July 2018

1. Patents

United States of America

Printed Publication Test for Material Distributed at Exclusive Meetings Clarified
In Medtronic Inc v Barry the Court of Appeal for the Federal Circuit (CAFC) vacated and remanded the finding of the Patent Trial and Appeals Board (PTAB) that the distribution of a video demonstration and slides at an industry meeting of experts did not constitute publically accessible disclosures.

In 2003, and more than one-year before the earliest filing date of Dr Barry’s patents, Medtronic distributed a video demonstration and a related slide presentation to spinal surgeons at an industry meeting and two conferences. Medtronic argued that Dr Barry’s patents are obvious in light of that material when combined with other prior art. In considering that issue the PTAB only considered the distribution of the material to the industry meeting of experts, which was composed of the Spinal Deformity Study Group (SDSG), who are experts voted into membership by an executive board based on their qualifications and ability to conduct research. The PTAB held that the exclusive nature of that meeting meant the material was not publically accessible and so did not constitute a printed publication for the purposes of §102(b).

The CAFC noted from precedent that Medtronic has the burden of establishing that the material was publically accessible, which requires that it was disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence could locate it. In the context of the scenario in this case where the material was distributed but not indexed or made searchable, the CAFC held that determination of public accessibility requires consideration of the following factors:

• the size and nature or purpose of the meetings;
• whether they are open to people interested in the subject matter of the material disclosed;
• whether there is an expectation of confidentiality between the distributor and the recipients of the materials (on the precedential basis that the lack of legal obligation of confidentiality is insufficient to show that the distributor’s expectation of confidentiality was unreasonable).

After noting that the PTAB’s analysis was remiss on account of not considering the distribution of the materials at the conferences to other surgeons who are not SDSG members, the CAFC proceeded to consider the scenario of if the distribution was only to the SDSG members. While noting that the SDSG meetings were quite exclusive, the CAFC found this not to be determinative, since factors such as the purpose of the meeting and whether the members had an obligation or expectation to maintain confidentiality also contribute to determining whether the materials were publically available. On this basis the CAFC remanded the case back to the PTAB to make a determination by taking into account such factors.

Pharmaceutical Patent Litigation Law Amendment Proposed
One of the sponsors of the 1984 Drug Price Competition and Patent Term Restoration Act has proposed amendments aimed at restoring the balance between drug innovators and generics which he claims has been compromised by the introduction of the inter-partes review (IPR) procedure in 2012.

The 1984 Act, more informally know as the Hatch-Waxman Act, was enacted to make it easier for generic drug companies to provide competition to innovator drug companies upon patent expiry. The Act reduced the evidential burden of drug efficacy for generics by only requiring their Abbreviated New Drug Applications (ANDA) to demonstrate bio-equivalence to the innovator product in addition to manufacturing and safety information. The Act also allowed a research exemption for ANDA related activities that would otherwise amount to infringement. This was balanced by providing innovators with a data exclusivity period and extensions of patent term for drugs that have been subject to regulatory delays – provided such patents are listed in the Orange Book. The Act also incentivised generics to challenge Orange Book patents by providing them with a 180-day administrative exclusivity period from other generics if the challenge is successful.

However, with the introduction of IPR it has become faster, cheaper and easier to challenge patents, including Orange Book patents. While acknowledging that IPRs have proved beneficial in other technological fields, Senator Hatch considers them to have unsettled the balance struck by the Hatch-Waxman Act. In response the Senator has proposed an amendment to the effect that if an Orange Book patent is challenged the generic will have to choose between standard litigation under the terms of the Hatch-Waxman Act, or by way of IPR although in that case not being able to rely on the drug innovator’s safety and efficacy studies for FDA approval.

2. Trade Marks

Australia

WTO Finds Plain Packaging Law Consistent with Australia's Trade Obligations
On 28th June 2018 the World Trade Organisation (WTO) rejected claims to the effect that Australia’s plain packaging regime for tobacco products are inconsistent with Australia’s trade obligations under the WTO.

The WTO upheld Australia’s contention that its plain packaging regime does not prevent the registration or maintenance of a trade mark. By ensuring that trade marks can be registered and remain on the register, the plain packaging measures do not have any impact on the ability of owners of registered trade marks to exercise the rights granted under the Trade Marks Act 1995 to bring infringement proceedings.

The WTO also rejected the argument that the protections under the Paris Convention and the TRIPs Agreement extend to include the right to any use of the mark. Rather, it was held that the Paris Convention only guarantees the right to apply for protection by way of registration provided that some minimal requirements are satisfied.

Subject to exceptions provided in the Paris Convention, Article 3.1 of the TRIPs Agreement (Agreement) provides that Members must provide the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property. In this regard “protection” includes matters affecting the use of intellectual property rights specifically addressed in the Agreement.

While Article 15.1 of the Agreement provides that Members may allow marks to be registrable on the basis of distinctiveness acquired through use, it is not mandatory. That Australia does allow registration on the basis of acquired use does not mean that it has to apply that in respect of all goods. If on the contrary it did have to apply it in respect of all goods, then it would be deprived from determining whether some signs may or may not be used in relation to specific categories of goods or services. The Agreement retains such discretion for States, since trade mark rights are a negative right to exclude - rather than being a positive right to unconstrained use.

The challengers also tried to argue that the plain packaging laws contravene Article 20 of the Agreement, which provide that:

The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements, such as use with another trademark, use in a special form or use in a manner detrimental to its capability to distinguish the goods or services of one undertaking from those of other undertakings. This will not preclude a requirement prescribing the use of the trademark identifying the undertaking producing the goods or services along with, but without linking it to, the trademark distinguishing the specific goods or services in question of that undertaking.

However, the WTO found no contravention on the basis that Article 20 has the requirement of use not being unjustifiably encumbered, finding that Australia’s reasons for the use restrictions to be a justifiable encumbrance. Further, the WTO held that a State is not obliged to refrain from adopting particular encumbrances merely because alternative measures may be available.

On 19th July 2018 Honduras appealed the decision to the WTO’s Appellate Body. New Zealand’s plain packaging legislation was assented to on 14th September 2016 and commenced on the 14th March 2018.

Europe

Louboutin Red Sole Shoes Held to be Position Marks not Shape Marks
In Christian Louboutin v Van Haren Schoenen BV the Court of Justice of the European Union (CJEU) declined to follow the earlier released opinion of an Advocate General.

As earlier reported, the Advocate General’s preliminary ruling held Louboutin’s red sole shoe mark to be a sign consisting of the shape of the goods and seeking protection for a colour in relation to that shape, rather than being a colour mark per se. From that basis the Advocate General held that the Article 3(1)(e)(iii) prohibition on the registration of signs that consist exclusively of a shape that gives substantial value to the goods can apply to Louboutin’s mark.

By contrast the CJEU held that Louboutin’s mark for the colour red applied to the sole of a high heeled shoe does not satisfy the Article 3(1)(e)(iii) sub-criteria of consisting exclusively of a shape. While the mark involves shape elements it is not the shape that the registration seeks to protect. Rather, the mark protects the application of colour to a specific part of the product. While the specific part of the product has a shape, that is insufficient to make it a sign that consists exclusively of a shape. Instead, such marks are more accurately classified as position marks, and so do not fall within the ambit of Article 3(1)(e)(iii).

Mexico

Notable Changes Being Made to Mexico's Trade Mark Law
On the 10th August 2018 several amendments to the Trade Marks law will enter into force.

Amendments that will generally make it easier for applicants are:

• including sounds, smells and holographic signs as registrable non-traditional marks;
• increasing the range of marks that will be registrable on the basis of acquired distinctiveness;
• allowing letters of consent from owners of cited marks to be recognised;
• introducing certification marks.

Amendments that could create problems for applicants and owners are:

• introducing a requirement to file a declaration of actual and effective use within 3-months after 3-years from the registration date, failing which the mark will lapse;
• introducing bad faith as a ground for nullity of a mark.

3. Copyright

New Zealand

Sealegs' Amphibious Crafts Constitute Copyright Material and Held to be Infringed
In Sealegs International Limited v Zhang [2018] NZHC 1724 the Judge upheld Sealegs’ claim of copyright infringement against several defendants in relation to its retractable wheel system for amphibious crafts.

The Judge was satisfied that the prototype boats for Sealegs’ retractable amphibious system are original artistic works that constitute a novel and unique arrangement of features for which copyright protection can exist. The Judge therefore rejected the defendant’s submission that the later produced CAD model was the original work. Further, the original expression of the idea of a retractable amphibious system was held not to exist until the respective prototypes were created, with the prior sketches and drawings merely being design work undertaken in the course of a design pathway having the objective of the creation of a final prototype. Where such preliminary design work was undertaken by third parties, the Judge was satisfied that this was done on a commissioning basis meaning that Sealegs owned the copyright therein.

The Judge’s infringement analysis was made using the sequential three step test of objective similarity, causal connection and substantiality, while also noting that the addition of original material to an infringing copy does not make a work non-infringing.

On a visual appearance basis the Judge found the defendant’s designs to be objectively similar, and in doing so declined to separate out the functional constraints on the basis that the separation of functional constraints is only relevant to the second and third steps.

The Judge held that causal connection was established on the basis of some of the defendant’s prior employment by Sealegs and the lack of evidence of an independent design path. Further, the evidence showed that the defendants started with and sought to improve upon Sealegs’ amphibious system while avoiding infringement of Sealegs patent, but in doing so did not also consider liability for copyright infringement. While the defendant’s system introduced some differences, the Judge found these to be dependent upon the underlying core features of the Sealegs’ system rather being evidence of an independent design path. The defendant’s attempts to establish an independent design path was further found to be implausible given that the lack of evidence of early concept design contrasted with the high level of documentation for the design features that the defendant’s introduced. The Judge also held that the causal connection could not be explained away by appealing to functional constraints that dictate design. The claimed functional constraints do not apply to all amphibious systems, but rather only apply if the unique arrangement of features used by Sealegs is used.

The Judge found that the defendants appropriated the core design concepts and features of the Sealegs system and in doing so copied a substantial part of works in which Sealegs has copyright. Hence, given the findings on objective similarity, causal connection and substantiality, copyright infringement was established. The Judge granted Sealegs a worldwide injunction preventing the majority of the defendants from infringing Sealegs’ copyright and from manufacturing, displaying, offering for sale or selling copies of Sealegs’ copyright works or the Orion S25 Crafts.

However, the Judge found that Sealegs’ New Zealand registered design had not been infringed. The Judge noted both similarities and differences between the registered design and the defendants product to the effect that while the two are broadly similar they are not substantially the same in appearance. In particular when the rear legs and wheels of the registered design are retracted they are substantially covered and enclosed, while the Defendants wheels remain entirely visible when retracted. The Judge was not swayed by Sealegs’ submission that the degree of novelty of its design should effectively give it a wide monopoly.