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All About IP | Mayer Brown LLP by Oliver Yaros, Warsha Kalé, Ryota Ni.. - 5d ago

Although the EU General Data Protection Regulation (the “GDPR”) entered into force on 25 May 2018, and the obligations under the GDPR have since taken effect, there remain significant uncertainties as regards enforcement. In particular, the application of the GDPR’s fining provisions – arguably the key concern for companies commercially – raises several issues, both in terms of the interpretation of the relevant GDPR provisions, and their operation in practice.

For further information on GDPR fines and their calculation, please see our Full Legal Update.

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated YouTube channel

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On 13 November 2018, the Court of Justice of the European Union (CJEU) ruled that the taste of a food product could not be classified as a ”work” within the meaning of Directive 2001/29/EC and that national member state legislation could not be interpreted differently (Case C-310/17). While the CJEU did not deny the copyrightability of tastes in principle, it held that “the current state of scientific development” does not allow the precise and objective identification of the taste of a food product.

The Facts of the Case

In the case before the referring court, a Dutch cheese manufacturer took the view that the production and sale of a spreadable cheese product infringed its copyright in the taste of one of its own cheese products and brought proceedings before a Dutch court. The Regional Court of Appeal, Arnhem-Leeuwarden, Netherlands, decided to stay the proceedings and refer to the CJEU the question of whether the taste of a food product is precluded from being protected by copyright under Directive 2001/29/EC.

The Ruling

The CJEU ruled that the taste of a food product could not be classified as a “work” within the meaning of Art. 2 lit. a) of Directive 2001/29/EC.

The Court ruled that for there to be a work, the subject matter protected by copyright had to be expressed in a manner that would make it “identifiable with sufficient precision and objectivity,” especially to competitors. However, the current state of scientific development does not provide a ” technical means” to make a “precise and objective identification of the taste of a food product which enables it to be distinguished from the taste of other products of the same kind.” Unlike, for example, literary and musical works, which are precise and objective forms of expression, the taste of a food product could not “be pinned down with precision and objectivity.” It could be identified by third persons “essentially [only] on the basis of taste sensations and experiences, which are subjective and variable.”

It is likely that the CJEU’s ruling can be extended further to scents and other sensory input.

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated YouTube channel

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On 21 November 2018, the data protection authority of Baden-Württemberg, Germany (the “authority”) imposed a fine of EUR 20,000 against a German social media provider (the “company”) for failing to encrypt user passwords. The authority’s decision marks the first time that a fine was imposed on a company for violating the European General Data Protection Regulation (GDPR) in Germany (here: Art. 32(1)(a)).

Email addresses and passwords of about 330,000 users of the company’s social media website were hacked and published on the Internet. The company notified the authority of the personal data breach and provided extensive information concerning its data processing activities. The company also informed its users of the breach in accordance with the applicable GDPR provisions.

From the information provided by the company, the authority learned that user passwords were stored unencrypted. Pursuant to Art. 32 of the GDPR, companies shall implement appropriate technical and organizational measures to secure personal data so that the rights and freedoms of the concerned natural persons are protected. To determine the appropriate measures, companies must take into account the state of the art, the costs of implementation and the nature, scope, context and purposes of processing the personal data. Based on those considerations—and the fact that encryption of personal data is listed as an appropriate measure in Art. 32(1)(a) of the GDPR—the authority determined that the company should have encrypted user passwords, rather than processing them in plain text, to grant a level of protection appropriate to the risks. Consequently, the authority concluded that the company had violated Art 32(1)(a) of the GDPR and applied a fine pursuant to Art. 83(4).

The fine could have been as high as EUR 10 million or 2 percent of the company’s worldwide turnover of the previous year, whichever is higher. However, when determining the amount of the fine, the authority considered the efforts taken by the company to implement the measures ordered and suggested by the authority and the company’s willingness to cooperate, in a very positive collaboration, with the authority.

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated YouTube channel

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On 25 October 2018, the European Court of Justice (“ECJ”) ruled on the Boston Scientific case (Case C-527/17) and decided that medical devices may not benefit from supplementary protection certificates (“SPCs”). The key aspects and the implications of this ruling are outlined in below article.

Legal Framework

Medicinal Products. — Pursuant to Article 6 of Directive 2001/83 , companies that intend to place a medicinal product on the market must first obtain a marketing authorisation (“MA”) from the competent authority; i.e. the national competent authority (typically the national Minister of Health) in the case of a decentralised MA procedure (Dir. 2001/83) or the European Commission in the case of a centralised MA procedure (Reg. 726/2004 ). Before an MA is granted, the national Medicines Agency (decentralised procedure) or the European Medicines Agency (“EMA”) (centralised procedure) performs a scientific assessment of the pharmaceutical, non-clinical and clinical data submitted by the applicant in the MA dossier in accordance with Article 8(3) and Annex I of Directive 2001/83, and concludes on the quality, safety and efficacy of the medicinal product.

Medical Devices. — Medical devices are regulated by Directive 93/42 (the “MDD”), which does not impose an authorisation procedure, but requires a so-called Notified Body (“NB”) to assess the product’s documentation on design, manufacture and performance with the purpose of ensuring compliance with the requirements set forth by the law. Following a (positive) assessment, the NB issues a certificate of conformity that entitles the manufacturer to affix the CE mark on the medical device and the product to circulate freely in the EEA.

Pursuant to Article 1(4) of the MDD, combined medical devices – i.e. those incorporating, as an integral part, a substance that (i) if used separately, may be considered a medicinal product and (ii) acts upon the body with an action ancillary to that of the device (a “medicinal substance”) – must be assessed in accordance with the specific procedure set out in Section 7.4 of Annex I to the MDD. Annex I sets out the essential requirements to be met by any medical device.

Section 7.4 requires that the quality, safety and usefulness of the medicinal substance be verified “by analogy with the methods specified in Annex I to [Directive 2001/83].” The NB verifies the usefulness of the substance and then seeks a scientific opinion from one of the national competent authorities or the EMA on the quality and safety of the substance, including the clinical benefit/risk profile of the incorporation of the substance into the device. The competent authority or the EMA takes into account the manufacturing process and the data related to the usefulness of incorporation of the substance into the device as determined by the NB.

SPCs. – Supplementary protection certificates were first governed by Regulation 1768/92, which was adopted in 1992 with the objective of compensating pharmaceutical companies for the patent protection lost while developing their chemical or biological ingredient into a medicinal product. Such development takes several years due, in particular, to the safety and efficacy testing as well as the MA procedure imposed by EU pharmaceutical law. Regulation 1768/92 has been repealed by Regulation 469/2009 (“SPC Regulation”).

Article 2 of the SPC Regulation provides that any ingredient protected by a patent and “subject, prior to being placed on the market as a medicinal product, to an administrative authorisation procedure as laid down in Directive [2001/83]“, is eligible for an SPC. Furthermore, as one of the conditions required for obtaining an SPC, Article 3(b) requires that the active ingredient has obtained a valid MA pursuant to Directive 2001/83.

Background of the Case and Question referred to the ECJ

Boston Scientific holds an European patent relating to the use of medicinal substances designed to reduce restenosis following angioplasty. That patent discloses in particular that Paclitaxel inhibits or reduces the proliferation and migration of cells in the blood vessel wall and thus counteracts the risk of restenosis. Paclitaxel is the principal active ingredient known for treating certain cancers and marketed under the name of Taxol.

Boston Scientific obtained a certificate of conformity for Taxus, a Paclitaxel-coated stent. As part of the conformity assessment procedure carried out by the NB, Paclitaxel was the subject of a prior assessment by the Dutch Medicines Agency, in accordance with Section 7.4 (1) and (2) of Annex I to Directive 93/42.

The company filed an SPC application for Paclitaxel with the German Patent and Trade Mark Office (Deutsches Patent- und Markenamt – “DPMA”) that, however, rejected the application on the grounds that the product had not been granted an MA. The company brought an action before the German Federal Patent Court (Bundespatentgericht), claiming that Taxus had undergone an administrative authorisation procedure equivalent to that envisaged by Directive 2001/83 as, during the conformity assessment procedure, the Dutch Medicines Agency had carried out an in-depth review of the safety and usefulness of Paclitaxel in relation to its use in the Taxus medical device. The German Court referred the matter to the ECJ for a preliminary ruling.

The referring court asked the ECJ whether a prior authorisation procedure for a combined medical device under Directive 93/42 is equivalent to an MA procedure for the medicinal substance incorporated in the device under Directive 2001/83.

Ruling of the Court

The ECJ ruled that a prior authorisation procedure, under the MDD, for a combined device is not equivalent, for purposes of the SPC Regulation, to an MA procedure for the medicinal substance under Directive 2001/83, even if that substance was the subject of the assessment provided for in Section 7.4 (1) and (2) of Annex I to Directive 93/42.

Article 2 of the SPC Regulation expressly subjects the eligibility for an SPC to two requirements: the active ingredient (i) must be placed on the market as medicinal product; and (ii) must be subject to an administrative authorisation procedure as that required for obtaining an MA pursuant to Directive 2001/83. The Court decided that neither of those two requirements was met.

Not a Medicinal Product. — With regard to the first requirement, the ECJ decided that the term “medicinal product” and the term “medical device” are mutually exclusive in such a way that a product that falls within the definition of a “medicinal product” may not be qualified as a “medical device” (see ECJ decision in Laboratoires Lyocentre). The distinction between medicinal products and medical devices lies with the principal mode of action of the combined product (see Art. 1(5)(c) of Dir. 93/42). A substance incorporated into a medical device that performs only an action ancillary to that of the medical device, cannot be qualified independently from that device and cannot be qualified as a medicinal product, even if it could be qualified as such if it were used separately.

Not an Administrative MA Procedure. — In relation to the second requirement, the ECJ decided that the medicinal substance is not subject to an administrative procedure equivalent or comparable to the MA procedure under Directive 2001/83. Indeed, the usefulness, quality and safety of the medicinal substance are assessed not in relation to a use of that substance as a medicinal product, as would have been the case in the context of the MA procedure, but by taking into account the intended purpose of the medical device and of the incorporation of the substance into that device.

Context. — The Court added that such literal interpretation of Article 2 is consistent with its context. Article 3(b) of the SPC requires that the product is granted a MA as a medicinal product and not as a substance forming an integral part of a medical device. Article 4 implies that the SPC protects a product that is used as a medicinal product and not as an adjuvant of a medical device and which performs an action ancillary to that which is performed by that device.

It is also consistent with the objective pursued by the SPC Regulation. The Court noted that it is apparent from its title and from Recitals 3, 4 and 8 to 10 that the EU legislature intended to reserve the grant of SPCs to medicinal products alone, to the exclusion of both medical devices and substances used as adjuvant products of a medical device.

Comments

More national harmonisation? — Before the ECJ decision, national authorities had adopted different positions on whether the certification procedure for combined medical devices could be considered as equivalent to an MA procedure (BPatG, Decision of 26 January 2010, 14 W (pat) 12/07 [2010] PharmR 237; “Genzyme Biosurgery Corp v Industrial Property Office”, BIE 70 (2002) 360-362). The German Federal Patent Court and the District Court of the Hague had answered positively, but the UK Patent Office did not, on the grounds that the consultation procedure established by the MDD was not comparable to the MA procedure for medicinal products (UK IPO, BL O/328/14, “Leibniz-Institut für Neue Materialien Gemeinnützige GmbH”, Decision of 29 July
2014; UK IPO, BL O/141/14, “Cerus Corporation”, Decision of 31 March 2014; UK IPO, BL O/466/15, “Angiotech Pharmaceuticals Inc. and University of British Columbia”, Decision of 6 October 2015). The same German Federal Patent Court had also denied SPCs for combined medical devices (BPatG, Decision of 8 March 2010, 15 W (pat) 25/08 [2011] MPR 23; BPatG, “Aminosylan beschichtete Eisenoxid-Nanopartikeli”, 14 W (pat) 45/12 [2016] GRUR 582). The ruling in the Boston Scientific case will hopefully bring harmonisation on the applicability of the SPC Regulation to combined medical devices.

Medical Devices Regulation (“MDR”). — In April 2017, the EU legislature adopted a regulation on medical devices that updates and strengthens the European rules on medical devices. The MDR, which repeals the MDD, will only enter into force in May 2020. It should not have any impact on the SPC protection of medicinal products because (i) it does not contain any rules on patent or regulatory protection of medical devices, and (ii) neither the term “combined medical device” nor the procedure currently set forth in Section 7.4 of Annex I of the MDD have been amended (see Art. 8 and Chapter II, Section 5.2 of Annex IX to the MDR).

Change in the Near Future? —The ECJ decision may soon be overturned by the EU legislature. Indeed, following its 2015 Communication on “Upgrading the Single Market“ , the EU Commission is carrying on a revision of the European intellectual property framework. The goal of the Commission is to strengthen EU-based manufacturing and competitiveness in industry sectors whose products are subject to regulated market authorisations. In that context, a series of studies was launched with the purpose of identifying the current issues and limits of the SPC Regulation (Study and annexes on the legal aspects of Supplementary Protection Certificates in the EU”, Max Planck Institute (May 2018); “Study of the economic impact of supplementary protection certificates, pharmaceutical incentives and rewards in Europe”, Copenhagen Economics (May 2018); “Assessing the economic impacts of changing exemption provisions during patent and SPC protection in Europe”, Charles Rivers Associates (October 2017); “25 years of SPC protection for medicinal products in Europe: Insights and challenges”, M. Mejer, (May 2017); “Economic Analysis of Supplementary Protection Certificates in Europe”, M. Kyle (January 2017)).

The Commission asked the Max Planck Institute to conduct a study on the application of the SPC Regulation by the national patent offices. The Max Planck Institute published a “Study and annexes on the legal aspects of Supplementary Protection Certificates in the EU” that was partly based on a survey carried out among the stakeholders active in the healthcare sector.

Question 41 of the survey was “To which types of products would you favour extending the current SPC protection?” 91% of respondents indicated that such protection should be extended to medical devices, pointing out that “[t]he present SPC system excludes a number of important trends, most importantly combinations of drugs with medical devices. (…) These combinations may not fall in the scope of the SPC directive due to non-compliance to Art. 2. This results in the rather unfair situation that a newly developed drug that has to be deployed from a medical device cannot obtain SPC protection merely due to its mode of administration” and that broadening the SPC regime to medical devices would make the EU more attractive for R&D activities.

In light of the goals set in the 2015 Communication and of the outcomes of the studies, on 28 May 2018, the Commission adopted a legislative proposal for the introduction of a so-called “SPC waiver”, i.e. the authorisation to manufacture a generic/biosimilar version of an SPC-protected medicinal product during the term of the SPC, for purposes of exporting to non-EU markets. The proposal represents the first step in the EU Commission’s efforts to update the SPC – and in broader terms the intellectual property – legal framework.

While introducing SPC protection for medical devices does not appear a Commission’s priority, recent surveys may push the Commission into submitting a legislative proposal that specifically addresses SPCs for medical devices. Given the wide range of medical devices, that legislative proposal would most probably cover not only combined medical devices but any medical device to which a patent has been granted. This SPC legal regime, however, will have to be very different from the SPC legal regime for medicinal products as, in many respects, medicinal products and the pharmaceutical regulatory framework remain very different from medical devices and their regulatory framework.

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated YouTube channel

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As automobiles are becoming part of the Internet of Things, “connected” technologies are increasingly deployed to enhance the safe operation of autonomous vehicles. These “intelligent” vehicles rely on an ecosystem of proprietary and third-party components to gather, analyze and react to data from both inside and outside the vehicle. In order to reduce costs, accelerate development and enhance the interoperability of connected technologies and applications, automakers and their suppliers are turning to pre-existing building blocks such as open source software (OSS). Though automakers see OSS as key to developing a base operating system that is flexible and allows for a continuous evolution, the technology does not come without its challenges.

First, despite OSS being available without charge over the internet, it is not “free” as it is provided via different specific license terms with varying requirements. Several OSS licenses require the licensees to make source code available to third parties. Other OSS licenses may require the automaker to license its patented technology to third parties. The varying licenses may conflict with each other which can frustrate an automaker’s adherence to the license.

Second, using OSS may not be less costly than using a proprietary solution. For example, costs are associated with conducting a comprehensive license and infringement analysis. Significant amounts may also need to be spent on designing and building necessary interfaces and testing the individual building blocks and the integrated system. Other costs may include the ongoing support and maintenance of OSS.

Third, the openness and transparency of OSS that allow for easy interoperability run contrary to traditional methods of secrecy, isolation and segmentation as means to maintaining system security. The openness and widespread use of a common technology platform for vehicle systems also means that the exploitation of a single security vulnerability will more likely reverberate through the entire ecosystem.

Conclusion

While OSS has been touted as a means to develop common standards and protocols, foster the ability for multi-sourced devices to communicate with each other and avoid any one device from being tied to a proprietary system or supplier, the effective use of OSS requires a careful evaluation of the total costs of deploying, maintaining and safeguarding resulting systems.

For further information, please read the full legal update.

This article was originally published on AllAboutIP – Mayer Brown’s  blog on relevant developments in the fields of intellectual property and unfair competition law. For intellectual property-themed videos, Mayer Brown has launched a dedicated YouTube channel

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