Construing patents: pretend the defendant had never been born

Convatec Ltd. & Ors v Smith & Nephew Healthcare Ltd & Ors [2011] EWHC 2039 (Pat) (27 July 2011) is a 185-paragraph blockbuster of a judgment of HHJ Birss QC, sitting in the Patents Court for a change. The case itself is a fairly straightforward infringement claim and invalidity counterclaim concerning wound dressings made from cellulose in various forms. There is a lot of consideration of wound dressing techniques and the construction of the claims of the claimants' patent - leading the judge to point out, as the IPKat notes, that it will not do to try to read the claims onto the defendant's product: "A patent is to be construed as if the infringer had never been born." (Nobel's Explosives Co. v Anderson (1894) 11 RPC 519.) Remarkably, Floyd J cited exactly the same principle (indirectly, given that he was quoting from Jacob LJ's judgment in Technip France's Patent [2004] RPC 46) in his judgment in Cephalon v Orchid & Mylan [2011] EWHC 1591 (Pat):

It is clear that one does not start with the alleged infringement, read the patent, and ask whether the patentee meant to cover it. But it is sometimes necessary to have regard to the infringement in order to identify the question which has to be asked on construction. In Technip France's Patent [2004] RPC 46 Jacob LJ put it in this way:

"Although it has often been said that the question of construction does not depend on the alleged infringement ("as if we had to construe it before the defendant was born") per Lord Esher M.R. in Nobel's Explosives Co. v Anderson (1894) 11 R.P.C. 519 at 523), questions of construction seldom arise in the abstract. That is why most sensible discussions of the meaning of language run on the general lines "does it mean this, or that, or the other?" Rather than the open-ended "what does it mean?"

I wonder whether I can encourage people to adopt the title "Man of the World Rule" for this principle - after the bleak but beautiful song by Peter Green?

Meltwater case upheld on appeal

The Newspaper Licensing Agency Ltd and Ors. v Meltwater Holding BV and Ors [2011] EWCA Civ 890 (27 July 2011) is an appeal from the judgment of Mrs Justice Proudman which I outlined here a while ago - November last year, indeed! Where does the time go? The Court of Appeal agreed almost entirely with her, the only difference being over the scope of the order to be made, which the Court considered should allow for the fact that some of the use made by the defendants of the claimants' material might not amount to an infringement of copyright.

The case asks whether a news aggregation service, and its clients, requires permission from the owners of copyright in the stories to which they are distributing links. The NLA had drawn up a new licence to cover this eventuality, but Meltwater's clients had shown little interest in taking one. The judge decided that members of the PRCA did require licences, despite arguments that the material reproduced was not of sufficient substance to amount to a literary work, that the use was fair dealing, that charging a second time for essentially the same act was unfair, and other things.

The first instance judgment explored the implications of Case 5/08, Infopaq in the Court of Justice, which had appeared to set some high standards for copyright protection under the information society directive - requiring that any literary work be the author's own intellectual creation. The Court of Appeal tells us that this refers to the origin of the material, not the level of originality required - which would be something like a novelty test. That, I think, is a shame, because a satisfyingly high originality test would be a great way to rein in excessive claims to copyright protection.

It's reported that Meltwater are contemplating an appeal to the Supreme Court.

Supreme Court holds Star Wars helmets not protected

Upholding, unsurprisingly, the conclusions of the lower courts, the Supreme Court (of the United Kingdom) held that there was no copyright in various artefacts made for the fourth Star Wars film, including in particular the Imperial stormtrooper helmet, in Lucaksfilms v Ainsworth [2011] UKSC 39 (summary here: judgment here) - the reinvented court's first foray into copyright law: indeed, its first foray into that area of law that we refer to as intellectual property law ...

However, they did differ from the Court of Appeal on the other question before them, namely whether claims under US copyright law were justiciable in the English courts. A careful analysis of the Rome Convention led the court to conclude that provided there is the necessary basis for in personam jurisdiction an English court could entertain a claim that acts committed outside the EU infringed US copyright law.

The crux of the copyright claim was that the helmet should be treated for copyright purposes as a sculpture, as in 4a in last weekend's Financial Times crossword perhaps. The Supreme Court explored the boundary between copyright and design protection, muddying the water a bit in the process, before coming to the conclusion that this was not a sculpture. The judge (Mann J) had found the helmets to be part costume, part prop, utilitarian articles that conveyed information about the characters. The necessary quality of artistic creation was lacking. The film was the work of art: the helmet was merely an element in the process of making the film.

Intrigued by ...

... the Beer (Amendment) Regulations 2011 (SI No 1795). How can legislation change a beverage? Or has it something to do with the memorable statement of a Commission official many years ago, in a lecture at the Law Society, that the Commission considered that bottled beer should be free? Sadly he was only talking abut tying restrictions ... But it turns out to be about excise duty, with a misleading title.

After the Hundred Years War - the War of the Roses

And it seems to have ended in a draw. A bit early to say, as I can't read 46 pages, 164 paragraphs, of a judgment that quickly, but cutting to the chase it looks like honours are pretty even. Samuel Smith Old Brewery (Tadcaster) v Lee (t/a Cropton Brewery) [2011] EWHC 1879 (Ch) (22 July 2011) is a trade mark infringement and passing off case. The protagonists are two Yorkshire breweries, Sam's being the oldest in the county (established in 1758, according to Wikipedia: now it might be more accurate to call the company Humphrey's for short, as Humphrey Smith is joint managing director, with his brother Oliver, and Humphrey seems to be the target of many critical comments) while Cropton (named after the village in which the brewery is located) is a relative newcomer having been established in 1984. Both make that once-rare thing, real ale, although I imagine that Sam (whose products I have found as far away as Seattle) makes considerably more of it.

Sam has a number of registered trade marks, one of which comprises a stylised white rose design, others of which include a white rose. Hardly a matter for surprise, in Yorkshire: for those unfamiliar with historic rivalries in the north of England (relatively speaking - we are talking about the area south of the Tees here) the white rose is the symbol of the House of York, and the red rose of the House of Lancaster. The Wars of the Roses speak volumes about the cordiality of relations between them.

These latter-day all-white Wars of the Roses erupted when Cropton began brewing two beers which clearly announced their Yorksire origins. There's Yorkshire Bitter, a bottled beer made for Marks & Spencer, and a draught and bottled beer which it called Yorkshire Warrior, profits from which go to the Yorkshire Regiment Benevolent Fund. All well and good - very commendable - but the white rose featured on both labels. The Warrior label incorporated the regimental colours of the Yorkshire Regiment, which - unsurprisingly - featured a white rose.

There was also a groundless threats claim or two.

Arnold J, who might justifiably be nicknamed Solomon after this effort, held that: 

i) Cropton Brewery has not infringed the Trade Mark by use of the Yorkshire Bitter label;
ii) Cropton Brewery has infringed the Trade Mark pursuant to Article 5(1)(b) by use of the Yorkshire Warrior label;
iii) Cropton Brewery has a defence in respect of its infringement of the Trade Mark by use of the Yorkshire Warrior label under Article 6(1)(b) in respect of the period to the end of October 2009, but not subsequently;
iv) Samuel Smith’s claim for passing off succeeds in relation to the Yorkshire Warrior label, but not the Yorkshire Bitter label;
v) The letter dated 10  December 2007 is an unjustifiable threat but Cropton Brewery is not “a person aggrieved” by it, while the letter dated 7 July 2010 is not a threat of infringement proceedings.

It all brings to mind an earlier - much earlier - trade mark case from the same part of the country: YORK TM [1982]. FSR 111, the last word (until the 1938 Act was repealed) on the unsuitability of geographical names as trade marks. Of course, a white rose might not be seen as a geographical indication, but this stylised design says "York" (House, city or county of) pretty clearly to a large number of people. A white rose is, at least, highly descriptive of anything connected with that part of the world, almost as much as the word - although there was no challenge to the validity of the key trade mark. Does this smack of absolutism - a trade mark bully trying to monopolise a sign that should be available for others to use too? Perhaps: and the excuse that the directors of a company have a duty to their shareholders to take advantage of what trade mark law offers doesn't apply here in quite the same way - in fact, the claimant is a private unlimited company.

The Yorkshire Bitter dispute was settled when Marks & Spencer agreed to change the label to remove the rose - which, when first approached by the claimant, they had argued was a very different white rose anyway. It was the claimant's first approach to M&S that was the first threat complained of. The Warrior dispute was decided by the fact that the defendant thought it had the permission needed to use the regimental badge - but the regiment itself had no authority to grant permission, so once that came out and the permission that had wrongly been given was withdrawn any further use became an infringement.

Well, still much to get out of reading this judgment - and I'll reassess the outcome: not as equal as I thought. Samuel Smith seems to have got just about everything it wanted in the litigation. In the court of public opinion, though, the comments I linked to above show that it has lost big time, and I'll certainly be choosing alternatives to their products in the future - as if that'll bother them.

TV Catch Up case for Luxembourg

It probably had to happen. ITV Broadcasting Ltd & Ors v TV Catch Up Ltd [2010] EWHC 3063 (Ch) (25 November 2010) (on an application to strike out, which was refused) has now been referred to the Court of Justice for a ruling on the meaning of "communication to the public" and whether streaming is a variety of that restricted act. That excellent service Out-Law has the story - read it there, while I write it up for the next podcast. But I will just mention that Out-Law tells us that the judge (Floyd J), who thinks that streaming is a form of communication to the public, is asking the Court of Justice whether he is right. Nicely put, but I doubt it's exactly how the expedition to Luxembourg is actually characterised.

Music royalties claim lives on

Wadsworth v Granada International Media Ltd and Granada Ventures Ltd [2011] EWPCC 20 is a judgment handed down on 9 June by HHJ Birss QC in the Patents County Court, involving the music from Space 1999, a TV series from the seventies, produced by Gerry and Sylvia Anderson in which nuclear waste stored on the far side of the moon explodes (on 13 September 1999) and sends the satellite hurtling off into space. What a ridiculous storyline ... Its transmission dates coincide pretty closely with my days as a full-time student, which explain why I never saw it, never even was aware of it until now as far as I can recall. Derek Wadsworth was a jazz musician and composer who wrote the music for some of the second series of Space 1999. He died in 2008 and his children were the claimants in this action.

Copyright in the music for the series was assigned to ATV Music, now part of the Sony empire. Mr Wadsworth was entitled to half the royalties earned by the publisher, which (with DVD releases and so on) should have been a substantial amount, but he felt he was receiving less than he should have had - perhaps a common condition among composers, as it is among authors, but not necessarily one that is without a remedy. He asked the publisher about it and they said they were handing over half of what they received, which meant that perhaps they were not being paid what was due to them. So a claim was issued against the company responsible for exploiting the programmes. The defendants applied to strike it out on the grounds that there was no privity of contract between Mr Wadsworth and them - his contract was with the publisher, which would therefore have been the party to pursue the payments.

In October 2008 the matter came before HH Judge Fysh QC, who made an order for disclosure of the licences entered into by the defendants, and Mr Wadsworth's solicitors raised a number of questions on the basis of this information by letter of 1 December that year. Two days later Mr Wadsworth died, and it was a couple of years before the court substituted his children as claimants. A case that has barely got started after four years is of course anathema to the Patents County Court, and the judge agreed with counsel for the claimants that the court had to grasp the nettle.

Regarding the strike out application, the judge considered there were two possibilities: either Granada had obtained clearance from the publisher before licensing the exploitation of the programmes, in which case there would be a pile of contracts somewhere, or it had failed to do so. The claimants contended that the defendants owed them a duty - referring to their having a beneficial interest in the copyright, which was clearly not the case, although they could be said to have an interest under the copyright - the right to half the royalties. The case was therefore firstly pleaded as a breach of a duty of care - in other words, it was a claim in negligence.

The second claim alleged a fiduciary duty, and the third that under the Contracts (Rights of Third Parties) Act 1999 the claimants could enforce contractual rights against the defendants.


On the basis of the judgment of the House of Lords in White v. Jones [1995] 2 AC 207 the judge rejected the argument that there was a duty of care, absent a special relationship between the parties. As for the contract point, it was not inconceivable that one or more of the pile of contracts (ones entered into since the 1999 Act came into force) could give the claimants the opportunity to take action against Granada, and accordingly the judge made a disclosure order - a Norwich Pharmacal order, designed to require the defendants to assist the claimants (Norwich Pharmacal Company & Ors v Customs And Excise [1973] UKHL 6 (26 June 1973)) - requiring those contracts to be produced. The fiduciary claim he also regarded as pretty unlikely, but not hopeless. So he left in two of the three claims, ordered disclosure, set a date for a case management conference, and urged (gently) the claimants to get their pleadings sorted out with a view to applying at the CMC to add Sony as a party, which he identified as the key to the claim.

There are some interesting points here about how to deal with a failure to pay the right royalties. I wonder why Sony were not added to the proceedings in the first place? Well, it seems they will be - although a lot of costs have presumably been thrown away getting to the present position.

Reading the judgment, I realise how impressed I have been with all the judgments rendered by Judge Birss since his appointment. They are extremely clearly expressed, thoughtful, helpful to the parties (where the parties deserve help) and, well, humane. Not that other judges don't achieve this too, but these PCC judgments really see to me to be exemplary.

Willy The Wizard struck out

The long-running - if "running" doesn't imply a degree of urgency that seems to have been completely lacking - claim that Harry Potter and the Goblet of Fire plagiarised a book with the banal title "Willy the Wizard" has been struck out after the claimant failed to make a payment to the court for security for the defendants' costs, which are already considerable. Guardian Law has the story, which suggests that the claim was doomed to failure and may have been nothing more than a publicity stunt. It sounds as if Willy the Wizard is a remarkably ordinary piece of work, an accusation that could hardly be levelled against Harry Potter - which seems to have popularised reading, and reading almost on a Tolstoyan scale, for a whole generation of children. And many adults, though I found insufficient in the first book to draw me in, unlike Philip Pullman's great trilogy.

Repair/replacement and trade marks

I covered Schütz (UK) Ltd v Werit (UK) Ltd [2010] EWHC 660 (Pat) (31 March 2010) in a podcast a long time ago, an interesting patent case raising questions about whether "cross-bottling" (not an act of enraged violence involving a glass container) amounted to an infringement of the patent that covered the plastic container in a metal cage. Werit, the bottle maker, won at first instance but lost on appeal [2011] EWCA Civ 303 (29 March 2011) and is now off to the Supreme Court. Schutz (UK) Ltd and Another v Delta Containers Ltd and Another [2011] EWHC 1173 (Pat) (5 May 2011) was a preliminary skirmish in the trade mark infringement and passing off case brought against the cross-bottler, the company that replaced the original bottles, an application for an adjournment to avoid the waste of resources that would inevitably happen if the trade mark case were decided one way then the patent case went the other way in the Supreme Court. The timetable for the trade mark case had been drawn up on the assumption that the patent case would have been disposed of by this stage, not on its way to another appeal - which would take a considerable time to resolve. But the judge (Kitchin J), as I mentioned in the May podcast, decided it was better to get on with the trial while people might still remember what the case was all about.

That has now happened, in Schütz (UK) Ltd and Another v Delta Containers Ltd and Another [2011] EWHC 1712 (Ch) (5 July 2011). Briggs J found there was infringement and passing off. Sorry, did that spoil the suspense for you? Well, this isn't supposed to be a thriller. Let's consider how he did that.

Schütz complained that Delta infringed their trade mark by selling the cross-bottled assemblies with Schütz trade marks on them. There were disclaimers, but Schütz argued that they didn't change matters. Schütz had registered UK and Community trade marks covering bottle and complete assembly. The judge considered that he had to apply an "average consumer" test, by which he did not mean consumers who occupied a position somewhere between the people who filled the containers and end users, but consumers who were "neither deficient in the requisite characteristics of being well informed, observant and circumspect, nor top performers in the demonstration of those characteristics."

Delta argued that end users are not consumers - to them, of course, the containers are merely a means to an end, and they want to consume the stuff inside. That was all very well, but the judge pointed out that if the container should fail it would be to the manufacturer of the device that the end user would direct his or her ire, and possible a complaint or claim. It would be Schütz that took the flak, even though the bottle might have been made by another and Delta might have put it in the cage. This "what if" question is the most interesting part of the judgment: it is not a simple matter. No-one would imagine that the contents of the container were anything to do with Schütz just because their trade mark appeared on the container, and the judge also distinguished the situation where a Pirelli tyre is fitted to a Ford vehicle. That does not suggest that the car was made by Pirelli, although the relative responsibilities of the manufacturers involved is no doubt better understood by the public in that situation.

The way the law deals with repairing and replacing others' products has been contentious for many years. This it seems to me is a sensible way to identify where the lines should be drawn in a dispute based on trade marks.

A slippery patent

Select Healthcare (UK) Ltd v Cromptons Healthcare Ltd & Anor [2011] EWHC 1830 (Pat) (15 July 2011) involved UK patent no 2 433 244 for a clever type of "slide sheet", which enables nurses easily to reposition patients. Proto-Magic owned the patent (which is brief to the point of being terse, as Mr Charrington comments (thanks!) and has a home-made look to it), Select claimed to be the exclusive UK licensee, and Cromptons were alleged to have infringed (and counterclaimed for revocation, naturally, on grounds of obviousness, insufficiency and added matter. The judge, Kitchin J, held the patent was invalid for obviousness, and not infringed anyway. The evidence of the experts showed that it was obvious to use pimples on the surface of the sheet to reduce friction, and the claimed invention was therefore obvious over the prior art. The insufficiency claim (which was by now redundant) was rejected by the judge and so was the added matter claim, but that did not matter.

The one claim that was in issue required a non-woven material with a pimpled finish on one side, coated with a low-friction material. The judge found that the material did not have anything that might be described as a pimpled finish, so although the coating was present the defendant's product did not fall within the claim.

The judge also found it unnecessary to decide whether there was an exclusive licence. However, he did express the view that the evidence supported Select's version of events, that it had the right to work the patent to the exclusion of all others - including the patentee. So had other parts of the judgment gone differently Proto Magic might have been in breach of the licence: but the patent was invalid and not infringed, so it didn't matter.

Second medical use patent not infringed by generic manufacturer

"Swiss Style Claims", as my Dictionary will tell you, were designed to overcome the exclusion in Article 52(4) the European Patent Convention of "methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body." The Swiss Federal Intellectual Property Office published Legal Advice (way back on 30 May 1984, reproduced by the EPO in OJ EPO 581) on the patentability of compounds used in the manufacture of a medicine for the treatment of a disease. Such claims have historically been encountered in "second medical use" situations (also defined in my Dictionary), where a compound used to treat condition A is found to work for condition B too. Sindinafel citrate is a good example: it is a vasodilator, a drug that has the effect of dilating the blood vessels which works by improving blood circulation, and was originally used to treat angina. A second medical use was spotted and it has been very successful under the brand name Viagra.

Swiss style claims became unnecessary after the revisions to the EPC in 2000, but because the patent in suit remained pending for so long the recent case of Ranbaxy (UK) Ltd. v AstraZeneca AB [2011] EWHC 1831 (Pat) (15 July 2011) required Kitchin J to interpret one. Ranbaxy wanted a declaration of non-infringement to clear the way to import a generic drug for treating gastric acid related conditions from India. The claim in question read:

The use of a magnesium salt of (-)-5-methoxy-2[[(4-methoxy-3,5-dimethyl-2-pyridinyl)methyl]sulfinyl]-1H-benzimidazole ((-)-omeprazole) with an optical purity of = 99.8% enantiomeric excess (e.e.) for the manufacture of a medicament for the inhibition of gastric acid secretion.

In Ranbaxy's product the compound was diluted by the addition of omeprazole racemate, so the optical purity in the drugs was not as high as the claim stipulated. The judge interpreted the claim, purposively, to be to the use of that compound with that level of purity. The specification did not mention any variation of the compound or adding other active ingredients, and as the claim was to a new therapeutic use of a medicament containing a known active compound, the medicament must contain that compound. A non-Swiss style claim might have been capable of a wider interpretation, but the form of the claim meant that it was strictly limited to the compound it stipulated. Ranbaxy got their declaration.

Bucks Fizz: dispute over group's name

It happens in the best of circles: members of a popular music combination have fallen out over the use of the name. The latest is Bucks Fizz, Eurovision winners in 1981 (a matter about which I will be respectful, in light of the result in 1997 and in particular the antecedents of the writer of the winning song that year) as a foursome, three of whom are still performing under the name "The Original Bucks Fizz" to the displeasure of the fourth, who has his own group which uses the name - and describes itself as "the official Bucks Fizz" - and importantly has the trade mark, or at least the owner of the trade mark (one of its members). (Between the two modern incarnations and the original there is not an apostrophe to be seen.) Oh, and neither will I be scathing about Bucks Fizz insofar as the lyrics to many of their songs were written by Pete Sinfield - unlikely as that might seem.

The Guardian reports that a Hearing Officer at the Intellectual Property Office (or The Original Patent Office, as it might be called) is seised of the matter (well, even Guardian Law didn't put it quite like that), a hearing has taken place and he will give his decision in a few weeks. It says that the trio's solicitor had told the hearing officer that there is a verbal agreement about the use of the name, but not whether it's a written verbal agreement or an oral one.

On the basis of the Saxon decision [2003] FSR 39 the name and goodwill would be assets of the partnership (a partnership at will, if not a formally constituted one) and would therefore be dealt with along with other partnership assets - though I don't know whether they were likely to be considered a partnership. There doesn't seem to be a sufficiently old Bucks Fizz company on the register, even a dissolved one - there's a Bucks Fizz Limited incorporated on 25 July 1997, a month after the trade mark application was filed, in the entertainment business, but that's 16 years too late really. Given that they were a manufactured band, a sort of musical SPV, it's reasonable to expect that the business structure received more attention than in most bands, so perhaps the ownership of the trade marks is clearer than usual. In any case, it's worth noting that a very similar dispute resulted in an injunction against an earlier spinoff back in the late 90s.

Summary judgment for trade mark infringement

Lewis v Client Connection Ltd. [2011] EWHC 1627 (Ch) (06 July 2011) is a case in which the the claimant, who runs a much-used website called "Money Saving Expert" sought summary judgment against the defendants who were trading as "Money Claiming Expert". The application for summary judgment was granted, though not under all heads.

Mr Lewis claimed three types of trade mark infringement, under section 10(1) (double identity), (2) (likelihood of confusion) and (3) (dilution) of the Act. The first was a little on the fanciful side, because it turned on the defendant's trading name being misheard when they cold-called (which was how they gathered business). There was a suggestion that their telephone agents were actually using the claimant's trade name, but either way this was not a suitable claim for summary judgment.

The second claim was another matter, though. Although there were witnesses who had clearly not been confused (the terms of their emails to Mr Lewis's business revealed that) actual confusion is not what is needed: only a likelihood of it happening has to be shown. The judge (Norris J) gave them summary judgment under that head.

He went on to say that he was satisfied, based on the number of people who visited the site, that money Saving Expert had a reputation sufficient for section 10(3) to apply, so he would also have been minded to give judgment in the claimant's favour under that heading too. But having given judgment on the basis of likelihood of confusion, there was no need to go on.

The judgment contains a brief and therefore handy review of the case law on identity between trade marks and on similarity and likelihood of confusion, and also the law on summary judgment, so it's worth a look - and not very long, either.

Recent High Court cases

Like painting the Forth Bridge was supposed to be, regular podcasting never ends. I'm not aiming to produce a podcast on the 1st of the month - it's better to allow a period for reflection - and anyway I have another regular, every-other-month, commitment now, which I have been working at this week. Two big chunks of work out of the way.

A glance at my feeds reader this evening reveals that the High Court is already piling the work on for the next edition of the podcast. Here are brief summaries of a few cases with links to the reports.

Ranbaxy (UK) Ltd v Astrazeneca AB [2011] EWHC 1831 (Pat) (15 July 2011) Patent - declaration of non-infringement (granted) and revocation - counterclaim for infringement (failed).

Select Healthcare (UK) Ltd v Cromptons Healthcare Ltd & Anor [2011] EWHC 1830 (Pat) (15 July 2011) Patent - infringement - exclusive licence - countercalim for revocation (obviousness, insufficiency and added matter) - held obvious, not infringed.

Lewis v Client Connection Ltd. [2011] EWHC 1627 (Ch) (06 July 2011) Trade marks - "Money Saving Expert" v "Money Claiming Expert" - application for summary judgment granted.

June Podcast

The June podcast is now online, covering (inter alia):

• The Court of Justice explains how to deal with levies on recording media in distance selling transactions 
• The High Court considers unregistered design right 
• The Court of Appeal upholds the Omega co-existence agreement, and 
• Champagne producers can’t get champagne.co.

If you'd like to subscribe, and get one hour a month CPD (for solicitors: different rules apply to IPReg and barristers) drop me an email!

L'Oréal v eBay: trade mark owners relieved

EBay, and other Internet businesses, have a much greater duty to trade mark owners than previously thought. Negligent failure to act, not just a positive act, can make them liable, according to the Court of Justice in Case C‑324/09, L'Oréal v eBay. The Court went on to say that national courts must be able not only to stop infringements but also to prevent future ones of the same kind.

The case was brought by L'Oréal, which distributes its products through a closed distribution network as is common in the fine fragrances sector. Sellers using eBay's electronic marketplace committed what L'Oréal said were trade mark infringements, and it sued eBay as well as some sellers. Another claim was that eBay had committed further infringements by purchasing keywords from paid Internet referral services (Google's AdWords being the main one) which corresponded to L'Oréal trade marks and which directed traffic to the infringers. L'Oréal argued that eBay's efforts to stop infringements were inadequate.

L'Oréal's claim was brought in the High Court of England and Wales. Arnold J referred a multiplicity of questions to Luxembourg. Advocate General Jääskinen gave his opinion last December, and now the Court has now given answers.

It starts by saying that there has to be a commercial activity - distinguished from a private activity by reference to the volume and frequency of sales - before there can be a trade mark infringement. Well, it has to be use in the course of trade, the directive is clear about that.

If the goods are offered for sale from outside the EU, infringements will be committed once it is clear that offers for sale and advertisements are directed at consumers in the EU. national courts have to assess on a case-by-case basis whether there are any relevant factors from which suggest that offers and advertisements on an online marketplace are directed to consumers in the EU. Where the seller is prepared to send the goods to will be one indication.

The operator of the marketplace does not itself use the marks: this reflects the logic of the AdWords judgment. Of course, it might do more than just enable its customers to display signs on the website in the course of their commercial activities, and leave itself open to action that way, but just providing the marketplace is not enough.

The operator of the marketplace might find itself in the liability zone if it plays an active role so that it has knowledge of or control over the date relating to the offers for sale. This might happen if it provides assistance which entails, for example, optimising the presentation of the online offers or promoting them. Then it will lose the exemption from liability given by EU law (specifically, the e-commerce directive) to online service providers.
Even where the operator has not played such an active role, it cannot rely on the exemption if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the online offers for sale were unlawful, and it fails to act promptly to remove the offending material from its website or disable access to it.

If the operator does not bring infringements committed by users of its service to an end, what orders can the courts make? The Court of Justice says that the operator can be ordered to take measures making it easier to identify the sellers, its customers, Personal data must be protected, but where the perpetrator is operating in the course of trade and not as a private individual (as they must be to commit an infringement) they have to be identifiable. That is a strange reading of the data protection directive, though the point that traders have to identify themselves on the Internet is an important safeguard in the e-commerce directive. So national courts must have the power to order the operator to take measures which contribute to preventing further infringements as well as dealing with infringements that have already been committed.

In the Google AdWords case, the Court did not hold Google responsible for what users of the service did - drawing an important line between the keyword and where it leads. The keyword might correspond to a trade mark, but the important question is whether the resulting sponsored link uses the trade mark or not. That's why Google is not liable, but why marketplace operators who help sellers or who know what the sellers are up to might be liable if the sellers are handling infringing goods.

Ford Sync patent action

From the company that broke the Selden patent: an interesting addition to the motor industry IP casebook in the making. Ford is being sued by Eagle Harbor Holdings, a small Washington State-based technology company, that claims the Ford Sync system infringes (infringes on, as they say in the States) its patents. The system enables users to control functions of the car using voice commands - how scary is that? - and has been fitted in millions of Ford cars in the US since 2007. The parties were in discussion as long ago as 2002, but seem now to have hit a brick wall.

Here is the story from Automotive News. Despite the "Holdings" part of the name, the company is a genuine practising entity, which is confirmed by the fact that it has issued proceedings in Federal Court in Tacoma, Wa, not the eastern district of Texas. You can read their press release about the matter here.

I hope they fare better than Selden did. He was eventually found to have obtained a patent over an improved version of the Otto engine, and his patent was declared invalid, Ford being the lead claimant in the action to get rid of the patent. I make no comment on the novelty of the Eagle Harbor patents, of course - and I will also forbear to comment on the social utility of inventions that might dilute the already limited connection between the driver and the vehicle. Not, of course, that this invention necessarily does so: but Federal regulators are already concerned about "driver distraction" and Ford Sync, and the complexity of the new improved "My Ford Touch" (a trade mark disaster in the making, perhaps) has caused Ford to drop down the J.D. Power Initial Quality Study, according to the AM story.

Trade mark invoice scams

Hat tip to the IPKat for drawing attention to a recent High Court case, London Borough of Croydon v Austin Hogarth [2011] EWHC 1126 (QB), 5 April 2011 (unreported and not available on BAILII), in which Judge Mackie held that Regulation 2(1) of the Business Protection from Misleading Marketing Regulations 2008 applied to a computer maintenance contract masquerading as a renewal notice. This could be the solution people have been looking for to all those dodgy trade mark notices demanding fees that look as if they have come from a registry somewhere. Go read the IPKat's posting - no point in me repeating the facts here.

Evidence in claims for breach of competition rules

It's long been open to anyone damaged by someone's breach of competition rules to claim damages, but there have been few cases of it happening. You'd think that if the competition authorities had found there was an illegal cartel, and had fined participants, it would be dead easy to get damages, but National Grid are currently demonstrating just how tricky it can be to adduce the necessary evidence. It's applied to the High Court to be given access to documents used in support of leniency applications. And the leniency deal (without which the authorities would have no chance of finding out about the existence of cartels) is a first past the post one: in contract terms, the second whistleblower is unable to give valuable consideration in return for immunity - the authorities already have the information. The result could be an unseemly rush to the Office of Fair Trading as soon as the cartel meeting is over ...

So, although it's not an IP case, this one will be worth watching. This report in The Guardian also makes the important point that prospective claimants are also likely to be concerned about the damage that pursuing a claim would do to commercial relationships. How much simpler life was when if someone ripped you off you didn't still need to be nice to them in future.

Postscript: Pfleiderer AG v Bundeskartellamt (Case C-360/09); [2011] WLR (D) 196 - ICLR summary says “A person adversely affected by an infringement of European Union competition law was not precluded by the provisions of that law from being granted access to documents relating to the leniency procedure for the purposes of bringing a civil action for damages.”

Can trade mark law be used to control criminal gangs?

It sounds like a silly question: trade mark law exists, almost, in a different universe from criminal laws against organised crime. Of course, there's a huge overlap especially in the area of counterfeiting, but the bright idea of the US law enforcement authorities to forfeit a trade mark used by a motorcycle gang called The Mongols and then sue members for infringement if they had the temerity to display it in public (reported on the Intellectual Property Brief blog) seems doomed to failure. Indeed, it might even be said that it deserves to fail. Trade marks (as IPB points out) are all about preventing confusion in the marketplace, so how can preventing someone using a distinctive sign help that? And anyone who is prepared to announce his membership of a gang (which is not as far as I can see an illegal organisation anyway) by wearing the insignia is unlikely to be worried about infringing a trade mark.

Another instance, perhaps, of someone ascribing magical powers to intellectual property - and an example of state-sponsored absolutism.

Website is copyright work

How websites are protected is a matter of speculation, or so I tell people. Obviously there might be several copyright works involved, and perhaps also database right (if that counts for anything). Now we have high-level confirmation that copyright will protect a website in France, with a decision of the Cour de Cassation reported by the Legalis.net blog. Vente-privee.com accused private-club of infringing copyright in the site architecture: the defendant argued that there was insufficient originality to sustain the claim, with which lower courts agreed but the Cour de Cassation did not. The matter has been remanded to the cour d'appel, Versailles.

Pursuing downloaders: sharing the proceeds

It's now several  months old but this piece from The Guardian reveals that ACS:Law took 40 per cent of the money received from recipients of threatening letters relating to downloads of music. For the adult movies it also handles claims for, the lawyers would retain even more. Interesting to know these figures.