Friday, 19 March 2021

Counterclaim for invalidity based on earlier common-law rights fails to see off trade mark infringement claim

In an action for infringement of the trade mark CRYPTOBACK (Wirex Ltd v Cryptocarbon Global Ltd & Ors [2021] EWHC 617 (IPEC) (16 March 2021)) the defendants argued that they had earlier rights to the name, and also that the application to register it had been made in bad faith, but acknowledged that if they lost on their counterclaim they were infringing the trade mark.

 

The counterclaim was therefore a slightly unusual s.5(4) claim, based on the defendants’ ability to oppose the registration because they had common law rights that, in other circumstances, would have enabled them to sue for passing off. The test for passing off is set out in Lord Oliver’s judgment in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 and the present case turned on whether the defendants (counterclaimants) had goodwill in the word. To succeed, they had to convince Hacon J that the name had been distinctive of their services at the claimant’s filing date.

 

The name was plainly a neologism, formed by merging elements of the words “cryptocurrency” and “cashback”. A neologism is not inherently non-distinctive, but it could be taken by consumers to be a new word for a type of goods or services, especially when used for something innovative. Linoleum Manufacturing Company v Nairn [1878] 7 Ch. D. 834 illustrates the problem: the product was protected by patents, which were assigned by the inventor to the plaintiff company which he set up to exploit them, but the name “linoleum”, coined by the inventor to denote the product, was used to denote the substance not (exclusively) the source of the substance, so the defendant could not be stopped from marketing his product as “Linoleum floor-Cloth” after the patents expired.

 

The evidence did not support Global’s contention that they owned goodwill in the name when the trade mark was applied for. There had been email campaigns, a web article and an invoice, but that did not amount to enough to impress the judge. To make matters worse for Global, in the few months of use before the filing date, they had actually applied the name CCRBBACK to their service, which made it more likely that CRYPTOBACK would be seen as a generic name for a new type of service.

Monday, 8 March 2021

Parallel imports and trade marks after B****t

 As everyone knows (well, perhaps not quite everyone), the doctrine of exhaustion tells us that once the owner of intellectual property rights of any type has put goods on a market, those rights are exhausted and cannot be used to control subsequent dealings with those actual goods. In the USA, the first sale doctrine does the same job, and it's an important job where a number of separate jurisdictions form a single market. It has always been an important component of EU law, too, needed to ensure that national intellectual property rights could not be used to partition the single market.

In EU trade mark law, it has therefore been a defence to an infringement action, enshrined in the Directive and the Regulation, subject to some exceptions, to say that the accused goods were placed on the market in the EEA by the trade mark owner or with its consent. Where that is the case, it will usually be impossible for the trade mark owner to use (say) a French trade mark to stop parallel imports entering France from (say) Germany. You could say that trade mark law gives the trade mark owner one bite of the cherry: the subtext (always important to understand) says that the same price should be charged in all the countries of the EU, so there is no incentive for parallel importers. Given that purchasing power in Germany and (say, again) Bulgaria is far from equal, the trade mark owner is highly unlikely to obey the subtext, and it will hurt to obey the letter of the law; but I put that down to politics rather than economics (like so much of the EU).

Up to the end of last year (rounded up to the nearest whole day), the UK was part of this arrangement. Section 12 of the Trade Marks Act 1994 embodied the principle of exhaustion, providing a defence to an infringement action where goods were borought into the UK from another EU Member State. Now of course goods coming into the UK would be leaving the EU, but (in an example of definitely not taking back control) the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019 (SI 2019/265) preserves this EEA-wide exhaustion principle. Goods imported into the UK from the EEA will still not infringe - unless there is a legitimate reason for the trade mark owner to oppose the goods entering free circulation in the UK, such as repackaging. There has been some changing of the words of s.12 (recognising that when you talk about the EEA the UK is no longer included) but no change of substance.

I'm probably missing something, because I can't see who benefits from this. Not the manufacturer whose goods are in circulation in the EEA, who must be charging more in the UK otherwise parallel traders wouldn't be interested. Not the UK distributor, who faces cut-price competition from the parallel traders. Not the government, which is losing a bit of VAT. Not even, really, UK consumers, who are unlikely to save very much as the parallel traders are going to undercut the legitimate channels by the smallest amount possible. Only the parallel traders are going to benefit - perhaps the government justifies this by calling them "arbitrageurs" to make it sound as if they are doing something socially useful, rather than just being parasites. Them, and maybe the NHS who are the main customer for parallel imports of pharmaceuticals.

I wonder, though, whether there are any parallel imports entering the UK now? Apart from the delays which the government minimises or denies, there's import duty and VAT to think about and it could be that parallel importing into the UK isn't worth it any longer.

I also wonder how long it will be before the government revisits this part of trade mark law, and decides that there are more votes to be had from moving to an international exhaustion doctrine. It already floated the idea, some 20 years ago, and attracted little or no support from its EU partners - whose support it no longer needs. Cheap jeans for the masses might be seen as a good platform for re-election, and a way to deliver a B****t dividend that is unlikely to arise in any other way.

Friday, 5 March 2021

Comparable trade marks, pre-Brexit use and EU trade marks as earlier rights

Having spent time today delving into some more of the darker corners of the changes to intellectual property law that Brexit has foisted on us, and also having had an e-mail conversation with a friend in the EU who told me he had been surprised when his clients received a bunch of unasked-for comparable trade marks from the UK registry at the turn of the year, I have a few things to say about trade marks today.

Comparable trade marks are the oddly-named UK trade marks that were spawned by EU trade marks on IP completion day, which was 11 pm on 31 December 2020. Calling a precise time such as 11 pm a "day" is a relatively innocent form of Newspeak, which it's no longer surprising to hear coming from our government. The reason the day in question started at 11 pm rather than midnight, as most days do, was simply that it was midnight in most of the EU, which doesn't seem to me to be a particularly good reason given that it wasn't the rest of the EU that was undergoing radical change at that moment (significant change, but short of radical) and hardly smacks of "taking back control". We'll take back control, but at a time to suit you.

Anyway, I digress, as usual. These new-fangled comparable trade marks (which come in two flavours, EU and International, depending on how the parent EU trade mark came into existence) look deceptively simple. They are, to all intents and purposes, UK trade marks and treated in exactly the same way under the Trade Marks Act 1994 - in most respects. They are instantly recognisable (if you need to recognise them) by their numbers: a prefix, UK009, is tacked on to the parent's EU registration number. A neat solution, although it leaves a lot of gaps in the register. (I wonder whether the IPO will triumphantly announce a ten-fold increase in new trade mark registrations in 2021?)

But go a little deeper and comparables get a lot more complicated. I want to consider two points here (because trying to do more would make this post too long and boring): will a comparable derived from an EU trade mark that hasn't been used in the UK in the past five years be instantly vulnerable to revocation for non-use; and how will an application for a declaration of invalidity play out where the earlier rights against which a UK trade mark is allegedly invalid were an EU trade mark?

The answer to the second question first, and I have just realised that there are in fact two elements to it. Will that EU trade mark still be an earlier right, and if not will its comparable stand in its metaphorical shoes? The answers seem to be no, and yes. The EU trade mark lost its status as an earlier right on the stroke of 11 that night, but the baton passed to its comparable which inherited all the vital statistics of its parent, including priority and seniority dates. So the conflict still has to be resolved, although presumably some trade mark litigators have been obliged to do some nifty footwork to substitute the comparable for the parent EU trade mark.

This is all buried in the Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/269), 28 pages of amendments many of which make little sense unless you have the Trade Marks Act open beside you. (Incidentally, the IPO has helpfully published an unofficial consolidation of the TMA with all these changes in it - though I wonder how it can be called "unofficial" when the office has produced it.) This change is one of those effected by Schedule 1, which (confusingly, to me anyway) inserts a new schedule 2A into the 1004 Act with all this good stuff in it.

As for the question of use or non-use, that is dealt with by stipulating that the use made of the parent EU trade mark is credited to the account of the comparable. That is logical, up to a point, because the comparable has inherited the priority and seniority of the comparable, so it's right to say that any use in the UK needs to be considered as use of the comparable in the UK. But that leaves a problem: what if the parent EU trade mark hadn't been used in the UK prior to IP completion day, but elsewhere in the EU? In that situation, the government says, it would be unfair and an unintended consequence to say that you are creating a new trade mark that is born with five years' non-use baked into it, so use of the parent EU trade mark anywhere in the EU will save it, which to a tiny but discernible extent negates the whole idea of leaving the EU.

Thursday, 4 March 2021

Sui generis database rights in the UK

I have been looking in detail at the legislation that deals with intellectual property rights in the context of Brexit, and finding it even more complicated than I had expected. So I thought I would share my new-found knowledge in this blog, starting (because it's the topic I have been looking at today) with databases.

Databases may be protected in two ways in the UK, copyright and database right (or, as it is known in the EU, sui generis protection). Both rights are .the subject of an EC directive, which was implemented in the UK by the Copyright and Rights in Databases Regulations 1997 (SI 1997 No. 3032).The whole point of the directive was to ensure that database operators received the same protection throughout the EEA, so that there was a single market in databases unhindered by differences in copyright protection (which was what started the whole thing: differences arose from the fact that some countries, in particular The Netherlands, gave copyright protection only if the work was its author's own intellectual creation, whereas the UK looked only to see whether the work was a copy of another work, so databases received little if any copyright protection in The Netherlands but much more protection in the UK, and that isn't good in a single market, which in those days was what was thought desirable).

Recognising that this would mean that databases had precious little intellectual property protection, the directive then gave them a new form of protection, and since it was one of a kind (and continental lawyers are less scared of Latin tags than we are required to be) it was called sui generis protection, which is actually pretty useless as a name if you expect it to tell you something about what the right does.

Copyright is therefore limited in its application to databases, because the directive makes clear that a database may only receive copyright protection if it is its author’s own intellectual creation: moreover, copyright only protects the selection or arrangement of material in a database, so any protection it does give is rather indirect.

Database right, on the other hand, protects the contents of the database and is much more concerned with unfair competition (unauthorised extraction and reutilisation of material from the database). On the face of the legislation, it gives 15 years' protection, but as a substantial change in the database will start that term of protection running again there is actually no reason why database right should ever expire.

Database right in the UK

A database does not have to be original for it to qualify for database right, but there must have been a substantial investment in obtaining, verifying or presenting the data. There is quite a body of case law exploring the question of when an investment in a database is directed towards one of these activities

Eligible databases received protection throughout all the EEA member states when the directive was introduced, and this of course included the UK. Following the UK’s departure from the EU, these reciprocal arrangements have ceased. Importantly, there are no international conventions in this field: the EU’s sui generis right was always a one-off, and the Directive contained all the rules and dealt exhaustively with international protection (which never extended beyond the EEA). However, the UK and EU agreed to continue the reciprocal recognition where those rights had already come into existence.

UK databases created before 1 January 2021 will continue to be protected in the EU, and vice versa, but only UK citizens, residents, and businesses are eligible for database rights in the UK for databases created on or after 1 January 2021. By the same token, UK databases will no longer receive protection in EEA countries. The changes to the legislation to achieve this are contained in the Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2019 (SI 2019 No. 605).

Sui generis database rights in the EU

Under the Directive, databases made by EEA nationals, residents or businesses receive protection in all EEA member states. UK citizens, residents, and businesses are not eligible to receive or hold database rights in the EEA for databases created on or after 1 January 2021. UK database owners whose databases were created on or after 1 January 2021 might still be able to rely on copyright, which is governed by a completely difference set of rules (including international treaties and conventions): but the valuable tailor-made protection given by the Directive has been lost.

Existing sui generis database rights

Database rights that subsisted in the UK or EEA before 1 January 2021 (whether held by UK or EEA persons or businesses) will continue to subsist in the UK and EEA for the rest of their duration. These rights were guaranteed under the Withdrawal Agreement, and are preserved in the 2019 Regulations. Given the effectively perpetual nature of database right, this could be pretty handy for database publishers: so long as they keep on making substantial changes to their databases, they will get a rolling 15 year term of protection, and so long as they don't take the rather drastic step of dumping their old database and replacing it with a new one (which doesn't strike me as being how the database industry works) they shouldn't have to worry.

That said, database right doesn't only benefit the likes of Westlaw and Lexis Nexis. There are lots of databases around, not all of them provided for the benefit of subsribers (although the cases indicate that if the database has been put together for the internal purposes of its creator, it might be hard to convince a judge that the right sort of investment had taken place). Big commercial databases will carry on as if nothing has happened, on the basis that they are merely making substantial changes to an existing databases. Newcomers are going to face the problem that they don't have protection outside the UK any longer.



Monday, 25 January 2021

Travel Counsellors Ltd v Trailfinders Ltd: breach of confidence and the reasonable person

What happens when ex-employees of a competitor bring client information with them when they go to work with a new employer? In Travel Counsellors Ltd v Trailfinders Ltd [2021] EWCA Civ 38, the Court of Appeal held that an equitable duty of confidence on the new employer arises if a reasonable person would make enquiries about whether it is confidential, but the recipient fails to do so. 

The appellant argued that the judge had applied the wrong legal test in holding that the appellant owed an obligation of confidence to its rival in respect of the relevant information. According to the appellant, the equitable obligation would only arise if the recipient knew or had notice that the information was confidential. Whether it had notice of the confidential nature of the information has to be assessed objectively, by reference to a reasonable person standing in the recipient's position. And just because a reasonable person would make enquiries about whether the information (or some of it) was confidential was insufficient for an obligation of confidence to arise.

Arnold LJ, with whom Lewison LJ and Asplin LJ agreed, noted that there was surprisingly little authority. He cited his own judgment in Primary Group (UK) Ltd v Royal Bank of Scotland plc [2014] EWHC 1082 (Ch), as well as the Court of Appeal's decision in Racing Partnership Ltd v Done Brothers (Cash Betting) Ltd [2020] EWCA Civ 1300. On the basis of these cases he decided that:

... if the circumstances are such as to bring it to the notice of a reasonable person in the position of the recipient that the information, or some of it, may be confidential to another, then the reasonable person’s response may be to make enquiries. Whether the reasonable person would make enquiries, and if so what enquiries, is inevitably context- and fact-dependent. If the reasonable person would make enquiries, but the recipient abstains from doing so, then an obligation of confidentiality will arise

On the other hand, where the issue is accessory liability for misuse by another person rather than primary liability for misuse of confidential information, it may be necessary to show actual knowledge or turning a blind eye.

Cases like this are always fact-dependent, but the decision seems to place a significant burden on the recipient of information - although it does seem from the judgment that anyone offered information about clients in these circumstances really ought to sense that something is not quite right.

Florence Foster Jenkins and joint authorship

"Movie makers do lunch, not contracts", said now-retired* Judge Alex Kozinski in Effects Assoc., Inc. v Cohen, 908 F.2d 555, 556 (9th Cir. 1990), cert.denied, 498 U.S. 1103 (1991). The writers of screenplays are also disinclined to write contracts, it seems - although in the recent-decided case, Martin & Anor v Kogan [2021] EWHC 24 (Ch) (11 January 2021), it was perhaps excusable given that the two collaborators were also romantically involved. Mr Martin was (and is) a professional scriptwriter, and Ms Kogan an opera singer. 

Before they met, Mr Martin did not know of Florence Foster Jenkins, but she became the subject of the first of his feature film scripts to be produced, and the film was a great success. But was it really his script?

Mr Martin and a number of companies involved in the production sued for a declaration that he was the author of the screenplay and the sole owner of the copyright; Ms Kogan sought a declaration that she was a joint author and therefore joint owner of the copyright, and she also claimed damages for infringement against the various production companies. The case came before HHJ Hacon in the Intellectual Property Enterprise Court in 2017, and he found for Mr Martin. Ms Kogan (represented by, among others, Lionel Bently) appealed, and the Court of Appeal (which included Floyd LJ, a distinguished intellectual property barrister before he became a judge, who delivered the judgment of the court) decided that the first instance judgment was wrong. Unusually, because the Court of Appeal must avoid involving itself in detailed and complex re-asessments of factual findings by a judge, it sent the case back for a new trial before a different judge - specifying a full-time circuit of High Court judge. It ended up in the Chancery Division before Meade J, who became a High Court judge on 7 September last year.

The Court of Appeal found that the judge had made a number of errors. He had tried to draw a distinction between primary and secondary skills in assessing the parties' respective contributions, a distinction that the Court of Appeal found had no basis in law. He had also failed to consider the screenplay as a dramatic work, with many differences from a literary work.

The case raises a number of important and interesting questions, of which the most significant (for a copyright lawyer) is what sort of contribution to a collaborative work is going to make the second collaborator a joint author. The secondary question of how to work out what proportion of the copyright should belong to each joint owner is also pretty significant. There is also a lot more to the case - the judgment runs to 72 pages, although it is fact-heavy so it needs a lot of exposition.

Although the largest part of the screenplay had been written by Mr Martin, the original idea had been Ms Kogan's and she had also been involved in the characterisation and had contributed some technical terms. She had been involved in the work through several drafts and the judge was satisfied that she had made an authorial contribution to the work that was not distinct from Mr Martin's; in the judge's words: 'Trying to separate them would be like trying to unmix purple paint into red and blue' - like Kamela Harris's carefully-chosen bi-partisan inaguration outfit.

The judge decided that Ms Kogan was entitled to a 20 per cent share of the copyright. The starting assumption with joint copyright is that the parties will have equal shares, but clearly the parties' respective contributions here demanded something else. The judgment confirms that the parties hold their shares as tenants in common, not as joint tenants.

*Under a cloud, it's fair to say, but I think it's still acceptable to quote him especially since he's a master of one-liners.


Rabbit skin patent refused

An appeals board of the European Patent Office has upheld the refusal of a patent for "rabbit skin comprising biological active substance and its use" on public policy grounds. And, having read the first claim, I heartily approve; more than that, I am appalled not only that the application was ever filed (it was an international application seeking a European patent, by a Chinese pharmaceutical company) but that the invention was even devised. Claim 1 is just ghastly.

Article 53 (a) EPC tells us that European patents will not be granted in respect of (the draftsman must have been paid by the word, otherwise why not just "for"?) inventions the exploitation of which would be contrary to ordre publique or morality. (Note that it's the exploitation of the invention that has to be considered, not the invention itself, or the rights and wrongs of giving it patent protection) The applicant argued that in Decision T19/90, which I would have recognised more easily had the Board referred to it as Onco-Mouse, the suffering of the unfortunate animal had to be weighed against usefulness to mankind, a point reinforced by the EPO's examination guidelines (GII- 4.1) .

Unfortunately the Guidelines and the Board's decision fall into saying "ordre publique and morality", which is probably acceptable of the word "and" is construed disjunctively - but why on earth depart from the clear wording of the Convention? It is plain that the two concepts are independent, and the fact that the guidelines mention anti-personnel mines as an example seems to me to reinforce the distinction. Anyway, it appears clear enough that the Article does not intend that ordre publique and morality be cumulative requirements. But which was engaged in the present case? That isn't clear. The Board, and the Onco-Mouse board before it, seem to have treated ordre publique and morality as synonymous, which I don't think can be correct. Both decisions go on to balance the suffering of animals against the invention's usefulness to mankind - which is appropriate if ordre publique is being considered, because there are competing public policy goals involved, but surely not if you are considering morality, which has to be absolute.

In the end the Board came to what I think (as if anyone cares what I think) is the right decision, albeit perhaps not for the right reason. Its view was that the invention lacked the degree of usefulness needed to outweigh the suffering its exploitation would cause, because while it was the only way to produce the product, there were other products that do the same job. But I do wish it could have got there more directly.

 

Monday, 14 December 2020

How many patent applications succeed?

 The question came up in my weekly seminar for students doing the University of London International Programme LLB IP module, and the answer is interesting - and quite easy to find in Patent Office statistics. The most recent statistics, published here, are for 2018 (with 2017 for comparison), give a great deal of detail but the headline is:


Applications Filed

Applications Published

Patents Granted


2017

2018

2017

2018

2017

2018

United Kingdom (total)

13,286

12,843

6,007

5,899

3,260

3,001

I had guessed that the number granted would be around half those applied for - but as you see I was a long way out, 50 per cent out I suppose: the numbers go down roughly by half at each stage, and I hadn't included publication as a stage in my estimate. It demonstrates the effectiveness of the system at attracting in applications, even if they don't proceed to grant.

How many of those granted patents are valid is another matter, and estimates (which is all you can expect to find) are pretty high. Tallying the number of successful validity challenges in reported cases is instructive, though: when I last counted it up, a few years ago, I recall that over half of patents in infringement cases were held to be invalid. But that might be my memory - time perhaps to sift through reports on Bailii again.

And no doubt it would be instructive to look at the comparable figures for the EPO, too. Another day.




















Friday, 30 October 2020

Cookie law

EU law regulates the use of cookies, because unregulated they could be a major problem for privacy.
Tracking cookies note your browsing habits, making it possible for websites to serve up advertisements for products you have looked at on other sites. This could help you find the best deal and it ensures that advertisers get the best value from their advertising budgets, but many people feel uneasy about websites tracking their every online move, using the browser history for gain.
EU law recognises that users should have a right to understand what cookies are being used by the websites they visited, and how the information they gather is used. Users of cookie should also have the right to opt out collection if they wish. These principles are embodied in the so-called cookie law, Directive 2009/136/EC, which requires websites to obtain consent from users before setting cookies. And consent must be informed, so website owners muust tell visitors that cookies are being set, and what they will be used for.
So there are four things that website owners must do :
  • Tell visitors that the website sets cookies;
  • Provide detailed information about how data collected by cookies will be used ;
  • Allow visitors to accept cookies; and
  • Ensure that cookies will not be set on their machine if they opt out or refuse.
The law is not very specific about how precisely these things must be done.

Permitted cookies

Not all cookies pose privacy problems. Some are essential to the working of the World Wide Web. Cookies that are strictly necessary to perform the services requested by visitors are covered by an exception.

For example, cookies ensure that when a user shops online the contents of their basket are not forgotten before they check out. It would be absurd to ask customers they wish to opt out of that sort of cookie. The same is not true of cookies that customise the user's experience or tailor product suggestions.
Where websites require a high high level of secunity - for example, online banking - cookies that provide security features will be regarded as strictly necessary. However, it is not possible to be absolutely certain about when cookies are strictly necessary and individual Member States may have their own interpretations of the EU requirements.

The legislation is not restricted to cookies other technologies enable website owners to collect user information, many of which involve pushing files to the user's device. Any such technology must be disclosed, and needs consent from the user.

How users must be informed is not something the legislation specifies. It takes a general, high-level, approach. Popups and header bars are common solutions to the problem of informing visitors, and it is permissible to provide detailed information ellewhere - perhaps in the website's privacy policy. However, the opt-out setting has has to be provided in the pop-up a header bar or whatever you are using. If users do not opt out of cookies, this constitutes consent for the purposes of the cookie law. (although this can no longer be relied on to constitute consent for other privacy legislation).

Cookie information may be contained in the website's privacy notice or in the terms and conditions, but this is a less satisfactory technique. It is not generally the case that users are required to accept those  documents - as they have to do with cookies, of course. And consent to cookies has to be specific.

Consent must be obtained the first time a visitor looks at your site. Cookies should identify returning
visitors, so they will not be asked for consent again. Changes to the cookies will not normally require
con seut, but if significant changes to how the cookies work, or what you do with the information, have
been made new consents may be necessary and erring on the side of caution is always the best policy.
The information provided about cookies on your website should be linked from each page of the site. It should detail the types of cookie used (not every single cookie) and how the information from each of these categories is used.

Not required, but often prudent, is a description of what cookies are. Arguably, as users have become more familiar with the technology, the need to explain what cookies are has diminished.

Opting out

It is permissible to put the burden on the user to disable cookies in their browser settings. The alternative will be simply not to use the site, and this is probably not what the site's owner wants, so websites will often be set up to with hold cookies when the user chooses to opt out. This may mean that the user does not felly enjoy the website experience, and it is common to tell the user that by rejecting cookies they may lose some of the website's functionality.
 

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