For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

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

Wednesday, 27 August 2014

The Blue Jay Trade Mark Battle Commences...

New Billy Bluejay
(U.S. Application Serial No. 86067719)
A cross-border trade mark dispute arose late last week when Canada’s only Major League Baseball team, the Toronto Blue Jays (Blue Jays), filed a Notice of Opposition (Proceeding No. 91217791) at the U.S. Trademark Trial and Appeal Board against a design trade mark application of a bird head in International Class (IC) 025 for Athletic apparel, namely, shirts, pants, jackets, footwear, hats and caps, athletic uniforms (Serial No. 86067719; the “Application”). The Application, owned by Creighton University—a small university in the U.S. mid-west (Omaha, Nebraska to be precise), depicts a new version of the university's sports mascot Billy Bluejay, which has been in use since October 9, 2013. The Blue Jays assert in their notice that Creighton’s new Billy Bluejay logo creates a likelihood of confusion (15 U.S.C. §1052(d)) with several of the Blue Jays’ prior-registered U.S. marks including Registration Nos. 4314074, 4314078, and 2619938 to name a few (collectively, “Registered Marks”).
Toronto Blue Jays Logo
(U.S. Registration No. 4314078)
Although news reports mentioned that Creighton representatives were in negotiations with the Blue Jays to resolve this trade mark dispute, some recent reports also show that Creighton may dispute the Blue Jays’ opposition claims. As reported in the Globe and Mail, Creighton’s general counsel James Jansen stated that, “there’s nothing that should confuse Creighton University with the [Blue Jays]” and that the Application’s design is a “remake” of Billy Bluejay, which has had multiple variations since it was chosen as Creighton's mascot in 1878. He further commented that “I don’t know how many different ways you can depict a bluejay head.”  
If the Application’s design is considered a remake of prior variations of Billy Bluejay dating back to the 19th century, Creighton may claim that the Application’s logo obtained common law protections well before the Registered Marks’ first use in commerce or even the Blue Jays' founding in 1977. This may allow Creighton to claim priority trade mark rights to the Application (15 U.S.C. §1057(c)15 U.S.C. §1052(d)).
Old Billie Bluejay
However, an examination of the Application and previous variations of Billy Bluejay shows that unlike Mr. Janson’s assertions, there are actually multiple ways to depict a bluejay head. Unlike the Application’s navy, light blue and grey coloring of Billy's head, previous Billy Bluejay images show Billy colored royal blue with yellow eyes and beak (no to mention he is wearing a white jumper!), which would likely be considered substantially different from the Application's depiction of Billy. Beyond these substantial differences, Creighton claims in the Application that their first date of commercial use of the new Billy was in October 2013—likely preventing the University from arguing that Creighton has prior use rights in the Application.
Absent priority, Creighton will likely have to show that the Application does not cause a likelihood of confusion with the Registered Marks. This will be determined based on the multiple factor likelihood of confusion test laid out in In re E. I. du Pont de Nemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973). Although any of the ten factors of this test may determine the outcome of such an assessment, one of the most contentious factors will likely be the similarity of the Application and the Registered Marks in their entireties as to appearance, sound, connotation and commercial impression. See, e.g. Federated Foods, Inc. v. Fort Howard Paper Co., 544 F.2d 1098, 1103 (C.C.P.A. 1976); TMEP § 1207.01.
(U.S. Registration No. 3080408)
Within this factor, one of the most contentious and highly subjective evaluations will be the similarity of the visual appearance of the Application and the design-only Registered Marks due to the Application’s design-only status. In evaluating the likelihood of confusion between design marks, the similarity of the marks must be decided primarily on the basis of visual similarity. In re Vienna Sausage Mfg. Co., 16 U.S.P.Q. 2d 2044, 2047 (T.T.A.B. 1990). Although the Application and the main design-only Registered Marks have triangular shaped bird heads and are depicted in public with similar navy and light blue coloring, most of such Registered Marks have something distinguishable from the Application such as a maple leaf (see above left; Reg. No. 4314078), a large letter J (see left), or a baseball background (Reg. No. 1256175). Further, neither the Application nor the Registered Marks claims color as a feature, meaning that their similar coloring will not be a determinative factor in a likelihood of confusion analysis. However, whether the visual differences between the marks are distinguishable enough in general to rule out confusing similarity amongst the general public remains to be seen.
Further, as has been excellently highlighted by Ms. Mari-Elise Taube in the Trademarkologist, there remains a burning question as to whether the public will be confused as to the source of the Application owner's goods or services. The likelihood of confusion between similar marks in general is not determined on whether people will confuse the marks, but rather whether the marks will confuse people into believing that the marks’ goods or services derive from the same source. Paula Payne Prods. Co. v. Johnson’s Publ’g Co., 473 F.2d 901, 902 (C.C.P.A. 1973); TMEP § 1207.01. Although likely unfamiliar to most European readers, Creighton is primarily known in U.S. sports for its previous mid-major, now major conference college basketball teamthink of a U.K. football club moving from League One to the Championship League or directly to the Premiership, e.g. Hull City A.F.C. but in an amateur status. In contrast, the Blue Jays are a professional baseball team. As raised by Ms. Taube, it may be difficult for the Blue Jays to argue that the general public will be confused as to Creighton's sponsorship or affiliation by the Blue Jays, who play a different sport, in a different league, in a different professional status, and who even originate from a different country.  
Although it is unknown how this dispute will be resolved, it is clear that the fate of bird head sport logos hangs precariously in the balance.

Patent Law in Greater China: a new title

Patent Law In Greater China, edited by Stefan Luginbuehl and Peter Ganea, has just been published by Edward Elgar Publishing as part of its Intellectual Property Law an Practice series, which itself is co-edited by two Katfriends, practitioner Trevor Cook and academic Jo Gibson. Stefan, incidentally, is an attorney at the European Patent Office (Eponia), while Peter lectures and researches in the Interdisciplinary Centre for East Asian Studies of the, Goethe University, Frankfurt. The book is enriched by the choice of a strong cast of contributors, some of whose earlier works this Kat has either read or indeed edited

Having had the opportunity to see this book ahead of publication, when asked to give an approbation of it for the website and back cover, this Kat has to confess that he had some reservations about agreeing to do so. Too many China IP books in his experience have suffered from the three vices, listed in increasing degrees of severity, of being (i) out of date to the point at which they were of more historical than practical value, (ii) often unclear in terms of their description and analysis of Chinese law and its applicability to the sort of problems that regularly beset IP owners whose rights have been (or are alleged to have been) infringed and (iii) dull. In the event, this Kat was pleasantly surprised. He wrote:
"Chinese intellectual property law has been one of the fields in which it has been most difficult to obtain an accurate, reliable and intelligible perspective. The achievement in putting together Patent Law in Greater China is therefore all the more laudable. Chapters from practitioners, administrators, academics and the business world give this work a degree of relevance and immediacy and show how the complex and initially puzzling interplay of law and practice in China and the economies within her orbit can be depicted and understood".
This is how the publishers describe it, in part:
"This book provides a comprehensive introduction to patent policy, law and practice in Greater China [which for these purposes includes Taiwan, Hong Kong and Macau] and will be a go-to book for patent practitioners who have client interests in that region.  Features [include]:
• Introduction to Chinese patent policy.

• Detailed coverage of technology transfer and substantive patent law in China, including prerequisites for protection, exceptions and limitations.

• Practical analysis of patent law relating to three specific fields of invention: employee inventions, biotechnological and pharmaceutical inventions, and software inventions.

• Overview of the patent application and examination procedure, with a particular view on PCT applications.

• Insight into specific characteristics of enforcement mechanisms and jurisprudence in China, including the dual enforcement system, claim interpretation, infringement types, and invalidity procedures.

• Invaluable section on the relationship between patent and antitrust law, including practical realities in the sphere of anticompetitive licensing.  ...
Not listed by the publishers but of potential interest and value to the reader are the book's coverage of design patents and utility models; the text is also replete with references and further reading -- in a wider variety of languages than this Kat can cope with.  The presentation of this volume has a genuine practitioners'-work feel to it, with numbered paragraphs and a handsome font. Well done, everyone!

Bibliographic data: Hardback. li + 469 pages. Hardback ISBN 978 1 78195 483 6; ebook ISBN 978 1 78195 484 3. Price: hardback $230 (online from the publisher, $207). Rupture factor: substantial. Book's web page here.

"Cultivated capsicums!" Peppers resist insect, breeders resist patent

This Kat has received information concerning the publication in a national Dutch newspaper of a double page item calling for crowd-funding of opposition proceedings against a European patent.  The patent in question, granted last year to Syngenta, relates to EP2140023 relating to insect-repellent pepper plants.  Or, to put it another way:

The Bemisia in question is none other than the whitefly, of which there are several varieties (the rather handsome Silverleaf whitefly is shown on the left: don't worry -- the real ones are a lot smaller than this).  What's good news for pepper-lovers is bad news for ladybirds, praying mantises and lacewings, which don't eat pepper in any shape or form but do enjoy tucking in to a juicy whitefly when the opportunity arises.  Too small to eat whiteflies, the Amblyseius swirskii mite (for it is he, or possibly she) will happily go to work on a whitefly egg, though it is not recorded whether this delicacy is preferred when scrambled, lightly boiled or poached. Merpel adds: Bemisia is quite unrelated to another Silverleaf, much respected in IP circles ...

EP2140023 has generated a good deal of interest, not to mention controversy; it has even been the subject of a question before the European Parliament which recites that 34 non-governmental organisations (NGOs) and farmers' and breeders' bodies are united in their opposition to it. So it is not surprising that Bionext (a Dutch organisation of organic farmers and food-growers) should be campaigning against it in the following terms:

Thanks to Google Translate, this Kat can bring you the following information (which you can read in the original Dutch here) about Bionext and its objection to EP 2140023:
BIONEXT is the organization for organic food and farming in the Netherlands. Within BIONEXT working farmers, growers, trade and processing and retailers together to promote organically in the Netherlands and more sustainable. 
BIONEXT is the organization behind Adopt a Chicken, Adopt an Apple Tree and consumer magazine Taste Making. ... 
With the campaign "Heart for biodiversity, no patents on life" asks BIONEXT attention to the trend that more and more natural properties of plants and animals to be patented. EP 2140023 B1 patent is central to the campaign. This patent has been granted by the European Patent Office (EPO) on May 8, 2013. With the patent Syngenta receives ownership over all paprika (and pepper) seeds, plants and -fruits who have a natural defense against whitefly. The patented pepper plants have been developed by a cross between a commercial sweet pepper with a wild pepper the desired property already owned. The insect resistance is derived from Mother Nature through the gene bank freely accessible to every grower and breeder. 
With patents on features of classically bred plants companies such as Syngenta their dominance in the global seed trade. Strengthen Breeders do not have freedom of access to the basic material of plant breeding: plant varieties and wild plants. 
The withdrawal of the pepper-patent would be an important first step in stopping patent classic bred plants. But for a structural solution is a modification of the European Patent legislation is necessary.
Not having a scientific background, this Kat is not in a position to judge whether the patent should have been granted or not. However, it seems to him that there may be something of an oversimplification. Whatever one may think about EPO examiners, they can usually be relied on to spot a piece of killer prior art, such as an insect-repellant wild pepper which is so blatant that NGOs and organic breeders' groups can see it too. And if the patent's claims seek to cover products and processes that already exist in nature, those claims won't be able to prevent anything being done with or to those products that wasn't already available for them to do before the patent was granted. On the other hand, the existence of some respected and rational organisations in the list of those opposing the patent suggests that -- unless they have been afflicted with some collective illusion -- there may be some firm ground upon which their concerns are based.

So can readers of this weblog clarify the position: 
(i) what exactly is the invention? (ii) how does it stand in relation to the prior art? (iii) do the claims cover things that already exist and can be made or done?(iv) is there (a) no problem at all, (b) a problem that the existing law can and will be expected to cope with or (c) a problem calling for legislative reform?
Pig and pepper here
Peppa pig here

Tuesday, 26 August 2014

Television Show Fan Does Not Own Facebook Likes

Jeremy kindly informed me of a very interesting case about the ownership of the “likes” generated by a social media account created by a fan of the television show The Game. Spoiler alert: the fan lost.

On August 20th, the Southern District Court of Florida granted Defendant Black Entertainment Television LLC (BET)’s motion to dismiss in a case where the network was sued by Stacey Mattocks over the control of her Facebook fan page dedicated to The Game television show. The case is Stacey Mattocks v. Black Entertainment Television LLC., 0:13-cv-61582.

This Kat Has to Ask: Is this Alsatian Pinot ? 

 The Game is a dramatic comedy about the lives of professional football players, their wives and girlfriends, and was originally broadcast by the CW Network from 2006 to 2009. In 2008, Plaintiff Stacey Mattocks created a The Game Fan Page on Facebook (the FB Page). According to Facebook’s Terms of Service, an individual may create such page, even if not affiliated with the brand or entity featured there, as long as it is not deceptive and that the page “make[s] clear that the Page is not the official Page of the brand, entity (place or organization) or public figure.” Fan pages are public. The FB Page did not contain any BET-owned or third-party-owned content and Plaintiff did not present the FB Page to be an official fan page.

After The Game was canceled in 2009, Plaintiff nevertheless, according to the complaint, “continued to aggressively promote [it] on the FB Page in hope that a network would eventually pick it up and return it to air.” At the time, the FB Page had over 750,000 “likes.” Plaintiff’s wishes came true when Defendant began producing and broadcasting new episodes of the show in January 2011. Plaintiff alleged in her complaint that this decision was made “due in large part to [her FB Page.]”

BET contacted Mattocks in the Fall of 2010, when the FB Page had about 1.3 Million “likes” and hired her part-time in January 2011 to manage the FB Page. BET then “prominently displayed its trademarks and logos in the top header of the FB Page, encouraged BET’s viewers to “like” the Page, and provided Mattocks with exclusive content, including links to video clips and photographs, to post on the Page.” Plaintiff could chose not to post some material, but posted most of it. The two parties entered into a letter of agreement in 2011 where BET could have access to the FB Page and Mattocks would not lose her administrative rights. All these efforts paid off as the number of “likes” on the FB Page went from around two million to more than six million.

After signing their letter of agreement, BET and Mattocks also discussed full-time employment, but Mattocks suspended BET’s administrative access to the FB Page pending further agreement. BET then asked Facebook to “migrate” fans of the page created by Mattocks to an official FB Page created by BET. Facebook also shut down Mattock’s FB Page. Further, BET successfully asked Twitter to shut down the account Mattock used to promote the series for BET.
I Could Have Been A Contender...

BET informed Mattocks that it had rescinded “any and all rights that may have been previously granted to you directly, implicitly or otherwise, to use BET intellectual property (“BET Material”). You are respectfully directed to cease and desist from using all BET Material in any and all media immediately and further advised that BET expressly reserves its various rights and remedies as copyright and trademark owner in connection with willful infringement of our intellectual property.”

Mattocks sued BET, alleging inter alia that BET wrongfully deprived her of “certain rights” by disabling the FB Page and her Twitter account. She also claimed tortious interference with her contractual relationships with Facebook and Twitter, breach of agreement and conversion of her business interest in the FB Page. Defendant moved for summary judgment. The court granted defendant’s motion on all counts. The court found no tortious inference with a contractual relationship as, under Florida law, the interfering defendant must be a stranger to the business relationship, unless it is done for malicious reasons. The court found that BET was not a stranger to the relationship as it exercised control over both social media accounts. It did not act maliciously either as it had been deprived of “control over its intellectual property on the [FB] Page and how [The Game] was officially promoted there.” The court found that BET acted to have these two social media accounts closed down under “companies’ policies protecting brand owners’ rights.” As for the breach of contract, the court found that Mattock’s material breach by blocking administrative access excused performance of the agreement by BET.

 Mattocks also claimed that BET converted a business interest she had in the FB Page. This interest was all the “likes” on the FB Page which provided her with business opportunities with companies paying her for redirecting visitors to their sites. But the court found no property interest in the “likes” on the FB Page, as ““liking” a Facebook Page simply means that the user is expressing his or her enjoyment or approval of the content.“ As users are free to revoke their “likes” anytime, the court concluded that “if anyone can be deemed to own the “likes” on a Page, it is the individual users responsible for them.“

The case is interesting as it raises the issue of ownership of a social media account. The issue is not novel when the case involves an employer and an employee‘s arguing over the ownership of an account [see here and here], but I believe this is the first time a court had to examine a case where a fan is claiming ownership rights over an account promoting a show, a sports team or an artist (if you know of such case, please let us know!).

The parties in the cases involving an employee and an employer both struggled to prove which party was indeed the source of a particular social media account’s success. In our case, before BET got involved in the FB Page, Mattocks could not, and did not, post any BET-owned or third-party-owned content from The Game. The FB Page got many more “likes” after “official content” was regularly posted and that content, protected by copyright and trademark, undoubtedly played an important role in the FB Page’s success. However, Plaintiff was certainly emotionally involved with the show and that passion may have attracted “likes” of users touched by an individual’s work of love, which may have contrasted with corporate promotional efforts. But, at the end of the day, it is the corporation which owns the IP rights over the content, not the fans.

Sparks fly as sharks fly, but attack on patent validity loses its bite

Sharks in the courtroom are nothing new according to some critics of the legal system, but they are usually referring to the lawyers who appear there, charging inflated fees and ruining their clients.  In this note, occasional guest blogger Paul England (senior associate, Taylor Wessing, and definitely not a shark) gives us the low-down on a recent fairly economical patent dispute in which the only things inflated were the products made by the respective parties.  This is what he tells us:

The Great White Infringer
The recent decision of His Honour Judge Hacon in the Intellectual Property Enterprise Court, England and Wales, in William Mark Corporation & Another v Gift House International Ltd [2014] EWHC 2845 (IPEC) is a very largely fact-based patent action concerning flying fish toys. The first claimant devises and markets toys and is the proprietor of the two patents in suit: GB 2482275 ("275") and a divisional of 275, GB 2483596 ("596").  Both are entitled "Flying shark", the invention of which is described in 275 in these terms: "flight of the toys can be controlled in both horizontal and vertical direction. Most preferably, such flying toys simulate with a high degree of realism movement of a fish in its natural habitat". The most important features of these are:
* 275, claim 1 - this can be summarised as a flying toy, comprising a body that includes a portion filled with lighter than air gas, in order to give neutral buoyancy; a moving surface and tail assembly, coupled to a first actuator and the body portion by an elastic element, such that it can move at variable and different angles to the forward motion of the body portion (ie a moving tail fin, but not necessarily one that propels the fish forward); a second actuator coupled to the body that can move a weight so as to change the pitch of the toy to allow for controlled ascent and descent (ie the fish can point its head down or up);

The patented Mark Shark
* 275, independent claim 9 - concerned with the tail fin assembly for a flying toy this can be summarised as comprising: a base plate with an actuator coupled to a moving surface such that the surface can move as described in claim 1; an elastic element that allows reversible coupling of the tail fin assembly to an inflatable and compressible body portion of the toy; and, configuration to allow application of a compressive force to the body via the elastic element (so as to maintain rigidity between body and tail fin);

* 596, claim 1 – primarily concerned with the movement of the weight to control pitch and provide for the weight element to comprise removable ballast;

* 596, claim 2 – contains the additional feature that "…the toy has a moving surface that is configured to move side-by-side for forward propulsion of the toy".
The defendant also devises toys, and imports for sale in the UK a flying fish known as a “Mega Flier”, which the claimants alleged, infringed its patents. The defendant argued that the patents were invalid.

Our guest blogger has left his mark
Further to an Order of Mr Justice Birss following this action's Case Management Conference, there were two issues to be decided on infringement, one of which was argued: did the defendant's products have an 'elastic element' within the meaning of claim 1 of 275? Judge Hacon held that the defendant's toys had plastic strips which were sufficiently elastic to serve as elastic strips as required by claim 1 of 275.

Invalidity was alleged on grounds of lack of inventive step over two items of prior art:
* Slater – disclosing an anchoring means on a full-sized airship. This comprises a magnet which, when the airship is brought to rest, attaches to an anchoring member on the ground. The airship also has a track support mounted lengthways along the underside of the main body, which allows the airship's gondola to slide forwards or backwards.

* Kinoshita – disclosing a mechanism for propelling a floatable structure filled with lighter than air gas. Such as a flying toy (exemplified by a flying fish in the specification). A powered fin swings to and fro in a vertical plane propelling the toy forward.
The judge held that claim 1 (and dependent claims) of 275 was not obvious over Kinishita, particularly as regards the second actuator and moving weight to control pitch claimed in 275. Further, there was no expert evidence to suggest that it was obvious on the basis of Slater to add a flapping tail to a toy. As regards independent claim 9, there was no evidence that it was obvious to adapt the base plate and plastic strip in Kinoshita to make the plastic strip elastic and have the surface move at variable and different angles. Slater also did not render claim 9 obvious. The result was that all claims of 275 were valid and the defendant's product infringed claim 1.

As regards 597, only Slater was relied upon. The experts accepted that removable ballast was a common feature of such toys and nothing was said to dispute that adapting the moving gondola to a moving weight that controls ascent and descent was obvious. However, the further feature of claim 2 which claimed forward propulsion by the side-to-side movement of the moving surface was not obvious over Slater. The result was that claim 2 of 597 was valid and infringed by the defendant's Mega Flier.
Sharks and Jets here
Law to save sharks here
Shark recipes here

Cold Comfort Farmers Cards: Californians feel New Zealand chill

From Katfriend and long-time respected IP commentator Ken Moon (AJPark) comes news of a 13 August ruling of the New Zealand Court of Appeal (Harrison and Miller JJ) in a software copyright and trade secrets dispute, Karum Group LLC v Fisher & Paykel Finance [2014] NZCA 389, which was heard this June.  Ken takes us through the IP aspects of this dispute as follows:

This case, which relates to alleged copying and misuse of confidential information arising from a system integration and data migration project, is the first New Zealand case on non-literal software copyright infringement. In short, the Court of Appeal upheld the judgment of the High Court that Fisher & Paykel Finance (FPF), in modifying its own credit software, had not infringed any copyright in Karum’s CMS software; nor had Karum proved a claim of breach of confidence through FPF incorporating Karum's trade secrets into its own software.


In 2004 FPF purchased Retail Financial Services (RFS) from Farmers Trading Company, principally to acquire the business of "Farmers Card", a private label credit card. The legacy software supporting Farmers Card, called "CMS" and written in COBOL, had been supplied by California based Karum in 1994. FPF secured a licence from Karum to continue to operate CMS temporarily on RFS mainframes while FPF modified its own credit system software called "Lending" (written in Ingres) to support Farmers Card functionality and allow the two business systems to be integrated.

The court's reasoning

The Court of Appeal noted the duration of the trial in the High Court – eight weeks with numerous expert witnesses – and the complexity of the action due to its technical detail and the ‘novelty of the copyright claim’. The latter remark arose because Karum did not claim its CMS source code had been copied, but rather that FPF had copied non-literal design elements and logic.


• The underlying factor in deciding whether copyright protection could extend to something beyond or more abstract than program code was observed to be the principle that copyright did not protect ideas, but rather protected the expression of ideas. While this was trite law it was reinforced by the TRIPS Agreement, to which New Zealand had been a signatory since 1994.

• Since there was no New Zealand authority on non-literal copyright infringement it was germane to consider English and United States authorities on non-literal software copyright infringement. In this respect the Court of Appeal made reference to the 1992 US case of Computer Associates v Altai which had agreed that, just as in traditional literary works, copyright could in principle extend beyond code to cover 'structure', although only to the extent that it was limited to structure as such and did not extend to any ideas or functions behind the structure – or for that matter at any other level of abstraction. The US Court of Appeals also said 'structure' referred to 'the functions of the modules in a program together with each module's relationships to other modules'.

• The judgments in SAS Institute v World Programming were then considered and the Court of Appeal observed that while the courts of England and Wales [here and, on appeal, here] and the Court of Justice of the European Union [here] had admitted the possibility of copyright protection for non-literal elements such as structure, the copied functionality in that case was not protectable expression.

• The Court of Appeal observed that claims of an analogy between the plot of a traditional literary work and some non-literal element of a computer program had been rejected by the High Court, England and Wales, in Navitaire v easyJet [here] because a computer program has no plot, merely a set of operations intended to achieve desired functionality: that Court had held that such functionality may be replicated precisely in another program because functionality is not protected by copyright as it lies on the ideas side of the line between idea and expression. And nor were business rules or business logic, these not being original to the programmer and in any event falling into the category of functions or ideas.

• In summarising the English and US cases the Court of Appeal concluded that the scope of any copyright in non-literal elements is constrained: a plaintiff would likely find it difficult to distinguish expression from idea or to prove specified elements were not mere functionality or business rules.

• Applying this law to what Karum had claimed were copied by FPF (namely character string displays of payment and delinquency calendars, and the use of 'buckets' for storing aged debt with payments being assigned to the bucket containing the oldest debt), the Court said that the CMS calendars and aged debt module were no more than mere functionality or business rules as the codes used to represent age of debt or payments as a proportion to debt were not distinctive and were not literary works whether taken singly or together.

• In particular, on the facts this case could not be distinguished from the English cases even though -- unlike those cases -- FPF did have access to the CMS source code. The Court categorised this as 'a distinction without a difference' as the CMS source was not copied by FPF.

• The Court concluded its findings on copyright infringement by observing that, for copyright to be infringed, the Copyright Act required that a substantial part of the work must be copied. In this case, even if FPF had copied any original expression in CMS software, it was not a substantial part of the CMS software package.

Breach of confidence

Cats may be difficult to herd, but they respond
well to modern farming techniques if properly fed
• In addition to the calendars and aged debt, Karum's claim extended to FPF's use of what it called 'special codes' and 'intercept codes'. The first were some of the codes used in a customer account to indicate the status of the account, examples being '4' meaning 'account with a collection agency' and '7' meaning 'closed'. Some of the claimed codes were in fact mapped into CMS during the changeover from the Farmers previous software, F-Credit. The Court held all these codes to be non-substantive content: they were simply arbitrary characters representing business rules and did not amount to trade secrets.

• The intercept codes were codes sent with customer statements electronically to the agency retained to print and mail out the statements, such as '54' indicating hold the statement (and not mail it). FPF did use some of these codes because it used the same interface file with the printing agency that Farmers had used. There was no proof that the interface file format was owned by Karum as it was an agreed format worked out with the print agency by Farmers.

• The Court observed that Karum had chosen to sue FPF for breach of confidence in equity and had itself expressly cited the three-step test established in the 1969 English case of Coco v AN Clark (Engineers) [noted here] which had been long adopted by New Zealand courts.
[Merpel adds: the Coco v Clark three-step test is as follows: (i) the information itself must have the necessary quality of confidence about it; (ii) that information must have been imparted in circumstances importing an obligation of confidence; (iii) there must be an unauthorised use of that information to the detriment of the party communicating it.  This is hardly rocket science and it's scarcely even a test, but judges, lawyers and litigants alike have clung to it like limpets for generations, almost to the point of making excuses for it when it doesn't quite fit ...].
It therefore rejected Karum's argument that establishing the necessary quality of confidence for the first step should solely be carried out by interpreting the relevant trade secret stipulations in the CMS software licence (which formed part of the settlement agreement). The Court added that, while the licence clauses should be taken into account, the determination was ultimately a question for the court, taking into account policy considerations as in Yates Circuit Foil Co v Electrofoils Ltd [1976] FSR 345.

• The Court found that there was no disagreement between the parties that FPF was entitled to examine CMS for the purpose of identifying business rules and functionality and that entitlement extended to testing both systems to ensure nothing was lost in translation. In any event the Court agreed with the High Court judge that there was nothing confidential about the codes -- which were arbitrary and trivial, both singly and collectively.

• In assessing the third Coco test, misuse of information to Karum's detriment, the Court confirmed that equity would require a showing of detriment in commercial cases, as in such cases it was the normal measure of fairness. The Court did not accept that Karum had suffered detriment because equity would not intervene where FPF only did what it had the right to do so.

Brief comments

It was not surprising that the idea/expression dichotomy dominated the reasoning for the first time in New Zealand copyright case instead of the usual subsistence and infringement considerations. However, the Court of Appeal rejected the opportunity to elaborate on what protectable expression might lie above source and object code, simply holding that the non-literal elements of software it was presented with fell on the idea side of the dividing line as being either functionality or business rules. 
On breach of confidence it could be argued that the Court of Appeal has raised the bar in New Zealand for the first Coco test in appearing to require a higher quality of confidence than simply that the information be more than mere trivia. The Court has ruled that at least for commercial cases in New Zealand, a showing of detriment is a required part of the third Coco test. It was interesting also that the Court of Appeal recognised that, in the interests of commercial efficiency courts should resist 'the attempts of legacy system owners to leverage intellectual property rights so as to inhibit competition from second comers'. 
There are still a lot of legacy banking systems requiring replacement over the coming few years because of brittle over-modified third generation code and/or mainframe hardware well past its use-by date.
Disclaimer of personal interest: Ken was part of the legal team representing Fisher & Paykel Finance.

Cold Comfort Farm here
Farm cats here
Earliest farm cats here

Monday, 25 August 2014

Monday miscellany

There are easier ways ...
Self-centred, or merely preoccupied?  The 1709 Blog's sidebar poll on the copyright position regarding selfies taken by black-crested macaque monkeys (or at least by one of them) has now notched up more than 250 responses, and there's still a week to go before the poll closes.  Do let us know what you think, if you haven't already. You can find the 1709 Blog's sidebar on the right hand side of the page you get to by clicking here.

Katnews. It is with pride and pleasure that this Kat announces a matter of no mere significance.  As of Monday of next week, fellow Kat Eleonora, our very own copyright enthusiast with a penchant for punchy posts and powerful PowerPoints, takes up her new permanent position as Lecturer in Intellectual Property Law at the University of Southampton.  The university has a distinguished Law School, which has produced such celebrated alumni as Geoffrey Hobbs QC, and Professor David Llewelyn. We wish Eleonora the best of luck in her new position and congratulate her on making such a splash with her e-LAWnora copyright law consultancy, which continues to flourish.

Back in July, the IPKat noted the publication of Pirates of Bollywood by Kalyan Kankanala, this being another work of IP fiction [you can check it out here].  The Kat called for someone to review it.  Katfriend Shalini Bengani kindly stepped up to volunteer -- and here's her verdict:
"Project Pi is ON, Mr Krishnan". It is with this foreboding Project Piracy plan that Dr Kalyan C. Kankanala, an IP lawyer and the managing partner of Indian Intellectual Property firm BananaIP, begins his third work of fiction Pirates of Bollywood. This copyright law fiction has project piracy as its lodestar, and this book indeed has all the makings of (dare I say) a Bollywood Masala movie, albeit with the only difference that the author casts his mojo by interweaving the legal aspects of the copyright law debate within its theatrical setting of Bollywood in Mumbai

It has won my rave review as it is a very riveting story which explores and educates the reader about the perils of piracy that plague our modern day technologically driven society. Most certainly, this book would wield its impact on the reader's understanding of the nexus between Bollywood actors, producers, entertainment lawyers and cops which has been revealed through a blizzard of investigation with the motive to pare down piracy. The author seamlessly introduces themes of Free Software, Open Source Software, and Creative Commons while giving an insight into how piracy operates (i.e from persons pirating films to persons distributing the content). At the core of the debate is the Copyleft Foundation which was founded in order to make creative works freely available for use, modification, and sharing by everyone in the society and a file sharing website called SHARE, built by students of the International Institute of Technology, Bombay.

The protagonists of this story are Arjun. the famed IP lawyer, and Helen Joseph, the young, energetic and dynamic Assistant Commissioner of Police in Mumbai. The reader’s attention would also be caught by the hapless character of Ilahi who is a teen selling pirated DVDs. The author manages to evoke the reader's sympathy for the likes of Ilahi as well as the assassin who commits cold-blooded murder in the story, by justifying their venality: the former is the only bread-winner for the family of six and the latter had a little sister suffering from spastic cerebral palsy, a physical disability due to brain damage.

Ultimately yours truly hopes that this crisp read will prove to be not only informative but also relished by one and all during their summer holidays or on a short distance flight (as it is all of 164 pages).

Around the weblogs. Clare Young, on the Allens' Scintilla IP weblog, reports on some fascinating litigation in Australia between AstraZeneca and Apotex over obviousness as the 'starting point' for assessing a patent's validity. IP Finance carries another post on the increasingly popular topic of financial reporting, this time in the context of the under-reporting (or non-reporting) of the risk of copyright infringement litigation in equity research reports.  On IP Tango, Patricia Covarrubia is swift to pick up on a spot of copyright infringement involving popular performer Shakira. Finally, on Class 46, Pedro Malaquias writes up a ding-dong battle between successful Portuguese football club Porto and football shirt manufacturer Silmoda over the SUPER PORTO trade mark.

Letter from AmeriKat: Judge Koh declares Takeda takes it too far with Mylan Dexilant declaration

The AmeriKitten may be one paw down,
but thankfully has nine lives to go.
"Yes, yes, it has been a while" says the AmeriKat.  But with the English IP judges and barristers having fled the un-airconditioned climes of London for the predictable meadows of southern France, the AmeriKat has finally been able to peek her head up without the fear of a court hearing only just missing her whiskers.  Of course, she did not then factor crushing her paw in a heavy door (together with a bushel of other calamities), so although back to her reporting, she is doing so sans a left paw.  But thankfully, you only need a right paw to trawl through an Order from a US judge in the latest "originator v generic" battle and talk-to-type will do the rest.  And without further ado....

Earlier this month, US District Judge Koh ordered that Takeda could not proceed with its claims for declaratory judgment that Mylan will infringe its patent that protects its acid reflux drug, Dexilant.  Judge Koh, who was made globally famous when she presided in the Apple v Samsung dispute, stated that to do so would essentially be going overboard. But before we get into her reasons, let's provide some context.


Congressman Henry Waxman -
the second half of the
Hatch-Waxman Act
Like the EMA in Europe, under the Food Drug and Cosmetic Act (FDCA), a drug manufacturer is required to submit a New Drug Application to the Food and Drug Administration (FDA) for approval.  In conjunction to the trial and safety information contained within the dossier, the applicant also submits the patent number and expiration of any patent that covers that drug (i.e. any patent which the patentee could use to sue a generic for infringement).  Once the drug is approved, it is listed with the relevant patent information in what is known as the Orange Book.  The Hatch-Waxman Act amended the FDCA to provide for the Abbreviated New Drug Application (ANDA) process.  This allows drug manufacturers to obtain FDA approval for generic versions of previously approved drugs but without having to go through the rigmarole and expense of the testing required for the NDA.  When a generic submits an ANDA, they must provide one of four possible certifications for each patent listed in the Orange Book as follows:  (i) that no patent information has been filed, (ii) that the patent has expired, (iii) that the patent will expire on a specific date, or (iv) the patent is invalid or will not be infringed by the manufacture, use or sale of the generic drug.

This latter certification is called "Paragraph IV certification".  If a generic makes this certification, then they are required to give the originator notice of the certification and why they consider the patent is invalid or will not infringe.  A Paragraph IV certification also means that the patent owner may sue the generic applicant under Section 271(e)(2) of Title 35 within 45 days of receiving notice.  This act then triggers a 30-month stay of FDA approval and the ANDA.  A bit like the European concept of the Bolar Exemption, the generic applicant has a safe harbor in respect of its use of the patent for the purposes of obtaining regulatory approval.  However, although not liable for acts for the purposes of obtaining regulatory approval, once an ANDA has been filed, such a filing constitutes an act of infringement if the purpose of the application is to thereafter engage in the commercial manufacture, use or sale of a drug claimed in the patent or patents before the expiration.  The infringement for the paper act of filing the ANDA for these purposes is designed to create an artificial act of infringement for the purposes of establishing jurisdiction in the federal courts (Eli Lilly v Medtronic (1990) and Glaxo v Apotex (2004)).  It therefore makes it possible for a patentee "to determine whether, if a particular drug were put on the market, it would infringe the relevant patent" (BMS v Royce (1995)).  Therefore, in American legalese, this provision has been deemed to be "primarily a jurisdictional-conferring statute that establishes a case or controversy in a declaratory judgment action" (Apotex).

Takeda takes action, Mylan seeks to dismiss

Mylan submitted an ANDA seeking approval to market a generic version of Dexilant - which is used for the treatment and prevention of digestive ulcers.  Mylan made a Paragraph IV certification and notified Takeda that certain of its Orange Book patents are invalid, unenforceable or would not be infringed by Mylan's intended drug.  Takeda filed two infringement cases against Mylan involving certain patents (seven in total) relating to Dexilant.  Mylan counterclaimed in respect of an eighth Orange Book patent.  Takeda's infringement suits meant that the 30-month stay was triggered which meant that Mylan would be kept off the market until January 2016 unless Mylan wins these cases.  On 21 January 2014, Takeda then commenced a third action subject to this post and presently before Judge Koh.  This patent infringement action was in respect of Takeda's US Patent No 7,339,064 (the "064 Patent") which claims crystalline forms of benximidazole derivatives in a pharmaceutical composition for treating and preventing digestive ulcers.  Takeda claims that this patent claims "hydrate and sesquihydrate crystal forms of dexlansoprazole", which is the active ingredient in Dexilant.  However, the '064 Patent is not listed in the Orange Book as Takeda has not submitted the required data to the FDA to show that these crystal forms are bioequivalent to the crystal form in Dexilant.

Takeda therefore:
(i) alleged that Mylan infringed the '064 Patent for the paper act of filing the ANDA pursuant to Section 271(e)(2) (i.e. that the purpose of filing the ANDA was to launch pre-expiry of the patent); and
(ii) sought a declaration pursuant to the Declaratory Judgment Act, under Section 271(a)-(c) that Mylan will directly or indirectly infringe the '064 Patent.    
Mylan applied to dismiss the declaration for lack or subject-matter jurisdiction or to terminate the automatic 30-month stay.

The Question

Mylan applied to dismiss the declaration.   Actions under the Declaratory Judgment Act require the party to show an actual and substantial controversy of "sufficient immediacy and reality to warrant the issuance of a declaratory judgment"  (MedImmune v Genentech (2007)).  The courts of have substantial discretion in whether to decide to declare the rights of litigants in accordance with the principles of "sound judicial administration"  (Elecs. for Imaging v Coyle (2005)).

The question before Judge Koh was whether an originator may simultaneously assert a claim for infringement under section 271(e)(2) and a claim pursuant to the Declaratory Judgement Act. The law on this is unsettled.  As Judge Koh wrote in her order:
"The Federal Circuit has not resolved this issue. Moreover, the Federal Circuit has not addressed the question of whether district courts may exercise jurisdiction over a claim asserting future infringement of a non-Orange Book patent under the Declaratory Judgment Act when such a claim is based solely on the filing of an ANDA by a generic manufacturer. "
The Answer:

Judge Koh warning against
throwing in the "kitchen sink"
in patent litigation
In short, Judge Koh agreed with Mylan and dismissed the declaratory action.  As she stated
"As discussed below, the legal precedent regarding these questions is unsettled. However, even assuming that a sufficiently immediate and real controversy exists for purposes of [the declaratory action], the Court exercises its discretion to decline declaratory judgment jurisdiction because [the declaratory action] is duplicative of [the infringement action] and serves no useful purpose in this case."
Her reasons were as follows:
  • The very act of submitting an ANDA is an act of infringement (Teva v Novartis (2007))
  • Infringement suits under Section 271(e)(2) should not be treated differently then patent infringement suits under Section 271(a) (Abbott Labs v Torpharm (2007))
  • In Teva the Federal Circuit considered whether Teva could pursue its claims for declarations of non-infringement in respect of four of Novartis's unasserted Orange Book patents (Novartis had only sued in respect of one).  In that case the court held that Teva's ANDA filing created an immediate controversy for all Orange Book patents and that the originator could not shield those patents from litigation by electing not to assert them.  Teva therefore indicates that the filing of an ANDA with a Paragraph IV certification and the assertion of an Orange Book patent always creates an immediate and real controversy.  
  • The filing of an ANDA also permits the originator to file a Section 271(e)(2) infringement claim for patents that are not listed in the Orange Book.  A similar outcome was reached in recent litigation between Takeda and other generic manufacturers in respect of Dexilant. 
  •  Some district courts have permitted originators to maintain declaratory actions against a generic manufacturer (see e.g. the Second Circuit in Cephalon v Watson (2009)).   However, other courts declined jurisdiction in similar claims.  
  • In light of the unsettled precedent, Judge Koh did not wade into the murk of decided whether an immediate and real controversy existed, but chose to point to her discretion as the reason for declining declaratory judgment jurisdiction.  
  • The main discretionary factor for consideration was whether entertaining the declaratory action would prove useful or worthwhile in clarifying and settling the legal dispute.  
  • Judge Koh found no useful purpose for hearing the declaration action.  
  • The purpose of Section 271(e)(2) was to create an artificial act of infringement in order to permit the resolution of infringement disputes arising from the ANDA process.  This, stated Judge Koh, suggested that an infringement suit under the Declaratory Judgment Act was not otherwise available to originators or, at the very least, is unnecessary in light of Section 271(e)(2).  
  • Further, the declaration action would not serve a useful purpose or help settle the case as the declaratory action was essentially a duplication of Section 271(e)(2).  Although Takeda argued at the hearing that the declaratory action offered "extra protection" by providing damages for any actual infringement by Mylan after the FDA approves the ANDA and before final resolution of the litigation, the judge held that damages are nevertheless part of the package with Section 271(e)(2).  There is no relief that Takeda could be awarded in the declaratory action that they could not also obtain if they won under Section 271(e)(2).  
  • As such, the declaratory action would be redundant as the court already has jurisdiction over Takeda's infringement claims under the Hatch-Waxman Act.

The kitchen sink - not to be
thrown lightly in the 9th Circuit
There are two immediate take home points from this decision:  First, declaratory actions filed on the basis of "extra protection" will not be entertained if they do not provide any useful purpose or assist in settlement.  If they are a duplication of the infringement actions, then adding "kitchen-sink" patent declarations will not provide fruitful for a patentee.  Second, the case law in this area is still a mess.  Until it is fully wrangled with and clarified by the Federal Circuit or Supreme Court, litigants may expect judges to rely heavily upon their discretion in determining whether to entertain declaratory actions in similar originator-generic battles.

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