From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Friday, 21 October 2016

Friday Fantasies

Friday Kat is at play.
TGIF! The weekend is almost underway and the IPKat is here to bring you a well-chosen list of miscellaneous IP events and news stories. Bon appetit.

1. The 10th Annual Standards, Patents & Competition: Law & Litigation, organized by IBC Legal will take place in London on 5-7 December 2016. Enjoy the 10% discount for IPKat readers (code: FKW82676IPKL).

2. James Thomson from the UKIPO brings us his frontline updates: International Trade Mark Applications can now be sent to the UKIPO using the email address: (this is an interim measure, and an e-filing system will be introduced soon). 
He asks that readers note:
• We would encourage you to use the UKIPO version of the MM2
• The MM17/MM18 will be accepted if filed with the MM2.
• No other forms or correspondence should be emailed to this address.
• An updated version of the UKIPO’s form MM2 can be found here

3. New book: Low Life Lawyer, a new novel penned by former solicitor Michael Simmons and inspired by his lengthy (50+ years) legal career has been published. To quote His Honour Judge Barrington Black, it is “a book to be enjoyed by lawyers and their prey alike”. A detailed book guide can be found here. 

4. Open consultation: Review of European Electronic Communications Regulatory Framework. Launched by the Department for Culture, Media & Sport (UK). This consultation closes at Nov. 30, 2016 11:30pm. Ways to respond are as follows:
Email to:
Write to: 
EU Framework Review, Markets and Consumer Policy Team
Department for Culture, Media & Sport, 100 Parliament Street, London

The event and all documentation will be in English and Estonian with simultaneous interpretation.

6. Brexit: FRAND, pharmaceuticals & intellectual property. Tuesday 1st November 2016 at the Law Society, 113 Chancery Lane, London WC2A 1PL, from 6pm.
This free event aims to bring together a range of perspectives to explore some of the key issues which Brexit will raise including in relation to the Unified Patent Court, trade marks and designs and SPCs. The presentations will seek to provide some practical guidance as to the likely implications and steps which can or should be taken now.
It is a Q&A style seminar moderated by Lord Hoffmann with a panel comprising with outstanding speakers. To register, please contact Andrew Grosvenor at or 020 7379 3550.

7. CopyCamp 2016: International conference on the future of copyright in Europe Oct. 27-28, 2016. The conference will be held at Kinoteka in Warsaw, Poland over Thursday and Friday and will be also streamed online. 

8. Dr. Eleonora Rosati has recently been interviewed by The Hollywood Reporter, addressing the IP issues facing protection of TV formats.

9. Brands in the digital market: seminar organized by BBP University Intellectual Property Society is coming soon. Save the date: Nov. 10, 2016.

10. Sick and tired of the refusals issued by the USPTO? For a possible remedy visit the Class 46 (trade marks) blog hosted by MARQUES, discussing a forthcoming seminar to cover both legal and procedural issues, as well as explaining the tools available, and which is designed to help applicants overcome objections when filing International Registrations based on the home application or registration. The class will be hosted in three versions:
- Amsterdam, The Netherlands, Monday, 24 October 2016
- Munich, Germany, Wednesday, 26 October 2016
- London, UK, Friday, 28 October 2016 

Meet the Trade Mark Judges (Part One)

Monday evening marked the annual IBIL and MARQUES Meet the Trade Mark Judges event at UCL.

This year the chair, The Rt Hon Professor Sir Robin Jacob, posed a set of pre-selected questions from the audience to:
  1. Paolo Catallozzi (Judge of the Enterprise Court of Rome) 
  2. The Hon Mr Justice Henry Carr (Judge of the English High Court) 
  3. Judge Christopher Vajda (Court of Justice of the European Union) 
  4. Oliver Morris (UK Intellectual Property Office Senior Hearing Officer) 
The evening covered enough ground to fill (at least) two posts.  This is Part One...

How much does advocacy play a part in judges reaching their decision? 

Not a new question but an understandably popular one for a room full of lawyers.  The broad consensus was that it can be very helpful to the judge to have good advocates but it's rare that it swings a decision one way or another.

Selected soundbites include:
  • If a party is in the right they have many chances to win even if their lawyer is not as good. 
  • Judges are not distracted by legal style... but when a famous lawyer is speaking a judge may unconsciously pay more attention.  
  • If there is no established jurisprudence it can be particularly helpful to be guided through the relevant steps the court is required to follow (and may avoid judges getting bored!)    
  • Whilst the English bar has a very good reputation in the Court of Justice of the European Union (CJEU), it does not follow that they always win the case!  
  • In the Intellectual Property Office (IPO), an advocate's style can make a particular difference where a case is finely balanced. 
  • A good advocate is unlikely to win a bad case but a bad advocate may lose a good one.
The view from the High Court of England and Wales was particularly pro-advocacy.  Carr J noted that the importance of advocacy was most noticeable where you have litigants in person without any professional legal input.  He gave the CLIPS scheme a glowing endorsement.  This scheme uses volunteer advocates to assign free representation to litigants in person in the Chancery Division.  Carr noted that whilst it may not make a big difference to the eventual outcome it made it much easier for the judge to identify and consider the relevant issues and use the limited court time effectively.  Carr estimated that in around 20% of marginal cases he might change his mind on a particular issue following persuasive advocacy but this might not necessarily affect the outcome.

Does the involvement of a well-known lawyer indicate a winning or a losing case?  There were two schools of thought: (1) a famous lawyer could not possibly have accepted a losing case for fear of the damage to their reputation; or (2) only more established lawyers take on the 'challenging' cases.

Big difference in the CJEU is the long gap between the hearing and reaching decision if the case requires an opinion from the Advocate General (AG).  In Vadja's experience, most cases he handles (and certainly all difficult cases) have an AG opinion.  The Court will wait for the AG's opinion before discussing the case between them.  In practice, this means the court has to return to their notes from the hearing several months after the event when the finer points under discussion may be a more distant memory.  This meant that the starting point is generally the AG's opinion (as intended).

How long should advocacy last? 

The CJEU now has a fixed time limit of 15 minutes for everyone.  Judge Vadja's view was that this approach works well. Written pleadings normally quite full and the oral hearing is simply a supplement to those pleadings.  Because of the nature of the court, the majority of the advocates have not appeared before the court before.  His big warning to advocates was not to simply repeat the written testimony but be sure to add something new and focus on the key points.  The judges often try to ask questions to focus the advocates to the case.  This means the hearings consist of short oral submissions followed by questions.  Although questioning of counsel is not necessary, it nearly always happens in practice.

Do we take too long in England? Henry Carr gave a simple answer: "Yes".  But went on to note that appeals do not tend to take too long and 15 minutes is not long enough to explore questions of fact.

The Italian courts have full discretion to decide the order in which issues are presented and how many minutes are permitted per issue.  However, unlike English judges, the Italian ones will not normally interrupt.  Hearings generally take 10s of minutes rather than hours.  The problem for Italian judges is not the oral hearing it is the written statements which can involve a lot of trees (as well as some irrelevant issues).

Should judges have prior experience of trade mark law before being entrusted with a case?  And is that prior experience necessarily a good thing?

At an EU level, a large proportion of the CJEU and General Court's case load concerns trade marks.  However, most judges have no prior experience of trade marks before they join the court.  Is this a problem?

It was a question of balancing efficiency with diversity.

To improve the efficiency of a court, particularly when it deals with a large volume of trade mark cases, there is something to be said for someone familiar with issues and arguments.  Therefore it can be helpful to have judges who are familiar with the underlying legal issues they have to consider.

Catalozzi indicated that the Italian system could benefit from more judges having prior litigation experience.  The same issue arises at the CJEU where many judges are nominated from routes where they have not had to gain litigation experience. As Robin Jacob put it: "I've seldom met anyone who doesn't think poachers turned gamekeepers isn't a good idea".

Although the General Court is on a hiring spree (the number of judges is doubling so each Member State will contribute two judges), Judge Vadja's view was that setting quotas is not helpful.  However, it is important to have a balanced and diverse court in terms of prior experience (career judge vs former practitioner), specialism and background.  Judge Vadja highlighted that it is a good thing for any judicial system to represent people from different backgrounds and with different perspectives.

Carr noted that many of the best trade mark judgments come from non specialists such as Neuberger LJ.  In his view, it is not necessary to have specialist trade mark judges.  However, patents is a different issue and non specialists tend to struggle with patent cases.

HHJ Hacon amplifies the law on EU trade mark jurisdiction: AMS-Neve v Heritage Audio

Recording studio engineers speak in hushed tones about the 1073 microphone pre-amplifier, and not just because they're habitually conditioned to keeping their voices down in the studio's control room. The “1073” is a top-end piece of vintage studio recording kit, swooned over by musicians and producers alike for "its beautiful top-end, rich lows and euphonically massaged low-mids"

Merpel says: Don't blame me; the IPKat told me to insert
 "a cool picture of some cat with a microphone".
Photo: Marcel Antonisse / Anefo - Nationaal Archief 
All very edifying no doubt, and an unimpeachable excuse for the IPKat to finally use the word "euphonically" in a post, but what's this got to do with IP? 

Well, the “1073” brand of pre-amplifier has been produced by AMS-Neve for over 40 years, so they reacted with some dismay to the appearance of a cloned product, also branded “1073”, on the website of a Spanish company called Heritage Audio. Dismay, quickly followed by the issuance of proceedings for infringement of an EU trade mark registrations, two UK national trade mark registrations, and a claim for passing-off.

Heritage Audio challenged the jurisdiction of the English courts to hear the claim, and HHJ Hacon has issued his decision on this preliminary point , finding that the IPEC has jurisdiction to hear the action for infringement of the UK TM registrations and the action for passing-off but has no jurisdiction over the EUTM infringement action.The decision is AMS Neve Ltd & Ors v Heritage Audio S.L. & Anor [2016] EWHC 2563 (IPEC)


Because this was not a full trial of the action, the findings of fact are preliminary, but evidence was given that Heritage Audio’s website (a) indicated that the products could be bought from a UK distributor, and (b) suggested also that direct orders could be placed on the website of Heritage Audio from anywhere in the EU and that Heritage would ship products using UPS or FedEx. Although there is dispute over whether the website reflected the reality of Heritage's business model, the judge was prepared to accept that the website targeted UK customers. Additionally, Neve’s solicitor gave evidence of a conversation with the identified UK distributor who told her that orders taken by the distributor would be placed with Heritage and the goods would be built to order and shipped to England.

At issue in the case was whether the English court had jurisdiction to hear the claims for EU and national trade mark infringement and for passing-off where the defendant was established in Spain and where all of the actions of the defendant at issue had occurred in Spain., albeit with the effect of targeting sales at UK customers.

The jurisdiction rules

HHJ Hacon distinguished between the jurisdiction rules for national TMs and passing-off on the one hand, these being governed by the Brussels I Regulation, and the rules for EUTMs on the other, being governed by the EU Trade Mark Regulation. Both rule sets say that the primary rule is that jurisdiction is given to the defendant’s home courts, and both provide exceptions allowing another country’s courts to hear an infringement action, but the similarities end there.

National TM infringement

In particular, as the judge noted, Article 7(2) of Brussels allows a much wider scope for an action to be heard elsewhere than the defendant's home country. An action for infringement of a national TM registration can be heard in the 'place where the harmful event occurred or may occur', and this can include the place where the defendant’s actions occurred, or the place where the damaging effects are felt. It is up to the national court of the country where the right exists (i.e. the courts of England and Wales in the case of the UK trade mark registrations) to decide whether damaging effects have been felt in the UK and whether an act occurred that constitutes infringement. In this case, the act complained of was an offer for sale in England, on the principles laid down in L’Oreal v eBay, i.e. the defendant’s website was not merely accessible from the UK but was in fact targeted at (among others) English customers.

The allegedly infringing product on Heritage Audio's site

For passing-off, the judge noted that the CJEU had applied the Brussels I rules not only to trade mark and copyright infringement claims but also to claims based on German unfair competition law in Case C-360/12 Coty Germany GmbH v First Note Perfumes NV [2014] E.T.M.R. 49. He therefore felt safe in saying that the same principles apply to passing-off: the right exists in England, where the protectable goodwill resides, and it is for the English courts to decide if there has been an actionable misrepresentation.

EUTM infringement

EU trade mark infringement rules are different. Jurisdiction for a foreign (to the defendant) court is not based on the place where “the harmful event occurred” (per Brussels I, with this extending to the place where damage was felt), but more specifically is confined to "the Member State in which the act of infringement has been committed or threatened" as stated in Article 97(5) of the Trade Mark Regulation. As the CJEU held in Coty, the “linking factor relates to active conduct on the part of the person causing that infringement. … Consequently, jurisdiction … may be established solely in favour of Community trade mark courts in the Member State in which the defendant committed the alleged unlawful act.”

And since Heritage Audio’s active conduct, i.e. the actions that resulted in the website being targeted at UK customers, occurred in Spain, and this was also where Heritage is established and domiciled, there was no jurisdiction for an English court to hear the action for infringement of the EUTM.

HHJ Hacon noted that there might be some procedural inefficiency in this result, but there was little prospect of conflicting decisions and in any event he could not find otherwise since the EU Trade Mark Regulation sets down rules explicitly acknowledged to be different from the Brussels I rules for infringement of national rights.

Joint tortfeasorship - which law applies?

A final question related to joint tortfeasorship. The sole director of Heritage Audio is named as a second defendant. Neve argued that he was liable as a joint tortfeasor, but Heritage argued that the question of whether he was a joint tortfeasor depended on Spanish law and they made submissions on how the question would be viewed in Spain, which the judge was urged to accept.

HHJ Hacon greeted this Spanish argument with all the enthusiasm of Sir Francis Drake spying a galleon sailing up the English Channel: “I reject this contention. The question whether one party is jointly liable with another for acts of infringement of trade marks and/or passing off in England can be determined only by reference to English law and the relevant facts. The law has been recently considered by the Supreme Court in Sea Shepherd UK v Fish & Fish Limited [2015] UKSC 10[2015] AC 1229, which I sought to summarise in Vertical Leisure Limited v Poleplus Limited [2015] EWHC 841 (IPEC).” He concluded that there was a good arguable case that the director was a joint tortfeasor, and so will be a joint defendant in the trial for UK TM infringement and passing-off. (Then, Merpel presumes, the judge returned to his game of bowls pending the full trial of the action).

Thursday, 20 October 2016

Launch of IP Pro Bono scheme

This moggy was delighted to scamper across to Gray's Inn on Monday evening (actually from Court 4 where he had been watching the Brexit case, but of that perhaps more another time) to attend the launch of the IP Pro Bono scheme.  As the media release noted:

The IP Pro Bono scheme, launched by Sean Dennehey, Acting Chief Executive of the Intellectual Property Office, has been designed to help small businesses and individuals involved in disputes about intellectual property such as a patent, trade mark, protected design or copyright.
Mr Dennehey said:
“I am delighted to mark the launch of this new service. I am sure that the service will prove invaluable to those businesses struggling to afford the costs of professional representation. I am pleased that the IPO has been able to support the initiative and I look forward to hearing progress of the service.”
IP Pro Bono is a collaboration between a number of leading IP organisations including the Chartered Institute of Patent Attorneys (CIPA), the professional body for patent attorneys in the United Kingdom – which manages the scheme, the Institute of Trade Mark Attorneys (ITMA), the International Property Lawyers’ Association (IPLA) and The Law Society.
The scheme was set up in response to a challenge set by His Honour Judge Hacon, presiding judge of London’s Intellectual Property Enterprise Court, for IP legal services providers to offer advice and support to unrepresented claimants and defendants in IP disputes.
The service is available to those who cannot reasonably afford to pay for professional advice from a firm. A case officer will assess applications and, if the applicant meets the stated criteria, allocate the case to one of the participating firms on a rota basis.  
At the event, HH Judge Hacon highlighted the difficulties faced by the Court when cases involve unrepresented individuals, and he welcomed this scheme to provide advice.  Although the scheme is probably particularly well suited to the Intellectual Property Enterprise Court (and its small claims track), it is not limited to that and may be appropriate for cases in the High Court as well.

Moreover, Mandy Haberman (famed, among other things, as the inventor of the Anywayup Cup, and now also a Director of the Intellectual Property Awareness Network) spoke movingly about the plight of the small enterprise faced with infringement at an early stage of their business - are you prepared to bet your entire livelihood on success in court?

There is now a spanking new website with details of the scheme here:

It was stressed that the placing of the case officer between the person seeking assistance and the professional advisor would ensure that the advisor was not left solely responsible for the person, and so, it is hoped, the scheme will be attractive for volunteer IP professionals.  It was also noted that we should probably stop using the phrase "pro bono" which is generally little understood outside legal circles, and say something like "at no cost", or even "free" instead.

So, says the IPKat, if you are an IP professional in the UK, please consider offering your services.

Lundbeck v European Commission - a rotten decision or effective competition law enforcement?

This GuestKat was entertained yesterday evening at Monckton Chamber's event at the Goldsmith Centre in London entitled "Recent key developments in competition law and regulation in the pharmaceutical sector". The main focus of the seminar was on last month's decision of the General Court in Case T‑472/13, Lundbeck v European Commission. This is the first time that the General Court has ruled that so called 'pay-for-delay' agreements breach EU antitrust rules, and the General Court upheld fines of €146 million on Lundbeck and the generic companies involved.

The speakers were Ronit Kreisberger, Ben Rayment, and George Peretz QC, and the session was chaired by Sir Robin Jacob.  Each of the speakers have been involved in the case, and were not expressing their own views or those of their clients in the debate.


The case concerns the Danish Pharmaceutical company Lundbeck's anti-depressant citalopram drug. Lundbeck's compound patent for citalopram had expired by 2002, but it also held a crystallisation patent that protected citalopram when produced using a crystallisation process. Lundbeck concluded a series of settlement agreements with four generic manufacturers (Alpharma, Arrow, Generics UK and Ranbaxy), and these agreements were the subject of the General Court's analysis. Under these agreements, Lundbeck made substantial payments to each of the generic companies, and the generic companies agreed not to enter the citalopram market for a defined period. The Commission's decision had found that the concluded agreements harmed patients and health care systems, in that they allowed Lundbeck to keep the price of its blockbuster drug citalopram artificially high, in breach of Article 101 of the TFEU.


Never one to sit on the fence, Sir Robin kicked off proceedings by labelling the decision a rotten case, and invited Ronit Kreisberger and Ben Rayment to take the floor in the debate.
One key issue is that the Commission declined to perform any analysis of economic effects in its decision - it only assessed the object of the settlement agreements. The audience was reminded that where an agreement has an anti-competitive object, the Commission is not put to proof on the effects of that agreement. This promotes legal certainty, and has a deterrence effect. So far so good. But did the settlement agreements deserve to be assessed on an object basis only?

As a threshold issue, article 101 is not triggered unless the parties to the agreements are actual or potential competitors.  The generic companies maintained that they were not potential competitors: they could not launch a generic form of citalopram because they were prohibited from doing so by Lundbeck's crystallisation patent. This was rejected by the General Court on the basis that the patent was not an insurmountable barrier to entry due to the presence of a number of factors, which included the following: the parties' internal documents suggested that the patent might be 'weak', litigation was unlikely even if the generics had launched, and the generics' investments were substantial which provided evidence of their intentions to develop and launch generic citalopram.  The General Court stated that the generic manufacturers could have developed citalopram using alternative processes [Merpel wonders whether these were really practical alternatives, given that the generic companies would have relied on Lundbeck's data to obtain marketing authorisation from the regulator].  This essentially involves a 'counter-factual' assessment. Is such an assessment appropriate for an abbreviated 'object' inquiry? Where does this leave pharmaceutical companies in circumstances where some but not all of these factors are present?  [There is no right under competition law to launch an infringing product, says Merpel!].

On the other hand, certain evidence pointed in the direction of the agreements having an anti-competitive object. The settlements covered all citalopram - irrespective of the production method, and were therefore inconsistent with the scope of the crystallisation patent.  Another oddity is that the generic companies only agreed to delay entry for a period of 2-3 years - this was significantly shorter than the term of the crystallisation patent and would therefore not have guaranteed ‘early entry’.  It is worth noting that the Commission did not itself assess the validity of the patent - it merely reviewed the parties' documents on this issue.


The General Court appeared according to some participants to proceed on the basis that because some patents will fall when subjected to revocation actions,  all patent settlement agreements should be treated as presumptively unlawful.

IPKat: getting her claws out
Should this be an area that is the subject of ex post competition enforcement or would ex ante regulation be more appropriate? There were a number of thought provoking questions for the panel from the floor:
1. Is the Commission adopting different standards in comparable contexts? The Commission appears very sceptical of 'potential competitor' entry in the merger context, yet in these 'pay for delay' cases, the Commission is willing to label generic manufacturers as potential competitors even though it is highly uncertain what would have happened in those markets 'but for' the settlement agreements. The speakers were divided in terms of whether those contexts were comparable, and whether a similar approach should be applied in both contexts.
2. What practical steps can a patentee take to ensure that it does not fall foul of antitrust provisions? It was noted that the settlement agreements in issue were particularly badly drafted.  It is key that the scope of any settlement does not extend beyond the scope of the relevant patent(s).

Following judgment, Lundbeck issued a press release expressing disappointment with the General Court's conclusions, and strongly disagreeing with the judgment. Lundbeck is considering an appeal to the European Court of Justice. The Commission's press release can be found here.

A further report on the second case discussed at this seminar, R (Roche Registration Ltd) v Secretary of State for Health, will be posted on this blog in due course.

Tuesday, 18 October 2016

Never Too Late: If you missed the IPKat last week!

Enjoying the latest IPKat wrap up......... 
Missed the latest IP news? Here’s the 118th edition of Never Too Late!

The Rome Court demonstrated the narrow scope of Italian copyright exceptions for news reporting and criticism/review in the case of Mediaset vs Gruppo L'Espresso, finding that TV programmes could not benefit from either of these exceptions.

Economists Oliver Hart and Bengt Holmström were awarded the Nobel prize in economics for their work on contracts. Their studies have examined how contracts affect relationships between employers, employees, societies and governments.

A round up of recent IP issues relating to Brexit and two upcoming events focusing on the impact of Brexit on IP.

Neil considered if we are on the cusp of a potential competition law problem in the area of cloud computing services, as recently reported by The Economist in an article on Amazon Web Services.

A round-up post of the week's news and forthcoming events.

Two recent English cases, Karen Millen v Karen Millen Fashions Ltd and Skyscape Cloud Services Ltd v Sky Plc, indirectly consider Declarations of Non-Infringement in relation to Trade Marks.

The German Federal Court of Justice's decision in Sparkassen Group/Banco Santander, regarding a dispute over the validity of Sparkassen's colour mark "red" for financial services, looked closely at the proper methodology of consumer surveys designed to prove acquired distinctiveness.

The German Federal Court of Justice overturned two decisions by the Federal Patent Court when correcting the fact finding of the lower court and invalidating the patents in question for lack of novelty.

The Cronut comes to the UK! US-based Katfriend Matthew Hintz informed us of the Trade Mark saga of the croissant-doughnut hybrid.

Katfriend Nedim Malovic updated us on the judgment of Universal Protein Supplements Corp v European Union Intellectual Property Office Case, T-335/15, EU:T:2016:579, concerning an application to register a figurative sign representing a body-builder as a EU trade mark.

The EU Commission has proposed a directive on copyright in the Digital Single Market that intends to introduce a new related right in press publications into the EU copyright framework.

The recent case of Secretary of State for Health and Others v Servier concerns the intersection of patent rights and antitrust claims, and the first occasion on which prescribing and reimbursement matters have been raised by way of defence in a claim made by public healthcare authorities against a pharmaceutical company.

Book Review: Nicholas Lovell’s The Curve.

A group of EU-based academics published a letter addressed to a number of EU institutions in the aftermath of the release by the EU Commission of the second copyright package.

Never too late 117 [week ending on Sunday 9 November] | The Commission's DSMS and CJEU case law: what relationship? | Generic marks as valuable commercial information | Other people's computers | Compared to Svensson, GS Media is not that bad after all | Introducing our new InternKats! | C-223/15: no EU-wide confusion, no EU-wide injunction

Never too late 116 [week ending on Sunday 2 October] | Book Review: WTO Dispute Settlement and the TRIPS Agreement | The IPKat team news: new arrivals and farewells | Brexit - who has the power to change UK law? | Book review: Computer Crimes and Digital Investigations | European business urge continued UK involvement in UPC on eve of Competitiveness Council meeting | Wednesday Whimsies | Book review: Global Governance of Intellectual Property in the 21st Century

Never too late 115 [week ending on Sunday 25 September] | Book Review: Arnold reviews “Economic Approaches to Intellectual Property” | The English approach to obviousness – It all depends on the facts? | AIPPI Congress Report 3: Biosimilars – similar but different? | AIPPI Congress Report 4: Lawyers who lunch – role of experts in litigation and the EPO in the 21st Century | Law & Economics – The Italian Edition | Friday Fantasies | Latest thoughts about Brexit and the UPC | Eye ‘should’ve’ done that! – Specsavers nears approval to trade mark single word “should’ve” & “shouldve” | A song of Ice and Ice | ChIPs Global Summit Report 3: Congratulations – your patent has been allowed, when is it finally final?

Never too late 114 [week ending on Sunday 18 September] | Commissioner unveils new copyright package | Open letter from Wikimedia et al on copyright package | Globalisation, Globalisation, Globalisation| Philip Morris loses investment arbitration | EPIP highlights | 20 million thanks | Tea & trade secret theft | Patent quality conference | free wifi networks & copyright infringement | Chiefs in Intellectual Property summit | Innovation and its discontents | GS Media rapid response event summary | AIPPI Congress reports

Sunday, 16 October 2016

Rome Court of First Instance rules that copyright exceptions for news reporting and criticism/review do not apply to entertainment TV programmes

Is the practice of publishing extracts of entertainment
TV programmes risky?
In Italy, yes
(in the picture, an example from UK's Daily Mail)
Do the Italian copyright exceptions for news reporting and criticism/review [respectively, Articles 65 and 70 of the Italian Copyright Act] apply to the reproduction and making available on a newspaper's website of extracts of TV programmes having the character of pure entertainment [eg Big Brother]?

As reported by very interesting online resource Marchi & Brevetti, according the Tribunale di Roma (Rome Court of First Instance) the answer is ... NO.

In a decision adopted on 13 July 2016 but only published on 5 October 2016 (18413/2016), the Rome court ruled partly in favour of RTI - Reti Televisive Italiane (owned by broadcasting company Mediaset). It did so in the context of proceedings that RTI had brought against Gruppo Editoriale L'Espresso over the unauthorised reproduction and making available on the website of Italian newspaper La Repubblica of extracts of a number of entertainment TV programmes to which it owns the copyright. 

The Rome Court ruled that Gruppo Editoriale L'Espresso had both infringed the claimant's copyright and committed acts of unfair competition, but rejected the claim that it had also infringed RTI's trade marks. All in all, the Court ordered the defendant to remove all relevant videos and refrain from the future upload of any further videos in which copyright is owned by RTI. The Court also ordered the defendant to pay damages for EUR 250k.

Here's what the Court said in relation to copyright infringement.

The EU framework

Following a series of preliminary remarks regarding RTI's ownership of rights, the Rome court held that the defendant would not be eligible for the safe harbour protection for hosting providers within Article 16 of D.Lgs. 70/2003 [by which Italy implemented the ECommerce Directive into its own legal system], as well as Article 17 therein [prohibition of an obligation to monitor]. The reason is that the defendant "selects and directly manages the contents it uploads onto its platform".

The Rome court then turned to the consideration of whether the exceptions for news reporting and criticism/review would apply to the activities of the defendant. 

By referring to the decision of the Court of Justice of the European Union (CJEU) in Infopaq, the Rome court noted how the exceptions in Articles 65 and 70 of the Italian Copyright Act have an exceptional and special character compared to the principle according to which the author has the exclusive right to exploit economically his/her work. As such, these provisions must be only applied in the cases expressly provided for by the law and as long as they are justified to protect interests that are recognised by the Italian constitution and have an equal - if not superior - rank to copyright protection.

News reporting?
Unless you're interviewing Merpel
with her breaking news stories,
it's difficult to invoke successfully
This said, the Court also recalled that in ACI Adam the CJEU suggested that copyright exceptions must be applied by courts in compliance with the three-step test in Article 5(5) of the InfoSoc Directive [on this point, ie who the addressees of the three-step test in this piece of EU legislation, see here]

Following this overview of relevant CJEU decisions, the Rome court considered the wording of Articles 65 and 70 of the Italian Copyright Act.

News reporting

In relation to Article 65, the court noted how the first paragraph in this provision limits the application of the exception to the reproduction and making available of "news articles having an economic, political or religious character". 

According to the Rome court, Article 65 would be therefore inapplicable [here the reasoning is a bit hard to follow: it is not entirely clear why the court referred to the first paragraph of Article 65, since what was reproduced on La Repubblica was not articles, but rather TV programmes].

Turning to the second paragraph in Article 65 ["The reproduction and communication to the public of protected works or materials used in the context of current events is allowed for the sake of news reporting and within the boundaries of what is needed to inform, as long as the source, including the name of the author, is indicated, unless this proves impossible"], the Court also concluded for its inapplicability, considering that the relevant TV programmes remained available for a long time after their first making available through RTI's TV channels.


Turning to the exception for criticism/review, the Court also concluded that this would not be applicable because of the commercial character of Gruppo Editoriale L'Espresso's use of RTI's programmes. The Court noted how the defendant had made EUR 17k from the sale of advertising space linked to videos reproducing relevant extract of RTI's programmes.

According to the Court there would be no direct link between the unauthorised use of RTI's videos and the journalistic activity of the defendant. This, in fact, in order to make its own product more appealing from a commercial standpoint, provides readers with a service that goes beyond mere information. The very circumstance according to which RTI's videos are physically located within an autonomous section of La Repubblica's website confirm - according to the judge - that this is a service that is distinct from the information activity carried out by La Repubblica. 

But is the publication
of these extracts bad for rightholders?
Some considerations

The decision is interesting for a number of reasons.

First, and to say the least, with this decision the Rome Court has confirmed once again to be particularly sensitive to copyright protection claims [see here, here, here for previous instances]

Secondly, turning to more substantial considerations, at least in the interpretation provided by the Rome Court, the scope of Italian exceptions for news reporting and criticism/review appears fairly narrow. 

A related question is whether Gruppo Editoriale L'Espresso could have relied on different exceptions, eg quotation. Also here, the answer appears to be in the negative. As previously reported by this blog in relation to the copyright position of GIFs, in fact, Article 70(1-bis) of the Italian Copyright Act allows online free publication of low resolution or degraded images and musical works, for educational or scientific uses and only where such use is for non-commercial reasons. 

Thirdly, while it is true that there is CJEU jurisprudence [note, however, not always consistently] supporting the view that copyright exceptions and limitations should be interpreted strictly and applied in compliance with the three-step test, more recently a line of CJEU cases has also been questioning the compatibility with EU law of the addition - by national legislatures - of extra requirements and conditions for national exceptions, when such requirements and conditions have no correspondence in the wording of relevant exeptions in Article 5 of the InfoSoc Directive. The question that arises is therefore whether the extra requirements provided for in Article 65 and 70 of the Italian Copyright Law - that go beyond the wording of Article 5 of the InfoSoc Directive - are (still) compatible with EU law.

Fourthly, if the one of the Rome Court is the correct approach to the interpretation of Articles 65 and 70, then other newspaper websites should quickly change their policy on publishing extracts of TV programmes. A quick search shows in fact that - not just La Repubblica - but many other newspapers' websites are very keen on publishing extracts of entertainment TV programmes ... An example is Corriere della Sera's obsession with the (entertaining) moods of Italian X Factor's judge Manuel Agnelli: see here, herehere.

Finally, a practical question: is the publication of these extracts really detrimental to rightholders? Or does it rather serve to make a TV programme known to a broader audience and - as result - a potentially higher number of viewers? 

If I take my case, the answer seems to be that publication of short extracts by third parties might not be all bad. Quite the contrary, actually. 

Being based in the UK, I am prevented from watching Sky Italia (despite subscribing to it). Without Corriere della Sera's extracts I would have not been able to know anything about Manuel Agnelli's X Factor adventure. Thanks to Corriere, not only do I know something about it, but I am also keen to watch X Factor as soon as I set foot in my beloved home country again.

Saturday, 15 October 2016

It's a gas! The Nobel Memorial Prize in Economics

Scientific Cat-nundrums
This week, contracts won a Nobel prize. Or rather, economists Oliver Hart and Bengt Holmström were awarded the Nobel prize in economics for their work on contracts. Their studies have enhanced our understanding of incentives by examining how contracts affect relationships between employers, employees, societies and governments.  The application of incentives to IP is broad - the innovation/social contract approach to IP, patents as performance indicators in employment contracts, and, the bread-and-butter of IP, licensing contracts.

Eyes on the Prize
First of all, a bit of background. If you are an economist who supports the selection, i.e. that the winning economist's work supports your own work, then you must praise the Nobel committee's choice and the prestige of the prize. If you are not, then you must highlight that the economics prize is not a true Nobel prize, as it is comes from the Swedish National Bank, and therefore is not particularly impressive. Either way, one must be careful not to be too enthusiastic about a fellow economist's success, lest it be taken for indication of an emotional imbalance.

Second of all, some tips if you, dear reader, are interested in winning said prize. First, start early and live long so that your genius has time to be recognised. Second, be male. Only one woman, Elinor Ostrom, has received the prize. Third, make sure you are somehow Western, and ideally American. Fourth, become at expert at posing for photos in front of books. Finally, surprisingly, remember you don't actually have to be an economist to win; John Nash, who had the gall to be a mathematician, won in 1994.  Things really are going to pot.

Contract theories
Hart and Holmström have won the prize because their names both start with H they developed complementary contract theories. Holmström began by studying trade-offs in contracts. The classic illustration is insurance, which combines both information asymmetry, where parties in a contract do not have the same information, and moral hazard, where a party may engage in riskier behaviour because the risk is shared. For example, a health insurer has less information about the insured's lifestyle than the insured.  [Merpel's insurer doesn't know how much catnip she consumes.] Once insured, the insured shares potential costs with the insurer, and will engage in riskier behaviour. [Merpel has taken up parkour, because she won't have to pay for the hospital bills.]

Hart built further on this theory by examining the incompleteness of contracts. No contract can possibly foresee every outcome and consequence of incentives. He argued that property rights help mitigate this, as they place the burden of decision making on those with the property - and hence those with a stake in the unforeseen outcomes. Hart's recent work on prisons illustrates this; summarised by The Economist: "In publicly owned prisons, managers might underinvest in quality-improving measures, but private owners face too strong an incentive to cut costs, leading to conditions for prisoners that are worse than those in public prisons." These incentives apply to most government services.  A privatised patent-granting body would have different incentives than a public body (think of those renewal fee$!)

Contracts and IP
Readers of Katonomics will be familiar with economists' focus on the incentives-to-innovate theory of IP. This is often known as the Social Contract (covered previously here), in which IP is a contract between innovators and society; the monopoly protection of IP provides a long-term incentive to innovate. Society cannot foresee (information asymmetry) the value of each potential innovation, so all innovators are granted the same level of protection. Assigning the property right to the innovator incentivises innovation as the innovator has a stake in the outcome and the IP system as a whole.

Trophies, by R. Oxley, CC
A goal of researcher employment contracts is to align firms' innovation needs with employee incentives. Patents are sometimes used as a metric of performance. There is a large body of economic analysis on the use of patents as a measure of innovation; the general conclusion of which is that patents measure patents, not innovation. More specifically, Harhoff and Hoisl (2007) examine German policies via a large survey, and find that, unsurprisingly, more valuable patents are associated with higher levels of employee compensation.  Baker (1992) models scientists' salaries as entirely dependent on the number of patents they produce (a problematic assumption.)  In his model, scientists are unduly incentivised to work on "easy" patents and therefore the employer reduces the per-patent payment to avoid overpaying. Japan has recently changed its approach to patents, making it easier for employers to own patents generated by employees.

Finally, licensing contracts enjoy a never-ending analysis of incentives and clauses. The primary job of lawyers negotiating and drafting such contracts is to align the incentives in the contract with the needs of the client.  While researching the biotech sector in 2007, I came across an interesting case. My interviewee had exclusively licensed a product on a royalty basis. The licensee instead marketed a competing product, leaving the licensor without royalties.  The contract had been used to eliminate competition from the market, and failed to align the parties' incentives. Another anecdote is the use by wealthy Multi-national Companies (MNC) of reversion clauses when partnering with companies in developing countries. The MNC engages in joint research and market expansion, then deliberately causes the project to fail in order to trigger the reversion clause. Both background and foreground IP, as per the contract, revert to the MNC. It's a cheap way to expand internationally.

I invite readers to tell their stories of the odd quirks of licensing contracts in the comments.  In the meantime, I'm off to work with Merpel on contract incentives of catnip producers. Fingers crossed for a Nobel!

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