Wednesday, 23 October 2019

Shanks v Unilever: Supremes identify outstanding benefit

The provisions of the Patents Act 1977 on compensation of employees for certain inventions (principally s.40) have no doubt been a disappointment to their proponents. The Trade Union Congress was influential in getting them included in the Act, and my friend Lord Lloyd of Kilgerran took the leading role (I think) in piloting them through Parliament, but they hardly ever deliver for the employee-inventor (Kelly and Chiu v GE Healthcare [2009] EWHC 181 (Pat) being the single swallow that could not make a summer). The problem is that the invention has to be of outstanding benefit to the employer, and the bigger the employer the harder it is to make that sort of impression on its business.

Shanks v Unilever [2017] EWCA Civ 2 was perhaps the paradigm case of an employee's invention not being of outstanding benefit to his employer because the company was too big to pay. £24 million is  not a lot to Unilever. Although the Court of Appeal recognised that the Hearing Officer who made the initial determination had to take many factors into account, it also recognised that the size of the employer eclipsed the others. "Too big to pay" is not the general rule, but it comes close. Or did, until today.

That case has now given us Shanks v Unilever Plc & Ors [2019] UKSC 45 (23 October 2019) in which Lord Kitchin (with whom the other Supremes, unsurprisingly given his background in IP law, agreed) warned that tribunals “should be very cautious before accepting a submission that a patent has not been of outstanding benefit to an employer simply because it has had no significant impact on its overall profitability or the value of all of its sales”.

A benefit, to be outstanding, has to stand out (the sort of statement of the obvious that judicial decisions are required from time to time to make). The consequence of this is perhaps rather less obvious: to stand out, the thing being considered has to be compared against something else. And what is the something else against which it has to be compared - the multinational ice-cream-to-deodorants behemoth, or Unilever UK Central Resources Ltd which actually employed him? The answer turns out to be a pracgmatic one - although Professor Shanks OBE FRS FREng (as the judgment calls him) worked for a small cog in the Unilever machine, it was right to consider the benefit to Unilever rather than strictly to his employer. The Act contains what are designed to work as anti-avoidance provisions, so the employer cannot licence the patent at a peppercorn royalty so as to avoid liability for compensation, and this approach seems consistent with this.

The decision also confirms that the outstandingness (my word) of the benefit must be assessed before tax, and that the employee should be compensated for what his Lordship rather nicely called the affect of time on the value of money. The application had been made in 2006, and only came before a hearing officer in 2012 since when it has taken a further seven years to get to this stage, which was not something for which the court thought blame should be laid at the Professor's door.

So Prof Shanks's invention was of outstanding benefit to his employer, and he was entitled to a fair share of that benefit. The lower instances had done the heavy lifting on the calculations, which I guess are not for the Supremes to interfere with except to say that Arnold J had been wrong to reduce the Hearing Officer's 5 per cent to 3 on the interesting basis that Unilever were able to drive a harder bargain than others in licensing transactions because they had deep pockets and would be able to protect their patents. The percentage was applied to the £24 million that the Hearing Officer had identified as the benefit, and the Professor receives a nice £2 million in recognition of the significance of his invention.

Thursday, 3 October 2019

Contempt and failure to comply with court order


Price and others v Flitcraft Ltd and others [2019] EWHC 2476 (Pat) is a straightforward (though rare - at least until recently, because just a few months ago we had Juul Labs, Inc & Anor v Quickjuul Ltd & Ors [2019] EWHC 1281 (Ch) (21 May 2019)) case of a defendant failing to do what the court ordered to repair infringements of patent and copyright, and being held in contempt as a result. There seems to be no new or startling legal principles involved but its subject-matter demands attention.

The defendants were found by the court to have breached the injunction by distributing a brochure. It showed the infringing product, and also contained matter that infringed the copyright.

Wednesday, 2 October 2019

No implied duty of confidence in standards-setting body

A European Patents Office board of appeal has decided, on the face of it surprisingly, that there is no implied obligation of confidence on members of a standards-setting committee. Because there was no implied duty, the claimed invention was anticipated by documents available to the committee and therefore (within the broad definition in the Convention) available to the public. The invention therefore lacked novelty so could not be protected by a patent.

The consequences clearly follow the board's finding that there was no implied duty (and no express duty either, of course - one lesson from the decision must be that more use needs to be made of appropriate confidentiality or non-disclosure agreements). But why was there no implied duty?

The answer is that the process of devising standards is a collaborative one, involving extensive consultation among interested parties. At least, that's what the board said, and it sounds convincing. 'The evidence points to a system designed to guarantee a certain "privacy" of its data while at the same time being sufficiently pragmatic and flexible to allow consultation with other parties in order for it satisfactorily to fulfil its mission', it stated. Whether a document or other carrier of information be confidential or no is relative, to some extent, and 'a certain "privacy'" does not amount to confidentiality.

So the lesson is that if you are involved in standards-setting, you need to make use of appropriate agreements and undertakings. They might make the standards-setting harder work, but they will preserve the possibility of gaining patent protection. ALthough you could always file the application earlier.

T 2239/15T MPEG INPUT DOCUMENTS/Fraunhofer – Dolby 

Sunday, 29 September 2019

Transfers from IPEC to the Patents Court

Just a glance at the title will tell you that Kwikbolt Ltd v Airbus Operations Ltd [2019] EWHC 2450 (IPEC) (31 July 2019) (not yet on Bailii, only reported by PLC, whose brief report I gratefully acnknowledge, so there is a great deal more to know about this) must be a David and Goliath contest. No matter how large the claimant might be, the defendant is pretty sure to be much bigger. On the face of it, even without considering the nature of the dispute, it is likely to be exactly the sort of claim that IPEC (and the Patents County Court before it) was designed for.

Nor will it come as a surprise that the defendant should have applied to transfer the case to to the Patents Court. Litigation is driven almost entirely by cost considerations, and if you can make your opponent worried that they will run out of money in the Patents Court instead of enjoying the cost caps that apply in the Intellectual Property Enterprise Court it would be unrealistic to expect any litigator, seeking to do their best for their client, not to try to transfer it.

The question for the court hearing such an application is whether the case is complex enough to justify transfer. Does it need days of court time with loads of expert witnesses - the very opposite of the speedy operation of IPEC? HHJ Hacon thought not. With proper management, the case could be heard in two or three days.

Obviously, the defendant was much better able to afford the expense of the Patents Court than was the claimant - which was exactly why David has chosen to sue Goliath in IPEC to start with. In IPEC you accept that your damages are going to be capped at £250,000 if you win (and costs at £50,000). But that's only part of the story: an injunction might be worth a lot more to David, and cost Goliath much more dearly, so the financial cap gives a slightly misleading impression. Anyway, the damages cap is not intended to keep high-value claims out of IPEC altogether, it just means that the full value might not be realised in damages.

An injunction would, of course, be damaging to Goliath, but that did not mean that the case had to go to the Patents Court. If that court granted the injunction, it would be just as damaging. The only reason for transferring the case because of the injunction issue would be if there were a realistic risk that Goliath would be unable fully to argue against it in IPEC. The idea of making an application to a judge which basically says "we don't think your court can hear this case properly" strikes me as fundamentally unattractive, and HHJ Hacon certainly took the view that IPEC was perfectly able to deal with it so no transfer was going to happen.

Thursday, 19 September 2019

Online EU trade mark infringement actionable where advertising directed



Infringement proceedings involving an EU trade mark must generally be brought before the courts of the member state in which a defendant is domiciled (Regulation 207/2009/EC, Article 97(1)). They can also be brought before the courts of the Member State “in which the act of infringement has been committed or threatened” (Article 97(5)). What happens when the defendants are a Spanish company and a Spanish individual, and the trade mark owners are British (and the exclusive licensee is an English company)? Obviously an action could be brought in Spain, but could the claimant sue in the UK on the basis of Article 97(5)??

The claimants issued proceedings for infringement in the Intellectual Property Enterprise Court, on the basis that the defendants' online activities amounted to advertising or offering counterfeit goods for sale in the UK. IPEC refused to accept jurisdiction under Article 97(5), taking the view that only the courts in Spain, where steps had been taken to put the offending sign on a website, or decision to that effect had taken place, had jurisdiction under that provision. The claimants appealed, and the Court of Appeal sent the matter on an expedition to Luxembourg.

The Court of Justice ruled that Article 97(5) allowed the trade mark owner to bring infringement proceedings before an EUTM court of the Member State where the consumers or traders to whom online advertising and offers for sale were directed were located. It made no difference that took decisions and steps necessary to bring about the electronic display in another Member State.

The Court reasoned that, if Article 97(5) were interpreted otherwise, a defendant could deprive Article 97(5) of any effect by making sure that the territory where they set up their website and activated the display of their advertising and offers for sale was the same as that in which it was established.

The Court of Appeal has to decide whether the advertising and offers for sale on the website and platforms in issue were in fact targeted at UK consumers or traders. It must do so on the basis of factors such as the details about the geographical areas where the products were to be delivered.
AMS Neve Ltd and others v Heritage Audio SL and others (Case C-172/18) EU:C:2019:674

Originality requirement is the same for all works – including applied art


In a case involving the design of jeans and tee shirts, referred by the Portuguese Supreme Court, the Court of Justice has extended the scope of its Infopaq decision and held that the Euro-originality test, that a copyright work be its author’s own intellectual creation, applies to all types of copyright work including works of applied art. It is not open to Member States to protect works of applied art on the basis that they have some aesthetic appeal in addition to their utilitarian appeal.

Clothing designs will perhaps rarely pass the higher originality test. In the UK this would not be a problem, as copyright is not the most apt way to protect them: they are more properly protected by design right, and in any case s.51 should exclude the use of copyright to protect the designs except where the item of clothing is itself an artistic work – which means it only works if the garment is a work of artistic craftsmanship, which it often will be but not if it is a tee shirt, or probably a pair of jeans. But the case raises the interesting question for the UK, does the Euro-originality test apply now to design right? The courts were always clear that they were not going to invent a new originality test for design right when they could just adopt the well-established copyright one, but that was before the Court of Justice drive a coach and horses through that test in Infopaq.

The judgment, which is not yet in English, raises other important questions about EU copyright law – which almost with each passing day seems to be the way we now have to regard copyright, as based on EU directives. How the activist Court of Justice brought us to this position, developing the Information Society directive into a comprehensive harmonisation of copyright law, is another story on which a lot has already been said and much remains to say.

Case C-683/17, Cofemel – Sociedade de Vestuário SA v G Star Raw CV EU:C:2019:721 (12 September) (in French – other language versions are available)

Tuesday, 30 July 2019

Copying music without knowing

The Guardian this morning reports another case in which a piece of music was held to infringe copyright in an earlier piece. It happens more and more often, it seems - as the twin evils, long identified in the trade marks world, of depletion and foreclosure insinuate themselves into copyright, albeit with changes to their form to take account of the very different subject-matter of trade mark protection.

The case in the papers today was decided in the United States, and by a jury, which means that the same will not happen here, not by the same route anyway. Katy Perry's song Dark Horse was found to have a similar beat to a piece called Joyful Noise by Flame, a Christian rapper (a new genre to me). It seems that several others were accused of infringing, too.

For copyright infringement to happen, in the USA as well as in this country (and every other country that has a copyright law, which I think is every country although in some of them the situation is a bit unclear), there has to be a nexus between the copyright work and what an infringer has produced (you can't say the infringer created it, because the whole point is that he or she hasn't, nor can you call it a work because it doesn't represent work, just appropriation). If an alleged infringer has no knowledge of the copyright work in question, there is no infringement: there is a second, similar or identical, copyright work, created independently by the defendant.

Many copyright owners don't like this situation, of course. They would rather their copyright was a true monopoly right. But copyright law is not patent law, and quite right too. Copyright doesn't protect the piece of music (or the book, or the painting) per se, but the effort that the creator put into it. So the owner of copyright in a piece of music has to show that the defendant had heard that piece. The case law tells us that it isn't necessary to show that the defendant has to recall the piece - if that were the case, a little selective amnesia would be enough to defeat any infringement claim - but merely that they have been exposed to it.

To avoid being exposed to others' music, composers will not generally listen to the recordings that they might receive from aspiring composers hoping for an endorsement (or perhaps hoping to contrive a situation in which an infringement action might lie). But in the modern world it becomes much more difficult to avoid exposure to music. When it is playing, unnecessarily, in lifts, shops, restaurants, gyms, and workplaces, it's impossible to get away from. I might have heard Dark Horse and Joyful Noise many times, quite involuntarily, but I certainly don't recall either of them. Were I a songwriter, I might well have incorporated some part of them (one or other of them) in a work of my own. And to some extent that's how music gets written, and always has been.

What strikes me as novel in this case is that sheer numbers of YouTube views seem to have raised a presumption that Katy Perry and her co-authors must have heard it. That's frightening. I might be exposed to a piece of music in the gym, however hard I try to shut it out and concentrate on my workout, and therefore become a prospective infringer.

How can this be addressed? It's right that the copyright owner should get something when another composer appropriates their hard (or even not-so-hard) work. What is needed is a narrower concept of what amounts to actionable appropriation, as well as consideration of what damages should be awarded and whether there ought to be some sort of licensing scheme to cover some types of infringing act. In the Kay Perry/Flame case, the situation is complicated by the fact that a jury made the decision that there had been an infringement, and having a jury decide matters like that doesn't appeal to me as a sound way to deal with them. Perhaps that accounts for why just taking the beat was held to be an infringement. In the name of research I have listened to the two songs on YouTube, and indeed the beats are very similar, although they are also pretty mundane and I wonder where Flame's came from in the first place. A rigorous analysis of the originality of the claimed work would be the starting point for a more rational approach to questions of infringement.

Another important difference between UK and US copyright law is that while the UK law considers the originality of a work as a whole, US copyright law is more inclined to take the work apart and look for originality in its components. Here, it seems to me quite likely that an English judge, asked to consider the two, might remark that the beats sounded similar but that the two songs as a whole were so completely different that the similarities could not be considered substantial. Perhaps it's not a problem that would ever come to court in this country, but the fact is that US copyright casts its shadow over the whole world and we need to take care always to distinguish what goes on there from our own approach.

Thursday, 14 March 2019

Commodities, commodification, commoditization and intellectual property laws

In a piece in The Guardian today, Anish Kapoor is quoted as saying: "Only poetry and the more serious classical music seem able to resist becoming commodities." He admits that he has benefitted from "neo-liberalist commodification", and indeed few artists can have done as well as him out of it, but even so he doesn't make it sound like a good thing. Which I guess he doesn't think it is.

Commodification is not a necessary consequence of copyright (or more generally intellectual property) protection. What the world of commerce needs is proprietary rights:
The merchant must have property in the things in which he trades, his rights to that property must be identifiable, When he sells an article he must be able to assure the buyer that the things is his to sell; he must be able to prove his property in it, if he is challenged. (Hicks, A Theory of Economic History, OUP, 1969, p.34).
It is true as much for intangibles as for tangible things. Argubly, a far-reaching law prohibiting unfair competition could do the job of all IP laws, but giving them the status of property rights probably makes them much more useful - much more tradeable, and available for use as security - than a mere right of action against an unfair competitor would be.

So, to make intellectual property tradeable it is commodified - turned into objects of trade. "Commodification" is a term used in Marxist theory, where it denotes the process of giving an economic value to something that it didn't have already, by producing it and presenting it for sale rather than just consuming it oneself. It's different from commoditization, which is a term found in business literature to denote the process by which goods that have economic value and can be distinguished by their attributes - their uniqueness or brand - become simple commodities in the eyes of the market or consumers. Here, the meaning of "commodities" is somewhat different from the Marxian one: the word denotes goods that have full or substantial fungibility (a great word), meaning that the market doesn't care who produced them, as one person's commodities are much the same as another person's.

So it seems to me that commodification is an essential result, or perhaps a goal, of copyright protection, whereas commoditization is what intellectual property laws (trade marks probably play a more important role here than copyright) are designed to prevent. Kapoor can earn a living (a very good one, I imagine) because his work is commodified, but it would be incorrect to consider his creations as commodities because they are readily distinguishable from the works of other artists. Ineed, I can see an argument for saying that anything that can be labelled a commodity in the second sense mentioned above should not receive any form of protection from intellectual property laws (by which I mean, in the trade marks field, that purely descriptive or non-distinctive trade marks like BREAD for bread must not be registrable, not that bakers should be denied access to the trade marks system altogether).

This is an aspect of intellectual property law about which I am developing my thoughts, so please excuse any half-bakedness in this posting. Any comments would be gratefully received.
 

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