Fordham 27 (Report 2): IP - Past, Present & Future

The second session to take the stage was a huge panel on "IP - Past Present & Future" chaired by Hugh Hansen, but the AmeriKat focuses on the presentations given by the main speakers below.

Ralph Oman (The George Washington University Law School) trotted through the history of copyright from the US Constitution (where the Framers wanted to emphasize the public good being the objective of copyright, not the welfare of authors; James Madison said those two concepts were not at war with each other) to today.  He noted that copyright protection was initially limited, but then the protected works expanded to align more with the works protected in European countries. He set out the legislative measures which Congress adopted to provide benefits for business, i.e. safe harbors, compulsory licences (albeit the companies that initially benefited, are now mature so its harder to justify the licences) and term extensions. He said that Google really has a chance to shape the contours of copyright in the years ahead, not just in the US but across the world.  Hugh considered that the Framers were only interested in two substantive issues - bankruptcy and copyright and patents (it says "secure", not "create", so they recognized the existence of IP already).  He said that the first statute actually contracted the public domain which indicated that the original legislative view was actually "pro-copyright".  What changed was the digital revolution, where people want access for nothing (and quickly).

Etienne Sanz de Acedo (International Trademark Association (INTA), New York) outlined the trends in trade mark.  He said that IP is in good shape.  The demand for IP is rising on the basis on the applications made for trade marks, designs and patents (data from the WTO).  The filings come mainly from Asia (65%) and the majority from the major offices - EPO, US and Japan.  The value of a business is its IP - 87% of the value is in IP.  By 2030, 30% of the global workforce will be on temporary contracts or on projects - so that know-how will be moving from one company to another. That will have an impact on IP.  Consumer behavior is also changing - with most shopping now conducted online.  Etienne queried whether the rise in IP rights is actually a good thing.  Do more patents really reflect innovation and do they actually provide aggregate value to society?  Etienne said that the first challenge to face for brand owners is the enforcement of trade marks, particularly with counterfeiting online (citing this week's story about the counterfeits advertising on Instagram).  He also said that we have moved from plain packaging to something scarier - brand restriction.  We started with tobacco on plain packaging and are now moving to sugary drinks and snacks.  You now cannot use Tony the Tiger on Kellogs cereal in Chile.  Heineken's reds stars are not on the packaging in Hungary because it reminds people of communism.  Etienne said that there was also a risk of depletion of the registry, as a result of too many trade marks in the registries, as well as congestion. 

Donald R. Dunner (Finnegan, Henderson, Farabow, Garrett & Dunner LLP) spoke on "Patent Eligibility: Coping with Alice, Mayo, Myriad, Bilski, et al." - i.e. the Section 101 debate.  For years and years, the Supreme Court paid no attention to the Federal Circuit and then in 2001, the Supreme Court became really interested in the Federal Circuit and more recently on Section 101.  The Supreme Court imposed a special test on eligibility - if the patent claims involved a law of nature, natural phenomena or abstract idea - you need a special test to distinguish those ineligible inventions from patent eligible inventions.  Was the claim directed to a patent eligible concept?  If not, did the claim call for something more than that concept, namely did it have an inventive concept added on it?  The Federal Circuit really did not know how to apply that test.  What is an abstract idea and when do you have a law of nature involved (since almost every invention has some law of nature)?!  The Federal Circuit admitted that it didn't understand this test and publicly bemoaned the fact that they had to find pioneering patents ineligible (e.g. in Ariosa).  So the Federal Circuit, Don explained, have been looking for ways to weave around the Supreme Court in several cases.  The USPTO has set forth Guidelines for examiners to apply rules stemming from the Supreme Court's decisions - which are difficult to apply - and there is current bipartisan activity in Congress to come up with a legislative fix. They are still working on the legislative fix.  Don reported that the current thinking is that the Supreme Court's aggregation of patent eligibility and patentability will basically be overruled. Don said he is optimistic that something could happen this year.

Nicholas Banasevic (DG Competition, European Commission) then turned to "The Interaction Between Competition Law and Standardization".  Sometimes, Nicholas commented, it is said that there is a conflict between IP and competition law.  But that is a misconception; we have the same goals.  The goal is to increase competition and thus, innovation, for the benefit of consumers.  Nicholas emphasized that DG Comps' interventions in the IP sphere are rare - 2 or 3 cases in their 60 year history, particularly because we have a high exceptional circumstances test.  Standardization facilitates innovation.  Nicholas declared that his core point was that in the SEP and standards context, there is an inherent competition angle.  But why is that?  He explained that it was because in a standard setting context, a technical body consisting of primarily competitors have to agree on technical norms.  They choose to include one technological solution in the standard over another and, in his words "exclude other technology".  He said that, as competition lawyers, we normally frown on the exclusion, but we recognize the benefit of standards.  With this competition context, there is risk of a dominant position.  Thus, we have conditions to encourage transparency.  If you have a patent that protects the technology that is adopted in the standard, then, as a quid pro quo, you  commit to licence it on RAND terms.  This operates to constrain the ex post exercise of extracting higher licensing rates after adoption in the standard, than the patent owner would have been able to do before the the adoption in the standard. That commitment to licence on RAND is very central to competition framework. It allows for fair remuneration.  Nicholas also set out the position in respect of injunctive relief following the Huawei v ZTE framework.  Where an injunction is brought by an SEP owner who is in a dominant position (to be proved on the facts) where they have given a commitment to licence on RAND and where there is a willing licensee, then an injunction based on an SEP is an abuse of a dominant position.  That is common sense, Nicholas said, as its a corollary of a commitment.  He reiterated from DG Comp's perspective, it is not just a contract law issue but a competition law issue given the context standardization creates.  He also stated that he considered the framework to be a balanced approach and is effectively being applied in national courts. Daryl Lim (the John Marshall Law School) considered that SEP debate is really drawn towards the what it means to have an IP right. He said that with a global business, where you have one Court deciding FRAND  (what is FRAND), you run into issues of comity.  These are questions that are global in nature and there needs to be a cross-industry, international  dialogue.  Daryl also emphasized the importance of China in being involved in the dialogue.