The team is joined by GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopolou, Mathilde Pavis, and Eibhlin Vardy
InternKats: Rose Hughes, Ieva Giedrimaite, and Cecilia Sbrolli
SpecialKats: Verónica Rodríguez Arguijo (TechieKat), Hayleigh Bosher (Book Review Editor), and Tian Lu (Asia Correspondent).

Friday, 29 January 2016

So you are at the museum: has that painting been preserved, restored or maybe even replicated?

This Kat had the luxury of doing a first degree in Medieval History before he set out to find a
field that might gainfully employ him. As a result of his studies, he developed a fascination with someday visiting the Cité de Carcassonne in southwestern France. Crumbling and set for demolition, the medieval citadel there was restored in the 1850’s under the direction of the renowned architect and intellectual, Eugène-Emmanuel Viollet-le-Duc, and it reportedly is the second most visited tourist site in all of France, eclipsed only by the Eiffel Tower. Fifteen years ago, this Kat realized his aspiration, and he spent the better part of a glorious day walking the length and breadth of the site. But the more he heard and learned that day about the restoration, the more he came away wondering—how much of the cité was conservation; how much was restoration; and how much what was what Violett-le-Duc decided should be added? How much was from the late medieval ages, and how much was a 19th century version of an amusement park?

This Kat recently recalled these questions in reading a piece by Ben Lerner in The New Yorker magazine, “The Custodians: How the Whitney Museum is transforming the art of museum conservation”. The article describes how the Whitney Museum of American Art, located in New York City has established a so-called replication committee (including one lawyer as a member) to determine under what conditions a work must be replicated if it cannot be fixed or otherwise restored in any traditional manner. The acute question that arises is whether it is still possible to talk about the original object when it has passed from conservation or even restoration to (mere?) replication.

As Lerner writes, the two poles of the debate were already framed in the 19th century. On one end was John Ruskin, who argued against any form of restoration, even if the result was that the building or object might wholly decay. In his words-- the “greatest glory of a building ….is in its Age.”

At the other end was the same Viollet-le-Duc, who argued and was engaged in multiple restorations. Reconstruction of a building was not only permitted, but called for, to--
“…reestablish it in a finished state, which may have in fact never have actually existed at a given time.”
A vigorous modern proponent of Ruskin’s view was Andrew Petryn, the former chief conservator at the Yale University Art Gallery, who was committed to what is called “de-restoration”, as he sought to remove all the restoration done to a work, leaving the work as created by the artist itself. Much controversy ensued, and Petryn was euphemistically criticized for “aggressive over-cleaning” of some pieces of the collection. At the other end was Viollet-le-Duc and his work at such sites as Carcassonne. In Lerner’s view, Ruskin’s position risks “fetishizing damage”, while Viollet-de-Luc risks “the Disneyfication of the historical record.” As Lerner suggests elsewhere in the piece, do we prefer the work “as an archaeological artifact” or should it be something that allows us to experience it as a picture qua picture? It seems to this Kat that the treatment of a building, which has an inherent functional purpose—namely shelter, can be distinguished from a painting, for which the artistic experience is the sine qua non. Still, the foregoing discussion on the two polar positions maintained by Ruskin and Viollet-de-Luc, respectively, usefully sets out the parameters of the discussion.

A fascinating example of how this might play out was described by Lerner in connection with a painting at the Whitney by the noted Abstract Expressionist painter, Mark Rothko. The head of the conservation department said that staff had noted “some unexplained, inconsistent coloration” in the painting. A painting conservator went about examining the painting with an infra-red camera, looking for either evidence of damage or if there had prior “intervention” of the painting. If the latter, “[i]t might be that Rothko himself restored this, and did a poor job.” If this were the case, would it be proper for the Whitney to effectively save the artist from himself? But it is also possible that the inconsistent coloration was done intentionally by the artist. If so, change would not “improve” the artwork but rather could do harm to the artist’s aesthetic intentions. Rothko died in 1970, so the ability of the Whitney to resolve the issue would seem especially daunting (it appears that no decision has yet been reached).

More fundamentally, to what extent does the Whitney need to first take a position on the
Ruskin/Viollet-de-Luc debate (as it has been refined over the last century) before it can then act on deciding what steps to take? At the least, Kat readers might keep these questions in mind the next time that they visit their favorite art gallery or museum—what exactly is the nature of the artwork being viewed. Is it more about then, or now?

We've got five years, that's all we've got

Earlier today, the IPKat mentioned the late, lamented David Bowie and a somewhat tenuous connection to patents (see Friday Fantasies). In the interests of equality for trade mark practitioners, the IPKat notes an equally tenuous Bowie link for them to marvel at: the opening track of The Rise and Fall of Ziggy Stardust and the Spiders from Mars is the song Five Years, from which the title of this post is borrowed (the first televised performance is here, but do come back when you've watched it).

In the song, five years is the length of time until the earth's foreseen destruction; in trade mark law it's slightly less apocalyptic but important nonetheless. Five years is the period within which a proprietor must put a registered mark into genuine use following registration, if revocation for non-use is to be avoided.

Which leads us to the point of this post, admittedly in a slightly roundabout fashion. The IPKat has learnt of a reference to the CJEU (Case C-654/15) from the Swedish Supreme Court (its case no. T 3403-14) asking two questions on "genuine use" of trademarks.

Länsförsäkringar's CTM No. 005423116.
They also have the same sign registered
with blue "L" shapes and a red central square
At issue is the question whether a proprietor's exclusive rights can be deemed to be limited to the goods and services on which the mark is actually used:

"1. Is it relevant for the proprietor of exclusive rights that it within a period of five years following registration has not put the Community Trade Mark to genuine use in connection with the goods or services in respect of which it was registered?
2. If the answer to question 1 is yes, under which conditions and how does this effect the exclusive right?"
News of this referral comes from James Russell, a Masters student in Uppsala, Sweden. James tells us that the reference arose from a dispute between Länsförsäkringar AB (a Swedish insurer and bank) and Matek A/S (an Estonian timber house producer).

Länsförsäkringar alleged infringement of their registered Community trade mark in respect of a device shown (above right) in black and white (they have a second registration for a colour version with the "L" shapes in blue and the central square in red).

Länsförsäkringar's registration covered goods and services in several classes, including construction services in class 37, but at the time of the alleged infringement, just two years after registration, the mark had not been used in relation to construction.

Matek's mark
Matek's mark (left) was nationally registered in respect of construction goods in class 19.

There was therefore held to be formal similarity between the services for which the CTM had been registered and the goods for which Matek had a registration ... but there was no use by Länsförsäkringar in relation to those services.

At first instance, an injunction was granted to Länsförsäkringar. On appeal this decision was reversed, with the Court of Appeal concluding that under Art. 9(1)(b) confusing similarity has to be assessed by reference to the proprietor's actual use of the trademark, even within the first five years of its registration, rather than as a "paper exercise". As such, the Court held, to the extent that Länsförsäkringar had not actually used the mark for manufacturing and sale of houses, the mark's protection should be restricted accordingly, and there was no infringement by Matek.

Länsförsäkringar therefore appealed to the Supreme Court, arguing that within the first five years "grace period" they can protect uses of the mark for which registration was granted, even if there has been no actual use of the mark for these goods/services at that time. The CJEU should tell us which approach is the correct one within the first five years of registration.

This Kat understood the exclusive rights under Article 9 to be absolute and to be defined in relation to the goods and services for which the mark is registered. The possibility of revocation for non-use after five years is a separate "use it or lose it" provision clearly giving a trade mark owner reasonable time to expand the use of the mark across the scope of the registration, and giving third parties an opportunity to remove unused marks from the register. If the rights of the owner were to be defined by actual use from day one, then this Kat believes that the legislation would have said so.

James and the rest of the Masters class in Uppsala, not to mention the IPKat, would be very interested to hear the views of readers on how the CJEU ought to answer the questions referred to it.

Rather a double life: 26 extra years of copyright for Beatrix Potter

This Kat would like to thank his solicitor colleague Tristan Sherliker for this interesting copyright mewsing. 

In a real-world fairytale story this week, the discovery was announced of a previously unpublished work by beloved mycologist (also children's author) Beatrix Potter, 150 years after her birth.

Would Beatrix have thought of Merpel as a well-behaved cat?
The newly uncovered story, The Tale of Kitty-in-Boots, was described by the author as "a well-behaved prime black Kitty cat, who leads rather a double life". It was discovered in the V&A Archives (where the majority of Potter’s papers reside) in 2015 by an amazingly fortunate editor at publisher Penguin Random House Children’s. Publication is anticipated in 2016.

Happily for Kat enthusiasts, there is an interesting IP story, which was first raised in our office when we wondered: Who owns the copyright, and why has it not expired?

A very lucky find

In fact the luck of this find in 2015 is quite striking. Readers with appropriate pocket change, will already know that Beatrix Potter died in 1943 – meaning copyright in her works expired at the end of 2013, and they came into the public domain (at least in Europe) just a couple of years ago on 1 January 2014.  So while the archive at Project Gutenberg gives free access to all her other publications, why will Kitty remain protected, for the benefit of the publisher?

The answer lies in a (nearly forgotten) schedule to the Copyright, Designs and Patents Act 1988. Schedule 1 to that 1988 Act provides as follows (we can ignore the specific provisions about printed paper hangings and machine-made lace):

3. The new copyright provisions apply in relation to things existing at commencement as they apply in relation to things coming into existence after commencement, subject to any express provision to the contrary. [•••]
12.(1) The following provisions have effect with respect to the duration of copyright in existing works.
(4) Copyright in the following descriptions of work continues to subsist until the end of the period of 50 years from the end of the calendar year in which the new copyright provisions come into force—
(a) literary, dramatic and musical works of which the author has died and in relation to which none of the acts mentioned in paragraphs (a) to (e) of the proviso to section 2(3) of the 1956 Act has been done;

The cross-reference into the “1956 Act” referred to isn’t much fun: The Copyright Act 1956 is pretty poorly drafted. Happily we can take the point from just looking at the following provisos to section 2(3), to find (added emphasis) that the publication of a work is one of those provisos:

2.(3)Subject to the last preceding subsection, copyright subsisting in a work by virtue of this section shall continue to subsist until the end of the period of fifty years from the end of the calendar year in which the author died, and shall then expire:
Provided that if before the death of the author none of the following acts had been done, that is to say,—

(a)the publication of the work,
(b)the performance of the work in public,
(c)the offer for sale to the public of records of the work, and
(d)the broadcasting of the work,
the copyright shall continue to subsist until the end of the period of fifty years from the end of the calendar year which includes the earliest occasion on which one of those acts is done.

A 26 year bonus

Kitty-in-Boots fulfils all the criteria for extended copyright protection: It existed at the date of commencement of the 1988 Act; it is a literary work; was unpublished before the death of the author; and the author died in the right timeframe for the work to be eligible (before the 1988 Act came into force).

The copyright will therefore expire at the end of 50 years from 1989 (being the date at which the 1988 Act came into force) – so copyright will not expire until the end of 2039.

But if it was previously unknown, who owns it? Well, Wikipedia tells us that copyright in Potter’s stories was left to her publisher, and ended up with the Penguin Group. The 1956 Act provides (§38) that such a bequest would be deemed to include unpublished works; so Penguin would appear to be the copyright owner.

Mixed work

As Warner-Chappell was reminded to its cost recently, one should not lose sight of the fact that the words may be dealt with differently to other elements that make up a work of mixed copyright. The publication itself will be a work of mixed authorship – while Beatrix Potter's famous illustrations are (were?) her own, the new publication will be illustrated by Quentin Blake and of course the typesetting arrangements will attract their own rights. So copyright in this book itself will continue long after the 2039 cut-off period. Speculating, the following factors may also complicate matters:
Beatrix Potter's Kitty-in-Boots illustration

  • Beatrix Potter did complete at least one illustration for Kitty-in-Boots;
  • A second, incomplete sketch of the villain (Mr Tod) was found with the papers; and
  • She also began to lay out the manuscript, which might influence or be incorporated into the final typographical arrangement.

So what?

Appreciating this is arcane, it is perhaps not as unusual as all that. The story is a good reminder that that some IP rights – especially copyright – last a long time, and it is the norm, not the exception, that they will change during the lifetime of their existence. The 1988 Act has been amended at least 12 times since it came into force, and even last year exceptions have been called into question. So checking an author’s date of death and adding 70 years isn’t always reliable.

This BBC article is the source of the images used.

Friday fantasies

Following the sad news of  David Keltie's passing, the IPKat has now learnt the details of the celebration of David's life: it will take place in Southwark Cathedral at 3:30pm on Thursday 10 March. Space is limited, and those who would like to attend are asked to let the organisers know as soon as possible please, by email to


The Old Nick (IPKat’s favourite pub) is hosting another IP-heavy band evening on 4th Feb – see flyer here – in aid of Leukaemia and Lymphoma research.  Acts include Kilburn & Strode’s The Black IPs, Collyer Bristow’s IP Freely and the Incontinents and Trade Mark Attorney and Youtube sensation Flora Cook

Gwilym Roberts tells us there's a slight Bowie theme to the evening. "The last one was fantastic," he saysm "this one’s bigger so come along and party like a patent agent." The IPKat notes that David Bowie had another connection with patents. In The Man Who Fell to Earth he played the lead character: a visiting alien who used the advanced technology of his home planet to patent many inventions on Earth, becoming immensely wealthy in the process, aided by a patent attorney who becomes his business partner. 


The IPKat is not the only one with a Forthcoming Events page. An even more comprehensive list of IP related events is published monthly by the Queen Mary Journal of Intellectual Property, so if you're looking for somewhere to collect CPD points or just want to hear interesting speakers on IP, their February listing is here.


Taylor Wessing have launched an interactive patent litigation map enabling users to find information on patent litigation in 30 different countries, allowing questions to be asked of all countries, an overview of one country or a comparison of 5 countries. Paul England of that firm invites readers to explore the tool here.


Last week, the European Patent Litigators Association, EPLIT, ran a mock trial in Munich based on the famous Improver v Remington litigation. A report provided by Chris Ryan was hosted on sister blog Patlit, which the IPKat thought many of his readers would also be interested in reading, so do head over there to check it out, along with all the other news and information on patent litigation practice.


Nestlé's high end coffee brand Nespresso is reportedly suing an Israeli rival (Espresso Club) for using an actor with a resemblance to its own brand ambassador George Clooney in an advert (watch it here on YouTube). The Evening Standard reports that Nestlé is seeking $50k in damages and to have the ad taken down, but the defendant contends that it was all just a bit of tongue-in-cheek fun.

Thursday, 28 January 2016

"If you go down to the Hague today...

... be sure that you close your eyes."

Dutch newspaper de Volkskrant reports on staff demonstration
(Screenshot shows Google translation of headline)
Close your eyes, that is, if you're a member of the Administrative Council. You see, EPO staff were demonstrating (again) today with 900 staff marching from the French embassy to the German embassy. AC members may have a hard time reconciling this unrest (considering also the 1300 who marched in Munich last week) with their promises to restore the social dialogue and sort out the staff disquiet. From what Merpel can see, the "social dialogue" mainly takes place in disciplinary hearing rooms during the final stages of proceedings against staff representatives instigated by Mr Battistelli or those close to him.

The protests have been noticed by parliamentarians and by the media. The EPO march was joined by a couple of Dutch MPs (Sharon Gesthuizen, John Kerstens), a French MP (Philip Cordery), and a delegation of FNV, the largest Dutch union. Mainstream media reports  have appeared here, here, here and here.

Mr Battistelli has continued to push through and even intensify disciplinary measures against staff and union representatives, dismissing two union officials and downgrading another [amended 21.30]. Disciplinary actions against at least two other staff representatives are being actively pursued, as far as Merpel can tell.

Many of those demonstrating today are also concerned with the hospitalisation of one of the staff representatives, with several commenters and correspondents linking this to stresses arising from a disciplinary procedure which the individual has been prohibited from discussing with colleagues. Merpel can't tell if it is fair to make such a connection, not having any verifiable information one way or another. However, the fact that the EPO makes it a disciplinary offence for a staff member to even discuss any aspect of an investigation of which they are the subject seems to make it difficult to confirm or deny such rumours when they spread widely through the Office (as they have in this case judging from the number of comments that Merpel has disallowed on this blog for various reasons).

A further issue underlying the demonstration concerns a different staff representative who, while certified sick by his/her doctor, has not had that certification recognised by the EPO and is thus deemed to be on an unauthorised leave. Merpel's somewhat sketchy understanding of the sickness rules is that this means the EPO's doctor has examined the individual and disagrees with the individual's own physician.

It would take a brave person to be an EPO staff representative in the current climate. Happily, being a member of the AC is far less risky. In that forum, outright rebellion is expressed in a more gentlemanly fashion, by abstaining from a vote every now and again, and then, to show that there are no hard feelings, publicly applauding the President for his latest production figures.

If the Administrative Council really does want to address the "culture of fear" and the indisputably toxic staff relations within the office, then allowing the management to continually target and pressurise the staff representatives seems counter-productive. As long as the AC limits its actions to public displays of hand-wringing and paternal expressions of concern, nothing will change, and staff relations will continue to dance to Mr Battistelli's rather discordant tune. Merpel suspects that residents of the embassy districts of Munich and the Hague can expect disruptions to their lives to continue for the foreseeable future.

Concerns about research ethics in ip, there are.

There's a disturbance in the force. A number of voices in the IP community have signed an, "Open Letter on Ethical Norms in Intellectual Property Scholarship."  It is a call to set, and uphold, high ethical standards in IP research. Largely concerned with legal scholarship, the letter focuses on private funding, transparency and objectivity in academic research.

(The Clone Wars, by Pities)
There are five Star Wars references
in this post - can you spot them all?
Why is private funding potentially a problem? Research stemming from direct (commissioned) or indirect (donations, grants etc.) funding tends to reach research conclusions which benefit the funders. The is most obvious in the "Big Tobacco" public health scandal. Research contrary to the tobacco industry's interests was ignored, and the industry commissioned academic and economic research to bolster their arguments. This research, directly or indirectly, contributed to a public health scandal which damaged all those involved. Concerns about the industry's funded research persist, and research organisations and journals have banned research funded by the tobacco industry.  Similar concerns have emerged in Coca Cola's funding of obesity research and "Big Sugar," (more here.)

At stake in the IP world is ethical policy debates.  Academic IP researchers are increasingly involved in advocacy. <Merpel notes that some of the Katonomist's blogging could be considered as such.> Research and evidence is "political ammunition" in policy debates and this evidence should be held to a high academic standard. The authors of the letter argue:
"We cannot imagine that any academic believes that his or her judgment is subject to purchase. Nevertheless, the flow of dollars can have an insidious effect on values we hold dear in academia. We have seen evidence in other fields that researchers who receive gifts and support can have an uncanny tendency to find results that would please their benefactors. One must be mindful of the delicate pull of friends with money."
The IP 'Open Letter' recommends ten professional norms for IP researchers (paraphrased in parentheses):
  1. Research disclosure (research funding is disclosed)
  2. General personal disclosure (researcher's other ties are disclosed)
  3. Institutional disclosure (institution's funding is disclosed)
  4. No quid pro quo (conclusions can not be dictated in exchange for funding)
  5. No prior approval (funders do not have the right to approve/disapprove publication)
  6. Data disclosure and replication (data is made available)
  7. Collegiately and open inquiry (play nice and no bullying)
  8. Dispersed institutional funding (institutions should have diverse funding)
  9. Call for action (discussion on norms should continue)
These are standard ethical norms for research in general, and particularly for academic research.  As the authors of the letter note, such norms are less established in the legal community.

Meow Wars, by Kevin Dooley
First a quick lesson on academic research funding.  Public research funding is non-politicised, grant funding which is managed by the government using taxpayer funds.  In the UK, it should be compliant with the long-standing Haldane principle, which states that researchers, not politicians, should decide how research funding is spent. Private funding is essentially everything else (industry, charity, commissioned research, etc.) and includes a lot of grey areas.  Most of the ethical concerns discussed here are associated with private funding.  Public funding is not immune to these concerns, and recent changes in UK research funding are prompting concerns of the politicisation and  subsequent contravention of the Haldane principle.  

Your Kat's Thoughts

The Open Letter suggests not a lack of faith, but a concern about disturbing questions regarding the issues such as independence of copyright research and a lack of transparency in funded research centres.  As evidence-based policy continues as the dominant principle in IP policy, independent evidence is crucial.  Biased evidence becomes biased political ammunition. Similar arguments can be made for the academic research in court cases and authorship of amicus cure briefs.

Many private funders are likely to be luke-warm to the 'no prior approval' principle in which they would not have the right to approve or disapprove research before it is made public.  Funders are held accountable by their stakeholders, and are under pressure to review outputs of research, such as white papers (persuasive documents issued by firms and governments) or supporting commissioned research. Yet prior approval is a slippery slope and clearly reduces research independence. Funders may be tempted to cherry pick (support publication of research conclusions that confirm the funder's particular point of view, and to dismiss conclusions that do not).  This blurs the fine line between consultancy and academic research.

Can you clone this?
Kristina Alexandersson
To be clear, the authors are not interested in taking money out of academia, but that funding be transparent. There should also not be an assumption that privately funded research is fundamentally compromised.  Adherences to ethical norms ensures that funding and research findings are independent of each other.  This would maintain high ethical standards and the unbiasedness of research, and increase the probability of the successful navigation of this ethical field.

Where does this leave us?  The letter was written with, "aspirations of reaching the highest ethical norms possible" for IP research.  There is little to quibble about this goal, but much do be done to put these aspirations into practice. As a community, the norms will help us avoid a Big IP hyperbole, and we can hope for independent research to continue to contribute to healthy debates in IP.

Pharmaceuticals, Fig Leaves and Accidental Overspill: the Merck-y World of Co-existence Agreements

The AmeriKat passed out on all of her
co-existence agreements...
A mammoth decision from Mr Justice Norris plopped on the AmeriKat's desk last week in the long-running awaited trade mark co-existence saga of Merck KGaA v Merck Sharp & Dohme [2016] EWHC 49 (Pat).  With limited time to digest the decision herself, she had to rely on a helping paw in the form of Kat friend Nick Buckland (Irwin Mitchell) who has helpfully summarized the judgment for readers:
"In the realm of trade mark (alas, as in life) even with the best intentions (and the assistance of binding legal agreements) we can't always get along.  And so it was that the case of Merck KGaA v Merck Sharp & Dohme Corp and others found itself in the Chancery Division of the High Court, following earlier preliminary skirmishes as reported here and here.
In short, the lengthy historical background to this dispute is as follows: Merck started life as a pharmaceutical business in Germany in 1668.  Success followed and by the late 19th century the company had expanded into a global business with a US subsidiary (“Merck US”). After World War I, Merck US became a completely separate entity, with the de facto situation being that Merck US traded under the name ‘MERCK’ in the US and Canada, with the original German company (“Merck Global”) trading under the name ‘MERCK’ everywhere else. After several unsuccessful attempts this arrangement was formalised in a Co-Existence Agreement in 1955, updated in 1970 (the “1970 Agreement”). Under the 1970 Agreement, outside of the US and Canada Merck US could only use the name ‘Merck’ if accompanied with due prominence by the rest of its company name ‘Merck Sharp & Dohme Corp’ or a geographical indication (i.e. ‘Merck, NJ, USA’).  The situation for Merck Global was the same inside the US and Canada.

So far, so straightforward.  The problems arose when both entities started trading and advertising over the internet, allowing global access and publicity in a way the 1970 Agreement (quite understandably) didn’t envisage. With Merck US increasingly using solely the name ‘MERCK’ and various slogans such as “MERCK Be Well” across (the US site which had been labelled the ‘global site’ until a couple of weeks before trial), as well as on social media and in presentations given in the UK, Merck Global decided enough was enough. It therefore issued proceedings for breach of the 1970 Agreement and trade mark infringement under its UK registrations for the word ‘MERCK’.

The questions facing Mr Justice Norris were three-fold:#
1.  Could the 1970 Agreement possibly cover usage over the internet? 
2.  If the answer to 1 was yes, had Merck US breached the 1970 Agreement through their use of solely the name ‘MERCK’?
3.  Had the remaining four defendants also been in breach of English trade mark law as joint tortfeasors? Could the 1970 Agreement cover internet usage?
Could the 1970 Agreement cover internet usage?
Just because you look the same, does not mean you cannot
As the 1970 Agreement pre-dated both the Rome Convention and the Rome I Regulation, the question of breach of the 1970 Agreement fell to be decided under German law.  Applying the relevant legal provisions (with the assistance of two German legal experts) the judge found that the 1970 Agreement could be interpreted so as to cover internet usage. This was either through a simple interpretation of the words used (internet use being a "classic means of advertising" which would be covered by the original wording relating to publicity) or by taking the German approach of considering how the parties would have bridged an "unintentional gap" in the drafting and assuming that the agreement would have been extended on its terms to cover use via the internet.
Had Merck US breached the 1970 Agreement?
The judge considered that Merck US’ usage of the name ‘MERCK’ without the remainder of the company name or a suitable geographic indication was prima facie a breach of the wording of the 1970 Agreement. Merck US advanced several counter-arguments.  The first argument pointed to the fact that on the ‘Terms of Use’ page Merck US was defined as "Merck Sharp & Dohme", with the same page stating that the site was ‘intended for residents of the US’.  Second, Merck US claimed it could do nothing about what it termed "unpreventable overspill" of visitors from the UK to what was its US site. Mr Justice Norris gave short shrift to this, stating that the reference to ‘Merck Sharp & Dohme’ did not equate to "due prominence" as required under the 1970 Agreement, and the content of the site was clearly aimed at UK visitors, with the statement on the Terms of Use regarding the US being merely a "fig leaf" which could not possibly cover all users.  
The judge then considered the possibility of honest concurrent use and the German doctrine of "forfeiture" (for English law read equitable estoppel). Applying the German cases of The Honda Grauimport Case GRUR 2012, 928 and The Hard Rock Cafe Case GRUR 2013, 1161, it was held that, although "" and the "" addresses had been used since 1993, any “equilibrium” which had been in place during that time had been extinguished due to the aggressive promotion by Merck US of their site following an increased global profile, as well as due to widespread use of the word ‘MERCK’ across social media. The onus was on Merck US to show that this increased activity had not led to increased confusion; it had not discharged this duty at trial. 
Accordingly Merck Global was entitled to an injunction restraining Merck US from describing itself in any printed or digital material addressed to the UK as "Merck", and Merck US was ordered to use either geo-blocking or pop-ups on any UK-targeted websites or social media to ensure that users know not only when they are leaving the UK site and are made aware of Merck Global’s rights outside of the US and Canada.  
Had the remaining four defendants also been in breach of English trade mark law as joint tortfeasors? 
The judge then returned to more familiar doctrines.  Having established that due to the amount of UK-centric material contained at the Merck US site was evidently directed towards the UK, Mr Justice Norris considered infringement under ss. 10(1), (2) and (3) of the Trade Marks Act (TMA) 1994, having regard to the tests as laid down in Interflora III [2014] EWCA Civ 1403 (paras 67 -69).  
Merpel could feel some "unpreventable overspill" was likely
any second....
The distinction was made between use as a trading name (such as “Merck is active in dealmaking” and “At Merck, corporate responsibility is a cornerstone…”) and use in a trade mark sense. It was found that Merck US’ use through activities such as listing prescription medicines and vaccines and detailing services rendered in medical and pharmaceutical areas equated to uses of a sign in the course of trade, and due to the identity of the marks the case for infringement was clear. This is interestingly where the provisions of the 1970 Agreement went beyond the general law: use of and were contrary to the provisions of the 1970 Agreement, but did not amount to use of the sign in a trade mark sense and so would not have amounted to infringement under the TMA.  
As far as it was necessary to consider s.10(2), the judge accepted Merck US’ argument that there was an inherent risk of confusion that could not be avoided due to the parties’ shared heritage. However this did not entitle Merck US to exploit such a risk to cause more confusion (which is what it had done through the acts complained of resulting in a finding of a strong likelihood of confusion as a result). The same outcome was found under 10(3).  The judge found a deliberate and transparent attempt by Merck US to push the boundaries of the 1970 Agreement and to promote itself in connection with the "MERCK" brand outside the area within which it has the exclusive right to use it and into the territory in which (by agreement) Merck Global has the right.  
Accordingly Merck Global was entitled to an injunction against all defendants (joint tortfeasorship being found due to the inter-relating corporate structure of the defendants) to restrain infringement of Merck Global’s UK marks.  
The judgment reads on logically from the provisions of the 1970 Agreement, and save for some partial revocations achieved by Merck US to slightly less-important parts of Merck Global's trade mark specifications (Merck Legal Services may now have to wait) this is a fairly one-sided judgment.  The decision seems to do the job of putting both parties in the position they would have been in had the 1970 Agreement been adhered to, together with a common-sense infringement decision sitting alongside it.  
If only the parties had have listened to the sage IPKat readership in the first place they could have saved themselves a lot of time and (presumably) a fair bit of catnip…"

Wednesday, 27 January 2016

Storm in a C Cup: Mr Justice Carr refuses injunction and account of profits in Stretchline v H&M spat

Without any underwires poking through, the AmeriKat
takes a quick nap in a very cosy location
Being 6,000 miles away, it is easy for the AmeriKat to miss the goings on in the English court. Indeed, she would have completely missed the recent unreported decision of Mr Justice Carr in the on-going Stretchline v H&M dispute  (see previous posts here) had it not been gratefully brought to her attention by an eagle eyed reader.  While the AmeriKat's head is inundated with UPC matters, the AmeriKat thanks Elettra Bietti (A&O) for summarizing the decision which serves as a warning for all those who draft IP settlement agreements in the event of future infringements.  Elettra reports:
"Stretchline Intellectual Properties, the claimant, is the proprietor of UK Patent GB 2 309 038.  The patent covers a method of manufacturing tubular fabric for use in the production of brassieres to prevent underwires from penetrating the fabric. Last November, Mr Justice Carr had earlier found that the defendant, much beloved by many a trendy kitten, H&M, had breached its settlement agreement with Stretchline (see decision dated 20 November 2015 ([2015] EWHC 3298 (Pat)). In an unreported decision on 21 January 2016 (also summarised here), Mr Justice Carr held that Stretchline was not entitled to an injunction against or to an account of profits from H&M.   But why? First some background.
In 2009, Stretchline suspected that H&M was selling brassieres incorporating fabric that infringed its patent.  In July 2010, it commenced infringement proceedings against H&M who promptly counterclaimed for revocation.  A year later, the parties entered into a global settlement agreement resolving, fully and finally, the validity and infringement actions.  Under the terms of that agreement, the parties agreed to mutually assist each another in investigating and reporting infringing products.  The peace didn't last long, as two years later Stretchline issued new proceedings alleging that H&M had infringed its patent in breach of the 2011 settlement agreement.  The dispute found its way to the Court of Appeal last May, where Lord Justice Kitchin held that the language of the settlement agreement precluded H&M from raising invalidity arguments in defence of the new claim.  The settlement agreement also prohibited Stretchline from pursuing an infringement claim in addition to their breach of contract claim.  Issues of validity and infringement had, the Court of Appeal held, been  definitively determined in the agreement (for more information see this post by PatLit).   As noted above, in November 2015, Mr Justice Carr held that H&M had breached the settlement agreement. 
In his decision last week, Carr J held that as long as the patent was in force and the settlement agreement was in place, any dealings by H&M that fell within the scope of the patent amounted to actionable breaches of contract.  This entitled Stretchline to contractual remedies. He further held that injunctions are available as a remedy for breaches of contract where the contract prohibits acts akin to infringement of an intellectual property right.  This was the case with respect to the 2011 settlement agreement which prohibits H&M from infringing Stretchline's patent and imposes policing duties on it.  Following Coflexip SA v Stolt Comex Seaway MS Ltd [2001] 1 All ER 952, Carr J held that the Court has discretion to impose an injunction where it is necessary and appropriate in the circumstances. In particular, a patentee must show an actual or implied threat of future infringement.  
In the circumstances there could be no presumption that infringement would recur. H&M’s infringements had been historic and had reduced over time.  Stretchline, who was likely continuing to test garments on an ongoing basis, had failed to present any new infringing products to the court.  By implication, the Court was of the view that there were no infringing garments. In addition, H&M had shown that their suppliers were instructed not to use any infringing products and none had been found in stores.  Mr Justice Carr stated that it would be disproportionate to impose a blanket injunction in circumstances where the policing of infringement was difficult, it was a mutual obligation of both parties under the settlement agreement to police and H&M could be held in contempt of court in respect of accidental breaches.  To respect the settlement terms, the requested relief should have been far more sophisticated than a simple undertaking not to infringe.  Accordingly, the court did not consider it necessary or appropriate to order an injunction.   Although an injunction was not granted, the Court made clear that Stretchline is still at liberty to return to court to seek injunctive relief in the event of future infringements.   
Mr Justice Carr also held that, in exceptional circumstances, an account of profits and Island Records Ltd v Tring International [1995] 3 All ER 444 disclosure would be available remedies for breaches of a settlement agreement prohibiting infringement of an IP right.  However, he declined to order them in this case.
The decision could have an important impact on settlement agreements in IP cases.  The English court appears more reluctant to grant standard IP remedies to patentees where the cause of action is actually a breach of contract.  Instead, the available remedies to a patentee may only be for breach of contract, collecting nominal as opposed to significant damages.  Further, patentees should be aware of the risks of including terms in settlement agreements which require broad mutual policing obligations.  The fact that Stretchline shared the responsibility for preventing infringement as a result of such a term was clearly a factor weighing against the granting of an injunction.   
In the meantime, while patentees check the terms of their settlement agreements, we are left wondering about the form that the sophisticated injunction alluded to by Mr Justice Carr would take.  Without any additional guidance from the court on this occasion, how would readers craft an injunction that would prevent the manufacturing of further infringing bras by H&M’s suppliers without being disproportionate?"

UK's Creative Industries - Economics

Yesterday the UK Government's Department for Culture, Media & Sport (DCMS) published the 2015 update of the UK's creative industries' contribution to the economy. The headline is, drumroll please, "the sector is growing at almost twice the rate of the wider UK economy - generating £9.6 million per hour." [The creative industries include: advertising and marketing; architecture; crafts; design (product, graphic and fashion); film, TV, video, radio and photography; IT, software and computer services; publishing; museums, galleries and libraries; and music, performing and visual arts.]

Cat Piano 1883, by La Nature 
Why does this matter? Money talks. The creative industries and IP are heavily linked. It was not that long ago that the 'creative industries' were referred to as the 'copyright industries.'  Policy discussions on copyright or design always consider the creative industries. The more the an industry contributes to the economy, the more power that industry has in policy discussions, and the more sway lobbyists have with politicians.

IPKat readers know to look a gift statistic in the mouth. The DCMS press release places a lot of emphasis on upcoming blockbusters in film, music, tv, publishing and video games <Merpel would like to borrow DCMS's blockbuster-predicting crystal ball>.  However, looking under the lid shows that 43.5% of value of the creative industries comes from the IT, software and computer services sector. There is no doubt that software is a creative sector, but the cultural and media-focus of the press releases skims over the dominance of IT. Something to keep in mind when discussing copyright.

A bit of history and some numbers

In 2001, after some wrangling, the UK government agreed a definition of the creative industries.  In 2014, they agreed a methodology to specifically developed to estimate the economic contribution of the creative industries. This methodology starts by identifying occupations considered creative and calculating the 'creative intensity' for all industries.  All industries with a minimum of 6,000 jobs and a 'creative intensity' of more than 30% are then classified as creative industries. The corresponding data from the government's Annual Business Survey (a business census) is then used to estimate the size of the sector.
Wain Cat

This approach to measuring an industry is unusual. Industries are typically measured relying on the Standard Industrial Classifications (SIC) system. However, SIC fails to capture the breadth of the creative industries, as creative occupations are scattered across different fields. For example, the fashion industry falls under design services, but argues its economic contribution should include fashion stores, which are classified under retail services. Hence the development of a creative-industries-specific methodology.

The music sector is arguably so poorly served by both of these methodologies, that the 2016 update notes, "the industry and occupation codes do not allow the contribution of music to be satisfactorily identified as a separate category." In yesterday's update, music is combined with performing and visual arts, which together contribute £5.4M. Unusually, the government's DCMS and the Office for National Statistics (ONS), the UK governmental statistics body, are working with industry group UK Music to separately measure the music industry. The result, Measuring Music, suggests the industry contributed £4.1 billion to the UK economy in 2014.

It is hard to measure the creative industries, but the numbers are important. According to Minister for Culture Ed Vaizey, the UK creative industries are, "worth a staggering £84 billion a year."  Staggering indeed.

Tuesday, 26 January 2016

INGRES conference on developments in European IP law - copyright, trade marks, designs

Victor Hugo, founder of ALAI
Continuing the marathon of presentations at the INGRES conference on Monday after the lunch break was IPKat's own Eleonora Rosati, who presented on developments in copyright law. Referring to the CJEU's State of Bavaria v. Verlag Esterbauer decision, Eleonora very handily summarized that "basically everything" can be a database in the sense of the Database Directive. She then tried to clear up the mess that is European linking law, not without criticizing ALAI's Hyperlinking Report and Position on the issue, which would require permission for this link, but not for this link, essentially breaking the internet. After the exposition of the CJEU's "Wilde Weldoener" parody decision, a lively discussion ensued whether a parody exception for trade mark rights was needed, and if the legislator thought so, as Recital 27 ("Use of a trade mark by third parties for the purpose of artistic expression should be considered as being fair as long as it is at the same time in accordance with honest practices in industrial and commercial matters. Furthermore, this Directive should be applied in a way that ensures full respect for fundamental rights and freedoms, and in particular the freedom of expression") of the new Trade Mark Directive 2015/2436 indicates, then why did such an exception not make it into the operative part of the new Directive?

Christoph Bartos, member of the Boards of Appeals at OHIM, provided an overview of the revision of the Community Trade Mark (soon EU Trade Mark), which he considers a minor update that should not cause great disruptions. One point of note is that disclaimers will no longer be allowed, and since the legal basis for disclaimers evaporates, all existing disclaimers become baseless, too. Nobody seemed to understand why the ground for exclusion of art. 4(1)(e) Directive, the "substantial value" given by the shape of the good, was not deleted as suggested by the report of the Max Planck Institute for Innovation and Competition, but now even includes "other [than shape] characteristics" of the mark that give it substantial value. As Sven Klos remarked, having litigated the same provision of Benelux trade mark law (where the "substantial value" exclusion originates from) for 20 years, he still does not know what it is supposed to mean (and the CJEU's Hauck decision hasn't made this easier, has it). If you have any questions regarding the new regulations coming into force on 23 March, you may send those to, and they will be answered in a Webinar on 2 February 2016.
Historic Hispano Suiza emblem

Of Christoph's picks of the highlights of the 2015 trade mark decisions, the Hispano Suiza decision of OHIM's 2nd Board of Appeal of 9 July 2015 gave rise to some discussion. Hispano Suiza was a famous brand of cars that has fallen out of use (for vehicles) many years ago, but some registrations in Spain and France persisted.  A person unaffiliated with the owners of the Spanish and French registrations had filed for HISPANO SUIZA for vehicles and clothing. Previously, it had filed cancellation actions for non use of the Spanish HISPANO SUIZA registrations, but not for the French registrations. The 2nd Board of Appeal held that the CTM had to be cancelled for bad faith (Article 52(1)(b) CTMR) because the proprietor had knowledge of the older mark and had only filed its mark after trying to "reach a deal" with the proprietor of the older (partially non used) figurative marks and checking whether those marks were still in use. This struck many as going too far in the protection of the reputation of a historic mark - it essentially abolishes the use requirement for marks that have had a high reputation in the past.

Safety valve - not purely functional, but lacking novelty
Peter Lukacsi then covered design law, pointing out that the "multiplicity of form" test was making a comeback in design law (after being abolished - so Peter - in Lindner Recyclingtech v Franssons Verstäder, Case R 690/2007-3). Peter pointed to R 998/2013-3 Austrotherm v Termo Organika and R 2162/2014-3 Velekey Szerelvénygyártó v Rotovill for his proposition that the alternative form test was alive and well (again) in the practice of the OHIM's (soon EUIPO) Boards of Appeal. He concluded by arguing that the same standard should apply in trade mark law - a sentiment some, but not all of the participants shared and all including Peter were well aware of was rather unrealistic given the CJEU's case law.
English cat not happy

Marianne Grabrucker, former judge at the German Bundespatentgericht, reported on the (unsatisfactory) state of the spare parts exception in European design law and the arduous process of finding a common position on this economically highly important aspect of design law. Referring to C-500/14 - Ford v. Wheeltrim, a reference on the interpretation of the Italian spare parts exception (bizarrely still not available in English, but for example in Estonian), she hinted that rather sooner than later there might be a referral from Italy on the question whether rims were "must match" parts at all - a question answered in the negative by most Member States that know a spare parts exception, but one for which divergent case law exists in Italy.

All in all a very informative day; if anything, it was too informative - this Kat has a hard time remembering all the information received.

INGRES conference on developments in European IP law 2015 - patents

Yesterday, the Institute for Industrial Property (INGRES), a Swiss association of IP enthusiasts, held its annual conference on developments in European IP law at the Sorrell hotel in Zurich. The esteemed speakers included Klaus Grabinski of the German Federal Court of Justice, Ursula Kinkeldey, former Permanent Member of the Enlarged Board of Appeal at the EPO, Stefan Luginbühl, International Legal Affairs with the EPO and expert on the Unitary Patent Package, IPKat Eleonora Rosati and many others.

The morning was dedicated to all things patent law. Klaus Grabinski presented highlights from the BGH's patent jurisprudence in 2015. I always find it interesting which cases an insider selects for such talks, which in this case were the Apple "slide to unlock" patent decision, concerning the thin line between technical nature and presentation of information as such, X ZR 101/13 ("polymer foam II") of 6 September 2015 concerning the interpretation of claims and added subject matter, X ZR 103/13 ("cross linkage") of 2 June 2015 concerning the interpretation of claims in view of the examples, and X ZR 81/13 ("cooking pot") of 13 January 2015 concerning equivalent infringement by means that do not achieve entirely the same effect as the means according to the claim. Klaus Grabinski also mentioned discussions in Germany on whether double patenting should be permissible in the future (see Article 139(3) EPC), as it currently is, e.g., in Denmark and Sweden (see p. 290 sqq. of National Law Relating to the EPC, 16th ed. 2013, for an overview of the legal regimes regarding double patenting in EPC contracting states). This would provide patent proprietors with a fallback position in case their European Patent or Unitary Patent was revoked unjustly by the Unified Patent Court. The downsides of double patenting are the risk of contradictory decisions and the increased burden on competitors to clear the path - good reasons that have led most contracting states not to allow double patenting.

Ursula Kinkeldey, as a former permanent member of the Enlarged Board of Appeal at the EPO no longer subject to the EPO's president's disciplinary powers, addressed the referral G1/15 concerning partial priorities, but not without first expressing her concerns over the "tumultous" (quote/unquote) staff relations at the EPO. Sticking to facts, let's just recap that as of 1 January 2016, 7 (25%) Technical Boards were without president, 14 (13%) of technically qualified member positions were vacant and 7 (21%) of legally qualified member positions were vacant. One board in the field of electrical engineering had only two technically qualified members, and the situation is expected to get worse in 2016. The firing of two SUEPO members last week led to a wave of solidarity namely for Ion Brumme, who is hard hit by the loss of income for his family. The plan to move the Boards of Appeal to Vienna, on the other hand, seems to be shelved.

Stefan Luginbühl of the EPO brought to everyone's attention that a new wording of Rule 82 EPC will enter into force on 1 May 2016, allowing handwritten auxiliary requests during oral hearings. Under the new (old) rule, the authentic text of the patent as amended will be the text filed during oral proceedings even if the proprietor is unable to provide formally correct documents at that moment. Documents fulfilling the formal requirements under Rule 49(8) EPC will only need to be submitted within a period of three months, as the other formal requirements set forth in Rule 82(2) EPC. Luginbühl's overview of the UPC Package's implementation provided little new information, except that last week, Finland ratified the Agreement on a Unified Patent Court as 9th Member State. A point of contention are the costs of the proceedings and the (amount of) reimbursement of legal fees by the losing party, which was considered too high by many small and medium enterprises according to the survey conduct last July.

Konstantin Schallmoser of Preu Bohlig & Partner then reminded everybody that not acting when the UPC Package comes into force is also a decision. "Acting, not reacting" was the theme of his talk. Reasons for opting out of the UPC system were the risk of an invalidity decision concerning all national parts of a European Patent, familiarity of national court systems and lower costs, at least in Germany, for the enforcement of a national part of an EP. On the downside, there was a risk that an opt-in was later not possible (because once a national proceeding has been started, there is no way back into the UPC system), higher cost in case of multi-jurisdictional proceedings, costs of the opt-out (this is still an open question - there may be no fee after all) and the legal uncertainty regarding the validity of the opt-out in case of multiple owners. Konstantin thinks that in case of "strong" patents, i.e., patents likely to survive a validity challenge, the advantages of the UPC system outweight the drawbacks, while "weak" patents should be opted out. Readers are invited to leave their comments.
Cat model, not utility model

Dirk Szynka provided an overview of the German utility model, highlighting several benefits not widely known - or rather, recently forgotten by many practitioners. Namely, although since the BGH decision "Demonstrationsschrank" the inventive step required for a valid utility model is the same test as the inventive step under patent law, the definition of the prior art is not. The German utility model knows a six month grace period in favour of the inventor and its successors, and prior public uses are only considered if they occurred in Germany. The latter point, together with the limited searchability of German utility models (they do not necessarily show up as members of a patent family), may provide a nasty surprise for foreign competitors. On the other hand, the courts in Düsseldorf and Mannheim are reluctant to issue ex parte injunctions based on (non examined) utility models - but the Munich courts seem to be more open for this.

In a second post, I will cover the "soft IP", starting with Eleonora's contribution on developments in EU copyright.

Postcard from the Valley: Patent trolls alive and kicking in 2016?

The AmeriKat was up early watching another 
airplane take off over Levi's Stadium
 - otherwise known as 
this year's SuperBowl stadium
At 6:30AM the planes started taking off from San Jose's airport.  Turns out the hotel is in a flight path.  Win.  Normally, this would have woken the AmeriKat but she was already wide awake.  Was it the thrill of turning a year older?  Unlikely.  Was it the jet lag?  Maybe.  Was it the excitement of being in a valley so inundated with innovation you can't swing a Kat without hitting a patent?  Most definitely.  January is almost always an incredibly bleak month in northern Europe (weather wise).  Cold, dark, rainy and miserable.  So the AmeriKat has decided to perk up her whiskers by taking a dose of California sun and American innovative spirit by relocating to Silicon Valley where she reports on the latest goings-on in the world of US patent litigation.

Much ado about the patent troll problem:  Earlier this month, an analysis published by RPX Corp reported that non-practicing entities (NPEs) filed over 3,600 patent cases in the US in 2015. This was an increase of over 700 cases from the previous year.   With NPEs being the most active in the high tech sector, it is no surprise that their 2015 top target was Samsung with 71 cases brought against it by NPEs.  AT&T (50), HP (43), Apple (40) and Dell (40) were not too far behind.

Some commentators have expressed surprise at this increase, especially in light of recent developments that should have started to stem the tide of troll-originated patent litigation in the US.  Such developments have included fee-shifting, increased pleading standard requirements and the Supreme Court's 2014 decision in Alice Corp v CLS Bank International which has seen lower courts cull several computer implemented inventions.  Indeed the AmeriKat, a sometimes subscriber to Mark Twain's take on statistics, hunted for further support that this was indeed the trend in 2015.  She found it by way of statistics published by San Jose based company UnifiedPatents. UnifiedPatents, a member-based organization, uses its membership fees to implement strategies aimed at reducing the amount of NPE litigation against its members, including by filing Inter Partes Reviews against NPE-owned patents (and with the success rate in IPRs, this is a tactic that should bear fruit).  UnifiedPatent's results found that of all NPE litigation in 2015, almost all (92%) were brought by patent assertion entities (PAEs - presumingly "trolls"), as opposed to small companies or individuals ["So a PAE is always a NPE, but a NPE is not always a PAE?" muses Merpel]

These numbers may not be wholly unexpected as reports over the summer suggested that patent trolls were already breaking records (see links here).  Indeed, the topic had even earlier reached the heights of HBO where John Oliver dedicated an entire segment to the issue in his show Last Week Tonight (click here to watch the excellent episode).  In that report, Oliver cited this 2011 article published in The Georgetown Law Journal that found that settlements accounted for 90.5% of outcomes where patents were repeatedly litigated, as is the case in NPE litigation, as opposed to once litigated.  Why such a high settlement rate?  Settlements avoid the high cost and risk that is associated with defending a case to trial.  Companies thus have to conduct a cost-benefit analysis when deciding how to respond to troll litigation - fight or settle.

This morning's Financial Timesinterview with Alan Trefler founder and CEO of Cambridge, Massachusetts based software company Pegasystems (with offices just down the road in Cupertino) illustrated this assessment.  In 2013, Pegasystems was faced with patent infringement claims brought by a troll in respect to their key product, SmartBPM.  Although it would have cost less to settle, Trefler chose to fight.  And, in the end, he did win.  Despite the win, Trefler still called the process "incredibly slow and incredibly expensive" and "torturous".  However, he stated:
“Some people at Pegasystems thought it would be more cost-effective to settle.  And you know what? They were right, it would have been. But I strongly believe that, if a patent claim is without merit, then it’s your moral obligation to step up and defend yourself, not just for the good of your company, but for the good of the patent system as a whole.”
Such tactics seem to work, as Newegg has found.  After adopting their 2007 strategy to never ever settle with trolls, they have pretty much been left alone (see the latest run-in here).  In an interview with Ars Technica in 2013 following their Court of Appeals for the Federal Circuit (CAFC) win in the Soverain "online shopping cart" case, Newegg's Chief Legal Officer Lee Cheng stated:
"We basically took a look at this situation and said, 'This is bull***. '  We saw that if we paid off this patent holder, we'd have to pay off every patent holder this same amount. This is the first case we took all the way to trial. And now, nobody has to pay Soverain jack squat for these patents."
The experiences of Pegasystems and Newegg seem to suggest that it pays not to settle with a patent troll (despite other studies, including the results of this survey published in the Stanford Technology Law Review, suggesting perhaps the opposite).  But for companies who may still not feel brave enough to endure a white-knuckle ride to the CAFC, last Friday's decision in Lumen View Technology LLC v, Inc (see decision here) may help.  In this case, the CAFC upheld the award of attorney's fees against a patent troll under the new fee-shifting rules.  This decision follows the US Supreme Court's 2014 decision in Octane Fitness where the Court helpfully reminded district judges that they enjoyed broad discretion to award attorneys fees in particular circumstances.  The CAFC in Lumen View upheld District Judge Cote's decision to award fees holding that
"[t]he allegations of infringement were ill-supported, particularly in light of the parties’ communications and the proposed claim constructions, and thus the lawsuit appears to have been baseless."  
However, the CAFC vacated the amount awarded by the lower court.  The judge had awarded double the amount of attorneys fees in order to act as a deterrent to ongoing predatory strategies for baseless litigation.  However, the CAFC concluded that:
"...deterrence is not generally a factor to be considered in determining a reasonable attorney fee under § 285. Although deterrence may be a consideration when determining whether to award attorney fees, it is not an appropriate consideration in determining the amount of a reasonable attorney fee, which is principally based on the lodestar method."
But judicial tools for deterrence can only go so far (as the courts often remind us). If a problem really needs to be addressed, Congress needs to do something about it.  And indeed, at one time there was presidential backing to enact further patent reform legislation to tackle the claimed troll problem.  In his 2014 State of the Union Address, President Obama stated:
"And let's pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation."
However, despite Congressional debate and the promise of reform, nothing happened.   Tackling this issue at the Consumer Technology Association (CES) conference held in Las Vegas earlier this month, a panel was asked what was the one thing that they considered most needed to be fixed in the patent system.  The panel, which included Lee Cheng (Newegg), Congressman Darrell Issa (Chair of the IP Subcommittee within the House Judiciary Committee) and Laurie Self (Qualcomm), entered into a heated debate about how to target abusive patent litigation conduct, how to define the term"NPE" and who was to blame for stalling patent reform legislation.  It doesn't take long to identify quite a clear difference of opinion between at least three panelists (who have been faced with troll litigation) and Qualcomm on the issue (see article by Laurie Self on patent reform here and from Qualcomm's General Counsel in the New York Times here ).  The AmeriKat suggests watching the proceedings from minute 45 where you can start to see some fireworks.  The debate helps to illustrate the issues on both sides of the issue that have presented roadblocks to Congress in progressing patent reform legislation aimed at tackling abusive patent litigation conduct.  A summary from the moderator of the session, Mike Masnick, is found here.

So will 2016 be the year that Congress finally tackle the issue?  House Judiciary Chairman Bob Goodlatte's optimism seemed circumspect, as reported by The Hill.  Although leadership is open to bringing patent reform legislation to the floor again, he said, the time and manner in which it happens is crucial.  The AmeriKat can't help but wonder if that is code for "unlikely, but I am not about to destroy the hope of a bipartisan bill in an election year."  In the meantime, one presidential candidate seems to be distracted with something arguably bigger than the patent troll problem - taxes.  In response to a question at a campaign stop in Iowa earlier this month, Hillary Clinton suggested that the US use the patents of large corporations as leverage to get them to pay higher taxes.  Although no details were provided as to how this leverage would be gained, the AmeriKat would still struggle to take this suggestion completely seriously - it is campaign season after all, she was in Iowa (see why Iowa is important here) and Clinton is racking up maximum individual donations (a less than eye watering $2700) from major players in Silicon Valley.  Not a recipe for suspending an innovative company's patents.  

Although Clinton's and the other presidential candidates' attentions (save, perhaps, for Fiorina's) are not yet focused on patent reform, the AmeriKat suspects that in light of the recent NPE statistics, this issue may yet enter the presidential debate. In the meantime, the Californian afternoon sun is demanding the AmeriKat's nap attention...

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