Bilski

I'm going to have to record a new Lawcast shortly - and it will have to include something about Bilski. Fortunately not much, because it's not our Supreme Court - it's SCOTUS, not SCOTUK. And I don't have to post much here, given that Dennis Crouch has already said a lot about it and the IPKat has also had his or her say. I'm pleased to note that it seems to indicate that we reached the high-water mark of business methods patents in State Street, while not actually binning that earlier case. It seems to tell us more about what it doesn't do than what it does do.

The patent covered a technique for hedging for commodities traders in the energy market - a classic business method patent. The examiner rejected it because it was not implemented on specific apparatus (as processes generally need to be), it merely manipulated an abstract idea,, and it solved a purely mathematical problem. The Board of Patent Appeals and Interferences agreed and affirmed. The Court of Appeals for the Federal Circuit also affirmed, rejecting its own test for whether a claimed invention was a patentable process (whether it produced a "useful, concrete, and tangible result", as in State Street). Instead, it applied the "machine-or-transformation" test - a process can be patented if it is tield to a particular machine or apparatus, or it transforms the particular article into a differnt state or thing. On that basis the CAFC held the application was not patent-eligibible. In doing so it threw down a gauntlet to the Supreme Court: the machine-or-transformation test was crafted from precedents from that court.

The Supremes declined the challenge, and threw the gauntlet back. They affirmed the CAFC judgment but did not endorse an exclusive machine-or-transformation test. There was no need to look further than the bar on patenting abstract ideas. The fact that the Bilski patent involved abstract ideas was reason enough to refuse it, and automatically this meant that the machine-or-transformation test could not be the exclusive one for patentability of processes. Nor was there any need to define further what constitutes a patentable process. Justice Kennedy gave the opinion of the court, and concluded:

Today, the Court once again declines to impose limitations on the Patent Act that are inconsistent with the Act’s text. The patent application here can be rejected under our precedents on the unpatentability of abstract ideas. The Court, therefore, need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr. And nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357. It may be that the Court of Appeals thought it needed to make the machine-or-transformation test exclusive precisely because its case law had not adequately identified less extreme means of restricting business method patents, including (but not limited to) application of our opinions in Benson, Flook, and Diehr. In disapproving an exclusive machine-or-transformation test, we by no means foreclose the Federal Circuit’s development of other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text. The judgment of the Court of Appeals is affirmed.

I sense that it's a bit of a disappointment - commentators were looking forward to much more robust statement about exotic patents, such as software and business methods ones. Instead, it sounds as if the court has said look at what the Patent Act says and work it out from there. The "machine-or-transformation" test is a tool to help, but not a rule to be applied in all cases. Nevertheless, Dennis Crouch detects something more in the judgment:

Although not rejected by the majority opinion, it is clear that the broad “useful, concrete, and tangible result” test is dead. That test is conclusively rejected by what I term the Anti-State-Street Majority — a majority created by the combining the two concurring opinions in Bilski and their five-justice majority.

Well, it would be a shame if software and business methods patents suddenly became cut and dried so there was nothing left to argue about!

Tip of the day: compensation for infringement of copyright

If someone infringes your copyright, your financial remedies will be either damages or an account of profits. The idea of damages is to put the parties back into the position they would have been, but for the infringement: if you'd have granted a licence had you been asked, a reasonable royalty will be the measure of damages employed, and if you wouldn't the judge will probably look at what the defendant has saved itself.

In an account of profits the court will find out what profit the defendant has made from the infringing act, and award that to the claimant: the profit, after all, is properly theirs.

Once upon a time (before 1988) a rather draconian remedy called conversion damages was available. The court would treat all the takings (not just the profits) from the infringement as the claimant's. The possibility of losing all the proceeds, not just the profits, made would-be infringers (including those whose activities might be marginal) think twice before going ahead.

Now the courts can award such additional damages as the justice of the case may demand. This sounds promising, but additional damages are very rarely awarded, for the simple reason that they push the boundary between compensation and penalty too far. Damages are not there to penalise the infringer, and once an award of damages has been made (so the claimant is restored to the position where they should be) there can be no room for anything to be added that can truly be called "damages".

Some countries - the USA being a prime example - give statutory damages. You can recover a certain amount without having to prove that you have lost anything. This is the blunt instrument that has been used to attack illegal filesharers in the last few years, resulting in substantial awards of damages against them - notwithstanding that very little actual damage has been caused. Statutory damages neatly sidestep the issue.

Tip of the Day: Avoiding copyright infringement

A very small and rather obvious point that came up recently - but it's sometimes the small and obvious ones that are most easily overlooked. Suppose you heve asked someone to create something for you that will be protected by copyright. Ideally, you'll have taken an assignment of the copyright, but there might be many reasons why that isn't possible - and one might be that the project is still in its infancy.

If you need to bring a new programmer/photographer/composer/writer/whatever in later to finish the project, don't fall victim to the temptation to show them what the previous person had done. Keep that completely out of sight. Go right back to the basics, whatever it was that gave you the idea in the first place. Then there can be no suggestion - no serious suggestion - that the second person infringed the copyright of the first.

There might be arguments that you did actually have the right to use the first person's work, but you shouldn't rely on them. They are arguments you will have eventually to present before one of Her Majesty's judges, and they make for a very critical audience. moreover, they aren't an audience that pays you so they can enjoy the show: they require you to pay for the privilege of appearing before them, and you'll have to employ a very expensive supporting cast too.

Tip of the day: trade marks as designs

Not feeling very inspired today, having spent yesterday in the office dealing with a visit from our regulator. Why, I wonder, is it thought that professions need to be regulated? The answer, I fear, is that being a solicitor is no longer a profession, it is a mere business, and one cannot rely implicitly on the integrity of some of its members, so the majority have to submit to a level of control designed for the truly dishonest or incompetent.

Anyway, today - following on from my comments about passing-off law as a back-up where design protection fails (as design protection usually does) by highlighting one area where it will work the other way round. The design that makes up your trade mark could also be protected as a registered design. The requirements for a registered design are stiff: it must be novel and have individual character. Trade marks, by contrast, even get better as they get older. But a new business or product is likely to have a new logo, and if it functions as a trade mark it has distinctive character which is at least part of the way to individual character. A rebrand might produce some registrable designs, too, though here the stumbling block will be that the character of the new design will often owe something to the old one and 'individual character' might be hard to show. But it's easy (and cheap) to get a design on the register, and these days maximising your IP portfolio is often the name of the game.

For an example of how this might work, see here and here.

Tip of the day: imitating designs

When I present courses, I like to stress that the different IP rights are quite independent, each designed to do its own job. The intellectual property field displays a lack of joined-up thinking not because of any lack of intellectual rigour but simply because the rights are not intended to interoperate.

They do, however, overlap to some extend, and there are also some provisions which display a little negative joined-up thinking, if you like: for example, the provisions in the Copyright, Designs and Patents Act that restrict copyright’s incursions into the designs field. The Trade Marks Act also ensures that many designs will not be eligible for dual protection as trade marks too.

There are also plenty of areas of overlap. All five ways to protect a design will often co-exist quite happily: there can be UK and EC registered designs, Community unregistered design right, UK unregistered design right and even a touch of copyright. But even if none of them applies – problably because they have all expired – the design might still be protected.

This is what happened in the recent Numatic v Qualtex [2010] EWHC 1237 case in the High Court. Qualtex had done their homework before they tried to make their own replica of the Henry vacuum cleaner: they ensured there was no remaining design protection. What there was, though, was a passing-off action, relying on the fact that the public recognised a tub-shaped vacuum cleaner with a shiny black ‘bowler hat’ type lid even if it didn’t say Henry on it and even without the face decals that decorate the original.

The get-up (hat the Americans would call ‘trade dress’) of a product, or of a business, can be protected by a passing-off action. There’s nothing new about it. It will cost a lot, but if your key market is threatened by an imitator that’s probably not going to be your first concern. As for what you can get away with, the old copyright maxim, ‘what is worth copying is worth protecting’ doesn’t apply – but if what you’ve produced is clearly an imitation it might well go to far. The question in a passing-off case is whether you are deceiving customers, and imitation – notl to intellectual property lawyers, the sincerest form of flattery – will often, perhaps nearly always, lead to deception.

Tip of the day: choosing a trade mark (1)

The number of trade marks in the world is finite. It might be large, but it doesn't go on for ever. Chances are, your preferred new trade mark will be similar to someone else's, and if it's similar enough to create a likelihood of confusion and the other people have theirs registered for similar goods or services, you're in trouble.

Of course, you can do a lot to put clear blue water between their trade mark and your proposed one. But that concept of likelihood of confusion creates a fuzzy edge to trade mark protection, and you can never be entirely sure whether you are heading for trouble.

One possibility in this sort of situation is to talk to the other trade mark owner. Of course this will alert them to a problem they didn't know about otherwise, and they might take a more hard nosed approach than they would if they found out about you only after you were up and running, at which stage it will cost them money to oppose your application or to sue for infringement. But these days the chances are that trade mark owners will oppose or sue more readily than in the past: it's because people have become so aware of the value of their trade marks, and they don't want anyone damaging it. I don't think you should normally assume that you can get enough momentum by ploughing straight on, though more litigious colleagues might advise differently.

Tip of the day for 10 June: getting copyright

It might seem to be too good to be true, but you don't need to do anything to secure copyright. All you have to do is create something that copyright will protect. You don't even need to put © on it, though there are good reasons to do so when you publish copies.

This might also seem to be too easy to be true, or to be entirely good for you. That's often right. When you say you own copyright in somethng, or that it is your copyright work, all you are really doing is claiming that you have it. To support that claim, you might need evidence. What if someone accuses you of copying their work, or you find someone who seems to have copied yours? Which one was first in time will then be an important matter (though it won't be the only thing to argue about, because if there's no copying there's no infringement).

To prove that you had created a work by a particular date, you can post a copy to yourself or some trusted third party (your lawyer might be a good choice) and keep the unopened package, conveniently dated by the Royal Mail, in a safe place. You could deposit the copy with a bank or other agent, of course, but the posting-to-someone option is particularly easy.

The United States still operates a copyright register, so there is somewhere in the world where you can officially deposit a copy and get a filing date. However, you should beware of ne thing: your work will be published as part of the process. If it's not confidential, that doesn't really matter, but if it's something like an idea for a film or TV series this is exactly what you don't want. A useful alternative which does meet the needs of the authors of such things is provided by the Writers' Guild of America, and it is available to non-members. But This is not legal advice, and you should ensure it is right for you first - and equally you should get professional advice on other tips given here. All I'm trying to do is point you in the right direction, and help you avoid some pitfalls!

British Standard on IP advice

The IPKat reports here that the British Standards Institution is consulting on consulting on a new standard (BS8538) on the provision of services relating to intellectual property rights. I am speechless. Already the professions that work in this area are ridicuously over-regulated. I have been very unimpressed in my dealings with trade mark agents, it's true, some of whom don't even acknowledge correspondence (which I think would be regarded as unprofessional in a solicitor - though I have probably done it myself in the past), and being obliged to conduct themselves according to a set of rules, as solicitors have done for decades, is a Good Thing.

So at whom is the proposed BS aimed? Presumably fringe IP advisers, because there's nothing in that solicitors, patent attorneys and trade mark agents aren't already obliged to do. Far better, in my view, to restrict the work to people who have a professional qualification and a code of ethics: the presumption so often seems to be that consumers of these services (who will often be businesses, of course) need the protection afforded by competition against high prices. But when competition comes from unqualified, perhaps uninsured, people, the interests of consumers have been sacrificed on the alter of price competition. Unfortunately, the imperative seems to be to ensure legal services are available as cheaply as possible, in the IP field as well as on the High Street.

Apart from these objections in principle, I am not impressed by the intellectual rigour of the document. It makes sweeping statements about IP without distinguishing the beneficial effects that patent protection provides [in theory] for technology and the very different benefits of trade mark protection. And, come to think of it, what about those professional advisers who help their clients obtain extensive, deep and anti-competitive intellectual property protection, so they can go about bullying smaller businesses? I reckon that some things these absolutists do are not compatible with a solicitor's duty to the court - a constraint that does not apply to patent attorneys and trade mark agents, and (a fortiori) to the targets of BS8538. Now manybe that's an aspect that the BSI could usefully look at.

Tip of the day

Until I run out of ideas, I'll present a tip every day - OK, let's say every weekday - for the benefit of readers - and the world at large. Feel free to request anything you think should feature.

I always tell people who come on a course where the subject comes up that they must remember that there is notihing in UK copyright law to make the commissioner (even for money or money's worth) of a copyright work the owner of copyright in it. That has to be done by assignment, and an assignment has to be in writing and signed by the copyright owner if it is to be legally effective.

Many businesses, and private individuals, hire others to create something for them: a photograph, a graphic, a painting, some prose, a piece of music, a film. It might be perfectly OK for copyright to remain with the creator - who can then sell the same thing, or one identical to it, to someone else, perhaps - but there will certainly be situations where this is not desired. Imagine if your business did not own copyright in its own website: it would be difficult to move it to another host. And trade marks - logos in particular - frequently comprise, or contain, copyright works. You can't leave them in the control of a graphic designer.

When you commission the making of the work, whatever it is, you should make a written record of the terms. This is what is commonly called a contract - and it's the ideal place in whcih to include an assignment. Pay your lawyer to draw it up for you. It's worth it. Because this site does not give legal advice (I am deliberately keeping these tips general) I'm not going to offer a form of words, I'm afraid.

May 2010 IP Lawcast available (now with added CPD)

You can download the audio file, as usual, here. Right click to download: left click starts it running, which might not be quite what you want. It's  now worth an hour's CPD for solicitors: barristers, patent attorneys and trade mark attorneys can also gain CPD and there is some guidance on this on the Lawcasts page of this site (click the tab above). The notes are here.

To obtain your CPD you have to register with me and pay the appropriate fee (details under teh Lawcasts tab, above). Once I have received payment I will send you the multi-choice questionnaire that will prove that you have listened to the programme.