘places accessible to the public against payment of an entrance fee’ within the meaning of Article 13(d) of the Rome Convention." 

Buying a beer: NOT
a mandatory fee to watch sports on TV
The AG concluded [para 26] that "a fee for a room in a hotel is not a fee for the possibility of viewing television broadcasts there, but for accommodation. Making television broadcasts available is merely an additional service which a customer expects, in the same way as running water, drinks and an internet connection." 

The AG also rejected the argument that the accessibility of TV set in a room makes it possible to raise the price of the accommodation and consequently part of that price must be regarded as a fee for the possibility of viewing TV broadcasts. To explain this point, the AG drew an analogy with catering establishments and held that [para 30] "[t]he owner of a catering establishment fitted with a television set can also raise the price of his services by dint of that fact, particularly during the broadcasting of programmes of particular interest to the public, such as sports broadcasts. It should be recalled that ordering a place at a table in that establishment will not normally be possible without ordering the food or drink on offer there. That does not mean, however, that the price of a glass of beer can be regarded as a fee for viewing that broadcast and the establishment can be regarded as accessible to the public against payment of an entrance fee within the meaning of Article 13(d) of the Rome Convention. A fee for an accommodation service in a hotel room is precisely the same in nature."

Also applicable under current technical and market conditions

The AG held that such a conclusion based on the history and rationale of the Rome Convention would be also applicable in today's conditions. 

While "a dynamic interpretation of the provisions of law, which is capable of adapting the wording thereof to the changing conditions in fact and thus allowing the objective sought by those provisions to be attained" is necessary [para 35], the AG concluded that no change is needed regarding the interpretation of Article 8(3) of the Rental and Lending Rights Directive. This is so because:
  1. Public showings of TV broadcasts have not disappeared;
  2. "[A] dynamic interpretation of the provisions of law is justified only on condition that it takes account of the objective which the legislature sought to attain in laying down those provisions and serves to realise that objective in changed conditions, but not to replace it with another objective." [para 37]

This is another carefully drafted and thoughtful opinion of AG Szpunar which bears signifcant points of resemblance with the approach taken in his earlier Opinion in Vereniging Openbare Bibliotheken v Stichting Leenrecht, C-174/15 [noted here].

Readers will recall that this reference from The Netherlands [in progress] has arisen in the context of proceedings brought by the association of Dutch public libraries which, contrary to the position of Dutch government, believes that libraries should be entitled to lend electronic books included in their collections according to the principle "one copy one user". 

Similarly to today's Opinion, also there AG Szpunar stressed the importance of interpreting relevant provisions of EU law in light of their history and rationale, but also - in order to maintain the latter unaltered over time – the need to adopt a dynamic interpretation of legal norms, if changes in circumstances and technology require so. 

Meet the Trade Mark Judges (Part two)

London Taxi CTM
Following on from Meet the Trade Mark Judges (Part One) is the inevitable sequel.

The questions continued...

The shape of a London taxi was found not registrable on the basis that the shape added "substantial value"... but do not all famous names add substantial value to the goods?  Is this test destructive of TMs?

This English case was dissected by the IPKat here.   Carr J recalled that one of his concerns when he represented Philips in the Philips v Remington litigation was that three heads (on the Philips shaver) would be said to add substantial value.  In his view, this argument never surfaced because every shape that becomes famous adds substantial value.  Carr's paradigm example of shape adding value was a cut diamond where the value from the shape and the gemstone itself can be clearly distinguished.

There was some concern that shape trade marks may have gone too far and design, copyright and unfair competition law should be sufficient to protect shapes (although it was accepted that there is not complete consistency across the EU).

Oliver Morris thought that the questioner may have got wrong end of stick as the question suggests that substantial value test applies to standard trade marks such as words and logos. He noted that the brand name adds no value to intrinsic nature of goods. So this is not an issue for standard trade marks.

"But what about celebrity names"? cried someone from the audience... In those instances, the value comes from the celebrity's identity and not the trade mark name.  The panel deflected this question with some philosophical "mewsing" on the shape of the VW Beetle which was initially treated with ridicule but over time the public was educated to love it.  The panel may have shied away from this question but IPKat readers can fill this void.  Add a comment and let us know what you think.

Is a trade mark primarily there to protect consumers or the businesses which owns the registered mark? Have you seen a shift in recent years and which way would you prefer the law to develop in the future?

All panelists considered that trade marks successfully protected both groups but identified a shift from a consumer-centric approach to more trade mark owner orientated focus over time.  The original raison d'etre for a trade mark was to help consumers by indicating the origin of goods and preventing consumers from being confused into purchasing the wrong product.  This was then extended to cover situations where there was no confusion (e.g. due to a prominent disclaimer that goods were not official) but there was nevertheless infringement (e.g. Arsenal v Reed).  This trend shows a move toward the interests of business rather than simply avoiding consumer confusion.

Some of the panel considered that dilution and tarnishment could be solved with other causes of action such as unfair competition.  Carr J agreed and identified a philosophical move from consumer protection to protecting an asset of a business by preventing blurring and tarnishment.  He saw these issues as closer in nature to competition and would prefer the use of blurring etc to be limited to situations where actual damage occurs.  He gave the example of Mercedes which, many moons ago, was in a dispute with a clothing brand called "Merc". At that time, the clothing brand's website linked to Neo-Nazi sites: clear evidence of potential tarnishment to the Mercedes brand.

Oliver Morris explained that although there has been a move toward a more business focus, the essential distinguishing function is all about protecting the consumer as well.  He saw the interests of the consumer and trade mark owner as working hand in hand reasonably well because if more power is given to a brand owner they are more likely to protect and avoid confusion because they are empowered. In his view, generally speaking brand owners having more power has not negatively impacted consumer opinion.

Judge Vadja queried the rationale for stopping parallel imports using trade mark rights.  These goods are  sold under and by the same brand so there is no consumer protection issue (aside from any regulatory issues between countries).  He therefore considered that the ability to stop parallel imports is a particularly good example of the general view that business interest now dominates over the interests of the consumer.

Are references to the CJEU "a force for good"? 

Judge Vadja noted that the way a CJEU reference is formulated is crucial.  It is like a pleading in that it sets parameters for the case.  It is therefore important to be as clear and straightforward as possible.  For example, complicated questions with several sub-questions do not tend to be well received by the court.  In Carr J's opinion, referring courts should keep questions short and this is normally fairly straightforward as the reference tends to be on a discrete legal point with two alternatives.

Will English remain a CJEU language post-Brexit?

Almost certainly.  Not only are Malta and Ireland not going anywhere but Judge Vadja noted that over 90% of hits on the Curia website are for the English version of a judgment or opinion.  Suggesting that regardless of nationality, everyone wants to see the English version.  Therefore it would be very strange if judgments are not in English.

Are trade mark disclaimers useful? 

Olive Morris noted that this is only an issue on a few cases and whilst he could see the benefit there was not enough time to carve up distinctive elements at the time of filing.  Also what is and isn't distinctive can change over time and may be different when any infringement arises. Had suggested volunteering a disclaimer when a borderline mark.

Robin Jacob noted that they can be useful in some circumstances and referred to the Kitchenaid case (an image of the mark is to the left).  In that case, registration of the mark was granted on the basis that it included the name Kitchenaid (regardless of the fact that the mark also included a shape), the trade mark owner subsequently used the mark to take action against a third party with a similar shaped product but who had not used the name.

Is it fair to characterise trade marks, designs and copyright as "soft IP" compared to patents as "hard IP"? 

The general view was that the artificial distinction was not accurate.  Paolo Catallozi noted that with the move toward digital technologies, copyright is growing in importance.  There was no consensus as to which right was the most valuable on an economic basis (one for Nicola Searle to investigate!).

Henry Carr suggested a rebranding exercise: "creative" vs "inventive" IP but noted that even that isn't strictly accurate and is only a very broad brush distinction.  Oliver Morris suggested that, again broadly speaking, patent cases may be harder factually but easier from a legal perspective (and vice versa for trade marks etc).

Should there be a parody defence for trade mark infringement?

Given the substantial investment that many trade mark holders make into their marks it is unsurprising that many trade mark holders fail to retain a sense of humour when presented with parodic use.  Parodic use can be funny, a political tool, a cash cow or all of the above.  But where should the line be drawn?

In Italy, parody is often deployed as a defence to infringement (both for trade marks and otherwise).  Catalozzi noted that this trend was increasing over time.  It can be difficult to balance the legitimate interest of the trade mark owner (particularly to avoid blurring or tarnishment) whilst allowing freedom of expression.

Henry Carr reminded the room of the South African Carling Black Labour case (Laugh it Off v South African Breweries).  In his view, this was a good example of where trade mark law was rightly compromised in favour of making a political point regarding the practices of the company.

In Carr's view, this shows why some sort of parody defence is necessary. Although, this line of defence is already available under the European Convention of Human Rights (and Human Rights Act).

Paolo Catalozzi agreed that it was a question of balancing constitutional rights and property rights. In other words it all comes down to a question of balancing the various freedoms.

Procedural fairness and the Penalties Regulation: R(Roche) v Secretary of State for Health

This is the second report covering Monckton Chambers' seminar last Wednesday (see previous report on the Lundbeck decision here).

The latter part of the presentation covered recent cases on medicines regulation, focussing on R(Roche Registration Ltd) v Secretary of State for Health [2015] EWCA Civ 1311 (although this English Court of Appeal decision was handed down on 21 December 2015, it may have escaped your radar due to seasonal festivities and/or the mad rush to tie up loose ends before the Christmas vacation...) The judgment considered issues of procedural fairness in the context of Commission Regulation EC No 658/2007 concerning financial penalties for infringement of certain obligations in connection with marketing authorisations (known as the Penalties Regulation) - the first case where the Penalties Regulation has been addressed by the English Courts.


The Penalties Regulation provides for penalties for breach of certain requirements, including pharmacovigilance obligations.  For readers not familiar with the term, pharmacovigilance can be described as the ongoing monitoring and reporting obligations of pharmaceutical companies concerning the detection, assessment, and prevention of adverse effects or any other drug related problem.  It addresses product safety and efficacy concerns for public safety and health purposes.The Penalties Regulation allows the Commission to impose substantial fines of up to 5% of EU turnover of the MA holder, provided that there is an intentional or negligent infringement. 

During the course of routine inspections in 2012 by the Medicines & Healthcare products and Regulatory Agency (the MHRA - the UK regulator), certain 'critical' pharmacovigilance issues were identified at Roche.  The MHRA decided that there should be no criminal investigation in the UK, but the European Medicines Agency (the EMA) informed Roche that it was being investigated under the Penalties Regulation.  In 2013, the EMA asked the MHRA to reinspect facilities at Roche in the UK and at its subsidiary, Genentech Inc., in the US.  Roche was informed that the scope of this inspection was to assess whether it was implementing the correction plan to address the deficiencies identified during the 2012 inspection. The EMA also asked the MHRA for information under Article 8(3) of the Penalties Regulation, which provides that the agency may ask any natural or legal persons to provide information relating to an alleged infringement.  Roche was not specifically informed of this Article 8(3) request. The MHRA reinspected Roche, and information concerning that inspection was passed to the EMA. 

Public law proceedings

Roche brought public law proceedings seeking declaratory relief, articulating its legal case on the basis that: (i) the MHRA had acted outside the scope of its powers (ultra vires) by responding to the EMA's request, because Article 8(3) did not cover a reference from the EMA to the MHRA - instead, such a request should have been made under Article 8(2) which explicitly refers to requests made by the EMA to national competent authorities; (ii) the MHRA had breached common law requirements of procedural fairness by not properly explaining to Roche at the time of the 2013 reinspection that material would be passed on to the EMA for potential use in a quasi-criminal investigation; and (iii) the material which the MHRA had passed to the EMA contained a number of fundamental errors of law - namely (a) the MHRA had wrongly assumed that Roche was responsible for a default by its subsidiary company, and (b) the Commission's 'initiation notice' provided to Roche in 2012 referred to standards that had not come into force until later.  


Sales LJ was unsympathetic to Roche's position.  On the first point, there was no reason why the EMA could not make a request to the MHRA under Article 8(3) - the language was clear enough to cover natural and legal persons of any kind, including national competent authorities.  Secondly, in terms of procedural fairness, Article 18(2)(c) of the Penalties Regulation makes clear that information regarding the approach of a MA holder to an inspection or reinspection will be relevant information to which the EMA is highly likely to have regard for the purpose of carrying out its functions under that regulation.  Roche was therefore on fair notice of the potential for use of information from the 2013 reinspection in the infringement investigation without the MHRA needing to say anything more.  Roche pointed out that it did not have any lawyers present during the reinspection, but the Court of Appeal noted that it did have two attendees present who were experienced in pharmacovigilance matters.  Furthermore, Roche was a sophisticated and informed client.  Thirdly, in relation to the alleged fundamental errors of law, the Court of Appeal refused to grant a negative declaration or refer the issue to the CJEU for interpretation.  The views of the MHRA were advisory in this context, and were not binding on the EMA.  Essentially, the information that formed the subject of Roche's complaint simply consisted of communication between two public agencies.  A request to the CJEU would be premature.  It would be open to Roche to raise these arguments in the context of an investigation under the Penalties Regulation, and a CJEU reference at this earlier stage would not be helpful. 

This case demonstrates the reluctance of the English Courts to read additional procedural fairness into European regulation which already contains certain procedural protections. Arden LJ summed up her concerns with the following observation: "When the framers of the Penalties Regulation formulated the scheme of procedural guarantees as they did, they may well have had in mind a wide range of considerations that are not known to us.  Moreover, that point reinforces the conclusion that the question of whether the law should imply any procedural guarantees into the Penalties Regulation, in addition to those expressly given, should primarily be a matter for the courts of the European Union.  In those circumstances, this Court should not lightly find a breach of the common law duty of fairness (by the failure to give notice before inspecting the premises and records of Roche) which would in effect introduce restrictions on what the EMA or MHRA could do under the Penalties Regulation. "

Monday, 24 October 2016

Court of Appeal on Pregabalin - Pfizer still in pain, but Swiss claims re-interpreted again

While this moggy was struggling to get back from Indonesia, the Court of Appeal handed down its decision in the pregabalin appeal Warner-Lambert Company LLC v Generics (UK) Ltd (t/a Mylan) & Ors [2016] EWCA Civ 1006 (13 October 2016), and finally the IPKat has managed to blog about it (the lateness by no means reflecting on the importance of the judgment).

It is very much a judgment of three halves.

In the first part of the judgment (up to [135]), which substantively disposes of the case, Lord Justice Floyd (with whom Lord Justic Kitchin and Lord Justice Patten agreed) upheld the decision of Mr Justice Arnold on the validity of the patent.  Arnold J had considered that the claims of the patent that were alleged to be infringed were insufficient, and in particular claim 3 directed towards use of pregabalin for neuropathic pain, because the patent did not render it plausible that pregabalin would be effective at treating central neuropathic pain, only peripheral neuropathic pain.  Floyd LJ agreed with Arnold J's construction of the claims, and rejected the challenge to the finding that claim 3 was not plausible across its breadth.

On the other hand, Floyd LJ also rejected a cross-appeal from Mylan and Actavis challenging the finding that the patent did make a plausible claim that pregabalin was effective to treat peripheral neuropathic pain (that is, seeking to widen the scope of the finding of invalidity of the patent).  Thus, the first instance judgment on validity was completely upheld.

The second part of the judgment, which procedurally disposes of the case (subject to any appeal to the Supreme Court, which Pfizer is reportedly seeking) relates to the refusal to allow Warner-Lambert (the patentee and Pfizer subsidiary) the opportunity to amend claim 3 after the end of the trial.  Arnold J considered that this was an abuse of process.  After a detailed analysis, Floyd LJ concluded "I therefore do not consider that there is any basis for this court to interfere with the judge's evaluation on the issue of abuse of process."

Then we come to the third part of the judgment, relating to infringement.  Merpel gleefully reminds the IPKat that this part of the decision is strictly obiter and therefore non-binding (since the findings on validity and abuse of process make the infringement issue moot), but only a fool would disregard it.  Moreover, this is really where it starts to get interesting.

In the Court of Appeal decision relating to interim relief before the main trial before Arnold J, Floyd LJ had examined the proper interpretation of Swiss-form, second medical use claims (the present judgment states that this was at the behest of the parties: "The court was invited by both parties at that stage to decide the issue of law so that the parties knew where they stood for the purposes of the trial").  The problem was, the parties disagreed on what was the test that the Court of Appeal had laid down.  At the first instance interim proceedings, faced with a choice of foreseeability and intention, Arnold J had in his substantive decision in the case plumped for the latter:  for a Swiss form claim to be infringed, it had to be not just foreseeable to the manufacturer that his product would be used for the claimed indication, but the manufacturer had to actively intend (or, as Arnold J put it "subjectively intend") that it be so used.  The Court of Appeal judgment had referred to both foreseeability and intention, and Arnold J thought the test laid down by the Court of Appeal was that it had to be foreseeable to the manufacturer that this product would be intentionally administered for the claimed indication, the intention coming from a doctor, or, under rare circumstances, a pharmacist.

It now turns out that when referring to "intention" in the earlier judgment, Floyd LJ had not meant what Arnold J understood, but rather a much narrower sense that: "Intentional use is to be distinguished from use where the drug is prescribed for a different indication and, without it in any sense being the intention of the treatment, a pain condition is in fact treated."  Thus, unsurprisingly in the present judgment, Floyd LJ thought that "the judge [Arnold J] fell into error in seeking to dissect the requirement for intentional treatment of pain in this way".  Instead, for a Swiss form claim to be infringed "it is only essential that the manufacturer is able to foresee that there will be intentional use for the new medical indication" (where "intentional use" has the meaning just stated).

Thus, Floyd LJ has now clearly laid down a test which is close to the pure "foreseeability" test that Warner-Lambert originally contended for:

The issue which the judge was called upon to decide was whether Actavis knew or could foresee that at least some of the prescriptions written generically for pregabalin to treat pain would in fact be fulfilled with Lecaent. Had Warner-Lambert succeeded in upholding valid claims on which they relied for infringement, it would then have been necessary to decide whether, at any of the various dates analysed by the judge, that test of knowledge or foresight was satisfied. If so the judge should have gone on to consider whether Actavis had taken all reasonable steps in their power to prevent Lecaent from being used to treat pain.

Moreover, and very helpfully, he has also laid down what kind of steps taken by the generic manufacturer would be sufficient to be the "reasonable steps" (in the last sentence just quoted) required to prevent liability for infringement|:

If that is the basic test to be adopted, what is sufficient to negative the existence of intention? In my judgment the absence of the patented indication from the label cannot conceivably be sufficient to negative the intention. ...
Viewed in this way I think the answer becomes clear. The intention will be negatived where the manufacturer has taken all reasonable steps within his power to prevent the consequences occurring. In such circumstances his true objective is a lawful one, and one would be entitled to say that the foreseen consequences were not intended, but were an unintended incident of his otherwise lawful activity. 

This Kat is a little disappointed that the judgment refers to the judge falling into error with no apparent acknowledgement that the source of the error is in fact the lack of a clear test being laid down in the earlier Court of Appeal judgment.  However, a clear exposition of what the Court of Appeal regards as the correct test is most welcome, and the IPKat eagerly awaits a case in which it can be applied.

Sunday, 23 October 2016

Around the IPKat’s Cousins Blogs

This InternKat brings you some highlights of the IPKat’s cousins blogs!

Ben Challis reports on The 1709 Blog on a number of items, including the expected sentencing next month by the Liverpool Crown Court in the Wayne Evans case; publication by The Music Managers Forum of the ‘Dissecting the Digital Part 2’ report; the request for Comments by the US Copyright about researching and repairing software-enabled devices; and the victory by Kanye West, Jay Z and Frank Ocean in a copyright infringement lawsuit filed by songwriter Joel McDonald.

with copyright, Patricia Covarrubias blogged in IP tango about measures taken by the Peruvian National Institute for the Defence of Competition and Intellectual Property Protection (INDECOPI) for enhancing authors rights. Moving to trademarks, the blog also covered the INTA announcement about the opening in 2017 of the Latin America representative office in Santiago (Chile).

Over at MARQUES Class 46, the blog discusses the judgment in the Gucci v. Guess saga, where the General Court upheld the findings of the Board of Appeals. More about trademarks on SOLO IP, where Barbara Cookson described the tough life of the Solicitor mark in York.

Moving to the economic field, the IP Finance blog has recently brought a summary by former GuestKat Mike Mireles (Hat Tip to Professor Paul Caron's Tax Prof Blog) about the California Legislative Analyst Office report on how much subsidies have really affected movie activity in California, and IPKat Neil Wilkof's ruminations on the challenges of building fashion brands online, focusing on the European company Zalando.

On IP enforcement issues, Amanda Lotheringen blogged on Afro-IP about the launch of the “South African Training Manual on Investigation and Prosecuting IP Crime for Senior Law Enforcement”. South Africa is the first Member State that has adopted a customised version of the WIPO manual on this topic. Finally, on The SPC Blog, Rob Stephen discussed the UKIPO decision regarding the Supplementary Protection Certificate (SPC) sought for the nab paclitaxel.

With free trade and globalization under attack, can IP licensing come to the rescue?

Whatever one’s view about globalization and free trade (dislocation of jobs, social and economic inequality and loss of sovereignty, not to
mention free movement and immigration), one cannot deny that more and more skepticism is being expressed, from the Brexit vote to the US Presidential candidates and so on. If the overarching trend since the 1950’s has been towards institutional integration, the current winds are casting doubt on this tendency. The question arises: how might this affect IP?

The justification for IP focuses on lofty notions such as creating the proper incentives for creation and invention. But let’s not kid ourselves: IP became mainstream while globalization and free trade were taking hold as instruments in fostering economic growth, roughly from the 1980’s. Many IP practitioners are probably too young to remember that this was not always so. In those antediluvian days, IP protection was viewed with skepticism on both sides of the Atlantic; there was wide-spread hostility to patents based on competition law grounds, while trademarks were viewed as a manipulative tool to create otherwise unnecessary consumer desires. For the most part, IP was a backwater legal area, at best a quirky niche practice.

The linkage of IP with the rise of globalization and free trade changed all of that. IP became valuable because it was seen as generating ever-greater commercial value, enhanced by the international reach of IP. There was a wide-spread tendency to view IP and global trade as two sides of a single, inevitable coin, even if the two are not necessarily one and the same. As Professor Matthew Kennedy graphically observed in the context of the TRIPS agreement, negotiating and implementing an IP agreement within the framework of a “multilateral trading system [is] like a cuckoo’s egg laid and hatched in the nest of another species” (p.1). Assuming arguendo declining support for globalization and free trade, this Kat can imagine three different ways to view the future relationship between them, depending upon whether one believes that the relationship between IP and globalization/free grade is coincidental or causal:

1. IP will be unaffected—The rise in the role of IP while globalization and free trade took hold was merely coincidental. The factors that propelled IP forward in the 1980’s were driven more by the transformation from an industrial to a post-industrial world, where intangible assets are increasingly important. Whatever the ebb and flow of globalization and free trade, this transformation will continue. As such, IP will continue to flourish.

2. IP will be disfavored as having been a major contributor—Here, IP is viewed as having a deleterious causal connection. To the extent that IP favors those who take advantage of the knowledge economy and facilitates replacing labor with capital in production, it can be accused as having contributed to the dislocation of workers and increasing income disparity. Accordingly, there is little reason to strengthen IP protection.

3. IP will be swept up as a bi-product of the hostility—Even if IP is not held directly accountable, it will still be affected by the general hostility to internationalism in the form of globalization and free trade. Here, as well, there will be no reason to strengthen IP protection, if all that that such measures do is to enhance the very factors that are under attack.

Even if the optimistic scenario outlined in (1) above comes to pass, one cannot ignore data that indicate a material slowing in world trade. This suggests a decline in the width and breadth of global supply chains and a potentially increasing focus on national, as opposed to trans-national commercial activity, here. If so, as applied to IP, will this mean more, or less, IP activity? The more instinctive response is to argue for less as a natural outcome of less trade. Multi-national patent or trademark protection may be less essential if there are diminished opportunities for trade in protected products across borders.

But perhaps there is a counter scenario. Unlike the situation before 1980, many more countries outside of North America and Europe can claim an increasing middle class. If a decrease in the scope of world trade does not allow satisfying them in the current manner, it does not mean that such needs cannot be met otherwise. One such way might be by import substitution, but another is via increased licensing of IP rights to exploit local potentials and capacities. Should this come to pass, perhaps scenario (1) described above will be the more likely one, after all.

The new French law targeting "automated image referencing services": does EU law allow it?

Image Search for IPKat
As reported by this blog [herehere and here], earlier this year France adopted a law [Loi No 2016-925 on freedom of creation, architecture and cultural heritage] which - among other things - introduced new provisions [Articles L 136-1 to 136-4] into the Code de la propriété intellectuelle (CPI) to regulate the exercise of the exclusive rights of reproduction and representation vis-à-vis automated image referencing services. 

The content of the new provisions

As explained by Brad Spitz in a post published on the Kluwer Copyright Blog, "the new provisions will apply to ‘automated image search services’, which Article L.136-1 IPC defines as any online public communication service that reproduces and makes available to the public for purposes of indexing and SEO, plastic, graphic or photographic works, collected in an automated way from online public communication services (i.e. internet websites). In other words, these provisions target search engine services like Google Images."

Spitz also adds that Article L.136-1 IPC specifies that the images have to be ‘reproduced and made available’ by the image search services. This suggests that an act of reproduction is needed in order to trigger the entire mechanism envisaged by Loi No 2016-925. Lacking reproduction, no permission would be needed.

But: permission from whom? Article 136-2(1) CPI answers that, by saying that the publication of a plastic artwork, graphic or photographic work by an online communication service will be now subject to the consent - not of authors - but rather one or more collecting societies appointed to this end by the French Ministry of Culture.

Readers will remember that on this blog I have already expressed some doubts regarding the compatibility of this new legislative initiative with EU law. In particular, three main questions come to my mind once again.

1) A deprivation of rights?

The first question is whether a mechanism by which relevant authors are ab initio deprived of their right to authorise or prohibit the reproduction and making available of their works through online referencing systems [appointed collecting societies will instead have such right] is in line with EU copyright law, notably the InfoSoc Directive.

Collecting societies are not included among relevant categories of rightholders in this piece of EU legislation. Further to the decision of the Court of Justice of the European Union (CJEU) in Reprobel [here], it is questionable whether such a departure from the so called author principle is allowed by the InfoSoc Directive [and France may not be the only instance ...].

This conclusion is strengthened by the Opinion of Advocate General (AG) Wathelet [here] in the pending reference in Soulier [the decision is due in a few weeks' time, 16 November 2016]. The AG stated [paras 38-39, emphasis added] that: 

Were you thinking of doing as you please?
"Article 2(a) and Article 3(1) of Directive 2001/29 require the prior express consent of the author for any reproduction or communication to the public of his work, including in digital format. That consent constitutes an essential prerogative of authors.
In the absence of any derogating EU legislation, the author’s express and prior consent for the reproduction or communication to the public of his work cannot be eliminated, assumed or limited by substituting it with tacit consent or a presumed transfer which the author must oppose within a fixed time limit and in accordance with conditions laid down by national law. It follows that national legislation like the decree at issue, which replaces the author’s express and prior consent with tacit consent or a presumption of consent, deprives the author of an essential element of his intellectual property rights."

It follows that, by depriving authors of their ability to authorise the making of acts of reproduction/communication to the public, French legislature might have gone against what is allowed under EU law.

In addition - further to the CJEU decision in Luksan [here; what was at stake here was an Austrian law that - in contrast with EU law - failed to recognise film directors as first copyright owners] - it is arguable that by vesting ab initio collecting societies with the rights to exploit copyright works France might have deprived authors of their fundamental right to (intellectual) property, as expressly protected instead under Article 17(2) of the Charter of Fundamental Rights of the European Union.

2) A re-design of liability rules?

The second question also relates to the compatibility with existing CJEU jurisprudence. 

Even if the French law requires the making of both an act of reproduction and and an act of communication to the public to fall within its scope of application, it appears to assume that an automated image referencing service:
  • is primarily responsible for the making of acts of reproduction and communication to the public; and
  • in any case, is not eligible for the safe harbour protection in the Ecommerce Directive.
Under the existing EU framework, it may be questionable whether such approach is correct. 

With particular regard to the notion of communication to the public, while it has taken the CJEU several judgments to try and make sense of this notion, as of today it is unclear whether an online referencing service can be considered as making acts of communication to the public itself. 

In the recent GS Media decision [discussed herehereherehere], the CJEU confirmed that if one construes communication as merely requiring the making available of a work, ie without the need for any actual transmission, then what needs to be considered is "the indispensable role played by the user and the deliberate nature of its intervention. The user makes an act of communication when it intervenes, in full knowledge of the consequences of its action, to give access to a protected work to its customers, and does so, in particular, where, in the absence of that intervention, its customers would not, in principle, be able to enjoy the ... work" [para 35]

One could wonder whether in the case of an online referencing service, it is this or rather the creators of the websites indexed  (or, in any case, third parties) that play such indispensable role to give access to protected works [as noted here, a similar approach seems to have been (correctly?) taken also by the EU Commission in its recently proposed directive on copyright in the Digital Single Market in relation to the so called 'value gap'].

Another model notification
under Directive 2015/1535
As I noted here, in light of certain decisions of the CJEU and national courts alike, it may be argued that – in the case of a copyright work made available through the service of a passive online intermediary – the latter would not commit an act of (unauthorised) communication to the public (potentially giving rise to primary liability for copyright infringement), because the role that is ‘indispensable’ in the whole process is the one of the third-party/uploader, rather than that of the intermediary. 

3) Why French Government did not notify the EU Commission?

Finally, Directive 2015/1535 requires Member States to notify the EU Commission of any draft technical regulation targeting information society services. The reason, as explained at Recital 4 of the directive, is that "[b]arriers to trade resulting from technical regulations relating to products may be allowed only where they are necessary in order to meet essential requirements and have an objective in the public interest of which they constitute the main guarantee."

By looking at the relevant Commission's database, it seems that this has not happened for Loi No 2016-925 at the draft stage. The only notification I have been able to find relates to the draft decree implementing Articles L-136.3 and L 136.4 IPC.

What could the implications of this missed notification be? 

The answer might be 'inapplicability' of relevant provisions. The CJEU clarified that this would be the effect of the failure by a Member State to notify draft technical regulations before they are adopted in its 1996 decision in CIA Security, and confirmed this in its 2000 Unilever judgment.

Something along these lines has been also suggested in relation to the German and Spanish initiatives on so called 'ancillary copyright' for press publishers [see B Vesterdorf (2015), ‘The effect of failure to notify the Spanish and German ancillary copyright laws’ 37(5) EIPR 263]

Ultimately, the right of appointed collecting societies to license the reproduction and making available of images via automated image referencing services could be unenforceable. So automated image referencing services might not have to secure a licence after all.

In conclusion ...

... It seems that the path to royalties is paved with a number of potential obstacles. As anticipated by Spitz in his blog post, it is indeed likely that "[t]here will be long discussions and probably lawsuits before some royalties result from these new provisions."

But what do readers think?

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