For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Monday, 28 July 2014

Whac-A-Mole Trade Mark Litigation: Using U.S. Trade Mark Litigation to Combat Foreign Counterfeiters

Beats By Dre
Over the past month, a number of well-known global brands have filed U.S. lawsuits against foreign  (predominately Chinese) online businesses for the sale of counterfeit products to U.S. consumers. Beats Electronics, LLC (dba Beats By Dre; “Beats”), the audio product manufacturer and online music provider, filed a lawsuit in the U.S. Federal District Court of Northern Illinois (Case No. 14-cv-5209) on July 9th against several foreign counterfeiters alleged to have sold counterfeit Beats products to U.S. consumers. Their complaint claimed that such acts constituted federal trade mark infringement, and violations of federal and state unfair competition laws. Similarly, Lululemon Athletica Canada, Inc. (“Lululemon”), the popular Canadian producer of yoga clothing and other sportwear, filed an almost identical lawsuit on July 17th in the same U.S. District Court (Case No. 14-cv-5478) against similar foreign online counterfeiters who allegedly sold knock off-versions of their apparel to U.S. consumers.

In both of their complaints, Beats and Lululemon claimed that foreign-based counterfeiters are increasingly damaging their U.S. market sales through direct sales to U.S. consumers that bypass traditional counterfeit import safeguards. Particularly, they claim that the named counterfeiters established deceptively similar websites to Beats and Lululemon’s own sale sites, and that they utilized search engine optimization tactics to increase their website rank on sites such as Google in order to directly market their counterfeit goods to U.S. consumers. Such counterfeiters are also claimed to be increasingly able to evade detection by U.S. Customs and Border Protection when exporting their goods to the U.S. by utilizing third-party payment systems such as PayPal and Western Union, and using small quantity direct mail to ship their products to U.S. purchasers.


Although these cases were only filed days ago and show how foreign counterfeiters have recently been adjusting their tactics to sell their counterfeit goods to U.S. consumers, they are by no means new and have become common means for global brands to seek U.S. enforcement against foreign counterfeiters. Beats sued several similar foreign counterfeiters last September (Case No. 13-cv-6724) based on the same claims in their current suit and prevailed in a default judgment, resulting in the seizure of nearly 1,500 domain names, 50 PayPal accounts, and statutory damages totaling $2 million per infringement. Lululemon prevailed in a similar lawsuit brought in the U.S. Federal District Court in Southern New York in June last year (Case No. 13-cv-4385-KPF) against a group of foreign counterfeiters who had established confusingly similar fake websites to sell counterfeit Lululemon products. Like Beats, Lululemon was victorious in a default judgment, resulting in $23.3 million in damages and injunctive relief including transferring counterfeit domains to Lululemon and restraining the named foreign counterfeiters from utilizing third-party U.S. payment and service providers who facilitated their U.S. counterfeit sales. Additionally, other well-known global brands such are Hermes and The North Face have sought and succeeded in similar actions in the U.S.

At face value, these U.S. based trade mark cases against foreign counterfeiters appear to be effective in providing compensation to damaged brands and helping to dismantle the U.S. instrumentality such counterfeiters use to sell their fake goods in the U.S. Yet a further examination shows that the redress obtained from these cases is incomplete and even ineffective at deterring repeat infringements by such counterfeiters. First, commentators have validly questioned the ability of a global brand to obtain actual monetary recovery from these foreign counterfeiters once they receive a U.S. judgment in their favor. China, home to an estimated 80-90% of the world’s counterfeiters and many of the counterfeiters identified in Beats and Lululemon’s lawsuits, will not honor a U.S. judicial judgment in their Courts. This makes it unlikely that any global brand could effectively enforce their U.S. judgment against a Chinese counterfeiter’s assets in China. Further, as such foreign counterfeiters are reported to be notoriously careful to ensure that their third-party U.S. payments accounts have low balances, it is unlikely that the large damages awarded from these recent U.S. cases will be recovered in the U.S.


The lack of enforceability of these U.S. judgments also makes them less likely to dissuade repeat infringement. Without the ability to enforce such judgments from a monetary standpoint, they provide no effective legal deterrent to repeat action, meaning that there is nothing to stop foreign counterfeiters from reestablishing their online markets through different domain names and locations once they are shut down. These deficiencies coupled with the sheer number of similar U.S. lawsuits increasingly make such cross-border enforcement actions, by themselves, an expensive and time-consuming Whack-a-Mole exercise (a futile repetitive act for those who did not have the pleasure to play Whac-a-Mole as a child).

Although these recent cases highlight the ineffectiveness of combating foreign counterfeiters by U.S. trade mark litigation alone, complementing such efforts with enforcement actions in the countries where the counterfeiters reside may be a more effective solution. For example, both Beats and Lululemon have many of the same trade marks registered in China that they claim rights to in their U.S. lawsuits. This gives both brands legal rights under Article 52(3) of the Trade Mark Law of the People’s Republic of China (CN 026) against parties who create counterfeit versions of their products utilizing their registered Chinese marks. The enforcement of such trade mark rights in China has numerous challenges and costs, but it is arguably improving as the U.S. Trade Representatives Office reported this year on better access to redress in Chinese civil courts as well as improved cooperation between Chinese and U.S. law enforcement on deterring the cross-border flow of counterfeit products.


As online marketplaces are now the main sales point for imported counterfeit goods, it is likely that global brands will increasingly need to focus their enforcement efforts both in the originating and the export sale markets in order to enforce their trade mark rights effectively. Only conducting both types of enforcement actions can better guarantee that global brands can effectively prevent the cross-border trade of counterfeit versions of their products. 

Never too late! If you missed the IPKat last week ...

Here is the fourth in our weekly series of compilations by our good friend and former guest Kat Alberto who is currently endearing himself to all of us and incidentally making himself indispensable by summarising the feature posts (excluding the regular around-ups) that  appeared on this weblog over the previous week. Newcomers to this blog (welcome!) and those who were busy last week can see what they missed and decide conveniently for themselves what they want to chase up.  Last week's features are as follows:

Some weeks ago this weblog reported the first episode of the legal battle between YouTube and Delta TV, which owns copyright over a number of South American soap operas that were uploaded on the popular video platform without its authorisation. The First Court of Turin’s interim decision dismissed Delta TV’s claims. Here Eleonora tells how the interim appeal went, with the Italian court discussing the relationship between Enforcement and E-Commerce Directives, shields from liability available for new generation providers (once known as “active”) and, most importantly, a rather innovative approach to ISPs’ filtering duties under the E-Commerce Directive regime.


A modest celebration after the IPKat's page-view counter reached the stunning figure of 10,000,000. Merpel, Jeremy and all the present and past bloggers have a deep respect and affection for their readers -- and how sweet it is when their affection is reciprocated.


This is the third and perhaps final episode of Darren’s series on the role of “precedent” in the European Patent Office (‘EPO’) [the previous two posts are here and here]. This time Darren focuses on the issue of res judicata and how it differs from precedent, both from a common and civil law perspective. If you have not yet taken a look at this essential trilogy, here's your chance to do so.


Last week Jeremy broke the news of AG Cruz Villalon providing his Opinion in Case C‑364/13, International Stem Cell Corporation v Comptroller General of Patents, concerning the concept of “human embryos” under Article 6(2)(c) of Directive 98/44 on the legal protection of biotechnological inventions and, in particular, of whether “unfertilised human ova whose division and further development have been stimulated by parthenogenesis” fall into that category. In this post Annsley leaves the floor to the in-depth analysis of Shohta Ueno, an Associate in Allen & Overy's IP Litigation team in London, who helpfully summarizes the key points of the AG's Opinion and place his bets on whether the CJEU will follow suit.


Should the US have resale royalty (droit de suit) and generalised moral rights? Starting from the hearing held on 15 July in the U.S. House of Representatives Subcommittee on Courts, IP and the Internet, Marie Andrée portrays the colourful state of law and case-law concerning these two typically French non-economic rights -- the right of artists to profit financially from the subsequent resale of their work and “moral rights”, by which is meant here the rights of attribution and right of integrity for all works protected under US copyright law.


Eleonora covers a recent decision by the District Court of Rome, considering Wikimedia’s nature as hosting provider and its liability for alleged defamatory content appearing on the world's most famous open encyclopaedia.  


This is a hard-to-believe story about some Belize-based company attempting to register trade marks for the flight numbers of the two ill-fated Malaysian Airlines jets -- the recent MH17 downed in Ukraine and MH370, which mysteriously disappeared somewhere in the Pacific Ocean on 8 March. Jeremy considers this difficult story in light of the EU TM Directive and US Lanham Act’s provisions dealing with trade marks contrary to public morality. This post also concerns the very role of the IP professional when asked to deal with clients’ requests. Would you file an application for those unlucky flights’ numbers? And for “Titanic”? Do participate in this discussion, which has already attracted a significant number of comments.


After the Directorate General (DG) for Internal Market and Services of the European Commission released its much-awaited Report on the 9,500 responses to the Public Consultation on the Review of EU Copyright Rules, Eleonora launches a series of posts delving into what the respondents said. This first episode explains who participated to the consultation and their takes upon cross-border access to online content and the ‘making available’ and the ‘reproduction’ rights within the context of digital transmission.


The second episode of Eleonora’s series on Public Consultation on the Review of EU Copyright Rules’ addresses respondents’ takes on browsing and linking, particularly in the field of news. Eleonora explores the relation between the Consultation’s outcome and the CJEU’s landmark decisions in Svensson and PRCA, as well of ancillary rights over on-line news that is being discussed a bit all over Europe.


Here’s another ruling in the famous saga of Comic Enterprises Ltd v Twentieth Century Fox Film Corporation [2014] EWHC 2286 (Ch), concerning the alleged infringement of the UK club-operator Comic’s “The Glee Club” trade mark by the producers of the “glee” TV series [previous episodes here and here]. Earlier decision held TCF’s infringement of Comic’s trade marks, and Roger Wyand QC is now called to decide whether and how the claimant's requests for injunction, destruction of infringing materials, account of profits, disclosure of information, publicity order, and interim payment should be granted. He did so in a very proportional way, Jeremy thinks.


Rebecca writes about a professional YouTuber, Ms Phan, using other people’s songs in her videos and being sued by a label owning copyright on those works. Some time later, one of the artists who composed the allegedly infringed song pops up and endorsed Ms Phan’s activity against his own label, calling copyright a “dinosaur”. That’s evolution, baby.


Katfriend Aaron Wood (Swindell & Pearson) reports a recent decision in Enterprise Holdings v Europcar Group UK Limited & Another [2014] EWHC 2498 (Ch), where the Community Trade Mark Court, England and Wales, addressed the long-debated issue of surveys in IP proceedings of a trade mark.


Blackberry’s past misfortunes and Microsoft’s intention to eliminate 18,000 employment positions have diverging effects on brand image. This is not only as the vast majority of laptops have Microsoft’s operating system installed, but also because the company formerly led by Bill Gates justifies the lay-off with promises to expand into new business fields. What if those promises are not delivered, Neil wonders?


Merpel is a kitten that everybody in the IP Community knows, but this familiarity does not in any sense lessen her ability to spring a surprise. This time, she shows this weblog’s readers a bit of her knowledge of modern and medieval geo-politics, penning a most learned article on the curious little fiefdom of Eponia. with blurred borders and a buoyant economy based on IP tourism, Eponia is populated by restless inhabitants linked to their Leader through vows of stability and obedience. More or less like Game of Thrones, but without mass murders. So far. 

Daylight robbery, value for money and patent renewals: it's time to talk

The IPKat and Merpel regularly receive vast quantities of marketing literature. Much of it is plainly irrelevant to the content of an IP weblog and some of it, while relevant to the subject, is of insufficient interest or significance to mention to our readership. However, the following piece of marketing literature is not only relevant but a little cheeky, if not perhaps a bit offensive.  In relevant part it runs like this:

Daylight Robbery: the hidden fees charged for annual patent renewals
This is how the usual patent
renewal businesses are portrayed
Over eight million patents are held worldwide by many thousands of businesses. All have to pay regular renewal fees, usually every year, to the Patent Office for each country to keep their patents in force.

The amount payable is usually modest (£100 or so) – varying from country to country and with the age of the patent. But you can be charged up to 4 times the actual cost to make these payments! [Goodness! Merpel exclaims: but where does this assertion come from?] This extra cost quickly mounts up when multiple patents are involved in many countries.

How does this happen? Initially patent agents (or the specialist renewals companies like CPA Global, Dennemeyer and Patrafee that they appoint) assume responsibility for making these payments – often without explaining what they are about.

Fees charged for everything in the patent world are high – in most cases justifiably because patent laws are complex. As a patent owner you get used to regular bills – and they are difficult to challenge because of this complexity.

But making renewal payments is essentially a straight forward and recurring exercise and does not justify the charges currently being levied.

Why do most businesses put up with this situation? For two reasons, firstly because it is difficult to find out exactly how much is payable and secondly because they do not trust themselves to make this important payment on time each year.

So RenewalsDesk.com has come up with a simple solution. It has collated all of the information about these renewal costs on a freely accessible website.

And if you wish, you can set up an auto-pay arrangement to ensure the payments are made every year until you decide to stop them. The charges levied for this service are a fraction of the current costs and are clearly shown.

You would not normally accept paying up to 4 times the true cost of your bills. Why put up with it any longer for your patent renewal charges? ...
RenewalsDesk.com is run by RenewalsDesk Ltd, a company based in London. The website does not lead visitors in the direction of any particular named individual, but the email received by this Kat offers an interview with Katherine Hedley, with whom this Kat thinks he has yet to be acquainted.

This Kat is not in a position to make a value-for-money comparison of specialist renewals companies like CPA Global, Dennemeyer and Patrafee with each other or with web-based systems such as RenewalsDesk (though his sure that many of his readers will have plenty to say on the subject). He is however decidedly uncomfortable with the designation of their services and pricing as being "daylight robbery", or indeed any other kind of robbery, in what had struck him as being a genuinely competitive market for services that patent owner are quite welcome to dispense with.

Merpel notes the covering email which introduces the text quoted above, in which the author writes:
"In the UK, businesses hold onto their patents for less time than in almost any other part of the world (according to research by the WIPO) and that may be due to these fees which are plagued with hidden fees often resulting in patent holders paying 4x more than they need to for each patent they hold". 
She suspects that there may be other, more cogent reasons and, again, would love to hear from readers on this issue.

Sunday, 27 July 2014

Eponia: a State of mind?

Practically independent already: the European
Patent Office -- or is it now Eponia? 
"Scottish independence: Europeans with an eye on Edinburgh" is the title of an informative piece for the BBC website by Esther Webber who asks:
"Voters will go to the polls in September to decide whether Scotland should become an independent country. But what other Europeans are pressing for independence and how closely are they watching Scotland?"
Esther then lists the eight: they are, in no particular order, Catalonia, the Basque country, Flanders, Padania, Veneto, Brittany, Corsica and Transylvania (or at any rate the Hungarian-speaking part of it).  This Kat has however spotted a ninth country which has pretty well established itself as an independent country within Europe: the Democratic Republic of Eponia.

Eponia is a small landlocked state mainly based in Munich, though it has established colonies in The Hague, Berlin, Vienna and Brussels.  Few people are born in Eponia (though it is rumoured that quite a few have been conceived there); most are settlers -- though they prefer to call themselves by a less provocative term, Examiners.

Patent income: a veritable cornucopia
One of the most buoyant economies in Europe, Eponia enjoys a unique and apparently inexhaustible source of income: patent tourism. Pilgrims come from far and wide to place their supplications before the local sages, or Boards of Appeal. Well-wishers also ply Eponia with money in order to obtain patents, cancel patents, amend patents or sometimes just to accelerate or retard the rate at which these much-desired services are delivered. Those whose petitions for a patent are successful often find that they are blessed with plenty, and that their influence extends from one end of Europe to the other. Some say that this good fortune can persist for getting on for 20 years, so long as occasional sacred donations, quaintly termed "renewal fees", are paid. What other country in Europe can offer such attractions?  The horseshoe, the four-leaf clover, the leprechaun pale into insignificance in comparison.

The European limit of the territorial reach of Eponia has been a matter of regret to its overlords, who have found the "EP"ness of its constitution something of a nuisance.  So they decided to simply ignore it, and venture forth into more distant territories, such as Tunisia which, last time Merpel checked, was not by any geographical or political criterion known to be part of Europe.

The national religion of Eponia is contained in a document known as the European Patent Convention, whose Articles (far more numerous than the Church of England's mere 39) are held to have been dictated directly into the ear of Blessed Bob van Benthem by a divine voice in the form of a holy hummingbird.  While of less mystical origin, the Rules are also greatly revered Like any sacred text, its superficial meaning is open to misinterpretation, and only specially trained priests are initiated into the deeper meaning of its rites and rituals (enigmatically referred to as "Guidelines"). When sufficiently inspired, those who are closest to achieving spiritual ecstasy can be seen and heard to be "talking in tongues", which embrace English, German and French -- but never Spanish or Italian.

"L'Etat, c'est moi!"
Many countries in Europe have a representative democracies which practise a strict division between church and state, and between the legislative, judicial and executive functions.  Eponia, however, practises a form of government which, economical in terms of labour, is highly efficient in terms of decision-making and in the enforcement of policy: some refer to it by the term that is derived from the Latin (dictatorship), while others prefer the Greek-originating version (tyranny). This should be no surprise to anyone who noticed the description of Eponia as a Democratic Republic.

The inhabitants of Eponia are restless, apart from the chosen few who enjoy the confidence of The Leader or upon whom he has cast a beneficent eye.  Spurning financial inducements, they crave the opportunity to pursue their avocation in peace and tranquility, to express their thoughts without fear of retribution and to, er, sign their own names when they post comments on popular intellectual property weblogs.

Inspired by the Rule of his namesake St Benedict, The Leader expects the Examiners to take vows of stability and obedience.  The vow of stability is enforced by paying them salaries higher than are available anywhere else, while the vow of obedience is enforced by the Guidelines for Investigation, which are wielded by the greatly feared Judges, who are, shall we say, Dredd-ful.  Their word is law and their word is final.  Cowering Examiners may not summon aid, nor keep silent to avoid self-incrimination.  Their cooperation is mandatory.  This however has not gone unnoticed by some of the territories in which Eponia metaphysically resides, and has dared to undertake legal, if not yet military, invasion into the sanctity of the Eponian premises.

To the public at large of Europe and further afield, the Democratic Republic, keen to attract its patent tourism Euros, issues glittering propaganda.  The most magisterially handsome, appealing to zealots and bibliophiles alike, is the Official Journal, that can be bound into volumes with pleasing ballistic properties.  For those who eschew such traditional means of communication, there is a handy newsletter thingamajig.  But these are mere fripperies compared with the Great Pilgrimage that is ordered every year to worship at the Shrine of Inventorship, where all the renewal fees of that year are spent on the European Inventor Award, thereby distributing to the few the offerings of the many.  By special Oecumenical Agreement, this is relayed to the world at large, at no little effort, by no less an organisation than CNN.

The theocracy of Eponia is not slow to learn from the religions of other territories, even those as far away as Japan.  Learning at one of the meetings of the Trilateral Offices that the Ise Shrine is rebuilt every 20 years according to Shinto precepts, The Leader resolved that whereas one patent life was sufficient for Japan, perhaps two might be suitable for the Netherlands, and so decreed the creation of a replacement building after 40 years.

There is another small troubling matter that irritates The Leader.  Unlike hereditary monarchs or papal clerics, his mandate does not last forever.  Fortunately, the college of overlords, cunningly picked from the very organisations that benefit from the overflowing bounty of the largesse of Eponia in the form of national renewal fees and direct assistance, are biddable.  The Eponians were delighted therefore to learn that the college of overlords happily extended the mandate of The Leader (well, perhaps not all of them) for a further four years.  All pilgrims were however perhaps surprised that the extension was approved without the details of the contract being finalised: these little details, such as presumably the pitiful associated emoluments, were left for subsequent private agreement between The Leader and the chief of the overlords.

And here we leave Eponia for the time being, to focus on the goings-on in other regimes but secure in the knowledge that readers of this weblog will continue to keep us informed of the happenings in this curious little fiefdom. Meanwhile, thanks to all of you who have kindly kept us informed of latest events there. There are too many of you for me to name here,and many of you must, on pain of losing your jobs, remain content for the time being with receiving just an anonymous Katpat.

Friday, 25 July 2014

Friday fantasies

Bogus bruin: more than
the Cubs can "bear"
Baseball team Chicago Cubs are reported to have filed a lawsuit against a group of five people who, they say, have been dressing in bogus "Billy Cub" mascot costumes, following which they are said to be participating in “inappropriate and unsavoury actions” in the vicinity of the Cubs' Wrigley Field stadium (thanks go to Lauren Somers of HGF for this link: she earns herself a Katpat). The inappropriate and unsavoury action in question appears to include exacting charging fans for pictures and getting into bar fights. Three of the five fake Cubs are not identified in the charges which are being brought against them.

The real item
According to the Cubs the accused, who are not affiliated with the Cubs in any way, are infringing the team’s trade marks by using the character to mislead people into thinking Billy Cub is associated with the team.  The suit alleges “mascot-like activities” and specifies such practices as dancing with fans and, in a presumed departure from normal mascot practice, making “rude, profane and derogatory remarks and gesticulations to patrons, ticket holders, fans or other individuals located in the area of Wrigley Field". One "Billy Cub" was also caught on video apparently punching a man in a local bar. There is also a website promoting the character, billycub78.info, the home page of which contains the following statement in defence of what many may quite reasonably demand as being indefensible:
"Help Save Billy Cub!!! 
For seven out of the last one hundred and ten years the Chicago Cubs have had a positive off the field image; a figurehead for the organization. From 2007 to present this significant role has been graciously filled by Billy Cub. During this time Billy Cub has served as the unofficial mascot of Chicago Cubs, positively impacting and improving the Wrigleyville game day experience for over 2,000,000 fans. Billy Cub wants nothing more than to be the official mascot of the Chicago Cubs but bureaucrats are trying to take Billy’s passion away. Official mascot or not, Billy Cub will never stop giving baseball fans, young or old, the best game day experience possible. Please support Billy Cub’s selfless efforts by signing the “Save Billy Cub” petition as well as posting your photographs and unforgettable moments on facebook. With your non monetary support you can help keep Billy Cub off the endangered species list and his dream of being the official mascot alive!"
The IPKat will continue to monitor the situation, rather suspecting that trade mark expert, American sports-lover and blog team member Neil will feel tempted to write something on it when the moment is ripe.


Another curiosity from the United States may be perused in this Daily Mail article, "New Jersey sues Florida pizza shop 1,300 miles away because logo is 'too similar' to Garden State Parkway", via a tip-off from Chris Torrero (Katpat!). New Jersey is known as the "Garden State": this dispute has arisen because the New Jersey Turnpike Authority felt that the Florida pizza shop's logo was too similar to the Garden State Parkway's green and yellow signs. This Kat is a little amused, recalling the ONEL case and the debate in the European Union as to whether use in one little corner of its territory should be regarded as genuine use in the EU.


Around the weblogs. After a week or two of relative torpor, PatLit has awoken, with posts in rapid succession on last month's "Limitation and Amendment of Claims during Litigation" event (here) and two applications to stay proceedings: in one, the idea is to stay office proceedings pending the outcome of a trial; in the other, the application was to stay court proceedings pending the outcome of an office action.  The 1709 Blog has been busy too, with a terrible tale of a copyright infringement claim that got out of control in the hands of an unreasonable claimant, who has now received a civil restraint order, plus the next of Ben Challis's oh-so-enjoyable CopyKat round-ups. Class 99 boasts a guest piece by José Ángel García-Zapata on locus standi and why Spanish distributors of goods made by their parent company outside Spain don't have it when they want to sue a competitor for design infringement.


Dr Parminder Lally is, during normal working hours, a Technical Assistant for Marks & Clerk LLP in its Cambridge office.  Once set free from his employment duties, she assumes an altogether different role: that of editor of the Yellow Sheet, the official blog of the Informals [no, explains the IPKat, it's not a paramilitary organisation; it's the (informal) organisation of student members of the Chartered Institute of Patent Attorneys, or CIPA]. Parminder asks the Kats to spread the following message:
“Those of you in the patent profession in the UK may be aware of the existence of the Yellow Sheet, the official blog of the Informals. The Informals is, as its name suggests, an informal association of the unqualified (and part-qualified) Student Members of the patent profession. The Informals provide a UK-wide support network for trainees, organising lectures and tutorials directed towards the examinations, trips to the UKIPO ["But why would anyone want to go there ...?", wonders Merpel] and social events. The Yellow Sheet blog (which some years ago replaced paper versions of the Yellow Sheet in the CIPA Journal), is used to publish information of interest to Student Members of CIPA. 
The blog includes information on upcoming social events across the UK, sporting fixtures, practical information relating to tutorials and Informals lectures, and the time-honoured “Wacky Patent” feature. The blog also contains links to other sites which may be useful when preparing for the PEB [Patent Examination Board] exams and the EQEs [European Qualifying Examinations]. Student Members, Fellows of CIPA, and anyone who’s just interested in finding out what patent trainees are up to -- all are encouraged to subscribe to the Yellow Sheet to keep up-to-date with Informals activities and education-related matters. Simply visit the site and enter your email address to subscribe. Subscribers will receive an email whenever a new post appears on the blog. If any IPKat readers have any news which may be of particular interest to patent trainees, they are most welcome to contact the Yellow Sheet Editor by email".

Finally, a word from Katfriend Aaron Wood (Swindell & Pearson) who advises the Kats that they may wish to blow the trumpet of a fellow IP professional – Keith Beresford. He is a patent attorney advocate and appeared in the Court of Appeal for England and Wales on Wednesday in Lantana Ltd v Registrar of Patents. Aaron thinks this is the first time a patent attorney advocate has appeared in the Court of Appeal. Can anyone confirm if Aaron is right about this? If so, well done, Keith!

When employee layoffs can spell trouble for your reputation

Does the public announcement of a large-scale lay-off of employees affect a company's goodwill and reputation? At a certain level, bad news about company may well affect consumer behaviour. This Kat admits that, a few years ago, he was dissuaded from buying a Blackberry mobile phone because of the announcements about the company's business difficulties, changes at the senior management level and substantial employee lay-offs. I suspect that what happened then was that I felt that, rightly or wrongly, I could no longer trust the brand. But Blackberry's decline was sudden and massive and occurred in the face of larger and better-healed competitors, such as Apple and Samsung. But what if the circumstances are less drastic?

This question arose following the 17 July announcement by Microsoft that it was eliminating 18,000 positions during 2015. The announcement, made by Microsoft CEO Satya Nadella, here, stated as follows:
"The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months. It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas."
[In addition, the company will abandon its attempt to create original content by gradually closing down its Xbox Entertainment Studio, here.]

We start with the assumption that most people probably did not actually see Mr Nadella's announcement. We further assume that only a relatively small number of people read at least one newspaper or online article about the move. On the other hand, we assume that many more people probably saw a headline or were exposed to a brief media description, enough to become aware of the scope of the lay-offs, although they probably did not focus on the fact that the bulk of the lay-offs are directed to employees who were absorbed only recently by the company as part of its acquisition of mobile phone assets from Nokia. What one is likely to remember is that the company is laying off a record number of employees. And so the question—has the Microsoft brand been impaired?

My immediate response would be—no. Microsoft is not Blackberry. Lay-offs do occur, not infrequently at mature mega-companies (HP also announced relatively recently sizeable lay-offs, here.) I have used the installed base of Microsoft software on my computers for years and I will continue to do so in the future. But the issue may be more nuanced that that. Mr Nadella has emphasized that he wishes to pursue "mobile-first" and "cloud-first" strategies for the company. Unlike the desktop, however, the cloud and mobile are both highly competitive areas where Microsoft is merely one among a number of competitors. It is here that potential trouble lurks for the Microsoft brand.

For a company of Microsoft's size, one can identify two different circumstances in which sizeable employee lay-offs will occur. The first is an outright cost-saving measure, where the company seeks to become "leaner and meaner". The second is an attempt to redeploy assets into new and more promising areas. Ironically, perhaps, it is this second type of lay-off that poses the greater risk to the reputation of a company such as Microsoft. This is because the company is making an implicit promise that the lay-offs are part of a larger strategy intended ensure that the company will have a better tomorrow. In such a situation, the risk to a company's reputation is that it will not make good on its promise. As such, the circumstances surrounding Microsoft's announcement will not harm the company's goodwill in the present. However, it does set up the brand for a fall if the company ultimately fails to deliver on its promise.

Thursday, 24 July 2014

Survey evidence: Mystery Morgan brings parrot back from the dead

This Kat's email inbox has been building up all day with excited missives about the fact that an endangered species, indeed one that was thought at one stage to be extinct, has been found lurking in a London Community Trade Mark Court. It was there that one of the jurisdiction's most rare and recondite intellectual property judges -- Mr Justice Morgan [a High Court judge since 2007 and mysteriously listed as a Patents Court judge, though he has only ever once got a mention on this blog, and even that was in a case that was really on competition law ...] -- brought to life an application to admit market survey evidence. With all regular Kats busy, in hiding or in the wrong time zone, it fell to occasional contributor and long-term Katfriend Aaron Wood (Swindell & Pearson) to step into the breach and write this post:
Unlike the famous Norwegian Blue parrot, it appears that trade mark surveys were not dead -- just sleeping!

The lord of all he surveys ...
Following the decision of the Court of Appeal for England and Wales in Interflora 2 [2013] EWCA Civ 319 [noted by the IPKat here], it had been felt in certain quarters that survey evidence no longer had a role to play in trade mark cases.  In infringement situations a survey may have been said to usurp the role of the trial judge, and in that case Lewison LJ commented:
“the general message [is] that evidence from consumers in this kind of case (i.e. trade mark infringement involving ordinary consumer goods or services) should only be admitted if it is of real value; and even then only if the value justifies the cost; and that judges should be robust gatekeepers in that respect”
The decision of 22 July 2014 in Enterprise Holdings v Europcar Group UK Limited & Another [2014] EWHC 2498 (Ch) tests this in the context of a case where the claimant seeks to adduce evidence of acquired distinctiveness, reputation and goodwill attaching to a mark.  Two of the counsel from Interflora 2 were counsel in this case: Geoffrey Hobbs QC again pitched as the erstwhile slaughterer of surveys, whilst Simon Malynicz reprised his role as counsel seeking to have the survey admitted.

Finding that the survey should be admitted, Mr Justice Morgan made a number of significant comments on the admissibility of survey evidence, as well as making findings on the validity of the survey itself.  Interested readers should read the comments on the validity of the survey, but the admissibility is of greater broad interest. On “real value” he noted the existence of OHIM’s guidelines on trade marks with a reputation, particularly the words: 
"Opinion polls and market surveys are the most suitable means of evidence for providing information about the degree of knowledge of the mark, the market share it has, or the position it occupies in the market in relation to competitive products. The probative value of opinion polls and market surveys is determined by the status and degree of independence of the entity conducting it, by the relevance and the accuracy of the information it provides, and by the reliability of the applied method."
He also commented that in Interflora 1 (Interflora Inc v Marks and Spencer plc [2012] EWCA Civ 1501 [noted by the IPKat here] Lewison L.J. had stated that different considerations from the general position on surveys apply where the issue is whether a registered mark has acquired distinctiveness.  He further noted the words of Etherton J in  D Jacobson & Sons Ltd v Globe Ltd [2008] EWHC 88 (Ch) [noted by the IPKat here] that the survey had helped on the question of whether a mark had acquired distinctiveness.

He also gave some thought as to how it might fit with other evidence to be provided:
  1. Before addressing the "likely to be of real value" test derived from Interflora 1, it may be helpful to discuss the point summarised at paragraph 17(4) and 18(5) above as to the utility of a survey when the competent authority has "particular difficulty in assessing distinctive character". This question has been identified in a number of decisions of the European Court of Justice. It seems that it is envisaged that the question will be answered as part of the overall assessment made by the competent authority, rather than at an earlier gatekeeping stage. If the question is addressed as part of the overall assessment, then the competent authority will be able to take into account all of the other evidence as to acquired distinctiveness when answering the question. If the question has to be answered at an earlier gatekeeping stage, then the competent authority may be much less clear as to whether the case will turn out to be one of particular difficulty. It may be that the cases which are more likely to be of real difficulty are those where the mark in question is not a traditional trade mark.
  1. In the present case, I consider that it is likely that there will be difficulty in assessing whether Enterprise's green logo has acquired distinctive character through use. Although the green logo is a traditional trade mark, some (possibly most) of its use has been as part of or in conjunction with another trade mark and the survey is designed to assist with the question whether the green logo, by itself, has acquired distinctiveness as identifying the goods or services of Enterprise.
  1. So far, I have considered Europcar's criticisms of the surveys carried out, or proposed to be carried out, for Enterprise. I have held that it is likely that the surveys will be held to be valid surveys. It nonetheless remains for Enterprise to satisfy the court at this gatekeeping stage that it is likely that the surveys will be of real value at the trial.
  1. My conclusion is that it is likely that the surveys will be of real value at the trial. I have already explained what is involved in the concept of a mark having a distinctive character acquired through use. I do not consider that a trial judge in this case will be able to determine that question by using his own knowledge and experience. Even if a trial judge thought that he had relevant knowledge and experience, the trial judge would wish to guard against the possibility that his view might be somewhat idiosyncratic or not fully informed. Of course, the trial judge will have evidence on the question of distinctiveness over and above the survey evidence. At the present stage, I do not have sight of that evidence. It is not possible at this stage to assess whether the survey evidence will be of real value in addition to the other evidence but, as I read the decision in Zeebox [noted by the IPKat here], I am not required to attempt to carry out that exercise.

On the question of whether the value justifies the cost, he noted that the parties had expended a substantial amount at this “gatekeeper” stage – indeed, Europcar had spent more on the gatekeeper stage than it estimated it would spend dealing with the results themselves, and the application had led to expert evidence on both sides as to the validity of the proposed surveys.  This irony was not lost on the judge, who noted that the point of the gatekeeper stage was to prevent parties incurring large cost dealing with surveys which have no inherent value.  If a party is willing to spend more than £100,000 on the gatekeeper stage when the cost of dealing with the results is less than this then there could be seen to be little concern with cost.  The judge also noted that the trial was set down for four days and has a collective legal budget of approximately £1.7M, so we might conclude that he felt this was not exactly a case without value.

The decision moves the needle back towards the position many litigators took, namely that there are instances where surveys are needed and that the cost of them is better incurred than not if it leads to a successful outcome.  It also follows the suggestion of Lewison LJ that the hard line taken in relation to surveys in “standard” trade mark infringement cases may not apply in the other situations he identified. 

In the present case the satellite litigation on the admissibility of the survey threatens to dwarf the remainder of the costs (the defendant having stated that it will appeal on admission of the survey).  As the judge suggests, where a survey may have real value it may well be worth allowing it in, with the weight and eventual value considered once all evidence is presented.  The clear suggestion is that if it turns out that the survey did not advance the case far beyond the other evidence available then there may be consequences, but that this cannot be assessed at the application stage. 

The outcome creates a risk that parties may make the request for survey evidence as a safety measure (or, worse make it not knowing the strength or availability of other evidence) –- it would seem likely that such behaviour would be penalised at the costs stage, and if opposing the admission of evidence it may be worth probing the level to which the applicant has reviewed the amount and nature of other evidence in order to provide the court with the fullest possible picture of the evidential value of the survey and to perhaps put the applicant in a position where it will be far less able to defend the cost of the exercise at a later date.
Thanks so much, Aaron (major katpat!) for your sterling efforts, and for your speed in setting your thoughts out for our benefit. 

Does this mean that every trade mark and passing off litigator in England and Wales will be rushing off to get a survey done? Not if pre-trial case management is conducted in a firm and pragmatic manner, thinks this Kat.  Will a lot of people seek to sneak survey evidence is, even where it shouldn't be? For sure, says Merpel: what can you expect of humans?

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