From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Tuesday, 25 April 2017

Fordham 25 (Report 8): The sun rises on plausibility, but where (and when) will it set?

Everyone knows the AmeriKat is not a morning person.  Although in recent months she has been up and out at the crack of dawn, she is not a fan preferring prowling into the quiet night undisturbed.  So although there were two Sunrise Sessions at Fordham that struck her fancy (especially the data mining session), she left the reporting to her German pal Christopher Weber (Kather Augenstein). The AmeriKat enjoyed reading the report, which touched on points raised in her presentation the day before in the trade secrets session as to whether and what role sufficiency (and indeed plausibility) should really have in patent validity given the reality of technical disclosure in the product development cycle and the disclosure doctrine, while safeguarding against speculative patents (subject of another post).  Christopher reports:

Brian Cordery
"After getting an early start to my New York day, being fortunate enough to still be operating internally on CET, this Kat friend arrived early to the second day of the excellent Fordham Conference and just in time to eat bagels, drink coffee and attend the slightly misleadingly named “Sunrise Seminar I: Second Medical Use & UK Plausibility”. As it turned out, it was 99% about plausibility and only 1% about Second Medical Use.

After an introduction by Brian Cordery (Bristows), who highlighted the importance that the plausibility check has gained in patent validity matters in the UK, Floyd LJ explained the complete history of plausibility in less than 5 minutes and with 5 decision. An astonishing act made somewhat necessary/easier by the strict rules of the conference itself. He reported that currently most cases would contain the allegation of lacking plausibility, which certainly raises the question why someone would use an implausible solution or even fight about it in the first place. The issue here is of course, that one has to look at the priority date.

The trouble began – so to say – with the EPO decision in AgrEvo/Triazole Herbicides (T 0939/92) of September 1995 – which does not even contain the word “plausible”. Headnote 1 of that decision describes the problem:
"1. If a claim concerns a group of chemical compounds per se, an objection of lack of support by the description pursuant to Article 84 EPC cannot properly be raised for the sole reason that the description does not contain sufficient information in order to make it credible that an alleged technical effect (which is not, however, a part of the definition of the claimed compounds) is obtained by all the compounds claimed (see reasons 2.2.2)."
The Lilly mega judgment on "educated guess"
The notion that there needs to be support e.g. in the form of (rudimentary?) test data or experiments first found its way into English law with the Prendergast’s Applications decision, which concerned four speculative applications in the swiss-type claim format for new medical uses of known compounds. The decision to decline the application was upheld to prevent applications being granted “in relation to all sorts of speculative uses for established drugs and other chemicals without a shred of evidence as to whether they would work, let alone as to whether they do work.” The other cases that were discussed where HGS v Lilly (follow this link to a classic Jeremy’s discussion of the “mega-judgment”) which set the bar at “an educated guess can suffice” and “some real reason for supposing that the statement is true” and Regeneron v Bayer in which an implausibility attack against the use of VEGF antagonists for certain diseases failed because the patent claim was deemed to be based on a “fair prediction”. Finally, in Warner-Lambert v. Generics UK the UK Court of Appeal found that the claims alleged to be infringed lacked sufficiency, because the patent did not render it plausible that it would work. The case law was summarized by the guideline that the patent’s monopoly should not exceed the patent’s contribution to the art and that it should not be possible to write a patent from an armchair. Although still “if you are lucky enough to draw up a working experiment, you would get it past the examiner”.

The first question of this still quite early day was asked by Trevor Cook and it turned out to be as concise as it was pertinent: “It is an old problem, why do we need a new solution?”

The "Plausiblity Attack Kat" is coming for your patent
Nicola Dagg (A&O) gave her perspective on the problem and pointed out that plausibility as a separate revocation ground is neither found in the UK Patents Act 1977, nor in the EPC and may even be prohibited by TRIPS because it is a limitation of intellectual property rights. She posited that it should be deemed sufficient if the active ingredient could be made and successfully used to treat the claimed indication at the priority date. Most cases would only cover a fraction of possible use cases and the EPO’s Factor-9/JOHN HOPKINS (T1329/04) considered that supplementary post-published evidence may in the proper circumstances also be taken into consideration, however, that it may not serve as the sole basis to establish that the application solves indeed the problem it purports to solve. She stressed that there is a need for a strong incentive for expensive medical research and that it is economically vital that the patent is able to file before clinical testing (which becomes public) even if the only available data to support the claim may be from animal testing.

Judge Rian Kalden of the Court of Appeal of The Hague, Dr. Ute Kilger (Böhmert & Böhmert), Munich, and Miquel Montana (Clifford Chance) then reported on their respective countries’ perspectives on plausibility as a separate requirement. I think it is fair to save everybody’s reading time by saying that there is hardly any such separate requirement in these countries and that the respective questions are handled under the headlines of sufficient disclosure and inventive step. It is not necessary e.g. that each and every claimed compound is explicitly disclosed to solve the patent’s problem.
Jurgen  Dressel 
Jürgen Dressel, Head of Global Patent Litigation Strategy at Novartis gave the innovators industry’s global perspective. The industry would increasingly be faced with prior art created by its own medical trial data. Thus, there is a need to safeguard inventions on the basis of surrogate parameters such as animal data or genetic data from which it should be fair to extrapolate from. His main wish, however, was for a realistic and pragmatic threshold for plausibility on a global basis. The industry would need patents across jurisdictions which diverge on this question around the world. He characterized the US as one extreme which would allow filing early for the patent and supplement tests only later and Asian countries as the other extreme where a lot of data would be needed early to get a patent. After all, the industry would need harmonization to have a fair chance to get a patent.

Nicola Dagg
This started the more general discussion. Here different attendees voiced concern for the Canadian patent system (i.e. the promise doctrine) in this regard before coming back to second medical use claims. It was posited that they are per se a functional limitation of a claim and that in the end the question should always be for the technical contribution of the patent. This was indeed the consensus: Patents need to add to the prior art to fulfil their part of the contract between patentee and society, i.e. disclosure for protection. However, no consensus emerged on the question whether there should be a plausibility test in the first place against the background of TRIPS and the limited number of revocations grounds enumerated in law.

Nevertheless, in the end everybody agreed with Brian Cordery, that the Sunrise Seminar was plausible in the original meaning: worthy of applause."

Fordham 25 (Report 7): Pharma, IP & Competition

Friday afternoon.  For those still standing, the Fordham conference opened up a treasure trove of interesting topics with a little something for everyone.  Laura Whiting made her way to the panel discussion on Pharma, IP & Competition where she reports:

Koren Wong-Evrin
"After introducing the speakers, Prof Daryl LimKoren Wong-Ervin explained the background to reverse payment cases in the FTC.  She commented on her surprise that other countries had cases relating to patent settlement despite not applying regulatory procedures comparable to the Hatch-Waxman system.  She noted that she was concerned by the apparent recent approach of the EU General Court to apply a truncated market analysis, as in her opinion it was preferable to apply a full market analysis to each product and case.  She also felt that it was problematic to exclude an evaluation of the validity of the patent(s) from the economic or market analysis. 
Jurgen Dressel
Jürgen Dressel noted that the European cases showed parallels to the "rule of reason" cases coming out of the FTC.  He said that although there was no system similar to the Hatch-Waxman regime in the EU, the Servier and Lundbeck cases had showed that the arrangements that were entered into between companies could be extremely complex.  In his view, the most concerning aspect for the innovator pharmaceutical industry of the recent decisions was the very narrow definition of "market", which was essentially restricted to the particular molecule in question.  The other concerning issue was that the "by object" definition effectively shifted the burden of proof onto the patentee as soon as any payment was identified.  

Cordula Schumacher noted that since the settlement agreements that were the subject of the recent EU decisions involved so many market players, in her view it was not appropriate to reverse the burden of proof – the situation was too complex for such a simplistic approach.

Justin Watts commented that the agreed facts on which the General Court in Lundbeck made its decision were such that the originator had paid the generic an amount equal to the profits it would have made by selling the drug, without regard to this being linked to the (potential) patent infringement that such sales would arguably have amounted to.  In this extreme case, he says it is understandable that the Court found there to have been anticompetitive behaviour.  However he questioned whether this reflected the real world situation of most disputes and whether it was really possible to apply a bright line test holding any transfer of value to be a problem to other cases, which were inevitably more complex than the assumed fact pattern on which Lundbeck was based.  What was needed was a full analysis of the reality of the competitive environment that obtained in fact in every case.  Deputy Director-General, DG-Comp Cecilio Madero Villarejo commented from the audience that last autumn, the General Court had considered revising its decision that the Lundbeck agreements were anti-competitive, since they had replaced the uncertainty of determining the validity of the patents with the certainty provided for by the agreement in question.

Jürgen asked him whether the Commission still considered that there were still issues regarding reverse settlements following the sector inquiry.  Cecilio explained that the reason why Commissioner Vestager has decided to retain the reporting requirements for this year is because the EU Parliament had asked the Commission to keep looking into the pharmaceutical industry.  He commented that the source of this focus from the Parliament appeared to be the recent news stories relating to alleged price hikes for generic products.  Cordula commented on the cost burden that the continued requirement to answer questionnaires imposed on companies within the sector – and queried whether the Commission had considered the investment that is required?  Cecilio answered that this was one reason why the Commission had intended to discontinue the questionnaire this year.  
Justin Watts
Justin reiterated that the results from the sector inquiry demonstrated that only 10% of the agreements collected involved a reverse payment, and of those only 2% were considered by the Commission to be in any way problematic.  He commented that in light of this low prevalence, it would be helpful to have guidance from the Commission, perhaps even a safe harbour, to assist companies and their advisors to settle patent cases.  Cordula agreed that clear guidance would be useful and commented that legal certainty was highly valued by clients, so in effect it did not matter what the law was, as long as it was clear.  Lawyers would then be able to better advise their clients. 
It was suggested from the audience that a suitable safe harbour for the US might be that a settlement agreement should not allow any exclusivity period for the generic (which would in effect waive its Hatch-Waxman rights).  It was suggested that this would bring pharmaceutical settlements into line with other industries where there is always some kind of reverse payment in return for a settlement, but there is not usually any accompanying exclusivity period.  Koren did not agree that the 180 day exclusivity period needed to be waived as it represented a legislative compromise designed to encourage Paragraph IV challenges by generics.  Jürgen said that he admired the US system as it was predictable, in contrast to the European situation which was unpredictable and varied by country.  
In response to a question about whether there were any parallels which could be drawn from the recent cases on SEP licensing, Justin commented that there were interesting lessons to be learned from FRAND cases, but there are huge differences between assessing the royalty rate for a single basic patent to a compound, and the rate to apply to a whole portfolio of patents on eg. LTE technology.  Jürgen saw little interaction between the two licensing models but noted that this might change in the future, perhaps in the area of personalised medicines, if products evolved which involved a more complicated IP position than traditional small molecules."

Tuesday Miscellany

Rock on
1. Music promoter Tony Green was prevented from naming his bar Draft Punk, after Brewdog sent a cease and desist notice, the Guardian reports. Brewdog registered the marks “PUNK” in class 32: Beer, lager in 2007 and “PUNK DOG Class 32: Beer, ale, lager, alcoholic beers, alcohol free beers, alcohol free beverages, bottled water, ginger beer, soft drinks in 2007. Although Green planned to name a pub, not a beer, Brewdog’s were “concerned that provision of food and drink services under the mark Draft Punk would give rise to a likelihood of confusion in the marketplace, including a likelihood of association with our client’s earlier mark Punk.” Subsequently Green abandoned the idea altogether… 

2. In other news, on 4 Friday 21 April, Richard Taylor (DLA Piper UK LLP) presented "Copyright or Wrong"  on BBC Radio exploring the history, significance and nature of copyright law across the arts and sciences, and asking whether the law is in need of reform.  Richard's interviewees include High Court Judge Colin Birss, Eleanor Rosati of the world-leading IPKat blog, Ted Shapiro of the Motion Picture Association, MEP for the Pirate Party Julia Reda, Professor Estelle Derclaye, and forensic musicologist Peter Oxendale, with pop-ups from Terry Gilliam and George Harrison.  This is a fascinating study of a topic which, whether we know it or not, affects each of us every day. You can listen again here.

3. Recently published title: 'An Introduction to CompetitionLaw - 2nd Edition' by Piet-Jan Slot and Martin Farley. The Blurb informs us that “this book is intended to serve as a first acquaintance with competition law.  It aims to reach a broad range of readers: students, teachers in further and higher education, officials and practising lawyers who are not usually faced with competition law issues in their working lives.”

4. Call for Abstracts: New IP Lawyers [a network of young practitioners and academics in Intellectual Property Law] invites submissions from IP PhDs and early career researchers for their 2nd Workshop series: New Technologies and Challenges to the Existing Intellectual Property System. The workshop takes place on 14 September 2017 at Bocconi University in Milan. Full details here.

5. Clear your schedules for there are an abundance of coming IP events. See our forthcoming events page for a full list!

The CLA will be holding an evening meeting on Tuesday 25 April at Bristows LLP, 100 Victoria Embankment, London EC4Y 0DH. Registration at 6pm, followed by lecture at 6:15pm. Steve Rowan (UK IPO) will speak on “Trademarks and Designs - where next when the UK leaves the EU?”

The WIPO Roving Seminar on IP 4 Global Business The Protection and Commercial use of Inventions, Trademarks and Designs takes place in Utrecht, Netherlands on 2nd May 2017.

Dr Eleonora Rosati will be speaking about “Latest Developments in copyright” at IPSoc’s next educational event held on Wednesday 10 May 2017 from 18:30 to 21:30 (BST) at Simmons & Simmons 1 Ropemaker Street EC2Y 9SS London United Kingdom. [IPSoc is a society for junior IP practitioners.]

The European Copyright Society (ECS) Conference: Building a EU unitary copyright takes place on Friday 12th May at SciencesPo, Auditorium Caquot, 28 rue des Saints-Pères, 75007 in Paris.

On 12th June 2017 the GRUR meets Brussels Workshop 2017 focuses on The Digital Single Market Copyright Directive Proposal and beyond: Towards a ‘toolbox’ for future European Copyright Law and takes place in Rue Montoyer 47, B-1000 Brussels.

CREATe IP Summer Summit 2017 takes place from 26th to 30th June at the University of Glasgow, jointly organized with the National Law University Delhi, India. This year’s theme is ‘Open Science and Open Culture’ with a special focus on development in the Global South.

Photo credit: Jason Kasper

Around the IP Blogs!

This Kitten is delighted to bring you the highlights from some recently published IP blogs!

The fresh smell of some IP blogs!
Tibbie McIntyre reports on The 1709 Blog on a number of items, including the declaration of fair use filed by the Andy Warhol estate against Lynn Goldsmith regarding Warhol’s Prince Series; the settlement reached by singer Ed Sheeran and songwriters Martin Harrington and Thomas Leonard in connection with the song ‘Photograph’; the case Mavrix Photographs v LiveJournal, No. 14-56596, which considered whether the safe harbor defense applies to moderators who review infringing content before it is published online; and the cases Malibu Media, LLC v Doe, No. 3:17-cv-195(JAM), and Foshan Limited v, No. 2:17-mc-00037 UA, in both of which subpoenas were granted for obtaining information of infringing uploaders who used BitTorrent and Pornhub, respectively.

Staying with copyright, but from the perspective of Competition law, Marco Lo Bue analyzes on TrustinIP the Advocate General Opinion in the case Biedrība ‘Autortiesību un komunicēšanās konsultāciju aģentūra – Latvijas Autoru apvienība’ v Konkurences padome, EU:C:2017:286, which involves the interpretation of article 102 TFEU in relation to a fine imposed by the Competition Authority to the Latvian collecting society for charging excessive rates.

Moving to trademarks, Christian Tenkhoff discusses on MARQUES Class 46 the case adidas AG v Shoe Branding Europe BVBA, R1515/2016-2, in which the Second Board of Appeal of the EUIPO upheld the Cancellation Division decision, which declared invalid the “three parallel stripes” trademark on the ground of lack of distinctiveness.

Staying with trademarks, Lina Marcela Tello Perlaza recaps on IP tango the refusal of registration of the mark AESCO Colombia in class 45 for covering, inter alia, legal services, based on the article 136 (g) of the Decision No. 486 Establishing the Common Industrial Property Regime. Registration was refused because the mark reproduces the pre-Columbian figure of the “Jaguar man”, which belongs to the community Pijao and reflects “the belief that all the species of the Earth are human beings with different cosmologies”.

Moving to the commercial side of IP, IPKat Neil Wilkof ruminates on IP Finance whether the concept of the “long tail”, popularized by Chris Anderson, has been successfully applied to the indie film industry.

Finally, Carina Gommers blogs on JIPLP how the ratification by several European countries of the MEDICRIME Convention could help in the fight against the counterfeiting of pharmaceutical products in the context of the findings of the Report of the European Observatory on Infringements of Intellectual Property Rights.

Monday, 24 April 2017

Court of Appeal dismisses Huawei's first appeal in Unwired Planet patent fight

The IPKat trying to stop time on a novelty clock.  
With the ink yet to dry on the judgment of Birss J on the non-technical issues arising from the Unwired Planet litigation (reported here and, with further analysis on its way), the Court of Appeal (Gross LJ, Floyd LJ and Arnold J sitting as a Court of Appeal Judge) handed down its decision in the first of the three related technical trials to receive judgment from the Patents Court in 2015/16.  With the AmeriKat busy at Fordham, she has depended on Steven Willis (Bristows) to update readers:  
"The patent in suit concerned a polling system for use in a wireless communication network.  At first instance, Birss J held the patent to be valid and infringed by wireless telecommunication networks that operate in accordance with the LTE standard i.e. the patent was standard essential.

Huawei was ultimately unsuccessful in its appeal of the Judge’s findings on novelty, entitlement to priority and inventive step, but the judgment raises some interesting issues concerning:
(i)      what constitutes the state of the art for the purposes of novelty and in particular what is meant by “before the date of filing” under Article 54(2) EPC;
(ii)     the approach to entitlement to priority where implicit disclosure is relied upon; and
(iii)  challenges to a finding of inventive step where the Judge at first instance relied upon secondary evidence.  

Article 54(2) EPC states that ”the state of the art shall be held to comprise everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the European patent application [emphasis added].

There was a dispute as to whether the “Ericsson TDoc” formed part of the state of the art.  There was however no dispute that if the Ericsson TDoc did so amount, the Patent was anticipated.

The “Ericsson TDoc” was uploaded to a publically available server operated by the European Telecommunications Standards Institute (ETSI) in Europe at 08:36 (CET) on 8 January 2008 / 02:36 (EST) on 8 January.  Over 14 hours later, the priority document was filed at the USPTO, which was under EST at the time, at 22:59 (CET) on 8 January / 16:59 (EST) on 8 January.

Huawei alleged that as the Ericsson TDoc was made available at a point in time where it was 7 January in some parts of the world (including Hawaii and California), it had been made available “before the date of filing” and thus formed part of the state of the art for the purposes of novelty.   
For the visual learners, the Court of Appeal helpfully set out the below table summarising the position [emphasis added]:      

CET (GMT +1)
EST (GMT -5)
Hawaii (GMT -10)
Ericsson TDoc uploaded to ETSI server
8 Jan 08:36
8 Jan 07:36
8 Jan 02:36
7 Jan 21:36
Priority Doc filed at USPTO
8 Jan 22:59
8 Jan 21:59
8 Jan 16:59
8 Jan 11:59 
At first instance, Birss J asked two questions: (i) what is the priority date?; and (ii) was the putative prior art made available to the public before that date?  Birss J considered the timezone in the patent office of filing to be the relevant one for determining both questions.  Thus the Ericsson TDoc was made available at 02:36 on 8 January which was not “before the date of filing” for the purposes of novelty.  “The fact that this time was 7th January in some places in the world such as Hawaii is irrelevant.”

Floyd LJ upheld Birss J and set out the position as follows: “The priority date is the 24 hour period of the day on which filing took place, in the time zone of the patent office where it was filed.  The publication must occur before that day, on a time basis, by reference to the time zone of the patent office of filing.” 
Entitlement to Priority
The key question before the Court was whether there was disclosure in the priority document of polling "upon assembly" i.e. just before the data unit was transmitted rather than afterwards notwithstanding references in the priority document to the counting and polling of “transmitted” data units and bytes.

In determining the issue, Floyd LJ emphasised a number of points that should underpin the Court’s analysis:
  •  the threshold for entitlement to priority is significantly lower than that for determining whether a claim is novel:  the exercise of determining priority involves asking whether the invention is directly and unambiguously derivable from the priority document, not whether every possible embodiment of the invention is so derivable.”  To adopt the alternative approach would make claiming priority “impossibly hard”;
  •  the priority document must not be read in a vacuum: “both explicit and implicit disclosure must be taken into account”.  This is not the same as adding to the disclosure something which is obvious in light of it; and
  • due to the importance of assessing the common general knowledge in order to determine what is implicitly disclosed, an appellate Court must exercise caution when interfering with a first instance finding relating to priority. 
Floyd LJ held that the trial Judge was entitled to base his finding on the common general knowledge functionality of UMTS.  Accordingly polling upon assembly was disclosed in the priority document.  “To read it otherwise would be to do so in a vacuum.”          
Inventive Step
The inventive step issues focused on the Judge’s approach to secondary evidence.  Obviousness was alleged over a single piece of prior art – the Motorola TDoc – a submission to the relevant 3GPP standard setting committee (“the Committee”).  At first instance, the Judge identified the fact that by the priority date the Committee had rejected the proposals in the Motorola TDoc  as Unwired Planet’s strongest argument against the allegation of obviousness.    
Huawei argued that the Judge was wrong to have placed such weight on the secondary evidence and that the "primary" evidence of the expert witnesses effectively compelled a finding of obviousness.  The Court of Appeal reiterated the oft-cited reluctance with which an appellate Court should interfere with a first instance finding of an obviousness.  The Court noted that Huawei’s submission “effectively requires the court to conduct a detailed review of the expert evidence to see whether it did indeed compel a finding of obviousness.”  The Court went on to say that if Huawei’s submission did relate to an error of principle, “it would seem to require an almost complete review of the evidence by this court in every case where secondary evidence is relied on.”  This, said the Court, would be a “serious inroad” to the approach to obviousness on appeals.

Despite these reservations, the Court did go on to consider and reject the suggestion that the primary evidence did indeed compel a finding of obviousness, or that the Judge thought that the primary evidence showed that the invention was obvious.  However, in view of the Court of Appeal’s qualms with the approach, it seems unlikely that submissions of this nature will be welcomed in future cases."

Once upon a time: Inventive step argumentation as storytelling

The IPKat crafting an invention story, but struggling
to identify a suitable protagonist....
It is all about the story. A few years ago, a judge commented to the AmeriKat that they felt that sometimes patent litigators can underestimate the benefit of telling a convincing invention story when opening a case. The story, after all, is used as a tool to indicate value. "Judge, my invention has value! It is worthy of protection!", the story is meant to convey. So when the AmeriKat learnt that Dai Rees, former chairman of the Technical Board of Appeal, had written a paper on the very topic entitled "Inventive Step: The Stories We Tell" she asked him if he would be willing to explain to IPKat readers how one could go about telling a convincing invention story.  Dai explains:  
"In my paper I argue that inventive step in patent cases is of necessity in telling a story, and as such should be judged by appropriate standards. After exploring the reasons for taking this position, the standard approaches used by the English and German courts and the European Patent Organisation Boards of Appeal are examined to see how well they stand up as story-telling. 
For the English and German courts and the EPO Boards of Appeal, determining whether there is an inventive step in patent cases boils down to deciding on the truth of a “counterfactual conditional”, “If the skilled person had had knowledge of prior art X at the date of filing, he would have created (or done or considered), without the exercise of inventiveness, something which fell within the invention claimed”. Defining the formal truth of counterfactual conditionals is difficult; defining a formal proof of their truth is even more so. Nonetheless every day advocates make their cases for and against inventive step and judges decide. How? If they cannot use formal criteria they must use informal ones, and at least for this particular form of counterfactual conditional there is an obvious way to do it: let the advocate tell a story of how the skilled person would have arrived at the invention, and judge whether that story is convincing or not.

To be convincing a story must have realistic characters with reasonable motivation and no unlikely coincidences. We only have one character, the skilled person. Unfortunately, he (or she) is not realistic for two reasons: 1) he has access to all the public prior art, wherever it is to be found. There is nothing to be done about this; it is a necessary legal fiction resulting from policy choices. 2) The skilled person is strange in that he does not have “any spark of inventive capacity”. In my opinion this is an unnecessary restriction – we only need to tell a story in which he doesn’t use any inventiveness, which is not to deny him any inventive capacity.

Both the English (following Pozzoli) and the German courts regularly begin their inventive step discussion by defining the relevant skilled person, who then chooses, finds or possibly is presented with a piece of prior art to start his considerations from. This is clearly a gaping hole in the story. An alternative approach would be to start with the particular prior art and suppose that for every piece of prior art there is a skilled person, an engineer with the education and experience to develop on it. This is a reasonable supposition; after all the prior art was also developed by somebody, who can more or less take the place of the skilled person. Moreover this idea is in line with the position which the courts and the EPO BoA all take in practice, that inventive step arguments can start from any prior art which works. 
If we take this view, we further have to see the first step of the problem and solution approach (PSA) adopted by the German courts and the EPO BoA, namely “determining the closest prior art”, not as an instruction to the skilled person, but as an instruction helping us to find the right story to tell. The next step of the PSA is to determine the problem solved. This is carried out by comparing the features of the invention with those of the prior art chosen. Frequently in decisions there is no mention of how the skilled person becomes aware of the problem, but this is clearly essential for the motivation of our character. This is a significant weakness in many German and EPO BoA decisions.

Undoubtedly there is more that could be said however, for example applying story criteria to cases where the skilled person is a team, or where the invention involves a mixture of “technical” and “non-technical” considerations."
Dai's paper discussing these ideas in more detail (complete with citations and footnotes) is found here.  The AmeriKat is struck by the point on "instruction to a skilled person", and more generally the PSA.  As soon as you instruct a skilled person to do anything (including reading a piece of prior art with interest or comparing the closest prior art with the invention), you already in danger of giving them some indication as to where you want them to end up or at least what the focus of the dispute is (plainly the invention, especially if you are on one side of the debate).  At that point the story seems to have already been written. Could defining your skilled person not based on the patent but on the prior art help avoid this?  You are therefore not necessarily (and knowingly) already imbuing the skilled person or team with the realm of the subject matter.  It would also lend more naturally to allowing the skilled person to identify whether they would reach out to another skilled person in an abutting profession instead of presupposing a team from the start and having to navigate those issues. Or do we all end up at the same place? What do readers think?

Sunday, 23 April 2017

Should investment in innovation worry about geographic dispersion? Steve Case says "yes", but what about Pareto?

Does it matter that most innovative activity, at least in the United States, is taking place in a small number of VC-funded locations? Steve Case seems to think so. For Kat readers who may not recognize the name, Case was co-founder in the 1980’s of what later was called AOL. The company was a pioneer internet company, particularly in its vision of exploiting the platform in the creation of on-line communities. Case and AOL gained particular notoriety as a result of the merger with Time Warner in 2001. The deal has been criticized by some as one of the worst mergers of the internet age. Whether or not, Case’s guru status in the digital world seems to have been unaffected.

Case has become preoccupied with the future sources of innovation (who can argue with that?) and he has penned a widely-discussed book, “The Third Wave: an Entrepreneur’s Vision of the Future”. One of Case’s recent concerns, as he discussed in a recent interview and podcast on Bloomberg radio, is that 78% of all venture capital is invested in only three locations—San Francisco/Silicon Valley, Boston, and New York. So troubled is Case about this state of affairs that he has embarked on Rise of the Rest road trips in the US to seek/encourage significant innovation that might/should take place in other locations and which, in time, will also presumably enjoy a fair share of venture capital funding.

He pointed to medical technology and the advantages of supporting the tethering of innovative activities to leading medical centers. I.e., instead of opening yet another start -up in Silicon Valley, why not promote start-ups in Cleveland to support the innovation coming out of the Cleveland Clinic, or in Baltimore to support similar activities at the Johns Hopkins School of Medicine. Or, more generally, to encourage start-ups in Detroit instead of, e.g., Boston or New York, to take advantage of the large pool of engineers in Michigan (due in part to the presence of the auto industry), the lower cost of living and the more relaxed Midwestern life style.

Far be it from this Kat to take on Steve Case. Still, this Kat is having some difficulty in understanding the advantages to entrepreneurship and innovation that would follow from a greater geographic dispersion of such activity. (For purposes of this post, I disregard what may be a prime political consideration, namely that such dispersion might help prevent a further economic hollowing out on a geographic basis, thereby reducing the likelihood of populist excesses.) Once we discount this, the question is whether such dispersion will lead to greater aggregate innovative activity at the national level.

What comes to mind in addressing this issue are the dynamics of the so-called Pareto principle, which is described by Wikipedia as follows--
"The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity states that, for many events, roughly 80% of the effects come from 20% of the causes. Management consultant Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who noted the 80/20 connection while at the University of Lausanne in 1896, as published in his first paper, "Cours d'économie politique". Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population; Pareto developed the principle by observing that about 20% of the peapods in his garden contained 80% of the peas.

It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients." Mathematically, the 80/20 rule is roughly followed by a power law distribution (also known as a Pareto distribution) for a particular set of parameters, and many natural phenomena have been shown empirically to exhibit such a distribution [footnotes omitted].
Is not the current dispersion pattern perhaps an exaggerated instance of the Pareto principle? This Kat understands that this principle is far more nuanced that a single quotation might suggest and indeed it means different things to different people. But the underlying point suggests that the concentration of venture capital funding in only three centers is not necessarily a bad thing, and may even be positive. If a fourth (or fifth or sixth) start-up center for attracting significant venture capital will emerge, it will do on an organic basis, because the factors that have facilitated the current locations will also find a home in these additional locations. But it cannot be willed into existence.

Kat readers who want further convincing are invited to read the piece that appeared on February 28, 2017, on, “Why It’s So Hard to Build the Next Silicon Valley: Google brought its high-speed internet to Kansas City, but it didn’t turn the city into a tech paradise.”

The image at the top right was originally posted to Flickr by Thiago Avancini

The image at the lower left was made by Bill Ebbesen

Trade mark trolls in Cuba: an update

Back in 2015 the IPKat hosted an interesting report by Jaime Ángeles (Angeles Pons) on the problem of trade mark trolls in Cuba. 

Jaime has now prepared an update on the situation. Here's what he writes: 

"In a post in March 2015 we discussed how the Cuban trade mark system had been invaded by numerous trade mark applications (at least 90 fillings, although the actual number might be around 100) by NON-owners of signs similar to registered US trade marks, most of them very well-known (and some including words and designs alike). Applicants have been Cuban citizens, US companies, and even Dominican Republic citizens.
Cuba is a country with a first-to-file regime and opposition process, and most of the real owners of the trade marks have filed oppositions to defend their rights. The first Cuban citizen that filed for several trade marks was Gustavo Fuentes Ledo. He filed applications for 66 trade marks, 39 of them were subject to a formal opposition.
In the latest publication of the Cuban Trademark Office (OCPI) (30 March) one could see the several appeals filed by Fuentes Ledo (arguably the first Cuban trade mark troll). The OCPI denied his applications on grounds of unfair competition and bad faith.
Trade mark applications already decided are:
·       SM SAM’S CLUB in class 35
·       Chase & design in class 36
·       Office Depot & design in class 35
·       Capital One & design in class 36
·       Carnival & design in class 39
·       Spirit Lines & design in class 39
·       Clark & design in class 7

From the review of the decisions (we reviewed the “Informe Conclusivo” of trade mark applications: SM SAM´S CLUB and design No.2014-0488, dated 3 February 2017), the OCPI searched the internet for the trade marks and found that the trade marks existed and had been subject to extended international use. However the Cuban Trademark Office considered that the trade marks were not well-known in Cuba, at least at the moment. It considered that the opponents could not demonstrate use by Cuban undertakings or foreign investors in Cuba. It however conceded that a small portion of the population might have been exposed to those trade marks.
The OCPI relied on bad faith and unfair competition to deny registration, and considered that:
·       The applicant (Fuentes Ledo) had filed for 66 different trade marks between June 2014 and January 2015 in twenty different classes.
·       The internet search confirmed that all the trade marks filed by Fuentes Ledo were at least “very similar” to those used by third parties.
·       The opponents are well-established in their own markets, notably the US.
·       Searches in international trade mark databases returned no registrations in the name of the applicant (Fuentes Ledo).
·       The applicant, being a Cuban citizen, does not have any official (Government) permits to operate in Cuba, in any or all the different economic areas affected by the perspective trade marks.
·       Part of the goods and services covered by the trade mark applications are forbidden activities for an individual person in Cuba (“trabajo por cuenta propia”), eg manufacturing pharmaceutical or dental products and cruise lines services, “to mention some”. The products and services would be only valid in Cuba for authorized legal persons and companies.

An individual person
operating a cruise line?
According to the OCPI, those elements all together amounted to unfair competition. The OCPI considered that the applications would harm the interest of different agents in the marketplace (actual and potential entities) and consumers alike, as well as being detrimental to the public order and fair competition that must prevail with transparency, loyalty and in such a way as to allow the good development of commercial relations and the principle of legal certainty.

The OCPI also considered that the ultimate goal of the applicant was to harm third parties in an irrational way.
The OCPI did not mention, value or consider in the decisions the Panamerican Convention. However it mentioned that the decisions would comply with the international commitments assumed by Cuba with the Paris Convention and TRIPS.
It is pertinent to mention that even way back in 1997, the OCPI denied several applications or cancelled registration of well know trade marks by third parties, including: GUESS, Old Spice, Pizza Hut, Duracell, Liz Claiborne, Calvin Klein, Hewlett-Packard, Kotex, Winchester, Hard Rock Café.  

In the following months, decisions will continue to flow. No doubt that the rights of original trade mark owners will also prevail in the decisions to come."

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