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LICENSING EXECUTIVES SOCIETYBritain and IrelandNEWS EXCHANGE
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Radical Change In Competition Law Threatens Technology Transfer.Commission proposals
What is happening?
The intention is admirable, but the result is legislation that erodes the benefits of the underlying intellectual property, only covers transfers of technology that is ready for immediate commercial production, and creates a great deal of uncertainty because it is difficult to apply it in a licensing context. Some of the more important problem areas
The new exemption will not cover licences of technology that needs any further research and development before bringing licensed products to the market. This means that unless the agreement covers some joint research and development, which is covered by another exemption, there will be no exemption available. Agreements between competitors who have a combined share on a relevant technology or product market that exceeds 20% will not be covered. If the parties are not competitors, and the individual share of each of the parties on the relevant market exceeds 30%, the agreement will fall outside the scope of the exemption. In many cases this information will simply be unavailable when the agreement is signed. However, the thresholds may be exceeded at a later stage, at which point the benefit of the exemption will be lost after a transitional period. If the market share exceeds the thresholds by 5% the exemption will continue to apply for a further two years, and if the market share exceeds those levels the exemption will continue to apply for a year. The effect overall
The drafting of the guidelines is also highly ambiguous in some areas, and even where it is clear you may need advice from both lawyers and economists. These problems, combined with the effect of the market share test, will increase the number of cases where comfort should be sought from the Commission .
What should you do?
Jennifer Pierce, Charles Russell
A number of LES B&I members together with Council members attended the LES USA and Canada Annual Meeting in San Diego, California at the end of September. A number of us also stayed on for the LESI international delegates meetings.
During the international delegates meeting Mel Jager handed responsibility to the new LESI President Jonas Gulliksson (LES Scandinavia). The President Elect is now Willy Manfroy who will be well known to many LES B&I members for his participation in our workshops and plenary sessions during the Annual Conferences. Barry Quest (LES Britain and Ireland) remains as Secretary to LESI. New LESI brochures are to be sent out to all members with Les Nouvelles to provide you with a broader description of LESI and LESI activities.
New LES societies are joining the network of members and those most recently adopted are LES Croatia, now being mentored by LES Austria, and LES India, now being mentored by LES ANZ. Both countries received their LESI flags at the San Diego international delegates meetings. The constitution of the most recent applicant, LES Chinese Taipei, is currently under review and it is expected that this society may be mentored by Japan.
For the first time during the San Diego meeting, LES USA and Canada hosted a successful commercial exhibition and provided well-controlled sponsorship opportunities for companies involved in licensing. The whole area of sponsorship is now under review and will be reported on at a later date for LES B&I.
At home you will probably have noticed that we are experimenting with different venues for our evening London meetings. It will probably take a few more weeks for us to find the most appropriate venue; please do contact me if you know of suitable venues for our meetings in London.
You will have noticed that our members have been deeply involved with the issues associated with the draft Technology Transfer Block Exemption and guidelines proposed by the European Commission at the end of September 03. I am grateful to those members who have spent time arranging meetings to convey the potential affects on our licensing activity if the proposed changes are adopted.
Please book your places at the LESI 2004 meetings in Paris as soon as possible; full details are available on the web site. Please also reserve February 12th 2004 for our Annual Savoy lunch when we are honored to have as our guest speaker Baroness Greenfield. There will also be a half-day, morning meeting before the lunch. Full details will be circulated shortly.
I wish you all a very Happy Christmas and health and happiness in the New Year.
Christi Mitchell,
Take advantage of the early payment rates!
The new LES membership forms will be mailed to you shortly. The rates for the year are as follows:
Those paying before 15th January 2004: £130.00
After that date: £150.00
From January 1st 2004 you will be able to renew your membership online by visiting our web site:
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Changes at the European Patent OfficeAlison Brimlow, Chief Executive (CE) of the UK Patent Office, will head the European Patent Office following an initial three year term by the French candidate, M. Alain Pompidou, son of the former French President. Alison Brimelow has announced that she will stand down as CE of the British Office in December 2003. She will stay in close touch with the EPO until she takes over from M. Pompidou. Ron Marchant, currently UK director of Patents, will take over as Chief Executive of the British Office. Ms Brimelow was born in Cuba, the daughter of a diplomat, attending schools in Washington, London and Moscow. She spent much of her youth behind the iron curtain. After her time at university, where she read European Studies, she worked at the British Embassy in Bonn and then spent 10 years at the DTI followed by two years as Deputy Director of the Cabinet Office Top Management Programme. In 1991 she joined the Patent Office. From 1997 to 1999 she went back to the DTI as Director of European & International Competition Policy, returning to the Patent Office in 1999. For further details please see: http://www.patent.gov.uk
Wrigley's Case Not So Fresh After ECJ DecisionThe long running saga over the registrability of DOUBLE MINT as a community trademark for chewing gum recently saw its latest instalment, with the European Court of Justice ("ECJ") overturning the decision of the Court of First Instance (the "CFI"). Wrigley's originally applied for a community trademark in March 1996 but the trademark office refused the registration on the basis that the mark was descriptive. The First Board of Appeal of the CTM office upheld this decision. They stated that the mark was a combination of two ordinary English words without any fanciful or imaginative element, which described certain characteristics of the goods for which it was to be registered. Therefore it fell foul of Article 7(1)(c) of the CTM regulation, which forbids registration of descriptive marks. Wrigley's appealed to the CFI. Giving the grounds for annulling the decision of the First Board of Appeal, the CFI stated that the purpose of Article 7(1)(c) was to prevent registration of signs which due to their purely descriptive nature were incapable of distinguishing the goods of one entity from another. However, signs the meaning of which went beyond exclusively descriptive were registrable. In this case, DOUBLE was an unusual adjective and when combined with MINT could mean either twice the mint or a combination of two types of mint. Therefore the mark was not exclusively descriptive and could be registered. The ECJ on appeal disagreed with the CFI's interpretation of Article 7(1)(c). The purpose of the provision was to ensure descriptive signs or indications relating to characteristics of the goods or services could be freely used by all. As such, a sign must be refused registration if at least one of its meanings designated a characteristic of the goods or services for which it was to be registered. It was made clear that the CFI had been wrong in law to hold that a sign had to be exclusively descriptive to fall within the ambit of Article 7(1)(c). The ECJ also reasserted from the "Baby-Dry" case that a term does not have to be in current descriptive use, provided that there is a reasonable likelihood that it may be in the future. The fact that there is more than one term which can be used to describe the product does not render the mark any less descriptive or objectionable. The case has now been referred back to the CFI for further judgment based on the ECJ's statement of how the Article should be interpreted. It is highly likely that the outcome of this will result in the final refusal of registration for DOUBLE MINT. This case appears to show the European courts pulling back from being over lenient with descriptive marks. It would seem that "Baby-Dry" was the high water mark and that any mark which cannot bring itself within the tests for registrability set down by that case as regards descriptiveness will only be registrable if it has become distinctive through use. Tracey Huxley
Top Zeta Jones And Douglas Get £,7500 For Affront To Their IPR In Historic JudgementIn the High Court on 7 November, the Douglases were awarded £3,750 each for the "distress" they suffered over the unauthorised use of their wedding pictures by Hello! magazine. OK! Magazine, who had the legitimate right to publish, got over £1 million commercial damages. The couple wanted £500,000 in commercial damages plus another £50,000 extra each for "personal distress", comparing the unauthorised use of the photographs as something akin to "burglary" where the victim was left with a sense of personal invasion of privacy and real distress. Since the action was decided in favour of the Douglases and OK! magazine on the basis of breach of commercial confidentiality, not 'privacy', the Court had to decide how much distress was caused by affront to their IPR rather than personal violation. OK! and the Douglases in a statement released afterwards described the awards as "historic damages." The 'distress' award raises the question of what would be appropriate for breach of IPR of a more permanent nature than the Douglases' transient confidentiality. Would the pain and suffering of trademark infringement be more distressing than that of breaking a patent? Will this now become a common additional ground for damages in IP actions? Hayley French
Top Stopping the counterfeiters: Arsenal and Rangers take a civil approachFootball clubs and players are now global brands. Manchester United have more fans in China than in the UK and when their star midfielder left to join Real Madrid, a large part of Beckham's transfer value was attributed not to what he would add to the team on the pitch, but to the anticipated increase in the sales of replica shirts. Recently, protection of that brand has become more urgent due to the well-publicised financial difficulties of the game as a whole. As players' transfer fees and wages rise and income from match attendance and TV rights fall, brands, which started out simply as a marginal revenue source, are now fundamental to survival of many clubs. Due to the rise in awareness by football clubs of the value of their intellectual property rights, many have developed sophisticated strategies to register, exploit and protect these rights. Despite the financial power and marketing muscle, it is ironic that these strategies have been seriously threatened by street traders, people who have neither of these attributes, trading in counterfeit merchandise from stalls often set up outside the club box. Until recently, clubs have preferred to rely on the criminal law to protect their brands against these counterfeiters. The police, in conjunction with trading standards, have provided the evidence, with the public prosecutors raising criminal proceedings. Where successful criminal proceedings are brought, street traders face fines and / or a prison sentence - on the face of it quite dissuasive. In practice, however, these penalties are not effective disincentives as the level of fines bear no correlation to the level of potential financial benefits. It is now more difficult for brand owners to rely on the criminal law. Counterfeiting must compete with other crimes which, in the eyes of many, are a more important use of public funds. Clubs have therefore looked for other ways of protecting their brands. Raising private criminal proceedings is one option in England (though it is nearly impossible in Scotland and rarely undertaken in England) but with this comes certain hurdles. The infringement must be proven beyond all reasonable doubt. Then, even where successful, the relatively minor fines and prison sentences remain the penalty. It now appears that a more cost effective, time saving and productive means of football clubs enforcing their rights against street traders is available through the civil courts, with clubs seeking financial compensation for lost revenue and damage to goodwill. In the civil courts the infringement needs only to be proven on the balance of probabilities. For this reason and the potential of being awarded damages, which may go some way to make up for lost revenue, more football clubs are bringing their claims in the civil courts. Arsenal - v - Reed*
Rangers- v- Penman
Having attempted unsuccessfully to resolve matters through criminal proceedings and enthused by the Court of Appeal's ruling in the Arsenal case, Rangers took matters into their own hands in the civil courts. The facts of the Rangers case are substantially similar to that of Arsenal. Rangers have a portfolio of registered trademarks including marks for the words "Rangers" and "the Gers" and for the club crest. Penman, a street trader, sold scarves, t-shirts and other football memorabilia bearing those registered trademarks outside Ibrox stadium. As with Arsenal, the case was brought, under Section 10 (1) of the Trademarks Act 1994, although this time in the Scottish courts. Section 10 (1) provides that a registered trademark may be infringed by using, in the course of trade, a sign which is identical with a registered trademark in relation to goods and services which are identical with those for which the mark is registered. Penman was selling standard football merchandise bearing Rangers' marks. Rangers quickly obtained interim interdict (injunction) preventing Penman from continuing to sell the infringing merchandise. Conclusion
Morven Shaw
The author wishes to express her thanks to Alistair Campbell, Brand Protection Manager, Rangers, for commenting on the draft of this article. * The Arsenal v Reed case has been covered extensively in past issues of News Exchange. See www.bi.les-europe.org for all past references.
Top Controversy Continues Over Massive U.S. Software Patent Damages AwardsPatent practitioners the world over have kept a close eye on the continuing development of substantive law and trial outcomes in the adjudication of United States business method and software algorithm patents. Although business method and software patents garnered great attention when the U.S. Patent Office first began allowing them in large numbers, the viability and value of such patents have been tested in litigation only more recently. As was evident from the widely-reported USD$35 million jury verdict1 in favour of MercExchange, L.L.C. against online merchant eBay this past spring, business method and other algorithm/software-based patents today seem to be the subject of steadily-increasing litigation, some of which has now advanced to verdicts and damages awards at the trial court level. More recently, in August of this year, Microsoft Corp. suffered a USD$521 million verdict2 against it for alleged infringement of a software patent asserting broad coverage to embedded programming functionality for Internet browsers (for instance, programming allowing access to plug-in applications or software applets through a web browser). The plaintiffs, the University of California and Eolas Technologies Inc. of Chicago, had initially asserted damages in excess of one billion dollars based on alleged infringement of their United States Patent No. 5,838,906. While the jury did not award plaintiffs the full per-browser royalty they had sought, it determined that plaintiffs were entitled to USD$1.47 for each of the 354 million copies of Microsoft Windows sold between 1998 and September, 2001. The Eolas verdict will be the subject of an appeal, but it illustrates the continuing emphasis patentees are placing on asserting (sometimes with notable success) their software and business method patents. Industry has taken note of the nascent trend toward massive verdicts by U.S. juries for alleged infringement of software patents, and, while industry participants may well be racing behind the scenes to shore up their own Internet patent portfolios, at least some major industry players have taken a strong public stance against such patents (usually by faulting the alleged inadequacy of the beleaguered U.S. Patent Office infrastructure for searching and examining software algorithm patents, and thus challenging the novelty and inventiveness of many issued software patents). Most recently, the World Wide Web Consortium ("W3C") (regarded by some as the creator and custodian of the Internet) has, on 28 October, 2003, lodged a formal request3 that the United States Patent Commissioner initiate a re-examination of the Eolas '906 patent, based upon citation of at least two previously uncited prior art references4 allegedly demonstrating embedding technology identical to that claimed by Eolas. Notably, W3C's strongly-worded filing places as much stress on the alleged severe disruptive effects of the Eolas '906 patent upon the global functionality and usefulness of the World Wide Web (especially its multimedia capabilities), and the standards therefore, as it does upon the technical prior art arguments. The Patent Office has not yet responded to W3C's arguments. With the stakes for software algorithm patents being as high as the MercExchange and Eolas cases have set them, the pressures brought to bear on all players, public and private, in the software patent prosecution, licensing, and litigation arenas will not likely decrease in the near future. Jeffrey D. Sullivan
Top IPR in Business
Monitored by Dr Hayley French
Top News from the RegionsLES Scottish Section - NewsThe sumptuous hospitality of the new Radisson SAS hotel in Glasgow (venue for the 2006 LES European Conference) was an excellent complement to the Scottish branch autumn event "The Counterfeit Challenge". This was, indeed, a challenging and illuminating evening, as we learned about the potential wider impact of those fake Gucci watches which our "friends" own from Asian jaunts, particularly with the stark facts that much counterfeiting is carried out by those involved in organised crime and that, as a result of the increased availability of counterfeit CDs and DVDs, a local WH Smith closed, with the loss of 15 real life jobs. The evening opened with Ian McDougall of NCR lifting the veil on the mysteries of counterfeit banknotes and their detection - with the US dollar and the Chinese RMB the most commonly forged notes, with the Euro being tipped to catch up soon. Many of us will never look at the foil from "KitKat" chocolate biscuits or cigarette wrappers in the same way. We also learned how those running economies take large amounts of notes out of circulation every year to prevent adverse effect on the currency value, and of the significant technical innovation and investment being carried out by NCR internationally to combat these activities. Robert Howat of Celtic Plc then provided an illuminating overview (together with a "guess the counterfeit" slot - most of us failed) of the challenges faced by companies on the coal face in this field. Shirts, scarves and more unusual merchandise bearing the trademarks CELTIC and/or the "Celtic Club Crest" are regularly counterfeited and sold outside football grounds (particularly in Celtic's own back yard at home games) but also by street traders, shops, wholesalers and over the Internet. Robert explained how Celtic deals with these challenges, combining the polite request, re-evaluating Celtic's own merchandising, approaches to Trading Standards with a view to seizure of goods and prosecution, liaising with other industry bodies and, if necessary, civil action for interdict (injunction) and financial remedy. Finally, John McGowan former police officer and now with the Federation Against Copyright Theft, spoke. John made an impassioned plea for assistance in this battle, mirroring his ongoing efforts through the media to raise the profile of copyright theft and counterfeiting, and of the need for this to be accorded higher priority both by law enforcement agencies and the criminal court system. He made it clear that not only do such activities adversely impact upon the creators and publishers of copyright works, with the resultant effect on innovation and the economy, but that such activities are now replacing narcotics as the new field for money laundering and exploitation by organised crime. This, combined with vivid social pictures such as the closure of WH Smith's and the use of children as "runners" to deliver goods and help avoid capture, made it clear that this issue involves much more than the simple concern of (legitimate) big business to maximise profits at the expense of the small time computer enthusiast. Altogether, the evening was a thought-provoking and quite scary look at counterfeiting on both the international stage and also its very direct and significant local and societal impacts. Abbe Brown, email: A.E.L.Brown@sms.ed.ac.uk The Scottish branch's next meeting is the annual Burns Supper with a difference, on 4 February 2004 at Dynamic Earth, Edinburgh. Book early for this very popular event.
North West RegionLES North West Region is holding its Christmas Meeting on Tuesday 2nd December in the Hurricane Bar and Grill Restaurant in Manchester. Known for selecting excellent eating places and fine speakers, the LES NW Region committee are certain that this is a Christmas event which should not be missed for all those within striking distance of Manchester! Barry Quest, December's speaker, will take you on a "romp" through the interesting, bizarre and exciting developments in intellectual property over the past year in which IP has hardly been out of the newspapers. The patent system is under attack and caused riots in Cancun; MEPs almost came to blows in the European Parliament over software inventions; the UK and France are at each others throats over the EPO; the ECJ sets precedents over Arsenal, which our judges don't like; personality and privacy rights are tested in the courts. These and other matters will be reviewed at break-neck speed by Barry, a long-time member of LES, current LESI Secretary, former President of LES B&I, current LES B&I Council Member, patent and trademark attorney and partner at Wilson Gunn and co-author of a text book on design law. Friends, family, colleagues and customers welcome - but book early! For further details please contact:
Top Hayley French - A ProfileCouncil member (and LES B&I web site Chair) Hayley French, has recently moved to join Bird & Bird's Life Sciences Group from Taylor Wessing, where she completed her training and qualified as a solicitor. After graduating with a B.Sc. and Ph.D. in microbiology, she developed her career by favouring intellectual property and the commercialisation of research rather than straight research. She took an MSc in intellectual property at Queen Mary and Westfield College and then, after a short period in the IP unit of the Ministry of Agriculture, Fisheries & Food she joined what was then University College London Ventures (UCLv), as a licensing executive. It was at UCLv that she met fellow council member Henry Connor who introduced her to licence negotiation and the LES. The focus of her work at UCLv was to approach potential licensees and to negotiate licences for UCL technology. She found the meetings organised by LES invaluable in terms of networking and education, especially at this early stage of her career. Just when she thought she had finished with exams Hayley decided to study to be a solicitor, whilst working as a senior licensing executive at UCLv. After completing her legal qualifications she joined the Centre for Applied Microbiology and Research (CAMR), Porton Down, as Head of Commercial Legal Affairs in 1999. (Anne Lane, another LES Council member, took over her position at UCLv). At CAMR she was involved with many interesting licensing deals involving pathogenic micro-organisms. During her time at CAMR, Hayley was elected to the Council of LES. Hayley's move to Bird & Bird has been an important professional move for her. Many of Bird & Bird's clients operate at the cutting edge of the Biotech industry and she is looking forward to advising on these innovative deals. As well as being Council member she is responsible for the LES Britain and Ireland web site (www.bi.les-europe.org) and the IPR in Business column in News Exchange, which is backed up with further information on the web site. The IPR in business section is an up to date information source for anyone involved in licensing and as well as case law we provide useful information such as government consultations, new legislation and funding programmes. We are continually looking to develop the web site into an important information tool for licensing professionals and we encourage members to make use of the site. As well as a Council member for LES, Hayley recently became a member of the "Worshipful Company of World Traders". The next step is for her to receive freedom of the City of London and then to become a liveryman. She believes this will be a fascinating opportunity to learn more about the great city of London and its traders. Outside work, Hayley has been trying to improve her golf and is known to enjoy going to Stamford Bridge, and further afield, to watch Chelsea Football Club "beat anyone". She relaxes with an occasional glass of wine!
Top Joint LES/CIPA Meeting - That Technology Transfer Block Exemption Again!Like many of you, I suspect, I was aware that a draft Technology Transfer Block Exemption had been issued by the Commission, but not of its implications! The joint CIPA/LES seminar was planned to enlighten us on this topic, with four speakers giving their views on the draft from different perspectives. The seminar opened in robust fashion with Professor Robert Lind giving us an economist's view. It quickly became apparent that, in his opinion, the draft was a radical departure from previously accepted positions and should not be adopted! The draft attacks three of the fundamental areas which give patents value, namely the ability to grant exclusive licences, impose territorial restrictions and impose field of use restrictions. He justified this position by a careful examination of the economic and legal principles behind competition law and patent licensing: in summary that licences should be able to convey the full monopoly rights granted by IP law, but not restrict competition beyond what is permitted by IP laws. The Commission appears to have decided that it is appropriate to trade off the value of IP against the supposed benefits of increased competition. At a more detailed level, there are significant implementational difficulties caused by the new market share provisions. Next, Aidan Robertson gave us a lawyer's view. Taking a historical perspective, the Commission has become gradually more anti-patent since 1962. Their main focus has been to remove artificial restrictions on the single market, and they tend to view IP as such a restriction. The new draft is intended to be more economically realistic with less emphasis on legal form. The black list of prohibited clauses remains, but as two lists depending on whether the agreement is between competitors. There is no white list, nor any opposition procedure. The draft guidelines were viewed as "not very helpful" and often "plain contradictory". His conclusion overall was that the draft is fundamentally flawed and unworkable, will have a significant chilling effect on licensing and significantly undermines other policies which attempt to make the EU a dynamic knowledge-led economy. Steven Preece, from the OFT, followed by giving us a regulator's view. He first explained the new functions of the OFT after the Competition Act. The main objective of the OFT is to make markets work well for consumers. With this in mind, he considered the draft. The OFT broadly welcomed the move away from a formalistic approach to one based on economic reality, and is quite happy with the abolition of black and white lists. However, there are still some questions and concerns, particularly in the areas of market share thresholds and their application, and field of use restrictions. In relation to limitations on field of use restrictions in licences, his view was that these can sometimes be pro-competitive, for example, if one company is better in one field of use and another company in another field. In summing up, he emphasised that the OFT greatly benefits from knowing what the future users think of the draft and would welcome discussions before comments are submitted to the Commission. The final speaker, Simon Davies, took a step back from the draft proposals to discuss the recent Rambus case from the USA, where Rambus ran into problems through their behaviour with standards bodies. The particular issue here was quite complex, but centred around Rambus promoting certain technologies which were incorporated into standards while not declaring their patent position. When Rambus sued Infineon for patent infringement, they were found guilty of fraud in relation to some of their activities (as well as litigation misconduct). This verdict was subsequently overturned by the CAFC, but serves as a warning to companies which are involved in standardisation activities. In conclusion, the seminar was enlightening and very worthwhile. My main criticism would be the lack of any balancing view attempting to support the Commission's draft (although the organisers recognised this problem and had tried to get a speaker from the Commission). Apart from one lone voice from the floor, the sentiment of both the panel and the audience was that the draft proposals were very worrying and could give rise to significant problems. Given the political momentum behind the proposals, everyone was encouraged to lobby in any way they could. Kevin Scott
Top LESI Meeting, San DiegoSeptember 2003 Key points:
Barry Quest,
Top 39th LES International Meeting39th LES International Meeting was held in San Diego, California on 26th & 27th September. The international meetings are packed with workshops and special interest groups. They are open to all LES members and are to be recommended, not only for the learning experience but for the business and networking opportunities. You would be surprised to find how many "deals" are done at these meetings. The next LESI meeting is in March 2004 in Paris, check the LES France website for further details:
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