Tuesday, 28 June 2016
Monday, 27 June 2016
|Is it safe to come out yet?|
* Neighbouring rights for publishers: are national and (possible) EU initiatives lawful?
Eleonora Rosati explains the limitations and restrictions on introducing a sui generis neighbouring right for publishers. National initiatives may fall short, but introduction at the EU level could be possible.
* The Pendulum Swings: US Supreme Court Makes it Easier to Obtain Patent Enhanced Damages
* US Supreme Court in Halo and Kirtsaeng makes IP victory sweeter for successful parties
Merpel bring us the latest decision from the extraordinary "House Ban" disciplinary action. The Enlarged Board of Appeal refused to make a proposal to terminate the appointment of the Board Member, ordered reimbursement of his costs, and ordered the decision to be published. You can find the document here.
We must rid ourselves of unconstructive criticism and the mortal danger of taking everything our union has achieved for granted. We must rediscover, love and cherish it.
Will Congress react? The US Supreme Court issued the much-awaited decision in Cuozzo Speed Technologies v. Lee. In that decision, the Supreme Court upheld the United States Patent and Trademark Office's (USPTO) use of the "broadest reasonable construction" standard in reviewing claims challenged in Inter Partes Review Proceedings (IPRs) before the Patent Trial and Appeal Board (PTAB). This standard makes it more likely that a challenged patent will be found invalid for obviousness. The Supreme Court also decided that the decision to institute an IPR is not appealable.
In Couzzo Speed Technologies, Justice Breyer wrote the unanimous opinion basically affirming the USPTO's power to adopt the "broadest reasonable construction" standard in IPRs. The Leahy-Smith America Invents Act clearly provided the USPTO with rule making authority concerning IPRs. The Supreme Court had little trouble following the statute. The Supreme Court also rejected arguments that IPRs were more like court proceedings than specialized agency proceedings. For example, challengers do not have to have constitutional standing, have a different burden of proof, and the USPTO can continue to hear the action without the challenger. Justice Breyer also noted that IPRs' predecessor was reexamination--essentially a return to review the agency's decision to grant a patent. The Court notes that there is nothing in the text, purpose or history of the statute to support a differing viewpoint. Notably, Justice Breyer recognizes that there may be inconsistent results between district courts and the PTAB, but that this was "inherent" in Congress' "regulatory design."
Justice Breyer also wrote the majority opinion on whether the decision to institute an IPR is not appealable. This may prove to be important because it essentially allows the PTAB full authority to decide whether an IPR should be instituted. Thus, ways to critique the application for an IPR may, over time, become more limited because of a lack (or threat) of judicial review.
|"Looks like a job for Congress!"|
In an analysis published in 2016, Harper Batts of Baker Botts explains that the "death squad" label is fiction. He argues that the relatively early high rates of invalidity were because those challenged patents were particularly weak and that defenders have learned how to successfully critique IPRs. Moreover, he notes that the PTAB may have received a signal from Chief Judge Rader that they may want to proceed with care. Additionally, a study published by Corporate Counsel announced that the "PTAB is Not a 'Property Rights' Death Squad." (behind a paywall).
In a study by Arti K. Rai, Jay Kesan and Saurabh Vishnubhakat titled, "Strategic Decision Making in Dual PTAB and District Court Proceedings," the authors state that, in part, based on the high percentage of PTAB proceedings that are instituted after a district court action is filed that the PTAB and district courts should apply the same standard. However, they do note that a substantial percentage--about 30%--do not involve proceedings at the agency and court.
The impact of In re Cuozzo Speed Technologies and IPRs remains to be seen. IPRs were designed to improve patent quality through a relatively quick and cheap method with knowledgeable judges. Apparently, the bio-pharmaceutical industry has been somewhat surprised at the use of IPRs against pharmaceutical patents by the generic industry. How did they not see this coming? It will be interesting to see if Congress moves to change the USPTO's rules.
Sunday, 26 June 2016
Registration of a trademark license: the result of the CJEU is reasonable, but what about the Court's reasoning?
Eckhard Ratjen, a member of the Bremen office of Kat friend Boehmert & Boehmert, for discussing, in the firm’s most recent newsletter (and sharing his thoughts with this Kat), the judgment given by the CJEU on February 4, 2016 (Case C‑163/15, Youssef Hassan v Breiding Vertriebsgesellschaft mbH).
At issue is a question that has occupied trademark law and practice for many decades: must a trademark license be registered for a licensee to be authorized to bring an action for infringement? In the words of the referral—
“Does the first sentence of Article 23(1) of [the Regulation] preclude a licensee who is not registered …from bringing proceedings alleging infringement of a Community trade mark?”.Member States of the EU differ on the answer to the question (e.g., Spain— “yes”; Germany— “no”). The answer given by the CJEU is that no registration is required. While this Kat believes that the result is reasonable, the legal analysis given shows how inadequate the nature of CJEU decision-making can sometimes be in providing a compelling explanation in support of it ruling.
The focus of the Court’s attention is Article 23(1) of the European Union Trademark Regulation, which provides that—
“Legal acts referred to in Articles 17, 19 and 22 concerning a Community trade mark shall have effects vis-à-vis third parties in all the Member States only after entry in the Register. Nevertheless, such an act, before it is so entered, shall have effect vis-à-vis third parties who have acquired rights in the trade mark after the date of that act but who knew of the act at the date on which the rights were acquired.”The Court states (para. 18) that--
“Read in isolation, that sentence could be interpreted as meaning that the licensee cannot, if the licence has not been entered in the Register, rely on the rights conferred by that licence vis-à-vis third parties, including the party infringing the trade mark.”However, the Court goes on to qualify what seems to be the plain meaning of Article 23(1) in favor or requiring registration of the license, stating that (para. 19) –
“… in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (citation omitted).”Given this analytical framework for resolving the question, the Court reaches the conclusion that (para. 25)--
“With regard to the purpose of the rule laid down in the first sentence of Article 23(1) of the Regulation, the Court takes the view that … the lack of effects, vis-à-vis third parties, of the legal acts referred to in Articles 17 [transfer], 19 [rights in rem] and 22 [licensing] of the Regulation which have not been entered in the Register is intended to protect a person who has, or may have, rights in a Community trade mark as an object of property. It follows that the first sentence of Article 23(1) of the Regulation does not apply to a situation, such as that in the main proceedings, in which a third party, by infringing the mark, infringes the rights conferred by the Community trade mark.”
The question of whether registration of a trademark license is mandatory or permissive has arisen in various jurisdictions and the ultimate result is not uniform. At the end of the day, the tribunal decides either “yes” or “no”. As such, whatever their decision, courts that place a value on fully disclosing the underlying policy grounds for their decision will need to address two major issues; (i) do we want to require registration in such circumstances, and (ii) if so, it is workable? It is unfortunate that the CJEU did not do so to provide a helpful window into its policy considerations in connection with its ruling on trademark licensing.
Since publishing IPKat's letter to our European IP colleagues (see letter here) following Friday's EU referendum result, the IPKat has received an outpouring of comments, emails and tweets from across Europe and the globe. Although there has been some criticism, the majority of responses have been warm and positive. The IPKat received a letter in reply from Sven Klos of the Netherlands that the team thought was worth sharing with our readers:
Friday, 24 June 2016
|The IPKat loves his European colleagues|
We are sorry.
Not one person in the IPKat team wanted to be writing this post this morning. Least of all, me. Despite my moniker, I have spent over 20 years in the UK, over half of which has been devoted to the study and practice of European intellectual property law.
As lawyers, we are taught that cases turn on the evidence. Patent litigators will tell you that you win or lose on the credibility of your expert witness. Strong expert evidence, strong case, strong prospects of success.
The expert evidence was strong and unambiguous. The UK must remain with the Union to continue to enjoy economic and political security and progress. Business leaders, economists and heads of state all agreed that turning our backs on the European Union would spell disaster for the UK's economic future. Our Katonomist, Nicola Searle, says she has never seen economists so unanimous on a subject. They have so far turned out to be right with shares and the British pound plummeting to a 30 year low, this morning. Experienced politicians and security advisers agreed that retreating from Europe would result in social and political insecurity.
The UK IP profession was in favour of remaining. The negative impact on key innovative industries, including life sciences, could not be ignored.
On the cold, hard evidence, the UK should have voted to stay. But the Leave campaign was built on emotion. And instead of a judge, the vote went to a jury. And any good trial lawyer will tell you, emotion can often displace the evidence.
And that is why we are writing to you. We wanted to share our emotion this morning.
We are sad.
Many of us are angry.
Some are ashamed.
I am a European IP lawyer. The IPKat team is heavily comprised of European IP lawyers, with representatives from the UK, Ireland, Italy and Switzerland in our mix. Since the IPKat's founding in 2003, our blog's predominant focus has been on European IP developments. A large proportion of our readership is European.
Although the IPKat has often been critical of decisions of European institutions, whether that be of the CJEU in SPC and trade mark matters, or the manner in which the Unified Patent Court came to fruition, we and the creative and innovative industries have overwhelmingly benefited from the European Union. The harmonization of IP laws across such a significant marketplace has made it easier for industry to protect, exploit and enforce their IP. It has led to job creation and fostered a shared understanding of how to improve IP law and practice for the benefit of all.
The European Union has made us stronger and closer as a profession. At IP conferences, you often see mini reunions with UK lawyers running up to hug their German, French or Italian counterparts, opponents and friends. It has benefited our clients, as much as it has enriched our professional and personal lives.
This morning's result is not a reflection of our profession's respect or love for our European colleagues or European IP law. That, at least, remains.
We do not want to lose our bond and we will not. You are our colleagues. You are our friends.
One of the IPKat's key objectives is to bring our global IP community closer together by sharing IP decisions, legislation and practice from across the world with our readers. Our aim is that by fostering a shared understanding of our unique perspectives, we can work together to improve IP law for innovators, creators, users and the public.
The IPKat's objective is now even more important. We will be as engaged as ever in European IP law, sharing news and commentary from national and European courts. With our readers, the IPKat will continue to foster the strong bond with our European colleagues that we have so luckily enjoyed for over forty years.
In the coming weeks, months and years, there will be a lot of questions about what the European IP landscape looks like without the UK. We will keep you updated on the latest news and insight as matters progress.
But, for now, all we can say is - we are sorry.
The IPKat Team
Thursday, 23 June 2016
The result of all this was that the EBA refused to make a proposal to terminate the appointment of the Board Member, ordered reimbursement of his costs, and ordered the decision to be published. Merpel is happy to comply with the last part.
One has to wonder how long Mr Battistelli's position can be considered tenable, given that he has been held by the highest tribunal in the European Patent system to have violated the judicial independence of that tribunal, and to have threatened its members?
Then again, some AC delegates will not be fans of this decision (this being their third rebuff from the Enlarged Board in relation to a single disciplinary matter). Bear in mind that the AC was already given the opportunity to distance itself once from Mr Battistelli's actions and did not do so, or at least not unambiguously. One must assume that Mr Battistelli still enjoys the love and support of at least a faction within the AC (though Merpel hears that the faction shrinks at each meeting...).
|The AmeriKat getting her paws on some sweet|
IP victory pie, thanks to the US Supreme Court
"Last week the U.S. Supreme Court issued two decisions enhancing the ability of the victor in IP disputes to further collect against the losing party—in one decision, easing the standard by which courts can enhance (triple) damages in patent cases, and in the second decision setting out the factors by which a court determines whether winners in copyright cases can collect attorney’s fees.
Enhanced (Treble) Damages in Successful Patent Suits
The decision on enhanced damages concerns two cases consolidated for Supreme Court review: Halo Electronics, Inc. v. Pulse Electronics, Inc., et al., No. 14-1513, and Stryker Corp. et al. v. Zimmer, Inc., et al., No. 14-1520. Writing for a unanimous Court, Chief Justice Roberts discarded the previously-used Federal Circuit Court of Appeals’ two-part test limiting a patentee’s entitlement to enhanced damages only to cases when there is a finding of objective recklessness by the infringer, in favour of awarding enhanced damages as a sanction for egregious infringement behaviour.
The statute governing the award of enhanced damages in patent cases, 35 U.S.C. § 284, provides that “the court may increase the damages up to three times the amount found or assessed.” As pointed out by Justice Breyer during oral argument, the statute does not provide much guidance as to when awarding treble damages is appropriate. The Federal Circuit had previously established the following test: first, a patent owner must show by “clear and convincing evidence that the infringer acted despite an objectively high likelihood that the actions constituted infringement of a valid patent,” and second, the patentee must demonstrate, also by clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.”
In rejecting the Federal Circuit’s test, the Supreme Court remarked that “enhanced damages are as old as U.S. patent law. The Patent Act of 1793 mandated treble damages in any successful infringement suit. In the Patent Act of 1836, however, Congress changed course and made enhanced damages discretionary” and within the power of the district court.
A district court’s discretion is not without limits. As the Court stressed, “a motion to a court’s discretion is a motion, not to its inclination, but to its judgment.” In using discretion a district court is “to be guided by [the] sound legal principles” developed over the last two centuries’ application of patent law. Awards of enhanced damages “are not to be meted out in a typical infringement case, but are instead designed as a punitive or vindictive sanction for egregious infringement behavior.”
Ultimately, a district court may award enhanced damages when appropriate given the preponderance of the evidence presented (rather than on a clear and convincing standard mandated by the previous Federal Circuit test). In addition, the district court’s decision to enhance damages will only be reviewed on appeal for abuse of discretion.
The decision comes as no surprise given the 2014 Supreme Court cases regarding attorney’s fees in patent cases: Octane Fitness LLC v. Icon Health & Fitness Inc., 134 S. Ct. 1749 (2014) and Highmark Inc. v. Allcare Health Management System, Inc., 134 S. Ct. 1744 (2014). Those decisions, cited in Halo, rejected the Federal Circuit’s test for awarding attorney’s fees in patent cases by similarly lowering the standard of proof to a preponderance of the evidence and limiting appellate review to abuse of discretion.
Attorney’s Fees in Successful Copyright Suits
In contrast, last week’s decision on awarding attorney’s fees in copyright cases made no mention of the Supreme Court’s jurisprudence on attorney’s fees in patent suits. In Kirtsaeng v. John Wiley & Sons (2016), the Supreme Court overturned the Second Circuit Court of Appeals’ rejection of attorney’s fees under the Copyright Act and remanded the case to the district court to reassess whether such fees are appropriate. Copyright law aficionados will recall that this is the second time Kirtsaeng’s case has come before the Supreme Court. In 2013, the Court held, by a 6-3 margin, that the “first sale” doctrine made it lawful for Supap Kirtsaeng to resell foreign-made books of publisher John Wiley & Sons in the United States. Kirtsaeng v. John Wiley & Sons, 568 U.S. ___ (2013) (see Kat report here).
This time around, the question presented was whether Kirtsaeng could recover his attorney’s fees (totalling over $2 million) from John Wiley & Sons. Justice Elena Kagan wrote for a unanimous Court, tracking the language used in Halo and emphasizing that the statute at issue allows for broad discretion of the district court, but that discretion is not without limits. 17 U.S.C. §505 of the Copyright Act states simply that “a court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” In determining when such an award is appropriate, the reasonableness of the losing party’s argument needs to be taken into account, but is not the single controlling factor.
In this case, Wiley & Sons had argued that since three Supreme Court justices had previously agreed with its position on the merits, its position was reasonable, and therefore no attorney’s fees should be awarded. The Supreme Court rejected this and the Second Circuit’s approach which gave not just “substantial,” but nearly “dispositive,” weight to the question of reasonableness. Rather, the reasonableness of the losing party’s position is but one factor a court must take into account. Other factors include frivolousness, motivation, objective unreasonableness and the need in particular circumstances to advance considerations of compensation and deterrence.
In remanding the case, the Supreme Court made clear that it was not intimating that the lower court should reach a different conclusion and award Kirstaeng attorney’s fees. Rather, the question of attorney’s fees needs to be reassessed by “giving substantial weight to the reasonableness of Wiley’s litigation position, but also taking into account all other relevant factors.” It remains to be seen how the district court applies the instruction and whether Kirstaeng ever collects his attorney’s fees.
In one week the US Supreme Court removed (or at least lowered hurdles) to receiving enhanced damages in patent cases and attorney’s fees in copyright suits, reminding litigants that these decisions are at the discretion of the district court, which is not to be abrogated on appeal. Parties opposing requests for enhanced damages or attorney’s fees must be aware of the lower standards now at play."
Wednesday, 22 June 2016
Is the U.S. Supreme Court pro-patent or anti-patent? One of my favorite books on patent reform is by economists Adam B. Jaffe and Josh Lerner titled, "Innovation and its Discontents: How Our Broken Patent System is Endangering Innovation and Progress and What to do About It," published in 2004 by Princeton University Press. One of the insights from the book is the recognition of how patent legal protection moves like a pendulum throughout history. Notably, we tend to swing either too far in favor of protection or too far away from protection. We have trouble finding the middle way. On June 13, 2016, the U.S. Supreme Court in Halo Electronics v. Pulse Electronics and Stryker Corp. v. Zimmer (Halo) made it easier to obtain enhanced damages for willful infringement in patent infringement cases.
In Halo, Chief Justice Roberts in a unanimous opinion rejects the Federal Circuit's standard for obtaining enhanced damages for willful infringement. The Federal Circuit's standard is essentially its interpretation of section 284 of the 1952 Patent Act which states, "courts 'may increase the damages up to three times the amount found or assessed.'" The Federal Circuit's standard included two parts: 1) "a patent owner must first 'show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent,' 'without regard to the state of mind of the infringer," and 2) "the patentee must demonstrate, again by clear and convincing evidence, that the risk of infringement 'was either known or so obvious that it should have been known to the infringer.'" Notably, under the first step objective recklessness is not found if a substantial question about noninfringment or invalidity is raised by the alleged infringer--even if they didn't know about that question at the time of infringement.
|"Rigid rules are not always the right answer."|
The Supreme Court further rejected the clear and convincing evidence standard for awarding enhanced damages because it does not find support in the statute. For similar reasons, it also rejected the Federal Circuit's review standards and now requires the abuse of discretion standard.
The majority opinion addressed the policy behind the creation of the Federal Circuit's test. The Supreme Court noted that concerns with impeding innovation "as companies steer well clear of any possible interference with patent rights" and the "embold[ing] of trolls" because of district court's "unlimited discretion to award up to treble damages" are not justified based on the discretion in the statute.
|Justice Breyer author of |
"The Uneasy Case for Copyright:
A Study of Copyright in Books,
Photocopies and Computer Programs"
Harvard Law Review 1970
Importantly, Justice Breyer in a concurring opinion notes that the decision does not "mean that a court may award enhanced damages simply because the evidence shows that the infringer knew about the patent and nothing more." Further, he notes that the decision is consistent with statutory language that a failure to obtain an opinion letter from counsel does not mean enhanced damages should be awarded. Justice Breyer expresses concern with the costs of such letters for small businesses. Justice Breyer also addresses the "patent troll" issue:
My understanding is that fear of enhanced damages often led counsel advising clients not to do extensive and detailed patent searches. Is this the incentive we want to create? The case could signal a course correction against the perception that there is a general anti-patent sentiment at the U.S. Supreme Court. Notably, the case is a unanimous decision. The Supreme Court issued Couzzo Speed Technologies on June 20, 2016, which pushes back the other way. What message should the Federal Circuit receive?"Consider that the U.S. Patent and Trademark Office estimates that more than 2,500,000 patents are currently in force. Moreover, Members of the Court have noted that some "firms use patents . . . primarily [to] obtai[n] licensing fees." eBay Inc. v. MercExchange, L.L.C. (2006) (KENNEDY, J., concurring). Amici explain that some of those firms generate revenue by sending letters to "'tens of thousands of people asking for a license or settlement'" on a patent "'that may in fact not be warranted.'" . . . How is a growing business to react to the arrival of such a letter, particularly if that letter carries with it a serious risk of treble damages? Does the letter put the company "on notice" of the patent? Will a jury find that the company behaved "recklessly," simply for failing to spend considerable time, effort, and money obtaining expert views about whether some or all of the patents described in the letter apply to its activities (and whether those patents are even valid)? These investigative activities can be costly. Hence, the risk of treble damages can encourage the company to settle, or even abandon any challenged activity. To say this is to point to a risk: The more that businesses, laboratories, hospitals and individuals adopt this approach, the more often a patent will reach beyond its lawful scope to discourage lawful activity, and the more often patent-related demands will frustrate, rather than "promote," the "Progress of Science and useful Arts." . . . Thus, in the context of enhanced damages, there are patent-related risks on both sides of the equation. That fact argues, not for abandonment of enhanced damages, but for their careful application, to ensure that they only target cases of egregious misconduct."
Tuesday, 21 June 2016
|... or, in alternative, |
to introduce an EU-wide neighbouring right
- the compatibility with EU law of national legislative initiatives (Germany and Spain) that have resulted in the creation of sui generis rights for press publishers, and
- whether a neighbouring right for publishers may be adopted at the EU level and, if so, what changes of the copyright acquis are required to this end.
The first part will focus on the compatibility of national rights for press publishers with the current acquis in the area of copyright – notably the InfoSoc Directive and the Rental and Lending Rights Directive. By considering relevant case law of the Court of Justice of the European Union (CJEU), it will recall that the InfoSoc Directive intended to achieve a broad harmonisation of national copyright laws.
In Svensson the CJEU clarified that, by adopting the InfoSoc Directive, the EU legislature deprived Member States of the freedom to broaden the scope of relevant economic rights. In Reprobel the CJEU held that the term ‘rightholders’ in the InfoSoc Directive does not include ‘publishers’. From a combined reading of Svensson and Reprobel, it follows that publishers cannot be granted any rights under the InfoSoc Directive. This is not only true in the copyright area, but also in relation to neighbouring rights. While C More suggests that Member States can broaden the scope of the neighbouring rights harmonised in the Rental and Lending Rights Directive (including in relation to communication to the public), this decision does not also suggest that Member States are free to add new categories of rightholders in addition to those indicated in that directive.