08 February 2017

Case Note: Jushi Group Co Ltd v OCV Intellectual Capital LLC

Strands of Glass Fibres
Author NoiseD
Source Wikipedia
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Jane Lambert

Jushi Group Co Ltd v OCV Intellectual Capital LLC [2017] EWHC 171 (IPEC) (06 Feb 2017) 

This was a claim by the Jushi Group Co. Ltd. ("Jushi") for declarations of invalidity and non-infringement and the revocation of European patent number 1 831 118 for glass yarns for reinforcing organic and/or inorganic materials. The patentee, OCV Intellectual Capital LLC (a subsidiary of Owens Corning) ("OCV"), counterclaimed for infringement of the patent. Jushi admitted infringement if the patent was valid. The only issue to be determined was whether the patent was valid. The action came on before His Honour Judge Hacon on the 5 and 6 Dec 2016. His Honour delivered judgment on 6 Feb 2017.

The InventionThe patented invention was a glass strand comprising 12 listed constituents, each being present in prescribed percentages by weight, with the further feature that 3 of those constituents taken in combination must constitute at least 23% of the total by weight.  The purpose of the invention was to provide glass reinforcement strands that combine the mechanical properties of reinforced glass, in particular, its stiffness, with improved melting and fiberizing properties, approaching those of electrical grade glass. Its advantage was that it could be produced more economically than strands of similar thickness.

The Action
The action was brought under s.72 (1) (a) of the Patents Act 1977. Jushi alleged that claims 1, 4, 5 and 6 of the invention were not new or were obvious. S.2 (1) of the Act provides that an invention is new if it does not form part of the state of the art. To succeed on this ground a claimant has to prove that an earlier invention or other prior art anticipated the invention. As Lord Hoffmann had put it in Synthon BV v. Smithkline Beecham plc [2006] 1 All ER 685, [2005] UKHL 59, [2006] RPC 10: 
"the matter relied upon as prior art must disclose subject-matter which, if performed, would necessarily result in an infringement of the patent."
As for obviousness, a patent will be granted only if it involves an inventive step and s.3 provides that "an invention shall be taken to involve an inventive step if it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art." For both anticipation and obviousness, it is necessary for a claimant to identify some prior art. To determine whether an invention was obvious the court must also consider the skills and knowledge of a skilled addressee or person skilled in the art.

The Prior Art
The prior art on which Jushi relied was US patent number 4,199,364 for a glass composition invented by Homer E Neely.

The Skilled Address
The judge held at para [38] that the skilled addressee was an engineer with experience in the manufacture of glass fibre, with a degree in chemistry, materials science or chemical engineering. 

Common General Knowledge
The parties agreed that common general knowledge would include the contents of three standard texts.

The Claims
Claim 1 of OCV's patent claimed:
"1. A glass reinforcement strand whose composition comprises the following constituents in the limits defined below, expressed as percentages by weight:
SiO 2
Al 2O 3
≤ 2, preferably ≥1.3
Li 2O
0.1-0.8%, preferably ≤ 0.6%
BaO + SrO
B 2O 3
TiO 2
Na 2O + K 2O
˂ 2%
F 2
Fe 2O 3
˂ 1%

wherein the composition has an Al 2O 3 + MgO + Li 2O content equal to 23% or higher."
In addition to claim 1, three dependent claims were in issue:
  • Claims 4 and 5 were each characterized by a specified weight ratio for Al 2O 3 / (Al 2O 3 + CaO + MgO). 
  • Claim 6 was similar form to claim 1 but with most of the ranges for the constituents were narrower. 
Neely's Patent
Neely had disclosed a boron-free and fluorine-free glass composition for producing glass fibres. His invention provided fibres with the mechanical properties of both electric grade glass and '621' glass, a type of glass from an alternative categorization with properties similar to electric grade glass.  The general composition of Neely's glass was as follows:
"Table IV
SiO 2
Al 2O 3
Na 2O
Li 2O

The specification added:
"In the glass composition of Table IV other substituents may also be present in small amounts typically below 1 percent each. In general, Fe 2O 3 is present in quantities of 0.1 to 0.5 percent, TiO 2 between 0.2 to 0.8 percent, K 2O between 0.1 and 0.5 percent and also if the glass composition desired is only a boron-free composition, then a small amount of fluorine up to 1 weight percent can be used in the composition."
The judge found at para [22] of his judgment:
"The 12 constituents in claim 1 of the Patent are either listed in Table IV of Neely or in the passage quoted above. Alternatively their % content as disclosed by Neely can be calculated from figures given. Likewise, Neely's (Al 2O 3 + MgO + Li 2O) content can be calculated, as can the weight ratio of Al 2O 3 / (Al 2O 3 + CaO + MgO), relevant to claims 4 and 5 of the Patent."
It was common ground that the range of each of the constituents in Table IV of Neely either fell within or overlapped the corresponding ranges of claims 1, 4, 5 and 6 of the Patent. Neely also disclosed preferred embodiments with narrower ranges.  Neely disclosed 6 specific examples of his glass, that is to say, 6 glass fibres having constituents present in precisely stated percentages, as opposed to ranges, and one comparative example. None of the 6 examples had constituents with ranges that all fell within the corresponding range specified in claim 1 of OCV's patent. Examples 1 and 5 came closest.


Jushi argued that example 5 of Neely anticipated claim 1 of the patent.  The judge did not accept that contention. He said at para [60]:
"In my view the short point is that the skilled person would not just dismiss the statement in the Patent that example 5 of Neely is a comparative example. Whatever else the skilled person might conclude about claim 1, he would be clear that it was not intended by the patentee to cover example 5 of Neely. This might influence the skilled person's view of how numbered ranges stated in the Patent are to be interpreted. I do not, anyway, accept that a Patent can lack novelty over an example expressly stated in the specification to be a comparative example where it is possible to construe the claims such that they are not anticipated by the comparative example. The allegation of lack of novelty of claim 1 over example 5 of Neely fails."
Jushi's alternative argument was that since the range of fibres falling within claim 1 overlapped the range falling within Neely, claim 1 lacked novelty.  In  T 26/85 TOSHIBA/Thickness of Magnetic Layers [1990] E.P.O.R. 267, the Technical Board of Appeal had said at para [9]:

"It appears to the Board, therefore, that a realistic approach in assessing the novelty of the invention under examination over the prior art in a case where overlapping ranges of a certain parameter exist, would be to consider whether the person skilled in the art would in the light of the technical facts seriously contemplate applying the teachings of the prior art document in the range of overlap. If it can be fairly assumed that he would do so it must be concluded that no novelty exists."
Judge Hacon adopted that approach for the reasons set out in paras [68] to [70]:
"[68] Looking at cases of overlapping ranges more generally, it is possible to envisage a spectrum of possibilities. At one extreme, the range claimed in a patent in suit could overlap that claimed in the prior art document almost entirely. At the other extreme there may be only a very small area of overlap. With very great respect for the reasoning of Floyd J (as he then was), for my part, I am not confident that where there is, say, 99% overlap, the invention of the patent in suit still lacks novelty over the prior art because it cannot be said with certainty that the skilled person would perform the prior art in conformity with 99% of the range disclosed - he might go for the other 1%. I think it could be said that in such a case there is disclosure of embodiments of the invention, i.e. those which are performed using any part of 99% of the prior art range. If any of those embodiments were performed, it must result in the patent being infringed (to echo the language of Lord Hoffmann).
[69] Where the overlap is more modest, one might well imagine that there comes a point at which the prior art does not deprive the invention of novelty. Take the example of only 1% overlap. It is still true that if the embodiment or embodiments in the 1% area of overlap are reproduced, the invention of the later patent will inevitably be performed. However, the smaller the overlap, the more likely it is that this part of the prior art disclosure is "so submerged in it as not to be available" (see Lundbeck at [88](b) and T 666/89). There will come a point at which the prior art does not anticipate the patent.
[70] If so, there must be a criterion to distinguish those circumstances in which an overlap deprives an invention of novelty from those circumstances in which it does not. Apparently with this in mind, the TBA devised the criterion of whether the skilled person would seriously contemplate applying the teaching of the prior art document in the range of overlap."
After considering the expert evidence, His Honour concluded at [83] that he did not know the extent of the overlap between Table IV and claim 1 but, more importantly, he was not satisfied that it had been shown that the skilled person would seriously contemplate making fibreglass according to the teaching of Table IV within that area of overlap, and thus within claim 1. It followed that claim 1 of the patent did not lack novelty over Neely's Table IV. The same was true of claim 6.

Jushi argued that a variation of the constituents in example 5 of Neely's patent bu plus or minus 6% would bring the skilled addressee within claims 1 and 6. OCV retorted that there was no reason why he should wish to try such variation. The judge was unpersuaded.  He said at [86]:
"In my view it was not shown on the evidence that the skilled person would regard changes in either example 1 or 5 of Neely - changes sufficient to bring the composition within the scope of claim 1 or claim 6 of the Patent - as workshop modifications. Research, with no pre-conceived expectation of success, would have been required to test whether such variations provided satisfactory glass fibre."
Nor was he persuaded that the table in claim 1 was obvious over that of Table  IV of Neeley.  In the course of argument, OCV had contended that its patent could be justified as its invention was a selection invention. That would have been important had its defence on novelty and obviousness failed, In that case, the judge would have agreed that the invention was at least in part a selection invention. However, it was not necessary for him to decide the point as OCV had successfully resisted the attack on the validity of its patent.

Judge Hacon dismissed Sushi's claim for declarations of invalidity and non-infringement and revocation and allowed the counterclaim for infringement in the light of Jushi's admission mentioned in the first paragraph.

This is a significant decision in that it imports the Technical Board of Appeal's doctrine on overlapping ranges into English law and gives the skilled addressee a role in determining novelty questions as well as those on obviousness and insufficiency. It also conflicts with Mr Justice Floyd's dicta in H. Lundbeck A/S v Norpharma SpA [2011] RPC 23, [2011] EWHC 907 (Pat) rejecting that approach. However, Judge Hacon's reasons set out in paras [68] to [70] are compelling and I should be surprised if they are overturned on appeal or simply not followed.

Should amplification or clarification of any point be required, I should be glad to take calls on +44  (0)20 7404 5252 during office hours or respond to messages through my contact form.

25 January 2017

Patents: Wobben v Siemens - Blowing in the Wind

Offshore Wind Farm
Photo Anke Hueper
Source Wikipedia
Creative Commons Licence

Jane Lambert

Wobben Properties GmbH v Siemens Public Ltd Company and Others [2017] EWCA Civ 5 (19 Jan 2017)

The claimant company, Wobben Properties GmbH is the registered proprietor of European patent  EP0847496 for a method of operating a wind power station.  The invention is described as follows:
"The invention pertains to a method of operating a wind power station, especially to limit the load on a wind power station, preferably a pitch-controlled wind power station. The invention also pertains to a corresponding wind power station. The invention is designed to increase the output of a wind power station and yet limit the load on the wind power station at very high wind velocities. This is accomplished by reducing the power of the wind power station as a function of wind velocity as of a predetermined wind velocity, preferably by reducing the operating velocity of the rotor of the wind power station when a wind appears with a wind velocity above a maximum wind velocity or maximum velocity in the blower stream."
The patent specification is very short and consists of four claims:
  1. "Method of operating a wind turbine with pitch control, in which the power of the wind turbine as well as the operating speed of the rotor is continuously reduced when a wind velocity is reached which is in danger of overloading the wind turbine, in dependence on the rise in the wind velocity or incident-stream velocity.
  2. Method according to Claim 1, characterized in that the operating speed (n) of the rotor is reduced such that the load level acting on the rotor of the wind turbine remains approximately constant or is reduced when the wind velocity rises above the wind velocity which is in danger of producing overloading.
  3. Method according to Claim 1 or 2, characterized in that the reduction in operating speed is associated with a change in power matched to the load level.
  4. Wind turbine with pitch control, characterized by a means for automatic power and rotor-speed reduction when a wind velocity is reached which is in danger of overloading the wind turbine, in dependence on the rise in the wind velocity or incident-stream velocity or the true or relative wind velocity."
Wobben accused Siemens Plc and its subsidiaries ("Siemens") of infringing claims 1 and 4 by installing wind turbines in the UK. In particular, the off-shore sites at the London Array, Westermost Rough and Gunfleet Sands.  Wobben estimated the value of its claim in the order of £13 mn. Siemens denied infringement and contended that the patent was invalid for anticipation and obviousness.

The Trial
The action came on before Mr Justice Birss in Wobben Properties GmbH v Siemens Plc and Others [2015] EWHC 2114 (Pat) (20 July 2015). After a 6 day trial, His Lordship concluded at para [211]  that the patent was invalid and would not have been infringed even if it had been valid.

The Appeal
Wobben appealed with the permission of Mr Justice Birss contending:
"that the judge wrongly directed himself as to the legal test for obviousness and made a series of fundamental errors in assessing the evidence of the expert witnesses. It also argues that the judge erred in assessing infringement and made findings which had no basis in the evidence. Siemens responds that the judge's findings are properly supported by the evidence and are correct, essentially for the reasons that he gave."
The appeal was heard by Lords Justices Longmore, Kitchin and Floyd.

The Judgment
The Court of Appeal unanimously dismissed the appeal.

Delivering the lead judgment, Lord Justice Kitchin summarized the technical background and the common general knowledge between paras [7] and [23] and the teaching of the patent between paras [24] and [32].

Turning to the question of obviousness, the learned Lord Justice considered the prior art relied on by Siemens which was an article by Dr Ervin Bossanyi entitled "Probabilities of sudden drop in power from a wind turbine cluster" which had been published in 1982 ("Bossanyi") between paras [33] and [47] and the judges findings between paras [48] and [59]. He summarized the appellants' argument between paras [60] and [71] and considered them in paras [72] and [81]. He said at para [82]:

"In my judgment the judge was entitled to hold that the skilled person given Bossanyi in 1995 would consider implementing it on a VSVP machine and so would think about how to implement the ramp down above the normal shut down speed. That requires the power to be reduced as the wind speed increases and the skilled person would appreciate that this could be achieved by keeping the torque constant and reducing the rotor speed; by reducing the torque and keeping the rotor speed constant; or by reducing both the torque and the rotor speed. These findings had a proper basis in the evidence and the judge has made no error of principle in his reasoning. Mr Silverleaf has not established any ground upon which it would be appropriate for this court to interfere with the judge's evaluation of the evidence or to set about re-evaluating that evidence for itself."
Lord Justice Kitchin then considered infringement.  At para [32] he had summarized Mr Justice Birss's construction of claim 1 as follows:
"First, the claim covers any suitable measure of wind speed. Secondly, the claim calls for a dependency between the reduction in rotor speed and the rise in wind speed. To satisfy the claim, there must be a causal relationship between the rotor speed and the wind speed. So also, there must be a causal relationship between the power of the turbine and the wind speed. Finally, the claim covers a method in which two different approaches to determining wind speed are used, one to control power and the other to control the rotor speed."
He then considered the evidence that had been before the trial judge and the reasons for his finding that the claim had not been infringed.

Wobben had alleged that Siemens's variable speed, variable pitch ("VSVP") turbines infringed the patents by High Wind Ride Through (HWRT) which reduces the speed of rotation and the power output of the turbine in high-speed wind conditions. At para [108] Lord Justice Kitchin observed that at the end of the day the case was concerned with the operation of HWRT and whether it may fairly be said that the operating speed of the rotor is continuously reduced in dependence upon the rise in the wind speed. That required a consideration of both the way in which and the level at which the control algorithms in HWRT work. Lord Justice Kitchin believed that the judge was entitled and indeed right to find that HWRT reduces rotor speed in dependence upon a rise in filtered rotor acceleration and that it does so to protect the turbine from dynamic loads associated with accelerations and decelerations. It followed that HWRT was not using filtered rotor acceleration as a surrogate for wind speed and was therefore not infringing claim 1 or indeed claim 4.

Lord Justices Floyd and Longmore agreed with Lord Justice Kitchin.

There was no dispute between the parties as to the law to be applied. The leading authorities on anticipation, obviousness and the construction of claims were considered at first instance and the judge's analysis was impliedly confirmed on appeal.  Anyone looking for an exposition of those doctrines could do worse than look at Mr Justice Birss's judgment. The analysis of the facts and the construction of the claims were, of course, specific to this appeal.

Should anyone wish to discuss this case or patent law in general, he or she may call me on 020 7404 5252 during office hours or send me a message through my contact form.

19 January 2017

Case Note: Bhayani v Taylor Bracewell LLP - Goodwill generated by a Partner or Employee

Jane Lambert

Bhayani and Another v Taylor Bracewell LLP [2016] EWHC 3360 (IPEC) (22 Dec 2016)

In Reckitt and Colman Products Ltd v Borden Inc, and Others[1990] 1 WLR 491, [1990] RPC 341, [1990] 1 All ER 873, [1990] WLR 491, [1990] UKHL 12 discussed the elements of an action for passing off. The first of those elements was
 "a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying "get-up" (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services."
His Honour Judge Hacon considered that element in the above-mentioned case

This was an application by Taylor Bracewell LLP for summary judgment in, or, alternatively, the striking out of, a passing off action that had been brought against it by its former fee earner, Jay Bhayani, and her law firm, Bhayani Law Limited.

Ms Bhayani is a solicitor specializing in employment law. The judge observed that it was common ground that she was "an employment lawyer of some note in Sheffield." Taylor Bracewell wanted to open an office in Sheffield with an employment law department. In 2011 it offered to employ Ms Bhayani as a salaried partner in charge of an office in Sheffield from where the firm was to carry on business in the name or style of 'Bhayani Bracewell'.

On 14 Feb 2014 Taylor Bracewell applied to register

as a British trade mark for a wide range of services in classes 35 and 45 under registration number UK3042588.

The parties fell out and Ms, Bhayani left Taylor Bracewell on 17 Oct 2014. For a while, it continued to practise from Sheffield in the name or style of 'Bhayani Bracewell'. Ms Bhayani sued Taylor Bracewell alleging:
"that by use of the 'Bhayani Bracewell' name Taylor Bracewell has falsely represented that Ms Bhayani is still involved with their business and has thus passed off its services, particularly its employment law services, as being those of Ms Bhayani. The claimants allege further and more specific acts of passing off: that Taylor Bracewell has (i) stated that Ms Bhayani is still a team member on pages of the Website and on the website hosted at www.taylorbracewell.co.uk, (ii) kept a voicemail message recorded by Ms Bhayani which clients are liable to access out of hours, (iii) told a Mr Greaves of AAG Systems Ltd that Ms Bhayani was still carrying out work for Taylor Bracewell, (iv) maintained a Google business account in relation to 'Bhayani Bracewell', (v) used the Domain Name and refused to surrender it and (vi) used the Trade Mark and refused to surrender it."

Ms Bhayani also claimed revocation of the trade mark under s.46 (1) (d) of the Trade Marks Act 1994.

Taylor Bracewell applied for summary judgment or a striking out on the following grounds:
"[20] First, Taylor Bracewell says that in law Ms Bhayani does not own goodwill to found a case in passing off. It is common ground that Ms Bhayani has never practised as a sole practitioner. Before she joined Taylor Bracewell she worked at a firm called Watson Esam, initially as an employee and then as an equity partner from 1996 to 2011. Mr Moss argued that any goodwill generated by her activities as a solicitor before October 2014 can only have vested in Watson Esam and subsequently in Taylor Bracewell. In each case the goodwill was associated only with those firms' respective trading names. Ms Bhayani has never owned any relevant goodwill herself.
[21] Secondly, on a correct construction of the 2014 Partnership Agreement Taylor Bracewell is entitled to use the trading name 'Bhayani Bracewell'.
[22] Thirdly, the contractual right to use that name means that the Trade Mark cannot be invalid pursuant to s.46(1)(d)."
In her reply, Ms Bhayani argued that
"[23] ...... the goodwill she generated while she worked at Watson Esam and Taylor Bracewell was associated with her own name and was at all times owned by her. Mr Keay submitted that in law it is not necessarily the case that goodwill generated by an employee or partner is vested in the employer or partnership, as the case may be. It will depend on the facts. Those facts have to be explored at trial.
[24] On a correct construction of the partnership agreements, Ms Bhayani's consent to use 'Bhayani Bracewell' terminated once she had left. To the extent that there was any doubt about that, the agreements have to be construed in the light of the relevant factual matrix, which should be left until trial.
[25] Finally, even if Taylor Bracewell were to own the relevant goodwill, its use of the 'Bhayani Bracewell' name and other representations that Ms Bhayani was still part of the firm rendered the Trade Mark liable to deceive the public."
The case thus turned on whether Ms, Bhayani or her former employer owned such goodwill as may have been generated by her activities as a solicitor in relation to the "Bhayani Bracewell" name. The judge first drew a distinction between reputation and goodwillH:
"[26] During the course of her career at Watson Esam Ms Bhayani acquired a significant reputation, particularly in the Yorkshire area, as a solicitor with a high level of expertise in the field of employment law. It is not in dispute that reputation by itself does not found an action in passing off. The question is whether Ms Bhayani also acquired goodwill.
[27] Goodwill cannot in law subsist as a thing alone – it is indivisible from the business with which it is associated, see Star Industrial Co Ltd v Yap Kwee Kor [1976] FSR 256, at 259, recently endorsed by the Supreme Court in Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31; [2015] FSR 29, at [23] and [51]-[52].
[27] This is to be distinguished from reputation which exists by itself. A solicitor celebrated for his or her expertise may enjoy the highest possible reputation and this will be personal, attaching only to that individual. But reputation alone cannot form the basis of an action for passing off, no matter how high the wattage of celebrity."
He then turned to whether Ms Bhayani, as opposed to her employer or partners, had acquired any goodwill by virtue of her activities.

Judge Hacon observed at para [29]:
"In the general run, goodwill generated by the acts of an employee will be vested in the employer, see Asprey & Garrard v WRA (Guns) [2002] FSR 31, at [36]; Kingston, Miller & Co. Ltd. v Thomas Kingston & Co. Ltd. (1912) 29 R.P.C. 289, at 295. Similarly, where an individual works in a partnership the goodwill generated by his acts will in the normal course vest in the partnership, see Leather Cloth Co. v American Leather Cloth Co. [1865] 11 H.L.C. 523."
However, there were exceptions. Ms Bhayani's counsel had argued that any person who acquires a reputation by carrying out acts under their own name, real or otherwise, generates actionable goodwill on which they can personally rely. It makes no difference whether the person is employed or works for a partnership.  The judge rejected that contention as contradicting well-established authority. He accepted Taylor Bracewell's contention that an employee or partner acquires goodwill only in respect of actvities outside the scope of the employer's or the partnership business and relied on Edmund Irvine Tidswell Ltd. v Talksport Ltd. [2002] FSR 60, [2002] EWHC 367 (Ch), [2002] 2 All ER 414, [2002] EMLR 32, (2002) 25(6) IPD 25039, [2002] 1 WLR 2355, [2002] WLR 2355, [2002] EWHC 367 for support. He said at para [38]:
"Mr Irvine was under contract with Ferrari. The terms of the contract were apparently not relevant and so not made clear, but even if it had been a contract of employment, it was unlikely that his duties were stated to include the endorsement of products under his own name. The business conducted by Mr Irvine in the field of endorsement was quite separate from his business as a racing driver. It generated a distinct goodwill which was his and on which he could found an action for passing off."
The judge concluded at paras [42] and [43] that as there were no special facts any goodwill in the  "Bhayani Bracewell" name accrued to the firm and not to Ms Bhayani. Moreover, even if he was wrong on the passing off point, the partnership agreements were sufficient to transfer the goodwill in the "Bhayani Bracewell" name to Taylor Bracewell.

Taylor Bracewell had argued that the same partnership agreements afforded a cast iron defence to a claim for revocation under s,46 (1) (d). His Honour was not persuaded and allowed that portion of the claim to go to trial.

Accordingly, he allowed the application in respect of the claim for passing off but not for revocation of the trade mark.

Should anyone wish to discuss this case, or passing off or trade mark law in general, he or she should call me on +44  (0)20 7404 5252 during office hours or send me a message through my contact form.

18 January 2017

Just where does Mrs May's Speech leave the Unified Patent Court?

Rt. Hon. Theresa May MP
Author: Home office
Source: Wikipedia
Creative Commons Licence

Jane Lambert

In her Lancaster House speech of the 17 Jan 2017 (the transcript of which can be found on The Independent's website) the Prime Minister acknowledged that "Britain might at times have been seen as an awkward member state" However, there is one policy upon which we have always been impeccably communautaire  That has been the scheme to establish a single European patent for the territories of all the EU member states with a single European patent court.

We were one of the few parties to ratify the Community Patent Convention in 1975 shortly after we joined the EEC. Ever since then our government has participated constructively in deliberations and negotiations both for a Community patent within the framework of the EU (see Community Patent on the Eur-Lex website) and a European patent litigation agreement ("EPLA") as an optional protocol to the European Patent Convention (see European Patent Litigation Agreement on the Wikipedia website).  The Gowers Review of Intellectual Property recommended the establishment of a unitary Community Patent (COMPAT) in 2006 to reduce substantially the cost of patent applications in Europe which were then twice as expensive as in the USA. Similarly, Professor Hargreaves urged the government to "attach the highest immediate priority to achieving a unified EU patent court and EU patent system, which promises significant economic benefits to UK business" (see page 8 of Digital Opportunity A Review of Intellectual Property and Growth May 2011).

The reason why different governments of different political parties have always supported these initiatives is that patent litigation is considerably more expensive in England and Wales than it is anywhere else. In The Enforcement of Patent Rights Nov 2003, the Intellectual Property Advisory Committee reported at page 50 that the cost of an action in the Patents Court was £1 million and between £150,000 and £250,000 in the Patents County Court compared to €30,000 - 50,000 in France, €25,000 - 50,000 for Germany and €10,000 - 20,000 for summary proceedings and €40,000 for a simple action in the Netherlands.  According to Taylor Wessing's Patent Map - European Litigation Guide typical first instance costs are between £200,000 and £1 million in England despite the changes to CPR Part 63 (see New Patents County Court Rules 31 Oct 2010) and nearly as much in Finland, France and Ireland but considerably less in Germany, the Netherlands, Italy and Spain while in Poland they are between €2,000 and €25,000 depending on the value of the claim.

The relatively high cost of enforcement in England is often cited as one of the reasons why the UK trails not just Germany and France in the number of European patent applications but also the Netherlands with one third of our population and Switzerland with one eighth.
European Patent Applications 2015
South Korea
Source: European Patent Office

A single European patent for the territories of the UK and the other EU member states with a single court would clearly level the playing field for businesses in the UK.

The initiative for the EPLA stalled in 2007 when the legal service of the European Parliament opined that such an agreement would breach art 292 of the Treaty of Rome. The proposal for an EU patent and patent court failed over a disagreement with Italy and Spain as to the languages that to be used in EU patent proceedings. The remaining member states including the UK decided to press ahead with a European patent for the territories of those states to be known as a unitary patent with a single court to be known as the Unified Patent Court ("UPC").  An Agreement on a Unified Patent Court was reached on 19 Feb 2013 and implementing regulations were adopted by the European Council.

As I reported in Preparing for the Unified Patent Court 23 Jan 2016 the British government acted with considerable alacrity:
"The United Kingdom ....... has passed primary legislation to enable the UK to ratify the agreement (see s.17 of the Intellectual Property Act 2014). The government has recently responded to to replies to a Technical Review and Call for Evidence on Secondary Legislation Implementing the Agreement on a Unified Patent Court and EU Regulations Establishing the Unitary Patent (see Government Response to the Technical Review and Call for Evidence on Secondary Legislation Implementing the Agreement on a Unified Patent Court and EU Regulations Establishing the Unitary Patent of 14 Jan 2016). It has also taken a lease to space in Aldgate Tower for the London section of the Central Division and the British Division of the Court of First Instance. Germany, the last of the three, is thought likely to ratify the UPC Agreement in September (see the interview of Wouter Pors of Bird & Bird by the Kluwer UPC News blogger on January 4, 2016, 2016: Countdown to the start of the Unified Patent Court Kluwer Patent Blog)."
Until the June referendum there was every chance that the UPC would open at the beginning of this year.

The result of the referendum has delayed the launch of the UPC and unitary patent but it has not killed it off altogether. On 28 Nov 2016 Lady Neville Rolfe, the former Minister for Intellectual Property, announced in UK signals green light to Unified Patent Court Agreement that:
"the UK will continue with preparations for ratification over the coming months. It will be working with the Preparatory Committee to bring the Unified Patent Court (UPC) into operation as soon as possible."
However, the problem for the UK is that art 84 (1) of the UPC Agreement makes clear it is open only to EU member states and that disputes shall be resolved ultimately by the Court of Justice of the European Union.

The Prime Minister did not address the question about what to do with the Unified Patent Court in her Lancaster House speech though she did include four short paragraphs into her 10th negotiating principle headed "The best place for science and innovation."  However, she did give two pointers in saying that the UK intends to renounce the jurisdiction of the Court of Justice upon its departure from the EU but nevertheless wishes to remain a close partner of the EU.

Mrs May's negotiating strategy seems to be to exit the EU altogether and then negotiate ad hoc arrangements on such matters as appear to be in both British and the remaining states' interests as she did with justice and crime when she was Home Secretary. That may be what she hopes to do about the UPC if it is on her agenda at all. The possibility of such an ad hoc agreement for the UPC was floated by Richard Gordon QC and Tom Pascoe who were consulted by the IP Federation, the Chartered Institute of Patent Attorneys and the Intellectual Property Lawyers Association.  However, they flagged up several difficulties and concluded that in the absence of such an agreement any divisions of the UPC in the UK would have to close.

Even though it seems likely that the UK will have to leave the UPC it is clearly in the interests of British business (as it is is also in the interests of American, Chinese, Japanese and Korean business) to promote the unitary patent and the UPC since it will reduce patent prosecution and enforcement costs. But if the UK excludes itself from the UPC and unitary patent by its renunciation of the jurisdiction of the jurisdiction of the Court of Justice it will make it very much harder for it to achieve the aim of being the best place for science and innovation.

25 November 2016


Victoria Plums
Author Rasbak
Source Wikipedia
Creative Commons Licence

Victoria Plum Ltd (t/a Victoria Plumb) v Victorian Plumbing Ltd and Others [2016] EWHC 2911 (Ch) (18 Nov 2016)  Mr Justice Henry Carr

In this case, Victoria Plum Ltd. had registered the words VICTORIA PLUMB as a UK trade mark in relation to a range of goods and services in classes 11, 20 and 35 under trade mark number 3,066,332. The specified services include:
"the bringing together, for the benefit of others, of…[bathroom items]… enabling customers to conveniently view and purchase those goods… via a website."
The question before Mr Justice Henry Carr was whether that trade mark was infringed by a process known as pay-per-click bidding.

Pay-Per-Click Bidding

Just about everyone who has ever used the internet will be familiar with Google, Yahoo and other search engines. Whenever a user wants to search the internet he or she enters search terms that the user thinks may be relevant into a slot on the search engine's web page and then clicks the "Search" symbol. Those search terms are known as "keywords" and search engine operators have found a way of making money out of them.

Whenever a user clicks a link to a website the website owner becomes liable to pay the search engine operator a sum of money.  That is what is known as "pay per click" (see the article on Pay-per-click in Wikipedia). The operators have developed software that enables advertisements containing pay-per-click links to be generated by typing keywords. Those advertisements appear on pages known as "search engine results pages" or "SERPS".  The position and prominence of such advertisements on a SERP depend on how much the advertiser wishes to pay for each keyword. Whoever is prepared to pay the most gets the best advertisement in the most prominent position. The price of each keyword is determined by the software through an automated online auction.

The process is perhaps better explained in this Wikipedia article:
"The advertiser signs a contract that allows them to compete against other advertisers in a private auction hosted by a publisher or, more commonly, an advertising network. Each advertiser informs the host of the maximum amount that he or she is willing to pay for a given ad spot (often based on a keyword), usually using online tools to do so. The auction plays out in an automated fashion every time a visitor triggers the ad spot.
When the ad spot is part of a search engine results page (SERP), the automated auction takes place whenever a search for the keyword that is being bid upon occurs. All bids for the keyword that target the searcher's Geo-location, the day and time of the search, etc. are then compared and the winner determined. In situations where there are multiple ad spots, a common occurrence on SERPs, there can be multiple winners whose positions on the page are influenced by the amount each has bid. The bid and Quality Score are used to give each advertiser's advert an ad rank. The ad with the highest ad rank shows up first. The predominant three match types for both Google and Bing are broad, exact and phrase match. Google also offers the broad modifier match type which differs from broad match in that the keyword must contain the actual keyword terms in any order and doesn't include relevant variations of the terms."
There is more information in paragraphs [23] to [29] of Mr Justice Henry Carr's judgment.

The Complaint

S.9 (1) of the Trade Marks Act 1994 confers on the registered proprietor of a trade mark "exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent." The next sub-paragraph of that section adds that the acts amounting to infringement, if done without the consent of the proprietor, are specified in s.10.  Subsection (4) of that section provides:
"For the purposes of this section a person uses a sign if, in particular, he-
(a). affixes it to goods or the packaging thereof;
(b). offers or exposes goods for sale, puts them on the market or stocks them for those purposes under the sign, or offers or supplies services under the sign;
(c). imports or exports goods under the sign; or
(d). uses the sign on business papers or in advertising."
Victorian Plumbing Ltd. had  bid quite considerable sums for the following keywords:
a) "victoria plumb" / "victoriaplumb";
b) "victoria plum"/ "victoriaplum";
c) "victorian plumb" / "victorianplumb";
d) "victorian plum" / "victorianplum"; 
When keyed into search engines those keywords generated advertisements with links to Victorian Plumbing's website. The claimant submitted that bidding for those keywords constituted use within the meaning of s.10 (4) and hence infringement of its trade mark in that each of those keywords was either identical or similar to that mark and used in respect of the same or similar goods and services.

The Defence

Victorian Plumbing could not deny that those search terms were identical or similar to the registered trade mark or that they were used in respect of the same or similar goods and services but it raised the defence of honest concurrent user which Mr Justice Henry Carr summarized at paras [13] and [14] of his judgment:
"[13] .............  The parties have traded for many years in a wide range of directly competing goods. It is self-evident that the parties' names are so similar that there is a likelihood of confusion on the part of the public between them. In spite of actual confusion, the parties have co-existed peaceably for many years, each trading, without complaint, on an increasing scale.
[14] They allege that the parties have, honestly, built up their respective businesses and reputations using confusingly similar names, over many years. Consequently, as a matter of law, they have to live with the resulting confusion. To those consumers who are confused, the Claimant's trade mark does not constitute a unique guarantee of origin. The Defendants have done nothing to exacerbate confusion. Bidding on the Claimant's trade mark as a keyword constitutes fair competition. It is less likely to cause confusion than, for example, the First Defendant's television advertising, about which the Claimant does not even try to complain."
Victorian Plumbing also relied on estoppel and acquiescence.

The Counterclaim

The learned judge noted at para [12] that:
"The Claimant has also bid on the First Defendant's name as a keyword. It ceased this activity in 2016. The Defendants claim that, as a result of this conduct, the Claimant is estopped from pursuing its claim of infringement of trade mark. Alternatively, it has pleaded a counterclaim for passing off, which it relies on solely as a "squeeze" in the event that its defences fail."
He added at [138]:
"The Defendants complain of the Claimant's bidding on the name "Victorian Plumbing" as a keyword, so as to cause the return of sponsored links containing the text "Victoria Plum(b)". They allege that if, contrary to their primary case, bidding by the First Defendant on the Victoria Plum(b) marks as keywords is an infringement, then the same is true of the Claimant's keyword bidding."
Director's Liability

The claimant also joined the first defendant's managing director, John Radcliffe, as a second defendant on the basis that he was a joint tortfeasor. It contended that  he had day-to-day control of his company's activities, that he maintained its website and dealt with making changes to it, that he was solely responsible for branding the site, that he undertook the majority of the search engine optimization work. that he nvested time and money into SEO and that until 2012 he was solely responsible for ad words campaigns.

The Issues

The issues that the judge had to decide were as follows:
  • whether bidding for the keywords constituted use within the meaning of s.10 (4);
  • whether the defence of "honest concurrent user" applied in a case such as this;
  • whether Mr Radcliffe was personally liable for his company's wrongdoing; and
  • whether the claimant was liable to the first defendant for passing off.
The Judgment

His Lordship held at [143]:
"i) The First Defendant is liable for infringement of trade mark of the Claimant's "Victoria Plum(b)" marks.
ii) The Second Defendant is not jointly liable with the First Defendant for infringement of trade mark.
iii) The First Defendant's counterclaim for passing off against the Claimant is successful."
Whether Pay-per-click Bidding infringes a Trade Mark

In Case C-236/08 Google France Sarl v Louis Vuitton Malletier SA  [2010] ECR I-2417, [2011] Bus LR 1, [2011] All ER (EC) 411, [2010] RPC 19, [2010] ETMR 30, 3 ALR Int'l 867, the Court of Justice of the European Union decided that bidding on a trade mark as a keyword could constitute use of a sign identical with that mark in the course of trade. However, the Court hinted in paras [82] to [90] of its judgment that might not always be the case. It was possible to envisage circumstances when bidding for a keyword might not indicate the origin of goods or services and hence not infringe.

The Court of Appeal considered Google France in Interflora Inc and another v Marks and Spencer Plc (Rev 1) [2014] EWCA Civ 1403 (5 Nov 2014), [2015] ETMR 5, [2015] FSR 10, [2014] WLR(D) 473, [2015] BUS LR 492. Lord Justice Kitchin noted at para [98]:
"… internet advertising using keywords which are identical to trade marks is not an inherently objectionable practice. On the contrary, its aim is, in general, to offer to internet users alternatives to the goods or services of trade mark proprietors and it is not the purpose of trade marks to protect their proprietors from fair competition"
After considering both cases Mr Justice Henry Carr and reconciled them as follows at para 51:
"In my view, the case law establishes the following:
") A user who searches by reference to a brand name is likely to be looking for that brand. In this context, there is a particular propensity for confusion if the resultant advertising is vague as to origin; Google France at [85]; Interflora at [132].
ii) This explains the particular emphasis on "transparency" in the judgment of the CJEU. The reason why transparency is necessary is to protect the consumer from unclear advertising which, in context, is liable to mislead; Google France at [86] – [87]; Interflora at [143].
iii) On the other hand, bidding on trade marks as keywords, where the advertiser ensures that his advertisements enable average internet users to ascertain whether the goods or services originate from the trade mark proprietor or an unconnected third-party, cannot be objected to; Google France at [57] – [59]; Interflora at [98]."
Earlier in his judgment at para [48] he distilled the following principles:
"In my judgment, it is necessary, first, to identify the signs complained of. These are 'Victoria Plumb' and trivial variations on that sign. This constitutes use of signs identical to, or immaterially different from, the Victoria Plum(b) marks. This is not use of the First Defendant's name 'Victorian Plumbing'. Secondly, it is necessary to ask whether such use is likely adversely to affect the origin function of the Claimant's trade marks (since, in the present case, is not alleged that any other function is adversely affected). If the answer to this second question is in the affirmative, then, subject to the various defences advanced by the defendants, there is infringement. If it is answered in the negative, then there is no infringement. This does not alter the fact that the First Defendant is using the Claimant's name, rather than its own name, in the keyword bidding complained of."
Applying that test to the facts of the case he found that the trade mark had been infringed.

Honest Concurrent User

Noting that there was no provision for the defence of honest concurrent user in Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks or indeed Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark, Mr Justrice Henry Carr explained that the doctrine derived from the CJEU's decision in Case C-482/09, Budejovicky Budvar NP v Anheuser-Busch Inc.  [2012] ETMR 2, [2012] RPC 11, [2011] EUECJ C-482/09, [2012] Bus LR 298 that:
"Article 4(1)(a) of Directive 89/104 must be interpreted as meaning that the proprietor of an earlier trade mark cannot obtain the cancellation of an identical later trade mark designating identical goods where there has been a long period of honest concurrent use of those two trade marks where, in circumstances such as those in the main proceedings, that use neither has nor is liable to have an adverse effect on the essential function of the trade mark which is to guarantee to consumers the origin of the goods or services."
That judgment was considered by the Court of Appeal upon receiving the CJEU's ruling and again in IPC Media Ltd v Media 10 Ltd [2014] EWCA Civ 1439 (12 Nov 2014).

After considering those cases, the judge concluded at [74]:

"i) Where two separate entities have co-existed for a long period, honestly using the same or closely similar names, the inevitable confusion that arises may have to be tolerated.
ii) This will be the case where the trade mark serves to indicate the goods or services of either of those entities, as opposed to one of them alone. In those circumstances, the guarantee of origin of the claimant's trade mark is not impaired by the defendant's use, because the trade mark does not denote the claimant alone.
iii) However, the defendant must not take steps which exacerbate the level of confusion beyond that which is inevitable and so encroach upon the claimant's goodwill."
A crucial element of that defence was honesty and that had to be assessed as follows:
"i) The defendant has a duty to act fairly in relation to the legitimate interests of the trade mark proprietor.
ii) All circumstances must be considered when ascertaining whether or not the use by the defendant is honest, including whether the defendant can be regarded as unfairly competing with the trade mark proprietor.
iii) However, the question is not simply whether use of the sign complained of gives rise to consumer deception, as such deception may have to be tolerated. Similarly, the defendant may well be aware of the existence of such confusion, having lived with it for a considerable period.
iv) The question is whether the defendant has taken steps which exacerbate the level of confusion beyond that which is inevitable and so has encroached upon the claimant's goodwill.
v) Whether the defendant ought to be aware that such steps will exacerbate confusion is a relevant factor."
His Lordship decided that the honest concurrent user defence could not apply when the parties used different trade marks . In any case, Victorian Plumbing had greatly increased its expenditure on keywords thereby greatly exacerbating the level of confusion.

Mr Radcliffe's Liability

The judge referred to Lord Neuberger's judgment in Sea Shepherd UK v Fish & Fish Ltd  [2015] 4 All ER 247, [2015] 2 WLR 694, [2015] WLR(D) 102, [2015] 1 AC 1229, [2015] UKSC 10, [2015] 1 Lloyd's Rep 593, [2015] 2 All ER (Comm) 867, [2015] AC 1229 where he identified three conditions for joint liability:
"First that he has assisted in the commission of the tort by another person; second, that it is pursuant to a common design; and third, an act is done which is, or turned out to be tortious."
In his Lordship's view the first and second conditions had not been satisfied:
"The acts complained of were not commenced until the end of 2012 and Mr Radcliffe's knowledge of and involvement in these acts was at a very high level of generality. He mistakenly claimed during his oral evidence that the First Defendant was still using the Victoria Plumbing ad format, although this was clearly incorrect. This shows his lack of involvement in the First Defendant's keyword advertising. The Claimant submits that because Mr Radcliffe stated in cross-examination that he took full responsibility for all actions of his staff, and had regular meetings with Mr Pascoe to discuss the success of the bidding campaign, this is sufficient to show a common design. I disagree. Mr Radcliffe was fulfilling his responsibilities as Managing Director but was not sufficiently involved in the acts complained of by the First Defendant for joint liability to be established."
This reasoning suggests quite a narrowing of scope for holding directors personally liable for their company's IP infringements since the Court of Appeal's decision in  MCA Records Inc and another v Charly Records Ltd and Others [2003] 1 BCLC 93, [2002] FSR 26, [2002] ECDR 37, [2001] EWCA Civ 1441, [2002] EMLR 1, [2002] BCC 650.

Claimant's Keyword Bidding

Victoria Plumb began to bid on Victorian Plumbing's name, initially in May 2011 and then on a more substantial scale in August 2012. That bidding continued until 2016. Victorian Plumbing and Mr Radcliffe argued that against the background of long-standing and peaceable coexistence of the parties' businesses, a reasonable party in their position would have understood the other side as positively indicating that it did not object to their bidding on its trade marks as keywords and that in the light of that representation, it would be unfair to allow the claimant to complain about those acts.  The judge rejected that contention on the ground that the claimant's conduct did not amount to a representation and, even if it did, the defendants never relied on it.

However, the claimant's bidding did amount to passing off.  The judge was satisfied that the first defendant had goodwill in the Victorian Plumbing name and that bidding for those keywords was a misrepresentation. In the circumstances, damage could be inferred. The counterclaim therefore succeeded.


This is an important decision on three difficult points of law, namely:
  • when keyword bidding infringes a trade mark and amounts to passing off;
  • whether the honest concurrent user defence applies under the 1994 Act; and
  • when a director can be personally liable for the wrongdoing of his company.
It is likely to be quoted frequently in skeleton arguments as well as case notes and articles. Should anyone wish to discuss this case or trade marks and passing off generally, he or she should call me on +44 (0)20 7404 5252 or send me a message through my contact form.