12 October 2008

Practice: How will the Economic Downturn affect IP Practice

Regardless of whether the steps agreed in Paris today will work (see "EU chiefs confront markets crisis" BBC website 12 Oct 2008), markets will eventually stabilize. However, that is unlikely to be the end of the economic crisis as there is every indication of a downturn more prolonged and more severe than any that most IP practitioners have experienced in our working lives.    The purpose of IP is to protect investment in the branding, design, technology and creative works that give one supplier and edge over his or her competitors. As it can safely be assumed that overall demand for products and services generally is likely to slacken the question that I and no doubt many other practitioners have been considering is whether that will create more work for IP practitioners or less.

Views of Other Practitioners
Some IP practitioners seem quite bullish. According to Crain's, Ian Morris of Kuit Steinart Levy, said:
"the rest of the economy may be feeling nervous about a slump, but one of the winners of a downturn will be sharp-eyed intellectual property lawyers"
(Crain's Manchester Business, 
Credit crunch encourages more IP claims Crain's 8 Sep 2008).
Earlier in the year, Gordon Harris of Wragge & Co. said:
"IP, or at least contentious IP, is pretty recession-proof," he adds. "Unless you're really strapped for cash, you're going to fight something like a patent infringement. A lot of these cases are bet-the-company disputes."
(see Ben Moshinsky IP and TMT associates left behind in a promotion round to forget, 21 April 2008)
Similarly most of the respondent s to a recent poll by Bruce MacEwan of readers of his Adam Smith Esq. (a law firm economics blog) asking  whether the realignment of the top financial services institutions will fundamentally alter the long-term demand for legal services, expressed the view that demand for legal services would increase for one reason or another. A large part of the respondents replied flippantly "Why do I care? I'm a Litigator".

Are they Right?
As a practising member of the IP Bar I should love to believe that Ian and Gordon are right but their views are hard to reconcile with other indicators. The headline of the article that quoted Gordon Harris was "IP and TMT associates left behind in a promotion round to forget".   To make its point it contained a table showing that only 7 of the top 19 IP law firms had actually proposed IP and technology, media and telecommunications associates to partnership in 2008. The authoritative Thomson Reuters PeerMonitor Index reported softness in IP notwithstanding that it is usually a high growth area. Looking at the client base Bobbie Johnson reported imminent job losses at eBay and sharp falls in the prices of leading technology stocks in In "Credit crunch hits tech sector" (The Guardian 6 Oct 2008). Most of the items on ZDNet's Management Toolkit "How the credit crunch is hitting the IT industry" are pretty negative.

My Perspective
Like Ian and Gordon I am now quite busy. Busier than I have been for some time, in fact, because I have a number of cases that seem certain to go to trial because all the parties involved are taking the dispute personally. There will always be disputes where litigants will pay whatever it takes to have their day in court. But I think there will be fewer of them and here's why.

First, litigation will become much harder to fund. Because large sums of money have to be raised quickly at short notice many litigants have had to rely on their bankers. That is likely to become increasingly difficult and expensive. even after the banks are recapitalized and short term inter-bank lending is restored.   That is because depositors, shareholders and governments will expect banks to be far more conservative in their lending.

Secondly, reduced demand will lower revenue streams and hence the capital value of intellectual assets. The lower the asset value the less the incentive to litigate over it.

Thirdly, with the collapse of land values and share prices many defendants be less able to satisfy a judgment and hence less worth suing.

I think litigants will be much more ready to consider alternatives to litigation such as IP Office opinions on the validity of patents and whether they have been infringed and the Uniform Domain Name Dispute Resolution Policy.  I also expect that they will seek remedies in Continental Europe where enforcement costs are lower than in the UK or in the USA where contingency fees are available 

Finally, in view of public revulsion against massive bonuses for traders there is likely to be increasing resistance to very heavy brief fees and high hourly rates.

10 October 2008

Interim Injunctions: Les Laboratoires Servier v Apotex Inc

When an applicant other than the Crown seeks an interim injunction he or she has to promise the interim applications judge to compensate the injuncted party for any loss or damage that that party may suffer as a result of the injunction. In Les Laboratoires Servier and another v Apotex Inc and others [2008] EWHC 2347 Mr Justice Norris had to decide how much compensation should be paid to a generic drugs manufacturer who had been injuncted from infringing what turned out to have been an invalid patent for nearly a year   The principles that the judge discerned from previous decisions were as follows:
"(a) The undertaking is to be enforced according to its terms. In the instant case (as in many others) it is that Servier will comply with any order the court may make "if the court…finds that this Order has caused loss to the defendants." The question for me is therefore: what loss did the making of the Order and its continuation until discharge cause to Apotex?

(b) The approach is therefore essentially compensatory and not punitive;(c) The approach to assessment is generally regarded as that set out in the obiter observation of Lord Diplock in Hoffmann-La Roche v Secretary of State for Trade [1975] AC 295 at 361E namely:-
"The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the plaintiff and the defendant that the plaintiff would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction: see Smith v Day (1882) 21 Ch D 421 per Brett LJ at p427."

(d) What Apotex was trying to do (and what the Order restrained it from doing) was to enter a new market for the sale of generic perindopril. It was denied exploitation of this opportunity. The outcome of such exploitation is attended by many contingencies but Chaplin v Hicks [1911] 2 KB 786 establishes (per Vaughan Williams LJ at p.791) that whilst "the presence of all the contingencies on which the gaining of the prize might depend makes the calculation not only difficult but incapable of being carried out with certainty or precision" damages for the lost opportunity are assessable.

(e) The fact that certainty or precision is not possible does not mean that a principled approach cannot be attempted. The profits that Apotex would have made from its exploitation of the opportunity to sell generic perindopril depend in part upon the hypothetical actions of third parties (other potential market participants) and in part upon Servier's response to them. A principled approach in such circumstances requires Apotex first to establish on the balance of probabilities that the chance of making a profit was real and not fanciful: if that threshold is crossed then the second stage of the inquiry is to evaluate that substantial chance (see Allied Maples v Simmons & Simmons [1995] 1WLR 1602). As Lord Diplock explained in Mallett v McMonagle [1970] AC 166 at 176E-G

"…. in assessing damages which depend on its view as to what…. would have happened in the future if something had not happened in the past, the Court must make an estimate as to what are the chances that a particular thing….. would have happened and reflect those chances, whether they are more all less than even, in the amount of damages it awards…"

(f) The conventional method of undertaking this exercise is to assess damages on a particular hypothesis and then to adjust the award by reference to the percentage chance of the hypothesis occurring. In many cases it is sufficient to postulate one hypothesis and make one discount: but there is no reason in principle why one should not say that either Scenario 1 or Scenario 2 would have occurred and to discount them by different percentages. That is the course which Mr Watson QC urged in the present case: and I note that it has some support in Earl of Malmesbury v Strutt & Parker [2007] PNLR 570."

The judge found that the injunction had deprived the injuncted party of opportunities to entrench itself in the market. While the injunction was in force other generics manufacturers were able to prepare to enter the market. Consequently when the injunction was lifted trading conditions were considerably less favourable than they had been at the time of the order.  That was taken into account in the assessment. The judge was also pretty critical of the manner in which the applicant had sought its injunction and also of the way it resisted the enquiry.  His judgment for the injuncted party was £17.5 million in damages.

This decision is a very salutary reminder of the consequences of abusing intellectual property rights.   The purpose of IP is to encourage investment in brands, design, technology and creative works and not to perpetuate unjustifiable monopolies.

09 October 2008

IP Professionals: Law Society Initiative

I have just seen an interesting post about Professional Bodies by Barbara Cookson on the IP Solo Practitioners' blog which deserves as much publicity as it can get. The legal services industry is in for major changes once Part V of the Legal Services Act 2007 comes into force. 

Although most of my colleagues have yet to see it, specialist IP counsel have far more in common with excellent one person or small firms of patent agents like Filemot or indeed law firms like Pemberton Reid and James Love Legal or indeed Toni Tease in America than we do with the factory sets in Manchester or Liverpool or indeed they do with the mega law firms and rapidly expanding patent agents firms. That's why I set up IP Yorkshire which Barbara understood and kindly blogged in An Alternative Business Model based on Quality.

Software Patents: Here we go again

I have not yet had a chance properly to analyse the Court of Appeal's decision in Symbian Ltd v Comptroller General of Patents [2008] EWCA Civ 1066 (8 Oc 2008) but it looks to me as though the Court has rowed back a bit since Macrossan [2007] RPC 7, [2006] Info TLR 215, [2007] Bus LR 634, [2007] 1 All ER 225, [2006] EWCA Civ 1371 and that English jurisprudence is now closer to that of the EPO Technical Board of Appeal.

Referring to the Board's decision in Duns Licensing Associates LPT 0154/04 - 3.5.01 which discussed Macrossan the CA (which included Lord Neuberger as well as Lord Justice Jacob who also delivered the CA's judgment in Macrossan) observed that at para [11] "at least as a matter of broad principle, it seems to us that the approaches in the two cases and indeed in the great majority of cases in this jurisdiction and in the EPO, are, on a fair analysis, capable of reconciliation." The basis of that reconciliation appears to have been as follows:
"The third stage mandated in Aerotel, which we would have thought normally raises the crucial issue, is whether the alleged contribution is excluded by article 52(2), as limited by art 52(3). So far as we can see, there is no reason, at least in principle, why that test should not amount to the same as that identified in Duns, namely whether the contribution cannot be characterised as "technical". In effect, this can be said to involve conflating the third and fourth stages in Aerotel, a conflation which is easy to accept bearing in mind that it was said in Aerotel that the fourth stage, while required by Merrill Lynch, was unlikely to add anything to the third stage (a view supported by Kitchin J in Astron Clinica Ltd v Comptroller-General [2008] RPC 14, [49] and by Patten J in this case at [44])."
Very clever. Reasoning worthy of Occam. In Gameaccount T 1543/06.the Board said:

"[A]n invention which as a whole falls outside the exclusion zone of [art 52(2)] (i.e. is technical in character) cannot rely on excluded subject matter alone, even if it is novel and non-obvious (in the colloquial sense …), for it to be considered to meet the requirement of inventive step. … [I]t cannot have been the legislator's purpose and intent on the one hand to exclude from patent protection such subject matter, while on the other hand awarding protection to a technical implementation thereof, where the only identifiable contribution of the claimed technical implementation to the state of the art is the excluded subject-matter itself. It is noted that here the term 'contribution' encompasses both means (i.e. tangible features of the implementation) and effects resulting from implementation".

The most interesting and perhaps most telling part of this case was the appellation of the Macrossan guidelines as reinterpreted in the light of Duns and Gameaccount to this case (paras [48] to [61]). In case anyone has forgotten them Those guidelines were:
    "(1) Properly construe the claim;
    (2) Identify the actual contribution;
    (3) Ask whether it falls solely within the excluded subject matter;
    (4) Check whether the contribution is actually technical in nature."
Stage (1) was not in issue. The "actual contribution" was "a program which makes a computer operate on other programs faster than prior art operating programs enabled it to do by virtue of the claimed features". That did not consist solely of excluded subject matter because it had "the knock-on effect of the computer working better as a matter of practical reality." (Don't all applications do that :-)) And that was £technical" on any view of the meaning of the word. On that basis, On that basis Nick Patten had asked the right questions and the appeal against his jusgment was dismissed.

08 October 2008

Trade Marks and Passing Off: Tubzee Ltd. v Saffron Foods Ltd.

Because  it was tried by John Behrens in Leeds I have blogged Tubzee Ltd v Saffron Foods Ltd[2008] EWHC B15 in my IP Yorkshire blog. This was a trade mark infirngement and passing off case between two Halifax kulfi makers.  There is not much law in it but it has a couple of points of interest as I say in my post.

06 October 2008

Domain Names: suttonlibdems.org.uk

There is a tantalizingly brief report of a decision by Nominet panellist Bob Elliott in a domain name dispute brought by the Sutton Borough Liberal Democrats against the Carshalton and Wallington Constituency Labour Party (see Sutton Borough Liberal Democrats v Carshalton & Wallington Constituency Labour Party [2008] DRS 6026 (26 September 2008) .

The poor old respondents don't seem to have a website of their own, poor things, and even if they did how much traffic would it get nowadays.    So just as their Chancellor took his lead from Vince Cable when looking for a solution to Northern Rock the Carshalton and Wallington CLP registered suttonlibdems.org.uk as a domain name.   Very understandable since they came a poor third in the last general election:

Turnout: 43061 (64%)

Liberal Democrat: 17357 (−4.7%)
Conservative: 16289 (+4%)
Labour: 7396 (−1.2%)

.... and their electoral prospects have not exactly soared since then despite the heroic efforts of Mrs Gordon Brown in my home town two weeks ago.

Alas for them Gerry Jerome of the local Liberal Democrats referred the case to Nominet under the Dispute Resolution Service Policy who decided the claim in his favour. Unfortunately, Nominet's decisions are pretty brief compared to those that WIPO panellists have to write (eg buy-tamiflu-online.com).   I should have loved to have read the arguments. There is free mediation in  Nominet disputes. How the Labour Party allowed the case to continue the Lord only knows. And by "the Lord" I am not referring to the new Secretary of State for Business even though he is called Peter. Perhaps the explanation for this gaff is hubris.

04 October 2008

Copyright: Featured Artists' Coalition

I know this is not a particularly fashionable point of view but unless we want our arts to be sponsored by the state as in the former Soviet Union the folk who produce and present them to the public need to be paid. Maybe not as much as they used to be before the digital age and probably not as much as they would like, but certainly enough to make it worth their while getting up in the morning.   Those folk include not just the recording companies who have made a lot of fuss and have made themselves unpopular by suing file sharers but artists, particularly those who are trying to establish themselves.   

Now I am normally suspicious of pressure groups. As Adam Smith put it 
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
But because of the dramatic changes to the economics of the entertainment industry brought about by digitization - namely the facility to make any number of perfect copies of a sound recording, film or just about any other work of art and distribute it around the world instantaneously, I have some sympathy with the Featured Artists' Coalition which campaigns for performers' and musicians' rights.   The coalition contains names that even I have heard of and their demands seem eminently reasonable.   For instance:
"An agreement by the music industry that artists should receive fair compensation whenever their business partners receive an economic return from the exploitation of the artists’ work."
"Copyright owners to be obliged to follow a ‘use it or lose it’ approach to the copyrights they control."
On some issues such as their demand that "rights for performers should be improved to bring them more into line with those granted to authors (songwriters, lyricists and composers", they are probably pushing at an open door. The Copyright Designs and Patents Act 1988 established for the first time a comprehensive code of legal protection for performances. Those rights have been added to incrementally since 1989. For instance, The Performances (Moral Rights, etc.) Regulations 2006 conferred moral rights on performers and while Gowers was unsympathetic to the idea of extending the term of protection for performances the European Commission certainly has been (see Proposal for a European Parliament and Council Directive amending Directive 2006/116/EC of the European Parliament an of the Council on the term of protection of copyright and certain related rights).

So have a look at their press release gentle readers.

03 October 2008

Trade Marks: Christmas Hick-Up

In K-Swiss v OHIM [2008] EUECJ C-144/07 (2 October 2008)  the ECJ dismissed an appeal against the CFI's refusal to entertain an application to set aside a Board of Appeal decision on th ground that the proceedings had been filed out of time.   

Art 63 (5) of the CTM regulation actions against decisions of the Boards of Appeal must be brought within 2 months of notification. Rule 61 (2) of the implementing regulation requires notifications to be made by the following means:
    "(a) by post in accordance with Rule 62;
    (b) by hand delivery in accordance with Rule 63;
    (c) by deposit in a post box at [OHIM] in accordance with Rule 64;
    (d) by telecopier and other technical means in accordance with Rule 65;
    (e) by public notification in accordance with Rule 66.'
Notification of the Board's decision was made by DHL courier rather than by post but there was evidence that the decision had been communicated to the applicant by 28 Oct 2005.  Proceedings were not instituted until 15 Jan 2006.  The applicant appears to have argued that it had never been properly notified.   Oh well, we have all had to argue points like this one and sometimes they neven work.

Not in this case though. Both the CFI and ECJ held that although the applicant had not been properly notified of the decision it certainly knew about it. While there is nothing in the judgment to indicate that that was the case, the chronology suggests that the application may have been overlooked in the run up to the Christmas holidays.   The moral of this sad tale is just get on with the application even if it means missing out on some pre-Christmas cheer. What would the author of A Christmas Carol  and A Poor Man's Tale of a Patent have made of this case "Humbug" I shouldn't  wonder.

02 October 2008

IP Yorkshire: Glossary of IP Terms

You may be interested in a glossary of IP terms and expressions that I have published on my IP Yorkshire blog.

That blog, in case, you have not seen it, is primarily for my local public access and non-specialist solicitor clients who are more interested in inventors' club meetings and Business Link Yorkshire vouchers than in high failuting matters like the the doctrine of equivalents or litigaiton between pharmas and mobiel phone makers.