Selected UK IP highlights for 2014

One of the overriding themes in IP-related law in the United Kingdom in 2014 has been the impact of EU law on English law and practice. For example, the Intellectual Property Act 2014 will pave the way for the future Unified Patent Court (UPC). The patent courts have issued key decisions which affect national litigation on patents where parallel European opposition proceedings are ongoing at the European Patent Office (EPO). Other legal developments include a clarifying decision on keyword advertising in trademark law and a decision on the use of computer-generated representations in design law.

Intellectual Property Act 2014

The Intellectual Property Act was designed to update IP law as it relates to the registration and enforcement of, in particular, designs and patents. It received royal assent in May 2014. The impetus behind the new legislation was to strengthen and clarify design protection and to help to usher in the future era of the unitary patent by providing for the power to implement the UPC in the United Kingdom.

In terms of designs, the act:

• provides for criminal penalties for primary infringement (ie, deliberate copying) or secondary infringement (ie, selling, importing, exporting, using or stocking a product knowing that its design has been deliberately copied) of UK or registered Community designs (RCDs);
• ensures that permitted users of RCDs cannot be sued for corresponding copyright infringement (this is already the case for permitted users of UK registered designs); and
• clarifies that the ‘owner’ of a design is the designer (not the commissioner of the design), bringing ownership into line with similar provisions in UK and EU copyright law. The amendment to the existing law does not affect the position that a design created in the course of employment is owned by the employer.

In regard to patents, the act authorises the ratification and implementation of the UPC Agreement concluded in Brussels on February 19 2013. This provision effectively paves the way for the United Kingdom to bring the UPC into effect, providing a single forum to enforce a unitary patent (when it goes live). The United Kingdom has yet to ratify the UPC Agreement, but is expected to do so in 2015.

Certain provisions of the new act will come into force from October 1 2014, with full implementation expected by late 2015.

Law Commission report on groundless threats

In April 2014 the Law Commission published its final report following an extensive review of the law on groundless threats of infringement proceedings in patents, trademarks and designs. In the United Kingdom, a party that is threatened with infringement proceedings for specified acts in relation to a patent, trademark or design has grounds to sue the party that made the threat if it is shown that the threat is “groundless” – that is, it is proven that there is no infringement or that the asserted right is invalid. The party aggrieved by the groundless threat can seek relief from the courts by way of an injunction, a declaration that the threat was unjustified and/or damages.

Many practitioners and rights holders find the idiosyncrasies of the existing threat provisions difficult to navigate, due to their failure to reflect the commercial reality of everyday infringement scenarios. Further, the threat provisions across patents, trademarks and designs law are different. It is hoped that the Law Commission report will lead towards reform and a harmonised approach.

New proposals for UK Bolar exemption

On May 6 2014 draft amending legislation was laid before Parliament proposing to amend the UK Patents Act 1977 by adopting a broader interpretation of the European Bolar-like exemption. This will narrow the scope of infringement in the United Kingdom for pharmaceutical companies conducting specified clinical and field trials. At present, pharmaceutical companies involved in conducting tests for the purposes of obtaining regulatory approval have an enhanced risk of infringement in the United Kingdom compared to member states where the European legislation has been interpreted quite broadly (eg, France, Germany, Italy and Portugal).

Following an extensive consultation period by the UK Intellectual Property Office (UKIPO), the government has proposed that the existing UK legislation be amended to exempt from infringement activities related to the preparation or operation of clinical field trials involving innovative drugs for the purpose of gaining regulatory approval in any country and activities necessary for health technology assessments.

The new provisions are expected to come into force in October 2014.

Case law

Patents

Stays pending parallel EPO proceedings: It is inherent in the patent system established by the European Patent Convention that there are two ways to revoke or affect the scope of a European patent:

• through the national courts, which will affect the national designation of a patent; or
• through the EPO via the opposition procedure, which will affect all European designations of the patent.

Often, national revocation and European opposition proceedings take place concurrently. The notoriously lengthy time taken to revoke a patent through the EPO route has led the UK national courts to issue guidance (eg, in Glaxo v Genentech) to assist determination on whether national infringement and validity proceedings ought to be stayed pending the outcome of a validity challenge at the EPO, which would have Europe-wide effect.

In November 2013 the Court of Appeal in IPCom v HTC revised the Glaxo guidance – the primary change was that a stay of national proceedings is now the default option for the English patent courts when faced with concurrent, potentially duplicating, EPO proceedings. Previously, the primary consideration was the length of time that it would take for respective proceedings to achieve some certainty regarding validity. Another important new consideration is the possibility that in the event that a stay is refused, the patentee may obtain an award of damages in the national proceedings balanced against the likelihood that the alleged infringer may or may not recover those damages if the patent is subsequently revoked at the EPO. The court may require undertakings to ensure that the patentee repays any damages if the patent is later revoked by the EPO before national litigation is allowed to continue in parallel. A further factor that may persuade a judge to refuse a stay is evidence that some commercial certainty could be achieved earlier.

Central limitations: A patentee is permitted to apply to the EPO to have the claims of its patent (in all its European designations) limited (or revoked entirely) under the European Patent Convention 2000. In Samsung v Apple the Court of Appeal allowed Samsung to adjourn its appeal hearing pending the outcome of its central limitation application. Samsung’s application to amend was made after the patents had already been tried and held invalid by the High Court, which led Apple to question whether this was an abuse of process. The court decided that as there is no prohibition on a patentee applying to limit centrally its patent under English law, even in the period between the first-instance decision and the appeal, Samsung could apply to limit its patent claims. The court held that support for this was found in the recent Virgin Atlantic v Zodiac Supreme Court decision. It was relevant that unlike EPO oppositions (see IPCom v HTC), the central limitation application is a relatively quick procedure.

Similarly, in Kennametal v Pramet Tools Kennametal’s patent had been revoked following the trial. Kennametal applied to stay the revocation pending the result of the central limitation application. However, unlike Samsung, Kennametal did not have permission from the court to appeal the judgment. Therefore, the court decided that the judgment was final and the stay pending central limitation was not granted.

Life sciences

Foreign declarations of non-infringement: In May 2014, in Actavis v Eli Lilly, the High Court for the first time exercised jurisdiction over other European designations of a European patent. Previously, the Court of Appeal had held that a UK court has such jurisdiction where validity of the patent is not in issue. Eli Lilly’s anti-cancer drug, Alimta, is covered by a European patent. Actavis proposed to launch a competing drug containing a variant of the patent’s active ingredient and sought a declaration of non-infringement for the UK, French, Spanish and Italian designations of the patent.

In this case, the court considered that the EPO prosecution history of a patent can be relevant when considering the construction of patent claims. The court decided that during the course of prosecution at the EPO, the claims had been narrowed considerably, and stated that if the patentee had wanted broader claims, it could have sought them. Eli Lilly attempted a further jurisdictional attack, arguing that the applicable law in respect of granting a declaration of non-infringement was that of the country of each foreign designation. The court disagreed. Having considered the claims of the UK and other European designations of the patent, the court held that Actavis’s product would not infringe in any of the jurisdictions considered.

This case, in which validity of the patent was not in issue, potentially opens the door to multi-jurisdictional proceedings under one roof.

Employee compensation: Employee compensation cases that reach a judgment are rare; typically, this is because employees do not want to sue their employers or cases are settled before reaching court. In Shanks v Unilever the High Court decided, on appeal from the UKIPO, that Unilever had not received “outstanding benefit” from patents on which the employee was named inventor and therefore did not have to award him a statutory “fair share” of the benefit of the invention. The High Court decided that the Kelly approach (as applied by the UKIPO hearing officer) was the correct one. On the facts, the patents were not significant to Unilever’s business, having regard to the size and nature of the business (in contrast to Kelly). The court decided that the hearing officer’s quantification of the benefit was correct, except that the correct sum was net of corporation tax. Following this decision, it is likely to be even more difficult for employee inventors to demonstrate outstanding benefit under the old regime where the benefit of the patent (only) is considered. The law was changed in 2004 to make it easier for employees to claim compensation and now “the invention” or “the patent for it” is assessed for benefit.

Trademarks

Keyword advertising: Cases on keyword advertising are particularly topical following a number of European decisions and the 2013 Interflora v Marks & Spencer decision. In Lush v Amazon Amazon purchased ‘lush’ as a keyword under the Google AdWords service, which triggered advertisements featuring the word ‘lush’. Further, Amazon’s website made product suggestions when ‘lush’ was typed into the search facility. In fact, Amazon stocked no Lush products.

The court reinforced the principle that even in a case of double identity (ie, an identical sign used for an identical product), a trademark owner must show an adverse effect on the origin function of the trademark. The function of a mark will be adversely affected if the ad does not enable the reasonably informed and reasonably attentive internet user (or enables him or her only with difficulty) to ascertain whether the goods or services referred to in the ad originate from the trademark owner or an undertaking economically connected to it, or on the contrary whether they originate from a third party.

Although Amazon was found to infringe on the facts, this is another case which suggests that using someone else’s trademark in keyword advertising is not inherently objectionable. A party considering using another’s mark as a keyword should be aware that:

• if the keyword is used in the ad text itself, it will likely infringe the trademark;
• trigger use (ie, use of a keyword that does not appear in ad text) is generally acceptable, provided that the ad is presented in such a way that it enables the user to ascertain the origin of the goods or services without difficulty; and
• use of the mark on an internal web page search engine will most likely give rise to infringement.

Survey evidence: There is now even less incentive to rely on survey evidence in either trademark or passing-off cases following the Court of Appeal’s decision in Zee Entertainment v Zeebox. Zee Entertainment had previously been refused permission by the High Court to adduce survey evidence as it was held to be unlikely that it would be of any real value so as to justify the expense of obtaining it. Along with Interflora v Marks & Spencer, this is yet another in a string of decisions which indicate that survey evidence has limited value to the court and can be admitted only in special circumstances.

Control of reproduction of an image: Following last year’s Fendi v Arcadia decision, Hearst v AVELA Inc concerned the sale of merchandise featuring fictional cartoon character Betty Boop. The court found that AVELA had infringed Hearst’s UK and Community trademarks and committed acts of passing off on the basis that Hearst had established a reputation for the marks in the United Kingdom over a 20-year period and the public had been educated to regard the Betty Boop character as a sign of origin. The position now stands that where the average consumer has been educated to see a fictional character as a badge of origin and not merely as descriptive, both trademark and passing-off law can be used to enforce rights in that character.

Designs

Every RCD has a graphical representation of the design. Therefore, the scope of the protection afforded to an RCD is determined from the representation that is registered. In Magmatic v PMS the Court of Appeal was asked to decide whether a computer-generated three-dimensional image (as opposed to a line drawing) can affect or limit the scope of the protection afforded to the design. Previously, the High Court decided that PMS’s children’s suitcase, the Kiddee Case, produced the same overall impression as, and therefore infringed, Magmatic’s RCD for its children’s ride-on suitcase, the Trunki.

The Court of Appeal thought that the circumstances of this particular RCD were distinct from others in that the representations were not simple line drawings, but rather sophisticated computer-generated monochrome images, which showed the effect of light on the surfaces of the suitcase. The court decided that as a result, the trial judge was wrong to disregard other considerations (eg, the surface decorations found on the Kiddee Case) when carrying out a comparison with the RCD. In the court’s opinion, the decoration significantly affected how the shape struck the eye and the overall impression it created. Although this was determined on the particular facts of this case, RCD owners should be aware of potential limitations to the scope of their protection where their representations are detailed computer-generated images, particularly those that feature shading.

 

Marks & Clerk Solicitors LLP

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Will James

Partner

[email protected]

Will James is an IP lawyer who advises clients on IP issues in a wide range of technical industries. His particular expertise is in advising on patent issues in the biotech, pharmaceutical and electronics sectors. He has direct experience of IP litigation in the Supreme Court, the Court of Appeal, the Patents Court, the IP Enterprise Court and the UK Intellectual Property Office. He is a solicitor advocate, with higher rights of audience, and has acted as junior counsel in the High Court. Mr James also advises on commercial IP issues.

Jake Hayes

Solicitor

[email protected]

Jake Hayes is an IP lawyer with experience dealing with contentious patents and trademark matters, including having recently assisted in a major life sciences patent revocation matter. On the non-contentious side, Mr Hayes has advised clients on and drafted commercial contracts dealing with various IP rights issues. He also has experience in relation to brand and IP rights protection strategies, including EU customs enforcement.