The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Pavis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Sunday, 22 October 2017

Letter from AmeriKat: Trade secrets long arms, NDAs go bust and sharing of passwords

The AmeriKat observing the extent to which
humans are creatures of routine.  
It is a sunny fall morning in Manhattan.  The AmeriKat is squinting into the sun, as her neighbors make their morning coffee runs grasping either yoga mats or dog leashes in their hand.   Routines liberate us from a cascade of small decisions which would otherwise occupy us - whether it would be how many times you press "snooze" in the morning to the line you take with the people in your life.  Routines can be freeing, but even good routines can shield us from progress and growth.

Trade secrets lawyers are probably glad that some ex-employees are not deviating from their seeming routine in misappropriating trade secret - otherwise with what would they occupy their time?  And a lot has been going on in the trade secrets world recently.  A little recap is below:
  • Long-arm of Delaware courts, not so long:  Last Thursday, the Delaware Court of Chancery held that it lacked jurisdiction over foreign companies based in Turkey, Luxembourg and the Netherlands accused by Dow Chemicals of stealing trade secrets concerning the manufacture of paint polymers relating to paint pigments.  According to Dow, the defendants "hatched and carried out a scheme in which they hired former Dow employees with knowledge of the relevant technology and used the trade secrets embodied in that technology to manufacture and sell polymers in competition with Dow" and break into the US market.  The complaint, filed last March, alleged that the defendants hired away two of it experts - Dilip Nene and Leonardo Strozzi.  The Delaware Court held that the trade secrets claims against a Delaware subsidiary and its parents could continue.  In Dow Chemical Company v Organik Kimya, Vice Chancellor Glasscock held that although Dow Chemicals had argued for long-arm jurisdiction over all the foreign defendants, it only extended to Organik Kimya Turkey (the Turkish parent of the US subsidiary).  This was because it was plausible that it was this Turkish defendant that created the US subsidiary in furtherance of trade secrets misappropriation.  On this basis the Court extended jurisdiction to the Turkish parent, but not to the other Foreign Defendants who, on the basis of the evidence, did not appear to have been involved in the incorporation of the US subsidiary.  This followed after almost a year of  discovery on these jurisdictional issues.  Organik disputes the claims.   The case has also been litigated in the ITC (including some fireworks concerning evidence and an appeal to CAFC) and was recently subject to a filing in Pennsylvania against Nene.  
  • NDAs spark Opternative v Warby Parker dispute:  Last week, Warby Parker - an eyewear retailer - was hit with a trade secrets lawsuit brought by Opternative (a Chicago-based healthcare technology start-up) in the Southern District of New York alleging that Warby Parker violated a non-disclosure agreement and misappropriated trade secrets.  According to the complaint, Opternative developed a "first-of-its-kind system whereby ophthalmologists generate an accurate corrective lens prescription using Opternative’s innovative refraction technology: an online eye-exam a patient can self-administer from any location without the use of specialized equipment. In the process, Opternative created the market for online refractions." The complaint alleges that pursuant  to NDAs between the parties, Warby Parker benefited from numerous demonstrations of Opternative's technology with the aim of investigating a business relationship.  Opternative claimed that Warby Parker then used that information to compete.  Warby Parker, in an interview with TechCrunch, stated that:
"The preposterous claims made by Opternative do not accurately reflect reality, and we’re prepared to take all necessary steps to defeat them. This is an unfortunate example of a company choosing to address competition with litigation instead of innovation. . . . We gave Opternative the opportunity to demonstrate that its product could live up to the high standards of quality and service that customers have come to expect from Warby Parker. Ultimately, they failed to meet those standards, and we determined that the product and user experience were unfit for our customers. Opternative is now trying to correct those failures through meritless litigation."
  • Sharing passwords and trade secrets theft not up for review at US Supreme Court:  A couple of weeks ago, the US Supreme Court rejected an appeal by David Nosal, a former regional manager of Korn/Ferry International, who was convicted of fraud for encouraging former co-workers to download confidential information from the company's computers in order to set up his own firm.  The 2013 conviction of six felony charges which included conspiracy, theft of trade secrets and computer fraud resulted in a fine of $60,000 and a year in prison.  Up for issue was the charge of computer fraud on the basis that Nosal and his co-conspirators (two former employees), "acted without authorization" when they "used the log-in credentials of a current employee to gain access to computer data owned by the former employer".  The hook came by way of Judge Reinhardt's dissent that sharing of passwords was "unscrupulous" but going further could result in unintended consequences saying that persuading a co-worker to share a password  was a type of “innocuous conduct engaged in by ordinary citizens — for example, a husband who shared his bank account password with his wife to help her pay a bill.”  The Electronic Frontier Foundation argued that "without authorization" access to computers under the Computer Fraud and Abuse Act should only apply to hacking and not to sharing of passwords. Unfortunately, no clarity on this issue will be given at this time.  
  • Implementation of the EU Trade Secrets Directive:  The draft of the Danish legislation that will implement the EU Trade Secrets Directive has been published.  The AmeriKat's friends at Plesner will be reporting on the legislation in the coming days.  The AmeriKat understands there has been no news from Germany and the UKIPO has already held an initial stakeholder meeting to illicit feedback (the AmeriKat understands the general stakeholder consensus being "you don't need to do anything").  But what is going on elsewhere?  Any IPKat readers who can share updates on their Member States' legislative efforts concerning with the EUTSD please e-mail the AmeriKat at  

Waldemar Haffkine: Pioneer of plague vaccine and the "Little Dreyfus Affair"

This Kat was recently reviewing a book on IP in India, here, during which he came across a reference to the Haffkine Institute located in Mumbai (Bombay). This sounded like a most non-Indian family name, and it led this Kat to ask: what is this Institute, who was the individual named Haffkine, and what was he doing in India? In searching the answers, this Kat became aware of one of one of the great bacteriologists/microbiologists of the late 19th and early 20th century, but whose name is largely unknown today. No less than Sir Joseph Lister is reported to have called Haffkine “a savior of humanity.” The account of Waldemar Mordechai Wolff Haffkine recalls one of the exemplars of the heroic first generation of modern bacteriologists, where medical researchers were willing to put their own bodies on the line, a tale from the Ukraine to Paris to London to Mumbai to London to Calcutta to Paris to the Soviet Union to Lausanne, against the backdrop of a medical scandal that still reverberates.

Haffkine was born in 1860 in what is today part of the Ukraine. There, he studied in Odessa with Ilya Mechnikov, sometimes called one of the fathers of immunology (who would share the Nobel Prize with Paul Ehrlich in 1908). But those were unsettled times in Russia, especially if you were Jewish. Haffkine himself had been injured in a pogrom against Jews, for which he ironically was imprisoned for a brief time. He was denied a position at the university since he had refused to convert to the Russian Orthodox Church.

In the face of these challenges, Haffkine emigrated to Geneva in 1888. A year later, he joined Mechnikov and Louis Pasteur at the newly created Pasteur Institute in Paris, initially as a librarian. Only later, in the early 1890’s, Haffkine was able to engage in practical bacteriology. About that time, Europe and Asia were undergoing the scourge of a cholera pandemic. Haffkine sought to develop a vaccine against cholera by producing an attenuated form of the bacterium. But how to test the vaccine? Haffkine decided that there was no better trial patient than himself. While the results for the efficacy of the vaccine were positive, the reception was underwhelming by certain members of the European medical establishment.

Undeterred, Haffkine decided that India would be a suitable place for further testing. He first was able to show his vaccination in England, which paved his way to India in 1893. There, in October 1896, he found himself amidst an outbreak of bubonic plague that had struck Mumbai. Finding a vaccine for bubonic plague had proven to be more difficult than for cholera. Once again, Haffkine developed a test vaccine that worked by using a small amount of the bacteria to engender an immune reaction. Once again, Haffkine used himself as an experimental patient. For his work, Queen Victoria named him in 1897 a Companion of the Order of the Indian Empire. It was the first of a number of awards that he received over his lifetime.

In 1899, Haffkine established the Plague Research Institute in Parel in Mumbai, which in 1906 was renamed the Bombay Bacteriology Laboratory and later, in 1925, the Haffkine Institute. By that time, however, Haffkine had long left India, and with it, the bitter-sweet legacy of having been a pioneer developer of a vaccine for bubonic plague, while being the center of a highly visible incident that went to the heart of his immunological efforts and appears to have haunted him the rest of his life.

The event in question was the death in October 1902 of 19 people located in Mulkowal in Punjab, all of whom had been inoculated with the anti-plague vaccination. Haffkine was suspended without pay from his position. Commissions and inquiries followed, both in India and England, as Haffkine sought to clear his name from the claim that the source of the contamination had been in Mumbai. In considering these events, one gets the sense that Haffkine was being deemed "guilty until proven innocent". It was only in 1907, after a protracted struggle culminating in the publication of a letter published in the Times and signed by Nobel laureate Sir Ronald Ross and nine other bacteriologists, that the matter reached the full light of day. The conclusion of Ross and the other signatories was that the case against Haffkine was “distinctively disproven”, stating that, as quoted in "Biography of Waldemar Mordecai Wolff Haffkine, here)--
“…there is very strong evidence to show that the contamination took place when the bottle was opened at Mulkowal [the village where the deaths occurred], owing to the abolition by the Plague authorities of the technique prescribed by the Bombay laboratory and to the consequent failure to sterilize the forceps which were used in opening the bottle, and which during the process were dropped to the ground.”
(A detailed account of these events is provided by Barbara J. Hawgood, here.)

Haffkine was soon thereafter exonerated. Some called this incident the “Little Dreyfus Affair” (here, for Dreyfus Affair), suggesting that Haffkine’s Jewish background played a role in the handling of the accusations against him. While it does not appear that anti-Semitic motivations played an overt role, at least as reflected in the official record, the issue is still debated. In any event, by the time that Haffkine returned to India, the position at the Institute was occupied and so he moved to Calcutta, where he was appointed the director of the Biological Institute there, reportedly warmly welcomed by the local Indian staff, less so by his English colleagues. He retired in 1914 and returned to France. Before doing so, as described by Barbara Hawgood:
“… Haffkine described the history of anticholera vaccines (both living and devitalized) and subsequent testing in the field. In a second monograph he detailed the history of his use of the antiplague vaccine during the incubation stage of the disease and its subsequent application to other infectious diseases. In these monographs Haffkine sought to safeguard his right to be the first person to undertake prophylactic inoculation in man.”
Haffkine later tried to reconnect with his homeland, now being the Soviet Union, but he could not adjust. Eventually, he moved to Lausanne, where he died in 1930. In his later years, with the zenith of his professional accomplishments far behind him (as he himself wrote—"the work at Bombay absorbed the best years of my life ….”) and the sting of the Mulkowal incident apparently still with him, he became active in various Jewish activities, including a return to religious observance and establishing a Foundation in his name (which is still in existence and still supports various religious institutions). Our collective memory quickly forgets pioneers who have helped shape our lives for the better. Haffkine was one such pioneer, whose life story is worthy of recalling almost 100 years later.

Another German decision warns against broad application of GS Media presumption for for-profit link providers

           Visual map on linking after GS Media, available here
A few days ago this blog reported on a recent decision of the Regional Court of Hamburg that, similarly to another German judgment – this being the also recent ruling of the Federal Court of Justice (BGH) [here] – questioned or, at least, proposed a restrictive meaning and application of the recent decisions of the Court of Justice of the European Union (CJEU) on the right of communication to the public and linking to protected content under Article 3(1) of the InfoSoc Directive.

It appears, in particular, that it is the CJEU construction of prima facie liability for unauthorized linking as found in GS Media [Katposts here] – notably the presumption of knowledge applied to link providers with a profit-making intention (see my table on the right hand side) – to face resistance.

Thanks to a couple of German Katfriends, I have been made aware that there is a third recent decision that also shows an approach to linking and the GS Media presumption which is possibly different from the one envisaged by the CJEU.

It is once again a judgment (310 O 117/17) [also commented here] of the Regional Court of Hamburg, once again involving pug dog Loulou.

The new Hamburg decision

In a nutshell, in this case the Hamburg court held that there is no act of communication to the public within §§ 15(2) UrhG and 19a UrhG if a person who links to protected content without the relevant rightholder’s permission is unaware that such content is unlawful. 

In particular, even if the link provider has a profit-making intention, there should be no presumption that he had awareness that the content linked to was unlawful if he operates in a context in which it would be unreasonable to expect that checks are performed to ensure that the content linked to is (and remains) lawful.

In the case at issue, the defendant’s linking activities were performed algorithmically and, similarly to the other Hamburg decision, also in this instance the infringing content linked to was available on

The defendant had no actual awareness that the content linked to was unlawful, nor was its unlawful nature recognizable. A relevant aspect was also the fact that, to be able to offer products for sale on Amazon, merchants have to agree to the platform’s terms of use, including declaring that they own the copyright to the images displayed.

Scaling down GS Media

According to the court [para 67], the GS Media presumption of knowledge cannot be considered as indistinctly applicable: instead, it should be only relevant in situations in which the link provider/defendant can be expected to carry out the necessary checks to determine the status – lawful or unlawful – of the content linked to.

Paragraph 68 of the decision contains a direct scaling down of the CJEU approach in GS Media

The German court acknowledged that [at para 51] the CJEU seemingly mandated a generally applicable presumption for links posted out of profit. However, a conclusion of this kind would contradict what is stated at paragraph 34 of GS Media itself, ie that the assessment of whether a link provider can be liable under Article 3(1) of the InfoSoc Directive must be individualized and take account of several complementary criteria that “may, in different situations, be present to widely varying degrees”.

telephone case
According to the court, in the case at issue it would be “unreasonable” and “economically unjustifiable” to expect that the defendant carries out such checks in relation to each and every content (automatically) linked to, including content hosted on a platform like Amazon.

The defendant’s business model – including the fact that the content is not ‘incorporated’ to look as the defendant’s own content - is such that no specific searches for unlawfulness can be expected. Holding otherwise would not only be unreasonable, but also amount to an undue compression of the fundamental freedom to conduct a business, pursuant to Article 16 of the EU Charter of Fundamental Rights.


This is the third decision in a short timeframe that proposes a 'minimalist' reading of the GS Media presumption for for-profit link providers. 

In these cases the German courts, instead of holding the presumption rebutted in the specific instance considered (as it appears - or rather appeared? - to be the approach in GS Media), held against its applicability tout court, on grounds of reasonableness and by placing significant emphasis on the fundamental rights dimension. 

From the reading of these judgments, the fear that the relationship between copyright protection and freedom to conduct a business might be too unbalanced in favour of the former is acutely felt. This - together with considerations relating to the proper construction of the right of communication to the public, including the requirement of an individualized assessment - arguably supported the resulting outcome. 

Book review: Intellectual Property Rights and Climate Change: Interpreting the TRIPS Agreement for Environmentally Sound Technologies

Climate change is devastating: “The UN General Assembly once recognized that climate change is ‘a common concern of mankind’ and should be dealt with effectively within a comprehensive global governance system.” It is widely acknowledged that the fight against climate change requires not only better technologies, but also LEGAL INNOVATION, by means of which a satisfactory balance between IPRs protection and technology diffusion can thus be possibly found. Unfortunately, the innovation and transfer of Environmentally Sound Technologies (ESTs), as an important part of the solution to climate change, has not taken place fast enough to effectively mitigate climate change.

Over the past weeks, this Kat has been delving into the book Intellectual Property Rights and Climate Change – Interpreting the TRIPS Agreement for Environmentally Sound Technologies recently launched by Cambridge University Press, and feels very much inspired by this new force on the legal front. 

This book is (very well-)written by Dr. Wei Zhuang. She takes a clear-eyed view of the interface between the TRIPS Agreement and innovation and transfer of ESTs.

A highly respected academic, Carlos Correa writes in the foreword that this book “contains what is perhaps the first comprehensive study on the characteristics and possible implications of the international intellectual property and technology transfer regime as applied to ESTs.” Plus, it is “the outcome of an interdisciplinary research combining economics and various disciplines of national and international law, including law of the treaties, WTO law and competition law.”

Two main research questions were addressed in this study:

1. Whether and to what extent the minimum IPR standards established by the TRIPS Agreement facilitate or inhibit innovation and transfer of ESTs;

2. Whether and to what extent the TRIPS flexibilities can be interpreted to facilitate innovation and transfer of ESTs so as to address global climate change. 

The analyses provided by the book is solid. In particular, this Kat was very interested in (and learned a lot from) Chapters 6 and 7 – on the patent-related flexibilities and the competition-related flexibilities – which are dedicated to investigating whether, and to what extent, the limits to patent protection and the competition-related provisions in the TRIPS Agreement, when properly interpreted, could be applied to facilitate innovation and transfer of ESTs, thus contributing to reconciling the public interest in tackling climate change with the private sector’s interest in IP protection. 

Dr. Zhuang confirms the existence of some “flexibilities” within the TRIPS Agreement, and then in Chapter 8, in order to make the balanced and pro-competitive interpretation of the TRIPS Agreement contained in Chapters 6 and 7 more authoritative, she proposes a Doha-type Declaration on IPRs and Climate Change. To further remedy the insufficiency of the treaty interpretation, she recommends some international guidelines for licensing of IP-protected ESTs “as possible pathways to improve the current international IP regime for facilitating innovation and transfer of ESTs”. 

This book was published in June 2017 and is now available in hard book or e-book. ISBN: 9781107158085, doi:10.1017/9781316662892.
AttentionA flyer about the book (with a discount code) is available here

Saturday, 21 October 2017

AIPPI Congress Report 13: The Business of IP: Big Data, Big Issues

I am not "big" -
I am just a collocation of
large sets of fur
How big is your data? If you ever pondered how big is "big" and where the future of Big Data is leading, you are in luck - AusKat Tom Reid (Accenture) reports from the Big Data session at the AIPPI World Congress in Sydney.  
"The sixth panel session at AIPPI’s Sydney Congress, moderated by my co-Guest Kat Warwick Rothnie, focused on issues for IP law raised by “Big Data”—a term arguably dating from as early as 1989.
The question for debate was whether existing IP rights sufficiently protect the interests of those in industry who create and use Big Data, but discussion moved quickly into the related topics of AI and the Internet of Things.
The session opened with a presentation by video from the European Data Privacy Supervisor, Giovanni Butarelli, pointing out some of the difficulties raised by the intersection between such interests and other rights, not least the rights of individuals in relation to personal information.  Mr Butarelli also noted the problems raised for democracies by reliance on Big Data to generate news content, particularly filter bubbles (the tendency of some online algorithms to serve up news by reference to a user’s prior reading or viewing habits, resulting in a progressive narrowing of news topics and the elimination of competing views), and fake news resulting from the automated propagation, via algorithm-powered media, of an originally untrue story.
Dr Benjamin Mitra-Kahn, Chief Economist at Australia’s IP registration authority, IP Australia, pointed out the ways in which we all trade in personal information—including when, as consumers, we routinely trade our information about ourselves for some monetary or other benefit, such as a supermarket discount card.  Dr Mitra-Kahn raised the question of whether, from an economic perspective, the market in such information is fairly balanced: he asked whether a consumer who is required to disclose personal information to get access to a service really has a practical choice, including where the service is technically discretionary but is routine or convenient.  Neatly, he used the AIPPI conference app, which requested personal information to register, as an example.
Tina Chappell, Associate General Counsel and Director of Intellectual Property Policy for Intel Corporation, focused on the advent of artificial intelligence as a logical evolution of Big Data, supported by simultaneous—and still continuing—advances in connectivity and computing power.  In this, she was supported by Dr Mitra-Kahn, who had begun his presentation by announcing that the age of Big Data is over, and that the age of AI is upon us.  Ms Chappell defined AI as the ability for systems to sense, reason, act, and adapt, and compared the effects she expects from the growth in prevalence and sophistication of AIs to the agricultural, industrial, and digital revolutions, being, according to Intel CEO Brian Krzanich, “the next major turning point in human history”.  Among her predictions, she told the panel audience to expect 50 billion connected devices by 2020, and an AI market worth US$96 billion by 2025—and US$290 billion by 2035.  For lawyers already nervous about a tight legal market, Ms Chappell had the happy news that an AI had recently been able to successfully predict the outcome of 70% of 7,700 US Supreme Court cases decided between 1953 and 2013, based on text analytics.  While the current number might be only 20% better than chance, it will no doubt improve.
Kenichi Nagasawa, Head of IP at Canon Inc, focused on the allied area of the “Internet of Things”.  He pointed to the increasing importance of standards-essential patents to the technologies that enable the IoT, including 4G, video compression standards, and wireless communication protocols.  According to Mr Nagasawa, the convergence of technologies brought about by the IoT will bring participants in traditionally separate industries into contact and potential conflict over IP rights.
Questions focused on the fascinating question of AIs as… IP creators.  If an AI generates an invention entirely by itself (and potentially is the first even to identify the problem solved by its invention), do we reward anyone with a monopoly, and if so, who?  Panellists here pointed to the well-known macaque photo debate as an analogy.  On the other side of the coin, can an AI infringe, and in what circumstances should a human being be held responsible for that infringement?  (Readers might be tempted to think the question premature, but Ms Chappell’s presentation mentioned a case where Swiss police had “arrested”—or perhaps just confiscated—a robot that had bought ecstasy pills online as part of an art installation about the dark web.)
Dr Mitra-Kahn had perhaps the best answer: when chess Grandmaster Garry Kasparov lost to Deep Blue in 1997, he didn’t stop playing chess—he began training with a computer.  So the future probably belongs, at least initially, to teams comprising both human beings and AIs, and the challenge for IP policy makers will be to establish rules on how much human involvement is required for a monopoly right to subsist."

AIPPI Congress Report 12: Sparkling wine corks pop as AIPPI passes resolution on geographical indications

The AmeriKat getting her
teeth into some celebratory
With people suing airlines for serving sparkling wine as opposed to champagne, the topic of geographical indications (GIs) is in the news.  It was also the subject of a resolution at this year's AIPPI Global Summit in Sydney.  Guest AusKat, Tom Reid (Accenture), reports:  
"This blog recently posted on an avalanche of academic material on geographical indications (GIs) and their cousins, appellations of origin (AOs).  To this may now be added a resolution on the topic passed at AIPPI’s annual meeting in Sydney, for which the author acted as secretary for the committee proposing the resolution
To recap and paraphrase, a GI indicates that a product has a characteristic or reputation “essentially attributable to its geographical origin”, whereas an AO is a subtype of GI indicating that the product’s characteristics are due “exclusively or essentially” to the geographical environment from which it originates.
The wine and cheese wars have persisted since the original Lisbon Agreement on AOs in 1958 (most recently revised in 2015 and now known as the Geneva Act).  While AIPPI’s objectives include the harmonisation of intellectual property laws among jurisdictions, it had, until now, refrained from saying much on the topic.
Twenty-eight member national groups contributed responses to a questionnaire preceding this year’s resolution, however, indicating significant member interest.  The responses documented what is a highly variable, patchwork approach to GI or AO protection among jurisdictions, consisting of a calico (note loosely-linked Kat pun) mix of sui generis rights and certification-type trade marks.  The inconsistent treatment is reflected, for example, in the fact that some jurisdictions, including New Zealand and Vietnam, protect GIs (via TRIPS) but not AOs; and some, such as Australia, protect them by sui generis legislation only in relation to certain products—such as wines.
AIPPI’s aim in Sydney was to establish at least a framework for future contributions to, among other things, WIPO’s Lisbon System working group, in which AIPPI has, for several years, participated as an observer.  The resolution adopts some basic principles, including:
  •  definitions of GIs and AOs drawn from corresponding definitions under TRIPS and the Geneva Act;
  • that registrations providing for the protection of GIs and AOs should be available;
  •  that GIs and AOs, both domestic and foreign, should be protected against both “use that is misleading or deceiving for consumers as to the origin or the characteristics of the product”, and “any conduct which harms or unduly exploits or takes advantage of the reputation of the GI or AO”
  •  that injunctions and money damages should be available for infringement; and 
  • that grounds for revocation should include that the GI or AO has become generic.
Détente, however, was not entirely achieved: more strongly-worded paragraphs recommending prohibiting the registering of a trade mark or domain name conflicting with a GI or AO were, after discussion in which the terms “Champagne” and “Prosciutto di Parma” were politely mentioned by delegates, voted down in the plenary session in favour of deferring those issues to future study.
This is, of course, where the real debate lies.  Time will tell whether the same economic factors that have contributed to an inability to find common ground at the diplomatic level constitute, in microcosm, a similar obstacle for AIPPI.
The full text of the resolution will be available at AIPPI’s website."

Friday, 20 October 2017

A defensive non-assert? Philips v Asustek and HTC

This GuestKat cut her patent litigation teeth on smart phones - back in the day when smart phones were not so smart.  She therefore had a wave of nostalgia delving into the acronyms of mobile telecommunications standards in the recent Court of Appeal decision of Koninklijke Philips N.V. v Asustek Computer Incorporation, HTC Corporation and others [2017] EWCA Civ 1526.  The judgment concerns an appeal from a decision of Arnold J on a preliminary issue [2016] EWHC 2220 (Pat), regarding the construction of a California law governed patent cross-licensing agreement containing a covenant not to assert patents against third parties. 


HTC are the third party beneficiaries of a covenant contained in a 1998 cross-licence agreement between Qualcomm Inc and the Claimant, Philips. At trial of the preliminary issue, Arnold J held that the covenant did not cover HTC's acts of alleged infringement complained of by Philips in patent infringement proceedings brought in the English High Court. The three patents in issue concern High Speed Packet Access (HSPA) and have been declared essential by Philips to the Universal Mobile Telecommunications System (UMTS) standard developed under the European Telecommunications Standards Institute (ETSI). 

The cross-licence is governed by the laws of the state of California.  It was common ground between the parties that under California law extrinsic evidence is admissible as an aid to interpretation to a greater extent than under English law.  Admissible extrinsic evidence includes the circumstances under which the parties negotiated or entered into the contract, the object, nature and subject matter of the contract, how and why particular language emerged from the parties' negotiations, and the subsequent conduct of the parties.  There was evidence of California law before the judge at first instance and he made extensive findings as to the relevant California law - none of these findings was challenged on appeal (see summary of findings at paragraph 32(i) to (ix) of appeal decision). 

HSPA was added to the UMTS standard in 2002 (enabling handsets to download data at high speeds) and in 2004 (for uplink data transfer).  The alleged infringing HTC handsets implement releases 5 and 6 of UMTS, and have HSPA.  HSPA is a hybrid TDMA/CDMA system. 

Covenant not to assert

The relevant extracts of the cross-licence provide as follows:

"QUALCOMM Option to Obtain Covenant Not to Assert. Philips hereby grants QUALCOMM an option to designate any or all of its existing and future CDMA licensees as a 'CDMA Technically Necessary Patent Beneficiary.' "..."Philips, on behalf of itself and its Affiliates, hereby covenants that, as to each CDMA Technically Necessary Patent Beneficiary, Philips and its Affiliates will not assert any of their CDMA Technically Necessary Patents against any manufacture, use, sale, importation of equipment and/or components, or other acts of infringement, relating to a CDMA Wireless Industry Standard of a CDMA Technically Necessary Patent Beneficiary".

The clause also provides that "nothing in this Section 4.3[1] shall prohibit or otherwise limit Philips' right to assert any of its patents against any entity for infringement relating to any TDMA equipment or system (including, without limitation GSM, IS-54, PCS-1800, and PCS-1900)."

"CDMA Wireless Industry Standard" is defined as standards for public code division multiple access communications including but not limited to a number of specified standards "including the proposed ETSI UMTS standard" and their "subsequent releases, revisions, derivations".   This definition also expressly excludes any standard "which utilizes a TDMA over-the-air interface".  

HTC argued that they are covered by the covenant not to sue, because (i) they have been designated a "CDMA Technically Necessary Patent Beneficiary" in writing by Qualcomm to Philips; (ii) the patents have been declared essential to the UMTS standard; and (iii) the UMTS standard is a "CDMA Wireless Industry Standard".  Philip submitted that the alleged infringements arise from HTC's implementation of high speed packet access (HSPA) which is not an act of infringement of a "CDMA Wireless Industry Standard".


The key issue on appeal was whether the non-assert covenant reached through and prevented Philips from bringing patent infringing claims covering HSPA - a hybrid CDMA/TDMA system that did not exist at the time the cross-licence was entered into. 

Had the drafters of the cross-licence expressly resolved the dilemma by stating in the HTC argued that the definition of CDMA Wireless Standard was completely clear, and expressly included the proposed ETSI UMTS standard within the definition?  Or did the exclusion for TDMA - which had been requested by Philips - mean that a hybrid TDMA/CDMA was excluded? 

Following an extensive analysis of contemporaneous events and witness evidence including the purpose of the cross-licence, the negotiations and drafts back and forth, the Court of Appeal concluded that the judge had not reached an incorrect conclusion and the appeal was dismissed.  The most significant factor was the absence of an express provision for payment of royalties to Philips.  This meant that had Philips been licensing its TDMA patents, it was doing so for nothing, yet the evidence showed that Philips had a much stronger position in TDMA than Qualcomm.  This was a "clear indicator that, if there is a practical and realistic construction of the agreement which does not result in Philips giving away its TDMA rights, then that construction should be adopted".  The equipment that implemented HSPA was TDMA equipment, and the covenant not to assert did not provide HTC with a defence to patent infringement. 

This is not the end of the story - HTC have other defences which await trial. The IPKat will keep you posted. 

Thursday, 19 October 2017

Recommendation on measures to safeguard fundamental rights and the open internet in the framework of the EU copyright reform

Further to the release of the European Commission’s Proposal for a Directive on Copyright in the Digital Single Market, the discussion has focused on a number of aspects. The proposal to remedy the so called ‘value gap’ (Article 13) [Katposts here] has attracted significant attention and commentary.

Together with a group of scholars active in copyright issues, Professor Martin Senftleben (Vrije Universiteit Amsterdam) has published a Recommendation on measures to safeguard fundamental rights and the open internet in the framework of the EU copyright reform.

Professor Senftleben explains more in detail the content of the proposal.

Here’s what he writes:

 Article 13 of the Proposed Directive on Copyright in the Digital Single Market (DSMD) and the accompanying Recital 38 are amongst the most controversial parts of the European Commission’s copyright reform package. Several Members States (Belgium, the Czech Republic, Finland, Hungary, Ireland, the Netherlands [here] and Germany [here]) have submitted questions seeking clarification on aspects that are essential to the guarantee of fundamental rights in the EU and to the future of the Internet as an open communication medium. 

A closer analysis of these questions in the light of jurisprudence of the Court of Justice of the European Union (CJEU) shows that the measures contemplated in Article 13 DSMD can hardly be deemed compatible with the fundamental rights and freedoms guaranteed under Articles 8, 11 and 16 of the EU Charter of Fundamental Rights. The application of filtering systems that would result from the adoption of Article 13 DSMD would place a disproportionate burden on platform providers, in particular small and medium-sized operators, and lead to the systematic screening of personal data, even in cases where no infringing content is uploaded. The filtering systems would also deprive users of the room for freedom of expression that follows from statutory copyright exceptions, in particular the quotation right (Article 5(3)(d) of the InfoSoc Directive) and the right to parody (Article 5(3)(k) of the InfoSoc Directive).

The adoption of Recital 38 DSMD would moreover lead to a remarkable restriction of eligibility for the liability privilege following from Article 14 of the E-Commerce Directive. Recital 38 DSMD does not adequately reflect the current status quo in the area of the safe harbour for hosting laid down by Article 14 E-Commerce Directive. Instead, it takes the assessment criteria of “promoting” and “optimising the presentation” of user-generated content out of the specific context of the L’Oréal/eBay CJEU decision. The general requirement of “knowledge of, or control over” infringing user-generated content is missing. In the absence of any reference to this central requirement, Recital 38 DSMD is incomplete and fails to draw an accurate picture of the current conceptual contours of the safe harbour for hosting.

Furthermore, there can be little doubt that according to the CJEU, Article 15 of the E-Commerce Directive is fully applicable to user-generated content platforms and intended to shield these platforms from general monitoring obligations. The Court’s jurisprudence shows clearly that an obligation to filter any information uploaded to the server of a platform hosting user-generated content would lead to a prohibited general monitoring obligation and be incompatible with Article 15 of the E-Commerce Directive.

In general, the Commission Proposal and subsequent Council Presidency Compromise Proposals confuse and mix different legal questions by bringing together the issue of the scope of the safe harbour for hosting under Article 14(1) of the E-Commerce Directive, and the issue of whether (and when) platform providers themselves carry out an act of communication to the public and fulfil the requirements of Article 3(1) of the InfoSoc Directive.

Looking for a safe harbour
Considering the criteria which the CJEU developed in the context of Article 3(1) of the InfoSoc Directive, it becomes moreover apparent that the mere act of storing and providing access to the public is not sufficient to establish copyright infringement. Recital 38 would dismiss additional infringement criteria that have evolved in the jurisprudence of the Court. Because of the ambiguous wording of Recital 38 DSMD, there is a real risk of modifying the notion of “communication to the public” considerably.

These findings shed light on the need to clarify service provider immunity instead of further complicating the legal assessment criteria. A further clarification of applicable rules should extend the principle that is already reflected in the EU acquis, namely that providers are not liable for users’ actions which they cannot reasonably be expected to know and control (Articles 12 to 14 of the E-Commerce Directive). A further clarification of this rule is advisable to pave the way for a uniform application of service provider immunity throughout the internal market. In the interest of legal certainty and a higher level of harmonization, a well-structured European legislative design of the “notice and takedown” procedure should be introduced, accompanied by an appropriate “counter notice” procedure.

In addition, it would be consistent with the existing acquis to introduce a new use privilege in favour of the creation of content remixes and mash-ups by users and the further dissemination of these remixes and mash-ups on online platforms. As a countermove, online platforms with user-uploaded content could be responsible for the payment of fair compensation. They could either pass on these additional costs to their users, or use a part of their advertising income to finance the payment of fair compensation. To generate an additional revenue stream for authors and performers, this alternative solution is clearly preferable. It does not encroach upon fundamental rights and freedoms, and leaves intact the safe harbour for hosting in Article 14 of the E-Commerce Directive.”

AIPPI Congress Report 11: What's the (technical) problem?

Said every alleged infringer everywhere...
The identification of the technical problem is an important aspect of European patent practice.  In this panel discussion on the final day of the AIPPI World Congress in Sydney, practitioners from Germany, the US, China and Japan explored the importance – or otherwise – of identifying the technical problem in their respective jurisdictions.  James Ellsmore (KWM) reports on Tuesday's final panel session:  
"The European Patent Office’s problem-solution approach to assessing obviousness renders the identification of the technical problem central.  It is also a requirement of the European Patent Convention that an application for a patent state the technical problem the claimed invention solves (at least implicitly, if not in explicit terms).  It was against this background that Dietmar Haug, Senior IP Counsel with KNH Patentanwälte, led a panel of practitioners in a discussion of the metes and bounds of the technical problem and its relevance to prosecution practice and infringement proceedings. Marina Cunningham, Managing Partner of McCormick Paulding & Huber, explained that the requirement to indicate the technical problem in a European application stood at odds with drafting practice in the US.  In the US, Marina explained that current practice is to limit the description of the technical problem in the background section as much as possible.  This is done for several reasons and stands in contrast to previous practice in the US, when applicants used the background section to define the technical problem addressed by the claimed invention.  As Marina explained, framing the problem in this way and identifying the closest prior art did not always work to the applicant’s advantage during prosecution or litigation and has now been abandoned. Sitting on the continuum between Europe and the US, Yali Shao, a partner of Liu, Shen & Associates explained that like Europe, China had adopted the requirement that a Chinese application describe the technical problem.  However, it is not a mandatory requirement: if there is no description in the specification, the examiner will not require the applicant to add a description into the specification.  Yali canvassed a number or pros and cons for either stating or not stating explicitly the technical problem in the specification.  Yali’s suggestion was that the Chinese application should state in a non-limiting way that more than one technical problem can be solved by the invention: “the invention solves at least one general problem and several specific problems”.  The one exception to the foregoing rule, Yali said, was that for business related inventions in China, an applicant should explicitly describe the technical problem in the specification, as this will often assist in demonstrating to the examiner that the claimed business method presents a technical solution and thus exhibits the required technical feature for grant. In Japan, like the US, there is no requirement that a specification include a description of the technical problem.  However, there are, as Nobushige Furuhashi, a partner of Abe, Ikubo & Katayama explained, benefits during prosecution in stating the technical problem – doing so may enhance an applicant’s chances of favourable examination as it is an opportunity to frame the problem that the invention overcomes in a way favourable to the applicant. The panel went on the discuss the effects of stating the technical problem and what impacts this might have for prosecution of the application where objections are raised based on novelty, obviousness, sufficiency and unity of invention, as well as the importance or otherwise of having an identified technical problem in cases of patent infringement.
 The panel session was a timely reminder of the difficulties faced by applicants filing patents in multiple jurisdictions and a valuable opportunity to learn more about how the specific issue of describing the technical problem is treated in different jurisdictions."

AIPPI Congress Report 10: Digital Health

The AmeriKat facing her own digit-al health 
In an invigorating panel discussion featuring experts from Australia, the US and Japan, the fourth and final pharma session of the AIPPI World Congress explored the IP challenges for digital healthcare businesses.  James Ellsmore (KWM) reports:   
"The key message from the panel, chaired by Niklas Mattsson of Awapatent, was that any IP strategy must align with, and support, the business’ overall commercial goals.  This was the case regardless of the type of business – whether an established pharmaceutical or medical devices company, university spinout or independent start-up. 
From an IP perspective, some of the major challenges identified by the panel included the difficult environment for patenting computer-implemented inventions in jurisdictions like the US and Australia, the need to work effectively with third party partners, and the inherent differences between traditional modes of IP protection, which evolve slowly and offer protection over the long term, and alternative methods of protecting IP in the digital health industry where product life cycles are much shorter.  
What does this mean for businesses looking to play in the digital health space?  First, digital health businesses need to develop (and regularly revise) their IP strategy.  What may have worked in the past, such as filing a patent for a key aspect of the new technology, may not work so well for a digital health technology.  Secondly, businesses should ensure that robust practices and procedures are put in place when working with any third party partners.  And finally, businesses should not be afraid to consider what other (non-traditional) modes of IP protection might support those businesses’ overall strategy and commercial goals. 
The first panellist spoke of her first-hand experience with Cardihab to develop a digital cardiac rehabilitation service.  Leonore Ryan, formerly of the Commonwealth Scientific and Industrial Research Organisation (CSIRO) (Australia’s leading government research body) and Cardihab, provided attendees with an insight into the constraints that digital health start-ups face when bringing a new digital health technology to market.  In Cardihab’s case, it was a 2-person start-up with $50,000 in the kitty.  It needed to get to market quickly and faced difficult choices about how to achieve this with a limited budget.  While it had an IP strategy, Leonore explained that it did not focus on traditional forms of IP protection.  Instead, Cardihab looked to gain a competitive edge through being first to market, enhancing user experience and developing robust clinical trial data to support its technology platform.  In Cardihab’s case, the ability to provide proof of clinical efficacy based on robust clinical trial data was more important than pursuing traditional forms of IP protection.  Leonore’s presentation echoed some of the key themes of an earlier presentation of Jane Perrier the previous day about venturing with IP.  As Jane explained, and which Leonore emphasized, the business must consider its IP strategy and how any IP can be used to achieve the business’ strategic objectives. 
The second panelist, Jonathon Anderson, patent counsel with Eli Lilly, then addressed the session on some specific IP considerations for digital health businesses, considered particularly from the perspective of an established pharmaceutical/medical devices company.  Jonathon expanded on challenges such as patent eligibility for computer-implemented inventions following the US Supreme Court’s decision in Alice, the significance of shorter product lifecycles for digital health products as opposed to pharmaceutical products, and discussed the different types of protection available for graphical user interfaces in the US and their value (or perhaps lack thereof).  Jonathon also canvassed some of the challenges for digital health collaborations between pharmaceutical and medical device companies on the one hand, and universities, research organisations and start-ups on the other.  He offered some ‘tips and tricks’ for overcoming some of these challenges.  A key message of Jonathon’s was that an established business moving into the digital health space needs to be aware of “culture clash” – there are different lifecycle management techniques for digital health products and that what has worked successfully in the past for traditional medical devices or pharmaceuticals may not necessarily work with a new product offering in the digital health space." 
Finally, Osamu Yamamoto of Yusua & Hara spoke of the Japanese experience with digital health technology.  Unlike Australia and the US, Osamu-san pointed out that some of the challenges in those jurisdictions – such as patenting computer-implemented inventions and isolated genomic DNA sequences – do not necessarily apply in Japan.  A key take away from Osamu-san’s presentation was the importance of knowing the market in which the business intends to develop its digital health product or service.  Given Japan’s “super-aging” society, the Japanese government has adopted a number of measures aimed at promoting the development of digital healthcare.  One of these measures was the liberalisation of remote medical treatment, which has led to a number of new applications and systems for the provision of remote medical care.  Other measures have included reforms to laws to protect personal information and to enhance trade secrets protection.  These reforms have significantly changed the landscape for offering digital health products and services in Japan, demonstrating the importance of customising a strategy to the specific market in which the product or service will be developed. 
While cats might have nine lives, digital health businesses only get one shot at success.  The panel session establishes that having an appropriately tailored IP strategy, investing in smart partnerships and being open to non-traditional forms of IP protection might significantly extend a business’ chance of success."

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