18 July 2016

Injunctions against ISPs: The Cartier Appeal

Cartier Watch
Author Noop1958
Creative Commons Licence
Source Wikipedia


Cartier International AG and Others v British Sky Broadcasting Ltd and Others [2016] EWCA Civ 658 (6 July 2016) 


In  Cartier International AG and Others v British Sky Broadcasting Ltd and Others [2015] ETMR 1, [2015] 1 All ER 949, [2014] EWHC 3354 (Ch), [2015] RPC 7, [2014] WLR(D) 464, [2015] 1 All ER (Comm) 641, [2015] BUS LR 298, [2015] EMLR 10 Mr Justice Arnold ordered the five leading internet service providers to block access to certain websites that offered counterfeit Cartier goods for sale under s.37 (1) of the Senior Courts Act 1981. I discussed the case in Injunctions against ISPs Part VIII: Cartier International AG and Others v British Sky Broadcasting Ltd and Others 6 Jan 2015. This was not the first time a court had ordered an ISP to block access to a website that infringed a claimant's intellectual property rights.  A number of earlier cases had already been brought under s.97A of the Copyright, Designs and Patents Act 1988. The significance of this case is that it had been brought under s.37 (1) because there is no equivalent to s.97A in the Trade Marks Act 1994 or any of the other IP statute.

In my case note I observed:
"None of the orders made by Mr Justice Arnold or other judges in the earlier cases has ever been appealed successfully and it is unlikely that anyone will appeal or apply to vary this order."
Contrary to my expectations the ISPs did appeal. Their appeal came on before Lords Justices Jackson, Kitchin and Bruggs in Cartier International AG and Others v British Sky Broadcasting Ltd and Others [2016] EWCA Civ 658 (6 July 2016).  The appeal was unsuccessful. All three Lord Justices found against the ISPs though Lord Justice Briggs would have ordered the rights holders to bear the costs of "obtaining valuable injunctive relief for the better exploitation of its intellectual property."

The ISPs' grounds of appeal were summarized by Lord Justice Kitchin at paragraph [7] of his judgment:
"They contend, in broad outline, that they are wholly innocent parties and are not alleged to be wrongdoers; that the court had no jurisdiction to make any such order; that if the court did have jurisdiction, the jurisdictional threshold requirements were not satisfied in the circumstances of these cases; that the judge failed properly to identify the correct principles that should be applied in deciding whether or not to make an order; that the orders made were disproportionate having regard to the evidence before the court; and that the judge fell into error in making the orders that he did in relation to costs."
The Open Rights Group also made written submissions on the position of third parties who are potentially affected by website blocking orders which Lord Justice Kitchin said he found very helpful.

As to jurisdiction, the ISPs argued that they were entirely innocent of any wrongdoing, they do not owe  any duty to prevent trade mark infringement committed by third parties, including those who operate websites offering counterfeit goods for sale, either under the Trade Marks Act 1994 or at common law, that s.37 (1) gave the courts no power to grant injunctions where none existed before the Act was passed, that it is a fundamental feature of the court's practice that it is not generally possible to obtain injunctive relief against a party without a substantive cause of action against it and that the Norwich Pharmacal exception should not be extended.  The Court of Appeal accepted that the ISPs were not guilty of any wrongdoing and that they did not owe a common law duty of care to take reasonable care to ensure that their services are not used by the operators of the offending websites but rejected the rest of their argument.

All three Lord Justices agreed that Mr Justice Arnold had been right to hold that he had power to grant blocking orders under s.37 (1).  That power arose upon a proper construction of the statute even without reference to art art 11 of the Enforcement Directive (Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (L195/16 2.6.2004)) but art 11 reinforced the position in national law. That article requires EU member states to ensure inter alia that:
"rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive 2001/29/EC."
The scope of that provision had been referred to the Court of Justice of the European Union in Case C-324/09 L'Oreal SA and Others v eBay International AG and Others [2012] Bus LR 1369, [2011] RPC 27, [2011] ETMR 52, [2012] All ER (EC) 501, ECLI:EU:C:2011:474, [2011] ECR I-6011, [2012] EMLR 6, [2011] EUECJ C-324/09, EU:C:2011:474. The CJEU held that:
 "art.11 of Directive 2004/48 must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade."
Accordingly Lord Justice Kitchin concluded at para [65] of his judgment:
"It seems to me to be clear from this guidance that Article 11 does indeed provide a principled basis for extending the practice of the court in relation to the grant of injunctions to encompass, where appropriate, the services of an intermediary, such as one of the ISPs, which have been used by a third party to infringe a registered trade mark. There is no dispute that the ISPs are intermediaries within the meaning of Article 11 and accordingly, subject to the threshold conditions to which I shall shortly come, I believe that this court must now recognise pursuant to general equitable principles that this is one of those new categories of case in which the court may grant an injunction when it is satisfied that it is just and convenient to do so."
Having decided that the court did have jurisdiction to make the orders appealed against, the Lord Justices considered whether Mr Justice Arnold had exercised his jurisdiction correctly.

The first objection was that the orders limited the ISPs freedom to conduct their business under art 16 of the Charter of Fundamental Rights of the European Union and their customers' freedom of expression under art 11. Art 52 (1) of the Charter provides:
"Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others."
The ISPs had argued that the limitations were not provided for by law and that Mr Justice Arnold's orders allowed the claimants to require the ISPs to extend the scope of those orders without reference to the court. The argument that the limitations were not provided for by law fell with the Court's decision on jurisdiction. As for the second, Lord Justice Kitchin said at [78]:
"I accept that the orders were likely to have the effect of blocking access to the websites of third parties. But this was a matter of which the judge was acutely conscious and his orders were carefully framed to deal with it. Specifically, the orders provide that where a server hosting a target website also hosts another website, then an ISP which is required to adopt IP address blocking measures is only required to block the target website's IP address where Richemont or its agents certify that the third party site is engaged in unlawful activity and that, if the website has disclosed a means of contact, appropriate notice has been sent to the operator of that site informing it of, inter alia, the order, why it is appropriate for the website to be blocked and that it may move the website to a different server. In my judgment this is a regime which deals in an entirely proportionate and appropriate way with the necessary mechanics of making a blocking order effective without interfering with the legitimate interests of other operators. It does not involve any activity which is not provided for by law."
 The Court of Appeal endorsed Mr Justice Arnold's finding that the following threshold conditions which must be satisfied before a website blocking order is made.
"First, the ISPs must be intermediaries within the meaning of the third sentence of Article 11. Secondly, either the users or the operators of the website must be infringing the claimant's trade marks. Thirdly, the users or the operators of the website must use the services of the ISPs. Fourthly, the ISPs must have actual knowledge of this."
The Court held that all four conditions had been satisfied.

It finally addressed the principles to be applied in considering whether to make a website blocking order which Mr Justice Arnold had listed as follows:

  • The relief must be necessary; 
  • It must be effective; 
  • It must be dissuasive; 
  • It must not be unnecessarily complicated or costly; 
  • It must avoid barriers to legitimate trade; 
  • It must be fair and equitable and strike a "fair balance" between the applicable fundamental rights; a
  • It must be proportionate;
  • It must have regard for the substitutability of other websites for the target websites; and 
  • Remedies should be applied in such a manner as to provide safeguards against their abuse.

The Court of Appeal endorsed all those principles, considered whether the judge below had applied them correctly and considered that he had.

Between paragraphs [23] and [31] of his judgment Lord Justice Kitchin set out the legislation that he had to apply which included the E-Commerce Directive (Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market L 178 , 17/07/2000 P. 1 - 16) as well as the Enforcement Directive and Charter which have been mentioned above. The Charter will fall away altogether and Parliament will cease to be bound by the Directives when the UK leaves the EU. It is therefore worth considering whether the decision will continue to be good law after our departure. In my view it probably will because the Senior Courts Act will not be affected by Brexit. Art 11 merely reinforced the Court's power under s.37 (1). Future cases will probably be decided purely on the balance of convenience with which the threshold conditions and applicable principles will be completely compatible. The absence of a European dimensions should simplify judicial decision making as it will no longer be necessary to refer to the Charter or underlying directives.

If anyone wishes to discuss this article or applications against ISPs generally, he or she should call me on 0202 7404 5252 during office hours or send me a message through my contact form.

    07 July 2016

    The Trade Secrets Directive











    The adoption by the Council and European Parliament of Directive (EU) 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ 15.6.2016 L 157/1) ("the Trade Secrets Directive") seems to have been overlooked in the furore over Brexit. The directive lays down rules on the protection against the unlawful acquisition, use and disclosure of trade secrets and is due to be implemented by 9 June 2018. As the negotiation of a withdrawal agreement is likely to take some time and our incoming prime minister seems to be in no hurry to begin such negotiations there is every chance that the UK will still be in the EU by that date.

    Even though we are on the way out of the EU I hope we implement the Trade Secrets Directive for two reasons. The first is that it is an opportunity to codify our trade secrets law. Something that has already been done in the USA where 47 states and several territories have enacted the Uniform Trade Secrets Act, Canada where the Uniform Law Conference of Canada has drafted its own Uniform Trade Secrets Act and the Dubai International Financial Centre (see my article DIFC Law of Confidence 27 Jan 2011 NIPC Gulf). The second is that it will bring our law closer to those of our neighbours which should at least remove one objection to continued commercial and academic collaboration between British and continental researchers that already shows signs of weakening (see Ian Sample UK scientists dropped from EU projects because of post-Brexit funding fears 12 July 2916 The Guardian).

    The need for harmonization of trade secrets law is summarized in para (8) of the recitals to the directive:
    "The differences in the legal protection of trade secrets provided for by the Member States imply that trade secrets do not enjoy an equivalent level of protection throughout the Union, thus leading to fragmentation of the internal market in this area and a weakening of the overall deterrent effect of the relevant rules. The internal market is affected in so far as such differences lower the incentives for businesses to undertake innovation-related cross-border economic activity, including research cooperation or production cooperation with partners, outsourcing or investment in other Member States, which depends on the use of information that enjoys protection as trade secrets. Cross-border network research and development, as well as innovation-related activities, including related production and subsequent cross-border trade, are rendered less attractive and more difficult within the Union, thus also resulting in Union-wide innovation-related inefficiencies."

    The basic obligation is for member states is to ensure that those who lawfully control trade secrets ("trade secret holders") can obtain redress for any unlawful acquisition, use or disclosure of their trade secrets (see art 4 (1) of the directive).  Art 2 (1) defines a trade secret as information that meets the following three conditions:

    • First, he information is secret in the sense that it is not generally known among or readily accessible to persons who normally deal with the kind of information in question.
    • Secondly, the information has commercial value because it is secret.
    • Thirdly, the trade secret holder takes reasonable steps to keep the information secret.

    "Unlawful use or disclosure" is defined by art 4 (3) of the directive as use or disclosure of a trade secret carried out, without the consent of the trade secret holder, by a person who is found to meet any of the following conditions:

    • he or she acquired the trade secret unlawfully;
    • he or she was in breach of a confidentiality agreement or any other duty not to disclose the trade secret; or 
    • he or she was in breach of a contractual or any other duty to limit the use of the trade secret.
    For these purposes art 4 (2) defines "unlawful acquisition" as

    "acquisition of a trade secret without the consent of the trade secret holder ...... whenever carried out by:
    (a) unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced;
    (b) any other conduct which, under the circumstances, is considered contrary to honest commercial practices."
    Art 4 (4) adds that the acquisition, use or disclosure of a trade secret should also be considered unlawful whenever a person, at the time of the acquisition, use or disclosure, knew or ought, under the circumstances, to have known, that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully within the meaning of art 4 (3). Art 4 (5) provides that the production, offering or placing on the market of goods, or the importation, export or storage of infringing goods for those purposes, shall also be considered an unlawful use of a trade secret where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was being used unlawfully within the meaning of art 4 (3). "Infringing goods" are defined by art 2 (4) as "goods, the design, characteristics, functioning, production process or marketing of which significantly benefits from trade secrets unlawfully acquired, used or disclosed."

    Art 6 (1) of the Trade Secrets Directive requires member states to provide for the measures, procedures and remedies necessary to ensure the availability of civil redress against the unlawful acquisition, use and disclosure of trade secrets. Such measures, procedures and remedies must be be fair and equitable, not unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays and be effective and dissuasive. They may include final and interim injunctions, damages and orders for delivery up. Art 14 requires damages for the unlawful acquisition, use or disclosure of a trade secret to be assessed in very much the same way as in  art 13 of the enforcement directive (Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004on the enforcement of intellectual property rights (OJ L195/16 2.6.2004)):
    "1. Member States shall ensure that the competent judicial authorities, upon the request of the injured party, order an infringer who knew or ought to have known that he, she or it was engaging in unlawful acquisition, use or disclosure of a trade secret, to pay the trade secret holder damages appropriate to the actual prejudice suffered as a result of the unlawful acquisition, use or disclosure of the trade secret.
    Member States may limit the liability for damages of employees towards their employers for the unlawful acquisition, use or disclosure of a trade secret of the employer where they act without intent.
    2. When setting the damages referred to in paragraph 1, the competent judicial authorities shall take into account all appropriate factors, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the trade secret holder by the unlawful acquisition, use or disclosure of the trade secret.
    Alternatively, the competent judicial authorities may, in appropriate cases, set the damages as a lump sum on the basis of elements such as, at a minimum, the amount of royalties or fees which would have been due had the infringer requested authorisation to use the trade secret in question."

    Although it is no doubt abundantly clear from the context ,"infringer" is defined by art 2 (3) as "any natural or legal person who has unlawfully acquired, used or disclosed a trade secret."

    No action can lie against anyone acquiring, using or disclosing a trade secret lawfully. Art 3 (2) provides that the acquisition, use or disclosure of a trade secret shall be considered lawful to the extent that such acquisition, use or disclosure is required or allowed by EU or national law. Art 3 (1) adds that
    "the acquisition of a trade secret shall be considered lawful when the trade secret is obtained by any of the following means:
    (a) independent discovery or creation;
    (b) observation, study, disassembly or testing of a product or object that has been made available to the public or that is lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret;
    (c) exercise of the right of workers or workers' representatives to information and consultation in accordance with Union law and national laws and practices;
    (d) any other practice which, under the circumstances, is in conformity with honest commercial practices."
    It will also be a defence under art 5 where the alleged acquisition, use or disclosure of the trade secret was carried out in any of the following cases:
    (a) for exercising the right to freedom of expression and information as set out in the Charter of Fundamental Rights and Freedoms of the EU (OJ 18.12.2000 C354/1) including respect for the freedom and pluralism of the media;
    (b) for revealing misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest;
    (c) disclosure by workers to their representatives as part of the legitimate exercise by those representatives of their functions in accordance with Union or national law, provided that such disclosure was necessary for that exercise;
    (d) for the purpose of protecting a legitimate interest recognised by EU or national law.

    Member states are required by art 8 (1) to lay down rules on the limitation periods applicable to substantive claims and actions for the application of the measures, procedures and remedies provided for in this directive.  Such limitation period may not exceed 6 years.

    Our trade secrecy law is governed by the law of confidence. Its basic principles were summarized by Mr Justice Megarry in Coco v AN Clark (Engineers) Ltd. [1968] F.S.R. 415 [1969] R.P.C. 41:
    "In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene, M.R. in the Saltman case on page 215, must “have the necessary quality of confidence about it”. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

    It was the opinion of the European Scrutiny Committee that "the protection of trade secrets under the UK's common and contract law is consistent with the terms of the proposed draft Directive" (see Documents considered by the Committee on 12 February 2014 - European Scrutiny Committee Protection of trade secrets).

    Should anyone wish to discuss this article, the directive or trade secrets law in general, he or she should call me on 020 7404 5252 during office hours or use my contact form. I shall be discussing this directive in more detail at seminars on IP and Brexit which will take place in Liverpool on 14 Sept 2016 and London 15 Sept 2016.

    03 July 2016

    What Sort of IP Framework do we need after Brexit and what are we likely to get?

    The UK and the remaining Member States of the EU
    Source Wikipedia


























    There was a bad reason for voting to leave the European Union and a good one. The bad reason, which was probably the one for which most leavers voted, was that art 45 of the Treaty of the Functioning of the European Union stimulated competition in the labour market. The good reason, of which I was and remain highly sceptical but which I hope turns out to be right, is that Union law imposed a break on British enterprise and that its disappearance once art 50 (3) of the Treaty on European Union takes effect will stimulate business. I premise this article in the hope that our people and politicians genuinely seek economic expansion.

    Introduction to IP

    Intellectual property ("IP") is the collective name for the bundle of rights that protect investment in intellectual assets ("IA"), that is to say branding, design, technology and works or art and literature which nowadays include such things as broadcasts, computer programs, films, sound recordings and arrangements of data. IP protects such investment by conferring monopolies, such as patents and rights in registered designs, or rights to prevent certain acts, such as copying, on the person who created the IA (the inventor, author, designer or entrepreneur) or who derived title from that person. Violation of the monopoly or other right is known as an infringement.  Although some infringements  are criminal offences, primary responsibility for their enforcement lies with the rights holder. He or she enforces his or her rights through proceedings in the civil courts. Litigation is expensive particularly in common law countries such as England and the United States. In Commonwealth common law countries such as England it is also risky because the losing party has to contribute towards the successful party's costs. The risk and cost of enforcement in the UK is widely believed to be a reason why the UK regularly trails not just Germany and France in the number of European patent applications but also the Netherlands and Switzerland with one third and one eighth of our population respectively (see Jane Lambert Why IP Yorkshire 10 Sept 2008 IP Yorkshire).

    IP Treaties

    Since the formation of the World Trade Organization ("WTO") on 1 Jan 1995, countries seeking preferential access to the world's richest markets have been required to grant minimum IP protection for IA in their territories in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS").  Long before then, however. the world's leading economies recognized the need to protect the IP rights ("IPR") of each other's nationals and entered a series of treaties to protect brands, designs and technology known as the Paris Convention for the Protection of Industrial Property of 20 March 1883 ("Paris Convention"), literary and artistic works known as the Berne Convention for the Protection of Literary and Artistic Works of 9 Sept 1886 ("Berne Convention") and broadcasts, performances and sound recordings known as the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations of 26 Oct 1961 ("Rome Convention"). These treaties have been supplemented by a number of other international agreements including some such as the European Patent Convention ("EPC") which apply only to specific regions of the world.  States such as the UK that are party to such conventions are obliged to bring their national laws into conformity with those treaties and other international agreements.

    EU Legislation

    As most IPR are granted by national governments differences in national IP laws can constitute non-tariff barriers to trade.  The member states and Parliament have addressed that difficulty in two ways. First, by harmonizing national IP laws by a series of directives and, secondly, by providing for new EU wide IPR by the European Trade Mark Regulation (Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark), Community Design Regulation (Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ EC No L 3 of 5.1.2002, p. 1)) and the Community Plant Variety Regulation (Council Regulation (EC) NO 2100/94 of 27 July 1994 on Community plant variety rights Official journal NO. L 227 , 01/09/1994 P. 1 - 30)). Each of those Regulations confers EU wide jurisdiction on designated courts in each of the EU member states so that a final judgment on say a Community design in one country applies throughout the whole EU (see for example Samsung Electronics (UK) Ltd v Apple Inc [2012] EWCA Civ 1339 (18 Oct 2012) [2013] FSR 9, [2013] FSR 9, [2013] ECDR 2, [2012] [2013] EMLR 10). This has greatly reduced the cost and difficulty of enforcing EU wide IP rights.

    European Patent

    The one area of IP law that has never been harmonized has been patents even though attempts  to establish one have been made since 1975. However, all the EU member states as well as several states outside the EU are members of the EPC which establishes a European Patent Office ("EPO") to grant patents (known as European patents) for each of its contracting parties on behalf of the contracting governments as an alternative to patents granted by national patent offices,

    Unitary Patent

    On 19 Feb 2013, an agreement was signed by most of the member states of the EU including the UK to establish a Unified Patent Court ("UPC") (a section of the central division  of which was to sit in London) to determine disputes over European patents including those to be granted for the territories of several EU member states including France, Germany and the UK to be known as unitary patents. HM government has long pressed for a pan-European patent court either within the framework of the EU or the EPC. Parliament has actually authorized the Secretary of State to ratify the UPC agreement by s.17 of the Intellectual Property Act 2014.

    The British IP Framework

    The British IP framework is a patchwork of law, most statutory but some, such as the obligation of confidence and the right to bring an action for passing off, are derived from common or judge made law. The main statutes are The Patents Act 1977, The Copyright, Designs and Patents Act 1988 ("the CDPA")The Trade Marks Act 1994 ("the TMA") and The Registered Designs Act 1949 ("the RDA"). The TMA was enacted to give effect to the predecessor of the current Trade Marks Directive (Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (OJ L 299, 8.11.2008, p. 25–33) and the CDPA and the RDA have been amended substantially by other EU directives. The EU trade mark, Community design and Community plant variety rights apply as much in the UK as everywhere else in the EU. All our laws have to comply with the relevant IP treaties and our Patents Act 1977 with the EPC.

    Is the Present Framework Right for the UK?

    I would not be so Panglossian as to say that such framework is the best of all possible worlds but I would agree with the Minister for Intellectual Property and TaylorWessing that it is pretty good. In a speech on National and International-level concerns and developments regarding the IP landscape that she gave to the British group of the Union of European Practitioners in Intellectual Property on 29 June 2016 Baroness Neville-Rolfe said:
    "I was delighted to read the latest Taylor Wessing’s Global Intellectual Property Index (GIPI5), in which the UK came out well. On patents we are ranked first in the world. The overall result - third - was a good one - but as sportsmen always rightly say you are only as good as your last performance. We will do our best to maintain our strong position."
    I am not sure how TaylorWessing came to their assessment but on the assumption that businesses need clarity in the definition and determination of their rights, comprehensive protection for their IA and effective enforcement of their rights at a reasonable cost I think they are probably right.

    What we need after Brexit

    The rest of the EU may be growing less strongly than some other parts of the world but it is still a market of several hundred million of the world's most affluent consumers and we shall wish to continue trading with, and investing in, it. It is therefore in our interests to disrupt our relations with the remaining member states as little as possible.

    The most pressing issue is the unitary patent. Even though it would cease to apply to the UK after it leaves the EU, a single patent that covers France, Germany and many of the remaining EU states with a single court for the resolution of disputes over such patents would still be attractive to businesses around the world including many in this country. It is not therefore in our national interests to block it. The statutory instrument to implement s.17 of the Intellectual Property Act 2014 has been drafted and partially debated. There is no reason why we should not ratify the UPC agreement and allow our businesses to benefit from it in the two or more years that remain before art 50 takes effect.

    We should also legislate to convert the EU trade mark and registered Community designs into national trade marks and registered designs. In the case of registered Community designs the commencement of the protection should be backdated to the date upon which an application for a registered Community design was filed with the EU Intellectual Property Office ("EUIPO"). In the case of applications to invalidate the registration of such rights novelty and individual character should be considered from the date of the application to the EUIPO.

    As President Battistelli said in his statement on the referendum of 24 June 2016 "the outcome of the referendum has no consequence on the membership of the UK to the European Patent Organisation, nor on the effect of the European Patents in the UK." I see no reason to repeal or amend substantially any part of the Patents Act 1977 or indeed any of the other IP statutes. I would hope that UK enters an arrangement with the rest of the EU similar to the Lugano Convention to ensure continuity in jurisdiction and enforcement of judgments in civil and commercial matters. Although the continental approach to statutory construction is different from ours I would hope that judgments of the Court of Justice of the European Union and indeed the EFTA Court the to have high persuasive authority.

    Looking beyond Europe I would hope that HMG would supports efforts at patent harmonization with regard to our main trading partners in North America and East Asia. There is no reason why we should not ratify the Hague Agreement on industrial designs. We should seek to improve the functioning of the Patent Co-operation Treaty and Madrid Agreement.  We should play an active part in the WTO and other international IP forums to promote out interests.

    What we are likely to get

    In her speech to the Union of European Practitioners in Intellectual Property which I mentioned above Lady Neville-Rolf said:
    "You can continue to expect outstanding, professionally delivered rights granting services including design rights; and copyright owners can expect that the framework will support creativity. The UK will continue to be envied around the world for the quality of its enforcement environment. We will continue to lead in international IP discussions. We will continue our work to build an environment that allows innovative and creative businesses across the UK to develop their ideas and exploit them effectively."
    Fine words indeed if those promises can be delivered. Unfortunately, the Minister could not give her audience any comfort on the unitary patent or UPC. These developments are in danger of stalling the longer if they are allowed to drift.

    Conclusion

    Brexit was probably a grave disservice to British business but it need not be the end of the world. South Korea with an even smaller population, land area and GDP than ours shows that it is possible for a small country to flourish outside an economic blocs by relying upon the creativity and inventiveness of its people. The next few years will be very uncomfortable for everyone in these islands but if we get our IP framework right we can recover

    Further Reading

    Jane Lambert
    14 July 2016
    IP North West
    10 July 2016
    4-5 IP and Tech
    5 July 2016
    NIPC Inventors’ Club

    31 May 2016

    Sometimes a Euro-Defence does work: Samsung v Ericsson

    European Commission
    Author: Amio Cajander
    Source Wikipedia
    Creative Commons Licence






















    A Euro-defence is an answer to a claim for the infringement of an intellectual property or other right under national law based on the primacy of European Union law. In the early days of our membership of what used to be called the European Economic Community such defences were pleaded quite regularly and they often succeeded. Probably the high water mark was Magill  (Radio Telefis Eireann and Others v Commission of the European Communities [1995] 4 CMLR 718, [1995] EUECJ C-241/91P, [1995] EMLR 337, [1995] All ER (EC) 416, [1995] ECR I-743, [1995] FSR 530, [1998] Masons CLR Rep 58) where the Court of Justice held that the enforcement of broadcasters' copyrights constituted an abuse of a dominant position within the meaning of art 86 of the Treaty of Rome (now art 101 of the Treaty on the Functioning of the European Union as it has now become).

    Such defences are now raised much less frequently partly because judges are astute to them but mainly because of harmonization of national intellectual property law and the development of the doctrine of exhaustion of rights. Nevertheless, the principle that Union law prevails over national law has never disappeared. The decision of the Court of Appeal in Samsung Electronics Co Ltd and Another v Telefonaktiebolaget LM Ericsson and Others [2016] EWCA Civ 489 allowing Samsung Electronic Co. Ltd and its UK subsidiary''s appeal against the striking out of its competition law defence by Mr Justice Birss in Unwired Planet International Ltd v Huawei Technologies Co Ltd and Others [2015] EWHC 2097 (Pat) (21 July 2015) is a reminder that a Euro-defence can still succeed.

    The point arose in a patent infringement claim by Unwired Planet International Ltd. against members of the Huawei, Samsung and Google groups of companies. Unwired had obtained all but one of the patents upon which it relied from Telefonaktiebolaget LM Ericsson. Ericsson had worked with the European Telecommunications Standards Institute ("ETSI") to set a standard known as SEP. It was alleged that anyone using the SEP standard would inevitably fall within one or more of those patents. As a condition for incorporating the patents into the SEP, Ericsson promised ETSI to grant licences to third parties on fair, reasonable and non-discriminatory ("FRAND") terms. Samsung argued that Ericsson had not complied with that condition and thus the agreement to assign of the patents to Unwired ("the MSA" or "master sale agreement") was void under European and English competition law.

    Mr Justice Birss summarized the issue thus at para [6] of his judgment:
    "Ericsson participated in the standard setting process in Europe involving ETSI. Ericsson therefore declared its SEPs to ETSI as essential under the ETSI IPR policy and gave a FRAND undertaking. The breaches of Art. 101 TFEU which fall to be considered on this application relate to the MSA whereby Ericsson transferred the patents to Unwired Planet. I will return to them below. On the basis of the breaches of Art 101, the transfer of the patents is said to be void and so Unwired Planet has no title to sue. Samsung has a patent licence from Ericsson which was entered into in 2014. Samsung contends that since the patents which came from Ericsson in fact still belong to Ericsson, they are covered by the 2014 licence. The proceedings include a counterclaim by Samsung for an indemnity under the 2014 licence to cover any sums due to Unwired Planet. Samsung also alleges that the patents are still under Ericsson's control even if not owned by it (the "control defence"). By that alternative route Samsung contends the patents are licensed under the 2014 licence, alternatively that Ericsson has a duty to procure a licence, even if they are owned by Unwired Planet."
    The breaches of competition law were pleaded as follows:
    "First, that in transferring patents to Unwired Planet, there was a failure to ensure the complete, proper and effective transfer of an enforceable FRAND obligation. Second, that by dividing Ericsson's patent portfolio into two parts (Ericsson retains patents itself and transferred some to Unwired Planet) in the way that it did a breach of competition law has taken place in that unfair higher royalties will be earned and competition will be restricted or distorted. Third, that certain terms in the MSA are stand alone infringements of Art 101."
    As the parties to the MSA were Ericsson and Unwired Planet Inc. and Unwired Planet LLC, Samsung had to join them to the action as 11th and 9th and 10th parties respectively.

    Ericssson applied to strike out the claim against itself and Unwired  under CPR 3.4 or summary judgment under CPR Part 24. It argued that the first contention was hopeless because the MSA contained a clear obligation to offer FRAND terms and that Unwired had made a FRAND declaration to ETSI. His Lordship agreed at para [24] of his judgment in respect of the first contention but refused to strike out the second and third.

    Samsung appealed against the striking out of its first contention. It accepted that the MSA contained a number of provisions which ensured that Unwired was subject to FRAND obligations but argued that the MSA failed fully to transfer the FRAND undertakings in two respects. First, it argued that the FRAND obligations in the MSA were not enforceable by third parties. Secondly, it argued that he MSA did not fully transfer Ericsson's FRAND obligation.

    The Court of Appeal rejected the argument that the FRAND obligations of the MSA were unenforceable in paragraphs [36] and [37] of Lord Justice Kitchin's judgment:
    "[36] ....... Ericsson submits and I agree that Samsung's position on this issue is entirely artificial. Not only has UP made a FRAND declaration to ETSI in the same terms as that of Ericsson but it has also pleaded in these proceedings that the declaration is enforceable by Samsung and by any other potential licensee. The only party in these proceedings disputing that it can enforce UP's FRAND declaration is Samsung itself.
    [37] Drawing the threads together, it can be seen that ETSI has addressed the competition concerns which arise from the transfer of SEPs from one company to another by requiring the transferor to include in the relevant transfer documents appropriate provisions to ensure that the FRAND undertaking of the transferor is binding upon the transferee......"
     The Court then considered Samsung' s second argument at para [45]:
    "Samsung contends the judge has here fallen into error for his reasoning fails to take into account that Ericsson's and UP's position robs FRAND of much of its substantive content. It points out, entirely correctly, that if the original owner of a SEP licenses it to a first licensee then it must adopt non-discriminatory terms when licensing it to a second licensee, for otherwise competition between the licensees is likely to be distorted. Its argument then proceeds as follows. Suppose that the original owner now transfers the SEP to a new owner. When dealing with a third licensee, the new owner must also adopt non-discriminatory terms, judged by reference to the terms struck by the first owner, for otherwise competition between the third licensee and the first and second licensees is again liable to be distorted. Furthermore, if the second owner does not need to take into account the first owner's licensing conduct, SEP owners could contract out of the non-discriminatory part of FRAND by transferring their SEPs to new corporate entity shells, not bound by their original FRAND undertakings."
    Ericsson tried to answer that argument with the following illustration:
    "Consider a business that acquires a portfolio of SEPs from a number of different sources over a period of years and gives a FRAND declaration to ETSI in respect of them all. When that business comes to negotiate terms for a licence to that entire SEP portfolio, it cannot possibly ensure that the terms which it offers are the same as or are no more onerous than the terms upon which the SEPs have been licensed by all of their different previous owners. It would present that business with an impossible task."
    Though he saw force in Ericsson's contentions Lord Justice Kitchin concluded at [50] that Mr Justice Birss had erred. He recognized that this is a developing area of law and it was arguable that in the circumstances of this case art 101 of the Treaty required the effective transfer to Unwired of Ericsson's FRAND obligation so that Unwired could not obtain more favourable terms from its licensees than Ericsson could itself have obtained. The learned Lord Justice also found "a degree of inter-relationship between this aspect of the first defence and the second and third defences" which Mr Justice Birss had allowed to go to trial.  In Lord Justice Kitchin's view it was "arguable that the matters complained of act together to allow Ericsson to circumvent its own FRAND obligations by increasing licence fees and weakening the competition between Ericsson and other users of its SEPs."

    The upshot was that it
    "was arguable that in breach of Article 101 TFEU the MSA agreements fell short of a full transfer of the non-discrimination aspect of Ericsson's FRAND obligation and that the anti-competitive nature of this breach renders the MSA agreements as a whole anti-competitive and void."
    Sir Timothy Lloyd and Lord Justice Tomlinson agreed and the Court allowed the appeal.

    Should anyone wish to discuss this case or patent or competition law in general, he or she should call me on 020 7404 5252 during office hours or send a message through my contact form.

    25 May 2016

    The IP (Unjustified Threats) Bill

    Minister for Intellectual Property
    Crown Copyright
    Open Government Licence























    On 19 May 2016 Lady Neville-Rolfe, the Minister for Intellectual Property, introduced the Intellectual Property (Unjustified Threats) Bill into the House of Lords. The purpose of the Bill is to reform the law relating to unjustified threats of IP infringement. The need for reform is illustrated by two comparatively recent cases:
    • Prince Plc v Prince Sports Group Inc. [1998] FSR 21 where the American lawyers of a well-known multinational sports goods supplier landed their client in High Court proceedings by demanding the transfer of a domain name by reference to their client's worldwide trade mark registrations in a letter before action that would have been quite unobjectionable in the United States; and 
    • Brain v Ingledew Brown Bennison and Garrett (No. 3)  [1997] FSR 51 where a firm of solicitors was sued for pre-action correspondence that would have been quite acceptable in almost any other cause of action.
    The reason why proceedings arose in both cases is that the Patents Act 1977, Registered Designs Act 1949, Copyright Designs and Patents Act 1988 and the Trade Marks Act 1994 create rights of action for those who are aggrieved by threats of infringement proceedings that turn out not to be justified. I discussed that legislation and the criticisms that have been made of it at some length in my case note on Global Flood Defence Systems Ltd and another v Van Den Noort Innovations BV and others [2015] EWHC 153 (IPEC) (29 Jan 2015) on 31 Jan 2015.

    As I mentioned in that case note, the Law Commission has considered whether such rights of action should be retained and has concluded in Patents, Trade Marks and Design Rights: Groundless Threats that they should although the law should be reformed. In a further report on whether to extend the right of action to threats to sue in the Unified Patent Court the Law Commission produced a draft bill.  Following further consultation the Minister has introduced this Bill. In their press release the Minister and Intellectual Property Office said that its key elements include:
    • "providing a clearer framework within which disputing parties and their professional advisers can operate to resolve disputes with a view to avoiding litigation
    • protecting retailers, suppliers and customers against unjustified threats
    • bringing the law for trade marks and designs into line with that for patents by allowing a rights holder to challenge someone who is a primary actor without fear of facing a groundless threats action
    • protecting professional advisers from facing personal legal action for making threats when they act for their clients
    • making the necessary changes to threats law so that the protection against unjustified threats can apply to European patents that will come within the jurisdiction of the Unified Patent Court."
    This Bill will follow a special procedure for Law Commission Bills.

    The Bill as introduced into the House of Lords consists of 9 clauses the first 6 of which relate to patents, trade marks and EU trade marks and registered, unregistered and Community designs. Clause 7 deals with geographic extent, clause 8 with commencement and clause 9 with short title and citation. The Bill amends the provisions creating threats actions in each of the above-mentioned statutes and the statutory instruments that extend the rights of action in respect of trade marks and registered designs to EU trade marks and registered Community designs.

    In the case of each statute the Bill would substitute several new sections for the single section  that creates a threats action at present.  Thus, a new s.70 and ss. 70A to 70F would replace the existing s.70 in the Patents Act 1977.  The new s.70 would create a new two stage test which is set out in the explanatory notes:
    "The first part, taken from the common law, is whether the communication would be understood by a reasonable person in the position of a recipient to mean that a right exists. The second part is whether the communication would be understood by such a person to mean that someone intends to bring infringement proceedings in respect of that right for an act done in the UK. This is also based on the current common law but has been modified so that the test can apply to European patents with unitary effect."
    If an action lies the remedies are set out in a new s. 70C (a).  The new s.70A (2) to (5) would create exceptions to the definition of "actionable threat" in s.70A (1). S.70B would permit certain communications between the patentee and third parties some of which would at present be actionable.  A new s.70D would exclude lawyers and patent and trade mark agents from liability provided that they act upon instructions and identify their clients.

    Clauses 2, 4 and 5 make similar changes to s.21 of the Trade Marks Act 1994, s.26 of the Registered Designs Act 1949 and s.253 of the Copyright, Designs and Patents Act 1988 respectively. Clause 3 makes consequential changes to The Community Trade Mark Regulations 2006. Clause 6 substitutes a new reg. 2  and regs. 2A to 2F for the existing reg. 2 of the Community Design Regulations 2005.

    Anyone wishing to discuss this Bill or threats actions in general should call me on 020 7404 5252 during normal office hours or send me a message through my contact form.

    30 April 2016

    Up the Spout: Bapco Closures v Selpac

    In Bapco Closures Research Ltd and Another v Selpac Europe Ltd [2016] EWHC 550 (IPEC) (18 March 2016), His Honour Judge Hacon had to decide a very short but very interesting point of claim construction.

    The patent in suit was European patent (UK) No 1, 656, 306 B1 which had been granted to Bapco Closures Research Ltd ("Bapco") for an opening device for a foil closure (that is to say, a ring pull). The invention is summarized in the following abstract:
    "Disclosed is an opening device for a foil closure can be fitted to a container body. The device comprises a spout (4) with a removable disc (10) attached to a pull-ring (12). The disc (10) is secured to the spout (4) by means of a frangible region (30). A foil (8) is sealed to a raised land (34) on a base of the disc (10). The pull ring is mounted to the disc (10) by means of legs so that it applies a force on a peninsula (50) of the disc, thereby reducing the length of the arc over which an initial pulling force is dissipated when the initial tear is being initiated reducing the force required to tear the foil (8) by up to 40%."
    The purpose of the invention was to address "the technical problem of minimising the effort needed to open a container closure. It is important to keep the force required to open containers to a minimum in order to reduce the risk of spillage during opening and to enable frail users to open the closure."

    Claim 1 of the patent claimed:
    "A closure (2) comprising:
    • a spout (4) defining an opening (6),
    • a removable plastics part (10) connected to the spout (4) by means of a frangible region (30),
    • a pulling device (12) connected to the removable part by means of a leg (14), and
    • means including a foil (8) creating a seal across the opening, between the removable part and the spout,
    characterised in that the leg (14) is mounted such that it applies a force on a peninsula (50) of the removable part to tear the sealing means (8)."
    Claim 14 claimed:
    "A closure (2) comprising a spout (4) defining an opening, a removable plastics part (10) connected to the spout (4) by means of a frangible region (30), a foil (8) attached to the plastics part (10) and the spout (4) to form a seal across the opening, characterised in that a device is mounted such on the spout (4) such that it applies a pushing force to a peninsula at the periphery of the removable part (10)."
    The defendant, Selpac Europe Ltd  ("Selpac") imported from Korea and distributed in the UK the opening device which is shown in the following diagrams. The first was marked up by Bapco:






















    The second was marked up by Selpac:


























    After referring to the Court of Appeal's decision in Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK Ltd  [2009] EWCA Civ 1062, [2010] RPC 8 and considering the prior art, the judge decided that a spout with a removable plastics part connected to the spout by means of a frangible region and a peninsular were essential features of both claims.

    At para [55] he asked first whether the Selpac device had a spout. Noting that Selpac's closure was essentially flat or at any rate less than 1 mm the judge found that a user operated the Selpac  device by pulling the ring pull in the centre. That tears the foil in the region marked "V-shaped slot defining peninsula". As the user continues to pull, the inner ring lifts up and continues to tear the foil. After the inner ring has been lifted all the way round then the combination of the ring pull, inner ring, and foil all lift off together leaving the outer ring. Defining a spout as "a pipe or similar conduit through which water or other similar liquid flows and is discharged" and noting that the height of the closure was negligible, Judge Hacon found at paragraph [56] that the Selpac product did not have a spout.

    As there was no spout it followed that the second feature could not be present.

    However, he decided that the Selpac device did have a peninsula:
    "I accept that the Defendant's products have a "pulling device" (the pull ring) and that this is connected to the "removable plastics part" (the inner ring) by means of a leg (the strip of plastic which links the two). The area indicated by the Claimants is not a protrusion, but it is at least a corner. Indeed it is not dissimilar to the third embodiment shown in the Patent. Moreover this corner forms a structure which 'results in a limited arc of the frangible region to which a pulling force created by the pulling device is applied and thereby increases a tearing pressure on the foil'
    There being no spout, it followed that neither claim had been infringed and that the action failed.

    If anyone wants to discuss this case or patent construction in general, he or she should call me on 020 7404 5252 during office hours or send me a  message through my contact form.

    28 March 2016

    The Institute for Capitalizing on Creativity: "Tales from the Drawing Board"

    St Andrews from St Rule's Tower
    Author Peter Gordon
    Source Wikipedia
    Creative Commons Licence
























    The Department for Culture, Media and Sport refers collectively to the following industries as "the creative industriels":
    • Advertising and marketing
    • Architecture
    • Crafts
    • Product design, graphic design and fashion design
    • Film, TV, video, radio and photography
    • IT, software, video games and computer services
    • Publishing and translation
    • Museums, galleries and libraries
    • Music, performing arts, visual arts and cultural education
    According to the Creative Industries Economic Estimates published by the Department in January of this year, the gross value added ("GVA") for the creative industries was £84.1 billion in 2014 and accounted for 5.2% of the UK economy. Between 1997 and 2014, the GVA of those industries increased by 6.0% each year compared to 4.3% for the UK economy.  It accounted for 3.9% of UK GVA in 1997 and increased to 5.2 per cent in 2014. Those industries employed 1.8 million individuals in 2014 in both creative and support jobs.  The creative industries' exports amounted to £17.9 billion in 2013 which accounted for 8.7% of British exports.

    As the creative sector is an important part of the British economy I am pleased to see that my alma mater has instituted The Institute for Capitalising on Creativity ("ICC") in conjunction with Abertay UniversityDuncan of Jordanstone College of Art & Design and the Royal Conservatoire of Scotland which I happened to mention in my dance blog Terpsichore this morning. The ICC describes itself on the home page of its website as "a multi-disciplinary team of researchers and educators who apply their skills to the management challenges of one of the fastest growing economic sectors, the Creative Industries." Its work includes carrying out research which culminated in the publication of Creative Industries Scotland:Capitalising on CreativityReport on ESRC grant RES 187-24-0014 , post-graduate education and various services to business that include holding events and publishing.

    One of the ICC's works that caught my attention over this bank holiday weekend was Tales from theDrawing Board:IP wisdom and woes fromScotland’s creative industries by Melinda Grewar, Barbara Townley, and Eilidh Young With legal observations form Philip Hannay of Cloch Solicitors in Glasgow. This work is a series of interviews with various business owners in computer games, dance and theatre, fashion and product design, film and television and music and publishing with a page or two of commentary by Mr Hannay at the end of each section.  It is well written and as it turned out quite compelling holiday reading.

    Mr Hannay's comments are very interesting and perceptive though I can't agree with everything he says. For instance, in a comment on Polybius Games, a computer games developer that had created an ingenious product for young hotel guests, carried out its own enquiries as to the sort of legal protection that it needed for its intellectual assets and registered its own trade mark, Mr Hannay wrote:
    "The case study of Polybius Games illustrates the first dilemma experienced by many early stage ventures over whether to action professional IP advice, which can form a significant proportion of an often very limited budget. While there is much to be said for the streamlined Gov.UK websites, user friendly UK-IPO staff, and bounty of free online resources on offer, a DIY approach may not only backfire on IP strategy by absorbing critical creative and management time – thus eating away at any first mover advantage – but an insufficient rights specification, or worst of all the forfeit of IPR on successful challenge, plus the absence of a professional representative on record can detract massively from the maximisation of IP value. There is no substitute for experience. In truth, cost is often not the actual detraction from taking professional advice or instructing legal assistance, cash flow is."
    I may have missed something but it seems to me that Polybius got its legal protection just about right without incurring professional fees.

    Other interesting chapters include one by  Angharad McLaren Textiles who was accused of infringing one of her own designs. She had not registered the design but someone else had and she received a letter before claim from solicitors acting for the registered proprietor just before she was due to display the design at an exhibition. Fortunately, she had an audit trail of her creation which would have invalidated the registration and she was able to persuade the complainant's lawyers to think again.  I have had to advise in similar cases like that arise because there is no substantive examination of design registration applications in this country or indeed the European Union as a whole.  As I said in my case note on the Trunki case (see Supreme Court upholds Court of Appeal in Trunki 10 March 2016):
    "It is far too easy to register a design in this country and the rest of the EU as there is no substantial examination of applications by the IPO or OHIM with the result that there is nothing to stop unmeritorious designs appearing on the register. One of the very few things that could be said for Brexit is that we would no longer be bound by the Community Design Regulation (Council Regulation (EC) No 6/2002 of 12 December 2001on Community designs (OJ EC No L 3 of 5.1.2002, p. 1) and Parliament would be free to repeal those amendments to the Registered Designs Act 1949 that were required by the Design Directive (Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs OJ L 289 , 28/10/1998 P. 28 - 35). It would be an opportunity to replace our law with something along the lines of the American design patent except that the public should have the added protection of a thorough prior art search by the Registry and an opportunity to third parties to oppose the application before it is granted."
    As I am something of a dance fan and still take ballet classes several times a week nearly half a century after my first pliĆ© I was gratified to see that two of the articles were on David Hughes Dance, "a small to middling company" based in Edinburgh and A Curious Seed about choreographer Christine Devaney.

    If anyone wants to discuss this article or legal protection for creative output in general he or she should not hesitate to call me during office hours on 020 7404 5252 or send me a message through my contact form.