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).

Sunday, 30 June 2013

Kat News and blog round-up

Tonight, as the clock strikes midnight, it is with not a little sadness that we say farewell to our three guest Kats for the first half of 2013: Stefano Barazza (who will be joining the team of authors of the PatLit weblog), Jeff John Roberts and Matthias Lamping. Good luck and all the best for the future! It has been fun to have you on board [Explanation for new readers: in addition to its regular blogging team, the IPKat and Merpel appoint three guest Kats to join the blog team for a non-renewable period of six months.  The IPKat is always interested in hearing from prospective guest Kats but he warns -- it can be tough!]. Stefano has asked me to convey a message to this blog's readers, thanking them for their suggestions, ideas and comments, from which he learned a great deal.


Tomorrow is 1 July, the first day of the second half of the year and the day we welcome our three new guest Kats for the period 1 July to 31 December. They are, in no particular order:
Two of the three -- Laetitia and Miri -- have quite a bit of blogging experience already; you may have encountered them on various IP blogs in the past. We hope that their combination of enthusiasm and experience will enrich the content of this weblog in coming months.


Meanwhile, Birgit returns from her six-month Kat Sabbatical to resume her regular blogging functions. Welcome back, Birgit!

Taking Birgit's place in the Sabbatical seat is David Brophy, who will be recharging his blogging batteries ready to return next January.


And now for something completely different: on your right and left you will see slightly refreshed versions of the logos of the IPKat and his crafty female friend Merpel. While we've always been very fond of the old ones, which have been around for more Kat-years than we can remember, the witty allusion to possessing the powers of a popular comic-strip super-hero has grown a bit aged and it's high time we gave the IPKat -- and Merpel -- a more independent identity. We hope that, once you've got used to their new kit, you'll take it to your hearts.


The Kat's blog friends. Every few months this weblog lists, in no particular order, a number of IP flavoured weblogs with which members of the IPKat's blogging team are associated. If you've not yet come across them -- and many of our more recent readers probably have not -- we hope that you will find some merit in them:
The 1709 Blog, which caters for the copyright enthusiast and seeks to cover all aspects of copyright law and practice in all its rich and varied glory ( As of today, this blog has 1,879 email subscribers and a searchable database of 1,460 items. It has a large and international team of contributors -- including Glastonbury Festival's Ben Challis, IPKat blogger Eleonora, Iona Silverman (Baker & McKenzie) and our man in Paris Asim Singh -- who are always pleased to learn and report on interesting and copyright developments from around the world.

The SPC Blog is a handy information source for anyone who is involved in the tiny but controversial and highly lucrative world of supplementary protection certificates (SPCs) for pharmaceutical and plant protection patents, as well as other forms of patent term extension ( As of today, this blog has 1,732 email subscribers, many of whom have enriched the content of this weblog with their comments and through the provision of information concerning SPCs. This blog contains 476 items, including English translations of some European national decisions that are not available elsewhere.

PatLit tackles patent dispute resolution topics -- principally litigation -- not just from the UK but from wherever interesting news and comments emerge. As of today this blog, whose contributors include Michael Thesen, Stefano Barazza, David Berry and Antonio Selas, has 1,243 email subscribers and a searchable database of 668 items.

IP Finance, which was launched in January 2008 in response to the UNCITRAL initiative on security interests in intangibles, touches that delicate interface between intellectual property and the world of finance, addressing securitisation, valuation, royalty rates, assessment of damages and the evolution of new business plans ( As of today, this blog has 1,351 email subscribers and a searchable database of 1,021 items. Kats Neil and Jeremy write for this blog, which is also garnished with content from Mike Mireles and guest posts from (F)RAND expert Keith Mallinson (WiseHarbor).

Class 46, founded by friends of European trade mark organisation MARQUES and driven by a big team of international contributors, delivers trade mark and brand-related news and developments from across Europe ( As of today, this blog has exactly 3,400 email subscribers and a searchable database of 3,276 items -- mainly relating to European case law and office practice but with coverage of plenty of other themes too. Kats Jeremy and Birgit both contribute to this blog.
Class 99, founded by patent and trade mark attorney and blogmeister David Musker, is dedicated to design law and practice in the UK, in Europe and beyond ( As of today, this blog -- which will soon become part of the MARQUES social media family along with Class 46 --  has 802 email subscribers and a searchable database of 476 items.

jiplp is the blog of the leading Oxford University Press monthly publication, The Journal of Intellectual Property Law and Practice (JIPLP), which IPKat team member Jeremy (, with assistance from Eleonora. As of today, this blog has 806 email subscribers and a searchable database of 387 items. This blog's content includes Current Intelligence notes, book reviews, requests for articles on specific topics and occasional guidance as to how to write (or not to write) good IP articles.

Afro-IP (, for which the blogmeister is Darren Olivier, deals with the IP scene in Africa. As of today, this blog has 756 email subscribers and a searchable database of 1,406 items. This blog, which offers the largest single searchable online source of recent African IP news, carries regular features by Kingsley Egbuonu on the current state of online information provision by national IP offices in Africa and how things have improved (or not) since his previous visit.
IP Tango (, which is a bilingual blog with contributions both in Spanish and English, covers the increasingly important developments for IP in Latin America. As of today, this blog has 479 email subscribers and a searchable database of 1,238 items. Like Afro-IP, IP Tango is a major source of intellectual property information and comment in its increasingly important area of focus (just look at the global sporting events that are heading Brazil's way in the next few years).
Art & Artifice ( As of today, this international weblog, which includes Simone BlakeneyRosie BurbidgeRachel BukerAngela Saltarelli and Elizabeth Emerson, has 436 email subscribers and a searchable database of 311 items. Its scope is broad enough to cover not merely intellectual property law but other areas of legal concern for artists and the art-driven industries.
Bringing up the tail is SOLO IP, which reflects some of the interests, and the anguish, of those who practise IP by themselves or in small groups, or who work in environments in which they are the only IP people ( As of today, this blog -- which is driven by blogmeister Barbara Cookson (Filemot Technology Law Ltd), has 178 email subscribers and a searchable database of 273 items. This blog warmly invites expressions of interest from would-be bloggers (on which see 'Would you like to be an IP Blogger' below)

Would you like to be an IP blogger? Most of the weblogs listed above are still hoping to recruit some fresh talent into their blogging teams, as well as to host more good guest items from occasional writers. If you (i) have something valuable to say about IP, (ii) have some experience of IP in one form or another and (iii) think that you may be able to turn your hand at blogging (or already have some experience), do email Jeremy here, attaching or linking to your CV, and explain why you think you might be a good blogger.


Don't forget Twitter!  IPKat team member Jeremy drives the Kat's Twitter account @Ipkat.  Class 46 tweets as @marques_ip and the jiplp can be found tweeting merrily on @JIPLP.

Some recent IP titles

Intellectual Property In Common Law And Civil Law, edited by Toshiko Takenaka (University of Washington School of Law, US), is yet another in the seemingly unending sequence of attractive IP titles coming from Anglo-American publishing house Edward Elgar.  The theme of contrasts between the common law and the civil law traditions -- contrasts which this Kat considers to have played an important part in the development of both national and EU IP law in the previous century but to be playing themselves out now -- has already been picked up and elaborated in an earlier tome published by Hart, that being Intellectual Property Overlaps: A European Perspective by Estelle Derclaye and Matthias Leistner (noted here by the IPKat). This collection of essays however treats the civil/common law contrast rather differently by meeting it full-on and asking whether it is destined to survive.  As the publisher records in the book's web-blurb:
"Despite increasing worldwide harmonization of intellectual property, driven by US patent reform [that's interesting, says Merpel, who had thought that US patent reform was driven by increasing worldwide harmonisation, rather than the other way round] and numerous EU Directives, the common law and civil law traditions still exert powerful and divergent influences on certain features of national IP systems.

Drawing together the views and experiences of scholars and lawyers from the United States, Europe and Asia, this book examines how different characteristics embedded in national IP systems stem from differences in the fundamental legal principles of the two traditions. It questions whether these elements are destined to remain diverged, and tries to identify common ground that might facilitate a form of harmonization.

Containing the most current and up-to-date IP issues from a global perspective, this book will be a valuable resource for IP and comparative law academics, law students, policy makers, as well as lawyers and in-house counsels".
The impressive team of scholars contributing to this book has a bit of the "all the usual suspects" feel about it, since many are tried-and-tested contributors to the literature of IP in recent years, and all but one of them are academics. The exception, the ever-original Mario Franzosi, has provided a curious little appendix on "The Patent Laws of Old" which looks like a chapter from another book that has somehow sneaked into this one. Never mind this, each of the chapters stands alone as a worthwhile read in itself.

Bibliographic data. x + 464 pp. Hardback ISBN 978 0 85793 436 9; ebook ISBN 978 0 85793 437 6. Hardback price £100; online price from the publisher's website £90. Rupture factor: small. Web page here.


Fundamentals of United States Intellectual Property Law. Copyright, Patent, Trademark (4th edition) by Katfriend Sheldon W. Halpern together with Sean B. Seymore and Kenneth L. Port, is remarkable for its authors' skills in rendering down some of the world's longest, fullest and most complicated principles of IP into a single manageable volume while still taking a little time and space to frame US IP law within wider historical and legal contexts. It is also quite handsomely produced and is therefore quite easy on the reader's eye -- although many readers will wish that the US law, so often idiosyncratic to the non-US reader, was as easy on the brain. As the publishers' web blurb indicates:
"This completely revised and up to date Fourth Edition of this well received work offers in one volume a comprehensive review of United States copyright, patent, and trademark laws. The material has been completely updated and includes detailed discussion of the 2011 America Invents Act, as well as other pertinent developments in U.S. law It provides thorough and sophisticated treatment of this complex material in a form both less cumbersome than a treatise and considerably deeper and more sophisticated than a study outline or "nutshell." [This is indeed so] With its detailed citations, and readily accessible and complete subject coverage, this book will be a useful quick reference or deskbook for intellectual property practitioners, students, law professors, and librarians, as well as for anyone interested in understanding American intellectual property law".
This book is really quite useful for any non-American who needs to gain a solid general overview of the guts of US IP law. Try it and see!

Bibliographic data. xxiv + 351 pp. Hardback, ISBN 9041145672 and 13: 9789041145673. Price $175. Rupture factor: mild. Book's web page here.


Intellectual Property Law and Policy, Volume 12, edited by another Katfriend, the formidable Hugh C Hansen, and published by Hart Publishing, contains a full collection of papers and discussions from the annual Fordham IP Conference when it migrated from New York's West Side to Cambridge, England, back in April 2009. It's disappointing that Fordham addicts have had to wait so long for this book, since a good deal of water has passed under Cambridge's many beautiful bridges since then -- in intellectual property terms, at any rate.

Apart from the obvious question as to why it has taken so long to get this excellent content into the marketplace, there's another unexplained mystery.  According to the book's web blurb:
"This is the 17th Annual volume in the series collecting the presentations and discussion from the Annual Fordham IP Conference. The contributions, by leading world experts, analyse the most pressing issues in copyright, trademark and patent law as seen from the perspectives of the USA, the EU, Asia and WIPO. This volume, in common with its predecessors, makes a valuable and lasting contribution to the discourse in IP law, as well as trade and competition law. The contents, while always informative, are also critical and questioning of new developments and policy concerns".
If this is the 17th annual volume, how come it's only volume 12? Readers who enjoy the cut-and-thrust of Fordham debate so much that, having consumed this volume, they want to buy the entire back catalogue, will definitely be perplexed by this strange numerology. It would in any case be useful if one page of this volume was dedicated to listing the whereabouts of the earlier volumes so that they could more easily be tracked down.

For those who have never attended a Fordham IP conference and wonder why its regulars rave about it so much, this is a must-read book. You will get a sense of the urgency, the clash of restless and talented intellects, the fusion of academic, practical and judicial strands of thought, which characterise this remarkable event, a veritable Glastonbury among IP festivals.

Bibliographic data: xvi + 738 pp. Hardback ISBN 9781849460576 (price £125). Adobe PDF ebook ISBN 9781782251170 (price £112.50); ePub 9781782251187 (price £112.50). Rupture factor: medium. Book's web page here.

Saturday, 29 June 2013

Evaluating the infringement of IP rights: should we adopt hybrid audiences?

The world of IP allows you to meet several funny individuals, including average consumers, experts, persons of ordinary skill in the art, reasonable observers, informed users, and many others. Each of them has a peculiar perspective, knowledge, and expertise, which it generously lends to judges and lawyers. Not every individual, however, crosses the path of all IP rights, as the latter focus on specific audiences, tailored to their characteristics (e.g. what would happen if the likelihood of confusion between trade marks was determined from the perspective of an industry expert, rather than through the eyes of an average consumer? Or if patent claims were not interpreted by a person of ordinary skill in the art, but by an informed user?). In a recently published article, 'The Audience in Intellectual Property Infringement', Jeanne Fromer and Mark Lemley suggested that these different audiences are a primary factor in determining the diversity of legal rules applicable to the infringement of IP rights. According to the abstract,

Patent, trademark, copyright, and design patent each focus on a different person as the fulcrum for evaluating IP infringement. The fact that patent law focuses on an expert audience while trademark looks to a consumer audience explains many of the differences in how patent and trademark cases are decided. Expert audiences are likely to evaluate infringement based on the technical similarity between the plaintiff’s and defendant’s works. Consumers, by contrast, are likely to pay more attention to market substitution and less attention to how things work under the hood.
Understanding the different audiences in IP infringement is critical to understanding how the IP regimes define infringement. The focus on audience has normative as well as descriptive implications. Neither patent law, with its focus on experts and technical similarity, nor trademark law, with its market-based consumer focus, has it entirely correct. Rather, we suggest that as a general matter infringement of an IP right should require both technical similarity and market substitution. Assessing infringement through the expert’s eyes ensures that the law prevents closely related works in the field while allowing later contributions to the field that are sufficiently different. The consumer vantage point ensures that we protect IP owners only when they have been harmed in the marketplace.
IP owners who want to show infringement should have to show both that the defendant’s work is technically similar to their own from the expert’s vantage point and that the defendant’s use causes the plaintiff market harm. Copyright law, which does look both to experts and to consumers at various points in infringement analysis, is on the right track.
The intuition is simple, but it caught this Kat's attention. The choice of the optimal hypothetical audience for interpreting specific IP rights, or evaluating their infringement, is usually left to legislators and courts, which identify the appropriate audience in light of the nature and scope of the relevant right. Thus: (i) trade mark law, which seeks to promote trade, ensure fair competition and protect consumer decision-making, focuses on average consumers; (ii) patent law, which aims to promote scientific and technological innovation, considers a person of ordinary skill in the art, with its expert knowledge, as the appropriate audience; (iii) copyright law, which protects and encourages the creation of artistic works, generally uses (in the US) 'a hybrid test, drawing both on the perspective of the expert and of some non-expert observer (either the consumer or the ordinary person)'; (iv) design law, which aims to ensure fair competition and encourage commercial creativity, asks ordinary observers to evaluate technical similarities.

Performing for the audience!
(c) ColKorn1982
Similarly, IP infringement can be assessed from the perspective of consumers, experts, or ordinary observers. The former commonly focus on market substitution, and represent 'an ideal audience choice for assessing IP infringement when that form of IP law seeks to discourage third parties from creating or distributing market substitutes of works protected by that IP right'. Experts are more sensitive to technical similarity, and are an appropriate audience for IP rights which have 'the goal of encouraging a range of works that make technically distinguishable contributions to the relevant field (and concomitantly, discouraging works that make no technically distinguishable contributions to the field)'. Finally, an ordinary reasonable person 'is worthy as an audience choice only when the relevant form of IP law wants to find infringement more readily without any attention to genre or marketplace substitutions; that is, if it wants to deter works that are less similar than an expert or consumer would find'.

Fromer and Lemley suggest that the evaluation of similarity, to determine infringement, should be conducted from the vantage points of both experts and consumers. This approach would ensure that 'substitutes to consumers that are not also too similar to experts will not be deemed to be infringement, just as similarities sufficient to satisfy experts that are not also substitutes to consumers will not be deemed to be infringement'. The article explains that these effects would contribute to expanding consumer choice and lowering prices, and would also allow a variety of transformative reuses of creative and inventive works, when no issues of market substitution arise. In particular, similarly to what happens in the context of copyright law, where a hybrid audience presides to the analysis of infringement and to the application of the fair use doctrine, considerations on market substitution in patent law would encourage follow-on improvements and innovative efforts in repurposing technology, while the evaluation of technical similarity in trade mark law would limit the scope of the likelihood of confusion test, allowing the introduction of evidence related to 'the genericity, functionality, descriptiveness, or parodic aspects of the trade mark'.

The article expressly recognises that the adoption of hybrid audiences would challenge courts and fact-finders with a double inquiry, which should be bifurcated or channelled 'without confusing the fact-finder or causing [it] to defer to one viewpoint at the expense of the other'. This Kat fears, however, that channelling the assessments conducted by hybrid audiences could be an even more challenging task, as courts should reconcile the evaluation of technical similarity and market substitution in light of the scope of each IP right. Perhaps, rather than adopting an entirely new audience, courts could benefit from using secondary considerations borrowed from the perspective of other audiences, to correct the rigidity of the current system.

Friday, 28 June 2013

Friday fantasies

The US Anti-Troll Squad prepares for action
The Adventures of Intellectual Ventures. A katpat goes to Ross Richards for forwarding this link to the news that Intellectual Ventures (that tantalising is-it-or-isn;t-it-a-troll enterprise that always does things differently), has decided once again to do things its own way.  Rather than chasing small, vulnerable companies for patent infringement and squeezing royalties of them, IV has gone where the money is by choosing to sue banks instead.  Connoisseurs of patent litigation may be in for a treat, since neither IV nor the banks are conspicuously short of funds and there are likely to be colossal sums of money at stake whatever happens.

New blog on the block. The IPKat has received news of a new intellectual property blog, IP Soundings, authored by Arent Fox partners David Gryce and James Davis. This blog seeks to highlight ways brand owners can protect themselves from cybersquatters: you can find it here.

Certificates were so much more
fun in the good old days ...
All change at WIPO.  The IPKat has learned from his dear Bulgarian friend Ventsi Stoilov (katpat!) that the World Intellectual Property Organization (WIPO) is to change the layout of the certificate of registration of international trade marks. This may not seem earth-shattering news, but since the new layout comes into effect this Thursday, 4 July, the Kat didn't want readers to get a shock or, worse, on seeing the new version, to assume that they hadn't been dealing with WIPO at all but with one of those noxious traders that masquerade as official IP bodies.  Further details of this exciting new change, which is definitely for the better, can be found here.

Fancy a trip to town?  On 18 July there's a pleasurable little conference taking place in Central London.  It's called "Intellectual Property and the Digital Entertainment Industry".  Organised by CLT, it boasts a programme cast that is literally burgeoning with IP bloggers. IPKat blogmeister Jeremy is in the chair, where he will be conducting the proceedings.  The list of speakers includes 1709 Bloggers Ben Challis and Iona Silverman, not to mention Art & Artifice co-founder Rosie Burbidge. Do click here for further details if you've nothing better to do that day. You'll be hugely welcome.

But if you'd rather stay at home ... don't forget the LLM and postgraduate diploma distance learning courses in UK, EU and US copyright offered by Kings College London in conjunction with the Informa Academy. There's a lot to be said for distance learning, as this Kat has mentioned in an earlier post.  And, if you think about it, there's an appealing symmetry: since most copyright infringement these days seems to happen at home, isn't it right that copyright law teaching should also happen at home?  Details of the programme, the faculty and registration can be found here

Only in it for the money?  Katfriend Maja Schmitt (DSM) writes as follows: "I am sure a number of readers will already be aware of this but, for those who don’t and who have inventors based in China, they may be interested in the new developments in the Inventor Reward and Remuneration Regulations. These were released for public comments in November 2012 and we are now awaiting the (final) version.  The translation is not legally binding". Well, here it is anyway:
Article 14: The entity shall, within 6 months from the service invention reporting date, decide whether to apply for intellectual property right, protect as know-how or publish and shall inform the inventor of the decision in a written notice. Where the entity fails to inform the inventor within the time limit as provided in the above paragraph, the inventor may send a written inquiry urging the entity to reply; if the entity fails to reply after 1 month of the inventor’s written inquiry, the invention shall be deemed to be protected as know-how.

Article 16: Where the entity intends to stop the process of applying for intellectual property right or abandon the intellectual property right of a service invention, it shall inform the inventor 1 month in advance. The inventor may negotiate with the entity to get the application right to intellectual property right or intellectual property right for a fee or free of charge.

Article 19: The entity may enter into an agreement with the inventor, or provide it in its policy formulated in accordance with the laws, on the procedure, manner and amount of the award and remuneration. The agreement or policy shall inform the inventor the right he is entitled to, the way to seek relief, and in accordance with Articles 20 and 23 of the Regulations. Any agreement or policy eliminating or limiting the right which the inventor is entitled with in accordance with the Regulations are invalid.

Article 25: Where the entity decides to protect the service invention as know-how, it shall pay a reasonable compensation to the inventor in accordance with the provisions of this Chapter.

Article 29: Where an entity intends to assign intellectual property rights of a service invention, the inventor is entitled to the right of first refusal under the same conditions. [similar to Article 326 contract law]
Maja goes on to explain that issues that employers are wrestling with include the fact that it is not clear if company policies will be sufficient to override some of the requirements. Currently, unless there is an agreement with the inventor to the contrary, payments are due on grant of an invention patent (minimum 3000 RMB, Art 77) and on commercialisation (not less than 2% of profit per year, Art 78).

So, for example, can rights to a payment on commercialisation be waived for a lump sum payment? Can rights be waived by students, professors or contract researchers in return for a lump sum payment in advance? What happens if an employee does not accept the policy or sign the agreement? Does “know how“ need to be patentable ? (for example an alleged breach of trade secrets can be challenged by showing they are obvious). Who can challenge decisions and when ?

Maja concludes: "If the new regulations come into force companies are going to need to put into place clear policies, more resources and good administrative procedures to ensure all ideas are recorded and allocated a status".  Thanks so much, Maja, for this really useful information.

Current rules and regulations and statistics can be found here
Online training e.g. an introduction to Chinese Patent Law can be found here

The Apple brand and its TV ad problem: Where is the light, where is the tunnel?

This Kat commented in March 2013 on sister blog, IP Finance, about the Samsung challenge to Apple's "cool" factor ("Apple v Samsung: The War over 'Cool'") here. Based on some anecdotal observations ("evidence" perhaps being too strong a word), this Kat wondered whether Apple is at risk of losing its preeminent position as the "coolest brand on the planet." More metric-based support for this suggestion appeared in the June 27 article by Peter Burrows on entitled "Apple's TV Ads Touting Company Values Flop With Viewers", here.

According to the article, Apple launched the ad in question on June 10, here, it being the 26th Apple TV ad to run this year. The 60-second ad features school kids with iPad tablets. Against this background, a voice describes the company's product-design goals or, as described in the article, "an actor reads the company's corporate philosophy." How well has the ad, called "Designed by Apple in California", done? Let's have the numbers speak for themselves. Based on a survey carried out by Ace Metrix, Inc., which evaluated ad effectiveness through a survey on 500 or more viewers, the following results were obtained:
1. The ad scored the lowest of all the TV ads run by the company this year, earning an overall rating of 489 under the system used. This result is below the industry average of 542 and far lower than the most successful Apple ad campaigns in the past, which often scored above 700.

2. On the subcategory of "Information", the ad had a score of 528 as opposed to with an industry-wide average of 603. By comparison, a recent Samsung ad for the Galaxy S4 phone, highlighting the feature of touchless call functionality, scored a scorching 757 on the same measure. Indeed, since May, Samsung has racked up eight ads with a score over 600.

3. The new ad scored less well with male rather than female viewers. It scored particularly low with males over 21 years of age.

4. Lest Kat readers think that these low results are a one-off, the article reports that ads described as "similar" in approach with respect to the iPhone's capabilities as a camera and music player device also posted relatively lacklustre results, with results of 560 and 537, respectively.
The article recites various reasons for the failure of the ad: (i) "[t]he company is moving away from upbeat ads promoting product features toward ones that identify it as a reliable provider of products"; (ii) Per Professor of |Advertising Edward Boches, "[i]n a manifesto ad, it's hard not to come across as self indulgent; (iii) "the ad lacks joy;"; (iv) the ad is too long; and (v) further referring to Professor Boches' observations, the ad's reference to the State of California is "inappropriately political", suggesting that Apple is not a Korean company.
It is above this Kat's pay grade to comment authoritatively on Apple's recent malaise, including the precipitous drop in its Apple stock price (down 44% since its record high In September 2012). Still, one does not need to be expert to be aware that the Apple brand seems to be drifting to the wrong side of the "what have you done for me lately" tracks, much to the melancholy of the owners of Apple devices. As the article recites, Professor Boches describes the current stumbling of the Apple brand with a heavy heart, [i]t feels like Apple is groping a bit", while characterizing himself as a "huge fan" of Apple.

It seems to this Kat that no mere corporate mortal (sorry for the mixed metaphor) can be expected to come up continuously with the next world-beating product, especially one which at the same time both cannibalizes its current product hit while building on past success with that product (think iPod to iPhone to iPad). In attempting to do so, Apple, and the Apple brand, is operating in unchartered waters. To the extent that the Apple brand rests on the continuation of this scenario, it is fighting the notion of regression to the mean. Sooner or later, everyone retreats a bit (or a more than bit) from the extremes of a population tail to the centre. The Apple brand may be more sensitive than most other brands to this phenomenon.

More on US patent litigation statistics - correlation with granted patents

Once a Kat always a Kat.  This moggy was delighted to receive an observation from Emeritus Kat Mark Schweizer (now a Rechtsanwalt in the Swiss firm of Meyerlustenberger Lachenal ) in response to the post a few days ago about US patent litigation statistics.

Says Mark:

Regarding your post - I was always wondering how the increase in litigation compared to the increase in patents granted. Turns out, the study answers this, with a quite striking graph on page 6. There is an almost perfect correlation between patents granted and patents litigated. 
Which seems to indicate, to this naive mind, that not much has changed with regards to the decision whether to litigate a patent or not. A small, steady, fraction of granted patents are litigated. That seems to indicate that neither patent quality nor incentives to sue have changed dramatically between 1991 and 2012. It is simply that more granted patents lead to more litigation, which is not exactly surprising. And which is not the public perception, with the brouhaha over NPEs and such.
The graph is this one, which even this untutored moggy can see shows remarkable correlation.

The IPKat of course fully agrees with himself.  How could he not?  But Merpel recalls from her school applied mathematics lessons that in the realm of statistics correlation does not imply causation.  So, is it the existence of the patents that drives the litigation, or does the desire to conduct patent litigation drive the obtaining of patents?  Or are the numbers of patents and amount of patent litigation driven separately by other considerations, which happen to correlate well?  What do readers think is the correct explanation for this extraordinary correlation?

Does exhaustion apply to works other than software? Here's a Katpoll

Do vote in our Katpoll!
This Kat has just returned from the idyllic setting of Pembroke College in Oxford, where she attended the 32nd ATRIP congress. Organised and hosted by ATRIP president - the learned and charming Professor Graeme Dinwoodie - this 3-day conference was devoted to answering the following question: Is Intellectual Property a Lex Specialis

There were many exciting discussions which elicited this Kat's curiosity. However, there was one in particular on which she would like to receive IPKat readers' feedback. 

This concerns the principle of exhaustion as interpreted and applied by the Court of Justice of the European Union (CJEU) in Case C-128/11 UsedSoft v Oracle (see Katposts here and 1709 Blog posts here). 

As readers will remember, in that case decided almost a year ago the CJEU ruled that 

"the right of distribution of a copy of a computer program is exhausted if the copyright holder who has authorised, even free of charge, the downloading of that copy from the internet onto a data carrier has also conferred, in return for payment of a fee intended to enable him to obtain a remuneration corresponding to the economic value of the copy of the work of which he is the proprietor, a right to use that copy for an unlimited period."

In other words, the Court held that Article 4(2) of the Software Directive is to be interpreted in the sense that the right of distribution over the copy of a computer program is exhausted following the grant of a licence if this can be considered tantamount to a sale, despite the different contractual qualification given by the parties.

Deep-in-thought: how far-reaching
is the UsedSoft ruling?
It is currently being discussed whether the decision in UsedSoft can be extended to subject-matter other than software.

A few months ago a German court held (see Katpost here) that, because of the nature of the Software Directive as lex specialis, the reasoning in UsedSoft could not be applied to other subject-matter (downloadable ebooks and audiobooks in that case). Thus the Landgericht Bielefeld held that the InfoSoc Directive does not permit application of the principle of exhaustion to works in non-analogue form. 

Following discussion (and mini-poll) with a number of academics at the ATRIP Congress, this Kat realised that there is growing belief that the CJEU, when given the opportunity to do so, would rule that exhaustion does indeed apply to digital works other than software (in a similar sense, see Graham Smith/Cyberleagle's analysis herecf the diverging approach in the US here).

The main arguments to support this conclusion are CJEU's overriding concerns with ensuring free movement within EU internal market and the fact that ebooks, downloadable audiobooks, digital music are not really "on-line services" for which "the question of exhaustion does not arise" (see Recital 29 to the InfoSoc Directive).

In other words, the ruling in UsedSoft would not be really lex specialis, but rather lex generalis 
Brad has been thinking about
copyright exhaustion for months now
(especially when wishing to fall asleep quickly)
under EU copyright.

This Kat is however slightly concerned whether this might be really the case, in that the Court made it quite clear that its conclusion descended from the special nature of the Software Directive. Furthermore, one of the aims of the InfoSoc Directive was to transpose the WIPO Copyright Treaty into EU legal order. The right of distribution as per Article 6 of the Treaty concerns just tangible - not also intangible - copies. Hence, is it possible to say that exhaustion as per Article 4(2) of the InfoSoc Directive applies only to tangible copies?

Discussing these issues is not just for the sake of getting a headache early in the morning but – among other things - is actually relevant to debates about potentially lucrative markets for second-hand digital goods. 

This is why the IPKat is launching a poll to gather readers' feedback. The question is:


You have time until Friday 5 July to cast your vote, by clicking your chosen button on the left-hand side of the IPKat content bar. 

Do let us know what you think!

Thursday, 27 June 2013

Which comes first - patent infringement or FRAND? "Patent infringement", says Birss J (Part II)

The discussion

Telling the difference between
the two types of cases is as easy as
telling the difference between
these two kittens. 
There are two kinds of cases, commenced Birss J:  

(1)  Those where a defendant argues that the patent being asserted against it is invalid and/or not infringed but where the defendant concedes even if it is valid and infringed its only worth $X; and
Here, the court can resolve the value of $X before deciding on the merits of the infringement case.  The English courts have referred to this mechanism both in the High Court (Floyd J's dicta in Nokia v IPCom) and Birss J when he was sitting in the Patents County Court in relation to copyright cases:
"In cases like this the preliminary issue being decided is on a tangible basis. If the claimant wins, the damages or royalty will be X. It is clear what conditions are required to be satisfied for the determination of the preliminary issue to apply. Once the preliminary issue has been decided and the rate has been found to be X, the parties are not compelled to stop fighting about the merits of the patent. A settlement may ensue but, if it does not and at the later trial the patent is invalid, nothing will be due at all. The preliminary issue is binding but it is not a finding that the defendant must pay the sum found. On the other hand, if the patent is held valid and infringed, then of course the finding on the preliminary issue will take effect."
(2)  Those cases where a court could determine the rate and terms which would be arrived at as the outcome of a notional negotiation between a willing licensor and licensee to negotiate without (and before) fighting a trial on the merits about the underlying rights.
In this case, the court can consider the strength of the patents on the basis Vringo proposed just like how negotiators would.  The royalty rate arrived at would be different from that arrived at in the first case (i.e., it would be one with a healthy discount). This is the basis proposed by Vringo.  
However, in this case ZTE is not prepared to be bound by the outcome of the determination that Vringo proposes.  So even if the FRAND trial is heard first, it does not in fact bring the proceedings to an end.

The Court of Justice - balancing
sail boats on a knife's edge
since 1952
If this is the case, argued Vringo, then ZTE cannot be said to be a willing licencee at all.  And why does this distinction matter?  Well, the question of injunctions of course (especially given the parallel proceedings in Germany).  As the judge stated:  

"The concept of a willing licensee arises in this context as follows. There is what I will call a general idea (without expressing a view on whether it is right or wrong) that when a patent is an SEP, if a defendant is a willing licensee, then it may be that the patentee is not entitled to obtain an injunction against the defendant, whereas if the defendant was not a willing licensee, then the defendant may be subject to the risk of an injunction. This issue has developed in Germany and questions have been referred to the Court of Justice dealing with these issues. It arises in Germany at least in part as a result of the bifurcated procedure where a defendant in an infringement court can find itself in a position in which the patent is found to be infringed -- that is to say it covers the standard -- and is therefore facing an injunction a long time before validity has been determined by the Federal Patent Court. Any problem of this kind caused by bifurcation is not an issue here. ["Save for the fact that Vringo's case theory seems to be, in a sense, to bifurcate the case by getting the FRAND issues tried first in order to force a settlement before the validity issues can be tried", comments the AmeriKat]
This case is a long way from having to consider whether to grant injunctive relief; after all, according to ZTE, the patents are all invalid and/or not infringed. However, in any case I reject the idea that the stance being taken by ZTE in this jurisdiction can fairly be said to mean that ZTE is not a willing licensee. ZTE has said it is willing to take a FRAND licence on any patent found valid and infringed. In my judgment, a defendant accused of patent infringement by a patentee who claims to have a standards essential patent is and must be entitled to say, "I wish to know if this patent is valid or infringed or not before I take a licence". Such a stance cannot fairly be described as unwillingness. 
So here the defendant is entitled, in my judgment, to adopt a contingent position. In a contingent case like this, there is no basis on which the court could compel the defendants to accept a licence arrived at by approaching the matter as if the licensee was willing to take a licence without having a judicial determination of validity and/or infringement. 
Looking at it the other way, if, once the patent trials are heard, for example, say Vringo's alleged SEPs were found invalid, it would be absurd for Vringo to say it still wanted to have a trial to determine a FRAND royalty rate applicable in the United Kingdom. The rate would be zero. Equally, say Vringo won all the patent trials hands down and then conducted a FRAND trial, it would equally be absurd for ZTE at that trial to say, "Oh but these are weak patents likely to be invalid or not infringed and the royalty should correspondingly be less"

Mr Justice Birss then distinguished the cases cited by Vringo. Microsoft v Motorola was a case where the court could settle terms in the knowledge that their determination would resolve the dispute.  InterDigital v ZTE is case where ZTE is, contrary to their position in the English proceedings, willing to be bound by a licence settled by the US court regardless of validity and infringement being heard later.  In the Philips case, the defendants were prepared to conduct a FRAND trial on the basis that the patents were valid and infringed.

The decision

"No, you can't make me!" - ZTE digging its claws in
on FRAND.....
On the question of whether a FRAND trial should be held first, the judge stated that the burden of the FRAND trial was much heavier than anticipated by Vringo and would commit the parties to significant costs and time given the portfolio of hundreds of patents.  If both sides were willing to be bound by the outcome of one court, then there would be no reason why the English court could not resolve issue of FRAND in helping the parties reach a global resolution of the dispute.  However, a defendant cannot be compelled or coerced by the court to be placed into a position of accepting that course;  it is entitled to challenge validity and infringement of the patents in suit.

Just because Vringo has patent rights, held Birss J, it does not have the right to compel a defendant to enter into a licence.  If the defendant wishes to challenge validity, then the determination of the FRAND first is "a major distraction" and "potentially misleading"  creating an "idea that the defendant owes a sum determined as if it was willing to negotiate without determining validity or infringement."  The judge therefore refused to schedule a trial of the declarations sought by Vringo before the outcome of at least one of the two patent infringement cases were heard.

Sir Colin Birss
The judge also noted that, courtesy of some quick "back of the envelope" calculations, that the figures in dispute
"are comparable to the sorts of value of cases routinely now heard in Patents County Court. I am not suggesting that these patents should be transferred to the Patents County Court, but it is an indication that it may be sensible to adopt some of the elements of active case management in the Patents County Court system, in order to ensure that a proportionate approach to these patents is taken. That is another reason why a large FRAND trial would not be sensible before these patent trials."
"You can take the judge out of the PCC, but not the PCC out of the judge", concludes the AmeriKat.

In light of this decision, the name of the game for defendants facing patent infringement relating to SEPs seems to be as follows:  refuse to be bound by the court's determination of FRAND terms, thus compelling validity to be tried first permitting you to try and knock out the patents before any FRAND terms can be set.  Helpfully, the court has held that such "unwillingness" does not make a defendant and "unwilling licensee" potentially subject to an injunction. However, as referred to by Birss J in his decision, the AmeriKat looks forward to seeing what effect this dicta could have pending the Dusseldorf court's recent preliminary reference to the Court of Justice in the Huawei case.

In the meantime, for those of you tracking Vringo's litigation, CEO Andrew Perlman has this top tip for you:  "In terms of our ZTE litigation, what people should be looking for I think is the October fifteenth hearing that's scheduled in Mannheim, Germany".  Mark your calendars, ladies, gentleman and Kats.

Which comes first - patent infringement or FRAND? "Patent infringement", says Birss J (Part I)

The AmeriKat has figured out
one strategy: keeping warm in
the garden during the English summers
(courtesy of Joe Delaney)
As a litigator, you spend your days grappling with legal strategy, client demands and barrister wrangling.  However, it is often the procedural strategy that can tie your brain into knots.  What applications and orders should you be making to the court?  When should you do so?  What judge should you try to get before?  Save for whatever tactical interim application a party may be dreaming up, it is the Case Management Conference (CMC) that can be all important to a case.  Under English procedural rules, the CMC comes after the pleadings have been finalized and before the meat of the case takes place (disclosure of evidence, witness statements, expert reports, experiments, etc).  The output of the CMC is an Order for Directions which governs the conduct of the rest of the case to trial, for example, what issues will be heard at trial and in what order.

It was a CMC earlier this month before Mr Justice Birss (who has, this week, been knighted) where the age old question of "which came first" was determined.  Although not of the chicken-egg variety, the question in Vringo v ZTE (UK) Limited and ZTE Corporation [2013] EWCH 1591 was just as philosophical:   Which comes first - a trial on patent infringement or a trial on FRAND issues?  The answer is, of course, a trial on patent infringement. 


"Show me your SEP, and I will show
you a willing licensee"
The claimant, Vringo, is the owner of a global portfolio of over 500 patents relating to telecommunications infrastructure, internet search and mobile telecommunications (in almost the exact words of Mr Justice Birss and Wikipedia).  The bulk of its patent portfolio was purchased from Nokia in August 2012.  It claims that a substantial proportion of its patents and portfolio are standard essential patents (SEPs).  Vringo has approximately 138 individual granted SEPs in various jurisdictions and a further 248 applications which may yet mature into granted SEPs.  

Last year, Vringo commenced two patent infringement proceedings against ZTE(UK) Limited, who is involved in the manufacture of mobile phones primarily in Asia, for infringement of six patents (3 patents per case) relating to mobile phone and telecommunication systems which it says are SEPs.  For SEPs to be declared SEPs by ETSI, the organization responsible for promulgating such standards, the patentee must be prepared to grant licences to them under FRAND terms, i.e. "fair, reasonable and non-discriminatory".  Vringo is prepared to offer ZTE Corporation a global portfolio licence on the whole of its global SEP portfolio which it says is made on FRAND terms.  Vringo addressed the FRAND offer to ZTE Corporation as, it argued, ZTE Corporation was the natural entity to be the licensee of the global licence and, similarly  should be made a party to the proceedings in order to be bound by the court's determination.  

The arguments

Cracking the egg of patent infringement, before the
FRAND chicken can be hatched
At the CMC, Vringo requested declarations in the following terms to be determined at a FRAND trial to be held before the trial on validity and/or infringement:
1.  That the terms of its offer was an offer to licence its patents on FRAND terms and is therefore not obliged to offer to licence any of its SEPS on any other term.   
2.  In the alternative, it requested that the court declare that the terms of its offer complied with the Claimant's obligations to make a licence available to ZTE in respect of the patents in suit.   
3.  In the further alternative, Vringo requested that the court make a declaration as to what would constitute an offer to licence to the Defendants its patents on FRAND terms.   
4.  A declaration that in all the circumstances  the Defendants had no entitlement to an individual licence to the patents in suit if they are found to be both valid and infringed by ZTE (UK) Limited.  
With similar patent infringement proceedings and/or disputes commenced in Germany, France, Australia and the in the US (there against InterDigital), Vringo contended that it was the terms of the global offer that was the real dispute between the parties.  If the court could determine the royalty to be paid by ZTE Corporation to Vringo for a global licence then the whole international dispute could vanish.  The court should, therefore, address this first and order that the FRAND trial be heard first.  

Judge Robart - the man
of the moment in the
But what if the patents turn out not to be valid and/or infringed (a determination that would come only after the FRAND trial is heard if Vringo has its way)?  Well, Vringo argued, the court will be able to take into account evidence about the strength of the patents, validity and infringement at the FRAND trial.  Indeed, Judge Robart in Microsoft v Motorola had heard a full trial over a number of days and settled RAND terms of a portfolio licence of Motorola's US patents including arguments on the strength of the patents and F/RAND. There is no reason why the English court could not do the same.  In fact, Judge Robart's conduct of the Microsoft v Motorola case illustrated a trend in the courts and competition authorities globally "to seek to resolve the problems caused by large portfolios of SEPs and questions of FRAND licences in this way instead of having costly and expensive patent trials."  Vringo thus asked the US court hearing its case against InterDigital to determine the issues of FRAND first before hearing the case on validity and infringement.

Vringo also cited the dicta of Mr Justice Floyd (as he then was) in IPCom v Nokia [2009] EWHC 1017 where, when asked to order a trial of a preliminary issue to determine the FRAND licence terms in relation to IPCom's patent in suit, he stated that:
"...What is at stake between parties in portfolio patent litigation of this kind is usually the sum of money which will enable the grant of a worldwide licence under the entire portfolio. The preliminary issue seeks to get to the heart of that question, without the need to try the validity of 15 patents and the infringement of 3 of them, and a variety of ancillary defences."
Floyd J refused to order the preliminary issue hearing because the proceedings had already progressed sufficiently far to address validity and infringement of the patents on the merits.  But, responded Vringo, the court still indicated that it was a good idea in principle had only it been raised earlier.  Further, Mr Justice Kitchin (again, as he then was) in Philips v Alba did order that the issues of FRAND be tried prior to the merits of the patents in issue.  

ZTE argued that structuring the case in that way would be a massive undertaking with hundreds of patents in issue in the portfolio, truckloads of evidence about the strength of the portfolio with a likely trial about the validity and infringement of the patents inside the FRAND trial and references to the Court of Justice on competition issues.  The patent infringement trials should therefore come first.  

With Vringo contending that the royalty due is $2.50 for smartphones, $1.50 for other handsets and 1.5% of the revenue on any infrastructure and ZTE contending that all of the six patents are invalid and/or infringed, the parties are far apart.  The basis of that difference, held Birss J, was a fundamental disagreement about the validity and the relevance of the patents, i.e., "whether this portfolio has any value at all".  

Continued in Part II here.  

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