The team is joined by GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopolou, Mathilde Pavis, and Eibhlin Vardy
InternKats: Rose Hughes, Ieva Giedrimaite, and Cecilia Sbrolli
SpecialKats: Verónica Rodríguez Arguijo (TechieKat), Hayleigh Bosher (Book Review Editor), and Tian Lu (Asia Correspondent).

Thursday, 31 December 2015

Congratulations, Sir Nicholas Forwood!

Congratulations to Sir Nicholas 
The AmeriKat is delighted to offer her and the entire IPKat team's congratulations to one of the recipients of this year's New Years Honours.  The list has revealed the name of at least one character in the field of IP law - that of The Hon Judge Nicholas Forwood QC  - who has been honored with a Knight Bachelor  in the Diplomatic Service and Overseas List for services to European justice.

For over 16 years until this October, Sir Nicholas has acted as the UK judge at General Court dealing with over 1500 cases, of which he acted as juge rapporteur in almost 500.  His path to Luxembourg saw him educated at Cambridge University with a degree in Mechanical Sciences and Law and called to the English Bar in 1970.  He took silk in 1987.

The official entry states:
"As the UK judge of the EU General Court and the Chair of a chamber for six years, Judge Forwood has made a significant contribution to the development of EU law and took part in many of the Court’s leading judgements. He played a leading role in the development of procedural reforms which substantially improved the functioning of the General Court. He was a founding trustee of European Children in Crisis (ECiC), a charity to aid children and their families facing personal crises associated with moving between countries and cultures; and a governor of St George’s International School in Luxembourg where he took the lead in the transformation of the school from a small private school into a non-profit organisation with over 600 students." 
In IP, Sir Nicholas is known primarily for his involvement in trade mark questions.  This past October he appeared as one of the panelists at UCL IBIL/Marques' Question the Trade Mark Judges event. In Spring 2014, Sir Nicholas also got involved in the UPC debate when he wrote to then Chairman of the UPC Preparatory Committee, Paul van Beukering, about the controversial interpretation of Article 83 Unified Patent Court Agreement which governs the transitional provisions of the UPC "opt out" regime.

The AmeriKat also notes that Sir James Dyson, often a critic of IP law (see posts here), has also been given the Order of Merit for his contributions to industrial design (although his and his legal team could have been honored for their significant contribution to the field of IP law - see posts here).

If the AmeriKat has missed any other IP law worthy candidates on the list, please let her know at  In the meantime, on behalf of the entire IPKat Team we wish our readers a joyous and safe New Years' Eve celebration.  We will be back tomorrow with a round-up of this year's top IPKat stories.

Patent amendments not allowed during court proceedngs, rules Malaysia's highest court

The AmeriKat teaching her trainee kittens about the
merits of looking outside one's own patent jurisdiction
It is so easy to get wrapped up in one's own orbit. What impacts you right here and right now, be it your local weather, your commuter train delays or the decision of your local patents judge, is often as far as your daily horizon ventures. However, it is becoming increasingly important that IP practitioners look further afield as to what is happening in IP law and practice in other jurisdictions. Much like a lion, the IPKat prides itself in bringing news of important decisions from other jurisdictions.

This week, IPKat friend NG Kim Poh from Kuala Lumpur based firm Shook Lin & Bok, reports on a landmark patent validity and infringement decision of the Federal Court of Malaysia in SKB Shutters Manufacturing Sdn. Bhd v Seng Kong Shutter Industries Sdn. Bhd. & Anor (FCCA No. 02(f)-97-12-2014) (FC) (26-10-2015) in which otherwise independently valid dependent claims suffer a terrible fate. Over to Kim Poh:
"At first instance, the High Court upheld the validity of Malaysian Patent No. MY-128431-A entitled “Rolling Door” belonging to the plaintiff / appellant, SKB Shutters, and found that the defendant / respondent, Seng Kong, had infringed the same. The High Court’s decision was reversed by the Court of Appeal which held that the patent was invalid for lack of novelty and obviousness. The plaintiff / appellant obtained leave from the Federal Court to appeal against the Court of Appeal’s decision where one of the legal questions posed to the Federal Court was :-
“Where a patent comprises multiple claims, whether, in invalidating a patent for lacking novelty and/or inventive step, the Court must make a determination on each and every claim.”
In answering the question, the Federal Court held that once an independent claim is found to be invalid, any dependent claim(s) which depend(s) on the invalid independent claim is / are also invalid because the dependent claim(s) cannot remain as dependent claim(s) anymore and the dependent claim(s) cannot be re-drafted or amended.

In reaching the decision, the Federal Court appeared to have relied on the decision of the Federal Court of Australia in E I Du Pont De Nemours & Co. v. Imperial Chemical Industries Plc. & Anor. (2007) FCAFC 163, albeit the basis for the reliance was not explained at all.
The Federal Court (of Malaysia)’s reasoning appears to be based purely on a technicality of the drafting under Section 79A(3) of the Malaysian Patents Act 1983 which states that it is not permissible to amend a patent whose validity is being challenged in court.

This writer is of the view that the decision is wrong because dependent claim(s), if otherwise valid in substance, should be upheld. The court could possibly overcome the obstacle placed by Section 79A(3) with an order that the dependent claim(s) be amended accordingly by the patentee under Section 79A(1) after conclusion of the court proceedings. In such circumstances, the amendment(s) would not run foul of Section 79A(3) since the validity of the patent would no longer be under challenge in court.

Alternatively, this writer believes that there is room to argue that the court has the necessary power under Section 56(3) of the same Act and / or inherent jurisdiction to amend a claim and, thus, the court can re-draft the dependent claim(s) in question to be independent.

On the above alternative argument, it is unfortunate to note that the Federal Court appeared to have tied the hands of the lower courts in terms of the power conferred by Section 56(3) when it held that the said provision is not the equivalent of Section 63 of the UK Patents Act 1977 (which permits enforcement of a partially valid patent).  The Federal Court held that Section 56 “merely states that some claims or part of a claim may be declared invalid which in our view it can only refer to the independent claims of a patent.” There appears to be no justification from a statutory interpretation context for the Federal Court to add the word “independent” to Section 56(3).

The decision of the Federal Court on the above issues has serious implications on future proceedings involving invalidation of patents in Malaysia. The implications may also extend to how claims should be drafted for patent applications in Malaysia so as to avoid being invalidated by the “accident” of mere dependence."
Given the reliance on Australian and UK statutory provisions and case law, do readers from those jurisdictions think that the Malaysian Federal Court got it right?  To assist you in your analysis, the relevant provisions of the Malaysian statute - the Patents Act 1983 - can be found at this link here.

Looking back over this GreeKat shoulder… the last bit: “In transit” to 2016

The EU trade mark reform package (for press release see here  and for the legislative texts see here, for the Directive, and here, for the EU TM Regulation) was probably the main course in this year’s IP Christmas table (though Santa’s General Counsel resignation might have just made all other topics of discussion vanish).
No worries! I'll be back in EU soil in a flash

The new set-up of rules may, amongst other positive effects, help to end EU’s days as, in Nokia’s words, “a logistical hub” for counterfeiters. The IPKat has posted on the issue, including, notably, here and here. The, rather over-technical and certainly awkward situation, of the “immunity” of counterfeit goods transiting through the EU, only to return to it, has always been hard for this blogger to understand. Moreover, as anti-counterfeiting practicioners around Europe have come to know too well, the transit immunity became useful, if not central, to counterfeiting strategies to bring illicit goods in to the EU.  As the EU seems to be hopefully closing this chapter, this blogger can “brag” as Greece had introduced a relevant provision in its TM law system as from 2012, exactly in recognition of the problem.

But how about controlling supply chains of genuine products? Nowadays, across industries, consumers’ needs go beyond the ability to verify product authenticity; consumers demand to know where the product was manufactured and whether it’s safe to use. Be it for reasons of reducing carbon footprint, quality, or purely health-related. A noteworthy example is heightened scrutiny over India-manufactured drugs in the recent media reports, e.g., here.

Trade mark owners are also naturally interested to see their products sold by legitimate supply chain operators, in the markets they were originally destined for. One self -evident reason is the nightmare of potential regulatory non-compliance of products sold in a market other than the one they were destined for (different requirements for voltage in the case of electronic products, veterinary clearance of meat products, or health warnings in the case of cigarettes). Another aspect – clearly visible in the case of luxury goods – concerns limitations on sale per person to (a) maintain the products’ exclusivity (and desirability), and (b) ensure that distribution of profits among their regional operations is in line with local demand (and prices). The technical means are available to deploy effective supply chain controls, although a vigorous sales data record keeping has also gone a long way for luxury brands and, on top, can be linked with giving clients the desired sense of exclusivity and personalization of service. In this respect, supply chain control is not a regulatory initiative linked with public goals, but rather a private, self-regulatory, measure aiming primarily at brand protection.

At the forefront of the regulatory controls is the pharma industry with the recently notified draft Commission Delegated Regulation (see here) to the Falsified Medicines Directive (2011/62/EU).  Tobacco industry is not far behind with the revised Tobacco Products Directive (2014/40/EU). Not least, explosives for civil use, while not as widely used as medicines or cigarettes [or so this blogger thinks], are also being tracked and traced. A task force was created under the auspices of the European Commission to ensure that what the Directive (2008/43/EC) prescribes is feasible and implemented (see here). Wondering whether this will come to mind while gazing New Year celebrations’ fireworks in the Athenian sky tonight! Probably not, but the sight is always nice.

Australia's big win in Philip Morris plain packaging arbitration

The AmeriKat is the epitome of
plain packaing....
Plain packaging has been a hot topic on the Kat this year, most recently with Guest Kat Niko's post on the topic here.  But if you thought that would be the last on the matter in 2015, think again.  From the AmeriKat's colleague, Jin Ooi (Allen & Overy), comes news of the latest development concerning Australia’s tobacco plain packaging legislation.  The latest news saw a "win" for the Australian government against Philip Morris Asia Limited (“PM Asia”) in which the arbitral tribunal seated in Singapore issued a unanimous decision that it has no jurisdiction to hear Philip Morris’ claim. Due to the confidentiality regime, it does not appear that the substance of the decision has yet been published.  Jin, who has been monitoring these proceedings, explains more below:
"Back in mid-2011, Hong-Kong based PM Asia launched a
UNCITRAL arbitration  against the Commonwealth of Australia over its proposed plain cigarette packaging legislation.  PM Asia argued that the legislation was in breach of the Australia–Hong Kong bilateral investment treaty (“A–HK-BIT”).  At the time, Philip Morris (Australia) Limited (“PM Australia”) (whose shares are owned by PM Asia and who owns 100% of the shares of Philip Morris Limited (“PML”)), was wrapped up in its own legal tussle.  PM Australia had earlier commenced a constitutional challenge to the legislation before the High Court of Australia (alongside challenges made by other tobacco companies).  In October 2012, a majority of the High Court ruled that even though the Tobacco Plain Packaging Act 2011 (Cth) restricted the intellectual property rights of the tobacco companies and regulated the packaging and presentation of tobacco products, the legislation was not an “acquisition” under section 51(xxxi) of the Australian Constitution, as there was no proprietary benefit or advantage conferred on the Commonwealth of Australia (JT International SA v Commonwealth; British American Tobacco Australasia Ltd v Commonwealth). As far as I am aware, this is the first ever investment treaty claim against Australia.
In the arbitration, PM Asia alleged that the legislation virtually eliminated Philip Morris’ branded business by depriving it of its valuable intellectual property and goodwill  This, in turn, undermined and diminished its investments in Australia.  Accordingly, PM Asia alleged that Australia breached its obligations under the A–HK-BIT because plain packaging:

  • deprives PM Asia of its investments and intellectual property without compensation, amounting to unlawful expropriation;
  • fails to accord fair and equitable treatment to PM Asia’s investments in Australia;
  • impairs by unreasonable measures the management, maintenance, use, enjoyment or disposal of PM Asia’s investments in Australia;  
  • fails to accord full protection and security for PM Asia’s investments in Australia; and  
  • fails to observe Australia’s international obligations with regard to PM Asia’s investments by violating the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the Paris Convention for the Protection of Industrial Property and the Agreement on Technical Barriers to Trade.
PM Asia sought an order for the suspension of the enforcement of the legislation or compensatory damages for the loss suffered by means of damage to its investments as a result of the enactment and enforcement of the legislation.  Although the amount was not specifically quantified it was understood to be in the order of billions of Australian dollars.

The Commonwealth of Australia raised objections as to the jurisdiction and overall merits of PM Asia’s claims. As to jurisdiction, the Commonwealth tethered much of its arguments on the fact that at the time PM Asia acquired its shares in PM Australia, the government had publicly committed to introduce the legislation by 2012.   In particular, it argued that:
  • an investor (PM Asia), could not buy into a dispute by making an investment in full knowledge. that a dispute is either existing or highly probable;  
  • the A-HK- BIT did not confer jurisdiction on any arbitral tribunal to determine pre-existing disputes that have been repackaged as BIT claims many months after the relevant governmental measure had been announced;
  • the A–HK-BIT extends protection to indirect investments only where companies incorporated in a third state qualify as investors under the A–HK-BIT.  The assets of PM Australia and PML - two Australian-incorporated companies – do not constitute “investments” for the purposes of the A–HK-BIT; and  
  • the A–HK-BIT does not extend to obligations owed by Australia to other states under multilateral agreements and that the arbitral tribunal is precluded from determining breaches of agreements under the auspices of the World Trade Organization (WTO) and under the Paris Convention since these treaties do not establish rights for private parties and contain their own dispute settlement procedures. 
Following a hearing regarding bifurcation of the proceedings in February 2014, the arbitral tribunal in April 2014 decided to split the proceedings into two phases.  The first would address the Commonwealth’s jurisdictional objections and the second phase would deal with the merits of the dispute. The hearing to address jurisdiction was heard in February 2015, resulting in last week's decision that the arbitral tribunal had no jurisdiction to hear PM Asia's claim.
This won’t be the last time Australia's plain packaging battles hit the news.  Challenges concerning Australia’s tobacco plain packaging requirements have also been brought before the WTO.  Following unsuccessful dispute consultations with Australia requested by Ukraine, Honduras and the Dominican Republic in 2012, and Cuba and Indonesia in 2013, each state filed a request with the WTO Secretariat for the establishment of a WTO dispute settlement panel to address the tobacco plain packaging measure. As a result, dispute settlement panels have been established by the WTO Dispute Settlement Body. Some 40 WTO members have also reserved their third-party rights to join the dispute on either side of the debate (or as a neutral party). In May 2014, the same panellists were appointed in all five disputes (although the Ukraine proceedings have since been suspended), and are expected to issue their final report to the parties not before the first half of 2016. "

Wednesday, 30 December 2015

The politics of IP conferences in India

The IPKat is delighted to receive this guest post from long time Katfriend and sometime blogger Prashant Reddy (details at the end of the post).

Many years ago, George Washington University’s law school used to hold a prominent conference on intellectual property law in India as a part of its ‘India Project’. The stated aim of the GWU IP conferences was to foster a discussion, dialogue and knowledge on IP policies and was quite popular on the conference circuit until it came within the crosshairs of several activists belonging to numerous NGOs working in the IP space.

In an open letter to the Indian Government in 2010, a number of Indian NGOs made scandalous allegations against the GWU organised conference, most of which implied that GWU was allowing itself to be used as a tool of advocacy by industries that were sponsoring the conference and that the conference was promoting a certain US centric view of IP. The presence of Indian judges and bureaucrats at the conference was also objected to, the letter said “Industry led initiatives with the Indian judiciary are considered unethical and unacceptable.” GWU rebutted these allegations and made it very clear that industry was not allowed to set the agenda at the conference.

Since the GWU controversy, Indian NGOs have made such arguments repeatedly and they have usually been successful in creating enough controversy to keep public officials away from any conference involving industry participation. For example, in 2013, five Indian activists sought the recusal of a Supreme Court judge hearing the famous challenge mounted by Novartis over its Glivec patent because the judge had attended a conference sponsored by the Intellectual Property Owners Association (IPOA) where he had submitted an entirely non-controversial paper on IP in India. Notwithstanding the flimsy allegations, the judge in question recused himself without giving any reasons. Last year, a scheduled visit by an IPOA delegation to India ran into similar rough weather after Indian NGOs objected to the delegation meeting judges of the Delhi High Court and the IPAB – the protests were successful since the meetings were cancelled, again without any reason. Earlier this year, when Assocham, an industry chamber held a conference on Standard Essential Patents (SEPs), Indian NGOs objected to the Chairperson of the Competition Commission of India (CCI) attending the conference because Ericsson, which is a litigant before the CCI, was one of the sponsors of the conference. The Chairperson ignored the protests and attended the conference. Public officials who are worried of their public image, will do anything to avoid controversy – the strategy therefore is to create a controversy through the press and then sabotage the event.

The arguments made by these Indian NGOs against the industry and the GWU conference clearly do not apply to conferences organised by them despite the fact that like industry, they too have certain ideological positions on IP. For example, the Centre for Internet & Society, Bangalore (CIS) a wealthy NGO whose name has appeared in some of the letters above, including those against GWU and the ASSOCHAM conference, was one of the co-organisers of this year’s Global Congress on Intellectual Property and the Public Interest, held in Delhi. This conference bills itself as the “the most significant event on the calendar for scholars and policy advocates working on intellectual property from a public interest perspective.” And the theme for this year’s conference was “Three Decades of Openness; Two Decades of TRIPS”.  In the words of the organisers, “The theme juxtaposes the beginnings of an aspect of a culture of Openness with that of the establishment of minimum standards of intellectual property protection and the carving of limitations and exceptions within these standards.” The conference has traditionally never called speakers or lawyers from IP creating industries since the focus of the conference is on lowering IP standards. Listed on this year’s speakers list were three former Registrars of Copyrights, who are still serving in the Indian Government albeit in different positions – at least one continues to be in the DIPP, which is the Government of India’s main department that formulates IP policy. Also on the list was Justice Ravindra Bhat of the Delhi High Court who has delivered several high profile IP judgments. Given the stated objectives of this Conference, it is not too difficult to imagine the kind of interactions that these public officials had with the other speakers. Obviously activist NGOs like CIS, which have previously objected to public officials attending industry events, didn’t think there was anything wrong in inviting public officials to such a conference featuring speakers with a particular view of IP law, and rightly so – public officials should be allowed to have a wide range of interactions with all kinds of stakeholders, no matter what the agenda of the conference. Mud-slinging purely on the basis of the conference’s sponsors is immature and silly.

One of the results of this culture of objecting to any kind of industry funding of conferences is that we see very few conferences where opposing camps invite each other to discuss and debate ideas. As a result, there are very few IP conferences in India featuring a diverse speaker list with participants holding forth opposing viewpoints. Several of the industry conferences feature speakers only from the industry, while events like the Global Congress on IP and the Public Interest have absolutely no representation from the IP creating industry and the organising committee’s attitude to industry viewpoints was in clear display when they refused Oxford University Press (OUP) permission for hosting a stall at the venue of the conference because OUP is involved in a very high profile copyright litigation with Delhi University (DU) on the issue of photocopying course-packs without payment of royalty. The DU photocopy case was one of the topics of discussion at the conference and apparently the organisers didn’t want OUP books being sold at the venue, while the case was being discussed inside. I spoke to the OUP staff in Delhi and they told me that they were planning to showcase some of the recent scholarship by Indian scholars who were speaking at the event, such as The Access Regime: Patent Law Reforms for Affordable Medicines by Feroz Ali. OUP stalls are a regular feature at Indian conferences and are very often the only marketing/advertising done for academic books in India. It is something of a contradiction to host speakers who have published their works with OUP but refuse OUP permission to market the books of these very speakers at the event. Such contradictions are a reminder of how bizarre the debate on IP can become in India.   

IP conferences in India have not always been such one-sided affairs. In the past, academia who don’t have the baggage of the activists or the industry, have held some conferences with a diverse speaker list. In 2009, Prof. N.S. Gopalakrishnan of CUSAT, a university in Kerala, held a very interesting conference on copyright law which had healthy participation with a proportional representation of speakers from academia, the Bar, the government and the NGOs. In 2012 Prof. Shamnad Basheer while at NUJS, a university in Kolkata, hosted a conference on the new amendments to Indian copyright law with a diverse speaker list that featured representation from all quarters. Unfortunately however Indian academia remains in an impoverished state when compared to the deep pockets of the activist community or the industry. Unless we witness a miracle in the near future, IP conferences in India will continue to be lopsided affairs serving as centres of propaganda rather than forums for discussion and debate between opposing viewpoints.   

The writer is a lawyer and can be contacted at preddy85[at] 

Monday, 28 December 2015

Never too late: if you missed the IPKat last week

A likely recurring thought these days ...
Together with IP, of course
Were you away last week or too busy celebrating the festive season? Do not worry because – as usual and even at this time of the year – our dear friend and colleague Alberto Bellan is back with his #NeverTooLate feature, now on its 78th edition.

So, this is what happened on this very blog last week:

Nicola’s post on lookalike products prompted debate and a British Brands Group’s response. In this post, Nicola provides further food for thought, introducing into the discussion the concept of the zero-sum game.

Like last year and the year before, Eleonora reviews the copyright year, awarding a number of prizes to the most relevant developments occurred in 2015. Once again, it would seem that in 2015 Europe was the place to be copyright-wise, with a couple of notable exceptions.

Ho-ho-ho! Eleonora has just entered in possession of a rare letter penned by Santa Claus and addressed to the UK Intellectual Property Office. As you may read in his letter, Santa is understandably concerned about the repeal of section 52 of the Copyright, Designs and Patents Act 1988 and its 25-year term of protection for industrial process articles.

Jani writes on Dallas Buyers Club LLC v iiNet Limited (No 5) [2015] FCA 1437, an Australian case regarding disclosure of details pertaining to individuals who had shared the film Dallas Buyers Club [see an earlier Katpost here].

Enjoy this IPKat Exclusive (powered by Nicola): IP Whose Hair is it Anyway? The name of the game is to match the hair to the IP personality.

Annsley reports on the brand spanking new specialist Patents Court judge Mr Justice Carr’s decision in Actavis v Eli Lilly [2015] EWHC.  In order to ensure a pleasant and in-deep reading, the AmeriKat has summarized the highlights of almost 50 pages of eloquent Carr J prose in two posts.

Founding difficulties in accessing USPTO website? Neil explains why.

Data protection, trade secrets, and IP trolls are making Santa's General Counsel’s life unaffordable. Thus, he decided to resign. Annsley leaks his letter, which should have been marked "Strictly Privileged & Confidential" – but which was not…

Neil pens this lovely Christmas post about IP and “Pet Rocks”, a vintage toy consisting of a smooth stones from Mexico's Rosarito Beach marketed like live pets.



Never too late 77 [week ending on Sunday 20 December] – GC on 5-stripe shoe mark | EPO BoA in T 942/12 on liability and renewal practice management for European patent attorneys | Magnesium Elektron v Molycorp, ie how to serve patent infringement proceedings on a Chinese company | EU Trade Mark reform adopted | WIPO IP indicators | Provisional agreement on EU Trade Secrets Directive | Battistelli’s proposal rejected? | “Je Suis” trade marks | Branding and 3D printing.

Never too late 76 [week ending on Sunday 13 December] – The Making of the TRIPS Agreement | German Balsamico?! | Trade secrets in the US | European Copyright Society | Merpel in Eponia | Henry Hadaway Organisation v Pickwick Group Limited and Ors | CJEU activism on copyright | EU Commission unveils future copyright reform path | Music publishing and copyright | Dreaming of copyright, new eLAW event | Trade mark right exhaustion | VW trade mark disaster | Linking and copyright | elite media takes IP wrong.  

Never too late 75 [week ending on Sunday 6 December] –  BHG on blocking injunctions | IP in Universities | Sweden on blocking injunctions | Canadian musings on patents | US Senate and trade secret reform | Chinese IP Courts | G1/14 referral and Article 108 EPC | PACE procedure (Procedure for Accelerated Conduct of Examination) ant the EPO | Greekat and trade mark partenalism | EPO Boards of Appeal tell AC: we were never consulted | What hacker means.

Never Too Late 74 [week ending on Sunday 29 November] –  Bob Marley copyright | Nintendo TPM triumphs in Italy | GIs and TMs in the EU | Prebalin again | YouTube will defend fair use | End-of-year reading |Stretchline Intellectual Properties Ltd v H&M Hennes & Mauritz UK Ltd | Goodbye from Jeremy, and thank you from us | Greekat on plain packaging | Rovi Guides Inc v Virgin Media Ltd & Others | IP in universities.

Friday, 25 December 2015

Pet Rock: The most implausible toy fad ever?

By the time this blogpost will have been published, Kat readers (or their children) will have already opened their Christmas
presents. Can there be a more psychologically charged moment than that in which a child gives his vote of approval or disapproval for the holiday gift that his parents have carefully chosen for him. The psychology of holiday gifts got this Kat to thinking: from the thousands of toys that he has seen, which stand out as the most improbably successful over the last 50 years? More intriguingly, how do we account for the commercial success of these products? And can IP inform us about the fate of these toy products?

Let us take as an anchor the list, compiled and published by Time magazine in 2010, of the top 10 toy crazes of modern times (“From Tickle Me Elmo to Squinkies: Top 10 Toy Crazes”). Here is the list:

i) Tickle Me Elmo; (ii) Beanie Babies; (iii) Silly Bandz; (iv) Pet Rocks; (v) Tamagotchi; (vi) Cabbage Patch Kids; (vii) OGs; (viii) Furby; ix) Bratz Dolls; and (x) the Rubik's Cube

An impressive list of improbably commercially successful toys, but in this Kat's eyes, one of them stands out: the success of the Pet Rock in the mid-1970’s. For Kat readers who may not be familiar with Pet Rock, a bit of history is called for. As Wikipedia explains--

“In April 1975, Gary Dahl was in a bar (which is now Beauregard Vineyards Tasting room in Bonny Doon) listening to his friends complain about their pets. This gave him the idea for the perfect "pet": a rock. A rock would not need to be fed, walked, bathed, or groomed; and would not die, become sick, or be disobedient. He said they were to be the perfect pets, and joked about it with his friends. Dahl took the idea seriously, and drafted an "instruction manual" for a pet rock. It was full of puns, gags and plays on words that referred to the rock as an actual pet.

Pet Rocks were a smooth stone from Mexico's Rosarito Beach. They were marketed like live pets, in custom cardboard boxes, complete with straw and breathing holes for the "animal." The fad lasted about six months, ending after a short increase in sales during the Christmas season of December 1975.”

Pet Rocks were not identical in appearance; different facial features adorned various Pet Rock products. However, by most accounts, the attraction of the toy rested on the charm of the instructional manual. One particularly memorable part of the 34-page manual stated that—

"Your Pet Rock will be a devoted friend and companion for many years to come. Rocks enjoy a rather long life span so the two of you will never have to part—at least on your Pet Rock's account."

The Pet Rock craze rapidly diminished soon after the 1975 Christmas season, but not before Dahl had become a wealthy man. It is estimated that in less than six months, he had sold approximately 1.5 units, at $4.00 per unit, netting him $15 million (in 1970’s) dollars. The rocks that Dahl purchased from the Mexican beach cost him one U.S penny each, leading to huge profit margins for each unit sold. The momentary success of the Pet Rock toy is particularly impressive when one recalls that it was launched before age of the internet and globalization. Nevertheless, Dahl succeeded in getting the word out about his product on a mass scale in remarkably short order. Dahl passed away in the spring of 2015. It is reported that several years ago, the mark Pet Rock was registered as a trademark in the United States (unfortunately due to the power outage at the USPTO offices in suburban Washington DC, this Kat was unable to verify this information).

How do we account for the success of the Pet Rock? Dahl himself is reported to have said:

"People are so damn bored, tired of all their problems. This takes them on a fantasy trip—you might say we've packaged a sense of humor."

In other words, it was a form of escapism. Lest Kat readers forget, the mid-1970's were a particularly dark time in U.S. history. The war in Vietnam was moving towards an inglorious end, while the Watergate scandal led to the resignation of President Nixon. Adding to all of this doom and gloom was the fact that the U.S. economy was mired in stagflation. This Kat well remembers those days; he also remembers the refreshing irreverence embodied in the Pet Rock. The Pet Rock was perfectly attuned to the somber mood of its times. Seldom had a toy served such a role as well.

IP did little to support the Pet Rock toy during the zenith of its fad. When one goes beyond the banal artistic facial features added to the various rocks themselves, and the fact that the instructional manual was protected by copyright, the only IP right that really mattered was the potential goodwill in the toy. But such goodwill was fleeting—a brand is so very hard to develop for the long term on the basis of cynicism and despair. To have staying power, Dahl needed to create a durable positive branding message. But he failed to do so. As a result, the Pet Rock was relegated to a prominent position in the Pantheon of toy fads that have come and gone.

To all Kat readers, enjoy your Christmas presents, faddish or not, and have a great holiday weekend.

Thursday, 24 December 2015

BREAKING: Santa's General Counsel in shock resignation

Holly Night, Santa's GC, will
now finally be able to enjoy
the holidays (including the
festive twinkle lights), without the
ongoing threat of litigation
Last minute shopping, lacklustre Christmas lunches, overly polite chit chat at the office party and stacks of unmailed holiday cards.  The holiday season can make even the calmest person feel strained and stressed beyond all recognition. But who has the most stressful job this time of year?  Santa's General Counsel, of course.

Last week, prior to the excellent Letter from Santa on Section 52 (see post here), the AmeriKat and some dear friends were gathered around a dinner table musing on what being Santa's GC would really be like. It was concluded that it would be enough for any, otherwise dedicated employee, to throw in the towel.  Sure enough, the prophecy has come true, as the AmeriKat has now been passed a copy of Santa's GC's letter of resignation.  The letter, which should have been marked "Strictly Privileged & Confidential" (which goes to show how frazzled the GC is at this time of year), reads as follows:
"Dear Santa 
With regret, I resign from my position of General Counsel of Santa Claus, Inc.  Although I have greatly enjoyed my time here, my workload has become unbearable. Even though your big night is over and done with in less than 24 hours, your return to the North Pole merely marks the start of another 12 months of litigation and misery for me, not to mention the ever continuing escalation of my blood pressure. 
Despite my repeated warnings to you to curb some of your and your associates' riskier behavior, these warnings go unheeded in an increasingly litigious global environment.  I detail some of the most recent issues below:
  • Data protection:  In the wake of Snowden's NSA disclosures, the number of data protection and privacy complaints we have received has risen 420% in the last 10 months.  The complaints all share a common thread:  Why does Santa know when I am sleeping and why does he know when I am awake?  Why does Santa know if I have been bad or good?   In addition, many complainants allege that, in breach of numerous data protection laws, we are collecting people's personal data without consent by "making a list, and checking it twice".  Despite instructing top external counsel, at considerable expense I might add, we have yet to come up with a bulletproof defence to these complaints.  I have so far been able to stem the tide of litigation by responding that the complainants' only proof of alleged data breaches and privacy are the highly prejudicial and defamatory comments made in that song.  However, its only a matter of time before some crusader commences litigation and the extent of our ongoing breach comes out in discovery.  Which reminds me, I need to speak to you about our document retention policy.    
  • Animal welfare and the FAA:  I understand that keeping reindeer and flying to homes across the world to deliver presents is part of the whole "Santa experience", but the number of animal welfare and Federal Aviation Administration (FAA) complaints we get each year is surely not worth it. As to the former, the complaints are obviously without merit - the reindeer are treated like kings but that doesn't stop at least 1200 letters landing on my desk, all of which I have to respond to (these people should be more worried about the poor GC's inhumane working conditions).  The FAA, however, mean business.  In light of the FAA's Temporary Flight Restrictions (TFRs) - which are not temporary at all it seems - you and the reindeer can not fly at 5,000 feet or below without clearance to land at an airport.  Stop telling me that there is a "Santa exception" to the FAA's rules - there is not (despite the US Department of Transportation issuing you a special air transportation operating authority each year - by the way this year's has come through see link here).  Mrs Claus and I white-knuckle through every Christmas thinking you and the reindeer are going to get intercepted by F-16s.  In that event, I will really have an animal welfare issue on my hands.  
  • Misguided IP enforcement program:  Although you have considerable goodwill built up in your name, appearance and jolly demeanour that would prevent the free-riding on your goodwill, going after every unauthorized Santa impersonator and swag is just not possible given the size of our legal team (me).  Further, as previously advised, such a course of action would have terrible PR repercussions. I can see the headline now in the IP press "Santa's evergreen IP monopoly destroys Christmas for children around the globe".  Unless the Santa impersonators are bringing your goodwill into disrepute by way of the usual antics (drunkenness, "kissing Mommy", etc), you would be better off focusing your attentions elsewhere - perhaps by investing the legal spend in some good ol' fashioned R&D.  Now, if you want to go after the big boys who use your image (Hollywood, soft drinks manufacturers, etc) in order to establish a robust IP licensing program to bring in revenue, give me the word. 
  • Trade secrets: This one is a nightmare, Santa. I warned you we were doing inadequate background checks on the elves before hiring them. Well, we now have a problem. The elf we hired from the major logistics company has been accused of misappropriating trade secrets relating to their delivery route optimisation algorithm. Worse, however, he’s been working on our algorithms for the last 9 months so who knows what third party trade secrets he’s incorporated in them!? Could this even mean that all of our presents become “infringing goods” under that new European trade secrets directive when it comes in? Of course, we’ve also had that other elf leave us to join the toy company in you-know-where. He knows a lot about the new tooling set-up in our workshop, but given the diverse range of protection afforded trade secrets globally, I never know quite when we can stop them from taking our ideas.  
  • Cybersecurity: Another nightmare, particularly when combined with our data protection issues (see above). Lots of families depend on us for a happy Christmas. But does that make us an “operator of essential services” under the upcoming European Network and Information Security Directive? I suspect many parents would say we provide a “service which is essential for the maintenance of critical societal…activities”, but on the other hand we don’t seem to be what the directive really had in mind! Who knows. Anyway, sorting out the contracts for replacing our ancient IT network and complying with this directive is now my successor’s problem. Our data breach response plan hasn’t made it beyond its first draft, by the way.  
  • Patent Trolls and defensive patent strategy:  Two years ago, I advised you that we needed to divert some funds from the reindeer to plan our patent strategy, including acquiring some defensive patent protection in the event of patent litigation.  You responded that the reindeer deserved their annual 4-month vacation in the Maldives.  How does their little holiday look now that we are facing three patent claims from patent trolls? In case you didn't read my email, the patent trolls allege that we are infringing patents that invariably protect various methods for delivering packages by means of an animal-drawn vehicle wherein said delivery takes place on 25 December.  I have talked to our patent lawyers and they say that the patent claims at issue are likely obvious, but the cost of fighting these claims is going to put a huge dent into the elves's rehabilitation and physical therapy fund after the numerous hours they spend in the workshop.  Which brings me onto ...
  • The elves:  I am sick of the elves.  
The above are only the latest in a long line of nightmare matters I have to tackle day-in and day-out.  Yes, beating your criminal charges for breaking and entering and damage to property has become routine, thanks in part to me being on first name terms with every public prosecutor in the world (which reminds me, please stop landing on thatched rooftops - the reindeer cannot control their appetite).  And, yes, I can handle a product liability case with my eyes closed (though your risks in these cases would be halved if the elves ever bothered to follow the established quality control checks).  But, taken all together, its too much for one GC. 
Nevertheless, I wish you the best of luck in your future and may the next GC have an easier time of it than I did.  
With best wishes 
Holly Night
General Counsel
Santa Claus Inc. 
Cc:  HR Department"
Oh dear.  Well, if anyone is interested in the position, you can send your application to  In the meantime, on behalf of all of the IPKat team, we wish you and your family a very happy and joyful holiday wherever you are.  And, if Santa is part of your holiday experience, perhaps give a thought to Ms Night before you pen that letter of complaint.    

Power outage at the USPTO

Some Kat readers, as well as this Kat, found it impossible already yesterday to connect to the USPTO website. The following statement from the USPTO explains the situation:
"USPTO Power Outage Update Statement updated at 5:55 p.m. ET December 23, 2015 to add information related to filing deadlines.

A major power outage at USPTO headquarters occurred Wednesday, Dec. 22, resulting in damaged equipment that required the subsequent shutdown of many of our online and IT systems. This includes our filing, searching, and payment systems, as well as the systems our examiners across the country use. Additionally we are unable to receive faxed documents. We are working diligently to assess the operational impact on all our systems and to determine how soon they can be safely brought back into service in the coming days. We understand how critical these systems are for our customers, and our teams will continue to work around the clock to restore them as quickly as possible, though we are currently estimating that these systems will be impacted at least through the Christmas holiday on Friday, December 25. In light of this emergency situation, the USPTO will consider each day from Tuesday, December 22, 2015, through Thursday, December 24, 2015, to be a “Federal holiday within the District of Columbia” in accordance with the description and regulations in this official notice".

It will be interesting indeed to find out how this quite extraordinary state of affairs plays out after the holiday weekend.

Mr Justice Carr tackles plausibility in Actavis v Eli Lilly ADHD dispute (Part II)

The law on insufficiency and the role of plausibility

Putting a face to a name:
Lilly's Strattera drug for the treatment of ADHD
The most interesting part of the Mr Justice Carr’s decision was his take on plausibility. [“Way to bury the lead, AmeriKat”, criticizes Merpel]. The parties’ arguments are summarized as follows.

Actavis argued that plausibility meant that a patent provides a "reasonable prediction" that the invention will work based on the common general knowledge.  This argument broke down as follows:
  • In light of Hospira v Genentech [2014] EWCA Civ 1094 and Regeneron, the patent must make it possible to make a reasonable prediction that the invention will work across the scope of the claim – it must be plausible or credible. Because Lord Justice Kitchin equated “plausible” and credible” with “reasonable prediction the invention will work”, the test for plausibility, in the context of sufficiency, is the same as “reasonable expectation of success” for obviousness. 
  • Although the results of clinical trials are not required, the patent has to be more than a paper proposal to use drug A to treat disease B without any other basis. Showing a pharmaceutical effect in vitro or if there is a clear and accepted established relationship between the physiological activity and the disease may be sufficient.
  • The standard for assessing obviousness and sufficiency should be the same as they both focus on the technical contribution provided by the patent. A patentee should not be able to obtain a monopoly for an invention that does not add to the art either because it was obvious to reach the invention based on the common general knowledge/and or prior art or because it was implausible based on the patent’s teaching. 
  •  Therefore, the EPO and the courts require it to be possible to make a reasonable prediction that the invention will work based on the technical teaching of the patent and the common general knowledge.
Eli Lilly argued that pluasibility was a low threshold test.  Its arguemente was as follows:
  • Lack of plausibility is not a ground of invalidity and the imposition of such a requirement would be contrary to TRIPS, the EPC and the Patents Act 1977. 
  • Plausibility arises only as a check on overly-broad claims, for example where a class of compounds is alleged to work in a number of different conditions (as was the case in Regeneron and Salk). 
  • Accordingly, the threshold for plausibility is a low and flexible one, especially as a higher threshold would discourage innovation as it would either be too difficult to satisfy the inventive step requirement as patents would only be awarded for inventions that were “implausible” from the prior art or too difficult to satisfy the test for plausibility, particularly in the life sciences sector where regulatory approval takes years of testing. 
  • This test was supported in Conor where Lord Hoffmann held that the objection of lack of plausibility applies to speculative patents, whose breadth of claim meant that the alleged invention is inherently improbable. The patentee in that case offered very little about how or why taxol would be efficacious in preventing restenosis and offered no proof in support. However, the House of Lords did not consider that this would lead to implausibility, which was unsurprising as it would have put a squeeze on the “obviousness to try” case (i.e. if it was obvious to try with a reasonable expectation of success surely the patent also made it plausible). The fact that the patent offered a theory, but no evidence, that taxol would be effective for the claimed therapeutic purpose, did not render it implausible. If it did, the patent would be invalid for insufficiency. This is why, held Carr J, plausibility is referred to as a “threshold test” which is consistent with its application to prevent the filing of purely speculative patents. 
  • This low threshold, in the context of industrial applicability, was supported by the Supreme Court in HGS v Lilly [2011] UKSC 51 where “plausible” was used alongside “educated guess” and “reasonably credible”. Had the Supreme Court intended plausibility to be the same standard of obviousness they had opportunity to say so in Conor and HGS and would not have adopted the “educated guess” language. 
  • This is supported by the EPO case law, in particular T 578/06 Ipsen, where the Board emphasised the need for substantiated doubts about the suitability of the claimed invention to solve the technical problem in order to call into question the plausibility of the patent. 
  • The “reasonable prediction” language comes from Agrevo where the Board there explained that it is possible for a prediction to be “not obvious, but nevertheless reasonable”. This only makes sense if the hurdle for “reasonableness” is below that of obviousness. “Reasonable prediction” is therefore not the flip side of obviousness. 
  • Evidence obtained after the priority date can be adduced to defend an allegation of insufficiency/lack of support at the EPO. This could only be justified if the plausibility hurdle is a low one – if it was high there would be no point in adducing evidence. There has to be some basis in the application. 
  • Finally, Lilly flagged that under Rule 42(1)(e) EPC a patent is not required to include examples nor does the invention have to actually been carried out (see T 1437/07 Allergan).
Mr Justice Carr gives the middle
box a big red check
From this Mr Justice Carr held that:
  • Although plausibility is not a separate ground of objection to the validity of a patent, it must be borne in mind and is when the Boards of Appeal of the EPO and the national courts interpret the requirements of TRIPS, the EPC and the Patents Act 1977. 
  • Plausibility does not apply only to claims of wide scope, but all claims. Whether an invention is plausible is fact, invention, claim, specification and CGK dependent. Claims of narrow scope are likely to be easier to demonstrate as plausible than those of wide scope. 
  • There is no requirement in the EPC that a patent should contain data or experimental proof to support its claims. Salk’s reference to the provision of experimental data is by way of example, only. 
  • The policy considerations underlying plausibility for sufficiency are different from those underlying fair expectation of success for obvious. As to the latter, almost anything could be said to be obvious to try and would lead to a denial of patent protection (and therefore research in pharmaceuticals) if it was not for the fair expectation of success requirement. “Plausibility, on the other hand,” Mr Justice Carr held, “is to exclude speculative patents, based on mere assertion, where there is no real reason to suppose that assertion is true.” 
  • The test of plausibility is a threshold test which is satisfied by disclosure that is “credible”, as opposed to speculative. Such disclosure may be subsequently confirmed or refuted by post-published evidence. If it is shown that the invention does not work across substantially all products/methods falling within the scope of the claim, the monopoly will exceed the technical contribution and the patent will be invalid. This is why plausibility is only a threshold test and not the same test as expectation of success in the context of obviousness.
The plausibility of the Patent

The judge held that the Patent was plausible by in light of four factors:
  1. The disclosure in the Patent: The patent disclosed that atomoxetine is effective in the treatment of ADHD, is a selective NE reuptake inhibitor and cited the Gelhert paper in support. The skilled person reading Gelhert would also read Wong, which would further support atomoxetine as a selective NE reuptake inhibitor. 
  2. The common general knowledge: At the priority date, the skilled clinician would have considered the hypothesis that the TAs had efficacy in the treatment of ADHD as a result of selective inhibition of NE reuptake to be reasonable and that selectivity would reduce side effects. The position with ADHD could be more complex, but that does not detract from the conclusion that the skilled team would consider the invention credible based on the specification and common general knowledge. 
  3. Post-published evidence: The widespread administration of atomoxetine to ADHD patients has confirmed that the product is safe and efficacious, as disclosed in the Patent. 
  4. The expert evidence: All the experts considered that the disclosure of the Patent to be credible. Actavis argued that Lilly's experts, Professors Hill and Sharp, made a fundamental error in that they had a mistaken believe that the Patent was an authoritative document in which statements made in it had to be supported by evidence. The judge agreed that their assumptions were wrong. However, their mistaken belief that the Patent was some authoritative document was one of several reasons why the experts considered the Patent credible.
Accordingly the judge held that the disclosure of the Patent was plausible. He continued:
“It’s technical contribution has proved valuable in the treatment of this serious condition. The prior art lacks this technical contribution. Neither citation makes it obvious to try atomoxetine for the treatment of ADHD. Furthermore, neither citation gives rise to a reasonable expectation that atomoxetine would be effective in the treatment of ADHD. For these reasons, I reject the alleged squeeze between obviousness and insufficiency.”
So with that, Mr Justice Carr held the Patent valid and Lilly’s counterclaim for threatened infringement succeeded.

The plausibility threshold:  you will
will trip if you don't look
where you going (or your patent lacks

Mr Justice Carr's decision provides some reminders on the limits on invalidity challenges by confirming that:
  1. The court must come to the question of obviousness with the mindset of the skilled person.
  2. Obviousness must be assessed in reference to the scope of the claimed invention, not in reference to some vague paraphrase based upon the extent of the disclosure in the patent's description. 
  3. Plausibility is a threshold test that asks if the invention is "credible" based on the patent and common general knowledge.  It is not to be equated with the fair expectation of success test for obviousness.  
In ring fencing the scope-creep of plausibility, Mr Justice Carr's decision will provide some reassurance for patentees who have watched plausibility attacks seep into obviousness and sufficiency without any discernible bounds (especially by virtue of vague and fuzzy pleadings).  However, it is doubtful that this will be the final word on plausibility as if there is any area in patent law ripe for the Court of Appeal, this is one of them. 

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