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.

How many patent applications succeed?

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

	Applications Filed		Applications Published		Patents Granted
	2017	2018	2017	2018	2017	2018
United Kingdom (total)	13,286	12,843	6,007	5,899	3,260	3,001

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

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

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

Shanks v Unilever: Supremes identify outstanding benefit

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

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

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

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

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

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

Purposive construction

A little while ago, I illustrated the concept of a transformative copyright work by referring to what Rachmaninov did to Pagannini's Caprice no 24. A little while? It was October 2017. Now another illustration of an important aspect of intellectual property law from the world of music has come along.

This time my inspiration came from Record Review on BBC Radio 3 a few weeks ago (on 14 December 2018, to be precise - if you go to the Radio 3 website you might still be able to find the programme, perhaps in the podcast version). The work being reviewed was Richard Strauss's Till Eulenspiegels lustige Streiche. It's a piece I came to love when I was still at school (the horn solo particularly appealed), and the three boxed set of LPs of Strauss's Orchestral Works by Kempe and the Dresden Staatskappelle were quite an early part of my record collection. But I digress, as usual.

About 17 minutes and 20 seconds into the podcast, the reviewer (the composer William Mival) is considering the 1959 recording by the New York Philharmonic under Leonard Bernstein - another of my favourite musicians. "Bernstein even adds in detail that isn't in Strauss's score", he tells us. "A snap or Bartok pizzicato in the double basses right at the end of the market scene just before till rides off into the far distance. It means that the string is plucked with so much force that it rebounds against the fingerboard producing a distinctive crack. This kind of addition is of course typical of Bernstein who would often be far more interested in the spirit of the written score rather than the literal instructions on the page."

That neatly brings together two memorable events from my first term at University, back in 1974: the opening of the new arts centre, when honorary degrees were conferred on Peggy Ashcroft, Eurgene Ionescu, Michael Tippett and Leonard Bernstein, and one of the earliest concerts there given by the Amadeus String Quartet, which included a Bartok quartet from which I learnt about that pizzicato. But again, I digress.

Thanks to YouTube, I can direct you to exactly the right moment in Lennie's recording. But how does this relate to intellectual property law? Less well than it would have done a few years ago, I admit, but it's still relevant. Ever since Lord Diplcok's speech in Catnic v Hill & Smith [1981] FSR 60, [1982] RPC 183 (HL) we have been familiar with the idea of a purposive approach to interpreting patent claims - considering what the applicant had in mind, the spirit of the claims, rather than the precise words used. And although the way the courts approach patent claim interpretation now has developed from that starting point, the idea of a purposive approach remains important. Modern claim interpretation, I suppose, can be said to date from the moment Lord Diplock chose to seek out the purpose of the claims rather than fixating on the words - a departure which I do not believe is an unalloyed good thing, but who am I to criticise the noble Lord and his colleagues? Suffice to say (for the time being) that to my mind the purposive approach works far better in musical performances than in patent litigation.

Happily, the outcome of the review of the available recordings was that the Kempe version which I have owned for about 45 years came out well ahead of the rest. Although I do like the Bernstein ...

Has the difficulty of ascertaining freedom to operate led to a patents arms race?

Reading Boldrin and Levine's "Against Intellectual Monopoly" (Cambidge University Press, 2008, and here), I am struck by a thought that isn't directly related to the authors' arguments against the patent and copyright systems (I expect they will get round to trade marks in due course, although that will have to be on a different basis). Perhaps it is such a banal thought, it isn't even worth putting out here, but I don't recall it being expressed in these terms before so maybe I have something original to say ...

There are so many granted patents in existence (why on earth did I waste time typing "granted"? There are so many patents in existence ...) that "freedom to operate" searches must be little more than a lottery. This may explain why patent owners (in some fields at least) now put their efforts into collecting extensive portfolios so that when (not if) a competitor sues them for infringement they will be able to find a patent which the competitor is infringing in their own portfolio. Then the problem can be dealt with by cross-licensing rather than fighting out the infringement claim in court.

There must also be a problem with unpublished applications (not quite submarine patents but similar) which form an undiscoverable part of the state of the art - they would not show up in "freedom to operate" searches but could prove fatally damaging. The accelerating pace of technological change must make these a bigger and bigger problem, which in turn makes freedom to operate searches even less reliable, and gives further encouragement to alternative defence mechanisms.

Interpreting patent claims: Actavis v Eli Lilley

It's now 13 years since Lord Hoffmann told us definitively how to interpret patents claims, in his opinion in Kirin Amgen v Hoechst Marion Roussel [2005] 1 All ER 667. The courts had spent a lot of time pondering how to do what should have been a pretty simple task: judges have always been in the business of finding the meaning of legal documents, and patent claims should never have been much different. Or should they? For many years the courts have eschewed (nice word) a literal interpretation and chosen instead to look at the claims as practical documents written for practical readers.
I have never bought into that view (but who cares what I think?). Patent claims are usually written by highly skilled and trained patent attorneys for other patent attorneys, members of the patent bar and ultimately specialist judges to read. Why should it be necessary to adopt a different rule about interpretation from that which governs the interpretation of, say, conveyances?
I suppose that, centuries ago, when patents for inventions first came before the courts, the judges were able to say "we know how to interpret documents like this: we look at the wording." Only later did the fiction arise that the claims were anything other than highly specialised documents written by and for experts. The idea that patent claims are addressed to some hypothetical individual skilled in the art strikes me as nonsense: what ordinary person, however skilled they might be in the art, ever reads patent claims?
The courts pursued this strange idea through a series of cases, tying themselves in more and more knots. Catnic, for one, should probably have been a professional negligence case - which is not to say that the patent agent who write the claims was necessarily negligent, but it would have been helpful if the courts had considered the point. Then in the Improver case Hoffmann J formulated a series of questions for the judge to ask, which turned into the Protocol Questions when the Protocol on Interpretation of Article 69 (of the EPC), originally dating from 1973, became recognised as the governing document, and in due course Lord Hoffmann put his own Improver Questions out of their misery.
In Activis UK Ltd v Eli Lilley & Co [2017] UKSC 48 (12 July 2017) the claim in issue was a Swiss-style claim for pemetrexed disodium, with vitamin B12, used in the manufacture of a medicament for treating cancer. Actavis sought a declaration that it would not infringe by marketing drugs containing other pemetrexed compounds (for example, with potassium instead of sodium). Arnold J at first instance gave the declaration, and the Court of Appeal upheld him, both following (as they pretty well had to) Kirin Amgen. The Supreme Court, however, allowed Actavis's appeal.
Lord Neuberger (who, remember, is a Oxford chemistry graduate) held that when a court has to consider a possible infringement by a variant, there are two questions that it must ask:

• First, does the variant infringe the claim at issue as a matter of interpretation? If it does, that's all the court has to do.
• If not, ask whether the variant infringes because it varies only in a way, or in ways, which are not material. Put another way, is the variant equivalent to the claimed invention?

Lord Neuberger said that the Improver or Protocol Questions remain useful in finding an answer to the second question, but needed to be changed slightly. They now require the judge to consider

1. whether the variant has a material effect on the way the invention works;
2. whether the notional addressee, on learning what the variant does, would consider it obvious that it would achieve substantially the same result in substantially the same way as the invention; and
3. whether the notional addressee would have uderstood from the language of the claim that the patentee intended strict compliance with the primary meaning to be an essential requirement of the invention.

The courts had previously set their faces against introducing a doctrine of equivalents into UK patent law, but the amendment to the Protocol which introduced Art.2 made this untenable. Potassium was, in effect, equivalent to sodium for the purposes of the patent and Actavis would infringe if they marketed the products about which they asked in the first place.
The further the courts move away from a literal interpretation of patent claims, the less certainty there is for those, like Actavis, who want to operate in the field but also don't want to infringe. One argument - perhaps the argument - against a literal interpretation is that it prevents a patent claim being read in the light of technological developments. But is it right that a patentee who has chosen to specify a sodium compound rather than using broader language (if, of course, they could get away with it) should receive such an extensive, and flexible, monopoly? Perhaps the correct approach would be to regard the discovery that a potassium or some other compound would do the job as leading to an invention in its own right.

Remedies for infringements of Standards-Essential Patents

In a nicely-balanced judgment in Case C‑170/13, Huawei Technologies Co. Ltd v ZTE Corp. and ZTE Deutschland GmbH (judgment here) (16 July) the Court of Justice held that the holder of a Standards-Essential Patent (or SEP, a term of art that is gaining currency very rapidly in this SEP-reliant age) can only have an injunction against an infringer if it has previously offered a licence on FRAND (a better-established term of art) terms. If the patentee has given an irrevocable undertaking to grant such a licence, it is not an abuse of a dominant position to seek an injunction and that would be prohibited by Article 102 TFEU, but the patentee has to get over a few hurdles before it is in the clear, to make sure that the right balance is struck between the interests of the patent owner and the would-be user.

First, the patentee has to alert the alleged infringer to the alleged infringement, and then it has to present a FRAND licensing proposal. If the alleged infringer carries on regardless, it will not be regarded (in the court's phrase) as having responded diligently to the proposal. It can only claim that there is an abuse of the patentee's dominant position if it has responded with a counter-proposal, offering FRAND terms (or, you might say, terms which are more FRAND, or FRANDER - there's a nice neoligism) of its own - because, of course, the only matter that can be in dispute is whether the purported FRAND terms qualify as such. Although that makes it sound far easier than it is: FRAND is not a binary, yes-or-no, matter - a wide range of terms might fall within the scope of what is fair, reasonable and non-discriminatory.

The court's approach, within its limits, nevertheless makes perfect sense: if your patent becomes the basis for a standard that everyone has to use, you have to accept that it is no longer a right to stop others from using it, merely a right to remuneration (which may be substantial). Everywhere in the IP field you can observe this shift from exclusive rights to a right to be paid for use: it happened in copyright even before the 1988 Act, when collective licensing suddenly took off with the creation of the CLA, and it was built into design right under Part III of the 1988 Act right from the start.

However, like all references to the Court of Justice, it leaves questions unanswered (usually because the questions weren't posed in the first place, which in turn is usually because they didn't arise in the case concerned so the referring national court had no reason to ask them). Can (as Laëtitia Bénard of Allen and Overy in Paris said to WIPR, that astonishingly inaccurate publication mis-spelling her surname) an injunction be blocked merely because the alleged infringer challenges the FRAND-ness (my word, not Ms Bénard's) of the offer? Will holding an SEP always place the patentee in a dominant position (a point made to WIPR by Axel Walz of King and Wood Mallesons, Munich)? How detailed does that "irrevocable undertaking" have to be (my own thought)? Given the growing frequency with which patents are already becoming standard-essential, which is likely to accelerate rapidly in the future, these are probably questions that we will see coming up before very long.

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Rounding conventions: what is the value of 1?

Smith & Nephew Plc v Convatec Technologies Inc [2015] EWCA Civ 607 (24 June 2015) is a patent case which turns on how to read a numerical range. The patent related to wound dressings in which silver - a known antimicrobial agent - was applied to the fibres. To prevent discolouration, the patent specified the use of a binding agent, at a concentration between 1 per cent and 25 per cent.

The trial judge, Birss J, interpreted this (using the conventions that I thought I had remembered from school maths lessons) to mean between 0.95 per cent and 25.5 per cent. But the Court of Appeal knew better (or at least they picked up on the argument).

Of course, like all interpretations of patent claims, the right approach is that set out in the Protocol on Interpretation of Article 69 - which requires us to consider what the person skilled in the art would think the claim was intended to mean.

It came down to whether the right approach was a "whole number" approach or a significant figure approach. The whole number approach would say that 1 per cent means all figures greater than or equal to 0.5 per cent and less than 1.5 per cent - or to put it another way, all values that round to 1 per cent when expressed in a whole number. The significant figure approach was explained by Kitchin LJ, who started by noting that the rules formed part of the common general knowledge: 

i) non-zero digits are always significant;
ii) zeros between non-zero digits are always significant;
iii) leading zeros are never significant; if a decimal point appears in a number then trailing zeros are significant (before or after the decimal point);
iv) in the absence of a decimal point, trailing zeros are not generally significant unless stated otherwise either expressly or with a bar over the zero.

Applying these rules, 1 per cent indicates a range from 0.95 per cent to 1.5 per cent. It is asymmetric because the values that round to 1 must comprise two significant figures: if there's only one significant figure, you can't round it up or down. This is how Birss J got to the conclusion that the defendants' 0.77 per cent concentration did not infringe. He reckoned that the skilled person would use the significant figures approach. The Court of Appeal preferred to think that the skilled person would assume that the values were expressed to the nearest whole number, so there was an infringement.

Why, oh why, didn't the person who drafted the claims (and the description, of course, as it has to support the claims) either write "up to 25 per cent" or "1.0 to 25 per cent" (especially when the teaching of the patent was that as little as 0.01 per cent would do the trick)? I'm sure they had their reasons, just as the patent agent who wrote the Catnic patents had his reasons for writing "vertical" (or was it "vertically"?). However, in neither case are the reasons known, while in both of them the effect was significant, indeed determinative, in the patentee's favour in both cases, though only just in the earlier one. Cases like these cause me to reflect on the received wisdom about patent claims, that they are technical documents written for technical people and not suited to the sort of legal scrutiny that a conveyance should get (I forget the precise quote). But in fact they are complicated legal documents (often incredibly so) written by highly-trained professional patent agents (soi disant attorneys, indeed) and to my mind that means that meticulous verbal analysis (there, I remembered the words!) is entirely appropriate. And the Protocol is wrong!



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IP Draughts pans Google patent contract

Do no evil …drafting is a typically robust piece of work from Mark Anderson, whose IP Draughts blog should be essential reading for anyone with any aspirations to write contracts, whether relating to intellectual property or not. In it he demolishes a badly-drafted contract the terms of which are intended to govern the acquisition by Google of any US patent you might wish to sell to them - the rest of the world, typically, not existing for the purposes of their mindset. Google's professed aim is to prevent unwanted patents falling into the hands of trolls - in the pursuit of which Google will become potentially the biggest troll in the world. Just as well that its well-known slogan (quoted by Mark in the title of his posting) rejects any possibility of trollery!

Court of Justice rejects Spain's objections to UPP

The IPKat reports that what he insists on calling the CJEU has rejected Spain's objections to the Unitary Patent Package: you can read the Court's press release here.

A Run Through Patents Part 2 now available

I've now recorded the second part of the Run Through Patents lecture - follow the links from the sidebar to the Run Through page where you can download the MP3 file (about 42MB, and 45 minutes). Please let me have any comments (good or bad) if you listen to it!

A Run Through Patents - part 1

I have uploaded the first of two recorded lectures on patents - download if from the Run Through page on this site. It covers obtaining patent protection, including patentability: next I will deal with ownership, employee inventions and infringement.

Patent Erosion 2013: What Would the Founding Fathers Think? - IPWatchdog.com | Patents & Patent Law

Here  is an interesting review of developments in patent law in the US over the past year, by Gene Quinn. I am pleased to be reminded of some of those quotes, and introduced to others that I haven't seen before. Gene's posting reads on its face like a plea for stronger patent rights, but on deeper reflection it's more a call for a better balance, which is what the entire intellectual property universe could do with. His observations about the relative roles of large and small businesses in innovation are thought-provoking (or perhaps they just show that I haven't really thought enough about this?): if innovation comes mostly from small businesses, universities, and the like, and large corporations merely pick up the fruits of others' labour, what constitutes a troll is a subtle matter - although the key element in the definition of a troll is the 'non-practising' part.

What is clear, from Gene's comments and those of many other people, is that the intellectual property systems (and I use the plural deliberately) need to be adapted to the needs of smaller businesses, yet everywhere I look the trend seems to favour big IP owners. To reverse that trend is a huge challenge, but as long as the balance is tipped in favour of big business there will be calls for revolutionary changes in intellectual property protection. Is radical reform the way to stave off revolution? I am sure that legislators everywhere need to think carefully about their presumptions, which too often come down to the simple proposition that intellectual property is a Good Thing and therefore more of it is even better.

Thanks, Gene, for an valuable piece. I would have added that you ought to review and rewrite and correct before pressing 'publish', but the beam in my eye prevents me from drawing attention to the mote in yours (Matthew 7: 3-5).

HTC Corp v Nokia Corp [2013] EWHC B16 (Ch) (12 September 2013)

HTC Corp v Nokia Corp [2013] EWHC B16 (Ch) (12 September 2013)  is a skirmish in the mobile phone wars that seem to have been raging since time immemorial, but are actually of more recent origin. HTC challenged two Nokia patents, and Nokia counterclaimed for infringement. No different from any number of similar dust-ups over the past few years. The judgment here, however, was concerned with steps taken to secure evidence from two companies in the USA who were not party to the litigation, Qualcomm and Broadcom (some inspired brand creation has been going on here). Only the Qualcomm evidence caused any problems.

Nokia made a third party disclosure application to the District Court for the Southern District of California, and that court made a protective order to ensure that the information disclosed went no further than the parties' legal advisers. Fair enough: the information was described as 'the crown jewels', though it is not clear by whom. (My guess is that it was an American.) Recipients would have to sign a prescribed form, and there lay the problem. HTC's counsel, while having no reservations about the obligations themselves, were not willing to submit to the jurisdiction of the District Court or to rick becoming personally liable for a breach. As their instructing solicitors had already signed up, they (the solicitors) were unable to show the evidence to counsel, which was, as the judge (Norris J) put it, an untenable position. What were they going to do? Bring in additional counsel, for that part of the claim?

The case was all about HTC's application for an order against Nokia for disclosure and inspection of the documents, which of course pursuant to the California order had been disclosed to Nokia with a view to them sharing them with HTC. Except that the documents were actually in the hands of Nokia's lawyers. But the Civil Procedure Rules (rule 31.8, to be precise) talk about 'control', and if something is in the hands of your agent it is in your control, isn't it?

Of course the problem could be solved by going back to the District Court and asking for the protective order to be made just a little less protective - though whether Qualcomm would be prepared to go along with that might be another matter. And that's exactly what HTC are engaged in doing, or were at the time of the application: so Norris J refused the order applied for, saying he didn't believe that Nokia had control of the documents for the purposes of CPR 38.1. He wasn't prepared to adjourn, because the date for trial was rapidly approaching: better that the time available be spent in appealing against his refusal, or going to court in California.

All in all, a fun little sideshow to the war.

India proposes hike in Patent Office fees

In a recent notification, the Government of India has proposed an amendment to the Patent Rules, 2003. The proposal is made to exercise powers conferred by sub-section (1) of section 159 of the Patents Act, 1970 which states that “The Central Government may, by notification in the Official Gazette, make rules for carrying out the purposes of this Act”. The Notification was published in the official gazette on 6th May 2013 seeking objection and suggestion from General Public.

The proposed amendments are of significance importance to the Patent process in India. The salient features of the proposed amendments are:

1. The First schedule of Patent Rules, 2003 has been revised to increase in the official fee by 100% for both natural and non-natural persons.

2. A further surcharge of 10% shall be levied if the filings for various proceedings are made in hard copy format and not use e-filing system. Levying of surcharge on the fee for filing patent applications and other forms through physical means by 10% is to encourage e-filing. The e-filing system was first launched by the Indian Patent Office (IPO) in the year 2007 which enabled online filing of new applications for Patents. The e-filing system is still not a favoured mode of filing method in India due to various technical drawbacks. Hence, the proposed increase in the fee may deter applicants from filing hard copies and subsequently encourage them to opt for online fling.

3. The Fourth Schedule of Patent Rules, 2003 has also been revised to increase the official fee up to 100%. Since, the pre-grant and post-grant oppositions have been rampant these days and one could also blame the meager fee involved with it, the fee have been increased with the belief that it would cut down frivolous oppositions. The fee for compulsory license have also been doubled apart from increasing the hike in fee for affidavits; and

4. Form 7 A has been introduced for filing pre-grant opposition. Since, Form 7 was used for both, pre and post-grant opposition; introduction of a separate form would ease the process.

The proposed amendment seems to have been made with the objective of reducing the number of frivolous patent applications and moreover comparing with the USPTO and EPO fee, the Indian Patent office fee has been very nominal. The proposed fee hike is currently facing a serious criticism from various sections and groups fearing that there would be substantive drop in filings by individual inventors and also from SMEs which may lead to lower industrial growth in India.

Agreement on a Unified Patent Court, Cm 8653

The Agreement on a Unified Patent Court has been published by the government, as Cm 8653. A mere 66 pages, which these days wouldn't be long for a judgment: in the shops it would cost you £11.75, but as a download it costs nothing - the wonders of the Internet ...

I am intrigued to see the copyright notice on the inside cover: "Crown copyright 2013", it says. Section 163 tells us that Crown copyright subsists in a work made by Her Majesty or an officer or servant of the Crown in the course of his duties. Her Majesty can be ruled out as a possible maker of this work, but so too I imagine can officers and servants of the Crown - except in the very limited sense that someone has created the typographical arrangement of this published edition. Surely this is a European Union text, but the various Copyright (International Organisations) Orders do not mention the Union, any of the Communities. Interesting. No doubt there is a simple answer, just not one that is very obvious.

SDL Hair Ltd v Next Row Ltd & Ors [2013] EWPCC 31 (14 June 2013)

SDL Hair Ltd v Next Row Ltd & Ors [2013] EWPCC 31 (14 June 2013)  is a judgment of Mr Recorder Richard Meade (not another debutant intellectual property judge?) and concerns a patent for heating hair rollers. There is a lot in the 44-page judgment about inductive heating, which is quite interesting but not knowledge that many lawyers will be able to put into regular use. The upshot of the consideration of the physics was that there was no infringement, but there were also points to be considered about whether the claimant was an exclusive licensee and therefore entitled to sue, and whether certain threats were actionable (they were) and if so who was liable for some of them (an individual who had made a threat was held to be personally liable).

When is genetic material capable of (or susceptible of) industrial application?

Human Genome Sciences Inc v Eli Lilly and Co [2011] UKSC 51 is by no means a new case. However, it is the Supreme Court's first foray into patent law, which gives it some lasting importance, and it is noteworthy for the way Lord Neuberger, the Master of the Rolls, played such an influential part in a court which is not normally his preserve, such that the Supreme Court reversed judgments of two of the finest intellectual property lawyers (Kitchin J and Jacob LJ) of the era. This article (for such it is) was a long time in the writing, so long that the journal for which it was intended no longer considered it current enough to use. If it is insufficiently current for a printed journal, it is even less sufficiently current for a blog, but we are not deterred. It will still be useful to someone, and we hope it will also be at least a bit entertaining. It is not all my own work: it benefits from the co-authorship of Dr Yasmin Churcher, shortly-to-be-a-solicitor, who actually understands the science involved.

Introduction

The unravelling of the human genome has led to many innovations, some of them in the patent system. For one thing, it has led to the formulation of rules that permit the grant of patents for what look to most people like excluded discoveries. Directive 99/44/EC confirms that a naturally occurring gene is patentable, but to overcome the objection that it is merely something that has been discovered the Directive goes on to insist that its industrial application be disclosed in the application. That might seem a bit of a statement of the obvious, simply reinforcing Article 52(1) of the European Patent Convention, but the key difference is that you can't get away with just hoping that some industrial application will turn up later, as many participants in the human genome patent rush seemed to be doing: it helps to ensure that the patent teaches how to solve a technical problem. Or, to put it another way: “However clever and inventive you may have been in discovering a gene sequence, you cannot have a patent for it or for the protein for which it encodes if you do not disclose how it can be used.” (Jacob LJ, [2010] RPC 14, [2010] EWCA Civ 33, para 57.)

Article 52(1) insists that you must have an invention that is susceptible of industrial application, and Article 57 expands on the meaning of this phrase, stating that the requirement will be satisfied if the invention can be made or used in any form of industry. Applying this to the fruits of biotechnology research, as the Supreme Court was called on to do in HGS v Eli Lilly, is not an easy matter.

The judgment does more than shed light on the difficult question of how to apply the industrial application rule. It is also intimately tied up with the equally important, perhaps even more important, issue of how national courts cope with the need to follow the case law of an institution with a very different approach to the doctrine of precedent.

The science and the patent

Readers more accustomed to reading complex legal material, whose eyes may glaze over (or skip over) scientific technicalities, may find the following summary of the science helpful. Those magical molecules so important to writers of detective fiction, deoxyribonucleic acid or DNA, are found in the nucleus of the cells that make up living organisms, such as us. Genes, sequences of nucleic acid, are regions located along those molecules, and they are said to code or encode (often with the redundant preposition “for”) proteins, determining how the organism will synthesise, or in the scientific vernacular “express”, the protein. Proteins have biological properties, including therapeutic ones, and so do their antibodies, which are another type of protein.

If a gene is involved in the regulation of cell proliferation, activation and differentiation, it might have applications in the field of cancer treatment, and knowing how it is expressed could be extremely valuable. Such was the case with European Patent (UK) 0,939,804, the application for which was filed by Human Genome Sciences Inc on 25 October 1996. The patent describes the encoding nucleotide, the amino acid sequence, and certain antibodies, of a novel human protein, Neutrokine-α (which for the sake of simplicity, readability, and ease of typing, is referred to in this piece as “the protein”). The patent includes what are referred to as “contentions” or predictions about its biological and therapeutic properties and those of its antibodies, but they are little more than educated guesses largely based on the proposition that the protein is a member of the group of proteins known as the tumour necrosis factor (or TNF) ligand superfamily (which, for the same reasons as set out above, is referred to in this piece as “the superfamily”). Members of superfamilies share certain properties, so the predictions were well-founded, but do those predictions show that the invention is susceptible of industrial application?

The history of the litigation

In the EPO, Eli Lilly opposed the grant, and the Opposition Division answered that question in the negative and revoked the patent. Eli Lilly also bought parallel proceedings in the High Court for revocation of the patent in the UK.

After the Opposition Division's decision, the High Court (Kitchin J) also revoked the patent on the grounds that a person skilled in the art would have concluded that the functions of the protein were too general and would provide nothing more than the basis of a research project ([2008] EWHC 1903 (Pat), [2008] RPC 29). There were further grounds for revocation based on insufficiency and obviousness. The High Court and the Opposition Division were in agreement, but then in October 2009 the Board of Appeal spoilt matters by reversing the Opposition Division's decision (on the basis, it should be noted, of more restricted claims) in T 0018/09. It held that the notional addressee would have appreciated that in the light of general knowledge of the superfamily the protein would have certain functions, and that was all that was needed.

In February 2010 the Court of Appeal unanimously upheld Kitchin J's decision on the industrial applicability point, maintaining the rift between Munich and London, and did not rule on the other issues ([2010] EWCA Civ 33, [2010] RPC 14). It dismissed the appeal on the basis that (even with the more restricted claims with which the Board of Appeal had been satisfied) the invention was not susceptible of industrial application. Conscious that its decision was contrary to that of the EPO, the Court of Appeal (in the judgment of Jacob LJ, with whom Lady Justice Hallet and Lewison J agreed) was at pains to explain and contrast the functions of the EPO and the Court of Appeal and the manner in which each reached its decision before concluding that:

157. ... The upshot of all this is that the Board, working on different evidence and using a different procedure came to a different conclusion on the facts. We are not bound to follow, or even give deference to, the Board’s findings of fact.158. For the above reasons I have come to the clear conclusion that the Judge was right to hold that the invention failed to comply with Art. 57.

The Supreme Court judgment

The Supreme Court which heard the appeal in July 2011 (giving judgment on 2 November) comprised Lord Hope (Deputy President), Lord Walker, Lord Neuberger MR, Lord Clarke, and Lord Collins. The leading judgments came from Lord Hope and, significantly, Cambridge chemistry graduate Lord Neuberger (the Master of the Rolls making, as it were, a guest appearance). Unsurprisingly, it was the judgment of the chemist (and former Patents Court judge) that was the more leading of the two.

While recognising the importance of deferring on matters of fact and value judgments to a court of first instance (especially when it had been upheld on appeal), the Supremes allowed the patentee's appeal. Lords Walker and Clarke went so far as to say that their default position had been not to interfere with the lower courts' decisions, but they had been persuaded by Lord Neuberger to allow the appeal. That they, against their instincts, should overturn the judgments of two heavyweight patents judges speaks volumes about Lord Neuberger's powers of persuasion. Some commentators have suggested that Lord Neuberger may be too influential and asked whether this situation is any different from the Hoffmann era.

The Supreme Court found little in the way of domestic authority on industrial application, particularly of biological material: the principles are found in the jurisprudence of the EPO's Board of Appeal, in what are sometimes, a little disparagingly, referred to as “T cases”. National courts are not obliged to follow the Board's reasoning in its decisions , but normally they should follow the EPO jurisprudence. This is especially so where the Board has adopted a consistent approach to an issue in several decisions, as the Supreme Court found was the case here – not that the Board's decisions all go one way.

The Supreme Court also identified good policy reasons for a consistent approach to patents in the biotechnology field: researchers need to be able to tell when they should file patent applications, and they need to be able to use patent protection to support their search for funding. These policy reasons surely extend to other areas of research too. The Justices were aided in their appreciation of this point by the intervention of the Bioindustries Association. See para 96 ff.

The patent contained wide-ranging and generalised suggestions about the uses of the protein it described and its antibodies: “[I]t contains an astonishing range of diseases and conditions which Neutrokine-α and antibodies to Neutrokine-α may be used to diagnose and treat and there is [sic] no data of any kind to support the claims made”: Kitchin J, at para 31. It did not however tell the reader anything specific: the only relevant guidance it gave came from its teaching about the tissue distribution of the protein, its expression in T-cell and B-cell lymphomas, and its membership of the superfamily. On the face of it, nothing about the invention's susceptibility to industrial application could be found in the patent. It neither revealed how the protein could be used to solve a particular problem, nor identified any disease or condition which it could be used to diagnose or treat.

So was the judge in the High Court right (or was he at least entitled) to conclude that Article 57 was not satisfied, that the inferences that (back in 1996) would have been drawn from the specification were insufficient?

The Supreme Court thought not, because this approach was not consistent with that of the Board in a series of cases, although the fact that both parties were able to derive support from the jurisprudence makes one wonder about the consistency of the Board's decisions.

Eli Lilly placed reliance on T 0870/04, Phosphatase/Max Planck where the Board held that it was not enough to describe the product, means and method for making it, and prospective use for basic scientific activities: the “application identifies no practical way of exploiting it in at least one field of industrial activity therefore not sufficient for industrial applicability”, and no function was identified. There was only a vague and speculative indication of possible objectives that might or might not be achievable by carrying out further research.

Shortly thereafter, the Board concluded in T 1329/04, the Tumour Growth Factor 9 (Factor-9/JOHN HOPKINS) case that because there was no functional characterisation and that a significant feature was not identical with the rest of the TGF superfamily there was an absence of applicability.

HGS sought assistance from T 0898/05 Hematopoietic receptor/Zymogenetics where the Board refused the patent application because the use of computer assisted sequence homology does not provide concrete conclusions about the actual function of the protein and therefore no inevitable therapeutic or diagnostic use, and because ZCytor1 was nothing more than a research tool and only the beginning of the process towards quest for industrial applicability.

In T 0604/04 PF4A receptors/Genentech the important point was that chemokines as a family were not only interesting but important for pharmaceutical industry irrespective of whether their role was clearly defined or not. It would therefore be reasonable to conclude that the claimed peptides exhibiting characteristics of receptors of PF4A family of cytokines would have been regarded as important to the pharmaceutical industry so the requirement for industrial applicability was automatically satisfied.


T 1452/06 Serine Protease/Bayer the application was refused due to lack of any experimental evidence in support of the claimed serine protease activity. Although the Board said that such support might be provided by computer assisted comparisons against known serine proteases and more particularly with the alleged closely related related sequence of Epithin, it pointed out that although Epithin is defined as a putative serine protease there was no experimental evidence to support that finding.

In T 1165/06 IL-17 related polypeptide/Schering 19 July 2007 the main issue was obviousness but the Board also considered the requirements of Article 57 and whether they had been addressed, and were decided that they had.

In light of the principles drawn from the jurisprudence of the Board, the Supremes considered that, taking common general knowledge into account, the disclosure of the existence and structure of the protein and its gene and of its membership of the superfamily sufficed to show that it was susceptible of industrial application. All known members of the superfamily were expressed on T-cells and could co-stimulate T-cell proliferation: the protein could be expected to display these properties too.

It made no difference that other properties found in superfamily members were not displayed by the new protein. Proteins in the superfamily were also known to have pleiotropic effects - multiple effects from a single gene, so members of a superfamily may be capable of driving multiple biological processes: but the Supreme Court considered this to be a red herring. given that the value of the new member of the superfamily lay in the features it had in common with all the other family members, and the skilled reader would have understood that not all its properties would be shared.

The patent was not well-drafted, but neither Kitchin J nor the Board had considered this would have diverted the person skilled in the art from their understanding of what the patent taught, given their common general knowledge and what they would have found in the literature. The Supreme Court considered that the lower courts had erred by concentrating on the speculative nature of some of the therapeutic uses of the protein which were disclosed in the patent, and on the extra effort that would be required to work out those uses: the known activities of the superfamily were enough in themselves to justify the grant of a patent for a novel molecule and its encoding gene.

The Supreme Court also rejected the argument that the specification was insufficient, for the same reasons. Kitchin J had, the Supreme Court decided, set a standard for susceptibility to industrial application that was higher, more exacting, than that set by the Board. He sought something that would show that a particular use for the protein had been demonstrated, when he should have been looking for something that showed that it could plausibly be used for research work. Reading between the lines of the Board's decision, the Supreme Court interpreted it as saying that this in itself amounted to an industrial activity.

After the Supreme Court reversed this decision, it remitted the case to the Court of Appeal, so that the question of insufficiency of three of the claims could be considered: two had been ruled insufficient at trial and HGS appealed, arguing that they weren't, while a third was ruled sufficient at trial and Eli Lilly appealed on the ground that it wasn't. But the insufficiency points are another, less important, story, not one we have time to tell here.

Queen’s Speech: Intellectual Property Bill

Actually, more of a Patents and Designs Bill, and it is unfortunate that it's entitled “intellectual property” – hardly a precise enough expression to use in legislation.  But whatever they call it, the Bill will implement changes to the design laws that the Government announced recently in response to a consultation it carried out.  These include introducing criminal penalties for infringing registered designs (but not, thank goodness, unregistered design right).  The concept of what is commonplace for unregistered design right purposes will be tied to a specific geographical area, and the first owner of unregistered design right will be the designer even where the design is commissioned.

The Bill also contains provisions to create a new opinions service, like the one the Patent Office already offers in relation to patents, covering registered designs.  It will also provide for appeals from decisions of the Designs Registry to go to an appointed person rather than to the High Court.

As far as patents are concerned, the Bill will create a framework for establishing part of the central division of the Unified Patent Court in the first instance in London, and local divisions elsewhere in the UK.

There is more to be said about the Bill, and I plan to come back to expand this post in the future.

Learning new words - Gebrauchsmuster

As an avid reader of the blog may have guessed, the brief voyage into intricacies of German language made in the previous post is not accidental. Last week Freshfields hosted the JIPLP/GRUR seminar on secondary protection for innovation in Germany. In the centre of scrutiny was the Gebrauchsmuster, or utility model as non-German speakers may call it – a separate patent-like IP right offered for new inventions in Germany.

For an English lawyer the Gebrauchsmuster may seem alien and mysterious – no comparable right existing in English law. However, similar protection is available not only in Germany, but also in other 57 countries.

The idea behind the Gebrauchsmuster and utility models in other jurisdictions, explained by the first speaker Wolrad Prinz zu Waldeck und Pyrmont of Freshfields Bruckhaus Deringer LLP, is that there are ‘small’ inventions which are unlikely to become the centre of a billion lawsuit between two international smartphone manufacturers. The life period of such inventions is shorter than that of ‘normal’ inventions and the legal monopoly in this case is deemed less dangerous. Small and medium enterprises should have easier and cheaper access to the protection of small inventions.

At first sight, a Gebrauchsmuster is in many ways similar to a patent. It can be granted for an invention which is novel, involves an inventive step and is capable of industrial application. An inventor will have to submit an application containing claims, description and drawings. If a Gebrauchsmuster is granted, its owner will acquire a time-limited protection and will be able to claim all remedies which are usually awarded to patent owners (injunctions, damages, destruction and recall of infringing products, etc.).

However, a closer inspection reveals many differences between the Gebrauchsmuster and patents. Substantive requirements for protection are much more easily satisfied in the case of a Gebrauchsmuster. When assessing the novelty of an invention, the German Patent and Trademark Office will only consider written publications and public use in Germany. Possible oral disclosures, secret use or public use outside Germany will not form part of the prior art. Furthermore, the applicants are awarded a 6-month grace period in respect of written disclosures or public use made by them or their predecessors in title. In effect, this means that it is possible to acquire a Gebrauchsmuster for an unpatentable invention (e.g. when there was public use outside Germany). Historically, the Gebrauchsmuster required less inventiveness than the patent. The idea was that there are small inventions which cannot be protected by a patent, but can become a subject matter of a Gebrauchsmuster. However, in 2006 in the case of Demonstrationsschrank the German Federal Court of Justice held that inventions protectable by a Gebrauchsmuster do not deserve special treatment and must show the same level of inventiveness as required in patent law: in some countries, however, utility models are not expected to measure up to the same level of inventiveness. The requirement of industrial applicability for the Gebrauchsmuster is the same, but the list of items excluded from protection is slightly longer. Gebrauchsmuster cannot be granted for biotechnological inventions and processes. Additional exclusions are explained by the difficulty of representing a process in the application.

The registration procedure for a Gebrauchsmuster is also slightly different. The German Patent and Trademark Office will only conduct a formal review of the application, making no examination of its substance. The lack of substantive examination is offset by a shorter length of protection – 10 years from the date of registration (compared to 20 years offered by a patent) and by availability of opposition proceedings which can be started by any person. The application and maintenance fees for a Gebrauchsmuster are smaller than those relating to a patent. In practice, though, this advantage is negated by the fees paid to lawyers and patent attorneys. Despite the fact that applications for a Gebrauchsmuster can be shorter, the claims still need to be drafted with the utmost precision. Should the opposition to a Gebrauchsmuster be successful, the opposing party will usually be able to claim the costs of representation. Even if the court awards only part of the costs, the amount can still be significant. As there is no substantive examination, a Gebrauchsmuster is usually granted faster than a patent (usually within 3 months). Yet again, this may not help the inventor if his or her Gebrauchsmuster is caught in an opposition action started by a watchful competitor. 

The scope of protection offered by the Gebrauchsmuster is similar to a patent protection. One rather important difference was highlighted by the second speaker, Karsten Koeniger of Harmsen Utescher – it is very difficult to persuade a court to grant a preliminary injunction when a Gebrauchsmuster is allegedly infringed.

Having considered the main differences between the Gebrauchsmuster and the patent, it would be interesting to see how these two interact with each other. A Gebrauchsmuster can be granted in parallel with a patent. Additionally, if there is a pending patent application, one or more of its claims can be ‘branched off’ and become a subject matter of a separate Gebrauchsmuster. This creates interesting opportunities in protecting inventions. For example, if a patent application is ‘stuck’ at the examination stage or it is necessary to challenge competitors as fast as possible, the inventor can branch off a claim from a patent and apply for a Gebrauchsmuster instead or together with a patent.

So, is a utility model protection a good thing to have? There is no agreement about this. German practitioners would be happy with the Gebrauchsmuster as it allows more flexibility in litigation and increases their revenue. It is difficult to say though that SMEs can substantially benefit from secondary protection. If the same standard of inventiveness is required, the inventor might as well apply for a patent. Smaller costs are often offset by lawyers’ fees. The attitude of English lawyers was aptly summarised by Darren Smyth during the panel discussion. It may be unnecessary and misleading to create special secondary protection, which would be liable to lead to multiplication of patent (Gebrauchsmuster?) trolls and thickets. A better idea may be to try to improve the patent system as a whole with a view to making it more friendly and affordable to SMEs.

Whatever side the reader may feel obliged to take, it should be noted that according to the information provided by Wolrad Prinz zu Waldeck und Pyrmont more than 96,000 Gebrauchsmuster were issued in Germany in 2011 with only 104 cancellation proceedings concluded in the same year. This suggests that the system is working adequately in Germany. On the other hand, it seems unlikely that the countries which do not provide secondary protection will decide to implement it. Further evidence to this view is the negative reaction of the majority of EU member states to the prospect of creating the Community utility model.

More information about the seminar is available on the JIPLP website (here). It also contains insightful presentations made by Wolrad Prinz zu Waldeck und Pyrmont and Karsten Koeniger on which this text is largely based.

The author wants to say a big thank you to Peter Groves for this delightful opportunity to contribute to the blog.