The team is joined by GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopolou, Mathilde Pavis, and Eibhlin Vardy
InternKats: Rose Hughes, Ieva Giedrimaite, and Cecilia Sbrolli
SpecialKats: Verónica Rodríguez Arguijo (TechieKat), Hayleigh Bosher (Book Review Editor), and Tian Lu (Asia Correspondent).

Tuesday, 30 April 2013

The end of copyright as we know it? Still on the Enterprise and Regulatory Reform Act (still unavailable)

Waiting for love or
just the full text
of the Enterprise and Regulatory
Reform Act?
The same rationale which underlies the universally acknowledged truth according to which "you can't hurry love" but "just have to wait" seems to apply also to new pieces of legislation, in particular the Enterprise and Regulatory Reform (ERR) Act which received Royal Assent last week (Katpost here).

This Kat has not had the chance to read the full text copyright provisions of the Act just because this is not yet available on However, impatient souls will be relieved (as was this Kat) to learn that, as reported by the BBC, the full text of the Act might be made available to the public on Thursday.

Following its adoption, not only has the ERR Act already attracted a series of criticisms, but has also been promptly renamed the ‘Instagram Act’ by The Register journalist Andrew Orlowski, in reference to a recent furore surrounding the use of images posted to the image-sharing social network.

On an even gloomier tune, Dominic Young wrote that, by passing the ERR Act, the UK abolished copyright.

Who appears particularly upset with the copyright provisions of the ERR Act is campaign group Stop43, that represents a wide range of photographers and agencies in the UK.

According to Stop43, while there are numerous reasons why photographers should feel "Royally f*cked by the UK Intellectual Property Office and UK Government", there are two in particular that cause the greatest concerns: orphan works and extended collective licensing.

While The Department for Business, Innovations and Skills (BIS) defended the Act by saying that "The powers in the Enterprise and Regulatory Reform Act 2013 aim to make copyright licensing more efficient", according to Stop43, the claim that the ERR Act has made copyright licensing more efficient" is true only if "by 'efficient' you mean 'no longer having to find, get permission from, and pay property owners before exploiting their property'. For almost any other kind of property, this idea would be outrageous. Imagine if this applied to cars, houses or bank accounts.

Still according to The Register, the ERR Act

"contains changes to UK copyright law which permit the commercial exploitation of images where information identifying the owner is missing, so-called "orphan works", by placing the work into what's known as "extended collective licensing" schemes. Since most digital images on the internet today are orphans - the metadata is missing or has been stripped by a large organisation - millions of photographs and illustrations are swept into such schemes.

For the first time anywhere in the world, the Act will permit the widespread commercial exploitation of unidentified work - the user only needs to perform a "diligent search". But since this is likely to come up with a blank, they can proceed with impunity. The Act states that a user of a work can act as if they are the owner of the work (which should be you) if they're given permission to do so by the Secretary of State.

The Act also fails to prohibit sub-licensing, meaning that once somebody has your work, they can wholesale it. This gives the green light to a new content-scraping industry, an industry that doesn't have to pay the originator a penny.


In practice, you'll have two stark choices to prevent being ripped off: remove your work from the internet entirely, or opt-out by registering it. And registration will be on a work-by-work basis."

The most up-to-date draft version of the ERR Act available to the public (a link to which was provided by Andy J here) provided that the Secretary of State might by regulations authorise a subject (to be determined by such secondary legislation) to grant licences in respect of orphan works (also these to be defined by means of secondary legislation). 

Differently from the recently approved EU Directive on certain permitted uses of orphan works (on which see here) which allows solely the reproduction and making available of the orphan works to the public, the regulations might provide for the granting of licences to do, or authorise the doing of, any act restricted by copyright.

Other differences from the EU Orphan Works Directive (of which, however, the ERR Act is not the implementation into UK law), concern also the beneficiaries of orphan works provisions, that do not appear to include just "publicly accessible libraries, educational establishments and museums, as well as by archives, film or audio heritage institutions and public-service broadcasting organisations ... in order to achieve aims related to their public-interest missions".

As regards extended collective licensing (ECL, this is something which was first implemented  in Nordic countries during the 1960s), according to the same draft version of the ERR Act, the Secretary of State might by regulations provide for a licensing body to be authorised to grant licences in respect of works in which copyright is not owned by the body or a person on whose behalf the body acts. 
ERR Act official merchandise
is already available

The ECL scheme UK Government appears to have in mind is modelled on an opting-out mechanism. As provided in the same most up-to-date draft version of the ERR Act, "the regulations must provide for the copyright owner to have a right to limit or exclude the grant of licences by virtue of the regulations."

When reading this provision, this Kat could not help but think what to do this weekend of the US Google Books Amended Settlement Agreement (ASA) which Judge Denny Chin rejected in 2011 (see 1709 Blog here). Among other things, the judge highlighted that "many of the concerns raised in the objections would be ameliorated if the ASA were converted from an ‘opt-out’ settlement to an ‘opt-in'".

As some IPKat readers pointed out, the copyright provisions of the ERR Act have remain unaltered since the Third Reading in the House of Lords and are thus included in the final text of the Bill, which we look forward to seeing.

[This post was amended on Wednesday 1 May] 

Spontaneous patent revocations? It's a matter of Opinion

An alternative system, "red-carding" patents
and suspending their validity for several months
at a time, did not find favour with industry
It seems like only yesterday that the UK's Intellectual Property Office (IPO) was commencing a consultation exercise as to whether its excellent, under-used and probably far too cheap Patent Opinion service should be extended.  But it couldn't have been yesterday [Katnote: it was last June; yesterday's consultation, metaphorically speaking, was on extending the Appointed Person dispute resolution facility from trade marks to patents] because today sees the publication of a fresh document, "Consultation on the Patents Opinions Service - Response document", a short document that you can read for yourself here.

To refresh readers' memories, it is possible for a person to ask the IPO for a non-binding opinion concerning (i) the validity of a granted patent and (ii) whether a contemplated act is likely to infringe a granted patent.  The law governing these opinions is contained in sections 74A and 74B of the Patents Act 1977 and the IPO's opinions page is here. In short, for just £200 [which is just over half the cost of the latest editions of Terrell on Patents and The Modern Law of Patents] you get, within three months, the non-binding opinion of a senior examiner which you can then wave under people's noses when negotiating the settlement of a dispute or the terms of a licence.

According to the Executive summary
"This document sets out Government policy on expanding the Patent Opinions Service in light of the recent consultation. It indicates the Government’s intention to legislate as soon as possible to extend the questions relating to validity that can be the subject of an opinion to align them more closely with the grounds upon which a person can request revocation of a patent. We intend to do this by amendment to the primary legislation [goodness, says Merpel, the government must be taking patents seriously if they're going to set aside time to amend an Act of Parliament rather than just go for another statutory instrument] to provide the IPO with a more general power to issue an opinion on the basis of questions set out in secondary legislation.

We also intend to expand the service to offer opinions as to whether a Supplementary Protection Certificate (“SPC”) is valid or is infringed [The IPKat can't imagine that the pharma industry -- whether original or generic -- has been clamouring for this, but if it's there they may as well use it].

Thirdly we propose to give the IPO the power to initiate revocation action against a patent that an opinion concludes is clearly invalid because the invention is either not new or lacks an inventive step in light of incontrovertible prior art [this will be so popular with patent owners, chuckles Merpel.  And why should there not be a power to act sua sponte, she mewses ...] ...".
This third proposal reads, in full, like this, at para.59:

"We have restricted the proposal in light of the comments received. We intend now only to extend the powers of the IPO to initiate revocation of a patent where an opinion concludes clearly that the patent lacks novelty and/ or inventive step. Such a limitation means that the revocation action is unlikely to be challenged by the patentee as it would be clear that in order for them to maintain a valid patent they would need to amend to overcome the undisputable prior art [The IPKat cannot imagine that the meaning of the term "indisputable prior art" would not be itself a matter of dispute]. Any conclusion of invalidity that was more finely balanced, where arguments or further evidence could overturn that conclusion would not be pursued. By allowing revocation in those clear cut cases the IPO envisages benefits to SMEs who do not have the financial capacity to bring revocation actions against a patent that is clearly invalid [will there not be benefits for larger companies, which can pick off SMEs' patents in much the same way?]. It would also be a cheaper alternative for the patentee than being faced with inter-partes actions. We believe that this modified proposal, coupled with the explanations we have given concerning the ability of the patent holder to comment fully or make amendments before the patent is revoked addresses the majority of concerns raised by those opposing the proposal".

What happens next?
"The Government intends to introduce legislation to amend the Patents Act 1977 to give effect to these proposals".
We shall keep you informed.

The IPKat wonders, are there any other countries in Europe or beyond in which the granting office can revoke a granted patent under the terms proposed here? If so, what has their judicial and commercial experience been?

An easier kind of IP valuation: what we feel about our assets

Often this Kat has to fight to stop himself glazing over when words like "IP valuation" are mentioned -- not because he doesn't find them interesting (after all, he is part of the original blog team of IP Finance, which often posts pieces on the subject) but rather because, increasingly, the gap between the propositions of principle (which he generally understands) and the algebra which they generate (which he generally doesn't) seems to get shorter ever year.  However, from time to time he encounters a piece on the subject that is relatively Kat-friendly and, rather than consign it to IP Finance, he's happy to let IPKat weblog readers enjoy it too. Here follows a guest piece from Miri Frankel (Aegis Media Americas), fresh from a recent trip to Europe and back in writing mode. It deals with the very most accessible level of IP valuation: whether we value IP rights in general terms (i.e. "yes, no, maybe"), rather than how much the rights are worth in commercial or taxation terms (eg "x =37y/z + (q)").  Writes Miri:

Are IPRs the Cat’s Meow or Undervalued Assets?

In spite of the stereotype that lawyers are afraid of mathematics, I’ve noticed that Katfriends seem keen to paw over statistics relevant to our profession. It is with this interest in mind that I’d like to share some rather startling IP-related survey results. reports that the United States Patent and Trademark Office (USPTO) and the National Science Foundation (NSF) each conducted surveys that aimed to quantify the value placed on various IP rights, including trade marks, trade secrets, copyrights and patents by companies operating in industries that would generally be expected to rely on, and thus prize, such IP rights. Both the USPTO and the NSF found that respondents did not report valuing applicable IP as highly as one would expect.

For example, only about 40% - 45% of publishers (“Information” sector in the NSF chart titled Figure 1) felt that copyrights were either Very Important or Somewhat Important. 85% of companies in the manufacturing sector did not consider patents to be of importance to their businesses, though nearly 30% did consider trade marks and trade secrets to be important.

Do these results reveal a widespread and fundamental misunderstanding of the use, impact and value of IP by the companies surveyed (which would likely suggest a broader misunderstanding)? Or is there something else affecting the results? For what it’s worth, here are some of my thoughts on these questions.

First, I do think there is some degree of misunderstanding among non-lawyer business executives with respect to the impact that IP has or can have on their businesses.

Over the years, I have encountered many business clients and contacts in industries that rely on – and even live and die by – the ability to leverage various intellectual property rights, and yet these clients do not realize that they are working with IP protected products or services every day in the course of their work. However, I suspect that a more significant reason for the undervaluing of IP, especially patents, may arise from the sheer cost of maintaining and enforcing IP rights, especially in the United States, where these surveys were conducted. The NSF chart below, which breaks their survey results down by companies that conduct research and development versus companies that do not, inspired my theory.

According to these NSF results, only 35% - 40% of companies that conduct R&D place some importance on either design or utility patents. On the other hand, more than 60% of those same companies believe that trade marks and trade secrets are very or somewhat important. Companies actively conducting R&D value trade marks significantly more highly than patent rights. 
Merpel ponders the value of IPR
My US-based perspective on this surprising result is that years of difficult navigation of the patent registration system, coupled with the practically prohibitively high cost of enforcing patents through litigation, has eroded the perceived value of patents within companies that would be expected to value them most. This isn’t to say that such companies do not continue to register patent applications or to enforce them when appropriate. However, imagine yourself as in-house counsel advising your internal clients that the enforcement process will cost the company millions of US dollars over several years of proceedings: is the company likely to fight on, or is it more likely to either settle with a claimant or ignore a potential defendant? It seems reasonable to think that such companies might place more importance on the notion (whether or not appropriate) that having a strong, recognizable trade mark and a high level of consumer goodwill would help attract and retain customers even when competition arises that may or may not be peddling potentially infringing goods or services.  
What do readers think? I’d be delighted if you would share your own comments or theories in the comments section of this post.

USPTO report here
NSF report here

Long flight ahead? Here's some IP reading-matter

Flying to Dallas? How about a feline
luggage tag? (Available here)
As the conference season continues in full swing, an estimated 9,000 intellectual property owners, professionals and service providers are now preparing to fly off to Dallas for this year's Meet the Bloggers session, conveniently scheduled to coincide in space and time with this year's International Trademark Association (INTA) Meeting.  Now, not everyone associates the trip to Dallas with opportunities for self-betterment. Many good folk are trying to build up a reservoir of sleep, fix their out-of-office messages, plunder the duty-free shops for non-existent bargains or simply to remind themselves, just one last time before they reach the INTA Meeting, what it feels like to have to pay for a drink.

The IPKat however knows that he has many diligent and discerning souls among his readers, many of whom sincerely wish to improve their skill sets and knowledge bases in anticipation of a possible encounter with an escapee from the INTA's Scholarship Sessions on the Monday.  For these good and earnest folk he offers a selection of recent publications that might appeal.


Patenting Medical and Genetic Diagnostic Resources, written by prolific young professor Eddy D Ventose, is published by the increasingly ambitious and adventurous Anglo-American house of Edward Elgar.  In recent years this Kat has read a great deal of what Eddy has been writing, not least because it was his pleasure to edit it for publication in the Journal of Intellectual Property Law & Practice (JIPLP), in which he has so far published over 20 articles and case notes, mainly on medical patent issues.
"This well-researched book explores in detail the issue of patenting medical and genetic diagnostic methods in the United States. It examines decisions of the Patent Office Boards of Appeal and the early courts on the question of whether medical treatments were eligible for patent protection under section 101 of the Patents Act. It then traces the legislative history of the Medical Procedures and Affordability Act that provided immunity for physicians from patent infringement suits. After considering the Supreme Court’s jurisprudence on patent eligibility, the book then comprehensively sets out how the Federal Circuit and the Supreme Court have dealt with the issue, paying close attention to the Supreme Court’s recent decision in Bilski and Prometheus".
Bibliographic and other details available here   Hand-luggage assessment: good.


Trade Dress: evolution, strategy and practice, by Darius C. Gambino and William L. Bartow, seems to be one of those books that has disappeared into an online Bermuda Triangle following the sale by its original publisher, Oxford University Press, to LexisNexis of a large number of US law titles.  This is a shame.  Despite the book's unforgivably sludgy cover colour -- conceived no doubt in an era when no purchaser ever saw a law book before he bought it, and when no-one worried about what books looked like online -- it's a bright, cheerful, handsomely illustrated and well-written book on a subject that is so well-known that we get it wrong.  The authors, both attorneys at the US end of DLA Piper LLP, deserve a plaudit or two for producing a book that can be read profitably on a transatlantic flight without straining one's eyes or one's brain.

Bibliographic and other details don't seem to be available online -- but the book has 310 pages and you can get it on Amazon and eBay.  Hand-luggage assessment: excellent.


Constructing European Intellectual Property: Achievements and New Perspectives, edited by Christophe Geiger, is (like Eddy Ventose's book above), another imaginative venture from Edward Elgar.  Published in conjunction with the European Intellectual Property Institutes Network (EIPIN), it is a busy celebration of European academic writing on a broad spread of intellectual property topics, penned by contributors whose skills extend from the strict letter of the law to the warmly multidisciplinary.  According to the publishers:
"Constructing European Intellectual Property offers a comprehensive assessment of the current state of intellectual property legislation in Europe and gives direction on how an improved system might be achieved [This direction does not include the words "Just trust the men in grey suits at the European Commission -- they know what they're talking about": Merpel].

This detailed study presents various perspectives on what further actions are necessary to provide the circumstances and tools for the construction of a truly balanced European intellectual property system. The book takes as its starting point that the ultimate aim of such a system should be to ensure sustainable and innovation-based economic growth while enhancing free circulation of ideas and cultural expressions. Being the first in the European Intellectual Property Institutes Network (EIPIN) series, this book lays down some concrete foundations for a deeper understanding of European intellectual property law and its complex interplay with other fields of jurisprudence as well as its impact on a broad array of spheres of social interaction. In so doing, it provides a well needed platform for further research".
This blogger disagrees with so eminent a figure as Christophe Geiger with the greatest of reluctance on matters of legal substance, but feels confident enough to debate with him on matters of mere metaphor. "Europe today stands at a crossroads", says Christophe. No, says the IPKat. Europe has stepped off the kerb and has wandered into the middle of the road, where the traffic is whizzing past it in all directions, in pursuit of a variety of goals which are sometimes complementary, sometimes contradictory.  Worse than that, Europe doesn't know the direction it must take in order to reach its destination -- and right now it can't move forwards or retreat to the place it formerly occupied.  Our first task, as academics, citizens, good Europeans and supporters of all things good and proper is to get Europe back to where it was originally standing. Only then can we examine the crossroads and work out, in light of Europe's priorities and objectives, how best they may be crossed.

Bibliographic and other details available here   Hand-luggage assessment: enough room for this and Patently in Love by Rhoda Baxter ...


Intellectual Property and Property Rights, edited by Adam Mossoff, belongs to Edward Elgar's Critical Concepts in Intellectual Property Law series, in which it is number five.  It's a vast book, containing a number of the most influential and indeed interesting journal articles on IP and its conceptual relationship with other forms of property. The contents span the years 1977 to 2011.  According to the publishers:

"Intellectual Property and Property Rights is an invaluable reference work in light of the increasingly important policy debates over patents, copyrights and other intellectual property rights. This insightful single volume consists of influential articles by leading scholars addressing the interconnections between intellectual property rights and property rights. Topics include the justification for intellectual property as property, the historical development of intellectual property rights as property rights and whether intellectual property can be conceptually framed as a property right. With a new and original introduction by the editor, this is a must-have volume that will be of use to lawyers, judges, legal scholars, policy analysts, researchers and all those who need a one-stop resource for understanding the nature of intellectual property and property rights".
This is all very well, says this Kat, who is about to repeat a point that he has made before on this blog and elsewhere.  There is absolutely nothing to alert the reader to the fact that this book contains debate and discussion between Americans and with regard to US law. The articles are all taken from US journals; their authors are US-directed. If the rest of the world has ever made a contribution to the current debate, there is no record of it here.  Fossil remains of Bentham, Hegel, Mill, Locke and others can be found here and there, along with the occasional reference to traditional knowledge, but by and large this is a lock-out.  It may well be that this can't be helped and that there is no non-US contribution to the discussion that is worthy of inclusion -- or that there is one but it lacks a commercial market. Either way, the reader should at least be advised in the promotional literature.

Bibliographic and other details available here   Hand-luggage assessment: it's a whopper. You won't have room for much else to read other than the piece of folded paper tucked into your favourite painkiller that tells you what might go wrong if you take it.


European Intellectual Property Law: Text, Cases & Materials, compiled by European IP scholars Annette Kur and Thomas Dreier, is -- yes -- another exciting new Edward Elgar publication. Here we have two big-name personalities taking the time and trouble to address a different audience for a change: not their peers, European decision-makers or representative organisations, but two kinds of reader: (i) those who may never have encountered European IP at all and who need to know something about its structure, its legal dynamic and the way EU principles impart their DNA into national statute and case law, and (ii) those who are so familiar with the law that they may never have stopped to think about it.  The first group are enriched with a text which is good as it stands and even more fun if you've heard Annette or Thomas lecturing and can therefore hear them in your mind while you read it.   The second group are treated to series of questions, each introduced by a 'black box' logo bearing a question mark. 

According to the publishers:
"The first of its kind, this textbook has been carefully designed to give students and non-specialist practitioners a clear understanding of the fundamentals of European intellectual property law.

Providing a comprehensive overview of both Community IP rights and areas of IP law that have been harmonised, and supported by judicious use of extracts from the most significant source material, the book assists the reader in navigating through the increasingly complex European IP system.

European Intellectual Property Law deals with European patent, trade mark and copyright law copyright, as well as with adjacent areas such as protection of plant varieties, geographical indications, industrial design, competition law, enforcement, and private international law, with a focus on the most relevant case law to be found in those areas".
Bibliographic and other details available here   Hand-luggage assessment: not too bad. The paperback version is handy: it can be bent to fill the space intended for it.


International Handbook on Unfair Competition, edited by Frauke Henning-Bodewig, lies right at the opposite end of the spectrum from Annette's and Thomas's book (noted above).  While that work is something of a bouncy romp through the peaks and troughs of contemporary EU IP law which does not pretend to be an exhaustive reference work, the International Handbook on Unfair Competiton has that "built-to-last" feel about it.  According to the publishers, C. H. Beck (who have co-published the work with Hart and Nomos):
"In a world of global trade, the “fairness” of commercial transactions gains in importance. While most countries agree that in the interest of all market participants competition shall not only be free but also honest, significant differences as to the approach to ensure this fairness prevail. This not only affects interstate trade, but also impairs the interests of competitors and consumers who increasingly deal or buy abroad. 
The book discusses the “Acquis” in unfair competition law on an International and Regional level, as well as the national approach of more than 20 countries to the regulation of marketing and advertising, of protection for competitors against passing-off and discrediting, and of special rules for consumers etc. It not only offers insights to business and lawyers dealing abroad, but also forms the basis for the development of uniform standards worldwide regarding the commercial fairness of business practices".
The individual country chapters have been written by an impressive collection of authors, and it is likely that a great deal of work has gone into the editorial side of this tome since both the English and the accessibility of the legal analysis are agreeably consistent across this long work.  Comparison between the laws in different jurisdictions is facilitated by chapter divisions that correspond as far as possible to equivalent subject matter. If the reader samples nothing else, the short (26 paragraph) introduction and the subsequent chapter on international provisions addressing unfair competition are both thoughtfully composed and frame the subject both conceptually and legally before one travels through the countries covered.

Bibliographic and other details available here   Hand-luggage assessment: this large, heavy book should travel in the first-class cabin.

Monday, 29 April 2013

Monday miscellany II

The IPKat learns from his AIPPI UK friends that there's a fascinating meeting ahead.  Charles Coombes (Professor of Medical Oncology, Imperial College London, and Director of the Imperial Cancer Research UK Centre) speaks on "The Future of Cancer Treatment" on 30 May at 5:30 for 6pm, at Freshfields. Lord Justice Kitchin has kindly agreed to take the chair. Katfriend Justin Watts adds:
"This is an area that comes up repeatedly in leading patent cases, and the future directions of cancer treatment form part of the essential background for patent practitioners. The event carries CPD points and free entry is available to all comers (but paid tickets are also available, funds going to Cancer Research UK, and donations to CRUK will be welcome)". 
For further details and to register, just click here.

The best form of digital
IP and Digital Entertainment.  Another event, though sadly not a free one, is CLT's one-day conference on IP and Digital Entertainment, which is coming up on Thursday 18 July.  Although, strictly speaking, blogging isn't usually characterised as a form of digital entertainment, the programme is studded with stars of the blogosphere, including four members of the 1709 Blog team past and present plus the ebulllient Rosie Burbidge (Art & Artifice).  Kat team member Jeremy is in the chair and, if all else fails, the real world is represented by Gill Grassie (Brodies) and Toni Vitale (head of legal, YouView).  You can check out the programme here (it's not yet online).

IPKat team member Jeremy is currently revising the contents of the Butterworths Intellectual Property Law Handbook, the 11th edition of which will be published later this year.  As usual, wearing his Consultant Editor's hat, he's happy to accept recommendations regarding new material -- and readers in past years have made some valuable suggestions.  A pdf of the contents of the 10th edition is available here.  If there are things you'd like to see added -- or indeed subtracted -- do let Jeremy know by emailing him here.  He has a little list of the really obvious stuff, like the new European patent laws and the UK's Enterprise and Regulatory Reform Act, but he'd sooner be told about prospective materials for inclusion several times over rather than miss them completely.

Long-term lover of all things IP, photographic and lexicographic lawyer Peter Groves -- who is currently dividing his time (as we all do) between working for a living and doing something useful -- spotted the street-marking on the left while walking the streets of London.  What could this cryptic sign mean? Was it a deliberate mis-spelling of IPKAT? Or perhaps stellar graffito artist Banksy was leaving himself a note? If any reader has a plausible explanation and would like to share it with us, we are waiting ...

Here's a curiosity that is worth a post for the facts alone, though the case may never travel all the way to the US Supreme Court -- a nasty spat between two worthy contestants with the same aims. relates the tug-of-war between New Jersey Divorce Center Inc and the NJ Divorce Center for control of what, to the innocent outsider, might look like a somewhat descriptive title for any enterprise that provides divorce advice and assistance in the Garden State (New Jersey, a.k.a. NJ).   This Kat is not alone in hoping that a bit of counselling and a small dose of common sense will see this dispute off.  Meanwhile, this is as far as it has gone.  A katpat to fellow Kat Eleonora for unearthing this piece.

Monday miscellany I

What could be more enjoyable, in
between IP lectures, than a gentle
round of croquet on a Cambridge
college lawn ...?
Summer splendour.  Last weekend IPKat team blogger Jeremy was mewsing about Sweet & Maxwell's forthcoming June 2013 one-day trade mark conference at London's Holborn Bars (see blogpost here). This week his thoughts turned to an event that's taking place rather later in this Kat's IP-rich summer, and which lasts considerably longer -- IBC's annual Intellectual Property Law Summer School, which takes place in the splendid comfort of Downing College, Cambridge, from 19 to 23 August. In each of the past few years, Jeremy has been inveigled into attending this event, initially as a speaker and now as author of the mock IP arbitration on Thursday 22 August, the trade marks and designs day. Although there is a serious side to it, which is why people are willing to pay substantial sums and travel some distance to attend, this Kat particularly enjoys the festive atmosphere which the Summer School setting imparts. IP students who are happy and relaxed are far easier to coax through difficult IP exercises than those who are stressed.  Then there is the social side to the week: mountaineering, deep-sea diving, or whatever people do in between the IP bits. Anyway, if you are thinking of coming this year, or even if you're just curious to see what the programme looks like, all you have to do is click here. Readers of the IPKat weblog are entitled to a 20% reduction of the cost of registration if they quote the IPKat's VIP code, FKW82373IPKBP (Merpel's sure this stands for something, but she's not sure what ...).

While on the subject of events, Sir Robin Jacob has been jogging the Kat's elbow to remind him to spread the word concerning an original and challenging conference on a topic that doesn't look as though it has been aired before -- the role of experts and scientific advisors in European patent litigation.  Date date is 11 June 2013, it's an IBIL event that will be hosted at UCL, London, and you can get information via PatLit or from IBIL itself.

The IPKat's nightmare: so much
animal life -- and just one tree ...
Whatever happened to Brüstle? In October 2011 the Court of Justice of the European Union (CJEU) issued its ruling in the keenly-contested dispute in Case C-34/10 Oliver Brüstle v Greenpeace over the patentability of human stem cells. This has led to continued debate, the issue of a new set of guidelines from the European Patent Office, and even a further reference for the attention of the Court of Justice.  But whatever happened to the original litigation in Brüstle v Greenpeace? What happened to it once the case, dealt with by the CJEU, returned to the German Bundesgerichtshof which sent it to Luxembourg back in 2009.  Thanks to Martina Brady we now know the answer: an English translation of the Bundesgerichtshof's rulig of 27 November 2012 can be read here.  It is a concise, clear ruling in which that court amends the earlier decision of the Bundespatentgericht, partially invalidates the patent in question, dismisses the rest of the appeal and declines to make a further reference to the CJEU.  A Katpat goes to Martina Brady for her persistence in looking for an English translation.

Spring surprise.  "EAPO Abolishes Accelerated Examination Of Patent Applications" was the headline that most startled this Kat last week.  Just when it seemed that everyone who really knew about patents was singing the praises of accelerated patent examination, could it really be that the Eurasian Patent Organization had signed a resolution abolishing accelerated examination of patent applications with effect from 1 March 2013?  Apparently so, though those lucky souls who had both sought accelerated examination and paid the appropriate fees before that date would get the promised examination. This news came from the newsletter of Petosevic (here), in a succinct report which conveys no explanation.  Does any reader know why the EAPO is not only bucking the trend but turning down the chance to earn some money?

Around the weblogs. The International Trademark Association (INTA) has gone public on its very own INTABlog. Very handsome it is too, says the IPKat, who has been perusing it here.  Class 99 has reminded readers that there are still a few days to go till its "Design a Design for Class 99" competition finishes. Do have a go!  Kat congratulations go to the jiplp weblog -- the informal site of the Journal of Intellectual Property Law & Practice -- for finally securing its 800th email subscriber.

Why books are like teeth: Merpel's explanation.  Readers may well recall Rhoda Baxter, the illustrious author of Patently in Love [reviewed on this weblog here]  Well, Rhoda has emailed the Kat to tell him this: "To bookend World IP Day [last Friday], I asked 'IP Lit' novelists Ivan Cotter [author of The Schmetterling Effect, on which see Katpost here] and Kalyan Kankanala [who wrote Road Humps and Sidewalks, reviewed on this blog here] to do guest posts in Rhoda's Inheritance Books feature (this involves naming the book from earlier generations that means the most to you, and the book you most want to hand down to future generations). You can check out Kalyan's post here, and Ivan's here.  This Kat is still struggling to name his two books since, every time he makes an effort to do so, his choice seems to vary with his mood and temperament. But Merpel asks: isn't that the thing about books?  They're a bit like teeth.  In first place, you generally need a whole load of them if they're going to be much use. Secondly, they don't normally make a lasting impression. Thirdly, however much you benefit from them, you can't usually count on future generations finding them much use.

Sunday, 28 April 2013

The rise of patent monetization entities Part Three: situation in the EU and UPC developments

In Part Two of this series of Katposts, we looked at the diffusion of patent assertion entities in England and Wales, where data show that only 6% of patent cases involve a PAE (in the US, instead, PAEs filed 56% of patent lawsuits in 2012 - see Part One). In the absence of detailed data on the rise of patent assertion entities in other EU countries, this Kat decided to take an indirect approach to the issue, looking at similarities or differences in (1) the usage of patents and (2) the legal framework in the UK and the rest of the EU.

Percentage of unused blocking patents
Source: PatVal-EU study
On the first aspect, the PatVal-EU study provides some useful evidence on 'unused blocking patents', a concept that refers to patents which are neither used internally by the right owner, nor licensed. Their most frequent use is strategic blocking, which aims to prevent competitors from using the patented innovations. It is therefore probable that PAEs may assert patents falling within this category. A look at the findings of the PatVal-EU study shows that, in respect to about 9000 patents with priority date in 1993-1997 (located in France, Germany, Italy, Netherlands, Spain and UK), the share of unused blocking patents is between 12,6 and 23% [these data, coupled with similar data on unused sleeping patents, brought concerns about low patent valorization in the EU: the Commission, here and here, suggested that the development of patent funds and pools may increase valorization, but noted that their activities could lead to anti-competitive and hold-up practices, unless they were committed to non exclusive licensing, based on reasonable remuneration - similar private-public funds are starting to appear in Korea (Intellectual Discovery Fund), France (Brevets) and Japan (Innovation Network Corp.), as reported by Reuters here]. The highest percentage of unused blocking patents is found in the UK, which suggests that the number of PAE cases in the UK and in other EU countries should be comparable, unless the former has a peculiar legal framework which discourages PAEs from filing lawsuits at the PHC.

This finding is corroborated by a research conducted by S. Fusco, who found that the number of known PAE cases in Italy and Germany is particularly low. According to her paper, in the period 2000-2012, only five lawsuits involved a patent assertion entity in Italy (out of about 1,000 patent cases); in Germany, again, Fusco was only able to gather evidence of five PAE cases (out of about 8,000 patent cases) in the same span of time (although these data were collected through indirect evidence). A study that examined the activity of patent assertion entities in the German patent market also confirmed these data: T. Fischer and J. Henkel found that PAEs are not particularly active in the market for technology, a conclusion which falls in line with the UK data (particularly, with the low activity in patent filing and litigation). The researchers were able to identify only 107 patent transfers to known PAEs in Germany, while similar entities acquired 458 patents in the US [the data, however, also suggest that the entities operating in the EU differ from those active in the US and vice versa: of all the PAEs listed in the study, only Intergraph and Rambus had engaged in patent transfers in both markets]. Although there may not be an exact correspondence between patent transfers and litigation, this study certainly suggests that PAEs' activity in Germany remains low, as highlighted in Fusco's work.

Since (1) patent usage (and market) looks uniform, attention should be devoted to (2) the differences in the legal framework of patent litigation around Europe. If one or more of the elements that are commonly regarded as safeguards against the spread of PAE litigation cannot be found in one or more of the EU member states, it could mean that the reassuring data on PAE cases in England and Wales cannot be extended to other countries. Before digging deeper, however, it may be useful to list these 'safeguards'. According to several studies (for example, here and here), these elements comprise:
(a) strict rules on the patentability of software and business method;
(b) fragmented enforceability, which increases the costs and complexity of litigation (and the likelihood of inconsistent decisions);
(c) unavailability of contingency fees;
(d) low litigation costs and damage awards in comparison to the US [similarly, low damage awards appear to be a factor in limiting PAE litigation in India - thanks Rahul!];
(e) implementation of the 'loser pays' rule.
Although they may be interpreted in slightly different ways, these safeguards appear to be present all over the EU. However, the major threat comes from the fragmented enforceability, which brings with it the risk of conflicting decisions. This certainly increases the litigation's complexity, but also allows a patent assertion entity to exploit the inconsistencies to identify the most PAE-friendly courts (look here for a comparison between UK, Germany, France and Netherlands). A prime example of this risk may be found in the different attitude of the courts on the issuance of injunctions in PAE cases. Sir Robin Jacob, at the 2008 GRUR Meeting in Stuttgart, offered a humorous perspective on the issue, discussing the different approach of UK and German courts:
[I]t comes out of a little discussion I had with a prominent German lawyer. He said to me: "for us, there is no problem." "Why?" I said. "Because if a valid patent is infringed, there will be an injunction." "Suppose", I asked, "the patent was for a life saving drug and the patentee had not enough product to supply the market. Would a German court really stop the supply of an infringer’s product?" "Well", he said, conceding the point: "Maybe not. But it would have to be a very extreme case."
In Germany, an injunction is usually granted if there is a finding or likelihood of infringement, and its use as an incentive to force settlement is openly acknowledged. In the PAE case IPCom v HTC, a German judge held that:
The Chamber does assume in principle that the enforcement of a cease-and-desist claim can be disproportionate since rights arising from a patent are not granted without limits (Art. 14 (2) of the Basic Law, § 242 of the German Civil Code). However, since the legislator does not make the cease-and-desist claim subject to any general prohibition on commensurability (not so: § 140a (4), § 140b (4), § 140c (2), § 140d (2) of the Patent Act) and the cease-and-desist claim secures the exclusivity right protected under constitutional law, the scope of the disproportionality defense remains restricted to atypical exceptional cases which could not be foreseen by the legislator. The fact that the patent licensing entity is attempting to enforce a cease-and-desist claim in order to urge infringing parties to pay for a license does not, in the view of the Chamber, constitute such an exception but rather is an inherent part of the patent system as part of the applicable legal and economic system, especially since a patent licensing entity will usually be urged to take such action with respect to existing license agreements.
One of the IPKat's favourite tunes!
Listen to it here...
The German approach seems at odds with the one taken by the PHC. Again, Sir Robin Jacob explained that judges in England and Wales are prepared to grant injunctions, but maintain a degree of discretion in relation to the relief, which they exercise taking into account the plaintiff's interest and previous conduct. He noted that UK courts reject absolutism and affirm the right to refuse an injunction when damages appear to be an adequate remedy. Reciting Seager v Copydex and Banks v EMI Songs, the former judge stated that 'where an inventor wanted to sell his idea for money, money is what he got'. A similar approach is adopted by courts in the Netherlands, which generally also exhibit a more sensitive attitude, than German courts, towards foreign judgments (head here and here for some food for thought on the topic). The practical consequence is that some companies are moving away from Germany, to relocate their headquarters in the Netherlands, citing legal concerns as the main reason for the relocation (Microsoft is probably the most prominent example - test your German here).

The recent judgment of the CJEU in Case C‑616/10, Solvay SA v Honeywell et al. (IPKat comments here), stirred things up, as it recognized the possibility of granting pan-European injunctions, if there is 'a real connecting link between the subject-matter of the provisional measures sought and the territorial jurisdiction of the Member State of the court seised' (a paper just published offers a perspective on the case). The Court did not move away from its previous ruling in Case C-4/03, Gesellschaft für Antriebstechnik mbH & Co. v Lamellen und Kupplungsbau Beteiligungs, which taught that a national court may assess infringement (or non-infringement) beyond national boundaries, but cannot rule on the validity of the patent at issue, as the courts of the member state where the patent was registered have exclusive jurisdiction on questions of validity, pursuant to the mandatory rule of Article 22(4) of Regulation 44/2001 (Article 16(4) of the Brussels Convention). Instead, the judges recognized that a pan-European interim injunction is permitted, if it does not lead to a final decision on the patent's validity:
According to the referring court, the court before which the interim proceedings have been brought does not make a final decision on the validity of the patent invoked but makes an assessment as to how the court having jurisdiction under Article 22(4) of the regulation would rule in that regard, and will refuse to adopt the provisional measure sought if it considers that there is a reasonable, non-negligible possibility that the patent invoked would be declared invalid by the competent court. In those circumstances, it is apparent that there is no risk of conflicting decisions ..., since the provisional decision taken by the court before which the interim proceedings have been brought will not in any way prejudice the decision to be taken on the substance by the court having jurisdiction under Article 22(4) of Regulation No 44/2001.
Further, the Court ruled that Article 6(1) of Regulation 44/2001 may be applied in cases where two or more companies from different Member States, in proceedings pending before a court of one of those Member States, 'are each separately accused of committing an infringement of the same national part of a European patent which is in force in yet another Member State by virtue of their performance of reserved actions with regard to the same product'. In Actavis Group HF v Eli Lilly & Company, the High Court for England and Wales accepted to hear foreign patent claims (if no question of validity is involved), declining arguments pointing to the forum non conveniens (and the AdvoKat commented it here).

It is difficult to predict whether these recent development may fuel or hinder the rise of patent assertion entities in the EU. The prospect of obtaining a pan-European injunction could potentially help the spread of PAE cases, while pan-European infringement proceedings might reduce fragmentation, inconsistency and litigation costs. This Kat, however, does not think that these elements could cause a sudden surge in PAE litigation: on one side, the judges' attitude towards the issuance of injunctions in PAE cases has so far been cautious; on the other, fragmentation could be restored, and usually will, through an invalidity claim.

The same concerns expressed above accompanied the Unified Patent Court Agreement (UPC), which many studies depicted as a test for the EU patent litigation system's resistance to the diffusion of PAEs. In particular, commentators (European Scrutiny Committee report here) pointed to bifurcation, forum shopping (and pro-patentee attitude, determined by competition between local divisions - see a recap of issues here) and pan-European injunctions as the main issues that might transform the EU into a 'trolls' paradise'. Professor Harhoff however stated that the UPC is designed with an emphasis on revocation, low costs and cautious use of injunctions, elements which should be adequate to counter 'trolling' activities. Certainly, that seems to be one of the aims of the UPC, as a recital states: '[w]ishing to improve the enforcement of patents and the defence against unfounded claims and patents which should be revoked and to enhance legal certainty by setting up a Unified Patent Court for litigation relating to the infringement and validity of patents'.

Of relevance to assess potential effects on PAE lawsuits are, inter alia, the following provisions:
* Article 19: the establishment of a training framework for the judges should ensure, or at least contribute to, the uniformity of judicial decisions among the different divisions (as expressly stated by the provision itself: 'Regular meetings shall be organised between all judges of the Court in order to discuss developments in patent law and to ensure the consistency of the Court's case law');
* Article 33(1)(b): allowing the plaintiff to bring an action under Article 32(1)(a), (c), (f) and (g) against multiple defendants 'only where the defendants have a commercial relationship and where the action relates to the same alleged infringement' should prevent the EU from suffering from one of the issues that plagued US litigation before the America Invents Act, which introduced stricter joinder rules;
* Article 33(3): bifurcation may be feared by many, but the real effects of the provision remain to be discovered, as two out of three options allow the case to proceed safely united. The risk, here, is that judges across the different divisions may adopt different practices with regard to bifurcation, effectively creating a pro-patentee enclave [shall we call it Eastern District for Europe, perhaps?];
* Article 33(10): as evidenced by the study cited in Part One of this post, information asymmetry may play a key role in favouring PAE litigation [Merpel cannot make up her mind on whether the adoption of a fair play rule in patent litigation - or in any fields of litigation - would be beneficial or deadly];
* Article 42: principles of proportionality and fairness, albeit theoretical premises which might be disregarded, certainly point the system in the right direction, as far as PAE (or any type of) litigation is concerned (e.g. they may influence the judges' decisions on bifurcation, when a patent assertion entity is concerned, concentrating litigation to avoid unfair use of the temporal discrepancy between the judgments of infringement and validity);
* Article 62: discretionary grant of provisional injunctions challenges the courts with the task of defining clear and consistent standards, giving actual shape to the elements indicated in Article 62(2) (interests of the parties and potential harm from granting or refusal). Once again, as with bifurcation, uniformity appears to be the key to a PAE-proof system;
* Article 63: similarly, allowing discretionary grant of permanent injunctions could lead courts to take a UK-inspired approach, limiting the award of permanent injunctions in PAE cases (again, uniformity is the issue here);
* Article 69: the adoption of the 'loser pays' rule is likely to be a disincentive for exploratory lawsuits and is commonly thought to be a powerful antidote to PAE litigation.
On a train to Milan, the
Kat saw something familiar...
To this Kat, the risk that the UPC Agreement may provide fertile ground for PAE cases does not appear significantly higher than that embedded in the current situation. The system, however, seems characterized by a degree of fragmentation, and perhaps incoherency [as shown by readers' comments to a recent IPKat post], which makes it hard to foresee how judges are going to apply the provisions of the Agreement. Usually, trolling activity thrives in situations where complexity and confusion rule. Thus, the challenge that awaits judges, practitioners and scholars is to shed light on the obscure issues and to ensure that the divisions' decisions will be consistent and uniform [Merpel adds that a good starting point would be to address some of the Max Planck's criticisms, examined by the AmeriKat here].

The analysis conducted so far, in Parts Two and Three, showed that (1) England and Wales enjoy a relatively PAE-adverse environment, (2) PAE litigation in other EU member states is equally constricted, although there is some inconsistency with respect to the use of injunctions, (3) the trend towards pan-European litigation should not significantly alter the current situation, and (4) the UPC Agreement contains potentially dangerous provisions, whose effects can [should, says Merpel] be contrasted by an effort to achieve consistency and to establish clear and shared standards for issuing injunctive remedies and dealing with bifurcation.

There is still one issue which is worth mentioning, as it gives a preview of possible developments of PAE litigation in Europe. As highlighted at the beginning of Part Two, the expression 'patent assertion entity' commonly refers to a company who manages a portfolio of patents for the primary aim of assertion and litigation, without practising the invention. Recently, however, primary companies in the ICT sector started using PAEs (already existent or created ad hoc) to assert patents against each other, in an effort to gain a competitive advantage and to hold up competitors, relying on the ever growing phenomenon of patent thickets ('a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology' according to Shapiro, more here). In June 2012, for example, Google filed a complaint with the EU Commission, alleging that Microsoft and Nokia 'are colluding to raise the costs of mobile devices for consumers, creating patent trolls that sidestep promises both companies have made' (Guardian article here). The giant search-engine company demanded that the competitors be held accountable and invited the Commission to look into these practices. Further, intense litigation in the EU (and US) is currently surrounding standard essential patents and FRAND licensing (examples: Germany here and UK here).

It seems that, if the EU has been relatively immune from traditional patent trolling, a new wave of better looking, well dressed, yet secretly malicious PAEs is appearing on the horizon. A similar development would not only shake the safeguards that protected the EU from traditional PAE litigation, but would ultimately challenge the patent system itself, shifting the focus from protection of research and innovation, to strategic use of patents to alter competition on the merits. Thus closely observing and studying old and new PAEs, even if the phenomenon appears to be minor in the EU, might be a very wise thing to do.

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