Exemptions for IP from Prohibitions on Restrictive Trade Practices Repealed
On 18th February 2019 the Treasury Laws Amendment (2018 Measures No. 5) Bill 2018 received Royal Assent. Consequently, from 19th August 2019 the exemptions from the prohibitions on restrictive trade practices that allowed for certain dealings in intellectual property will be removed when the repeal of subsection 51(3) of the Competition and Consumer Act 2010 by schedule 4 of that Treasury Laws Amendment Act takes effect.
Part IV of the Competition and Consumer Act 2010 covers restrictive trade practices and principally involves prohibitions on cartel conduct, arrangements or acquisitions that have the likely effect of substantially lessening competition, certain types of boycotts, misuse of market power, exclusive dealing and resale price maintenance. Cartel conduct concerns arrangements between parties who would otherwise be in competition involving: price-fixing; restricting outputs in the production and supply chain; allocating customers, suppliers or territories; or bid-rigging.
Section 51 provides for exceptions to the prohibitions on restrictive trade practices covered in Part IV. Currently subsection 51(3) concerns exceptions for the conditional licensing or assignment of patents, registered designs, copyright or eligible circuit layout rights, although its exceptions do not extend to the misuse of market power or resale price maintenance.
The repeal of subsection 51(3), which will apply to both existing and future contracts was one of the recommendations of the Productivity Commission’s 2016 Report on Intellectual Property Arrangements, and will make that aspect of Australia’s competition laws consistent with those of major trading partners such as Canada, Europe, and the United States. The repeal will allow IP rights in Australia to be considered as not necessarily mutually exclusive with competition law, but could have compliance issues for parties - particularly for IP intensive industries in the following scenarios:
- clauses or arrangements that place territorial restrictions on licensees;
- clauses or arrangements requiring licensees to vest or licence any improvements they make to the licensor as this can dis-incentivise innovation and strengthen the licensor;
- where there are arrangements involving IP between competitors or otherwise potential competitors that fall within the scope of the above noted attributes of cartel conduct;
- where there are exclusive arrangements involving IP that have the purpose, effect or likely effect of substantially lessening competition in a market;
- the aggregation of patent rights by a particular business having the likely effect of substantially lessening competition in a market;
Where a party’s conduct falls within the prohibitions of restrictive trade practices they may be able to obtain immunity from the Act’s penalties by obtaining an authorisation under section 88. Obtaining such authorisation requires sufficiently establishing that the IP arrangement is unlikely to result in a substantial lessening of competition in a market (unless it also qualifies as cartel conduct, certain types of boycotts or resale price maintenance) or that its public benefits offset any public detriments.
Improved Purity of Compound Can Provide Novelty and Inventive Step
In recently published decision T 1085-13 Recordati Ireland Limited the EPO Board of Appeal has annulled its own precedential rulings when holding that claims to a known compound at previously unobtained levels of purity can be both novel and involve an inventive step.
Claim 1 of Recordati’s long pending application is for Amorphous Lercanidipine Hydrochloride having a purity of at least 99.5% determined by HPLC analysis and containing less than 0.5% of crystalline Lercanidipine Hydrochloride. Relying upon EPO Board of Appeal decision T 990/96 the EPO Examining Division held that the claims lack novelty. Decision T 990/96 held that disclosure of a low molecular chemical compound and its manufacture makes that chemical compound relevantly available to the public in all desired grades of purity, unless there was evidence that conventional methods could not achieve particular levels of purity – whether or not in commercial quantities. The EPO Examining Division found that Recordati had not discharged its onus of showing that all previous attempts to achieve the claimed purity had failed. It was also held that the claims lack an inventive step over the closest prior art.
In overturning the EPO Examining Division finding the EPO Board of Appeal first noted that Recordati’s evidence (Report 56) sufficiently established that the claimed purity level had not been achieved. In particular, Report 56 established that the prior art’s claim to a purity level of 99.85% was untenable and that by following the procedure given in the prior art the purity level could not be expected to be much higher than 97.91%. Consequently, on the precedential basis that anticipatory subject matter must be reproducible by a person skilled in the art, the prior art was not held to be novelty destroying for Recordarti’s application.
The EPO Board of Appeal then proceeded to annul the precedential principle given in decision T 990/96 on the basis that it is inconsistent with precedents G 2/88 and G 2/10 of the Enlarged Boards of Appeal. A corollary of the main finding in decision G 2/10 is that in order to conclude a lack of novelty, there must be at least an implicit disclosure in the state of the art of subject-matter falling within the claimed scope. Where, as per EPO Board of Appeal decision T 1523/07 implicit disclosure means no more than the clear and unambiguous consequence of what is explicitly mentioned. Decision G 2/88 made it clear that being available to the public carries with it the idea that, for lack of novelty to be found, all the technical features of the claimed invention in combination must have been communicated to the public. From these the EPO Board of Appeal concluded that the skilled person, using their common general knowledge, would understand a feature as implicitly disclosed in a prior art disclosure only if it is the clear and unambiguous consequence, and hence the inevitable result of what is explicitly derivable from that prior art disclosure. Consequently, common general knowledge can be used in order to assess how the skilled person would understand the disclosure of the prior art, but cannot be used to supplement it.
In the context of this case this was held to mean that a claim to a compound of a certain purity lacks novelty only if the prior art discloses the claimed purity at least implicitly, for example by way of a method for preparing that compound, the method inevitably resulting in the purity as claimed. If achieving the claimed level of purity requires supplementing the prior art with further purification methods, then the claim does not lack novelty - even if the further purification methods are within the common general knowledge of those skilled in the art. Rather, if it is contended that the claimed invention can be arrived at by supplementing the prior art with what is common general knowledge of those skilled in the art, then that is relevant to the assessment of inventive step, not novelty.
However, the EPO Board of Appeal held that the prior art did not contain any indication of purification techniques which would prompt the skilled person, using common general knowledge, to obtain the compound at the higher level of purity disclosed in claim 1 of Recordarti’s application. In obtaining the higher level of purity Recordarti’s disclosure both solved a technical problem and resulted in the technical effect of making Lercanidipine Hydrochloride more suitable as a pharmaceutical product.
3. Trade Marks
Comparing a Pear to a Well known Apple - Apple Unable to Take a Bite Out of Pear Technologies
In T-215/17 Pear Technologies Ltd v EUIPO a General Court clarified the assessment of similarity between device marks where it is alleged that an application takes unfair advantage of the well-known reputation of a prior registration.
The General Court overturned a decision by the Board of Appeal of the EUIPO, which had upheld the decision of the Opposition Division to deny registration of Pear Technologies' device mark based upon the well-known status of Apple’s device mark.
Pear Technologies applied to register its device mark in classes 9, 35, 42, and this was subsequently opposed by Apple most notably on the basis of the well-known status of its ‘apple device’ mark, which is registered in the same classes for goods and services that are identical and similar. Both the EUIPO Opposition Division and the Board of Appeal of the EUIPO upheld Apple’s opposition. While the visual and conceptual similarities between the two marks were not found to be strong, the high degree of reputation in Apple’s mark coupled with elements of visual and conceptual similarity were found to be sufficient for a consumer to make a mental link between the marks such that there was a risk that Pear Technologies mark would take unfair advantage of the distinctive character or reputation of Apple’s mark.
The General Court began by noting that a successful opposition based upon the well-known status of the earlier mark does not depend upon the degree of similarity of the respective goods and services. However, the opponent has the cumulative burden of establishing that:
(i) the earlier trade mark is registered;
(ii) the earlier mark and the mark applied for are identical or similar;
(iii) the earlier EU trade mark has a reputation in the European Union;
(iv) the use without due cause of the mark applied for leads to the risk that unfair advantage might be taken of the distinctive character or the repute of the earlier trade mark or that it might be detrimental to the distinctive character or the repute of the earlier trade mark.
While the degree of similarity between the respective marks does not need to be such that the relevant public would be confused, it needs to be sufficiently strong to lead to the risk of taking unfair advantage of or being detrimental to the distinctive character or reputation of the earlier mark.
In contrast to the earlier decisions, the General Court held that the word element in the applied for mark makes more than a negligible contribution to the visual impression created by the mark as a whole. It was also held that the top and right slanted element on the earlier mark is more reminiscent of a leaf than the stalk that is depicted in the later mark, and that in any case such visual similarity is outweighed by the more significant visual differences that the relevant public can easily and clearly distinguish. In particular, whereas Apple’s mark is comprised of a solid, smooth edged silhouette of an apple with a concave side, Pear Technologies mark is not solid or smooth edged and only implicitly rather than explicitly forms the outline of a pear – that does not have a significant concave or indented side.
Regarding conceptual similarity the EUIPO and Apple argued that apples and pears share strong biological and botanical similarities, and are commonly distributed and marketed together where they are effectively in competition with each other due to their similar end uses. As such their similarity extends well beyond both merely being fruit and that requiring more would be akin to requiring them to be identical even though only similarity is sought to be established.
The General Court began by noting that a finding of conceptual similarity for device marks requires that the images have similar semantic content and that marks are to be compared on the basis of the overall impression they make on the relevant public taking into account their intrinsic properties. As such, something more than both being fruit was required for a finding of conceptual similarity. The General Court found that the relevant public would have no difficulty in finding that the respective marks depict an apple and a pear and that at least on that level a significant semantic difference is clearly established. Further, they could not both be classified as ‘fruit with a bite taken out of it’ or ‘fruit with a leaf’ or ‘fruit with a stem’ and so did not share conceptual similarity in those ways. The General Court nonetheless noted that the depiction of two different objects does not preclude a finding of conceptual similarity between those objects. However, that did not assist Apple in this case, since the biological, botanical and commercial use similarities they relied upon were not found in the depictions of the respective marks as is required in order to create such an impression on the relevant public. It was further held that even if the depictions of the different objects evoked the biological, botanical and commercial use similarities there would still be a large range of fruits that would be considered similar, and that such similarity would not counterbalance the clear conceptual differences.
Consequently, the General Court held that neither visually nor conceptually was there sufficient similarity between the depicted marks for a consumer to make a mental link between the marks such that there was a risk that Pear Technologies mark would take unfair advantage of the distinctive character or reputation of Apple’s mark.
New Process Allows for Elevated Review of Contentious Trade Mark Applications
IPONZ has recently established a Request for Review process for trade mark applications. This allows applicants to request a more senior examiner to review the examination of a trade mark application under specific circumstances:
- The request for review will only be considered once an objection has been maintained twice on the same grounds.
- The request must be made before impasse is notified.
- The request must be made through the online case management system, via a Respond to TM Compliance Report task.
- The request must include the heading “Request for Review”.
- The request must clearly identify the specific point/s for review.
- The request may include further submissions on the point/s of contention, but no new matter.
Once a submitted request for a review is determined as having fulfilled the above requirements, the application will be assigned to a more senior trade mark examiner for review. Should the review confirm the validity of the objection, impasse will be notified in the subsequent compliance report. The applicant/agent will then be given the option to request that the application be rejected so that they may take the matter to a hearing.
USPTO Likely to Require Foreigners to use a US Licensed Attorney
On 15th February 2019 the USPTO issued a Notice of Proposed Rulemaking under which the Federal Trademark Rules of Practice would be amended so as to require foreign domiciled trade mark applicants, registrants and parties to Trademark Trial and Appeal Board (TTAB) proceedings to use an attorney who is licensed to practice law in the United States.
The requirement would apply to trade mark applicants, registrants, and parties who have a permanent legal residence or a principal place of business outside the United States. The proposed changes would require these applicants, registrants, and parties to hire an attorney who is licensed to practice law in the United States to represent them at the USPTO. However, the requirement will not apply to Madrid Protocol applications designating, unless an Office Action issues in which case a U.S.-licensed attorney would need to be appointed.
Any U.S.-licensed attorney who has an active bar membership and is in good standing, regardless of where the attorney resides (including outside the United States), can represent foreign and domestic trade mark applicants and registrants at the USPTO. Comments on the proposal are required by 18th March 2019, and should be sent to TMFRNotices@uspto.gov.
New Zealand Soon to Join WCT and WPPT
New Zealand deposited its instrument of accession to both the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) on the 17th December 2018. While both treaties will officially enter into force in New Zealand on 17th March 2019, the legislative changes that enabled New Zealand to be compliant with those treaties entered into force on 30th December 2018.