For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Thursday, 18 September 2014

BREAKING NEWS: Spanish court refers new case to CJEU on private copying levies

Wait a moment: who should bear
the levy system?
From enthusiastic and invariably helpful Katfriend Fidel Porcuna (Bird&Bird) comes the news that the Spanish Supreme Court has just referred two questions to the Court of Justice of the European Union (CJEU), in the context of an administrative appeal filed by a number of collecting societies (VEGAP, EGEDA and DAMA) and concerning the legitimacy of Spanish system of private copying levies. 

The two questions referred are:

A – Is a copyright levy system, that - taking as a basis the estimation of the actual damage - is financed through the State budget thus not making possible to guarantee that the costs of this compensation are only supported by the users of the private copies (as opposed to the non-users), compliant with Article 5(2)(b)b) of Directive 2001/29?

B – If the answer is in the affirmative, is it compliant with Article 5(2)(b) of Directive 2001/29 that the total quantity set aside by the government for this compensation, which is calculated in view of the estimation of the actual damage, is set within [or conditioned by] the budget restrictions for each financial year?

Fidel adds: "As you know reform of current Spanish Intellectual Property Law was passed by the lower chamber of Parliament on 26 July 2014 and was now at the high chamber's agenda for a definitive approval that everyone took it for granted."

The Royal-Decree 20/2011, in force as of 1 January 2012, established  that compensation for private copying would no longer be obtained through a levy on reproduction devices but rather from the State budget (fixed at EUR 5m per each year 2012 and 2013), thus suppressing the collecting obligations for the industry. It may be difficult to determine now how this calculation would be made. A basic principle is to set a fair balance according to the harm caused to copyright owners as a result of copying by individuals for private use, but not for professional or business use. Calculation and payment have been left for the implementing regulations to define. Objective criteria were nonetheless set by Royal Decree 1657/2012 in force as of 8 December 2012, whose draft was discussed here.

Will this new CJEU reference prevent final approval of Spanish IP reform? Readers will remember in fact that one of the main points of proposed reform concern private copying and the levy system.

In its press release the Spanish Ministry of Education has stated that, no, this new reference will not have any effect on the final stage of the legislative process. However, rumours reported in the El Cultural and El Confidencial suggest that, yes, this new reference means that, not only were proceedings stayed before the Supreme Court, but also approval of IP reform could be now stayed pending the decision of the CJEU.

More press coverage herehere, and here.

The KatChat (or was it a PatChat?): Christopher Rennie-Smith and Darren Smyth discuss EPO proceedings

With apologies for the length of time that it has taken to transcribe his paw-written notes and to fill in the gaps with some creative memory, this Kat offers the following summary of the KatChat that took place on 4 September between the redoubtable Christopher Rennie-Smith (right, now returned from a lengthy tour of duty in the European Patent Office's Boards of Appeal) and our blogging colleague, practising patent attorney and Darren Smyth (EIP). The venue was the congenial office of London-based solicitors Collyer Bristow, whose hospitality was greatly appreciated by all and whose current display of contemporary art was greatly appreciated by a handful of cognoscenti who spotted that it was indeed a current display of contemporary art ...

Following welcomes by Patrick Wheeler and IPKat blogmeister Jeremy, the pattern of the event emerged as Darren subtly lobbed some deceptively simple questions at Christopher, who had a quick think about them and then subtly lobbed some deceptively simple answers back.  For the purposes of this blogpost, the European Patent Office is referred to as Eponia the EPO, Board of Appeal becomes 'BoA', Christopher is abbreviated to 'CR' and Darren is the 'Kat'. This blogger's additions are contained in bold red square parenthesis like [this] and words which appear in quotation marks in Christopher's answers are either (i) what Christopher said or (ii) what this blogger thought he said

The dialogue, broadly speaking, went like this:
Kat: I'll open with a chatty question: how does the EPO cope with three official languages?
One logo, three languages
CR: It's not a difficult problem. In the Biotech Board, 90% or more of what goes on is in English. EPO staff must speak the two other languages [French and German], If you speak one, they teach you the other -- but it does make recruitment [of linguistically challenged Brits] difficult.

Kat: EPO statistics suggest that UK-ish people are under-represented. Why?
CR: There are several reasons. The German and Dutch are over-represented because of location [of EPO operations in Munich and The Hague]. It's also hard to recruit BoA members from outside the EPO itself: such people are typically in their forties or early fifties, discontented with their current employment and willing to move.

Kat: How does the work of legally qualified BoA members differ from that of technically qualified ones?
CR: Once the formalities officer has processed the earliest stages of an appeal and the rapporteur has prepared it, all members of the BoA, whether legally or technically qualified, have the same role and the same vote. The legal BoA deals with "pre-grant incidentals" and its decisions are really quite dull; its members don't actually have that much to do.

Kat: What happens in the lead-up to the BoAs making their decisions?
CR: First, the admissibility of appeals is checked (this is done by the Board's legal member). If an appeal is not admissible, it won't be heard.  The appeal then goes into limbo till the rapporteur picks it up; unless the appeal is accelerated, it just waits for that to happen.  The rapporteur may write a preliminary internal opinion, to guide the Board's opinion or stimulate discussion. Other Board members rarely express any disagreement with the rapporteur's provisional view since they are all so busy.

Then comes the summons to attend the oral proceedings.  A week to 10 days before the oral proceedings, all the BoA members read the case in detail, discuss it and form their opinions. "It's not a very good system, but there's no better one".  A day or two before the hearing, the Board forms both individual and collective expectations as to what arguments it might hear and what their outcome might be -- but often the BoA is surprised by the points made in the oral proceedings.

Kat: It's a characteristic of BoA proceedings that the Board decides cases on the same day, having sent the parties out in order for the BoA members to deliberate. What happens when the parties go out?
CR: [having revealed the real or alleged secrets of one Board which kept a supply of coffee under the table for consumption at this point] The BoA may confirm its provisional decision, or it may choose to ask some further questions of the parties.

Kat: The chair of an EPO Examining Division once said that oral proceedings aren't there to change the outcome -- they exist only to give the parties a chance to be heard. Is that correct? 
CR: "For the record, I disagree". In the light of "eloquence, persuasion and clarity" of a presentation in the oral proceedings, the Board's provisional decision can be changed.

Kat: [having noted the presence of a "mixed audience" of solicitors, patent attorneys and barristers, all of whom have rights of audience of one sort or another in UK patent proceedings] do the arguments submitted by patent attorneys, barristers and so on tend to lead to different outcomes?
CR: "Yes -- and no".  There are good advocates and bad advocates in all tribunals. The quality of advocacy at the Bar is good, but the best patent attorneys are on a par with barristers in BoA proceedings. There is however a clear difference in approach between advocates of different nationalities. "There are some good ones elsewhere, but the British -- even the solicitors -- are the best [this sentiment appeared to go down well with the members of the audience, among whom could be discerned no expression of dissent. At this point Andrea Brewster, from the floor, gave an enthusiastic plug for the CIPA course on EPO Oral Proceedings which, she hoped, would be pursued by "everyone in the patent profession"].

Kat: Turning now to substantive matters, when it comes to the issue of added subject matter the BoAs are very strict and seem to be getting stricter. Are there any signs that they may become more lenient in the future?
CR: I think things are going to stay the way they are, unless the EPO's Enlarged Board of Appeal can be persuaded to make an across-the-board ruling.  Some Boards are criticised, particularly by the Americans, for their "bewildering or incomprehensible attitude to added matter".  But things are likely to stay the way they are for the foreseeable future.

Kat: Turning to consistency, between the BoAs per se and between the BoAs and First Instance, there seem to be substantial differences regarding procedural matters like the handling of late-filed claims, the application of the new rules on handwritten submissions and the delivery of opinions. Does not the independence of the BoAs lead to uncertainty?
CR: "I don't know how truly inconsistent the Boards are" [... but readers of this blog do, murmurs Merpel] "and I'm not convinced the problem is so big".  Apart from the treatment of added matter, there's not much difference between the Boards when it comes to substantive issues. There are some procedural differences, notably with regard to late filing, but the 2003 amendment of the Rules of Procedure "did some good".  As for the First Instance, there aren't actually any procedural rules.

Some BoAs issue preliminary opinions, while others don't.  In principle some sort of preliminary opinion is good, if it helps set the agenda for the oral proceedings. However, they do involve more work.  An impressive argument against making preliminary opinions available to the parties [which, it seems, some BoAs do but others don't] is that this practice gives encouragement to one or other party to believe that the Board favours one side or the other, and the Boards are "terrified at showing bias". Judges in civil litigation in the national courts may pre-read cases and show their inclination towards one side or another, but the Boards are scared to do so.

Kat: Patent judges in Europe get together to chat.  Do BoA chairmen do the same?
CR: "Jein" [this being a contraction of the German words "ja" and nein", = "yes" and "no"].  They sometimes go to judges' meetings. While chairmen don't get together, even with Board members in the same technical field, the legally qualified members do: "it can only increase consistency, or at least understanding". Actually, there was one [chairmen's meeting ...].

Kat: Let's look at the doctrine of precedent. The EPO doesn't have it, but has published its own book on the case law of the EPO ...
CR: The case law book is very useful because "it summarises the options and major trends. It is not precedent as we know it" and, "unless there is a way of reporting and cataloguing important cases, it isn't going to happen". In Eponglish [that's "EPO English", the lingua Franca of Eponia], "the established case law of the Boards of Appeal" does not mean the same thing as "precedent". In terms of principles of law it doesn't mean "there isn't a chance of the BoAs going against it", but rather "you will find a reference to it in the case law book".

Kat: In contrast with "established case law", some concepts are thrown up by one Board and then studiously ignored by the others. Where do these 'outliers' come from and what can be done about them?
CR: With 2,000+ decisions a year, one must expect a few rogue decisions: "the inconsistent are eliminated fairly quickly".

Kat: Double patenting seems to be creeping in ...
CR: The system allows it to happen: "if people want it and are prepared to pay for it, let them have it".  Double patenting "will stay till it's legislated against".

Kat: What about second appeal on substantive issues?
CR: No.  The Enlarged Board "is just there for the thorny issues".  Petitions for review are "something of a lost opportunity" and it would have been good to get past admissibility issues and on to the substantive ones"

Kat: There is no IP gathering that doesn't seem to mention the new European Patent system. Will BoA members serve as judges in the Unitary Patent Court?
CR: There has been some interest. However the European Patent Convention would need to be amended -- unless the BoA members in question resign first.

Kat: What's it like to be on the Enlarged Board?
CR: It's a different experience, with seven members of the Board, of which five are legally qualified.  Questions before it are thorny, and usually procedural, requiring "examination of both established and disestablished case law".
The KatChat was then brought to its conclusion by the prospect of a generously over-catered reception by our hosts at Collyer Bristow, to whom we again express our thanks.

Wednesday, 17 September 2014

AIPPI Congress Report 5: 'A' stands for "Arbitration" and "Aereo"

There was so many 'A' things going on on Monday afternoon
the AmeriKat's 45th chai tea latte of the day
was adopting its shape
While the AmeriKat was ramping up her third day of the AIPPI Congress marathon with an ever-increasing influx of caffeine into her veins with back-to-back meetings from contacts around the world, her colleague Lorraine Neale was herself having a marathon afternoon in the Land of 'A' - arbitration and Aereo.  Lorraine brings you the details:
"Following a busy morning meeting old work colleagues and exploring interesting collaborative opportunities with new ones, this AIPPI newbie settled in for an afternoon of workshops. The first was a mock International IP arbitration.  The mock trial fast becoming a regular feature of the AIPPI Congress following the first mock patent trial at the 2008 Boston Congress.  This year's mock centred on the validity and infringement of industrial design rights in glassware. It showcased the typical procedural, evidentiary, legal and tactical issues that may arise in international IP arbitrations, and was excellently executed by the skilful international team of arbitrators and litigators representing the 3-person Tribunal, the Plaintiff team, the Defendant Team, and each sides’ expert witness (the amusing Argentinian expert Ivan Poli for the plaintiff and the Italian expert Mario Franzosi for the Defendant). The facts of the dispute mirrored those of a case decided by the Federal Court of Canada in 2012, Bodum USA v Trudeau Corporation (1889) Inc.

From arbitrating designs to litigating copyright, the chosen follow-on workshop entitled “Aereo – copyright lessons for the US and beyond” provided an engaging debate surrounding the US Federal Supreme Court’s decision in ABC v Aereo, handed down in June 2014.

John Carson Partner (Knobbe Martens, US) and a member of the AIPPI standing Copyright Committee, moderated the debate.  Before launching into proceedings, John provided the audience with a helpful summary of the case. Aereo, a TV-over-the-internet service, had introduced a disruptive business model, using thousands of very small antennas stored in a warehouse, to stream broadcast signals which they had encoded into packets, directly into the homes of users. It was sued by the broadcasters (originally including 21st Century Fox, CBS, NBC and ABC) for infringement of their copyright in public performance. Aereo defended its actions claiming that all it did was to provide a device to watch a programme that was already available. The Supreme Court decided 6-3 in favour of the broadcasters, ruling that Aereo and its cloud-based technology was too similar to a traditional cable company to say that its service did not infringe. Justice Scalia, however, writing for the minority felt that this legal underpinning ("looks like-cable -TV") was flawed and would “sow confusion for years to come”.

In the opinion of Mitch Stoltz (Electronic Frontier Foundation), the Supreme Court had got it wrong! Up front about his organisation’s amicus brief submission in support of Aereo, Mitch was of the view that Aereo was fulfilling a market need that was not met elsewhere, i.e. for people to receive their local suite of broadcast channels (local news, sport, commercial), live or nearly live on a mobile device. This case was as much about competition as anything else. Furthermore, the case highlighted the important question as to who should make technology policy - the courts, the legislature, or should it be left to the market?  The court had felt able to engage in a free form construction of industrial policy, whereas Justice Scalia had recognised that this was the remit of the legislature. In Mitch’s opinion the markets are always the better determinants of whether a policy is promoting or prohibiting competition.

Elizabeth Valentina, Vice President Content Protection for Fox Entertainment Group, (speaking on her own behalf as Fox was still litigating the case), pointed out that Aereo’s business model involved the streaming of broadcast content obtained without permission, authorisation or license, and for which service Aereo were charging their subscribers. This business model was harming that of the broadcasters and content owners, by devaluing their content, interfering with exclusive deals for content to be delivered over the internet and to mobile devices, as well as diverting eyeballs from TV advertising revenue. It was a harm clearly recognised by Judge Nathan at first instance, in the broadcasters’ motion for a preliminary injunction.

The case was now back in this District Court on remand, with Judge Nathan considering the scope of the injunction. Furthermore in an interesting shift in business and legal strategy, Aero has raised a section 111 US Copyright Act defence. Aero is arguing that, as the Supreme Court thought that it acted like a cable system and should be treated in the same manner as cable system for all purposes, it should also be entitled to carry the signals of TV stations pursuant to the statutory licence granted to cable systems by section 111 of the US Copyright Act.

Sanna Wolk (Associate Professor at University of Uppsala, Sweden and co-chair of AIPPI’s copyright committee) compared the US position with that adopted in the EU where the CJEU in March 2013 ruled that online near-live streaming by the UK Company, TV Catchup, was an unauthorised "communication to the public" within the meaning of Article 3(1) of Directive 2001/29 (InfoSoc Directive) and therefore an actionable infringement of copyright. The CJEU concluded that as TV Catchup was making the works in the original “terrestrial” TV broadcast available over the internet, and hence using different technical means to retransmit the broadcast, this retransmission was a “communication” within the meaning of the Article 3(1). Furthermore in the circumstances the court did not have to consider whether communication was to a “new public”, as the new transmission required an individual and separate authorisation from the copyright owners. 
In the following Svensson case (Case C-466/12) an Article 267 TFEU reference from the Svea Court of Appeal in Sweden, the CJEU however reiterated that under Article 3(1) every act of communication of a work, by the same technical means, to a “new” public (“a public that was not taken into account by the copyright holders when they authorised the initial communication to the public” SGAE), has to be authorised by the copyright holder. The CJEU held however that making the works available by means of a clickable link does not lead to the works being communicated to a “new” public and does not therefore need authorisation. The CJEU emphasised that the position is different where the hyperlink permits users to circumvent restrictions and access works not freely available elsewhere. In these circumstances, circumvention makes the works available to a “new” public (as defined above) and requires authorisation. Sanna noted that we should now be looking out for the decision in another reference to the CJEU from Sweden, C More Entertainment AB v Linus Sandberg, this time from the Hogsta Domstolen. Sanna hoped that this case would offer some clarification as to the status of “the new public” criteria.

Finally Andrea Rush (Blaney McMurtry, Canada), provided the Canadian perspective drawing the audience's attention to an important case on technological neutrality that is currently being appealed to the Supreme Court of Canada - Canadian Broadcasting Corporation v Sodrac 2003 Inc. In 2012 the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) invoked section 70.2 of the Copyright Act and asked the Copyright Board of Canada (the Board) to settle a licensing dispute with CBC. The latter had taken issue with the fact that SODRAC requires producers to pay for the right to incorporate musical works into their productions even in cases where a project is commissioned by a SODRAC –licensed broadcaster. The Broadcasters argued that requiring each link in the distribution chain to pay for the right to make copies of a musical work is inconsistent with the prevailing industry model. 
The Board, however, found for SODRAC on the basis that the copy-dependent technology adds value to the businesses of producers and broadcasters because it allows them to remain competitive. The Broadcasters appealed the decision, with their primary legal argument being that the Board’s decision flew in the face of the principle of technical neutrality in copyright matters. They contended that copies of musical works that are made purely out of technological necessity should not attract royalties and that to hold otherwise would impede technological innovation and efficiency. The Board had grounded its reasoning in the Supreme Court decision in Bishop v Stevens (1990) which held that the use of ephemeral recordings is not implied in the right to broadcast a work, and that the right to copy and exploit a copyrightable work was the exclusive remit of the copyright holder. The Federal Court of Appeal upheld the Board’s decision and it was this decision that is currently under appeal. "

Puss In (Infringed?) Boots

On September 8, Judge Wright from the Central District of California dismissed Plaintiff Deckers Outdoor Corporation’s trade-dress infringement claim against retailer J.C. Penney over the sale of allegedly infringing boots, but allowed the patent infringement claim to proceed. The case is Deckers Outdoor Corporation v. J.C. Penney, No. 2:14-cv-02565.

Plaintiff Deckers Outdoor Corporation makes and distributes the UGG® boots, which had their fashion moment in the early 21st century. As stated in the amended complaint, “UGG® sheepskin boots have become a high fashion luxury item and can be found on  fashion runways around the world.” The UGG® boots are made out of sheepskin, and are worn with the fleece inside of the boots, which make them quite warm to the tootsies. They were very popular in the cold U.S. Northeast, but it also became quite a look on the West Coast to wear them bare legged with a short or a mini skirt.

Plaintiff owns several  patent designs for the UGG® “Bailey Button” boots, including design patent D599,999 for the Bailey Button Single boot (the patent is for a “[p]ortion of a footwear upper”) and design patent D616,189 for the Bailey Button Triplet boot (the patent is for “[t]he ornamental design for a portion of a footwear upper.”)

The Bailey Buttons boots are a bit different than the UGG® boots which became popular in the U.S. a decade or so ago, as these did not have a button as part of their design. As explained in the Amended Complaint, the front and rear panels of the Bailey Button boots overlap on the lateral side of the boot’s shaft, the overlapping panels have curved top edges, and the edges have exposed fleece-type linings. Also, one or more buttons are “prominently featured on the lateral side of the boot shaft adjacent the overlapping panels.” The Plaintiff claimed that these elements are non-functional and serve primarily to identify UGG® as the source of the product.

As a reminder, U.S. copyright law does not allow for the protection of useful items, which has left fashion designers with the options of protecting their work either with a design patent, or by claiming that a particular design is a trade dress, as it has acquired secondary meaning and can thus protected by trademark law.

Indeed, when Plaintiff found out that Defendant J.C. Penney was selling boots that Plaintiffs believed were knocking off its Bailey Button boots design, it filed suit for infringement, false designation of origin, unfair competition, and patent infringement. J.C. Penney moved to dismiss.

Plaintiff claimed in its amended complaint that “[e]lements of [the] Bailey Button Boot Trade Dress are nonfunctional and [that] its inherently distinctive quality has achieved a high degree of consumer recognition and serves to identify Plaintiff as the source of high-quality goods,” and that defendant’s use of Plaintiff’s trade dress is likely to cause consumers’ confusion. Plaintiff also claimed that such unauthorized use of its trade dress constituted false designations of origins and unfair competition.

Defendants argued  that the court should dismiss the false designations of origin claim, quoting the DastarCorp. v. Twentieth Century Fox Supreme Court case, where the Court held that the “origin of the goods” provision of §43(a) of the Trademark Act refers to the producer of the goods offered for sale, not “to the author of any idea, concept, or communication embodies in those goods.” Defendants interpreted Dastar as meaning that there is no violation of the Trademark Act if Defendant produces goods which are alleged to infringe Plaintiff’s rights, even if these goods embody Plaintiff’s ideas and concepts. Here, J.C. Penney argues that it never presented Plaintiff as being the producer of the boots sold at the J.C. Penney store.
You should have patented this
 non functional design, but
now the Ogre sells them! 

Dastar was a reverse passing-off case, where a defendant affixed its own mark on goods produced by plaintiff, while here Plaintiff was claiming passing-off. Judge Wright nevertheless granted defendant’s motion to dismiss Plaintiff’s  false designation of origin claim, as J.C. Penney is indeed at the origin of its own goods, the allegedly infringing boots it sells at its stores, and, as such, is indeed the producer of the goods it offers for sale.

However, Judge Wright did not dismiss Plaintiff’s design-patent infringement claim. He dismissed  however Plaintiff’s willful patent infringement claim, because Plaintiff had not shown that Defendant had actual knowledge of the patent. Merely claiming that Defendant knew about the patents because  the boots are so popular meets only a constructive knowledge standard, not the actual knowledge standard necessary to establish willful infringement. 

AIPPI Congress Report 4: Should Europe embrace a patent linkage system?

The site of this year's Pharma Day -
reminding the audience that, yes, you
are in Canada
Without the slightest hint of pharma fatigue, the AmeriKat continued her Pharma Day in the SPC session.  Sadly, however, she had to leap off like the bounding feline beast of prey that she is for a meeting (::snort:: IP joke!).  But not to fear, the AmeriKat's ever-eloquent colleague, Eibhlin Vardy was in attendance and reports on what was a lively discussion on the topic of "Early Resolution Mechanisms for Patent Disputes Regarding Approved Drug Products" with Larry Welch of Eli Lilly (US) moderating panelists representing a range of views across the innovator / generic spectrum.  Over to Eibhlin:
"Welch began by explaining the background to patent linkage, by reference to the US Hatch-Waxman legislation of 1984. This was a compromise between innovator and generic companies, and resulted in legislation on a number of components including patent term restoration, data exclusivity, and patent linkage. The key aspects of patent linkage in the US system are that originator companies must notify their patents to the regulator and industry, and generic companies must notify innovator companies of marketing authorisation applications. In Welch's opinion, the US patent linkage system works fairly well, in that it allows the resolution of patent issues prior to the approval of a generic product. He observed that patent linkage systems exist to some extent in a number of jurisdictions, including Canada, Mexico, Australia, and Korea. 
Warren Sprigings (Sprigings IP Law, Canada), started by saying that other countries should learn from Canada's mistakes in implementing a patent linkage system with some similar features to the US system. The Canadian system links new drug approvals to certain patent requirements. Although proceedings under the Canadian Patent Medicines (Notice of Compliance Regulations) (known as PM(NOC)) are supposedly "summary proceedings", in practice they can be complicated, expensive and very time consuming, involving both fact and expert evidence. Once proceedings are initiated, there is an automatic 24-month stay of the generic marketing authorisation application, and in Spriging's opinion, this automatic stay provides originator companies with an incentive to issue proceedings even if they are not warranted on the facts. Once the PM(NOC) proceedings are concluded, there is a right of appeal to the Court of Appeal, and the unsuccessful party can still bring an infringement, DNI or invalidity claim as appropriate. Therefore, even if a generic company is successful in PM(NOC)proceedings it may still be subjected to litigation for years thereafter. There is one carrot for generic companies in the PM(NOC) Regulation in that damages are recoverable from the date the generic would have otherwise entered the market. However, the onus is on the generic to establish lost sales and profits which is very difficult in practice. 
Young Kim (Kim & Chang, Korea) outlined the patent linkage system in Korea introduced in 2012, which applies to both small molecule and biologics. In Korea, patent notification is optional (unlike the US system), but despite this there were over 1,000 patent notification listings up to the end of 2013. An improvement of the Korean system over the Canadian one is that any notified patent must be relevant to the product approval dossier, meaning that generic companies are less likely to get bogged down in irrelevant patents. In Korea, the system is bifurcated, meaning that generic companies can issue validity and scope of claim proceedings before the IP Tribunal/Patents Court, while infringement is dealt with separately by the High Court. A draft Bill is expected to be passed by the end of 2014, including the introduction of a stay for 12 months (directed at generic sales rather than marketing authorisation approval). Kim explained that the Korean system seeks to minimise the negative impact on generic companies, but she is concerned that it has apparently resulted in a massive increase in invalidity/scope confirmation actions by generics, leading to a significant litigation burden. 
David Rosenberg (GSK, UK) explained that although there is no patent linkage or early resolution mechanism in Europe (with the exception of Portugal), there are three European issues that need addressed: 
1.There is a significant drop in reimbursement price at generic launch, which can never be recovered;
2. This price drop has an extra-territorial effect, due to international reference pricing amongst certain European Member States; and
3. Third parties may suffer harm as a result of this price drop - for example if there are cheaper alternative drugs available to treat the same condition, the sales of a third party will be affected by a generic entrant. 
Rosenberg recognised the need to balance protection for originators, and freedom to operate for generics. However, he observed that the current system is procedurally imbalanced, given that generic companies can issue litigation to clear the path well in advance of any product launch, but originator companies have no sight of the generic company's activities until very shortly before launch. It is therefore impossible for originator companies to launch infringement proceedings at an early stage. This lack of transparency could be addressed by making generic abridged marketing authorisation applications public. Without an early resolution mechanism systems, preliminary injunctions are essential. However, the possibility of third parties (such as the payor Department of Health) obtaining a cross-undertaking in damages following the grant of a PI is a further complication in the system which could have significant ramifications for the way originator companies think about litigation going forwards."
The AmeriKat wonders whether there is scope for greater transparency of generic launch plans in Europe, either by a linkage system (avoiding the Canadian experience) or by making generic marketing authorizations public in the way described by David.  Given the general move in Europe towards more transparency in numerous respects in the pharma industry, why should transparency in relation to a generic's activities be any different?  Would the potential allegation that such launch plans are commercially confidential trump any such measure?  What do readers think?

AIPPI Congress Report 3: Biosimilars - into the great unknown?

The AmeriKat successfully keeping
herself awake yesterday morning
After an ungodly early morning breakfast meeting yesterday morning, the AmeriKat dragged her paws to the second session of yesterday's Pharma Day sessions on the hot topic of "Biosimilar pharmaceutical products".  The session was promised to explore the latest developments in the area, including key definitional issues and the currently contentious issue of naming biosimilars.  Although there was an unusual lack of AIPPI audience participation, the panel did not fail to deliver.

Masahisa Yamaguchi (Chugai Pharmaceutical Co, Japan) provided a very concise and helpful summary of the biosimilars landscape.  Masahisa explained that unlike small molecule drugs, it is impossible to produce exact copies of reference biological drugs.  As such, the regulatory pathway to approval of such drugs is crucial.  However, the global regulatory position is mixed.  In Japan there is only one single guideline published in 2009 in relation to all types of biosimilars.  In the US there are four draft guidelines including the latest one, published in 2014, entitled Clinical Pharmacology Data to support Demonstration of Biosimilarity to a reference Product.  However, these are all draft guidelines.  In Europe, a general guideline has been published entitled "Similar biological medicinal products".  There are also product specific guidelines in Europe making Europe's regulatory landscape a little bit more user-friendly.

Masahisa explained that the major feature that these three systems have in common are the requirements of post-marketing surveillance studies and risk management plans.  The big difference between the three systems is that in naming.  In Japan a different non-proprietary and brand name is required to be distinguishable from the reference drug.  In Europe the biosimilar adopts the same non-proprietary name as its reference product.  In Australia they use a different non-proprietary name.  In Japan, there is a three-part naming process.  The divergence in approach has led the World Health Organization to develop its own recommendations - the use of the same non-proprietary name as the reference product plus a unique suffix.  Generally, innovators argue that a different non-proprietary name should be required, while generics oppose such an argument.  The main point in dispute, Masahisa explained, really turned on what is better for prescribers and patients.  In his view, both arguments have merit, but for now the only certainty was that the different regulatory authorities had different opinions on the issue.

AIPPI's Pharma 2 lineup for yesterday morning
Although there are many biosimilar products on the market in Europe, Masahisa explained that the US market is less developed.  In Japan, there are currently four biosimilar products on the market.  This generally low market impact could be attributable to the cost of developing biosimilars which are more expensive than small molecule generics.  A developer will need financial power behind them to develop biosimilars.  Masahisa also explained that the general price reduction of biosimilars in Europe is around 10-35%, of that of the reference product. The penetration rate in Europe is 10-30%.  In Japan, he considered that the market penetration is less than 5%.  This relatively slow and low market penetration rates may have to do with the fact that, besides expensive, biosimilar substitution is not allowed in Japan and Europe, resulting in a longer regulatory approval pathway.

Looking to the future, Masahisa explained that the projected total sales of biologics to 2020 shows rapid growth.  One of the most important and strong areas of growth is the monoclonal antibody field.  This will be the next target for biosimilars, he concluded, but it requires significant investment.

Agnes Klein (Health Canada) was next up to explain the regulatory framework for drugs and biologics in Canada under the Food and Drugs Act.  Following a technical sprint through the Canadian regime for biosimilar approval, Agnes described some key pointers for framing the studies that Canada Health look at when examining biosimilar applications.  Such factors included the preference of equivalence trial data over non-inferiority trial data, studies that are conducted using clinically relevant endpoints to detect potential differences (which could be different from the innovator's original study) and for pivotal trials, duration, route of administration and dosage ranges should be similar.  On the final point, Agnes stated that it was very unlikely that extrapolation of a different route or dosage would be permissible if there was no sufficient pharmacokinetic or pharmacodynamic data to support such extrapolation.

Health Canada says "no"
to automatic biosimilar
A significant issue with biosimilars, Agnes explained, was that of immunogenicity.  Most biologics introduce some level of anti-drug antibodies and these antibodies may have an undesirable clinical effect on pharmacokinetics and pharmacodynamics, efficacy or safety.  From a safety perspective, these antibodies can cause allergic or anaphylactic reactions, reduction to efficacy, reduction of autoimmunity and/or neutralization of an endogenous counterpart.  Unwanted immunogenicity is currently difficult to predict from analytical and non-clinical data in terms of incidence, characterization, clinical consequences and significance.  Risk based immunogenicity evaluation strategy and the filing of post-marketing risk management plans are therefore required just like any small molecule generic drug.  Agnes explained that Canada is moving towards a life-cycle management regime for all drugs, which is especially important for biosimilars as they are finding that increasingly biosimilars have common trans-properties.

Agnes concluded by explaining that Canada Health does not support automatic substitution of a biosimilar for a reference drug, but that biosimilars "are safe and effective as guidelines are sufficiently robust to ensure safety and efficacy.

Prior to introducing the final panelist for the morning, the moderator Mary Padbury (Ashurst, Australia) cited a comment made by to provide some context for the current slow growth rate of biosimilars in the global market.  Jimenez stated that although there will not be a big difference in the rate of growth of biosimilars for the next 2-3 years, there will be an inflection point in 2016-2019 when it is anticipated there will be big biosimilar launches. By 2020, we are likely to see a big impact in the biosimilar market.

Is the Hospira v Genentech case just
the first of many biosimilar cases
to come before the English Court?
The final speaker, Dominic Adair (Bristows, UK) brought the audience back to the present market conditions of low market penetration.  This has been evidenced in the UK by very few cases involving biosimilars having been heard by the High Court.  Currently there are 17 biosimilars approved by the European Medicines Authority - two of which are for monoclonal antibodies both for infliximab.  But, against this background there has not been much biosimilar patent litigation save for one case decided earlier in the year - Hospira v Genentech (see IPKat post here) - where Hospira was clearing the path in respect of two patents covering Genetech's Herceptin cancer drug.  Although the uptake in biosimilar litigation has been slow, Dominic predicted that as we begin approaching the biologic patent cliff with basic biosimilar patents expiring, there will likely be an increase in litigation activity.  In the meantime, echoing Masahisa's comments, it is likely that a reason for the generally quiet biosimilar litigation landscape could be attributable to there not being enough approvals to create litigation, a longer regulatory process to obtain marketing authorizations for biosimilars and strategic moves by biosimilar manufacturers to wait until the expiry of the basic patent.  On this final point, Dominic explained that when he investigated this issue he found that when the two EMA approvals for infliximab were granted in 2013, it was reported that Hospira and Celltrion would only enter markets that did not have patent protection for Remicade.  Eastern Europe was therefore the target for that biosimilar market launch.

Without any litigation in this space, it is difficult to predict whether the courts will react similarly to issues raised in biosimilar litigation as they do to those raised in standard  small molecule litigation.  A significant issue that Dominic raised related to the granting of interim and permanent injunctions.  In the classic case the test for an interim injunction under American Cyanamid asks whether there is a serious question to be tried, whether damages would be an adequate remedy and where the balance of convenience lies.  The launch of generics pre-patent expiry is a substantial threat to innovators given the dramatic price spiral following the first launch (see commentary in SmithKline Beecham v Apotex). The normal course of conduct is that the first generic prepares for launch, ends up challenging the patent(s), litigation ensues and depending on the outcome all the other generics with market approval pile in.  The price of the innovator product reduces dramatically and its market share can reduce significantly.  In such circumstances irreparable harm is straightforward as the price will never recover and it is therefore relatively easy to obtain an interim injunction from the English court.

What does the future of biosimilar
litigation hold?  Do we have
some idea or is it into
the great unknown?
However, the biosimilar situation is different.  There are less approvals for biosimilars, so it is arguable with only one or two biosimilars on the market innovators are not going to see the price spiral that they experience with small molecule generic launches.  On present market conditions, a biosimilar launch will see the innovator likely operating in a duopoly.  Further, given that many biologics are delivered with specific delivery devices, like Humira, and other patient care programs there may be reluctance by patients and doctors to change to a biosimilar.  Again, this could result in a less dramatic price and market share reduction.  Dominic questioned whether in these circumstances the court will be as ready to grant in injunction.  His view is that it could be more difficult, but this has to still be weighted against the difficulty in calculating damages in an assessment after trial.

So what is the take-home point from this session?  With a current diverse regulatory landscape and small market penetration, we are still few years off from reaching the precipice of the next big frontier in patent litigation.  It probably won't be until the AIPPI Congress in Cancun, Mexico in 2018 when we really start seeing how the regulators and courts will react to this current great unknown.

Of Welsh love spoons, patents and trains: Brits and Chinese still get on just fine

Last week this weblog hosted the first of two instalments of the adventures of the members of the British IPO/FCO-led Expeditionary Force that headed for the Far East to do their bit for China-UK Intellectual Property Week (a.k.a. #UKChinaIP).  In the post below, participants and Katfriends Gwilym Roberts (CIPA, Kilburn & Strode) and Catherine Wolfe (ITMA, Boult Wade Tennant) share their further experiences:

Extra functionality
over chopsticks?
"The sheer scale of the Chinese IP operation emerged as part of the team found themselves at the Suzhou Patent Examination Cooperation (PESC) Centre in East China. The team, including Beijing Embassy’s Shi Hui, and the IPO’s Andy Bartlett, Andrew Davidson and Nathan Abraham arrived desperate to share knowledge and a Welsh love spoon brought along in case of memento exchange. Outside Suzhou, the “Venice of China” SIPO has set up a subsidiary Examining section in a purpose-built 60,000 sq. m facility with its own restaurant and pagoda, handling 30,000 grants and 70,000 exam reports last year and more still this year (although it’s never quite clear where design patents and utility models figure in these statistics). UKIPO’s Deputy Director Andy Bartlett gave a discussion of quality control measures, which was of huge interest and relevance to an operation with no fewer than 1,300 Examiners, and about to double in size. And we heard about the training at PESC -– from this reporter’s patent attorney point of view, by far the most important issue. But despite a false alarm, the love spoon did not change hands.
There's no truth in the story
of the Chinese IP infringers'
favourite karaoke track
being "I Did It Your Way"
Reassuringly there was a comfortable convergence on best practices, the biggest difference inevitably being scale; someone else can do the maths on proportional patent turnover at IPO v SIPO. PESC seems to use a mix of teaching and experience based training with lectures from local and SIPO based experts, and has a quality control mechanism which is itself quality-controlled by SIPO in a sort of recursive quality super spiral. Given the target of two million patent filings per year by next year in China, this scale and growth is essential; SIPO recognises that this needs to go hand in hand with maintenance of quality and, if the outcome matches their ambition, then patent offices around the world will want to know how they did it. This was a good opportunity to keep to policy -– to underline our enforcement concerns in China, build mutual respect for our systems –- two jobs done. The team then stayed in Suzhou new city for a pleasant evening chatting to academics from a local branch of Liverpool University, including a comparison of modern theory on stimulation of creativity v drafting broad claims, but still no love spoon exchange. Another staggering place (enormous hotel, café, pizza restaurant and karaoke lounge – but no people). They really do plan ahead there.
Opportunity lost? The IPO could have marketed
the joys of slow-track Welsh railway technology?
Then on to Nanjing by superfast train. Watching one of those come through the station without slowing down had even the most travel-hardy delegate glassy-eyed. Following more information- (and to our delight, love spoon-) sharing at the Jiangsu Provincial IPO we headed (in a minibus with a card table, and cards) on to the Technical University for a round table followed by a panel session on trends in European IP; another opportunity for Gwilym Roberts, Catherine Wolfe and Rob Furneaux to promote British expertise, then back to another fabulous hotel, playing snap all the way. Mention is also due to the China-British Business Council at this point. The Council set up many of these provincial meetings and also took the team to a very pleasant Bavarian micro-keller to recuperate in the evening.

The final leg was Hong Kong, with excellent discussions of a range of IP issues, a well-attended panel session headed by HKIPD Director Ada Leung and the opportunity to express once again CIPA’s support for and enthusiasm to assist with the current patent law and system reboot there. The ambition is huge, but we met an impressive team who look likely to deliver both on the law and the training of Examiners and attorneys to accompany it. Then home.

The week was demanding and aimed high but, in terms of coverage and delivery, hit its targets. There is no faulting the intentions nor endeavour of the IPO team both here and in Tom Duke’s domain and, while there may be many more visits to come, and much depletion of Wales’ armoury of love spoons, this correspondent at least is confident that our policy goals will be met".

Tuesday, 16 September 2014

Deadmau5 and the new Batmobile: is there any synergy?

The BBC reports that Zack Snyder has tweeted the first official photo of the new Batmobile, which will be featuring, if not actually taking the star role, in the forthcoming movie which he is directing, Batman v Superman: Dawn of Justice. [Merpel was rather hoping for something more legal content, maybe Batman v Superman: Court of Justice, but this seems unlikely at present].  The vehicle (below), which is likely to give Batman a headache fitting it neatly into a supermarket parking lot, is a good deal less car-like than the original model (even more below).

Never mind issues of fuel consumption, one wonders how the new Batmobile does for spares and components. Merpel is just a little disappointed that the vehicle doesn't have a number-plate.  As for insurance ...

This Kat has been doing some legal speculation too, since he suspects that there may be some synergy between the new Batmobile and Deadmau5.  Having recently pondered the case of the de-branded Ferrari/Purrari belong to Deadmau5 (on which see Lucy Harrold's guest post here), it occurred to him that the new and plainly monochromatic Batmobile, suitably de-branded and decorated, might appeal to the Canadian rapper (or is it wrapper?) [it has now been explained that he isn't a rapper, but the pun was too good to waste -- and Merpel is sure that he could if he tried ...]. After all, what is a bat but a flying mouse, so the Batmobile embodies an aural-to-conceptual link between "mouse" and "mau5".  But how might Deadmau5 choose to decorate it?

If Deadmau5 were to get his hands on the Batmobile and give it the Nyan Cat treatment, an interesting issue would arise.  On the assumption that the newly-styled Batmobile is an authors' work in which moral rights vest, would the exposure of a Deadmau5-decorated Batmobile to potential ridicule infringe its creator's right to object to derogatory treatment or distortion in those countries where that right is protected?  Such decorative activity might fall within the protective scope of parody under the recent ruling of the Court of Justice of the European Union in Deckmyn [on which see fellow Kat Eleonora's post here] -- but that ruling appears to this Kat to have no application beyond the realm of the distribution right, and at a pinch other economic rights, and would not be able to assist a defendant in a moral rights-based claim.

Readers' comments and suggestions are welcomed.

IP Publishers and Editors Lunch 2014

The IPKat can now confirm that we have all the necessary ingredients for the IP Publishers and Editors Lunch 2014. We have a date, Tuesday 25 November, at 12.30 pm to 2.30 pm. We have a venue, this being the London offices of law firm Bircham Dyson Bell, round the corner from Birdcage Walk -- a clear conceptual magnet for those of the feline persuasion, though few if any birdcages are now seen in those sumptuous parts. Finally, we have a guest speaker, the ever-challenging Ashley Roughton (barrister, one of the General Editors of The Modern Law of Patents, published by LexisNexis and now in its third edition).  This event is free to attend and offers a lovely opportunity to rub shoulders with other people who are part of the sequence of events that leads from things happening in the field of IP to those selfsame things being known and discussed.

In past years we have welcomed colleagues from various corners of the world. We do hope that this year will be no exception!

If you are involved in any aspect of intellectual property editing or publishing, whether in the traditional media or the social media, and you'd like to attend, please email the IPKat at and let him know.

Monday, 15 September 2014

AIPPI Congress Report 2: Second medical use heats up a Sunday morning

Good morning, Toronto!
Sunday mornings. Normally, the AmeriKat can be found burrowing under her comforter (not her "duvet" while she is on this side of the Atlantic) clinging to her final hours of pyjama-wearing, work-avoiding bliss. However, yesterday morning was different. At the crack of dawn she sprinted to the hotel gym before a dizzying whirlwind of client meetings and navigating her way through the streets of Toronto to show her whiskers at a plethora of law firm hosted sessions. The AmeriKat's colleague, Eibhlin Vardy, had a similarly eventful morning at the AIPPI Congress. Eibhlin reports:
Following a manic dash to the Eaton Centre to find suitable convention attire following lost baggage, this AIPPI Congress newcomer settled down to hear the deliberations of Working Committee Q238 on "Second medical use and other second indication claims".
At the outset, the Committee expressed an ambition to pass a resolution that went further than merely endorsing the status quo. The Working Committee rose to the challenge, and the wording of the resolution was duly agreed which called for changes to both the legal and regulatory framework.
Highlights included discussion on how infringement of second medical use claims should be assessed when the product has a skinny label with a carve-out for the patented indication. There was agreement that the offering or promotion of a skinny label product, where such offer or promotion (e.g. by sales reps) specifically referred to the patented second medical use should constitute infringement. The Working Committee then went further, and approved a non-exhaustive list of 9 factors that should be taken into account when determining whether acts relating to skinny label products might amount to an infringement, even where there is no explicit reference to the patented indication. This list included: (1) subjective factors, such as the alleged infringer's intent; (2) the alleged infringer's actions, including any steps taken by the alleged infringer to discourage or encourage infringing use for patented indication; and (3) wholly external factors such as the economics of the relevant market, and the prescription practices of relevant professionals. This list of factors, to be considered on a case by case basis, recognises that second medical use claims may require special treatment when considering the issue of patent infringement. 
The Working Committee also resolved that the pharmaceutical regulatory framework "governing the marketing of pharmaceuticals, their labelling, prescription, distribution, dispensing and reimbursement should be transparent as to whether drugs are being dispensed for patented medical uses, and, while not preventing the legitimate commercialisation of products for second medical uses that are not patent protected, facilitate the proper enforcement of patent protection for second medical uses.” Many jurisdictions had raised concerns about the regulatory framework in their national responses to Q238. In view of the fact that the pharmaceutical market was so heavily regulated, to do otherwise would mean that regulatory law would be allowed to distort patent law.
The Working Committee concluded by passing a further resolution proposed shortly before lunch, urging the relevant authorities to approve necessary measures so that effective protection of second medical use patents is not jeopardised by the regulatory framework.
Q238 is being discussed right now in today's plenary session.  Eibhlin will be back to report on the outcome in due course.

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