This year the IP world will be brimming with changes, the largest of which will take place in the European Union. Sweeping reforms in EU trademark law will be implemented in March as well as the likelihood of the Unitary Patent making its debut in Europe at some point this year. China will likely see patent changes as well. Ladas & Parry has been at the forefront of helping IP owners handle the changes in IP law year after year. It’s going to be a busy year so to learn more, read on.

TRADEMARKS: LARGE SCALE REFORM OF EUROPEAN TRADEMARK LAW TO BE IMPLEMENTED IN MARCH

On March 23, 2016, the recently adopted European Union (EU) trademark reform legislative package will enter into effect making several substantial changes to the European trademark regime. Notable changes include:

• The Community Trademark (CTM) will be renamed the European Union Trademark (EUTM)
• The Office for Harmonization in the Internal Market (OHIM) will be renamed the European Union Intellectual Property Office (EUIPO)
• All EUTM’s will be considered to cover only the “literal meaning” of the goods and services listed in their identifications.
• A proprietor of a EUTM with (1) an identification covering a class heading, which was previously considered to cover all of the goods in their respective class, and (2) an application date earlier than June 22, 2012, will have until September 24, 2016 to file a declaration with the EUIPO clarifying which goods and services their application was intended to cover within the respective class. Those who do not will be subject to the “literal meaning” standard of interpretation (discussed immediately above).
• Designations of Origin and Geographical Indicators will be barred from trademark registration.
• The requirement that trademarks must be “graphically represented” will be abolished, potentially permitting the registration of scent, sound, taste, and color marks.
• Owners of EUTMs will have the ability to obtain the seizure of counterfeit goods being transported through Europe, even if the final destination is outside European Union.
• A new fee structure will be adopted, requirement filing fees on a per class basis.
• Renewal fee payments will be due by the EUTM’s actual expiration date (10 years from the application filing), and no longer by the end of the month during which the expiration occurs.

TRADEMARKS: GROWTH OF THE MADRID SYSTEM

The Madrid System allows citizens of member states to apply for “international registrations”, or trademark registrations across multiple other member states through one centralized process coordinated by the World Intellectual Property Organization (WIPO) and subject to special rules of prosecution and maintenance. Filing an application designating multiple jurisdictions through the Madrid System can potentially be less costly than filing multiple national applications.

In 2015, the following jurisdictions joined the Madrid Protocol: African Intellectual Property Organization (OAPI) [joined March 2015], Algeria [joined October 2015], Gambia [joined December 2015], and Zimbabwe [joined March 2015]. The People’s Democratic Republic of Laos has also acceded to the Madrid Protocol, and its membership will enter into effect on March 7, 2016. Canada, as well as Trinidad and Tobago, are in the process of implementing national trademark law reform, and are expected to join the Madrid Protocol soon.

TRADEMARKS: U.S. COURTS WEIGH FREE SPEECH VS. DISPARAGEMENT

In late December 2015, the U.S. Court of Appeals for the Federal Circuit reversed the Trademark Trial and Appeal Board’s decision to refuse a trademark application for THE SLANTS for “entertainment in the nature of live performances by a musical band,” on the grounds that the mark consists of a term disparaging for people of Asian descent. The Federal Circuit held that Lanham Act § 2(a)’s prohibition against disparaging trademarks is unconstitutional and a violation of the First Amendment, stating that, “it is a bedrock principle underlying the First Amendment that the government may not penalize private speech merely because it disapproves of the message it conveys.”

This decision overturns nearly 70 years of precedent under Lanham Act § 2(a), and will likely breathe new life into the Washington Redskins’ appeal of the USPTO’s invalidation of the REDSKINS trademarks, discussed in our article at: https://ladasparry.wpengine.com/education-center/redskins-affirmed-as-disparaging-appealed-to-4th-circuit/.

TRADEMARKS:  TRENDING ISSUE – REGISTRATION OF WIDELY-USED PHRASES

In addition to its prohibition against disparaging or scandalous material, Lanham Act § 2(a) bars the registration of marks which consist of matter that may falsely suggest a connection with “persons, institutions, beliefs or national symbols”.  Citing this basis, the USPTO has rejected trademark applications for widely-used slogans, recently including those used in social and political movements such as “BLACK LIVES MATTER”

To better elaborate on the examination of widely-used phrases, the USPTO will be issuing a draft Examination Guide for public comment in early 2016, which will outline how such marks should be analyzed and discuss the case law pertinent to the issue.

PATENTS: EUROPEAN UNITARY PATENT FINALLY ARRIVING IN 2016?

2016 will see the start of the implementation of the regulations and treaty introducing the long-awaited Unitary Patent in the European Union.  These will create a single patent with unitary effect in the EU member states and put disputes relating to the unitary patent and also potentially any other patent issued by the European Patent Office for an EU country under the jurisdiction of a unified European patent court. During the second half of 2015, significant steps were taken with respect to the forthcoming EU Unitary Patent and the Unitary Patent Court:

• The final rules of procedure before the court were agreed in 2015. As they were carefully drafted by patent practitioners over a long period of time, they promise a high legal standard for effective prosecution and litigation of patents.
• It was agreed that there would be a “sun-rise” period before final ratification of the Treaty on the Court so that it could commence operations promptly after the necessary ratifications (Germany, France and the U.K and ten others) had been made. The “sun-rise” period will enable the court to rent space and appoint judges ahead of the treaty coming into effect. It will also permit opening of the court registry before the treaty comes into effect.
• The “sun-rise” period is important, because the question of opting out will become a big issue once the UPC enters into force. All patents issued by the EPO both before and after the treaty comes into effect will become subject to the jurisdiction of the new court unless the patent owner opts out in which case disputes relating to the patent will remain to be resolved by the relevant national court. Opt outs are to be effected by notifying the court registry. Applicants should start to consider whether they wish the new court to have jurisdiction over their already-granted European Patents.

The Agreement on a Unified Patent Court will enter into force, once at least 13 nations have ratified it; it is mandatory that the UK, Germany and France are among these nations. This is expected to occur in 2016. However, the timetable might be disrupted by the referendum of Britain that will take place on July 23rd of this year on the subject of leaving the European Union.

PATENTS: ELI LILLY SUES CANADA OVER PATENT REQUIREMENTS

In 2013, Eli Lilly instituted arbitration proceedings against the Government of Canada under the dispute settlement provisions of Article 11 of NAFTA claiming that Canada’s implementation of its patent law was in breach of Canada’s obligations and had thereby damaged Lilly. The essence of the claim was that the judicial interpretation of the law by the Canadian courts contravenes Canada’s obligations under TRIPs, to grant patents for inventions that are “capable of industrial application” or “useful” because Canadian courts have imposed a further requirement that to be patentable, the invention must fulfill any “promise” set out in the specification.  It is also alleged that court decisions breach Canada’s obligations under the Patent Cooperation Treaty not to impose any requirements on form and content of a patent application beyond those set out in the treaty by requiring that the patent specification must contain sufficient information to make a “sound prediction” that the invention will work. A hearing is scheduled for May 30 – June 9, 2016

PATENTS: BRAZIL REQUIRES ADMINISTRATIVE APPROVAL FOR PHARMACEUTICAL PATENTS

Under Brazilian law patent applications for pharmaceutical inventions have to be approved by the National Agency for Sanitary Vigilance Administration (ANVISA as well as the Patent Office) before the patent can be granted. This requirement, referred to as the “jabuticaba law”, sets Brazilian law apart from other patent systems in a time when the world-wide trend is harmonization. Recent changes have led to conflict between ANVISA and the Patent Office with the Patent Office asserting that ANVISA has acted beyond its authority by effectively carrying out an additional patent examination (in which it frequently finds inventions unpatentable).  It is hoped that this conflict will be resolved in 2016.

PATENTS: CHINA CONTEMPLATES CHANGES TO PATENT LAW

On December 2, 2015, the Chinese authorities published a new draft for the Fourth Amendment to the Chinese Patent Law.  Several drafts have been issued since the initial proposal for an amendment was published in 2012, but it now looks as though the text could be finalized in 2016. If enacted as proposed, the amendment would bring about the following significant changes:

• Allowing for design patents to cover portions of an article rather that requiring that protection can be effected only for whole articles, which has been a problem, for example if one wishes to claim the design of a car and not have to file separate applications for every possible hub cap or wheel that may be used on the car;
• Providing statutory basis for claims of induced and contributory infringement;
• Expanding the scope of patent eligible subject to include methods of treatment or diagnosis of farm animals;
• Increased damage awards will be permitted in cases of willful infringement and the courts will have a power to require disclosure of information about its infringing use if the best efforts” of the patent owner have failed to achieve this;
• Increasing the role of local IP authorities in enforcing patents;
• Modifying the law relating to employee inventions to give more rights to the employee.

PATENTS: FIRST JUDGMENT ON SEPs BY ECJ (ZTE V. HUAWEI)

In its decision of July 16, 2015, ZTE v. Huawei, the Court of Justice of the European Union gave its first opinion on enforcement of standards-essential patents. Huawei owned a patent that was deemed standards-essential by the European Telecommunications Standards Institute (ETSI) and so under Huawei’s agreement with ETSI subject to the grant of licenses on fair, reasonable and non-discriminatory (FRAND) terms to implementation of ZTE technology. After failure of negotiations with ZTE, Huawei brought an action for infringement against ZTE in Dusseldorf, which deferred the case to the ECJ for an opinion. The Dusseldorf court referred the case for an opinion by the Court of Justice of the European Union, noting that the question of whether Huawei had a dominant position in the market was not in dispute and the issue related to whether Huawei had abused its dominant position under Article 102 of the Treaty on Functioning of the European Union (roughly equivalent to Section 2 of the Sherman Act).

With this caveat in mind, the Court addressed two issues with respect to an SEP: 1) whether an injunction could be granted and 2) whether orders could be made for other relief such as an accounting of the alleged infringer’s use of the SEP and an award of damages for such use. On the question of the grant of an injunction, the CJEU held that this was permissible if:

• prior to bringing that action, the proprietor has, first, alerted the alleged infringer of the infringement complained about by designating that patent and specifying the way in which it has been infringed, and, secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, presented to that infringer a specific, written offer for a license on such terms, specifying, in particular, the royalty and the way in which it is to be calculated, and
• where the alleged infringer continues to use the patent in question, the alleged infringer has not diligently responded to that offer, in accordance with recognized commercial practices in the field and in good faith, this being a matter which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.

On the question of other types of relief, the court held that it was not an abuse of a dominant position to bring an action for infringement against the alleged infringer of its patent and seek the rendering of accounts in relation to past acts of use of that patent or an award of damages in respect of those acts of use. The court noted that where parties could not agree on an appropriate FRAND royalty rate, the parties were free to request an independent third party to determine an appropriate rate.

Following the Huawei v. ZTE decision, the Dusseldorf Court of Appeal granted Sisvel an injunction against Haier in a patent infringement case based on a patent essential on the basis that Sisvel had made an offer to Haier of a license that it said was on a FRAND basis but Haier had failed to respond in a timely manner.

The determination as to what terms are in fact FRAND is still to be resolved and is likely to be the subject of further decisions in 2016.

TRADE SECRETS: BOTH EU AND U.S. WORK ON CODIFICATION OF LAW ON TRADE SECRETS

The Commission of the European Union issued a proposal for a Directive on harmonization of the law on trade secrets in EU member states in 2013. In December 2013, the Council and parliament reached a provisional political agreement on the proposal and so it stands a good chance of being enacted in 2016. Basic provisions of the proposal are to prohibit “unlawful acquisition, use or disclosure of a trade secret”.

“Trade secrets” are defined as “information which is (1) secret (not generally known among or readily accessible to persons within the circles that normally deal with that kind of information), (2) has commercial value because it is secret and (3) has been subject to reasonable steps to keep it secret.”

“Unlawful acquisition” is defined as: (a) unauthorized access to, appropriation of, or copy of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced; (f) any other conduct which, under the circumstances, is considered contrary to honest commercial practices.

Some aspects of the proposed legislation were controversial especially having regard to employees changing jobs and possible penalization of “whistle blowers”.

In this context, the proposed Directive specifically states  “Nothing in this Directive shall be understood to offer any ground for restricting the mobility of employees” and a controversial provision allows employees changing jobs to take the experience and skills honestly acquired in the normal course of their employment” to a new job. There are fears that this may provide too broad a loop-hole for employees of, for example financial institutions to use techniques learned in one firm in their new place of employment.

In order to protect whistle blowers, the Directive excludes from the definition of misuse of a trade secret any disclosure “for revealing a misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest”. It also includes provisions for sanctioning anyone who institutes proceedings for misuse of a trade secret in bad faith.

It is currently expected that final adoption of the Directive will occur in the spring of 2016.

In the United States, on January 28, 2016, the Senate Judiciary Committee approved the Defend Trade Secrets Act (S1890) , a new legislation designed to supplement the current state laws by providing federal relief for trade secrets claims. If enacted, a civil action will be able to be brought in federal courts with respect to misappropriation of a trade secret which is related to a product or service used in, or intended for use in, interstate or foreign commerce.

It is expected that the full senate will vote on the bill later this year.

A parallel bill, HR 3326, is pending in the House of Representatives where it is under consideration by the Subcommittee on Courts, Intellectual Property, and the Internet.

PATENTS: JAPAN 2015 SUPREME COURT DECISION MAKES “PRODUCT BY PROCESS CLAIMS” EVEN HARDER TO OBTAIN

A product-by-process claim is a claim that defines a product by the process used to make the product rather than by the structure of the product.

Previously, the Examination Guidelines of the Japanese Patent Office (JPO) (Part 1, Chapter 1, 2.2.2.4 (2)) stated that a product-by-process claim is unclear:

(1) If the manufacturing process (e.g., the starting materials or manufacturing steps) cannot be understood based on the recitation of the claim in view of the specification and drawings as well as common general knowledge as of the filing date of the application; or

(2) If the characteristics of the product (e.g., the structure or the properties thereof) cannot be understood in view of the specification and drawings as well as common general knowledge as of the filing date of the application.

On June 5, 2015, the Supreme Court of Japan issued a decision which now makes it even more difficult for a product-by-process claim to be granted in Japan. The new “clarity” standard for product-by-process claims defined by the Supreme Court of Japan establishes that: “unless it was impossible to define the product with structure and/or properties, or it would have been impractical to do so, the claim will be rejected for “lack of clarity.”

This new standard will be applied retroactively meaning that not only will new Japanese patent applications be examined under the new standard, but also those which have already been filed. Moreover, granted Japanese patents will also be subject to the new standard. Therefore, granted Japanese patents having one or more product-by-process claims have the risk of being subject to an invalidation trial based on “lack of clarity.”

In view of the forgoing, the new “clarity” standard defined by the Supreme Court of Japan will make it more difficult for an applicant to receive a patentable product-by-process claim in Japan because such claims will be patentable only if it was impossible or impractical to define the product with structure and/or properties at the time the application was filed.

PATENTS: U.S. SUPREME COURT: CERT GRANTED HALO ELECTRONICS V. PULSE ON PATENT INFRINGEMENT DAMAGES

On October 19, 2015, the Supreme Court granted certiorari to review the requirements for enhancement of damages in both Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc. and consolidated the cases. Following the Supreme Court’s 1993 decision in Professional Real Estate Investors Inc. v. Columbia Pictures Industries Inc., the Federal Circuit had been applying a two part test to requiring both objective unreasonableness of the suit and a subjective element to questions of both whether a case was exceptional so as to justify award of attorney fees and to the question of when a damage award could be increased (35 USC  284 permits a court to increase a damages award up to three times the actual damage suffered).

In Octane Fitness LLC v. Icon Health & Fitness Inc., the Supreme Court held that this was not an appropriate test for determining whether a case was exceptional for considering an award of attorney fees. Halo and Stryker will consider whether the test is the appropriate one for an award of enhanced damages and may also consider more broadly the circumstances under which enhanced damages may be awarded. At present the Federal Circuit largely limits such awards to cases of willful infringement.

PATENTS: U.S. SUPREME COURT TO REVIEW CLAIM INTERPRETATION IN POST GRANT PROCEEDINGS

On January 2016, the Supreme Court granted certiorari in Cuzzo Speed. The main issue in this case is whether it is proper to use the “broadest reasonable interpretation “of a claim in proceedings before the Patent Trial and Appeal Boards (PTAB) in the new “opposition” proceedings created by the America Invents Act (IPR or inter partes review, covered business method review and post grant review). In district court proceedings, the court carries out a claim construction based on the specification and any external evidence to try to determine the “true” meaning of a claim. The PTO has traditionally used the “broadest reasonable interpretation” in prosecution of applications on the basis that the applicant has an opportunity to amend the claim to deal with any issues that arise from giving the claim a broad interpretation. The PTAB uses the same standard in post grant “opposition proceedings” even though the ability to amend is much more limited than in pre-grant examination. The result is that challengers have a larger “target” to hit when challenging validity and it is thought by some that this is one factor in the large number of claims found invalid in such post grant proceedings.

PATENTS: WILL U.S.  SUPREME COURT GRANT CERT. IN SAMSUNG V. APPLE?

One case in which a petition for certiorari is pending but not yet granted is Samsung v. Apple, where Samsung has petitioned for certiorari on the question of how damages should be determined in cases of infringement of design patents.  Whereas the old common law remedy for infringement of a utility patent in the form of the infringer’s profits was abolished for utility patents in 1946, 35 U.S.C  289 preserved it for infringement of design patents. The Federal Circuit has held that when this test is applied, it should apply to the total profit made on the infringing article. This is in contrast with the approach to damage awards for utility patents where the courts try to calculate damages on the basis of the significance of the infringing feature to the whole article sold.

With the increasing use of broken lines to disclaim portions of a design so that a patent is no longer for a whole article, this has become an important issue with respect to design patents. Samsung’s petition has attracted support in the form of amici briefs from several major technology companies.

PATENTS: FEDERAL CIRCUIT EN BANC: IS THE COPYRIGHT INTERNATIONAL EXHAUSTION RULE APPLICABLE TO PATENTS?

In April 2015, the Federal Circuit sua sponte announced in Lexmark v. Impression Products that it would consider en banc the questions of whether the Supreme Court’s holding in Kirstaeng v. John Wiley and Sons that international exhaustion of rights occurred under copyright law where the copyright owner had sold the product abroad and it was subsequently imported into the United States was also applicable to patent rights and whether its own prior holding Mallinckrodt v. Medipart (where it had been held that sale of a patented product with a restrictive covenant did not exhaust a patent right if the covenant was breached as long as the covenant itself was not unlawful) should be overruled in view of the Supreme Court’s decision in Quanta Computer v. LG Electronics.

Oral argument took place on October 2, 2015 and a decision has been made.  The decision is reported in our Education Center.

PATENTS: EUROPEAN PATENT OFFICE – PENDING ENLARGED BOARD OF APPEAL DECISION ON PARTIAL PRIORITY

In case G1/15, the EPO’s Enlarged Board of Appeal is considering the question of whether a patent publication can be cited as prior art against a second application which derives from the same parent. The question of so-called “poisonous divisionals” and “poisonous parents” arises where one application contains claims that are entitled to a later priority date than those of the parent application (for example where a European application claims priority from a US application but subject matter has been added and the European application is then subjected to a lack of unity objection and has to be divided.  Article 82 of the European Patent Convention provides that a claim can have more than one priority date. However, earlier case law has held that this provision only applies if the claim sets out clear alternatives. This creates problems if, in the example given above the original U.S. application referred to a species and the European application claimed a genus encompassing that species such that the claim does not set out clear alternatives having different dates.  The question before the Enlarged Board is whether an application can be rejected over the publication of an application from which it itself claims priority. A decision is expected during 2016.

COPYRIGHTS: UK TO REPEAL LIMITATION OF INDUSTRIALLY APPLIED COPYRIGHT WORKS

Section 52 of the UK Copyright, Designs and Patents Act 1988 provides that copyright protection for a work that has been applied industrially by making more than 50 copies is limited to 25 years, compared to other artistic works which are protected by copyright for the lifetime of the creator plus 70 years. The compatibility of this provision with the EU directive on the term of copyright protection has been questioned and as part of the reforms of UK Copyright Law adopted by Enterprise and Regulatory Reform Act 2013, Parliament voted to repeal this provision but delayed the repeal to allow time for transitional provisions to be adopted. The Government initially announced that the repeal would be delayed until 2020. However, in July 2015, the government reversed itself following a petition for judicial review of the question of whether the proposed repeal in 2020 complied with EU law. No new date for repeal was given, leading some to speculate that repeal will be earlier than previously announced and others to speculate that it will be later than previously announced.  2016 should give us the answer.

UNITED KINGDOM: POSSIBLE ENACTMENT OF INTELLECTUAL PROPERTY (UNJUSTIFIED THREATS) BILL

The United Kingdom has long had provisions by which someone threatened with an unjustified threat of a law suit for patent or trademark infringement can seek redress in the courts. In October 2015 the Law Commission published a proposed bill to up-date the law which has a good chance of being enacted in 2016. The proposed changes would bring the law relating to trademarks and designs into line with that for patents by removing from the definition of “actionable threats” any threat made to a manufacturer or importer of the allegedly infringing article and clarifying the situation with respect to international rights such as the EU trademark or design and the new European Unitary Patent.

PATENTS: CHINA JOINS HAGUE AGREEMENT ON DESIGNS

China has announced an intention to join the Hague Agreement on the International deposit of Designs.  Once it does so, all of the major design offices will be bound by its provisions allowing filing of a single international design application to give rights in all participating jurisdictions.