Reflecting on World IP Day
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It's World IP Day, and a good time to reflect on IP in the courts over the last year. So what lessons can we take forward into next year? There's a lot to cover, because major jurisdictions across the world have seen a great range of cases since last April. And it's not just about household brands and blockbuster drugs: we've seen recent decisions that go to the root of IP law, shaking up IP practice, and moulding the enforcement landscape for 2018-2019.
So with cases covering all the major IP rights and four different jurisdictions, here are the Top Ten IP cases of the last 12 months.
Copyright’s digital frontier
European Union Court of JusticeStichting Brein v Filmspeler C-527/15, Court of Justice of the European Union (CJEU), 26 April 2017
We start exactly one year ago – on World Intellectual Property Day 2017 – with a copyright decision from the European Court of Justice. The decision in Filmspeler was a finding on the scope of the communication to the public right.
The Filmspeler was a digital media player, marketed with the promise that its users could enjoy “unlimited access to the best films, series and sports without a subscription”. Unsurprisingly, the court found that sale of a media player designed to hyperlink to infringing content online was a copyright infringement under EU law.
But what is surprising is the degree of flexibility in the law that the CJEU used to get to this result, over the course of several decisions beginning with GS Media in 2015. Derived from the EU Information Society Directive, the right of a copyright holder to prevent acts of communication to the public. Several decisions have led to a purposive interpretation of those four words expanding to a wide range of acts involving hyperlinking and making available on the internet. The line of cases has caused some controversy, and the law continues to develop.
Chocolate: barred
UK, Court of Appeal of England & WalesNestle v Cadbury [2017] EWCA Civ 358, 17 May 2017
A long-running battle may finally have concluded in May 2017 after the Court of Appeal found that the famous KitKat chocolate bar may be well-known, but its shape cannot be registered as a trade mark.
Even for a non-standard trade mark, this case was particularly complicated. After a rocky road via the CJEU, the UK national court in appeared to disagree with the CJEU’s interpretation of the law and application to the facts of the case. But the four-fingered snack suffered in particular from two major issues.
First was the question of whether its shape achieved a technical effect - the ability to snap off bits of the bar into bitesize fingers. The second issue was whether the mark would be perceived by a consumer as fulfilling a trade mark function, or whether it was simply the shape of the product that the consumer found after their purchasing decision was already finished.
It is unlikely to be the end of the battle for either Nestle or Cadbury, whose attempts to prevent each other from protecting various trade marks have kept the courts busy for many years.
Keeping close to your Heartland
United States Supreme CourtTC Heartland v Kraft Foods Group, 137 S. Ct. 1514, 1517 (2017), 22 May 2017
Local patent venue may not sound like fodder for a landmark decision but this US Supreme Court case changed US patent practice overnight, and featured in headlines across the world.
Of the 89 court districts in the USA, some naturally become known for being action. For example, the Central District of California has seen many major decisions in music industry. Similarly, for years the Eastern District of Texas has been venue of choice for patent actions – even to the extent that companies facing several patent lawsuits reportedly donated funds to various community causes in the area. The parties were often only loosely connected to Texas, but that was regarded as sufficient to establish good venue.
But TC Heartland changed this, reinforcing the criteria from the US patent venue statute and applying it strictly to prevent cases being brought in venues of convenience. Overnight, it was necessary to find a new de facto patent court – and Delaware found itself suddenly very busy.
At the limits of exhaustion
United States Supreme CourtImpression Products, Inc. v. Lexmark International, Inc., 581 U.S. 1523 (2017), 30 May 2017
Barely a week later, the Supreme Court gave judgment on another patent case. But while Heartland narrowed localities, the decision in Lexmark threw the doctrine of exhaustion open to cover the whole world.
Patent exhaustion – also known as the first sale doctrine – is based on the principle that once you own property, you should be able to do with it as you wish. It prevents patent claims being asserted after the patentee has sold a product (and therefore benefitted from it economically).
But for a US patent, which sales trigger exhaustion, and which do not? Different jurisdictions treat the question differently. In the EU, for example, exhaustion doesn’t take effect until the product has first been put on sale in the EU market with the proprietor’s consent. But the US took the opposite view: that wherever the product has been put on sale in the world, that is an act of exhaustion.
Imports into the US can therefore be resold more widely than was previously thought. And this was surprising because as a leading economy, the US market can provide good profits on sales of goods; but overseas prices can be significantly lower, leaving a profit margin for importers to compete with the product manufacturer on its own turf.
IP vs Freedom of Speech
US Supreme CourtMatal (USPTO) v Tam 582 U.S. ____ (2017), 19 June 2017
IP law is often contrasted with competition law – much less often does freedom of speech come into the question. In Tam though it was front and centre, as the Supreme Court considers the extent to which a racial slur should be denied trademark protection.
Tam had applied to register The Slants for a band name. It’s known to be a racial slur, but the band wanted to break free of that mould, recapturing the term and making it their own.
The USPTO refused the application on the basis that it was disparaging to persons of Asian descent, and citing evidence of its derogatory use. The USPTO may have been applying the Lanham Act correctly, but the Supreme Court found that the terms of the Act were unconstitutional: by allowing some messages to be registered but restricting others, the Act was effectively restricting free speech and discriminating based on viewpoint, in addition to mere content.
As a result another high-profile case was abandoned, which concerned protection of the logo for the Washington Redskins. That case concerned similar arguments and was underway at the same time.
Tam was a complicated analysis of whether legislation was constitutional, and the constitution won out – but it highlights the complexity and care that underlies IP law.
Equivalents in the UK
UK Supreme CourtEli Lily v Actavis, [2017] UKSC 48, 12 July 2017
In July 2017, The UK Supreme Court judge Lord Justice Neuberger marked the end of his distinguished career with a judgment that changed the fundamental assessment of patent infringement in the EU. The case concerned an important drug, formulated somewhat differently to the claimed composition but achieving the same therapeutic effect using the same active ingredient.
The doctrine of equivalents, well-known in the USA, has always been a foreign concept to the UK courts. Instead, we have applied a doctrine of purposive construction based on nearly 45 years of case law.
But the Supreme Court changed that last year, and moved away from a strict focus on the claims of a patent and more towards an assessment of infringement based on the problem underlying the invention. The analysis was rooted in proper application of the European Patent Convention, and could be an important factor on the international stage to make sure the UK conforms to the rest of the market when it leaves the European Union. But the doctrine remains underdeveloped, and further cases can be expected to clarify the scope and extent of its application.
FRAND it over
US, Central District of California
TCL v Ericsson, SACV 14-341 JVS(DFMx) and CV 15-2370 JVS (DFMx), 21 December 2017
Just before Christmas, the Central District of California released its judgment deciding on the value of one of the biggest patent portfolios in the telecoms industry –Ericsson’s range of patents essential to cellular telecoms. The central question was: what licence fee is “fair, reasonable and non-discriminatory” for a cellphone manufacturer to pay to a patent holder? Known by the acronym FRAND in the industry, these words derive from the membership rules of various technical standards-setting bodies such as ETSI.
Following the success of the Unwired Planet case in the UK in 2016 (which also concerned patents from the Ericsson portfolio), all eyes were on the US to see how they would conduct a similar analysis. And the judgment is a big one, combining technical findings with legal and economic analysis – but there were several important differences to the UK judgment, including a consideration of the different aspects of the FRAND promise separately rather than as one connected whole.
The result was a finding that low-end and high-end manufacturers should be treated the same, resulting in a back-payment to Ericsson of $16.5 million followed by annual payments over the next 5 years.
The value of a design
UK, High Court of England & WalesL'Oreal v RN Ventures Limited [2018] EWHC 173, 5 February 2018
Judgments on registered designs are much rarer than patent or trade mark cases, but this year has already offered us more than one important case to consider.
Until 2018, there has not been a single example of a registered design case that has gone to trial and been found both valid an infringed. This is not so much that aesthetic protection isn’t useful, but thought to be because cases of clear infringement are likely to settle quickly, and where there is an argument to the contrary the law in the area is tricky to apply. The famous decision concerning Trunkii children’s ride-on suitcases was just such an example, where a design did not capture the infringement due to the technicalities of the visual representation on the original application form.
L’Oreal v RN concerned the design of a facial scrubbing brush – a relatively new product, that was unusually found to be valid and infringed based on the representations of the registered design. Could this mark a turning point for registered design cases? We will be on the lookout for more cases in the future.
An honorable mention also goes to the CJEU decision in Doceram (March 2018), which considered the degree to which a product feature will be considered to be down to a technical function rather than a protectable aesthetic characteristic.
Treading carefully
EU Court of Justice
Christian Louboutin v Van Haren Schoenen, C-163/16, Opinion of the Advocate General of the CJEU, 6 February 2018
This one hasn’t reached final decision yet, but shoe manufacturer Louboutin has seen a significant step in the right direction. The case concerns the famous red sole for women’s high-heeled shoes, and whether that can be registered as a trade mark per se under European Union law.
The Advocate General of the CJEU issued an opinion in June 2017 that the sole of the shoe may fall under the category of a shape trade mark, and not merely a colour applied to the position of a sole. But the case was then reassigned to the Grand Chamber due (perhaps to its perceived importance) and the Advocate General was asked to prepare a supplementary opinion, which he did in February 2018.
Initially reported as a bad result for Louboutin, the opinion appeared to suggest that a combination of shape and colour might make a trademark vulnerable to cancellation. But Louboutin broke its customary silence to put things straight in a press release: they viewed the Advocate General’s opinion as a strong boost to its case, supporting the ability of its red sole mark to add substantial value to its shoes and thereby fulfil the function of a trade mark. The case continues.
The Chinese position: IWNCOMM v Sony
China, Beijing Municipal High People’s Court
Sony Mobile Communications Products (China) Co., Ltd. v Xi'an Xidian Jietong Wireless Network Communication Co., Ltd. (2017) Jingmin 454, 28 March 2018
Rounding out the list is an important case from China. Traditionally not viewed as a major IP jurisdiction, China has been taking positive steps towards a rigorous IP enforcement system including the launch of a system of specialist courts in 2014 and the new (and recently reaffirmed) importance of precedents in its judicial rulings. As a result, judgments in Chinese IP cases are being published and made available for scrutiny internationally.
The IWNCOMM case concerned a relatively minor telecoms technology – the Chinese WAPI standard for WiFi security – but apart from the local significance on the facts themselves, the analysis was detailed and international-standard.
Not only was the result among the highest payouts for an IP case in China, but it also led to the first time an injunction has been granted in respect of standardised telecoms. The original 2015 judgment was immediately appealed to the higher court, but last month it was affirmed on all counts, and will stand as precedent in the future.
Most importantly, it shows how much scrutiny the Chinese courts will give to negotiation history between warring parties in a FRAND dispute, and the lessons it teaches are actionable right away.
Tristan Sherliker is an IP specialist at Bird & Bird London, focussing on dispute resolution in patents and trade marks.
This article was first published in Intellectual Property Magazine and has been reproduced with kind permission.
