Can Unified Patent Court and national laws of infringement diverge? An IPKat dialogue

This moggy has previously posted his view that when the signatories to the UPC Agreement ratify the Agreement, they will have to conform their national law of patent infringement to that specified in the UPCA (Articles 25 to 30), not only for Unitary patents and Classical European patents, but also for national patents.  The law must conform for Unitary patents and Classical European patents because that is what ratifying a treaty means, and the law must conform for national patents because Article 2 EPC says that:
The European patent shall, in each of the Contracting States for which it is granted, have the effect of and be subject to the same conditions as a national patent granted by that State, unless this Convention provides otherwise.
He has previously considered whether this introduces harmonisation of the law of patent infringement “by the back door” (he thinks yes), although maybe the UK has found a sneaky way to make a divergent law seem compatible with the UPC text.

It has to be said that there is a substantial body of views that disagrees with this Kat.  Of course he thinks those views are incorrect.  However, with law, as with grammar, if enough people subscribe to the “wrong” view, especially if this includes those responsible for implementing and ratifying the UPC, it can become “right”.

Therefore, he was very glad to receive this masterful analysis from Donal Kelly, senior associate at FR Kelly, where our own dear Kat David Brophy resides.  In the below, I shall put my words in red, and Donal’s in blue, and the connecting language of this blog in black.  I hope that will make this easer to follow.

The background is that Ireland has just implemented a Bolar provision that on the face of it diverges from Article 27 UPCA (of which Donal gave advance notice here).  As Donal now writes:
I thought you might like to know that the Intellectual Property (Miscellaneous Provisions) Act 2014, amending the Patents Act 1992 and giving effect to the Singapore Treaty on the law of Trademarks, has now been enacted in Ireland. The Act also makes a small number of technical amendments to the Competition and Consumer Protection Act 2014. 
Primarily, the Act limits the extent of the rights conferred by a patent in Ireland by exempting from patent infringement acts done in conducting studies, tests, experiments and trials (including clinical trials and field trials) with a view to applying for a marketing authorisation in order to sell or supply a medicinal product for human or veterinary use.
The ambit of the exemption is broad insofar as the acts done can be to satisfy the application requirements for marketing authorisation “or similar instrument (howsoever described) that is required by the law of the State or of any other state”; and includes “any other act done” which is required as a consequence of those acts. 
Indeed, the exemptions form part of a new (additional) legal dispensation alongside existing exemptions relating to acts necessary to apply for a marketing authorisation for a medicinal product for human use under Directive 2001/83/EC or a veterinary medicinal product under Directive 2001/82/EC.
In this regard, the Act appears to be diverging from the limitations of the effects of a patent under Article 27 UPCA. However, I am (still thus far) of the opinion that these Irish exemption provisions will not be in direct conflict with the UPCA provisions, but the divergence does appear to require patent proprietors to carefully consider under which provisions their “classical” European Patents are to be litigated, possibly by availing of the Article 83.3 UPCA opt-out from jurisdiction of the UPC.
Earlier, Donal had provided a detailed view of why there is no problem for national courts to apply a “national” law of infringement, while the UPC applies one based on the relevant provisions of the UPC.  He writes as follows:
I don’t see that national law and the UPCA will be in direct conflict because I think national law and the UPCA will have mutually exclusive application – there does not appear to be any provision in either the UPCA or the UPR that requires national law to be harmonised with the UPCA. If you are prepared to take a short trip with me and your EU Pet Passport is up to date, my thoughts regarding Bolar-type exemptions in the new European patent system meander something like this:
First, to Brussels (I) – since registration or validity is not at issue in our consideration of Bolar-type exemptions, the UPC should have exclusive competence as specified in Article 32 UPCA. On to Rome (II) where the applicable law is determined by the country for which the protection was sought which, for European Patents in the exclusive jurisdiction of the UPC, should be the UPCA – Even though Article 24 UPCA allows the UPC to base decisions on EU law, the UPCA, the EPC, binding international agreements applicable to patents, and national law; we need only turn to national law if the unitary right does not govern Bolar-type exemptions, but the UPCA does so at Article 27. Back to Brussels to visit the Unitary Patent Regulation, Article 5 of which states that any exemptions from infringement are defined by the national law applied to the UP – I don’t know that any country (at least not the UK or Ireland) has (yet) applied any national laws to the UP, so the applicable law should still be the UPCA. 
Practically speaking, three primary scenarios will arise:
1. European Patents with unitary effect (UP) – which, based on the above, I think should fall under the exclusive jurisdiction of the UPC and the applicable law should be the UPCA, which defines the Bolar-type exemptions allowable under Article 27.
2. European Patents (EP) not opted out – which should likewise fall under the exclusive jurisdiction of the UPC and Article 27 UPCA. 
3. European Patents (EP) opted out – which is where I think it becomes (even more) complicated:
There is an ongoing debate regarding an opt out from “exclusive” jurisdiction from the UPC but, for the purpose of maintaining sanity, I am of the opinion that an opt out from “exclusive” jurisdiction from the UPC puts the EP bundle of patents in the hands of national courts (unless a claim brought at the UPC causes the UPC to seize jurisdiction, in which case I think we are back to scenario 2 above). So, if a national court has jurisdiction, should the applicable law be the UPCA? – Article 3 UPCA seems to think so (at least as far as UPs, SPCs, EPs, and EPAs are concerned). 
But if we resume our trip to Vienna, we should probably be interpreting Article 3 UPCA as referring exclusively to EPs not opted out and EPAs not opted out, because the whole premise of the UPC and the UPCA was to apply uniform law and interpretation. Allowing national courts to apply and interpret the UPCA would be contrary to this objective. Resultantly, I think the UPCA will not apply (but national law will apply) in the case of EPs opted out, and so the new/proposed Bolar-type exemptions in UK and Irish law will then apply to the respective UK and Irish validated patents. This disparity in exemption provisions between the UPCA and national law will likely become the very basis for forum-shopping-through-opt-out as parties seek to take advantage of the differences between national law and the UPCA.
So, in short, I don’t think either the UK or Irish exemption provisions will ever be in direct conflict with the UPCA and a national court will not have to interpret differences in the exemptions.
There are of course many assumptions made to come to this conclusion, including the definition of an opt out from “exclusive” jurisdiction from the UPC, whether exemptions from infringement are defined by national law or “national law applied to the UP” in the UPR, and that Article 3 UPCA actually does not apply to EPs and EPAs opted out. A consideration of Bolar-type exemptions is also facilitated by the fact that the UPCA has its own exemption provisions – It’s not entirely clear to me, if the UPCA is silent on some other provision, and the UPC (not finding an answer in EU law, the EPC, or binding international agreements applicable to patents) turns to national law, which national law will apply. If the UPC is to determine national provisions on private international law under Article 24 UPCA, the applicable law might differ depending on which provision is to be interpreted, and perhaps we will simply have to wait for the first instance of national law application by the UPC to understand?
Now, our dear readers will not be surprised to know that I do not subscribe to this view.  So I replied setting out why, while following his reasoning, I could not find myself agreeing with it:
The IPKat contemplates the UPCA
Image courtesy of Joe Delaney
Firstly, your view that "these Irish exemption provisions will not be in direct conflict with the UPCA provisions" comes I think because according to your analysis all European patents are either Unitary or not-opted-out Europeans, under the jurisdiction of the UPC, or opted out Europeans under national jurisdiction.  But for the transitional period, not-opted-out Europeans are under joint jurisdiction of national courts and UPC.  So I don't think your statement "Allowing national courts to apply and interpret the UPCA would be contrary to this objective" is compatible with this reality during the transitional period. In this period national courts will have to apply the harmonised law for non-opted out cases. If it were the case that they are supposed to apply national law,  it does not seem correct that the exceptions to infringement could depend only on the forum in which the case is brought.  (From my understanding of Article 83(3) UPCA, I think that it is even possible to opt out while national proceedings [but not UPC] proceedings are pending - if that made a difference to the applicable defences to infringement, it would mean that they could change mid litigation). 
Secondly, you stated that "there does not appear to be any provision in either the UPCA or the UPR that requires national law to be harmonised with the UPCA".  I cannot agree with this for two reasons.
A. Article 2 EPC states "The European patent shall, in each of the Contracting States for which it is granted, have the effect of and be subject to the same conditions as a national patent granted by that State, unless this Convention provides otherwise. "  This requires all European patents, unitary or otherwise, opted out or in, to have the same effect as national patents, and hence as each other.  That is the fundamental reason why I don't think that it is possible to have different exceptions to infringement for different types of patent.  I simply do not think that EPC contracting states are permitted to allow a situation to arise where there are two parallel laws. 
B. The UPCA is a treaty.  It is not a law in its own right.  Ratifying a treaty MEANS harmonising law with it:  that is fundamentally what ratification means.  So when the UPCA defines a law of infringement for a European patent, a state which ratifies the UPCA must adopt the same law.  Otherwise it has not ratified it.  In your analysis you state "Article 5 of which states that any exemptions from infringement are defined by the national law applied to the UP – I don’t know that any country (at least not the UK or Ireland) has (yet) applied any national laws to the UP, so the applicable law should still be the UPCA." - the reason (and the only reason) why UK and IE have not applied national laws to the UP is because they have not ratified the UPCA - when they do ratify the UPCA they will have to have such a law, because otherwise they won’t have ratified.  The UPCA is never of itself an "applicable law" - it becomes the law only when and to the extent that it is implemented into national law in the manner that the UPCA requires.  (Just as the EPC did not become a law until states harmonised their law to it and ratified it - for matters governed by the EPC countries are not permitted to have separate or divergent national laws).

Finally, Donal had these words of reply:
1) Will not-opted-out European Patents fall under the joint jurisdiction of the national courts and the UPC, given that Article 32 UPCA bestows “exclusive” competence to the UPC in respect of inter alia actions for infringements and revocation of patents? (again, we must determine the definition of exclusive). 
2) By stipulating that UPC decisions are to be based on EU law (having primacy), the UPCA; the EPC; binding international agreements; and national law; does Article 24 UPCA suggest that UPCA is/will be a source of “applicable law”? – the UPCA will enter into force by ratification by 13 states (including the holy patent trinity) and then become legally binding.
3) If a national law (e.g. Bolar) provision is of differing scope to (but not directly conflicting with) a multinational legal act, does the fact that the multinational provision is already encompassed within the national law provision result in a form of ratification without national amendment – is the national law provision already compliant with the UPCA provision, even if the national law provision includes additional (e.g. exemptions) leading to differing scope, but thereby allowing for harmonised but not identical provisions?
In respect of 1) I queried:
I did just want to come back on point 1) above - I agree that there is joint jurisdiction between national courts and the UPC for non-opted-out patents in the transitional period - Art 32 UPCA says "exclusive" but it is trumped in the transitional period by Art 83 UPCA which additionally gives competence to national courts.  But I would have thought that then it is pretty clear that UPC law would have to be applied (or there would have to be a clear reason why not); although I have already said that don't accept that there can be a difference between the two, which is my main point.
And Donal replied:
I think we both agree that Article 83(1) UPCA gives competence to national courts. I am just of the opinion that the UPC has exclusive competence for UPs and not-opted-out EPs (NOOEPs) and the national court has competence for opted-out EPS (OOEPs) under Article 83(3) UPCA – if there is joint jurisdiction over both NOOEPs and OOEPs, why have an opt out? The EP would be opted in/out once jurisdiction is seized by a first action being filed.
The IPKat thanks Donal again, and hopes that this dialogue may spark some thoughts among our dear readers, and earnestly wishes to see them in the comments below.
Can Unified Patent Court and national laws of infringement diverge? An IPKat dialogue Can Unified Patent Court and national laws of infringement diverge?  An IPKat dialogue Reviewed by Darren Smyth on Thursday, January 15, 2015 Rating: 5

14 comments:

  1. Also there's a territoriality aspect. If one makes a medicine in a European country for clinical testing in another European country how does the exemption apply to the manufacture? In the UK would the clinical testing exemption apply if the testing was abroad. Would this be different for a UK national, classical EP and unitary patent? And would the answer be different if abroad was EP versus non-EP?

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  2. There is a further territoriality issue not covered - for contributory infringement, currently in the UK law a patent is infringed if both the supply of the essential means, and the infringing use supplied for, are in the UK. The UK is proposing to implement the UPCA broadening this to UPCA member states, but only in respect of unitary patents. This is a grey area, I think, but I am not convinced that it is compliant with the UPCA that the use has to be in the UK (obviously the supply does or there is no act in the UK to complain of). Thus I believe that even for UK national law, supply in the UK of essential means for infringing use in other UPCA countries should probably be considered infringement.

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  3. Darryn,

    Your comment prompts me to bring up topic currently under discussion here in the US concerning our infringement law 35 USC 271(f), which contains an element of extraterritoriality and a tie back into US suppliers. Our law is directly intended to affect actions by entities outside of the US.

    Will there be a similar effect between a Unified Patent Court and transnational sourcing?

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  4. Thank you anon at 15:34 - there is no provision in the current UK law, or the UPC Agreement, corresponding to 35 USC 271(f), and applicable to inducing infringement anywhere in the world outside the territory of the patent. The current UK provision (which is also somewhat different in scope from 35 USC 271(f)) requires the supply and the related infringement are in the UK:

    .. a person ... infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.

    The UPC provision broadly replaces "UK" with "contracting member states".

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  5. There now follows in two parts a comment received by email from Vicki Salmon (to whom thanks!)

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  6. Vicki Salmon comment part 1:

    Thanks for highlighting the issue of infringement provisions and the UPC again. This is a really important point and without a lot of political lobbying across Europe, we are going to be left with a mess.

    Even before the courts start to apply the new UPC infringement provisions, we practitioners are going to be advising our clients as to what they can and can’t do. All companies have to worry about competitor patents. In fact there are more of those patents to worry about than how to enforce their own patents. Clearance advice is important (as your correspondent on the Bolar provision highlighted). Once a court is seized, it will only have to decide what its law is and apply that. However, we practitioners have to advise clients as to what will and won’t be an infringement before the patentee even begins to consider which court might be seized. Having multiple parallel infringement regimes is bonkers.

    Example: There is a pending European application. You don’t know whether it will become a unitary patent or be validated nationally. The application may have been opted out, but that is not a guarantee that it will not be opted back in again at grant. Your client wants to start a competing business. Under which law will you advise? Or will your opinion (supplemented by colleagues across Europe), contain multiple opinions, depending upon which law applies? Or which court might hear the dispute?

    At least before, I knew that if the business was only selling in the UK, then I only needed to worry about UK law. The new regime will sweep that away.

    The Bolar provisions provide a very good example as to how patent infringement law varies across the EU. But there are far more basic differences even in relation to claim construction, what is an infringing act and who can be sued as a joint tortfeasor which means that this change intended to deal with Europe's fragmented market and various national court systems will in fact have made it worse.

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  7. Vicki Salmon comment part 2:

    For the Unitary Patent, the regulation says that the infringement law is “the law applied to European patents with unitary effect in the participating Member State whose national law is applicable to the European patent with unitary effect as an object of property…”. So the first problem will be to decide which law applies under Art 7 (but that is another problem for another day). Then we will have to check that member state's law to see what it said about which infringement law applies to unitary patents. If it did choose to apply Arts 25-27 UPC, then we may still need to check that national law for the gaps which the UPC does not yet cover.

    I don’t know how International Treaties take effect in different member states. Collecting that information together and being able to compare and contrast will be a useful exercise. No assumptions can be made that what works in one jurisdiction will be the same in another. What I do know is how the IPO first proposed that the UPC take effect in UK law. The treaty does not have direct effect. Prior to ratification, the UK law must be amended to bring it into compliance. But what is that compliance? Does it have to be harmonised or not?

    In the draft Statutory Instrument, the proposal was to make certain amendments to s60 Patents Act – some of which mirrored the wording of Arts 25-27 and some of which did not. (I think this was done in a mixed form in order to hear what we thought about the proposals.) Then the proposal extended parts of the UK Patents Act to Unitary Patents, including the amended UK infringement provisions, subject to some of those provisions being modified further in relation to the unitary patents (for those interested see Schedule A3). So this meant that the UK would be applying the amended s60, not Arts 25-27!!

    This suggested to me that the law which a member state applies to unitary patents could well be specified as being national law and need not be the law of the UPC agreement at all.

    CIPA provided extensive feedback to the IPO on difficulties with the proposed implementation. Although the IPO had hoped to issue the new draft at the end of last year, there are clearly some really difficult issues, not least about what to do with exemption Art 27(k). So we are currently expecting a fresh draft showing how the UK will implement the UPC and unitary patent regulation only after the May General Election. It will only be after that that we can know what the UK will do to amend its law and whether it will harmonise with the UPC or even apply the UPC rather than its national law to the Unitary patent.

    Whether there is a requirement to harmonise national law or not, there is a real practical issue as to whether we are all going to lobby our Governments to come up with a sensible national and European infringement regime, and speak to each other to compare and contrast what has been achieved, or whether we are going to leave them each to do their own thing, in the assumption that they know what they are doing. It will not be good for European industry or for investment in Europe if we have to say that the proposals to make European Patent Litigation easier for litigants has just made it a lot harder. If it does not offend the Kats, we do not want a dog’s breakfast!!

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  8. I wonder what the status of this note (http://www.unified-patent-court.org/news/71-interpretative-note-consequences-of-the-application-of-article-83-upca) is "representing the views of the preparatory committee"; and stating clearly:

    "Conclusion

    19. It is the Preparatory Committee’s view that if an application for a European patent, a European patent or a Supplementary Protection Certificate that has been issued for a product protected by a European Patent is opted out (or during the transitional period the case is brought before a national court), the Agreement no longer applies to the application for a European patent, the European patent or the Supplementary Protection Certificate concerned. As a consequence the competent national court would have to apply the applicable national law."

    I think it could be seen as an interpretative note to the treaty, which would mean that (from an UPCA perspective) opted out EPs do not fall under any of its provisions. I subscribe to your view that such a provision is contrary to the EPC....

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  9. Dear Treaty Notifier

    Thank you for raising this. The view of the Preparatory Committee is precisely that - a view. I don't see how it could possibly be elevated to the status of an interpretative note for the treaty (although i think it is very relevant for interpreting the Rules of Procedure). Actually, I think that as far as it goes it is not incorrect. But the point is that the "applicable national law" is that of a state that has ratified the UPCA and has therefore modified, as necessary, its national law to be in accordance with it, including, inter alia, what constitutes infringement of a European patent.

    When the UK ratified the EPC, it did not keep its 1949 act law and then apply the EPC directly when necessary - it modified its law (as it happens by passing a new one in the form of the Patents Act 1977) that was in accordance with the EPC. I don't see how or why ratification of the UPCA should be considered any differently. The precise legal route of enabling legislation in the Intellectual Property Act 2014, followed by a statutory instrument, is not identical, but it is completely equivalent as far as I can see. I don't see why the view, that one can ratify a treaty with provisions of substantive patent law without conforming your law to it, seems so persistent, actually.

    Thanks again for an interesting point.

    Darren

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  10. Darren, thanks for your quick reaction.

    Indeed there must be a big difference with the Netherlands, where treaties have direct effect, and trump national law. So if
    i) Dutch law is not equal to or directly referring to UPCA-proviosns
    ii) a Dutch judge would find that UPCA would still apply to an opted out patent,
    then he would use the UPCA provisions of his own motion.

    IF
    i) Dutch law is not equal to or directly referring to UPCA-proviosns
    ii) a Dutch judge would find that the UPCA would not directly apply to opted out patents (in accordance with the interpr note)
    -then probably national law would be applied

    So for states with direct effect of treaties, this interpretation (IF it has any legal value) is very important.

    Prep com furthermore seems to have explicitly anticipate in its interpretative note the possibility of divergence between EPs under UPCA jurisdiction and EPs opted out; e.g. if you look at

    16. From this it can be concluded that it was the purpose of the contracting states to create a new jurisdiction in order for substantive patent law, to be interpreted by a court common to the contracting states exclusively (i.e. the Unified Patent Court). It was not intended to be obligatory to harmonise national patent law, nor was it intended that national courts would have jurisdiction with regard to the agreement itself.


    it is even seen as undesirable to fully harmonise:

    15. There is no possibility for national judges to refer interpretative questions to the Unified Patent Court. As a consequence, application of the substantive patent law that is contained in the Agreement by national courts would seriously bear the risk of diverging interpretations, which is would be contradictory to the goals of the Agreement.

    Therefore (to react to your last statement) in the opinion of the prep com. one can ratify the treaty with provisions of substantive law without comforming your law (only) if those provisions do not formally apply. As there is ambiguity regarding applicability of the UPCA to opted out patents and after looking at the intention of the signatories, prep com concludes explicitly the UPCA should be inputted as determining harmonisation is not necessary. (of course rules not-opted out patents should be in conformation with the agreement, but there is no implementing legislation necessary for that).

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  11. Dear Treatynotifier

    Thank you very much for the further excellent points that you raise.

    I am aware that in some countries treaties have direct effect, but actually I don't think that this affects the principle of the matter, namely that if you ratify a treaty that states "A European patent is infringed by..." then your national law (either by a new law or by directly applying the treaty) has to be that.

    However, if treaties have direct effect it does as you identify change the mechanism by which the applicable national law changes upon ratification of the treaty. Here there is something I don't understand. You imply that Dutch law will not change when you refer to the direct effect of the treaty, but then you refer to "Dutch law is ... directly referring to UPCA-provisions". If the Dutch law is "directly referring" then Dutch law has been amended, if only to refer to the UPCA. If that what will happen? If so, then I don't think it so different from the UK.

    The preparatory committee is a very eminent group, but I don't assume that they are infallible. I do think that they seem in the passages that you quote to not fully have considered Article 2 EPC. Also, I think that we can draw a distinction between "harmonise" which means that the black letter law is the same everywhere, and FULLY harmonise, which additionally requires a mechanism to ensure consistent interpretation in each country, which is indeed lacking in the UPC framework. (This is what has happened for example to national provisions for patentability under the EPC - the black letter law is the same in all EP countries, but national courts don't always interpret them the same way, although increasingly they have tended to).

    Article 5(3) of the Unitary Patent regulation refers to the applicable law of infringement being "the law applied to European patents with unitary effect in the participating Member State whose national law is applicable to the European patent with unitary effect" - not the UPCA as such: it is the UPCA as implemented into national law (again, however any country may do that). Every member state is therefore, as far as I can see, obliged to create such a law. I still fail to see how this cannot be done without a harmonising effect.

    But we shall see...

    Best wishes

    Darren

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  12. Art. 5(3) UPR reads: "... by the law [1] applied to European patents with
    unitary effect in the participating Member State whose national
    law is applicable to the European patent with unitary effect as
    an object of property in accordance with Article 7." Note that the reference to "law" at [1] is not necessarily to national law (or, a national statute), it may as well be the UPCA itself. For the Netherlands, I am not aware of any public draft of the envisaged national ratification law or amendments to the Dutch Patent Act.

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  13. So there are diverging views between different experts as to which laws will apply.

    Whilst I am inclined to agree with Darren that UPs ought to bring in complete harmonisation of the laws on infringement, I very much doubt that many (if any) national governments agree. Indeed, based upon the views expressed by the UPC Preparatory Committee, you can expect that they will disagree.

    That is a shame, as only complete harmonisation avoids the ridiculous situations in which, for example:
    - the applicable law on infringement for non-unitary EPs will depend upon the opt-out status (i.e. something that can change at any time); and
    - obtaining a freedom-to-operate opinion in one country might, where there are multiple EP patents held by multiple owners (having principal places of business in various different Member States), require consideration of the provisions of the national laws of up to 20 or more countries!

    If this will indeed be the case, it will be very interesting to see how, in future, this issue is dealt with in the qualifying examinations for patent attorneys in Europe!

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  14. > the opt-out status

    Maybe some of the readers could help me with two questions with respect to "the opt-out status".

    Is my understanding correct that the opt-out status is regulated by the Rules of Procedure? And, in principle, the opt-out rules can be changed independently from the revision of the UPC Agreement?

    Would it be possible for a defendant (alleged infringer) to opt-out?

    ReplyDelete

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