Assessing damages due under a cross-undertaking in damages—more of an art than a science?

Authors: Gary Moss and Emma Muncey (EIP Legal)

AstraZeneca AB & Another v KRKA, DD Novo Mesto & Another [2014] EWHC 84 (Pat), 24 January 2014, Patents Court, England and Wales

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu028, first published online: March 4, 2014

The Patents Court decided that krka would have had a substantial ‘first-mover’ advantage in relation to the launch of its branded generic pharmaceutical had it not been wrongfully prevented from doing so by an interim injunction and accordingly assessed damages due under the cross-undertaking. The decision once again highlights the difficulties which the court faces in trying to put a monetary value on hypothetical scenarios.

Legal context

The assessment of damages in patent cases is a notoriously difficult task. As Jacob J at 396 in Gerber Garment Technology Inc v Lectra Systems Ltd [1995] RPC 383 noted:

[Q]uantification of damage in a case such as the present [a patent infringement case] is a much harder, and less certain, task than I had hitherto thought. Although I have had to reach an answer I do not pretend it is an accurate measure of the damage, of what would have been. It is just the best assessment I can make!

In assessing such damages, the court is tasked with trying to work out what would have happened had there been no infringement or, as in the present case, no injunction, and then reflecting that in the amount of damages awarded. However, the position of the parties as to what would have happened had the event in question not occurred tends to vary considerably. This is not surprising; in the real world, commercial decisions are driven by a multitude of interlinking considerations whereas, for the purposes of assessing damages, the court is asked to consider only one, albeit an important one.

In the present case, Sales J used a hypothetical counterfactual scenario to estimate the advantage that Krka would have enjoyed had it not been wrongly subjected to an interim injunction. The judgment indicates that Sales J's decision was based more on his general impression, or ‘feeling’, of the evidence as a whole, rather than on the forensic expert evidence submitted by the parties, in particular AstraZeneca.

Facts

AstraZeneca held a European patent, effective in the UK, for its branded esomeprazole proton pump inhibitor (PPI), Nexium. Krka developed a branded generic esomeprazole PPI, Emozul, which it sought to launch in the UK. AstraZeneca began proceedings in the UK against Krka, asserting that Emozul infringed its patent rights in relation to Nexium. In October 2010, AstraZeneca successfully obtained an interim injunction to prevent Krka from launching Emozul in the UK. Also at this time, AstraZeneca's Nexium patent was being challenged by another generics company, Ranbaxy. In July 2011, Ranbaxy's product was found not to infringe the Nexium patent (Ranbaxy (UK) Limited v AstraZeneca AB [2011] EWHD 1831 (Pat)). Shortly after that judgment, AstraZeneca discharged the injunction against Krka.

Krka finally launched Emozul in the UK in September 2011. However, it claimed that by then it faced a very different market from the one which existed in October 2010, and that it had been deprived of the ‘first mover’ advantage. This was because, following the Ranbaxy ruling, several generic esomeprazole PPIs were launched in the UK. In particular, AstraZeneca launched its own generic product in July 2011, only two days after the Ranbaxy judgment. Ranbaxy then launched in September 2011, followed by Mylan in November 2011. Krka argued that this drove down the price for generic esomeprazole PPIs and had an impact on the success of its launch of Emozul in September 2011. By contrast, had Krka been able to launch in October 2010, it would have been the first and only alternative in the market, thus enabling it to capture a larger market share and command higher prices.

It was agreed between the parties that the injunction did have the effect of depriving Krka of ‘first mover’ advantage. However, there was a significant difference between the parties as to the value of that advantage: AstraZeneca assessed the damage to Krka as £6 million whereas Krka's estimate was that it had lost over £30 million.

Analysis

Assessment of damages

Sales J's judgment highlights the complexities involved in making an assessment of such a hypothetical counterfactual scenario. The court heard evidence from representatives of both parties, Medicine Managers, experts on the pharmaceutical market and expert accountants and economists. (Medicine Managers are experienced pharmacists employed by Primary Care Trusts (in England and Wales) and heath boards (in Scotland and Northern Ireland) to provide guidance and assistance to GPs to encourage them to prescribe the cheapest relevant drugs to their patients, in order to minimise the costs for the NHS.) Sales J used this evidence to build a picture of the scenario had Krka not been subject to an interim injunction and launched Emozul in the UK in October 2010.

Evidence

AstraZeneca endeavoured to counteract the Medicine Managers' assessment of what they would have done in the counterfactual scenario by adducing evidence from an expert economist to the effect that there is a well-established tendency of witnesses to exaggerate the impact of monetary incentives in relation to hypothetical scenarios. However, Sales J was not impressed. He held that this was not a matter for expert evidence, and that it was not appropriate for the court to rely on academic studies in making an assessment of the evidence given by witnesses of fact. In fact, he found the evidence of the Medicine Managers to be a good representative cross-sample of the different Primary Care Trusts (ie differing populations, size, social conditions etc) and the evidence to be credible overall. In short, he preferred to rely on his own assessment of this evidence rather than on academic studies as to that evidence's credibility.

There was another significant issue on which AstraZeneca did not succeed. It sought to argue that, in the hypothetical scenario under consideration, if Krka had captured 20 per cent of the market, it would have dropped the price of Nexium by 10–15 per cent. This would have had two consequences. First, it would have enabled AstraZeneca to hold onto a greater share of the market, thereby reducing the amount of the market captured by Krka. Secondly, it would have reduced the price which Krka could charge, even with its first mover status. However, it emerged during the course of cross-examination that decisions by AstraZeneca as to reducing the price of a product were not taken solely with regard to competition in the UK but with regard to other factors including what effect a reduction in the UK price would have on prices in other markets. Unfortunately for AstraZeneca, it failed to call any evidence as to how those factors were likely to play out in this particular context. Accordingly, Sales J considered that he had no option other than to ignore that factor altogether and assess the counterfactual scenario on the basis that AstraZeneca would not have dropped the price for Nexium.

Asserting the difficulties in assessing loss

In setting out the legal framework surrounding the assessment of damages due under cross-undertakings in damages, Sales J made reference to Mann J's judgment in Smithkline Beecham v Apotex [2006] EWCA Civ 658 in relation to the relative difficulty of assessing each party's loss. In doing so, he reiterated that it does not lie in the mouth of the claimant to submit at the interim inunction stage that it is going to be easier to assess the defendant's loss than its own, only to submit at the damages stage that in fact the defendant's damages are very difficult to assess, that the onus in proving damages lies on the defendant and that, accordingly, the court should only take into account that which the defendant can establish with an element of certainty.

Outcome

Sales J concluded that a substantial percentage of the Primary Care Trusts, health boards and dispensing doctors would have switched to Emozul if Krka had been able to launch in October 2010, largely accepting the switching figures submitted by Krka with a cut-off date in 2015. Since the number of prescriptions made is published, this calculation could easily be made. Sales J thus left the final damages calculation to be agreed between the parties' experts. It seems likely that the final figure will be more towards Krka's value than AstraZeneca's.

Practical significance

The main point that comes across in Sales J's judgment is the difficulty in making an assessment of the damages due under a cross-undertaking in damages in relation to the launch of a pharmaceutical, or any other, product. Building a picture of the hypothetical counterfactual scenario had an injunction not been imposed is a complicated and detailed task. Given those scenarios, it would appear that the court tends to be more comfortable in relying on the evidence of those people who are familiar with the field and what goes on in practice rather than on expert forensic evidence. In this instance, Sales J placed significant reliance on the evidence of the Medicine Managers and his own assessment of that evidence and was not prepared to accept the theoretical suggestions that that evidence had a tendency to be overstated.

Different notions of "copyright-protected work" in Europe: the JIPLP-GRUR Int seminar

Silke: "We still don't have
100% harmonisation, if
we have it at all" ..."

A packed audience met today in the lovely new building of the Max Planck Institute for Innovation and Competition (MPI), Munich, to participate in the fourth in the series of JIPLP-GRUR Int seminars. The event was opened with a warm welcome from Professor Josef Drexl, followed by short addresses by GRUR President Dr Hans-Peter Kunz-Hallstein and Jeremy Phillips.

First to speak was Dr Silke von Lewinski, who addressed the position of protected subject-matter under the European Union's laws and judicial rulings. Silke reviewed the provisions of the Software Directive, the Database Directive and the Term Protection Directive which addressed specific cases in which protection was to be accorded to "the author's own intellectual creation", on what was initially been assumed by all (especially in the light of Recital 16 to the Term Protection Directive) to be the basis that in all other situations the definition of protectable subject matter

Silke then addressed the controversial ruling in Court of Justice of the European Union (CJEU) Case C-5/08 Infopaq in which "the author's own intellectual creation" was set as the norm for protectable subject matter, together with the case law that followed it in Cases C-03/08 and 429/08 Premier League, C-145/10 Painer, C-393/09 SAS v World Programming and Case C-604/10 Football Dataco. These qualified Infopaq somewhat by stipulating that a sports event as such was not "the author's own intellectual creation" and that account should be taken of the scope for creativity which was open to the author. In the absence of  "the author's own intellectual creation", the addition of significant skill and labour does not imbue the work with the quality of being copyright-protected. Likewise, where function dictates form, there is no exercise of independent intellectual creation.

Dr Karl-Nikolaus Peifer then reviewed the concept of individuality/originality in German law. Unlike "the author's own intellectual creation", Germany requires "personal intellectual creation". Evidently these terms do not match. Karl-Nikolaus looked at the term "original" in other jurisdictions: depending on the country, it was interpreted as "personal impression" or "not copied".   Case C-145/10 Painer appears to support the requirement of there being a need for a "personal touch"; AG Mengozzi in Case C-604/10 Football Dataco addressed this contrast, effectively making a choice in favour of the (continental) personal input approach over the "not-copied" approach.

Said Karl-Nikolaus, there were five tests to be satisfied before a work was protected in German law: 'fixation' (a better word might be "expression"), 'intellectual content', 'creation' (meaning something that does not exist in nature and is not an objet trouve),  'personal input' and 'level of creativity'.  He sought to explain each of these and to pin them, where possible, to CJEU. Karl-Nikolaus then took the example of a Mondrian painting: would every painter, seeking to achieve the same effect, reach the same solution? If so, there would be no personal level of originality in it. He concluded that the German law fits well with the EU standards, though conceptually "personal" may mean more than "own".


Next to speak was Professor Antoon Quaedvlieg, speaking on the position under Dutch law, addressing minimal originality and technical exclusion.  His paradigm case was S&S v Esschert, Hoge Raad, 25 October 2013, involving an action for infringement of copyright in a fire basket (left).  Three criteria in particular were cited: was there a "personal stamp"? Does the work have its "own original character", and is it not dictated by technical criteria? On this basis, the Dutch ruling on copyright protection for scents fits with Case C-145/10 Painer and is probably right -- unless the French are right when their Cour de Cassation say that a scent is a single application of a piece of know-how.

Antoon then turned to the recent Dutch rulings in the complex Stokke litigation over the TRIPP TRAPP child's chair. How much of its design is determined by considerations of anatomy and stability, or is there more to it? The Dutch court of appeal considered it a revolutionary design that deserved a wide scope of copyright protection, so long as its technical functionality is kept free. But is this decision wholly in accord with the position of the CJEU? The level of "personal imprint" required of an original work is very low: anything above "zero level" is fine in terms of copyright protection. In the Stokke case, there were two such elements, which is more than enough.

Last to speak was JIPLP Deputy Editor Eleonora Rosati, speaking on the UK position.  She started with s.1(1) of the Copyright, Designs and Patents Act 1988, which lists the descriptions of protected works: the list is a closed list and only protects those works that fall within it. This is a "pigeon-hole" approach in which, for example, different copyrights subsist in the words lyrics and the music of a song.  "Originality" only applies explicitly to authors' works.  The UK is going through a transitional phase at the moment. While the gist of Copinger & Skone James is that "a work is a work", Cornish, Llewelyn & Aplin suggest that there must be both the right sort of work and that some sort of effort must have gone into it.

What is better, a unitary approach, recognising one set of criteria for protection, or a categorised one? Mr Justice Laddie favoured the former, while Sir Robin Jacob preferred the latter.  Eleonora illustrated the problem by reference to two "works" -- the set from which an Oasis album cover shot was taken and the Star Wars Storm Troop helmet (which was not a "sculpture").

Following these presentations and a refreshing cup of coffee, a panel discussion ensued and a good time was had by all.  JIPLP says "Thanks" to everyone concerned, and especially to our German hosts.

JIPLP and friends at INTA 2014: come and visit us

Confused? Now you know
where to find us!

Oxford University Press, publishers of the Journal of Intellectual Property Law & Practice (JIPLP) and a growing list of IP titles, will be represented at this year's International Trademark Association (INTA) 136th Annual Meeting in Hong Kong from 10 to 14 May 2014.

OUP can be found at booth 409. JIPLP editor Jeremy Phillips is attending the Meeting and, if he is not in the vicinity of the booth when you visit, he generally won't be too far away and you can arrange to meet him if you want to discuss anything to do with JIPLP.  Our commissioning editor Sarah Harris will also be there.  We'd appreciate the chance to meet readers, subscribers, authors and would-be contributors, so please take the opportunity to come and say "hello".

Even more books for review!

Earlier this week JIPLP announced that it had five more books for review; now here are a further four.  As usual, we invite readers of this weblog to let us know if they would like to write a book review, indicating clearly (i) which book they would like to review and (ii), if their interests and qualifications are not already known to us, why they feel that they should write the review.  If you'd like to write a review, please email Sarah Harris at sarah.harris@oup.com and let her know by close of play on Monday 10 March.

We are anxious to receive interesting, perceptive reviews and are will no longer be prepared to accept reviews that consist of little more than a recital of the book's contents together with any of the usual clichés ("essential reading", "everyone should have this book", "the author is to be congratulated", "looking forward to the next edition" etc) that haunt lazily-written book reviews.

The following books are on offer:

• Inside Intellectual Property: Best Practice in Intellectual Property Law, Management, and Strategy
Author: Michael Jewess
Publisher: Chartered Institute of Patent Attorneys

"This management text, written by Michael Jewess and published by the Chartered Institute of Patent Attorneys, seeks to help intellectual property law practitioners relate law and legal practice to their clients’ business objectives. It is written for insiders by an insider who believes that the devil is often in the detail of which an outsider is unaware. Effecting a grand strategy may often depend on the details of a law, on the details of claim and agreement drafting, and even on what boxes (“fields”) are available on computer screens. A consequence of this perspective is, it is hoped, that the book will be of immediate practical value to practitioners, building on what they already know rather than imposing some external philosophy with unnecessary novel concepts."

Further information is available from the book's web page here

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• Trademark Valuation: A Tool for Brand Management, 2nd Edition
Authors: Gordon V. Smith and Susan M. Richey
Publisher: Wiley

"The Second Edition of Trademark Valuation is a fresh presentation of basic valuation principles, together with important recent changes in worldwide financial reporting regulations and an update on the current worldwide legal conditions and litigation situation as they relate to trademarks.

A new section discussing issues surrounding valuation of counterfeits and the economic effects of trademark counterfeiting is included in this informative Second Edition."

Further information is available from the book's web page here

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• TRIPS Compliance, National Patent Regimes and Innovation,
Authors: Sunil Mani and Richard R. Nelson
Publisher: Edward Elgar Publishing

"With respect to intellectual property regimes, a significant change in international governance rules is mandated by the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

This topical volume deals with the processes through which TRIPS compliance was achieved in four developing country jurisdictions: Brazil, China, India and Thailand. More importantly, it analyses the macro and micro implications of TRIPS compliance for innovative activity in industry in general, but focuses specifically on the agrochemical, automotive and pharmaceutical sectors".

Further information is available from the book's web page here

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• Intellectual Property and the Common Law,
Editor: Shyamkrishna Balganesh
Publisher: Cambridge University Press

"In this volume, leading scholars of intellectual property and information policy examine what the common law - a method of reasoning, an approach to rule making, and a body of substantive law - can contribute to discussions about the scope, structure and function of intellectual property. The book presents an array of methodologies, substantive areas and normative positions, tying these concepts together by looking to the common law for guidance. Drawing on interdisciplinary ideas and principles that are embedded within the working of common law, it shows that the answers to many of modern intellectual property law's most puzzling questions may be found in the wisdom, versatility and adaptability of the common law. The book argues that despite the degree of interdisciplinary specialization in the field, intellectual property is fundamentally a creation of the law; therefore, the basic building blocks of the law can shed important light on what intellectual property can and should (and was perhaps meant to) be."

Further information is available from the book's web page here

The Belgian beer battle: the scope of protection afforded to colour marks

Author: Jeroen Muyldermans (Altius, Brussels)

InBev Belgium v Brouwerijen Alken-Maes, Court of Appeal of Brussels, 2012/AR/1999, 21 October 2013

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu020, first published online: March 4, 2014

The Court of Appeal of Brussels confirmed a first instance decision accepting the validity of the abstract Benelux colour mark blue owned by Belgian beer brewer Alken-Maes and finding that the mark had been infringed. This decision clarifies the scope of protection afforded to colour marks against use of identical or similar signs.

Legal context

The unified Benelux trade mark law is governed by the Benelux Convention on Intellectual Property (BCIP). Article 2.1 BCIP, which corresponds to Article 2 of the Trade Mark Directive (TMD), stipulates that a trade mark may consist of any signs capable of being rep­resented graphically, provided that such signs are capable of distin­guishing the goods or services of one undertaking from those of other undertakings.

The requirements for the graphic representation of a trade mark are that it be clear, precise, self-contained, easily accessible, intelligible, durable and objective (Case C-273/00 Sieckmann [2002] ECR I-11737, para 55). In the context of a colour or colour combination, this implies, among other things, that filing a sample of the colour is insufficient, as this may deteriorate over time. Instead, it is indispensable to designate the colour using an internationally recognized identification code, such as the Pantone Matching System or the RAL Colours system (Case C-104/01 Libertel [2003] ECR I-03793, para 37).

It is generally accepted that, since a colour is not inherently capable of distinguishing the goods, distinctiveness without prior use is impossible except in exceptional circumstances. This limitation can be avoided by showing that the mark has acquired distinctive character through use. If the colour mark has passed the test of familiarization, it may prevent third parties from using identical or similar signs in the course of trade. Those conditions are provided in Article 2.20.1 BCIP (Article 5 TMD).

Facts

Alken-Maes which is part of the Heineken group, is one of Belgium's oldest surviving breweries. As early as the 1960s, it began marketing its lager under a trade dress using a distinct shade of dark blue.

In 2006, Alken-Maes successfully applied for registration of an abstract Benelux colour mark, claiming protection for the International Pantone Code 2478C in relation to beers.

In 2012, InBev Belgium, part of Anheuser-Bush InBev (the world's largest brewing conglomerate), redesigned its low-alcohol beer, changing from JUPILER BLUE to BLUE BY JUPILER under the following trade dress:

Alken-Maes sought injunctive relief, relying on, among other things, the infringement of its colour mark which it claimed was well known in part of Benelux. Surveys had shown that over 60 per cent of Belgian consumers attribute the distinct shade of dark blue to beer—in particular, to Alken-Maes. Alken-Maes' claim was based on Article 2.20.1(a) and 2.20.1(c) BCIP (corresponding to Article 5.1(a) and 5.2 TMD).

Analysis

The court accepted the validity of the colour mark and upheld the infringement, at least insofar as it was based on the enlarged protection conferred to well-known marks.

First, the court considered whether the colour used by InBev for its beer constituted a sign in relation to that product or, by contrast, a simple property of things or decoration. That assessment, which is a question of fact, depends on the context in which the colour is used as well as the perception of the average consumer of those goods (Case C-104/01 Libertel, para 27). According to the court, the use by InBev Belgium of the colour blue for its beer packaging was done ‘as a trade mark’—that is, with the intention to distinguish the origin of the product. That finding was apparent from the predominant appearance of the blue colour on the cans and bottles, and was not called into question by the presence of verbal elements on the packaging. On the contrary, due to its obvious meaning, the verbal element ‘BLUE’ even strengthened the conclusion the colour was used a distinctive sign.

While there was no discussion of the fact that the sign was used in the course of trade for goods identical to the those for which the mark was registered, it was equally apparent to the court that the colour mark is well known, which was evidenced by its long-lasting and heavy use on the Belgian market, as well as by the associated investments for advertising emphasizing the use of that colour. The recognition that the mark enjoyed among 60 per cent of Belgian consumers was largely sufficient for the mark to be considered as enjoying a reputation in Benelux.

When comparing the mark with the sign, the court, however, refused to accept that both were identical in the perception of the average consumer. Even if that consumer was not likely to display a higher degree of attention in relation to these kinds of fast-moving consumer goods, the difference between the mark and sign, the latter found to be characterized by a gradation of dark and light blue, were not so insignificant that they would go unnoticed (Case C-291/00 LTJ Diffusion [2003] ECR I-02799, para 53). Although not identical, a high degree of similarity between the mark and the sign was undeniable, to the extent that the average consumer of beers, who rarely makes a direct comparison between the products, would be likely to establish a link between the two. The finding that consumers would recall the mark when seeing InBev Belgium's packaging was not called into question by the addition of the well-known mark JUPILER and the bull logo, because these marks were less prominent and visible, especially when seen on the shelves from a certain distance. Because of that, the court also noted that the colour blue retained an independent distinctive role within the compound sign, constituted by the packaging, and could therefore be challenged as such.

As to the different types of injury referred to in Article 5.2 TMD, the court surprisingly did not look into the unfair advantage taken from the repute of the mark, but held that InBev Belgium's trademark use of a highly similar colour was likely to cause detriment to the distinctive character of the colour mark (Case C-323/09 Interflora [2011] ECR I-08625, para 79). That, according to the court, was sufficiently clear from the counter-claim seeking to annul the colour mark for lack of distinctive character by relying on examples of other beers using a shade of blue.

Finally, InBev Belgium could not rely on any due cause for the infringing use. The alleged prior use of the colour blue which it claimed was deemed to be irrelevant by the court because the shade of blue used for the previous packaging—before its rebranding—was different and was also used in a less distinctive way.

Practical significance

Colours are widely used on packaging and send a powerful, attention-grabbing signal that it is often processed more rapidly by the human brain than verbal or figurative signs, especially when perceived at a distance. A single colour or colour combination can thus fulfil the function of a trade mark: to guarantee the origin of goods or services to consumers or end users by enabling them unambiguously to distinguish particular goods or services from others.

Belgian case law demonstrates that, once registered, a colour mark is a powerful tool. Infringements are often easily demonstrated and accepted by the court on the grounds that a colour mark which has acquired distinctiveness through use tends to be regarded as having acquired a reputation. The factors to consider in examining whether a mark is well known are identical to those for the process of familiarizing the relevant public. Marks that are well known because of the use made of them enjoy a broader scope of protection and may be relied on to prevent third parties from using similar or identical colours, even if that is done in combination with other (sometimes well-known) marks.

This colour mark ruling is the latest in a series of decisions in which Belgian courts have ruled in favour of the trade mark owner. Earlier cases included the blue-silver colour mark of Red Bull (Pres Commercial Court of Brussels, 8 June 2011, A/10/06233), the heavenly blue colour mark of Rizla (Court of Appeal of Brussels, 21 March 2011, 2008/AR/2318) and the orange colour mark of Veuve Clicquot (Pres Commercial Court of Brussels, 4 November 2011, A/11/04774).

JIPLP-GRUR Int partnership survey: closing date extended

Back on 18 February we reminded readers that we would greatly appreciate a little feedback from them regarding our partnership with the German Association for the Protection of Intellectual Property (GRUR) and our content exchange with GRUR Int.  To this end, we ran a brief online JIPLP/GRUR Partnership Survey, for which the closing date was 28 February 2014.

While we have received a very gratifying 72 responses, Oxford University Press has decided to extend the closing date of the survey until Friday 14 March in the hope of receiving some more.  Do please participate if you can; your opinions are very valuable to us.  You can access the survey here.

For more details of the JIPLP-GRUR partnership, click here for details.

Five more books for review

JIPLP has five more books for review.  As usual, we invite readers of this weblog to let us know if they would like to write a book review, indicating clearly (i) which book they would like to review and (ii), if their interests and qualifications are not already known to us, why they feel that they should write the review.  If you'd like to write a review, please email Sarah Harris at sarah.harris@oup.com and let her know by close of play on Wednesday 5 March.

We are anxious to receive interesting, perceptive reviews and are will no longer be prepared to accept reviews that consist of little more than a recital of the book's contents together with any of the usual clichés ("essential reading", "everyone should have this book", "the author is to be congratulated", "looking forward to the next edition" etc) that haunt lazily-written book reviews.

The following books are on offer:

• Information Technology and Intellectual Property Law, 6th edition
Author: David Bainbridge
Publisher: Bloomsbury Professional Law, Tax and Accounting

"The book adopts an in-depth, yet practical approach to equip lawyers specialising in IP and IT laws with a thorough and up-to-date understanding of this important area of practice. It is particularly useful when advising clients involved in, or contemplating litigation, and it provides a useful source that points to further research.

It is also an ideal resource for people specialising in the development and delivery of IT projects. This includes SME and start-up companies, software developers, website and e-commerce specialists, information society service providers, and their sub-contractors, clients or users. It is also suitable for academic readers, especially computer science and postgraduate students taking subjects such as copyright, patents, software development and e-commerce".

Further information available from the book's website here

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• The WTO Agreements on TRIPS, A Commentary,
Editors: Justin Malbon, Charles Lawson and Mark Davison
Publisher: Edward Elgar Publishing

"This reference book is a major authoritative work that is clearly organised and presented, allowing users to navigate quickly to commentary on any element of TRIPS. The book begins with a context-setting section, providing guidance on interpreting TRIPS. It considers the salient elements of the Vienna Convention on the Law of Treaties, the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes, and the preamble to the Agreement Establishing the WTO. The book then follows the seven part structure of TRIPS, and provides an article-by-article analysis of each of its 73 provisions and specifically addresses the interpretation of key phrases in each article.

An essential resource for practitioners and scholars, this detailed and exhaustive volume will also prove invaluable to academics and students of intellectual property law, international law and trade law. It is a first point of reference for anyone needing to know more about TRIPS".

Further information available from the book's website here

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• Digital Copyright Law and Practice, 4th edition
Author: Simon Stokes
Publisher: Hart Publishing

"The first edition of this book in 2002 was the first UK text to examine digital copyright together with related areas such as performers' rights, moral rights, database rights and competition law as a subject in its own right. Updated editions have included the UK implementation of the 2001 Information Society Directive and commentary on user-generated content and the development of Web 2.0 and beyond. Now in its fourth edition, the book has been updated and revised to take account of legal and policy developments in copyright law and related areas, in particular the increasing role of the Court of Justice of the European Union in shaping EU copyright law.

The book helps put digital copyright law and policy into perspective and provides practical guidance for those creating or exploiting digital content or technology, whether in academia, the software, information, publishing and creative industries, and other areas of the economy. The focus is on the specifics of the law in this area together with practical aspects, including precedents and precedent checklists dealing with common digital copyright transactions. The latest edition has been expanded to include a discussion of Open Access, eBooks and app development and licensing. Both academics and practitioners will find the book an invaluable guide to this rapidly developing field of law".

Further information available from the book's website here

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• Intellectual Property, Innovation and the Environment
Editors: Peter S. Menell and Sarah M. Tran
Publisher: Edward Elgar Publishing

"This topical volume brings together seminal papers which explore the interplay of intellectual property, innovation and environmental protection. It traces the emergence of intellectual property as an environmental protection policy lever and examines the interaction of market failures at the intersection of technological progress and environmental protection. Further, it discusses concerns that have been raised about the use of proprietary rights in the service of environmental protection. Finally it considers alternatives to intellectual property, such as subsidies and prizes, which seek to encourage advances in environmental protection technologies.

With an original introduction by the editors, this important collection will be of interest to students, scholars and practitioners working in the field of intellectual property, innovation and the environment".

Further information available from the book's website here

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• Overview of the Appeal Proceedings According to the EPC
Authors: Hugo Meinders, Ingo Beckedorf and Gérard Weiss,
Publisher: HTel

"The Rules of Procedure of the Boards of Appeal of the European Patent Office were substantially revised in 2003. These Rules make it clear that the function of the Boards of Appeal is a judicial one, namely the review of the appealed decision. Thereto, the proceedings are essentially in writing and the case must as complete as possible at the early stages. They are more a judicial review of the decision than a continuation of the administrative first instance proceedings, particularly in opposition-appeal. Hence, the appeal proceedings are substantially different from the first instance proceedings, a fact not generally appreciated by parties attending appeal proceedings.

The book provides an easily readable overview of the appeal proceedings, in the three official languages of the European Patent Office, which helps in understanding the nature of the appeal proceedings before the Boards of Appeal.

The book also contains the complete text of the Rules of Procedure of the Boards of Appeal in the three official languages and an alphabetic index for each language".

Further information available from the book's website here

Can springboard injunctions be awarded in respect of non-infringing acts?

Author: Darren Smyth (EIP)

Smith & Nephew plc v Convatec Technologies Inc & Another No 2 [2013] EWHC 3955 (Pat) Patents Court, England and Wales, 12 December 2013

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu022, first published online: February 26, 2014

The Patents Court found that (i) Smith & Nephew's process for preparing silverized wound dressings did not infringe Convatec's patent; (ii) several experiments from Smith & Nephew's earlier development work, which were used to obtain regulatory (CE) authorization, did infringe the patent; and (iii) while the court was capable of granting final springboard injunctions to restrain non-infringing acts, this case did not justify the grant of such relief.

Legal context

The term ‘springboard’ injunction refers to an injunction granted in a situation such as where a defendant has built up a bridgehead or springboard into a market, and the springboard injunction is designed to deprive the defendant of that benefit. Springboard injunctions may arise in cases of misuse of confidential information, in which case the injunction relates to the benefit of that misuse. In patent cases, springboard injunctions usually restrain post-expiry acts which would have infringed the patent when in force. In this case, an injunction was requested that would have prevented acts which would never have constituted infringement of the patent as amended. As the judge noted, the important question that therefore arises is whether and in what circumstances the court should grant a final injunction which restrains what would otherwise be a lawful act.

Facts

This case is the latest in a series of disputes between Smith & Nephew and Convatec involving wound dressings. Convatec owns European Patent (UK) No 1 343 510, a patent for the silverization of gel-forming fibres used in wound dressings, and markets the wound dressing Aquacel Ag. Smith & Nephew developed a competing wound dressing, Durafiber Ag, which it planned to sell in the UK. In earlier proceedings, Smith & Nephew contested the validity of the patent, but the Court of Appeal upheld it in amended form (Smith & Nephew plc v Convatec Technologies Inc [2012] EWCA Civ 1638). Also in earlier proceedings, the Court of Appeal upheld a different patent owned by Convatec in relation to non-silverized versions of the wound dressings (Convatec Ltd & Another v Smith & Nephew Healthcare Ltd & Others [2012] EWCA Civ 520).

After the amendment of the patent, Smith & Nephew developed a new process to manufacture Durafiber Ag, and sought a declaration of non-infringement of the patent in relation to that new process. Convatec counterclaimed alleging infringement of the patent.

The relevant claim as amended is as follows: A method of preparing a light stabilized antimicrobial material, characterised in that the method comprises the steps of:

 (a) preparing a solution comprising an organic solvent and a source of silver in a quantity sufficient to provide a desired silver concentration in said material;

 (b) subjecting a material which includes gel-forming fibres containing one or more hydrophilic, amphoteric or anionic polymers to said solution for a time sufficient to incorporate said desired silver concentration into said polymer, wherein said polymer comprises a polysaccharide or modified polysaccharide, a polyvinylpyrrolidone, a polyvinyl alcohol, a polyvinyl ether, a polyurethane, a polyacrylate, a polyacrylamide, collagen, or gelatin or mixtures thereof; and

 (c) subjecting said polymer, during or after step (b) to one or more agents selected from the group consisting of ammonium salts, thiosulphates, chlorides and peroxides which facilitate the binding of said silver on said polymer, the agent being present in a concentration between 1 and 25% of the total volume of treatment, which material is substantially photostable upon drying, but which will dissociate to release said silver upon rehydration of said material.

Analysis

The significant figure approach

The first issue to be decided as to infringement was the construction of the concentration range of the agent used in step (c) and, specifically, the meaning of ‘1%’. (This concentration range had been introduced by the amendments made in the earlier proceedings.) Smith & Nephew's commercial process used an agent in a concentration of 0.77 per cent. Convatec submitted that this process infringed the patent because ‘1%’ should be taken to include any value which when rounded to the nearest whole number gives 1.

Birss J adopted a construction put forward by Smith & Nephew, to interpret ‘1%’ as stated to one significant figure, meaning between 0.95 and 1.5 per cent, calling it the ‘natural approach of the skilled person … in these circumstances’. He noted the asymmetry of the range according to this interpretation but did not see that as a reason to reject its use. The concentration of agent used by Smith & Nephew's commercial process therefore did not infringe the patent.

Development experiments

Based on the decision in relation to the first issue, the only remaining acts alleged to infringe the patent were four experiments carried out by Smith & Nephew in earlier development work which were used to generate data to obtain regulatory (CE) authorization for Durafiber Ag. Just before trial Convatec accepted Smith & Nephew's argument that a large number of other experiments fell under the ‘experimental use’ exception under s 60(5) of the Patents Act 1977, leaving only these four at issue.

Whether the four experiments actually infringed depended on whether ‘carryover’, that is the volume of fluid brought forward from step (b), should be taken into account when calculating the concentration of agent in step (c). If carryover was not taken into consideration, the concentration would infringe the claim as construed by the judge. If carryover was calculated using a ‘theoretical’ method according to Smith & Nephew's original Process Description, the concentration would also infringe. However, according to a later-submitted ‘empirical’ method, which involved carrying out tests subsequent to the four experiments at issue, Smith & Nephew argued that the experiments were actually at a lower concentration and did not infringe the patent.

Birss J accepted that carryover should be taken into account, and concluded that the only reliable figures he had to go on were those in Smith & Nephew's Process Description where the ‘theoretical’ method been used. Accordingly, the four experiments were held to infringe the patent as amended.

Springboard relief

The final issue to be decided was that of springboard relief. Convatec argued that the four infringing experiments which had been used in obtaining regulatory (CE) authorization had provided a springboard allowing Smith & Nephew to market Durafiber Ag earlier than if seeking regulatory authorization had followed the development of the non-infringing process. Convatec therefore sought a final springboard injunction, notwithstanding that the injunction would apply against acts that had been held not to infringe the patent.

Birss J set out the following factors to be considered in deciding whether final springboard relief is appropriate in patent cases:

i Caution is required before a final injunction is granted restraining an otherwise lawful activity. Nevertheless in a proper case it will be.

ii The nature of any unwarranted advantage relied on should be identified. The precise relationship between the unlawful activity in the past and the later acts which are said to exploit that unwarranted advantage needs to be considered.

iii If an injunction is to be granted it must be in an appropriate form and for a duration which is commensurate with the unwarranted advantage relied on.

iv The court must be particularly careful not to put the claimant in a better position than it would be if there had been no infringement at all, especially if otherwise lawful competitive activity will be restrained.

v In considering what relief to grant, the availability of other remedies apart from an injunction needs to be taken into account, not only damages but, as in Vestergaard [Vestergaard Frandsen v BestNet Europe [2009] EWHC 1456 (Ch)] the availability of an account of profits should be considered too.

He also held that the court is able to grant an injunction of the kind sought by Convatec, ie an order to restrain acts that would never have infringed a patent, but that it was unnecessary in the present case. This was primarily because he concluded that it was likely as not that Smith & Nephew would have been able to obtain marketing approval by the time of his decision even if they had never infringed the patent, as sufficient time had passed to allow them to obtain that approval on the basis of the non-infringing process. Thus it was held that the springboard had expired.

Practical significance

In this case, Birss J confirms that it is possible for the court to grant a final springboard injunction in respect of acts which themselves would not infringe. The judgment also sets out the factors to be considered in deciding whether springboard relief is appropriate in patent cases. Finally, the case shows that, in the absence of evidence or a patent specification suggesting the contrary, rounding to the number of significant figures expressed in the patent claim is an approach likely to be adopted by the court in interpreting numerical values.

JIPLP readers and writers: now we are 200!

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Supreme Court of Canada rules on substantial copying

Author: Emir Crowne and Kiratjot Tiwana (University of Windsor, Faculty of Law)

Cinar Corporation v Robinson, 2013 SCC 73, 23 December 2013

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu009, first published online: February 17, 2014

The Supreme Court of Canada unanimously confirmed that a substantial part of the respondent's work had been copied by the appellants.

Legal context

Section 3(1) of Canada's Copyright Act, RSC 1985, c C-42 gives the owner of a work the ‘sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof …’.

Facts

In 1985 Robinson's work was registered with Canada's Intellectual Property Office. The registration identified Robinson as the owner of The Adventures of Robinson Curiosity (‘Curiosity’) and Les productions Nilem Inc (‘Nilem’) as the owner of the rights to the work. Robinson was the sole director and shareholder of the corporation Nilem. From 1985 until 1987 Robinson and Nilem worked on getting support for the production of the project.

In 1986 Cinar Corporation was hired to promote the project in the United States and to provide general advice. Robinson gave directors of Cinar, Ronald Weinberg and his late wife Micheline Charest, copies of his work. Nothing came of their efforts to find support in the United States.

In 1987 Robinson partnered with another company (Les Productions SDA Ltée) to produce the work into a television show. Through the partnership two more corporations were formed, Curious Island Productions Inc and Curious Island Enterprises Inc. After this partnership was developed, Robinson and SDA attended a convention in France where they presented Curiosity to a creator of children's shows, Cristophe Izard. However, after the project failed to attract support and stalled, the two new corporations were dissolved in 1990.

In 1995 Robinson watched a children's television show called Robinson Sucroë (‘Sucroë’) and saw several striking similarities to his work Curiosity. He launched an action for copyright infringement against the appellants.

At trial (2009 QCCS 3793), Justice Auclair found for the creators of the work. Noting that Curiosity ‘was an original work protected by copyright, that the creators of Sucroë had copied Curiosity, and that the features reproduced in Sucroë represented a substantial part of Curiosity’ (2013 SCC 73, para 11). The Court of Appeal upheld the trial judge's decision for the most part (2011 QCCA 1361). Variations were only made with respect to the personal liability of one of the parties and the overall quantum of damages originally awarded.

Analysis

The Chief Justice, writing for a unanimous Court, held that a substantial part of the respondents' work had been infringed. The Court noted that ‘substantial part’ was a flexible notion that was qualitative in nature. At paras 26 and 55 the Chief Justice said:

A substantial part of a work is a flexible notion. It is a matter of fact and degree. ‘Whether a part is substantial must be decided by its quality rather than its quantity’: Ladbroke (Football), Ltd. v William Hill (Football), Ltd [1964] 1 All E.R. 465 (H.L.), at p. 481, per Lord Pearce. What constitutes a substantial part is determined in relation to the originality of the work that warrants the protection of the Copyright Act. As a general proposition, a substantial part of a work is a part of the work that represents a substantial portion of the author's skill and judgment expressed therein ….

Finally, the works at issue had both patent and latent similarities. Or, as Dr. Perraton explained it, they shared ‘perceptible’ and ‘intelligible’ similarities. ‘Perceptible’ similarities are those that can be directly observed, whereas ‘intelligible’ similarities—such as atmosphere, dynamics, motifs, and structure—affect a viewer's experience of the work indirectly. Expert evidence was necessary to assist the trial judge in distilling and comparing the ‘intelligible’ aspects of the works at issue, which he would not otherwise appreciate. Consequently, the trial judge did not err in admitting the expert evidence of Dr. Perraton. (2013 SCC 73)

Practical significance

Substantial taking requires a careful balancing. An author's skill and judgment must be balanced the need for a robust public domain. The Chief Justice herself noted:

The need to strike an appropriate balance between giving protection to the skill and judgment exercised by authors in the expression of their ideas, on the one hand, and leaving ideas and elements from the public domain free for all to draw upon, on the other, forms the background against which the arguments of the parties must be considered. (2013 SCC 73, para 28)

The Court embraced the trial judge's ‘holistic’ approach in determining the nature and quality of the taking (ibid, para 33). The Court also doubted whether a wholesale incorporation of the American ‘abstraction-filtration-comparison’ approach into Canadian law was appropriate. At paras 33–35 the Court stated:

The trial judge found that the Cinar appellants copied a number of features from Robinson's Curiosity, including the visual appearance of the main protagonist, the personality traits of the main protagonist and of other characters, visual aspects of the setting, and recurring scenographic elements. He concluded that, considered as a whole, the copied features constituted a substantial part of Robinson's work.

The Cinar appellants argue that instead of applying a holistic approach, the trial judge should have applied a three-step approach requiring him to (1) determine what elements of Curiosity were original, within the meaning of the Copyright Act; (2) exclude non-protectable features of Robinson's work (such as ideas, elements drawn from the public domain, and generic elements commonplace in children's television shows); and (3) compare what remains of Curiosity after this ‘weeding-out’ process to Sucroë, and determine whether a substantial part of Curiosity was reproduced.

The approach proposed by the Cinar appellants is similar to the ‘abstraction-filtration-comparison’ approach used to assess substantiality in the context of computer software infringement in the United States: see Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693 (2nd Cir. 1992) … It has been discussed, though not formally adopted, in Canadian jurisprudence: Delrina Corp., at paras. 43–47. I do not exclude the possibility that such an approach might be useful in deciding whether a substantial part of some works, for example computer programs, has been copied. But many types of works do not lend themselves to a reductive analysis. Canadian courts have generally adopted a qualitative and holistic approach to assessing substantiality. ‘The character of the works will be looked at, and the court will in all cases look, not at isolated passages, but at the two works as a whole to see whether the use by the defendant has unduly interfered with the plaintiff's right’: J.S. McKeown, Fox on Canadian Law of Copyright and Industrial Designs (loose-leaf), at p. 21–16.4 (emphasis added).

Indeed, Curiosity may have sparked this litigation, but the Court left no doubt as to the principles to be applied. ‘Substantial taking’ is a holistic endeavour. Qualitative aspects of the plaintiff's work must be compared against the defendant's work. Those aspects may include ‘perceptible’ similarities that can be directly observed' and ‘intelligible’ similarities (such as themes, structure and atmosphere).