This month we report on the use of keywords in the resale of goods in Portakabin Ltd, Portakabin BV v Primakabin BV; we consider the case of Nintendo Company Ltd & Anr v Playables Ltd & Anr in which Nintendo succeeded in its application for summary judgment that Playables, by importing and dealing in devices which enabled Nintendo DS users to play unlawful copies of Nintendo DS games, was liable under the copy-protection provisions. Plus we look at the case of SAS Institute Inc. v World Programming Ltd (“WPL") where Arnold J referred questions to the Court of Justice which probe the fundamental scope of copyright protection for computer software under the EU Software Directive.

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Decisions of the GC (formerly CFI)

Kureha Corp.  v OHIM; Sanofi-Aventis SA

Application (and where applicable, earlier mark)  

- pharmaceutical preparations, all being for use in the treatment of renal disease, liver disease, diabetes mellitus and Crohn’s disease, in various forms, and all being for oral administration, and none being administered intravenously or being for use in the treatment of heart conditions (5)

- phamaceutical, veterinary and sanitary products (5)
(earlier International mark)


The GC dismissed the appeal from the BoA’s decision that there was a likelihood of confusion between the marks under Art 8(1)(b).

The GC concluded that the goods were similar, rather than highly similar as the BoA had found. Although both covered pharmaceutical products directed at health professionals and patients and were distributed through the same channels, their therapeutic indications differed.

The GC held that the marks were highly similar both visually and phonetically.  As genuine use of the earlier mark had only been established in Italy, the perspective of the Italian relevant public was considered.  The Italian pronunciation of the first syllable of the marks was identical and the final syllable was near identical.  Neither mark had any conceptual meaning.

The high level of attentiveness of the relevant consumer was not sufficient to exclude a likelihood of confusion.

Case GC
MIP Metro Group Intellectual Property GmbH & Co. KG  v OHIM; CBT Comunicación Multimedia, SL

- downloadable publications (9)
- publications (16)
- advertising (35)
- education (41)
(all goods and services limited as “solely related to metrology matters”)


The GC annulled the BoA’s decision to reject the opposition under Art 8(1)(b).
The BoA was correct to conclude that the goods and services at issue were identical or similar.  The goods and services of the earlier mark were worded in broad terms which would also include those goods and services “solely related to metrology matters”.

The GC agreed with the BoA that the marks were only slightly visually similar but, in contrast to the BoA, held that the marks were aurally similar.  The fact that the syllables were pronounced in an inverted order could not prevent the signs from being similar overall.  Conceptually the marks were identical.

In light of the relevant public, being professionals in the metrology field, the element ‘metro’ while not being descriptive, was not considered to be highly distinctive.  However, this did not preclude a finding that there existed a likelihood of confusion in this case, taking into account the similarity of the signs and the identity or similarity of the goods and services covered.


Case GC
Engelhorn KGaA v OHIM; The Outdoor Group Ltd
Application PEERSTORM
- clothing, footwear, headgear (25)
- articles made from leather, bags, back packs (18)
- clothing, footwear, headgear (25)
(CTM and UK marks)
Comment The GC dismissed the appeal from the BoA’s decision which held that there was a likelihood of confusion under Art 8(1)(b).

The GC agreed with the BoA’s conclusion that the goods were identical.  The GC also concurred with the BoA’s conclusion that there was a degree of visual and aural similarity between the marks.  In addition, the GC held that there was a degree of conceptual similarity as both marks consisted of a first name and a surname (‘peer’ being a first name in Nordic countries and Germany) and that STORM would suggest to consumers that the goods were designated to provide protection against bad weather.

Despite the marks consisting of a first name and a surname being common in the clothing sector, the GC rejected Engelhorn’s submission that the earlier mark had a low degree of inherent distinctiveness.  Even if the earlier mark was only weakly distinctive, the identity of the goods and similarity of the mark was sufficient to demonstrate a likelihood of confusion.
Case GC
Grain Millers Inc v OHIM; Grain Millers GmbH & Co. KG

- meat, fruit, milk (29)
- coffee, tea, sugar, bread, condiments and flour (30)
- agricultural, horticultural and forestry products, grains, animals, fruit, vegetables (31)

Business name and figurative sign on letter heads.
(opposition based on flour, in particular wheat flour and rye flour)

Comment The GC dismissed the appeal, upholding the BoA’s decision that the evidence submitted by Grain Millers GmbH in support of its unregistered mark met the requisite standard of proof for the purposes of Art 8(4).

The BoA had allowed the opposition in respect of flour, agricultural and horticultural products and grains, but had rejected the opposition in respect of other goods.  The applicant appealed.
The BoA was entitled to rely on a newspaper article, press release and an invoice showing a transaction between Germany and Romania which displayed the word and figurative marks when concluding that the use of the earlier sign was not merely local and was in the context of commercial activity.

The fact that Grain Millers GmbH had used the “GmbH & Co. KG” designation prior to company registration did not affect the finding that it had used GRAIN MILLERS and as such acquired the right to oppose the application on the basis of this earlier use of its business name.
Case GC
Exalation Ltd v OHIM

- pharmaceutical and veterinary preparations, dietetic substances adapted for medical use, food for babies (5)
- meat, preserved, dried and cooked fruits and vegetables, jams, milk products (29)
- coffee, tea, cereals, bread, confectionary, sauces (condiments) (30)

Comment The GC upheld the BoA’s decision that the mark was descriptive of the goods applied for under Art 7(1)(c).

The BoA was correct to find that the term ‘lycopin’ (a technical term designating a food supplement) was descriptive.  The term was known by some of the relevant public (namely, professionals), whilst others were likely to become aware of it through dictionaries, websites and seeking advice. It was irrelevant that the term ‘Vektor’ (meaning an agent transmitting a molecule, substance or disease) had other meanings in the field of mathematics and physics.

The combination of ‘vektor’ and ‘lycopin’, linked by a hyphen, was usual in German and English, and would be indicative of the properties of the goods applied for.
The BoA did not err in refusing the registration under Art 7(1)(c).


Decisions not yet in English


Matratzen Concord GmbH v OHIM; Pablo Barranco Schnitzler and Mariano Barranco Rodriguez

Application (and where applicable, earlier mark)  

- cushions, pillows, mattresses (10)
- mattresses, beds, non-metal lath floors (20)
- bedding (24)

- furniture, in particular beds, mattresses and cushions (20)


The GC allowed the appeal from the BoA’s decision to reject the mark on the grounds that there was genuine use of the earlier mark and a likelihood of confusion under Art 8(1)(b).
The appeal was allowed under Art 73 as the BoA had not given sufficient reasons for its finding that there had been genuine use of the earlier mark.

Case GC
T 124/09
Valigeria Roncato, SpA v OHIM; Roncato Srl

- cleaning products and perfumes (3)
- vending machines, cash registers and photographic apparatus (9)
- precious metals and jewellery (14)

- bags, leather goods and suitcases (18)
(Italian national registered and unregistered marks)


The GC upheld the BoA’s decision to reject the opposition to the mark under Arts 8(4) and 8(5).

Valigeria Roncato failed to adduce sufficient evidence of use of the unregistered marks.
The mark applied for did not take unfair advantage of the distinctive character of the earlier registered marks’ reputation.

Case GC
Herhof-Verwaltungsgesellschaft mbH v OHIM; Stabilator sp. z o.o.
- building materials (19)
- building services (37)
- architecture services, technical reports (42)

- devices connected with recycling (1, 7, 11, 20)
- installation of machines (37, 40)
- chemical and physical analysis (42)
Comment The GC dismissed Herhof’s appeal from the decision of the BoA to reject the opposition under Art 8(1)(b).

The relevant goods and services were not similar and there was no likelihood of confusion.
Case GC
T 385/08 and T 386/08
Nadine Trautwein Rolf Trautwein GbR, Research and Development v OHIM

- leather goods, bags (18)
- pet food and drinks (31)
- clothing, headgear and belts (25) (for the horse mark only)

Comment The GC upheld the BoA’s decision to reject the application to register the marks under Art 7(1)(c).

The marks could serve to designate the intended purpose of the goods in question.
Case GC
T 510/08
Toqueville Srl v OHIM; Marco Schiesaro
Application TOCQUEVILLE 13
- clothing, footwear and headgear (25)
- leisure and entertainment services, particularly night clubs (41)
- catering services and bars (42)
Comment The GC upheld the BoA’s decision to dismiss Toqueville’s appeal against the partial revocation of the mark. 

Partial revocation of the mark was granted under Arts 51(1)(a) and 56(1)(a) after Toqueville failed to submit comments or evidence of genuine use.  However Toqueville did not appeal within the required time period. Tocqueville’s plea for restitutio in integrum failed.  The GC dismissed the appeal, rejecting Toqueville’s submission that it had no knowledge of the revocation proceedings.

Use of keywords in the resale of goods

Portakabin Ltd, Portakabin BV v Primakabin BV (CJ (First Chamber); C-558/08; 08.07.10)

Portakabin Ltd made and supplied mobile buildings and owned the Benelux trade mark PORTAKABIN.  Primakabin, an unrelated party, sold and leased new and used mobile buildings.  Some of the used units included those manufactured by Portakabin. Primakabin chose the following keywords on the Google ‘AdWords’ service: ‘portakabin’, ‘portacabin’, ‘portokabin’ and ‘portocabin’, and was sued for such use by Portakabin.  As part of those proceedings, questions were referred by the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) to the CJ regarding the interpretation of Articles 5, 6 and 7 of Directive 89/104 in the context of keyword advertising.

In relation to Article 5(1), the CJ followed its judgments in the Google France (C-236/08 to C-238/08) and Die BergSpechte cases (C-278/08), holding in summary that the use by advertisers of keywords identical or similar to a registered trade mark may constitute trade mark infringement where the ad did not make it clear to the average internet user whether the goods or services on offer originated from the trade mark owner or from an unrelated party.

On the interplay between Articles 5 and 6, the CJ noted, firstly, that Article 6(1)(a) was irrelevant.  Secondly, the CJ repeated certain submissions pointing out that:

  • under Article 6(1)(b), use of a sign identical or similar to a trade mark as a keyword for an internet referencing service was not generally intended to provide an indication of one of the characteristics of the goods or services; and
  • under Article 6(1)(c), it was unlikely that the use by Primakabin of signs identical or similar to Portakabin could be categorised as being ‘necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts’.

An Article 5(1) case might “easily correspond to a situation in which the advertiser cannot claim that it is acting in accordance with honest practices in industrial or commercial matters, and cannot therefore validly rely on the exception provided for in Article 6(1)”.  As a consequence, the CJ held that in these types of keyword cases, advertisers would not, in general, be able to rely on the exceptions provided in Article 6(1).  Unsurprisingly, it was ultimately for the national courts to decide the issue taking into consideration all circumstances of the case.

The CJ then considered the issue of exhaustion. Under Article 7(1), a trade mark owner cannot prevent keyword advertising (which would otherwise be preventable under Article 5) where such ads were for the resale of goods placed on the market in the EEA by the trade mark owner or with his consent.  However, where a legitimate reason existed under Article 7(2) such ads could be prevented, for example, where the ad gave the impression of an economic link between the parties or was seriously detrimental to the mark’s reputation.  In determining whether or not there was a legitimate reason, the CJ concluded as follows:

  • The national court cannot find a link, or serious detriment, just because a reseller is using another person’s trade mark with additional wording to indicate that the goods in question are being resold (e.g. ‘used’, ‘second-hand’);
  • The national court must find such a legitimate reason where the reseller has, without the proprietor’s consent, removed the trade mark from the goods being resold and replaced it with the advertiser’s own mark (which had happened in a limited number of instances according to Primakabin);
  • The national court must find that a specialist reseller of second-hand goods cannot be prevented from using the proprietor’s trade mark in advertising its resale activities (even where those activities include the resale of third party second-hand goods) unless the resale of the third party goods, due to their volume, presentation or poor quality, risks seriously damaging the image which the proprietor has succeeded in creating for its mark.

The national court will therefore have to decide whether the fact that the links from Primakabin’s ads took users to webpages displaying not just Portakabin’s goods but also other third party goods risked causing damage to the ‘Portakabin’ mark in this case.


Hearing Officer’s decision upheld by Judge

Ruark Distribution Ltd v Marpea SL (Mr N Strauss QC sitting as a Deputy Judge of the Chancery Division; 29.07.10)

Reporter’s note: The company name of the Respondent (Marpefa SL) is incorrectly recorded as Marpea SL on the front page of the judgment.

Mr Nicholas Strauss QC dismissed Ruark’s appeal from the decision of the Hearing Officer refusing the application to register VITA AUDIO in Class 9 on the basis of an opposition by Marpefa under Section 5(2)(b).  Marpefa was the proprietor of two CTMs both registered in Class 9 in the following form:

Mr Strauss QC held that the Hearing Officer was right to find that consumers with imperfect recollection who saw or heard the marks on different occasions would not appreciate the minor differences between them, which resulted from Marpefa’s use of VIETA in a stylised form and Ruark’s use of VITA coupled with AUDIO.

Ruark also submitted that the average consumer would recognise the element VITA as a well known word.  Conversely, consumers would not recognise VIETA and would be puzzled as to its meaning.  Ruark submitted that this was sufficient to distinguish the marks.  Mr Strauss QC disagreed, finding that the average consumer would neither be struck by the relative familiarity of VITA nor puzzled by VIETA.

Regarding aural similarity, Ruark submitted that the Hearing Officer had failed to take into account the fact that consumers would be familiar with how to pronounce VITA but would have to guess at the correct pronunciation of VIETA.   Mr Strauss QC disagreed, finding that any puzzlement as to the pronunciation of VIETA might be forgotten by the time of a VITA AUDIO purchase.  In addition, Ruark submitted, there would be a significant minority of consumers who would pronounce the two words as “veeta” and this would give rise to a risk of confusion.  Mr Strauss QC considered that the law did not require the Hearing Officer to fix on one possible pronunciation of a mark when performing such an analysis.


Threats action fails due to “without prejudice” rule

Best Buy Co Inc & Anr v Worldwide Sales Corporation Espana SL* (Floyd J; [2010] EWHC 1666 (Ch); 08.07.10)

Best Buy failed in its threats action against Espana under Section 21. Best Buy had used the Best Buy name extensively in the US in relation to consumer electronics shops.  It intended to expand into Europe and applied for a CTM which included the words, “Best Buy”.  Espana owned various national marks and CTMs, which included the words, “Best Buy”.  It relied on two such marks to oppose Best Buy’s CTM application.

Correspondence ensued whereby Best Buy sought to negotiate a coexistence agreement, however, the parties were unable to reach agreement.  Best Buy commenced threats proceedings under Section 21 on the basis of a letter written by Espana’s solicitors during the course of the negotiations (the “Letter”).

Did the Letter threaten proceedings for infringement of the Espana CTMs in the UK?
The Letter stated that Best Buy’s activities represented a conflict with Espana’s intellectual property rights, which would entitle Espana to take legal action to defend its interests.  The Letter also required undertakings to ensure that Espana was “able to protect its rights in a proper fashion”.

Floyd J held that the alleged threat should be assessed from the perspective of a reasonable businessman who received the Letter and who had knowledge of the relevant background; including the fact that Best Buy had also written a letter setting out its litigation stance, albeit indicating that it was prepared to discuss co-existence.   Judged from this perspective, Floyd J held that the Letter conveyed in the clearest terms that proceedings for trade mark infringement were being threatened.  It was immaterial that the threat was conditional upon Best Buy declining to negotiate and to cease use of the mark.

In order for the threat to be actionable under Section 21, Floyd J held that it was necessary for the proceedings threatened to be UK proceedings.  Assessed from the perspective of a reasonable recipient, Floyd J held that although Espana could bring proceedings in a number of fora, the recipient would recognise that if a major launch was to take place in the UK, then the UK would be a likely choice for proceedings. Thus, the hurdle was satisfied.

Was the threat made in relation to an “excluded” infringement?
In order for the maker of a threat to take advantage of the exclusions in Section 21(1), the threat must be framed in such a way that it was clearly limited to proceedings in respect of the excluded acts.  This must be assessed from the perspective of the recipient of the threat.

Floyd J held that as the Letter sought undertakings in respect of any use of the mark; a reasonable recipient would not have understood the threat to apply only to the supply of services (an excluded act).  Thus, the exclusion was not available.

Was evidence of the threat inadmissible by virtue of the “without prejudice” rule?
Statements made during the course of negotiations which are genuinely aimed at settling litigation are generally inadmissible in evidence.  However, context is important and the Court should not shut its eyes to the possibility that an offer to negotiate is in fact an open one.

Floyd J held the Letter to be part of a negotiating process, which was therefore entitled to “without prejudice” protection.  Having asserted the strength of its own position, Best Buy invited Espana to negotiate.  Espana was therefore entitled to respond by asserting the strength of its own rights.  Viewed as a whole, and in the context of what preceded it, the Letter was no more than a comprehensive negotiating response to Best Buy’s proposal so was entitled to “without prejudice” protection.  Thus, the threats action failed.


Extended Passing Off

Diageo North America Inc & Anr v Intercontinental Brands (ICB) Ltd & Ots* (Rix & Patten LJJ & Peter Smith J; [2010] EWCA Civ 920; 30.07.10)

The Court of Appeal dismissed ICB’s appeal against the High Court’s finding that it was liable for extended passing off in respect of its VODKAT products ([2010] EWHC 17 (Ch)), reported in the CIPA Journal, February 2010).  Diageo’s cross-appeal against the form of the injunction was also dismissed ([2010] EWHC 173 (Pat)).

Extended passing off is where protection is sought in respect of the goodwill generated by a particular product (for example, champagne, sherry or Swiss chocolate) rather than by relying on the mark of the particular trader who produces the product.  On appeal, ICB submitted that vodka was not an appropriate product for an extended passing off case because extended passing off ought only to apply to those products which have ‘cachet’, i.e. products perceived by the relevant public as being of superior quality.  Without this requirement, the courts would be faced with actions to protect ordinary products such as beer, which have no connotation of quality or prestige and where the misdescription of a product as “beer” could not possibility impact on any single brewer or even brewers as a class.  Thus, a claimant wishing to bring an extended passing off action by relying on a descriptive name ought to be required to show more than just that the product was distinctive.  Although unable to define precisely what more would actually be required, ICB relied on a passage from the House of Lord’s judgment in Erven Warnink BV v J. Townend & Sons Ltd [1980] RPC 31 (“Advocaat”) which suggested that a descriptive name must show that it had gained a public reputation which distinguished it from competing products of a different composition.

Patten LJ (giving the lead judgment) did not accept that cachet was a requirement of the tort, stating that there was no support for the proposition in the authorities.  The argument that a product must be a premium or luxury one in order to be protectable by way of passing off was contrary to the principle underlying the tort, being the protection of goodwill.  Although it may be easier for a premium product to acquire goodwill, there was no reason why goodwill could not also accrue to a product simply because consumers came to like and value it for its inherent characteristics, rather than for its status.
Patten LJ considered that ICB had difficulty in defining cachet because the concept of distinctiveness was already sufficiently well defined.

Nor was the CA persuaded by ICB’s floodgates argument.  Patten LJ pointed out that this had been rejected by the House of Lords in Advocaat. In any case, it was unlikely to transpire in practice since the requirement to prove the necessary reputation and goodwill in a distinctive product was likely to limit cases of extended passing off to a relatively narrow class.  Thus, ICB’s appeal was dismissed.

Although agreeing with Patten LJ’s judgment, Rix LJ expressed concern that the present case differed from previous extended passing off cases, which had all involved geographical sub-markets, in that Diageo sought to claim the whole of the wider category (vodka) as the market in which it shared, as its own property, a reputation and therefore goodwill and in which the defendant should not be permitted to partake.  Rix LJ was concerned that the extended form of passing off should not trespass beyond the legitimate area of protection of goodwill into an illegitimate area of anti-competitiveness, deceptive competition not being enough to constitute the tort of passing off.

Form of the injunction

Diageo brought a cross-appeal against the form of the injunction granted by the High Court, which provided inter alia that ICB be restrained from selling alcoholic beverages under the name VODKAT or under any other name closely resembling vodka unless the alcoholic beverage was clearly distinguished from vodka.  Diageo contended that as VODKAT was an established brand, it would be practically impossible for ICB to now make it clear that VODKAT was not vodka.  Thus, Arnold J ought to have granted an unqualified injunction.

The CA held that the decision to grant a qualified injunction was one for the trial judge as a matter of substance based on his findings about past confusion and his assessment of whether such confusion would likely continue unless an unqualified injunction were granted.  Arnold J had determined that there was a realistic possibility that ICB could continue to use the VODKAT brand in such a manner so as avoid future confusion and there was no reason why the CA should interfere with such assessment.  Where there was a realistic possibility that ICB could avoid future confusion, it should have the opportunity, via the qualified injunction, of satisfying the Court that this could and would be done. 


Damages for trade mark infringement, passing off and breach of contract

Gary Fearns t/a Autopaint International v Anglo-Dutch Paint & Chemical Co Ltd & Ots (Mr G Leggatt QC sitting as a Deputy Judge of the Chancery Division; [2010] EWHC 1708 (Ch); 09.07.10)

This was a damages enquiry following the High Court’s decision on liability ([2007] EWHC 955 (Ch)); reported in the CIPA Journal, May 2007) in which it was held that Autopaint was entitled to damages for trade mark infringement, passing off and breach of contract and that Anglo-Dutch was entitled to the unpaid price of goods sold to Autopaint.

Autopaint sold paint under the Autopaint brand via its own shops and through a network of distributors.  Anglo-Dutch was Autopaint’s main supplier.  Some time into the relationship, Anglo-Dutch began selling Autopaint branded products directly to Autopaint’s distributors under the Autopaint brand.  Autopaint’s financial situation deteriorated and the business eventually collapsed.

In the liability decision the High Court held that there had been an oral agreement between Autopaint and Anglo-Dutch which entitled Anglo-Dutch to sell directly to Autopaint’s distributors whenever Autopaint was itself unable to supply a particular product.

Extent of unauthorised sales
Mr Leggart QC held that 70% of all sales made by Anglo-Dutch to Autopaint’s distributors under the Autopaint brand were sales in breach of the oral agreement (because Autopaint could have supplied product to the distributor itself).  Mr Leggart QC held that it was reasonable to assume that Autopaint would have earned the same revenue from the relevant sales as Anglo-Dutch.  Autopaint’s gross profit on sales was 47%, thus the amount of profit lost by Autopaint as a result of the unauthorised sales was 47% of the value of 70% of Anglo-Dutch’s sales.  This was payable in sterling, being the currency in which Autopaint conducted its business and in which the sales of which it had been deprived would have been made.

Did Anglo-Dutch’s unlawful acts cause the collapse of Autopaint’s business?
Mr Leggart QC held that it was unlawful for Anglo-Dutch to offer to supply Autopaint’s distributors with products under the Autopaint brand in breach of the oral agreement.  Anglo-Dutch’s offer to supply the distributors with Autopaint branded products (as opposed to rebranded products) was a factor which induced the distributors to transfer their custom to Anglo-Dutch: (i) because Anglo-Dutch’s offer to supply products under the same brand substantially enhanced the attractiveness of the offer given the goodwill and reputation in the Autopaint brand; and (ii) because Anglo-Dutch must have realised that it was necessary to offer to supply the products under the Autopaint brand in order to induce the distributors to transfer their business.

However, even if Autopaint’s distributors had not switched their business to Anglo-Dutch, it would not have made a material difference to the financial condition of the Autopaint business, which was already in dire straits.  Nevertheless, this did not mean that the loss of the distributors had no financial effect: the loss caused Autopaint to lose further sales and it was therefore entitled to compensation for its lost profits.

Mr Leggart QC determined that in light of the problems with the Autopaint business, the distributors who switched to Anglo-Dutch would probably have continued to purchase goods from Autopaint for just six further months.  Hypothesising that sales during this period would have been the same as in the previous year, and then applying the 47% profit margin used in other calculations, the Judge held that Autopaint’s lost profits totalled £275,890.



SAS Institute Inc. v World Programming Ltd (“WPL”)* (Arnold J; [2010] EWHC 1829 (Ch); 23.07.10)

Arnold J referred questions to the Court of Justice which probe the fundamental scope of copyright protection for computer software under the EU Software Directive (the “Directive”).

SAS Institute developed software which enabled users to undertake various analytical and statistical tasks.  Users could create applications to run with the components of the SAS software by writing scripts in SAS’ proprietary language (“SAS Language”).

WPL wrote software (“WPS”) which was capable of running user applications written in SAS Language.  It did this by studying the published SAS manuals and the response of SAS learning edition to a large number of programs written in SAS Language.  WPL developers did not have access to the SAS source code and had not decompiled the SAS object code.  However, WPS reproduced elements of the SAS Language and was able to read and write SAS data file formats.
SAS alleged that WPL had infringed its copyright in the following ways:

  1. WPL had copied the SAS manuals when creating WPS and thereby had infringed copyright in the manuals

  2. By copying the SAS manuals when creating WPS, WPL had indirectly copied the SAS programs and infringed copyright in the SAS programs.

  3. By its use of SAS learning edition WPL had contravened the terms of its licence and had thus breached contract and infringed copyright in the learning edition.

  4. In creating its own manuals and quick reference guides WPL had infringed copyright in the SAS manuals.

Regarding the fourth claim, Arnold J held that WPL had infringed copyright in the SAS manuals but not in the quick reference guides.

Regarding the first, second and third claims, the Judge elected to refer questions of interpretation of the Directive to the CJ.  However, he commented obiter that if he had not made such a reference, he would have decided the claims as follows:

  1. He would have applied similar reasoning to the protection of the manuals as non-computer programs under the Copyright in the Information Society Directive.

  2. He would have followed Navitaire v Easyjet ([2005] EWHC 0282 (Ch)), reported in the CIPA Journal, April 2005) and Nova v Mazooma ([2007] EWCA Civ 219)) and found that there was no infringement of copyright in a computer program by copying functionality.

  3. He would have found that WPL was protected by the Directive’s provisions permitting study of the functioning of a computer program in order to determine the ideas and principles underlying it.

Although the precise questions to be referred to the CJ have not yet been formulated, the questions will cover:

The interpretation of Recital (14) of the Directive, which states: “to the extent that ... programming languages comprise ideas and principles, those ideas and principles are not protected under this Directive”.  In Navitaire this was held to mean that programming languages were not protected at all.  However, SAS submitted that the expression of programming languages was not excluded.

  1. The interpretation of Recital (13) and Article 1(2) of the Directive, which exclude protection for “ideas and principles which underlie any aspect of a computer program, including those which underlie its interfaces”.  In Navitaire this was held to mean that interfaces were not protected in situations not covered by the decompilation provisions of the Directive.

  2. In Navitaire and Nova, it was held that on the true interpretation of Article 1(2) of the Directive, copyright in computer programs does not protect the functions of the programs from being copied.  SAS submitted that this was incorrect, particularly having regard to the inclusion of preparatory design material within the definition of Article 1.  Arnold J was of the opinion that there was a distinction between the design of a program (its structure, sequence and organisation) and its functionality, the former being protected and the latter not.

  3. SAS submitted that even if Navitaire and Nova were correctly decided, they applied only to computer programs.  SAS claimed that WPL had reproduced substantial parts of the Manuals in the WPS source code.  The manuals were ordinary literary works and the normal rules of infringement should apply, unaffected by the Directive. Arnold J’s view was that it is not an infringement of copyright in a manual describing a computer program’s functions to use the manual as a specification of the functions that are to be replicated and, to that extent, to reproduce the manual in the source code of the new program.  Functions were on the wrong side of the idea/expression dichotomy expressed in the Directive, TRIPS and the WIPO Copyright TreatyThe Information Society Directive applied to non-computer programs and should be interpreted in the same way as the Directive. 

  4. As to the use of SAS learning edition, Article 5(3) of the Directive provides “The person having a right to use a copy of a computer program shall be entitled, without the authorisation of the rightholder, to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie any element of the program if he does so while performing any of the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do.”  SAS submitted that this was a “for the avoidance of doubt” provision which simply confirmed that the acts of observation, study and testing are not infringements provided that the user is licensed to use the program in the manner in question.  WPL submitted that so long as the user was doing the kind of acts of loading, displaying, running, transmitting or storing that he was entitled to do under the licence then he could not be prevented from doing those acts for the enumerated purposes of observation etc.  Arnold J’s provisional view favoured WPL, but the point was difficult and should be referred to the CJ, as should the question whether “ideas and principles” had the same meaning as in Article 1(2) of the Directive.

The judgment also addressed the issue of data file formats, which Arnold J deemed to be interfaces, which were not protectable.


Copy-protection provisions

Nintendo Company Ltd & Anr v Playables Ltd & Anr* (Floyd J; [2010] EWHC 1932 (Ch); 28.07.10)

Nintendo succeeded in its application for summary judgment that Playables, by importing and dealing in devices (“Devices”) which enabled Nintendo DS users to play unlawful copies of Nintendo DS games, was liable under the CPDA copy-protection provisions (specifically Sections 296ZD and 296) and liable for copyright infringement by authorisation under Section 24.

Section 296ZD

Section 296ZD deals with circumvention of effective technological measures (“ETM”) which have been applied to a copyright work other than a computer program.  A “technological measure” is any technology, device or component which is designed, in the normal course of its operation, to protect a copyright work other than a computer program.  A technological measure will be “effective” if it presents a physical barrier to copying, as opposed to merely discouraging, or acting as a general hindrance to, copying.  The Judge accepted that encryption and scrambling measures were “effective” technological measures.

Under Section 296ZD, a claimant has the same rights as a copyright owner has in respect of an infringement of copyright against persons who manufacture, import or deal with any device which: is promoted, advertised or marketed for the purpose of the circumventing ETM; has only a limited commercially significant purpose or use other than to circumvent ETM; or is primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of ETM.

Nintendo had implemented a range of measures to prevent the loading and playing of unlawful copies of its games including: applying a particular shape to the connector arrangement of the slot on the Nintendo DS and to the corresponding shape of the game cards; boot-up software permanently stored on the Nintendo DS which checked for the presence on an inserted card of the Nintendo Logo Data File (“NLDF”) and prevented execution of programs if the NLDF was not detected; and the use of shared key encryption technology and scrambling to enable the Nintendo DS to detect whether game cards were authentic.

Floyd J held that the boot-up software, NLDF, encryption and scrambling were clearly ETM which had been applied to Nintendo’s games and thus granted summary judgment.  Whether the shape of the connector was an ETM was a triable issue as it was arguable that Section 296ZD had in mind something which acted as a barrier to copying once connection had been made.

Section 296

Section 296 deals with circumvention of “technical devices” applied to computer programs.  A “technical device” is any device intended to prevent or restrict acts that are not authorised by the copyright owner of that computer program.  Under Section 296, a claimant has the same rights as a copyright owner has in respect of an infringement of copyright against persons who:

  • know or have reason to believe that a technical device applied to a computer program will be used to make infringing copies – the Judge clarified that it was not necessary to show that the defendant knew any particular program was to be copied or that the means would only be used for making infringing copies; and
  • manufacture, import or deal with any means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of the technical device or who publishes information intended to enable or assist persons to remove or circumvent the technical device.  The Judge held that the fact that a device may be used for a purpose which does not involve infringement of copyright does not necessarily mean that the “sole intended purpose” is not the unauthorised circumvention of a technical device.

It was clear that technical devices had been applied to the copyright computer programs in the Nintendo DS and game cards.  It was also clear that Playables’ products had the sole intended purpose of circumventing those technical devices and that Playables had the requisite knowledge. As all of the other conditions specified in Section 296 were also satisfied, the Judge granted summary judgment.

Copyright infringement

Nintendo owned copyright in the source code for the Nintendo DS boot-up software. It contended that this was infringed when a user inserted the Device into the console because a copy of the boot-up software was copied into the RAM.  Nintendo’s case was that it did not authorise the making of the copy and that Playables was liable for authorising the act of infringement pursuant to Section 24.  The Judge, however, refused to grant summary judgment on the basis that there may be an answer to the allegation based on the scope of Nintendo’s authority.

However, Floyd J did grant summary judgment on Nintendo’s claim for authorisation of infringement of the (artistic or literary) copyright in its NLDF because each game card had the code relevant to the NLDF installed on it.  The Judge held that the Devices were “templates for infringement” and therefore much more than the reel-to-reel tape recorders in CBS v Amstrad ([1988] 2 WLR 1191).  The knowledge requirement was plainly met.



Jn Dairies Ltd v Johal Dairies Ltd & Anr  (Mummery, Burnton & Sullivan LJJ; [2010] EWCA Civ 348; 31.03.10) and Jn Dairies Ltd v Johal Dairies Ltd & Anr (HHJ David Cooke; [2010] EWHC 1689 (Ch); 15.06.10)

The Court of Appeal decision

The CA dismissed Johal’s appeal against Judge Cooke’s decision on a preliminary issue, where he held that Johal had committed an actionable breach of confidence in relation to Jn Dairies’ customer invoices ([2009] EWHC 1311 (Ch), reported in the CIPA Journal, July 2009).

Johal raised two grounds of appeal.  First, Johal contended that Judge Cooke had closed his mind to Johal’s case and therefore, despite there being no allegation of a relationship between the Judge and Jn Dairies capable of giving rise to bias, or of any misconduct on the part of the Judge during the trial, Judge Cooke nevertheless lacked objectivity.  Johal submitted that the Judge had failed to consider the improbabilities of Jn Dairies’ case and had failed to take into account Johal’s attacks on the credibility of Jn Dairies’ witnesses.  However, the CA found no criticism of the Judge or his conduct.  Johal also submitted that the Judge was wrong not to have given judgment on a number of the matters raised by Johal during the proceedings.  The CA held that the Judge was not required to address every argument and every item of evidence in his judgment, especially where both sides had made a large number of points. His failure to comment on certain issues was no indication of bias or lack of fairness. 

Second, Johal submitted that the trial and judgment were unfair because the Judge had made a finding on serious unpleaded issues.  Jn Dairies’ pleaded case was confined to an allegation of breach of confidence, namely that a former employee had stolen Jn Dairies’ customer invoices and given them to Johal, which used the invoices to appropriate Jn Dairies’ customers.  However, during the proceedings, there arose on both sides unpleaded allegations of serious dishonesty with Jn Dairies alleging that Johal had bribed the former employee to steal the invoices and Johal alleging that there was a conspiracy between Jn Dairies’ witnesses to present a false case against Johal.

CPR 16.4(1)(a) provides that the Particulars of Claim shall include a statement of the facts upon which the claimant is relying, whilst paragraph 8.2 of the Practice Direction to CPR Part 16 requires a claimant to specifically set out any allegations of fraud and/or illegality where it wishes to rely on them.  Thus, the CA concluded, JN Dairies ought to have been confined to its pleaded case of breach of confidence.  That Johal had also relied on an unpleaded allegation was of no consequence.  Nevertheless, the CA did not consider that there had been any unfairness with which it should interfere because Johal had failed to question whether the unpleaded issues ought to be struck out prior to trial and it was now too late to raise the issue.

Johal’s application for strike out or summary judgment
Following the CA’s decision to uphold Judge Cooke’s finding that Johal had committed an actionable breach of confidence, Jn Dairies claimed damages based on the value of the information taken from it (“Value Basis”) (relying on a principle from Seager v Copydex Ltd (No 2) [1969] 1 WLR 809) rather than based on its actual loss of profit (“Loss of Profit Basis”).

Johal applied to strike out, or in the alternative for summary judgment on, Jn Dairies’ claim on the basis that damages on a Value Basis were only available to claimants who would not have used the information themselves but would rather have exploited it by sale or licence.  Johal relied on two CA decisions (Dowson and Mason v Potter [1986] 1 WLR 1419 and Gorna v Scales [2006] EWCA Civ 311) in support of this proposition.  Johal contended that it was for the Court to choose between the two bases of assessment but that which one was chosen was dependent solely upon whether the claimant would itself have used the information or whether it would have sold or licensed it.  As Jn Dairies used the information itself, it was restricted to damages on a Loss of Profit Basis. 

Jn Dairies submitted that damages on a Value Basis were available in cases where the extent of the claimant’s loss could not be fairly measured by his direct financial loss.  Alternatively, Directive No. 2004/48/EC on the enforcement of intellectual property rights required that the Value Basis for assessment of damages be incorporated into national law.

Judge Cooke held that it was at least arguable that the two bases of assessment did not establish an exclusive and invariable method of assessment of damages but rather were merely examples of the application of the general principle by which the Court sought to compensate successful claimants.  In particular, it was arguable that the concept of providing fair compensation could encompass an assessment based on the value of the information taken.  The Judge also held that Jn Dairies’ argument on the basis of the Directive No. 2004/48/EC was arguable. Thus, the Judge refused to grant Johal’s application for strike out or summary judgment.

Jn Dairies suggested that the value of the information taken should be based on the market value of the information on a sale between willing parties and then discounted by 50% to reflect the fact that the information was not sold on the basis of exclusive use but rather on the basis that it would confer on the buyer a competitive advantage, albeit in a competition which already existed.  The Judge approved this approach, adding that the advantage in the market to be gained by the information would be bound to be temporary.



Leo Pharma A/S & Anr v Sandoz Ltd* (Floyd J; [2010] EWHC 1911 (Pat); 27.07.10)

Floyd J dismissed Sandoz’s application under CPR r.40.12 (the ‘slip rule’) to correct an alleged error in an order made by the Judge earlier in the action.

Sandoz submitted that the inclusion in the order of a provision that it pay interest at judgment rate on any damages or account of profits was an error which should be corrected under CPR r. 40.12, which provides that the Court may at any time correct an accidental slip or omission in a judgment or order.

The interest provision was first included in a draft order prepared by Leo Pharma.  Sandoz countered with a draft which deleted the interest provision and proposed that the matter of interest be stayed pending any appeal.  However, Sandoz later acquiesced to Leo Pharma’s form of order and the order was sealed.  Sandoz then relied on the interest provision as a reason why Leo Pharma should not be entitled to delay the damages inquiry.  Sandoz claimed that it was not until a year after the order had been made that it appreciated that the matter of interest had not been the subject of an order by the Court.  Floyd J held that this was a contentious way of putting the issue: the matter of interest had been the subject of an order, albeit that the subject of the rate and period of such interest had not been debated in Court.

Floyd J held that matters deliberately included by the parties in an order drawn up and sealed by the Court do not constitute accidental slips or omissions for the purposes of CPR r. 40.12, unless, as established by Bristol Myers Squibb v Baker Norton Pharmaceuticals ([2001] EWCA Civ 214), the order has an unexpected and unintended effect which is inconsistent with the Court’s intention.

The Bristol Myers Squibb exception did not apply in this instance.  When the order was spoken, the precise form of order about interest was one of the matters to be settled between counsel and was, on the face of it, so settled.  Thus, the order did not have an unintended effect inconsistent with the Court’s intention.

Nonetheless, Sandoz submitted, its counsel had made a mistake in agreeing to the order.  Counsel had never intended to agree to the interest provision, as evidenced by Sandoz’s draft order in response, and he had not realised that Leo Pharma’s form of order involved abandoning Sandoz’s objection to the interest provision.

Taking into account that it had throughout been open to Sandoz to pursue its objection to the interest provision, which Sandoz had not done, and that Sandoz had instead relied on the provision in correspondence, Floyd J dismissed the application.  The Judge was also persuaded by the fact that if there had been argument before the Court before the order was drawn up as to whether the interest provision ought to be included, the outcome of such argument was not obvious.  This, the Judge held, was a strong indication that the mistake relied upon by Sandoz did not fall within the ambit of the slip rule.

Katharine Stephens, Zoe Fuller and Gina Brueton
Bird & Bird LLP
15 Fetter Lane
London EC4A 1JP
Tel: 020 7415 6000
Fax: 020 7415 6111

Reporters’ note: We are grateful to our colleagues at Bird & Bird LLP for their assistance with the preparation of this report: Graham Smith, Nick Aries, Nick Boydell, Rachel Fetches, Rob Hamblin, Emma McDowell, Emily Peters, Dania Rifaat and Victoria Poyer.

The reported cases marked * can be found at and CJ and GC decisions can be found at