Wednesday, 30 November 2011

Proof reading

"Now, is that 'i' before 'e'
except after 'c' ...?"
I recently received an email advertisement for a proof-reading service which contained, inter alia, the following text:
" ... We are offering an efficient service to help you and your colleagues ensure that your academic and professional work is written in perfect English. We will check the grammar and style of your work and return it to you to meet your requirements and deadlines.

If your research has too many English spelling and grammar errors, or if the publisher’s style guide has not been followed, your research may be rejected without due regard to its content. We strongly suggest sending the document to us for editing and proofreading before submission, particularly if English is not your first language.

We can provide you with a professional proofreading service at a very reasonable rate. All our proofreaders are highly qualified native English speakers. Many work as leading academics in their fields and all have extensive experience of proofreading to the highest standards. We ... [cover] all academic areas including ... Law ...

... All you have to do is send us your document ... with the deadline and we will guarantee delivery of a perfectly written document to give you complete confidence when you submit your work. The fee is worked out on a flat rate (£7.99 per thousand words or 0.799 pence per word), so you know exactly how much the proofreading will cost in advance. ..."
This service is provided by one of a large number of companies which vie with each other for the custom of authors.  Sadly it is my impression that, even at the relatively modest sum which these companies charge, virtually no use is made of their services by anyone who submits material for publication in JIPLP. This is a pity, since poor-quality text distracts peer reviewers and incurs extra, quite unnecessary labour for the editing and production staff.  Good-quality proof reading would benefit not merely those contributors who are not native English-speakers but those who are and who, because they have never learned the rules of their native language or have forgotten them, sometimes produce texts of woeful quality.

JIPLP does not make the engagement of a professional proof-reader a condition for the submission of articles and Current Intelligence notes; nor does it propose to do so. However, we wish to remind readers that an error-free page of text is not a sign of pedantry; it is evidence that its author has attained a degree of proficiency in communicating his or her thoughts which cannot be impeached for fostering distractions. If you don't wish to engage the services of a professional, do at least remember to check for textual imperfections yourself!

Tuesday, 29 November 2011

Interflora: the last word on keyword advertising?

Author: Darren Meale (SNR Denton UK LLP)

Interflora Inc v Marks & Spencer Case-C323/09, Court of Justice of the European Union, 22 September 2011

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr180, first published online: November 23, 2011

Several years of Court of Justice jurisprudence on the legality of an advertiser using a competitor's trade mark to trigger the display of sponsored listings on search engines have come to a conclusion. Having already largely approved the practice, the Court of Justice has now, in the interests of fair competition, declined to give famous marks any additional rights to prevent it. But uncertainties remain, particularly as regards the application and effect of some of the newly emerging functions of a trade mark.

Legal context

When European trade mark law was first put together, Google, along with most of the internet, was very much a series of twinkles in their eventual creators' eyes. It is thus hardly surprising that, some 20 years later, those laws have repeatedly struggled to cope with technological and commercial practices which were barely imaginable when they were drafted. Alongside online piracy, search engine keyword advertising is a prime candidate for trade mark law's biggest headache. In a series of judgments which are likely to conclude here, the Court of Justice (ECJ) has explained how the old laws apply to an entirely new form of advertising which has arrived to both the delight and the despair of brand owners.

Facts

When consumers searched on Google for the term ‘interflora’, as well as seeing ‘natural’ results for the famous network of independent florists, they also saw sponsored listings—advertisements—for Marks & Spencer's online flower delivery service. This was because M&S had ‘bid’ on Interflora's well-known trade marked name, paying for its advert to be displayed when a user searched for its competitor. This practice, referred to here as ‘keyword advertising’, has been considered a useful advertising tool by some brand owners. Others, however, have sought to prevent it by asserting their trade mark rights. Interflora is one such brand owner: it sued M&S for trade mark infringement in the High Court of England and Wales.

The case was heard by Mr Justice Arnold who, in 2009, sought guidance from the ECJ on the application to keyword advertising of Articles 5(1)(a) and 5(2) of the Trade Marks Directive (Directive 89/104, now replaced by Directive 2008/95) as well as the substantially identical Articles 9(1)(a) and 9(1)(c) of the Community Trade Mark Regulation (Regulation 40/94, now replaced by Regulation 207/2009). Those questions, as addressed by the ECJ, now provide guidance on two issues:

  • whether keyword advertising adversely affects any of the functions of the trade mark used, in particular the essential function, advertising function, or the investment function; and
  • whether, without due cause, keyword advertising takes unfair advantage of or causes detriment to the distinctive character or repute of the trade mark used.

Guidance on the first issue has been largely repeated from earlier ECJ jurisprudence, so contains few surprises. The second and perhaps crucial issue has now received its first full consideration.

Analysis

The ECJ did most of the hard work on keyword advertising in a set of judgments which began before Interflora commenced but which concluded after the High Court's 2009 reference: Joined Cases C-236/08 to C-238/08 Google France [2010] ECR I-2417, 23 March 2010. Additionally, keyword advertising enjoyed consideration in Case C-278/08 Die BergSpechte [2010] ECR I-2517, 25 March 2010; Case C-91/09 Eis.de, 26 March 2010; and Case C-558/08 Portakabin Ltd v Primakabin BV [2010] ECR I-0000, 8 July 2010. Arguably, this body of jurisprudence rendered a proportion of the reference in Interflora redundant by the time the ECJ came to consider it (around half of the questions the High Court had originally posed were withdrawn in light of these decisions).

Issue 1: Article 5(1)(a)/9(1)(a) and the functions of a trade mark
Google France and the cases which followed it established that advertisers ‘used’ a trade mark when indulging in keyword advertising, and that such use was ‘in relation to’ the goods and services for which the trade mark was registered. The ECJ in Interflora confirmed this.

Following a long line of ECJ jurisprudence stretching back to Arsenal v Reed Case C-206/01 [2002] ECR I-10273, Google France also held that, notwithstanding that keyword advertising involved use of an identical trade mark for identical goods or services—putting it squarely in the purview of Article 5(1)(a)/9(1)(a)—such use only infringed if it was liable to have an adverse effect on one of the functions of the mark. While everyone knows that the ‘essential’ function of a trade mark is as a badge of origin, the ECJ judgment in L'Oréal Case C-487/07 [2009] ECR I-5185, 18 June 2009, confirmed that trade marks have any number of functions. Three were considered in Interflora—only one need be affected for infringement—the essential function; the advertising function and the investment function.

Essential function
In Google France, the ECJ held that keyword advertising would infringe Articles 5(1)(a)/9(1)(a) in circumstances where the advert made it difficult for consumers to work out whether the advert originated from the trade mark proprietor or a person economically linked to it as opposed to some unconnected party. In such a case, the essential function of the trade mark—as a badge of origin—would be affected.

The ECJ in Interflora confirmed this approach, considering it in light of Interflora's nature as a network of independent florists. Would the essential function of the mark be affected if internet users wrongly gained the impression from the advertising that M&S was part of the Interflora network? Yes, held the ECJ. However, it qualified this conclusion by noting that internet users are to be considered reasonably well-informed and reasonably observant and so it would not be enough if merely ‘some’ had ‘difficulty grasping that the service provided by M&S is independent from that of Interflora’. While this is ultimately a question to be answered by the national court on the facts, the ECJ's view was that, in the case of a network as large and diverse as Interflora's, internet users may find it ‘particularly difficult’ to work out whether an advertiser is in or out of the network. The ECJ thus hinted that in a case such as Interflora, it is up to the advertiser to make sure its advert uses sufficient words to enable the user to make the distinction.

Advertising function
The greater the number of advertisers which bid on a particular keyword, the more it costs each of them to do so. Thus M&S's bidding on ‘interflora’ made it more expensive for Interflora to do the same, forcing it to either do less advertising or spend more on the same. That might appear a good basis for an argument for impairment of the ‘advertising’ function, but that argument has already been rejected by the ECJ in Google France.

The ECJ in Interflora took the same view, although it stated that keyword advertising would not be adverse to the advertising function ‘in every case’, suggesting it might be in some. It then sought to justify its decision not to consider the above ‘repercussions’ as sufficiently ‘adverse’. Trade mark law, it said, was not in place to protect a proprietor against ‘practices inherent in competition’. Further, keyword advertising's general aim was to offer an internet user an alternative to whatever he or she had searched for (the ECJ implicitly acknowledging that this is a good thing). Finally, and hinting at what would impair the advertising function, the ECJ stated that keyword advertising does not have the effect of ‘denying the proprietor of … the opportunity of using its mark effectively to inform and win over consumers’. The author questions this assertion—it might well deny a proprietor this opportunity if he cannot afford the increased costs of his advertising.

Investment function
The trouble with many of the functions which are ascribed to trade marks following L'Oréal is that they are little more than buzzwords. The ECJ has now given one such buzzword, ‘investment’, some context. The ECJ says that a trade mark may be used ‘to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty’, which sounds suspiciously like saying that a trade mark can attract goodwill. Investment can be made in a mark, says the ECJ, by advertising but also by other (unspecified) commercial techniques. Any ‘substantial interference’ with this goal of reputation acquisition or preservation will amount to an adverse affect on the investment function which a proprietor may prevent. The ECJ adds that, where a trade mark already enjoys a reputation, the investment function is impaired by a use which ‘affects that reputation and thereby jeopardises its maintenance’. Note that there is no requirement here of ‘substantial’ affect, and it is not obvious whether the ECJ is referring to a trade mark which enjoys a reputation in the Article 5(2) sense (see below) or in some other sense. The conclusion here is therefore unclear.

In a nod to fair competition, this guidance is qualified by the ECJ's remark that it is not enough ‘if the only consequence of [the] use is to oblige the proprietor of that trade mark to adapt its efforts to acquire or preserve’ its reputation. Again this is hardly clear. Would not the proprietor only be forced to adapt because otherwise his reputation would be in jeopardy or otherwise interfered with? While it is helpful to know something about what some of the myriad functions of a trade mark mean, on this one we remain only a little wiser.

Issue 2: Article 5(2)/9(1)(c) and the additional protection afforded to famous marks
Trade marks with a reputation—often termed ‘famous’ or ‘well-known’ marks—gain additional protection under European trade mark law. The Google France cases, and the jurisprudence which predates Interflora, approached keyword advertising from the point of view of the protection given to all marks, not just the famous. That jurisprudence has largely been seen as giving advertisers the all clear to indulge in keyword advertising.

However, for the most part, advertisers will bid on the trade marks of their most successful competitors: many, if not most, of the trade marks bid upon will be famous ones. Following the ECJ's judgment in L'Oréal, which came in for heavy criticism from the Court of Appeal in England and Wales and elsewhere, famous brand owners' rights have been significantly bolstered, at least as regards their ability to prevent ‘unfair’ advantage taking. Thus the ECJ set itself up for something of a collision: on the one hand, Google France says keyword advertising—which undoubtedly allows an advertiser to gain an advantage off the back of his competitor's mark—is ok, while on the other L'Oréal regards all forms of advantage taking of marks with a reputation (like the INTERFLORA mark) as unfair. Which side would prevail?

Rather than unravel all of the previous Google France-led case law, the ECJ appears to have continued to find in support of keyword advertising, with favourable findings in respect of the limbs of Article 5(2)/9(1)(c) concerning both detriment to distinctive character (or ‘dilution’) and unfair advantage.

Dilution
Dilution is the whittling away, over time, of the distinctiveness of a mark such that it loses its ability to distinguish one trader's goods or services from another's. Interflora's concern was that M&S's practice would cause INTERFLORA to become a generic term for any flower delivery service. The ECJ was not convinced, holding that unless an internet user is confused by an advert, the advert will only serve to present M&S's service as an alternative offering, thereby preserving the distinctiveness of the INTERFLORA brand (an argument not without its counters). This means that dilution is effectively a non-runner in any attack on keyword advertising: if a proprietor needs to show confusion before it can start arguing dilution, it will already have succeeded on other trade mark grounds, and need not bother further.

Unfair advantage
The ECJ noted that keyword advertisers do obtain a ‘real advantage’ from bidding on their competitor's famous brand names, noting that because of the fame of those names, a large number of consumers will search for them and thereby see competitors' keyword adverts. In L'Oréal, the ECJ held that such ‘riding on the coat tails’ of a mark's reputation is unlawful where the advantage taker neither provides financial compensation to the brand owner in respect of it, nor makes its own marketing efforts. This much criticized decision, given to render smell-alike look-alike imitation perfume products unlawful, led the ECJ in Interflora to the inevitable conclusion that keyword advertising also took unfair advantage of marks with a reputation.

However, noting that keyword advertising is essentially about traders presenting consumers with alternative products and services, the ECJ chose to save it from unlawfulness as follows. Taking unfair advantage under Article 5(2)/9(1)(c) is only unlawful if it is done ‘without due cause’. Presenting one product as an alternative to another, absent any confusing, dilution, tarnishment, or any other wrongdoing, was fair competition, and so while the ECJ was not prepared to rule that the advantage taken is fair, it did conclude that it was with due cause, and therefore lawful. In doing so it indicated that the harsh approach in L'Oréal might be reserved for ‘imitation’ products, although quite what those are is not clear (see ‘Trade marks: Owners of famous brands given wide rights to prevent the use of their trade marks in comparative advertising’ JIPLP (2010) 5(8): 550–552).

Practical significance

With this decision, the ECJ has now covered almost all the bases so far as trade mark law and keyword advertising are concerned. However, it is now for Arnold J and the High Court to apply the ECJ's guidance to conclude Interflora and M&S's dispute. The ECJ has given a fairly clear steer on some points: the author anticipates that M&S will now prevail against Interflora as regards Article 5(2)/9(1)(c), on the basis that it is only taking advantage with due cause so as to present alternative products. However, the ECJ's guidance on the investment function is far from enlightening and the case could go either way on that (although the author suspects Arnold J might be reluctant to give such an imprecise function too strong an effect). Moreover, the unique nature of Interflora as a network, and the ECJ's comment that consumers might find it ‘particularly difficult’ to work out whether M&S is a part of that network, provide a firm pointer to the High Court that Interflora should ultimately prevail under Articles 5(1)(a)/9(1)(a). Arnold J may not agree.

Most cases of keyword advertising, however, do not involve brand owners which are comprised of Interflora-like networks. Aside from this complication, it now appears that the ECJ has given the go ahead to ‘normal’ keyword advertising, and most advertisers may now indulge in it in relative comfort. But not everything is perfect. To the extent they have now been defined, many of the functions of a trade mark (such as investment) remain vague and opaque, all but guaranteeing future disputes as to their meaning, whether in the context of keyword advertising or elsewhere. Further, if the internet continues to evolve at the astounding pace it has in the past decade, we may find this entire body of law redundant in five or so years, in which case we shall have to start the whole process all over again when the next big thing comes along.

How to abbreviate Europe's senior court: time to ask again

In January of this year the jiplp weblog reported that, following a poll of its readership, a handsome majority voted to retain "ECJ" as the preferred abbreviation of the highest court in the Court of Justice of the European Union. 69% of respondents opted for ECJ, while just 25% favoured CJEU. We wrote at the time:
"We'd be grateful if contributors of future copy would please bear this in mind when submitting material for publication".
It has however become apparent that the proportion of contributors using CJEU in preference to ECJ has steadily increased, to the point that a preponderant majority of manuscripts submitted to JIPLP use CJEU and the journal is becoming somewhat isolated in its use of ECJ.  Accordingly I have decided to put the matter to the vote again, to ascertain whether readers agree that the time for change has arrived.  The poll appears at the top of the jiplp weblog's side bar and will be open for a week.

Thursday, 24 November 2011

Euro-injunction mechanism in Community designs: Samsung Galaxy Tab European ban partially lifted

Author: Séverine Mas, avocate

Apple Inc. v Samsung Electronics GmbH and Samsung Electronics Co. Ltd, Düsseldorf Tribunal of first instance (Landgericht), Germany, Press Release No 013/2011 of 9 September 2011 concerning case No 14 c O 194/11

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr181, first published online: November 23, 2011

The 14th Civil Division of the Düsseldorf Tribunal of first instance confirmed an interim decision preventing the German firm Samsung Electronics GmbH from selling the Samsung Galaxy Tab 10.1 in the whole of the European Union, on account of a potential infringement of a Community design registered by Apple. The ban was, however, restricted to the German territory for sales by Samsung Electronics Co. Ltd, based in South Korea.

Legal context

The court examined its authority to grant a European injunction in the case of a Community design infringement, in application of Articles 82 and 83 of the Community Designs Regulation (EC Regulation 6/2002), following two interim decisions rendered on 9 and 16 August by the same court.

Facts

In a preliminary injunction (9 August 2011), the Düsseldorf court of first instance prohibited the sale, import, export, and interim storage of the Samsung Galaxy Tab 10.1 in the whole of the EU except in the Netherlands, on the grounds that it potentially infringes Apple's Community design rights (Community design 000181607 for the iPad product).

However, the President of the Düsseldorf court announced on 16 August that execution of that decision was suspended. The announcement stated that the court did not have jurisdiction to grant a European-wide injunction forbidding a company based outside the European Union to commercialize its products in the EU. The ground stated for the suspension was that the court was asked to examine an interim matter and thus did not have such far-reaching powers.

The decision for the appeal filed by Samsung against the 9 August injunction, following the court hearing of 25 August, was rendered on 9 September.

The Landgericht maintained the injunction against Samsung Electronics GmbH, a German company, confirming the prohibition of selling the Samsung Galaxy Tab 10.1 in the EU, and in particular, the prohibition of producing, offering for sale, commercializing, importing, exporting, or storing the product for these purposes.

With regard to Samsung Electronics Co. Ltd, based in South Korea, the court has, however, limited the ban to the German territory. The European-wide ban was lifted.

Analysis

Competition is fierce in the tablet PC market, and registrations of IP rights are some means of obtaining a competitive advantage. The current context is part of a legal strategy between Apple products and Android-based smartphones and tablet PCs (Android is an open-source operating system created by Google, used by several manufacturers including Samsung).

The mechanism of the European injunction in favour of Community design owners allows Community design courts to prohibit the sale of a product potentially infringing a Community design, in the whole European Union territory, without examining the grounds for the claims (ie the validity of the design registered). As the German decision has not yet been published, we assume that the injunction was based on Article 85 of the Community Designs Regulation. The Regulation on Community designs requires that in proceedings for an alleged infringement action, the courts treat the Community design as valid (Article 85 of the Regulation). Validity can only be challenged through a counterclaim for a declaration of invalidity, or by way of counterclaim in so far as the defendant claims that the Community design could be declared invalid on account of an earlier national design right belonging to the defendant.

The Düsseldorf Landgericht's summary judgment of 9 August is an exceptional decision, given its scope and potential consequences. We should, however, bear in mind that the tribunal had no choice but to consider the design as valid. Acting on an interim matter, the court could not examine the grounds of the claims. It could only examine the existence of IP rights on which the claims were based.

This leads on to the validity of the Community design. Apple's registered Community design may be seen as so basic that the ‘individual character’ condition of Article 6 may be absent. In addition, the shape of the design can be considered being dictated by the functionality of a tablet PC (Figure 1).


Apple's registered design for a handheld computer

Design law requires that the form of a design not be solely dictated by its technical function (Article 8 of the Regulation). It is therefore questionable that a simple rectangular, flat geometric shape be registered as a Community design for a tablet PC. The shape in itself could be seen as being dictated by the functionality of the apparatus, which is to provide a tactile screen for interaction with the user.

In conclusion, it is possible that the design may be declared invalid in the future. The legal issue at stake would then fall under the realms of unfair competition rather than of industrial property rights.

Practical significance

A similar provision relating to trade marks allows national courts to grant Euro-injunctions in favour of trade mark owners (Article 98 of the Community Trade Mark Regulation). The extent of jurisdiction on Community design infringement depends on the international jurisdiction criteria stated in Article 82 of the Community Designs Regulation. Article 82(1) states that infringement proceedings
shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment.
Article 85(2) states that if
the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment.
If the claimant or the defendant is domiciled or has an establishment in the Member State, the Community Design Court will have authority to grant a Euro-injunction based upon the Community Design Regulation, Article 83(1). If, however, the court is acting only so as to stop potential infringement in the Member State in which the act of infringement has been committed or is going to be committed—the forum loci delicti (Article 82(5))—it will not have the authority to grant a Euro-injunction (Article 83(2)).

In the present case, the defendants were Samsung Electronics GmbH (based near Frankfurt) and Samsung Electronics Co. Ltd (headquartered in South Korea). The reasoning behind the suspension of the execution of the original 9 August decision is that the court only had jurisdiction to grant a Euro-injunction towards Samsung's German defendant. With regard to Samsung Korea, the company is not viewed as an ‘establishment’ in the sense of the Regulation. This may be due to a problem of translation of the European Regulation into German. In the German version of the text, the term ‘establishment’ is translated as ‘Niederlassung’. This can mean either an independent company or a subsidiary.

In order for Article 82(1) to apply, Samsung Electronics GmbH would need to be considered a subsidiary of Samsung Electronics Co. Ltd (South Korea). This seems not to be the case. Due to the plaintiff's headquarters being situated in California, Article 82(2) could not be applied either.

The appropriate form of action in order to obtain a Euro-injunction would have been for Apple Inc. to have applied to the courts of Alicante in Spain, where the OAMI is situated (Article 82(3)).

Industrial property offices have a great responsibility in maintaining a healthy market, by being cautious before granting industrial property rights. The combination of Articles 83 and 85 of the Community Design Regulation creates a powerful instrument for corporations. Aggressive registration of questionable designs followed by summary injunctions seeking a European ban is an effective technique for eliminating competition.

In the case of abusive procedures, there is little in the way of compensation for victims if the design is subsequently invalidated. This current state of affairs may limit healthy competition and place a brake on innovation in the European Community market.

Tuesday, 22 November 2011

Books for review in JIPLP

The following books have been offered to the Journal of Intellectual Property Law and Practice (JIPLP) for review.  If you would like to volunteer to review one of these titles, please email Sarah Harris at Oxford University Press at sarah.harris@oup.com by Sunday 4 December and let her know your particular interest or expertise in the subject that would qualify you to tackle the task. After that date, you will receive either confirmation that your offer to review has been accepted or a grateful acknowledgement of the fact that you have offered, even though the review has been given to another. Suitably qualified volunteers to review who are unsuccessful will be given priority when next they request to review a book.

JIPLP is committed to making sure that books which are sent for review are actually reviewed, so please do not volunteer to review one of the titles unless you are genuinely prepared to deliver.  If you do not review the book, you will be asked to return it so that it can be sent to another reviewer. This policy is not intended to make life hard for reviewers, but rather to give a better deal to publishers and authors who depend on reviews as a means of drawing the attention of their works' intended readers and purchasers -- and who also benefit from even critical feedback.

The books on offer are as follows:

National Developments in the Intersection of IPR and Competition Law: from Maglite to Pirate Bay
Edited by Hans Henrik Lidgard.
Hart Publishing, Oxford.
Publication date: May 2011 400pp hbk 9781841139449 £55.00
More information concerning this title is available here 

Intellectual Property, Competition Law and Economics in Asia
Edited by R Ian McEwin.
Hart Publishing, Oxford.
Publication date: October 2011 368pp hbk 9781849460873 £75.00
More information concerning this title is available here 


Refusals to License Intellectual Property: Testing the Limits of Law and Economics
Ian Eagles and Louise Longdin.
Hart Publishing, Oxford.
Publication date: December 2011 272pp pbk 9781841138732 £65.00
More information concerning this title is available here

Handbuch des Fachanwalts Informationstechnologierecht
Michael Lehmann and Jan Geert Meents
Carl Heymanns Verlag
2. Auflage 2011. 1708 Seite(n), gebunden.
lieferbar. EUR 168,00. ISBN 978-3-452-27399-4
More information concerning this title is available here

Die europäische Patentanmeldung und der PCT in Frage und Antwort
Gerard Weiss and Wilhem Ungler
Carl Heymanns Verlag
8. Auflage 2011. 478 Seite(n), gebunden.
ISBN 978-3-452-26819-8. sofort lieferbar EUR 118,00
More information concerning this title is available here

Electronic Communications Law: Competition & Regulation in the European Telecommunications Market (second edition)
Paul Nihoul and Peter Rodford
Oxford University Press.
More information concerning this title is available here


Know-how-Schutz in Deutschland zwischen Strafrecht und Zivilrecht - welcher Reformbedarf besteht?
Björn Helge Kalbfus
Carl Heymanns Verlag
1. Auflage 2011. 424 Seite(n), kartoniert
ISBN 978-3-452-27597-4. EUR 114,00
More information concerning this title is available here

Friday, 18 November 2011

Bits and pieces

By now, all subscribers to the print edition of the November 2011 issue of JIPLP should have received their copies. If you've not yet received yours, you can check the contents here and see what you're still missing. Incidentally, some 20 items are available on JILP's Advance Access service while they await their paper publication dates.


Some of our editorial board members have been on the move.  Newly-appointed Andrew P. Bridges is now with Fenwick & West, San Francisco, California (you can email him here), while Neil J. Wilkof, who has been on the editorial board since the journal's inception, is now of counsel to Dr Eyal Bressler & Co., Ramat Gan, Israel (you can email him here).


Notice to all prospective authors: please, please, PLEASE -- when submitting articles for publication, do try to bear in mind the fact that JIPLP has a house style. While we try to be as flexible as possible and want to help our authors gain the publication of their submissions, we have to bear in mind the interests of our readers too.  In particular:

  • While authors rejoice in the publication of longer articles, most readers prefer shorter ones. If your subject matter is too long for an article 7,500 words or thereabouts, ask whether you actually have two separate articles on your hands.
  • JILP's footnotes should appear at the bottom of each page, not at the end of the article. They should refer to sources cited in an article and should not be bibliographic exercises in scooping up all the articles you've found on Google.
  • If you are writing on a topic which is tangential to IP but nonetheless of importance to it, spell out its relevance to JIPLP readers. Any article which contains no mention of the words "intellectual property" or of any specific IP right will be rejected since it is unfair to expect subscribers to a quality specialist journal to read through an apparently irrelevant piece in order to work out why it should be of interest or importance to them.
  • There has in recent months been a disconcerting trend towards the inflation of credits. Whereas formerly an author might acknowledge support from a research assistant, a colleague, a professor or a funding body, the credits are starting to read like Oscar acceptances. If this continues, I shall consider the launch of a fresh website on which authors can gratefully praise their partners, their pets, their cars and anything else that occurs to them. These items would link back to the original JIPLP article, in the event that the reader was curious enough to want to read it.

Sunday, 13 November 2011

Harmony with the rest of the world? The America Invents Act

Author: Toshiko Takenaka, Professor of Law and Director, CASRIP, University of Washington

The America Invents Act, 16 September 2011

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr175, first published online: November 11, 2011

President Obama has now signed the America Invents Act (AIA) into law, following a process which began when Congress and US industry first sought to overhaul the US patent system in 2004 and which draws US practice closer to the patent laws of the rest of the world than has previously been the case.

Legal context

During discussions to review patent infringement remedies, US industry was increasingly divided in their views with respect to a grant of injunction and adequate damages to compensate infringement. With the development of case law to resolve the different views (see eBay Inc. v MercExchange, LLC, 126 S. Ct. 1837, 164 L. Ed. 2d 641, USPQ2d 1577 (US 2006), Lucent Techs. v Gateway, Inc., 580 F.3d 1301, 92 USPQ2d 1555 (Fed. Cir. 2009), the industry was finally able to reach an agreement for all controversial issues in patent reform and convince Congress to pass a reform bill (see HR 1249 (AIA), 112th Congress: 2011–2012 (here)). However, the terms of America Invents Act represent a lot of compromises between competing interests of different sectors of US industry, including large multinational firms, universities, and non-profit research labs and independent inventors, which will lead to a lot of uncertainty for US courts and the US Patent and Trademark Office (USPTO) as to how to interpret these terms.

Facts and analysis

Here are the most important aspects that will affect interests of European patent owners for their patent procurement and enforcement in the USA.

First-inventor-to-file (FITF)

The patent community worldwide has been excited by the news that the USA has finally adopted the first-inventor-to-file (FITF) system (AIA, section 3) that US lawyers describe as a first-to-file system to join the rest of the world for patent harmonization. However, there is still a big question mark as to whether the USA gives priority between two independent and identical inventions based on the date of filing. Many view the novelty and priority under the AIA as the first to publish in which the first to invent is established only through a disclosure.

Prior art (AIA, section 3)

New section 102(a) is comparable to EPC Article 54 in defining an invention which is part of the state of art before the effective filing date. It not only lists a broad definition of such invention, an invention which is available to the public as provided in EPC Article 54(2), but also examples of such inventions, an invention being patented, described in a printed publication, in public use or on sale. These examples are copied from the current patent statute and are associated with the peculiar interpretation of these examples based on the first-to-invent policy. For example, ‘public use’ includes an inventor's own secret but commercial use (Metallizing Eng'g Co. v Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 517–8 (2d Cir. 1946)) excludes experimental public use (City of Elizabeth v American Nicholson Pavement Co., 97 US 126, 134–5 (1877)). Because US courts usually retain an interpretation of the term through its case law, unless the interpretation is expressly repealed by Congress, it is likely that US courts would interpret the definition of the state of art under the AIA differently to that of the EPC, Article 54. Despite this ambiguity, the AIA has removed the geographical limitation with respect to public use and sale and has thus harmonized with the EPC and Japanese Patent Act (JPA) in adopting worldwide novelty.

A new section 102(a) also provides a prior right which is comparable to the prior art under EPC Article 54(3), an invention described in a patent or patent application pending at the USPTO, to constitute the state of art if the patent application is filed before the effective filing date of the claimed invention under examination as long as the application is published after 18 months from the effective filing date or upon an issuance of patent (some US patents are not subject to 18-month publication, according to 35 USC 122(b)(2)(B)). Because the effective date is defined to include a foreign priority date under the Paris Convention and the PCT filing date, the AIA expressly repeals the Hilmer doctrine (from In re Hilmer, 359 F.2d 859, C.C.P.A. 1966) and gives the patent a defeating effect as of the priority date. Thus, the AIA's prior right provision is in line with the EPC as well as the JPA in giving the patent a defeating effect as of the priority date. However, it differs from the EPC and JPA by making the prior right reference available for not only novelty but also non-obviousness. Unlike the EPC, a prior right reference does not apply to applications which name the same inventor(s) or are owned by the same person or subject to an obligation of assignment to the same person to avoid the self-collision problem. This approach is in line with the JPA.

Grace period (AIA, section 3)

Contrary to the perception of US lawyers that FITF is a first to file, FITF is in fact a revised version of a first to invent. The definitions and underlying policy of disclosures excluded from the state of art make clear that the AIA still follows a first-to-invent system, although the period that the inventor can rely on the first to invent is limited to the 12 months from the filing date and the evidence to establish the first to invent is limited to a disclosure.

The new section 102(b) is comparable to EPC Article 55 in defining a disclosure of an invention which is removed from the state of art. The grace period, to take advantage of this exception to remove disclosed inventions, is 12 months and thus twice as long as the grace period under the EPC and JPA. The scope of inventions removed from the state of art is much broader than that of the EPC. Section 102(b) removes two classes of disclosed inventions from the state of art. The first class includes inventions which are disclosed by an inventor, joint inventor, or a third party who obtained the invention directly or indirectly from the inventor. Removing this class of disclosures is familiar within the first-to-file world because these disclosures are also excluded from the state of art under Article 9 of the Draft Substantive Patent Law Treaty (World Intellectual Property Organization, Draft of Substantive Patent Law Treaty, Article 9 (here).

The second class of inventions is most controversial because of the complexity and ambiguity in defining the class. The definition reads: ‘the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor, a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor’ (§ 102(b)(1)(b)). US lawyers and academics read the definition to remove from the state of art any disclosure of an invention after the first disclosure which falls into the first class as long as the inventor files an application within the 12-month grace period regardless of such disclosure made by another inventor who independently developed the same invention. In other words, the definition of second class should read to give priority based on the date of disclosure. This view is foreign to the first-to-file world, where a disclosure gives rise only to a patent-defeating effect. However, US lawyers who are trained in the first-to-invent world view the disclosure as evidence of invention which gives rise to priority for obtaining a patent as well as the patent-defeating effect. This interpretation is supported by some discussions in Congress where a sponsor of the AIA bill emphasized the protection of an inventor by giving the priority based on his or her disclosure (22 June 2011, H4420-4452 (here)).

The first-to-file trained lawyers would read the definition in line with the grace period provisions under the non-prejudicial disclosure under EPC Article 55, JPA Article 30, or Article 9 of the Draft Substantive Patent Law Treaty. For them, these provisions should read to remove from the state of art only certain types of disclosures by the inventor or derived from the inventor. This is because the grace period is an exception to the first to file and covers only minimum acts of inventors. In contrast, under the AIA, the grace period is an exception to the first to invent in barring inventors from obtaining a patent after 12 months from the filing date. That the AIA follows a first-to-invent system is further confirmed in that the subject matter resulting from both classes of disclosures is prevented from constituting a prior right. Non-prejudicial disclosures are not exempted from the first-to-file principle under either the EPC or the JPA.

Accordingly, ‘disclosure’ plays an important role in establishing the priority. However, the AIA does not include any definition of disclosure. Although the ‘disclosure’ should at least exclude a confidential sale and secret use, a non-confidential commercial offer of an invention or a public use of an invention may constitute a disclosure. The AIA does not suggest what degree of public access is necessary in order to rise to disclosure for establishing a priority. Because the FITF provisions will apply to applications with effective filing dates after 16 March 2013, we have to wait for a long time to determine how the US courts will interpret ‘disclosure’.

Derivation procedure (AIA, section 3)

Interference proceedings that determine priority based on the first to invent are restructured as derivation proceedings. The new proceedings will determine whether an invention of an application or a disclosure during the grace period is derived from the applicant. There is no proceeding to determine priority based on disclosures during examination if competing applications claim early disclosures during the grace period to establish the priority. Once a patent is granted, a first to disclosure may use the new post-grant review for challenging the priority.

Prior user rights (AIA, section 5)

The AIA will expand the scope of inventions to which a defence of infringement based on a prior use of an invention applies. Currently, a defence based on prior use is available only with respect to a method of doing or conducting business (see 35 USC §273). Under the AIA, the defence will be available for a process, a machine, manufacture, or composition of matter used in a manufacturing or other commercial process regardless of the field of technology. A substantial commercial use of the invention must be made at least one year before the earlier of either the effective filing date or the first disclosure of the invention claimed in the patent against which a defence is asserted. However, this defence is not available if the patent against which this defence is asserted was owned or to be subject to an obligation of assignment to universities at the time of invention. This defence will apply to any patent issued after 16 September 2011.

Multiple proceedings for challenging validity (AIA, section 6)

The AIA makes the US patent system complex and unique in offering multiple options for challenging patent validity at the USPTO in addition to invalidity challenge options at US courts. The AIA will provide three inter partes proceedings:
  • post-grant review;
  • inter partes review; and
  • a special post-grant review for business methods.
The post-grant review and the special post-grant review are new inter partes proceedings in contrast to the current inter partes reexamination which will be renamed as the inter partes review with some important revisions. The ex parte reexamination will remain as it is with a very minor change and interference proceedings. A comparison of the four proceedings is provided in the table below [If your screen shows only a partial version of the table, click it and you should be able to read it in its entirety].

Tuesday, 8 November 2011

TV Catchup paused as High Court refers to Europe

This Current Intelligence note refers to the then-pending ruling of the Court of Justice of the European Union in Case C-403/08 Football Association Premier League and Others, which has since been delivered here.

Authors: Joel Smith and Emily Mallam (Herbert Smith, London)

ITV Broadcasting Ltd and Others v TV Catchup Ltd [2011] EWHC 1874 (Pat), Patents Court, England and Wales, 18 July 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr156, first published online: November 4, 2011

The High Court has referred to the ECJ questions concerning communication of films and broadcasts to the public.

Legal context

This was a copyright action brought by ITV Broadcasting Limited and others (‘ITV’) against TV Catchup Limited (TVC). TVC had previously applied unsuccessfully for summary dismissal of the action on the basis that ITV had no chance of succeeding at trial.

Facts

TVC operated a live streaming service of broadcast television programmes over the internet so that users could watch live television on their computers, tablets, and smartphones. The material streamed included programmes and films in which ITV owned the copyright. In order to take advantage of this service, users had to create an account and agree to certain terms, confirming that they held a valid TV licence and that they would restrict the use of TVC to their country of residence.

The TVC service was supported by advertisements which were shown before the live stream of the broadcast. Any advertisements that formed part of the live stream were shown unaltered. Since further advertisements surrounded the TVC live stream, TVC was in direct competition with ITV.

The TVC service was administered by capturing the broadcast signals using a single domestic television aerial, processing them through several servers. At no stage during the streaming process was any of the stream stored on a permanent storage medium. However, at each step, a small amount of data from the video stream (a few seconds worth) was held in the memory of the servers for the purposes of buffering the live stream.

ITV alleged that TVC infringed its copyright in two categories of work; broadcasts and films. The alleged infringement occurred by (a) communicating the works to the public and (b) making, or authorizing the making of, transient copies of the works in TVC's servers and on the screens of users.

TVC's defences in relation to broadcasts


Denying infringement by communication of works to the public, TVC argued that

  1. the amended version of section 20(1)(c) of the Copyright, Designs and Patents Act 1988 (‘CDPA’) which creates a general communication to the public right in respect of broadcasts, was invalidly enacted and
  2. in any event, what TVC did was not a ‘communication to the public’.

As to making or authorizing the making of transient copies of broadcasts, TVC argued that

  1. the copies were not substantial parts of the works relied on and
  2. section 28A of the CDPA, which says that the making of temporary copies that have no independent significance will not infringe copyright, applies.

TVC also raised a defence under section 73(2)(b) of the CDPA, which allows broadcasts to the re-transmitted by cable.

TVC's defences in relation to films


TVC raised the same defences in relation to films, save that there was no challenge to the validity of the legislation on communication to the public insofar as it related to films.

Analysis

Was section 20(1)(c) of the CDPA ultra vires?

Article 3 of Directive 2000/29 on the harmonization of certain aspects of copyright and related rights in the information society (the ‘InfoSoc Directive’) established a general ‘communication to the public’ right for broadcast copyright owners. The Copyright Related Rights Regulations 2003 introduced a new section 20(1)(c) and section (2) to the CPDA, which now reads:
(1) The communication to the public of the work is an act restricted by copyright in-
(a) a literary, dramatic, musical or artistic work,
(b) a sound recording or film, or
(c) a broadcast.
(2) References in this Part to a communication to the public are to a communication to the public by electronic transmission, and in relation to a work include-
(a) the broadcasting of the work;
(b) the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and a time individually chosen by them.
TVC alleged that (i) since this amendment required primary legislation, it could not be implemented via the 2003 Regulations and (ii) the Regulations were drafted on the mistaken assumption that Article 3 of the InfoSoc Directive required Member States to extend an exclusive right over communication to the public to broadcasts. ITV (and the Secretary of State) argued that, to the extent that the amendment went further than required, it fell within the powers given to the Secretary of State under section 2(2) of the European Communities Act 1972: this confers a general power to legislate to satisfy European obligations.

Floyd J rejected TVC's submission that section 2(2) was merely for ‘filling the cracks’ in Community legislation and explained that it went further. He agreed with the submission by the Secretary of State that the addition of section 20(1)(c) to the CPDA: had the effect of restricting wireless transmission for on demand access; made it a restricted act to make a transmission wirelessly for reception at two or more places and extended to anything else properly characterized as a communication to the public by electronic means. Since these amendments were closely related to the subject matter of the Infosoc Directive and helped to fulfil its harmonizing function, Floyd J did not think that section 21(1)(c) went further than Article 3 of the Infosoc Directive; nor was it ultra vires.

Communication to the public

ITV alleged that TVC was communicating its broadcasts and films to the public under section 20 of the CPDA. By section 20(2) ‘communication to the public’ means communication to the public by electronic transmission. Recital 23 in the InfoSoc Directive indicates that the communication to the public right should be
… understood in a broad sense covering all communication to the public not present in the place where the communication originates.
ITV cited Article 11bis(1)(ii) of the Berne Convention and argued that, whenever there is an intervention by a broadcasting organization other than the original one, there is a communication to the public within the exclusive right of the copyright owner and which it is entitled to control: the signal was re-transmitted to members of the public who were not the direct recipients of the signal.

TVC referred to the Rome Convention Intergovernmental Committee, 12th Session (Geneva, 5–7 July 1989), which said of ‘Cable distribution’:
It does not amount to distribution by cable of the broadcast of the work concerned where the broadcast, received by an aerial larger than generally used for individual reception, is transmitted by cable to individual receiving sets within a limited area consisting of one and the same building or a group of neighbouring buildings, provided that the cable originates in that area and is made without gainful intent …
TVC submitted that this demonstrates that not every physical act of distribution of a broadcast signal is a communication to the public: merely providing technical assistance to allow people to access more readily what they could receive by other means was not such a communication.

Floyd J referred to the ECJ decision in Sociedad General de Autores y Editores de Espana (SGAE) v Rafael Hotels SL where distribution by hotel proprietors of broadcast signals received by them to rooms in their hotels did constitute a ‘communication to the public’ under Article 3(1) of the InfoSoc Directive. This case sought to clarify whether there was a communication to the public when an intervening organization, acting for its own profit, intervenes in full knowledge of the consequences of its acts and in order to attract an audience to its own transmission to members of the public who would otherwise be able to access the transmission.

Floyd J indicated that in his view, given the broad meaning which the InfoSoc Directive requires for ‘communication to the public’, the natural meaning of that expression should not be narrowly construed. He distinguished between acts that are purely supportive of the original broadcaster's intention and those intended to attract the audience of the original broadcaster away from direct reception of its signals, the latter being within the notion of communication to the public. Said the judge, TVC's interception of ITV's broadcasts, making them available to the public, amounted provisionally to a ‘communication to the public’. However, he referred the question to the ECJ for its opinion.

Reproduction right and substantial part

When it copied the broadcasts for a transient period via the buffers, was TVC copying a whole or substantial part of the broadcast or film? Floyd J thought that TVC both produced and authorized the reproduction of a substantial part of the films, but not the broadcast, in the buffers and on the screens—subject to anything that the ECJ say in their ruling on Football Association Premier League v QC Leisure.

Does section 28A apply to broadcast copyright?

In defence of the allegation of making or authorizing the making of transient copies of broadcasts, TVC invoked section 28A of the CDPA:
Copyright in literary work, other than a computer program or a database, or in a dramatic, musical or artistic work, the typographical arrangement of a published edition, a sound or recording film, is not infringed by the making of a temporary copy, which is transient or incidental, which is an integral and essential part of a technological process and the sole purpose of which is to enable-
(a) transmission of the work in a network between third parties by an intermediary; or
(b) a lawful use of the work;
and which has no independent economic significance.
This defence only applies if, contrary to the judge's provisional view, reproduction of the broadcasts is found.

While section 28A implements Article 5 of the InfoSoc Directive, which does apply to broadcasts, its list of rights to which the defence applies omits broadcast copyright. Floyd J considered that, since no policy reason was advanced for this omission and it would not be inconsistent to read section 28A as if it included a reference to broadcast copyright, the Marleasing principle should be applied and the court should construe section 28A as including broadcasts.

Doing just this, Floyd J agreed that the copies made by TVC were temporary and transient. Further, if TVC successfully argued that the activities were not a communication to the public, the copies were a lawful use of the work. As to whether the reproduction in the buffers and the screens had real economic significance, Floyd J said that, since the position would be clarified in the ECJ ruling on Football Association Premier League v QC Leisure, he would defer judgment until its outcome.

Section 73 CPDA

Under section 73 of the CPDA:
… where a wireless broadcast is made from a place in the UK and immediately re-transmitted by cable:
(2) The copyright in the broadcast is not infringement-
(a) if the re-transmission by cable is in pursuance of a relevant requirement, or
(b) if and to the extent that the broadcast is made for reception in the area in which it is re-transmitted by cable and forms part of a qualifying service.
(3) The copyright in any work included in the broadcast is not infringed if and to the extent that the broadcast is made for reception in the area in which it is re-transmitted by cable; but where the making of the broadcast was an infringement of the copyright in the work …
ITV argued that ‘cable’ should be construed narrowly, excluding transmission over the internet—which often encompasses transmission over a wireless network. TVC said that, while this was sometimes so, it is only the re-transmission that must be by cable, which was always the case here. Floyd J thought that, to take advantage of section 73, the entire transmission of the broadcast should be by cable. TVC could not accordingly take advantage of the defence where their re-transmissions were for reception by a mobile telephone.

ITV further argued that, since TVC transmitted the London regional services to regions where the signal could not usually be picked up, the broadcasts were not ‘made for reception’ in the area into which they were transmitted. TVC disagreed: it was technically possible to receive any of the ITV regional services anywhere with correct equipment, for instance by entering a postcode for a different region in a Freesat box. Floyd J concluded that it would be an incorrect interpretation of the legislation if it were to reference areas where to broadcast was ‘receivable’ rather than where it was ‘made for reception’. Accordingly, the section 73 defence would not be available where TVC transmitted outside the regional area of the service in question.

Practical significance

While the court's analysis of both the factual and the legal issues raised by the parties is of great interest, at this stage it is hard to predict the degree of practical significance to attach to it since it could be some years until the ECJ rules on the referred questions. In the meantime TVC continues to offer its services.

Sunday, 6 November 2011

Supplementary Protection Certificates for combination products

Editor's note: this the Court of Justice of the European Union has announced on the Curia website here that the ruling of its Fourth Chamber will be delivered on Thursday 24 November 2011.  JIPLP is pleased to be able to make this note on the Advocate General's Opinion available in advance of that date. 

Authors: Tim Powell and Rebecca Lawrence (Powell Gilbert LLP)

Joined Cases C322/10 Medeva and C422/10 Georgetown University, Court of Justice of the European Union, Advocate General's Opinion, 13 July 2011

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr158, first published online: November 4, 2011

The Advocate General has opined on the availability of Supplementary Protection Certificates (SPCs) for combination products, clarifying the interpretation of Articles 3(a) and 3(b) of Regulation 469/2009.

Legal context

SPCs may be granted to patentees to extend the life of patent protection in relation to specific medicinal products. The availability of SPCs is prescribed by Regulation 469/2009, which aims to compensate patentees where the effective monopoly afforded by the patent has been eroded by a lengthy marketing authorization process.

In order to obtain an SPC, certain requirements prescribed by the Regulation must be met, including:
Article 3
(a) the product must be protected by a basic patent in force;
(b) a valid authorization to place the product on the market as a medicinal product must have been granted;
(c) the product must have not already been the subject of an SPC;
(d) the authorization in (b) must be the first to place the product on the market.
‘Product’ is defined in Article 1(b) as ‘the active ingredient or combination of active ingredients of a medicinal product’. ‘Basic patent’ is defined in Article 1(c) as ‘a patent which protects a product as such, a process to obtain a product or an application of a product … ’.

Issues relating to SPCs for ‘combination products’ which contain two or more active ingredients have resulted in the recent referral of questions by the courts in England and Wales to the Court of Justice of the European Union (ECJ). Advocate General Trstenjak (‘the AG’) has now provided her Opinion in the first of those cases.

Facts

Both Medeva and Georgetown University concerned multi-disease vaccines. Due to public health policy, vaccines often contain a combination of active ingredients directed to a number of different diseases so that multiple immunizations can be carried out via one injection. This approach has led to problems in obtaining SPC protection as the British courts have considered there to be a mismatch between the patent (which, for example, might relate to only one disease) and the SPC application and/or marketing authorization (which, for example, might cover a number of components of a multi-disease vaccine).

The facts in Medeva illustrate the relevant issues. Medeva had a patent relating to two antigens of the whooping cough virus Bordetella pertussis. However, the vaccines Medeva marketed additionally contained other active ingredients directed to diphtheria and tetanus and, in some vaccines, meningitis and polio. Medeva applied for five SPCs, four of which covered vaccines containing eight or nine active components and one (the '018 Application) which covered the two patented components.

The applications relating to eight or nine active components were rejected as not complying with Article 3(a) of the Regulation as a product containing a multiplicity of active ingredients was not considered to be ‘protected’ by a basic patent which only claimed a subset of those ingredients.

The '018 Application was rejected as not complying with Article 3(b) of the Regulation as the relevant marketing authorization contained a greater number of active ingredients than the product, so there was considered to be no valid authorization to place the product on the market.

The key questions in Medeva referred by the Court of Appeal to the ECJ can be summarized as follows:
1. What is meant in Article 3(a) of the Regulation by ‘the product is protected by a basic patent in force’ and what are the criteria for deciding this? 
2. Are there further or different criteria for determining whether or not ‘the product is protected by a basic patent’ for medicinal products comprising more than one active ingredient and, if so, what are those further or different criteria? 
3–5. … 
6. Does the Regulation and, in particular, Article 3(b), permit the grant of a supplementary protection certificate for a single active ingredient or combination of active ingredients where:
(a) a basic patent in force protects the single active ingredient or combination of active ingredients within the meaning of Article 3(a) of the Regulation; and 
(b) a medicinal product containing the single active ingredient or combination of active ingredients together with one or more other active ingredients is the subject of a valid marketing authorization?
Questions 3–5 were specifically related to Article 3(a) as it applies to multi-disease vaccines and are of less general importance. The sole question referred in Georgetown University was the same as question 6 in Medeva.

Analysis

The ECJ was faced with the challenge of including a partially patented multi-disease vaccine within the scope of the Regulation in a manner consistent with its objectives, without jeopardizing the balance achieved in that Regulation between the various interests at stake in the pharmaceutical sector.

Article 3(a): questions 1–5
Medeva argued that a combination of active ingredients is protected by a basic patent where at least one of its active ingredients is claimed in the patent, so that the whole combination would infringe the patent (the so-called infringement test). The UK government supported this approach, while the Commission submitted that the Court must establish which active ingredients are protected by a patent under national law, not which forms of commercial activity by third parties the patent proprietor can inhibit.

The AG considered that, on a literal reading of the Regulation, an SPC may be granted only in relation to the entire combination of active ingredients because, according to the wording of Article 1(b) of the Regulation, only the combination of active ingredients as such constitutes the ‘product’. Thus there should be no mismatch between the ‘product’ the subject of the SPC application and the ‘product’ the subject of the patent.

However, the AG recognized that such a literal interpretation would not be in accordance with the aims of the Regulation as it would lead to a rejection of SPCs on extremely important combination medicinal products. She therefore considered that a ‘teleological’ interpretation should be adopted taking into account the aims of the Regulation. By this approach, the definition of ‘product’ in Article 1(b) also included one or a subset of the authorized combination.

The AG then considered whether the widening of the concept of ‘product’ in this way upset the balance of interests envisaged by the legislature in adopting the Regulation. She was concerned about the risk of ‘evergreening’ whereby a manufacturer of medicinal products could develop a number of products with different combinations of active ingredients on the basis of one patented active ingredient and place those products on the market at different times, for the purpose of obtaining a variety of certificates of different durations.

The AG considered that the product within the meaning of Article 3(a) must be interpreted as meaning the product which forms the subject matter of a basic patent within the meaning of Article 1(c). Thus, whichever combination is marketed, the product is always the same. Subsequent authorizations with different combinations will not give rise to further SPC applications because the product will already have been the subject of an SPC (Article 3(c)) and the authorization will not be the first to place the product on the market (Article 3(d)). In other words, if the patent relates to a + b but the marketing authorization is for a + b + c + d, the patentee can apply for an SPC on a + b. If a + b + f + g is later authorized, no further SPC can be granted as a + b is already the subject of an SPC.

In light of this finding, it was unnecessary to apply the infringement test advanced by Medeva. The AG rejected the test and instead drew a distinction between the subject matter—or extent of protection—and the protective effect of the basic patent, considering that this followed from the requirements of Article 1(c) of the Regulation that sets out the definition of a ‘basic patent’ under which an SPC can be granted.

Article 3(b): question 6
In considering the question referred on the interpretation of Article 3(b) of the Regulation, the AG decided that it follows from the teleological interpretation adopted in respect of Article 3(a) that the marketing authorization under Article 3(b) can relate to a medicinal product which contains, in addition to the patented active ingredient/combination, one or more other active ingredients (provided that it is the first authorization to place the product on the market).

Practical significance

The AG has been prepared to interpret the Regulation in a teleological fashion, introducing flexibility into the requirements of Article 3 and allowing a ‘mismatch’ between the number of active ingredients included in the marketing authorization and the number in the patent. To this extent, this Opinion seems favourable to the research-based pharmaceutical industry in that the Regulation has been interpreted to avoid an unduly harsh refusal of SPC protection. The ECJ must decide whether to adopt the Opinion of the AG. However, the Opinion leaves open to interpretation the ‘subject matter’ of the basic patent. Also, in rejecting the infringement test, the AG did not go as far as many in the pharmaceutical industry would have liked in providing SPC protection for second generation combination patents.

Tuesday, 1 November 2011

Application for ‘TDI’—Audi's arguments fail to impress

Author: Timothy J. Pinto (Special Counsel, Taylor Wessing LLP)

Audi and Volkswagen v OHIM, Case T-318/09, General Court, 6 July 2011

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr150, first published online: November 1, 2011

The General Court rejected Audi's application to register as a Community trade mark (CTM) the word ‘TDI’ on the basis that the mark was descriptive and Audi failed to prove acquired distinctiveness through use in the Community.

Legal context

It is common for car manufacturers to designate different specifications of a particular model of car with three or four letters and/or numbers. A classic example is GTi for a Volkswagen Golf. In many cases, the numbers or letters indicate the type or size of the type of vehicle within the range and/or of the engine. When are such initials registrable as trade marks and when should they be left available for all traders to use?

Facts

Audi and Volkswagen (‘Audi’) applied in 2003 for a CTM for ‘TDI’ for ‘vehicles and constructive parts thereof’. The main issues were whether

  • the mark was devoid of distinctive character under Article 7(1)(b) of the Community Trade Mark Regulation; or
  • the mark was descriptive under 7(1)(c); and if so,
  • the mark had acquired distinctiveness through use under Article 7(3).

The OHIM examiner rejected the application on the basis of Article 7(1)(b) and (c) and ruled that the applicants had not established distinctiveness through use. The Board of Appeal dismissed the appeal (based on Articles 7(1)(c) and 7(3)).

Audi appealed to the General Court and argued TDI should be registered on the bases that:

  • the sign TDI had been the subject of a number of national registrations and an international registration;
  • the applications of two other car manufacturers for CDI and HDI had been accepted without proof of acquired distinctiveness.

Analysis

Article 7(1)(c)


The court held that ‘TDI’ is an abbreviation of ‘turbo diesel injection’ or ‘turbo direct injection’. This is an essential characteristic of the goods applied for. The Board of Appeal was thus correct in holding that the ground under Article 7(1)(c) applied.

Audi's argument that TDI had been registered elsewhere was irrelevant as OHIM had to apply its own test. As for any registrations for CDI and HDI (for which the public would not view them as acronyms for a description of a characteristic of vehicles), these were different marks and the position was not comparable.

Article 7(3)

The applicants relied, among other things, on market share information relating to Denmark, The Netherlands, and Ireland, advertisements, the registration of the mark in certain member states, some sales figures, and the fact that each vehicle has TDI affixed to its boot. It also argued that it only had to show acquired distinctiveness among a significant amount of the EU population.

The General Court noted that Article 7(3) requires that:

  • at least a significant proportion of the relevant public identifies the products or services concerned as originating from a particular undertaking because of the mark;

  • evidence must be provided which proves distinctiveness in all member states in which the mark applied for did not, ab initio, have distinctive character.

The court emphasized that the test for acquired distinctiveness is not the same as that for reputation under Article 9(1)(c). If this were not so, a descriptive mark could be registered even if it had acquired distinctiveness only in a substantial part of the EU, even though it would remain descriptive in other parts of the EU. This is contrary to Article 7(2) and the unitary nature of a CTM.

As the court had held that TDI was descriptive in all 15 member states (the number in the EU when the mark was applied for), Audi was required to prove acquired distinctiveness in all 15. However, Audi's market share evidence in relation to Denmark, The Netherlands, and Ireland was not sufficient to show that the relevant public perceived TDI as originating from a particular undertaking in those three member states, let alone in the other 12. The court explained that data relating to market share do not show that the public perceives a descriptive sign (such as TDI) as an indication of commercial origin. Acquired distinctiveness must be as a result of the use of the mark ‘as a trade mark’ (ie use indicating that the product or services originated from a particular undertaking).

Practical significance

This appeal related to Audi's application for TDI filed in 2003. Audi had applied to OHIM for the identical mark in 1996. That application also went up to the General Court (then the Court of First Instance). In both cases, Audi's numerous arguments were shot down. It appears that Audi's determination may be driven by the fact that other registries have registered TDI and that a couple of other car manufacturers have CDI and HDI registered as CTMs. However, as mentioned above, those arguments were found to be irrelevant.

Assuming there is no successful appeal to the CJEU, if Audi wants to have TDI registered as a CTM, it is probably going to have to educate the public more than it has done to date that TDI is as synonymous with Audi as ‘Vorsprung durch Technik‘ and ‘quattro’. Such an educational programme will have to be done through substantial and considered marketing throughout the EU for a sustained period. Whether it can succeed if it applies for TDI again, even after such a campaign, will depend on the evidence it adduces next time and what competitors have been doing in the meantime.

One point of interest is the court's assessment of Audi's advertising which was submitted in support of its application. The court upheld the Board of Appeal's view that the use of TDI was not ‘as a trade mark’ but to describe a characteristic of the vehicles. The sign TDI always appears in the adverts with another mark belonging to the applicants (eg Audi, Volkswagen, or VW). The court noted that advertising in which a sign devoid of distinctive character appears alongside distinctive marks does not constitute proof that the public perceives the sign as an indication of origin. This appears to contrast with Nestlé v Mars (Case C-353/03), the ‘Have a Break’ case, where the Court of Justice held that the distinctive character of a mark may be acquired in consequence of the use of that mark as part of or in conjunction with a registered trade mark.

Based on the General Court's comments in this decision, it would not be obvious how a car manufacturer could educate the public that a set of initials and/or numbers indicating a sub-category of a model of a car is an indication of origin, if the manufacturer cannot also use its usual indicators of origin (ie the name of the manufacturer (eg Audi) and/or the model (eg TT)) in such advertising. However, it is likely that the General Court was making a point about the quality of evidence submitted, rather than creating a principle of law. To educate consumers that TDI is an indication of origin of Audi and/or Volkswagen would almost certainly need these initials to be used alongside at least one of Audi's or Volkswagen's main marks.

Perhaps another potential difficulty with Audi's application for TDI is that TDI is used on both Audis and Volkswagens. Furthermore, a proportion of the relevant public probably does not know that the Volkswagen Group owns Audi (among other well-known car brands). Therefore, even those people who pay sufficient attention to the TDI sign may therefore believe that, because TDI is used on more than one type of car, it is thus not distinctive of one undertaking.