Friday, 30 November 2012

November's JIPLP: valuing innovation

Amid all the recent excitement in the field of intellectual property in the international and domestic spheres, I forgot to post news of the publication online of the November 2012 issue of JIPLP, the contents of which you can peruse here. Over 95% of JIPLP subscribers take the online edition, either by itself or in conjunction with with the hard copy -- and even non-subscribers can purchase limited-time access to JIPLP's contents.

There's a guest editorial in the November issue, by long-standing JIPLP editorial board member and Bristows LLP partner Pat Treacy, who writes:
Valuing innovation

When Jeremy invited me to act as guest editor of JIPLP, I knew immediately what subject I would discuss: the ever evolving IP–competition interface. Virtually all textbooks on competition law include at least a few pages on the ‘tension’ between IP and competition law. Strangely, the reverse is not always true. In the coming months IP professionals can anticipate developments in competition law which may illuminate the scope of IP protection and may question how innovation is valued and rewarded through the IP system.

Pharmaceuticals are first to shine. In late July the European Commission sent statements of objections to Lundbeck and various generic companies, alleging that they had concluded anticompetitive patent settlement agreements. Similar statements of objections were sent to Servier and further generic companies a few days later. Public details are sparse, but the outline allegation is well known: the proprietor of a patent allegedly agrees to share its monopoly rents with a potential infringer through so-called ‘reverse payments’ rather than risk losing in litigation. As yet, there is no precedent in the EU for such cases. Across the Atlantic there has been no shortage of precedent, often conflicting.

In April, the Court of Appeals for the 11th Circuit ruled that even where a patent proprietor was ‘likely’ to lose at trial, a reverse payment settlement would be immune from antitrust attack so long as its exclusionary effects fell within the exclusionary potential of the patent. The court commented that even a patentee likely to prevail has an incentive to settle rather than gamble in litigation, and concluded that it makes little policy sense to guess what a court would have decided if the case had gone to trial. In July, the Court of Appeals for the Third Circuit took the contrary view. It suggested treating any payment to a patent challenger by a patentee as prima facie a restraint of trade. The US Federal Trade Commission (FTC) supports the view of the Third Circuit. There is now speculation that the US Supreme Court may step in to resolve the varying approaches of the Appeals Courts.

Next on stage is mobile telephony and the so-called ‘patent wars’ between new-comers, including Apple and others, and more established players such as Nokia and Motorola. As smartphones took off, various patent infringement actions were launched to persuade new entrants to conclude licences, relying on the essential patents that support mobile telephony standards. The patentees made the usual requests for relief—including injunctions. The competition authorities then took an interest.

In March 2011, the FTC published a report ‘The Evolving IP Marketplace—Aligning Patent Notice and Remedies with Competition’ which was critical of injunctions as a remedy for infringement of standards essential patents. Not to be outdone, earlier this year the European Commission launched investigations against Motorola and Samsung for alleged abuses of dominance, including the seeking of injunctions. The acquisition by Google of Motorola's patent portfolio was also examined in merger proceedings in Europe and the USA. The national courts in Europe are grappling with how to value licences of standards essential patents; with the meaning of ‘fair, reasonable, and non-discriminatory terms’ (FRAND) (alongside the more usual issues of validity and infringement); and with the circumstances in which they will grant injunctions. The media is gripped by an unusual interest in patent law—and its unruly sibling, competition law.

In a perfect world, questionable patents would not be granted; questions of infringement would easily be resolved; all licensees would be willing; all licensors would be generous and negotiations smooth and efficient; courts and regulators would be omniscient; and the valuation of innovation would be straightforward with appropriate compensation precisely calibrated. In the real world, things are not so simple. Information shortfalls exist; transaction costs are high; and innovation has real worth even when the IP which protects it is imperfect—but it is difficult to calculate and attribute that value, and to know when innovation should be shared, irrespective of IP rights.

The competition interest in the current cases highlights imperfections in the IP system, while it is unclear that competition law has perfect or practical answers. Nevertheless, given the supra-national reach of European competition law, and similar developments in the USA and elsewhere, these cases are important, not simply because competition rules may constrain the exercise of IP rights, but also because these cases explore fundamental questions about the value of innovation, how that value is realized and by whom. Perhaps now it is time for IP texts to start including more (or longer) chapters on competition law.

Friday, 23 November 2012

Thomas Terrell and the Secret Santa

This year's Festive Feature piece, "The Incredible Affair of the Secret Santa", is now available online. Another masterpiece from the fertile pen of Christopher Wadlow, this sumptuous concoction of painstaking research and febrile fancy opens thus:
"What could be more seasonable than a good old-fashioned Victorian melodrama, complete with a beautiful and long-suffering young heroine, an insufferably priggish young hero, two vile and villainous parliamentarians (one a vulgar Tory parvenu, the other a vicious Liberal aristocrat), a chorus of rude but honest East End mechanicals and a sentimental Russian nihilist with a talent for conjuring rubies and emeralds out of thin air? And what could be more appropriate for this Journal than an exclusive preview of just such a melodrama, from the pen of Thomas Terrell QC, of Terrell on the Law of Patents, no less?"
The author, Professor of Law at the University of East Anglia and author of Passing Off: Unfair Competition by Misrepresentation, is a member of the JIPLP editorial board.

This item, and others, can be accessed via JIPLP's Advance Access facility, here.

Thursday, 15 November 2012

In the news: secondary protection for innovation

Today's publication of the judgment of the Court of Justice of the European Union (CJEU) in Case C-180/11 Bericap Záródástechnikai Bt. v Plastinnova 2000 Kft., Szellemi Tulajdon Nemzeti Hivatala intervening, gave some high-profile coverage to utility model protection -- a species of secondary protection for innovation which has yet to be harmonised in the European Union, despite its manifest potential and, where the right exists at national level, substantial value.

Secondary protection of innovations is generally achieved through a registration system in which the innovation in question -- which may well be eligible for a full-scale patent -- is required to possess criteria of novelty and inventiveness, but is not not subjected to the laborious, slow and expensive examination process as a precondition of grant.  Accordingly, while the legal mechanisms that provide for secondary protection (petty patents, utility models, etc) do not confer the same level of presumptive validity as a fully-fledged patent, they can be a valuable market tool for businesses, especially SMEs, which may not have the capital or the patience to secure and exploit a full patent.  This device is also attractive for businesses that do not require protection beyond their own local markets.

Secondary protection of innovations is the subject of JIPLP's inaugural seminar to celebrate its cooperation with leading German intellectual property periodical GRUR Int.  Details of this seminar may be found on an earlier blogpost here.  Bookings for this free event are already coming in and we are hoping to provide an occasion to remember. Do join us!

Late news: CPD points will be provided ...