Latest JIPLP now online with editorial on whether IP creates jobs

The November 2011 issue of the Journal of Intellectual Property Law & Practice (JIPLP) is now available online. Subscribers to the electronic version of the journal can access it in full; non-subscribers can still take a look at this issue's contents -- for which they can acquire access on an article-by-article basis by pay-per-view. This month's Editorial, "Gainful Employment", asks some questions about the popular assumption that intellectual property rights create the right climate for innovation and thus create jobs. This piece is reproduced in full here:
"Gainful employment

The recent debate over the need to reform, strengthen and generally reinvigorate intellectual property rights has taken on a stirring note, as IP champions have argued that we can innovate our way out of the current financial malaise that has blotted the economic performance of some of the world's most creative nations. With better IP protection, it is argued, there will be more investment in innovation, with the result that new jobs will be created, more people will be gainfully employed and paying taxes rather than living off them.

This argument is most appealing since it binds together all those things we hold dearest and, what's more, suggests a sort of virtuous circle in which the revenues generated by increased employment and the prosperity which accompanies it will likely be reinvested in the development of new IP-based products and processes, thus stimulating even fuller employment.

There is however one problem. The assumption that IP investment creates or even enhances employment is not self-evidently true but in need of verification—and this editorial doubts that it is true except on an ad-hoc basis.

If we recall the agricultural revolution which changed the face of Europe in the eighteenth and nineteenth centuries, the prime effect of the investment in new means of performing agricultural tasks was to emancipate labour from the often back-breaking seasonal tedium of physical labour on the land, but its economic effect was to enable land to be husbanded and crops harvested through the use of a smaller labour force, not a larger one. Redundant labour, an impoverished drain on charitable resources in rural areas and without alternative prospects for work, drifted to the cities.

Next came the industrial revolution, when manufacturing machinery enabled the production of goods of higher quality and in greater quantity than those produced by the manual labour of skilled artisans. Excess production might have caused even greater local redundancy than it did, were it not for the potential for machine-made goods to be exported, thus exporting unemployment from the place of manufacture to the destination of imports. Automation has also reduced the vast numbers formerly needed in order to run a railway, deliver messages or man an army. Now, in the twenty-first century, much of the West lives in a post-industrial society which makes very little but instead provides an almost endless round of professional and other services.

The printing press was a great invention -- except for scribes 
Within the field of the arts and culture, the impact of innovation has taken its toll on employment too. It has been said that, in the years following the introduction of the printing press to Venice in the second half of the fifteenth century, some 30,000 scribes lost their livelihoods. The same result must have occurred in other centres of book production, though not always on the same scale. Even in our own time, we have seen entire orchestras replaced by synthesizers that replicate the sound, tone and volume of the original with plausible accuracy. Where once live bands performed at parties, the sound recording, skilfully manipulated by a disc jockey, provides the entertainment. The onset of the social media has seen a similar shrinkage of gainful employment, as newspapers close, reporters dwindle in number and news is increasingly commoditised through the media of the weblog and social networks.

Where then is employment created? A cynic will point to the sweatshops of the developing world to which labour-intensive manufacturing work has been outsourced, or to the coffee plantations which are kept busy by the demands made upon them through another successful intellectual property device—the branding of commodities so as to make them particularly valuable in the eyes of Western consumers.

But we should not be cynical, we should just be honest. Intellectual property, and investment in it, is a good thing in itself: it increases choice and meet demands in a way in which nothing else can. We must not however allow false claims to be made for it. If IP creates employment, let's show how and where it does so".

A valued peer reviewer gives a reminder

This weblog has never before quoted any of its peer reviewers, but it may be beneficial to draw these words -- written by one of JIPLP's longest-serving and most valued peer reviewers --  to the attention of prospective authors:
"... this article submission indicates that the suggested authors' guidelines need to be amended to make it clear that the journal's title is meaningful and not just a marketing ploy.  I say that because  ... many so-called "specialist" journals pay only minimal attention to their own titles, and I would not be surprised to find out that [name of author] (and, as is more likely, his [name of co-author]) were following ... practice in essentially ignoring the journal title ...."
It may seem surprising, but JIPLP receives a considerable number of submissions that do not fit within the scope of "intellectual property law and practice". Some are picked up and rejected before the peer process commences; others are less blatant and are not detected until they fall into the peer reviewer's hands.

Recent articles include submissions which are apparently about the protection of geographical indications but which turn out to be more like advertisements for the beneficial properties of the product itself; economic analyses which are richly encrusted with algebra but have little or no law at all; political diatribes and philosophical speculations.

Please remember: our core readership consists of people who work in the field of intellectual property, whether as practitioners, rights managers, judges, teachers, business consultants or administrators. If you are thinking of sending us a piece for publication and cannot realistically imagine any of the categories of person listed here reading your piece while they are at work, or at least working, as a way of enriching their understanding -- JIPLP may not be the right place for your contribution.

Art, Style, Design: a thought-leader

Professor Mario Franzosi is a founder-member of the Journal of Intellectual Property Law & Practice Editorial Board and a well-known thought-leader in both international and European intellectual property circles. A leading advocate of the need for fresh and functionally useful thinking in the field of design protection, he is the author of "Design protection Italian style", Journal of Intellectual Property Law & Practice (2006) 1 (9): 599-602..

The following piece marks Mario's appointment as the International Association for the Protection of Intellectual Property (AIPPI) rapporteur for Design.  JIPLP hopes that, apart from serving as a clarion call for the reform of design protection law, it will generate the submission of articles to the journal on that subject.

Art, style, design
1.     The AIPPI logo
The occasion for this article stems from my appointment as rapporteur for AIPPI for the Question: Design. At first, I considered the AIPPI logo, to see whether it is visual (or graphic) design (right). To me, it is clear what the logo expresses. To the left you see a school of fish, which confidently enter a trap in the centre. However, the trap is broken, so that fish exit to the right. There is nothing wrong, however, since the fish are inedible. The acronym AIPPI (which is in French) clearly summarizes the idea: Association Internationale de Pecheurs de Poissons Inutiles, in English: International Association of Inedible Fish.
I do not believe this logo is a work of design. In addition, it is somehow deceptive: a trap for fish. AIPPI should or must change it. 
2.     Art, style, design
So we have to consider the protection of design in the world. I have to say at the outset that the various laws of the various countries are very, very different. What is design in country A is not design in B; what is protectable in one country is not in another. But it is worse than that. It is not infrequent that, in the same country, in case of litigation the first instance court reaches conclusions utterly different from the higher court. Of course, this event is not infrequent in other areas, but what is peculiar here is the confidence in which the lower court says something (like: this design is extraordinary and clearly deserves protection) and the higher court says, with the same or greater confidence, just the opposite (this is a ridiculous and stupid design). There are no grey areas: what is absolutely white for somebody is absolutely black for others. How is it possible? The judges adopt a lay concept of design, and apparently there are first grade and second grade laymen.
I believe the starting point should be to try to understand what is design in the real world, before the law comes into consideration. To this aim, a distinction should be made between Art, Style and Design.  
2.1.Art results from the work of artists, those people who, with constant and enduring passion, communicate in understandable form their feelings and thoughts -- feelings and thoughts that are universal: those of the human race. 
Art expresses those permanent ideas like Beauty, Love, Courage, Misery, Heroism, Passion, Faith, which are everlasting principles and sentiments. The message is not immediately evident; especially for modern art, it has to be detected or interpreted; when detected, it makes an everlasting impression. 
Works of Art are in Museums, and also in the lobbies of the most prestigious law firms. Some months ago I was in the office of a well-known, high-profile IP lawyer and I saw in the lobby a most catching picture. In this picture I clearly recognized that lawyer (looking, perhaps, a little younger than his actual years), working tirelessly for a case. The picture expressed clearly the intelligence, dedication, tension and ability of the professional. It seemed that this IP star was considering only the interest of his client, and nothing leaked from the external world. I expressed my admiration to the secretary. And she said (I told you that the meaning of the work of art is not immediately evident !): “Yes, Sir, true. However, it is a fact that the painting depicts a lobster, cooked with onions and potatoes”. I will not tell whether it was lobster or potato or onion that brought me to the identification with our famous friend. 
2.2. Style is typical of stylists, those people who express their style, their personality  in their creations.  A work of style is recognizable and easily attributed to the stylist. It is the signature of the creator, like a real signature made with a pen (stylus, in Latin). It must show the personality of the creator; if not, it is a creation with no style. And the style has to be consistent: if Armani changes style and designs in the style of Dolce & Gabbana, the public will say that he has lost style, and deserves no consideration and appreciation. The same if Dolce & Gabbana designs in the Armani’s style: nobody would accept it. An exchange of image is not allowed, since it would be a loss or style, no matter whether the new style is good or bad. 
2.3. Design is quite a different animal. Designers design common objects, those kind of items that you use every day, in a manner that it is (or should be) appropriate for you and the object. They design common coffee-pots, or typing machines or refrigerators, which make good coffee, keep your food fresh, type letters easily. The personality of designers does not count; it is the utility and elegance of the object that matters. When in a shop window you see a coffee-pot that is a work of design, you look at it with interest, enter the shop and buy it (even if it costs a little more than expected, but not so terribly more), because you have a feeling that it is nice and makes a good coffee. You put the old coffee-pot aside, and think of using the old only if the new breaks out. But the new does not break, if it is good design, so that the old remains disconsolate on the shelf, until it goes, even more disconsolate, in the basement. 
A work of design is a work of a designer, working with other functions in the company. If the company could buy aluminum at a bargain, the coffeepot is made of aluminum; if not, is made of iron. If the company wants to make use of a number of filters that lay in the warehouse and nobody finds a proper use, the coffeepot employs said filters. The product is made with what is easily available, provided is appropriate (fit and match, if I may use the European terminology). The product is proper, but not fanciful; the public does not know, and does not recognize, the designer. The public buys coffeepots, and not names. 
Of course there are contact, or conflicts, between Art, Style and Design. For instance, if you enter a museum of fine art and see a beautiful chair, you may not know if it is a work of Art or Design. But there are ways to find out. For instance, if you sit on the chair and you feel comfortable, it is a work of Design. If you sit and the alarm sounds, the guardian comes with a broom and scolds you, it is a work of Art. The amount of scolding is the amount of creativity. 
3.     Do we have good laws for design? 
Now, what is the legal protection given to design by the various laws? The answer is easy, albeit disappointing. 
It is not at all clear what the laws protect, under the purported label of design. It is clear instead, at least to me, that the laws contain highly generic formulations which at best signify nothing, and at worse are a source of confusion. See for instance the definition of design in the European (or Community) Design Regulation. It says that 
"design" means the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture and/or materials of the product itself and/or its ornamentation.” 
This is not an exceptionally brilliant definition. And the law specifies that 
A design shall be protected by a Community design to the extent that it is new and has individual character”. 
The element of novelty is relatively clear (or at least I do not want to confuse the innocent reader at this point). The most important and problematic element is the individual character: 
A design shall be considered to have individual character if the overall impression it produces on the informed user differs from the overall impression produced on such a user by any design which has been made available to the public…” 
before the date of the design or the priority. 
If you apply the law for what it says, you end up protecting a coffee-pot in the shape of a shoe-brush, or a shoe-brush in the shape of a coffee-pot.  You would protect a mouse trap in the shape of the statue of the finance minister, and the statue of the finance minister in the shape of mouse trap.[1] This is somehow an exaggeration, but not so much. The register of the European Design Office (OHIM) is full of useless and sometimes ridiculous designs. Worse, it is full of unnecessary monopolies which add nothing to human knowledge, art, progress.
This situation is not at all unique for Europe. I have a feeling (better, I have to say) that the situation is no better in other countries. But I feel at ease to criticize my system, and hesitate to criticize the systems of others who have not requested my opinion, and that could not care less. 
Is this the law (are these the laws) we have? Yes. 
Is this the law we need? No. 
There are two categories of persons who would be happy with this law. One is the class of patent attorneys who file design applications. The other is the class of litigators who profit from it. Personally, I feel discomfort, even if I belong to one class or both. Double discomfort, therefore. 
I do not think it should be the spirit and mission of the law to create useless  monopolies. And every monopoly whose boundaries are uncertain is either useless or dangerous. And see what kind of monopoly! 
While for a patent for inventions an inventive level is necessary, a small difference is sufficient for designs. It is enough that the product is not common-or-garden. And if this condition is fulfilled, the law grants a monopoly for 10 or 20 or 25 years. 
One could say that this is not the first time that the laws have provided monopolies for realizations which are not creations, and one could add that there is nothing wrong with it. For instance, a trade mark does not require ingenuity in order to be protected. And a copyright exists also on creations of low level. All these are monopolies, and this is not a problem. But the argument does not fly for design. Design is a different animal. It consists of the form of an object, and the availability of forms is not unlimited. In some cases, the forms are few. In all cases (repeat, ALL), the forms are limited, and normally much less (I would say, incommensurably less) that the operators of a specific product. The available shapes for coffee-pots are much less than the producers. And monopolies for common shapes, or immaterial variations, are bad. They are an obvious and unnecessary obstacle to free activity, an obstacle that can only be removed with pain and effort. 
Let me mention a personal experience. Some time ago I received a client who makes a common product, which I will call a mouse-trap. It was a mouse-trap not too different from a conventional mouse trap, those that you know and that all mice find so attractive.[2] The client had received a warning letter from an entity which had obtained a Community design registration, and asked for a cease-and-desist undertaking, or a not so terrible compensation for allowing my client to continue commercialization. To me, even if this is not (I have to confess) my primary qualification, the mouse-trap looked almost conventional. But I decided to make a search, and found that Entity Inc had obtained about 350 similar registration for mouse-traps. The result was that all the field was covered: all mouse-traps in Europe infringe Entity's registrationsy. Of course, my client could litigate and win the case, but the cost of litigation would have been much higher that the cost of settlement. So the client decided to pay. You can multiply this case by 350 (in reality, much more) and see the purpose and social function of the Community Design System, or at least how it could be used. Beware, you innocent reader, that intend to sell mouse-traps, even if common-or-garden or immaterial variations !

[1] Incidentally, a shape with is somehow descriptive of the situation, when you consider that you have to pay taxes.
[2] Incidentally, the validity of an European design has to be assessed with the eyes of the informed user. The  informed user for a mouse-trap is (according to the definition of the prevailing jurisprudence) the average mouse, well informed and attentive.

A new editorial board member

The Journal of Intellectual Property Law & Practice is delighted to welcome Andrew P. Bridges to its Editorial Board.  Andrew, a partner in the San Francisco office of US law firm Winston & Strawn LLP, will be well known to many people who have appreciated his contributions in the annual International Trademark Association Meetings and Fordham International Intellectual Property Conferences.

By sheer coincidence, Andrew has something in common with JIPLP's editor other than a passion for intellectual property law and practice: both have a classical education based on the four pillars of Latin, Greek, Ancient History and Philosophy

You can read more about Andrew on his firm's website here.

Levies for private copying when blank media are imported: who pays?

Author: Sophie C. van Loon (Attorney-at-law, Kennedy Van der Laan The Netherlands)

Stichting De Thuiskopie v Opus Supplies Deutschland GmbH, Mijndert van der Lee and Hananja van der Lee, Case C-462/09 Court of Justice of the European Union (Third Chamber), 16 June 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr146, first published online: 18 October 2011

European Union Member States have a duty to guarantee that authors receive a fair compensation for private copying. The end user carrying out the copying is the person responsible for paying such fair compensation. However, if it is impossible to ensure recovery of the levy from the end user, national courts must interpret national law in order to allow recovery of that compensation from a debtor acting on a commercial basis.

Legal context

The Dutch Supreme Court referred a case concerning levies for private copying to the European Court of Justice for a preliminary ruling. The case concerned a manufacturer of blank media, Opus Supplies, which supplied customers in the Netherlands from Germany. Although the Dutch Copyright Act obliges the ‘importer’ of blank media to pay a private copying levy, neither the Dutch customers nor Opus Supplies paid such levy in relation to the blank media that the customers bought from Opus Supplies. Dutch courts had ruled that the individual customers might be regarded as ‘importer’. However, the Dutch Supreme Court hesitated as to whether such interpretation would be compliant with Directive 2001/29 (Copyright in the Information Society; ‘InfoSoc’). The reason for this was that, according to the Dutch Supreme Court, such interpretation of the national law would be tantamount to admitting that the levy cannot in fact be recovered, since individual purchasers in practice cannot easily be identified. As a result, the European Court of Justice had to decide on the interpretation of Articles 5(2)(b) and 5(5) of the Directive: the provision establishing the exception for private copying and the provision containing the three-step test.


Opus GmbH, a German entity managed by a Dutch couple, sold blank media such as CDs and DVDs through the internet. It had customers in various Member States, among which many were in the Netherlands. Before 2003, sales were handled by Dutch entity Opus BV, which paid levies for private copying to Stichting De Thuiskopie, the Dutch foundation responsible for the recovery of private copying levies imposed on blank media. As of 2003, all sales were executed from Germany through websites operated by Opus GmbH. However, customers could still use the website and place their orders in the Dutch language.

Opus GmbH paid no copyright levies to De Thuiskopie or to its German equivalent. In Germany, no levies are due if the products are not brought into the German market. In the Netherlands, Article 16c of the Dutch Copyright Act states that the ‘importer’ of blank media is responsible for paying the ‘fair compensation’ for private copying that Member States are obliged to recover on the basis of the InfoSoc Directive. In this respect, it is relevant that, when placing an order online, Opus's customers had to accept its general terms and conditions, stating that:
Orders are placed by the customer directly with Opus Supplies Deutschland GmbH in Heinsberg, Germany. … Prices do not include Levy, Auvibel, Thuiskopie, GEMA or other charges. Goods are dispatched by order of the customer via TPG Post or DHL Express and always in the name of the customer. Accordingly, you may be regarded in your own country as the importer … .
The products were subsequently transported to the Netherlands at the customers' own expense and risk.

Opus GmbH clearly took the view that this arrangement would release it from the obligation to pay copyright levies in the Netherlands. Stichting De Thuiskopie, however, thought otherwise, and started summary proceedings in 2005 in order to recover the levies that it believed Opus should pay. According to De Thuiskopie, the sales performed by Opus constituted approximately one-third of the total sale of blank media in the Netherlands, so the amounts involved were considerable.


Both in first instance and appeal, the court ruled that Opus was not to be regarded ‘importer’ and therefore was under no obligation to pay levies. However, neither was the consumer: from the legislative history, it appeared that it was not the legislative intent to oblige consumers buying blank media abroad to pay levies. The courts were clearly unhappy with this result. However, this did not change their ruling. Probably the fact that it concerned summary proceedings played a role in this respect.

The Dutch Supreme Court was not pleased with the outcome either, and referred the following questions to the ECJ for a preliminary ruling:

  1. Does Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, provide any assistance in determining who should be regarded under national law as owing the ‘fair compensation’ referred to in Article 5(2)(b)? If so, what assistance does it provide?
  2. In a case of distance selling in which the buyer is established in a different Member State to that of the seller, does Article 5(5) of Directive [2001/29] require national law to be interpreted so broadly that a person owing the ‘fair compensation’ referred to in Article 5(2)(b) of the directive who is acting on a commercial basis owes such compensation in at least one of the Member States involved in the distance selling?

In its answer to the first question, the ECJ established that the InfoSoc Directive does not indicate who should pay the fair compensation, so that Member States enjoy much freedom in this respect (paragraph 23). The ‘fair compensation’ in Article 5(2) of the directive must be regarded as compensation for the harm resulting for the author from the reproduction for private use of his protected work without his authorization. Therefore, the ECJ ruled, the person who performs such reproduction for its private use should be responsible for financing the fair compensation (paragraph 26). Here, the ECJ relied heavily on its recent Padawan judgment (Case C-467/08) where it decided accordingly, and acknowledged that ‘there may be practical difficulties in identifying private users and making them pay compensation to right holders. In those circumstances, it is open to Member States to institute a “private copying levy” payable by persons who have digital reproduction equipment, devices and media and who, on that basis, in law or in fact, make that equipment available to private users or who provide copying services for them’ (Padawan, paragraph 46).

Thus the ECJ's answer to the first question may be summarized as follows: although the consumer in principle is responsible for the payment of the fair compensation, as he is the one bringing the harm to the author involved, the Member States are free to determine that manufacturers of blank media should pay levies. Such manufacturers may then charge the consumer higher prices, so that in the end the consumer still pays for the harm that it has brought authors by making reproductions of their works without their permission.

However, the freedom that Member States enjoy with respect to the decision as to who should pay the levies for private copying is curtailed by the conclusion of the ECJ that the recovery of a fair compensation must be regarded as an obligation to guarantee a certain result (paragraph 34). In its answer to the second question, the ECJ ruled that Member States that have implemented a system whereby manufactures should pay the levy must safeguard actual payment of that levy. If it is impossible to collect that levy with the buyers of the blank media, national courts are obliged to interpret the national law in such a way that a compensation can be recovered from a debtor acting on a commercial basis.

Practical significance

The ECJ has decided that someone should pay one way or another. In this case, this probably means that the Dutch courts will have to consider Opus as the ‘importer’ even though both the factual and legal circumstances may point in a different direction. Shortly after the judgment, Opus has announced that it will no longer sell blank media to Dutch customers.

However, the further practical significance of this case may be limited. Not many consumers still frequently use CDs and DVDs; rather, they make reproductions on USB sticks, hard disks, or even in the cloud, for example by using NPVR (Network Personal Video Recorder) systems. In the Netherlands, manufacturers and providers of such services are not obliged to pay a private copying levy. Therefore, even though De Thuiskopie will probably be pleased with the outcome in this case, it may be facing far greater challenges in the future

Greener pastures for Tucows

Author: Emir Aly Crowne (Associate Professor, University of Windsor, Faculty of Law; Barrister & Solicitor, Law Society of Upper Canada)

Tucows.Com Co. v Lojas Renner S.A., 2011 ONCA 548, Ontario Court of Appeal, Canada, 5 August 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr165, first published online: October 12, 2011

The Ontario Court of Appeal has ruled that domain names constitute ‘personal property’ in Ontario, which therefore creates a real and substantial connection with the Province, allowing it to assume jurisdiction.

Legal context

Rule 17.02(a) of Ontario's Rules of Civil Procedure, R.R.O. 1990, Reg. 194 permits service outside Ontario without a court order with respect to real or personal property in Ontario. The rule states:
17.02 A party to a proceeding may, without a court order, be served outside Ontario with an originating process or notice of a reference where the proceeding against the party consists of a claim or claims,
Property in Ontario
(a) in respect of real or personal property in Ontario …
At first instance, the respondent, Renner, brought a motion under rule 17.06(1) of the Rules to set aside Tucows' statement of claim, and permanently stay Tucows' action for lack of jurisdiction. In turn, that rule states:
17.06(1) A party who has been served with an originating process outside Ontario may move, before delivering a defence, notice of intent to defend or notice of appearance,
(a) for an order setting aside the service and any order that authorized the service; or
(b) for an order staying the proceeding. R.R.O. 1990, Reg. 194, r. 17.06 (1).

Tucows purchased over 30,000 domain names from Mailbank Inc., including The respondent held a registered trade mark for the word Renner and disputed Tucows' ownership of the domain name in the face of the registration.

Procedural history

Under the Uniform Domain Name Dispute Resolution Policy (‘UDRP’) adopted by Internet Corporation for Assigned Names and Numbers (ICANN, which assigns and manages domain names), Renner initiated dispute resolution proceedings against Tucows. Among the list of dispute resolution service providers under the UDRP, Renner selected the World Intellectual Property Organization (‘WIPO’) Arbitration and Mediation Center and initiated proceedings on 12 May 2009. In turn, Tucows was notified of the complaint on 22 May 2009.

On 10 June 2009, Tucows initiated an action in the Ontario Superior Court of Justice seeking the following declarations:

  • that Tucows has rights or legitimate interests in respect of the domain name \;
  • that the domain name has neither been registered nor is it being used in bad faith by Tucows; and
  • that Renner is not entitled to the transfer of the domain name

A day later, on 11 June 2009, Tucows asked WIPO to suspend or terminate the proceedings initiated by Renner in accordance with 18(a) of the UDRP Rules. Namely,
18. Effect of Court Proceedings
(a) In the event of any legal proceedings initiated prior to or during an administrative proceeding in respect of a domain-name dispute that is the subject of the complaint, the Panel shall have the discretion to decide whether to suspend or terminate the administrative proceeding, or to proceed to a decision. [Emphasis added by Ontario Court of Appeal]
In the Ontario Superior Court of Justice (2010 ONSC 5851), the motions judge set aside Tucows' statement of claim on the basis that there was no real and substantial connection between Renner and Ontario and as such rule 17.02 (permitting service outside Ontario without leave where ‘real or personal property in Ontario’ is involved) was not engaged.


A unanimous Court of Appeal ruled that a domain name does constitute ‘personal property’ that is located ‘in Ontario’. According to the Court of Appeal:
[50] The dominant view emerging from international jurisprudence and academic commentary appears to be that domain names are a new type of intangible property. American jurisprudence treating domain names as intangible property includes Kremen v Cohen, 337 F.3d 1024 (9th Cir. 2003) … 
[52] Outside the United States, other common law jurisdictions have also treated domain names as intangible property. In OBG Ltd v Allan [2008] 1 A.C. 1 (H.L.), Lord Hoffmann for the majority observed at para. 101, ‘I have no difficulty with the proposition that a domain name may be intangible property, like a copyright or trademark’. In Satyam Infoway, the principal question raised on appeal before India's Supreme Court was whether, in the absence of specific legislation, internet domain names were subject to the legal norms applicable to other intellectual properties such as trademarks. It answered this question in the affirmative. In doing so the court held, at paras. 11–12, that a domain name can be said to be a word or name which is capable of distinguishing the subject of trade or service made available to potential users of the internet. Goodwill can be built up in connection with a domain name: para. 31. See also Hoath v Connect Internet Services Pty Ltd (2006), 229 A.L.R. 566 (N.S.W.S.C.), at pp. 594–95, where the court presumed a domain name was intangible property. 
[53] For the most part, academic commentators also agree that domain names should be considered a form of property. As an example, in ‘Bad Faith in Cyberspace: Grounding Domain Name Theory in Trademark, Property, and Restitution’ (2010) 23 Harv. J.L. & Tech. 447, Jacqueline D. Lipton comments at p. 473, ‘The attraction of the property theory is that it fits the way people routinely think about domain names.’ She suggests at p. 474 that a property model may be the preferable basis on which to ground domain name theory: 
[A property model] best accords with the way market participants relate to domain names. Even though a domain name is a form of contractual license from a registrar to a registrant, it results in a valuable asset that is freely traded on the open market and that is occasionally stolen by a bad faith actor. Even though a transfer of a domain name is, in reality, a de-registration from the original registrant and re-registration to the new registrant, it is now treated routinely as a seamless transfer, as if the name was being handed directly from the original registrant to the new registrant. Further, the acceptance of a property rights rationale for regulating generic domain names could take advantage of existing property-based laws such as theft and conversion, and simply extend them judicially to virtual property. 
See also Hancock, at pp. 191 and 205, in which the author acknowledges that in the United States domain names are generally treated as intangible property, but argues that domain names, although incorporeal, should be treated as tangible property with which they have more in common. (paras. 50, 52 and 53 footnotes omitted)
The Court acknowledged that most of the jurisprudence did not consider the issue in any depth (para. 55) and therefore sought to outline the elements of the property right in question. The Courts distils several elements that define ‘property’:

  1. A bundle of rights (paras. 57–60);
  2. Which affords the owner the right to exclude others (i.e. exclusivity) (para. 63); and
  3. ‘must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.’ (quoting Lord Wilberforce in National Provincial Bank Ltd. v Ainsworth [1965] A.C. 1175 (H.L.)) (para. 64).

A domain name, according to the Court, satisfies all of these elements and is therefore personal property. It is located ‘in Ontario’ because the registrant (Tucows) is located in Ontario, as are its servers. There is thus a real and substantial connection with the Province of Ontario, such that it is appropriate for its courts to assume jurisdiction in the matter.

Practical significance

Tucows is a fairly well-known player in the domain name market. The decision effectively gives the Ontario courts jurisdiction over all domain names held by Tucows, on its servers in Toronto, in the event of a dispute. The decision follows on the heels of an earlier ruling by the Ontario Superior of Justice in South Simcoe Railway Heritage Corporation v Wakeford, 2011 ONSC 1234, 18 April 2011, that domain names possess proprietary rights. In an earlier Current Intelligence (‘Ontario Superior Court rules on ways to recover domain names’, Journal of Intellectual Property Law & Practice (2011) 6 (9): 612–613). I argued that this was a hasty approach that ignored the Supreme Court of Canada's guidance in R. v Stewart [1988] 1 S.C.R. 963 discussing theft of confidential information under the Criminal Code (as it stood at the time):
… that property must be capable of being taken or converted in a manner that results in the deprivation of the victim. Tangible things present no difficulty in this regard, as it is easy to conceive how they can be both taken and converted. On the other hand, pure intangibles, as they have no physical existence, can obviously only be converted, not taken. The ‘taking’ of an intangible could only occur where such intangible is embodied in a tangible object, for example a cheque, a share certificate or a list containing information. However, that would not result in the taking of the intangible per se, but rather of the physical object evidencing it.
Even by the Ontario Court of Appeal's own definition of ‘property’, it is debatable whether a domain name can be considered a form of property. Consider the requirement that property have some degree of permanence or stability. By tying the requirement of the property to the location of Tucows and its servers, the property rights in the domain name are far from permanent or stable. One need only copy the data on to a remote server and suddenly the permanence or stability of the right diminishes (or is destroyed completely). Even intangible forms of property like copyright, patents, and trade marks enjoy some measure of permanence or stability because they are territorially limited rights. A valid IP right in Canada cannot be enforced against persons in foreign jurisdictions without something ‘more’ (ie a corresponding territorial right in that foreign jurisdiction). Then there is the potential duplication ad infinitum of the alleged property rights in domain names if those servers are backed-up in a dozen or so jurisdictions, are property rights created in all of those jurisdictions, each with seemingly valid competing claims of jurisdiction.

Without a thorough analysis of the issue by the Supreme Court of Canada, everything becomes a property right—including email addresses, telephone numbers, and commonplace, descriptive domain names (like in South Simcoe Railway)—and all of the attendant privileges, rights, and burdens that accompany that designation. Without something more, like parallel trade mark rights, domain names are merely contractual rights to use a given address for a limited period of time.

Patent protection for the BRCA1 gene and genetic diagnostic methods in the USA

Author: Eddy D. Ventose Faculty of Law, Cave Hill Campus, University of the West Indies, Barbados)

Association for Molecular Pathology v United States Patent and Trademark Office (Fed. Cir. 2011), 29 July 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr171, first published online: October 12, 2011

Protein structure of BRCA1 
In AMP v USPTO, the Federal Circuit Court of Appeal considered whether Myriad's claim for, inter alia, an isolated DNA coding for a BRCA1 polypeptide was patentable under section 101 and applied its recent decision in Prometheus v Mayo, relating to a species of ‘dosage regime’, and the most recent consideration of patent-eligibility by the US Supreme Court in Bilski v Kappos, to find that, while claims to genetic diagnostic methods were unpatentable, claims to genetic screening methods were patentable.

Legal context

The claims at issue related to three broad types:

an isolated DNA coding for a BRCA1 polypeptide; the isolated DNA of claim 1 and an isolated DNA having at least 15 nucleotides of the DNA of claim 1 (the ‘composition of matter’ claims);

  • a method for detecting a germline alteration in a BRCA1 gene (the ‘genetic diagnostic method’ claim);
  • a method for screening potential cancer therapeutics (the ‘screening method’ claim).

Were these product and process claims patent-eligible under section 101 of the Patents Act? In the District Court, Judge Sweet claimed that the issue was whether the isolated DNA was patentable under section 101. Relying principally on Supreme Court decisions of Funk Brothers Seed Co. v Kalo Inoculant Co. 333 US 127 (1948) and Diamond v Chakrabarty 447 US 303 (1980), he noted that the mere purification of a product of nature could not transform it into patentable subject matter: the purified product most possess ‘markedly different characteristics’ in order to satisfy the requirement of section 101. Myriad's focus on the chemical nature of DNA failed to acknowledge the unique characteristics of DNA that differentiated it from other chemical compounds. Accordingly, since the claimed isolated DNA was not markedly different from native DNA as it existed in nature, it constituted unpatentable subject matter under section 101. This was the same for all the composition of matter claims.

In relation to the genetic diagnostic method claims, Judge Sweet held that the claims which were directed only to the process of ‘analysing’ a BRCA1 sequence and noting whether or not the specified naturally occurring mutations existed, they were invalid under section 101. He then distinguished the District Court decision in Prometheus Laboratories Inc. v Mayo Collaborative Services 581 F.3d 1336 (Fed. Cir. 2009) on the basis that the claims in that decision were found transformative because the act of ‘determining the metabolite levels’ was construed to include the extraction and measurement of metabolite concentrations, such as high pressure liquid chromatography. However, in the case before him, the ordinary meaning of the terms ‘analysing’ or ‘comparing’ established that the claimed methods were directed only to the abstract mental process of ‘comparing’ or ‘analysing’ gene sequences. Additionally, the claim directed to ‘comparing’ the growth rate of cells in the presence of a potential cancer therapeutic was not patentable under section 101 because it sought simply to patent a basic scientific principle: that a slower rate of cell grown in the presence of a compound indicated that the compound might be a cancer therapeutic.

The opinion of the Federal Circuit

The Federal Circuit's opinion in AMP v USPTO is fascinating because of the three different approaches adopted by the judges who formed the Panel. Judge Lourie wrote the majority opinion. Judge Moore concurred with this opinion but only in respect of certain aspects, while agreeing with the result. Judge Bryson concurred in part and dissented in part with the ‘majority’ opinion of Judge Lourie. While there was unanimity as to whether the genetic diagnostic and screening methods were patent-eligible, the patentability of the isolated DNA produced three different approaches.

Composition of matter claims

The majority opinion

In relation to the isolated DNA, Judge Lourie accepted that the distinction between a product of nature and a human-made invention for purposes of section 101 turned on a change in the claimed composition's identity compared with what existed in nature; noting that the Supreme Court in Funk Brothers and Chakrabarty had drawn a line between compositions that, even if combined or altered in a manner not found in nature, had similar characteristics as in nature, and compositions that human intervention had given ‘markedly different’, or ‘distinctive’, characteristics. The distinction between a product of nature and a human-made invention for purposes of section 101 turned on a change in the claimed composition's identity compared with what existed in nature. After examining the differences between native DNA and isolated DNA, he concluded that BRCA1 and BRCA2, in their isolated state, were not the same molecules as DNA as it existed in the body; and human intervention in cleaving or synthesizing a portion of a native chromosomal DNA imparted on that isolated DNA a distinctive chemical identity from that possessed by native DNA. Judge Lourie claimed that it was the distinctive nature of DNA molecules as isolated compositions of matter, rather than their physiological use or benefit, which determined their patent eligibility, adding that the claimed isolated DNA molecules were distinct from their natural existence as portions of larger entities, and their informational content was irrelevant. The District Court had held that isolated DNA molecules were not patent-eligible because their only genetic function was to transmit information; however, he rejected this reasoning claiming that patent eligibility was not negated because it had similar information properties to a different, more complex natural material that embodies it. Focusing on the actual structure of the isolated molecules rather than their function, he held such isolated DNA molecules patent-eligible under section 101. Applying the test Funk Brothers and Chakrabarty to the isolated DNAs, the claims were drawn to patentable subject matter because they covered molecules that were markedly different—had a distinctive chemical identity and nature—from molecules that existed in nature. He added that the majority decision that isolated DNA molecules were patent-eligible was in line with the longstanding practice of the USPTO. If the law were to be changed, and DNA inventions excluded from the broad scope of section 101, contrary to the settled expectation of the inventing community, the decision must come not from the courts, but from Congress.

Concurring opinion of Judge Moore

Judge Moore noted that courts had long applied the principles articulated in Funk Brothers and Chakrabarty to different factual scenarios in order to determine whether an invention, as claimed, fell into the laws of nature exception. She saw no reason to deviate here from this longstanding flexible approach. Concurring with the majority, she reached some of the same conclusions by a different route. Joining the majority with respect to claims to isolated cDNA sequences, she concurred in the judgment with respect to the remaining sequences and then examined the isolated DNA claims to determine whether, in accordance with Funk Brothers and Chakrabarty, they had markedly different characteristics with the potential for significant utility, for example, an enlargement of the range of utility as compared to nature. The cDNA claims presented the easiest analysis since, although the District Court held that cDNA fell within the ‘laws of nature’ exception to section 101 patentability, she could not reconcile this argument with the fact that the claimed cDNA sequences did not exist in nature; cDNA sequences have a distinctive name, character, and use, with markedly different chemical characteristics from either the naturally occurring RNA or any continuous DNA sequence found on the chromosome. The claimed isolated cDNA sequences were thus the creation of man, made using biological tools and the naturally occurring mRNA as a template. Judge Lourie's analysis had focused on the ‘markedly different chemical structure’ of isolated DNAs, as compared to the corresponding native DNA, which, for her, suggested that isolated DNA was not a product of nature but that this difference alone did not necessarily make isolated DNA so ‘markedly different’ from chromosomal DNA so as to be per se patentable subject matter.

Judge Moore held that DNA sequences that had the same pattern of DNA bases as a natural gene, in whole or in part, presented a more difficult issue. Unlike the isolated cDNA molecules, whose sequence was not present in nature, those kinds of isolated DNA claims included nucleotide sequences which were found in the human body, albeit as part of a much larger molecule, the chromosome. The different chemical structure suggested that isolated DNA was not a product of nature, Judge Moore did not think that that difference alone necessarily made isolated DNA so ‘markedly different’ from native DNA so as to be per se patentable subject matter. Accordingly, given the differences, the Federal Circuit should, as precedent instructs, consider whether these differences imparted a new utility which made the molecules markedly different from nature. The claimed isolated DNA molecules, which were truncations (with different ends) of the naturally occurring DNA found as part of the chromosome in nature, were not naturally produced without the intervention of man. In her view, the isolated DNA could be used as a primer in order to selectively detect the presence of the BRCA1 gene or BRCA1 gene mutation in a patient. Accordingly, because the different chemical structure of the isolated DNA, which was a product of the intervention of man, led to a different and beneficial utility, isolated DNA fragments were patentable subject matter.

The judge then cautioned that, if she was deciding the case on a blank canvas, she might have concluded that an isolated DNA sequence that included most or all of a gene was not patentable subject matter: despite the literal chemical difference, the isolated full-length gene did not clearly have a new utility and appeared simply to serve the same ends devised by nature by acting as a gene encoding a protein sequence. However, she claimed (like Judge Lourie) that the case came to court ‘with a substantial historical background’. Congress had for centuries authorized an expansive scope of patentable subject matter, while the USPTO had allowed patents on isolated DNA sequences for decades and patents on purified natural products for centuries. With thousands of patents with claims to isolated DNA, and some unknown (but certainly large) number of patents to purified natural products or fragments thereof, Judge Moore pointed out that this meant that the Federal Circuit must be particularly wary of expanding the judicial exception to patentable subject matter where both settled expectations and extensive property rights were involved. Therefore, in addition to the belief that the Federal Circuit should defer to Congress, these settled expectations tipped the scale in favour of patentability.

Dissenting opinion of Judge Bryson

Judge Bryson dissented from the majority's holding that Myriad's BRCA gene claims and its claims to gene fragments were patent-eligible, claiming that those claims were not directed to patentable subject matter and that, if sustained, the Federal Circuit's decision would likely have broad consequences, such as pre-empting methods for whole-genome sequencing. The isolated BRCA genes fell clearly on the ‘unpatentable’ side of the line drawn in Chakrabarty because Myriad claimed the genes themselves, which appeared in nature on the chromosomes of living human beings. The only material change made to those genes from their natural state was the change that was necessarily incidental to the extraction of the genes from their natural environment. The isolated genes were not materially different from the native genes and the composition claims were not defined by any particular chemical formula. Judge Bryson explained that, from a genetic perspective, the claim covered one ‘composition of matter’—the BRCA1 gene: first, the isolated BRCA genes were identical to the BRCA genes; secondly, they had the same sequence, they coded for the same proteins, and they represented the same units of heredity; thirdly, the only difference between the naturally occurring BRCA genes during transcription and the claimed isolated DNA was that the claimed genes had been isolated according to nature's predefined boundaries, that is, at points that preserved the ability of the gene to express the protein for which it was coded.

Judge Bryson claimed that the test employed by the Supreme Court in Chakrabarty required the Federal Circuit to focus on two things: the similarity in structure between what was claimed and what was found in nature and the similarity in utility between what was claimed and what was found in nature. What was claimed in the BRCA genes was the genetic coding material; that material was the same, structurally and functionally, in both the native gene and the isolated form of the gene. As a result, the isolation of the naturally occurring genetic material did not make the claims to the isolated BRCA genes patent-eligible. He agreed, however, with the majority that the claims to BRCA cDNA were eligible for patenting. The cDNA could not be isolated from nature, but instead must be created in the laboratory. However, he disagreed in relation to the two claims to short segments of DNA having at least 15 nucleotides. Because small sequences of DNA were repeated throughout the three billion nucleotides of the human genome, the claim covered portions of the cDNA of more than 4 per cent of human genes and covered portions of the DNA of nearly all human genes. These, in his opinion, were not patent-eligible.

The genetic diagnostic method claims

In relation to the claims to methods of ‘comparing’ or ‘analysing’ BRCA sequences, Judge Lourie, with whom Judges Moore and Bryson agreed, concluded that Myriad's claims to ‘comparing’ or ‘analysing’ two gene sequences fall outside the scope of section 101 because they claimed only abstract mental processes. He noted that the claims recited, for example, a ‘method for screening a tumor sample’, by ‘comparing’ a first BRCA1 sequence from a tumour sample and a second BRCA1 sequence from a non-tumour sample, wherein a difference in sequence indicates an alteration in the tumour sample. In his view, the claims recited nothing more than the abstract mental steps necessary to compare two different nucleotide sequences: look at the first position in a first sequence; determine the nucleotide sequence at that first position; look at the first position in a second sequence; determine the nucleotide sequence at that first position; determine if the nucleotide at the first position in the first sequence and the first position in the second sequence are the same or different, wherein the latter indicates an alternation; and repeat for the next position. After citing from Supreme Court decisions of Flook, Diehr, and Bilski, Judge Lourie argued that, although the application of a formula or abstract idea in a process might describe patentable subject matter, Myriad's claims did not apply the step of comparing two nucleotide sequences in a process; rather, the step of comparing two DNA sequences was the entire process claimed.

Judge Lourie held that the method claims in this case were distinguishable from the claims upheld by the Federal Circuit under section 101 in Prometheus Laboratories Inc. v Mayo Collaborative Services 628 F.3d 1347 (Fed. Cir. 2010). In that decision, the patents claimed methods for optimizing the dosage of thiopurine drugs administered to patients with gastrointestinal disorders. There, the claimed methods included the steps of ‘administering’ a thiopurine drug to a subject and/or ‘determining’ the drug's metabolites levels in the subject, wherein the measured metabolite levels were compared with predetermined levels to optimize drug dosage. Judge Lourie claimed that the Federal Circuit in Prometheus held that, in addition to the ‘administering’ step being transformative, the ‘determining’ step was both transformative and central to the purpose of the claims. The same case held that because the metabolite levels could not be determined by mere inspection, the determining step necessarily required a transformation, and that this transformation was not just insignificant extra-solution activity or necessary data-gathering steps, but was central to the claims in that: determining the metabolite levels was what enabled the optimization of drug dosage. However, in his view, the Myriad claims did not include the step of ‘determining’ the sequence of BRCA genes by, for example, isolating the genes from a blood sample and sequencing them, or any other necessarily transformative step; rather, the comparison between the two sequences could be accomplished by mere inspection alone. He accordingly held that Myriad's claimed methods of comparing or analysing nucleotide sequences failed to satisfy the machine-or-transformation test, being instead directed to the abstract mental process of comparing two nucleotide sequences. The claims thus failed to claim a patent-eligible process under section 101.

The screening method claim

The plaintiffs argued that this claim was directed to the abstract idea of comparing the growth rates of two cell populations and pre-empted a basic scientific principle—that a slower growth rate in the presence of a potential therapeutic compound suggested that the compound was a cancer therapeutic. Judge Lourie, with whom Judges Moore and Bryson agreed, took as his starting point the machine-or-transformation test: the claim included transformative steps, an ‘important clue’ that it was drawn to a patent-eligible process. The claim recited a method that comprised the steps of: ‘growing’ host cells transformed with an altered BRCA1 gene in the presence or absence of a potential cancer therapeutic; ‘determining’ the growth rate of the host cells with or without the potential therapeutic and ‘comparing’ the growth rate of the host cells. This claim included more than the abstract mental step of looking at two numbers and ‘comparing’ two host cells' growth rates. In his view, the claim included the steps of ‘growing’ transformed cells in the presence or absence of a potential cancer therapeutic, an inherently transformative step involving the manipulation of the cells and their growth medium, and the step of ‘determining’ the cells' growth rates, a step that also necessarily involved physical manipulation of the cells. These steps were central to the purpose of the claimed process.

Judge Lourie also held that the claim was not so ‘manifestly abstract’ as to claim only a scientific principle, and not a patent-eligible process. The claim did not cover all cells, all compounds, or all methods of determining the therapeutic effect of a compound; rather, it was tied to specific host cells transformed with specific genes and grown in the presence or absence of a specific type of therapeutic. Observing that the claim was tied to measuring a therapeutic effect on the cells solely by changes in the cells' growth rate, it represented ‘functional and palpable applications’ in the field of biotechnology, thereby satisfying the requirement of patentable subject matter under section 101.

Practical significance

The majority of the Federal Circuit in AMP v USPTO ruled that isolated DNA molecules are in principle patentable because human intervention resulted in the creation of an isolated DNA with a distinctive chemical identity from that possessed by native DNA molecules. Thus, to be patent-eligible, isolated DNA molecules must be ‘markedly different’, or have ‘distinctive’ characteristics from the native DNA molecules. The biotechnology industry would be relieved that claims to isolated DNA and DNA itself remain patent-eligible. In addition, the majority opinion made it clear that genetic diagnostic methods that simply contain abstract mental steps necessary to compare two different nucleotide sequences would not be patent-eligible; whereas those which contain transformative steps central to the purpose of the claimed process would be patentable under section 101. However, the real difficulty remains with the methods claims, in particular, determining whether such claims are transformational at all.

JIPLP: some changes for 2012

The Journal of Intellectual Property Law & Practice will be introducing some changes in the coming year. In particular,
  • Printed annual index. In the past, JIPLP has produced, and posted to subscribers of its paper version, an annual index for binding together with the monthly issues for each year. It is now apparent that, since most people -- including non-subscribers -- now search the content of JIPLP online via the "Search this journal" box on the journal's home page, there is little to be gained from persisting with the printed annual index and it will no longer be produced.

  • JIPLP Express.  A feature of JIPLP since its inception, JIPLP Express was designed as a convenient means by which readers could read in brief the contents of each issue; it was particularly handy when printed copies of the journal were circulated manually among members of the same company or law firm, since the swift identification of content increased the speed of circulation. However, this feature is now little-used and will be phased out at the end of the year.

  • Current Intelligence. The Current Intelligence section of JIPLP, dealing with recent legal decisions, legislation and current developments, is very popular among readers and will now be expanded. Please feel free to contact JIPLP's Content Commissioning Editor Sarah Harris if you would like to write a Current Intelligence note on a recent case or issue which is of particular interest to you.  Guidelines for authors regarding Current Intelligence notes and articles can be found here.

  • Guest Editorials. While Jeremy Phillips will continue to write the majority of the editorials, several members of the Editorial Board have indicated their willingness to contribute editorials too -- so be prepared for a bit more variety and a broader expression of opinions.