Countdown Starts for End of Innovation Patents
The Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 received Royal Assent on 26th February 2020 after passing through both houses of Parliament.
As earlier summarised most of the Bill’s provisions entered into force the day after receiving Royal Assent. However, as subsequently noted, the provisions relating to the abolition of the innovation patent system will enter into force 18-months from the day after receiving Royal Assent. Hence, the last day on which an innovation patent can be filed in the first instance will be 26th August 2021, and if such innovation applications are filed on that day, then they will be the last to expire on 26th August 2029. After 26th August 2021 it will only be possible to file an innovation patent either as a divisional or as a conversion of a standard patent application that itself was filed on or before the 26th August 2021 and such innovation patent applications will expire 8-years from the deemed filing date of the standard patent.
Amongst the other earlier summarised changes, which entered into force on 27th February 2020, are changes to the Crown Use and Compulsory Licensing provisions of the Patents Act 1990. While these provisions are rarely used there is a good chance that they will be utilised as part of the response to the corona-virus pandemic.
Anti-Competitiveness of Pay for Delay Agreements Considered
In C 307-18 Generics (UK) Ltd v Competition and Markets Authority the Court of Justice of the European Union (CJEU) has provided guidance on when ‘pay for delay’ agreements between originator and generic manufacturers of medicines are anti-competitive and an abuse of a dominant position.
Until January 1999 GlaxoSmithKline plc (GSK) had a patent for the compound paroxetine, but also obtained later expiring patents including GB2297550 for specific forms of paroxetine hydrochloride anhydrate, processes for preparing them and its (Swiss-form) use. By 2001 several generic medicine manufacturers were taking active steps to obtain marketing authorisations for generic versions of paroxetine. In 2001 and 2002 GSK entered into agreements with 3 of the generic manufacturers with the effect that those generic manufacturers did not manufacture generic versions of paroxetine until those agreements expired at various dates in 2004. During that time period there were various proceedings in relation to the validity of GB2297550, which culminated in the November 2004 Court of Appeal decision that an amended version of the patent containing only 2 process claims is valid but not infringed by another generic manufacturer.
In 2016 the UK Competition and Markets Authority found 2 of those agreements to be anti-competitive and that GSK had abused its dominant position in the market for paroxetine. That decision was appealed and in 2018 the UK Competition Appeal Tribunal issued a decision that referred several questions to the CJEU around the assessment of a restriction by effect, the definition of the relevant market and the definition of abuse of a dominant position and possible justification of the latter, which concern Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
The questions involve the scenario of an originator and generic manufacturers, where the originator holds a manufacturing process patent for an active ingredient that is in the public domain and where the generics are preparing to enter the market of the medicine containing that active ingredient, and who dispute whether the patent is valid or whether the generic medicines concerned infringe that patent. The CJEU made several findings in relation to that scenario. In particular:
- Provided the generic manufacturers can establish a firm intention and an inherent ability to enter the relevant market without facing insurmountable barriers, then those generics are potential competitors of the originator.
A settlement agreement between such parties, being potential competitors, that involves the generic undertaking not to enter that market and not to pursue revocation of the process patent in return for transfers of value from the originator, constitutes an agreement which has as its object the prevention, restriction or distortion of competition:
(i) provided the net benefit of those transfers has no explanation other than the commercial interest for those parties to not engage in competition;
(ii) unless the settlement agreement also involves pro-competitive effects which can create reasonable doubt about whether competition will be harmed.
- If such a settlement agreement has significant potential for or actual effects upon competition so as to characterise it as a ‘restriction by effect’, it cannot be counterfactually assumed that the generic manufacturer would otherwise have invalidated or established non-infringement of the patent or entered a less restrictive settlement agreement.
- Where the disputed process patent impedes market entry by the generic manufacturers, the generic versions of the medicine can still nonetheless constitute part of the definition of the market if they can enter the market at short notice with sufficient strength to affect the marketing of the originator medicine.
- The originator’s strategy of concluding a set of such settlement agreements constitutes an abuse of a dominant position if that strategy has the effect of restricting competition and having exclusionary effects that go beyond the anticompetitive effects of individual settlement agreements.
Scope of IPR Proceeding Restrictions Clarified
In 19-1169 Samsung Electronics America v Prisua Engineering Corp held that the presence of indefiniteness in respect of some claims in inter-partes review proceedings does not necessarily prevent findings being made about whether those same claims are invalid for anticipation or obviousness.
In 2011 the Leahy-Smith America Invents Act replaced inter-partes re-examination with inter-partes review (IPR) so as to make the alternative to full litigation more streamlined and affordable. Under IPR a party can challenge the validity of a patent and have input on its re-examination by the Patent Trial and Appeal Board (PTAB), but the grounds for re-examination are restricted to anticipation and obviousness and only in respect of patents and printed publications.
Samsung instituted IPR in respect of claims 1-4, 8 and 11 of Prisau’s patent, which is directed to generating an edited video data stream from an original video stream, after Prisau sued Samsung for infringement on account of Samsung’s “best face” feature. The “best face” feature creates the best image by substituting unwanted features from within a burst of images captured over a short duration.
The PTAB declined to undertake IPR in respect of claims 1-4 and 8 after concluding that it could not determine the scope of those claims with rulings on indefiniteness being outside the scope of IPR proceedings. The PTAB found there to be the presence of claim scope indeterminateness for two reasons. Firstly, it was unclear whether those claims cover an apparatus that includes a data entry device capable of being operated by a user to select the at least one pixel, or covers only the user actually operating the data entry device to select the at least one pixel. Secondly, the PTAB concluded that the digital processing unit limitation in claim 1 can be construed in means-plus-function form and that by not specifying the structure corresponding to the claimed function those claims were indefinite since the means-plus-function claims had not been limited to a means specified in the specification.
The CAFC firstly confirmed that the PTAB would have been acting outside of its statutory authority if it had cancelled the claims for indefiniteness, either directly or after instituting review on statutorily sanctioned grounds. The CAFC also noted from Supreme Court precedent that nor does the PTAB have discretion on its own account to cancel claims for being indefinite as it is the petitioner’s contentions, not the Director’s discretion, that define the scope of the litigation all the way from institution through to conclusion. While Samsung noted that in IPR proceedings the PTAB’s statutory authority extends beyond anticipation and obviousness to include grounds such as indefiniteness when a claim is amended during the proceedings, the CAFC found this to be a clear statutory distinction that does not apply to unamended claims.
The CAFC found that the PTAB was wrong to hold that the term digital processing unit is a means-plus function term. It instead found that it is used as a stand-in for terms like general purpose computer or central processing unit and as such recites structure rather than being any device that can perform the function. Nonetheless, the other finding of indeterminateness remained and was not contested by the parties. However, the CAFC found that the PTAB was not thereby necessarily precluded from considering anticipation and obviousness issues in respect of the affected claims, and so remanded the case back to the PTAB for consideration of those grounds.
3. Trade Marks
Criteria for Genuine Use of Collective Mark Clarified
In C 143-19 Der Grune Punkt v EUIPO the Court of Justice of the European Union (CJEU) has clarified how the assessment of genuine use is to be made for a collective mark which is used on packaging for a wide spectrum of goods.
In 1999 Der Grune Punkt achieved registration of a collective mark for a recycle symbol in all of the goods classes and in service classes 35, 39, 40, 42, where the symbol indicates that the packaging will be disposed of in an environmentally sound way when taken to a local collection point as a result of the contribution of the manufacturer or distributor of the goods. In 2012 Halston Properties applied to have the mark revoked in respect of all of the goods classes. The EUIPO Cancellation Division upheld the revocation request with the exception of packaging goods. That decision was upheld in further appeals to the Fifth Board of Appeal of the EUIPO and to the General Court.
The General Court held that genuine use requires use of a mark in a way which guarantees the identity of the origin of the goods or services for which it is registered in order to create or preserve an outlet for those goods or services. In the case of collective marks this requires use that distinguishes the goods or services of members of the association that owns the mark from those of other undertakings. As with the lower courts the General Court held that the genuine use of that mark on packaging does not constitute proof of genuine use of the goods as the public is capable of distinguishing between a mark indicating the product’s commercial origin and a mark indicating that packaging waste may be recovered. It was only in respect of the environmentally responsible recovery and disposal of packaging waste that the mark was found by the General Court to be put to genuine use in respect of goods as it does not create or preserve an outlet for the underlying goods, but only for their packaging.
Der Grune Punkt argued that the General Court’s analysis of genuine use did not sufficiently take into account the characteristics of collective marks and that the Court was wrong to separate the goods from the packaging. In particular, it was argued that the use of the mark by affiliated members on the packaging of their goods was also a use in relation to the goods in as much as the goods of those undertakings are affiliated with that particular packaging recovery program. It was also argued that the goods and the packaging form a sales unit and that in respect of the use of the symbol on the packaging, on account of the publics association, that symbol expresses an intangible characteristic of the goods. Further, it was argued that the simultaneous use of each undertaking’s individual marks did not count against the symbol also being put to genuine use in relation to those goods.
The CJEU noted that, unlike standard trade marks, a collective mark does not have the function of indicating to the consumer the identity of origin of goods or services in respect of which it is registered. Further, affiliated members can be and frequently are in competition with each other. Nonetheless, the CJEU found that the principles of genuine use apply equally to collective marks, with the effect that to be genuinely used their use must be part of the objective of the undertakings concerned to create or preserve an outlet for their goods and services while distinguishing themselves from other (non-affiliated) undertakings.
However, the CJEU found that the General Court did not follow precedent in determining whether there was such genuine use. The Court should have: (i) examined whether the mark at issue is in fact used ‘on the market’ in respect of the goods or services covered; (ii) evaluated whether such use is viewed as warranted in the economic sector concerned to create or maintain a share in the market for the goods or services protected by the mark; and (iii) evaluated the nature of those goods or services, the characteristics of the market and the scale and frequency of use of the mark.
In considering these factors the CJEU found that it cannot be ruled out that the indication by affiliates on the packaging of their goods that they are affiliated with a particular packaging recovery program may influence consumers’ purchasing decisions. Where that is the case the use of the mark contributes to the creation or maintenance of a share in the market relating to those goods. The CJEU further emphasised that where such economic benefit accrues to the users of a mark, which in the case of a collective mark is the affiliated members, that there is appropriate protection for such marks which can extend to the goods themselves in addition to the packaging.
CJEU Gives Guidance on Intention to Use and Bad Faith
In C-371/18 Sky PLC v SkyKick UK Ltd the Court of Justice for the European Union (CJEU) gave important guidance on both whether a trade mark can be invalidated for having an inappropriately wide specification and on whether a specification that contains goods or services for which there is no intention to use is invalid for bad faith.
Sky had brought trade mark infringement proceedings against SkyKick on the basis of Sky’s EU and UK trade mark registrations for the word SKY or stylised version thereof which, amongst others, covered a wide range of goods and services in classes 9 and 38. SkyKick operate a niche SaaS business limited to Microsoft Resellers involving cloud migration of Microsoft Office Outlook data into Microsoft Office 365 format and cloud backup for Office 365 generally. They originated in the US and changed their name to SkyKick in 2012 and expanded into the EU in late 2014. Sky brought trade mark infringement proceedings against SkyKick on 23rd May 2016.
In the main proceedings before a Chancery Division High Court Judge SkyKick argued for the invalidity of Sky’s registrations on account of their specifications including goods and services that are too broad, lack clarity or precision, or for which there was no intention to use. SkyKick did not seek partial invalidation on the basis of non-use since Sky’s registrations had been registered for less than 5-years when their pleadings were filed. However, given that all but one of the registrations passed the 5-year registration threshold during the proceedings, the Judge considered that SkyKick had the opportunity to make non-use invalidation applications.
While Sky’s marks were registered relatively recently, the applications were filed from 2003 to 2006 for the EU marks and in 2008 for the UK mark. Consequently, the proceedings were considered under Council Regulation 40/94 in respect of the EU marks and the implementation of Directive 89/104 in the UK Trade Marks Act 1994 for the UK mark. Sky’s infringement action was based upon a range of goods and services in the class 9 and 38 specifications. The High Court Judge, though, considered as representative the following items in class 9: computer software; computer software supplied from the Internet; and computer software and telecoms apparatus to enable connection to databases and the Internet. The Judge was inclined towards finding that these terms are too broad on account of claiming too wide a monopoly, but considered that it did not follow that they also lack clarity and precision. However, on account of its relevance to the question of infringement, the Judge referred to the CJEU the question of whether lack of sufficient clarity or precision in a trade mark registration can be a ground for invalidity and if so whether terms such as ‘computer software’ are lacking in that respect.
After considering EU and UK legislation and jurisprudence the Judge found that in limited scenarios a finding of bad faith based upon no intention at the time of filing to use the mark can and has been made, but that the law in that respect is not acte clair. The Judge went on to hold that for some of the goods and services Sky had no intention at the time of filing of using them. For similar reasons the Judge also referred to the CJEU the questions of whether it constitutes bad faith to apply to register a trade mark without any intention to use it in relation to the specified goods or services and whether a finding of bad faith can be made in respect of only some of the goods or services?
The Judge went on to find that if Sky’s specifications are valid, then the claim for infringement would be made out and that SkyKick cannot avail themselves of the ‘own name’ defence, since either it is not a ‘natural person’ or the use of its name is not in accordance with honest practices in industrial and commercial matters.
Regarding clarity and precision the CJEU noted that under both Council Regulation 40/94 in respect of the EU marks and Directive 89/104 in respect of the UK mark there is an exhaustive list of grounds for invalidity, which neither includes lack of clarity or precision as a ground and nor does it fall within one of the grounds. The CJEU further noted, in line with the referring Judge’s comments, that the CJEU’s 2012 C-307/10 CIPA v Registrar of Trade Marks decision on the requirement for trade mark application specifications to be stated with sufficient clarity and precision does not extend to registrations.
Regarding bad faith, the CJEU noted that it is not defined in the relevant legislation, but readily found that it presupposes the presence of a dishonest state of mind or intention. In the context of trade mark law bad faith was found to involve seeking to register a mark with the intention of undermining the interests of third parties in a manner inconsistent with honest practices, or with the intention of obtaining an exclusive right for purposes other than the essential function of indicating origin. While use is not required for 5-years from registration bad faith can still be found to apply at the time of filing if there is objective evidence that the making of the application was inconsistent with honest practices or for purposes other than indicating origin. A lack of economic activity in the relevant field at the time of making the application is insufficient to make a finding of bad faith. Where a finding of bad faith affects only some of the goods or services only those goods or services would be invalid on the basis of bad faith.
USPTO Makes Electronic Filing of Trade Marks Effectively Compulsory
Since 15th February 2020 it has been compulsory, subject to limited exceptions, for trade mark applications filed with the USPTO to be filed electronically using the Trademark Electronic Application System (TEAS) and also to supply an email address.
For applications filed prior to 15th February 2020 that have yet to achieve registration or become abandoned documents can still be filed in paper format either up to registration or until a document is filed using TEAS.
For applications filed on or after 15th February 2020 there are several exceptions. Namely:
- Given that the requirement to file electronically and to use email is incompatible with the Trademark Law Treaty (TLT), applicants, registrants, or parties that are a national of a country that is a member of the TLT but not the Singapore Treaty on the Law of Trademarks (STLT) will not need to comply. This exception will not apply to nationals of New Zealand and Australia as both are members of the STLT.
- Specimens for scent or flavour marks will not be able to be filed electronically, but the preceding submission of information regarding the specimen will need to be filed using TEAS.
- Where TEAS is unavailable due to system outage at the USPTO or at the user’s site or if there is an extraordinary situation. These require specially petitioning the USPTO Director.
For applications filed on or after 15th February 2020 email addresses of each applicant in addition to the email address of the attorney will be required in order to obtain a filing date. This will not apply to Madrid Protocol applications designating the US, but subsequent submissions to the USPTO will require an email address. The per class fee for designating the US in a Madrid Protocol application is US$400, whereas direct US applications have a US$275 per class fee for TEAS Standard or US$225 for TEAS Plus.