The High Court examines consent to service and jurisdiction to hear application for declaration of non-infringement
In this application contesting jurisdiction, the High Court ruled (not unexpectedly) that the English court has jurisdiction to hear an application for declarations of non-infringement in relation to both a UK and several foreign designations of a European Patent. More significantly, the High Court also considered the question of effective service - by consent and under the Civil Procedure Rules (CPR 63.14(2) and CPR 6.9(2)). The ruling makes clear that before consenting to service, the scope of the claim and reservation of the right to challenge jurisdiction should be carefully considered.
Actavis Group HF v Eli Lilly & Company and between Medis EHF v Eli Lilly & Company  EWHC 3316
The cancer treatment drug pemetrexed, marketed by the defendant ("Lilly") under the brand name Alimta since 2004, was protected by a basic patent extended by Supplementary Protection Certificates ("the SPCs") due to expire in December 2015. Lilly also owned a further patent EP No. 1 313 508 (the "Patent") due to expire in June 2021.
The claimant ("Actavis") contended that the claimant's product pemetrexed dipotassium did not infringe the Patent, although Lilly disputed this. Actavis, in order to resolve the issue in good time for entry onto the market on expiry of the basic patent SPCs and in order for the issue to be determined with respect to the French, German, Italian, Spanish and United Kingdom designations of the patent in a single trial, commenced proceedings seeking declarations of non-infringement of each of those designations of the Patent. Actavis did not challenge the validity of the Patent. Lilly, in response, sought declarations that the English court did not have, or alternatively should not exercise, jurisdiction in respect of the French, German, Italian and Spanish designations of the Patent but did not contest the court's jurisdiction with regard to the UK designation.
Before legal proceedings were commenced by Actavis, letters were exchanged between the parties respective firms of solicitors. Following the exchange of correspondence, on 1 August 2012 a claim form (the "First Claim") was served by the claimant Actavis' solicitors on the defendant Lilly's solicitors. On 23 August 2012, the defendant's solicitors wrote to the claimant's solicitors, disputing that the letter of 1 August 2012 constituted valid service of the claim form for two reasons; firstly, that the defendant's solicitors were not instructed to accept service of a claim by the claimant company and secondly, that an earlier letter sent by the defendant's solicitors dated 31 July 2012 giving confirmation that the firm was instructed to accept service on behalf of Lilly, was given only in respect of appropriate declarations of non-infringement which would not include declarations in relation to the foreign designations of the Patent. For reasons which are not clear, Lilly followed this with an application to the court contesting the court's jurisdiction in respect of claims concerning the non-UK designations.
On 29 August 2012, the claimant's solicitors wrote to the defendant's solicitors and Dr Ivan Burnside, a senior patent attorney employed by Lilly in the UK since 2001, enclosing by way of service a claim form, Particulars of Claim and Response Pack in a further action (the "Second Claim"). Apart from the name of the claimant, the Second Claim was identical to the First Claim. The defendant's solicitors disputed that this letter constituted valid service in so far as it related to the non-UK designations of the Patent and (again for reasons which are not clear) subsequently filed an application contesting the court's jurisdiction in respect of claims of the non-UK designations.
(On 11 October 2012, the claimant's solicitors wrote to Lilly, care of Mr Burnside, enclosing by way of service the Claim Form, particulars of Claim and Response Pack in the First Claim without prejudice to Actavis' contention that the First Claim had already been served.)
Accordingly, the issues arising on Lilly's applications concerned valid service of the claims and consent to jurisdiction:
- Was service of the First Claim validly effected:
- under the consent for service contained in the defendant's solicitors' letter dated 31 July 2012;
- under the Civil Procedure Rules ("CPR") r. 63.14 (see below for full details); and/or
- under CPR r. 6.9 (again, see below for full details)?
- Was service of the Second Claim validly effected under the consent for service? (The issues under CPR r. 63.14 and 6.9 are identical for the Second Claim.)
- If the consent for service covered the First (or Second) Claim, was it also a consent to jurisdiction?
- If service had been validly effected, but there had been no consent to jurisdiction, should the Court decline to exercise its jurisdiction on the ground of forum non conveniens?
Mr Justice Arnold concluded that:
- Lilly consented to service of the First Claim and thereby consented to the jurisdiction of the court over it;
- the First Claim was not validly served pursuant to CPR r 63.14(2)(a);
- the First Claim was validly served pursuant to CPR r 6.9(2);
- Lilly did not consent to service of the Second Claim (and the conclusions with regard to the First Claim also applied to the Second Claim); and
- if Lilly did not consent to service, but the First Claim was validly served, no stay of Actavis' claims under the non-UK designations of the Patent should be granted on forum non conveniens grounds.
Dealing specifically with the issues, the judge decided:
Consent to service
A letter consenting to service should be interpreted in accordance with the principles of contractual interpretation: the law states that the correct approach is to ask what a reasonable person having all the background knowledge which would have been available to the parties at the time would have understood the words to mean. Words should be given their 'natural and ordinary meaning' and it requires a strong case to persuade the court that something must have gone wrong with the language. (following Investors Compensation Scheme Ltd v West Bromwich Building Society  1 WLR 896, Bank of Credit and Commerce International SA v Ali  UKHL 8,  1 AC 251 and Chartbrook Ltd v Persimmon Homes Ltd  UKHL 38,  1 AC 1011
In the present case, Lilly disputed that the letter dated 31 July 2012 gave consent to service of the First Claim. Lilly contended that it consented to service of a claim by the companies identified in the claimant's solicitors' letter dated 12 July 2012, namely "Actavis Group PTC ehf and its relevant national subsidiaries". However, the claimant was neither Actavis PTC ehf nor a subsidiary of Actavis PTC ehf. Actavis contended that a reasonable person having all the background knowledge available to the parties as at 31 July 2012 would have understood the claimant's solicitors' letter to have requested, and the defendant's solicitors' letter to have given, consent to service of proceedings by the parent operating company of the Actavis Group and its relevant national subsidiaries regardless of their precise identities.
The judge said that the starting point was to identify the background knowledge available to the parties as at 31 July 2012. Since Lilly was being asked to consent to service, it was the knowledge available to Lilly which mattered. On the evidence and having heard the parties' submissions, the judge concluded that Lilly consented to the service of proceedings by the parent operating company of the Actavis Group and its relevant national subsidiaries and that the claimant was covered by that consent.
Did the consent to service extend to a claim in respect of the non-UK designations of the Patent?
Lilly contended that it only consented to service of a claim in respect of the UK designation of the Patent. It was Actavis' position that Lilly also consented to service of claims in respect of the non-UK designations (France, Germany, Italy and Spain). Counsel for Actavis argued that its solicitors' letter dated 12 July 2012 made clear that it was concerned with the position in France, Germany, Italy and Spain as well as the UK and that it sought both "a written acknowledgement" in relation to the UK and "a written acknowledgement" in relation to the other jurisdictions. Counsel for Actavis also argued that the letter clearly stated that if "the acknowledgements [plural]" were not provided, Actavis intended to serve proceedings seeking "appropriate declarations [plural]", which must mean declarations in respect of the matters not acknowledged, from "the Court" [singular]", which could only mean the present Court. The letter then asked whether the defendant's solicitors were instructed to accept service of "such proceedings", which could only mean proceedings in the present Court seeking those declarations.
Counsel for Lilly argued that the correspondence had to be read against the background that claims for declarations of non-infringement of foreign designations of patents were almost unprecedented. (Note, whilst counsel's argument was that such declarations were almost unprecedented, of course such declarations have been granted in the past both in the UK and in other Member States, for example in Mölnlycke Health Care v BSN Medical Ltd  EWCA Civ 988, 30 July 2010. Counsel for Lilly and the judge appear to have overlooked this). The judge ruled that the importance of the factor raised by counsel was tempered by the Supreme Court's decision in Lucasfilm v Ainsworth  UKSC 39,  1 AC 208 on 27 July 2011. An experienced intellectual property solicitor would have known that Lucasfilm made it much easier for parties to argue that the claims concerning infringement and non-infringement of foreign patents were justiciable in the English Court. Thus it was only a matter of time before a case such as this one presented itself.
The judge considered that the correct interpretation of the correspondence was that argued by counsel for Actavis and therefore concluded that Lilly consented to the service of proceedings which included claims for declarations of non-infringement of the non-UK designations of the Patent.
Having concluded that the First Claim was validly served under the consent for service, the judge went on to consider whether the First Claim was validly served in one of the other ways relied on and whether the Second Claim was validly served (just in case he was wrong in his conclusion above).
Was service validly effected under CPR r 63.14(2)(a)?
CPR r 63.14(2)(a) provides that "a claim form relating to a registered right" may be served..., ..on a party who has registered the right at the address for service given for that right in the United Kingdom Patent Office register, provided the address is within the United Kingdom..".
The claimant's solicitors served the First Claim on the address for service (within the United Kingdom) given by Lilly for the UK designation of the Patent. While that was good service of the First Claim so far as it concerned the UK designation of the Patent, Actavis contended that it was also good service of the First Claim so far as it concerned the non- UK designations, a matter disputed by Lilly.
The dispute turned on the proper interpretation of the words "claim form relating to a registered right" in CPR r 63.14(2). It is common ground that a UK designation of a European patent is a registered right within the definitions contained in r. 63.1, but a non- UK designation of a European patent is not.
Counsel for Actavis submitted that a claim form which contained a claim concerning a UK designation related to that registered right even if it also included claims relating to other designations. However, counsel for Lilly successfully submitted that "relating to" meant "so far as it relates to". He pointed out that, if Actavis' interpretation were accepted, it would enable a claimant with a claim concerning a UK patent to serve unrelated claims against the same defendant without having to found jurisdiction under Articles 2 or 5 of the Brussels I Regulation, without having to obtain permission to serve out of the jurisdiction and without having to satisfy CPR r. 6.9.
The judge ruled that Lilly's construction was correct. Therefore, service of the Claim Form in the First Claim on the address for service did not constitute good service of the First Claim under r. 63.14(2)(a).
Was service validly effected under CPR r 6.9(2)?
CPR r 6.9(2) enables a claim form to be served on a company or corporation other than one registered in England and Wales at any "place within the jurisdiction where the corporation carries on its activities; or at any place of business of the company within the jurisdiction".
There is no requirement that the claim is connected to the activities or business carried on at the place in question.
The leading authority on this question remains Adams v Cape Industries plc  1 Ch 433 in which the Court of Appeal held that the question whether the representative had been carrying on the foreign corporation's business or had been doing no more than carrying on his own business would necessitate an investigation of the functions he had been performing and all aspects of the relationship between him and the corporation.
Actavis contended that Lilly has a place of business at the Lilly Research Centre in Windlesham, which is owned by Lilly UK. The European Patent Operations Department at Windlesham was headed by Dr Burnside, a European patent attorney and a UK chartered patent attorney. Dr Burnside was Lilly's representative before the European Patent Office in respect of the Patent and his address is given as the address for service in respect of the UK designation. Lilly had delegated to Dr Burnside broad authority concerning Lilly's patent portfolio.
While counsel for Lilly submitted that the role of Dr Burnside and his colleagues was no different to that of an external firm of patent attorneys, the judge did not accept that. In fact, Dr Burnside had broad authority, including to surrender Lilly's European patents. An external firm would not be given that authority.
Counsel for Lilly submitted certain other factors supporting their argument that Lilly did not have a place of business in the UK, such as the fact that Lilly does not pay corporation tax in the UK. However, the judge did not find such factors persuasive. He concluded that Lilly had a place of business in the UK for the purposes of CPR r. 6.9 in the form of the European Patent Operations Department in Windlesham. Accordingly, the First Claim was validly served at that address.
So far as the remaining issues were concerned, the judge addressed these as follows:
Was service of the Second Claim validly effected under the consent for service?
Actavis contended that the Second Claim was validly served under the consent for service given by the defendant's solicitors on behalf of Lilly but Lilly argued that, by the time the claimant's solicitors purported to serve the Second Claim, Lilly had withdrawn any consent to the service of claims for declarations of non-infringement of the non-UK designations of the Patent. The judge ruled that Lilly was correct on this point. Accordingly, the Second Claim was not validly served under the consent for service.
Was there consent to jurisdiction?
Actavis contended that, if the defendant's solicitors' letter dated 31 July 2012 amounted to consent to service of the First Claim, it also amounted to consent to the Court's jurisdiction. Counsel for Lilly did not present any argument to the contrary and the judge ruled that Actavis was correct on this point. Therefore, since Lilly consented to the jurisdiction of the Court over the First Claim Lilly could not contest jurisdiction on the ground of forum non conveniens.
If service had been validly effected, but there had been no consent to jurisdiction, should the Court decline to exercise its jurisdiction on the ground of forum non conveniens?
Lilly sought a stay of the proceedings on the ground of forum non conveniens (if the First Claim was not validly served under consent for service, but was validly served under either r 63.14(2)(a) or r 6.9(2) there was an issue as to whether the proceedings should be stayed on the ground of forum non conveniens).
The principles to be applied to the question of whether to grant a stay of proceedings are those set out in Spiliada Maritime Corp v Cansulex Ltd  AC 460 by Lord Goff.
While it was common ground that Actavis' claims for declarations of non-infringement of the French, German, Italian and Spanish designations of the Patent could be tried in the national courts of France, Germany, Italy and Spain, the question before the court was whether those courts were the appropriate fora for the trial of those claims.
Counsel for Lilly argued that the natural forum for determining an issue as to patent infringement was the courts of the state in which the patent was registered and that accordingly, the present court should be very cautious about exercising jurisdiction over questions of infringement of foreign patents (following Plastus Kreativ AB v Minnesota Mining and Manufacturing Co.  RPC 438 at 447).
Actavis submitted several arguments as to why the claims should not be determined by the national courts: this was not a conventional forum non conveniens dispute, since it was accepted that the English court had jurisdiction in respect of the UK designation of the Patent; there was no court which was better placed to hear and determine claims in respect of the five designations of the Patent together; and the real issue before the court was whether the English court should determine all five claims together, or whether they should be tried separately in five different courts.
In addition, Actavis argued that it was advantageous for all five claims to be determined by one court in order to reduce the number of legal teams and witnesses involved, thereby keeping costs to a minimum. Finally, Actavis argued that the English courts could provide a final determination more quickly than the French, German, Italian and Spanish courts.
The judge concluded that Lilly had not shown that the courts of France, Germany, Italy and Spain were the appropriate fora for the trial of Actavis' claims in relation to the French, German, Italian and Spanish designations of the Patent. Lilly had not shown that those courts were clearly or distinctly more appropriate than the present court.
Accordingly, the judge declined to grant a stay of the French, German, Italian and Spanish claims on the grounds of forum non conveniens.
The judge's ruling on consent to service is not surprising. Before consenting to service, the scope of the claim and reservation of the right to challenge jurisdiction should be carefully considered.
Whilst counsel for Lilly portrayed a claim for a declaration of non-infringement of the UK and foreign designations of a European patent as almost unprecedented, and the judge appeared to accept this, there is nothing surprising or unusual at all about this. It is hardly surprising the claimant did not challenge the validity of the European patent - thus avoiding the impact of Article 22(4) of the Brussels Regulation which gives exclusive jurisdiction over validity of a European patent to the courts of the state in which the patent is registered (in which case there would have been separate proceedings in each country).
High Court rejects Dr Reddy's challenge to paediatric extension for SPC
The High Court has ruled that a failure to complete a third clinical study prior to the grant of a paediatric extension of a SPC for a patent did not render the extension invalid. Accordingly, in a decision which will be welcomed by producers of branded products applying for a paediatric extension, the extension would not be revoked.
Dr Reddy's Laboratories (UK) Ltd v Warner-Lambert Company LLC  EWHC 3715 (Pat), 20 December 2012
The claimant Dr Reddy's Laboratories (UK) Ltd ("Dr Reddy's"), a producer of generic medicines, applied to the court to set aside the paediatric extension to the supplementary protection certificate ("SPC") granted to the defendant, a company in the Pfizer Group ("Pfizer").
Pfizer produced a medicinal product called atorvastatin, marketed under the brand "Lipitor", used to treat raised cholesterol levels in both adults and children. The product was subject to the paediatric extension which expired on 6 May 2012. The purpose of Dr Reddy's claim was to establish a basis for recovery of damages pursuant to a cross-undertaking given by Pfizer in November 2011. The issue before the court was whether the paediatric extension to the SPC for atorvastatin was validly granted and whether it should be revoked.
Marketing authorisation, SPCs and the paediatric extension
Medicines may not be placed on the market in the UK without a marketing authorisation ("MA"). Within the European Union ("EU"), MAs are usually issued nationally by the competent authority of the Member State.
SPCs were introduced in the EU in 1992 as a way of extending patent protection for medicines. Many medicines require lengthy and expensive research taking many years.
Without the additional period of protection conferred by the SPC, many medicines may not be developed. The SPC takes effect at the end of the basic period of patent protection and lasts for a maximum period of five years.
The paediatric extension is a six month extension period to the SPC which was introduced by the Paediatric Regulation (EC 1901/2006) in 2007 as an incentive for producers, in order to encourage specific research into existing medicines to determine the medicine's suitability for use in children. In order to obtain the paediatric extension, the medicine producer is required to complete a research and development programme (paediatric investigation plan or "PIP") and produce the results of studies conducted in order to determine the medicine's suitability for children.
Atorvastatin already had a MA when the Paediatric Regulation came into force. Pfizer applied for a paediatric extension and submitted a proposed PIP to the paediatric committee. The terms of the PIP were agreed. Three clinical studies were included in the PIP; the issues arose because of the terms of the third study which was required to be initiated by a certain date but not completed before the grant of the paediatric extension.
Dr Reddy's grounds of challenge
Dr Reddy's put forwards three grounds of challenge:
- Ground 1: The European Medicines Agency acted ultra vires by approving a PIP that allowed Pfizer to defer completion of the third clinical study. Although it was possible to apply for a formal deferral, Pfizer did not do so and a deferral was not granted;
- Ground 2: A paediatric extension should only be granted once all significant studies in the PIP have been completed, pursuant to Article 45(3) of the Paediatric Regulation; and
- Ground 3: Even if it was legitimate for the European Medicines Agency to approve a PIP that required initiation but not completion of the third clinical study, pursuant to Article 36 of the Paediatric Regulation, Pfizer was not entitled to a paediatric extension unless it included the results of the third study in its application for a marketing authorisation.
The High Court ruled that the paediatric extension was validly granted. There would be no revocation.
Roth J in his decision considered the court's jurisdiction to revoke a paediatric extension. Under Article 16 of the SPC Regulation (EC 469/2009) (note, this is different to the Paediatric Regulation), the court 'may' revoke the extension if the extension was granted contrary to the provisions of Article 36 of the Paediatric Regulation. Pfizer submitted that this provision gave the court a discretion to revoke the extension whereas Dr Reddy's submitted that the extension must be revoked if it was contrary to the Paediatric Regulation. The judge concluded that Pfizer was correct. The provision should be given its plain meaning (the meaning was consistently the same in other language versions of the Regulation) and made good policy sense.
In relation to the three grounds of challenge put forwards by Dr Reddy's, the judge concluded:
- Ground 1: Atorvastatin had already been authorised for
marketing for adults. Pfizer was not seeking any further or amended
marketing authorisation for adults. There was no question of the
paediatric study delaying authorisation for adults nor did the
third clinical study have to be delayed on safety grounds. It was
never the case that the third study would be completed by the
completion date stated in the PIP but that in itself would not
bring the third study within the statutory criteria for a deferral.
On the evidence, the paediatric committee had considered that
sufficient data would be generated by the first two studies to
provide the necessary information but that the third study had been
included in the PIP by the paediatric committee as part of a risk
management system. Pfizer had suggested that the study be carried
out outside the scope of the PIP but the committee disagreed.
Pfizer did not contest the decision of the paediatric committee and
subsequently complied with the terms of the PIP. In those
circumstances, the judge did not see that it was open for Dr
Reddy's to challenge the grant of the paediatric extension on
the basis of ground 1 – the third study had not been
Since ground 3 was closely associated with ground 1, the judge decided it was appropriate to address ground 3 before ground 2.
- Ground 3: The judge ruled that the PIP did not require completion of the third clinical study by the completion date of the PIP. Only initiation of the study was required. Accordingly, Pfizer did what was required and the terms of the PIP were duly complied with. Since the first ground of challenge did not succeed, there was no basis for challenge on this ground.
- Ground 2: Dr Reddy's second ground of challenge turned on the proper interpretation of Article 45(3) of the Paediatric Regulation. Under Article 45, completed paediatric studies (which were those which were completed by 26 January 2008) were to be submitted for assessment for marketing while existing paediatric studies (not completed) were to be eligible to be included in a PIP. Specifically under Article 45(3), rewards and incentives (such as the paediatric extension) could not be granted until significant studies in the PIP were completed. Pfizer contended that the requirement that significant studies contained in the PIP be completed prior to grant was a transitional provision which had no application in the present case. The judge considered the legislative history of Article 45(3) and concluded that it supported Pfizer's interpretation of the provision as a transitional provision designed to address the issue of pre-existing research. He said he was satisfied that Article 45(3) was not of general application. It would not apply when all studies in the PIP were initiated after the Paediatric Regulation came into force. He added that although this was a question on the proper interpretation of the Paediatric Regulation he could see no need to refer this question to the Court of Justice of the European Union.
The ruling on interpretation of Article 36 and Article 45(3), and the clarification of the European Medicines Agency's powers, is helpful to pharmaceutical producers seeking to obtain paediatric extensions. It is to be noted that the commercial benefit of such extensions is significant because the extension is not restricted to paediatric use of the product – the extension provides six valuable months of additional patent protection.
CJEU rules on whether use within a single Member State may constitute "genuine use in the Community" (Article 15(1) Regulation 207/2009)
Following AG Sharpston's opinion on the meaning of "genuine use" in July 2012, the Court of Justice for the European Union has now ruled that the correct approach for national courts to take is that territorial borders should be disregarded and that a CTM will be put to genuine use if it is used in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it. Further, it is for the national court to decide on the facts and circumstances of each case how much territorial use will satisfy the "genuine use" requirement.
Leno Merken BV v Hagelkruis Beheer BV, Case C-149/11, 19 December 2012
Following Advocate General Sharpston's opinion regarding this case in July 2012 (see here for our earlier update), the Court of Justice for the European Union ("CJEU") has now handed down its ruling.
Hagelkruis Beheer BV ("Hagelkruis") applied to register the word OMEL as a Benelux trade mark in connection with services in classes 35, 41 and 45 of the Nice Classification. Leno Marken BV ("Leno") opposed the registration arguing that it was the proprietor of the already registered Community Trade Mark ("CTM") ONEL for certain services in classes 35, 41 and 42. In response, Hagelkruis asked Leno to prove genuine use of the ONEL mark. Leno responded by providing proof of use in the Netherlands.
The Benelux Office for Intellectual Property rejected Leno's opposition and decided Hagelkruis should be permitted to register OMEL as a Benelux mark. Leno appealed that decision before the Regional Court of Appeal in The Hague. The matter before the court was whether Leno was required to demonstrate genuine use of its CTM for the mark ONEL in more than a single Member State in order to be able to oppose Hagelkruis' registration of OMEL. The Dutch court referred questions to the Court of Justice of the European Union ("CJEU") concerning the interpretation of Article 15(1) of Regulation No 207/2009 (the "CTM Regulation").
The CJEU was asked to determine the extent of the territorial area in which the proprietor of a CTM must use the mark to avoid the sanctions set out in the Regulation. Article 15 provides that a proprietor of a trade mark must put the CTM to use and if, within a period of five years following registration, the proprietor has not put the mark to "genuine use in the Community" in connection with the goods or services in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, the CTM shall be subject to the sanctions provided for in the Regulation. In opposition proceedings, an opponent can be asked by the applicant for a mark to prove that the earlier mark (on which the opposition is based) has been put to "genuine use in the Community". If not used for five years, a mark may be revoked.
AG Sharpston's opinion on the meaning of "genuine use in the Community" (Article 15(1) CTM Regulation) made clear that genuine use should not be assessed solely on geographical lines but should take into account other factors such as the characteristics of the products and services and features of the relevant market for those products and services (all of which may change over time). Use in a single Member State might therefore be sufficient.
AG Sharpston recommended that the CJEU should respond to the national court as follows:
Article 15(1) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark must be interpreted as meaning that:
- use of a Community trade mark within the borders of a single Member State is not, of itself, necessarily sufficient to constitute genuine use of that trade mark, but
- it is possible that, when account is taken of all relevant facts, use of a Community trade mark within an area corresponding with the territory of a single Member State will constitute genuine use in the Community.
The CJEU has largely followed AG Sharpston's opinion and ruled as follows:
- Article 15(1) of the CTM regulation must be interpreted as meaning that the territorial borders of the Member States should be disregarded in the assessment of whether a trade mark has been put to 'genuine use in the Community' within the meaning of that provision.
- A CTM is put to 'genuine use' within the meaning of Article 15(1) when it is used in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it.
- It is for the referring court to assess whether the conditions are met in the main proceedings, taking account of all the relevant facts and circumstances, including the characteristics of the market concerned, the nature of the goods or services protected by the trade mark and the territorial extent and the scale of the use as well as its frequency and regularity.
The referring court had asked the CJEU to consider whether use within the borders of a national Member State was sufficient to constitute genuine use of the mark and if not, whether such use could never be regarded as genuine use, in which event the referring court asked what requirements would apply in respect of territorial scope when assessing genuine use. As an alternative, the referring court had asked the CJEU whether genuine use should be assessed without reference to territorial borders.
The CJEU decided that it was appropriate to consider both questions together ruling that the correct approach for national courts to take is that territorial borders should be disregarded and that a CTM will be put to genuine use if it is used in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it.
Further, the CJEU ruled that since the assessment of whether the use of the mark is genuine is carried out by reference to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark serves to create or maintain market shares for the goods or services for which it was registered, it is impossible to determine what territorial scope should be chosen in order to determine whether the use of the mark is genuine or not. A de minimis rule, which would not allow the national court to appraise all the circumstances of the dispute before it, cannot therefore be laid down and it is for the national court to decide on the facts of each case how much territorial use will satisfy the "genuine use" requirement.
The CJEU has now handed the case back to the referring court for it to decide if ONEL has satisfied the requirements.
Given that the CJEU's ruling follows AG Sharpston's opinion, the decision is not surprising. "Genuine use" will be assessed not on geographical boundaries alone but instead taking into account other factors including the characteristics of the market concerned, the nature of the goods and services protected by the mark and the territorial extent and scale, frequency and regularity of use (all of which may change over time). Whether use of a mark is restricted to a single territory or part of a single territory might still therefore satisfy the conditions for genuine use and the outcome of future cases may not be easily predicted.
When is yoghurt Greek? The High Court considers whether to allow survey evidence to be adduced.
In allowing this application to adduce survey evidence, the judge outlined his reservations and concerns in his decision. The case was subject to an expedited trial timetable. Had that not been the case, the judge said he would have been minded to decline to admit the survey and to ask for a further and better survey.
Fage UK Ltd and another v Chobani UK Ltd and another  EWHC 3755 (Ch), 11 December 2012
The trial in this matter was listed for late February 2013. The defendants Chobani UK Ltd and another ("Chobani") are producers of a brand of yoghurt called CHOBANI Greek Yoghurt, introduced into the UK market in September 2012.
The claimants, Fage UK Ltd and another ("Fage") produce a brand of yoghurt sold as TOTAL Greek Yoghurt. Fage's case in passing off is that (i) a valuable reputation and goodwill exists in the name "Greek Yoghurt" as denoting a particular type of yoghurt coming from Greece; (ii) Fage own a share in that goodwill; and (3) that goodwill will be damaged by Chobani's sale of a product which is falsely described by that name because its product is not made in Greece but in the USA. (In essence, Fage says that only yoghurt made in Greece from Greek milk can be called Greek Yoghurt.)
Chobani contends that its yoghurt product can properly be called "Greek Yoghurt" and that Greek Yoghurt connotes a yoghurt with a particular consistency and taste but does not denote that the product is made in Greece from Greek milk.
In the present application, Chobani applied for permission to adduce survey evidence and evidence from respondents to the survey. A pilot survey was carried out and the results were submitted in evidence. The question before the court was whether a further survey was likely to be of real value and sufficient to justify the additional costs of the trial if survey evidence was to be admitted.
Fage opposed the application, contending that the pilot survey and the full survey were unreliable and valueless, and that a witness collection exercise based on the survey and results would in turn be so tainted as to yield no evidence of real utility to the court. Fage also submitted that it was premature to permit Chobani to call evidence from respondents to the proposed survey since Chobani was not yet in a position to demonstrate how the witnesses were selected nor what they were likely to say.
The High Court agreed, with reservations, to Chobani's request for a full survey, but said that Chobani would be at its own risk as to costs. Chobani's application to adduce evidence from respondents to the survey would be dealt with at a future date.
The judge considered that a survey along the lines proposed by Chobani could be of assistance in enabling relevant evidence to be adduced, but he considered it likely that the survey questionnaire would benefit from expert input and consideration of the points of objection raised by Mr Malivoire, Fage's survey expert. (Mr Malivoire had given evidence and his evidence was commended in the Interflora case (see below).) The judge also said that, but for the pressure of time (in the context of the directions made for a speedy trial in the matter), he would have been minded to decline to admit Chobani's survey and ask for a further and better survey to be provided.
In his judgment, the judge referred to the approach to survey evidence set out recently in Marks and Spencer PLC v Interflora Inc and another  EWCA Civ 1501. Prior to this case, the practice was to allow such survey evidence in unless the judge was satisfied that it would be valueless. However, the Court of Appeal in Interflora considered that approach to be the wrong way round. Lewison LJ (at paragraph 144) stated that
"...even if the evidence is technically admissible, the judge should not let it in unless (a) satisfied that it would be valuable and (b) that the likely utility of the evidence justifies the costs involved."
Further, the Court of Appeal made clear that the decision should be made at an interlocutory stage, and that the judge faced with an application to let in such evidence should resist the natural temptation to leave questions of admissibility to trial, and determine the issue by balancing the cost of a survey against its likely utility.
Dealing with the various submissions of the parties, the judge concluded the following:
- a survey properly designed and administered could provide
useful evidence. He said:
"it seems to me that the issue as to whether a substantial proportion of consumers or potential consumers of Greek yoghurt would regard a fundamental characteristic or attribute of "Greek yoghurt" as being that the yoghurt must have been made in Greece with Greek milk, so that yoghurt manufactured elsewhere cannot be Greek yoghurt, is at the heart of the action. A survey properly designed and administered could provide useful evidence as to that fundamental ingredient of the Claimants' case. The fact that the Defendants, rather than the Claimants, have taken up the task does not diminish its relevance or potential utility";
- he rejected Fage's argument that the sample size of 1,100 was insufficient. Such a sample size could be sufficient if calculated and likely to be truly representative of a relevant cross section of the public and if questioned in line with the "Whitford Guidelines";
- he rejected Fage's argument that the general approach adopted by Chobani and the specific questions in the survey proposed in the survey were subject to such serious flaws as to undermine the survey's reliability and evidential value;
- he considered Chobani's estimate of £10,000 for a marketing company to conduct the full survey was modest and pointed out that these costs would not include Fage's consequential costs of addressing the survey evidence as well as Chobani's costs of engaging an expert to defend the survey.
Finally the judge pointed out that it was difficult for the court to deal fairly and definitively with the issue as to what evidence it will permit at trial when it has expert evidence from one side only as to the reliability of the process and the cohort selected and the representative nature (or not) of the respondents' replies to the survey questions.
Following Interflora, a number of cases are to be expected concerning applications to allow surveys and allow in survey evidence. In this application the judge was under some pressure to provide a ruling due to the expedited timetable for trial and made clear his reservations and his anxiety that he was departing from Interflora in the particular circumstances.
Court of Appeal partially overturns High Court decision granting Norwich Pharmacal order
The High Court previously granted a Norwich Pharmacal order for disclosure of customer data to two of the claimants in this case. The order has now been extended by the Court of Appeal to the other claimants allowing their intellectual property rights to be enforced against thousands of unsuspecting defendants.
Golden Eye (International) Ltd and others v Telefónica UK Ltd and another  EWCA Civ 1740, 21 December 2012.
Following the High Court's ruling on this case in 2012 (see here for our earlier update), the Court of Appeal has now partially overturned the ruling and has ordered O2 to disclose customer details to the balance of the claimants in the original case.
The case was brought by fourteen claimants, all owners of copyright in pornographic films. Ben Dover Productions, the main claimant, granted Golden Eye International Limited, the second claimant, an exclusive copyright licence with a right to bring claims for copyright infringement. The other twelve claimants had entered into agreements with Golden Eye, all agreements being in the same form, which granted Golden Eye the right to act in relation to any breaches of copyright arising out of peer to peer copying of material across the internet.
The object of the claim was to obtain disclosure and full details of names and addresses of O2's customers who were alleged to have committed infringements of copyright through peer to peer filesharing. Evidence of infringement was obtained by the claimants use of a tracking service identifying various IP addresses which had been used to make the copyright works available to third parties. The claim raised various questions as to the operation of the Norwich Pharmacal regime, the rights of copyright owners and consumers and the practice of speculative invoicing all of which were considered at the High Court in March 2012.
O2 did not contest the claim and even agreed, in advance of the High Court hearing, the terms of an order for disclosure of customers details through its solicitors.
In the High Court the judge held that it was proportionate to grant the Norwich Pharmacal order to Golden Eye and Ben Dover Productions provided that the order and letter of claim were worded so as to protect the interests of O2's customers. However, the court declined to make any order in favour of the other claimants; the judge said that such an order, taking into account the terms of agreement between the other claimants and Golden Eye, would not proportionately and fairly balance the interests of the claimants with the intended defendants' interests and if the other claimants wanted to obtain redress for wrongs suffered, they must obtain redress themselves.
The other claimants appealed against the refusal of the order on two related grounds. They submitted that it was both illogical and inconsistent for the judge to deny the self-same relief to the other claimants merely because they had chosen to pursue their claims with the assistance of Golden Eye under arrangements which the judge had previously found to be both lawful and not part of a speculative invoicing scheme.
They also submitted that the judge's statement that to grant the order would amount to the court sanctioning the sale of the intended defendants' privacy and data protection rights to the highest bidder was not only wrong in itself but also contradicted the view expressed in paragraph 113 of his judgment that this was a legitimate commercial arrangement for the other claimants to enter into in order to vindicate their intellectual property rights.
The Court of Appeal ruled that the appeal should be allowed and that customer details should be disclosed to the other claimants in the case.
The Court considered that the other claimants' submissions were well-founded. The specific factors which weighed in favour of preserving the data protection rights of P2P fileshare users over the enforcement of the claimants' copyrights together with the vulnerability of the users, the inability of the defendants to afford specialist legal advice, and the propensity for innocent subscribers to pay up rather than face the embarrassment of being accused of illegally downloading pornography were all common features which had to be taken into account in relation to the relief sought by all the claimants. The factors were as relevant to the enforcement of the copyrights of the first and second claimant as they were to the other claimants.
The Court considered that the judge's refusal to grant relief to the other claimants was based on his disapproval of the recovery sharing arrangements the other claimants had with Golden Eye (confirmed by his statement that to make the order would be tantamount to the court sanctioning the sale of the intended defendants' rights to the highest bidder). Lord Justice Patten said that he found the judge's reasons difficult to follow and he could see no justification, in the present case, for refusing relief based on a disapproval of those arrangements. The Court of Appeal considered that the safeguards put in place by the High Court protected the defendants against the risks which had been identified.
The Open Rights Group (who replaced Consumer Focus as intervenors in the case), submitted that Golden Eye would become privy on disclosure to personal data of the intended defendants even though it was not asserting any property rights of its own. The Court of Appeal dismissed this objection. Golden Eye would not be able to use any of the disclosed information received through its solicitors except for the purpose of enforcing the intellectual property rights of the other claimants.
The Court of Appeal ruling corrects a decision that was based on a judge's disapproval of the terms of agreement in place between the other claimants and Golden Eye. The judge had previously found the terms of agreement to be lawful. All claimants are now at liberty to pursue would-be defendants for copyright infringement, subject to the safeguards put in place by the judge in his High Court ruling.
OTHER MATTERS OF INTEREST - IN BRIEF
The Unified Patent Court Agreement
An international agreement establishing a Unified Patent Court was signed on 19 February 2013 paving the way for a European patent with unitary effect and a Unified Patent Court as soon as the agreement is ratified. For more information click here.
Repeal of Section 52 of the Copyright Designs and Patents Act 1988
The Enterprise and Regulatory Reform Bill
Section 66 of Part 6 (page 52) of the new Enterprise and Regulatory Reform Bill will repeal section 52 of the Copyright Designs and Patents Act. The Bill is currently at report stage in the House of Lords and is expected to receive Royal Assent soon. Section 52 currently limits the term of protection for artistic works which have been produced through an industrial process. The section is being repealed because the UK is one of the few European Union member states which limits the term of protection for copyright works which are produced through an industrial process.
The term of copyright protection for artistic works is usually life of the creator plus 70 years. Currently if an artistic work is exploited through an industrial process, then the Section 52 exception in the UK's copyright legislation only protects that work for 25 years from the date on which the work is first placed on the market. (This period of 25 years is the same as the term of protection for registered designs.)
In future, if an artistic work is exploited by an industrial process this will not affect the term of protection and the artistic work will enjoy the full term of copyright protection rather than just the 25 year term. Of course, products will still need to meet the relevant thresholds to qualify for copyright protection.
Designers, manufacturers and distributors of classic furniture and other homewares argue that their products are artistic works and therefore protected by copyright. Repeal of Section 52 will mean that legal proceedings could be brought to prevent the importation, sale and manufacture of any replicas of such products which become illegal as a result of the change. Success of such proceedings will depend on whether the Court decides whether copyright protection applies to an individual work and if so, whether a replica infringes the copyright in that work by reproducing a 'substantial part' of it.
IPO consults on changes to term of copyright
IPO consultation and IPO press release, 7 January 2013.
The Intellectual Property Office (IPO) has published a consultation on proposals for legislation amending the term of copyright in sound recordings and performers' rights in sound recordings from 50 to 70 years. The consultation closes on 4 March 2013.
IPO publishes summary of responses to consultation on reform of designs law
Reform of designs law - summary of responses
The government has published a summary of the responses to its consultation on proposals for reform of designs legislation in the UK.
Improvements to the enforcement regime, means to promote better understanding of rights held by others and to avoid legal disputes and simplifications to the laws relating to the ownership of and qualification for design right featured in the consultation's responses.
IPO publishes an updated Manual of Practice
Changes to the Manual of Patent Practice, 2 January 2013.
The Intellectual Property Office has published the latest version of the Manual of Patent Practice, effective from 1 January 2013. Changes relate to some clarifications of practice and recent case law on Supplementary Protection Certificates.
Changes to copyright law from October 2013
Changes to copyright law - response to consultation
The government has published a response to its consultation concerning changes to copyright law. New statutory instruments will come into force in October 2013. The changes will introduce new copyright exceptions for private copying, pastiche, parody, caricature and data analytics for research. Existing exceptions such as the educational purposes exception will be simplified. The legalisation of format-shifting by way of a new exception will not be welcomed by the music and film industries.
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.