More books in search of a review

JIPLP has received four more books for review. If you are interested in reviewing one of them, please email Sarah Harris at sarah.harris@oup.com and tell her of your interest, ideally by close of play on Wednesday 2 September.

If you are not yet known to JIPLP as a contributor or reviewer, do send us your CV or tell us why you think you are the right person to review the book you are are requesting. Don't forget: if you review the book, you get to keep it -- but if you don't review it in a timely manner, we ask for it back so that it can be reviewed by someone else.

These are the books:

Title: Managing the Legal Nexus Between IP and Employees: Domestic and Global Contexts
Editors: L Oswald and M Pagnattaro
Publisher: Edward Elgar Publishing

The explosion in intellectual capital coincides with a growing understanding of the importance of human capital to the firm. This book examines the pressing legal issues that arise at the intersections of intellectual property law, employment law, and global trade, such as the use of employment contracts to protect intellectual property, ownership of intellectual property created by the employee, officer liability issues relating to infringement, post-employment confidentiality and non-compete agreements, and inadvertent or deliberate misappropriation or theft of trade secrets.

Further details are available from the book's web page here.

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Title: A User’s Guide to Trade Marks and Passing Off (4th edition)
Authors: N Caddick QC and B Longstaff
Publisher: Bloomsbury

... [F]ocuses on the current law relating to the protection of registered trademarks and certain related rights. This includes registered trade marks, well-known trade marks, certification marks, collective marks, protested geographical origin indicators, international conventions, and Passing off.

There is clear explanation of the underlying principles and concepts with a breakdown of procedural matters, thereby helping to tie the different areas together.

Further details are available from the book's web page here.

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Title: International Handbook of Social Media Laws
Author: P Lambert
Publisher: Bloomsbury

[This] is the only title currently available to address social networking laws at an international level. It clearly explains each of the main legal issues and developments across various legal jurisdictions to ensure that a company's social media presence can be fully compliant with the law of each country.

It covers all aspects of the law from a UK and international perspective by offering country report chapters that highlight the legal issues, cases and rules in each jurisdiction.

Further details are available from the book's web page here.

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Title: IP and Genetically Modified Organisms: A Convergence in Laws
Editors: C Lawson and B Charnley (eds)
Publisher: Ashgate

Taking a global viewpoint, this volume addresses issues arising from recent developments in the enduring and topical debates over Genetically Modified Organisms (GMOs) and their relationship to Intellectual Property (IP).

The work examines changing responses to the growing acceptance and prevalence of GMOs. Drawing together perspectives from several of the leading international scholars in this area, the contributions seek to break away from analysis of safety and regulation and examine the diversity of ways the law and GMOs have become entangled.

This collection presents the start of a much broader engagement with GMOs and law. As GMO technology becomes increasingly more complex and embedded in our lives, this volume will be a useful resource in leading further discussion and debate about GMOs in academia, in government and among those working on future policy.

Further details are available from the book's web page here.

Custom in the UK is required to sustain a passing off case

Author: Giles Parsons (Browne Jacobson LLP)

Starbucks (HK) Limited and Another v British Sky Broadcasting Group PLC and others [2015] UKSC 31 (13 May 2015)

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv132, first published online: August 20, 2015

The United Kingdom Supreme Court has unanimously held that a claimant in a passing off action must have a business with customers within the jurisdiction.

Legal context

The ‘classical trinity’ of elements that a claimant must demonstrate to succeed in a passing off action were set out by Lord Oliver in the Jif Lemon case, Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491: goodwill attached to the claimant's goods or services; a misrepresentation by the defendant that his goods or services are the claimant's goods or services; and finally, damage to the claimant caused by the misrepresentation.

Goodwill is, according to Lord Macnaghten in Commissioners of Inland Revenue v Muller & Co's Margarine Ltd [1901] AC 217, the ‘attractive force which brings in custom’, but the courts in England and Wales also draw a technical distinction between ‘goodwill’ and ‘mere reputation’. Goodwill does not exist in a jurisdiction unless there has been business carried on in that jurisdiction (Anheuser-Busch Inc v Budejovicky Budvar N.P [1984] FSR 413).

However, different approaches have been taken in other common law jurisdictions.

The leading example of this is ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 106 ALR 465, in which the Federal Court of Australia held that, as we now live in a modern world with mass advertising and international commerce,

It is not necessary in Australia that a plaintiff, in order to maintain a passing off action, must have a place of business or a business presence in Australia; nor is it necessary that his goods are sold here. It is sufficient if his goods have a reputation in this country among persons here, whether residents or otherwise, of a sufficient degree to establish that there is a likelihood of deception among consumers and potential consumers and of damage to his reputation.

In that case, the plaintiff failed to demonstrate sufficient reputation in Australia in ‘Healthy Choice’.

ConAgra was cited with approval by the Supreme Court of Appeal of South Africa in Caterham Car Sales and Coachworks Ltd. v Birkin Cars (Pty) Ltd and Another (393/95) [1998] ZASCA 44. In their judgment, the Supreme Court of Appeal said that the correct question to ask was

whether the plaintiff has, in a practical and business sense, a sufficient reputation amongst a substantial number of persons who are either clients or potential clients of his business.

The Supreme Court of Appeal held that extent and locality of the business are still however relevant, as they can determine the scope of the reputation, whether any harm takes place; and as in ConAgra, the plaintiff failed to establish the necessary reputation to found the case.

In Starbucks v British Sky Broadcasting the Supreme Court considered the conflicting jurisprudence, but came to reaffirm the traditional English approach, which requires customers within the jurisdiction.

Facts

The claimants, a Hong Kong-based media group, provided internet protocol television (IPTV) under the names NOW BROADBAND TV and NOW TV. The set-top service was provided in Hong Kong, where it was very popular; in the UK, it was only accessible through YouTube, through the claimants' website and as part of in-flight entertainment.

The claimants had planned to launch in the UK, but were pre-empted by Sky's own NOW TV service. The claimants launched proceedings for trade mark infringement and passing off, which failed in the High Court and the Court of Appeal. The passing off aspect was appealed to the Supreme Court on the basis that the claimants' reputation in the UK was sufficient foundation for a claim in passing off.

Analysis

Lord Neuberger acknowledged the acute significance of this issue in an ‘age of global electronic communication’, and emphasized that ‘it is one of the great virtues of the common law that it can adapt itself to practical and commercial realities’. However, he thought that there was no clear trend away from the ‘hard line’ approach taken in previous English decisions, and emphasized that the law had to balance the competing interests of free competition and unfair competition. Lord Neuberger explained that a claimant who had

simply obtained a reputation for its mark in this jurisdiction in respect of his products or services outside the jurisdiction has not done enough to not justify granting him an effective monopoly in respect of that mark within the jurisdiction.

Part of the foundation for this appears to come from the decision in Maxwell v Hogg (1867) LR 2 Ch 307, in which Turner LJ had said that merely advertising without having commenced selling a product meant that the plaintiff had not provided ‘consideration’ for the ‘monopoly’. It is interesting to see this cited, as the notion of ‘consideration’ had previously been considered irrelevant in passing off; in the fourth edition of his textbook Passing Off: Unfair Competition by Misrepresentation (2011), Professor Wadlow states at paragraph 3-066 that ‘no such concept is relevant in passing off or trade mark law, and Maxwell v Hogg appears to be the only case in which it has been advanced’.

Lord Neuberger also found support for his decision in section 56 of the Trade Marks Act 1994. Section 56 protects well-known trade marks that belong to proprietors that are nationals of countries (other than the UK) which have signed the Paris Convention, and allows such proprietors to obtain an injunction against use in the UK of an identical or similar mark for identical or similar services where the use is likely to cause confusion. Although Lord Neuberger chose not to rule on the point, he saw ‘considerable force’ in the argument that, as Parliament had legislated to protect well-known marks in this way, it was not for the courts to extend the principle to marks which are not well known.

The Supreme Court also chose not to rule on whether a business which has not commenced trading but had launched a substantial advertising campaign could bring a claim in passing off. There is case law in Singapore and in England and Wales which supports the view that such activities could be the foundation of a claim in passing off, but to device that would involve overruling Maxwell v Hogg, and Lord Neuberger refrained from deciding the point.

Practical significance

The Supreme Court's decision is a clear affirmation that to maintain a passing off action in England and Wales one must have a business with customers within the jurisdiction.

This action as a whole has shown how difficult it is to enforce a brand that has little inherent distinctiveness, particularly when no trade has taken place within Europe or the UK.

Where possible, brand owners should choose a brand which is distinctive. Where there is little inherent distinctiveness, developing distinctiveness is vital.

Unless a company can show that it has a mark that is well known in the UK, or that it has business with customers in the UK, it will not have enforceable rights in the absence of a valid registered trade mark.

Here's the new team to steer JIPLP

At the end of November 2015 Jeremy Phillips steps down as Editor of the Journal of Intellectual Property Law & Practice (JIPLP), the journal of which he was the founding editor at its launch exactly ten years earlier.  Jeremy's responsibilities as Editor will be taken over by a fresh, new panel of three editors, all of whom are currently members of the JIPLP Editorial Board. They are (in alphabetical order):

Stefano Barazza

A lecturer in the Faculty of Business and Society, the University of South Wales, Stefano also provides training for the United Kingdom Intellectual Property Office. An Italian-qualified avvocato, Stefano formerly ran his own practice in Udine. A frequent contributor to JIPLP, Stefano, who has also contributed to the IPKat and PatLit weblogs, is particularly interested in patent and trade mark rights.

Eleonora Rosati

Currently Deputy Editor of JIPLP, copyright specialist Eleonora holds a doctorate from the European University Institute, Florence. Well known as a regular member of the IPKat weblog team, she is an Italian-qualified avvocato who practised in the Milan office of Bird & Bird. Eleonora lectures in intellectual property law at the University of Southampton and runs the e-LAWnora consultancy. A regular contributor to the journal, her next article, "Are national courts the addressees of the InfoSoc three-step test?", is co-authored with Sir Richard Arnold.

Marius Schneider

An attorney before the Brussels and Mauritius Bars, Marius heads the IP boutique firm IPvocate, the IP department of Belgian law firm CEW & Partners. An experienced IP litigator, Marius is a member of the EU Observatory on Infringements of Intellectual Property Rights and the immediate past chairman of the European Communities Trade Mark Association Anti-Counterfeiting Committee. Marius is co-editor of Enforcement of Intellectual Property Rights through Border Measures - Law and Practice (Oxford University Press). Marius has already masterminded some JIPLP special issues.

In addition, with the journal continuing to grow in readership and momentum, Sarah Harris (currently the journal's Content Commissioning Editor) is stepping up to shoulder the burden of further editorial and administrative responsibilities. Legally-educated Sarah, who holds an LLM from the University of London, has a vast experience of publishing, both within intellectual property law and beyond it and has been with JIPLP since its inception.

As outgoing Editor, Jeremy wishes his successor team the very greatest of success in continuing JIPLP's adventure in intellectual property publishing, in maintaining its relevance and topicality and in nurturing its unique presence on the social media. He has every confidence that they will improve the journal's breadth of vision and urges everyone to give them their fullest support.

There are a couple of new Editorial Board appointees too. This blog will be announcing them in the course of this week.

The informed user's perception and a design's individual character

Author: Valentina Torelli (Salvador Ferrandis & Partners, Madrid)

Senz Technologies BV v OHIM, Impliva B (Parapluies), Joined Cases T-22/13 and T-23/13, EU: EU:T:2015:310 General Court of the European Union, 21 May 2015

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv136, first published online: August 20, 2015

In a scenario in which the freedom of the designer is limited and the informed user shows a higher level of attention when wishing to buy an umbrella, the General Court held that Senz's highly wind-resistant umbrellas had individual character and deserved to be registered notwithstanding a challenge from invalidity applicant Implivia. That was so even though it had been recognized that some prior art existed in the form of an US earlier patent, but that earlier design of an umbrella produced a different overall impression on the informed user.

Legal context

Article 6(1) of Regulation 6/2002 (the Community Design Regulation) sets out one of the two requirements to afford protection to designs in the EU by defining when a Community design has individual character. This occurs when the Community design produces a different overall impression on the informed user from that conceived by any design which has been made available to the public before either the date of application for registration or of priority of the registered Community design or, where the latter is an unregistered design, before the date it has been disclosed to the public.

Article 7(1) of Regulation 6/2002 provides that a design has been made available to the public for the purposes of assessing a Community design's novelty and individual character if it has been published, exhibited, used in trade or otherwise brought to the public before either the date of application for registration or of priority of the registered Community design or before the unregistered Community design has been disclosed in the EU. There are two exceptions to this rule: first, no account is taken of a disclosure when the design cannot be reasonably known in the normal course of business within the circles specialized in the relevant sector in the EU; secondly, a disclosure does not count when it has been made under an explicit or implicit obligation of confidentiality.

Finally, Article 52 in combination with Article 25 of Regulation 6/2002 grants any natural or legal person the right to apply for the invalidity of a Community design when it does not comply with the legal requirements established in Articles 4 to 9 of the Community Design Regulation, among others when it lacks individual character.

Facts

In 2006 Senz applied to register two Community designs for highly wind-resistant umbrellas, featuring respectively a black and a brown asymmetrical canopy with a beak-like shape and an off-centre shaft in respect of the canopy.

In 2009 Impliva sought to invalidate both of Senz's designs before the Office for Harmonisation in the Internal Market (OHIM) on the basis that they did not meet the legal requirements for registration under Articles 4 to 9 of Regulation 6/2002. In particular Impliva claimed that the contested designs produced the same overall impression on the relevant informed user as that characterizing identical or similar umbrellas, among others, the asymmetrical umbrella covered by US patent No. 5505221, registered on 9 April 1996.

Both the Cancellation Division and the Board of Appeal upheld the invalidity claims, holding that the contested designs did not have individual character. In particular, the Board of Appeal stated that, insofar as in the US designs are known as ‘design patents’ and the USPTO register is one of the most important IP registers in the world, the earlier US patent covering an umbrella similar to those of Senz should have been known within the circles specialized in the EU umbrella sector.

As to the assessment of the individual character of Senz's designs, the Board of Appeal started from the premise that the freedom of the designer was limited. It added that the informed user was deemed to be any person willing to buy an umbrella and showing a relatively high level of attention, especially in respect of the umbrella's basic structure. Therefore, the Board of Appeal concluded, all the designs at issue produced the same overall impression, whether from the perspective of the lateral or the underneath view of the umbrellas: all designs had asymmetrical and beak-like canopies and their distribution of the ribs and proportions of the canopies were similar.

In the joined appeals to the General Court, Senz relied on two pleas in law. First, it contested that the US patent could serve as prior art in the assessment of validity, alleging misapplication of Article 7(1) of Regulation 6/2002. Secondly, it argued that the Board of Appeal misapplied Article 6(1) of Regulation 6/2002, in that its umbrella designs had individual character.

Analysis

The General Court sided with the Board of Appeal in the evaluation of the US patent no. 5505221 as prior art of Senz's Community designs, confirming its interpretation of Article 7(1) of Regulation 6/2002.

The court started from the premise that the earlier patent protected both the asymmetrical umbrella's technicalities and its appearance deriving from its various features. On this basis some prior art was disclosed before the filing of the contested designs, in that the USPTO Register was a reliable source for the specialized circles in the umbrella sector to search for possible earlier conflicting rights. That was even more so, said the court, since in this case the design proprietor was a designer of a wind-resistant umbrella which needed to meet specific technical requirements.

Moreover, Senz failed to substantiate its claim properly. It did not provide evidence that European IP lawyers would disregard the fact that, in the United States, designs are protected in the patent register and that patent searches in that register would not be financially sustainable for individual designer and small companies. In any event, Senz failed to prove that the European umbrella sector was composed of such operators.

Finally, the General Court took the view that, contrary to what Senz argued, although the earlier patent had never been incorporated in a product which was actually marketed, knowledge of the patent could have been obtained within the circles specialized in the umbrella sector by means of online searches in the USPTO Register. This conclusion was even reinforced by the circumstance that the United States is an influencing commercial partner for EU specialized operators of the relevant sector.

Notwithstanding all the above, Senz succeeded in relation to its second plea in law and the General Court annulled the Board of Appeal's decisions while affirming that the two contested designs had individual character according to Article 6(1) of Regulation 6/2002.

The court agreed with the Board of Appeal on the definition of the informed user and on the fact that the freedom of the designer was limited. However, it considered that the three designs of asymmetrical umbrellas produced different overall impressions, especially due to the shape of the umbrellas' canopies.

While Senz's designs were characterized by pyramidal and quasi-pyramidal canopies with bent lateral contours forming an irregular octagon, the earlier patent featured a flat surface in the middle and curved lateral contours forming a regular octagon. Although all designs concerned umbrellas' asymmetrical and unusual shapes, the informed user may still be able to perceive the differences between them. Indeed, the informed user may be deemed to recognize their variations despite the fact that all designs shared the same characteristic.

The court then found that the off-centre shaft was not the dominant feature of all the conflicting designs and that it could not have any bearing in establishing that the designs created different overall impressions. Additionally, the perception of the umbrellas from the underneath perspective should not be taken into account, in that design rights protect the appearance of a product as it has been represented in the design, not those perspectives which have not been included in it.

Finally, the court rejected the argument that, inasmuch as the canopies' shapes had been dictated by technical constraints in order to provide the umbrellas with an aerodynamic structure, they were to be disregarded in the comparison of the overall impression. When the appearance of a product is also aimed at fulfilling a technical function it can be nonetheless afforded protection under Regulation 6/2002.

Practical significance

The General Court explained here how the assessment of a design's individual character must be undertaken. What is relevant an identification of the design's features which determine the overall impression capable of influencing the informed user's perception. It follows that, for the purposes of establishing the design's individual character, the comparison between similar designs must entail solely those parts which constitute the appearance of the product as resulting from the design's representation. It therefore cannot be argued that the new and unusual features of a design can be used to prohibit competitors to develop further versions of those features which show significant differences, as in the present case. In such a situation, the General Court clarified that the saturation of the state of the art cannot serve to deny that the informed user can recognize the differences of the conflicting designs insofar as they share a single characteristic feature.

© The Author (2015). Published by Oxford University Press. All rights reserved.

Books in search of a reviewer

JIPLP has received four more books for review. If you are interested in reviewing one of them, please email Sarah Harris at sarah.harris@oup.com and tell her of your interest, ideally by close of play on Wednesday 2 August.

If you are not yet known to JIPLP as a contributor or reviewer, do send us your CV or tell us why you think you are the right person to review the book you are are requesting. Don't forget: if you review the book, you get to keep it -- but if you don't review it in a timely manner, we ask for it back so that it can be reviewed by someone else.

These are the books:

Title: International Copyright Law: US and EU Perspectives
Authors: Jane Ginsburg and Edouard Treppoz
Publisher: Edward Elgar Publishing

"International copyright law is a complex and evolving field, of manifest and increasing economic significance. Its intellectual challenges derive from the interlocking relationships of multiple international instruments and national or regional laws and judgments.

This ground-breaking casebook provides a comprehensive and comprehensible account of international copyright and neighbouring rights law, from the cornerstone of the 1886 Berne Convention and the Rome Convention of 1961, through to the 1994 TRIPS Agreement and the 1996 and later WIPO Copyright Treaties. It examines how national laws have implemented the international norms, and explores the issues these sources have left ambiguous or unresolved".

Further information concerning this title can be obtained from the book's website here

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Title: Guide to Intellectual Property: What is it, how to protect it, how to exploit it
Author: Stephen Johnson
Publisher: The Economist

"IP accounts for an estimated $5trn of GDP in the US alone. It covers patents, trademarks, domain names, copyrights, designs and trade secrets. Unsurprisingly, companies zealously guard their own ideas and challenge the IP of others. Damages arising from infringements have fostered a sizeable claims industry. But IP law is complex, and the business, financial and legal issues around it are difficult to navigate. Court decisions and interpretation of IP laws can be unpredictable, and can dramatically change the fortunes of businesses that rely on their IP - as demonstrated in the pharmaceutical industry's battle with generic drugs".

Further information concerning this title can be obtained from the book's website here

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Title: Innovation & IP: Collaborative Dynamics in Africa
 Editors: J de Beer and others
Publishers: UCT Press

"In the global knowledge economy, intellectual property rights - and the innovations they are meant to spur - are important determinants of progress. But what does this mean for the nations of Africa? One view is that strong IP protection can facilitate innovation in African settings. Others say that existing IP systems are simply not suited to the realities of Africa. This book, based on case studies and evidence collected across nine countries in Africa sheds new light on the complex relationships between innovation and intellectual property. It covers findings across many sites of innovation and creativity, including music, leather goods, textiles, cocoal, coffee, auto parts, traditional medicine, book publishing, biofuels and university research, and presents a picture in which innovators share a common appreciation for collaboration and openness".

Further information concerning this title can be obtained from the book's website here

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Title: Trade Marks and Free Trade: A Global Analysis 
Author: Lazaros Grigoriadis
Publisher: Springer

"This book is the first study to examine the issue of the legality of parallel imports of trademarked goods under the most important legal systems on an international level, namely under GATT/WTO law, EU law and the laws of the ten major trading partners of the European Union. ... 

The book is the first legal study to welcome, in light of economic analysis, the approach adopted by GATT/WTO law and EU law to the question of the geographical scope of the exhaustion of the trademark rights rule. It includes all the case law developed on an international level on the issue of the legality of parallel imports of trademarked goods and a comprehensive overview of the scientific literature concerning the phenomenon of parallel imports in general and the legality of parallel imports of trademarked goods. All the views expressed in the book are based on the European Court of Justice’s most recent case law and that of the courts of the most important trading partners of the European Union".

 Further information concerning this title can be obtained from the book's website here 

Good faith belief of patent invalidity not a valid defence to induced infringement

Author: Kevin Winters (Trainee Solicitor Shepherd and Wedderburn, Edinburgh)

Commil USA, LLC v Cisco Systems, Inc 575 U.S. __ (2015)

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv131, first published online: August 20, 2015

The United States Supreme Court has held that it is no defence to induced infringement that the alleged infringer had a good faith belief that the patent was invalid.

Legal context C

Commil USA, LLC (‘Commil’) claimed that Cisco Systems Inc (‘Cisco’) had induced other parties to infringe Commil’s rights under 35 U.S.C. §271 (b) of the Patent Act through the selling of infringing wireless equipment to other parties.

Facts

Commil USA, LLC, originally brought proceedings against Cisco Systems, Inc, for both direct and induced infringement of its patent for a method of implementing short-range wireless networks. Cisco Systems, Inc, made and sold wireless equipment.

In the District Court, Cisco objected to the instruction given to the jury concerning Cisco's alleged induced infringement. The court directed the jury that they could find Cisco guilty of induced infringement if “Cisco actually intended to cause the acts that constitute … direct infringement and that Cisco knew or should have known that its actions would induce actual infringement”.

After the jury found Cisco liable for induced infringement, the US Supreme Court gave its ruling in Global-Tech Appliances Inc v SEB SA 563 US __ (2011), holding that in an action for induced infringement it must be shown that the alleged inducer knew that induced acts were infringing. Cisco therefore argued that the District Court's instruction to the jury was wrong, as it did not indicate that knowledge of the inducement was necessary. Cisco appealed the decision to the US Court of Appeals for the Federal Circuit (CAFC) which held that the District Court had acted erroneously in its instruction to the jury. This component of the case is to be the subject of a new trial, with the knowledge element to be added to the jury's directions.

At issue before the Supreme Court was the District Court's refusal to allow Cisco to adduce evidence that it had a ‘good faith’ belief that Commil's patent was invalid. The CAFC considered that the District Court erred in finding Cisco's evidence inadmissible, on the basis that such ‘evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement’. The Supreme Court agreed to consider the question whether a good faith belief in invalidity was a defence to induced infringement.

Analysis

The Supreme Court held that Cisco's ‘good-faith’ belief in the invalidity of Commil USA's patent was no defence to a claim of induced infringement, on the following grounds:

Infringement and invalidity are separate issues

The court pointed out that infringement and validity under the Patent Act 35 U.S.C. are treated as separate issues: non-infringement and invalidity are distinct defences which are available to defendants to raise either individually, or together. The court took the view that, if it were to interpret the terms of the legislation so to allow a defence of belief in patent invalidity, it would combine the two issues.

Preserving the presumption of patent validity

There was concern expressed that, if the court allowed a good-faith belief of invalidity to exist, this would destabilize the presumption in US patent law that a patent is valid. This presumption removes the need for plaintiffs to prove that their patent is valid before they bring a claim. If belief in invalidity was to be a defence to induced infringement, the court felt that the presumption of validity would be lessened, allowing a defendant to avoid liability for infringement if it could demonstrate a reasonable belief that the patent was invalid. This was deemed to be contrary to the ‘clear and convincing’ standard set by Congress that must be met to rebut the presumption.

The need to avoid negative consequences

The court believed that the creation of a defence of belief in invalidity would have a negative impact on litigation. The availability of the defence for a claim of infringement wold incentivize would-be infringement inducers to argue a theory of invalidity, the truth of which a court would find more difficult to ascertain than matters concerning patent infringement. The result of this would be that those accused of inducing infringement would be able to rely more easily on a defence of belief of invalidity, more than non-infringement. The court was also wary of the impact such a defence would have on juries, requiring the separation of a belief of patent validity from validity itself.

Practical concerns

It was pointed out that alleged inducers of patent infringement, who believe that a patent is invalid, already have a variety of ways to obtain evidence of this. They can approach a federal court to declare the patent invalidity, raise the affirmative defence of invalidity, pursue ex parte re-examination of the patent by the Patent and Trademark Office or seek inter partes review of the patent at the Patent Trial and Appeal Board.

Practical significance

This case sends an important message to would-be infringement inducers of patents: ignorance of patent validity is no defence to a claim of induced infringement. The court appears to have no appetite to create new avenues to establish patent invalidity beyond those already available, nor to disrupt the underlying presumption of validity. Organizations involved in the creation and selling of products and services that risk inducing patent infringement cannot rely on their belief that a patent is invalid—they will have to challenge the validity of the patent head-on if they are to escape liability for inducement.

The court then made brief comments in respect of patent trolls, and their often frivolous claims of patent infringement. While alleged inducers may not be able to rely on a defence of a belief in patent invalidity, the court did encourage them to use the avenues available to certify invalidity. Furthermore, it also emphasized the role of the district courts in sanctioning attorneys that raise frivolous claims, and award attorney's fees in certain circumstances.

This decision appears to have either raised an inconsistency in the court's jurisprudence, or qualified the law on knowledge and patent infringement. In Global-Tech, the court held that in an action for induced infringement of a patent, a defendant must know that its acts constitute infringement. However, in the present case, the Supreme Court held that the knowledge element for induced infringement concerns infringement and not validity, as such a good faith belief that a patent was invalid did not vitiate knowledge of induced infringement. The question arises: how is an inducer who believes a patent to be invalid, to know that what it is doing will be patent infringement? Given that it is unlikely that the Supreme Court will answer this question in the near future, alleged inducers would be well advised to ensure a patent's invalidity to avoid being embroiled in a claim for induced infringement.

A new private copying law for Portugal

Author: Pedro Malaquias

The Portuguese Assembly of the Republic (AR) overcame a presidential veto and confirmed the approval of amendments to the Private Copying Law, updating the selection of products that are levied and modernizing the system.

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv128, first published online: August 5, 2015

Legal context

A private copying exception is provided under Article 81(b) of the Author's Right and Neighbouring Rights Code (Decree-Law 63/85, of 14 March, last amended by Law 32/2015, of 24 April). In return, Article 82 establishes a levy compensation system, which is further regulated by a separate bill.

The levy has been in place since 1998 in accordance with Law 62/98, of 1 September, with the amendments introduced by Law 50/2004, of 24 August. It applied to blank media and analogue equipment whose sole or primary purpose was the fixation and reproduction of works. Despite successive attempts to update the law in accordance with social, technological and economic developments, no amendment to the bill had been approved since 2004.

To become law, a decree must be approved by the AR and promulgated by the President of the Republic (PR). However, the PR can opt to exercise a right of veto and seek reconsideration of the Act. In that situation, the AR can confirm its vote by an absolute majority of the Members of Parliament (MPs) in effective office, in which case the PR must enact the legislative Act.

Facts

In August 2014, the Portuguese Government approved a proposal to amend Portugal's Private Copying Law. Following several controversies, including citizens' petitions and disagreements between the two government parties, the final text of the law was approved by the AR in February 2015, with the supporting votes of the coalition parties (with the exception of two MPs from the junior coalition partner, who voted against the proposal).

On 31 March, the PR sent the decree back to the AR, refusing to promulgate it. The reasoning behind the refusal was as follows: (i) there was a need to achieve an adequate balance between authors' rights to fair compensation and consumers' rights to access digital economy goods and services in fair market conditions; (ii) the ongoing debate at European Union (EU) level and the need for a common regulation to avoid market imbalances and disparities, which, in a globalized economy, could result in an increased acquisition of goods and services abroad to the detriment of all the national stakeholders; (iii) account had to be taken of the recent decisions of the Court of Justice of the European Union (CJEU); (iv) as argued by the Portuguese Association for the Defence of the Consumer, which lobbied against the bill, the bill was considered obsolete, ineffective and disproportionate, failing to achieve a clear distinction between legitimate and illegal copies and receiving insufficient debate and finally (v) account had to be taken of the rectitude and efficiency of the law, which imposes a levy independently of the use that is made of the equipment by the consumers and the potential effects of such a decision on the development of digital economy, an area in which Portugal lags behind other EU countries.

Despite the veto, the AR confirmed its vote by an absolute majority of MPs. As a result, the PR was forced to promulgate the law, but not without restating his disagreement in the accompanying message sent to the AR.

Analysis

Law 49/2015, of 5 June, came into force on 5 July 2015. It updates the list of products that are levied. In particular, devices with capability to store digital copies, including MP3 players, USB sticks, memory cards and internal and external hard drives (even when part of a mobile phone or a set-top box) will start to be levied.

The storage capacity and primary function of the equipment were taken into account in determining the levies, which range from €0.5 to €20.00. The table establishing the levied equipment and the value of the levies will be reviewed every two years.

The responsibility for payment lies with the first acquirer of a device. Responsibility for the collection and delivery lies with the manufacturers and importers. If the annual collected levies are above €15 million, the additional collected value shall be allocated to a cultural development fund managed by the state. This adds to the obligation to which AGECOP (the collective society for the management of private copy) is subject to of retaining 20% of the collected amounts for investment in cultural activities and in the promotion of public awareness and research of copyright-related matters.

After accounting for costs of collection and distribution (up to 20%), AGECOP will distribute the residual sums as follows: in remunerations arising from photocopies, 50% for collecting societies representing authors and 50% for collecting societies representing publishers; in remuneration arising from supports typically used for the reproduction of audio and audiovisual works, 40% for collecting societies representing authors, 30% for collecting societies representing artists and performers and 30% for collecting societies representing music and video producers. No reasoning was presented to justify the different percentages attributed to authors on the one side and artists, performers and music and video producers on the other.

The bill also imposes higher standards of governance, financial management, transparency and reporting obligations to AGECOP and its associated Collective Management Organizations (CMOs). Among these obligations is the need for AGECOP to include in its bylaws the criteria for the distribution of the equitable remuneration between the members of its associates, including the methods of distribution and payment to beneficiaries that are not registered in the CMOs. These criteria must take into account, inter alia, studies conducted by the CMOs in respect of the nature of the works reproduced as well as the private copying behaviour of the Portuguese population. These studies, the distributed incomes and the criteria used for the distribution must be published annually.

Finally, the law reforms the list of exemptions from private copying remuneration. In addition to equipment used to support people with a disability and to equipment acquired by audiovisual communication bodies or by producers of phonograms or videograms for their own productions, the bill exempts equipment and media for export as well as equipment and media acquired by natural or legal persons in the following cases: where their main activity is the protection of movable cultural heritage; professional use; acts intended exclusively for clinical use, public missions of defence, justice, internal security and scientific research, as well as the guarantee of accessibility for disabled people. The reference to legal persons is disturbing, as it seems to widen the scope of the private copying exception in an inadmissible way taking into account the wording of Article 5(2)(b) of the InfoSoc Directive.

Independently of theoretical discussions on the need to compensate authors as a result of private copying, the fact is that, if a compensation scheme is established, it does not make sense to ignore devices that are used widely for such a purpose. In a law that aims to be up to date, the non-inclusion of cloud services seems to be the most striking omission. Still, if observed by the legislative power, the obligation to review the levies' table of charges every two years will avoid similar omissions.

Unfortunately, the approved decree does not amend the Author's Right and Neighbouring Rights Code. Accordingly the opportunity to clarify that the private copy must result from a lawful copy (see CJEU, ACI Adam, C-435/12, EU:C:2014:254) was missed. This would be of particular importance as courts in Portugal have interpreted the private copying clause in an extensive manner (see João Pedro Quintais, ‘Dr Strangelaw, or how Portugal learned to stop worrying and love P2P’, JIPLP (2013) 8 (3)).

Further, the timing of the law is open to criticism. On the one hand, it comes too late, as equipment used for private copying did not generate fair compensation for authors for more than ten years. Arguably, the increase in the use of licensed copies via streaming services and e-markets has reduced private copying activities and it is therefore up for discussion if the prejudice to the right holder is nowadays more than minimal. In addition, with the pending revision of the EU copyright framework, it is possible that this issue will need to be reopened.

Practical significance

After successive attempts and more than a decade since the previous amendment to the private copying law, the Portuguese legislation finally takes into account those devices that are more commonly used for private copying. This will contribute to reverse the decline in the collection and distribution of private copying compensation.

Additionally, the transparency of the system will increase as a result of the obligations imposed to AGECOP and its associates. In particular, the studies on private copying may bring to light new and thought-provoking information.

Finally, it will be interesting to analyse a year from now whether the prices of the levied equipment suffered any increase, considering that this was one of the major arguments raised by consumer associations and general public opposing the revision of the law.

Copyright protection for technical drawings in the Commonwealth Caribbean

Author: Eddy Ventose (Faculty of Law, University of the West Indies)

Gold Rock Corp Limited v Nylund Hylton (The Bahamas) [2015] UKPC 17 20 April 2015

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv130, first published online: August 5, 2015

The Privy Council rules that technical drawings of septic tanks are copyright protected in the Bahamas.

Legal context and facts

The principal issue raised this case was whether a technical drawing containing details of a septic tank was capable of protection under the Copyright Act (Chapter 323) of the Commonwealth of the Bahamas. Gold Rock Corp Ltd and Del Zotto Products of Florida Inc (the appellants) are in the business of manufacturing concrete septic tanks. The origin of the drawing is a technical drawing created by the appellants for a 900-gallon septic tank. One of Gold Rock's employees then used that drawing to create a technical drawing for a 950-gallon septic tank (LAD5). Mr Nylund Hylton, a former employee of Gold Rock, acquired intimate knowledge of the appellant's mould for making septic tanks; and he made sketches and took photographs that he took away with him when he left. The trial judge found that (1) Hylton had direct access to Gold Rock's technical drawings, including the LAD5; (2) based on the overwhelming similarities between that drawing and LAD5 (including the reproduction of spelling errors) the defendant's drawing (HC8) was a copy of LAD5; (3) Hylton was the only link between LAD5 and HC8. As a result, the trial judge concluded that Hylton was the person who had infringed the copyright in LAD5 by preparing or giving instructions for the preparation of copies of LAD5. In other words, it was a finding of direct copying by Hylton of the technical drawing itself. The Court of Appeal of the Bahamas, reversing the decision on the trial judge, held the technical drawings did not constitute ‘artistic works’ as defined in section 2(1) but fell within the definition of ‘design of a useful article’, found in section 2(3), because ‘the plans would be a design of a useful article without any artistic features capable of existing independently of the utilitarian aspect of the article’. The appellants appealed to the Judicial Committee of the Privy Council (‘Privy Council’ or ‘Board’).

Analysis

The Opinion of the Privy Council

The Privy Council noted that the first issue was whether LAD5 was capable of being protected by copyright in the Commonwealth of the Bahamas. This, in its view, turned on the interaction of four parts of section 2 of the Copyright Act. Section 2(1) defines ‘artistic works’ as including ‘two-dimensional and three-dimensional work of fine, graphic and applied art, photographs, prints and art reproductions, maps, globes, charts, diagrams, models, architectural plans and technical drawings’. Under Section 2(1) ‘“useful article” means an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or convey information and an article that is [not] normally a part of a useful article is considered a “useful article”’. Section 2(1) states that ‘the terms “including” and “such as” are illustrative and not limiting’. Section 2(3) adds:

The term ‘artistic works’ as defined in subsection (1) shall include works of artistic craftsmanship in so far as their form but not their mechanical or utilitarian aspects are concerned; and the design of a useful article, as defined in this section, shall be considered an artistic work only if, and only to the extent that, such design incorporates artistic features that can be identified separately from and are capable of existing independently of, the utilitarian aspects of the article.

The Privy Council explained that it was clear that LAD5 is a technical drawing and therefore fell within the primary definition of ‘artistic work’ unless it was excluded, either wholly or partly, by section 2(3) which was intended to widen the scope of the definition of ‘artistic works’ in section 2(1).

That section does not in any way limit the copyright protection afforded to ‘technical drawings’ as ‘artistic works’ in section 2(1). The Board explained that, whatever the word ‘artistic’ meant, a work of artistic craftsmanship was a three-dimensional physical artefact (such as a piece of furniture or jewellery) rather than a drawing of such a work. In its view, this colours the remainder of the subsection; and that a ‘useful article’ was likewise a three-dimensional physical artefact. A technical drawing, the Privy Council explained, which gave instructions about how to make such an artefact was not itself a ‘useful article’, not least because its function was merely to convey information about how to make it. It further explained that the ‘design’ of a useful article was a reference to the physical aspects of the article itself, rather than a technical drawing conveying instructions about how to make it. Consequently, the Board concluded that other interpretation would mean that it was almost impossible for any technical drawing to be protected by copyright, even though technical drawings were specifically included in the primary definition of ‘artistic works’. It further held that to interpret section 2(3) as cutting down the scope of the primary definition of ‘artistic works’ ran contrary to the explicit instruction in the Copyright Act that the word ‘including’ was not limiting.

Since the Court of Appeal relied on definition of ‘design of a useful article’ in section 2(3) to hold that ‘the plans would be a design of a useful article without any artistic features capable of existing independently of the utilitarian aspect of the article’, and because the respondent's attorney relied on the definition of ‘design’ in section 30(1) of the Industrial Property Act (Chapter 324), the Privy Council had to address this aspect in its judgment. Section 30(1):

In this Act the expression ‘design’ shall mean features of shape, configuration, pattern or ornament of an article or features of pattern or ornament applicable to articles in so far as such features appeal to and are judged solely by the eye.

The Board was of the view that this definition was clearly referring to physical aspects of a three-dimensional artefact: in short ‘features of … an article’. In addition, the purpose of the Industrial Property Act was to confer design copyright on three-dimensional artefacts, not on drawings of artefacts. The Privy Council explained that the more limited scheme of protection under the Industrial Property Act was consistent with a general legislative concern to prevent copyright from becoming the means of acquiring a monopoly over a manufacturing technique or a manufactured article, which would not qualify for (in any event much shorter) patent protection. With this explanation, the Board reasoned that far from supporting the respondent's case, the definition in section 30(1) undermined it.

The Privy Council buttressed its reasoning by reference to American case law interpreting section 101 of the US Copyright Act 1976, which defines ‘pictorial, graphic and sculptural works’ as including technical drawings but also provide that:

the design of a useful article … shall be considered a pictorial, graphic, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.

The Board cited Imperial Homes Corp v Lamont (1972) 458 F 2d 895 where the Court of Appeals for the Fifth Circuit considered the application of section 101 to architectural drawings. There the Court of Appeals held that, although the architectural plans did not give their author the right to prevent reproduction of the building itself nothing prevented him from having the exclusive right to make copies of the drawings themselves. It also held that ‘[t]he exclusive right to copy what is copyrighted belongs to the architect, even though the plans give him no unique claim on any feature of the structure they detail’. The District Court for the Eastern District of Missouri also considered the same point in Warren Sign Company Inc v Piros Signs Inc (No 4): 09-CV-1984 (CEJ), which concerned a technical drawing for a sign to be erected at the Eagle Bank, holding that ‘[e]ven if the Eagle Bank Drawing does depict a ‘useful article’ plaintiff would still be protected against the unauthorized copying of the drawing itself’.

The Privy Council reasoned that, since both the Copyright Act of the Commonwealth of the Bahamas and the US Copyright Act sought to give effect to the Berne Convention for the Protection of Literary and Artistic Works, and did so in substantially the same way, the American cases were at least persuasive authority on the meaning of section 2(3). It noted that no authority was cited before the Court of Appeal and that none was mentioned in its brief extempore judgment. The Privy Council also noted that the Court of Appeal simply announced its conclusion that the plans did not fall within the definition of ‘artistic works’ but fell within the definition of ‘design of a useful article’ ‘in as much as the plans would be a design of a useful article without any artistic features capable of existing independently of the utilitarian aspect of the article’. The Board ruled that that conclusion failed to give effect to the distinction between the useful article itself and a technical drawing of the useful article. It continued that the Court of Appeal reached a conclusion that differed from that of the US courts in almost identical language. As a result, the Privy Council held that the trial judge was right in holding that, although the plaintiffs could not prevent copying the septic tank itself, they were entitled to prevent copying of the technical drawing, and that the decision of the Court of Appeal on this issue was wrong.

Practical significance

It was surprising that the matter reached the Privy Council because a clear reading of section 2(1) of the Copyright Act of the Bahamas would show that ‘technical drawings’ are ‘artistic works’. Section 2(3), which provides examples of ‘artistic works’, did not limit that definition in any way. The trial judge's interpretation was the correct one and the Court of Appeal's rejection of that reasoning was shown by the Board to be flawed if inexplicable. In any event, the Privy Council explained that, if the Court of Appeal's approach were to be followed, it would leave little if any protection for technical drawings, contrary to the express provision in section 2(1).

Even more interesting is the Board's foray into US copyright jurisprudence to explain a section in the Bahamas Copyright Act, which was not even at issue in this case. In any event, the decisions cited made it plain that copyright existed independent of the utilitarian aspects of the work. Although the Privy Council's discussion on that aspect of the case was obiter, it was a clear indication by the Board that the jurisprudence of the US courts on section 101 of the US Copyright Act 1976 is applicable to section 2(3) of the Bahamas Copyright Act and similar provisions in the copyright legislation in the Commonwealth Caribbean.