Confidence preserved: a concrete ruling on an abstract contract

Orr-Adams (trading as Applied Concrete Systems, a Partnership) v Bailey (trading as G Bailey Services) [2013] EWPCC 30 is a Patents Count Court decision of Katfriend and long-time IP enthusiast Miss Recorder Amanda Michaels last Tuesday, 19 May. It is a curious case, involving a good deal of implication of contract terms in order to put flesh on the bones of an oral contract.

Applied Concrete and Bailey struck an oral deal in July 1996: Applied Concrete was to develop cement formulations for Bailey in return for payment of a proportion of the profits on their sale. The disputed formulations were the last in a series that Applied Concrete had developed and which Bailey supplied to customers. This agreement terminated in August 2010, following which Applied Concrete alleged that -- both in breach of confidence and in breach of contract -- Bailey continued to use the formulations and to supply cement products after termination without making any payment to it. For good measure, Applied Concrete threw in a copyright infringement claim too, in respect of the copying of explanatory documents and quality manuals.

Recorder Michaels held for Applied Concrete, adding that it was appropriate for an order to be made that would maintain the confidentiality of the formulations. Why?

• The production of the formulations involved skill and creative input by Applied Concrete, being truly the product of the skill of the human brain and thus capable of being protected as confidential information.
  
• While Applied Concrete had included that information in documents which it sent to Bailey without marking it "confidential", it would have been known and understood by both parties that it was confidential and should be treated as such. Having invested time and effort in developing these formulations, the parties had a shared interest in maintaining confidentiality. Accordingly, any disclosure by Applied Concrete to Bailey was made on the basis that Bailey would maintain that confidentiality. This understanding remained unaffected by the fact that base formulations might be in the public domain.
  
• No confidence in the formulations was lost by their being sent to a third party company for blending: an obligation of confidence would be imposed on that company and confidentiality would be maintained.
  
• The formulations were not put into the public domain at the point at which they were tested, since the company involved did not know what was in the formulations and anyone who became privy to any details was subject to an implied duty of confidence since the commercially valuable nature of the formulations was plain, as was the fact that they were not being released into the public domain.
  
• While Applied Concrete had included parts of the formulations in the annex to the particulars of its claim, it must have been clear to Bailey that this had been done by mistake, so its obligation to maintain the confidence of those formulations was not terminated -- there being no public dissemination of the information which was sufficient to destroy its confidentiality.
  
• Since Bailey was not in a position to supply new formulations for at least four months after termination of its contract with Applied Concrete. Accordingly, any products supplied during that period would be taken to be made according to the formulations in issue. Since Bailey was not entitled to exploit those formulations after termination, it had to pay for any unauthorised use.
  
• Bailey's "clean-room" defence -- that new formulations had been derived without any reference having been made to the disputed formulations -- was rejected.
  
• Bailey only required a licence to use the copyright works with its sales of the formulations, for which it had to pay the appropriate licence fee. Any copies of the works supplied with products made using the formulations in dispute and for which no payment was made were issued to the public in breach of the terms of the licence. Alternatively, if there been an assignment rather than a licence, Bailey was still obliged to pay Applied Concrete for use of the copyright works in question.
  
• The obligation to pay fees was one of the few express terms of the contract, which also contained an implied term that Bailey could continue selling products made to the formulations either for a limited period after termination, or indefinitely. In either case, those sales carried an obligation to continue making payments to Applied Concrete.
  
• Even if Bailey had commissioned Applied Concrete to produce the formulations and was therefore the only party entitled to the confidential information and to continue using it after termination, it was axiomatic that the contractual right to payment for such use would continue. Bailey's use of the formulations without continuing to pay Applied Concrete was therefore a breach of contract.

Says the IPKat, it's strange how, where there's a written contract, if the parties leave anything out the contract is then in substantial risk of being held void for uncertainty. However, if the parties make an oral contract, the court will go to such great lengths to infer the existence of even uncertain implied terms in order to give that contract a degree of commercially meaningful content.

Concrete and Clay here (earworm warning)
Concrete Angel here (tissue warning)

Reporting the news, or making it? When things don't quite "ad" up for Fox

Though she is still officially on Kat Sabbatical, Catherine Lee (alias Cat the Kat) has sent us this little piece to keep readers amused, bewildered or slightly troubled, depending on their perspective:

Waiting for mummy to come
home with tonight's dinner ...

Like many readers of this Blog, this Kat has seen the weaponry of copyright deployed in often creative but sometimes bizarre factual circumstances.  One of the more bizarre instances occurred recently in relation to comments on research which was presented on Fox News. 

The research, conducted by the Pew Research Centre ("Non-partisan, non-advocacy public opinion"), was released on 29 May and, among other things, concluded that that in 40% of US households with children, mothers are the sole or primary provider.  By way of comparison, the share was just 11% in 1960. 

On the Lou Dobbs Tonight TV show, broadcast by Fox, various male Fox News personalities commented on whether the report spells trouble for American families.  For instance,politically conservative blogger Erick Erickson said ‘When you look at biology, when you look at the natural world, the roles of a male and a female in society and in other animals, the male typically is the dominant role. The female, it’s not antithesis, or it’s not competing, it’s a complimentary role’.  Fox News political journalist and analyst Juan Williams went as far as to say that it reflected the ‘disintegration of marriage’ and that ‘something going terribly wrong in American society’.

On 31 May Fox News host Megyn Kelly replayed these provocative comments and used them as the basis for a live debate with Dobbs and Erickson about working and family lives in the United States (click here for a spirited 12 minute debate and for attempts by Dobbs and Erickson to water down their original comments.  So far Fox News had no objection to broadcasting such controversial comments. 

Reporting the news ---
or making it?

UltraViolet, an online community which advocates women's equality, then used some of the more inflammatory sound bites by Dobbs, Erickson and Williams in the footage which had already been broadcast by Fox News to create an advertisement highlighting the sexist stance of these Fox News personalities (the 30 second advertisement is here).  Throughout the clip a voiceover states: ‘Lou Dobbs has a problem’ … ‘Women are winning the bread’ … ‘Even his own network isn't safe from this source of lady breadwinners’  … ‘Tell Fox to retire Lou Dobbs, Erick Erickson, and Juan Williams and spare them the pain of equality’.

What do you think happened when UltraViolet tried to buy advertising time to show it on Fox News?  It was flatly rejected by Fox News, somewhat surprisingly on copyright grounds.  Earlier this month Laura Bassett reported in the Huffington Post that, when asked what rationale Fox News used to reject the advertisement, UltraViolet co-founder Nita Chaudhary forwarded an email from the group’s media buyer, Buying Time LLC.  Here’s what it said: 

Team – Just heard back from Fox Business. Unfortunately, Fox has rejected the ad. Due to their copyright rules, they can’t air an ad that uses their material in a spot. 

This Kat would be interested to know what is meant by ‘their copyright rules’ for under US copyright law she cannot see how it would be a reason for blocking the advertisement (the same goes for her view of UK copyright law).

Surely it is not an infringement of Fox News’ copyright in the original broadcast for Fox News to rebroadcast excerpts from such broadcasts in a later advertisement on the same channel.

From the US perspective, UltraViolet’s use of the excerpts would be protected by the doctrine of fair use.  As we all know, in respect of US copyright law, under 17 USC §107 the factors to be considered in determining whether the use made of a work in any particular case include:

• 1.       the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; 

• 2.       the nature of the copyrighted work; 

• 3.       the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 

• 4.       the effect of the use upon the potential market for or value of the copyrighted work.

Taking each briefly in turn:

• the purpose of the use was to criticise the opinions of some Fox News personalities and to raise awareness of Ultraviolet: it was not for commercial gain.  

• the copyright work is various discussions of the changing nature of working and family lives in modern America which had already been broadcast on Fox News with its consent.  

• the advertisement uses short sound bites from longer interviews, although highly selective.  

• the advertisement does not compete with Fox News broadcasts: indeed no one would watch the advertisement instead of Fox News.  

In this case it was the opposite with this Kat: after watching the 30 second advertisement, she went back to watch Ms Kelly’s interview and the Lou Dobbs tonight segment to see what the fuss was about.

Merpel wonders why Fox News was not more direct with UltraViolet.  If it does not like UltraViolet’s opinion and does not need its money, why try to hide behind a dubious copyright claim?  

Myriad: does it make a difference in the real world?

The IPKat is always pleased to receive an email or two from a respectable source, so he was delighted so receive the following brief and to-the-point message from Professor Sir Robin Jacob, helpfully signposted 'IPKat Question' in case its recipient should mistake the sender's intention. It reads like this:

Does Myriad [see earlier Katposts here and here] really make a difference? If you can have patents for cDNA consisting of a gene code but not the isolated gene (with its introns) what difference does that really make in the practical world?

Sir Robin is talking here about the world in which business decisions are taken, new products tested and marketed, investments placed and scientists employed; a world in which manufacturers vie with one another for commercial advantage, and in which patent owners tiptoe through the minefield of prospective patent litigation, regulation of healthcare products and antitrust and abuse of monopoly.  What does the ruling in Myriad mean in this world?  Answers, please.

Security interests in trade marks: has something gone awry?

Every so often the IPKat is asked to draw readers' attention to an issue of interest or concern with regard to the administrative machinery that underpins the smooth and efficient operation of the IP system. Here's one such instance, in the form of a reader's email:

Perhaps there's no room left in the computer ...

This may have passed me by [writes Mark Robinson, of Mark Robinson Transactional Intellectual Property Services], but I have just noticed that the trade mark section of the UK Intellectual Property Office (IPO) website no longer provides online details of registrable transactions such as security interests. In the recent past, a search against a trade mark would indicate a security interest together with details of the holder and a brief summary of the restrictions on the trade mark owner. Now the website just reveals that there is a 'registrable transaction', the date on which the form was received, and the journal reference number. If one wants to obtain further details (and assuming that one doesn't keep a lifetime's supply of journals), one has to request an office copy of the file. This costs £5 per mark and there's a two week backlog. 

 There seem to be a number of issues here:

1. in an age of making information freely available, why has the IPO suddenly changed its system in order to prevent free and immediate inspection? 

 2. it is important for all users of the IP system that any security interests (or other registrable transactions) be immediately apparent from a search of a trade mark. Under the new system, the case details no longer indicate the existence of any registrable transactions. In order to find these, you have to click on 'view historic case details' and then click again on 'view historic details'. This requires a degree of dogged persistence that should not be necessary to ascertain important limitations on a trade mark; 

 3. having finally established the existence of a registrable transaction, is it reasonable for the public to pay £5 per mark (and wait two weeks) in order to see this type of important information?

I am not aware of this change being the subject of a public announcement by the IPO, and I don't yet know whether it also applies to patents and registered designs.

Do any readers -- including those from the IPO -- have any comments or explanations? And what happens in countries other than the UK? Do let us know.

China leads US in Champagne protection

"Cheers!"

This Kat avoids all sparkling wines, regardless of their geographical provenance, since they get literally up her nose. Far more fun for her are the still, dry products of the vine or, even better, a good single malt whisky.  That is not to say, however, that he does not take an acute interest in the legal shenanigans that have accompanied the persistent efforts of the French Champagne industry to secure the exclusive right to use the word 'Champagne' in respect of one particular type of sparkling wine -- and the equally persistent efforts of their cousins in the United States to thwart those efforts.  In a helpful blogpost, Elizabeth Dunn, a trade mark attorney in the Brighton office of Dehns, explains the current legal position:

The Comité Interprofessionel du Vin de Champagne (CIVC), the body representing producers of Champagne, has succeeded in securing protection in China, as a geographical indication, for the word CHAMPAGNE and its Chinese transliteration "香槟". 

 China is currently only the twelfth-largest market for champagne exports in the world, but it is the fastest growing.  Sales exceeded two million bottles in 2012, an increase of 52% since 2011 and a quadrupling of sales since 2006.  With a population of 1.3 billion there is enormous potential for further growth: a spokesman for CIVC is quoted as saying the country is one of the biggest future markets for champagne. It was therefore imperative to protect the name and to avoid it becoming a generic word for sparkling wine which would dilute the reputation of 'Champagne' in the minds of Chinese consumers. 

 The applications were filed with the Administration of Quality Supervision Inspection and Quarantine (AQSIQ), one of three organisations which can grant geographical indicationprotection in China, in June 2012.  Published in December 2012, they proceeded rapidly to registration on 20 March 2013.  The registrations include a list of qualifications to be met by producers labelling their product as Champagne; in order to qualify the grapes must be grown in the Champagne region of France, the grapes must be of the correct variety and the wine must be manufactured by the  traditional process. Before obtaining these registrations, Champagne manufacturers had to rely on the concepts of "famous foreign place name" as set out in Chinese trade mark law and "unique name of a famous commodity" defined in the Anti-Unfair Competition law to take action against those using the mark on wine produced outside France and on numerous other goods from candles to dog toys.  

Viet-Champ

The successful registrations make it possible to initiate administrative raid actions, customs protection and civil litigation on grounds of trade mark infringement. The rapidity with which the Chinese authorities acknowledged the status of Champagne and allowed its protection as a GI provides a sharp contrast to the position in the US, a significantly more developed market for the product.  The United States is the second largest export market for champagne (only the British drink more). Sales of Champagne in the US totalled 23 million bottles in 2012.  However, presumably as a result of the lobbying power of its own, long-established, wine producers, the US authorities have been reluctant to limit the exclusive use of the Champagne mark to the French producers. The US is now among only a handful of countries which does not offer full protection to the Champagne name; the others are Russia, Vietnam and Argentina.  Arguably, champagne is seen as a generic term for sparkling wine by US consumers and the dilution feared by the CIVC in China is already apparent in the US.  Californian champagne is still legally available from US wine merchants and is traditionally served at theinauguration dinner for each new US President.  

The protection for geographical indications of source as it is now understood was set out in the Trade -Related Aspect of Intellectual Property Rights Agreement (TRIPS) 1994 to which the US was a signatory.  This was the first internationally codified protection for GIs. Under the TRIPS agreement, geographical indications are 

"indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin".  

Under Article 23 of the agreement, specific provisions give additional protection for wines and spirits.  These state that members must enact laws that prevent the use of geographical indications for wines and spirits that do not originate from the designated geographical location.  Further, these laws must also prevent uses of such indications where the true place of origin appears in conjunction with the geographical designation of the goods. 

 The US has never enforced this article to the satisfaction of the champagne producers.  The national regulations which govern the use of GIs in the US are those of the Alcohol and Tobacco Trade and Tax Bureau (TTB).  These regulations divide geographical indications for wines into categories and base their protection on these divisions.  Champagne is defined as a 'semi-generic' indication and, for many years, could be used on wines which did not originate in the Champagne region provided that the actual place of origin was used in conjunction with the geographical name -- hence Californian Champagne. Following years of negotiation between the US and the EU, an agreement on trade in wine was signed on 10 March 2006.  In that agreement, the US agreed to change the legal status of these semi-generic names to restrict their use solely to wines originating in the relevant member state.  The law to give effect to this restriction was enacted on 20 December 2006.  However, there was a significant limitation to the protection enacted which is the basis of the ongoing complaint against the US by the CIVC.  There is a "grandfather" provision included in the US legislation which allows any person who was using a semi-generic name in direct conjunction with an appellation of origin disclosing the true place of origin of the wine, prior to 10 March 2006 to continue with that use. 

 Given that many of the sparkling wines produced in the US are made using the traditional Champagne method and were developed by representatives from, or with connections to, the French Champagne houses, it is hardly surprising that they are reluctant to relinquish the name.  The CIVC continues to educate US consumers as to the special status of Champagne via its educational and promotional arm the 'Champagne Bureau'.  Their espoused goal is global protection of the Champagne name but it may be some time before the US gives in to perceived EU protectionism and removes all the rights of its producers to use the famous name. 

What one hand gives, the other takes away? A deeper look at Myriad

Catering for all tastes, this weblog has provided (i) the breaking news announcement by Jeremy that the US Supreme Court had given its ruling in Myriad Geetics and (ii) a mouth-watering hors d'oeuvres from guest Kat Matthias together with Roberto Romandini in the form of some succinct comments on that decision. Now's the time for (iii) the main course -- elegantly prepared and eloquently presented by IP master chef and former guest Kat Norman Siebrasse.  This is Norman's take on the decision, flavoured with some delicious thoughts of his own:

Association for Molecular Pathology v Myriad Genetics, Inc 12–398, 569 U. S. ____ (2013)

But what exactly is a law of nature anyway ...?

In Myriad Genetics the USSC has held, in a unanimous decision, that claims to isolated DNA are not patentable subject matter, but that claims to cDNA are patentable. The Myriad Genetics decision is better than I had anticipated after the disappointing Prometheus decision -- and not only because of the holding regarding cDNA. The Court’s reasoning turned primarily on its misguided rule against patenting “laws of nature,” and to that extent it is seriously flawed, but there are hints of a better analysis. Moreover, the Court expressly noted that “this case does not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes. . . .  Many of its unchallenged claims are limited to such applications” (original emphasis). There is also an important negative point: the Court did not reaffirm its traditional “preemption” rationale for its rule against patenting laws of nature. This suggests that by claiming applications of knowledge relating to newly discovered genes, an inventor may be able to gain the same practical protection as would be possible by a claim to the gene itself.

The patent systems I am familiar with, including the US, the EPC, and the UK pre-EPC, all have a rule against patenting abstract ideas. (For the origin of the rule, see here.) In UK and Canadian law, this is understood as an objection to patenting abstract ideas: “A disembodied idea is not per se patentable. But it will be patentable if it has a method of practical application.” (Shell Oil [1982] 2 SCR 536 at 554, summarizing UK case law.) Laws of nature are often assimilated to abstract ideas, and often, as with “F = ma” stated as such, this is sound. But starting with Funk Brothers , 333 US 127 (1948), the USSC has interpreted this as a rule against patenting inventions based on laws of nature. This is very different. As Frankfurter J pointed out in Funk Bros “[e]verything that happens may be deemed ‘the work of nature,’ and any patentable composite exemplifies in its properties ‘the laws of nature.’ Arguments drawn from such terms for ascertaining patentability could fairly be employed to challenge almost every patent.” Unfortunately, Frankfurter J was in the dissent on this point, and the result has been that the USSC has tended to strike down claims where it is intuitively clear that the invention rests on a discovery of nature, while upholding claims where the invention is, on the surface, a thing. (For a detailed review and critique of the US law on this point, see here.)

This same fallacious reasoning continues in Myriad Genetics when the Court noted (slip op 11-11) that

It is undisputed that Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature before Myriad found them. Nor did Myriad create or alter the genetic structure of DNA. Instead, Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. The question is whether this renders the genes patentable.

Conversely, “the lab technician unquestionably creates something new when cDNA is made” (slip op 17), and it is therefore patentable. This seems to conceive of the invention as a thing, namely the gene itself, which Myriad admittedly did not create, or the cDNA, which it is did create. But in either case, Myriad’s real contribution was knowledge about the function of the gene. And, as Sir Hugh Laddie, has explained, “The invention is a novel mental concept which is embodied in, or exploited through, new products or processes. The patent's function is to enable that concept to be protected in exchange for publishing it to the world so that, after expiry, the public can use it” (American Home Products v Novartis [2000] RPC 547 (Pat) [18], my emphasis). More pithily, Lord Hoffmann noted in Merrell Dow [1996] RPR 76 noted that “An invention is a piece of information.”

With that said, that an invention is information does not imply that the information may be claimed as such. The rule against abstract claims places limits on how information may be claimed. The Myriad Genetics decision hints at this in its response to the argument that isolated DNA is just as unnatural as cDNA:

Myriad’s claims are simply not expressed in terms of chemical composition, nor do they rely in any way on the chemical changes that result from the isolation of a particular section of DNA. Instead, the claims understandably focus on the genetic information encoded in the BRCA1 and BRCA2 genes. If the patents depended upon the creation of a unique molecule, then a would-be infringer could arguably avoid at least Myriad’s patent claims on entire genes (such as claims 1 and 2 of the ’282 patent) by isolating a DNA sequence that included both the BRCA1 or BRCA2 gene and one additional nucleotide pair. Such a molecule would not be chemically identical to the molecule “invented” by Myriad. But Myriad obviously would resist that outcome because its claim is concerned primarily with the information contained in the genetic sequence, not with the specific chemical composition of a particular molecule.

This suggests that the Court’s real objection is not that the patents claimed naturally occurring DNA, but rather that it claimed “presentations of information . . . as such,” to put in the terms of EPC Art 52. The difficulty with the Court’s reasoning here is that a proper analysis of this issue would turn on how the claims are construed. It is no doubt true that the claim is “concerned primarily” with the information, but that alone does not make it a claim to information as such, rather than a claim to a molecule embodying that information. The Court seems to have assumed that because the claim is about information, is therefore a claim to information. This again reflects the basic misunderstanding that has dogged the USSC analysis of patentable subject matter for decades: the USSC cannot seem to grasp that there is a difference between a claim to an idea, and a claim to an application embodying that idea. So, this passage is at most a hint at a better analysis, rather than a sound justification for the decision.

How would a proper analysis proceed? Though that rule against abstract claims is fundamental, it has seldom been applied to strike down a claim, and its precise bounds are not clear. I have argued that the rule against abstract claims is probably best justified by the difficulty of determining the bounds of such claims. For example, Morse’s famous eighth claim at issue in O'Reilly v Morse 56 US 62 (1854), to the use of electromagnetism for communication at a distance, should have been held invalid as being anticipated, not just for overbreadth: the claim would encompass semaphores, as light is a form of electromagnetism. But no one could appreciate this at the time, as it was not known that light and electromagnetism were linked. Put another way, if an invention is claimed as a theory, it is necessary for a defendant to know the theory of how its gizmo works in order to know whether it infringes the claim. When an invention is claimed as an application, all that is necessary is to see whether the practical application is the same. On this rationale, a claim to isolated DNA might be invalid if the claim did not provide adequate notice to other as to what activity would be infringing. I suspect that on a proper construction of the claim, a claim to isolated DNA would not offend the rule against abstract claims; but that conclusion would require a very different analysis from that provided in Myriad Genetics.

While the reasoning in Myriad Genetics is deficient, the Court did indirectly affirm one half of the traditional rule as stated in Shell Oil, namely that applications of knowledge are patentable, when it acknowledged that “this case does not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes” (slip op 17-18). Moreover, it made no reference at all to the rationale for the rule against patenting laws of nature offered in cases such as Prometheus, which is that patents based on laws of nature would monopolize or “preempt” that knowledge. The preemption argument is also fallacious; a patentee should be able to monopolize it inventive contribution, in order to ensure that the reward is commensurate with the contribution. By omitting any mention of the preemption rationale, and by affirming the patentability of applications of this knowledge, it may be that the USSC in Myriad Genetics has taken away with one hand, but given with the other. By claiming all applications of the knowledge of a gene sequence, it may well be possible to get the same practical protection that would be offered by a claim to the isolated gene.

Note that the holding regarding cDNA was strictly obiter. The claims at issue in the USSC were claims 1, 2, 5, 6, and 7 of U. S. Patent 5,747,282, claim 1 of U. S. Patent 5,693,473, and claims 1, 6, and 7 of U. S. Patent 5,837,492, all of which claimed an isolated DNA molecule, and all of which are consequently invalid. In addition to these claims, at issue were claim 20 to ‘282, claim 1 of U.S. Patent 5,709,999, claim 1 of U.S. Patent 5,710,001, claim 1 of U.S. Patent 5,753,441, and claims 1 and 2 of U.S. Patent 6,033,857, all of which were methods for screening by comparing the suspect gene with the specified gene sequence. All of these claims were held to be invalid by the Federal Circuit. Claims that were not challenged include transformed cells, primers and kits.

Thanks so much, Norman. We really appreciate your well-informed analysis and hope that our readers will too.

Are Human Genes Patentable?

Copy Kat, the first kitten clone

Washington – On Thursday, the Supreme Court delivered its eagerly awaited judgment in the Myriad case (Association for Molecular Pathology v. Myriad Genetics), putting an end to 20 years of USPTO practice and overruling what had appeared to be settled since the Court’s landmark decision in Diamond v. Chakrabarty: the patentability of human genes. Gone are the days when biotechnology companies could obtain patents for isolated human DNA [although they may still obtain a patent for isolating it].

The Supreme Court had to decide on two issues: (1) Are DNA sequences eligible for patent protection? (2) If not, what about complementary DNA sequences (cDNA)?

In an unanimous ruling, the nine Justices came to the conclusion that DNA sequences are products of nature; isolating them from their natural environment does not create anything with markedly different characteristics. Isolated human genes are therefore not considered patentable. However, cDNA is deemed patent eligible, because its chemical composition is different from that of naturally occurring DNA.

With regard to genomic DNA, the Supreme Court notes:

It is undisputed that Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature before Myriad found them. Nor did Myriad create or alter the genetic structure of DNA. Instead, Myriad's principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes […]. The question is whether this renders the genes patentable. […]  

Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention. Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the § 101 inquiry. […]. Myriad found the location of the BRCA1 and BRCA2 genes, but that discovery, by itself, does not render the BRCA genes "new . . . composition[s] of matter," § 101, that are patent eligible. […]  

Many of Myriad's patent descriptions simply detail the "iterative process" of discovery by which Myriad narrowed the possible locations for the gene sequences that it sought. Myriad seeks to import these extensive research efforts into the § 101 patent-eligibility inquiry. But extensive effort alone is insufficient to satisfy the demands of § 101. 

With regard to cDNA, the Court explains:

cDNA does not present the same obstacles to patentability as naturally occurring, isolated DNA segments. […]. Creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring. […] The lab technician unquestionably creates something new when cDNA is made. cDNA retains the naturally occurring exons of DNA, but it is distinct from the DNA from which it was derived. As a result, cDNA is not a "product of nature" and is patent eligible under § 101. 

Finally, the Supreme Court points out that the case does not involve method claims, patents on new applications of knowledge about the BRCA1 and BRCA2 genes, or the patentability of DNA in which the order of the naturally occurring nucleotides has been altered.

Since the IPKat is a native European [the UK is still a Member of the EU, right?], it cannot hurt to draw a brief comparison with the situation in Europe. As far as genomic DNA sequences are concerned, the protection available in EU Member States is partly broader und partly narrower than in the US. It is broader because, according to Articles 3 and 5 of the Biotechnology Directive, genomic DNA can be subject to a composition claim even though it is identical to natural DNA. At the same time, protection is narrower because both genomic DNA and cDNA are only subject to purpose-bound protection. According to the interpretation of Article 9 of the Biotechnology Directive adopted by the CJEU in the Monsanto case (Monsanto Tchnology v. Cefetra et al.), the protection conferred by a patent for a gene sequence is limited to the (technical) function of that sequence, as indicated in the patent application.

This Kat will not dare to speak out on the practical implications of the Myriad ruling. But other Kats and readers are very welcome to put in their two cents.

Posted by: Matthias Lamping & Roberto Romandini

Image source: ScienceMag

Friday fantasies

This week the IPKat learned of the existence of the Kosovo Institute of Intellectual Property (KsIIP). The KsIIP, so far as he can discover, is a non-profit association, established in Kosovo, which aims to promote intellectual property rights in that country by providing training for young professionals, entrepreneurs, lawyers, not to mention students of law and economics. Further details may be obtained by emailing the KsIIP at kosovoip@gmail.com

This Kat was thrilled to hear the news today that his friend Dr Galit Gonen, who heads up Teva's European litigation team, was voted ILO Global IP Counsel of the Year in New York last night.  Recent readers of this weblog may not know that, having obtained her doctorate on linkages between legal and marketing theories regarding secondary patents for pharmaceuticals, Galit was kind enough to put her head on the chopping board and defend it all over again for an IPKat Seminar back in November 2011 -- a brave and courageous thing for anyone to do.

Around the weblogs.  Cynics may laugh at the usefulness of geographical indication protection, but they work: here's a Class 46 blogpost by Miguel Angel Medina on how a Colombian GI for coffee was enforced in Spain against a speculative local trade mark applicant.  Over in Africa, Chijioke Ifeoma Okorie -- who has now joined the Afro-IP blog team -- has made some good points about the relationship of copyright-based businesses to the increasingly popular concept of open educational resources. On the 1709 Blog, Asim Singh relates how the transfer of responsibility for graduated responses to online copyright abusers from HADOPI to the CSA has hit a speed bump.

Do you practise IP and speak Bulgarian? If so, you will be pleased to learn from Katfriend Ventsi Stoilov that Bulgaria's Council of Ministers has now said that all citizens of the European Economic Area and Switzerland can practise intellectual property law in that lovely country -- so long as they are registered with the local Patent Office [hang on there, says Merpel, shouldn't this have happened ages ago?  What has taken so long?]. 

It’s Friday – why not curl
up and listen to a good
podcast on patent trolls?

When patents attack. Much has been written recently about recent efforts by the US government and other jurisdictions to help operating businesses defend themselves against claims from patent trolls, including here, here and here. What more could be said? Well, Katfriend Miri Frankel has just come across a podcast called “When Patents Attack” by National Public Radio show This American Life. The podcast details the show’s investigation of an NPE called Intellectual Ventures and its subsidiaries and patent holdings. According to This American Life, the representatives they interviewed from Intellectual Ventures stated they were helping small inventors generate income from their patented inventions. That claim set This American Life off on a two-year investigation into the inner workings of Intellectual Ventures and the inventors they claim to help. The twists and turns they uncover in the history of the NPE and the patents it acquired is fascinating and worth a listen.

AG Jääskinen says that "intention to target" applies also to online copyright infringement cases

At last! Merpel celebrates
publication of the AG Opinion
in Pinckney

While busy thinking (as she constantly does) about online copyright-related issues, this Kat wanted to see whether there were any news concerning her long-time obsession (here and here) with Case C-170/12 Pinckney.

And indeed here is some news at last!

Yesterday Advocate General Niilo Jääskinen issued his Opinion [not yet available in English though - lack of timely translations was discussed also during last Wednesday's katparty] on this alluring reference from the French Court of Cassation, seeking clarification as to the interpretation of the Brussels I Regulation (Regulation 44/2001) as applied to online copyright infringement cases.

The French court referred the following questions to the Court of Justice of the European Union (CJEU):

Is Article 5(3) of [Brussels I Regulation] to be interpreted as meaning that, in the event of an alleged infringement of copyright committed by means of content placed online on a website,

-    the person who considers that his rights have been infringed has the option of bringing an action to establish liability before the courts of each Member State in the territory of which content placed online is or has been accessible, in order to obtain compensation solely in respect of the damage suffered on the territory of the Member State before which the action is brought,

or

-    does that content also have to be, or to have been, directed at the public located in the territory of that Member State [eg intention to target] or must some other clear connecting factor be present?

Kat light pink knees

Is the answer to Question 1 the same if the alleged infringement of copyright results, not from the placing of dematerialised content online, but, as in the present case, from the online sale of a material carrier medium which reproduces that content?

According to the Italian version of the Opinion, overall the AG thinks that the CJEU should declare the request for a preliminary ruling inadmissible. However, should the Court decide to consider the case, in the event of alleged infringement of the exclusive rights of distribution by means of online sales of material supports (CDs) that contain copyright-protected materials or communication by means of online transmission of copyright-protected contents, then Article 5(3) of Brussels I Regulation should be interpreted as allowing the relevant rightsholder to sue the alleged infringer in the Member State:

- in which the subjects who were responsible for the making available online of CDs are established, to seek full redress of damages, or

- to which the activity of the concerned website is targeted, to seek redress of the damages suffered in the territory of that Member State.

We'll see whether the CJEU decides to follow AG Jääskinen's Opinion, although this Kat suspects that it is unlikely that it will depart significantly from it, especially after exciting judgments like Sportradar, Pammer and Donner. 

Thanks again!

Now that the IPKat's Tenth Birthday party's over, the guests and active participants have returned to their day-jobs and the remains of the last accidentally trampled canapé have been carefully scraped from the carpet in readiness for the next reception, it's time for a few further thank-yous.

First, gratitude is expressed to those generous souls who presented this Kat with various items of mammalian memorabilia (books, postcards, maneki-nekos and the like): he can't thank you all personally since some came unsigned, but the thought behind these little gifts is very much appreciated.

Secondly, the IPKat thanks the ancillary staff at Allen & Overy LLP for working so hard to keep the event running smoothly. Adam the sound technician, together with the squad of well-trained waiters, waitresses, door-hold-openers and cloakroom staff -- your unobtrusive efficiency was a credit to you.

Thirdly, our gratitude is extended to the hundreds of registrants who played their part too, by leaving (as far as possible) no-one alone and without company during the break and the reception, and for brazenly introducing themselves to some of the celebrities present, regardless of the latter's status and temperament.

Finally, thanks to our online readers, without whom there would never have been much point the IPKat and Merpel perserving.  We're thrilled to announce that today, so nearly on the tenth anniversary of this blog's birth, we have welcomed our five millionth visitor to the website.  You are truly welcome, whoever you are, and we hope to be able to serve you and your fellow members of the IP community for many a long year to come.

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And now for an apology: several of yesterday's speakers have asked for a little time to revise their PowerPoint presentations in the light of yesterday's discussions and their consequent afterthoughts, so please be patient with us while this process takes place.  The PowerPoints will be posted soon, as will be news of when the recording of the seminar will be available.