End of the Line for Australian Innovation Patents

 Australia has phased out its innovation patent system, following legislative changes to the Patents Act 1990 (Cth). 

The final day for filing a new Australian innovation patent is 25 August 2021.

The relevant amending provisions of the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020 (Cth) commence from 26 August 2021 - 18 months after the Act received royal assent.

What is (or was) an Innovation Patent?

The innovation patent was conceived as a simpler, faster, and more economical, form of protection for inventions compared to a standard patent or provisional patent.

Unlike a standard patent, an innovation patent does not require the applicant to demonstrate an "inventive step". 

However, the prospective patentee must still demonstrate the subject matter has:

• novelty - namely, the absence of public disclosure of the invention before the priority date; and 
• an innovative step - namely, that the invention is different from known prior art, and makes a 'substantial contribution to the working of the invention'.

The duration of an innovation patent (once granted) is up to 8 years after its filing date, subject to payment of annual renewal fees. The specification is limited to 5 patent claims and formal examination of the application is optional.

Once filed, the application may be granted in as little as 1 month, and examination (if requested) can be completed within 6 months.

The overall cost of the application (excluding professional attorney fees) is estimated at approximately A$1,500 - substantially less than the cost of a full standard patent.

The Phase-Out

In 2015, the Australian Productivity Commission was tasked with a review of Australia's intellectual property laws, including to "ensure that the intellectual property system provides appropriate incentives for innovation, investment and the production of creative works while ensuring it does not unreasonably impede further innovation, competition, investment and access to goods and services".

The Productivity Commission's Final Report was released in 2016, and included a recommendation to abolish the innovation patent system.

That recommendation was formally supported by the Australian Government in 2017, stating in its response: "The [Australian] Government considers that more targeted assistance would better achieve this objective [to stimulate innovation in Australian SMEs], while avoiding the broader costs imposed by the innovation patent system."

Legislation was then implemented in two parts:

• The 'Part 1' Act (passed in 2018) included amendments to copyright, designs and trade mark legislation, among other measures; and
• The 'Part 2' Act (passed in 2020) addressed the recommendation to abolish the innovation patent system.

According to IP Australia's official announcement, the phase-out stems from several reasons, which are reflected in the 2016 Productivity Commission Final Report:

1. The innovation patent's low barriers to entry made it easy to file a patent application, but resulted in a clogging of the system. Further, it was argued that strategic filers could exploit the system as a means of stifling competition.
2. The low innovation threshold and lack of compulsory examination created difficulties and uncertainty for other innovators in gaining a clear understanding of freedom to operate.
3. Innovation patents were not recognised internationally. This is said to have jeopardised international expansion prospects and exposed patent holders to potential copycat activity in international markets.

IP Australia's conclusion was that the innovation patent system had failed to achieve to its objectives, whilst imposing an A$11m annual administrative burden on the agency.

Where to from here?

Existing innovation patents filed before 25 August 2021 will continue to remain in force until their expiry, and divisional applications based on an existing innovation patent application will still be permitted provided the effective priority date is on or prior to 25 August 2021.

To support SME innovators, IP Australia has deployed a range of other measures including:

• an online portal;
• a dedicated "SME Fast-Track" patent process to shorten the examination timeframes for SMEs; and 
• piloting access to subject matter experts and case managers targeted at assisting self-filers.

It will remain to be seen what impact the removal of innovation patents has on the broader Australian patent landscape.

---

Ben Thorn is an Australian intellectual property lawyer based in Brisbane, Queensland. He is the founder and director of Xuveo Legal, and is the current chair of the Queensland Law Society Technology and Intellectual Property Committee. Ben has been listed as a recommended intellectual property lawyer in Doyle's Guide 2020 and 2021.

TRIPS waiver: many academics sign open letter supporting it

 The idea that the TRIPS agreement should be waived (just a little) to remove IP protection from Covid vaccines, first raised by India and South Africa a few weeks ago, has new momentum following publication of an open letter signed by “over 100 international IP academics” supporting the intiative. The list contains some well-known names (well-known, that is, to IP practitioners and students) although a couple that are missing are perhaps even more significant (I leave you to work out who they might be). You can read the text here and my friend Mark Anderson's take on it here. He is not convinced, and neither am I.

Despite the government's commitment (superficially at any rate: it hasn't exactly stuck to the script, otherwise it would never have repealed s.52 or introduced criminal offences for designs) to the Hargreave Report's recommendation that changes in the law should always be supported by hard evidence - so-called "evidence-based policy-making" - the letter is rather short on hard facts. It footnotes a number of academic papers, and perhaps I should not expect an open letter to go into its evidence at any length but simply citing academic articles is not very convincing. Annoyingly, the links in the footnotes do not take you to the articles themselves, which would have enhanced the credibility of the exercise: I would have liked to have been able to look at them easily. As it is, I have downloaded the half-dozen that look most relevant and will read them in due course, but as this is not a peer-reviewed academic journal I don't need to be extremely rigorous in expressing my opinions.

It seems to me that, while the patent system clearly failed to ensure that we had a vaccine from an early stage (however magical the patent system is, it could hardly have produced a vaccine before the pandemic), it is not good enough to say that it must therefore be done away with - at least for the duration of the present emergency. Perhaps the proposed waiver would help, but if it does I think it will be only in a very small way. Waiving patent (and other IP) protection is all very well, but without the accompanying know-how the patent will be of little use. Protection for know-how could also be waived, but far from ensuring that the information becomes freely available, that is likely to cause the pharmas to keep its secrets even more tightly controlled.

This is a crisis in which there has been a conspicuous failure of the market system, which is built on patent protection. Vaccines have been produced not because the pharmas could enjoy monopoly profits from behind their patent fortifications, but because governments gave them a great deal of public money. There is a very important discussion to be had about how the fruits of that expenditure - the patents and other IP - should be distributed, and no doubt the pharmas will say that they need the patents for the future, and perhaps that the publc money was just a contribution. It might well lead to a fundamental reappraisal of how the patent system works, and the desirability of creating so many private monopolies especially when they are created at public expense. But that is very far removed from saying that patent protection should be waived. Perhaps it would make a contribution, and perhaps the evidence that I haven't yet read will support that, but it will be a very small contribution, quite out of proportion to the amount of noise being made about it, and it would be far more productive to direct the energy that is being expended on the waiver campaign to matters that will have a more immediate and greater impact on the problem.

Unified Patent Court agreement not contrary to German constitution

The Unified Patent Court, which will bring much-needed consistency to patent litigation in Europe (but which the UK will do without), has already faced problems in Germany once: back in March 2017 it was approved by the Bundestag but not by the right majority, so the decision was declared void. Then the UK dropped out (initially after the referendum the UK government, in an excess of "cakeism", announced that it would still participate although no-one could quite see how that would work, but then someone noticed that the Court of Justice had a role to play in the new system and it suddenly became an impossibly hot potato), which threw the entire project into doubt. But now the Bundesverfassungsgericht (federal constitutional court) has rejected two claims that the UPC Agreement violated fundamental rights under the Constitution and the way seems clear for the Bundestag to approve it again (by they correct majority this time).

As this is not a blog about German constitutional law, and one of the many things that I am not is a German constitutional lawyer, I won't try to explain the details. The court has very helpfully put out a press release in English (here). It's got at least one split infinitive in it, but apart from that the English is excellent: if you prefer, the German version is easy to find from that same link but that's all the language versions there are to choose from.

IPO launches consultation on exhaustion of IP rights post-Brexit

The UK government has launched a consultation on the future regime for the exhaustion of IP rights. The consultation is open for responses from 7 June to 31 August 2021. It is going to be a crucial decision which would significantly impact IP owners, consumers, and others involved and affected by parallel trade. 

IP rights give economic incentives for creations, products and innovations of new technology, enabling rights owners to benefit from the information and intellectual goods created. Consumers benefit from the availability of a wider range of innovative or attractive goods. But move away from this justification and you have a plain old monopoly, which means fewer goods being made, innovation being sidelined, and prices being raised.

The doctrine of exhaustion of IP rights exists to balance the different interests of consumers and rights owners when goods move between jurisdictions, preserving competition in situations where the traditional justification for IP protection is not convincing. The doctrine limits the ability of IP rights holders to use their rights to control the distribution of physical goods once they have legitimately been put on the market. Intellectual property rights can be invoked to prevent goods crossing territorial borders, an issue that has caused problems within western Europe since the earliest days of the European Economic Community. “Parallel trade” - goods moving between national markets outside the manufacturer’s official channels, are a challenge to rights-owners’ marketing strategies, but often a key factor in reducing prices.

Price differentials, naturally, lie at the heart of parallel trading. Traders - arbitrageurs, they might prefer to be called - will buy goods where they are cheap and move them to markets where they command a higher price. At one level, this is nothing that has not been going on for centuries: Traders will buy produce where it is grown and move it to where people want to buy it. But in the consumer society it’s far more complicated. Purchasing power differs enormously, even within the European Economic Area, and a rational manufacturer will pitch their prices according to what local consumers can afford - which might represent a fantastic bargain to someone in a richer EU country.

Following Brexit, the UK is no longer bound by the requirements of EU’s rules, which in essence say that once goods have been placed on the market within the European Economic Area any IP rights attached to them will not be infringed if those goods are imported into another Member State (although the rules do provide for cases where there are legitimate reasons for stopping parallel imports, for example where they have been repackaged). The goods have to be free to circulate within the EEA. Notwithstanding all the talk of taking back control, the UK (at least in part because the Northern Ireland Protocol limits its room for manoeuvre) continues to apply the same rules after Brexit, so we are open to trade in cheap pharmaceuticals from The Netherlands; but the EU simply treats the UK as a third country, not within the Single Market, so parallel imports entering EU Member States from here are likely to infringe.

The consultation identifies four possible regimes: 

● The current unilateral EEA regime 

● National exhaustion 

● International exhaustion 

● A mixed regime 

The current unilateral EEA regime 

Once goods are put legitimately on the market in the EEA, rights are considered to be exhausted in the UK. IP rights cannot be used to prevent goods being imported from the EEA into the UK. On the other hand, the EEA is closed to parallel imports from the UK, but that is a matter for EU law so naturally the consultation does not touch on this aspect.

National Exhaustion 

Under this regime, rights are only considered exhausted in the UK once goods are legitimately put on the market in the UK, so IP rights can be used to prevent goods put on the market anywhere in the world from flowing into the UK. But this option has been ruled out by the government because of the inconsistency with the Northern Ireland Protocol, which means no checks are needed on the goods crossing the border with the Republic of Ireland. 

This option was only included in the consultation to gather what evidence is available on economic impact.

International exhaustion 

This regime would automatically allow the import of goods from any country. exports, on the other hand, would be automatically allowed only to those other countries with an international regime. This means that the rights are considered exhausted in the UK when goods are legitimately put on the market anywhere in the world. IP rights then cannot be used to prevent goods from entering the UK from any other country. This would have significant implications for IP owners in that it would limit their ability to prevent goods from being parallel imported into the UK. 

We have been here before, though it was over 20 years ago. Following the Silhouette case, the Commission had a report drawn up entitled "The economic consequences of the choice of regime of exhaustion in the area of trademarks" (NERA/SJ Berwin, February 1999), which found that the issues were complex and the benefit to consumers of changing to international exhaustion likely to be small (in some sectors under 2 per cent). It then consulted widely, including with Member States: in the UK, the result of this was the Eighth Report of the Select Committee on Trade and Industry (9 July 1999). The Commission dropped the idea of changing, though the Select Committee favoured international exhaustion at least for some goods. Which leads us to...

A mixed regime 

This would mean that specific goods and sectors could be subject to one regime and all other goods, sectors and IP rights subject to a different regime. Switzerland has a regime in which most goods can be parallel imported but an exception for medicines which is governed under their national regime. It is going to be a rather complex system if implemented and may be difficult for consumers and businesses to understand, but that doesn’t seem to have given the government pause for thought since the referendum. 

Note that the consultation does not cover some major topics such as: 

● Exhaustion of rights in purely digital goods. 

● Geographical indications or plant variety rights 

● Counterfeit goods 

● Parallel exports

Conclusion

Since the “National Exhaustion regime” has been ruled out, the UK government is left with limited possibilities . It will be interesting to see which regime will win the votes for this Post-Brexit battle as this will be of great commercial concern. Will the Government  head towards a “Mixed regime” and implement a complex system for consumers and businesses or getting cheap exports through “International regime” become the vote-winner? Only time will tell.

Post-implementation review of s.72 CDPA

 The government recently announced a post-implementation review of the changes made to s.72 five years ago.

S.72 creates what the government (though the IPO) tells us is "an exception to copyright infringement" though I insist (especially to students) that it is a permitted act. If the legislation uses that terminology, why should we call it something different? It has the effect of an exception to copyright infringement, but calling it by that name is sloppy.

Anyway, that section (should you need a reminder) permits free showing of a broadcast, and certain copyright elements that go with it (because a broadcast has to be of something: in modern terminology, which I also find objectionable because it devalues the work of creative individuals, "content"), and applies only in places where the public has free access, which may include retailers, hospitality, community spaces, gyms, voluntary centres, hospitals, charities, and some workplaces.

The Copyright (Free Public Showing or Playing) (Amendment) Regulations 2016 amended s.72 by removing “film” from the list of exceptions. That's a small change, but a dramatic one, akin to adding the word "not" to a sentence. 

The change was a response to a series of judgments of what the IPO calls the Court of Justice of the European Union, or CJEU, which is not entirely incorrect but unforgiveably sloppy: the CJEU is the judicial institution of the EU, comprising two tribunals (the Civil Service Tribunal having been merged into the General Court in 2016). The Court of Justice is one of those tribunals, which is daft and highly confusing but it should be capable of being understood by a moderately intelligent person, and certainly by a lawyer. Anyway, if you want to revisit it, the original consultation is here along with a further consultation (when the government changed its mind a bit) and the government response.

The bit that the government changed its mind about involved what I think is probably the most interesting aspect of the whole exercise, the distinction (which EU law makes) between the cinematographic element of a film and the fixation aspects. It's not a distinction that our copyright law has ever made, as the Court of Appeal found in Football Association Premier League Ltd v QC Leisure & Ors [2012] EWCA Civ 1708 (20 December 2012), so basically the government agreed with a number of reespondents that the best thing to do would be to take out the word "films" altogether.

At the heart of the matter lies the showing of broadcasts of football matches in public houses, and clearly this was something that FAPL wanted to be controllable by the copyright owner. At first glance this seems a heavy-handed approach, because there will surely be collateral damage: all manner of broadcast films will be removed from the scope of the permitted act. But the get-out-of-jail free card here seems to be that this content is already covered, to a large extent if not completely, by collective licensing arrangements.

There is a lot more to this consultation than I have had time to mention here, but it is a specialised area and I don't propose to comment in great detail. I have nothing to say to the government in response to their questions: I cannot give them any evidence to help the consultation, so I'll just draw readers' attention to it, provide links to assist with further research, and move on to something else.

Secretary of State v Servier: Supremes decline to broaden scope of unlawful means tort

When a patent is held to be invalid for want of novelty or inventiveness, a party which has suffered loss by being denied access to cheaper products cannot get damages on the basis that their loss was caused by unlawful means. In Secretary of State for Health v Servier Laboratories Ltd, where the loss arose because there were no generic equivalents of the invalidly-patented drug, the Supreme Court held that the "dealing requirement" laid down in OBG Ltd v Allan [2008] 1 AC 1, which states that the unlawful means should have affected the third party’s freedom to deal with the claimant, is a necessary element of the tort. So it's not exactly a patent case, but it deals with interesting questions about what an applicant or patentee can and can't do to protect their invention when novelty or inventiveness is in doubt.

The issue of the validity of the UK designation of the patent in suit was held to be invalid as long ago as July 2007 by the late Pumfrey J held ([2007] EWHC 1538 (Pat)). It lacked novelty, or alternatively was obvious over another existing patent. The Court of Appeal upheld that decision in May 2008 ([2008] EWCA Civ 445), the leading judgment being given by Jacob LJ, and in 2009 the EPO Technical Board of Appeal revoked the patent.

Causing loss by unlawful means is an economic tort, consisting of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful and which is intended to cause loss to the claimant. In this case, the claimant was of course the Secretary of State (not the recently departed one - it would have been Jeremy Hunt at the relevant time) and the third parties whose freedom was interfered with were the European Patent Office and the courts of England and Wales. As neither of the third parties had dealt with the Secretary of State, the claim could only succeed if the court said that the dealing requirement did not form part of the ratio of OBG or departed from that case (which, incidentally, was one of three cases dealt with together by the House of Lords, one of the others being better-known to IP lawyers: Douglas v Hello!).

To cut a fairly long story (30 pages) short, the Supremes could see no reason to do either of these things. In reviewing Lord Hoffmann's reasons in OBG for imposing the requirement, they listed seven good reasons for it, which should be enough for anyone. The claim was struck out by the judge at first instance, the Court of Appeal upheld him, and now the Supremes have too.

Whether the patentee deceived the EPO or the courts is another matter: for the purposes of the strike-out, it was assumed that they had, but the important matter is that there was no sufficient connection between the alleged deception and the loss that the Secretary of State claimed to have suffered. Under the 1966 Practice Statement which remains effective in the Supreme Court (see Practice Direction 3, para 3.1.3), there was no reason for the Supreme Court to depart from OBG, no injustice that called for the invocation of that Statement.

But this is an intellectual property law blog, so we should leave the tort law to others - if the Secretary of State cannot claim on the basis of unlawful means, what can he (or, though not then and not now, she) do about what would (if proven) be reprehensible conduct? Jacob LJ dealt with this back in 2008, saying that there might be a sanction under competition law but noting that the application of that body of law to unmeritorious patents was not something that had been explored. There is, it seems, a claim that Servier's conduct amounts to an abuse of a dominant position, and we (and the Secretary of State) must now wait to see how that goes. It certainly looks more promising, and more closely related to patent law than the tort under consideration in today's judgment.

OpenStreetMap identifies catastrophic effect of Brexit on database right

The Guardian today reports that the open-source mapping project OpenStreetMap, described as "Wikipedia-for-maps", is contemplating relocating from the UK to somewhere that is still in the EU. Although there seem to be manifold reasons, one of them (and I should have thought a pretty important one) is the fact that databases of UK origin will no longer enjoy protection in EU27.

What we know (and possibly love) as database right in the UK is, of course, a creature of EU law. Actually, it's old enough to be EC law: Directive of the European Parliament and of the Council 96/9/EC on the legal protection of databases, implemented by the Copyright and Rights in Databases Regulations 1997, SI 1997 No 3032. Those regulations were amended in 2003 and further amended in the blizzard of secondary legislation that was caused by Brexit, by the Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2019, SI 2019 No 605 (Regulation 28 is the place to look, if you are interested). I wrote about all this not long ago, here, but it bears repeating in this new context.

The amendments are not complicated, although it takes a lot of legislative verbiage to convey what they are doing: where the original legislation mentioned the EEA, it now refers to the UK. This means that where previously a connection with the EEA (being a national of an EEA Member State, or incorporated in one, or habitually resident in one - I am going from memory here, so please check the legislation if it's important for you) meant your database qualified for protection in the UK, from now on (for databases created after IP completion day, as 11pm on 31 December 2020 is called - "completion" being a form of Newspeak and actually denoting something very different) you have to show the same connection with the UK. For databases created before IP completion day, protection continues on the old basis and for the original term, but I imagine that will cause all kinds of interesting problems when the proprietor finds it convenient to argue that there has been a substantial change in the database such that protection can start running again - only to find that it potentially means the database no longer qualifies for protection.

Anyway, that's the other side of the OpenStreetMap coin. What OSM are worried about is the treatment of databases of UK origin in the EEA, and of course with the UK no longer being in the EEA, UK databases (if I may call them that) no longer enjoy the protection of the sui generis right created by the Directive. Pre-existing databases will still be protected, by virtue of Article 58 of the Withdrawal Agreement, but given the nature of databases that is a wasting asset. Arguably, the OSM database is a pre-existing one and (the OpenStreetMap Foundation being incorporated in England) it therefore enjoys continuing protection, but the term is only 15 years: the saving grace, for database makers, is that a substantial change to the database "which would result in the database being considered to be a substantial new investment" qualifies the resulting database for protection. Never having had to think about it particularly before, I had reduced that rule to "a substantial new investment in the database keeps the 15 term running", but clearly that is too simplistic: in fact, a substantial new investment means you have a new database which is protected for 15 years, and that makes it abundantly clear why OpenStreetMap are unhappy.

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.

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 brought 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.

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 1994 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.

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. The term of protection is set at 15 years, but for rational database operators it should normally be effectively perpetual: making a substantial new investment in the database causes protection to restart. However, a close reading of the legislation shows that the mechanics of this process are actually rather different, and the substantial investment brings a new database into existence which gets 15 years' protection. That's a very different matter, and it's going to mean that UK database operators are looking at a limited future of protection under EU law.

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.