UK: IP Bulletin - Autumn 2011

KEY CASES AND DEVELOPMENTS

• Schütz (UK) Ltd v Werit UK Ltd and another, Court of Appeal – s.68 Patents Act. The Court of Appeal has given its judgment on the construction of section 68 of the Patents Act 1977.
• Government response to Hargreaves review. The Government has accepted the recommendations made in the Hargreaves review, and has set out the actions it intends to take and the timetable for them (see May Bulletin for report on Hargreaves Review).
• Digital Economy Act. The Government has published the next steps for implementation of the Digital Economy Act.

PATENTS

Court of Appeal – s.68 Patents Act
Schütz (UK) Ltd v Werit UK Ltd and another, [2011] EWCA Civ 927, 29 July 2011

The Court of Appeal has given its judgment on the construction of section 68 of the Patents Act 1977.

Section 68 of the Patents Act 1977 concerns the recovery of damages and costs where a proprietor or exclusive licensee has delayed in registering their assignment or licence. It was amended with effect from 29 April 2006 by the Intellectual Property (Enforcement etc.) Regulations 2006.

Section 68 provides that:

The part in bold is the form after amendment of the original form of s.68 which had provided that the court or the comptroller shall not award damages or an account for the profits in respect of infringement occurring before registration. The amendment was made so as to comply with the Art. 13 of the Enforcement Directive (2004/48/EC) which makes the award of damages mandatory.

In this case, the defendant argued that the claimant was not entitled to any costs at all, as it had registered outside the six months period.

However, the Court of Appeal held that the effect of section 68 was to penalise the claimant only for those costs relating to the period before registration. The court acknowledged that this interpretation means that section 68 is largely ineffective, as the discovery of an infringement usually triggers registration before an action is commenced and so before the claimant incurs most of its costs.

High Court – expedited trial
Warner-Lambert Company LLC v Teva UK Ltd and others, [2011] EWHC 2018 (Ch), Floyd J, 22 July 2011

The High Court has made an order for an expedited trial and considered the principles to be applied on hearing such an application.

This hearing concerned an application by the lead defendant in a patent action, Teva UK Limited, for an expedited trial. The action related to the drug atorvastatin, which was protected by SPC GB 97011. Atorvastatin was marketed by Warner-Lambert Company LLC (the claimant and patentee) as Lipitor, which was one of the world's most successful drugs.

When the action started in June 2011, the SPC was due to expire later this year, but a paediatric extension was subsequently granted so that the SPC will now expire in May 2012.

Teva launched generic atorvastatin, without notice to Warner-Lambert, on 20th June 2011. Their commercial reason for doing so was that the alternative of giving the patentee notice and seeking revocation of the patent in advance of the launch would have prevented Teva from gaining a marketing advantage over other generic companies.

However, a without notice injunction was granted on 21st June to restrain further sales by Teva, which was then continued to trial by consent.

Teva, therefore, sought a speedy trial in November 2011. Warner-Lambert were not opposed to an order for a speedy trial, provided that they were given adequate time to prepare their case. They would have been content if the trial were in February 2012.

Teva argued that if judgment were handed down invalidating the patent after a speedy trial in November 2011, as opposed to February 2012 closer to the SPC expiry date, all the generic companies would not launch at the same time, and Teva would still gain a head start over its competitors.

The principles to be applied on an application for an expedited trial were summarised in CPC Group Ltd v Qatari Diar Real Estate Investment Company, as follows:

• whether to grant expedition was in the discretion of the trial judge;
• under the CPR, cases should be brought to court as soon as possible, consistent with the overriding objective;
• the court has to take into account the requirements of other litigants;
• the applicant had to satisfy the court that there was an "objective urgency";
• the procedural history was a relevant factor: delay in seeking an order might count against an applicant; and
• the respondent's attitude to the application would only be relevant if the respondent could show that an expedited trial would be prejudicial.

The respondent argued that expediting the trial would prejudice it because there would be insufficient time for disclosure, in response to which the applicant agreed to waive disclosure.

IPO – removal of patent from register
Premium Aircraft Interiors Group Ltd BL O/281/11, 10 August 2011

The hearing officer has refused to remove a European patent (UK) from the UK patents register.

The patent for aircraft seats was owned by Virgin Atlantic Airways. It had been the subject of an opposition in the EPO, during which Premium had argued that the patent should not have been issued because the GB designation had been excluded by Virgin in the original application. This argument was rejected by the EPO Examining Division which ruled that the original patent application could proceed with the UK as a designated state.

The hearing officer refused the application to remove the European patent (UK) from the UK patents register. He said that, on the face of it, this was an application for correction of an error under Rule 50 of the Patent Rules 2007, on the basis that the European patent (UK) does not exist and therefore the mention of it in the register is incorrect.

However, the hearing officer said that to conclude beyond reasonable doubt that there is an error, he would have to review the EPO's explicit determination, and there is no basis on which he could do this.

COPYRIGHT

Digital Economy Act

http://www.culture.gov.uk/publications/8365.aspx

The Government (Department for Culture Media and Sport) has published the next steps for implementation of the Digital Economy Act following the Government's successful defence of the Act in judicial review.

The paper covers implementation of the initial obligations of the internet service providers (ISPs) which include notifying its subscribers if the internet protocol (IP) addresses associated with them are reported by copyright owners in a copyright infringement report (CIR) as being used to infringe copyright; and providing, on an anonymous basis, copyright infringement lists (CILs) to copyright owners.

A draft Sharing of Costs order is included which will require copyright holders to pay 75% of the initial obligations costs, with ISPs making up the remaining 25%. Following the judicial review ruling, the obligation on ISPs to contribute towards the costs of Ofcom and the independent appeals body in setting up and administering the regime are being removed.

Ofcom's Code setting out the details of how the DEA initial obligations will work in practice will be published shortly.

Reports from Ofcom have also been published on:

Digital Economy Act Appeals Process: Options for reducing costs, and "Site blocking" to reduce online copyright infringement.

Following this further advice from Ofcom on the potential costs of the appeals system, a £20 fee for subscribers to appeal is being introduced, with the aim of minimising the risk of the system being disrupted by vexatious or non bona fide appeals. The fee will be refunded if the appeal is successful.

Also following advice from Ofcom, site blocking regulations under the DEA will not be brought forward at this time. Ofcom judged the court-based procedure set out in the DEA under sections 17 and 18 to be too slow to effectively tackle the problem of illicit file-sharing websites: site operators would simply move the site to a different URL long before any injunction would be issued.

DATABASE RIGHT

Patents County Court – infringement of database right
Beechwood House Publishing Ltd v Guardian Products Ltd and another, [2010] EWPCC 12, HHJ Birss QC, 20 June 2011

The Patents County Court has given a judgment on infringement of database right. The parties were rival producers of healthcare information. The claimant published a database which consisted of the names and addresses of 43,000 individuals, such as practice nurses and doctors, associated with GP Practices.

The claimant found clear evidence that the first defendant was using information from its database. This was because the claimant put a few seeds in its database, which were fictitious entries with addresses corresponding to the claimant's staff. A mailing to the seed entry took place when the defendants were conducting a mailing exercise to 6,000 practice nurses using at least 4,783 records that were identical to the records in the claimant's database.

The claimant commenced an action for database right infringement under Regulations 12 and 16 of the Copyright and Rights in Databases Regulations 1997.

Regulation 12(1) provides that:

Regulation 16 provides that:

1. "Subject to the provisions of this Part, a person infringes database right in a database if, without the consent of the owner of the right, he extracts or reutilises all or a substantial part of the contents of the database.
2. For the purposes of this Part, the repeated and systematic extraction or re-utilisation of insubstantial parts of the contents of a database may amount to the extraction or re-utilisation of a substantial part of those contents."

The issue at trial was whether the data used by the defendants amounted to a substantial part of the claimant's database.

The court found that the defendants' actions constituted infringement of the database right under regulation 16(1) because the defendants had extracted a substantial part of the 43,000 records in the claimant's database, whether evaluated quantitatively or qualitatively, by loading the practice nurse records on to their own computers.

The court also found that the mass-mailing exercise infringed the database right under regulation 16(2), because the printing of individual letters with names and addresses constituted repeated and systematic extractions of insubstantial parts of the database that added up to a substantial part of the database.

GENERAL

Government response to Hargreaves review

http://www.ipo.gov.uk/ipresponse-full.pdf

http://www.ipo.gov.uk/about/press/press-release/press-release-2011/press-release-20110803.htm

The Government has accepted the recommendations made in the Hargreaves review, and has set out the actions it intends to take and the timetable for them (see May Bulletin for report on Hargreaves Review).

The main recommendations that have been accepted are set out below.

The UK should have a Digital Copyright Exchange - a digital market place where licences in copyright content can be readily bought and sold. The review predicted that a Digital Copyright Exchange could add as much as £2 billion a year to the UK economy by 2020. A feasibility study will now begin to establish how such an exchange will look and work. The Government will announce arrangements later in the year.

Proposals will be brought forward in the autumn for an opening up of the copyright exceptions regime, including a non-commercial research exception covering search and analysis techniques known as 'text and data mining', limited private-copying exception, parody and library archiving.

Licensing and clearance procedures should be established for orphan works.

The government will resist extensions of patents into sectors which are currently excluded unless there is clear evidence of a benefit to innovation and growth. The IPO will set targets for the reduction of its patent backlogs which will be reduced through work-sharing with other patent offices and greater use of the Patent Prosecution Highway. The IPO will publish findings on the scale and prevalence of patent thickets, including whether they present a particular problem to SMEs seeking to enter technology sectors.

The IPO will shortly publish research which it has commissioned on the relative levels of design registration in the UK compared to France and Germany, and whether the UK's lower level of registration has any impact on the UK's competitiveness. The IPO will also publish its assessment of the case for simplification of the design right system, and in particular whether there is a need to continue having a UK unregistered design right alongside the EU right.

The Government will, subject to establishing the value for money case, introduce a small claims track in the Patents County Court for cases with £5000 or less at issue, and will consider renaming the PCC to be the Intellectual Property County Court.

The government will explore options for a future role for IPO and will set out plans for a copyright opinions service by December 2011 or January 2012.

Evidence should drive future policy.

Alongside the Government response, an international strategy for intellectual property and a new intellectual property crime strategy have been published – see reports below.

Government – international strategy for IP

http://www.ipo.gov.uk/ipresponse-international.pdf

The government has published "The UK's International Strategy for Intellectual Property" which sets out the government's plan for responding to one of the recommendations in the Hargreaves review.

This is that the UK should pursue its international interests in IP, particularly with respect to emerging economies such as China and India, and should prioritise achieving a unified EU patent court and EU patent system, and making the Patent Co-operation Treaty more effective.

The three key goals identified in the strategy are a well-functioning international framework, good national regimes, and economic and technological development.

The goal of good national regimes includes pushing for more effective and consistent enforcement of IP laws within national regimes – by strengthening relationships with key economies like China, India, Brazil, and the US, and establishing a network of IP Attachés.

The strategy document also sets out the UK's five-year vision for an international IP framework and identifies points of action for the government at international and European level in relation to copyright, patents, trade marks and designs.

The implementation of the strategy will be led by the UK Intellectual Property Office.

Government – IP crime strategy

http://www.ipo.gov.uk/ipcrimestrategy2011.pdf

The Government has published "Prevention and Cure. The UK IP Crime Strategy 2011" which outlines how the IPO will continue to enforce IP crime issues domestically.

It identifies a number of practical initiatives that will be led by the IPO with the aim of enabling enforcement agencies to deal more effectively with IP crime.

These include improved use of technology to make it harder to copy products and easier to spot fakes, and improved co-ordination between enforcement agencies and industry.

IP Crime Group – annual report

http://www.ipo.gov.uk/ipcreport10.pdf

http://www.ipo.gov.uk/about/press/press-release/press-release-2011/press-release-20110809.htm

The government has published the 2010-2011 intellectual property crime report of the IP Crime Group.

The Report continues to focus on the activities of those involved in combating IP crime over the past year. It does not provide any measurement as to the scale and impact of IP crime on the UK economy, but it does illustrate industry estimates and information from seizures of counterfeit products.

The first part looks at the impact of IP crime and provides information on the range of products that are being illegally counterfeited. There is a focus on counterfeit BMW parts, including an example of fake oil filters that have found their way into the genuine supply chain. Pharmaceuticals, alcohol and electrical goods are also products that are being readily copied.

Market research, in conjunction with YouGov, was also carried out which identified that 40% of all people surveyed had purchased fake products in the past; but 56% would definitely not buy a product if it was proved to fund organised crime.

The results of a trading standards survey identifies that more criminality is being carried out online for example, through auction sites, social networking media, and misleading domain names. Other distribution channels which are more commonly associated with IP crime, such as outdoor markets and car boot sales, also remain problematic.

The Joint Asset Recovery Database under the Proceeds of Crime Act 2002 indicates that cash forfeitures orders and confiscation orders for fraudulent activities, including IP crime, more than doubled to £21.5 million in 2010/11.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.