For the half-year to 31 December 2015, the IPKat's regular team is supplemented by contributions from guest bloggers Jani Ihalainen, Nikos Prentoulis and Mark Schweizer.

Birgit Clark is on Sabbatical till the end of the year

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

Monday, 3 August 2015

Letter from AmeriKat: Biologics data exclusivity tripping up TTP, Samsung wins CAFC Smartflash stay & USPTO IP Girl Scout Patch

The AmeriKat hypnotized by the calm,
peaceful air of a New England
summer's night
The AmeriKat is back in her motherland this week.  Having commenced this journey with a fleeting visit past the hallowed grounds of the USPTO in Alexandria, Virginia (like the Taj Mahal it was smaller than she expected), the AmeriKat is now perched in her upstairs study watching as a neighbor's American flag gently flaps against the pillars of their New England porch.  It is a peaceful and lazy Sunday night.  The warm summer air is cut only briefly by the salty breeze from the Atlantic Ocean a few blocks away.  Coast to coast tonight American families are undertaking their Sunday night routines - cleaning up after dinner, watching their Sunday night shows, organizing a week of carpool.  For the AmeriKat, her Sunday evening has included searching for the latest IP news and goings-on from across the nation.  This week's stories take us from sea to shining sea, starting first with Mountain View, California and ending up back in Boston via Hawaii and D.C.  
IP Girl Scout's patch

USPTO's Girl Scout IP patch:  Last Thursday, USPTO Director Michelle Lee announced that on 15 October 2015, the USPTO will have its grand opening of its permanent Silicon Valley satellite office in San Jose's City Hall.  The announcement came during Lee's attendance at a Churchill Club discussion in the Mountain View offices of Microsoft  (to watch the session click here).  Lee, a transplant from Santa Clara via Fenwick & West, stated that the USPTO also has an initiative underway in collaboration with the Intellectual Property Owners Education Foundation for an IP Girl Scout patch.  For those unfamiliar with the concept, Girl Scout patches are earned after a member completes certain tasks.  As a former Girl Scout herself (first as a Brownie and then as a Junior), Lee commented that her first badges were earned in first aid and sewing:  "In this day in age we have to do better and we can do better by getting girls to enjoy invention and creation and entrepreneurialism." Girls will win an IP patch by learning about copyright, patents, trade marks and trade secrets.  The USPTO's Guide on the patch explains that:
"Girls at some levels of the patch are expected to develop the skills to conduct very rudimentary searches for patents and trademarks utilizing the USPTO databases and publicly available resource and research tools. Real world examples of girls and women who have received U.S. patents and registered Trademarks are provided as examples to demonstrate the potential of girls to invent, create, and go into business as well as the accessibility and value of IP protection. Girls are also encouraged to explore careers in intellectual property and STEM."
The AmeriKat loves this initiative and encourages those US IP enthusiasts and professionals to get involved by sharing their experience and stories with their local Girl Scout troop.  More information on how to get involved can be found here.  The only thing the AmeriKat wishes is that she could get a patch of her own...

Biologics data exclusivity argument puts pressure on TTP negotiations:  A few weeks ago, the AmeriKat wrote about the ongoing negotiations in the Trans-Pacific Partnership deal and the IP issues that were causing some turmoil for the parties on the matter of pharmaceutical IP protection (see post here).  Given that it would be the largest regional trade deal if concluded, it is no surprise that there are some bumps in the road especially in relation to an industry that contributes almost $800 billion to the US economy.  However, a recent article in the AmeriKat's favorite of paper - the New York Times - reported that US officials were finding themselves between a rock (activists aiming to secure access to low-cost pharmaceutical products) and a hard place (Republicans who threaten to vote down the deal if it doesn't provide for strong IP protection).
Senator Hatch

During last week's meeting in Hawai, it was this issue that was reported to elicit the most fevered debate.  Utah Republican Senator Orrin Hatch claimed that “a strong intellectual-property chapter - including strong patent and regulatory data protections for biologics- is vital to securing congressional support for this trade deal.”  Biologics are reported to account for 900 of the 3,372 drugs in development in the US.  Whats the beef with biologics?  US data exclusivity protects biologics for 12 years before a generic can piggyback, whereas other countries provide for far less such as 8 years, or in the case of Australia, 5 years.   In a statement, Doctors Without Borders' US manager and legal policy advisor, Judit Rius Sanjauan, argued that:
"Eight years of data exclusivity is still an exceedingly long and unnecessary time to block access to price-lowering competition for this important class of lifesaving medicines and vaccines.   
Pharmaceutical companies already enjoy some of the longest monopoly protections of any industry, and granting them extended and additional exclusivity terms is just another way to delay competition and keep medicines out of reach of MSF medical operations and millions of people. Government representatives meeting this week in Hawaii have an obligation to protect access to affordable medicines."
Samsung lucking out before the CAFC
in staying Smartflash patent dispute
CAFC stays Smartflash's Samsung infringement action pending USPTO decision:  A few weeks ago the AmeriKat reported about Apple's win against Smartflish after US District Judge Gilstrap ordered that a February jury damages award of $532.9 billion be vacated.   Last week, Smartflash was again defeated (albeit perhaps temporarily), this time by Samsung.  Last Thursdays, the US Court of Appeals for the Federal Circuit (CAFC) held that the patent infringement action Smartflash brought against Samsung should be stayed pending the Patent Trial and Appeal Board's determination of the validity of Smartflash's patents at issue.  Last spring, the PTAB instituted a Covered Business Method review on Smartflash's patents in suit on the basis that it was "more likely than not" that they were directed to ineligible subject matter.  Apple had also requested a stay of its litigation, but were refused on the basis that their trial had already commenced.  Samsung's trial has not.  Writing the lead opinion, Judge O'Malley wrote that "[d]espite the substantial time and effort already spent in this case, the most burdensome task is yet to come."  Judge Newman dissented arguing that the distinction was not correct given that Apple and Samsung were in the same position with respect to Smartflash's patents:
"The only difference between Apple and Samsung as defendants is that the Samsung case was placed on a later calendar, as the district court reasonably chose to proceed with one case at a time, moving the cases against Google and Amazon even further into the future. But the landscape changed after the Court decided Alice Corporation, and even more so after experience was gained with the CBM section of the America Invents Act. In view of the PTO’s institution of post-grant review of all of the claims in suit, it is fair and just that all of the defendants be treated equally, and thus that the stay be granted to all. From my colleagues’ contrary decision as to Apple, I respectfully dissent."
Judge Newman's dissent continued:
"On continuing with the Apple litigation in the district court, as the panel majority today orders, it is far from clear how the appellate process will proceed. What happens to possibly conflicting rulings? Are we creating another race-to-the-courthouse, where the interests of justice succumb to the fleet of foot, or the deepness of the pocket? This court is already burdened with irregular precedent, as in Fresenius, where a panel sustained the district court’s final judgment of validity and infringement, and then held that since post-judgment damages remained for determination, the Federal Circuit’s affirmance of the district court’s judgment gave way to the Federal Circuit’s sustenance of the PTO’s later determination of invalidity. Fresenius USA, Inc. v. Baxter Int’l,Inc. 721 F.3d 1330, 1344, 1347 (Fed. Cir. 2013) (Newman, J., dissenting)."
For more information, see the articles from The Recorder and Reuters.

On Point address the copyright
of jokes this week
Conan copyright one liners:  As she is currently in Boston, the AmeriKat has been listening to WBUR - Boston's NPR station.  On Thursday, a great little piece on one of her favorite shows, On Point, was aired regarding the copyright position of jokes.  The show came after late night television host, Conan O'Brien (made even more famous by Leno-gate  - see Vanity Fair article here for a fascinating read about that particular incident), was sued by comic Robert Kaseberg alleging that the show had used four of his jokes posted on the Internet during the opening monologue.  See Elmeownora's recent post on similar issues facing Twitter here and to listen to the On Point episode, click here.

Never too late: if you missed the IPKat last week ...

What better blogpost is there to start the week with than Katfriend Alberto Bellan's famous round-up of the previous week's Katposts?  This is our 57th weekly round-up, ideal for anyone returning from a vacation, a business trip, a stretch in prison or some other exciting adventure that took them away from the late July IP blogosphere.  

Anyway, here is Alberto's summary of last week's substantive features:
In 2012, France adopted a law allowing the digital exploitation of out-of-print 20th century books. Being unsure whether allowing exploitation of works without prior permission from the relevant rightholder is permitted, the French Council of State has just sought guidance from the CJEU. Eleonora tells all.

Mark writes up a Swiss Supreme Court decision on one of the hottest topics of the moment, private copying. This case relates to the Federal Institute of Technology in Zurich (ETH) offering a document delivery service for scientific articles which includes scanning and online forwarding.

The unsatisfying U.S. Supreme Court decision in Brulotte v Thys Co. (379 U.S. 29 (1964)) fixed a bright-line rule that a patentee cannot charge royalties for the use of its invention after the expiry of the patent. In delivering Kimble v Marvel Entertainment, LLC (as reported by the AmeriKat on 30 June), the very same Supreme Court has missed a chance to provide some more clarity on the issue, Neil says.

Gama Healthcare Ltd v Pal International Ltd in a decision from Judge Richard Hacon in the Intellectual Property Enterprise Court (IPEC), England and Wales addressing look-alike between packages of wet wipe products. Jeremy explains the decision and launches a poll.

Here’s this week’s letter on exciting US IP issues from Annsley, whose contents are well described in the title.

Twitter has begun to comply with DMCA takedown requests relating to tweets, notably jokes, lifted in their entirety from someone's own account and re-tweeted without any attribution as to their original author. Eleonora analyses the social network’s decision in light of EU and US’ originality criteria, as well as moral rights. 

The Toronto 2015 Pan Am and Parapan Am Games’ Terms of Use provide bizarre guidelines as regards linking to and from the Games’ website. How could this occur, wonders Eleonora?

With recent changes to IP crime laws, Nicola casts her gaze criminalisation and the economics of crime.  

Former guest Kat Darren Meale has blown the dust off his abacus and actually totted up how many websites British browsers aren't supposed to be able to reach any more, due to blocking injunctions.

After PETA  launched a petition against the use by Hermès of crocodile and alligator-skin accessories, Ms Birkin asked the fashion house to remove her name from one of the company’s bags. Does she have any legal ground to do so, wonders Eleonora?

In a decision of 26 February 2015 (published in May), the German Bundesgerichtshof addresses the extent to which innovations in user interface design are patentable. Marks tells all.

After many posts on Smith & Nephew v Convatec (Court of Appeal judgment here, here, and here; first instance judgment of Mr Justice Birss here), Neil covers the last episodes of the series, both in the UK and in Eponia.

Jeremy presents a brand-new report, which Katfriend Luke McDonagh co-authored with two economists, Christian Helmers and Yassine Lefouili, and which examines the impact of the 2010­-2013 reforms undertaken at the former PCC, now the Intellectual Property Enterprise Court ("IPEC").

Neil’s question is simple: does Twitter have a long-term future? The answer, based on the words of the company’s senior management following the company’s earnings announcement the past week seems to be: at bes t—maybe.

The IPKat's weblog has just recorded its 15 millionth page view. Thank you, thank you, thank you!

Jeremy reviews Secrets: Managing Information Assets in the Age of Cyberespionage, by James Pooley, Andrea Stazi’s Biotechnological Inventions and Patentability of Life: The US and European Experience, and The New European Patent, by Alfredo Ilardi.



Never too late 56 [week ending on Sunday 19 July] - Private copy in the UK | IP statistics | India and TK | Copyright enforcement in Australia | Wobben Properties GmbH v Siemens PLC & Others Blue Gentian v Tristar Products | EU Copyright reform: IP or competition law?  

Never too late 55 [week ending on Sunday 12 July] - Traditional Knowledge and indigenous people | Traditional Knowledge in Canada | Traditional Knowledge and unbalanced dialogues | E-mail addresses as trade secrets | CJEU on essential patents in Case C-170/13 Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH | CJEU on disclosure of infringers’ bank data in Coty Germany GmbH v Stadtsparkasse Magdeburg Infocit - Prestação de Serviços, Comércio Geral e Indústria, Lda v OHIM | Moral ambiguity of trade secrets | CJEU on limits of TM exclusive right in TOP Logistics BV, Van Caem International BV v Bacardi & Company Ltd, Bacardi International Ltd | Non-traditional trade marks in Japan.

Never too late 54 [week ending on Sunday 5 July] - Google v Oracle and Microsoft/Kyocera settlement | GC and Nagoya | Life Science IP Summit 2015 | (Kat)onomics of patents | Case T-15/13 Group Nivelles v OHIM | Case T‑521/13 Alpinestars Research Srl v OHIM v Kean Tung Cho and Ling-Yuan Wang Yu | Smith & Nephew Plc v ConvaTec Technologies Inc | Multi Time Machine, Inc., v, Inc.; Amazon Services, LLC | EU reform on freedom of panorama and (Google) News ancillary right | 3-D Printing choked by IP? | Pro-Football Inc v Amanda Blackhorse et al. | Condoms made in Germany | the Beckhams’ IP.

Never too late 53 [week ending on Sunday 28 June] - EU trade marks in Arabic in Case C 147/14 | Is UberPop a transport service? The floor goes to the CJEU | Is Michael Jordan’s ”Jumpman” logo a copyright infringement? | Plant variety in Case C‑242/14 | US Supreme Court on Spiderman patent | Hospira v Genentech saga | Are EU policy-makers fighting the right copyright battles? | The IPKat and his friends | GO Outdoors Ltd v Skechers USA Inc II | Allfiled UK Ltd v Eltis & 16 Others | OAEE 'victims' mark in Greece | Icons, flags and the Hazzards of intellectual property toxicity | Why Finland is not Silicon Valley | The Sofa Workshop Ltd v Sofaworks Ltd The Ukulele Orchestra of Great Britain v Clausen & Another (t/a the United Kingdom Ukulele Orchestra) | Sony/ATV Music Publishing LLC & Another v WPMC Ltd & Another | The London Taxi Corporation Ltd v Frazer-Nash Research Ltd & Ecotive Ltd.

Friday, 31 July 2015

Something to read? A couple more fresh titles ...

Secrets: Managing Information Assets in the Age of Cyberespionage, by James Pooley, is a very different kettle of fish from the same author's Trade Secrets, an 800-page blockbuster from US publishing house Law Journal Press which is addressed principally to US practitioners, particularly those who find themselves grappling with any number of technical legal and procedural issues when contemplating litigation, portfolio management and transactional issues.  Secrets however is addressed to the people who have secrets at their fingertips, as it were -- people who have to safeguard the confidential information which is at their disposal against prying eyes, accidental spillages, errant employees and ex-employees and other hazards that are daily encountered in business or commerce. Ideally, readers of this book follow the general guidance it contains and minimise their need to meet and instruct the readers of the other book.

This is not the author's first foray in writing for the benefit of the lay reader. Older readers may recall that, way back in 1982, when dinosaurs roamed the Earth and laptops, tablets and smartphones were still the stuff of science fiction, James hatched Trade Secrets: A Guide To Protecting Proprietary Business Information.  In the intervening years, his day-jobs with a leading IP practice and then with the World Intellectual Property Organization, not to mention his teaching activities, have given him a more complete, well-rounded view of a subject that was so poorly served by any sort of literature in the early 1980s.

According to the book's web-blurb:
"Information is the business asset of the 21st century. So our impulse may be to guard it. Yet in a flat global economy, we have to share it--not just with employees but also partners, vendors, customers and consultants.

Here's the risk: secrets falling into the wrong hands can destroy a project, or even bring down a company. And the same technology that enables seamless communication also makes data theft easy, cheap and hard to detect. So what can managers and business owners do to protect and exploit their competitive advantage, maintain productive relationships, and avoid lawsuits?

In Secrets you will find the answers, discovering how to:
  • Identify and reduce your risk of information loss 
  • Deal with employees leaving to join or start a competitor 
  • Manage your data on the Internet and in the Cloud 
  • Build an information protection program with best practices 
  • Respond when you find a breach of confidentiality ...
The books itself is short, in commendably large print, footnote-free and not cluttered by jargon. More spacious margins would have been nice, but everyone likes to make written notes on the printed page. The guidance is clear and direct, as are the appended non-disclosure and consultancy engagement templates. While a US readership is contemplated, much of the advice is law-flavoured common sense, which means that busy business readers can get something out of it whichever jurisdiction they find themselves in.

Bibliographic details: paperback. xviii + 286 pages.  ISBN 978 0 9963910 0 9.  Rupture factor: zero. Available on Amazon here.


Biotechnological Inventions and Patentability of Life: The US and European Experience is the second volume in Edward Elgar Publishing's New Directions in Patent Law series. Its existence is owed to funding from the Italian government's Ministry of Education, University and Research. The author is Andrea Stazi (Department of Human Sciences, European University of Rome, Italy).  Regular readers who have taken a glance at the cover illustration will need no reminder of this reviewer's antipathy to light bulbs as lazy cliche'd symbols of innovation. In this instance the light bulb is even less appropriate, since the tome itself deals, as the title indicates, with biotechnological inventions. No-one has however yet succeeded in cloning a light bulb or nurturing a breeding pair of them.  However, once past the cover, the book gets better -- as is so often fortunately the case.

According to the publisher:
In today’s technological world, biotechnology is one of the most innovative and highly invested-in industries for research, in the field of science. This book analyses the forms and limitations of patent protection recognition for biotechnological inventions, with particular regard to patentability of life.

The author expertly compares the United States model, traditionally based on technical evaluations, with the European model, inspired by fundamental rights and bioethics. He highlights how the regulation of biotechnological inventions should guarantee a fair balance between protection of investment and access to information, which is essential for further research and innovation.
The problem with this book is the problem faced by its subject-matter. The legal, philosophical, theological and economic literature on both sides of the Atlantic is vast and the author has done a valiant job in trying to identify this literature (largely but not exclusively that which is published in the English language) and make sense of it.  However, as is so often the case with books from the same publishing house, there is no stand-alone bibliography; nor is there a table of cases cited or treaties and statutes referred to.  Having read, edited and published a number of articles in this interdisciplinary field of scholarship, this reviewer had no means of spotting conveniently whether they were discussed by Andrea Stazi and what sort of opinion was formed in respect of them.

The depth of the author's thoughts on the subject can be gauged from the unusual length of the final chapter, bringing together a whole string of conclusions. It is difficult to summarise them since there is a dense weave of interrelation between the conclusions' many strands. The main themes of the author's approach can best be summarised by a string of words beginning with the letter "C": care, consideration, caution, control and cooperation -- but that would be trivialising the journey taken to reach that happy end.

Bibliographic details: hardback, vi + 325 pages. Price £85 (online from the publisher, £76.50). ISBN 978 1 78471 589 2. Rupture factor: lowish. Publisher's web page here.


The New European Patent, by Alfredo Ilardi (former Head of the World Intellectual Property Organization's Collection of Laws and Treaties), is a slender book that can best be described as a small monument to a large event and as a lost opportunity. According to the publisher's website: 
On 17 December 2012, following a complex negotiation which lasted 12 years, the European Parliament adopted Regulations (EU) 1257/2012 and 1260/2012 and the text of the Agreement on a Unified Patent Court (UPC Agreement). These instruments institute the ‘European patent with unitary effect’, the first unified system for the protection of inventions within the European Union. The two Regulations will be applicable after the entry into force of the UPC Agreement, which was signed on 19 February 2013 by 24 Member States of the European Union. This book traces the evolution of the idea behind the institution of the European patent with unitary effect, including a comparative analysis of the existing parallel regional and international procedures for the protection of inventions. It presents a synthesis of the different phases of the negotiations which led to the adoption of the first unitary patent system within the European Union. In addition it examines the provisions of the two Regulations, of the UPC Agreement and of the jurisdictional system under Brussels I Regulation. Finally, it reproduces in the Appendix the texts of Regulations (EU) 1257 and 1260/2012 and of the UPC Agreement.
This introduction gives an accurate flavour of the book: it is full of correctly-recorded official detail and does not venture into the real world of human passion, corporate concern, political expediency and devious diplomacy -- the very stuff of which the "complex negotiation which lasted 12 years" was made.  There has been a wealth of academic, scholarly and professional literature on this book's subject matter, not to mention a magnificent concatenation of blogposts in many languages and from many legal and linguistic cultures. None of this can be found here.  More than half of this book actually consists of appended materials that can be conveniently downloaded from the internet at no cost at all, which makes the £65 price look a trifle optimistic. 

Bibliographic details: hardback. ix + 150 pages; ISBN 978184946833. Price £65. Book's web page here.

Fifteen million reasons to say "thank you"!

This morning (or this evening, if you are basking in the Pacific moonlight) the IPKat's weblog recorded its 15 millionth page view, which works out at a little more than a million a year since the Kat started his IP blogging exploits in 2003.

Both the IPKat and Merpel would like once again to express their sincerest gratitude to all their readers, contributors and commentators for helping the blog to reach this milestone.  Thanks are also owing to those heroes and villains whose exploits, whether in court, in legislative chambers, in the marketplace or elsewhere, have been sufficiently memorable to make them worth commenting on.

This Kat would just like to add that being at the operational centre of this weblog, which is a team effort, is an exhilarating and often quite scary experience. He knows quite how much goes on behind the scenes, how much correspondence is received and processed, how many queries are answered or redirected, how many threats are parried, and how many photos of readers' cats are gratefully acknowledged.  From where he sits, the view of the intellectual property community is a remarkably complex and interdependent one. It is also a community of which he is immensely proud to be an active member.

Friday fantasies

We'll never know what they were laughing at,
since Twitter took the joke down ...
Twitter jokes: Katpost goes viral and it's no joke! "Lifting Jokes on Twitter", recently posted to this weblog by leading copyright Kat Eleonora, has attracted the attention of the wider media.  First we learned that this article on Twitter's take-down of tweets that allegedly infringed copyright had been picked up by practitioners' publication Legal Week. Then we discovered that our good friends at Managing Intellectual Property had been giving it some air.  Says the IPKat, it's lovely to know that what we post on this weblog is put to good use by others.  Adds Merpel, yes, just like you put their content to good use too ...

Forthcoming attractions.  Apart from the IPKat's frequent Friday reminder that there are lots of great events coming up, which you can check on his Forthcoming Events page, it's also the dawn of a new month -- August -- which means that it's time for the monthly Queen Mary Journal of Intellectual Property summary of events coming up in that lovely month.  Talking of events, the next JIPLP-GRUR London seminar, on IP Enforcement in the wake of the IP Enforcement Directive,, is coming up on 8 September: more than 60 people have now registered, but there's still room for more. Details of this seminar, which is free and has this Kat in the chair, can be accessed here.

Patents for second medical use, coming to a Bosphorus near you.  The mysteries of the patentability of a substance that already has one known medical use, one a further medical use is found for it, have been recently addressed in numerous Katposts on the litigation in England and Wales between Warner-Lambert and Actavis, most recently here and here. This Kat thanks his friends at the Turkish IP practice of Deriş for the information that Turkish practice, following that of the European Patent Convention, indicates that patents are available there for second medical use. Thanks go to Okan Can for sending him this link to the piece he wrote together with his colleagues.

Around the weblogs. "Old Money, Old Navy, Fabric Copyright Infringement Suit, Oh Dear!" is Marie-Andrée Weiss's instructive post on the 1709 Blog about a US copyright infringement action involving fabric designs (clothing designs per se are unprotected by copyright law on the basis that they are "useful articles").  There's also a CopyKat post from Ben Challis with a round-up that includes the latest on the sad saga of copyright in that eternal dirge "Happy Birthday to You".  The jiplp weblog features a note by Indranath Gupta and Vishwas H. Devaiah on the Court of Justice of the European Union ruling in Ryanair v PR Aviation, on whether the"you can't contract out" provisions of the Database Directive apply to data that isn't protected as well as to data which is. PatLit carries a helpful account by Marqués Jarque and Silvia Saenz de Ormijana on the new Spanish Patent Act and what it foretells for a jurisdiction that is determined not to be marginal in innovation terms, whatever it feels about the new European patent package.

In brief, and now at length.  The AmeriKat neatly potted this month's resolution of the major US patent dispute between Netflix and Rovi, relating to five Rovi patents covering interactive programme guides and multiple-device playback, in a single succinct paragraph here. Katfriend Kevin Winters, not to be outdone, has prepared his own summary of this decision which stretches to a little over 4,000 words: you can check it out here.

What kind of future does Twitter have?

For those Kat readers who do not actively follow the corporate earnings reporting season, Second Quarter (Q2) results have been coming in for several weeks. While disappointing results by hi-tech behemoths such as Apple and Microsoft have garnered most of the headlines, given the sheer bulk of these companies, perhaps the most interesting dynamic took place regarding Twitter. It is no secret that Twitter has seen ups and downs since its IPO on November 7, 2013, and whispers having been getting louder and louder about whether the company’s business model will meet investor expectations. The Kat question is simple: does Twitter have a long-term future? The answer, based on the words of the company’s senior management following the company’s earnings announcement earlier this week seems to be: at best—maybe.

The summer has been a trying time for the company. The CEO, Dick Costolo, stepped down in June and there was hope that the company’s share price would improve. Add to this the fact that Twitter co-founder Jack Dorsey returned as interim CEO-- but the share price still declined. Then came the release of the Q2 numbers following the close of the share trading day on July 28th. The announcement seemed encouraging, reporting better than anticipated results; the stock price rose almost immediately more than 10% in after-hours trading. However, this was accompanied by the customary earnings call with senior management, the substance of which painted a challenging, if not worse, outlook for the company. Consider the following, as reported here and here:

1. Dorsey began his comments by warning that the company has a long road ahead, stating bluntly:
"We’ll take the necessary time to build the service people love to use every single day, and we realize it will take some time to show results we all want to see.”
The stock price immediately began to fall.

2. Dorsey went on to discuss user growth and audience participation, lamenting that new features such as the Timelines and Logged-Out experiences have not had the desired impact. “This is unacceptable and we’re not happy about it,” he said.

3. Dorsey was followed by CFO Anthony Notto, who was equally, if not even more, downbeat. He noted:
"Specifically, we did not see organic growth, positive seasonality or growth initiatives seen in Q1. As Jack mentioned, we’re obviously not satisfied with these results.”
4. Noto paid particular attention to the metric of monthly active users (MAUs), regarding which he observed:
“We do not expect to see sustained, meaningful growth in MAUs until we start to reach the mass market. We expect that will take a considerable period of time.”
5. In other words, the company had not yet found a way to reach the “average” user of social media, which is the key for ultimate financial success. Some investors found enough in the bluntness of these remarks to stick with the stock, but a significant number did not. The stock price at one point declined over 10%.

6. As for the question who will take over as the permanent CEO of Twitter, Dorsey stated:
“I know this is a trending topic on Twitter around the CEO search, but unfortunately, we do not have an update to provide today.
The upshot is that the company saw the ex-CEO walk out the door last month, is currently being run by an interim CEO, and has no replacement for the CEO position for the moment.

Stepping back from the dynamics of quarterly earnings reports, what does this spike up and almost instantaneous down in the Twitter stock price tell us about the company. An interview on July 30th on Bloomberg radio with hi-tech analyst Brian Wieser of Pivotal Research Group made several telling observations. At its heart, the question is whether Twitter will ever be more than a niche company, serving a certain number of users who find benefit in it. The target of comparison is Facebook and, indeed, Twitter is said to be obsessed about benchmarking itself to Facebook. The problem is that Facebook seems to be moving inexorably forward towards establishing itself as a social media platform. It is reported that the average Facebook user is on the site for over 40 minutes a day. Together with the extraordinarily high number of Facebook users world-wide, that is music to the ears of advertisers, of whom more and more turn to Facebook as a first port of call.

Compare this with Twitter. It reported that it has slightly more than 300 million users, a respectable number—if you are a niche social media service. The attractiveness of Twitter as an advertising opportunity is, however, more limited, and one wonders whether just the passage of time can ever ameliorate the situation. Add to this an anecdotal observation by this Kat. He has four fully grown Kittens, with whom he is in nearly daily contact. Facebook is frequently mentioned in conversation; Twitter has never once been uttered. So we end where we began—does Twitter have a long-time future?

Thursday, 30 July 2015

Best thing since sliced bread -- or even better? Report praises IPEC litigation option

This Kat's excitement about the possibilities for IP litigation at the bargain basement end of the market was stirred up when, in England and Wales, the Patents County Court ("PCC"), was first reformed, reconfigured within the High Court and then rebranded as the Intellectual Property Enterprise Court ("IPEC"), with its Enterprise Judges and its Small Claims Track. Could the IPEC really be the best thing since sliced bread, he wondered -- apart from sliced toast, that is.  This excitement has been shared by some of the litigants themselves, notably photographers who previously generally found copyright infringement litigation far too expensive to make it worth the effort. an example of this can be enjoyed in a blogpost on the 1709 Blog, "Small claims triumph as aerial photographer routs flagrant infringers", here, posted on 15 April and the most frequently-visited item on that blog in the past three years.

Excitement, however, is not enough, says Merpel: what we need is some evidence that the IPEC is a good place to litigate. Well, Katfriend Luke McDonagh, together with some scholarly friends of his own, has been doing some research. Luke, some readers may have spotted, has a serious interest in IP litigation and drew attention to this in providing the information for a PatLit post, "Patent litigation in England and Wales 2007-2013: is it a predictor for UPC behaviour?" which you can read here.

Luke has just told this Kat about a 53-page UK Intellectual Property Office-commissioned report, Evaluation of the Reforms of the Intellectual Property Enterprise Court 2010-2013, published yesterday and accessible via this link.

In this report, which I co-authored with two economists, Christian Helmers and Yassine Lefouili, our task was to examine the impact of the 2010­-2013 reforms undertaken at the former PCC, now the IPEC. The primary aims of the reforms were to streamline litigation procedures and reduce litigation costs, and thereby increase access to justice for IP litigants, particularly for individual claimants and SMEs who had previously found the PCC an expensive and unwieldy litigation venue. The reforms introduced a number of changes -- staggered over the period 2010-­2013 -- including a cap on recoverable costs and damages, a reduction of the length as well as complexity of court actions, and the reconstitution of the PCC -- a county court -- as the specialist IPEC within the Chancery Division of the High Court.

In our report we assess the reforms both quantitatively and qualitatively. In our quantitative case counts we find that there has been a large increase in the quantity of IP cases filed at the IPEC post-reforms, and via a comparative study of IP cases at the High Court (HC) and Patents Court (PHC) we show that with the exception of patent cases, there has not been a corresponding increase in cases at the higher level.
IPEC has a very positive message for SMEs 
We find quantitative and qualitative evidence that the costs cap and active case management by the IPEC judge have been the most influential reforms with respect to the large increase in cases filed at the IPEC post-reforms. We also note that case filings by SMEs have increased substantially following the reforms, fulfilling one of the key aims of the reforms [Look, everybody, and forget mind all the pompous pontificating  about what's good for SMEs -- here's something SMEs actually need and use]. Importantly, we find that this effect is driven by changes at the extensive (more claimants) and intensive (more cases per claimant) margins of litigation behaviour at the IPEC. Finally, we provide a theoretical model that allows us to gauge the effect of the reforms on those IP disputes that never reach a court. Our theoretical predictions suggest that in addition to encouraging more IPEC case filings, the reforms have had the effect of increasing the quantity of out-of-court settlements as well [this is great news too, for SMEs, anyone locked in legal dispute with them, and for mediation services such as those offered by the IPO itself].
This Kat is thrilled at the import of these findings and hopes that the functional utility of IPEC will continue to flourish.  Merpel hopes so too, and is a little sad when she speaks to friends who have taken professional advice and who have not been told by their chosen professional adviser about the option of suing in the IPEC.

Smith & Nephew seek to go to the Supreme Court and EPO proceedings continue - the war is not over

This Kat does not routinely comment on procedural judgments, but the IPKat has reported so extensively on the ongoing dispute between Smith & Nephew and Convatec, and this case is so fascinating, that on this occasion this Kat feels moved to post on the decision just out (not yet on BAILII but you can read it here).  He criticised the Court of Appeal judgment (here and here), also reported by Jeremy here, and preferred the analysis of the first instance judgment of Mr Justice Birss here.  These judgments related to infringement of Convatec's patent by Smith & Nephew; the validity of the patent had been considered, and the patent upheld in amended form, in earlier proceedings (see here for first instance and here for appeal).

This case concerning silverised wound dressings is not to be confused with a related case between the same parties, noted by the IPKat here. This latter case relates to a similar technology, but without the silver.  Readers interested in that case may wish to know that the decision was upheld on appeal (see here), and that there was a further decision, principally about costs (see here).

Returning to the silverised wound dressings case, infringement turned on the question of what is meant by "1" in the context of a claimed range of 1 to 25%. At first instance, Birss J construed it as meaning a lower limit of 0.95%, meaning that Smith & Nephew's modified process did not infringe, although some experiments conducted to obtain regulatory approval did.  But on appeal the Court of Appeal held that the lower end of the range extended to 0.5%, so that the modified process did infringe.  So what happens now?  That is what today's decision addresses.

Appeal to the Supreme Court
The Court of Appeal has refused leave for Smith & Nephew to appeal to the Supreme Court, because it considered that there is no significant point of general public importance at stake, since it has done no more than apply the established principles of claim construction from Kirin Amgen (Kirin Amgen Inc v Hoechst Marion Roussel Ltd [2004] UKHL 46, [2005] RPC 9) to the case before it.  However, Smith & Nephew have stated that they will seek leave to appeal from the Supreme Court, and the Court of Appeal has recognised that the Supreme Court may take a different view.

Proceedings at the EPO
Merpel & nephew
There are ongoing opposition proceedings at the EPO relating to the same patent EP 1,343,510, which have taken a rather complex course.  The Patent was granted on 19 May 2010. On 18 February 2011 Smith & Nephew filed a notice of opposition. The opposition proceeded to an oral hearing and, in its written decision issued on 21 December 2012, the Opposition Division upheld the Patent with claims in an amended form corresponding to the amended claim held valid by Birss J in the Patents Court at [2012] EWHC 1602. Both Smith & Nephew and ConvaTec appealed against this decision. Oral proceedings took place before the Technical Board of Appeal (the “TBA”) in November 2013 and the written decision was issued on 29 January 2014. The TBA held the Patent invalid for lack of inventive step. However, it then remitted the case to the Opposition Division for consideration of the admissibility and allowability of various auxiliary requests. A further oral hearing took place before the Opposition Division in October 2014 and it issued its decision on 16 December 2014. It declined to admit further evidence upon which ConvaTec sought to rely and revoked the Patent. ConvaTec have now appealed against that decision.

Both sides claim that they will eventually prevail in the opposition.  They have also offered different views of the likely timescale for the proceedings to be finally concluded.

Stay of injunction and delivery up
Convatec has sought an injunction to restrain further infringement by Smith & Nephew and an order for delivery up of infringing product. Whilst accepting that Convatec is in principle entitled to this relief, concerning the timing, because of the possibility of appeal to the Supreme Court, and the possibility that the EPO Board of Appeal might uphold the revocation of the patent, the Court of Appeal has decided:
We have therefore come to the conclusion that the injunction should be stayed pending the decision of the Supreme Court in relation to the application for permission to appeal or, if later, the decision of the TBA. For like reasons we also grant a stay of the order for delivery up or destruction. We grant these stays on the basis that Smith & Nephew undertake to continue to press for expedition of the TBA hearing and to prosecute their application for permission to appeal to the Supreme Court with all due diligence. We would make it clear that, subject to any further stay which the Supreme Court may grant, we do not envisage this stay extending beyond April 2016. We therefore give the parties liberty to apply to a single judge of the Patents Court of the High Court should that appear likely.
There are fairly complex submissions on costs, because on the one hand Convatec has ultimately prevailed, and so is in principle entitled to its costs, but on the other hand Smith & Nephew argue that Convatec withdrew at a late stage a large part of some aspects of their case in respect of which Smith & Nephew had incurred substantial costs, which were wasted because of the withdrawal.  Holding that Convatec's behaviour was not unreasonable, but recognising that some wasted costs were incurred, the Court of Appeal ordered Smith & Nephew to pay 60% of Convatec's first instance costs and 86% of their appeal costs.

This Kat is no more able than the Court of Appeal to predict the outcome of the EPO proceedings, but it does seem that maintenance of the revocation of the patent is at least a possibility, in which case these protracted UK proceedings will have been entirely vitiated.  This makes him sad.  On the other hand, he would dearly love the infringement case to go the Supreme Court so that we can finally find out what "1" means.

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