Recent developments in IP law and practice

This chapter describes recent developments in UK IP law and practice that are unrelated to Brexit or the proposed Unified Patent Court (UPC). However, it would be disingenuous to ignore completely the United Kingdom’s ongoing exit negotiations with the European Union. At the time of writing, there is no clear indication as to the deal that will be in place. Although no one knows how Brexit negotiations will go, there will be major implications for IP rights in the United Kingdom, particularly in relation to the UPC, supplementary protection certificates, trademarks and design rights.

The UK courts are developing law and procedure in a way that is attractive to potential litigants. The courts’ commitment to increasing speed, efficiency and value is laudable in any case, but particularly so in the current period of uncertainty. Whatever the rationale, the focus on ensuring speedy and cost-effective IP litigation in the courts means that the United Kingdom will remain a highly competitive forum for IP litigants.

Procedural developments

IP rights are dealt with in several different specialist courts in the United Kingdom; all litigants – from highly sophisticated users to small and medium-sized enterprises (SMEs) and individuals – have a venue well suited to their needs.

Small claims

The small claims track of the Intellectual Property Enterprise Court (IPEC) is a new forum for litigants in person and companies pursuing claims of low monetary value (but which, for example, might wish to seek final injunctive relief). It allows quick resolution either at trial or by focusing the parties’ attention on the dispute and thus encouraging settlement.

Medium claims

SMEs (and large corporations) benefit from the streamlined procedure of the IPEC, which has been performing well for many years now. Standard IPEC proceedings benefit from a costs cap of £50,000, although damages recoverable are limited to £500,000.

However, a recent case removed the costs cap when a claimant makes a so-called ‘Part 36 offer’ if it subsequently beats that offer at trial. A Part 36 offer is an offer to settle the dispute at a certain level, made under specific court rules, with cost consequences if that level is not ultimately beaten, encouraging serious consideration of the offer. In PPL v Hagan the court ruled that the cost consequences of Part 36 trump the IPEC cost cap. This means that a claimant can apply significant pressure on a defendant with the threat of higher legal costs.

Large claims

Concepts behind the streamlined case management of the IPEC are now finding their way into the High Court’s patent practice, particularly via Justice Birss (a High Court judge elevated from the IPEC). Previously, patentees would often be ordered to give disclosure on validity issues, usually at high cost and of dubious benefit. However, the court has now clearly set out that convincing reasons are required from a party seeking disclosure to persuade the court to order disclosure in relation to both obviousness (Positec v Husqvarna) and insufficiency (Illumina v Premaitha). This has the potential to save litigants significant costs while retaining the power to order disclosure where it is necessary and proportionate to the specific dispute.

The High Court has also recently shown that the cogs of UK justice can turn quickly, for both a standard case and an expedited case:

• The Patents Court has given guidance enabling a claimant to obtain a trial date within 12 months of issuing a claim, and encouraging the consideration of the trial date very early in the process (before any case management conference);
• The High Court (non-patent cases) Shorter Trial Scheme allows a claimant to seek trial within 12 months, provided that the case can be accommodated within a four-day trial; and
• Expedited trials can be achieved within six months (including appeal) when a party can show a legitimate commercial need. For example, in Napp v Dr Reddy’s a claim (with an interim injunction application) was launched by the patentee in February 2016 and was expedited in March; a two-day trial occurred in June with judgment issued within three weeks and a Court of Appeal hearing a little over a month later, at which an oral decision was given (a written decision followed in November).

The High Court has also demonstrated a willingness to determine complicated – and even controversial – disputes by developing its jurisprudence on so-called ‘Arrow’ declarations and fair, reasonable and non-discriminatory (FRAND) licensing cases. The court has recently granted Arrow declarations to biosimilar manufacturers seeking confirmation that specific biosimilar products could not infringe a valid patent. This has involved the court determining whether such products would be obvious (at least) at the relevant priority date (Fujifilm v Abbvie). In developing the law on the appropriate level of FRAND royalties, the court was prepared to determine a worldwide royalty rate to be FRAND in one case and developed a new type of final injunction specifically crafted to deal with FRAND issues in the context of standard-essential patents (Unwired Planet v Huawei).

UK legislation

Threats

The Intellectual Property (Unjustified Threats) Act 2017 harmonises the threats regimes for patents (UK and European), trademarks (UK and EU) and designs (UK registered, unregistered and EU), bringing the law for trademarks and designs into line with pre-existing patent law. This will make enforcement of all these rights simpler, as a single regime must be followed.

The act also introduces significant further reforms, including a safe harbour for “permitted communications” which can make implicit threats permissible (eg, notifications of rights that exist).

Other developments

Under Section 52 of the Copyright, Designs and Patents Act 1988, artistic works which had been sold on an industrial scale (more than 50 copies) were protected by copyright for only 25 years. This section has now been repealed, meaning that the term of copyright in these works reverts to the usual life of the author plus 70 years. Rights holders and producers of industrial articles will need to be alive to the fact that certain works – especially “works of artistic craftsmanship” – will have a revived protection.

The Digital Economy Act 2017 updates aspects of UK IP law in the digital era, including lending rights for e-books, increasing maximum sentences for online copyright infringement and allowing marking products with a website address instead of the number of a registered design.

Case law round-up

Patents

Claim construction: In Actavis v Eli Lilly – arguably the most important UK patent case in the past 10 years – the Supreme Court reviewed the principles from the Kirin-Amgen case, which was the prior leading case on claim construction, as well as the Improver questions that pre-date Kirin-Amgen. Throughout Europe, claim construction is governed by Article 69 of the European Patent Convention and its accompanying protocol, which deals with equivalents. It is now clear that the United Kingdom has a doctrine of equivalents. Lord Neuberger held that, to provide fair protection to patentees, equivalents/variants must be taken into account using re-written Improver questions:

• Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention (ie, the inventive concept revealed by the patent)?
• Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention?
• Would such a reader of the patent have concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention?

In order to establish infringement in a case where there is no infringement based on normal claim interpretation, a patentee must establish that the answers are yes, yes and no, respectively.

The case is also interesting because the declarations requested by Actavis concerned several European counterpart patents, again showing the cross-jurisdictional reach of the UK courts. The Supreme Court considered that its conclusion on infringement was also applicable under French, Italian and Spanish law.

Plausibility: Whether an invention is ‘plausible’ (and thus ultimately valid) on the basis of the disclosure in the patent has become a frequent question in UK patent litigation, even though this word does not appear in the Patents Act. The Court of Appeal in Warner-Lambert expressed the view that plausibility is only a “low-threshold” test. However, this principle is still causing patentees significant problems when trying to obtain sufficiently broad protection. The question is due further consideration, as it is understood that the point is to be argued at the Supreme Court as Warner-Lambert seeks to overturn the invalidity findings against their broader claims.

Trademarks

The KitKat cases – origin and distinctive character: Nestlé has tried to protect the shape of its KitKat bar for years. The UK Court of Appeal and the EU General Court have given judgments this year relating to this dispute. In the United Kingdom, the question posed was what needed to be proved to show that the shape of the KitKat bar (without the KitKat logo embossed on it) had acquired distinctiveness in the United Kingdom; whereas the EU General Court considered where an EU mark must have acquired distinctive character.

In the UK action, the UK Intellectual Property Office had found that consumers associated the shape with KitKat, but that they had not relied on the shape to indicate the origin of the goods. On appeal, Nestlé challenged this ‘reliance test’.

The Court of Appeal held that the mark (in this case the shape) alone had to be capable of informing customers as to the origin of the goods. Showing reliance by the relevant consumers would be sufficient, but was not a precondition. The public must perceive that the shape originated from a particular producer. On the facts, Nestlé failed (Société des Produits Nestlé v Cadbury UK): mere association of the shape with KitKats was not enough.

In Europe, Nestlé had succeeded in showing that the mark had acquired distinctiveness in 14 of the 15 member states in question (including the United Kingdom). Put simply, the issue was whether 14 out of 15 was sufficient. It was not: as a matter of law, acquired distinctive character must be established throughout the entire EU territory – that is, in all member states.

If the evidence submitted does not cover part of the European Union – even a part which is not substantial or consists of only one member state – a party will not succeed. As a result, the shape mark was refused.

Glaxo v Sandoz – a lighter shade of purple: This case involved a determination of the validity of Glaxo’s trademark. The mark was registered as consisting exclusively of one or more colours, but was represented both graphically and descriptively. The description included the words “the colour dark purple as applied to a significant proportion of an inhaler, and the colour light purple applied to the remainder of the inhaler”. Sandoz argued that, in light of the description, Glaxo had failed to properly limit the scope of the mark, as there could be potentially limitless variations falling within the description.

The court agreed, holding that the mark was ambiguous in scope and consequently invalid. Although the law remains unclear, the judgment provides useful guidance for practitioners as to what is not acceptable in registering colour marks.

Property Renaissance v Stanley Dock Hotel: This dispute in the High Court centred on the use of trademarks containing the word ‘Titanic’ between Titanic Hotel and Titanic Spa. The case was complex, with multiple rights at issue, but of more general interest is the application of the ‘own name’ defence for trademark infringement.

The case is an example of the balancing act that a court must conduct when a trademark infringement action is defended on the basis of the defendant’s own name (including trading names). This may succeed if it is consistent with ‘honest commercial practices’. The court found that there was confusion in the relevant consumers (the mark was for spa services), but that this had been considerably reduced following a rebranding exercise for the hotel’s spa. Therefore, the court held that the Titanic Hotel could continue using the name despite infringing the Titanic Spa mark, provided that a disclaimer was placed on the hotel’s website.

Designs

In Magmatic v PMS International the Supreme Court ruled that the design of the famous Trunki rideable suitcase was not infringed by Trunki’s rival, the Kiddee case. The court ruled that the Trunki design, as registered, was not infringed. The reasons, as set out below, show that the exact form of the design application (eg, whether photo, line drawing or three-dimensional monochrome representation) can be critical to the scope of protection obtained:

• The design had no surface decoration and this supported the overall impression of a “horned animal”. The lack of decoration was capable of being a design feature in and of itself. The alleged infringement’s surface decoration (eg, tiger stripes) affected the impression given by its shape; and
• The design drawings were monochrome and this characterised the extent of the registered design. If the owners of the Trunki design had wanted to protect surface decorations, they should have made appropriate registrations to cover these.

Copyright

FA v BT concerned live streaming of Premier League football and the involvement of various UK internet service providers (ISPs). Previously, blocking injunctions had been granted against ISPs for infringing websites, but new technology meant that streaming servers were offering the copyright content live direct to consumers (not via web browsers). This meant that the injunctions needed to be carefully crafted to protect legitimate interests of the streaming servers and be limited in time to the live matches at issue.

Elsewhere, the pursuit of certain infringers by a royalty collection society, Phonographic Performance Ltd (PPL), has highlighted wide-ranging available deterrents. First, financial deterrent is available via ‘additional damages’, which the courts used to dissuade both the defendant and third parties from further infringements of PPL rights (PPL v Hagan). Second, the UK courts can and do imprison copyright infringers: in one case a night club manager had gone to great lengths to avoid payments due to PPL and made several misrepresentations. The infringement was ongoing and in breach of court order, and in the circumstances a three-month suspended sentence was appropriate (PPL v Miller).

Conclusion

The United Kingdom continues to develop and adapt so that its IP protection and enforcement system offers a robust and user-friendly experience for users. UK courts are fast, inventive and flexible. The Supreme Court also frequently weighs in on important points of law to provide clarity. This is a powerful combination, making the United Kingdom a popular choice for claimants in many types of dispute, and this is likely to continue no matter what happens as the United Kingdom exits the European Union.

Will Cook

Partner

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Will Cook is an IP lawyer (solicitor) with a focus on the litigation and licensing of patents. He advises major corporations and other entities in the technology, media and telecoms, life sciences and other sectors. He has litigated patents covering electronics, semiconductors, telecoms, software, pharmaceutical compounds, drug delivery mechanisms, biotechnology and mechanical engineering. He has significant experience handling litigation in the Patents Court, IP Enterprise Court and Court of Appeal, as well as of various arbitration procedures. He regularly advises clients in multi-jurisdictional disputes with parallel proceedings in the United States and key European jurisdictions. He also handles EU customs border detention matters and advises on standards, fair, reasonable and non-discriminatory licensing and essentiality issues.

Ian Turner

Managing associate

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Ian Turner is an IP lawyer (solicitor) who advises clients on the full range of intellectual property, with a particular interest in contentious patent matters. He has worked on many biotechnology and pharmaceutical disputes, usually involving multi-jurisdictional issues, as well as cases in the technology, media and telecoms and mechanical fields. He frequently works with lawyers from around the world, often with a coordinating role for international disputes. As well as specialising in the legal/technical aspects of biotechnology and pharmaceutical patent cases, he has experience of supplementary protection certificate validity issues and financial relief in the pharmaceutical sector.

Luke Hill

Associate

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Luke Hill is an IP lawyer (solicitor) who advises clients on all aspects of IP law, particularly in contentious patent matters and copyright matters relating to the music sector. In addition to patent litigation, he has experience in regulatory law and in coordinating multi-jurisdiction litigation across Europe. His main patent litigation experience centres on the pharmaceutical and biotechnology fields. His copyright practice involves advice on music deals including publishing contracts, record deals and management contracts, as well as ancillary issues such as music rights registrations, music copyright infringement and sample clearances.