January 2016

1. Patents

Japan

Japanese Supreme Court Construes Correct Product by Process Practice
The Japanese Supreme Court recently issued a unifying decision specifying the interpretation and validity of product by process claims. Namely, claims of the form: Product A which is obtained by process X.

Prior to the Supreme Court’s decision there have been two ways of interpreting product by process claims. During examination, they are given a product-based interpretation in which they are considered to cover the product irrespective of the process used to obtain it. However, infringement cases have sometimes given a product-based interpretation and other times given a process based interpretation in which the patent right only covers the product when obtained by the specified process. Both interpretations require the product to be novel irrespective of how it is produced, which favours a straight product claim over a product by process claim. However, the applicant has been able to use product by process claims if they consider it is inappropriate to define the product without using the process.

The case under appeal was a decision by the Grand Panel of the Intellectual Property High Court (IPHC). In that decision, the IPHC gave a hybrid interpretation of product by process claims. Namely, in general the product by process claim format restricts the patentee’s right to the product when produced by the specified process, but that wider protection is possible if it is impossible or unrealistic to define the product without using the process to obtain it at the time of application.

The Supreme Court overturned the IPHC decision and held that a product by process claim should always be given a product-based interpretation, since the scope of the patent should cover all the products which have the same structure, physical properties, etc. as those of the claimed product. However, they also held that product by process claims are in principle unclear, since they usually make it difficult for the skilled person to understand what structure, physical properties, etc. the claimed product has. Nonetheless, the Supreme Court held that clarity can be satisfied for such claims if it is impossible or unrealistic to define the product without using the process used to obtain it at the time of application. The Japanese Patent Office has subsequently updated its practice in light of the Supreme Court’s decision.

United Kingdom

Validity OK when Time is not a Priority
In Unwired Planet International Ltd v Huawei Technologies Co Ltd the High Court ruled on whether a document available over the internet constituted prior art when it was publicly disclosed the day before the filing date when considered from the perspective of another time zone.

The alleged prior art document, which is agreed to be an enabling disclosure, was uploaded by Ericsson (in Europe) to a publically accessible server at 08:36 Central European Time (CET) on the 8th January 2008. The priority document was filed at the USPTO on the 8th January 2008 at 22:59 (CET). When considered from the time zone of the USPTO, which goes by Eastern Standard Time (EST), all the times still fall on the 8th January 2008 – being 02:36 and 11:59 (EST) respectively. Being between these time zones, the time zone of the UK patent also involved respective times that all fell on the 8th January 2008.

However, Huawei argued that when assessed from the time zone of someone in Hawaii the alleged prior art document was uploaded and available on the 7th January 2008, while the priority document was filed on the 8th January 2008. In support of this argument Huawei cited two EPO decisions in which patents were revoked on account of prior art that followed a similar chronology. The reasoning applied in each of the cited cases differed, but Huawai claimed that the patents were revoked effectively on account of disclosures at earlier times being publically available at a location where the date is the day prior to the priority date.

The Judge rejected that argument for being wrong in law. The Judge noted that the legislation deems the state of the art to be everything made available to the public before the priority date. This, the Judge held, requires first establishing what the priority date is and only then determining whether the alleged prior art was made available before that date. In determining the priority date the only time frame that is relevant is the time zone in which the priority filing is made. Likewise, it is the date in that time zone that the availability of prior art is assessed. The Judge noted that knowledge of the time of filing is not required by the UK or EU legislation, nor by the Paris Convention provisions which the UK and EU legislation enacts.

2. Trade Marks

Europe

Reputation is a Cut Above the Rest when Assessing Similarity
In El Corte Inglés SA v OHIM the European Court of Justice (ECJ) recently clarified the assessment of conceptual similarity when comparing marks in different languages.

In 2010 the clothing company The English Cut made an ECTM application for The English Cut in class 25. This was opposed by El Corte Inglés on the basis of their registered Spanish word mark and ECTM device marks for El Corte Inglés covering identical goods.

After an unfavourable decision by the OHIM Board of Appeal El Corte appealed to the EU General Court. The General Court upheld the Board of Appeal’s findings that the marks were not visually or phonetically similar. Unlike the Board of Appeal though, the General Court held that the marks were a literal translation of each other. Nonetheless, the General Court still held the marks to have a low level of conceptual similarity on the basis of its assessment that average Spanish consumers would not recognise that the marks are literal translations of each other, and so would not make an immediate conceptual connection between the marks. While acknowledging that the El Corte Inglés marks have considerable reputation, the General Court did not make an assessment of whether the opposed mark would take unfair advantage of or be detrimental to the distinctive character of those marks, since it held similarity of marks is necessary to such an assessment.

On appeal from that decision the ECJ held that the General Court should still have made an assessment of whether the opposed mark would take unfair advantage of or be detrimental to the distinctive character of the earlier marks. The ECJ clarified that while comparing marks without taking reputation into consideration requires a degree of similarity with the opposed mark which is capable of giving rise to a likelihood of confusion, such a likelihood of confusion is not a necessary condition when reputation is considered. Consequently, the General Court should have examined whether the low level of conceptual similarity was sufficient, on account of the established reputation of the earlier mark, for the relevant public to establish a link between those marks. The ECJ also held that when an assessment is made as to whether the opposed mark would take unfair advantage of or be detrimental to the distinctive character of the earlier marks it is not required that consumers need to make an immediate connection between the marks. The ECJ referred the case back to the General Court for assessment in light of these findings.

EU Trade Mark Law Getting Modernised and Harmonised
Following a review commenced in 2008 the European Parliament has now approved reform of the Community Trade Mark (CTM) system, which will take effect from 23rd March 2016. While generally still fit for purpose, the following amendments are being made with a view to modernising, harmonising and improving efficiency:

• Replacing the term ‘Community Trade Mark’ with ‘European Union Trade Mark’, and replacing ‘Office for Harmonisation in the Internal Market’ (OHIM) with ‘European Union Intellectual Property Office’ (EUIPO).
• Formalising a framework for cooperation between the EUIPO and national office. This will include harmonising national practices with the EU trade mark system, with a view to having more streamlined procedures that are less burdensome on SME’s.
• Removing the requirement for registrable trade marks to be capable of graphical representation. Provided marks satisfy the criteria of being clear, precise, self-contained, easily accessible, intelligible, durable and objective they will be registrable. This will make it easier for non-conventional marks such as sounds, smells, tastes and colours to be registered.
• Following the ‘IP Translator’ decision by the ECJ in June 2012, subsequently filed specifications with general terms matching the relevant class heading have been interpreted literally unless accompanied by a statement to the effect that the term is to be interpreted with the scope of the class heading. This practice will be extended to earlier registrations unless proprietors file a declaration within 6-months of the new regulations entering into force (i.e. by 23rd September 2016) stating that they sought coverage as a class heading.
• Making bad faith a ground of opposition in addition to being a ground of revocation.
• Where invalidity proceedings are commenced against a trade mark on the basis of lack of acquired distinctiveness, the proprietor can rebut that allegation by showing acquired distinctiveness before the date of application for invalidity rather than as of the application filing date.
• Currently counterfeit goods can transit within the EU provided they are not released for free circulation therein. However, the revised law would allow rights holders to prevent counterfeit goods from entering the EU, even if only for the purpose of forwarding on to a destination outside the EU.
• Applications will need to be filed at the central office rather than via a national office, and application fees will need to be paid at the time of filing rather than within the current one month grace period. Currently the minimum application and renewal fees can cover up to three classes. This will be replaced by single per class application and renewal fees that give discounts for concurrently filed or renewed classes.
• Where amendments are required to be made to national laws member states will have until 23rd March 2019 to do so.

New Zealand

Court of Appeal agrees that Assessment of Genericism is Jurisdictional
In Tasman Insulation NZ Ltd v Knauf Insulation Ltd the Court of Appeal largely upheld the findings of the May 2014 High Court decision which considered the issues of genericism, use as a trade mark, infringement and misleading and deceptive conduct.

The dispute stemmed from when the defendants started selling insulation products in New Zealand under the EarthWool brand while also using the word ‘batt’ or ‘batts’ on the label, packaging, website and html code. Knauf claimed that such use of the words ‘batt’ or ‘batts’ was not use as a trade mark and that in any case those words had become generic for insulation products. Along with pleading infringement, Tasman also claimed that Knauf’s use of the brand EarthWool was misleading and deceptive as it gave the false impression that the product is made from natural wool when it is actually made from recycled glass.

The Court of Appeal agreed with the trial Judge’s finding that Knauf had not satisfied its burden of establishing that ‘batt’ or ‘batts’ are generic terms in relation to the goods. While the terms were only marketed as trade marks in conjunction with the word ‘pink’, the evidence establishes the terms to be separately understood by the general public in New Zealand as iconic brands. While the terms have descriptive meaning in relation to the goods in overseas markets, it is the use of the terms in New Zealand that is important. The Court of Appeal noted that some generic use of the terms is inevitable and virtually impossible to eradicate, but held that any evidence of the terms being used descriptively was not on account of any acts or inactivity on Tasman’s part. Consequently, Tasman's registration for BATTS was not revoked.

The Court of Appeal also agreed with the trial Judge’s findings that Knauf’s use of the terms on the label, packaging and website would not be understood by prospective users as having trade mark significance, and hence were not infringing uses. The Court of Appeal overturned the trial Judge’s holding of infringement for the use of the terms in the HTML code, finding there was insufficient evidence that such use of the terms would convey to a substantial number of normally informed and attentive internet users that the words were used as a trade mark.

The Court of Appeal also upheld the trial Judge’s findings that the EarthWool brand and online marketing were misleading and deceptive. While the survey evidence supporting those findings had some deficiencies, the evidence nonetheless showed that a clear majority of people thought EarthWool was made from sheep wool. Particularly given that end consumers were part of Knauf’s marketing audience, they should have made it plain that the product was made of glass.

United States of America

En Banc Rehearing Slants in Favour of Constitution over Trade Marks Act
The Court of Appeals for the Federal Circuit (CAFC) recently held that the disparagement provisions of the US Trade Marks Act (Lanham Act) are unconstitutional.

The case involves an appeal from a Trademark Trial and Appeal Board (TTAB) decision which affirmed an examiner’s refusal to register the mark THE SLANTS for live band performances. The TTAB noted that the band name was adopted to reclaim and take ownership of Asian stereotypes. However, the Board held that despite the intent behind such re-appropriation a substantial number of people of Asian descent would find the term offensive.

In April 2015 a 3-Judge panel of the CAFC upheld the TTAB decision, however a week later the CAFC reinstated the appeal and ordered a rehearing of the case before a full panel of the CAFC. At both the TTAB and the earlier CAFC hearing in addition to disputing that the mark is disparaging it was also argued that rejecting a mark for being disparaging is unconstitutional on account of breaching the First Amendment. In particular, it was argued that the freedom of speech aspect of the First Amendment, which prevents governments from penalizing private speech merely because it disapproves of the message conveyed, should render the disparagement provisions in section 2(a) of the Lanham Act unconstitutional. In responding to this both the TTAB and the CAFC referred to CAFC precedent from 1981 to hold that refusing registration was not unconstitutional since it did not prevent the applicant from using the mark.

The majority view of the full panel of the CAFC is that the disparagement provision of section 2(a) is a viewpoint discriminatory regulation of speech, created and applied in order to stifle the use of certain disfavoured messages and as such is contrary to the First Amendment. After observing that it is a mark’s expressive character, rather than its source identifier function, that the disparagement exclusion applies to, it was further held appropriate to make a First Amendment assessment of the disparagement provision in relation to a mark’s expressive character. As such, the commercial speech function of a mark is not sufficient to exempt it from the operation of the First Amendment.

The CAFC consequently found section 2(a) to be presumptively invalid and can only be found constitutional if it satisfies strict scrutiny. In applying strict scrutiny the CAFC rejected the defence that the disparagement provisions still allow the applicant to use the mark. The CAFC found that being denied federal registration has a chilling effect on speech, since it denies valuable rights to those whose trade mark expresses a message that is deemed to be disparaging. The CAFC concluded that the disparagement provisions of section 2(a) are unconstitutional, since the basis of the government’s interest in applying it is not a legitimate interest under the First Amendment. While implying that there is scope for extending the finding of unconstitutionality to the immoral and scandalous provisions of section 2(a), the CAFC left that for future panels to consider.