From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Friday, 24 March 2017

"What is this thing called love, this funny thing called love"? And while you're at it, what is a covenant not to sue?


“…[W]hat is this thing called love, this funny thing called love”? (song by Cole Porter)

Some topics in IP attract more attention than they deserve, while others are underappreciated. Think about all the academic ink that has been spilled about genericism in trademarks; it seems that the more that is written, the less likely it is that genericism will be found. To the contrary is IP licensing. Most Kat readers can anecdotally confirm that IP licensing is wide-spread. However, there is a surprisingly thin corpus of commentary, with the result that certain licensing practices are, frankly, not well-understand.

A good example of the latter is the notion of “covenant not to sue” (also referred to as a “nonassertion agreement”). Again, anecdotally at least, it seems that a covenant not to sue is frequently used, especially in patent and trademark licensing. Notwithstanding, this Kat has not found a satisfactory way of defining, or at least describing, what the covenant is. “Come on Kat”, you might say, “the fault lies with you.” Perhaps. But this Kat would argue that the problem rests with the notion itself.

Focusing on patents, consider that the statutory treatment of licenses and licensing varies greatly. In the U.S., the subject is largely absent from the patent statute, with no real treatment of the differences between an exclusive and a non-exclusive license. By contrast, take a country like Israel, whose patent statute provides (at least a partial) definition of exclusive and non-exclusive licenses, with special attention to the right to sue. Here, as well, however, there is no statutory reference made to a covenant not to sue. Varieties of these two approaches can be found in most other jurisdictions; what seems common to all is that none provides a real definition of what is entailed in a covenant not to sue.

“Not so fast, Kat, there is a body of understanding about what is meant.” Let’s explore this claim. A useful book on patent licensing, at least under U.S. law, is Drafting Patent License Agreements, by Brian Brunsvold and others (now apparently published in its 8th edition). The lead paragraph on their brief treatment of the topic in the 6th edition (written by Brunsvold and Dennis O’Reilly) states as follows:
“A patent owner may contractually agree not to assert the patent. Such an agreement, interchangeably known as a nonassertion agreement or a covenant not to sue, is used where a nonexclusive license is in inappropriate or is to perceived have unacceptable consequences.

The grantor of a nonexclusive license impliedly represents possession of the power to grant the license and necessarily represents the power to impose the equivalent of a lien on the patent. Similarly, the grantor of a covenant not to sue will be presumed to have a right of action against the grantee at the time the covenant is granted. Since a patent application does not give its owner a right of action, a covenant not to sue cannot be granted until the patent issues. Notwithstanding a presumption that the grantor has a right of action, i.e., owns or had the right to enforce the patent, good practice suggests obtaining an express representation to that effect.

A covenant not to sue is a promise of the grantor that does not necessarily future owners of the patent. Thus, even where the grantor owns the patent at the time, the grantor may assign it to another who, absent a contractual provision, would not be bound by earlier covenants not to sue. The recipient of such a promise, therefore, should obtain an express representation of ownership by the grantor and should contractually require the grantor to impose the same promise on any future assignee of the patent” (footnotes omitted).
This Kat would suggest that the foregoing reflects a common understanding that a covenant not to sue differs from a non-exclusive license in that it is personal to the parties. A covenant not to sue does not represent that the grantor necessarily has good title or can enforce the patent against the grantee, nor does it bind successors to the patent. (As such, it reminds this Kat of a quitclaim deed in real property, where the grantor does not warrant that it has any rights in the property). So far, so good—if the parties want to bind themselves in this fashion, they should be allowed to do so.

What this Kat does not understand, however, is the suggestion by the authors that express representations be given by the grantor regarding ownership and assignment of the covenant. If these explicit assurances are contractually given, what is the difference between a non-exclusive license and a covenant to sue, whatever the caption? Consider the sample clause provided by the authors—
“Company A hereby covenants not to sue Company B under any patent listed in Exhibit A for infringement upon any act by Company B of manufacture, use, sale, offer for sale, or import that occurs after the effective date of this Agreement. Company A hereby represents that it owns full and equitable title to each patent listed in Exhibit A. Company A further promises to impose the covenant of this paragraph on any third party to whom Company A may assign a patent listed in Exhibit A.”
What makes this provision a covenant not to sue, as opposed to an alternative formulation of a grant of non-exclusive license? This Kat has no answer.

See also, “When is a licence not a licence? When it’s a covenant not to sue?”, IP Draughts, 26 January 2013, here.

Around the IP blogs

MARQUES Class 46 (trade marks)


See the information below received by MARQUES, which “will probably not affect the immediate workload of our practitioner readers, but it does relate to the general betterment of the intellectual property environment on a global basis for years to come” – it relates to the highly successful TMview online search and availability service and it reads like this:

OAPI TMview development visit at EUIPO 
Searching for some IP blogs!

Under the framework of the International Cooperation Service, a delegation of IT experts of the African Intellectual Property Organization (OAPI) visited the EUIPO from 13 to 24 February 2017. This visit aimed at planning its integration into TMview in the coming months. TMclass was already implemented and went live on 15 January 2015.

*April ETMR now published

The April 2017 issue of the European Trade Mark Reports (ETMR) has now been published.

To remind readers, the ETMR is a series of law reports published monthly by Sweet & Maxwell. It contains English-language reports, together with informative headnotes, of recent decisions from national and EU courts and intellectual property offices. 

The April issue contains three cases. Two are High Court rulings from England and Wales. One of these was an application by Jaguar Land Rover for summary judgment in an infringement action relating to the DEFENDER trade mark, in which alleged infringer unsuccessfully sought partial revocation on the basis of bad faith. The second was a passing off and trade mark action involving the once inauspicious word "Titanic".

The third case, from the Fifth Chamber of the General Court, has a familiar taste to it, being yet another stage in the battle over the Kit-Kat four-finger chocolate bar shape mark.

The 1709 Blog


“The US Supreme Court held on March 22, 2017 that a feature incorporated into the design of a useful article is eligible for copyright protection “if, when identified and imagined apart from the useful article, it would qualify as a pictorial, graphic, or sculptural work either on its own or when fixed in some other tangible medium.” The case is Star Athletica LLC v .Varsity Brands. Justice Thomas wrote the opinion of the Supreme Court.” -- See Marie-Andree Weiss’s case review here

KluwerIPLaw


Spain will not join the Unitary Patent system. That became clear during a session of the Spanish parliament (on March 22, 2017). Earlier this month, the parliamentary committee for economics, industry and competitiveness had approved a motion of the socialist party PSOE, requesting the government to reconsider joining the system. Only the Popular Party, which runs the minority government in Spain, voted against the motion. See the full report here

Photo courtesy of Guo Si-te.

The Perks of Being a Coffee Seller - Star Box

"Coffee Cat" was the punny headline that caught reader Chris Ellins's (Westminster Law School) eye. Chris wrote in to let us know that something was brewing in Swiss Cottage. In a Doppio-and-Goliath fight, Doppio had lost. Yes, a coffee kiosk named "Star Box" was being forced to change its name following action by the coffee giant Starbucks. After the fight, there were grounds on the ground.

Looking under the lid of the matter, there are some interesting twists. According to the Camden New Journal, Nasser Kamali, the owner of the Camden Star Box, named his coffee kiosk in honour of Marxism, “I do believe in Marxism and that is very important to me. That is why I had the red star logo on my stickers. I am in a box. It’s my red, star box.” Alas, this got Kamali into hot water with a global multinational corporation, and in the name of keeping its brand strong, Starbucks requested he no longer use "Star" and change his logo (which contains a red star). Kamali has complied.

Photo by benho.sg
The case has attracted a latte of international attention. The Daily Mail noted Kamali's refusal of a £300 goodwill payment from Starbucks. Even Fox News has it covered, and includes a series of reader comments dissecting the role of Marxism and American politics in downfall of Star Box.

Yet "Star Box" itself is not original. Oddly enough, this Kat has history with Star Box, and Starbucks. Her coffee roots go back to high school in the 90s in Washington State, when having a bumper sticker that said, "I drive espresso because I am latte" was considered cool, and Starbucks was a local business with less than 150 stores.  The mermaid logo was only partially clothed.

Fast forward to 2007, and now both a coffee and an IP fan, this Kat was delighted when she came across "Star Box" in Teheran, Iran. She sent a photo to IP Professor Susan Scafidi's Counterfeit Chic blog.  It then got picked up in 2008 in an Iranian forum, again in 2010, hit Reddit in 2011, made it to Buzzfeed in 2014 and NewsDay in August 2015. The image is currently on at least 30 websites, all pointing to the amusing similarities with Starbucks."Star Box" clearly has brand appeal.  Curiously, Kamali is Iranian, perhaps this Kat's photo caught his eye? [Merpel would also like to note that the Katonomist now uses this story in lecturers to demonstrate how digital content is often copied without attribution or incorrectly attributed.] 
Buzzfeed screen shot, Photo 
incorrectly attributed to Reddit

While this make look like a heated and strong debate, the distilled version is simply large brand versus small brand. This Kat has previously written about the interaction between lookalikes and brands. It's hard to imagine any of Star Box's London customers mistook the kiosk for Starbucks. Using a homonym of Starbucks is useful for attracting attention, and Star Box has benefitted Kamali, both in current new coverage and customer appeal. Starbucks's pursuit of Star Box may have some negative impact on the Starbucks brand, but could have deterrent effects. The public pursuit of Star Box could dissuade lookalike brands, which may save Starbucks potential legal costs - assuming that legal action is necessary. However, the pursuit of lookalike brands for such a dominant global brand is questionable, and Starbucks recently lost a case to a small coffee roaster named Charbucks.  The economic impact is unclear.

And now, for gratuitous conspiracy theories. Could this be the start of a global political takedown of American capitalism - starting with the tarnishment of coffee brands? Is Big Tech making "tarnishment" autocorrect "garnishment" to annoy human beings whose jobs will be replaced with machines?

However, Kamali isn't wasting time over spilled milk - he's back to selling coffee.

Thursday, 23 March 2017

Telstra loses big in keeping its information confidential in Australian patent dispute

The AmeriKat is looking forward to  her first
sojourn to Australia
The AmeriKat has yet to set a paw in Australia.  This makes her unique amongst most of her English peers, almost all whom have taken the long series of flights to experience the gorgeous sandy beaches, unrivalled scary insects and snakes and Neighbours nostalgia.  However, despite the fact that we are so far away, Australia's legal system seems very familiar to the English having derived from our common law system.  But how similar are we when it comes to protecting confidential information in court proceedings?  Martin O’Connor (Addisons) reports on the recent case of Upaid Systems Ltd v Telstra Corporation Limited (No 4) [2016] FCA 1514 where the Federal Court of Australia recently grappled with the issue.  Martin reports:
"The long running patent dispute between technology company, Upaid Systems Ltd and major Australian telco Telstra Corporation Limited reached a key inflexion point recently with the Full Court of the Federal Court of Australia rejecting Telstra’s attempts to have the matter summarily dismissed. In a follow up decision several weeks later, the Federal Court dismissed an application by Telstra to have large tracts of information which had been provided in connection with its summary dismissal application suppressed from public access.

Given issues relating to the suppression of material are not frequently canvassed by the Court—they are usually resolved directly between the parties—the decision provides a rare and interesting insight into the Court’s views on suppression issues generally. This is particularly important given that a defendant in a patent infringement proceeding may be required or may choose to disclose information they would prefer to keep confidential.

Background – re-cap

Upaid Systems Ltd is a technology company founded in 1997 and has an international portfolio of patents over certain enabling technology for mobile commerce. In Australia, Upaid is pursuing legal action in the Federal Court against Telstra, alleging that Telstra has infringed two of Upaid's Australian patents, through the use of a convergent communications system and an enhanced services platform to provide a range of products and services to users connected to Telstra's mobile telecommunications networks.

The Suppression order decision

One of the fundamental principles of litigation in Australia is that the Court conducts its business in public and that any documents which are read in open court form part of the public record. The Court may, however, in limited cases make orders to suppress information where it is necessary.

Telstra sought suppression orders over vast swathes of information, including: evidence filed in relation to its summary dismissal application; parts of the transcript of the hearings at which the contents of the evidence was freely disclosed and discussed; written submissions; and an outline of evidence and flowchart describing the process of purchasing a particular Telstra product using an internet browser on a Telstra mobile device.

In the course of the proceedings the scope of what Telstra sought to supress changed and was inconsistently applied so that materials earlier revealed were later sought to be included. Telstra’s application was also haphazard. Words or data redacted in one submission were left open to view in others.

Significantly, Telstra had made no attempts to request that the Court be closed for the relevant hearings during which the above materials were canvassed, meaning that members of the public were allowed to and did attend the hearing. In fact, explicit disclosure was made in open court of information recorded in some of the documents, including references to names of system components and functions that form part of Telstra's telecommunications network.

Following the hearing of its summary dismissal application, Telstra later claimed the material contained information of a kind that could be used by 'miscreants' for the purposes of damaging Telstra or third parties in the form of a cyber-threat. As a result, it applied for a suppression order over the material on the basis that it was necessary to prevent prejudice to the proper administration of justice. This ground is commonly relied upon as a generic rationale when a litigant is unable or unwilling to be more precise.

The Federal Court refused Telstra's application for a suppression order. Justice Yates found that Telstra's disclosure in open court of what was claimed to be sensitive information was a decision Telstra had taken deliberately. The manner in which the purported confidential information was managed within the Telstra organisation was also prominent in the Judge’s thinking as he reached his conclusion:
“…Telstra has not demonstrated that the information it seeks to supress is confidential and treated as such by its employees, suppliers, contractors and consultants…there is no evidence that Telstra’s employees, suppliers, contractors and consultants, involved with the systems in question, are or have been under any obligation whatsoever not to disclose the actual information that happens to be contained in the outline, flowchart and affidavits."
In summary, in circumstances where Telstra had not shown it treated its information as confidential, it was too late for it to ask the Court to suppress that information:
“If there is no evidence that Telstra itself has a system or arrangement in place to protect the alleged confidentiality of the information in question, why should the Court be prevailed upon to put such a system in place or make such an arrangement for the purposes of this proceeding? Why is a suppression order necessary when Telstra itself does not appear to recognise, through its own procedures, the same necessity? The security concerns it has advanced in this application appear to be security concerns it tolerates and manages in its own commercial activities.”
Justice Yates was not satisfied that the suppression order sought was necessary to prevent prejudice to the proper administration of justice, other than in respect of 3 exhibits tendered at the hearing of the summary dismissal application, the confidentiality of which was not contested by Upaid:
“As the High Court emphasised in Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 at [31], it is insufficient that the making or continuation of such an order might be convenient, reasonable or sensible or be seen to serve some notion of the public interest. The question is whether such an order is "necessary" and, as the High Court emphasised, "necessary", in this context, is a "strong word". If the Court is of the view that such an order is "necessary", the order should be made. Otherwise, the order should not be made. If an order has been made and the circumstances show that it is not, or is no longer, "necessary" then that order should be discharged.”
Telstra's application concerned a hearing which took place in March 2015; the application for a suppression order was heard in November 2015; and a decision was made on the suppression order December 2016.

Finally, the Court took the view that Telstra should pay Upaid its costs in relation to the application."
The emphasis on the treatment of the confidential information by the party seeking to assert confidence and the necessity of the order are all points that are similarly pressed by parties seeking to protect confidential information before the English courts.  Also important is the speed with which you act to protect the information.  In this case months passed before the hearing and the application for the suppression order, which always raises a judicial eyebrow (or two).  Speed, like much of life, is of the essence.  Unless, of course, you are like Merpel and consider time a mere construct...

«Printed by Jouve» it’s not

Rly?
If there ever was a first world problem, then this is it. But whenever (okay, not every single time) I walk to the printer in our office and pick up a freshly printed European patent application or European patent, I read the line at the very bottom of the first page which reads “Printed by Jouve, 75001 PARIS (FR)”, and I think “no, it isn’t. It’s printed by my Cannon makeupsomenumber in Zurich, Switzerland. I wish I was in Paris”. Why does it say “Printed by Jouve” on every single European patent (application)?

Jouve is a group of companies headquartered in Paris providing, in their own words, “customers with cross-media solutions for designing, enriching, showcasing and distributing content”, whatever that means. Those services include on-demand printing and web-to-print services. I would assume that Jouve has some kind of contract with the European Patent Office. However, are they printing anything for the EPO, much less patents and patent applications?

Solving another first world problem (Fig. 1 from EP 3 047 756 B1)
Since 1 April 2005, European patents and patent applications are published electronically, the printed publication was ceased on that day. Until 1 January 2014, it remained possible, on request, to be sent a (printed) copy of the patent specification together with the certificate for a European patent. As of 1 January 2014, this option was also ceased, because it was hardly ever used. It remains possible to obtain certified copies of the certificate with the specification annexed upon request and payment of an administrative fee. I would assume these are printed on the printers on location at the EPO’s offices in Munich or The Hague, and not by Jouve.

So, I just cannot fathom what Jouve is printing in Paris. Yet, even on the most recent applications published – such as EP 3 143 898 A2 “Anti-theft carrying bag with security and expansion panels and with carrying strap” (112 pages, no less) – or granted patents such as EP 3 047 756 B1 “Mobile beach basket” read “Printed by Jouve, 75001 PARIS (FR)” on the first page. If any reader has an answer to this riddle, please put it in the comments.

Wednesday, 22 March 2017

Welcome clarification on the Malaysian law of well-known marks; but there is still judicial work to be done


The law of well-known marks continues to develop apace in various countries in Asia. Kat friend NG Kim Poh has offered a summary of an important decision in Malaysia on this dynamic topic.

The Court of Appeal of Malaysia had recently provided its grounds of judgment for an important decision in Y-Teq Auto Parts (M) Sdn Bhd v X1R Global Holdings & Anor (CACA NO. W-02(IPCV)(A)-511 -03/2016). The case dealt with the well-known mark provision under the Trade Marks Act 1976, prohibiting registration of a mark even where the goods or services of the parties are not the same.

The two respondents (the claimants in the action filed in the High Court) were the registered proprietor and registered user, respectively, of a mark in Class 4. A representation of the respondents’ mark is shown below:
The appellant (the defendant in the action filed in the High Court) was the registered proprietor of a mark in Class 7, Class 9, Class 12, and Class 35. The appellant also had a pending application for the same mark in Class 25. A representation of the appellant’s mark is shown below:
The respondents’ action in the High Court sought to expunge the appellant’s registrations and application, alleging that their use is likely to deceive or cause confusion to the public or would be contrary to law. The respondents further relied on Section 14(1)(e), which provides protection for a well-known mark.

The respondents prevailed at the High Court. In a relatively detailed judgment, the High Court delved into the applicability and scope of various provisions under the Trade Marks Act on protection of well-known marks in Malaysia. At the outset, the High Court ruled that the respondents had the necessary locus standi, notwithstanding that the parties’ respective goods fell under different classes.

There was evidence showing that the respondents were adversely financially affected because a third party declined to distribute their goods due to the mistaken belief that the goods originated from the appellant, which was a competitor of the third party. Further, there was likelihood of confusion and deception between the use of the respondents’ mark and the appellant’s mark.

The High Court ruled that the respondents’ mark was a well-known mark, inter alia, because:
(a) the public and people involved in the trade had identified the respondents’ mark with the respondents’ goods distributed by them. This assertion by the respondents was not denied by the appellant;

(b) the respondents’ mark had been used in more than 30 countries around the world, including in Malaysia;

(c) the respondents’ mark had been registered in various countries throughout Asia;

(d) the respondents had extensively promoted, advertised, publicized and presented goods to which the respondents’ mark had been applied; and

(e) there was clearly value associated with the respondents’ mark.
With respect to question of the connection between the mark and goods of the appellant and those of the respondents, the High Court ruled that this had been made out, based on showing either there was a “connection” as to the origin of the goods or in respect of the quality of the goods, or there was a business “connection” that might be perceived by the public.

Regarding likelihood of damages, the High Court held that this would be satisfied when:
(a) the claimant suffered a dilution to its goodwill in this country (i.e. Malaysia);

(b) there was a loss in the sales of the claimant’s goods;

(c) the claimant was restricted from expanding the use of its mark to goods in other classes; or

(d) the claimant was exposed to the risk of incurring legal liability from traders and consumers who had purchased the inferior goods of the defendant in the mistaken belief that they had acquired the claimant’s goods.
Consequently, the High Court ordered the appellant’s registrations and application be expunged from the Register.

The appeal was dismissed by the Court of Appeal.The Court of Appeal did not address the applicable legal principles in any detail, which is perhaps a bit unfortunate. Still, it is important to note that, in affirming the decision, the Court of Appeal in no uncertain terms held that the High Court had identified the correct legal principles and applied them to the facts of the case based on the evidence adduced by the parties.

Comment

These decisions are an important development in the law on protection of well-known marks in Malaysia, particularly because they have provided much welcome (indeed needed) guidance on the applicable principles and interpretation of important provisions of the TMA with respect to the protection to the protection of a well-known mark.

That said, the decisions appear to have missed an opportunity to discuss and provide guidance on the scope of the words “mark or part of a mark” in the context of Section 14(1)(e), TMA. For instance, would the provision apply to an impugned mark that is not identical with and is not part of the well-known mark in question? The decisions appear to have left this question unanswered.

Perhaps the answer to that question lies in Regulation 13A(b). The provision states:
"13A. The Registrar shall not register a mark or part of a mark where –

(b) the mark or part of the mark is identical with, or confusingly similar to, or constitutes a translation of a mark considered well-known under
regulation 13B, which is registered in Malaysia with respect to goods or services whether or not similar to those with respect to which registration is applied for, provided that use of the mark in relation to those goods or services would indicate a connection between those goods or services, and the proprietor of the registered mark, provided further, that the interests of the proprietor of the registered mark are likely to be damaged by such use”(emphasis added).
Time will tell whether reliance on this provision will be made in a relevant future case.

BREAKING: US Supreme Court holds cheerleading uniforms eligible for copyright protection

Disclaimer:
not one of the uniforms
at the centre of the case
The US copyright decision everybody was waiting for is finally out.

In Star Athletica v Varsity Brands the US Supreme Court has just ruled that cheerleading uniforms are eligible for copyright protection ['copyrightable', to use the US copyright jargon].

The law

The US Copyright Act, §101 states that “pictorial, graphic, or sculptural features” of the “design of a useful article” can be protected by copyright as artistic works if those features “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” 

Background

Varsity Brands holds more than 200 copyright registrations for two-dimensional designs - consisting of various lines, chevrons, and colourful shapes - appearing on the surface of the cheerleading uniforms that they design, make, and sell. 

It sued Star Athletica (also in the market for cheerleading uniforms) for copyright infringement, but the District Court held that Varsity Brands' designs could not be conceptually or physically separated from the uniforms and were therefore ineligible for copyright protection. 

In reversing, the Sixth Circuit concluded that the graphics could be “identified separately” and were “capable of existing independently” of the uniforms under §101.

Today's decision

In today's decision the US Supreme Court decided - 6 to 2 (Justice Breyer filing a dissenting opinion, in which Justice Kennedy joined) - that cheerleading uniforms are indeed eligible for copyright protection if certain conditions are met.

Writing for the majority, Justice Thomas held that a feature incorporated into the design of a useful article is eligible for copyright protection only if the feature: (1) can be perceived as a two- or three-dimensional work of art separate from the useful article; and (2) would qualify as a protectable pictorial, graphic, or sculptural work - either on its own or fixed in some other tangible medium of expression - if it were imagined separately from the useful article into which it is incorporated. 

A detailed analysis of the decision will be provided in due course: stay tuned!

Italian Supreme Court rules that mere reproduction of Vespa image may amount to counterfeiting

Roman Holiday Vespa
Italian online IP resource Marchi & Brevetti has just reported a very interesting and recent decision of the Criminal Section of the Italian Supreme Court (Corte di Cassazione) regarding the crime of counterfeiting within Article 474 of the Italian Criminal Code.

More specifically, it its judgment on 17 March 2017 (sentenza No 13078/2017) the Fifth Section of the Supreme Court addressed the question whether the mere reproduction of the image of a Vespa [a well-known and iconic symbol of 'italianità', ie 'Italian-ness' and - more generally - Italian life-style] on gadgets (eg key rings) and T-shirts without also the reproduction of the word 'Vespa' [a registered trade mark] would amount to counterfeiting. 

Under Italian law counterfeiting is not just a matter of trade mark infringement [in this case, it would be trade marks held by Piaggio, which also produces quite a lot of Vespa-related merchandise] but also a conduct that is subject to criminal sanctions.

Background

The Rome Court of First Instance (Tribunale) had already found against the defendant, who appealed the decision before the Supreme Court and argued that his conduct would not fall within the scope of Article 474 of the Italian Criminal Code. This provisions states [translation by myself]:

"1. Except in cases of joint liability covered by Article 473 [ie counterfeiting, alteration or use of distinctive signs of creative works or industrial products], anyone who introduces into the territory of the State, in order to make a profit, industrial products bearing trade marks or other distinctive signs, whether national or foreign, that are counterfeited or altered, is punished with imprisonment between 1 and 4 years, and a fine between EUR 3,500 and 35,000.
2. Except in cases of joint liability in the counterfeiting, alteration, introduction into the territory of the State, anyone who is in possession for the sale, starts selling or otherwise circulates, in order to make a profit, the products mentioned above sub paragraph 1 is punished with imprisonment up to 2 years and a fine up to EUR 20,000.
3. The delicts sub paragraphs 1 and 2 are punishable upon condition that internal laws, EU regulations and international conventions on the protection of intellectual and industrial property are observed."

Kat Holiday Vespa
The core of the defendant's argument was that the crime within Article 474 of the Italian Criminal Code distinguishes between the concepts of, on the one hand, trade marks and distinctive signs and, on the other hand, products or objects. There would be no crime when one merely reproduces images of industrial products (like a Vespa) without also reproducing any trade marks or distinctive signs. In such case, there could be confusion among products, but not also trade marks or distinctive signs.

The decision

The Supreme Court rejected the defendant's argument.

Recalling an earlier Supreme Court decision (sentenza No 9362/2015), the court noted that even the mere reproduction of an image can fall within the scope of Article 474 as long as: (1) such image is a trade mark or a distinctive sign of the product; and (2) the reproduction has the potential to create in some way confusion among consumers as regards the origin of the good in question.

It follows that the material reproduction of a trade mark as such is not required for Article 474 to apply.

Comment

This decision is consistent with earlier Italian case law on this point. 

Even if the Supreme Court did not refer to decisions other than Italian ones, the ruling also appear consistent with relevant trade mark case law, including the seminal decision of the Court of Justice of the European Union (CJEU) in Adidas-Salomon, C-408/01. In the case the CJEU considered use of a sign as embellishment [this appears to have been to some extent the defensive line used in the case decided by the Supreme Court], and held that the fact that a sign is viewed as an embellishment by the relevant section of the public is not, in itself, an obstacle to trade mark protection where the degree of similarity is none the less such that the relevant section of the public establishes a link between the sign and the mark. 

Never Too Late: If you missed the IPKat last week!


This Kitten is delighted to bring you the 140th edition of Never Too Late covering the posts from 13 until 19 March! 

Friday Fantasies
InternKat Tian Lu recaps IP news and events including a training program for judges in Strasbourg.

It’s Never Too Late for playing around the IPKat posts!
Kat konfusion regarding passing off: likelihood of confusion and the Starbucks (HK) case
IPKat Neil Wilkof muses about the complexity of the three requirements of passing off and the issue of likelihood of confusion as they played out in the UKSC’s Starbucks (HK) decision.

Thursday Thingies
This Kitten reports forthcoming events in Bournemouth (3D Printing), Budapest, Minnesota, Basel and Geneva.

Wednesday Whimsies
InternKat Hayleigh Bosher summarizes IP news and events including an IP Ball.

First live blocking order granted in the UK
IPKat Eleonora Rosati discusses the first injunction granted in the UK for blocking streaming servers, which give access to unauthorized live streaming content.

The scope of a well-known mark: not always as broad as some might wish
Kat friend Latha Nair discusses the case of Cipla Limited v. Cipla Industries Pvt Ltd in India, which involved the use of a well-known mark as trade name in respect to dissimilar goods.

Monday miscellany
InternKat Tian Lu recaps IP news and events including the UKIPO call for views regarding illicit IPTV streaming devices.

Around the IP Blogs
InternKat Tian Lu covers the latest posts from some IP blogs.

UK's IP Enforcement Framework-IPO Research Bid Opportunity (Update)
IPkat Neil Wilkof announces the deadline for submitting applications to UKIPO research bid.



PREVIOUSLY ON NEVER TOO LATE

Never Too Late 139 [week ending on Sunday 12 March] | Shall we dance? Regulatory approval, trade secrets and the transatlantic biosimilars patent wars | Biosimilars and generics as "rip-offs": when the facts may not matter | UK's IP Enforcement Framework - IPO Research Bid Opportunity | Curtain - Merpel's final EPO post | Amgen, Pfizer, Alphabet and Uber face up to trade secrets in biosimilars, self driving cars and product launch plans | BREAKING: Politico publishes (part of) draft copyright report by MEP Comodini Cachia | Parallel imports are permitted--unless they are not: the case of SAMSONITE in Singapore | UPC to open in December - a triumph of hope over experience? | The KitKat shape mark – no merging of territories for proof of acquired distinctiveness

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Never Too Late 137 [week ending on Sunday 26 February] | Patents and the Silicon Valley of clothespins | Interested in EU copyright and wish to discuss it in Florence? Here's the event for you | ARGOS - trade marks, domains, and google advertising | Swedish Patent and Market Court of Appeal orders block of The Pirate Bay and Swefilmer | The Enforcement Directive permits punitive damages - or does it? | Trader keeps the [good] faith in a spare part in trademark doublebill | Book Review: The Informal Economy in Developing Nations - Hidden Edge of Innovation? | Copyright law in the UAE: it's not what you might think | Monday Miscellany | Major changes to trademark law in Turkey: read all about it

Never Too Late 136 [week ending on Sunday 19 February] | Tartan Army scores own goal? | Book review: "Brandfather: John Murphy, The Man Who Invented Branding" | IP Summit 2016 (Second Part) | Around the IP Blogs! | Monday miscellany

Tuesday, 21 March 2017

The Delhi University photocopy case comes to an abrupt end after publishers withdraw lawsuit

The IPKat is delighted to receive this guest post from long time Katfriend Prashant Reddy (details at the end of the post).

In a rather bizarre end to the long running copyright infringement lawsuit filed against Delhi University (DU) and a photocopy shop, the three publishers: Oxford University Press, Cambridge University Press and Francis & Taylor who filed the lawsuit have announced that they are withdrawing the lawsuit. The lawsuit was filed by the publishers in 2012 to restrain DU and the photocopy shop from reproducing portions of copyright protected books for the purpose of creating course packs for students of DU. This had been the practice in DU and most Indian universities for several decades and was never challenged till the filing of this lawsuit. As a result, the lawsuit provoked protests and rallies by students and also rallies and a legal intervention by a society of academics and students who supported the university’s position that the educational use was covered by an exception in the Copyright Act, 1957.

A single judge of the Delhi High Court denied an interim injunction in September 2016 and dismissed the lawsuit after having reserved the case for judgment for several years. In December 2016 a Division Bench of the Delhi High Court also denied an interim injunction in a judgment that was very damaging to the publishers. Given the importance of the case, it was widely expected that the publishers would appeal the case to the Supreme Court, an almost routine affair for such cases. But last week, my co-blogger at SpicyIP, Shamnad Basheer who was at the forefront of the legal battle against the publishers reported that the publishers had put out a statement announcing that they were withdrawing the lawsuit. The publisher also claimed that they would continue working with academics and students to contribute and improve India’s education system.

The failure to communicate during a PR disaster

When the lawsuit was originally filed, the lethargy of the publishers in communicating with the students led to a widespread belief that publishers wanted each student to purchase entire books for the use of one chapter. The story that spread amongst the students however was that they would have to buy individual books for the use of a single chapter and that the final bill for a course could go up to Rs. 80,000. Later when the damage had already been caused, the publishers clarified that it was their intention to require universities or photocopy shops to buy licenses to photocopy books and charged half a rupee per page that was photocopied for a course pack. A course pack which earlier cost Rs. 250 towards photocopying charges would now cost Rs. 500 towards both photocopying and copyright fees. The publishers did too little to set the record straight and the flame of discontent spread through the student body like wild fire.

An incomplete legal strategy?

Then comes the issue of the legal strategy. I’ve written about it over here and here on the IPKat. For reasons best known only to the publishers, they characterized the volume of copying as ranging from 8% to 33% of a copyrighted book. As I’ve explained in an earlier post, these figures are inaccurate. The books in question were mostly compilations of essay or chapters by different authors and most of the course-packs consisted of entire chapters from these compilations – so while the portion copied may have been 10% of a book, the chapter in itself was an entire copyrighted work. Thus, effectively, entire copyrighted works were being photocopied. This was an important point that the publishers should have paid more attention to from the very beginning because it appears to have weighed on the minds of the judges. These small facts make a big difference when public perception is loaded against the copyright owners from the very beginning.

Regarding the interpretation of Section 52(1)(h) of the Copyright Act, the publishers dug their teeth into the black letter of the provision without paying enough attention to the substantial history of Indian Copyright law. I’ve explained the history of Indian law in more detail in the previous post. In specific, Indian law has a provision – Section 32A, which was introduced post the 1971 Paris Revision of the Berne Convention – the provision provides Indian users with a broad compulsory licensing provision for educational uses provided the copyright owner was compensated with reasonable royalty. The existence of this provision should have been reconciled with the broadly worded Section 52(1)(h) which allows for the reproduction of any work by a teacher or a pupil in the “course of instruction”. Read either provision too broadly and one will end up being redundant - which is not a permissible result in law.

This argument is not dealt with in either of the judgments rendered by the High Court, presumably because it was not raised before the Single Judge who first heard the lawsuit. The compulsory licensing provision in Section 32A has been rendered redundant because Section 52(1)(h) has been interpreted by the Delhi High Court to allow for any kind of photocopying without any quantitative or qualitative restrictions as long as it can be established that the photocopying was towards an educational purpose. For example, in the case of a course-pack as long as the teacher has prescribed the reading for the course it can be photocopied in its entirety. It should be noted that the judgment doesn’t define the phrase “educational institution” or limit it to non-profit institutions. India has a thriving for-profit education industry, which can also fall back on this judgment.

Indian students can’t pay for books and legit photocopies?

The most powerful argument put forth by the students and academics was one of economics. They painted a picture of penniless students and a financially broken public education system that could not pay for copyrighted material. Very often these tales are true and cannot be denied. It’s a simple, emotive argument that resonates well in India where everybody including the Supreme Court is on a populist roll. This argument however does little to address the task and costs of production of new scholarship and the challenges of pricing them right for India. This is a complicated issue as reflected in the cost structure of education in India.

As I pointed out in a piece written in the early days of the lawsuit, the annual fees at a high school like the Delhi Public School (notwithstanding the name, DPS is actually a chain of private schools) was Rs. 40,050. Now, 5 years later, it has increased to Rs. 90,000 a year. It is students from schools like DPS who then enter DU because admission to universities like DU are based on the XII standard scores and the best private schools produce the students with the best scores. A small percentage of seats (22.5%) in these universities are reserved per the Constitution for students from marginalized sections but a vast majority of students entering public universities in India are likely privileged.

What are the fees per student? In 2012, the Delhi School of Economics (the lawsuit was filed against the photocopy shop affiliated to DSE) which is a post-graduate college under DU charged an annual tuition fees of Rs. 216 (2.67 GBP) per annum and an annual library fee of Rs. 6 (0.074 GBP), and an annual library development fee of Rs. 200 (2.47 GBP). As per the latest available brochure for DSE none of these charges have increased since 2012 (despite record inflation level in the last 5 years). According to the same brochure these students then go on to work for companies like Goldman Sachs, Citibank etc.

The affordability of educational material needs to be viewed in the context of the cost of education but if higher education is so irrationally subsidized, how are publishers supposed to price their material to fit the definition of ‘affordability’?

Will contract triumph where copyright has failed?

The last question that needs to be addressed is why did the publishers withdraw the lawsuit? Their public statement doesn’t provide any reason. One likely answer is that they intend to shift their business models to the digital world, making available their works to universities through databases like the Oxford Scholar Online. Licensing agreements for these databases are likely to be governed by foreign law, most likely English law and publishers will be able to curb fair dealing limitations and exception with the help of arbitration clauses that locate litigation before foreign arbitral tribunals. Do Indian universities have the resources to deal with this changing paradigm and does the law help provide users with remedies against abusive conduct by owners of such databases? That is a debate worth everybody’s time. In the meanwhile, it is the smaller Indian publishers who are going to feel the brunt of the decision to not appeal this judgment. Some of them have already expressed their unhappiness with this decision of OUP etc. to withdraw the lawsuit. They deserve a better explanation that the bland public statement put out by OUP.

The writer is co-author of Create, Copy, Disrupt: India’s Intellectual Property Dilemmas (with Sumathi Chandrashekaran) published by OUP, India and is a Research Associate at ARCIALA, School of Law, Singapore Management University

Traditional Knowledge: beware of patent protection


Few intellectual assets give rise to as much passion as Traditional Knowledge. India has become a center for this conversation. Kat friend R.S Praveen Raj, a scientist and a former patent examiner in India, shares his views on the protection of Traditional Knowledge and against what he sees as misuse of IPR legislation.

Protection of Traditional Knowledge (TK) is a complex legal issue, owing to its dynamic nature, lack of definition and the difficulty in establishing ownership and the geographical origin of TK, as well as the absence of an appropriate scheme for its protection. Indigenous communities and traditional knowledge practitioners all over the world are greatly concerned about the increased biopiracy and usurpation by commercial entities. It is in this context that the Council of Scientific and Industrial Research (CSIR) in India formulated the Traditional Knowledge Digital Library (TKDL), which is an endeavor to preempt the grant of patents on India’s TK. TKDL contains approximately 2,08,000 formulations based on the traditional healing systems, such as Ayurveda, Unani, Siddha and Yoga.

TK Digital Libraries are the best defensive mechanism to prevent the patenting of TK already written down in ancient texts and manuscripts, although it still leaves scope for private appropriation of TK by making cosmetic improvements on it. India has signed access agreements with the European Patent Office and US Patents and Trademark Office, on the condition that secrecy be maintained and the database may be used as prior art for search and examination only. 'Prior art' is meant to encompass everything that has been published, presented or otherwise disclosed to the public as of the date of the patent and it includes documents in foreign languages disclosed in any format in any country. However, it is common sense that secrecy cannot be maintained on something that is classified as ‘prior art’.

When a patent office denies a patent to someone citing that the claimed invention is TK, it is obliged to disclose the entire gamut of TK associated with the invention as a prior art citation to the applicant, since the burden lies on the patent examiner to prove that the claimed invention is already in the prior art. This leaves open a channel for a fishing expedition by commercial outfits seeking to obtain complete details of a TK practice or product available in TKDL, by filing patent applications in the guise of inventing same and craftily drafting claims using the information available to them. Therefore, the closed access policy of TKDL actually enhances bio-piracy, as it is impossible for patent offices to maintain the secrecy of TK.

Of late, there are also attempts to create digital libraries of community-held TK that are not yet written down anywhere. Any attempt to codify community-held TK in the form of Traditional Knowledge Digital Libraries, using “Prior Informed Consent” and “Access and Benefit Sharing” concepts, would be a gross injustice for those communities, if the knowledge was shared with patent offices, as it would affect the livelihoods of Traditional Knowledge practitioners. This blogger reckons that TK Digital Libraries are to be created only on TK already known to a larger cross-section of people and the same should be made accessible to researchers. For example, Curcumin Resource Database (CRDB), an open source TK database from India, is a good example of a strategy to prevent patenting of TK. CRDB has documented all the traditional knowledge about curcumin already in public domain and the database is made accessible to researchers.

In the case of community-held TK, a Traditional Knowledge Docketing System (TKDS) should be made instead of TKDL. TKDS should indicate the location in which the knowledge is available, the community that possesses the traditional knowledge, a short description of the nature of TK and the community protocol, if any. Indigenous communities should be educated and empowered to protect their TK through existing legal mechanisms or to take patents on the innovations made by them on the TK (if they so choose), as well as to negotiate with potential customers by forming societies or trusts of their own. There is no bar for patenting inventions, though it may be based on TK. The Patent Acts only prevent patenting of traditional knowledge or which is an aggregation or duplication of known properties of traditionally known component or components. But there is no bar on patenting inventions based on Traditional Knowledge

Suggested legislation for 'In Situ’ perpetual protection of TK through a non-IPR mechanism

TK should not be allowed to be patented, since it is existing knowledge and not inventions. We should also be careful in creating registrable rights on the Traditional Knowledge (TK), including Traditional Medicine Practices, and classifying TK under Intellectual Property Rights, which are private exclusive rights operating like a monopoly in practice. Patents create private spaces in the knowledge arena (though for a limited, fixed duration), and therefore no private appropriation should be allowed in the realm of TK.

Protection for community-held TK is called for. But trade secret protection for TK is not appropriate, since knowledge/practices would remain in the custody of a selected few. It is like allowing monopoly over knowledge and a democratic nation shall not allow it. At the same time, Traditional Knowledge protection shall be holistic and ‘in situ’, hence allowing its sustainable development. Therefore, we may commit all traditional knowledge, including traditional medicines, to the realm of a “knowledge commons” and not to the public domain. Knowledge commons refers to the knowledge that is the collectively produced sphere of ideas, left unencumbered for the greater benefit of all. Since TK is not definitive in terms of its geographical origin and custodians, ownership should be held by the State only, given the fact that TK is accumulated traditional wealth and the long-kept preserve of its practitioners, tribal communities and families, wherein all of them have acted as deemed “trustees” of the State.

There shall be ‘deemed rights’ for the Traditional Knowledge holders and they should be made aware of their rights. It shall be a kind of “deemed license”, which immediately applies to the user of TK, the moment that the user decides to employ it for any purpose. The provisions for governing the deemed license/community protocols will need to be laid down in the legislation. But these licensees are not empowered to sub-license this right for commercial use to any third party, and the right for transferring licenses will be enjoyed solely by the State. In principle, the purpose of the proposed legislation is to assign some (not all) of the rights owned by the State to those deemed trustees, in lieu of their willingness to put the TK into the realm of a “knowledge commons”. The ultimate aim of the legislation is not to protect the financial interests of the TK holders, but to benefit society at large, just as with patents.

While envisaging ‘deemed rights’ in traditional knowledge, all the rights holders shall be deemed to be holding their rights under a Commons License, wherein the rights holders shall permit others the use of the knowledge in their possession for non-commercial purposes. Specific provisions for such Traditional Knowledge Commons License will need to be worked out to ensure free, non-commercial reproduction and codification of the Traditional Knowledge.

It shall be further provided that any development made using this knowledge and licensed under the above obligation, should be put back to the realm of a Traditional Knowledge Commons, thereby denying any scope for patenting thereof. Although license holders are obliged to contribute their developments made in TK back to the realm of the Traditional Knowledge Commons, path-breaking inventions, such as the development of a new drug molecule or process thereof, which involves substantial developmental costs, need not form a part, even if TK may constitute the basis of its origin.

Wish to discuss GS Media and linking?

Well, who could possibly reply 'no' to such a question?!?

If you are in London in the evening of Tuesday, 28 March, then you may want to attend the new event organised by TIPLO (The Intellectual Property Lawyers Organisation), to which I have also been kindly invited to speak.

Entitled 'Linking after GS Media: clear (and happy) at last?', this meeting consists of a convivial dinner in the beautiful premises of Middle Temple (The Princes' Room to be more precise), followed by a discussion of the issues addressed (and raised) by everybody's favourite court, ie the Court of Justice of the European Union (CJEU), in its seminal decision in GS Media, C-160/15.

In that case the CJEU tackled the issue of linking to unlicensed copyright content, and determined what the relevant legal treatment should be.

Yet, the ruling raises several questions:
  • How did the CJEU reach that decision?
  • Where are we after GS Media: is the relevant legal framework on linking any clearer now?
  • Profit-making intention: what is it all about?
  • Who is likely to be most at risk in the post-GS Media world?

Click on this (GS Media-approved) link for further information and to register your place.

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