Issue 12
8 January 2019
The Pregabalin discussion In the wake of the UK Supreme Court’s ruling against Warner-Lambert in the Pregabalin second medical use case, expert panellists discuss its effects
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In this issue
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Editor: Becky Butcher beckybutcher@blackknightmedialtd.com +44 (0)203 750 6018 Deputy Editor: Barney Dixon barneydixon@blackknightmedialtd.com +44 (0)203 750 6026
Alibaba and the OIN
Second medical use
Alibaba’s Roger Shang discusses the company’s accession to the Open Invention Network
In the wake of the UK Supreme Court’s ruling in the Pregabalin second medical use case, expert panellists discuss its effects
Subject matter eligibility
Cadbury Appeal
The USPTO has released new guidance for determining subject matter eligibility under the US Patent Act section 101
The UK Court of Appeal has dismissed an appeal from Cadbury in its attempt to trademark the colour purple
Contributors: Maddie Saghir, Rebecca Delaney
Alito back on Oracle dispute
Unwired Planet v Huawei
US Supreme Court justice Samuel Alito will participate in Oracle v Rimini Street
IPcom’s managing director runs through the potential outcomes for FRAND agreements
IP Portfolio Manager: Serena Franklin serenafranklin@blackknightmedialtd.com +44 (0)203 750 6025 Publisher: Justin Lawson justinlawson@blackknightmedialtd.com +44 (0)203 750 6028 Office Manager: Chelsea Bowles accounts@blackknightmedialtd.com Published by Black Knight Media Ltd Copyright © 2018 All rights reserved
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Reporter: Ben Wodecki benwodecki@blackknightmedialtd.com +44 (0)203 750 6017 Designer: James Hickman jameshickman@blackknightmedialtd.com +44 (0)203 750 6021
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Not quite bright enough
Latest events
BIC’s Steve Burkhart discusses recent actions by the company against counterfeiters
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Patents · Latest News USPTO releases section 101 guidelines The US Patent and Trademark Office (USPTO) has released new guidance for determining subject matter eligibility under the US Patent Act section 101 and the application of section 112 to computer-implemented inventions. The revised guidance, which takes effect as of 7 January, aims to “improve the clarity, consistency, and predictability of actions across the USPTO”, according to Andrei Iancu, under secretary of commerce for intellectual property and director of the USPTO. He said: “The USPTO will provide training to examiners and administrative patent judges on both documents to ensure that guidance is being properly administered.” The guidelines make two primary changes to how patent examiners apply the first step of the US Supreme Court’s Alice/Mayo test, which determines whether a claim is “directed to” a judicial exception. It brings the USPTO’s guidance in line with judicial precedent set at the Supreme Court to “improve certainty and reliability”, by extracting and synthesising key concepts identified by the courts as abstract ideas to explain that the abstract idea exception includes certain groupings of subject matter: mathematical concepts, certain methods of organising human activity, and mental processes. Secondly, the guidance includes a “two-prong” inquiry for whether a claim is directed to a judicial exception. In the first prong, examiners “evaluate whether the claim recites a judicial exception and if so, proceed to the second prong”. In the second prong, examiners “evaluate whether the claim recites additional elements that integrate the identified judicial exception into a practical application”. If a claim recites both a judicial exception and fails to integrate that exception into a practical application, then the claim is “directed to” a judicial exception, in which case further analysis under the second step of the Alice/Mayo test is required. With respect to the USPTO’s new guidance for section 112, the USPTO has described “proper application of meansplus-function principles under section 112(f), definiteness under section 112(b) and written description and enablement under section 112(a) if that idea is implemented in a practical application.”
IPOS grants first ever accelerated financial technology patent The Intellectual Property Office of Singapore (IPOS) has granted the first accelerated patent under its financial technology fast-track initiative. The first patent was granted to Voyager Innovations, a South East Asian technology company. Normally, patent grants from IPOS take at least two to four years, but under its fast-track initiative it only took Voyager seven months from application to grant. According to IPOS, it is crucial for businesses in fast-paced industries to obtain their patents in months, instead of years. Fintech is one of those fast-paced industries. Currently, there are over 1200 FinTech businesses in Singapore, according to IPOS. Its accelerated patent application-to-grant process comes at no additional cost and is open to any fintech enterprises from anywhere in the world that file through IPOS. Commenting on the grant, Daren Tang, chief executive of IPOS, said: “Singapore already has all the ingredients for a vibrant innovation ecosystem.” “Our broad intellectual property network reaches out to over 70 countries which account for more than 90 percent of global GDP.” “Complemented with a world-class financial services infrastructure and business-friendly regulatory policies, Singapore is well placed for fintech enterprises to commercialise their IP into this fast-growing region.” “Beyond the fintech fast track initiative, we will continue to explore and introduce more initiatives to help innovation-driven enterprises use Singapore as a base for taking their ideas and IP to the market.”
The USPTO is seeking public comment on the two guidance documents, which has a deadline of 8 March 2019.
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Patents · Latest News Alibaba and Ant Financial join Open Invention Network Global ecommerce platform Alibaba, alongside its affiliate Ant Financial, has joined the Open Invention Network (OIN), marking the latest drive by the network to get innovative Chinese companies on board with its patent nonaggression community. OIN is the largest patent non-aggression community in history. It supports the freedom of action in Linux as a key element of open source software. It is funded by Google, IBM, NEC, Philips, Red Hat, Sony, SUSE and Toyota. In a recent interview with IPPro, OIN CEO Keith Bergelt said the organisation was looking to bring in more Chinese companies and that in 2018, the total number of Chinese OIN licensees “has eclipsed the total number of Japanese licensees”. According to OIN, as a global leader in ecommerce and cloud computing and a global leader in financial technology, respectively, Alibaba and Ant Financial are “demonstrating their commitment to open source software as an enabler of their platforms and systems”. Bergelt commented: “The ecommerce, computing and financial services industries are experiencing significant disruption, driven by global leaders that recognise the benefits of shared innovation which enables them to effectively differentiate their services higher in the technology stack. We are pleased that Alibaba and Ant Financial have joined our community and committed to patent nonaggression in the core.” Jiangwei Jiang, general manager of technology research and development at Alibaba Cloud Computing, added: “Openness and sharing are the sources of innovation. Alibaba is excited to join Open Invention Network and share our cutting-edge innovations with industry leaders.” Benjamin Bai, vice president and chief IP counsel at Ant Financial, said: “We are excited to join OIN.” “Since its inception in 2005, OIN has been at the forefront of helping companies reduce patent infringement risks relating to Linux.” “It does so by creating a voluntary system of patent crosslicenses between member companies covering Linux System technologies. We look forward to working with OIN and its members to protect the Linux ecosystem and also encourage innovation in the open source software community.”
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Chris Skidmore named new IP minister UK member of parliament Chris Skidmore has been appointed minister of state for universities, science, research and innovation, following the resignation of Sam Gyimah. Skidmore is the third person to hold the position, which includes responsibilities for intellectual property, since the beginning of 2018. In a post on Twitter, Skidmore said he was “delighted and honoured” with the appointment. Gyimah resigned from the position on 1 December blaming issues with the controversial withdrawal agreement that the UK Government has proposed to parliament. Specifically, Gyimah claimed that he could not support the government’s deal in view of the UK’s recent decision to pull out of the EU’s strategic satellite navigation system, Galileo. Gyimah said the prime minister, Theresa May, was “right to call time” on Galileo negotiations, but that this was “only a foretaste of what’s to come under the government’s Brexit deal”. Skidmore is the MP for Kingswood, as well as an author and historian. He currently serves as the vice chairman of the Conservative Party for Policy and was previously minister for the constitution between July 2016 and January 2018.
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Trademarks · Latest News Swiss luxury group Richemont has joined the 115-member strong Alibaba Anti-Counterfeiting Alliance Alibaba’s Anti-Counterfeiting Alliance acts as a partnership between Alibaba and brands working toward the common goal of protecting intellectual property rights on Alibaba platforms. Richemont owns 17 luxury brands including Cartier, Montblanc and Chloe. The luxury group also owns the YOOX NET-A-PORTER GROUP, which includes brands such as NET-A-PORTER and online flagship stores for fashion brands, including Armani, Moncler and Valentino. As part of the Anti-Counterfeiting Alliance, Richemont will share its technology, expertise and other information to support the Alliance’s efforts. Alibaba’s Anti-Counterfeiting Alliance tripled in size last May, with new members including companies from a range of industries such as Bose, Honda, Samsung, Adobe, L’Oreal, Microsoft and Sony.
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In 2017, the Alliance established an advisory board for brands to provide feedback in areas related to IP enforcement. Michael Yao, senior vice president and head of brand protection and cooperation at Alibaba, commented: “The protection of intellectual property rights requires all stakeholders to work closely together and share their expertise. The AACA will continue its efforts to establish industry best practices for IP protection by creating effective collaboration among brands, platforms and law enforcement.” Alibaba has nearly 620 million active users and 1.8 billion listings across its platforms; this reach has led to an increase in the ecommerce platform’s anti-counterfeiting efforts as it has come to understand its responsibility in the industry. For just over two years, Alibaba has been involved in a number of measures aimed at improving its relationship with brands and tackling counterfeiting across its platforms.
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Trademarks · Latest News Cadbury appeal for purple trademark denied The UK Court of Appeal has dismissed an appeal from Cadbury in its attempt to trademark the colour purple. Cadbury had been seeking trademark protection for the colour purple, in particular the shade of purple applied to “the whole visible surface of the packaging” of products such as Dairy Milk.
It said: “Our iconic colour purple has been used for Cadbury chocolate products for more than a century and is synonymous with the brand.” “We will continue to protect what we believe is a distinctive trademark and challenge those who attempt to pass off their products as Cadbury chocolate by using this colour.”
Following an unfavourable UK High Court ruling, Cadbury had been attempting to remove part of its registration description concerning purple “being the predominant colour applied to the whole visible surface”.
Commenting on the case, Alex Borthwick, of counsel at Powell Gilbert, called Cadbury’s argument “creative” due to its contention that its registration was to a “series of marks”, as opposed to a single mark.
Both the hearing officer for the registrar of trademarks and the High Court refused Cadbury’s request to make the deletion. The Court of Appeal has now dismissed Cadbury’s appeal.
He remarked that had Cadbury been successful, it would have been able to “excise the offending part of the description since owners of series of marks could delete a mark in the series”.
Presiding judge Lord Justice Floyd argued: “Cadbury’s argument places too much weight on the appearance of the word ‘or’ in the description which follows the identification of a single mark.”
He added: “However, one of the difficulties arising from that argument was the strict requirements for a series of marks: the courts have explained that a series of marks is a ‘bundle’ of marks under a single reference number and that each of those marks must ‘resemble each other as to their material particulars and differ only as to matters of a non-distinctive character not substantially affecting the identity of the trademark’”.
He added: “The case where the colour purple covers the whole visible surface is merely at one extreme end of the range of cases covered by the predominant colour wording.” “Taking both parts of the description and reading the description as a whole, what is being described is every conceivable case where purple is the predominant colour, including, for the avoidance of doubt, the case where no other colour is visible.” A spokesperson from Mondelēz International, the owner of Cadbury, said that the company was “disappointed” by the ruling.
Borthwick warned that the sole condition that purple is the predominant colour would cover various marks, and called the rejection of this by the court as “a powerful reason why it reached its’ result”. Mewburn Ellis trademark attorney Rebecca Anderson-Smith called the decision “a significant blow to Cadbury” adding that this decision could leave Cadbury “open to attack by Nestle and other third parties for being invalidly registered”.
European Patent Organisation appoints Kratochvíl as Administrative Council chair
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Josef Kratochvíl has been elected chairman of the European Patent Organisation’s Administrative Council.
deputy chairman of the council. He will remain president of the Industrial Property Office of the Czech Republic.
Kratochvíl replaces Christoph Ernst who was appointed vice-president for Directorate General Legal and International Affairs at the European Patent Office (EPO). He began his tenure on 1 January 2019 for a term of three years. Until then, he will continue in his role as
The Administrative Council is one of two organs of the European Patent Organisation, the other being the EPO.
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The council is the office’s supervisory body and is made up of delegations from the 38 member states.
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Industry · Latest News UK signs rights protection agreements with non-EU European states, IP included The UK has reached agreements with several non-EU European states, including Switzerland, Liechtenstein and Norway that addresses protection of rights post-Brexit. The agreement with the Swiss will protect the rights of nationals, regardless of a no deal scenario, with intellectual property being an aspect of rights covered by the agreement. IP is also covered in the agreements with other states, with the governments of the UK, Norway, Iceland, and Liechtenstein stating that they “are pleased to have reached this agreement”.
Meanwhile, a joint statement from the UK and the Swiss government, stated: “The legal text of this agreement has now been finalised and agreed by both governments.” It continued: “This will ensure citizens can continue living their lives broadly as now and secure the rights Swiss and UK citizens currently enjoy. We want to put in place new arrangements from the end of the implementation period to protect our historic relationships.”
A joint statement from the UK, Norway, Iceland and Liechtenstein said: “It will protect the rights of our citizens as the UK leaves the EU, and it will provide certainty to businesses. We want to put in place new arrangements from the end of the implementation period to protect our historic relationships, including in the area of trade.”
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Copyright· Latest News
European Parliament, Strasbourg, France
Anti-article 13 petition reaches four million signatures A petition against article 13 of the European Copyright Directive has reached over four million signatures and will be presented to the European Parliament. The petition warned that the internet is “endangered by article 13” and calls for users to “strengthen themselves” and to “make a stand for the preservation of the free internet and freedom of information”. Article 13 shifts the burden of responsibility for copyright infringement to the platforms, forcing them to readjust their content protection mechanisms and take down user content at the request of rights owners. It was included in the controversial EU copyright reform, which was adopted in a 438 to 226 vote in September. The petition, which claims a previous petition that reached one million signatures rejected, calls on its signatories to “decide against directives similar to article 11 and 13 or which restrict freedom of information in any other way”. YouTube’s CEO Susan Wojcicki recently visited the European Parliament to lobby for upload filters. Wojcicki, an outspoken critic of article 13, met with MEPs in Strasbourg, including rapporteur Axel Voss. According to Julia Reda, member of the European Parliament for the Pirate Party and vice chair of the Greens/EFA group, Wojcicki has made several public statements in favour of mandatory upload filters. RWS IP PRO AD 0418 HERO.pdf
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Reda, who is also a supporter of the Save the Internet petition, called YouTube’s public lobbying for mandatory upload filters as “not surprising in the least”. She said: “By introducing ContentID, YouTube has already proven that is is very much capable of developing filters for certain types of content, such as music. If the entire market was obliged to install such filters, YouTube would not only be miles ahead in of its competitors in the development of such technologies, it would also be in a position to sell its filters to smaller platforms.” In late November, YouTube began rolling out adverts warning its users that the site may be drastically changed under article 13. UK Music, who created the #LoveMusic campaign which supports article 13 of the EU’s Copyright Directive, weighed in on the petition, with its deputy CEO, Tom Kiehl stating: “Contrary to a campaign of misinformation, inflamed by companies which have a vested commercial interest in resisting the new directive, including Google’s YouTube, article 13 will have a positive impact on the internet. It will ensure online platforms play fairly by closing a legislative gap that has allowed a distortion in the digital market to develop.” He added: “YouTube is by far the worlds most popular music service yet pays creators substantially less than competitors like Spotify and Apple Music as a result of this distortion. By providing legal certainty, article 13 will make it easier for the public to create, share and post online content.”
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Copyright · Latest News
Justice Alito no longer recused from Oracle Rimini Street US Supreme Court justice Samuel Alito will participate in Oracle v Rimini Street, despite previously recusing himself over a conflict of interest. Alito recused himself when the Supreme Court granted certiorari in the case in September last year and the court said Alito took “no part in the consideration or decision of this petition”. According to Alito’s financial disclosure report for 2017, he held between $15,000 and $50,000 worth of stock in Oracle, which was sold on 27 February 2017. In an announcement on its online docket on 3 January 2019, the Supreme Court revealed that Alito was no longer recused in the case.
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Oracle v Rimini Street revolves around whether the copyright act’s allowance of “full costs” to a prevailing party is limited to taxable costs under the US code on judicial procedure, as the Eighth and Eleventh Circuit Courts hold, or also authorises non-taxable costs at the Ninth Circuit holds. In 2016, Rimini was ordered to pay $73.9 million to Oracle. Last year, the US Solicitor General filed an amicus brief in support of Rimini Street, endorsing its interpretation of the US Copyright Act’s cost-shifting provision. The Solicitor General said that Oracle’s “contrary reading, which would allow courts to award expenses that are not ‘costs’ at all, stretches Section 505 [of the Copyright Act] beyond what its text can bear”. Oral arguments in the case are due to be heard on 14 January. www.ippromagazine.com
Copyright · Latest News
Not unusual to be sued: Fortnite creator in infringement battle with Fresh Prince star
Nirvana sues Marc Jacobs over ‘smiley face’ image
Alfonso Ribeiro, famous for his role as Carlton Banks in the 90s sitcom The Fresh Prince of Bel-Air, has sued Fortnite creator Epic Games for the alleged infringement of his famous dance move.
Nirvana has filed a complaint of copyright infringement against Marc Jacobs over the band’s copyrighted “smiley face” design and logo.
Ribeiro filed a lawsuit in the US District Court for the Central District of California accusing Epic of using his signature dance move as an animation in Fortnite without his consent. In his complaint, Ribeiro claimed that Epic has “unfairly profited from exploiting [his] protected creative expression and likeness and celebrity without consent or authorisation”. Ribeiro created ‘the Carlton dance’ in which he dances to Tom Jones’ Not Unusual by shimmying side to side whilst rhythmically swinging his arms from left to right. The dance appears in Fornite as an ‘emote’ titled Fresh. Fortnite is a free-to-play game that derives its profit through in-game purchases. Players can purchase emotes for in-game currency called V-bucks, which is bought using real money.. Ribeiro’s lawsuit claims that Epic creates “fake endorsements by celebrities”. Ribeiro is seeking injunctive relief and damages, including, but not limited to, Epic’s profits attributed to its misappropriation of both his dance and his likeness. The lawsuit also mentions other artists disapproval of Epic’s alleged infringement, including Chance the Rapper and 2 Milly, who have both sought profits from Epic for infringing their dances.
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In its complaint, filed at the US District Court for the Central District of California, Nirvana argued that Marc Jacob’s new “Bootleg Redux Grunge” range of clothing, includes a “smiley face” image that is obviously similar to, and an intentional copy of the copyrighted image, which makes it appear that the band has endorsed or is otherwise associated with the collection. Each Marc Jacobs webpage promoting the infringing products also states that “this bootleg [product] sure smells like teen spirit”, referencing one of Nirvana’s most famous songs, Smells Like Teen Spirit. The brand also used promotional materials, which reference “Come As You Are,” another Nirvana song. Nirvana owns a valid US copyright in its “smiley face” design and logo and has obtained a copyright registration. The band has used that copyrighted image continuously since 1992 to identify its music and licensed merchandise. Nirvana is now seeking compensatory and punitive damages for the harm Marc Jacobs actions have caused, and injunctive relief to stop the brand infringing conduct. Although Nirvana has demanded that Marc Jacobs cease and desist all such wrongful activities in writing, the brand has not only ignored but further expanded activities.
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Copyright · Latest News US Copyright Office denies luxury placemat protection The US Copyright Office has denied attempts by placemat company Benson Mills to protect a two-dimensional placemat after numerous applications. Benson Mills had sought copyright protection for its twodimensional artwork titled ‘Bellagio Pressed Vinyl Placemat’. A similar request was rejected by the US Copyright Office in June 2017. The placemat is a golden circle with concentric rows of U-shaped holes covering the entire piece. The size of the U-shapes decreases as the rows approach the centre of the mat. The registration specialist presiding over Benson’s 2017 application concluded that the artwork “does not contain any non-useful design element that could be copyrighted and registered”. Benson challenged the refusal, arguing that the work contains “more than the very minimal level of creativity required to meet the threshold requirement of originality under the Copyright Act”.
European Commission publishes notable infringing site list
The Copyright Office refuted the refusal challenge, stating that the U-shapes used in the design “are a common and familiar shape”.
The European Commission has published a watch list of notable websites that distribute counterfeit goods and pirated content.
Following a second request from Benson Mills, the Copyright Office has again rejected protection applications for the placemat, as the product “fails to satisfy the requirement of creative authorship”.
The Counterfeit and Piracy Watch List, believed to be the first of its kind, shows that the European Commission is actively monitoring troublesome websites that distribute copyright infringing material via various methods such as cyberlocking, stream-ripping, or BitTorrent indexing, as well as ecommerce sites that sell counterfeits.
Benson had argued that its placemat “does not function as a placemat” because “the sole function of a placemat is to protect a surface” and “the punched out markings take away from that protective function.” The Office took issue with this claim, stating that this puts it at odds with the title of the work. The office argued that while the holes in the placemat undoubtedly affect the utility of the placemat to protect a surface from food or beverage, the placemat “retains its intrinsic utilitarian function to provide a protective barrier between a table surface and dinnerware”. The Copyright Office’s review concluded that a minimal combination of U-shapes in a standard symmetrical, concentric arrangement “lacks the modicum of creativity required”.
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Named on the list were infringing sites that utilise cyberlocking, stream-ripping, referring, BitTorrent index, and unlicensed pay per downloads as methods to obtain copyrighted materials. The likes of Torrentz2.eu, Mp3va.com, and Fullhdfilmizlesene.org were on the list. Of the noteworthy ecommerce platforms featuring on the list’s distributors of counterfeits included sites ran by the EVO Company Group, Bukalapak, and Snapdeal.com.
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Domains · Latest News
amazon discussions have not reached a “desired conclusion”, says ICANN CEO The dispute over the .amazon top-level domain has not reached its “desired conclusion”, according to Göran Marby, president and CEO of ICANN. In a letter to ICANN’s Government Advisory Committee (GAC) chair, Manal Ismail, Marby explained that ICANN’s facilitation process associated with the application for the .amazon domain had “not been successful”. US ecommerce company Amazon applied for the .amazon domain in 2012, but was faced with criticism from the governments of Brazil and Peru. In 2013, ICANN denied Amazon’s application for the TLD over concerns that the word Amazon is a listed geographic name and that allowing the .amazon TLD would create public policy concerns. In its decision, ICANN also found that Peru had legal grounds to the name ‘Amazon’ as it denotes a river and region in both Brazil and Peru. But an independent review of the decision resulted in an order for ICANN to “promptly re-evaluate Amazon’s applications” and make an “objective and independent judgment regarding whether there are, in fact, well-founded, merits based public policy reasons for denying Amazon’s applications”. The GAC issued a communiqué with advice on a facilitation process for the domain, with the participation of the Amazon Cooperation Treaty Organisation and Amazon. However, Marby said these two had failed to reach an agreement. Marby said he hoped to finalise discussions between Amazon and the ACTO countries. On 26 November, ACTO secretary general Jacqueline Mendoza sent a letter to Cherine Chalaby, chairman of the ICANN board, stating that the countries would like to find a “mutually acceptable solution for the .amazon applications”, but said they had yet to receive the text of any proposal.
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Wilson Sonsini Goodrich and Rosati promotes two IP partners Law firm Wilson Sonsini Goodrich and Rosati has promoted two of its intellectual property attorneys to partner. Ali Alemozafar and Tracy Rubin, who both focus their practices on IP, have been promoted to partner. Alemozafar, who is based in the firm’s San Francisco office, advises clients on IP issues in the genomics, bioinformatics and artificial intelligence industries among others. He aids clients in patent strategy, patent prosecution and patent diligence. Rubin, who is based in the firm’s Palo Alto office in California focuses her practice on complex IP transactions and advises clients initial public offerings, strategic investments, and a wide range of licensing matters. The firm’s managing partner, Doug Clark, commented: “The many talents and skills of these attorneys have been exemplified, most notably, in the quality of the work done on behalf of our firm’s clients.” “We’re very appreciative of the commitment each attorney has made to the firm, as excellent practitioners and as colleagues who help shape our culture, while delivering the level of sophisticated representation our clients deserve.” Clark concluded: “We’re proud to welcome them as partners.” The promotions will become effective on 1 February 2019.
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Pio Suh · Interview
Unwired Planet v Huawei: What’s the fallout? IPcom’s managing director runs through the potential outcomes for FRAND agreements following Unwired Planet v Huawei Ben Wodecki reports
What does the outcome of the Huawei v Unwired Planet mean for future FRAND arrangements? The outcome is fully in line with IPCom’s fair, reasonable and non-discriminatory (FRAND) licensing process, and confirms our commitment to FRAND obligations. Our FRAND patent licence offer and method of calculating our FRAND rate takes justice Colin Birss’ calculation method in the original ruling as one of the major benchmarks. In his first instance decision in April 2017, justice Birss provided a very detailed mathematical formula for calculating a global patent portfolio licence fee, which takes into consideration various parameters such as number of standard essential patents (SEPs), determination of the total patent landscape, sum of total cumulative royalties and different weightings of a multimode device (2G/3G/4G). We regard this method of calculation as indeed reasonable and balanced, as it is usually very difficult to define a royalty rate that will be accepted by potential licensees. Since the initial ruling, we have received positive feedback from potential licensees, confirming that IPCom´s FRAND licence offer is extremely transparent and supplemented with details to help potential licensees understand how the FRAND rate has been determined. One of the potential licensees also confirmed that, due to the clear-cut FRAND offer, there’s a good chance that the dispute will be settled without litigation. Whilst we were comfortable with the first instance decision, we were also worried about the appeal decision, as all of the questions raised would have had an impact on our licensing approach. The issues on appeal as asserted by Huawei were referring to the global aspect of the portfolio license. The non-discrimination point, with the question of whether Huawei should be given the same royalty rate as Samsung, owing to the non-discrimination limb of FRAND, was also raised. Finally, the appeal court had to decide how strictly the Huawei v ZTE protocol set by the Court of Justice of the EU (CJEU) should be followed.
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As it turned out, the appeal decision largely followed the first instance decision, something we are very pleased about, as it meant there was no need to change our FRAND offer or licensing approach.
We regard this method of calculation as indeed reasonable and balanced, as it is usually very difficult to define a royalty rate that will be accepted by potential licensees What are the major implications that this case could have for the telecoms industry? Are there other industries that could be affected? The negotiation of FRAND requirements and obligations started about 10 years ago, since then it has shifted and evolved. In 2009, there was a benchmark decision of the German Supreme Court (Bundesgerichtshof): the ‘Orange Book’ case. In this landmark decision, Philips asserted its patent,which is essential for recordable Compact Discs (CDRs), against German CD-R manufacturers which had failed to request a license. The defendant contended that Philips was abusing a dominant position in the CD-R market by seeking an injunction on its SEP. At this time, I was working in the licensing team of Philips and was also involved in the optical storage licensing activities related to the CD-R standard which was at issue in the court proceedings. Philips wasn’t the only one; there were a lot of major telecoms and technology companies which owned SEPs and held dominant positions in the market. These parties were arguably in such an elevated position of control that they could theoretically exclude implementers out of the market by refusing a licence (‘hold-out’). Thus, the discussion of how to limit the power of the IP owners began, reaching a political dimension with the involvement of the European Commission. www.ippromagazine.com
Pio Suh · Interview Ultimately, to what extent should innovative ideas be dependent on FRAND terms? Any innovative idea deserves protection. If it’s an idea which contributes to the development or evolution of a technology, then it’s important to be properly safeguarded. This also means that anyone who wants to use this innovative idea should pay fairly. I think FRAND itself is a really good tool to help balance the interests of both parties. It protects and regulates the position of the IP owner because, in the real negotiating world, it has historically been a challenge to judge the quality of and put a price on IP. IP owners are ultimately trying to licence something that’s intangible, pretty abstract and very technical. I have never in my almost 15 years of licensing had a potential licensee voluntarily come to me and say ‘this is such a great technical feature, I really want to pay for the idea behind this feature and reward its owner.’ This never happens. Instead, it’s the other way around, involving a more active approach on the part of the IP owner, who must be the one to say, ‘hey, you’re using my idea, and you need to pay for it.’ As such, I’ve experienced a lot of reluctancy, stalling and delaying on the part of potential licensees. Why? Because holding up any licensing discussion and thus delaying time can mean saving money; it’s that simple. This is such a problem for the licensors, and it means they can’t establish a timetable to move licensing activities forward, ensure the opponent commits to a timetable, and then have meaningful and reasonable discussions about the use of the invention as well as the terms of the licence offer.
FRAND is changing this and helping to regulate timescales and discussions. It establishes a mutually beneficial framework for negotiations, whereby a licensor can make a FRAND offer, and the potential licensee can then either accept the offer, or come up with a fair counter offer. FRAND also means that if the counter offer is regarded as unreasonable and is rejected by the licensor, then the licensee must provide security for past usage, as well as for future royalties. The recent Unwired Planet v Huawei ruling is a further sign that the tables are turning in favour of IP owners. This landmark decision will give IP owners more rights, and grant more flexibility in negotiating IP rights with potential users. As well as reflecting IPCom’s long-held FRAND commitments, the ruling will help to create a courteous business environment and re-distribute the power traditionally held by some big technology firms when it comes to negotiating IP licenses. On the other side, and in addition to the aforementioned ‘holdout’ issue, we often see licensors, (more often than not huge multi-national corporations) approaching implementers simply saying, ‘pay two percent or ‘pay $3,000 per unit’, without giving the other party a reason as to why. The FRAND protocol is changing all this and helping implementers to better understand a license offer, especially regarding royalty fees. This is nothing new for IPCom, as we’ve been working to level the playing field and shine a light on anti-competitive practices for some time now, but should come as great news for all of the inventors and innovators that are driving developments in the tech and telecoms industry. IPPro
We’ve been working to level the playing field and shine a light on anti-competitive practices for some time now
Pio Suh, managing director IPCom
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Steve Burkhart · Interview
United States International Trade Commission, Washington DC, USA
Not quite bright enough BIC’s Steve Burkhart discusses recent actions by the company against counterfeiters at the US International Trade Commission and District Courts Ben Wodecki reports
Why has BIC taken action against these sellers at the USITC? For multiple reasons. BIC must protect its intellectual property and the trademark infringement, trade dress and IP claims do just that. For a long time, BIC has had a threedimensional trademark for its lighter and that trademark is being infringed by these activities. That is the principal part of the lawsuit, but this case is unique in that there is the added dimension of safety. BIC is known as the leader of quality and safety, so when we purchased some of the infringing lighters from the marketplace, subjected them to testing by an international accredited lab to the safety standards, and found test failures, that significantly increased the harm, not only to BIC, but it’s consumers and business partners as well. A lighter isn’t like a piece of clothing. It is a hazardous material, subject to federal laws and industry standards. You can imagine consumers and authorities being confused, thinking a lighter is a BIC when it is not. Then that lighter fails the safety tests, damaging property and harming people—that is a huge problem. If consumers, the government and reporters are confused, people may think a BIC lighter is at fault when it isn’t. Frankly, that’s an outrageous situation.
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How many safety concerns are there with these products? How much did that danger factor into your decision to take action? Under the law, IP rights are important to protect, just like consumer safety rights are important to protect. But for a consumer, safety is most important. As a consumer, I understand that good companies try to play by the rules and go to the trouble of establishing IP. The IP protects the workers, the investors, the brand, etc. But as a consumer you are incredibly concerned about safety of the products you buy for yourself and your family. The safety standards have been around for a long time in the US. For over 40 years we have had the American Society for Testing and Materials (ASTM) Standard, and in most of the rest of the world, it is the International Organization for Standardization (ISO). I am a member of both and in fact, I chair the ISO standard group for lighters. We’ve just gone through the process of updating those standards so I am quite familiar with all the requirements. Elements of the standards include lame height, self-extinguishment and ability to withstand a drop test so that if I drop the lighter it won’t break into a million pieces. The infringing products failed some of these and other tests and it is hard say how many will continue to fail. www.ippromagazine.com
Steve Burkhart · Interview Remember, many lighters made in Asia are made by hand. Who knows how these were made. But handmade products like these can have quality that is much more variable and less consistent. Thus, there is a greater chance of test failures.
How problematic are counterfeits to BIC’s brands? Counterfeit lighters like those named in the lawsuit present a significant risk to BIC, its consumers, and BIC’s business partners. I have been with the company for over 25 years and I have had responsibility for litigation the entire time, including IP cases. Past examples of counterfeit products seemed like one-off examples of a shipment of two, or of diverted products. The activity here doesn’t seem like a single, diverted shipment of counterfeit goods. This activity seems like an intentional business model. Here, one of the defendants attempted to register a trademark for their product and they were rejected because of BIC’s trademark. It is not by accident that a company makes a mould of certain dimensions and specifications and chooses a plastic to make its lighter look like a BIC. BIC’s trademark has been around for decades. The safety standards have been around for decades. In the US, we have two federal agencies that are involved in regulating lighters, the Consumer Product Safety Commission prescribed a child resistance requirement to the lighters and that rule has been around for decades. The US Department of Transportation has responsibility for the fuel content and how much is allowed to be inside the lighter (volumetric fill) and those rules have been around for decades. These constitute the very well-established
rules of the level playing field. As you can see from our lawsuits, we have many examples of defendants ignoring those rules. Add to all of that activity the fact that MK had a booth at a trade show blatantly selling their product—again—it doesn’t seem to be an accident.
Have you got any advice for other brands thinking about taking action against counterfeiters at the USITC? A guiding principle since the day I was hired was—when we’re right, we fight. How are we right in this case? Well, we made an investment to make the lighters meet and beat the standards. We registered the trademarks to make sure our products are protected. We are doing what companies are supposed to do to protect their consumers, employees, shareholders, and brands. We are right, so we fight. We understand that there is always risk in a fight. Usually, someone loses. In my experience with BIC, when we fight, the loser tends to be the other guy. We would not have filed the lawsuits if we didn’t think we were right. It is just so outrageous to me that this is happening. We will seek every remedy afforded under the law to defend and protect consumers, our employees, our shareholders and our brand. I think if your company is right and ethical and must be defended, you do it. Only then will people respect you, and play by the rules. IPPro
We are doing what companies are supposed to do to protect their consumers, employees, shareholders, and brands. We are right, so we fight
Steve Burkhart General counsel and vice president, BIC
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Roger Shang · Interview
An open and shut case for Alibaba Alibaba’s Roger Shang discusses the company’s accession to the Open Invention Network Barney Dixon reports
What was the onus behind Alibaba joining the Open Invention Network? Alibaba is involved in over a hundred open source projects, including contributions to Linux kernel. Alibaba and its cloud computing company, Alibaba Cloud, have joined open source organisations including the Linux Foundation, CNCF, Free Software Foundation, and Apache Software Foundation.
Alibaba has been focusing on research and development in cloud computing, operating systems, data processing and other areas for many years Open source software can benefit the entire ecosystem and provide a win-win situation for software vendors, developers and users. As a related company to Alibaba, Ant Financial shares the same views on open source and the need to ensure its continued development. The Open Invention Network (OIN) is the largest patent non-aggression community in history. By joining OIN, Alibaba and Ant Financial are publicly demonstrating their commitment to software development collaboration and innovation in core Linux and adjacent technologies. Alibaba and Ant Financial believe that participating in this community will ensure that open source, and its ability to drive new innovation, is available to all members without patent holdup concerns.
definition will be available royalty-free to other community members.
How does joining a non-aggression entity like the Open Invention Network promote innovation? OIN actively promotes the idea of innovation collaboration at the operating system level—while encouraging product or service differentiation at the middleware and application technology layers. Fostering collaboration drives innovation farther and faster.
How can Chinese companies benefit from joining the Open Invention Network? What advice would you give to interested parties? Innovation and collaboration on a global scale is good for all citizens of the world. It enables new technologies while doing so more efficiently and less expensively. At Alibaba and Ant Financial, we are very proud to be working with engineers, researchers, developers, small businesses and customers around the world. Many Chinese companies are embracing and contributing to open source software. Joining OIN will enhance their freedom to collaborate and innovate. IPPro
What notable patents will Alibaba be bringing to the patent pool? Alibaba has been focusing on research and development in cloud computing, operating systems, data processing and other areas for many years. Likewise, Ant Financial has been pioneering the use of technologies, such as blockchain and AI, to accelerate financial inclusion. Many of our innovations have materialised and will continue to materialise in the form of patents. Like the other participating members of the OIN Community, we have signed the cross licence that ensures any patents that are addressed by OIN’s Linux System
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Roger Shang, senior legal director, Alibaba Group www.ippromagazine.com
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Second Medical Use · Panel
Nicholas Jones, partner Withers & Rogers
Rachel Fetches, partner HGF
Darren Smyth, partner EIP
Nick Sutcliffe, partner Mewburn Ellis
The Pregabalin discussion In the wake of the UK Supreme Court’s ruling against Warner-Lambert in the Pregabalin second medical use case, expert panellists discuss its effects How will the UK Supreme Court’s ruling in the WarnerLambert case appeal affect patentees? Nick Sutcliffe: It will predominantly affect people with Swissform claims. Although people with the more modern European Patent Convention (EPC) Art 54(5) format claims are still going to be nervous, the UK Supreme Court case is quite clear that this ruling concerns Swiss-form claims. Still, you do wonder whether some of the policy issues underlying the ruling will also apply to the newer format, so similar reasoning may be applied when the newer format claims are litigated in the UK. If you’ve got a granted Swiss-form claim, you are going to be looking very hard at how broadly you’ve claimed the second medical indication, and whether there is sufficient evidence or details of an underlying mechanism in your application to make it plausible. I think the Supreme Court ruling has definitely raised the bar in terms of what is considered sufficient to make a claim plausible.
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It was interesting that the Court’s initial legal analysis indicated that plausibility was a low threshold test, but after actually going into the technical details of the case, the Court seemed to arrive at quite a high threshold. In particular, the distinction between inflammatory pain and neuropathic pain was crucial. The experimental models described in the patent related to inflammatory pain and the patentee couldn’t persuade the Court that there were technical reasons why findings in the inflammatory pain models could be reasonably extended to neuropathic pain. You could see a similar logic being tried for Swiss-form claims to cancer treatment. If only breast cancer models are described in a patent, is it then plausible that the treatment will work on other forms of cancer, such as prostate cancer? Parties alleging invalidity of a Swiss-form claim are likely to see whether the claimed indication can be subdivided into narrower sub-indications, only some of which may be plausible from the experiments in the patent. The presence of a narrower sub-indication that is not made plausible by www.ippromagazine.com
Second Medical Use · Panel the patent, for example, because it does share a common mechanism of action with other sub-indications, may form the basis for an insufficiency attack. Rachel Fetches: The ruling increases uncertainty and makes it harder for in-house counsel to advise businesses in terms of exclusivity. Now, as counsel, you will be advising a generic manufacturer to perhaps look at what laws Lord Jonathan Mance referred to.
Innovators could find it more difficult to secure and enforce exclusive rights to market such treatments in the future Nicholas Jones Partner, Withers and Rogers You would be looking at its outward presentation test, but you would also need to be thinking about some of the steps that the generic pharmaceutical companies went through earlier on in the case, the various things that the patentee said. The difference with the Supreme Court judgement is that all of them considered the public policy underlying second medical use, so, yes, we want to reward innovation and we want to give the patentee the ability to use them because it’s rewarding and for that innovation. However, they gave more weight than the Court of Appeals to the public benefit of people being able to have access to the competitive market in the non-patented indications for the first medical use. They were also particularly concerned about the impact downstream on pharmacists—the potential to be sued is obviously fairly terrifying, and they really did take that into account. They weighted those two factors slightly more, so they were trying to give more certainty. I think the courts would like to be able to take that into account—I’m sure they would. In the common law system they would. For patentees it gives them a lot less certainty of how they might stop people coming into the second medical use bit of the market, but the courts decided that actually the previous test effectively destroyed any generic competition in the non-patented market, and so they tried to balance it. Darren Smyth: I would distinguish between medical and non-medical patents, because for non-medical patents, not very much changes. Plausibility is really only an issue when
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you’re dealing with a field where the patent can’t directly show that the invention works so that you are relying on some kind of test or prediction to show that it should work. In practice, that is almost exclusively the medical field. A large number of patents will continue exactly as before, but for medical patents, it’s not quite clear whether the standard to show that the invention plausibly works is the same as before or maybe a little bit higher. It is certainly no lower. People drafting patent applications now will be looking to strengthen their arguments as to why the medical effect that they are predicting is actually plausible based on the evidence in the patent application. Nicholas Jones: Innovators could find it more difficult to secure and enforce exclusive rights to market such treatments in the future. While this is a setback, drug companies should not be put off from pursuing new medical use patents in the future. Building on previous case law, the Supreme Court’s decision is a significant victory for generics producers.
What does it mean for those looking to obtain second medical use claims? Sutcliffe: I’ll be telling clients going forward to look very carefully at exactly what model systems are used in the experiments described in a patent application and think hard about what can reasonably be concluded from them. It may be worthwhile to include dependent claims directed at very narrowly defined indications that are closely related to these models, to ensure that there are fallback positions that might survive an insufficiency attack based on this ruling. It is also important to consider mechanistic connections between different indications. For example, if your experiments show an effect on breast cancer cells, why it is plausible that other types of cancer are also treatable in the same way? What mechanism is your compound working on and why is that mechanism relevant to other types of cancer? The presence of a coherent narrative that links all the pathologies that fall within a Swiss-form claim will be helpful in convincing a UK Court that all of the pathologies can be plausibly treated by your compound and your claim is sufficiently disclosed. Smyth: For second medical use patents, this case is not actually representative. In most cases, even when the patentee is relying on the second medical use patent, there isn’t another authorised use for the drug covered by the second medical use patent, which is both off-patent and uses exactly the same presentation of the drug (dose, form etc). In those cases, a second medical use patent can give an effective monopoly, and so these patents are still very valuable. www.ippromagazine.com
Second Medical Use · Panel The three decisions on infringement contained in the ruling are all non-binding, but they do indicate the way that the courts are going. In a situation like the present one where the patented and off-patent uses of the drug have the same presentation, if any of the three approaches in the ruling is followed, then second medical use patents will become difficult to enforce. This means that the patentee will probably get very little effective monopoly for their second patent. But actually, that situation is rare. Quite often, the treatment covered by the second medical use patent is the only authorised use for the drug, or if the drug does already have another authorisation, it’s not the same dose, presentation or administration route. In those cases, the scope of a second medical use patent is not that much different from the scope of a product patent, because if the patent covers the only authorised use, then you effectively have a complete monopoly. This is why it has taken so long for a case like this to arise. It is weird that we had this second medical use form of patent for several decades and this is the first case that has really looked at the fundamental question of what do these claims actually mean and what scope of monopoly does the patentee get for them. The value of second medical use patents is reduced in cases factually similar to this one, which will disappoint many patentees, but such cases are overall quite rare.
For second medical use patents, this case is not actually representative
Darren Smyth Partner, EIP Fetches: If you’re looking at a second medical use claim, you’re not looking at a Swiss-form claim, you’re looking at a European Patent Convention (EPC) 2000-style claim, which is different. All of the courts all the way along in this case have been really careful to say it’s a process claim, whereas an EPC 2000 is a product claim.
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For people who are coming in now and looking at getting a second medical use claim, they’re putting in a product claim. Really, it’s all to play for and will make a difference on secondary infringement, which was hopeless under the Swiss-form claim, but indirect infringement could be treated completely differently.
It’s all to play for and will make a difference on secondary infringement
Rachel Fetches Partner, HGF Jones: The judges were unable to reach agreement on the issue of ‘plausibility’. This means that further case law may be required to determine whether generics companies will be successful in challenging second medical use patents on the grounds that insufficient data was provided to support their functionality at the time of filing. While it wasn’t a binding part of the ruling, the judges also couldn’t agree on the matter of what would constitute infringement of a second medical use patent by a generics company.
Will there be an increase in data filed later following this case? Sutcliffe: Evidence to support sufficient disclosure should be in the patent application when you file it. Only under very limited circumstances is a court likely to consider later filed evidence, and only if it supports what is already in the patent application. Ideally, applicants would include evidence from as many different experimental systems as possible in the application when it is filed. This is likely to provide the best position should the plausibility of any aspect of the Swiss-form claim be challenged later. The experimental systems should show the applicability of the compound across all the indications that fall within the claim. For example, three experiments in model systems illustrative of three different diseases that fall within the claim would be preferable to three experiments in model systems illustrative of a single disease that falls within the claim. www.ippromagazine.com
Second Medical Use· Panel In this respect, ‘shallower and broader’ is more helpful than ‘narrower and deeper’ in providing plausibility across the whole scope of a Swiss-form claim. For example, tests on cancer cells from 30 different types of cancer might be more helpful in making it plausible that a compound works on all types of cancer than lots of tests on cancer cells from a single type of cancer. It is helpful to think at an early stage of patent drafting about the experiments or mechanistic information that might be useful in making plausible all the individual disease conditions that might fall within a broad claim.
As patents with Swiss-form claims expire, the Supreme Court may have to look at the issue of infringement again Nick Sutcliffe Partner, Mewburn Ellis It looks like the UK courts are going to want positive proof of plausibility rather than just the absence of anything to suggest implausibility. It is clearly in nobody’s interest that people obtain granted patents for things that they haven’t invented. If a patentee could just say ‘my compound is good for treating everything’ and then cross out diseases from a long list when they turn out not to be treatable, that’s not a great basis for a patent system, as it discourages innovation from other people. The difficulty is how high you put the threshold for making it plausible that a disease is treated by a compound. Of course, in the case before the Supreme Court, pregabalin is actually effective in treating neuropathic pain, so the issue was not that the drug didn’t work, but that it was not made plausible at the time the patent application was filed.
Second medical claims are enforceable in Germany and Holland, will cases such as this crop up again? Sutcliffe: This ruling applies to Swiss-form claims, which are no longer being granted in Europe. As patents with Swiss-form claims expire, and patents with Art 54(5) EPC format claims take over, the Supreme Court may have to look at the issue of infringement again. In particular, the new format is a purpose limited product claim rather than a purpose-limited process claim and
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the consequences of this difference will need to be thought through. However, this ruling presents a reasonably clear steer for Swiss-form claims that is likely to last until Art 54(5) EPC format claims begin to be litigated. Despite the stricter infringement criteria set out by the Supreme Court, Swiss-form claims will still be valuable to pharma and life science companies, as part of their global patent strategy as they protect important assets. Jones: The ruling will be a disappointment for Pfizer and other drug companies that have invested large sums of money to find new medical uses of existing drugs and bring them to market. However, crucially, it may still be possible to bring an infringement action against a generic rival if their intention is unclear. Drug companies are also likely to take a more strategic approach when pursuing second medical use patents in the future. Actavis has been marketing Lecaent, its own version of Lyrica, with a so-called ‘skinny label’, for example, an information sheet noting that the drug can be used for epilepsy or general anxiety disorder, but not mentioning neuropathic pain. Despite doing this, due to prescribing practices in the UK, it was inevitable that the drug would also be sold for the purposes of treating neuropathic pain. To try to minimise this practice, the High Court took the unprecedented step of granting an order mandating the NHS to issue guidance to doctors and pharmacists that Lyrica must be prescribed for the treatment of neuropathic pain using its brand name, and not using its generic name ‘pregabalin’. In the leading judgement for the Supreme Court, however, Lord Sumption appeared to disapprove of this intervention noting that it is “by no means clear that it will always be appropriate to meet problems arising in relation to second medical use patents by guidance of this kind”, which suggests similar orders are unlikely in the future. Fetches: If you were a patentee and you had a similar kind of scenario in a different jurisdiction, even with a Swiss-form claim, given the way it went at the UK Supreme Court, I think it is worth trying again elsewhere. It may be struck down, but generally, when you’re talking about things that are worth the money to try, you don’t have generics piling into the market because it’s not commercially worth it. IPPro www.ippromagazine.com
Industry Events
46th Global Legal & IP ConfEx Singapore
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21 February 2019 Oil & Gas IP Summit London
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26-27 February 2019 47th Global IPIP ConfEx & Global GDPR ConfEx Life Sciences Summit San Francisco London
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27-2828November February 2018 2019 IP Law Summit Los Angeles
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