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Cadbury faced another trade mark set back last week before the Court of Appeal ([2018] EWCA Civ 2715).

Background

Cadbury filed a trade mark application in 1995 covering a range of goods in Classes 29 and 30 ("Mark 1"). Mark 1 was filed with a sample of the colour purple (Pantone 2685C) and a description which originally read "the mark consists of the colour purple". The application form did not specify that the application was for a series mark.

During the examination procedure, at the request of the examiner, the goods were limited to "chocolate in bar or tablet form" in Class 30 and the description was amended to "The mark consists of the colour purple (Pantone 2685C) as shown on the form of application, applied to the whole visible surface, or being the predominant colour applied to the whole visible surface, of the packaging of the goods".

Cadbury filed another application in 2004 for the same sample of the colour purple (Pantone 2685C) but covering "chocolate in bar and tablet form, chocolate confectionery, chocolate assortments, cocoa-based beverages, preparations for cocoa-based beverages, chocolate-based beverages, preparations for chocolate-based beverages, chocolate cakes" in Class 30 ("Mark 2").

Mark 2 was successfully opposed by Nestlé on the basis that it did not constitute a sign that was graphically represented with sufficient certainty or precision. (This dispute went as far as the Court of Appeal in 2013: see our blog here.)

The successful opposition against Mark 2 meant that Mark 1 was potentially vulnerable to invalidation because it was identical to and used the same description as Mark 2. Cadbury requested the deletion of the words "predominant colour" from the description of Mark 1. The UKIPO's hearing officer refused this request on the basis that alterations to registered trade marks are prohibited, except in very limited circumstances. The hearing officer's decision was confirmed by the High Court (for details see our blog here).

The appeal

Cadbury appealed on the basis that Mark 1 was not a single mark but, rather, a series mark. A series mark is defined by the Trade Marks Act 1994 ("TMA") as "a number of trade marks which resemble each other as to their material particulars and differ only as to matters of a non-distinctive character not substantially affecting the identity of the trade mark". Cadbury argued Mark 1 actually consisted of:

  1. a mark covering the colour purple (Pantone 2685C) applied to the whole visible surface of the packaging of the goods; and
  2. the colour purple (Pantone 2685C) being the predominant colour applied to the whole visible surface of the packing of the goods.

Under the Trade Mark Rules 2008, it is possible for a trade mark owner to request the deletion of a mark in a series registration. On this basis, Cadbury requested the deletion of the second mark in the "series".

The ruling

The Court of Appeal noted that that the description of Mark 1 on the register begins “The mark consists of the colour purple…”. It noted that this suggests that Mark 1 "purports to define one mark".

Cadbury was found to have placed too much weight on the use of the word “or” in the description. Lord Justice Floyd said, "Beguilingly though it was put, I cannot accept Cadbury’s argument that there are two marks. Once one starts to parse the description on the basis that every alternative gives rise to a different mark, one is faced with the fact that the predominant colour wording itself covers what Sir John Mummery, in Cadbury 1, called a “multitude” or “unknown number” of different signs. The logical result of Cadbury’s argument is, as it seems to me, that the registrar has allowed registration not of a series consisting of two marks but a series consisting of an unknown number of marks. Rather than reach such a conclusion, the informed reader of the registration would, I have no doubt, conclude that the various alternatives covered by the description were not intended to identify separate marks, but were parts of a generalised but imprecise description of a single mark".

Comment

This decision will provide worrying, but probably not unexpected, news for Cadbury because it leaves Mark 1 vulnerable to invalidation.

It is interesting to note that the description which ultimately proved problematic for Cadbury was originally suggested by the UKIPO itself during the application process. It is also interesting that the court, in essence, found that the UKIPO had incorrectly accepted Mark 1 when it was filed. Trade mark owners should therefore be cautious when answering office actions and consider the possible long-term consequences of any changes that they make to their application.

Thought should also be given to the wording in the TMA which currently states that trade marks must be a "sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings". This provision is soon to be amended when the UK implements the Trade Marks Directive in January 2019 (see our blog on the reforms here) However, although there will no longer be a requirement for graphical representation, trade marks will still need to be clearly and precisely defined.

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In the latest round of Unwired Planet International Ltd v Huawei Technologies Co. Ltd & Ors ([2018] EWCA Civ 2344), previously discussed in our blogs here, here and here, the Court of Appeal has rejected Huawei's appeal against the High Court's decision of April 2017 (see the full judgment here).

Background

The European Telecommunications Standards Institute (ETSI) is the EU's standards setting organisation (SSO) for mobile telephone technology. Its standards are set by participating members, such as mobile phone manufacturers. Certain intellectual property rights, which protect the technology which is required to meet and implement industry standards, are known as standard essential patents (SEPs). Members who hold such SEPs are required to inform ETSI of those patents and must license them to users of the standard on 'fair, reasonable and non-discriminatory' (FRAND) terms.

This is designed to mitigate the potential for anti-competitive behaviour, by which SEP owners could refuse to license their patents or receive excessive royalty fees. Nonetheless, negotiations are still often lengthy and drawn out. Owners of SEPs may threaten injunctions in an attempt to secure payment. Likewise, infringers may refuse to engage constructively to avoid paying the fees.

Due to these issues, in November 2017 the European Commission outlined some key principles designed to ensure a more predictable and fair framework for licensing SEPs, as discussed by us here.

High Court decision

Unwired Planet ("UP") has numerous patents, which it licenses to companies who make and sell mobile phones. It sued several companies, including Huawei, for infringement of six UK patents, of which five were claimed as SEPs. This led to five "technical trials" in relation to the patents' validity and infringement, and a sixth "non-technical trial" in relation to FRAND and competition law issues.

UP settled with all the other defendants. It and Huawei then each made offers of licence terms which were unacceptable to the other and which Birss J - in his High Court decision - decided were not FRAND. He found that Huawei's insistence on a national rather than global licence was unreasonable, as were the rates sought by UP. He held that in the circumstances a FRAND licence should be worldwide for all of UP's SEP portfolio, and set royalty rates based on a number of existing comparable licences. He also held that UP did not abuse their dominant position in the market by, among other things, issuing injunction proceedings prematurely and bundling SEPs and non-SEPs in a global licence.

Birss J therefore granted a UK injunction against Huawei until it entered into a global agreement with UP. Huawei subsequently undertook to enter into whatever licence was finally determined to be FRAND.

Court of Appeal ruling

Huawei appealed on three grounds, as set out below.

1. Global licensing

Huawei stated that imposing a global licence on terms set by a national court based on a national finding of infringement is wrong and does not qualify as being FRAND. In its view, its offer to enter a FRAND licence which covered all of UP's UK rights sufficiently met UP's FRAND undertaking, and it was inappropriate to set royalty rates and impose an SEP licence extending beyond the UK.

The Court of Appeal found, however, that it is often impractical for owners of SEPs to negotiate licences of their patent rights on a country by country basis. Indeed, a licensee acting willingly and reasonably would regard country by country licensing as 'madness', and no rational business would do this if it could avoid it. It is therefore possible for a global licence to be FRAND, particularly given that both patent portfolios and the FRAND obligations of patentees are often international.

The only substantive point of disagreement with the High Court was with Birss J's assertion that there is only 'one true FRAND' set of rates and terms. This, the Court of Appeal held, is not correct, as there is always a range of terms upon which willing licensors and licensees could potentially reach agreement.

2. Non-discrimination

Huawei stated that it should have been offered the same rates as those contained in UP's licence to Samsung. It contended that the non-discrimination limb of FRAND is intended to prevent SEP owners from charging similarly situated licensees substantially different royalty rates for the same SEPs.

The Court of Appeal found, however, that the non-discrimination limb is not 'hard edged'. In other words, licensees cannot demand a rate given to another licensee simply because that rate was lower than what is considered 'fair and reasonable' under FRAND. The starting point is always what is considered 'fair and reasonable', which is essentially the rate which reflects the proper valuation of the portfolio to licensees. That is regardless of what has previously been offered to other similar parties, although other licences can, in the right circumstances, provide a guide to what is 'fair and reasonable'.

3. Abuse of a dominant position

UP had sued Huawei without giving any notice of which SEPs were said to be infringed or why, and without having made any licensing offer. Huawei contended that, following the decision in Huawei v ZTE, this conduct is an abuse of a dominant position under Article 102 TFEU and ought to be a defence to an injunction.

The Court of Appeal found, however, that Huawei v ZTE only provides a 'safe harbour' for licensors and that UP being outside of the safe harbour did not automatically mean that it had abused its dominant position. Nor are the steps outlined in Huawei v ZTE necessarily mandatory in all situations.

Result: In a unanimous decision given by Kitchin LJ, the Court of Appeal therefore dismissed the appeal.

Comment

Although not a ground-breaking decision in that it very largely affirms the judgment of Birss J, this is an important decision as regards FRAND and SEPs. It likely will have application to 5G, the next generation of telecoms technology. It also confirms the UK as a highly attractive forum for cases of these types, by showing the flexibility of UK courts to such disputes.

The decision does attempt to strike the balance aimed at by the European Commission, by ensuring that the terms insisted upon by SEP owners are fair, but that licensees cannot force those owners to litigate in every single country. It also provides useful clarification on both the calculation of royalty rates when other licences already exist, and how compulsory the Huawei v ZTE  'safe harbour' provisions are.

It remains to be seen if Huawei seeks leave to appeal to the Supreme Court, a distinct possibility given the case's history. 

With special thanks to trainee, Chris Eykel, for his contribution to this article.

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The 585-page updated 'Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community' was published on 14 November 2018. A link to the draft can be found here.

The terms agreed in principle in March relating to intellectual property (which are contained in Articles 54-61 (pages 88 to 102)) remain largely the same - we have blogged about those changes here.

There is now however more clarity on the position regarding the protection of geographical indications, supplementary protection certificates (SPCs) and the mechanics of registering EU IP rights as comparable UK national rights. The agreed position at present is:

  • Geographical indications granted in the EU before the end of the transition period will be protected in the UK at the end of the transition without any re-examination (Article 54).
  • Any applications for SPCs or applications for extensions of SPCs submitted before the end of the transition period will be assessed on the same bases and new applications can continue to be filed (Article 60).
  • Registration of EU IP rights as comparable UK national rights will be free and will be carried out by the relevant UK authorities using the data available in the EUIPO registry, Community Plant Variety Office and the European Commission (Article 55). The IPO has been quoted as saying that it is confident of meeting the administrative burden of transferring thousands of rights.

The provisions concerning intellectual property have been fairly uncontroversial during negotiations and so we do not expect any further changes (but watch this space!)

Of course, the implications of the other non-IP related provisions will be almost, if not equally as important for all businesses. We have identified some of those below.

Transition period

  • The transition period will last until 31 December 2020 (subject to requests for further extensions from the UK) during which the UK will continue to be treated by the EU as if it were a member state (with limited exceptions) (Article 126).

Jurisdiction

  • The current European regulations governing:  
  1. Applicable law in contractual and non-contractual matters will continue to apply to contracts concluded or events giving rise to damage before the end of the transition period (i.e. Rome I and II) (Article 66).
  2. Jurisdiction in cases concerning the UK and Member States will continue to apply to cases instituted before the end of the transition period (i.e. the Brussels Regulation) (Article 67).
  3. The recognition and enforcement of judgments, decisions, authentic instruments, court settlements and agreements will continue to apply to proceedings instituted before the end of the transition period and to documents formally drawn up or registered as authentic instruments and agreements concluded before the end of the transition period (i.e. the Brussels Regulation) (Article 67).

Pending and new cases before the Court of Justice of the European Union (CJEU)

  • The CJEU shall continue to have jurisdiction in any proceedings brought by or against the UK before the end of the transition period. This includes the jurisdiction to give preliminary rulings on requests from courts and tribunals of the UK made before the end of the transition period (Article 86).
  • Judgments and orders of the CJEU handed down before the end of the transition period and those handed down after the end of this period in proceedings referred to in Articles 86 and 87, shall having binding force in their entirety on and in the UK (Article 89).

The agreement still needs approval by the other 27 EU member states for a vote (scheduled for 25 November 2018) before coming to the UK Parliament in December. We will be following that closely and will update the blog then.

We are advising a number of clients as to the implications of the various Brexit scenarios for their IP portfolios. Get in touch with a member of our IP team should you need any advice.

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In previous blogs (see here and here), we have discussed the ongoing saga in copyright infringement proceedings relating to the taste of a cheese product.  In 2017, the Dutch Court of Appeal referred various questions to the CJEU for clarification on what constitutes a "work" for the purposes of the Copyright Directive (2001/29/EC) and the Berne Convention.

On 25 July 2018, Advocate General Wathelet gave his opinion on the referred questions.  According to the Advocate General, EU copyright law should not be extended to the taste of food.  In its judgment published this morning, the CJEU agreed with the Advocate General's opinion. The CJEU also issued a press release here.

Background

The dispute is between Dutch companies Levola Hengelo BV ("Levola") and Smilde Foods BV ("Smilde"). Levola produces a garlic and leek flavoured cheese spread called Heks'nkaas. Levola claimed that Smilde has infringed the copyright in the taste of Heks'nkaas by producing a spreadable cheese called Witte Wievenkaas with the same taste as Heks'nkaas. Levola claimed that the taste of Heks'nkaas qualified for copyright protection under EU law and in particular, that the taste of a food product can be categorised as a 'literary, scientific or artistic work'.

Levola justified its position by referring to a 2006 judgment of the Supreme Court of the Netherlands (Lancôme v Kefoca) in which the Supreme Court held that the smell of perfume, may, in principle, be eligible for copyright protection. The Dutch Court of Appeal disagreed, particularly in light of the diverging case law across Member States.  For example, the French Supreme Court rejected the possibility of protecting the smell of a fragrance.

The Dutch Court of Appeal referred various questions to the CJEU for clarification on whether the taste of a food product could constitute a "work" and, therefore, benefit from copyright protection.

The Advocate General's Opinion

Advocate General Wathelet noted that the Copyright Directive does not define a "work". The term is an autonomous concept of EU law which must be given identical scope in all Member States.  He stated that "originality", being the author's own intellectual creation through free creative choices (see Infopaq, Painer and Football Dataco), was not sufficient to create a "work" - the concepts are distinct.

The Berne Convention contains a non-exhaustive list of literary and artistic works, none of which are capable of perception by way of taste, smell or touch. Therefore, the Advocate General reasoned that the scope of protection did not extend to taste.  Similarly, the idea / expression dichotomy (enshrined in EU law through Article 9 of TRIPS) meant copyright should not protect a recipe which is merely an idea.

Lastly, the Advocate General drew an analogy between trade mark law and copyright. Trade marks must be sufficiently precise, self-contained, easily accessible, intelligible, durable and objective to be registered ("the Sieckmann criteria").  Copyright, too, must be sufficiently precise.  He held that taste was subjective, making the precise identification of the copyright work impossible. 

For these reasons, the Advocate General held that the taste of a food product was not a "work" which attracted copyright protection.

The CJEU's Judgment

Today, the CJEU has confirmed that the taste of a food product cannot be classified as a "work".

In the judgment, the CJEU stated that for there to be a "work", two requirements must be met. Firstly, the subject matter must be original in the sense that it is the author's own intellectual creation.  Secondly, the subject matter must be an expression of the author's intellectual creation.  Copyright protection is granted for expressions but not ideas, procedures, methods of operation or mathematical concepts (Article 9 of TRIPs). 

To be protected by copyright, the subject matter must be expressed in a manner which makes it identifiable with sufficient precision and objectivity, even if the expression is not in permanent form. This is because authorities and competitors need to be able to identify the work.  The taste of food does not meet that requirement because it is identified through taste sensations and experiences.  These are subjective and variable.  Taste can be influenced by factors which are particular to the person tasting the product.

Conclusion

In the UK, the Copyright Designs and Patents Act 1988 contains discrete categories of works. The taste of a food product would not fall easily within any of these categories.  A claimant could argue the taste is a work of artistic craftsmanship, but that argument would not be easy to run. 

The CJEU appear to have introduced the requirement that a work be a precise and objective expression of intellectual creation in order to benefit from copyright protection as a "work". It reasoned that taste is influenced by factors such as a person's age, their food preferences or the environment and context in which the food product is tasted.  However, this analysis is equally applicable to other types of copyright work.

Musical notes are heard differently depending on the listener's age and their ear's receptiveness. The environment in which music is played can have an effect on the sound and resonance.  The context in which music is heard can cause a different reaction in a listener.  Does this make music subjective and variable? It is debatable, although the press release indicates that a musical work is a precise and objective expression.

It is important that the parties to litigation and the authorities enforcing the copyright owner's rights are clear as to the scope of the work claimed. However, the need for precision and objectivity to reassure competitors is more important for trade marks than copyright.  This is because the trade mark register can be inspected.  By contrast, the scope of a copyright work is, in most instances, only defined when a dispute arises.

It will be interesting to see what effect this judgment has on copyright law going forward.

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Since we blogged on the CJEU's judgment in Teva v Gilead (C-121/17) in July 2018, Arnold J has decided that Gilead's SPC for the combination of Tenofovir Disoproxil (TD) and Emtricitabine does not comply with Article 3(a) and must be revoked (see [2018] EWHC 2416 (Pat)).

CJEU ruling

In its judgment, the CJEU determined that Article 3(a) must be interpreted as meaning that:

‘… a product composed of several active ingredients with a combined effect is ‘protected by a basic patent in force’ within the meaning of that provision where, even if the combination of active ingredients of which that product is composed is not expressly mentioned in the claims of the basic patent, those claims relate necessarily and specifically to that combination. For that purpose, from the point of view of a person skilled in the art and on the basis of the prior art at the filing date or priority date of the basic patent:

  • the combination of those active ingredients must necessarily, in the light of the description and drawings of that patent, fall under the invention covered by that patent, and
  • each of those active ingredients must be specifically identifiable, in the light of all the information disclosed by that patent.’

High Court's decision

Following the CJEU's ruling, Gilead applied to the English High Court for permission to adduce further expert evidence, directed to what they say was a new test articulated by the CJEU, and directions for a second trial. The claimants issued applications for a final judgment to revoke Gilead's SPC.

Arnold J rejected Gilead's application on the basis that it amounted to an abuse of process because it was effectively an attempt to adduce fresh evidence after the trial and get a 'second bite at the cherry'. The evidence could and should have been brought before the trial. Arnold J also considered that it would not be in accordance with the overriding objective to give Gilead permission to adduce further evidence and direct a second trial, with the additional expense and delay which would result. Of particular note was Arnold J's analogy of the current situation with attempts to amend patent claims after trial – an issue currently before the Supreme Court in Generics v Warner-Lambert which was heard in February 2018 and on which a decision is keenly awaited (see our blog for further details).

Arnold J reached the following conclusions in relation to Emtricitabine and its combination with TD:

  • The combination of TD and Emtricitabine did not necessarily, in the light of the description and drawings of the basic patent, fall under the invention covered by the basic patent. This was not a simple extent of protection test – instead the combination must be one which the skilled person would understand (on the basis of the description and drawings and their common general knowledge) to embody the technical contribution of the patent. TD embodies the technical contribution but there was nothing in the basic patent to suggest that TD and Emtricitabine could be combined to treat HIV.
  • Emtricitabine was not specifically identifiable by the skilled person on the basis of the prior art at the priority date, in light of the information disclosed by the basic patent. TD is, but emtricitabine is not mentioned in the patent and is not even a member of a specific class of compounds listed in the patent. Further, there was no evidence that it was known, still less that it was common general knowledge, that emtricitabine was an effective agent for the treatment of HIV.

On this basis, Arnold J concluded that Gilead's SPC did not comply with Article 3(a) of the SPC Regulation and should therefore be revoked.

Comment

Arnold J has now set out his understanding of the test articulated by the CJEU and robustly applied that test to the facts in this case, closing the door to the hearing of further evidence.

Interestingly, the CJEU determined that the question of whether a product is protected under Article 3(a) of the SPC Regulation falls to be judged by the skilled person on the basis of the prior art at the filing or priority date of the basic patent – and this was applied by Arnold J. Prior to the CJEU decision it had been argued and accepted in the English courts that the relevant date was when the product was known. The CJEU's test seems to be a more stringent one which national patent offices will have to keep in mind when deciding whether to grant SPCs for products devised after the filing or priority date of the basic patent.

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