The monetarisation of Let's Plays: an exercise in copyright management

Despite his impressive pedigree, having served time as a patent examiner with the UK's Intellectual Property Office, Katfriend and Page Hargrave trainee patent attorney Sean Gilday is modest enough to describe himself as something of a novice in the fields of both patent attorneyhood and guest-blogging. However, if there is one thing that Sean is prepared to admit to being reasonably well versed in, it’s video games.  Several news articles circulating recently have motivated him to write a post that takes a look at the oftentimes hazy interface where the world of video games touches the world of intellectual property.  Sean writes:

This week, Nintendo became the last of the “big three” in the world of home game consoles (the others being Sony and Microsoft) to assert its copyright against so-called “Let’s Play” videos uploaded to YouTube.  Briefly, a Let’s Play video is a screen capture of a person playing through the entirety of a video game, usually accompanied by a commentary from that person. 

 Under the terms of service, owners of copyright material may register their content with YouTube’s database.  When a user attempts to upload a video which YouTube detects as matching that content, the owner has several options: (a) he can do nothing, (b) he can have the video taken down, or (c) he may allow the video to stay up but play adverts at the start, with any resulting revenue going to the copyright holder.  Nintendo has opted for option (c), releasing a press statement to the effect that this will allow fan-made videos to stay up, while preventing people from making an otherwise gratuitous use of Nintendo’s IP, the assumption here being that “fans” would simply make videos for the love of it, and not for any pecuniary remuneration. 

 Several points of interest arise from this: 

 First, Nintendo’s press statement accompanying this decision implies that they are being fairly public spirited by allowing the videos to stay up, and that they merely wish to stop people profiting from their IP.  Ironically, however, the result of this action for the video-sharing community is that adverts have now been forced onto many fan-made videos that didn’t previously have them.  Those videos could be considered the purest type of fan-made video, as the creators didn’t make any money from any exploitation of the IP. 

 It may be worth just considering all the places where IP does subsist is in this instance.  The code of video game being played is protected under copyright (rather clumsily as a literary work under the UK's Copyright, Designs and Patents Act (CDPA) 1988 (s.3(1)(b), CDPA).  Naturally, a video taken of a video game is a film under s.5B(1) CDPA.  However, in a Let’s Play the video was made by the fan making the video.   

There is an exception in s.5B(4) that copyright does not subsist in a film which is a copy taken from a previous film, but for most games (except perhaps for the genre of games called interactive movies, and some point ‘n’ click games) it seems unlikely that the developer or publisher would have made a near-identical video of a fan-made playthrough. 

Karpov v Kasparov (1985):
black to play and win

 The art assets of the game are protected as artistic works.  Many video games also have “cutscenes” which are essentially short videos, and copyright would subsist in them as films.  Similarly, music from the game would be protected as a sound recording.  Also, don’t forget any trade marks the developer might have embedded into its product.  To me, it seems more appropriate to consider most video games as, well, games -- that is, a set of rules or parameters within which one may play.  If we compare this to some other games, it would seem quite bizarre to demand that BSkyB remunerate the person who codified football (or his estate for 70 years post mortem auctoris) for making videos of the games.  Indeed, like football matches, most playthroughs of video games are unique experiences (this is especially true of sandbox games, for example) and much of the entertainment value derives from the nuance and variation within each game.  People generally enjoy watching people play games well and, if there is an audience for the virtual version of a chess game such as Karpov v Kasparov, should publishers and developers prevent people from filming it? 

 While there are people who profit off Let’s Play videos enough to make a living out of it, the number of people able to do so is estimated to be very small.  If I were to upload a video of a Let’s Play to YouTube, very few people would be likely to watch it and consequently the revenue from any adverts on it would be negligible.  To make substantial sums of money, one really needs viewers in the tens and hundreds of thousands.  The Let’s Players able to generate these quantities have usually built up a following of subscribers, which is not easily done.  With the sheer quantity of LP videos available on YouTube, viewers can take their pick.  As a result, it seems reasonable to assume that an amount of success a Let’s Player has is, to at least some extent, tied to his or her personality and to the entertainment value of the added commentary.  Some viewers will be attracted by the game content, and some will be attracted by the personality of the player.  Sorting viewers of one category from the other, however, would seem to be a tricky proposition. 

 The viewers attracted by the game content are those of particular interest to developers and publishers, and they can be further broken down into two categories: those who are more likely to buy the game as a result of watching the LP video, and those who are less likely to buy the game.  It is this commercial consideration that dictates whether copyright holders allow the videos to stay up.  If viewers are using LP videos as a try-before-you-buy sneak preview, then copyright holders would presumably be happier to let them stay up (and Let’s Players might even claim that their videos are a form of free advertising).  If they are watching the videos as a substitute to actually playing the game, and therefore as a substitute for buying it, copyright holders would likely be more keen to take them down.  Again, sorting one class of viewer from the other does not seem trivial. 

If one imagines the (admittedly unlikely) possibility that viewers purely come for the personality of the players and the quality of their commentary, and that the copyright content is completely immaterial to the viewers enjoyment, one could easily suggest the solution that the commentary be uploaded on its own without the video.  Similarly, for example, to how Rifftrax commentaries are sold to accompany movies.  Unfortunately, unlike films, one cannot simply synchronise the commentary with the start of the game and play alongside it.  Video games are an interactive medium: each experience is bespoke, and depends on the particular input of the player.  The copyright content is therefore integral to the commentary and cannot be separated.  That being the case, it would seem that the solution proposed by developers and publishers such as Nintendo may be an imperfect solution, but perhaps the only practical one if Let’s Play videos are to continue to exist at all.

Thanks, Sean. Now let's find out what our readers think!

"But everyone else does it": the Corporate edition

Last week, fellow Kat Neil delighted us with a brilliant post on one of the biggest nightmares of IP lawyers, who are so often confronted with the wisdom of the crowd. “But everyone else does it” is not only the client’s dreaded response to an advice he dislikes. It works equally well (or bad) to explain corporate practices that raise doubts or concerns. A couple of days ago, representatives of Apple appeared before the Permanent Subcommittee on Investigations of the US Senate, at a hearing dedicated to ‘Offshore Profit Shifting and the US Tax Code’, to testify about the Cupertino-based company’s fiscal practices (video here). This post is not a comment on these practices, but a collection of IP-centred thoughts, triggered by the arguments and issues discussed at the hearing.

A familiar sight welcomed this Kat
during a trip to Austria

The members of the Subcommittee, whose positions concerning Apple’s fiscal practices varied from appreciation to severe criticism, appeared particularly concerned by the discrepancy between the share of research and development conducted in the US, some 95%, and the allocation of the majority of its worldwide income, consisting in the profits made through the sale of products on several non-US markets, to subsidiaries in Ireland, where a very low tax rate is applied (a process characterised, by the Chairman, as intellectual property ‘shifting’ from Apple to its subsidiaries, for the purpose of minimising the company's tax burden). Apple clarified that all the profits generated by sales in the US (35% of worldwide income) were taxed in that country. The Chairman Senator Levin, however, argued that the company benefits from the favourable environment and services offered by the US. Senator McCain added

'[a] company that found remarkable success by harnessing American ingenuity and the opportunities afforded by the U.S. economy should not be shifting its profits overseas to avoid the payment of U.S. tax, purposefully depriving the American people of revenue' (statement here). 

These remarks trigger an interesting question: what is the relationship between corporate taxes and IP?

Answering this question requires a level of abstraction. If taxes paid by individuals are generally seen both as a compensation for services rendered by the public administration and as a contribution to their financing, proportional to the citizen’s income, the situation is different in relation to corporations. Many of the services they benefit from are either financed through non-income based taxes (e.g. property taxes in relation to local services), or are indirect and non-exclusive. As far as IP, in a broad sense, is concerned, these services include the establishment of an intellectual property law system (through relevant national legislation and international cooperation efforts), the creation of judicial bodies and procedures that ensure the enforcement of IP law, the creation and maintenance of a high-quality educational system (from which future innovators come from), and the development of research-centred policies (including public research financing, incentives for research and development, grants and international exchange programmes, etc.).

Assuming that a relevant part of corporate taxes is indeed devoted to this aim, it would be interesting to measure the efficiency and costs of these services, comparing these data with corporate tax contributions. In this hypothesis, the interdependence between the IP system, the companies that use it, and the (future) inventors that fuel it would necessary imply that, when companies attempt to minimize their fiscal burden, the overall development of the intellectual property system, and its beneficial effects, could be reduced, to the detriment of companies themselves. In other words, low-taxed profits may generate happy share holders in the short term, but may also take a long term hit on the overall efficiency of the IP environment from which the companies benefit. Several arguments could dispute this reasoning.  For example, we could argue that a very small amount of corporate taxes is used to improve the IP system, or that its efficiency does not justify the current tax rates - Apple's CEO expressed its disappointment about the length of IP trials in the US, in contrast to the fast productive cycles of the same products which are the matter of the underlying disputes. Most of these counter-arguments, however, share a common concern: it is in the companies' interest that their taxes are invested in the development of a working and efficient environment for the protection of IP. Perhaps the Subcommittee should have focused on this perspective as well, since it may actively influence the companies' fiscal strategies.

Tim Cook, Apple's CEO

There is more to the story, though. Most of Apple's hearing revolved around its tax practices, the interests of shareholders versus those of the American people, and the enormous amount of cash owned by Apple oversea (more than US$ 100 billion). Although intellectual property was originally meant to protect 'the labours of the mind, productions and interests as much a man's own, and as much the fruit of his honest industry, as the wheat he cultivates, or the flocks he rears' (Davoll v Brown, 1845), its use has recently shifted, from a primary force in company growth to a strategic asset frequently asserted for defensive purposes. This shift has been accompanied by an increase in patent transfers, F/RAND litigation, hold-up and other defensive or anti-competitive practices, and a corresponding decline in patent quality (noted by the OECD here), and slowdown of investments in the research and development of innovative technologies (exacerbated by the economic crisis and by investments in incremental innovation and other areas of IP). Fast productive cycles, which represent one of Apple's strengths, and incremental innovation are capable of generating fast upgrade rates and a corresponding high income, reinforced by the usually generous gross margins enjoyed by companies in the ITC sector. However, the long term sustainability of a business remains strongly rooted in its ability to bring real innovation to the market. From this point of view, although incremental innovation has many positive effects, as it allows companies continuously to bring improved products to the market, it also generates a slow but continuous deceleration in medium term sales, which is usually offset by a new generation of products, based on a more innovative technology.

These dynamics suggest that investments in research and development could provide important long term benefits. A low fiscal burden, coupled with high cash deposits and generous policies for rewarding share holders, may improve a company's financial stability in the short term. By contrast, a higher participation to public spending in the IP sector, through a fair tax contribution, and the use of cash reserves to improve the company's potential to generate innovation, may result in lower short term income, and meet the share holder's criticism, but should secure the long-term business sustainability which essentially gives innovative companies a competitive advantage independent from the market's trends, and the stability that comes from the reduced reliance on it. Even if market dynamics, consumers' preferences and strategic use of cash and IP assets appear to drive competitors' moves, the "everyone else does it" mantra may prove, once again, to be a weak argument.

Can unfit copyright laws favour businesses' growth and emergence of new services?

Surely thinking about (bad)
copyright and innovation:
Katfriend, photographer and copyright owner
Douglas McCarthy's Pushkina

After a week in Shanghai, this Kat is back on the blogosphere with a question which has been haunting her for the past few days, even more than jet-lag or the conclusion of season 5 of Mad Men (which she could enjoy in its entirety while on the plane back to London).

The obsessive (well, sort of) question has arisen following a bit of reflection on the (quite trite) universally acknowledged wisdom that good copyright laws might favour innovation and growth. But can the contrary also be true? In other words, can there be innovative (and lawful) services which develop or even emerge thanks to unsatisfactory legal solutions?

Surely this question has been addressed already, but two recent examples might be also employed to respond 'yes' to this Hamlet dilemma.

 

Netlifx as producer and provider

The first example might be that of Netflix, the popular provider of on-demand internet streaming media currently available to North and South America, the Caribbean  UK, Ireland, and Scandinavian countries.

It is estimated that on a normal week night, Netflix accounts for almost a third of all internet traffic entering North American homes [the remaining two-thirds being directed to IP blogs].

As both Kevin Spacey's fans and Bloomberg Businessweek readers will know, Netflix has recently decided to act not just as a provider of third parties' licensed contents, but also as a provider of self-produced contents, the first being the political thriller House of Cards, starring American Beauty's lead actor.

According to The Hollywood Reporter, House of Cards has bowed to near-unanimous praise, with many heralding the streaming service as a legitimate rival to premium cable outlets HBO and Showtime.  

Netflix's plan is to continue producing original works and stream them directly. Besides considerations as to the progressively and rapidly dissolving identity of providers as ... well ... just providers, it was particularly interesting to read Bloomberg Businessweek's analysis on the future relationship between Hollywood studios and Netflix (and similar services). According to the magazine, 

 

"[There is] concern ... that the studios will stop licensing content now that Netflix is in the originals business. Hollywood is right to remain wary of letting any single entity get too powerful. As Netflix expands overseas, it intends to strike worldwide licensing deals instead of hammering them out country-by-country. From a studio perspective, that could give Netflix the ability to come up with lucrative terms that no regional competitor could match."

 

From an EU perspective, it has become quite common - and sometimes even rather un-original - to say that copyright licensing should be made easier across the EU, possibly by establishing an EU-wide licensing system which could (to some extent) adjust the territoriality principle to the digital age. Last year the Commission issued a proposal for a directive on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market, and a few months ago the "Licences for Europe" initiative was launched.

 

However, while some private actors have entered partnerships to create a de facto system of multi-territory licensing (eg online music licensing hub Armonia, on which see Katpost here), at the EU level there is still no system of multi-territory or pan-European licensing in place.

 

So, if the concerns raised by Bloomberg Businessweek translated to reality, in Europe at least this could be also because of the lack of a default legislative framework allowing pan-European licensing.

There is no need to say, suggests Merpel, that in any case quality, availability and price of an entertainment product remain the most important things to determine its commercial success.

Amazon's Kindle Worlds

 

The second example comes from Amazon and its new publishing model Kindle Worlds.

 

This is basically intended to boost and make money from fan fiction. It is well known that the relationship between copyright and works which build upon previous original ones has not always been idyllic.

 

As explained by Forbes, Kindle Worlds will let "would-be writers publish, and profit from, fan-fictional e-books with the blessing of the original characters’ creators, who will receive royalties from every sale."

 

The revenue split is considerably less generous than that enjoyed by authors who use their own characters.

 

Kindle Worlds  has already signed licences with franchises owned by Warner Bros and plans to get new ones soon. It is apparent that Kindle Worlds has the potential to be quite a lucrative business (at least for Amazon), in that fan-fiction has become increasingly popular and, in some cases, hugely successful (eg Fifty Shades trilogy, even if the terms of Kindle Worlds prohibit pornographic or extremely sexual fan fiction).

Overall, the examples above might serve to highlight that sometimes innovative services are provided and have the potential to develop also because competitors might be left behind struggling with the constraints of outdated copyright laws, or the law itself and its application are so uncear and unpredictable (eg fan fiction and copyright exceptions) that specific contractual arrangements might appear the most sensible (if not only) form of clarification. 

The Green Mountain state sues a Texas patent troll

This cat can attest that the state of Vermont is not only one of America's loveliest states, with big lakes and green mountains, but one of its quirkiest too. The place has a penchant for electing socialist Senators and hosting "Bread and Puppet" theatre and has a strong independent streak dating from its days as an independent republic.

But into this happy land roamed a Texas cowboy who carried not a six gun, but something more

A new cat-sherriff comes to Vermont

dangerous -- hundreds of demand letters asking small businesses of all stripes to pay a $900-$1200 patent license for each employee who used an image scanner.

"As you can imagine, most businesses, upon being informed that they are infringing someone's patent rights, are interested in operating lawfully and taking a license promptly," wrote the cowboy in one of his many missives.

The cowboy in question is Jay Mac Rust (who can see a picture of him and his chapeau here), who is an American "super lawyer" and counsel for MPHJ, a patent assertion entity that wrangles more than 40 shell companies, all of which have the same address - at a mail service company in the state of Delaware. MPJH's handful patents, one of which issued in 2001, cover basic imaging technology and have not been asserted until last year -- when MPHJ targeted everyone far and wide, including a non-profit organization that assists disabled Vermonters. 

The Green Mountain state ultimately decided enough was enough and this month sued MPHJ and its passel of shell progenies, arguing its behavior amounted to a violation of Vermont laws against unfair and deceitful trade practices. Here, to wit, are some of the alleged unfair acts:

• Threatening infringement actions despite no evidence that the defendants had in fact infringed the patents
• Using shell companies to hide the true owner of the patents and encourage quick settlements
• Implying that defendants' failure to respond to initial letters suggested that they had consulted patent counsel that would cost more than the license demand

And here are of some of the allegedly deceptive ones:

• Stating that plaintiff would sue if the defendant did not reply in two weeks
• Stating that the licensing program had received a "positive response from the business community"
• Saying that the average license price was $900-$1200 per employee and that "most" letter recipients had paid

The IPKat's head is spinning at seeing a major patent matter -- which are always a federal affair in America -- land in a state court, and no less in tiny Vermont. The state government's response is perhaps the most creative one yet to the ongoing problem of patent trolls like Mr. Rust in America, whose activities slurry the good names of patent owners. Other recent ideas include proposed federal laws to expand inexpensive post-grant review and to force patent owners to identify themselves. 

Merpel muses on starting
her own patent republic

Merpel, though, wonders about jurisdiction issues and whether the good people of Vermont will be able to pin down MPHJ in state court for long. While reining in patent powers seems a laudable goal in this case, it also raises obvious questions of federal pre-emption.

As Vermont is a small and friendly place, this cat, in the course of his day job, decided to ring up the state's head lawyer to ask him about the jurisdiction issue. Sure enough, Attorney General William Sorrell was soon on the line. He explained that the state's legal complaint (read it here) took no issue with the patents themselves but focused instead on the deceitful nature of the letters. Sorrell added that MPJH has been tormenting a wide variety of businesses for years. One of the rural states main industries is craft cheese and dairy products (must visit, notes the IP Kat).

It will be curious if other states take up Vermont's tactics. California is well-known for asserting its robust consumer protection laws and may wish to fight trolls on behalf of Silicon Valley (but wait, says Merpel, the California government also has a booming business in partnering with non-practicing entities to seek patent licenses).

And if that isn't enough Vermont patent news for one day, the governor today signed a novel law -- unrelated to the MPHJ lawsuit -- that vows to protect the state's businesses from "unscrupulous patent trolls."

Wednesday whimsies

Queijo de Cabra Transmontano:
non-minor-amended PDO

Around the weblogs. Until this Kat met Meera Nair, he was unaware of her copyright law and policy weblog Fair Duty. Well, here it is, and it's definitely worth taking a look at.  Meanwhile, the MARQUES Class 46 European trade mark law blog lists another batch of "non-minor amendments" to EU protected geographical indications and designations of origin. This Kat would love to know how much scrutiny these non-minor amendments receive, what is their cumulative effect, whether the non-minor amendments always extend rather than narrow down the scope of protection and whether anyone is currently doing any research on this phenomenon.  Elsewhere The SPC Blog has just launched its 2013 seminar, which takes place on 2 July in the London office of Olswang LLP (near the Old Nick). Whether you love pharmaceutical patents to the point of extending them, or side with the generic drug industry in aiming to prise them away from patent protection, this is for you.

Turkish academic and katfriend Mehmet Artemel has been busily spreading the word that the International Conference on Managing Intellectual Property in Universities is about to take place, for the third  year in succession.  As before, the venue is the Bogazici University, Istanbul, and the event runs from tomorrow, 23 May, through to 25 May -- so even if you can't magic yourself there in time for the beginning, you might yet make it for the end.  The IPKat has asked Mehmet to let him know if there's anything particularly worth reporting, in which case it will find its way on to one or other of a number of IP weblogs. In the meantime, you can check out the programme here.

Some Indexes attract more
attention than others ...

This Kat has previously praised the Global IP Index, which is coordinated and edited by Taylor Wessing LLP partner and Katfriend Roland Mallinson, not least because some information about how people regard the IP rituals and routines in other countries is always fun, and also because it has an inherent capacity to encourage reforms in those countries that score badly when compared with others.  Each year's Index draws its data, and therefore its appeal, from the survey of IP owners and practitioners, including many readers of this weblog.  To refresh readers' memories, each year's report gives a snapshot assessment of IP regimes around the world and recent developments. In response to requests from practitioners and some government officials, this year's Global IP Index, the fourth, has now expanded the number of countries which it embraces [the 12 newly-listed countries include Switzerland, Ukraine, Indonesia and Thailand].  Says Roland:

"I hope this may appeal to your wider international readership as a result. However, there's still the option of narrowing responses to just a few countries and to answer anonymously if preferred, so it can still be done fairly quickly and painlessly".

If you enjoy sharing your opinions with others, or just enjoying doing online surveys, the link is here.

The MARQUES Workshops on trade mark coexistence agreements (or 'prior rights' agreements, if you prefer) are filling up nicely.  The first, in English, takes place in Rotterdam on 18 June (details here); the second, in German, will be held in Munich a day later (details here). If they work out as well as is hoped, with luck there will be more of them in the future, spread across other European cities.  But wouldn't it be grand to tell your grandchildren that you were there for the very first one ...?

Did celebrated artist 
Jackson Pollock start out
by designing infographics?

If you love brands and like to savour the occasional infographic, you will probably appreciate this one which has been brought to the attention of the IPKat by Exeter, England-based law firm Stephens Scown Solicitors. It contains some fascinating data relating to UK trade mark filings in 2011.  For example, did you know that three of the five top companies filing UK trade mark applications have names that end with the letter 'o'?  [Merpel adds: can you name them?].  Also, Welsh applicants file three times as many applications as those from Northern Ireland, and the Scots file twice as many as the Welsh -- but if you add Northern Ireland, Wales and Scotland together you get only around as many applications as appear to come from East Anglia.  So now you know ..

Speedypats can be okay -- if handled with care

Will it all be plain sailing for speedypats?

Little over a month ago ("Coming soon: Speedypats", here), this Kat reported on the proposal in the United Kingdom to grant superfast national patents in just 90 days.  He expressed some anxiety as to whether this was the right thing to do in terms of both theory and practice and, speculating as to how schemes for accelerated examination were working in the US and beyond, he asked his friends at Patexia for their view.  Here, Patexia's Daniel Porter tells us what he thinks:

"Speedypat machinery

As every kat knows, grooming quality patents takes time. In recent years a glut of patent applications has left IP offices worldwide in a near-catatonic state. Here in America typical inventors expect to wait several years to get get a patent issued; a delay that many recognize as possibly undermining the goal of promoting rapid, competitive innovation. The United States Patent and Trademark Office (USPTO), like the United Kingdom Intellectual Property Office (UKIPO) and corresponding agencies elsewhere in the world, is trying hard to get its system up to scratch. These attempts have been no walk in the park for those involved and, for this reason alone, last month's UKIPO consultation considering 90-day-or-less prosecution (on which, see discussion here) piqued my curiosity.

My initial reaction ("can they really do a good job of examining a patent in 90 days?") was more disbelief than curiosity. I was surprised to find that the consultation laid out a plausible scenario and timeline for such expeditious examination. My curiosity turned instead to the effects on patent quality and the purported benefits for SMEs, the economy, and innovation. This led me to investigate the details of the proposed acceleration service more closely. What does this mean for the mechanics of search and examination to those with fur in the game? Are these speedypats really the cat's whiskers?

Approaching acceleration

Many intellectual property offices around the world already offer expedited examination. Some of these programmes succeed in reducing examination times to less than a year, but the 90-day speedypats programme is unique in its alacritous ambitions. In my estimation, the superfast program's success will depend upon even more carefully navigating many of the same issues facing existing acceleration programmes.

The two most prominent USPTO acceleration schemes are known as "prioritized examination" and "accelerated examination." Prioritized (also known as "Track One") examination is the newer of the two programs, effectively allowing 10,000 applicants to request the opportunity to pay a little extra (currently US$ 4,000 -- or US$ 2,000 for a small entity) and skip their inventions to the "front of the line." Prioritized examination doesn't mean faster examination, but instead a quicker route to get to the examination stage.

Merpel never did quite get the idea of electronic filing

Accelerated examination, on the other hand, aims to reduce examination time itself by requiring more up-front information as well as increased responsiveness from the applicant. The required "accelerated examination support document" and "pre-examination search document" burden the applicant with the task of locating prior art and to differentiate the claimed invention from earlier innovations with a high degree of specificity. Accelerated examination also requires that applicants make use of the electronic filing systems; they are restricted to a shorter turnaround for responses to office actions and must be available for a phone interview with the examiner. Prioritized examination is more expensive than accelerated examination, though paradoxically many recognize the latter (which requires substantially more preparation) as resulting in stronger, more strategic claims. Both services limit the number of claims per application.

Existing UKIPO acceleration services (reasons-based acceleration, combined search and acceleration, early publication) are in effect similar to these USPTO services. There is more than one way to skin the accelerated-examination cat, though, and notable procedural differences exist. Where the IPO typically performs the search and examination stages separately, USPTO examiners perform a prior art search in conjunction with their examination. Where the IPO publishes applications after a preliminary search, the USPTO publishes most unaccelerated applications before reaching an examiner for the first time (they categorically publish all applications 18 months after filing.) Where acceleration with the USPTO is more costly than normal filing, IPO acceleration comes at no extra charge, but may require the applicant to demonstrate a good reason.

Both offices also offer acceleration of international applications, leveraging the time and resources spent by foreign patent offices.

The UKIPO superfast acceleration seems modelled as a condensed copycat version of the combined search and examination (CSE) process. After an initial search and examination the application undergoes a first amendment and re-examination stage, followed by publication for public comment and a second amendment and re-examination stage. Superfast patents will cost up to £4,000 on top of regular application fees, will require applicants file online, and could establish tight deadlines forcing applicants to respond with cat-like reflexes.

Significant question marks remain surrounding how to guarantee thorough prior art search and public review. Solutions could include revisiting prior art search more than once throughout the application process, and even after patent grant (possibly resulting in revocation). The current standard period for public review is three months. The consultation hints that the IPO is considering a reduced timeframe, and seeks public comment on the utility of this review.

What to expect

So the cat's out of the bag. Superfast processing seems possible in practice--an extreme case of similar acceleration schemes available in the UK and elsewhere. Questions remain about overcrowding, patent validity, patent value, innovation diffusion, and the effects on economic growth. Right now, the best we can do is guess based on the information available.

The first empirical analysis of patent acceleration seems to be a recent report by the International Centre for Trade and Sustainable Development (ICTSD). Its goal was to investigate patent acceleration for environmentally helpful technologies as a climate change initiative. The report focuses on 5,000 "green" patents in seven countries. In addition to concluding that these services do in fact result in reduced examination time, the study found through citation analysis that accelerated patents were more effectively disseminated than their unaccelerated counterparts.

The study detailed several other interesting findings as well.

First, participation in acceleration programs was low, but demand still exists for this choice of service (and this demand appears highest in the UK). This highlights a common response to acceleration; that delay in the patenting process is advantageous to many entities hoping to maximize the length of their patent protection. Overcrowding won't likely become an issue. A related concern arose in a previous consultation. Some worried that inexperienced entities without representation may choose accelerated examination when it is not in their business interests. In a similar vein, the ICTSD study found that communication regarding the advantages and disadvantages of these services could improve substantially.

Finally, accelerated green patents are more valuable than their unaccelerated counterparts. This value does not likely stem from the shorter time scales, but instead from the more careful invention selection and scrutiny encouraged by many acceleration programmes.

I remain skeptical that such a short time frame for patent prosecution can guarantee effective examination and prevent the hasty issue of applications that will be invalid when examined more carefully. The IPO will need to construct with care its rules surrounding public review and prior art search, possibly requiring additional prior art search before application filing similar to the USPTO's accelerated examination. Whether superfast processing will benefit small-to-medium and the economy more generally remains unclear. But it will help some, while improving technological diffusion and reducing patent pendency, so the IPO seems wise to at least offer the choice".

Thanks, Daniel, for your survey and for your thoughts, which this Kat very much appreciates.

Huawei: the Duesseldorf court presumes to ask

The Court of Justice of the European Union (CJEU) has been asked to consider some questions of vital importance to our understanding of how patent monopolies and standard-essential proprietary technologies fit in with the European Union's omnipowerful rules on competition and antitrust in Case C-170/13 Huawei Technologies. As the UK's Intellectual Property Office (IPO) succinctly summarises the underlying dispute, it concerns "a request for a preliminary ruling in a case concerning the abuse of dominant market position in the field of mobile communications technology". The questions referred for a preliminary ruling are:

1. Does the proprietor of a standard-essential patent who informs a standardisation body that he is willing to grant any third party a licence on fair, reasonable and non-discriminatory terms abuse his dominant market position if he brings an action for an injunction against a patent infringer although the infringer has declared that he is willing to negotiate concerning such a licence? [Says the IPKat, there's a good case for saying that, theoretically, this is a question that can be answered 'always', 'sometimes' or 'never' -- but the reality is, in his opinion, that what constitutes an abuse of a dominant position is a question of fact rather than a question of law. He wonders if the question could have been better drafted]

Or

Is an abuse of the dominant market position to be presumed only where the infringer has submitted to the proprietor of a standard-essential patent an acceptable, unconditional offer to conclude a licensing agreement which the patentee cannot refuse without unfairly impeding the infringer or breaching the prohibition of discrimination, and the infringer fulfils his contractual obligations for acts of use already performed in anticipation of the licence to be granted? [This Kat wonders how helpful such a presumption would be in practice where an injunction is sought, particularly in any field of fast-moving technological advance, since it depends on proof of so many variables. It might provide some measure of comfort where after-the-event relief is sought though]

2. If abuse of a dominant market position is already to be presumed as a consequence of the infringer's willingness to negotiate:

Does Article 102 TFEU [for which see full text below] lay down particular qualitative and/or time requirements in relation to the willingness to negotiate? [No. There's nothing laid down in Article 102 ... ] In particular, can willingness to negotiate be presumed where the patent infringer has merely stated (orally) in a general way that that he is prepared to enter into negotiations, or must the infringer already have entered into negotiations by, for example, submitting specific conditions upon which he is prepared to conclude a licensing agreement? [This Kat wonders why the referring court -- the Dusseldorf Regional Court, Germany -- is so keen to break down the fact-finding tasks into presumptions. It's a dangerous and slippery slope, particularly if, for example, the CJEU considers that such presumptions exist on these facts but it's not clear whether and, if so, to what extent, they might apply in other fields of technology in which essential standards practice is less well established]

3. If the submission of an acceptable, unconditional offer to conclude a licensing agreement is a prerequisite for abuse of a dominant market position:

Does Article 102 TFEU lay down particular qualitative and/or time requirements in relation to that offer? Must the offer contain all the provisions which are normally included in licensing agreements in the field of technology in question? In particular, may the offer be made subject to the condition that the standard-essential patent is actually used and/or is shown to be valid? [What's the betting that the CJEU will not engage this question at the level of detail at which it is asked, and will simply say that this is a matter for the referring court to resolve?]

4. If the fulfilment of the infringer's obligations arising from the licence that is to be granted is a prerequisite for the abuse of a dominant market position:

Does Article 102 TFEU lay down particular requirements with regard to those acts of fulfilment? Is the infringer particularly required to render an account for past acts of use and/or to pay royalties? May an obligation to pay royalties be discharged, if necessary, by depositing a security? [Ditto]

5. Do the conditions under which the abuse of a dominant position by the proprietor of a standard-essential patent is to be presumed apply also to an action on the ground of other claims (for rendering of accounts, recall of products, damages) arising from a patent infringement? [This presumes that there is such a presumption ...]

It's not so long since the IPKat praised the UK IPO for finally managing to give people enough time to enable them to make comments on the questions referred so that they could email Policy at the UK IPO and help the UK government decide whether it wished to make representations in the proceedings before the CJEU.  However, the request for comment on this case was emailed on 21 May (ie yesterday), asking for comments by today.  Fortunately, the IPO has now atoned for this folly and given a fresh deadline of 29 May for the receipt of comments.

How to pronounce Huawei here and here
How to pronounce Haway/Howay here and here

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Text of Article 102

(ex Article 82 TEC)

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Copyright and performance: reflections on a complex relationship

Although this Kat has recently been living with a spotty connection, which almost cut him off the blogosphere for a week, he noticed that Professor Rebecca Tushnet published a new article on 'Performance Anxiety: Copyright Embodied and Disembodied'. According to the abstract,

The primary economic and cultural significance of copyright today comes from works and rights that weren’t contemplated by the Framers of the Constitution’s Copyright Clause. Performance - both as protected work and as right - is where much of copyright’s expansion has had its greatest impact, as new technologies have made it possible to fix performances in records and films and as cultural change has propelled recorded music and audiovisual works to the forefront of the copyright industries. Yet copyright has never fully conceptualized performance, and this has led to persistent confusion about what copyright protects.

(c) Stephen Moorer

The author explains that performance, whose protection is usually justified either in relation to the presence of a technical element (the camera operator's choice of a shooting angle, the sound engineer's choice of a particular level), or of a creative one (the creative actions of the performers), 'is now the prototype for all works'. A play or score allows for a practically infinite set of performances; copyright, which expanded 'beyond exact copying to substantial similarity and derivative works', similarly covers an almost infinite set of potential variations. However, performance remained in the background, while copyright law focused on text and 'performance rights', and mainly dealt, in the digital era, with 'pure reproductions'. The article identifies several key issues in the relationship between performance and copyright: (1) how to identify the 'creative element' that makes a work of performance original and protectable, (2) who should be deemed its author and how to deal with joint authorship, and (3) how to assess infringement in this context. Let's briefly look at Professor Tushnet's view on each of these issues.

Creativity and fluidity
The author observes that plays and scripts, although meant to be performed, are protected as works, and that only certain performances are protected under US law (e.g. performances of a musical work or play, fixed in sound or audiovisual recordings). The protection of movies and other audiovisual works raises the possibility of recognising a separate protection for the dramatic work thereby depicted. Copyright law, however, 'has often ignored the fluidity of creativity, especially when it comes to works that are performed'. Contrary to literary works, performance is 'less fixed and predictable', as it is based on interaction between performers, which produces a unique interpretation of the underlying plot. According to the paper, this fluidity 'is inherent in any work under modern copyright law', and the boundaries of a work only emerge through comparison with other similar works:

Every copyrighted work is therefore like the script for a play: it is a blueprint, but not just for one particular instantiation. Rather, the blueprint can have a potentially infinite series of variations. All works are surrounded by possible derivative and infringing variants, most unrealized. However, as copyright’s scope expanded, the conception of a work of art, paradoxically, hardened.

Professor Tushnet describes the sacralization process that focused on a 'single canonical performance as the embodiment of a work', explaining that a static work raises fewer legal concerns than a changeable performance. To underline how performance may affect, and change, the meaning of the underlying work, she provides an exhaustive list of examples, ranging from Tina Fey's parody of Sarah Palin, to Jimi Hendrix's performance of The Star-Splanged Banner. The trasnformativeness of performance may not be widely recognized yet, but sensitivity towards it appears to be on the rise. The author cites the recent case of Keeling v New Rock Theater Prods as an example of this enhanced sensitivity, but warns that ' [i]f we don’t have a good vocabulary for explaining how meaningful performance is, it should come as no surprise that we don’t even know how to give credit to performers'.

(Joint) authorship
'[C]ontroversies over performance works', the paper notes, 'make up a large share of disputes over joint authorship in the U.S. system'. The courts' tendency to award authorship to a single person (motivated by the fact that joint authors share equally in the rights to a work, and can license the work non exclusively without the consent of the other authors) 'often leads to dismissiveness regarding the real creative contributions of others involved in bringing a work of performance to its audience'.

Kats are real performers!

The author recognises that economic reasons explain the focus on the doctrine of 'work made for hire', and that compensation for performers is usually expected to come from direct payment for their work, rather than from royalties. However, '[t]he ideology of creativity as the foundation of authorship suggests that (some) performers should count as authors'. Although contracts usually address the issues of authorship, through a 'work made for hire' clause, identifying the author remains important for many purposes. The inherent limitations of the test for joint authorship applied by US courts (which look at the specific intent to share authorship, and at customary roles), contribute to 'freezing notions of authorship and discounting the contributions of people who play vital roles in the form and content of the final work but who didn’t write scripts for it'. This flow could threaten copyright’s legitimacy, denying protection to creative contributions (the paper examines these issues in the context of some well-known cases, including the 'Innocence of Muslim' video, on which the IPKat commented here).

A plausible solution, according to the author, is to openly identify 'specific roles eligible for joint authorship treatment ..., making explicit judgments about manageability rather than implicit judgments about value'. On the other hand, instead, an overall reform of the system, through the allocation of interests proportionally to the contributions, or by partitioning copyright into smaller parcels, recognising 'microworks', would probably have an overall negative impact on the protection of authors' rights and third parties.

Performance as infringement

'Infringement inquiries', examined in the last part of the article, 'also raise difficult questions about how to compare distinct media, particularly when one medium includes a performance element and the other doesn’t'. The comparison requires a high level of abstraction, which calls for an appreciation of the inherent differences between the media (for example, literary analysis should not be applied to a movie). Professor Tushnet notes that courts have generally taken these aspects into account, when comparing movies with texts ('recognizing that film’s narrative techniques generally involve completely different kinds of expression than written texts') or with photos (the former being a 'wholly dissimilar and dynamic medium'), and when dealing with videogames (reasoning that 'infringement had to be evaluated in the context of the experience of gameplay rather than simply looking at screenshots'). Similarly, according to this study, jurors exhibit a high sensitivity towards performance, when comparing musical works.

Citing Newton v Diamond (where a court was confronted with the difficulties inherent to the distinction between performance elements and sound recording, and allocated the former to the latter), the author exhibits a cautious approach towards the shift away from written scores, in the context of musical works. 'More generally', she explains, 'careful consideration of performance elements in infringement claims may require courts to go beyond the terms with which they are familiar - plot and melody primary among them - and consider narrative techniques, rhythm, and other features that may affect similarity judgments'. Thus, courts 'should be skeptical about performance-based or cross-genre infringement', as the comparison of works and the identification of the contributions of performance elements represent key difficulties in this process.

Focusing one's sights on invalid dependent claims

Here are the conclusions from a recent case in the Patents Court (the last two paragraphs of the judgment with some explanatory notes added by the IPKat for context).

228. As appears from my treatment of the issues above, I have concluded that Leica's challenges to the validity of the Patent fail [these challenges mainly being novelty and inventive step attacks on claim 1, as well as some sufficiency and added subject-matter issues]. I have also found that Leica's riflescopes infringe the Patent.

229. It may be that the findings that I have made demonstrate the obviousness of claim 3 of the Patent [this being a conventional dependent claim,” as claimed in claim 1 or 2”] from the IOR riflescope, but I will hear further argument on that point and also as to the consequences of my other findings, the relief to be granted, and as to costs.

The IPKat’s whiskers started to twitch reading these conclusions. His understanding is that conventionally, a dependent claim can save a patent where the independent claim lacks novelty or inventive step, but the opposite is rarely true. In other words, it is unusual for a dependent claim to be anticipated or obvious, while the independent claim basks in the warm glow of novelty and inventive step.

The judgment in which this finding was made is Swarovski-Optik v Leica Camera [2013] EWHC 1227 (Pat) and it runs to 229 paragraphs over 76 closely spaced pages. To be fair, about a third of the 76 pages are accounted for by a full translation of this German-language EP(UK) patent specification, and some lengthy quotations from the case law.

The IPKat believes this to be the first patent case to be decided by Mr Justice Vos in his capacity as a Nominated Judge of the Patents Court. It may also be his last, given his elevation to the Court of Appeal in March 2013. He is not entirely a stranger to the field of IP though, having decided a couple of trade mark and passing-off cases, notably United Air Lines Inc v United Airways Limited (discussed here), and Lady Gaga v Moshi Monsters (discussed here).

Unconventional dependent claims 

Back to the IPKat’s twitchiness. One can conceive of unconventional claims which are framed to appear dependent but in fact are not, e.g.

1. A room having walls, a ceiling, and a floor, and characterised by a light bulb within the room which is powered to provide illumination.

2. A room according to claim 1, in which there is no light bulb, and illumination is provided by a transparent window in the walls, floor or ceiling.

Patent attorneys are trained not to write claims in this way, but perhaps such cases could slip through the cracks once in a while. Faced with such a claim, one would expect judicial criticism of the claim’s clarity: how can the room of claim 2 be “according to claim 1” and yet omit the light bulb which is essential to claim 1? In construing claim 2 one would probably have to notionally rewrite it as a separate independent claim, sans lightbulb. Either way, it’s unusual and would normally occupy a good deal of reasoned comment if its validity were impugned.

The claims in Swarovski

A conventional riflescope. A distant, unthreatening animal (not shown) to the left, is rendered large, nearby and threatening to the eyeball on the right. Quick! Shoot it!

Claim 3 in Swarovski v Leica is not some sort of mutant claim which deletes or replaces a feature of the independent claim. It actually looks entirely conventional. The claims were directed to riflescopes which normally have an objective lens at one end, an eyepiece lens at the other end, and in between these one finds a system of internal lenses (labelled as the field lens and movable zoom relay lens elements in the diagram above) which magnify the image and turn it the right way up. On either side of the internal lens arrangement there are two positions where the object being viewed is in focus, these positions being “image planes”.

In the invention of claim 1, paraphrasing somewhat, an additional negative lens (coloured orange in the second diagram below) was provided to improve the image seen through the eyepiece. An important question of construction of claim 1 focused on (sorry) where this new lens was positioned, relative to the image plane 10 nearest the eyepiece 5.

The claimed riflescope with the extra lens shown in orange. What mattered was the position of this lens relative to the image plane (10)

In other words, did claim 1 require the lens 10 to be on the objective side of the image plane 10 (i.e. to the left, as shown above), or could it be on the eyepiece side (right) of that plane? The broader construction would have left the claims more vulnerable to attack based on the prior art and Leica argued for that interpretation.

Construction of the claims

Claim 1 did not mention the relative positions of the lens and the image plane, but it required that the new additional lens had to be “integrated in” the system of inverting, zoom lenses, and “disposed on the end of the inverting system facing the eyepiece”. The judge held that on its proper construction, this meant that the lens had to be

“at the end of the inverting system, but still as part of it [optically, if not mechanically], some way to the objective side of [the] second intermediate image [10]”.

Claim 3 seems at first glance to do little more than confirm this interpretation in different words:

3. Telescope or sighting telescope as claimed in claim 1 or 2, characterised in that the optical beam deflecting device [i.e. the negative lens] is disposed on the side of an eyepiece-end image plane (10) of the telescopic device pointing away from the eyepiece (5).

So claim 3 says that the lens is disposed on the side of the intermediate image plane (10) which points away from the eyepiece, i.e. the objective side. Claim 1 is construed by the judge to require this lens being positioned “some way to the objective side of the second intermediate image (10)”. Surprisingly (to this Kat at least), the judge concludes that claim 3 is “an alternative to claim 1”, based on a paragraph in the description which reads:

[0017] It has proved to be of practical advantage if the optical beam deflector device 2 is disposed on the side of the inverting system 1 facing towards the eyepiece 5. It is also advantageous if it is positioned on the side of the eyepiece-end image plane 10 facing away from the eyepiece 5. [The first sentence is essentially parroting an integer of claim 1; the second sentence is parroting claim 3]

Specifically, the judge found, that “claim 3 broadly mirrors the words used in the last sentence of paragraph 17, and is, as it seems to be, envisaging a different position closer to the second intermediate image than claim 1, but not on it [the image plane] or on the eyepiece side of it.”

Even after several readings this Kat is not entirely sure he follows the construction of claim 3, but his best interpretation of the judgment is that while claim 1 requires the negative lens to be “some way” from the image plane on the objective side, claim 3 also puts the lens on the objective side, but much closer to the image plane than the “some way” inferred from the construction given to claim 1. Confused yet? The IPKat certainly is, on the grounds that the exercise of construing the claims should lead to greater clarity rather than less, and if the scope of claim 1 hinges on the meaning of “some way from”, it is difficult to see how this allows the parties to understand what the boundaries of the claim are.

The conclusion that claim 3 is an alternative to claim 1 does not get a great deal of discussion in the judgment, and certainly is not presented as a surprising or unconventional interpretation (unless the IPKat has missed some nuance of the judgment).

The IPKat suspects and indeed hopes he is missing something crucial, and will be grateful to any readers who can provide their own thoughts on the construction given to claims 1 and 3.

Prior use and "normal usage"

There is more to this judgment than just this unusual issue of construction. Another finding which caused the IPKat to pause in his tracks was found in a discussion of prior use. The prior rifle scope had a negative lens (as in the invention) which normally was located to the right of the image plane, i.e. on the eyepiece side of it, rather than on the objective side as claim 1 was held to require. Interestingly, evidence was given that in some situations, such as when focusing on a close target with high zoom, the negative lens would inevitably be located slightly to the left of the image plane (in the position of claim 3 perhaps). The judge gave little weight to the fact that the prior use could be in this configuration, because one would not normally keep the lens in that configuration for hunting, and thus “in normal usage” the lens would be on the opposite side of the image plane, and outside the scope of the claims. It was not clear from the judgment if it was alleged (or disputed) that the prior art scope had, before the priority date, in fact been placed into the anticipatory configuration, and if so, whether that could be safely ignored because it was not normal usage.

What happens next? According to the final paragraph, the judge has yet to hear the parties on the claim 3 issue, or on the form of order to be made, but the IPKat will keep readers posted. In the meantime, please do add a comment if you make it through this longish judgment and come to a firm conclusion on how claims 1 and 3 have been construed.