2017 saw a bumper crop of Supreme Court decisions on intellectual property matters around the world including eight by the United States Supreme Court, two by the Canadian Supreme Court, and two by the United Kingdom Supreme Court.

U.S. Supreme Court

Apple Inc, v. Samsung held that damages for infringement of a design patent under 35 USC 289 can be based on profit made on a component embodying the patented features of the article instead of whole article. However, the court gave no guidance as to how to determine the component to be used for this purpose when the design was for a combination of specific features of the article and returned the case to the Federal Circuit to consider this. The Federal Circuit decided that it had an inadequate factual record to do this and returned the case to the district court for more fact-finding. The district court has set out the factors to be considered as being:

1. the scope of the design patent claim;
2. the relative prominence of the design in the defendant’s product;
3. whether the design is conceptually different from the whole product; and
4. the physical relationship between the claimed design and the rest of the product.

The problem presented by this case has become acute in recent years as increasing numbers of design patents claim, via liberal usage of broken lines, only particular features of an article rather than the entire article making it difficult to know what the proper basis for determining damages should be, for example, for infringement of a design patent in which only certain features of the design were claimed.

Life Technologies v. Promega held that- inducement of patent infringement under 35 USC 271(f)(1) by export of components of a patented product requires export of more than one component of the patented product. In this case, only one of five components of a patented kit was exported from the United States. The other components were produced in Europe and the kit was assembled in the United Kingdom. The component exported from the United States was the key component of the kit and the Court of Appeals for the Federal Circuit has held that this was sufficient to meet the requirement of the statute that “all or a substantial portion of the components of a patented invention” were being supplied from the United States. The Supreme Court disagreed noting that the statute required export of “components” so that export of a single component did not meet this requirement, no matter how important the single component might be to the patented product.

SCA Hygiene Products v First Quality Baby Products held that laches (that is an unjustified delay in bringing suit) could no longer be pleaded as a defense against a claim for damages for patent infringement. The Supreme Court reasoned that laches provided equitable relief that was only needed when the law itself failed to provide for the situation in question. 35 USC 286 provides that no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint. Therefore, the equitable remedy was not required. The decision did, however, leave intact the possible use of another form of equitable relief that of equitable estoppel which can arise if the patent owner communicated that it would not commence infringement proceedings, the recipient of the communication relied upon that communication, and harm resulted. Before this decision, laches had been receiving some prominence as a way to defend against infringement suits brought by non-practicing entities who had been perceived as waiting to bring suit until the defendant had established its business, thereby providing the opportunity for a larger settlement than would have been the case had it brought the action earlier.

Impression v. Lexmark, held that sale of a patented product by patent owner leads to domestic and international patent exhaustion even if purchaser breached contract terms imposed at the time of sale. The patent owner’s remedy should be for breach of contract against the original purchaser, not an action for patent infringement. In reaching this decision, the Court noted the long-standing principle that once a chattel had been sold, the original seller had no recourse against subsequent purchasers. Following its recent reasoning in the copyright case of Kirstaeng v. Wiley, the Court saw no reason why the fact that the article was patented should affect the application of the basic principle. Furthermore, it was irrelevant whether the original sale took place in the United States or outside or whether the sale was by the patent owner or a licensee. The consequence of this is that it is likely that suppliers of reusable goods (the goods in question in the Lexmark case were toner cartridges) will choose different ways of carrying out business, for example, by leasing the goods to users rather than selling them. Other ideas include obtaining separate patents on methods of use or particular components of a patented ensemble. Issues could also arise as to whether an initial sale was “authorized” such as those considered by the United Kingdom Supreme Court in R v. M discussed below.

TC Heartland LLC v. Kraft Foods the court held the specific patent venue statute (28 USC 1400(b)) which limits the courts in which patent infringement actions may be brought had been unaffected by changes to the general venue statute that in effect made venue proper anywhere that a court had personal jurisdiction over the defendant by “deeming” a party to be resident anywhere that a court had personal jurisdiction over it. The patent venue statute on the other hand limited venue in cases where the defendant to courts in whose district the defendant “resides”, or where the defendant has committed acts of infringement and has a regular and established place of business. To comply with the first of these alternatives actual residence rather than “deemed residence” was required, i.e., the Court held that a domestic corporation “resides” only in its state of incorporation. The expected effect of this decision is to reduce the number of patent infringement cases brought in the Eastern District of Texas many of which have been based on “deemed residence” and increase the number of cases brought in states where corporations are “resident”, for example, in the case of a domestic corporation, the state under whose laws a corporation is incorporated, such as Delaware. The decision did not address the question of “residence” for foreign corporations. The decision has also brought into focus the second alternative set out in the statute which raises the question of what is a “regular and established place of business”. In In re Cray the Court of Appeals for the Federal Circuit addressed the question of what constitutes “a regular and established place of business” holding that the requirements include a physical geographical location in the district where business is carried out on a regular and permanent (i.e. not sporadic) basis over which the defendant (not just an employee of the defendant) exercises attributes of possession or control or where the defendant conditioned an employee’s employment on using the employee’s premises for its own business. Having an employee in the district who works at home is not by itself enough to meet the requirement.

Sandoz v. Amgen held that applicants for authorization to market biosimilar products (essentially generic versions of biological drugs) cannot be compelled to perform the “patent dance” provided for by the Biologics Price Competition and Innovation Act. The so-called “patent dance” is an elaborate scheme requiring exchanges of information between patent owners and those seeking to market products aimed at enabling early resolution of any patent disputes that might be involved. The requirements were seen as favoring patent owners. The Supreme Court held that the statute was not entirely clear, but since it contemplated other remedies if the requested information was not provided during the patent dance, no injunction was available under federal law to compel supply of that information. The Court did, however, leave open the possibility that failure to dance could be a breach of California’s unfair competition law. The Federal Circuit subsequently closed this possibility by holding that any claims under that law were preempted by the federal Biologics Price Competition and Innovation Act.

In Star Athletica v. Varsity Brands the Supreme Court considered the Copyright Act’s provision in 17 USC 101 that copyright protection for design of a useful article exists “only if, and only to the extent that, the design incorporates features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article”. The useful articles under consideration were cheer leader’s uniforms bearing particular decorations. After noting that:

• The ultimate separability question…is whether the feature for which copyright protection is claimed would have been eligible for copyright protection as a pictorial, graphic, or sculptural work had it originally been fixed in some tangible medium other than a useful article before being applied to a useful article.

The Court concluded that copyright protection available to surface ornamentation of clothing such as the features on the cheer leaders’ uniforms was potentially subject to copyright protection because such ornamentation is separable. However, any such protection extended only to the two-dimensional work of art fixed in the tangible medium of the uniform fabric protection would not extend to a cheerleading uniform of identical shape, cut, and dimensions to the ones on which the decorations in this case appear.

In Matal v. Tam the Supreme Court considered the constitutionality of the provision of trademark law denying registration to trademarks that may “disparage . . . or bring. . . into contemp[t] or disrepute” any “persons, living or dead.”(15 U. S. C. §1052(a).) The suit had been brought by a band named “The Slants” who had attempted to register its name as a trademark. The Patent and Trademark Office had refused to register the mark on the ground that the term disparaged persons of Asian descent. The Supreme Court held the disparagement provision of the Trademark Act unconstitutional as violating the First Amendment of the Constitution that prohibits Congress and other government entities and actors from “abridging the freedom of speech”. The government argued that this provision did not apply to trademark registration since, as had been held in earlier cases, the Free Speech clause does not regulate government speech and trademark registration was a form of government speech. The Supreme Court disagreed pointing out that it was the users of a mark not the government that created the mark. Therefore, compliance with the First Amendment was required and the provision was unconstitutional. In a concurring opinion, Justice Kennedy noted: A law that can be directed against speech found offensive to some portion of the public can be turned against minority and dissenting views to the detriment of all. The First Amendment does not entrust that power to the government’s benevolence. Instead, our reliance must be on the substantial safeguards of free and open discussion in a democratic society.

Following the Supreme Court’s decision, the Court of Appeals for the Federal Circuit in In re Brunetti held further that prohibitions in the Trademarks Act on registering immoral or scandalous marks was also unconstitutional.

Patent Subject Matter Eligibility in the United States

The two-part test for determining whether claimed subject matter is eligible for patent protection under 35 USC 101 following the Supreme Court’s decisions in Prometheus v. Mayo and Alice v. CLS Bank is now firmly established requiring determinations of:

1. were the claims directed to a patent-ineligible concept, i.e., an abstract idea, law of nature or natural phenomenon; and
2. if so, did they have the necessary “something extra” that meant that they did not preempt that idea and claimed an inventive application of it.

Case law is beginning to provide reasonable guidelines as to what is or is not an abstract idea, at least in the context of computer-related inventions. Although a few Federal Circuit decisions have held subject matter eligible for patent protection even though directed to an abstract idea because the claims were limited to an inventive application of the idea, it seems that one has a better chance of success in arguing that the invention is more than an abstract idea in the first place. Applications improving the way in which a computer operates or particular ways of operating a network have been found to be patent eligible. Similarly, specific ways of using computers to control real world processes in novel ways and reorganizing the sequence in which steps are carried out to result in improved processing have been accepted. On the other hand, simply computerizing an old method or claiming applications where the sole novelty of the claims has been in the result obtained have not been allowed.

Examples of cases where computer-related inventions were found to meet the requirements of 35 USC 101 include: Visual Memory LLC v. NVIDIA Corporation where the Federal Circuit held that a patent on a computer memory system was directed to patent-eligible subject matter as an “improvement to computer functionality.” In so holding to court noted that it “must articulate with specificity what the claims are directed to and “ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.” The court stated that “Configuring the memory system based on the type of processor connected to the memory system is the improvement in computer technology to which the claims are directed.” The specification explained that multiple benefits were provided for by the invention. Thus, the patent claims were “directed to an improved computer memory system, not to the abstract idea of categorical data storage.”

In Thales Visionix v. United States the Federal Circuit recognized patent-eligible subject matter in a system for tracking the motion of an object relative to a moving reference frame notwithstanding the need to solve equations to implement the method carried out by the claimed system. The court drew an analogy with the treatment of an equation in Diamond v. Diehr (a 1981 Supreme Court case that had held that a method of curing rubber that relied on use of a mathematical equation to determine when to open a mold) to conclude that a system comprising two inertial sensors and an element adapted to receive signals from the sensors and / or determine an orientation based on signals received from those sensors that provided multiple advantages over the prior art was not an abstract idea and so was patent eligible.

Although the practice has been criticized by some judges on the Federal Circuit and not universally followed, the USPTO and the federal courts often look to the specification for guidance in determining the question of patent-eligibility and in particular to descriptions of the real world use and advantages of what is claimed. As was pointed out in. Two-Way Media Ltd. v. Comcast, however, as is the case in other situations where one is relying on advantages of the invention to establish patentability it is important that such advantages are tied to some feature of the claims. Accordingly, as can be seen from the above discussion, in the computer-related context reasonable guidelines have been emerging as to what is or is not an abstract idea. There, has, however, been less progress with respect to patenting inventions that can be regarded as laws of nature or natural phenomena and so there is still a large cloud over patenting diagnostic methods unless they use a novel technique or reagent.

The “On Sale Bar” Under the America Invents Act

Under U.S. Patent Law prior to the America Invents Act, prior art that might destroy the novelty of an invention included “public use or [having been] on sale in this country, more than one year prior to the date of the application for patent in the United States”. The America Invents Act changed this to “public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention” This change generated significant discussion as to whether under the new law it was necessary that any public use or offer for sale should make the nature of the invention publicly available or whether as case law had held under the old law any commercial use of the invention or any offer to sell something embodying the invention sufficed. In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. the Federal Circuit held that in the circumstances of the case before it, if the sale was a public sale, this still constitutes a bar even if the nature of the invention could not be determined by what was sold or offered for sale. The court did emphasize that its decision was confined to consideration of the on sale bar and that it was not considering the question of prior use.

Federal Circuit and PTAB

The America Invents Act created a new avenue for challenging the validity of granted patents by actions brought before the Patent Trial and Appeal Board (PTAB). The PTAB has been seen by many as an anti-patent institution and its activities severely criticized.

On November 27, 2017, the United States Supreme Court heard oral argument in the case of Oil States Energy Services LLC v. Greene’s Energy Group LLC to consider the question of whether inter partes review—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

The answer may depend upon whether the Court regards a patent as a public right, in which case the Constitution probably permits the Patent Office to enlist the public’s help to correct itself where patents have been granted that should not have been, or a private right such that only a court authorized under Article III of the Constitution can abrogate the right. A decision will be issued by the end of June.

In the meantime, the Court of Appeals for the Federal Circuit has been exercising its powers of judicial review of the actions of the Patent Trial and Appeal Board more vigorously. Among the issues considered have been:

1. the need for the PTAB to set out its reasoning clearly, for example as set out in In re Stepan;
2. rejection of the PTAB’s rules that place the burden on the patent owner to show that any proposed claim amendment is patentable and making it clear that the challenger must show on the balance of the probabilities that the proposed claim is not patentable (Aqua Products Inc. v. Matal);
3. construing the requirement that covered business method review is only permissible if the invention is not a technological one strictly to limit the scope of the covered business method review provisions of the America Invents Act Secure Axcess LLC v. PNC Bank; and
4. holding that notwithstanding the provisions of the America Invents Act that decisions by the PTAB to institute proceedings are not appealable, appeal may be possible in cases where a challenge has been made to the validity of a patent and it is questionable whether the statutory time bar for instituting such proceedings has been met (WI-FI One, LLC, v. Broadcom Corporation).

On the other hand, it has been held that a losing challenger to the validity of a patent in proceedings before the PTAB does not have an automatic right to appeal to the Federal Circuit unless it has a genuine business reason for challenging the patent since otherwise there is no “case or controversy” sufficient to give the federal courts jurisdiction under Article III of the Constitution.

Another Constitutional issue that has arisen is whether it is possible to challenge patents owned by state universities in the PTAB. The answer has been “no” unless it can be shown that the state waived its sovereign immunity to permit suit to be brought against it. Waiver has been found in cases where such universities have sought to enforce the patents in question. Related to this is a similar right under the Constitution with respect to Native American tribes who also enjoy sovereign immunity. This has led to some corporations assigning patent rights to such tribes to try to avoid the risk of their patents being challenged in the PTAB. Whether this will work or not remains to be seen.

Standards Essential Patents

2017 saw several developments and cases relating to standards essential patents (SEPs), that is patents whose use is essential in order to implement a standard that has been adopted by a particular industry, for example for enabling communication between different types of electronic devices. Typically, those participating in establishing such standards are companies active in the relevant field and they normally agree that they will license any patents that they own whose use is essential to complying with the standard on Fair, Reasonable and Non-Discriminatory (FRAND) terms. Issues arise, however, as to the circumstances under which a patent owner can enforce a patent that is claimed to be subject to such a FRAND obligation if there is a dispute as to whether the patent being sought to be enforced is in fact subject to the obligation, how seriously must the parties have negotiated terms of a license before the patent owner can seek to enforce the patent and exactly what terms and royalty rates should be applicable in a FRAND license. Among developments in this field in 2017 were new Antitrust Guidelines issued by the U.S Department of Justice and the Federal Trade Commission, a paper from the EU Commission specifically setting out a position on standard essential patents and Guidance by the Beijing High Court on the handling of litigation relating to standards essential patents. Interesting cases included Unwired Planet International v. Huawei in the English Patent Court, TCL v. Ericsson in the district court of the central district of California and Huawei v. Samsung in the Shenzhen Intermediate people’s Court.

The US Department of Justice/Federal Trade Commission Guidelines for Licensing Intellectual Property

The 2017 Guidelines follow the approach of the previous 1995 Guidelines that intellectual property rights do not of themselves create market power of the type that attracts antitrust scrutiny and that intellectual property licensing is generally pro-competitive. The major change since 1995 is in respect of resale price maintenance, the 1995 Guidelines having regarded agreements in which a supplier set minimum prices at which a purchaser could resell goods as being likely to be unlawful, whereas the 2017 Guidelines no longer take this view. The Guidelines specifically state that licensing of standard essential patents should be covered by the same general principles as other patent licensing and so provide no specific guidance on this topic.

EU Commission

In contrast to the United States authorities, the European Commission does regard the situation with respect to standards essential patents as requiring special treatment and sets out the following principles for licensing standards essential patents.

In view of current developments, the Commission considers that SEP licensing should be based on the basis of the following principles:

• There is no one-size-fit-all solution on what FRAND is: what can be considered fair and reasonable can differ from sector to sector and over time. Efficiency considerations, reasonable license fee expectations on both sides, and the facilitation of the uptake by implementers to promote wide diffusion of the standard should be taken into account.
• Determining a FRAND value should require taking into account the present value added of the patented technology. That value should be irrespective of the market success of the product which is unrelated to the value of the patented technology.
• In defining a FRAND value, parties need to take account of a reasonable aggregate rate for the standard.
• The non-discrimination element of FRAND indicates that right holders cannot discriminate between implementers that are ‘similarly situated’.
• For products with a global circulation, SEP licenses granted on a worldwide basis may contribute to a more efficient approach and therefore can be compatible with FRAND.

The Commission calls on SDOs and SEP holders to develop effective solutions to facilitate the licensing of a large number of implementers in the IoT environment (especially SMEs), via patent pools or other licensing platforms, while offering sufficient transparency and predictability. The Commission will monitor licensing practices, in particular in the IoT sector. It will also set up an expert group with the view to deepening expertise on industry licensing practices, sound IP valuation and FRAND determination.

Beijing High Court Guidance

The Beijing High Court has issued general guidance on questions on how the lower courts should handle patent infringement cases. The following points are of interest with respect to SEPs and are in some ways similar to the Court of Justice of the European Union’s decision in Huawei v. ZTE noted below:

1. If the patentee intentionally breaches an obligation it has undertaken to grant licenses on FRAND terms and the prospective licensee has negotiated “without obvious fault’ the courts generally should not grant an injunction to prevent the accused infringer from implementing the standards. The patentee bears the burden of proof in the specific content of its fair, reasonable and non-discriminatory terms committed in formulating the standard;
2. Where there is no evidence to prove that the patentee willfully violates its obligation for licensing on fair, reasonable and non-discriminatory terms, and the accused party has no apparent fault in negotiation of license, if the accused party timely provides the royalty he alleged or guarantee which is not less than its alleged royalty, the court generally should refuse the patentee’s request for an injunction; and
3. Acts which may constitute fault by the accused infringer include failing to diligently respond to a license proposal from the patentee within reasonable time after receiving written notification of infringement from the patentee; failing to respond constructively to proposals for a license from the patentee and obstructing, delaying or refusing to participate in the license negotiation without adequate reasons.

Unwired Planet International v. Huawei

European Case law on these issues needs to comply with the 2015 decision of the Court of Justice of the European Union in Huawei v. ZTE in which the Court addressed the question of the application of Article 102 of the Functioning of the European Union to SEPs. This Article, somewhat similar to Section 2 of the Sherman Act in the United States, prohibits abuses of a dominant position that affect trade between the member states of the European Union. In its decision, the European Court held that, although ownership of an SEP did not necessarily mean that the owner was in a dominant position, before the owner of a patent subject to a FRAND obligation could bring an action to enforce, it needs first to draw an alleged infringer’s attention to the existence of the patent in question and why the actions in question are believed to infringe the patent and if the alleged infringer indicates a willingness to take a license, present the alleged infringer with a proposed license and consider diligently and in good faith any counter proposal made by the alleged infringer. The decision therefore implied that FRAND terms would be a matter of negotiation between the parties.

It was against this background that in April 2017, the English Patents Court issued its decision on a situation in which Unwired Planet instituted proceedings for patent infringement and then offered to license Huawei under a bundle of patents relating to telecommunications some of which were SEPs and some were not. Huawei responded by claiming non-infringement or invalidity of the patents in question and claiming that in any case, the terms of the license offered were not FRAND. Prior proceedings had found that at least some of the patents were valid and infringed. The court therefore now had to address the question of what constituted a proper FRAND license. It concluded that:

1. Only a single set of terms could be FRAND in a given set of circumstances and this is not dependent on the size of the licensee;
2. If the alleged infringer refused to take a license on terms that the court concluded were FRAND, an injunction for patent infringement could be issued;
3. In the present case it was proper that the FRAND license should be a world-wide license, however neither proposals of Unwired Plant nor Huawei were FRAND and so it was proper for the court to give guidance;
4. The number of patents involved was a key factor in determining a FRAND rate, although in some cases not may be taken of a keystone invention;”
5. A FRAND rate may be determined by reference to prior licenses if they are available and freely negotiated. Alternatively, a “top down” approach may be used based on the patentee’s share of SEPs relating to the product.

Based on these and other factors the Court stated what it regarded as appropriate FRAND royalty rates for products meeting three telecommunications different standards.

On the question of whether Huawei could be enjoined from infringement if it did not accept the terms the court had determined to be FRAND, it was held that institution of the suit prior to making a license offer was not an abuse of a dominant position and that, subject to a stay pending a possible appeal, an injunction could be granted that would continue in effect until Huawei took a FRAND license.

TCL v. Ericsson

In TCL v. Ericsson, the judge disagreed with the English court’s first conclusion and held “There is no single rate that is necessarily FRAND”. He did, however, agree with TCL that Ericsson’s proposed license rate for TCL to manufacture smart phones under SEPs was discriminatory. Ericsson had different rates under which it licensed large companies who operate worldwide such as Apple and Samsung and higher rates that it charged other companies who operated only in regional markets. Ericsson proposed that TCL should pay the higher regional rate. TCL refused. The key factor in the judgment of the California court was whether the royalty rate would prevent TCL from being able to compete effectively in its market. The rate proposed by Ericsson had this effect. Therefore, the judge set a rate that he believed would permit such competition.

Huawei v. Samsung

In the Shenzhen the issue was whether Samsung had improperly delayed negotiations aimed at setting a FRAND rate. After noting that negotiations had been carried out over a period of six years during which there had been discussions of appropriate rates and possible cross licensing, the Shenzhen court found that Samsung’s actions and inactions had been the main cause of the delay and consistent with the Beijing High Court guidance noted above concluded that under such circumstances rather than determine an appropriate FRAND rate itself, an injunction against patent infringement could be granted.

European Patent Office

Validation of European Patents in Tunisia

Under an agreement between the European Patent Office and Tunisia, it became possible to validate European patents in Tunisia on December 1, 2017. Tunisia thereby joins Bosnia, Moldova, Montenegro and Morocco as countries in which a European patent may be extended or in which it may be validated even though they are not members of the European Patent Convention.

Prohibition on Patenting of Products of Essentially Biological Processes

Enlarged Board of Appeals decisions had previously held that even though the European Patent Convention bars the grant of patents to essentially biological processes for the production of plants or animals, the products of such processes were patentable as long as they did not constitute plant or animal “varieties”.A decision of the Administrative Council of the European Patent Office amended Rule 28 of the Implementing Regulations of the European patent Convention to overrule these Enlarged Board decisions and render the products of such essentially biological processes unpatentable by adding the following provision:

• Under Article 53(b), European patents shall not be granted in respect of plants or animals exclusively obtained by means of an essentially biological process.

The legality of this amendment has been questioned and the final outcome remains to be seen.

Disclaimers

It will be recalled that any amendment made in the EPO must in general be directly and unambiguously derivable from the original text.

The application of this general test to disclaimers had been considered in two previous Enlarged Board of Appeals decisions which had spawned two different lines of cases by other boards of appeal as to whether when disclaiming prior art there needed to be basis for the disclaimer in the original text, one line taking the view that this was always necessary and the other recognizing limited exceptions where the prior art in question was an earlier unpublished application or where the anticipation was “accidental.” In decision G1/16, the Enlarged Board has endorsed the more liberal of these approaches holding:

• The introduction of such a disclaimer may not provide a technical contribution to the subject-matter disclosed in the application as filed. In particular, it may not be or become relevant for the assessment of inventive step or for the question of sufficiency of disclosure. The disclaimer may not remove more than necessary either to restore novelty or to disclaim subject-matter excluded from patentability for non-technical reasons.

Requirements for Divisionals Having Partial Priority

For the past few years there has been fear that the law on priority claims in the European Patent Office could result in a divisional application becoming prior art against its parent if the divisional application described subject matter that was clearly disclosed in an application from which its parent claimed priority, but the parent itself had claims that were not entitled to such priority, for example where a PCT application claimed priority from a US application, but contained added subject matter and then after regional phase entry in the EPO, a divisional application was filed focused on the subject matter of the original US application, but the parent contained the claims that were generic to both the subject matter of the original US application and the subject matter added in the PCT application on the theory that such generic claims were only entitled to the date of the PCT application whereas the divisional was entitled to the date of the US application and so could be considered as unpublished prior art under Article 54(3) of the European patent Convention. Such a scenario came to be referred to as the “poisonous divisional” and was played out in Decision T476/09. In other cases, boards of appeal had found ways to avoid coming to this conclusion. The divergent lines of cases made it appropriate for a decision of the Enlarged Board of Appeal. This has now occurred in Decision G1/15 which was released to the public on February 1, 2018 and in effect destroyed or severely limited the effects of the “poisonous divisionals” theory.

After noting that Article 88(2) of the European Patent Convention provides for the possibility of multiple priorities in a single claim, the Enlarged Board stated:

• It can thus be concluded both from the law and from the logic of the underlying concept that the right of priority as established in the EPC (and the Paris Convention) operates to exclude the collision of subject matter disclosed during the priority period with identical subject matter disclosed in a priority document, in so far as priority has been validly claimed.

This being the case, the proper test to be applied:

• In assessing whether a subject matter within a generic … claim may enjoy partial priority, the first step is to determine the subject matter disclosed in the priority document that is relevant, i.e. relevant in respect of prior art disclosed in the priority interval. … If the answer is yes, the claim is de facto divided into two parts, the first corresponding to the invention disclosed directly and unambiguously in the priority document, the second being the remaining part of the subsequent generic … claim not enjoying priority …

Once this is done, it is clear that subject matter disclosed in the priority document cannot be prior art against a claim claiming the same subject matter. Need for the text as originally filed to make the practicality of the invention plausible. Decision T 488/16 of the European Patent Office Boards of Appeal is widely seen as having raised the disclosure requirements for European patent applications, at least in the field of pharmaceuticals. It has been a requirement in the European Patent Office for some years that the specification contained sufficient information to make it plausible that the invention worked. If this plausibility test was met, data in support could be filed later. The patent application under consideration in decision T 488/16 stated:

• “Compounds described in the following Examples have been tested in one or more of these assays, and have shown activity”

The Board held that this was not enough to meet the plausibility requirement. To establish inventive step, it was necessary to show that the compounds were improved PTK inhibitor the compounds were otherwise apparently obvious). The Board noted, “The patent in suit does not contain any evidence that the problem as formulated by the appellant has been successfully solved.” Plausibility had to be shown at the date of filing the application, post-filed evidence “may be taken into consideration, if it is already plausible from the disclosure of the patent that the problem is indeed solved.”

Based on this decision, it may therefore be desirable to include at least some efficacy data relevant to the condition that the compounds are expected to be able to treat when filing an application at the European Patent Office.

Importance of making sure that the Applicant for a European Patent is the same as or the Successor in title to the applicant in any application from which priority is claimed.

Decision T 577/11 of the Boards of Appeal considered the requirement that in order to make a valid claim to priority under Article 87 of the European Patent Convention, it is necessary for the application to be made by the party who filed the application from which priority is claimed or his successor in title. In this case the Board of Appeal held that this requirement had not been met and so priority could not validly be claimed where the applicant of the application from which priority had been claimed and the applicant of for the European application had contractually agreed only that economic ownership (“economische eigendom” under Dutch law) of the priority application and the right to claim its priority from it had been transferred to the applicant for the European patent. Furthermore, such defect could not be rectified by a more comprehensive transfer of rights to the European patent application effected after the European filing.

A similar issue as to whether all rights had been properly transferred by the applicants of applications from which priority was claimed to the applicant for the European patent is understood to have arisen in the January 2018 decision of an EPO opposition division to revoke the Broad Institute’s patent on CRISPR gene editing technology after it had found that the patent was not entitled to its claimed priority date.

Brexit

So far, there are no substantive development on how intellectual property matters will be affected by withdrawal of the United Kingdom from the European Union. Under the terms of Article 50 of the Treaty on the European Union, the United Kingdom will leave the EU on March 31, 2019. An agreement in principle has been reached whereby this will be followed by an “implementation period’ of about two years during which it is anticipated that the United Kingdom will continue to be bound by the current EU rules, and possible any new rules made during this period but would have no participation in any new rule-making. Hopes have been expressed that after this some new form of close relationship between the United Kingdom and the European Union can be negotiated. Legislation adopted by the British Parliament has in any case provided that all EU legislation in force at the time of the exit will become part of the United Kingdom’s national law on that date to allow time for evaluation as to whether it is appropriate under the new situation. In the IP field key issues include how to preserve rights in the United Kingdom with respect to community design and trade mark registrations and how the EU’s free flow of goods doctrine which effectively requires exhaustion of IP rights in individual countries once the goods have been placed on the market anywhere within the EU by the IP rights owner will apply to the new situation.

EU Unitary Patent and Unified Patent Court

There had been hopes that the EU’s unitary patent legislation, providing that a patent granted by the European Patent Office could have unitary effect throughout the EU and the Unified Patent Court system would come into effect by the end of 2017. This has not happened. The key event to trigger this legislation to come into effect is ratification of the Treaty Unitary Patent Court by Germany and the United Kingdom. The United Kingdom government announced that notwithstanding Brexit it intended to ratify the treaty so that it could come into effect before the United Kingdom left the European Union, apparently at least in part because it was thought that if the court was already functioning it would be easier to negotiate terms on which the United Kingdom could remain part of the court system after Brexit than would otherwise be the case. The United Kingdom has, so far not deposited its instrument of ratification. The real delay on implementation has been caused by a challenge in the German Constitutional Court claiming that the court system set out in the treaty would be a violation of German sovereignty as set out in the German Constitution. As at present advised, it seems that a decision by the German Constitutional Court, which is expected to reject the challenge, is still several months away. If this is the case, it may prove difficult for the court to open its doors prior to the March 31 2019 due date for Brexit. If this were to be the case, the Court treaty would have to be amended to set out alternative ratification requirements and to move parts of the court that are required to be in London to another location. This might take time.

In the meantime, a protocol has been signed to enable the court to commence operations quickly once the political process is complete and to create a “sunrise” period for allowing a patent owner to opt out of the new unitary patent system for “old” patents granted by the EPO, that could otherwise be subject to a validity challenge in the UPC from the date on which the court opens for business.

Court of Justice of the European Union

Sale of Device to assist in unauthorized viewing of copyright-protected works is a breach of the copyright owner’s rights

EU Directive 2001/29 providing for harmonization of certain aspects of copyright law within the European Union contains a provision that require EU member states to provide copyright owners with an exclusive right to authorize or prohibit any communication to the public of their works by wire or wireless means. The directive also provides that temporary acts of reproduction which are transient or incidental [and] an integral and essential part of a technological process and whose sole purpose is to enable: (a) a transmission in a network between third parties by an intermediary, or (b) a lawful use of a work protected by copyright and which have no independent economic significance, shall be exempted from copyright infringement. In Stichting Brein v. Jack Frederik Wullems, the Court of Justice of the European Union addressed the question of whether the provision relating to temporary acts protected a seller of a device that made it possible to view on a television screen audiovisual material that was subject to copyright and was distributed with the authority of the copyright holder only through streaming web-sites on the Internet. The defendant had advertised his device as enabled one to view audiovisual materials on a television screen without the consent of the copyright owner.

The Court held that the concept of ‘communication to the public” set out in the directive included the sale of a multimedia player, such as that at issue on which there are pre-installed add-ons, available on the internet, containing hyperlinks to websites on which copyright-protected works have been made available to the public without the consent of the right holders and that the safe harbor for temporary acts did not apply to temporary reproduction, on a multimedia player, such as that at issue, of a copyright-protected work obtained by streaming from a website belonging to a third party offering that work without the consent of the copyright holder does not satisfy the conditions set out in those provisions.

Designs and Protection for Replacement Parts

It will be recalled that adoption of an EU regulation for the protection of designs was delayed for many years over the question of whether it should be possible to obtain protection for replacement parts, in particular for cars and that the regulation eventually addressed this in Article 110(1) of the Community Design Regulation (Regulation 6/2002). The Article reads as follows:

• Until such time as amendments to this Regulation enter into force on a proposal from the Commission on this subject, protection as a Community design shall not exist for a design which constitutes a component part of a complex product used within the meaning of Article 19(1) for the purpose of the repair of that complex product so as to restore its original appearance.

The cases of Acacia v. Audi and Acacia v. Porsche started in Milan and Stuttgart respectively, but the national courts referred similar questions to the Court of Justice of the European Union which consolidated them. The key question was whether Audi and Porsche respectively could enforce European design registrations for car wheel rims against Acacia which makes car wheel rims notwithstanding the provisions of Article 110 of the Regulation. The Court of Justice focused on the fact that Article 110 of the regulation provided an exemption from infringement only for parts intended for repairs that are designed to restore the complex product to its original appearance. Consequently the court’s opinion was that the exception applied only when the replacement part has an identical visual appearance to the part that was originally incorporated in the complex product and also that the seller of the replacement part had a “duty of diligence as regards compliance by downstream users” to make sure that the parts were being used only for repairs. Such diligence could include statements in catalogs and provisions in sales contracts that the parts were only for use in repairs.

Nintendo Co. Ltd v BigBen Interactive GmbH

Under the EU’s regulation for protection of designs, enforcement of design rights is by certain designated courts in each member state which will be designated as Community Design Courts. Such courts have EU-wide subject matter jurisdiction over natters of infringement. Actions can be brought in a design court in the country where the defendant has an establishment. If the defendant has no establishment in the EU, actions can be brought in the courts in a country where the plaintiff has an establishment. Failing that actions can be brought in the Community Design Courts in Spain. Additionally, actions can be brought in the Community Design Courts in a country where infringement occurs, but in this case subject matter jurisdiction is limited to acts of infringement in that country.

In Nintendo Co. Ltd v BigBen Interactive the Court of Justice of the European Union was confronted with a situation in which a German subsidiary of the French BigBen company sold products that allegedly infringed Nintendo’s Community Design registrations in Germany, the products having been made in France. Nintendo brought an action before a German Community Design Court naming both the French and German BigBen companies. BigBen France contended that the German court lacked jurisdiction over it. The Court of Justice of the European Union disagreed noting that Article 6(1) of the Regulation on jurisdiction and recognition and enforcement of judgments in civil proceedings provided that a party domiciled in an EU member state could be sued:

• Where he is one of a number of defendants in the courts where one of them is domiciled, provided that the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

Consequently, since an EU design registration is a unitary right (unlike the current situation applying to patents) and since the French company supplied the goods being sold by the German company, a community design court in Germany had jurisdiction over the French company. Such jurisdiction included the authority to order provision of information, payment of damages and costs, even though these were matters of national law.

In addition to the question of jurisdiction, the court also considered the question of the scope of the exclusion from design right protection provided by Article 20(1)(c) of Design Regulation applicable to:

• Acts of reproduction for the purposes of making citations or of teaching, provided that such acts are compatible with fair trade practice and do not unduly prejudice the normal exploitation of the design, and that mention is made of the source.

The issue arose in connection with the defendant’s use of images of the products covered by the design registration on its web site for the purpose of showing how accessories not covered by the design registration might be used in conjunction with products whose design was covered by the registration. The Court held that such use was permissible as long as all of the requirements of Article 20(1)(c) of the design regulation were met and this was a matter for the national court to verify.

Trademark Protection for Shape of Functional Articles

In Yoshida Metal Industries v. EUIPO, the Court of Justice of the European Union held that notwithstanding the fact that certain knife handles may have acquired distinctiveness, this did not make them registrable as trademarks where all essential characteristics of the mark perform a technical function. Article 7(1)(e)(ii) of the Trademark Regulation which bars the registration of “signs which consist exclusively of the shape, or another characteristic, of goods which is necessary to obtain a technical result.”

Kit Kat –UK, EU Singapore, UK Supreme Court – Doctrine of Equivalents Applicable to Questions of Patent Infringement

Traditionally, the English courts had been reluctant to find that anything falling outside the literal scope of a patent claim was an infringement of the patent. In recent years they had recognized that in applying this principle claims had to be construed purposively and so if it appeared that the draftsman had intended that the claim should be given a relatively liberal interpretation (for example whether the term “vertical” simply meant something pointing generally upward rather than being at right angles to the ground) this should be taken into account. The Protocol to Article 69 of the European Patent Convention is applicable to interpretation of claims in England. As originally drafted, this requires that claims be construed to give a fair protection for the patent proprietor with a reasonable degree of legal certainty for third parties. Earlier English case law had held that purposive construction of a claim met these requirements. The amendments to the European Patent Convention that came into effect on December 13, 2007 added a further provision to the Protocol requiring that:

• For the purpose of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.

In the case of Eli Lilly v. Actavis, the United Kingdom Supreme Court recognized that the amended Protocol to Article 69 of the European Patent Convention requires that the UK adopts some form of protection for equivalents outside the scope of the claim. It sets out the following test:

1. Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention, i.e. the inventive concept revealed by the patent?
2. Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention?
3. Would such a reader of the patent have concluded that the patentee nonetheless intended strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention?
4. To establish infringement where there is no literal infringement, a patentee would have to establish that the answer to the first two questions was “yes” and the answer to the third was “no.”

The court considered the question of the extent to which the prosecution history of a patent should be used in determining infringement and was reluctant to do so unless the applicant had, during prosecution of the patent application, clearly stated that what it now claimed to be an infringement fell outside the scope of the claims.

In a subsequent decision of the Patents Court in Generics (U.K.) Limited v. Yeda Research and Development Company Limited Arnold J. held that when construing claims prior to applying the “equivalents test” noted above, it was still correct to apply a purposive construction rather than a literal one. He also held that when considering the question of anticipation any broadening of protection afforded by application of the doctrine of equivalents should not be taken into account.

United Kingdom Supreme Court- Criminal Liability for Sales of Grey Market Goods

In the case of R v. M the United Kingdom Supreme Court was confronted with an interlocutory appeal in a case where the defendant had been indicted under Section 92 of the UK Trade Marks Act as having sold garments in the United Kingdom under registered trademarks such as Ralph Lauren, Adidas, Under Armour, Jack Wills, and Fred Perry where such goods had been manufactured outside the EU and use of the marks on the goods had not been authorized by the trademark owner. The statute makes sale of goods that bear a trademark a criminal offense if done “with a view to gain for himself or another or with intent to cause loss to another without consent of the proprietor”. The question before the Court was whether criminality under the statute was confined to sale of genuinely counterfeit goods or also applied to other “non-authorized” uses of the mark such as garments deliberately have been made by the factories in excess of the numbers permitted by the trademark owner, or made under a permission which was cancelled by the trade mark owner for example where the trademark owner was dissatisfied with the quality. After considering the precise wording of the statute and its predecessors, the Court concluded that there was no basis for limiting offenses under the act to sale of true counterfeits but in cases where manufacture had been outside the EU and so the EU’s free flow of goods doctrine did not apply, an offense could be committed by any sale of the trademarked good without the consent of the trademark owner. The case could therefore proceed to trial.

United Kingdom – Actions for Unjustified Threats of Patent, Design or Trademark Infringement

In the United Kingdom, the Intellectual Property (Unjustified Threats) Act 2017 came into effect on October 1 and amends the law with respect to making unjustified threats of patent, design or trademark infringement. More specifically, the changes extend the definition of actionable threats so that it covers threats to bring actions in courts outside the United Kingdom, although the action with respect to which the threat is made must still take place within the United Kingdom, and expands the type of communication that can constitute a threat to “a communication directed to the public or a section of the public” and so is no longer confined to threats to specific individuals. The law does provide a safe harbor for certain types of communication (including simple notification of the existence of an IP right).

Spain – New Patent Law

A new Patent Law came into effect in Spain on April 1. Since Spain intends to remain outside the EU’s unitary patent regime, it is not required to adopt the provisions of the unitary patent regulation or the Unified Patent Court, although it will remain a member of the European Patent Convention.

Main features of the change are to bring the Spanish law more into line with the 2000 amendments to the European Patent Convention especially with respect to protection of pharmaceutical invention in particular having regard to second medical use inventions and supplementary protection certificates. Consistent with the other main European countries, opposition proceedings will now be post-grant and limitation of the scope of protection of partially valid patents will be possible.

The new law also specifies that only a limited number of courts have jurisdiction over patent infringement proceedings with the objective of building up specialist expertise in those courts. Initially, such courts will be only in Madrid and Barcelona.

Other changes make the requirements of patent and utility model protection more similar having regard to novelty requirements and subject matter eligibility (although methods, biological products and pharmaceuticals are still excluded from utility model protection). However, a lower standard of inventivity will still be required for utility models than for patents and, although utility models will be granted without examination, it will be necessary to obtain an examination report before they can be enforced.

Canadian Supreme Court – Abolition of the Promise Doctrine in Patent Law

Some years ago in Apotex Inc. v Wellcome Foundation the Supreme Court of Canada adopted a version of the utility requirement that is common to most patent laws that went beyond international norms in requiring the applicant for a patent must be able to demonstrate that the specification as filed either shows or soundly predicts that the invention claimed actually fulfills any promise set out in the application. This has come to be known as the Promise Doctrine.

On June 30, 2017, in AstraZeneca Canada Inc. v. Apotex Inc the Canadian Supreme Court, held that the Promise Doctrine is unsound and went beyond what was required by the Patent Law in requiring an invention to have utility.

The case related to a patent on the drug sold under the name NEXIUM. The patent indicated that the drug reduces the amount of acid in the stomach and would have less variation in patient response than other proton pump inhibitors used to reduce the amount of acid in the stomach. It was accepted that the first of these ‘promises” was met, but both the trial court and the Court of Appeal held that the second promise was neither demonstrated nor soundly predicted. Consequently, both courts had held the patent invalid for failure to comply with the Promise Doctrine. The Supreme Court disagreed with this conclusion and noted:

• The Promise Doctrine is excessively onerous in two ways: (1) it determines the standard of utility that is required of a patent by reference to the promises expressed in the patent; and (2) where there are multiple expressed promises of utility, it requires that all be fulfilled for a patent to be valid.
• This went beyond the proper requirements of the law which were satisfied when a patent discloses multiple uses, if a single use makes a subject matter useful, and any single use of that subject-matter that is demonstrated or soundly predicted based on the disclosure of the application.

Canadian Supreme Court on Liability of Intermediaries Google v. Equustek (Supreme Court of Canada)

In the case of Google Inc. v. Equustek, the Supreme Court of Canada has upheld the grant of a preliminary injunction by the Court of Appeals of British Columbia ordering Google to de-index on a global basis websites of a party accused of passing off the plaintiff’s goods and misusing its trade secrets. Equustek, a small Canadian technology company, had brought suit in British Columbia against its former distributor (Datalink) for passing off and misuse of their trade secrets. Datalink initially contested the action but left British Columbia for an unknown destination and continued to maintain web pages that were indexed by Google. The British Columbia courts issued an injunction against Datalink ordering it to cease operating or carrying on business through any website. Following this and a request by Equustek, Google had de-indexed some but not all of Datalink’s webpages so that they would not be found if they were being searched for on Google’s Canadian site, google.ca, but they could still be found by a search for example on google.com or other country-specific Google search sites. When these measures had proved ineffective to stop Datalink’s activities, Datalink sought the injunction now affirmed.

On November 2, the district court for the Northern District of California issued a preliminary injunction to prevent enforcement of the Canadian court order requiring Google to delist search results worldwide on the grounds that enforcement would be contrary to Section 230 of the Communications Decency Act which immunizes providers of interactive computer services against liability arising from content created by third parties. The court noted that Congress enacted Section 230 in 1996 to address “the threat that tort-based lawsuits pose to freedom of speech in the new and burgeoning Internet medium.” Since Google was therefore likely to succeed on the merits, issue of a preliminary injunction was appropriate.

Easing of Examination Guidelines on Computer-Related Inventions in China and India

Both China and India have amended their patent examination guidelines in ways that should make it easier to obtain patent protection for some computer-related inventions.

In 2016, India issued examination guidelines for computer related inventions that apparently required some novelty in the hardware used to implement the invention. This provision was modified in 2017 to omit reference to novel hardware and state “it is important to ascertain from the nature of the claimed computer related invention, whether it is of a technical nature involving technical advancement when compared to the existing knowledge or having economic significance or both”.

In China, the Guidelines were amended to make it clear that a computer program operating on an apparatus can be regarded as a functional component of that apparatus and to provide for protection for computer-readable media bearing programs containing instructions for carrying out patentable methods.

Amendments to China’s IP laws

An expected amendment to China’s patent law was not enacted and it is believed that a draft prepared by the Chinese patent Office has been returned to the office for further consideration.

Amendments to the Unfair Competition Law were enacted. While the changes that have attracted most attention pertain to issues relating to bribery and corruption, there are some changes relating to trademark-type matters. Provisions relating to infringement of registered trademarks have been removed from the unfair competition law on the ground that such matters are already covered by the trademark law and inclusion in the unfair competition law is either duplicative or confusing.

As a result of the changes, a business entity are prohibited from carrying out acts intending to cause confusion, which would mislead others into thinking that its products belong to another party or that there is an association with another party. Acts that could cause such confusion and mislead others are listed as including unauthorized use of a mark, name of an enterprise a social organization or an individual with a certain degree of influence, or the main element of a domain name and acts intended to mislead others into thinking that a product belongs to another party or there is an affiliation with another party.

It is of interest to note that even before this change to the unfair competition law, Michael Jordan, the former basketball star, succeeded in securing rights to his name in Chinese characters in a case that went up to the Supreme People’s Court. Qiaodan Sports, a Chinese sportswear manufacturer had registered Jordan’s name in Chinese characters as its own trademark. The Supreme People’s court overturned lower court decisions and held that such registration had been done with malicious intent and so the registration was invalid.

Foreign Reputation did not Help in Indian Trademark Dispute

In Toyota Jidosha Kabushiki Kaisha v. M/s Prius Auto Industries Ltd., the Indian Supreme Court held that the Indian company Prius Automotive had the right to continue use of the Prius trademark. Toyota had alleged passing off together with infringement of other registered trademarks it owned. Its application for registration of the “Prius” mark was still pending. The Indian company had started using the mark in India before Toyota had started to sell its Prius cars in India. Toyota argued that it had an international reputation in the Prius name before the Indian company started using the mark. The Supreme Court held that this was not enough. The court based its decision on the principle of territoriality of trademarks, as opposed to the doctrine of universality. The principle of territoriality requires that a trademark should be recognized as having a separate existence in each sovereign country. Reputation outside India was not enough by itself to provide basis for a passing off action.

English Court of Appeal on Product Shapes as Trademarks

In Nestlé S.A. v Cadbury UK Ltd, the English Court of Appeal was confronted with the question of whether the four finger shape of a Kit-Kat confectionary bar could serve as a trademark. The English Court of Appeal first noted that the Court of Justice of the European Union had held that the shape of a product was inherently non-distinctive but could acquire distinctiveness and so qualify for trademark protection but for this to happen, identification, by the relevant class of persons, of the product as originating from a given undertaking must be as a result of the use of the mark as a trade mark and thus as a result of the nature and effect of it, which make it capable of distinguishing the product concerned from those of other undertakings.” (Emphasis added)

In the present case, after considering survey evidence, the Court of Appeal agreed with lower court findings that the Kit-Kat shape had not acquired such distinctiveness that it distinguished the product from those of other undertakings.

Trans Pacific Partnership

Following the withdrawal of the United States, the remaining eleven countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) renamed the agreement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and amended the original agreement to “freeze” certain of the IP provisions in the original agreement including those providing for an extension of the term of copyright from life of the author plus 50 years to life of the author plus 70 years; those relating to patent term extensions resulting from patent office delay or unreasonable curtailment of protection for pharmaceutical products, requirements for countries to provide patent protection for inventions derived from plants, provisions requiring protection of undisclosed test and other data generated to obtain marketing approval of pharmaceutical products, and provisions requiring countries to provide for criminal penalties for knowing interference with rights management systems for commercial advantage or financial gain, provisions requiring countries to provide for criminal penalties for manufacturing, modifying, importing or exporting equipment intended to assist in decoding encrypted program-carrying satellite signals and provisions requiring countries to provide legal incentives for Internet Service providers to cooperate with copyright owners to deter unauthorized storage or transmission of copyright materials.

Provisions that survive the re-write are found in Chapter 18 and include: a requirement to allow registration of sound trademarks and to make best efforts to register scent trademarks, a requirement for each country to provide a procedure for settlement of disputes relating to its own country code top level domain names, a requirement to provide some form of protection for geographical indications, a requirement for all participating countries to adopt a grace period of twelve months prior to the filing date of a patent application for disclosures made by the applicant for the patent; commitments to protect undisclosed test and other data generated to obtain marketing approval of agricultural chemicals; provisions requiring design protection for parts of an article rather than the whole article, and general provisions on enforcement of intellectual property rights.

Canada – EU Free Trade Agreement

Most provisions of the free trade agreement between Canada and the European Union came into effect on September 21, 2017. Provisions relating to intellectual property are found in Chapter 20 and include: obligations to provide adequate legal protection of rights management systems and to protect against circumvention of rights management technology used to protect copyright and performers rights, to define the obligations of service providers acting as intermediaries in supply of works subject to copyright or related rights, provisions for the fair use of descriptive terms, including terms descriptive of geographical origin, as a limited exception to the rights conferred by a trademark; extensive provisions relating to protection of geographical indications, provisions that where appropriate there can be simultaneous protection of an article under design and copyright law, provision for sui generis patent-type protection for a pharmaceutical whose marketing was delayed to obtain marketing approval, commitments to protect undisclosed test and other data generated to obtain marketing approval of pharmaceutical products and plant protection products, and general provisions on enforcement of intellectual property rights.

The treaty provisions have been implemented in Canada by the Canada–European Union Comprehensive Economic and Trade Agreement Implementation Act and regulations made under it which amend the Patent Act to, among other things create a framework for the issuance and administration of certificates of supplementary protection, for which patentees with patents relating to pharmaceutical products will be eligible, and amend the Trade-marks Act to, among other things, (i) protect EU geographical indications set out in the agreement, (ii) provide a mechanism to protect other geographical indications with respect to agricultural products and foods, (iii) provide for new grounds of opposition, a process for cancellation, exceptions for prior use for certain indications, for acquired rights and for certain terms considered to be generic, and (iv) transfer the protection of the Korean geographical indications listed in the Canada–Korea Economic Growth and Prosperity Act into the Trade-marks Act.

Membership of WIPO-Administered Intellectual Property Law Treaties

New members of the main intellectual property law treaties during 2017 have included:

• Jordan joined the Patent Cooperation Treaty;
• Thailand and Indonesia joined the Madrid Protocol on trademarks;
• Cambodia and Russia joined the Hague Agreement on protection of designs;
• Cook Islands, Kiribarti and Tuvulu joined the Berne Copyright Convention

EU Data Protection Regulation

The European Union (EU) General Data Protection Regulation (GDPR) will take effect on May 25, 2018. The main purpose of the regulation is to protect the personal data of EU citizens and will apply to the processing of this data by data controllers and data processors regardless of whether the processing takes place in the EU.

The regulation provides individuals with the following rights:

• Rights on the collection, use and disclosure of their personal data;
• Right to obtain information about whether their personal data is being processed and if so, where and for what purpose;
• Individuals shall be provided with opt-in rights for the use of their data and in addition, entities are required to document their opt-in procedures.

Entities are required to:

• Give prompt notice of data breaches;
• In situations where notification of a data breach is mandatory, notification must be made within 72 hours of first becoming aware of the breach;
• Data controllers and processors must document their standard practices for processing data and their system for receiving and managing individuals’ requests about their personal data

Looking to the Future

Cyber Courts

On August 18, 2017, China launched Hangzhou Internet Court in Hangzhou City, the first court in China charged with reviewing exclusively internet-involved matters in central China’s e-commerce industry, home to such giant tech companies as Alibaba and NetEase. The Court reviews internet-involved matters including the disputes arising from the internet copyright ownership, infringement of the works originally published on the internet, the right of online information transmission of non-internet works, and disputes arising from internet domain name ownership, license agreements and infringement.

Documents and fees can only be submitted and delivered online, and the judges conduct trials through real-time video conferences.

Does this portend the creation of such on-line courts elsewhere?

Hot Tubbing

Many recent developments in the legal field have had their origins in Australia, including the idea that law firms may be publicly owned and shares in them traded in the stock market and that financial institutions should be allowed to invest in (fund) other people’s litigation in return for a share of any recovery obtained. One further innovation has been a litigation practice in which expert witnesses for both parties are cross-examined together at trial and required to respond immediately to each other’s testimony. In Unwired Planet v Huawei (a case noted above in the context of fixing royalty rates for standard essential patents), the English Patent Court adopted the hot tubbing technique to question experts on the damages issue.

Does this portend a greater use of hot tubbing worldwide to assess expert testimony?

Arrow Declarations

The question of whether there has been a merger of law and equity following such actions as the English Judicature Acts of the 1870’s and the adoption of the U.S. Rules of Civil Procedure in 1938 is normally one for the academics. However, the issue moved front and center in the English Court of Appeal’s decision in Fujifilm Kyowa Kirin Biologics Co, Ltd v AbbVie Biotechnology Ltd. In this case, AbbVie had obtained a European patent on a product that FujiFilm wished to sell in the United Kingdom. The European Patent was opposed in the European Patent Office and revocation proceedings against it commenced in the English courts. Following this AbbVie effectively surrendered that European patent by disapproving of the granted text. However, it had several divisional applications still pending covering the product and strongly implied that it intended to enforce the patents granted on those divisionals. FujiFilm contended that this created commercial uncertainty and sought a declaration that even if granted, any patents arising from the divisionals could not validly cover the product it intended to sell because that product was not novel or was obvious at the priority date of any patent that might be granted on such a divisional application. AbbVie sought to have this application for the declaration dismissed.

Noting that the modern law on the grant of declarations had been enunciated in Financial Services Authority v. Rourke as:

• “when considering whether to grant a declaration or not, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are any other special reasons why or why not the court should grant the declaration,”

The Court of Appeal went on to find that grant of the requested declaration was appropriate in this case because, although the Patents Act provided a legal remedy in the form of a declaration of non-infringement of a granted patent, this applied only to patents that had actually been granted, and AbbVie’s effective surrender of its parent patent apparently to avoid a decision on its validity and its statements about its intentions with respect to any patents granted on the divisionals meant that grant of the requested declaration was within the discretionary power of the court and that the issue should be considered on the merits as to whether the declaration should actually be granted.

Does this portend an increased use of applications for equitable declarations for relief in patent cases where the law provides no quick remedy and this results in substantial commercial uncertainty?

Possible Changes in PCT

Discussions continue within WIPO on how to simplify national phase entry for PCT applications. Does this portend changes in PCT to make it more similar to the Hague Design Agreement and the Madrid Protocol on trademarks?

Closer Cooperation Between the EPO and the EU?

The creation of the European Patent Convention was to some extent a reaction to France’s veto of the United Kingdom’s application to join what was then the European Common Market, replacing the original idea of a Common Market patent with a European Patent open to all countries geographically present in Europe. This is in contrast to the European Intellectual Property Office which was set up as an organ of the European Union. Hitherto, although the EU has had some indirect influence over the EPO, for example in the field of patenting biotechnology inventions, there has been little direct involvement by the EU in the running of the European Patent system. The newly-appointed head of the European Patent Office is Antonio Campinos who is currently Executive Director of the European Union Intellectual Property Office. Does this portend greater EU involvement in the field of patents in the future?

Reducing Patent Office Backlogs

Since the European Patent Office expanded its “Early Certainty” project to patent examination in 2017, there has been a noticeable increase in the number of summons to oral proceedings being issued at a relatively early stage in the prosecution, apparently in an effort to reduce the backlog of pending applications. In many, but not all, cases, examiners are willing to discuss outstanding issues after the summons has been issued in an attempt to resolve matters without the oral proceedings having to take place since this is administratively easier for the examiners than actually having to take part in the hearing.

China has taken a different route in trying to reduce its backlog by issuing new regulations for prioritized examination that came into effect on August 1, 2017, although it is still only applicable to inventions in certain “key” industries.

Brazil on the other hand requested public comment on proposals to do away with examination altogether for patents relating to inventions outside the pharmaceutical sector but to introduce pre-grant opposition to enable the public to bear the burden of carrying out the examination. While awaiting the outcome of these proposals, Brazil has implemented a pilot program to permit applicants to make early amendments to their Brazilian applications to take account of objections made in other countries that might apply to the Brazilian application and has finally resolved the dispute between the patent Office and the Ministry of Health (ANVISA) over which body has the final say as to whether a pharmaceutical product is patentable in favor of the Patent Office.

Do these developments portend further experiments on expediting patent prosecution and increased pressure on applicants to decide on patent scope before the commercial opportunities for the invention have been fully evaluated?