28 November 2010

Copyright Licensing: The Newspaper Licensing Agency Ltd and Others v Meltwater Holding BV and Others

In The Newspaper Licensing Agency Ltd and Others v Meltwater Holding BV and Others [2010] EWHC 3099 (Ch) (26 Nov 2010) Mrs. Justice Proudman had to decide whether the customers of a commercial media monitoring service needed a licence from the copyright licensing agency of the British newspaper industry to receive emailed reports containing data that had been extracted by the monitoring service from the websites of British newspapers. The parties to this action were

· the leading British newspaper publishers and the Newspaper Licensing Agency, their copyright licensing agency (“the publishers”);

· Meltwater Holding BV and its British subsidiary the companies providing newspaper monitoring service (“Meltwater”) and

· the trade association of the companies that used Meltwater’s services (“the end-users”).

By this action, the publishers sought a declaration that the end-users require a licence or consent from the publishers in order lawfully to receive and/or use the Meltwater News Service.

The Commercial Background

It was common ground that Meltwater monitored a wide range of websites, including those of the publishers, using so-called "spider" programs to "scrape" or "read" the content of the publishers’ websites. Its programs then create an index which records the position of every word in every article on every such website. Meltwater's customer may select particular search terms and Meltwater will then provide a monitoring report with details of every article containing the search term published within a defined period such as the preceding day or the last 7 days. Meltwater News is then either emailed to the customer or the customer is given the facility to access it at Meltwater's website. Each report contains:

· a hyperlink to each relevant article on the publisher's website;

· the opening words of the article after the headline and

· an extract from the article showing the context in which the search term appears reproducing the search term and some words immediately preceding and following it.

The judge observed that the publishers feel a strong grievance against Meltwater's perceived commercial exploitation of their websites. The newspapers have devoted very substantial resources in developing their websites and to the selection, arrangement and presentation of the material on them. Meltwater is making millions of pounds from its own activities which include 'scraping' the Publishers' websites for information for its own commercial gain. On the other hand, the Publishers have arrangements or understandings with certain free media monitoring services such as Google News and Google Alerts whereby those services are currently licensed or otherwise permitted. It would apparently be open to the end users to use such free services, or indeed a general search engine, instead of a paid media monitoring service without (currently at any rate) encountering opposition from the publishers. That is so even though the end users may be using such services for their own commercial purposes.

Judgment

Her ladyship found that Meltwater’s end-users do need a licence lawfully to receive that company’s emails.

She found first that the mere act of receiving an email requires reproduction of matter emanating from the newspapers’ websites. That is actually quite a useful finding because it confirms the power of website owners to set conditions on access to their websites (see my article on “Website Terms and Conditions” on the NIPC website on 7 Nov 2010).

Next, Mrs. Justice Proudman held that newspaper headlines can be copyright works and it is here that she made some new law. It had previously been held that copyright could not subsist in

corporate names such as “Exxon” in Exxon Corp. v Exxon Insurance Consultants International Ltd. [1982] RPC 69,

advertising slogans and such as “Youthful appearance is a social necessity, not a luxury” in Sinanide v La Maison Kosmeo (1928) 139 LT 365, and

book titles such as “Splendid Misery” in Dicks v Yates [1881] 18 ChD 76

because they were too slight to merit legal protection. However, it has to be stressed that the late Sir Hugh Laddie and his fellow authors of the third edition of The Modern Law of Copyright and Designs had cautioned at paragraph 3.62 that it should not be assumed that an advertising slogan or title is incapable of protection as a matter of principle. In Meltwater the judge had the evidence of the Chief Operating Officer of The Daily Mail that:

"• The headlines are often striking and substantial, both in terms of content and in terms of length.

They are not usually written by the journalists who write the underlying articles but by editorial staff whose specific functions include the composition of headlines.

The ability to compose a headline is a valuable and discrete skill and courses exist to teach it.

Headlines require skill in order to fulfil the objective of capturing the reader's attention and inducing them to read the article. Thus a headline frequently has some emotional or sentimental 'hook', it may contain a pun, it may summarise the content of the article to which it relates.

The process of final selection of a headline is separate from the selection of the article. Often a number of options will be proposed and the decision will be taken by a senior editor. Occasionally the article will be tailored to fit the headline.”

The judge relied on that testimony to reach her conclusion.

Less controversially, applying the English authorities as well as the Court of Justice of the European Union’s decision in Case C-5/08 Infopaq International v. Danske Dagblades Forening [2010] FSR 495, her ladyship held that the text extracts of Meltwater’s reports could be substantial parts of an article on the publisher’s website. However, she refused to find that Meltwater’s activities infringed copyright on so far as a website was a database or that accessing an article through Meltwater’s links rather than the publisher’s home page could infringe. Having found that reproduction of a headline and text required a licence the judge considered the temporary copying and fair dealing exceptions under s.28A and s.30 of the Copyright, Designs and Patents Act 1988 but concluded that neither could apply.

Conclusion

Explaining why the government had commissioned Professor Hargreaves to review our intellectual property law, Baroness Willcox, Minister of Intellectual Property, observed:

"An IP system created in the era of paper and pen may not fit the age of broadband and satellites. We must ensure it meets the needs of the digital age."

This is one of many examples of the increasing difficulties that arise in the digital economy and it is one of the reasons I am confident of a boom in intellectual property work despite the scepticism of one of my beloved legal luddites (see “You may as well sell fridges to the Eskimos” NIPC website 26 Nov 2010). If anyone wants to discuss this case or has a similar or related case, he or she should not hesitate to call me on 0800 862 0055 or fill in the “Can we help you form?”

27 November 2010

Patents: Unilever Plc and Others v Shanks

This appeal was a rare inventor’s compensation case. S.7 (2) (a) of the Patents Act 1977 provides that a patent for an invention may be granted primarily to the inventor or joint inventors. However, this provision is trumped by paragraph (b) where a person by virtue of any enactment or rule of law or by virtue of an enforceable term of any agreement entered into with the inventor before the making of the invention was at the time of the making of the invention entitled to the whole of the property in it (other than equitable interests) in the United Kingdom. Such a person would typically be the inventor’s employer either by virtue of an express term in the inventor’s contract of employment or s.39 of the Patents Act 1977. If the inventor is employed in a capacity in which he or she is likely to invent something such as a member of a research and development team in a private company or other institution he or she will be paid a salary for such work. Also, he or she will be given credit for the invention by being mentioned as inventor under s.13 which will do doubt do the inventor’s career prospects no harm at all.

Inventions of Outstanding Benefit to the Employer

Since most inventions do not go very, far the above settlement is in most cases is a fair balance between the rights of the inventor and the rights of his employee. But what happens if the invention is a blockbuster that generates a crock of gold for the employer. Is it right for the employer to hog the whole windfall for itself paying the inventor just his normal salary? The public through the legislature have said that it is not which is where s.40 (1) of the Patents Act 1977 comes in. This section provides that:

“Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that the employee has made an invention belonging to the employer for which a patent has been granted, that the patent is (having regard among other things to the size and nature of the employer's undertaking) of outstanding benefit to the employer and that by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer, the court or the comptroller may award him such compensation of an amount determined under section 41 below.”

S.41 further provides:

“An award of compensation to an employee under section 40(1) and (2) above in relation to a patent for an invention shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive, from the patent or from the assignment, assignation or grant to a person connected with the employer of the property or any right in the invention or the property in, or any right in or under, an application for that patent.”

There is, as Lord Justice Jacob said at paragraph [7] of Unilever Plc and others v Shanks [2010] EWCA Civ 1283 a double hurdle for the employee:

“Under s.40(1) the employee has two hurdles to get over: he must show that the patent is "of outstanding benefit to the employer" and if so that it "is just" that he should be awarded compensation.”

For the sake of completeness I should add that the above provisions do not apply where there is a collective agreement that provides for the payment of compensation in respect of inventions of the same description as that invention to employees of the same description as the inventor (see s.40 (3)).

The Dispute

In this case the respondent, Professor Ian Shanks, had invented a device which draws into itself by capillary action a precise volume of fluid to enable rapid chemical and biochemical measurements to be made in relation to that fluid which has found large scale use in home diagnostic kits for diabetes. He made the invention while working for Unilever UK Central Resources Ltd. which assigned it to its holding company, Unilever Plc for a nominal sum. Unilever Plc was slow to make use of the invention and did so only by licensing to third parties for which it received £23 million. Professor Shanks contended that had the invention been properly exploited the patentee would have received revenues of US$1 billion or above.

Professor Shanks’ Argument

Professor Shanks based his case on s.41 (2) of the Patents Act 1977 which provides:

“For the purposes of subsection (1) above the amount of any benefit derived or expected to be derived by an employer from the assignment, assignation or grant of—

(a) the property in, or any right in or under, a patent for the invention or an application for such a patent; or

(b) the property or any right in the invention

to a person connected with him shall be taken to be the amount which could reasonably be expected to be so derived by the employer if that person had not been connected with him.”

He argued that the section referred not to the actual benefit – namely the licence fees of £23 million - resulting from the actual assignment of the invention from Unilever UK Central Resources Ltd. to Unilever Plc but to a notional assignment of the invention to an assignee that would have exploited the invention for all it was.

Professor Shanks had tried to amend his statement of case to make that allegation before the hearing officer, Mr. Elbro, in Shanks v Unilever Plc and others BLO/138/09 on 19 May 2009 but he was refused permission to do so on the ground that the employer could end up paying considerably more than it had actually received. Professor Shanks appealed to Mr. Justice Mann on the ground that the words “a person connected with him” could refer to a notional rather than an actual assignee. In his judgment in Shanks v Unilever Plc and Others [2010] RPC 11, [2009] EWHC 3164 (Ch), (2010) 33(2) IPD 33012, [2010] Bus LR 761 the judge allowed the amendment concluding that the hearing officer's final formulation of the meaning of "that person" in section 41(2) was wrong.

“Warts and All”

The Court of Appeal restored the hearing officer’s decision. In his judgement Mr. Justice Mann had said at paragraph [42]:

“I therefore conclude that the hearing officer's final formulation of the meaning of "that person" in section 41(2) is wrong. One does not treat that person as being the precise real person with all the same characteristics (commercial warts and all) as that person has but simply without the connection. I consider that in using the formulation that it did, Parliament was, perhaps a little clumsily, intending to refer to a notional non-connected counterparty operating in the appropriate market at the appropriate time. This is not inconsistent with its assumption (in the case of other actual transactions leading to benefits) that an employer is likely to want to exploit the patent properly and not give away its benefits, albeit (as I have observed) that it did not impose a positive obligation on the employer to do that.”

Latching on to the “warts and all” phrase used by Mr. Justice Mann, Lord Justice Jacob replied at paragraph [8] of his judgment:

“Clearly this, key, subsection contemplates the inventor's particular employer, not some notional employer. The fact that it refers to "the size and nature of the employer's undertaking" makes this clear beyond any argument. It is the real actual benefit to the actual employer which is all that matters. If an invention had been immensely valuable and a patent for it could have been or could be (if still in force) exploited for a vast sum or have fetched vast royalties or a great sum on the open market, that is irrelevant. The inventor's particular employer may not have exploited the invention well or at all. If so, the inventor cannot complain. The employer must be taken as it was, warts and all. The provision is not some kind of "best endeavours to exploit" requirement.”

After considering the consequences of the professor’s argument the judge concluded that the words “a person connected with him” meant a real person – in this case Unilever Plc – and “the amount of any benefit derived or expected to be derived by an employer from the assignment” referred to the actual benefit received which in the case was known to be £23 million. It had been argued faintly by Unilever that they would never have paid more than a few thousand pounds for Professor Shanks’s invention had it been offered to them on the open market and that £23 million was small change to them but that was abandoned by their counsel “recognising that this position was deeply unattractive.”

Conclusion

The net effect of the appeal is that Professor Shanks is now no better off than he had been in the Intellectual Property Office when Mr Elbro dismissed his application in May 2009. Lord Justice Jacob hoped that the parties can also now agree on what amounts to a "fair share" for Professor Shanks but as the case has already been mediated once and fought all the way up to the Court of Appeal the prospects are not bright.

Sewing the Fly Buttons onto the Statute

Mr. Justice Mann had complained that the provisions relating to inventors’ compensation were “not particularly well drafted.” More colourfully, Lord Justice Jacob said that the approach to construction of an ill-drafted provision was "sewing the fly buttons on the statute." The complexity and uncertainty of these provisions plus the cost of fighting them in the Patents Court and in this case Court of Appeal no doubt explains why so few employee invention claims ever come to court. That is a tragedy because situations like the professor’s cannot be all that uncommon. Should an inventor or his patent agent or for that matter his employer find themselves in this position they are very welcome to discuss it with me on 0800 862 0055 or by clicking this form. Those who are in this position could clearly benefit from mediation by mediators specializing in patent disputes such as Mr. Peter Back, an experienced forensic accountant like Michael Swift or even me. We also provide a cost effective specialist intellectual property arbitration service.

Patents County Court Practice: Westwood v Knight

Save that the claimant is a well-known fashion designer, Westwood v Knight [2010] EWPCC 16 (19 Nov 2010) is a bog standard case management conference in a trade mark and copyright infringement and passing off claim. The reason why this case deserves attention is that the Judge gave some useful guidance on the following issues

  • Directions for transfer to the Patents County Court
  • Skeleton arguments at the CMC
  • Pleadings
  • Statements of truth, and
  • Evidence.

Directions on Transfer

This case had started life in the Chancery Division just before the long vacation and was transferred to the Patents County Court on 1 Oct 2010, the day that the new Patent County Court rules came into force. On the order for transfer the master had directed a CMC on the first open day after 22 Oct 2010. The judge commended that order as “a useful thing to do since it ensured that the matter came before the Patents County Court for directions at an early stage after transfer.”

Skeleton Argument

In this case the claimant’s solicitor filed a witness statement which addressed various matters arising and explained the claimant's position but no skeleton argument. Judge Birrs QC described that as a “useful exercise” adding that “in this case such a skeleton would have been unnecessarily duplicative and a pointless cost”. He explained that that might not always be appropriate:

“In the Patents County Court parties' skeleton arguments at the interim stage need not be filed if they are not necessary. Nevertheless it is obvious that in some cases a skeleton argument on at least some issues will be needed at the CMC. The matter needs to be approached on a case by case basis. Part of the point of the new CMC procedure in the Patents County Court is that the court will pre-read into the case as a whole in order to conduct the CMC. A highly abbreviated skeleton argument on specific issues may well be necessary but there should be no need for extensive duplicative skeletons.”

Pleadings

CPR 63.20 (2) requires a claimant to state whether the claimant has complied with paragraph 7.1(1) and Annex A (paragraph 2) of the Practice Direction (Pre-Action Conduct). Paragraph 7.1 (1) provides:

“Before starting proceedings (1) the claimant should set out the details of the matter in writing by sending a letter before claim to the defendant. This letter before claim is not the start of proceedings.”

Para 2 of Annex A of the Practice Direction specifies the ingredients of such a letter. As the case had started in the High Court where it is not necessary to plead compliance with the Protocol, the claimant’s counsel needed permission to amend his particulars of claim.

Statements of Truth

CPR 63.20 (1) modifies CPR Part 16 in that a statement of case should set out concisely all the facts and arguments upon which the party serving it relies. The Judge explained that the reason for that rule is that the Intellectual Property Court Users’ Committee recommended that statements of case should stand as evidence in themselves and indeed constitute the primary evidence on which a party relies. Accordingly statements of case have to be signed by the person or if more than one all the persons with knowledge of the case. That had not been done in the original pleadings in Westwood so the judge gave permission for that to be done now. His Honour added that where more than one person signs a statement of case each should indicate the bits of the pleading that he or she is confirming.

Evidence

CPR 63.23 (1) requires a court to “identify the issues and decide whether to make an order in accordance with paragraph 29.1 of Practice Direction 63.” That paragraph enables the judge to order (1) specific disclosure, (2) a product or process description (or a supplementary product or process description where one has already been provided), (3) experiments; (4) witness statements; (5) experts’ reports; (6) cross examination at trial; and (7) written submissions or skeleton arguments but only if the court is satisfied that the benefit of the further material in terms of its value in resolving those issues appears likely to justify the cost of producing and dealing with it. Also, the order must relate to specific issues identified by the judge in accordance with CPR 62.23 (1). As the judge acknowledged at paragraph [36] of his judgment, this is little short of revolutionary in the English adversarial tradition:

“These interlocking provisions represent a radical departure from previous English civil procedure, at least as it is practiced in the courts handling intellectual property claims. The provisions are a key element of the new procedure and its purpose in making intellectual property cases less expensive and quicker to resolve. The parties do not have a free rein to call any evidence they want on any topic. The court will control the procedure. Further material will only be permitted on identified points and only if it satisfies the cost benefit test in paragraph 29.2(2). If material has not been permitted in this way, CPR Pt 63.23(2) sets a significant hurdle in the way of its introduction into the case. It seems to me that one important consequence of the provisions is that, subject to proper safeguards, some relevant evidence will be excluded from trials. Merely because some evidence is relevant will not necessarily justify permission being given to adduce it. On the other hand the parties need to know that the court will give permission for evidence to be filed in a proper case since otherwise there will be a temptation to overload the statements of case with unnecessary material.”

In the case in front of him the judge identified 7 issues and applied the cost-benefit test in paragraph 29 to each of them. On some issues he found the pleadings would suffice. On others he ordered further witness statements. CPR 63.23 (1) and paragraph 29 (1) provide the key to the new Patents County Court procedure because this cost-benefit balancing exercise is the instrument for preventing delay and controlling costs.

Issues still to be decided

The judge purposely left one big issue for another day, namely whether the £50,000 costs cap should apply to all the costs in a case such as this that had been transferred from another court or just the costs from the date of transfer. As only one party was at the case management conference and as it had not prepared submissions on the point, it was not possible for the judge to make a determination at the point. However, as very little had been done in the High Court before transfer it was not likely to make much practical difference.

Patents County Court Guide

The new procedure with its rigid control of costs will take a lot of getting used to. The Working Group had recommended model pleadings in a new Patents County Court Guide to assist practitioners to get the right level of detail in their pleadings. As the Report was published on 31 July 2009 it should have been possible to prepare a new guide before the 1 October 2010.

Related Articles

Setting the limit on the value of claims heard in the Patents County Court 10 Nov 2010

Patents: Alk-Abello Ltd v Meridian Medical Technologies 9 Nov 2020

16 November 2010

Super Injunctions: Ntuli v Donald

A super injunction is one in which an anonymized applicant is granted an injunction restraining an anonymized respondent from doing specified but unpublishable things and further restraining the respondent and others from publishing the fact that the injunction had been sought and obtained.

In Ntuli v Donald [2010] EWCA Civ 1276 (16 Nov 2010) the appellant Adakini Ntuli sought to overturn an order by Mr. Justice Eady restraining her from publishing, using or disclosing scheduled categories of confidential information, the existence of the proceedings or the identity of the parties. The information itself concerned details of the Ntuli's personal relationship with Howard Donald of "Take That". After their relationship came to an end, Ntuli sent Donald the following text:
"Why shud I continue 2 suffer financially 4 the sake of loyalty when selling my story will sort my life out?"
She then engaged the publicist Max Clifford whereupon Donald applied to Mr. Justice Eady without notice for a super injunction in the above terms. On the return date, his lordship modified the order with the following proviso:
"PROVIDED THAT nothing in this paragraph of this Order shall prevent the Defendant from publishing, communicating or disclosing the following (a) any material that before service of this Order was already in, or that thereafter comes into, the public domain …; or(b) the fact that the Claimant had a relationship with the Defendant; AND PROVIDED FURTHER THAT nothing in this paragraph of this Order shall prevent the Defendant from discussing any of the material which she has already discussed or wishes to discuss with any family member or close friend, nor from disclosing to any such family member or close friend the existence of these proceedings or the Claimant's interest in them."
He also ordered her to pay two thirds of Donald's costs.

Ntuli appealed against the injunction on the ground that it should never have been made at all, that it was too vague, that she should not have to pay costs and that the order should not have been anomymized.

Delivering a judgment with which Lord Justice Sedley and Lord Neuberger, Master of the Rolls agreed, Lord Justice Kay characterized the dispute as a clash of human rights in which Donald relied on his right to privacy under art. 8 of the European Convention on Human Rights and Ntuli on her right to freedom of expression under art. 10.

Relying on Lord Steyn's speech in Re:S (a child)(Identification: Restrictions on Publication) 17 BHRC 646, [2004] 4 All ER 683, [2005] Crim LR 310, [2004] UKHL 47, [2004] 3 FCR 407, [2005] HRLR 5, [2005] 1 FLR 591, [2004] 3 WLR 1129, [2005] 1 AC 593, [2005] EMLR 11, [2005] UKHRR 129, [2005] EMLR 2 that
(1) neither art 8 or article 10 has as such precedence over the other,
(2) an intense focus of those individual rights in the context of the case is required where those rights conflict;
(3) the justifications for interfering with or restricting those rights must be taken into account; and
(4) a proportionality test should be applied to each;
the Court refused to discharge or limit the scope of the injunction or disturb the order for costs. However, the Lords Justices did not consider than the order had gone too far. And they discharged the super injunction and anonymity provisions on the ground that the interests of the parties did not override the public interest in the openness of the proceedings.

This judgment provides a thorough analysis of the principles to applied in cases of this sort but the Court of Appeal made clear that each case has to be decided on its own facts.

13 November 2010

Assessment of Damages: National Guild of Removers & Storers Ltd v Silveria

This is a very useful authority for the following points:

  • the jurisdiction of the Patents County Court in trade mark infringement and passing-off claims;
  • the basis for assessment of damages for trade mark infringement and passing-off;
  • the basis to be applied where there is no loss of a sale; and
  • the procedure to be followed when the damages awarded exceed the limitation in the claim form.

Background

In National Guild of Removers & Storers Ltd v Silveria (t/a C S Movers) [2010] EWPCC 15 (12 Nov 2010) the claimant was a trade association for a number of businesses in the removal and storage industry. The claimant owned a number of trade marks which it allowed its members to print on their stationery and advertisements. Members were required to pay an annual subscription, to follow a code of practice and comply with awards of the association ombudsmen. Members who left the claimant association were obliged to remove the trade marks from their advertisements and stationery at once. Since it would not always be easy to withdraw an advertisement in circulation in say a trade directory or Yellow Pages the departing member was required to pay a licence fee of £100 per week for so long as the advertisement remained in use. Any former member using the trade marks after that time would have to pay a penalty of £200 per week. Any former member breaching his post-termination obligations was required to pay liquidated damages of £100 per week in addition to the licence fees mentioned above.

Each of the defendants had used the claimant's trade marks when not entitled to do so. The first had never been a member of the claimant's association. The other defendants were former members who continued to use the marks after they had ceased to be entitled to do so. Each of them was adjudged to have infringed the claimant's trade marks and passed itself off as a member of the claimant association. An inquiry was ordered against each of the defendants with directions for disclosure and service of evidence with which none of the defendants complied. The hearing of the inquiry was attended by counsel for the claimant. The defendants were neither present nor represented.

Jurisdiction

Before considering the evidence, Judge Birrs QC made clear that his jurisdiction in trade mark infringement and passing-off derived not from s.287 of the Copyright, Designs and Patents Act 1988 but from the Central London County Court's general jurisdiction to hear actions in contract and tort pursuant to s.15 of the County Courts Act 1984. The court's jurisdiction to revoke a trade mark has been extended by art 4 (1) and (2) of the High Court and County Courts Jurisdiction Amendment Order 2005 (SI 2005 No 587). The court's jurisdiction as to trade marks and passing off was expressly recognized by CPR 63.13 (b) and para 16.1 (12) and (14) of the Part 63 Practice Direction.

Bases for the Assessment of Damages

The judge took as his starting point Lord Wilberforce's principles in General Tire & Rubber v Firestone [1976] RPC 197 that

  • a claimant has the burden of proving its loss
  • the defendants being wrongdoers, damages should be liberally assessed, but
  • the object is to compensate the claimant and not punish the defendants.

Although that was a patent case it had been established in Blayney (t/a Aardvark Jewelry) v Clogau St. David's Gold Mines Ltd [2002] EWCA Civ 1007 (16 July 2002) and Irvine and Others v Talksport Ltd. [2003]EWCA Civ 423 (1 April 2003) that the same principle applied to other intellectual property claims. His Honour concluded:

"In my judgment, as a matter of principle, where a defendant uses a mark without permission and thereby infringes a registered trade mark or commits an act of passing off, that act is capable of damaging the claimant's property in the mark (see s14(2) of the Trade Marks Act 1994) or property in the goodwill attaching to his business. That is so whether or not a lost sale has taken place. It is the same kind of damage as the damage to a patent monopoly caused by an infringing sale which is not a lost sale to the patentee and for which a reasonable royalty is payable. It is an invasion of a (lawful) monopoly. Thus there is no reason in principle why damages should not be available, calculated on a "user" basis for trade mark infringement and for passing off. Of course it will be a question of fact in any given case to decide the amount of such damages."

As the claimant company's rules provided for licence fees, penalties and liquidated damages to be paid by departing members the judge considered it appropriate to award damages on that basis.

The Award

The judgment sets out tabular form the damages and interest payable by each of the defendants.

Court Fees

The claim against one of the defendants had been limited to less than £15,000. As a consequence, the fee for issuing the claim form had been £225. The actual damages awarded exceeded that sum. In order to recover those damages the claim form had to be amended. The judge allowed the claimant to amend its claim upon payment of the difference between the fee for claiming the amount actually awarded and the amount previously paid.

Name of the Court

At para [52] of Alk-Abello Ltd v Meridian Medical Technologies Dey Pharma Lp [2010] EWPCC 14 (9 Nov 2010) Judge Birrs had observed:

"I understand that the Defendants, as American corporations, are concerned that their rights might be decided in a lesser court than the High Court. Perhaps the name "Patents County Court" has put them off. Many observers have suggested that the name should be changed. For a start the court is not concerned only with patents and never has been. It is a specialist IP court staffed by a specialist judge. The special jurisdiction of the court relates to patents and designs (s287(1) of the 1988 Act) and the court is competent to hear the full range of patent cases including cases concerning entitlement, infringement and validity. The court is a designated community designs court (Art 80(2) of Council Regulation 6/2002/EC and art. 2(1)(a)(ii) of the Community Designs (Designation of Community Designs Courts) Regulation 2005 (SI 2005/696)), and the court has jurisdiction in trade mark cases and is a designated community trade mark court (Art 91(1) of Council Regulation 40/94/EC (now Art 95(1) of Council Regulation 207/2009/EC by virtue of reg. 12(1)(a)(ii) of the Community Trade Mark Regulations 2006 (SI 2006/1027). The Patents County Court's jurisdiction in copyright and passing off is recognised in CPR 63.13(1)(a) and PD 63 para 16.1. Thus the report of the Intellectual Property Court Users' Committee Working Group on proposals for reform of the Patents County Court, which led to the new rules now in place, suggested it should be renamed the Intellectual Property County Court.".

The judge observed that National Guild was an example of the court's jurisdiction in trade mark infringement and passing-off despite its name.

Patents: Abbott Laboratories Ltd v Medinol Ltd

Abbott Laboratories Ltd v Medinol Ltd [2010] EWHC 2865 (Pat) (12 Nov 2010) was a claim for a declaration of non-infringement and revocation of three European patents for cardiac stents and a counterclaim for infringement. The patents were derived from a US patent. The corresponding European patent had been divided into a number of divisional patents. These had been the subject of opposition proceedings in the European Patent Office. The Opposition Division had revoked two of the grants though the decision was under appeal. There had also been proceedings in respect of the same patents in Germany and the Netherlands which resulted in findings of non-infringement. There are shortly to be similar proceedings in Dublin.

The claimant attacked the patents for want of novelty and inventiveness, added matter and insufficiency. The judge, Mr. Justice Arnold, found that one of the patents had been anticipated but that the others were valid (or, in the case of one patent) would be valid. He also found that none of the patents had been infringed.

The judge applied the usual tests.
As with most patent cases the outcome hung on the construction of the specification.

10 November 2010

Confidential Information: EFH Technologies Ltd and another v. Rytium Technology FZC and another

This decision of Lord Turnbull in EFH Technologies Ltd. and another v Reytium Technology FZC and another [2010] ScotCS CSOH_143 (29 Oct 2010) highlights differences between the procedures in Scotland for obtaining the equivalent of interim injunctive relief and those of the rest of the United Kingdom.

This was an application for an interim interdict (the equivalent of an interim injunction) to restrain the defender (defendant) from manufacturing, distributing or selling a product called NaturAD Shrimp Treat. This is used to prevent freshly caught prawns from turning black and unsightly. The pursuer (claimant) alleged that NaturAD Shrimp Treat was a copy of its own product called Prawnfresh. The pursuer's product had not been patented - though a patent application had been filed in December 2009 several years after Prawnfresh had first been marketed. The pursuer therefore had to rely on the law of confidence - again notwithstanding that the product had been in the stream of commerce and hence, presumably, available for purchase and analysis, for some time. His Lordship entertained the application even though the pursuer had been aware of the defender's product since 2008 yet had done nothing about except to commission an expert's report.

In American Cyanamid v Ethicon Ltd. Lord Diplock had said:
"It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations."
Even though the evidence before him could not be tested by cross-examination, that is precisely what Lord Turnbull did. Although the defender appears to have argued that the product was no longer in the public domain there was no discussion in the judgment as to whether the product could have been purchased on the open market and reverse engineered.

The two years delay between first learning of the defender's product and the issue of the application was excused by "the amount of time which had been taken up obtaining scientific reports from different sources and seeking to be able to rely on the work of an expert of indisputable world standing...." The factors that the defender's product accounted for 75% of its revenue, that an interdict would imperil its existence, that a proof (trial) could not take place until well into the New Year and that there was no evidence of the pursuer's ability to compensate the defender in damages seem to have carried very little weight with the judge. What does appear to have impressed His Lordship was the incorporation of the defender in Sharjah Free Zone rather than the UK supposedly making it difficult for the pursuer to recover damages. As The Global Competitiveness Report of The World Economic Forum for 2010 to 2011 placed the legal system of the United Arab Emirates 22nd in the world ranking for efficiency in settling disputes - well behind the UK's which came in 8th but well ahead of the USA's which was 33rd - that was surprising. Notwithstanding all these considerations the judge held that the balance of convenience favoured the pursuer and granted the interdict.

If anyone would like to discuss this case (or indeed the law of confidence generally) with me they should contact me on 0800 862 0055 or through this form.

Setting the limit on the value of claims heard in the Patents County Court

On 31 July 2009, a working group consisting of the three Patents Court judges, His Honour Judge Fysh QC and representatives of the patent bar, CIPA, ITMA and various other interest groups published a report on Proposals for Reform of the Patents County Court.

For those who are not familiar with the English legal system, there are two tiers of civil courts of first instance in England and Wales:
  • the High Court of Justice with unlimited jurisdiction throughout England and Wales; and
  • a network of local courts with jurisdiction limited by geography and subject matter known as "the county courts."
S.287 (1) of the Copyright, Designs and Patents Act 1988 enabled the Lord Chancellor to designate any county court as a "patents county court" and to confer on it jurisdiction to hear and determined proceedings relating to patents and designs. There has only ever been one patents county court at any one time, Two courts have been designated and both of those have been in London. First, there was the Edmonton County Court, then, in 1994, the Central London County Court. As Sir Rupert Jackson observed at paragraph 5.2 of his interim report on costs, the Patents County Court had not been a success, initially because of its procedures and original location at Wood Green, and later because it offered no cost-saving or other advantage over the High Court.

In their report the working group recommended changes to the Patents County Court's procedure, limits to the costs that a successful party can recover from unsuccessful parties and a £500,000 limit to the value of claims. The procedural changes and the costs limits were introduced at the beginning of October. I blogged about them in "New Patent County Court Rules" on 31 Oct 2010.

There is now a consultation on the the limit to be set to the value of claims. That began at the end of October and will remain open until 3 Dec 2010. In a consultation paper, "Setting the Limit", HM government announced its intention of limiting the value of claims in the Patents County Court from the outset to avoid the need for lengthy and protracted transfer applications but it has not yet chosen the figure. Members of the public who want to contribute should address their submissions to

Copyright and IP Enforcement,
Room 3B49
Concept House
Cardiff Road
Newport
South Wales
NP10 8QQ
United Kingdom

E-mail: IP Enforcement
Fax: +44 (0) 1633 814922

Patents County Court Practice: Westwood v Knight 27 Nov 2010

New Patents County Court Rules 31 Oct 2010

09 November 2010

Patents: Alk-Abello Ltd v Meridian Medical Technologies

One of my worries when the Intellectual Property Users Committee announced its Proposals for Reform of the Patents County Court was that the proposed costs cap on intellectual property litigation in the PCC would be scuppered by transfers to the High Court or routine arguments that a party had behaved badly. My fears have been allayed to a certain extent by Judge Birrs QC's pledge to make the new Rules and Practice Direction work. Thus it would enable the Patents County Court to achieve its objective of ensuring that
"small and medium sized enterprises, and private individuals, were not deterred from innovation by the potential cost of litigation to safeguard their rights."
If that comes to pass, I am very glad to hear it. I have to add that I think the judge means what he says. I found myself up against Colin Birrs more than once when he was at the bar and I can say that he was always a fair, reasonable and not an unpleasant opponent.

Having said, the judge did kick this case before him upstairs even though he found it "entirely suitable to be tried in the Patents County Court from the point of view of the issues arising and the case management machinery necessary to deal with them." Now why did he do that? First, Alk-Abello Ltd v Meridian Medical Technologies and Another [2010] EWPCC 14 (9 Nov 2010) was not a battle between a start-up or private inventor and a multinational. Both were or were part of substantial undertakings. Further, in view of Judge Birrs QC's earlier decision in Technical Fibre Products Ltd and Another v Bell and Others [2010] EWPCC 011 (20 October 2010) that the cost capping rules do not apply retrospectively there would not have been a dramatic costs saving had the case stayed where it was. The applicant's solicitors promised to co-operate with the respondent's to fix and early trial in the Patents Court so there was no time saving in keeping the case in Fetter Lane. The decisive factor for His Honour was the commercial value of the claim. US$24 million on the applicant's evidence. It was in short too big for the County Court. It would take up space in a list that was to be used to resolve disputes involving SME.

His Honour also made a point about the prestige of the court:
"I understand that the Defendants, as American corporations, are concerned that their rights might be decided in a lesser court than the High Court. Perhaps the name "Patents County Court" has put them off. Many observers have suggested that the name should be changed. For a start the court is not concerned only with patents and never has been. It is a specialist IP court staffed by a specialist judge. The special jurisdiction of the court relates to patents and designs (s287(1) of the 1988 Act) and the court is competent to hear the full range of patent cases including cases concerning entitlement, infringement and validity. The court is a designated community designs court (Art 80(2) of Council Regulation 6/2002/EC and art. 2(1)(a)(ii) of the Community Designs (Designation of Community Designs Courts) Regulation 2005 (SI 2005/696)), and the court has jurisdiction in trade mark cases and is a designated community trade mark court (Art 91(1) of Council Regulation 40/94/EC (now Art 95(1) of Council Regulation 207/2009/EC by virtue of reg. 12(1)(a)(ii) of the Community Trade Mark Regulations 2006 (SI 2006/1027). The Patents County Court's jurisdiction in copyright and passing off is recognised in CPR 63.13(1)(a) and PD 63 para 16.1. Thus the report of the Intellectual Property Court Users' Committee Working Group on proposals for reform of the Patents County Court, which led to the new rules now in place, suggested it should be renamed the Intellectual Property County Court. The term "county court" is entirely accurate having regard to the way the English legal system is set up but it can also convey an inaccurate impression, particularly to observers from abroad. Although the legislation allows for the creation of multiple Patents County Courts, there is only a single one and it has a territorial jurisdiction the same as the High Court – the whole of England and Wales. The same remedies are available in each court. There is no reason whatsoever why litigants foreign or domestic should be put off from having their intellectual property rights determined in the Patents County Court."
I couldn't resist a smile at that remark. "Good old Colin!" I thought to myself. "We've got a good 'un on the bench."

Even though I once argued that this court should be abolished and its functions merged with the IPO tribunals ("Why not Abolish the Patents County Court?" 15 Jan 2010), I've always had a soft spot for it. I argued for it against Henry Carr QC (as he now is) as long ago as 1988 when I put the case for a PCC in Manchester, Liverpool and Leeds (if anything the case for provincial courts and maybe a Sheriff's Patent Court in Scotland and PCC in Belfast is stronger now). I supported it even when Judge Ford was being knocked back by the Court of Appeal once settling 4 out of the claims that had been issued out of it. And his successor Judge Fysh QC was lovely to me welcoming me back to his court in my first trial after my transition into womanhood - even though he went on to give judgment to my opponent.

So I think the new rules will work. All we want now is some more intellectual property litigation.

If anyone wants to discuss this case with me further, they can call me on 0800 862 0055 or contact me through this form.