Beatles documentary reproducing twelve songs in their entirety is not fair use

Author: Eleonora Rosati (University of Southampton and e-LAWnora)

Sony/ATV Music Publishing LLC & Another v WPMC Ltd & Another [2015] EWHC 1853 (Ch), Chancery Division, England and Wales, 1 July 2015

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv144, first published online: September 2, 2015

In his decision Arnold J ruled, among other things, that the unauthorized use of twelve songs by the Beatles for inclusion in a documentary on their first US concert could not be considered fair use under §107 of the US Copyright Act.

Legal context

The Beatles in 1964

What the High Court had to determine in this case was (1) whether (under English law) a collateral contract to grant a synchronization licence was concluded during the negotiations between the claimants and the defendants; (2) whether (under English law), if no collateral contract was concluded, the claimants were estopped from denying that they had granted a synchronization licence; (3) whether the exploitation of the documentary in the US (currently subject to consideration in parallel US proceedings) would infringe the US copyrights in the works, or whether instead the fair use defence under §107 of the US Copyright Act would apply.

Facts

In 1964 the Beatles held their first US concert at the Washington DC Coliseum. On that occasion the group performed twelve songs. The 35 min concert was videotaped for subsequent exhibition at cinemas and theatres across the US.

In 2009 one of the defendants (Iambic) acquired a copy of the master tape of the concert video to make a documentary of the concert. Subsequently it transferred the rights to the tape to the first defendant (WPMC). Between 2009 and 2010 Iambic negotiated with the claimants (collectively SATV, holders of the rights to the relevant Beatles songs) for a licence to reproduce and otherwise exploit the works as part of the soundtrack to the documentary. No synchronization licence was executed as a result of these negotiations.

In 2012 SATV discovered that the documentary was being promoted by a means of a website and a trailer. SATV thus brought proceedings in both the UK (where the documentary had been made) following the UK Supreme Court decision in Lucasfilm Limited and Others v Ainsworth and Another [2011] UKSC 39, and the US (this being the defendants' principal target market).

Analysis

In relation to the issue whether a collateral contract to grant a synchronization licence was concluded during the negotiations, Arnold J held that no contract could be considered to subsist between the claimants and the defendants.

Turning to the point whether, if no collateral contract was concluded, the claimants were estopped from denying that they had granted a synchronization licence, the judge relied on Motivate Publishing FZ LLC and Another v Hello Limited [2015] EWHC 1554 (Ch) to hold that the defence of proprietary estoppel is not available in a case like the one at hand, ie a ‘subject to contract’ case.

Finally Arnold J considered whether the exploitation of the documentary in the US would be eligible for the application of the fair use defence under §107 of the US Copyright Act. Among his preliminary observations, the judge addressed criticism of the fair use doctrine as being ‘indeterminate and unpredictable’ (para 100). He recalled that over the previous decade scholarly research in this area ‘has demonstrated that what at first blush may appear to be an amorphous mass of individual decisions can be analysed and categorized in the same way as other areas of common law (negligence, for example)’ (para 100).

The judge then undertook his analysis of the four fair use factors within §107 as the US Supreme Court interpreted them in Campbell v Acuff-Rose Music (92–1292), 510 US 569 (1994). With particular regard to the first three factors, he rejected the claimants' argument that, to succeed in a fair use defence, the defendant must show that no more has been taken of the protected work than is necessary for the transformative purpose. Instead, ‘what the defendant must show is that the amount taken is reasonable, and not excessive. If no more is taken than is necessary, then that will be reasonable. The defendant does not have to show that he has taken the minimum necessary, however’ (para 107).

The judge also accepted WPMC's contention that ‘it can be fair use to copy the whole of the copyright work where this is justified by the transformative purpose, particularly but not exclusively if the copy is not a high quality one (eg where an image is reduced in size)’ (para 108).

This said, Arnold J ruled, however, that the inclusion of the copyright works in the documentary could not be considered fair use because the Beatles' songs in it ‘are expressive works within the core of copyright protection; the use is a commercial one; the use is only partly transformative; the [c]opyright [w]orks are reproduced in their entirety; the extent of the reproduction is excessive having regard to the transformative purpose; and to permit such use would be likely to damage the market for, or potential value of, the [c]opyright [w]orks’ (para 122).

Practical significance

Besides issues relating to existence of a contract and proprietary estoppel, the importance of this case lies in the appreciation of the fair use doctrine by a court outside the US. In reviewing the relevant fair use factors, not only did Arnold J address the main criticisms against this doctrine but also provided a clear overview of the current law on fair use.

Considering the sometimes contrasting approaches at the level of US courts, this judgment sheds light on controversial aspects of the fair use doctrine. By tackling issues such as transformativeness, Arnold J clarified both that: (1) what is required for a finding of fair use is that the defendant proves that what he/she has taken from the original work is reasonable, rather than the minimum necessary, and (2) reproduction of a work as a whole does not prevent per se a finding of fair use.

There is a balm in Gilead: Idenix's patent infringed but invalid

Authors: Darren Smyth and Robert Barker (EIP)

Idenix Pharmaceutical, Inc. v Gilead Sciences, Inc. & Others [2014] EWHC 3916 (Pat), Patents Court, England and Wales, 1 December 2014

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv044, First published online: March 8, 2015

Idenix unsuccessfully argued that a cited document constituting novelty-only prior art is not entitled to its priority date due to a procedural defect rather than its substantive disclosure.

Legal context

According to Article 54(3) of the European Patent Convention (EPC), a European patent application that has a priority date before the date of filing of a subsequent patent application, but is published on or after the subsequent patent application's filing date (or effective priority date if priority is claimed), can be cited as prior art against the novelty, but not inventive step, of the subsequent patent application.

When contemplating prior art patent applications under Article 54(3), two aspects must be considered in assessing the validity of the application's claim to priority: the substantive disclosure of the application and priority document, and the procedural rights of the applicant.

With respect to the substantive disclosure of the application, in order to be entitled to priority the subject matter of the application must be present in the priority document. Further, regarding the procedural aspect of claiming priority, the applicant claiming priority must be either the applicant of the priority document or the successor in title to the priority applicant. Many practitioners are used to considering the substantive aspects of the priority claims of the prior art, but it is unusual for the procedural validity of a priority claim to be attacked.

Facts

The patent in suit (EP 1523489) claimed pharmaceutical compositions for the treatment of viruses belonging to the Flaviviridae family. Idenix asserted that Gilead infringed the patent by the keeping and disposal of sofosbuvir (marketed as Sovaldi), a drug for use in the treatment of Hepatitis C (which belongs to the Flaviviridae family).

Gilead denied infringement and filed a counterclaim for revocation of the patent on the grounds that the claimed subject matter (i) lacked novelty over a PCT application owned by Gilead (PCT/US2004/012472, ‘the Pharmasset PCT’), (ii) lacked inventive step, (iii) was insufficiently disclosed, and (iv) contained added matter over the application as filed.

The Pharmasset PCT was a novelty-only citation, and even then only if it was entitled to its claimed priority; the Idenix filing date fell between the priority date and the filing date of the Pharmasset PCT. Idenix did not dispute the substantive entitlement to priority of the Pharmasset PCT from the priority application (US Provisional Patent Application 60/474,368 – ‘US 368’), but alleged that the Pharmasset PCT applicant was not entitled to claim priority from US 368 at the time of filing. Furthermore, Idenix did not contest that, if the Pharmasset PCT priority claim was found to be valid, all but two of the claims would lack novelty.

When the Pharmasset PCT was filed there were two Pharmasset legal entities: Pharmasset Ltd, a company incorporated in Barbados (‘Pharmasset Barbados’), and Pharmasset Inc., a company incorporated in the state of Georgia, USA (‘Pharmasset Georgia’). US 368 was filed in the name of the inventor, Mr Clark, who worked for Pharmasset Georgia, but the Pharmasset PCT was filed in the name of Pharmasset Barbados.

Gilead convinced Mr Justice Arnold that, according to contracts governed by US Federal and Georgia State law, the Pharmasset PCT was entitled to priority from US 368 in the UK, as discussed in the analysis below. Consequently, the patent was found to lack novelty over the Pharmasset PCT. Irrespective of the PCT's right to priority, the claimed subject matter was also found to lack an inventive step as it did not make any technical contribution to the art, and was insufficiently disclosed, as the patent did not enable the claimed inventions to be performed without undue burden.

Turning to the accusation of infringement, Gilead's product sofosbuvir was found to fall inside the granted claims' scope, but this was of little consequence given the finding of invalidity.

An interesting point (although ultimately irrelevant to the outcome) arose during construction of the term ‘phosphate’. Gilead cited Actavis v Lilly [2014] EWHC 1511 (Pat), another decision of Arnold J, when arguing that, as the claim had been amended during prosecution, the term ‘phosphate’ should be construed narrowly. The judge disagreed:

I had held in Actavis v Lilly at [112] that, in principle, a limitation made to a claim to avoid an objection of lack of clarity could be relied on as aid to construction. I adhere to that view, but with the benefit of the arguments of the present case I would add that such an amendment is less likely to be a useful aid to construction than a limitation to avoid an objection of lack of support, which was the primary focus of my discussion in Actavis v Lilly.

Analysis

Gilead provided three routes by which Pharmasset Barbados was Mr Clark's successor in title. The main argument Gilead relied upon was that the contract of employment signed by Mr Clark stated that his rights to the invention vested in Pharmasset Georgia, and a separate agreement between the two Pharmasset entities further assigned these rights to Pharmasset Barbados.

This assertion presented by Gilead was complicated by the fact that there were no records of a signed copy of the agreement between the two Pharmasset entities. Idenix presented strong arguments that this agreement was never signed, and that therefore Pharmasset Barbados was not the successor in title to the invention. However, on balance, Arnold J decided that the agreement had been signed on the basis that, among other reasons, it was unlikely that such an important document had not been signed.

Arnold J held that the effect of the two contracts was to vest Pharmasset Barbados with the entitlement to priority. Accordingly, the Pharmasset PCT was found to be entitled to claim priority from US 368.

Gilead was able to prove a succession in title, but only because it had access to documentation that would not usually be available to the public; the priority claim was held valid, and the claimed subject matter to consequently lack novelty. However, it is somewhat unsatisfactory that the decision regarding novelty was entirely dependent on these private records. Had the prior art in question been owned by a third party, the various agreements and contracts presented in this trial would have been inaccessible: in such a case, would the outcome have been different? This must call into question whether the procedural validity of a priority claim of a prior art document should be a relevant consideration. There is an argument that for prior art under 54(3) EPC, only the substantive disclosure should be at issue.

Practical significance

The priority entitlement issue in this case arose in part due to executed assignments being misplaced. These should be treasured in case a priority claim is ever disputed, either when enforcing rights as a patentee, or when relying on the priority claim in an invalidity attack on another party. However, there is no obvious resolution to the issue regarding how to prove the validity of a third party's priority claim, as these privately held assignments would probably be impossible to access.

Failure to show breach of implied licence and secondary passing-off of airline goods by advertising agency

Author: Sophie Arrowsmith (Hamlins LLP)

Orvec International Limited v Linfoots Limited [2014] EWHC 1970 (IPEC), 18 June 2014, Intellectual Property Enterprise Court (IPEC), England and Wales

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu219, first published online: November 19, 2014

The Intellectual Property Enterprise Court (IPEC) rejected Orvec's claims against Linfoots, an advertising agency, for (i) breach of an implied copyright licence for photographs of products supplied to airlines by Orvec and (ii) secondary passing-off of the products.

Legal context

In determining whether a term is to be implied into a contract, the court should look at the meaning the contract would convey to a reasonable person having the necessary background knowledge reasonably available to the audience to whom the contract is addressed (see Investors Compensation Scheme Ltd v West Bromwich Building Society (1997) UKHL 28). The court cannot improve the contract and cannot introduce terms to make it fairer or more reasonable.

Where a contract does not expressly provide for the circumstance arising, it is usually inferred that nothing is to happen if that circumstance does occur and that any loss lies where it falls. However, if the reasonable reader concludes the authors intended the contract to convey that something was to happen, a term to that effect will be implied. Such implied term only goes to the contract's meaning, and is not an addition to the contract. An implied term must be (i) reasonable and equitable; (ii) necessary to give business efficacy to the contract (no term will be implied if the contract is effective without it); (iii) so obvious that ‘it goes without saying’; (iv) capable of clear expression and (v) not contradictory to any express term (BP Refinery (Westernport) Pty Ltd v Shire of Hastings (Victoria) (1977) UKPC 13).

To establish an action in passing-off, it needs to be shown that (i) there is goodwill or reputation attached to the goods or services in question; (ii) the defendant made a misrepresentation leading, or likely to lead, the public to believe that the goods or services it offers are those of the claimant; and (iii) the claimant suffered damage by reason of that incorrect belief. It is an actionable misrepresentation where a defendant represents the claimant's goods as being the product of his own efforts and skill (see Bristol Conservatories Ltd v Conservatories Custom Built Ltd (1989) RPC 455). Secondary passing-off occurs when the defendant assisted in or procured the passing-off.

Facts

Orvec provided textile products to airlines. Under Linfoot's standard terms and conditions Linfoots provided advertising and marketing services to Orvec which involved Linfoots taking photographs of Orvec's products. Linfoots retained ownership of copyright in the photographs. Upon the cessation of their relationship, it was agreed Linfoots would supply certain images from among the photographs for Orvec's internal use and for supply by email to Orvec's customers.

Of Orvec's products shown in the photographs, some were manufactured by Orvec but most were supplied to Orvec by another company, Intex. After Intex and Orvec had terminated their business dealings, Intex asked Linfoots to create and supply photographs of its products for use in Intex's advertising. Among the images supplied by Linfoots to Intex were photographs created for Orvec.

Orvec claimed an implied term of the contract with Linfoots gave Orvec a perpetual and exclusive licence under the copyright in the photographs. Linfoots had therefore infringed Orvec's exclusive right. Further, Orvec claimed the use of the photographs by Intex gave rise to passing off on the part of Intex and, by supplying Intex with the photographs, Linfoots both equipped Intex with the means to pass off and and procured the passing off.

Orvec's action against Linfoots failed in relation to both breach of contract and passing off.

Breach of implied licence

The parties agreed there was an implied copyright licence for Orvec to use the advertising material supplied by Linfoots. However, they disagreed as to the nature of that licence. As some of the photographs included Orvec's trade marks and/or the livery, trade marks and logos of Orvec's airline clients, Orvec argued Linfoots had no use for those photographs and, therefore, the licence must have been exclusive and perpetual, and covering all photographs, not just the photographs containing trade marks. However, the court held there was no implication that exclusive rights were granted when the photographs displayed a third party's trade mark. Using the minimalist approach which must be taken when inferring the presence of unexpressed terms in a contract, only a non-exclusive licence and no more than a non-exclusive licence was sufficient to make the relevant part of the contract consistent with the whole of the contract. If more than a non-exclusive licence was to be implied, at most the licence is exclusive only where Orvec's trade mark appears in the photographs.

The term implied was therefore one which granted Orvec a non-exclusive licence under the copyright in the photographs, although the licence was probably perpetual.

Passing off

By displaying samples of products which were recognizably used in the cabins of Orvec's clients on its website, Orvec argued Intex falsely represented (i) that the products came from Intex, when in truth they came from Orvec; and (ii) that those airlines were customers of Intex, when in truth they were not. However, the court found the first misrepresentation was not supported by the evidence presented. Where the products in the photographs were made by Intex, it was true (ie it was ‘not false’) to represent the products originated from Intex. Where the products were not made by Intex, the products would be seen as nothing other than a generic product, and therefore could not have represented anything regarding products which originated from Orvec.

The court additionally found the second misrepresentation was not supported by the evidence presented, either. Of Orvec's three customers in question, the first was also an Intex customer, or at least had received samples from Intex marked with its name; the second (to which Intex had not supplied products) had stopped flying and so there could have been no inference it was a customer of Intex; and the third had never been a direct customer of Intex. While persons with knowledge of the airline industry, looking at the photograph, would know the product displayed was used in the past by Orvec's third customer, it did not follow that such persons would take from this a representation that the customer bought the product directly from Intex. Such persons were more likely to think Intex was providing examples of the products it previously supplied, and could in future supply, and there was no false representation in doing this. Also, since Orvec's third customer no longer used the product in the photograph in question, there was no reason why it could not be offered to other airlines.

Since Orvec did not establish its case for passing off by Intex, its case on Linfoots' liability could not succeed.

Analysis

This case does not really establish any new legal ground. However, it does reiterate that the more complex a term required to be implied into the contract is considered to be, the less likely it is the objective, reasonable person would take it to be an implied term of the contract. Detailed terms will either be present as an express term of the contract or will not be present at all.

Orvec did not make a claim against Intex—the party alleged to have committed the primary acts of passing off—but only against Linfoots for secondary passing-off. The reasons for this were not clear from the case report.

Also of interest is the judge's discussion of the contrast between the implied licence to use the copyright in the photographs of trade marked products and the licence that might have been implied for the use of the trade mark itself (had this been the issue). It was thought that, where a designer had created a logo for a client, it would have been understood no one other than the client could have a legitimate reason to copy the work and the client would expect to be able to prevent others from copying it. A term would therefore be implied that the copyright in the logo passed to the client. This implied term is supported by the client having other rights in the logo which could be relied on to prevent other parties from using the logo (ie trade mark rights).

Practical significance

When drafting a contract, all the key circumstances must be clearly and expressly provided for: it should not be assumed a term will be implied into the contract. If it is necessary to rely on an implied licence, bear in mind the court will take a minimalist attitude and will imply as bare a licence as possible in order to give effect to the contract.

Passing off: Another ‘no’ from the Court of Appeal on survey evidence

Authors: Sarah Burke and Joel Smith (Herbert Smith Freehills LLP)

Zee Entertainment Enterprises Limited and others v zeebox Limited [2014] EWCA Civ 82, Court of Appeal, England and Wales, 24 January 2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu059, first published online: April 18, 2014

The Court of Appeal refused permission to adduce survey evidence in the first case to come before it on the admissibility of survey evidence in a passing off case since the landmark judgments of the Court of Appeal in Interflora Inc v Marks and Spencer Plc.

Legal context

In Interflora Inc v Marks and Spencer Plc [2013] EWCA Civ 319, Lewison LJ set out a strict test in relation to adducing survey evidence in trade mark cases, namely that ‘a judge should not let in evidence of this kind unless the party seeking to call that evidence satisfies him that (a) that it is likely to be of real value; and (b) that the likely value of the evidence justifies the cost’. Some uncertainty remained after the Interflora cases as to whether the tests as set out in them could be extended to survey evidence in passing-off cases, given that Lewison LJ had made certain obiter comments about different considerations coming into play in relation to passing-off cases, since it was necessarily a different legal question.

Facts

The appellants, Zee, owned a number of satellite and cable television channels, including Zee TV. In November 2011, zeebox Limited launched a free app marketed under the name ‘zeebox’, which acted as a second screen companion for use while watching TV. Zee issued proceedings against zeebox for trade mark infringement and passing off in July 2012. Zee carried out a pilot survey in September 2012 and a second pilot survey in May 2013, although the questions used in each survey were largely identical. Zee then sought permission to adduce survey evidence in support of its passing-off case, claiming that the surveys showed deception among the British Asian population. Birss J refused permission to conduct a full survey at an interim hearing in June 2013, finding that the survey failed the ‘real value’ test as set out by Lewison LJ in the Interflora cases.

Zee appealed to the Court of Appeal, citing five grounds of appeal:

that the judge failed to differentiate, in applying the real value test, between passing off and trade mark infringement cases;

that the judge failed to appreciate that the relevant public was a cultural and linguistic subsection of the UK public and not the population at large;

that the judge took too strict an approach to the real value test;

that the judge failed to take account of the fact that he had not found any criticism of the surveys to be proved; and

that the judge made errors in the assessment of the likely costs.

Analysis

The Court of Appeal dismissed the appeal on all five grounds, and refused permission to adduce the survey evidence, upholding the judgment of Birss J for additional reasons. Floyd LJ delivered the leading judgment, with Lewison LJ adding additional comments in his assenting judgment. The Court of Appeal found that Birss J should have gone further in deciding the value of the survey itself, and felt bound to exercise his discretion afresh. The most significant factor was that the survey was obviously flawed, and that any marginal value that it might have had was outweighed by the disproportionate costs of introducing such evidence. Whilst there was a balance to be struck in considering that the appellants would be prevented from adducing potentially relevant evidence, the Court of Appeal held that the ‘balance came down heavily in favour of refusing permission for the survey evidence’.

The Court of Appeal did not raise any issue with Birss J's application of the Interflora tests to this case, accepting that he had been live to the legal distinction and had not applied the real value tests too strictly in relation to a passing off case.

Real value (Grounds 1 and 3)

Lewison LJ made it clear that he had not intended his judgment in Interflora to invite a mini-trial of the strength of the parties' cases at the stage of deciding whether to allow a survey. The real value test is not intended to invite the court to evaluate the likely outcome of the case. If there was a special factor about the goods or services, or their consumers, survey evidence may well be of real value but this was not the case here.

Subsection of the UK population (Ground 2)

The pilot surveys had been directed at British Asians in the UK. Zee claimed that the trial judge would likely have little familiarity with its channels or the reactions of an ethnically distinct market to which it was directed. Floyd LJ was not concerned by the fact that the trial judge might not be a watcher of Zee TV (or indeed, a watcher of television at all). If the trial judge were equipped with knowledge of the extent and popularity of Zee's channels, he would be capable of assessing the susceptibility of watchers of those channels to any alleged deception when confronted with the zeebox sign. Floyd LJ saw nothing in this case which would not be readily understandable by the trial judge since the case concerned the delivery of television services to people in the UK.

Criticism of the survey (Ground 4)

The use of leading questions in the pilot surveys was criticized and, in particular, the fact that survey respondents were told that zeebox is an app or website ‘relating to TV’. The Court of Appeal found that this was unfair, given that no further information was provided as to the precise nature of zeebox's service. There was also criticism of the acontextual display of the zeebox sign in the survey, with Lewison LJ noting that, even in cases of alleged trade mark infringement, the acontextual comparison of mark and sign had been abandoned. The show card depicting the zeebox sign as shown to the survey respondents did not accord with how real-world users would encounter the zeebox app.

The Court of Appeal found that the judge had not gone far enough in considering the survey itself. The reliability of the survey forms an important part of the real value determination and this survey had ‘obvious flaws’.

Costs (Ground 5)

The cost of introducing the survey evidence (in the region of £100,000) was a factor that the judge could and should have properly borne in mind when making his decision. The estimated costs of £100,000 were found to be significant, especially when viewed from zeebox's perspective as a small start-up company.

Practical significance

Parties should give careful thought to the design of any pilot survey since the pilot survey will ultimately inform the full survey, if the court grants permission to proceed with a full survey. The court will consider the design of the survey and the questions in some depth in deciding whether to grant permission to adduce survey evidence. Survey questions should be drafted carefully and respondents to the survey should not be shown a mark and sign in circumstances devoid of context. Further, a survey should take care not to introduce factors that would not be present in normal use, and an attempt must be made to minimize the artificiality inherent in most surveys. Since passing off is a ‘real world’ cause of action, the circumstances of the real world should be present when carrying out the survey, in so far as this is possible.

It is clear that the real value test as set out by Lewison LJ in Interflora can be applied to passing-off cases despite the legal distinction between trade mark infringement and passing off. In this case, Lewison LJ has once again emphasized that survey evidence is not necessary in cases involving ordinary consumer goods or services. Parties should not seek to deploy survey evidence other than in exceptional circumstances, where the goods or services are sufficiently non-mainstream that the court is likely to need assistance by way of a survey.

‘Greek yoghurt’ gains protection

Author: Leigh Smith (McDermott Will & Emery UK LLP)

Fage UK Ltd & Another v Chobani UK Ltd & Another [2013] EWHC 630 (Ch), High Court, England and Wales, 26 March 2013

Journal of Intellectual Property Law & Practice (2013) doi: 10.1093/jiplp/jpt123, first published online: July 17, 2013

The expression ‘Greek yoghurt’ has been held to possess a particular meaning for consumers and was therefore entitled to be protected.

Legal context

This case concerned the use of the term ‘Greek yoghurt’ to describe yoghurt produced by the defendants. The yoghurt had a thick and creamy texture as a result of the process used to manufacture it, described as straining, but was manufactured outside of Greece. The claimants brought an action for extended passing off to prevent the on-going use of the term by the defendants. Whereas traditional passing off prevents one trader from misrepresenting the goodwill of another, extended passing off has been relied upon to prevent the goodwill in a particular term, that a consumer would identify with a particular type of product or characteristics of a product, being exploited by a trader producing a product that does not fall within the consumer's understanding of the term.

This form of passing off was first recognized in Bollinger v Costa Brava Wine Co Ltd [1960] RPC 6 in respect of the term ‘champagne’. Extended passing off has since been relied upon to protect terms such as ‘sherry’ (Vine Products Ltd v Mackenzie & Company Ltd [1969] RPC 1), ‘Scotch whisky’ (John Walker & Sons Ltd v Henry Ost Company Ltd [1970] RPC 489) and most recently ‘vodka’ (Diageo North America Inc v Intercontinental Brands (ICB) Ltd [2010] RPC 12).

Extended passing off consists of the same elements as classic passing off, namely a requirement to demonstrate goodwill, misrepresentation and damage.

Facts

The claimants sold yoghurt on the UK market under the mark TOTAL which was manufactured in Greece using the process described above and described as ‘Greek yoghurt’. The claimants argued that the use of the term ‘Greek yoghurt’, as opposed to ‘Greek-style yoghurt’, would mislead consumers into believing the yoghurt was manufactured in Greece.

For the claim to succeed, Mr Justice Briggs first had to be satisfied that there was goodwill in the term ‘Greek yoghurt’. This required the claimants to show that a substantial number of people buying Greek yoghurt in the UK believed that the term conveys the message that the yoghurt was made in Greece, and that this added an attribute to the product other than geographic origin. Consumers must recognize the difference between this and ‘Greek-style’ yoghurt, which would be of the same consistency but produced outside of Greece. If the claimants satisfied this requirement, they then had to show that use of the term in connection with a product made outside of Greece was a misrepresentation, and that this misrepresentation would cause damage.

Analysis

Briggs J began by considering whether there was goodwill in the term. This, he noted, required the expression to add something attractive to consumers, rather than merely denote geographic origin. He also observed that previous cases, in particular Chocosuisse Union des Fabricants Suisse de Chocolat v Cadbury Ltd [1998] RPC 117 concerning the term ‘Swiss chocolate’, confirmed that ‘goodwill’ was not equivalent to ‘cachet’: in other words, the expression should denote a particular type of product but not necessarily a higher quality.

The claimants submitted evidence to support the assertion that consumers purchasing Greek yoghurt in the UK, in contrast with Greek-style yoghurt, believed that the yoghurt they purchased was produced in Greece. The claimants also submitted evidence to show that there was a naming convention that had been applied for over 25 years in the UK, subject to minor exceptions, that ‘Greek yoghurt’ was only used for yoghurt produced in Greece. Advice given to the defendants in the course of developing their product supported this proposition. There was also evidence to show that Greek yoghurt commanded a higher price per kilo than Greek-style yoghurt. The judge was satisfied that all yoghurt described as ‘Greek yoghurt’ sold in the UK by Fage or its competitors at all material times was yoghurt that was thick and creamy in texture and manufactured in Greece. He was further satisfied that a substantial proportion of consumers of Greek yoghurt would think it was produced in Greece, and that this conveyed something more than territorial origin. Accordingly, the claimants had established goodwill in the trade name.

Turning to whether there had been a misrepresentation, the judge considered that, once goodwill in the trade name was established, it was a clear misrepresentation to suggest that a product produced outside of Greece had been produced there. That the same method for producing the product had been used was immaterial, as the misrepresentation concerned the place of manufacture rather than the quality of the product. Revealing the true place of manufacture in small type on the reverse label of the product was not enough to avoid the misrepresentation.

Finally, the judge considered whether the misrepresentation caused damage to the claimants. He suggested that two types of damage were relevant in such cases. First, loss of sales and, second, erosion of the distinctiveness of the term the claimants sought to protect. In this instance, the judge formed the view that the latter damage was likely to occur. He therefore ordered that the defendants be prevented from using the expression ‘Greek yoghurt’ on their product.

Practical significance

The judge was persuaded by evidence in this case that demonstrated that a naming convention applied in the UK in relation to different types of yoghurt, which served to distinguish between ‘Greek yoghurt’ and ‘Greek-style yoghurt’. Curiously, the term ‘Greek yoghurt’, unlike other terms protected by way of extended passing off, receives no protection in its territory of origin. The judge refused leave to appeal; permission to appeal has, however, been lodged

Malaria combination patent invalidated for obviousness

Author: Keo Shaw (McDermott Will & Emery UK LLP)

Glenmark Generics (Europe) Limited & others v The Wellcome Foundation Limited & Glaxo Group Ltd [2013] EWHC 148 (Pat), Patents Court, England and Wales, 7 February 2013

Journal of Intellectual Property Law & Practice (2013) doi: 10.1093/jiplp/jpt101, first published online: June 25, 2013

The Patents Court, England and Wales, has held that a patent for the 5:2 ratio combination of two anti-malarial drugs (atovaquone and proguanil) was obvious, based on prior art that disclosed the two drugs in combination, but not at the claimed ratio.

Legal context

The claimants, Glenmark and Mylan, sought revocation of European Patent (UK) No 0 670 719, protecting the invention of a combination anti-malarial drug, in order to clear the way for the launch of their own generic versions of the drug. The defendants were both part of the GlaxoSmithKline group of companies. The Wellcome Foundation Limited was the registered proprietor of the patent, and Glaxo Group Ltd was the patent's beneficial owner and exclusive licensee.

Facts

The patent related to an anti-malarial medication with a priority date of 26 November 1992, comprising a combination of atovaquone and proguanil in the ratio 5:2. The only ground on which the claimants contended that the patent was invalid was obviousness in relation to two pieces of prior art: a presentation by Dr David Hutchinson, one of inventors named in the patent, and an abstract from a plenary lecture by Dr A T Hudson, who also worked for the defendants.

The defendants sold a pharmaceutical composition consisting of a 5:2 combination of atovaquone and proguanil under the trade mark Malarone. The claimants wanted to launch a generic version of Malarone, resulting in the defendants counterclaiming against both for infringement. There was no dispute that the proposed products would infringe the patent if it was valid. Notably, the defendants made an unconditional application to amend the patent by deleting Claim 1 (a claim to a method of treatment using a combination of atovaquone and proguanil in any ratio), which was granted.

Analysis

There were certain areas of dispute as to what fell within the common general knowledge, the most interesting of which related to combinations. One of the claimants' experts, Professor Molyneux, gave evidence as to the benefit of additive combinations of drugs where there is some resistance to one or both drugs and an absence of any synergy, arguing that it was rational to use an additive combination in the appropriate circumstances. Arnold J agreed with this, commenting that he found a combination that was shown to be significantly synergistic in vitro (experimentation ‘within the glass’, ie in a test tube or petri dish) would encourage the skilled team to go forward to in vivo (experimentation using a whole, living organism) trials.

Arnold J continued by setting out the law on obviousness by reference to consideration of the ‘Windsurfing’ test in Pozzoli v BDMA SA [2007] EWCA Civ 588 and in MedImmune Ltd v Novartis Pharmaceuticals Ltd [2012] EWCA Civ 1234.

Arnold J then applied the test to the patent's claims. He found that there was no technical significance in the 5:2 ratio set out in the claims. The correct question therefore was whether or not it would be obvious to proceed with the development of a medication consisting of atovaquone and proguanil in combination. As the prior art disclosed the combination for the treatment of malaria and set out promising clinical trials results, the defendants needed to show that the skilled team would not proceed with the development of the combination of atovaquone and proguanil in order to be successful. Arnold J rejected the defendants' arguments that critical comments made about the findings would have deterred the team of skilled persons from investigating the combination further. He also rejected arguments claiming that the invention was not obvious because at the time few pharmaceutical companies supported such investigation on account of a perception of limited profit in anti-malarial drugs; he stated that commercial factors are irrelevant in determining obviousness. Arnold J concluded that, against the backdrop of a pressing need for new anti-malarial drugs, the skilled team would have reached the conclusion that the combination merited further investigation and that this would, in turn, have led to a formulation based on suitable proportions of the two drugs. As such, the invention was obvious.

Practical significance

This judgment is another adverse decision for combination patents at the hand of the courts of England and Wales and, once again, highlights the dangers of inventors publicly disclosing the findings of their research before a related patent application has been filed. While this is not a welcome decision for pharmaceutical combination patent owners, especially where their combination product has no other patent protection, the issue of a combination patent where the patent discloses a synergy that was not disclosed in any prior art remains to be tackled by the courts.

A triple strike against piracy as the music industry secures three more blocking injunctions

Author: Darren Meale (SNR Denton UK LLP)

EMI Records Ltd and others v British Sky Broadcasting Ltd and others [2013] EWHC 379 (Ch), Chancery Division, England and Wales, 28 February 2013

Journal of Intellectual Property Law & Practice (2013) doi: 10.1093/jiplp/jpt097, first published online: June 13, 2013

It looks as though s 97A blocking injunctions may now be the film and music industries' weapon of choice against peer-to-peer file sharing. The Pirate Bay, a notorious BitTorrent tracker, was blocked this way last year and now the music industry has succeeded in an application for blocks against three more culprits by the names of KAT (KickassTorrents), H33T and Fenopy.

Legal context

The United Kingdom's Digital Economy Act 2010 was one of the most controversial pieces of legislation in recent years, particularly insofar as it sought to force British internet service providers (ISPs) to write to their users and notify them when they were suspected of indulging in unlawful file sharing. The same legislation contemplates users being punished if they continue to indulge. With 2013 now well underway, the Act's anti-piracy measures have still to come into effect. Meanwhile, the content industries are enjoying much greater success targeting ISPs—the businesses which provide UK consumers with access to internet content, lawful or otherwise—and in compelling them to block those consumers from accessing offending sites. With this victory, there have now been five victims: Newzbin2, The Pirate Bay, KAT, H33T and Fenopy.

Facts

Earlier “Current Intelligence” pieces provide the background to blocking injunctions (Darren Meale ‘Avast, ye file sharers! The Pirate Bay is sunk’ (2012) 7(9) JIPLP 646). Section 97A of the UK's Copyright, Designs and Patents Act 1988 (CDPA) provides that

The High Court … shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.

This provision, implemented to comply with the Information Society Directive (2001/29/EC), was first used successfully by the film industry in NewzBin2 [2010] EWHC 608 (Ch). In this case, a group of record companies sought to force the six leading UK ISPs to block three popular BitTorrent trackers. These sites provide users with links which can be used to download infringing copies of films, television programmes, computer games and other material using the BitTorrent file-sharing protocol.

The evidence was that KAT enjoyed around 3.7 million UK visitors a month, making as much as US$22 million a year in advertising revenue; H33T 400 000 and US$2.6 million and Fenopy about 500 000 and US$1.3 million. Each was found to be a ‘substantial profit-making business’.

Analysis

Before considering the substantive decision, one must bear in mind the following:

No claim for copyright infringement had been brought against KAT, H33T, Fenopy or any of their users. Further, the judge found that there was no need to serve the operators of the sites, as it would be ‘impracticable and pointless’ to try to do so. The ISPs were not represented. They did not oppose the making of the orders sought provided that the court felt it was proper and appropriate to make them.

The applications were brought by way of the CPR Part 8 alternative claims procedure.

Mr Justice Arnold considered the application on paper, without a hearing.

Turning to the substance of the decision, four matters had to be established if the blocks were to be ordered. Each was carefully considered by Arnold J as follows.

Were the ISPs ‘service providers’?

The defendants did not deny this and, as the judge had held in previous s 97A applications, they were indeed ‘service providers’ within the meaning of regulation 2 of the Electronic Commerce (EC Directive) Regulations 2002, implementing the E-Commerce Directive (2000/31).

Do the users and/or the operators of the websites infringe copyright?

Users

Yes, by copying or downloading unlawful copies of copyright protected material. A further ‘yes’ in respect of uploaders (ie users who allowed material on their computers to be uploaded to the internet and passed on to others), by ‘communication to the public’ of copyright works, contrary to s 20 of the CDPA. Infringement by ‘communication to the public’ is a less than straightforward infringing act; it continues to be subject to significant attention from the Court of Justice of the European Union (CJEU), as well as domestic courts in Europe. Mr Justice Arnold updated his analysis from The Pirate Bay litigation (see here Meale ‘Avast, ye file sharers! The Pirate Bay is sunk’). One issue was whether the users communicated works to a ‘new public, that is to say a public which was not taken into account by the rightholders when authorizing the distribution of the recordings’. Arnold J recounted Case C-135/10 Societá Consortile Fonografici v Del Corso [2012] ECR I-0000, in which the CJEU held that a dentist playing background music in his private dental practice did not partake in communication to the public. Relevant to this finding were the facts that (1) the patients constituted a determinate circle of potential listeners, who only heard the recordings one at a time; (2) the patients attended for the purposes of dental treatment and had no choice over the recordings they listened to; and (3) the broadcast was not of a profit-making nature.

The judge also referred to Case C-173/11 Football Dataco Ltd v Sportradar Gmbh [2012] ECR I-0000. In essence, this case asked whether, where a server in jurisdiction A sends data to a user in jurisdiction B, there could be an infringing act in A, B or both jurisdictions. The CJEU held that the act takes place ‘at least’ in B provided that ‘there is evidence from which it may be concluded that the act discloses an intention on the part of the person performing the act to target members of the public’ in B. Although it did not explicitly deal with the point, Arnold J opined that the CJEU also accepted that, in this situation, an infringing act occurred in jurisdiction A as well.

Applying this case law, Arnold J held that uploaders communicated works to a new public, a ‘large and indeterminate class of people’, in the hope that other users would make other recordings available which they could download free, thereby providing them with an indirect financial benefit as a result of their activity. He found that there would be infringement in the UK where the uploader, who made recordings available, was in the UK. He was not so sure if there would be infringement where only the person receiving the work, the downloader, was in the UK, ‘since it is not clear to me that the act of communication by the uploaders is targeted at members of the public in the UK’. Having already found infringement by UK uploaders, he did not reach a conclusion on this point.

Operators of the websites

Operators were also held to infringe in three ways: (1) by communication of works to the public; (2) by authorizing the infringements of UK users; and (3) on the basis of joint liability with UK users as accessories.

On (1), Arnold J held that both the operators of the websites (who provide a mechanism designed to achieve the act) and its users (who provide the actual sound recordings etc) were involved in the act of communication to the public. Like the users, the operators made the relevant works available to a ‘large and indeterminate class of people’ and benefitted financially from doing so. Each of three websites was found to be targeting the UK with factors such as the number of UK users, the large number of UK artists whose recordings were available, and the default language of the sites being English was considered as relevant. It was also thought relevant that KAT served its users with adverts with prices in sterling (although it was not discussed whether this was KAT's doing or the action of the adserving provider responsible for managing KAT's adverts). These factors led the judge to conclude that KAT clearly targeted the UK, while H33T and Fenopy did as well, albeit less clearly.

On (2), all three sites had made obvious efforts to afford their users ‘the easiest and most comprehensive service possible’, going to great lengths to facilitate and promote the download of torrent files by users (eg providing an easy-to-use interface, indexing torrents in specific categories, explaining how to download and how to get round court-ordered blocks). Infringement was not merely an inevitable consequence of the provision of torrents on the site, but their objective and intention. Mass copyright infringement was the ‘cornerstone’ of the sites' business models; each site showed an obvious disregard for copyright law; and each had sought to evade international investigations by constantly changing domain registrant details and moving ISPs. Stated content removal policies were mere window-dressing. H33T asks for payment of a US$50 fee before it will take a torrent down.

On (3), Arnold J applied much the same reasoning and found accessory liability in the same way as he did in NewzBin2 and The Pirate Bay.

Do the users and/or the operators of the websites use the ISPs' services to infringe?

Again, Arnold J answered this question in the affirmative following his reasoning in the earlier blocking cases. He did, however, note that the pending CJEU reference in Case C-314/12 UPC v Constantin, a reference from the Austrian Supreme Court, had asked for guidance in this area. The judge noted that the Austrian Supreme Court's preliminary view was in agreement with his.

Did the ISPs have actual knowledge of this?

Indeed, not least as a result of their involvement in the case. The industry also wrote to ISPs on a weekly basis prior to their application to notify them of infringing activity.

With all these affirmative answers, Arnold J then considered whether he should exercise his discretion to order a block. Again he answered yes, holding that blocks would be proportionate here and could be implemented at a modest cost. Noting that they might easily be circumvented, he remarked that evidence indicated that blocking orders could be reasonably effective: a block in Italy of The Pirate Bay had led to a reduction of 73 per cent of those visiting it and a 96 per cent reduction in page views. While questions of proportionality were pending before the CJEU in UPC v Constantin, he felt able to make a decision and order the blocks.

Takedown policies not good enough?

The websites in this case had what are fairly standard takedown policies, offering to take down infringing content once notified by way of the provision of a specific URL (though none of them did this). Arnold J remarked that such a policy was, even if complied with, ‘overly burdensome’, impractical and ineffective. One URL was no good when multiple users might have uploaded multiple versions of each infringing recording and were constantly uploading additional ones. In order to ensure the cessation of infringing activity in respect of a particular copyright work, a rightholder would have to monitor a website on a continuous and on-going basis. Arnold J concluded:

A ‘provision of URL’ policy might work for a website which generally hosts legal content, but which suffers from isolated instances of infringing content. It is entirely unworkable where the website is geared towards offering a constantly replenished stock of infringing content.

‘Provision of URL’ policies are fairly standard for online service providers. The world's largest video sharing website, YouTube, operates one. While it cannot be said that YouTube is ‘geared towards’ infringement, it does suffer more than isolated instances of infringing content, as do many other such services. Do Arnold J's comments suggest that this kind of policy will not be enough for the service provider to benefit from the ‘hosting’ safe harbour provided by Article 14 of the E-Commerce Directive, which is only available where a service provider acts expeditiously to remove an infringement once it becomes aware of it? Do they also indicate that, following the CJEU's decision in Case C-324/09 L'Oréal v eBay, 12 July 2011, Article 11 of the Enforcement Directive (2004/48) may require intermediaries to take more active steps when it comes to removing infringing content present on their services, rather than just reacting to notifications on a piecemeal basis?

Practical significance

As with NewzBin2 and The Pirate Bay, this was another example of an attack on an unlawful website in circumstances where the traditional route—going after the infringing service itself—was not practical (these services are generally based outside of the jurisdiction, move around a lot and generally have no regard for the law or legal process). Being no different on the facts to The Pirate Bay, it is no surprise the application succeeded. The music and film industries will continue to pursue blocks by ISPs against other infringing services, and it will be interesting to find out whether other service providers become targets (this author has previously wondered whether search engines like Google might be asked to block users from accessing The Pirate Bay etc).

Now that the content industries have secured a number of favourable decisions, it can be seen that they and their lawyers are becoming quite practised at the exercise. ISPs do not appear to be interested in actively opposing blocking applications, and the courts have been clear that there is no need to even attempt to involve the offending websites themselves (or their offending users). On this occasion, the record companies used the streamlined CPR Part 8 alternative claims procedure and Arnold J made his decision without need of an oral hearing. All of these factors will have reduced the cost of the application, probably making it quicker and easier to do. The evidence put in by the record industry will also be similar each time and therefore cheaper on each occasion. That points to s 97A applications becoming fairly fixed in terms of time and cost and so much easier for the industry to fund and to evaluate their effectiveness by way of a cost/benefit analysis. The author's instinct is that we will see several more of these applications within the next 12 months (indeed, as this article was being proofed, there were reports that the UK music industry was readying an application against as many as 25 more services and domain names).