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

Wednesday, 28 February 2018

The 1st specialized IP Tribunal of Northwest China unveiled in Xi'an

Since 24 February 2018, the Xi’an Intellectual Property (IP) Tribunal has officially come into operation. Located in Xi’an International Trade & Logistics Park, it is the first specialized IP tribunal in Northwest China, and is considered to be a major development in the National IP Strategy, in terms of promoting the judicial system reform, and fully implementing the ongoing  Belt and Road Initiative

1. Empowered by the Supreme People’s Court (SPC), Xi’an IP Tribunal will have jurisdiction over: 
  • IP-related civil or administrative cases at first instance occurring within the jurisdiction of Shaanxi Province which involve patent, know-how, computer software, plant varieties, layout designs of integrated circuit, recognition of well-known trade marks, and competition disputes; 
  • IP-related civil, administrative or criminal cases of first instance occurring in the jurisdiction of Xi’an district, except those that are under the jurisdiction of the grass-roots courts; 
  • Appeals from the first instance IPR adjudications of civil, administrative or criminal cases occurring within the jurisdiction of Xi’an district. 
2. IP judicial resources integration in Northwest China

It is expected that the number of IP disputes in China will grow. For instance, the report titled Intellectual Property Protection by Chinese Courts (2016) issued by the SPC shows that in 2016, 152,072 IP-related first instance cases were admitted by local courts (a 16.80% increase compared with 2015). 

The establishment of specialized IP courts in Beijing, Shanghai and Guangzhou in 2014 is considered a milestone in China’s efforts in improving the level of IP protection. By June 2017, the three IP courts had accepted in total 46,071 cases, 33,135 of which have been concluded. 

In 2013, the SPC noticed that a rapid increase in the number of IP cases was happening in the Mid-Western regions of China; then in 2014, the SPC pointed out that the distribution of the new IP cases had been showing a shifting trend from the Eastern coastal developed regions of China to the less-developed Mid-Western areas. In response, the setting-up of the IP Tribunals in Suzhou, Nanjing, Wuhan and Chengdu in late 2017 managed to cover through the Yangtze River economic zone from East to West, and has further consolidated the regional specialization of the IP-related adjudications. 

The Kat from Xi'an Beilin Museum
 is playing with glowworms.
Finally, the missing piece of puzzle, i.e. the Northwest China, is now covered by the Xi’an IP Tribunal.

Xi’an is the capital city of Shaanxi Province, and has been long known as a world-famous tourist destination with an inexhaustible treasure of cultural relics. Historically, from the Western Zhou Dynasty to the Tang Dynasty, Xi’an served as the ancient imperial capitals for up to 1,129 years. 

Geographically situated in the middle of China, Xi’an is a hub city with integrated road, railway and air transportation networks extending to all directions. This eastern departure point of the ancient Silk Road today is a very important node of the ongoing Belt and Road Initiative of China. Empowered by the cross-regional jurisdiction over the entire province, Xi’an IP Tribunal can be expected to integrate the local IP judicial resources, and to address the perennial problems including, but not limited to, the interventions of local protectionism in trials, the uncertain (too many) jurisdictions, and the discordance of judgement benchmarks. 

3. Concluding thoughts

The establishment of the Xi’an IP Tribunal, to some extent, is merely another reinforcement of the “local troops” within the vast IP protection landscape of China. This Kat agrees very much with what Professor Chuntian Liu once addressed in an IPKey conference in London, saying that the many “local teams” may indeed contribute to the quantitative change in the progress of improving the judicial expertise of people's tribunals, yet the critical qualitative evolution can only be completed if the national team, i.e. the unified appeals court is eventually built up. Certainly alternatives, like the idea of "setting up several regional IP appellant courts instead of only having the centralized one in Beijing" from Professor Mingde Li and Shunde Li, may also have merits -- all in all, given the combination of all the special national conditions, e.g. the vast territory, the regional economic imbalances, the rapid development and the very large and ever-growing caseload, to affirm any specific changes in the future of the complicated Chinese IP judicial system might be difficult, yet probably interesting -- stay tuned. 

Photo courtesy: Xi'an Beilin Museum.

Do patents and literature have something in common?

Patents and literature would seem to have nothing in common. Kat friend Dr. Aloys Hüttermann suggests that this may not be necessarily so.

Do patents and literature have something in common? At first glance, this seems like a strange question. The famous sociologist Niklas Luhmann considers literature (as well as art) as “autonomous”, i.e., systems which have no other purpose than themselves. In other words, one creates a work of art or literature for no other purpose than the act of creation itself. On the other hand, no one would consider a patent claim to be autonomous; a patent is clearly written for a purpose, which is to obtain a monopoly for an invention. Secondly, there is surely a great difference between a text such as that by Shakespeare-- “What's in a name? That which we call a rose, By any other name would smell as sweet,“ or by Heinrich Heine-- “Ich weiß nicht was soll es bedeuten, dass ich so traurig bin” (from the Loreley: "I don't know what it can mean that I am so sad"), with a text that starts “A system for transmitting an electronic signal, comprising...."

On the other hand, perhaps this question is not so strange at all. For sure, the rationale for literature is aesthetic, while that of patents is commercial. Still, like literature, patents are ultimately the subject of interpretation, either by a patent office or a court. As such, it can be asked: Can we learn from literature something valuable for the interpretation of patents? May the interpretational (= juridical) tradition of the patent jurisprudence of different countries be compared with different approaches concerning literature?

In attempting to answer, let's begin with the different approaches or theories concerning literature. Sabina Becker, from the University of Freiburg, in her classic bookLiteratur- und Kulturwissenschaften: Ihre Methoden und Theorien” ("Literal and cultural sciences: Their methods and theories"), distinguishes between no less than nineteen different approaches or theories towards literature. Generally speaking, one can classify them into three categories, following the observation by Terry Eagleton from Lancaster University:
“Indeed one might very roughly periodize the history of modern literary theory in three stages: a preoccupation with the author (Romanticism and the nineteenth century); an exclusive concern with the text (New Criticism); and a marked shift of attention to the reader over recent years.“
In other words, literary interpretation has focused variously on the author, the text itself, and the reader.

Applying them to patents, it seems to this blogger that the last approach is not relevant, since, by definition, a patent has only one reader, namely the skilled person in the art. Of course one can question what this skilled person in the art, being a legal construct, reads in a given patent text, but an approach that asks what different impact a given text may have on various readers becomes irrelevant if there is only one reader. Assuming, therefore, that a "reader focus" is not appropriate, the question becomes: are there jurisdictions whose approach to patents can be seen as either either author-centered or text-centered?

If the author (i.e. the applicant) is the central figure, then--

- There would be liberal possibility of amending claims, and lack of description would be less of an issue. This is because it is the author’s intention and knowledge that counts and not so much what is written down in the specification.

- On the other hand, any comments or statements made by the applicant would surely influence the patentability or the scope of protection. This is because the thoughts and intentions of the author must be recognized.

- The first-to-invent principle applies, since the individual act of making an invention is essential for priority, with the race to the patent office beng of lesser interest.

If the (application) text is central, then--

- Lack of disclosure in the patent application would lead to refusal of the patent or the absence of any possibility to change the claims. This is because it is the text qua text that counts and not what the intention for which it was written.

- On the other hand, the file history or declarations of the inventors are less important, or wholly irrelevant, since the text is essential and not what the inventor/author thought about its meaning.

- For the same reason, only interpretation of the claims as such and as granted would be appropriate for interpretation in the context of patent infringement.

- First-to-file principle applies.

With that in mind, it seems to this blogger that that it can be said that the US tends to follow the "romantic“, author- centered tradition. To the contrary, Europe - and more or less the rest of the IP world, since many countries, especially in Asia, adopted their patent law from that of Germany - follow the text-based tradition, with the European Patent Office and the German patent courts being traditionally the strictest in this regard.

That said, it is interesting to note that recently each side seems to be showing an inclination to be influenced by the other’s tradition. Thus, the US has moved to a first-to-file system, while the EPO has issued the G1/15 and the Bundesgerichtshof overturned the very strict Kunststoffrohrteil decision in the Pemetrexed case. However, the different approaches, i.e., romantic author-centred US-tradition on the one hand, text-based European/Asian tradition, on the other, are still discernible and even somewhat striking. This might be another reason to explain the sometimes cosmic dissatisfaction that US patent scholars and professionals have with the rest of the world and vice versa – they simply emerge from very different traditions.

For more on this blogger’s thoughts on this topic, see Mitteilungen der deutschen Patentanwälte, 2013, 113, available in English, see here.

Photo in upper right by L.A. Pelton and is in the public domain.

Photo in lower left by Lienhard Schulz and is licensed under Creative Commons Attribution-Share Alike 3.0 Unported license.

Tuesday, 27 February 2018

Exclusive interview with Johanne Bélisle, Chief Executive Officer of the Canadian Intellectual Property Office

IPKat was honored to recently conduct an exclusive interview with Johanne Bélisle, Chief Executive Officer of the Canadian Intellectual Property Office. We publish in its entirety this interview, which was in the format of providing written questions and receiving written responses.

1) Before we consider the Canadian Intellectual Property Office’s (CIPO) strategy statement, permit me to observe that for many non-Canadian IP practitioners, Canada’s IP law has had, I dare say, a certain quirkiness about it, at least in the sense that certain principles and practice seem exclusively Canadian. Is that view shared by the local Canadian IP community?

I cannot speak for all of Canada’s IP community, but CIPO strives to ensure that its administrative practices are up to date, consistent with and reflective of changing legislation, regulations and current Canadian jurisprudence. In this respect, Canada is generally acknowledged as having a modern IP system that is aligned with best practices across the globe. There are of course flexibilities in all national IP laws, but Canada is seen as a good place to file IP. For instance, Taylor Wessing’s Global Intellectual Property Index Fifth Report ranked Canada fourth in the world for IP-friendliness in 2016.

In addition, a 2016-2017 evaluation of CIPO’s patent services by the department that oversees our agency assessed their relevance and performance. That evaluation confirmed that the quality of Canadian patents compares well with those of our international counterparts. In addition, the length of time patent holders are choosing to maintain their patents suggests that Canadian patents are valued, especially by those interested in selling or manufacturing their products in Canada.

We know there is always more we can do. A key part of CIPO’s Five-Year Business Strategy (2017-2022) is our commitment to providing IP rights and services that reflect client expectations, market needs and respect the public interest. Our goal is to be recognized as a quality-based organization and we are proud of the fact that in March 2017, CIPO’s Patent Branch was awarded the International Organization for Standardization (ISO) 9001:2015 certification. Achieving this certification will bolster marketplace confidence in the timeliness and quality of our products and services.

Building on this success, we intend to implement an organization-wide quality management system for all of our business lines that will further our efforts to be responsive to our clients' needs while making constant improvements to our service quality and cost-effectiveness.

2) The prime focus of the strategy statement seems to be improving innovation in Canada. Internationally there is a debate about the best role for government in the innovation process (choosing national winners, at one extreme, and allowing the market to be the sole determinant, on the other). What do you see as Canada’s approach to the issue?
The goal of the Government of Canada’s Innovation and Skills Plan is to make our country a global centre of innovation. The Plan recognizes that innovation happens in every sector of Canada’s economy and depends very much on the resourcefulness, creativity and drive of Canadians, as well as on collaboration between the public and private sectors. (Last sentence excerpted from July 5, 2017 Speech by the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development.)

The Government has committed to several specific initiatives and investments to reach this goal: a national IP strategy; programs to enhance skills for Canadians; efforts to reduce the commercialization gap of university research; and making it easier for Canadian innovators to access and benefit from Government-led innovation programs.

3) Following on the previous question, what do you see as the particular role of CIPO in facilitating such innovation?
IP rights are a key enabler of innovation, facilitating technology investments and transactions as well as foreign direct investment, business partnerships and international trade. Therefore, a robust IP regime is essential to maximizing Canada's economic potential. A central objective of CIPO’s Five-Year Business Strategy is to support the Government’s Innovation and Skills Plan, by ensuring the right tools, resources and programs are in place for businesses to effectively leverage their IP at home and abroad.

Each of the priorities in our Five-Year Business Strategy reflects the fact that CIPO’s contribution to innovation lies not only in our efficient administration of high-quality IP rights, but in the strength and depth of our expertise. The five key priorities in our Business Strategy are:

• Help advance innovation by enhancing the IP system in Canada and globally;

• Continue to improve the quality, timeliness and efficiency of IP rights that we grant;

• Provide innovators in Canada with the IP knowledge they need to succeed;

• Offer a modern service experience that is responsive to clients’ needs; and,

• Foster an agile and high-performing organization.

4) In connection with your strategic goal of improving IP awareness and use, I found your data on the relatively low awareness of IP among Canadians to be striking (e.g., 83% stated that IP was not relevant to their businesses (from "Statistics Canada, Survey on Financing and Growth of SMEs, 2011"). What concrete plans have been implemented, or contemplated to be implemented, to address this challenge?
We know that having robust, innovation-focused IP laws is not enough to drive innovative outcomes. It’s also critical to ensure innovators know how to use the IP regime to grow to scale and compete internationally. Small and medium-sized businesses are important engines of the Canadian economy. But business owners who do not understand that IP is really about business will miss tremendous opportunities to make use of IP to generate even more revenue and drive enterprise growth.

Although there is low awareness of IP among Canadian businesses, evidence demonstrates that Canadian SMEs who hold formal IP are four times more likely to export; sixty-four percent more likely to be a high growth SME; and thirty-two percent more likely to seek financing.(Survey on financing and growth of SMEs, 2014.) So, the more you understand about IP, the more likely you are to succeed.

In May 2017, CIPO launched a comprehensive IP Awareness and Education Program to help bridge that knowledge gap. In particular, we are targeting high-growth sectors of the economy and SMEs that have the potential to scale up. And we are partnering with a range of organizations that are part of the innovation ecosystem in Canada.

There are three elements to the program: IP for Business, IP Academy, and IP Hub: IP for Business is a new suite of products and services to provide businesses with the tools and information they need to acquire, manage and leverage their IP assets. Some products that we have already launched include an IP Toolkit with information on the fundamentals of IP, guides for Doing Business Abroad, and an interactive IP Training game.

IP Academy is a suite of seminars and training services for businesses, partners, intermediaries, and other organizations who deal with innovators (for example, government organizations, incubators, and tech transfer offices). So far, we have conducted over 90 IP seminars on a range of subjects, from IP fundamentals to more detailed discussions of IP strategy. While still in the concept stage, IP Hub would be a digital platform to connect business and innovators with IP services in marketplace. It will connect with the new Innovation Canada website, which works as a one-stop shop for businesses to explore the wide range of government support, advice, and information available to them in Canada.

5) One specific goal of the strategy statement is for Canada to join and implement five international treaties. Once this takes place, do you foresee Canada enhancing its role in influencing the manner and direction of IP at the regional and international levels?

Canada already plays a significant role in this regard and we will continue to represent Canada's interests abroad, exchanging best practices, providing technical assistance and advancing international harmonization of the IP system. Multilaterally, Canada is actively involved in the development of norm-setting treaties on various IP topics at the World Intellectual Property Organization, and we are also actively engaged in the context of the World Trade Organization through implementation of the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement. In addition, we work closely with organizations such as the Organization for Economic Co-operation and Development (OECD) and Asia-Pacific Economic Cooperation (APEC) in order to support businesses operating globally.

Pursuing the inclusion of balanced IP rules in Canada’s trade agreements is another way that we support Canadians doing business abroad and encourage and attract investment at home. This is because Canada is a country which is deeply open to international trade and international commerce: we have free trade agreements with over 15 countries and international trade represents more than 60% of Canada's GDP.

Given the global nature of IP and the increasing value of IP rights as intangible assets for our businesses, we will continue to engage constructively with our major trading partners and other IPOs towards the negotiation of minimum and transparent IP standards and in partnership make continuous improvements to the functionality and transparency of the international IP system. Such efforts will go a long way in ensuring that not only Canadian, but all businesses, can grow, innovate, and succeed across international borders.

6) In 2014, Canada enacted significant changes to its trademark system, beginning with removing “use” as a requirement for registration. At the time, push back to these changes was expressed in several quarters. How have these changes been received by practitioners and administrative offices since their enactment?
The concept of trademark use in Canada is not being abandoned. Trademark owners will still be required to use their mark in order to maintain their registration and to enforce their trademark rights. In an attempt to reduce costs to business, the amendments were meant to remove an administrative requirement for businesses to file an unverified and unsworn statement, by way of a declaration of use, that they had started using their trademark in Canada. Note that the change is not yet in effect. As well, the regulations pertaining to the Madrid Protocol and providing for Canada’s adherence to the Singapore Treaty and the NICE Agreement are currently in the formal consultation process.

While commercial use remains a fundamental principle of the Canadian trademark system, an unsigned statement of use either before or after registration with no evidence behind it is considered to be of very little value to businesses. With respect to non-use of registered trademarks, section 45 non-proceedings have been strengthened, including making it more clear that the Registrar may commence these proceedings should the TM register become cluttered. Moreover, if the Registrar commences the proceeding, there would be no cost to business to initiate the case.

7) Having grown up in the Great Lakes region of the U.S. bordering on Canada, with hockey and maple syrup omnipresent, your country has always played an oversized role in my national imagination. How would you describe the main elements of “brand Canada”?
Canada is the best country in the world, in my opinion, for many reasons, including hockey and maple syrup!

When Canada was celebrating its 150th anniversary in 2017, our Prime Minister pointed to Canadians’ integrity, our compassion, and our never-ending desire to be better. He noted that Canada’s greatest pride is that you can come here from anywhere in the world, build a good life, and be part of our community.

With respect to “brand Canada” from CIPO’s perspective, we strive to be known as a modern, internationally-leading IP office, one that provides high-quality and timely rights and that serves its clients well. We are a trusted source of IP information and knowledge for Canadian businesses and innovators. And we work in partnership with others, including our international partners in the IP ecosystem, to help make Canada a global centre of innovation. Canada is already an attractive place for business, trade and innovation to flourish, and we continue to make it more attractive all the time.

Photo on lower left by Pmx, who has released it to the public domain.

Interview by Neil Wilkof

Monday, 26 February 2018

GUCCI as a well-known mark, with special attention to evidence, surveys, and unfair advantage

Katfriend Melvin Pang of Amica Law in Singapore reports on a decision in Singapore regarding several fascinating aspects of the treatment of well-known marks.

Disputes involving luxury brands and the issue of well-known marks seem ubiquitous. Most often, two questions are asked: Is the mark at issue “well-known” and, if so, has there been dilution or an unfair advantage taken of the distinctive character of the well-known mark? A particularly interesting instance occurred recently before the Intellectual Property Office of Singapore involving the “GUCCI” mark, with particular attention to whether survey evidence was necessary and the need to prove that dilution or unfair advantage had occurred.

The case at issue concerned trade mark opposition proceedings brought by the luxury brand Gucci (the “Opponent”), based on its registration of the “GUCCI” mark in Singapore in Classes 21 and 35 against the mark in Class 11, applied for by Guccitech Industries (Private Ltd) (“Guccitech”).

Whether the GUCCI mark is well-known to the public at large in Singapore

Under Section 8(4) of the Singapore Trade Marks Act, a mark which is “well known to the public at large in Singapore” belongs to a “rare and exclusive class”, and receives a greater degree of protection as there is no need to prove a likelihood of confusion. More extensive proof is needed to be deemed a well-known mark (Novelty Pte Ltd v Amanresorts Ltd and another [2009] 3 SLR(R) 216 (“Amanresorts”) at [233]). Against this background, the IP Adjudicator found that the GUCCI mark was well-known to the public at large in Singapore, based on a review of the following evidence:
1. Local use of the mark since 1979;

2. “[M]ore than tens of millions” SGD in revenue from local sales of Gucci products;

3. Wide range of products on which the mark is used;

4. Local marketing expenditure of “hundreds of thousands of euros”;

5. Google searches of the term “guccitech” in various permutations, resulting “overwhelmingly in a search result showing sites offering for sale [Gucci products]”;

6. Extensive advertising and editorial coverage of Gucci products in more than 31 local newspapers, magazines, Chinese language publications and online websites; and

7. Advertising and promotion on leading social media platforms. The IP Adjudicator noted the “vast majority of these followers and subscribers are…outside Singapore, but the overall numbers do at least attest to how well known the GUCCI trade mark is globally”.
Interestingly, the Opponent succeeded in establishing that the mark is well-known without adducing any survey evidence, the IP Adjudicator noting that the commissioning of such a survey would have been a “waste of money”. This stance appears to be in line with the cautionary attitude of the Singapore Courts in relying on surveys, especially when they are poorly planned and conducted (see Ferrero SPA v Sarika Connoisseur Café Pte Ltd [2011] SGHC 176 (“Ferrero”) at [103], albeit in the context of a likelihood of confusion query).

Even where survey evidence is relied on, it is seldom determinative on its own. For example, in Clinique Laboratories, LLC v Clinique Suisse Pte Ltd and another [2010] 4 SLR 510, the High Court accepted the survey evidence which was adduced. However, the Court expressly referred to other evidence in holding that the Clinique brand was well known to the public at large in Singapore including: the brand’s long history in Singapore, extensive advertising in a wide variety of media, large advertising expenditure, presence in local and worldwide departmental stores, and high local sales figures. These are the same factors on which the IP Adjudicator relied.

Whether the registration would cause dilution in an unfair manner of the distinctive character of the GUCCI mark

The IP Adjudicator further found that the registration and notional use of the GUCCITECH mark would dilute the distinctiveness of the GUCCI mark “by depriving the Opponent of the exclusivity it currently has in the registration and use of the word GUCCI as an indication of origin of goods and services”. However, the IP Adjudicator did not discuss whether this dilution was “in an unfair manner”, which is enshrined in the statutory language and could be viewed as a further requirement. Indeed, there has been academic commentary that neglecting to consider whether the dilution was “unfair” and finding that this ground is satisfied simply by a finding that there has been dilution by blurring or tarnishment is unsatisfactory and renders the “unfair manner” requirement otiose (Tan Tee Jim, "Law of Trade Marks and Passing Off in Singapore" (Sweet & Maxwell, 3rd Edition, 2014) at [4.113]).

Still, in the view of this blogger, the approach of the IP Adjudicator is arguably consistent with the Court of Appeal’s decision in Sarika Connoisseur Café Pte Ltd v Ferrero SpA [2013] 1 SLR 531. There, the Court of Appeal appeared to reject that such an “additional factor” is necessary, holding that all that needs to be shown is a real or serious probability of damage to the well-known trade mark’s advertising quality or symbolic function in order to establish a dilution claim.

Whether the registration would take unfair advantage of the distinctive character of the GUCCI mark

The IP Adjudicator also found in favour of the Opponent on the basis that he had earlier held that there was a likelihood of confusion. Consequently, there would be an unfair advantage as consumers viewing the GUCCITECH mark would “assum[e]…there is some trade connection with the owner of the well-known GUCCI trade mark”.

There was again no consideration of the “unfair” element, with the approach of the IP Adjudicator appearing to echo the EU position, which merely requires “clear exploitation on the coat-tails of the [well known] mark” and “relates not to the detriment caused to the mark”. (L’Oreal SA v Bellure NV [2010] RPC 1 at [41]). This was lamented by Jacobs LJ in L’Oreal SA v Bellure NV [2010] EWCA Civ 535 at [49] as making the “unfair” qualifier meaningless whilst serving to curtail legitimate competition. It will be interesting to see how this area of the law continues to develop within Singapore and where the boundaries are drawn for parties to compete in the marketplace.

Picture on lower left made available under Creative Commons CC0 1.0 Univeral Public Domain Dedication; file donated by the Metropolitan Museum of Art, accession number 2006.457

Sunday, 25 February 2018

PTAB puts a stop to Allergan's tribal sovereign immunity gamble

Substance over form matters in RESTASIS IPR dispute
Back in September 2017, the AmeriKat posted about the transactional strategy executed by Allergan and the Saint Regis Mohawk Tribe to avoid the jurisdiction of the PTAB. 

Allergan transferred all of its Orange Book listed patents for RESTASIS® to the Saint Regis Mohawk Tribe who, in turn, exclusively licensed back its patents to Allergan. In exchange, the Tribe received $13.75 million upon execution and is eligible to receive $15 million in annual royalties. The purpose of this transactional manoeuvre was to put the patents beyond the reach of the Patent Trial and Appeal Board (PTAB).  Mylan had instituted inter partes review (IPR) proceedings against Allergan back in December 2016.  Mylan was later joined by Teva and Akorn.

The transactional move, argued Allergan, did not mean that their patents could not be challenged in federal court and it would have no effect on their pending abbreviated new drug application (ANDA) patent litigation (recently subject to a five day trial in the Eastern District of Texas).  Despite such assurances, the move caused quite a bit of debate in the press and in the Senate.

On Friday, the PTAB ruled that the Tribe could not claim sovereign immunity to avoid the IPR.  Although there was an interesting discussion on whether tribal immunity applied to IPRs, for the AmeriKat it was the finding that the deal structure meant that Allergan retained ownership interests such that the IPR could continue as Allergan being a "patent owner".  Mylan et al argued that the IPR could continue because Allergan was the "true owner of the challenged patents".

Substance matters more than form and if the substance of the transaction has a party retaining all substantial rights under the patent, then they are a "patent owner" irrespective of whether the transaction characterizes them as such (see Waterman v Mackenzie (1891); Speedplay v Behop (2000); Alfred E Mann Foundation v Cochlear Corp (2010)).  Although relevant, a party's intention in entering into the agreement is not dispositive (Azure Networks v CSR (2014)).  Instead, from factors set out in Azure, the courts examine the rights transferred and the rights retained as follows:
"(1) the nature and scope of the right to bring suit;
(2) the exclusive right to make, use, and sell products or services under the patent;
(3) the scope of the licensee’s right to sublicense;
(4) the reversionary rights to the licensor following termination or expiration of the license;
(5) the right of the licensor to receive a portion of the proceeds from litigating or licensing the patent; (6) the duration of the license rights;
(7) the ability of the licensor to supervise and control the licensee’s activities;
(8) the obligation of the licensor to continue paying maintenance fees; and
(9) any limits on the licensee's right to assign its interests in the patent."
The PTAB held that the terms of the licence-back between Allergan and the Tribe transferred "all substantial rights" back to Allergan.  They were thus the "patent owner" for the purposes of continuing the IPR.

In reaching its decision, the PTAB took the following factors into consideration:
  • Allergan retained the important and exclusive right to sue for patent infringement.  The courts have stated that this is a "key factor" in determining whether an agreement results in a transfer of ownership (Apex Eyewear v Miracle Optics (2006)).  This was the most important factor for the PTAB. 
  • Allergan retained rights to exploit the patents "for all FDA-approved uses in the United States".   Because the claims of the patents are directed to pharmaceutical compositions and methods used to treat human medical conditions, it was not shown that there could be any other commercially relevant ways to practice the invention without FDA approval.  Thus, Allergan's exclusive rights were not limited in any meaningful sense.  
  • The Tribe has no ability to control or veto Allergan's ability to sub-licence the patents.  
  • The Tribe has no reversionary rights - the rights granted to Allergan are "perpetual" and "irrevocable" continuing until the patents expire or until all the claims are held invalid in a non-appealable final judgment.  
  • The Tribe does not receive any proceeds from litigation or other licensing activities, it also does not have the ability to freely assign its interests in the patents.   
The PTAB also concluded that the Tribe was not an "indispensible party" to the IPR.  Accordingly, the Tribe's motion to terminate the IPRs was denied and that they could continue with Allergan as the patent owner.  The AmeriKat wonders whether, even assuming the Tribe could win on the sovereign immunity basis on appeal, the terms of the transaction are such that the point is rendered moot.  Has the PTAB thus effectively closed off this type of transaction in the future?   Is there a work-around that could ever make this type of transaction effective?

The news of the decision came later on Friday afternoon, so the AmeriKat has yet to see any published comments from either party (see Allergan press releases here and here).  But it is only a matter of time before we hear whether this fight will reach the federal courts. 

L'Oreal v RN Ventures - The Registered Design Perspective

The '747 Design (plainly not a plane)
L'Oréal Société Anonyme RN Ventures Ltd (Rev 1) [2018] EWHC 173, the recent decision by Mr Justice Carr, has been given the Amerikat treatment here and here.  As a non-patenty Guest Kat, my eye was particularly drawn to the registered design claim which (spoiler alert!) succeeded.

One of my favourite features of design cases is identifying the informed user.  In this case, the judge considered it was the "observant user of powered skin brushes".

The 747 was sufficiently different from the prior art and design corpus to be novel but was it sufficiently different to have individual character?

Carr J confirmed that following the CJEU's decision in Easy Sanitary (Cases C-361/15P and C-405/15 Easy Sanitary (21 September 2017), ECLI:EU:C:2017:720)"it is not necessary for it to be established that the informed user would know of an item of prior art for it to be considered as part of the design corpus" [152].

The design corpus included a wide variety of powered skin brushes (and one manual but undated example which was excluded from consideration).

As Carr J noted "[a]t a high level of generality, [the design corpus] are cylindrical or wedge-shaped devices, with a single brush head, with elongated handles with straight or slightly waisted sides, with some form of attachment area for the brush head" [161].

By contrast, "[t]he 747 Design is of a sculpted shape which narrows in the middle into an hourglass with a very distinctive bulbous head with curved sides and castellations around the brush. The issue is one of overall impression, and in my judgment, the 747 Design looks very different to the design corpus and represents a significant departure from the design corpus."
The design corpus

The expert evidence confirmed that there was a "wide degree of design freedom".  The impact of design freedom has been considered by both the General Court in Kwang Yang Motor v OHIM (T-10/08) [2011] E.C.R. II-265, ECLI:EU:T:2011:446 at [32] to [33] and the Court of Appeal in Procter & Gamble Co v Reckitt Benckiser (UK) Ltd [2007] EWCA Civ 936[2008] FSR 8 

Carr J summarised the principles from these cases as "The greater the designer’s freedom, the wider the scope of the monopoly; conversely, the more limitations on design freedom, the narrower the scope of the monopoly."  Consequently, L'Oréal had a wide monopoly.

The overall impression discussion involved the usual poetic analysis of each feature (e.g.  "The base of the brush has castellated features topped by a concentric circular arrangement of bristle tufts") ultimately the question was one of overall impression.  Following the findings that the 747 Design is significantly different from the design corpus, and there is significant design freedom, he reached the conclusion that each of the Magnitone Products (i.e. the Defendant's products) creates the same overall impression as the 747 Design [183].

As David Stone pointed out at a recent IBIL event on designs, there is not a single example of a design which has been held to be valid and infringed by the Court of Appeal.  Given that RN Ventures was held to have also infringed L'Oreal's patent, the design is less crucial than it might otherwise have been but it would be interesting to see how the design fares in the Court of Appeal.

Saturday, 24 February 2018

Repair or reconstruction: Where do you draw the line for exhaustion under patent law?

What can the buyer of a patented product do with the product in question under the doctrine of exhaustion? Stated otherwise: when does the use of a patented invention fall outside the scope of what a buyer is allowed or even expected to do and   instead enters the grey zone of patent infringement? This question becomes even more compelling  when it comes to drawing the line between repair (permissible from a patent law perspective) and reconstruction (which constitutes patent infringement).

The difficulties in distinguishing between the two, repair or reconstruction, becomes more important when it comes to products that need refilling and  third parties are thus given the opportunity  (along with providing  refills) to also provide substitutes  for parts of the patented invention. There is  certainly room for further interpretation of the scope of the principle of exhaustion with regards to repair/reconstruction, since the caselaw relating to  it is  limited.

The German Federal Court of Justice (FCJ) decision,  in the case of “Trommeleinheit” [Drum Unit] – court docket: X ZR 55/16, GRUR-Prax 2018, 50 of the 24th  of October 2017, provides a valuable contribution in this respect. The FCJ, has now clarified that the central point of reference, when determining whether it is a question of repair or reconstruction, is the technical effect of the invention and whether this is reflected in the replaced element.

 The case

The patentee, Canon K.K., manufactures and distributes copying machines and printers as well as their respective toner cartridges. In the toner market, Canon has to compete with companies that reuse toner cartridges by replacing the photosensitive drum with a new drum. Canon filed a law suit and claimed direct patent infringement of claim 1 of its European Patent  2 087 407 in Germany.  Claim 1 covers a photosensitive drum unit, and further independent claims cover a cartridge and an electrophotographic image-forming apparatus, both of which  encompass a drum unit. The defendants distribute recycled printer cartridges, which may be used instead of the cartridges manufactured and distributed by the plaintiff.
Both the Düsseldorf District Court and the Düsseldorf Court of Appeal found that the defendant, by substituting the drum, had engaged in act equivalent to reconstruction i.e. an act of infringement.
The ruling of the FCJ

A previous ruling of the FCJ, namely the Palettenbehälter II case, provided  useful guidance  by establishing that the starting point for determining if  a certain use constitutes repair or reconstruction is to ask whether the identity of the processed object is maintained, despite the replacement of components, or alternatively  whether the replacement of the component constitutes the making of a new patented product. An important parameter is whether the components in question are of such a kind that their replacement can  usually be expected during the working life of the device. If this is the case, the use (the replacement of the part) per se is not an infringement, and a further aspect then needs to be investigated, namely, whether the technical effect of the invention is reflected in the components replaced. If this is the case, then the use constitutes reconstruction and thus patent infringement.

The FCJ, just as previously the Regional Court and the Higher Regional Court, concluded that the relevant point of reference was the claimed unit. However, and contrary to the lower courts, the FCJ ruled that,  in the specific case  before it, members of the trade would have  no opinion  whether replacement of the drum is to be expected during the working life of the drum unit, since the drum unit was  not sold separately, but only sold as part of the cartridges. Since the  the “opinion of the trade” criterion was not available, the FCJ applied the second step in the Palettenbehälter II test, whereby what is determinative is whether inventive character was embodied in the replaced spare part. The Court concluded "no", and thus  the action of the defendants did not constitute infringement.
The conclusions

In the view of this Kat, The FCJ’s ruling is not surprising, since it confirms its previous ruling in ““Palettenbehälter II”. The ruling in “Trommeleinheit” is nevertheless  noteworthy  because it relates to the application of previous case law in a rather special case, namely where a patented (drum) unit  is exclusively placed on the market as part of a comprehensive device (the toner cartridge) rather than as a stand-alone product. This ruling has also entailed a slight adjustment in how the distinction between repair and reconstruction is to be made, namely, changing the focus from how the product is viewed in the trade in favour of focusing on the objective aspect of technical effect as embodied in the repaired spare part. The outcome in the specific case might also influence how patent applicants will claim their inventions going forward, so as to guarantee that the claims cover all of the invention’s different components and protect the inventive character of the invention at all possible levels.

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