22 August 2011

Unitary Patents: Spain and Italy throw in their 2 cents

Compared to Germany, France, the Netherlands and Switzerland we don't do very well in the European patent application stakes but there are two large European countries that do even worse than us, namely Spain and Italy. According to the European Patent Office there were 4,088 patent applications from Italy in 2010 and 1,436 from Spain compared to 27,354 from Germany, 9,530 from France, 6,742 from Switzerland, 5,957 from the Netherlands and 5,402 from the United Kingdom.

Most people in the United Kingdom who have an opinion on the subject believe that a European patent for the whole European Union would be a very good thing. At page 25 of his report, Professor Hargreaves recommended that the UK "should attach the highest immediate priority to achieving a unified EU patent court and EU patent system, which promises significant economic benefits to UK business" which recommendation the government has accepted. While we may not be good Europeans in every respect we have always been supportive of the EU patent. One of the reasons for the Patents Act 1977 was to ratify the Community Patent Convention of 1975.

Over the years there have been two stumbling blocks:
  • the languages to be used; and
  • enforcement.
The language issue is the insistence of the Spanish and Italian governments on parity of their languages with English, French and German as at OHIM. As for enforcement the Court of Justice of the European Union held on that the Draft Agreement on the European and Community Patents Court was incompatible with EU Law (see my article of 8 March 2011).

The response of the rest of the EU has been to press ahead with a common European patent for all the member states except Spain and Italy to be known as a "unitary patent" (see my article of 29 April 2011 "The Community patent is dead - long live the unitary patent"). Even though - or probably because - the proposed unitary patent will have nothing to do with them the Italian and Spanish governments have launched actions in the Court of Justice against the European Council to annul the decision of 10 March 2011 to authorize enhanced co-operation in the area of the creation of unitary patent protection.

Although both governments want essentially the same relief their arguments are different. The Italian case is that the decision is ultra vires, incompatible with the objectives of enhanced co-operation, introduced without sufficient consultation and erects a barrier to trade. The Spaniards argue that the Council decision is a misuse of power and fails to respect the judicial system of the EU. Alternatively, the Spanish government says that it is possible to have enhanced co-operation without a dispute resolution system, that the Council decision is discriminatory and discriminatory and disregards the rights of the Kingdom of Spain.

The Spanish and Italian governments are not the only ones to have a go at the unitary patent today. The Guardian published an article by Richard Stallman of the Free Software Foundation entitled "Beware: Europe's 'unitary patent' could mean unlimited software patents." Now one can be for or against software patents and at the same time for and against the unitary patent because they are two quite separate issues. Indeed, the position of Professor Hargreaves and indeed Her Majesty's government seems to be that they are against software patents (see page 62 of his report) but for the unitary patent (page 25 as I mentioned above). Mr. Stallman mentioned Hargreaves recommendation against software patents but omits to mention his support of unitary patents.

The reason why Professor Hargreaves can be for unitary patents but against software patents is that any unitary patent will be a European patent and art 52 (2) (c) of the European Patent Convention excludes from patentabilty programs for computers as such. That exclusion will remain whether we have a unitary patent or not. Of course, the words "as such" will continue to be seized upon by clever patent agents to draft specifications for software implemented inventions but that will happen anyway regardless of whether patents are granted separately for 25 EU member states or for the whole EU minus our pals in Spain and Italy.

I shall keep you informed of developments.

13 August 2011

Patent Litigation in Northern Ireland: Siemens AG v Seagate Technology

"Litigate patents in Northern Ireland? Yes, it can be done" was the headline of the PatLit blog for its case note on Siemens A.G. v Seagate Technology (Ireland) Ltd [2011] NICh 12 as if the author of that piece had seen and heard a talking monkey. No discussion of the case other than the result, an aside from the judge and the delayed publication of the judgment.

In a circular to Solo IP Practitioners that same day, Jeremy Phillips asked
"Does SOLO IP have any Northern Ireland readers out there who would like to share their thoughts and feelings with others -- or who can disabuse this blogger of the impression he has painted above? If so, we'll be delighted to hear from you."
That impression was of rain clouds with the caption "Northern Ireland - better known for its weather than for its IP". The circular continued:
"its small population (fewer than 2 million) and largely agrarian economy probably offer less scope for developing an intellectual property-based practice and in building concentrations of expertise. Also, because of its geographical isolation, IP practitioners must inevitably find it difficult to network with professional colleagues, attend seminars and so on."
"Agrarian?" Hasn't Jeremy heard of the shipyards, aircraft manufacturing, linen, or at least De Lorean. Belfast has a proud industrial heritage. Though many of those industries may have gone the way of Lancashire cotton and Sheffield steel the good people of Ulster are not exactly peasants. Despite decades of troubles between Harold Wilson's sending in the troops and Tony Blair's Good Friday agreement, many new businesses have been established in the province not a few of which are based on science and technology.

"Typical bloody Londoners" I thought. "Why should it not be possible to litigate in Northern Ireland if the parties so wish?" That is just the sort of prejudice that I used to encounter when I settled copyright or trade mark proceedings out of the Manchester or Leeds District Registry. "Oh there are no judges outside London" the other side used to say. Excuse me! Sir Robin Jacob presided over the Chancery District Registries of Birmingham, Bristol and Cardiff and Lord Scott and Sir Andrew Morritt were Vice-Chancellors of the County Palatine of Lancaster. Moreover, the Patents Court and the Patents County Court Guide both provide for the patents judges to sit outside London for the convenience of the parties and to save costs.

But returning to Northern Ireland, I checked the IPO's Facts and Figures for 2009 - 2010 and found on page 2 that there were only 240 patent applications from Northern Ireland compared to 550 from Wales, 1,001 from Scotland and 2,810 from South East England. Having said that, the number of patent applications from the province had gone up from 213 the previous year. That is more than can be said for the East Midlands, London, North West, North East, Scotland, South West, Wales and God's own county where the number of applications actually went down.

I checked out the resources in Northern Ireland. There is the Queen's University in Belfast "a broadly based, research-driven university with a dynamic world-class research and education portfolio and strong international connections". There is the HALO Business Angel Network on the Northern Ireland Science Park. There is a patent information unit at Belfast Central Library which is more than can be said for Manchester now that Chris Brown has gone or Liverpool while it is refurbished. According to CIPA there are 4 patent agencies in Belfast, namely Ansons, F R Kelly, Hanna IP and Murgitroyd and three of those firms have "Trade Mark Experts" listed on the ITMA website. I would add that there is also the excellent Eddie O'Gorman who runs the PatentNAV IP Search and Management Service. So there is already a lot going for Northern Ireland.

It is true that there is not much IP litigation in Northern Ireland. The last patent case from the province before Seagate of which I am aware was Henry Brothers (Magherafelt) Ltd v Ministry Of Defence and Northern Ireland Office [1998] EWCA Civ 1708 (6 Nov 1998) and that was contested in London. The Northern Irish court system seems to be very much like ours with a Court of Judicature consisting of a Court of Appeal and High Court divided into Queen's Bench, Chancery and Family Divisions. According to the Northern Ireland Courts and Tribunals Service ("NICTS") website the "Chancery Office" deals with copyright and patents.

I have struggled unsuccessfully to find a compilation of the Court of Judicature rules on the internet. The basic legislation seems to be the Rules of the Court of Judicature (Northern Ireland) 1980 SR 1980 No 346 and that seems to have been amended many times. There seems to be some influence from the Civil Procedure Rules because I found several pre-action protocols. On the other hand, in Seagate the trial judge referred to Siemens AG as "the plaintiff" rather than the "claimant".

The Seagate case, incidentally, makes very interesting reading. The leading counsel in the case were James Mellor and Colin Birss leading local juniors. The claim was for the infringement of EP0674769 for a magneto resistive sensor the validity of which was challenged on the grounds of obviousness and insufficiency. The transcript suggests that the boys had a little bit of fun while on their holidays in the Emerald Isle. Even though his client was incorporated in the Cayman Islands, Colin seems to have called Siemens a "patent troll" for no better reason that Siemens no longer make the patented invention. That seems to have ruffled James's feathers but he gave as good as he got much to the exasperation of Mr. Justice Deeney at paragraph [20]:
"While Mr Mellor was critical of the defendant's description of his client as a "patent troll" based on these points he was not above robust references to the defendant himself. In particular there was an allegation repeated that the defendant was seeking to over simplify the scientific issues before the court, complex in all truth as they clearly are. I may say that I reject that contention. Rather it seems to me that, if anything, the plaintiff has sought to blind the court with science rather than to narrow and crystallise the issues."
One gets the impression that the judge wished they had taken their dispute to London as happened in Henry Brothers (Magherafelt) Ltd:
"The defendant also draws attention to the fact that the plaintiff chooses to seek adjudication here in the High Court of Northern Ireland with regard to the manufacturer of the wafer, to use a neutral word, produced at Springtown. In doing so it takes upon itself the burden of showing that that product infringes the Patent. It has not chosen to plead infringement of the plaintiff's Patent in the finished sensors in computers, which undoubtedly have measuring contacts and a signal when used in the hard discs manufactured by Seagate. The defendant says that there was nothing to stop the plaintiff suing in the Patent Court in London in regard to the finished product. Despite this point being repeated the plaintiff has chosen not to answer it."

In his very lengthy judgment the learned judge set out in exhaustive detail the provisions of the Patents Act 1977 and the European Patent Convention that he had to apply and directed himself to the following issues at paragraph [17]:
"Issue 1- What are the relevant attributes of the “person(s) skilled in the art” (per Article 83 of the Convention and Section 3 of the Act). This notional person or persons is to be viewed from the relevant agreed date of 21 December 1992, the priority date of the Patent.

Issue 2 - Identify the common general knowledge of this notional skilled addressee, again at 21 December 1992.

Issue 3 - Reading the Patent with the educated eye of the skilled addressee interpret the claims of the Patent where they are disputed. In this case that involves the true construction of Claim 1 of the Patent. (On June 14th Mr Mellor helpfully accepted that I need not concern myself further with Claim 19 as his client no longer contended that it had independent validity. The other claims had earlier been agreed not to require adjudication). In their closing submissions the defendant further identifies within this issue the following:
a) Does the Patent cover Tunnel Magnetic Resistance (TMR hereafter) ?
b) Is the requirement for a sensor comprising measuring contacts to detect a resistance signal satisfied by a layer stack with no measuring components (such as a current source and volt meter)?
c) How are the requirements which relate to the properties of the layers to be approached?
The plaintiff in response does not approbate that division but does not offer any alternative division to the court.

Issue 4 – Having interpreted the claim or claims decide whether the acts carried out by the defendant fall within either of the claims in question. With regard to such infringement of the Patent the defendant draws attention to three particular questions:
a) Do TMR products infringe at all?
b) Do the wafers with no measuring components infringe?
c) Do the TMR sub-units/Giant Magneto Resistance (GMR hereafter) tool kits have the required properties when being tested?

Issue 5 – Utilising the same interpretation of the claims without hindsight and in accordance with the case law decide whether the invention in the Patent was obvious to a skilled addressee in the light of the then common general knowledge. (The defendant sub-divides the issue of obviousness between problems of stray flux and the alternative Patent known as Parkin 1.) If obvious it fails the test in s.3 of the Act, although that refers to the state of the art.

Issue 6 – To decide whether the Patent fails for insufficiency. This is of potential relevance to the earlier issue as to whether the Patent covers TMR. If properly construed it does so, then it must enable a skilled addressee to make a working prototype TMR, which the defendant disputes it does."
On the evidence before him Mr Justice Deeney concluded at paragraph [121] that the patent was invalid for obviousness though not for insufficiency (paragraph [123]) but he refused to revoke the patent or declare it invalid. He also found that the defendant did not infringe the patent in suit.

Now that the courts and legal profession of Northern Ireland have tipped their toes in the water I hope that they will do more IP litigation in Belfast. There is nothing like the crucible of the court room for sharpening skills. Should anyone in Northern Ireland or elsewhere wish to discuss this case note or IP law generally in the province, he or she should call me on 0800 862 0055 or contact me through this form.

11 August 2011

Patents: Convatec Ltd. v Smith & Nephew Healthcare Ltd

In Convatec Ltd. and others v Smith & Nephew Healthcare Ltd and Others [2011] EWHC 2039 (Pat) (27 July 2011), His Honour Judge Birss QC, sitting as a judge of the High Court, tried a claim for patent infringement and a counterclaim for revocation of the patent in suit on the grounds of anticipation, obviousness and insufficiency.

The invention for which the patent was granted was a moist wound dressing. The patent specification explained that most dressings consisted of materials that tended to absorb puss and other body fluids produced by a wound known as exudate. Such absorption tended to dry and thereby stick to the wound thus impeding healing. The invention was a gel that kept the wound moist while absorbing exudate.

The relevant claims were as follows:

    "Claim 1:

    A wound dressing comprising a blend of discrete modified cellulose gel forming fibres with at least one other type of discrete gel forming fibres.

    Claim 3:

    A wound dressing as claimed in any preceding claim wherein the dressing comprises a wound contacting surface consisting of a blend of discrete modified cellulose fibres with at least one other type of discrete gel forming fibres.

    Claim 5:

    A wound dressing as claimed in any preceding claim wherein the dressing comprises a blend of discrete alginate fibres and discrete modified cellulose fibres.

    Claim 9:

    A wound dressing as claimed in any preceding claim wherein the gel forming fibres have an absorbency of at least 2 g of liquid per g of fibre."
The first case I used to get my pupils to read thge first occasion a patent infringement case came into chambers during their pupillage was Nobel's Explosive Co. Ltd. v Anderson (1894) 11 RPC 519. The reason I did that was that it sets out the methodology for deciding whether a patent has been infringed. At page 522 the Master of the Rolls said:
"Now as to the law of the case, - Here is a patent, and an alleged infringement. What is the course that the Court ought to take? In my opinion it is perfectly plain that the first thing that the Court must do is to construe the Specification. How can you consider at all the question whether what is alleged is an infringement of the patent until you have made up your mind what is the true construction of the Specification."
The next question that his lordship addressed was when the specification should be construed. He continued on the next page:
Now what is the very first canon of construction of all written business documents? Why, that the Court ought to construe them the day after they were published. That is the first. Therefore in construing this patent, one has no right to do what Mr Moulton so often invited us to do, by considering what the Defendant has done. I adjure that altogether, and I say we are bound to construe the patent as if we had to construe it before the Defendant was born, if the patent was before that time."
That rule remains as true today as it did then and it is noteworthy and commendable that Judge Birss QC referred to that case at paragraph [68] of his judgment. The reason he did that was that in construing the first of the above claims upon which all the subsequent claims depended he rejected the constructions of both parties' counsel and substituted his own.

Not having been present in court and not having read the skeletons I have to be careful not to do a disservice to my friends on both sides but it seems to me that they spent an awful lot of time exploring blind alleys. For example, there appears to have been a lot of argument over whether the words
"A wound dressing comprising a blend of discrete modified cellulose gel forming fibres with at least one other type of discrete gel forming fibres"
claimed a product or merely a product by process (that is to say, a product derived from a process). Being, as Baroness Kennedy QC once put it, "a puir woman" also from Borealian regions the answer seems to me to have been obvious and so it transpired. With admirable clarity, Judge Birss QC concluded at paragraph [77]:
"Claim 1 is a product claim. It requires the wound dressing to comprise a mixture of two classes of gel forming fibre. The mixture must be intimate but the fibres must retain their separate (discrete) nature. There must be modified cellulose gel forming fibres together with at least one other type of gel forming fibres, i.e. some gel forming fibres not made of modified cellulose."
In cases such as this that turn on the construction of the specification and their own facts there is not much point in going into the details. Counsel for the claimant concluded that claim 1 had been anticipated and the judge found that even if it had been valid it would not have been infringed. He found that the remaining claims to have been valid rejecting the obviousness and insufficiency attacks. Having found claim 1 not to have been infringed he made similar findings in relation to the remaining claims.

It is perhaps worth quoting from the passages that show the judge's reasoning. As to infringement he said at paragraph [48] of his judgment:
"In Kirin Amgen Inc v Hoechst Marion Roussel [2004] UKHL 46, [2005] RPC 9 the House of Lords comprehensively reviewed the principles applicable to patent construction under the 1977 Act bearing in mind Article 69 of the European Patent Convention and the Protocol on the Interpretation of Article 69. Construction of a patent claim is purposive in nature and the question is always to work out what the person skilled in the art would have understood the patentee to be using the language of the claim to mean. Lord Hoffmann put it this way in paragraph 34:

'34. "Purposive construction" does not mean that one is extending or going beyond the definition of the technical matter for which the patentee seeks protection in the claims. The question is always what the person skilled in the art would have understood the patentee to be using the language of the claim to mean. And for this purpose, the language he has chosen is usually of critical importance. The conventions of word meaning and syntax enable us to express our meanings with great accuracy and subtlety and the skilled man will ordinarily assume that the patentee has chosen his language accordingly. As a number of judges have pointed out, the specification is a unilateral document in words of the patentee's own choosing. Furthermore, the words will usually have been chosen upon skilled advice. The specification is not a document inter rusticos for which broad allowances must be made. On the other hand, it must be recognised that the patentee is trying to describe something which, at any rate in his opinion, is new; which has not existed before and of which there may be no generally accepted definition. There will be occasions upon which it will be obvious to the skilled man that the patentee must in some respect have departed from conventional use of language or included in his description of the invention some element which he did not mean to be essential. But one would not expect that to happen very often.'

A number of points emerge from this passage which are of particular relevance to these proceedings. First, the words of the claim are to be construed having regard to the patentee's purpose as set out in the rest of the specification. Second, the exercise is one of interpretation of the words of the claim. It follows that it is not permissible simply to ignore an integer of the claim; nor is it permissible to write a new integer into the claim."

He also referred to the following passage from Lord Justice Jacob's judgment in Virgin Atlantic Airways Ltd v Premium Aircraft Interiors UK Ltd [2009] EWCA Civ 1062 [2010] RPC 8 at paragraph [5]:

    "One might have thought there was nothing more to say on this topic after Kirin-Amgen v Hoechst Marion Roussel [2005] RPC 9. The judge accurately set out the position, save that he used the old language of Art 69 EPC rather than that of the EPC 2000, a Convention now in force. The new language omits the terms of from Art. 69. No one suggested the amendment changes the meaning. We set out what the judge said, but using the language of the EPC 2000:
    [182] The task for the court is to determine what the person skilled in the art would have understood the patentee to have been using the language of the claim to mean. The principles were summarised by Jacob LJ in Mayne Pharma v Pharmacia Italia [2005] EWCA Civ 137 and refined by Pumfrey J in Halliburton v Smith International [2005] EWHC 1623 (Pat)following their general approval by the House of Lords in Kirin-Amgen v Hoechst Marion Roussel [2005] RPC 9. An abbreviated version of them is as follows:
    (i) The first overarching principle is that contained in Article 69 of the European Patent Convention;
    (ii) Article 69 says that the extent of protection is determined by the claims. It goes on to say that the description and drawings shall be used to interpret the claims. In short the claims are to be construed in context.
    (iii) It follows that the claims are to be construed purposively—the inventor's purpose being ascertained from the description and drawings.
    (iv) It further follows that the claims must not be construed as if they stood alone—the drawings and description only being used to resolve any ambiguity. Purpose is vital to the construction of claims.
    (v) When ascertaining the inventor's purpose, it must be remembered that he may have several purposes depending on the level of generality of his invention. Typically, for instance, an inventor may have one, generally more than one, specific embodiment as well as a generalised concept. But there is no presumption that the patentee necessarily intended the widest possible meaning consistent with his purpose be given to the words that he used: purpose and meaning are different.
    (vi) Thus purpose is not the be-all and end-all. One is still at the end of the day concerned with the meaning of the language used. Hence the other extreme of the Protocol—a mere guideline—is also ruled out by Article 69 itself. It is the terms of the claims which delineate the patentee's territory.
    (vii) It follows that if the patentee has included what is obviously a deliberate limitation in his claims, it must have a meaning. One cannot disregard obviously intentional elements.
    (vii) It also follows that where a patentee has used a word or phrase which, acontextually, might have a particular meaning (narrow or wide) it does not necessarily have that meaning in context.
    (vii) It further follows that there is no general "doctrine of equivalents."
    (viii) On the other hand purposive construction can lead to the conclusion that a technically trivial or minor difference between an element of a claim and the corresponding element of the alleged infringement nonetheless falls within the meaning of the element when read purposively. This is not because there is a doctrine of equivalents: it is because that is the fair way to read the claim in context.
    (ix) Finally purposive construction leads one to eschew the kind of meticulous verbal analysis which lawyers are too often tempted by their training to indulge."
Finally the judge reminded himself a paragraph [50] of his judgment that "it is always important to bear in mind that the skilled person reads the specification in light of the common general knowledge and appreciating that its purpose is to describe and demarcate an invention, that is to say a practical idea for a new product or process."
As to obviousness, the judge directed himself as follows at paragraphs [125] and [126]
"125. Section 3 of the 1977 Act 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 by virtue of s2(2) of the 1977 Act. A structured approach to the assessment of obviousness was set out by the Court of Appeal in Windsurfing International Inc v Tabur Marine [1985] RPC 59 and was adjusted somewhat by Jacob LJ in Pozzoli v BDMO [2007] EWCA Civ 588, [2007] FSR 37. It is:
(1) (a) Identify the notional "person skilled in the art";
(b) Identify the relevant common general knowledge of that person;
(2) Identify the inventive concept of the claim in question or if that cannot readily be done, construe it;
(3) Identify what, if any, differences exist between the matter cited as forming part of the "state of the art" and the inventive concept of the claim or the claim as construed;
(4) Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?
126. In Conor v Angiotech [2008] UKHL 49, [2008] RPC 28 the House of Lords considered the issue of obviousness. There Lord Hoffmann (with whom the others of their Lordships agreed) approved the following statement of Kitchin J made in Generics v Lundbeck [2007] RPC 32:

The question of obviousness must be considered on the facts of each case. The court must consider the weight to be attached to any particular factor in the light of all the relevant circumstances. These may include such matters as the motive to find a solution to the problem the patent addresses, the number and extent of the possible avenues of research, the effort involved in pursuing them and the expectation of success."
This is a useful little case for a law student or novice intellectual property practitioner because it really has everything in it. If anyone wants to read another view of this case, I can commend the post of my friend Peter Groves on the case of 27 July 2011 in his Ipso Jure blog.

07 August 2011

TV Streaming: ITV Broadcasting Ltd. and Others v TV Catchup Ltd.

Art 3 (1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society ("the Information Society Directive") required EU member states to
"provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them."
However, art 3 (2) required member states to provide broadcasting organizations only with
"the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them."
The Directive was implemented in the UK by The Copyright and Related Rights Regulations 2003 which were made by the Secretary of State for Trade and Industry pursuant to s.2 (2) of the European Communities Act 1972. Reg. 6 of those regulations amended s.20 of the Copyright Designs and Patents Act 1988 in such a way as to confer upon broadcasters the same right as was to be conferred upon authors by art 3 (1) and not just those that were required to be conferred by art 3 (2).

In ITV Broadcasting Ltd and Others v TV Catchup Ltd. [2011] EWHC 1874 ITV Broadcasting Ltd and a number of other commercial broadcasters relied on that amended section to to sue TV Catchup Ltd. for converting satellite and terrestrial broadcasts into data that could be streamed to subscribers over the internet or to their tablets or mobile phones. I set out the facts and discussed the issues in Copyright: ITV Broadcasting v TV Catchup Ltd, last December when TV Catchup applied unsuccessfully to strike out the claim.

The action came on for trial before Mr. Justice Floyd in June. TV Catchup's principal argument at trial was that s.20 was ultra vires since it went further than art 3 (1) of the Directive. The company also argued that it did not reproduce a substantial part of any of the claimant's works and that in any case its activities were exempted by s.28A and s.73 of the Copyright, Designs and Patents Act 1988.

In his judgment, Mr. Justice Floyd concluded at paragraph [144] that the Secretary of State did not exceed his powers in implementing the Directive. However, he decided to refer the question of whether the defendant infringed copyright by communicating the claimants' works to the public, whether the process of converting broadcast signals into data that could be streamed to subscribers amounted to reproducing a substantial part of the claimants' broadcasts and whether the s.28A defence applied to the Court of Justice of the European Union. He also found that the s.73 defence applied except for transmissions to subscribers' mobile phones or other wireless devices or out of area.

In arriving at his decision on implementation the judge analysed the Court of Appeal's decision in Oakley Inc. and others v Animal Limited and others [2005] EWCA Civ 1191, [2006] Ch 337, [2006] 2 WLR 294 and subsequent cases from which he drew the following principles at paragraph [66]:

    "i) Section 2(2)(b) is not to be approached restrictively as if it were a Henry VIII clause: it is sui generis because it is for the purpose of implementing treaty obligations of this country: Oakley [19], [70];Ahmed [212];

    ii) The primary objective of any legislation implemented under section 2(2) must be to bring into force laws which, by treaty, the United Kingdom has agreed to make part of her laws: Oakley [39];

    iii) Section 2(2)(b) nevertheless goes further than section 2(2)(a) in that it allows for legislation which is not necessary for the implementation of a Directive: Oakley [21], [39], [47], [74];

    iv) Moreover section 2(2)(b) permits legislation to be enacted which is consistent with the Directive but which does not have the same purpose: Cukorova [60];

    v) It is thus incorrect to say that the "child" cannot be wider, larger or "greater" than the parent: Oakley [39], [47], [76];

    vi) How much further the sub-section goes cannot be defined in the abstract – one just has to apply the statutory language to the case concerned: Oakley [47], [80]; Cukorova [60];

    vii) It is not correct to ask whether the measure is distinct, separate or divorced from the Directive and only then to hold it to be unrelated: Oakley [39], [80];

    viii) A measure would not arise out of or be related to an obligation if the Minister was not at the same time bringing into force a Directive, or did not have the trigger of a Regulation becoming directly applicable: Oakley [23];

    ix) Equally, a tenuous or general relationship with the subject matter of the Directive will not be enough: Jacob LJ's example of a Directive on mistake being used to reform the whole of contract law or Moses LJ's connection with financial collateral arrangements or stability of markets: Oakley [78]; Cukurova [99];

    x) In some cases, consistency of subject matter and purpose between Directive and Regulation may not be enough: Cukurova [99];

    xi) The fact that the Directive expressly contemplates that member states may take further steps in the direction in question may be a factor indicating that the measure is within the power: Pothecary[42];

    xii) However, the fact that the measure involves an original policy choice does not necessarily take it outside section 2(2)(b): Oakley, [47];

    xiii) Measures which represent a small further step on the same path as trodden by the primary provisions of the Directive may be within the power, even if they widen the protection of the law to a wider class of individuals or cases than required by the Directive: Pothecary [42];

    xiv) The extent to which the measure is consistent with pre-existing domestic law may be a factor. So if a Directive requires a law to be enacted in relation to one species of case recognised by domestic law: it may be legitimate to legislate at the same time for a sub-species of that case: Pothecary [42]."

The former s.20 had already given some protection for broadcasts and cable programmes and there was nothing in the Directive that required the Secretary of State to revoke such protection. However, the Directive required an additional restriction of wireless transmission for on-demand access. S.2 (2) (a) of the 1972 Act confers a genera power on ministers to implement EU obligations by secondary legislation but s.2 (2) (b) enables them also to deal with matters arising out of, or relating to, such implementation. In preserving the existing protection in the amending s.20 as well as adding to it to comply with the Directive the Secretary of State was exercising the powers conferred to by s.2 (2) (b).

Although he was of the opinion that TV Catchup had communicated the claimants' broadcasts to the public a distinction had to be drawn an act that qualifies as a communication to the public and just providing a means of access and the precise boundary between the two was not clear from the Court of Justice's decision in Case C-306/05 SGAE v Rafael Hoteles SL [2006] I-11519. As Mr. Justice Floyd put it at paragraph [90]:
"What is less clear from the decision of the CJEU in Rafael Hoteles is whether there is a communication to the public when an intervening organisation, acting for its own profit, intervenes in full knowledge of the consequences of its acts and in order to attract an audience to its own transmission and advertisements, to communicate the original broadcast signal to members of the public who would in fact be able to access the original broadcast signal using their own television sets or laptops in their own homes. Reading paragraph [40] of the judgment in isolation would give an affirmative answer. But other passages suggest that it is material to ask whether there is a "new public" and whether the hotel guests would have been able to access the broadcasts without the intervention. I consider that the principles which it is possible to extract from Rafael Hoteles do not go far enough to enable me to answer that question conclusively in the claimants' favour. I propose therefore to refer a question for the opinion of the Court of Justice on this point."
The issue on reproduction arose because the process of converting television signals into data involves the transient reproduction of the broadcast on TV Catchups computers and its subscribers' screens. Relying on Football Association Premier League Ltd. and others v QC Leisure and others [2008] EWHC 1411 the judge inclined to the view that such transient copying did not amount to reproduction of a substantial part of the protected work. However, that had been put in doubt by the Court of Justice's subsequent decision in Case C-5/08 Infopaq International A/S v Danske Dablades Forening [2009] EUECJ C-5/08, [2009] ECDR 16, [2010] FSR 20, [2009] ECR I-6569 albeit in the rather different context of scanning newspaper articles. He therefore decided to refer this point to the Court of Justice too.

The Football Association and Infopaq cases had considered the extent of the s.28A exception to the CDPA which had also been inserted by the 2003 Regulations to implement the Directive. This section provides:
    "Copyright in a literary work, other than a computer program or a database, or in a dramatic, musical or artistic work, the typographical arrangement of a published edition, a sound recording or a film, is not infringed by the making of a temporary copy which is transient or incidental, which is an integral and essential part of a technological process and the sole purpose of which is to enable -
    (a) a transmission of the work in a network between third parties by an intermediary; or
    (b) a lawful use of the work;
    and which has no independent economic significance."
The scope of the s.28A exception had already been referred to the Court of Justice in relation to the Football case. The judge decided to defer judgment on the point until after the Court had decided the issue.

Finally s.73 (2) of the CDPA provides:
"The copyright in the broadcast is not infringed—
(a) if the re-transmission by cable is in pursuance of a relevant requirement, or
(b) if and to the extent that the broadcast is made for reception in the area in which it is re-transmitted by cable and forms part of a qualifying service."
A"relevant requirement" is defined by s.73 (7) as a requirement imposed by a general condition (within the meaning of Chapter 1 of Part 2 of the Communications Act 2003) the setting of which is authorised under section 64 of that Act (must-carry obligations). Sub-section (6) includes all the claimants' services as a "qualifying service". The judge thought that this section must cover streaming through wired connections to personal computers but not to tablets or mobile phones.

In its response to Hargreaves the government accepted and shared the concern that "the IP framework is falling behind and must adapt". That criticism was made a few days ago in relation to the Court of Appeal's decision in Meltwater where a licensing scheme for the use of a new technology was in place. The criticism can be made with far greater cogency to a case like this where relatively small businesses are developing a new technology that could greatly increase consumer choice of entertainment and news but which is hampered by legal uncertainties. Those uncertainties will increase rather than diminish as a result of this judgment. That is not the fault of Mr. Justice Floyd whose analysis was masterly. The difficulty arose from the legislation and case law that he had to apply.

05 August 2011

Court of Appeal upholds Proudman's Decision in Meltwater

"King's Moll Reno'd in Wolsey's Home Town." Thus an American newspaper reported the divorce of the Duchess of Windsor from second husband Ernest Aldrich Simpson at Ipswich Assizes. This witty pithy sentence imported a new verb into Cisatlantic English, namely "to Reno" for which there is still no equivalent, alluded to the family law of the state of Nevada and Tudor history. Yes, Henry VIII's first minister, the builder of Hampton Court, was indeed a butcher's boy from the county town of Suffolk. If this headline does not deserve copyright protection I don't know what does.

Mrs. Justice Proudman certainly thought so as I reported in "Newspaper Licensing: The Newspaper Licensing Agency Ltd. v Meltwater Holding BV and Others" on 28 Nov 2010. But the Public Relations Consulting Association Ltd. who were the effective defendants in the Meltwater case argued that she was wrong in their appeal (The Newspaper Licensing Agency Ltd. v Meltwater Holding BV and others [2011] EWCA Civ 890 (27 July 2011), The Chancellor of the High Court and Lords Justices Jackson and Elias agreed with her ladyship describing her conclusion as "unassailable" at paragraph [22].

Similarly, the lordships dealt with the contention that a 256 character digest was too short and too factual to amount to a substantial part of a newspaper article. The Chancellor said at [28]:
"I do not accept these criticisms. Each time Meltwater produces an edition of its news for a client, depending on the search term or agent, a large number of extracts are taken from a variety of publications, in some cases several from the same article. Given the principles to be applied it seems to me to be inevitable that some of them will constitute a substantial part of the original so as, when copied by the client, prima facie, to amount to an infringement of copyright in the original literary work."
The Court of Appeal also agreed that not of the exceptions relied on by the Consultants could apply.

The main point of the appeal, however, was that the judge's decision necessitated "double licensing", They drew an analogy to subscribers to a clipping agency who do not require a licence to read extracts from the claimant's columns in hard copy. The flaw in their argument is that reading does not require reproduction whereas viewing in a browser does, I discussed the point in detail in my
previous case note because it underpins the right of a website owner to control linking and downloading of material from his or her website. That is one of the reason why this case is so significant and why pace my dear friend Steve Kuncewicz this decision is to be welcomed. As the Chancellor put it at paragraph [47]
"The copies created on the end-user's computer are the consequence of the end-user opening the email containing Meltwater News, searching the Meltwater website or accessing the Publisher's website by clicking on the link provided by Meltwater. They are not the same copies as those sent by Meltwater. PRCA admitted as much in its defence and the agreed statement of facts. For these reasons I consider that the double licensing contention is unmaintainable."
The only ground upon which the Court of Appeal differed from the trial judge was that her declaration went further than her findings or the Court of Appeal's conclusions warranted. It was not the case that every recipient or user of Meltwater News would inevitably infringe the copyright so as in all cases to require a licence or consent from the publisher. There may be some cases in which neither the headline nor the 'scrapings' would constitute a copyright work or a substantial part of a copyright work. A licence would not be required in such a case but there cannot be many of them. Accordingly the Court of Appeal modified the declaration by inserting the words "most if not all" before the words "members of the PRCA".

In my case note I mentioned the commissioning of the Hargreaves Report. I have discussed the report in some detail in "IP Policy: Does Hargreaves say Anything New" on 24 June 2011. Shortly after the Court of Appeal's judgment Dr Vince Cable announced in a letter to stakeholders dated 3 Aug 2011 that HM Government accepted all Professor Hargreaves's recommendations, In a press release on the same day the Meltwater Group seemed to draw solace from that announcement. I am not sure why because I have read the government's response and Hargreaves very carefully and can find nothing that would reverse the finding of the Court of Appeal and over 100 years of case law.

Should amplification or clarification of this case note be required please call my chambers on 0800 862 0055 or complete the "Can we help you?" form.

03 August 2011

Copyright: Twentieth Century Fox Film Corp. v British Telecommunications Plc

In Twentieth Century Fox Film Corporation and Others v Newzbin Ltd. [2010] EWHC 608 (Ch), [2010] ECC 13, [2010] FSR 21, [2010] EMLR 17, [2010] ECDR 8, members of the Motion Picture Association of America Inc. ("the MPAA") sued an English company called Newzbin Ltd. ("Newzbin") in the Chancery Division for copyright infringement. Newzbin operated a website through which subscribers could search the Usenet for files that members of the public had posted download and view them. I explained how the Usenet worked in my article Reflections on Newzbin which I posted to my chambers website on 2 Sep 2010.

Much, though by no means all of the matter posted to the Usenet infringes copyright including the copyrights of some of the MPAA's member studios in their films and television shows. The way that was done was to digitize a film, TV programme, sound recording, book or other work - that is to say convert it into sequences of ones and noughts known as binaries. As can be imagined, the binary file for a film can be very large indeed so it has to be broken down into parcels that are laborious to locate, download, collate and reconstruct. As few members of the public have the skill, time, patience or technical skills to do that work the Usenet was not worth bothering about for most copyright owners. After all, the quality of much of the stuff on the internet was very low - films recorded in a cinema with a camcorder - and most people with a life preferred to visit the cinema on an Wednesday with a friend who had an Orange mobile phone, wait for the DVD to appear in Tesco or perhaps a little bit longer still for it to be shown on telly. The threat posed by Newzbin to the MPAA and other copyright owners was that its web based service could be used by people with few technical skills and it charged users very little. In other words, it made piracy a viable alternative to watching a film in the cinema or on telly or buying the DVD.

As I explained in "Copyright: Twentieth Century Fox v Newzbin" and "Reflections on Newzbin" I took over the defence of Newzbin at a very late stage after all the evidence was in. All I could do was make oral and written submissions on the company.'s behalf. Despite my best efforts Mr Justice Kitchin found on 29 March 2010 that Newzbin had infringed the MPAA's copyrights in some of their films by authorization, participating in a common design and communicating those works to the public. There was, however, further argument in April 2010 over the terms of the injunction as a result of which his lordship ordered:
"2. The Defendant shall be restrained (whether acting by its directors, officers, servants, agents or any of them or otherwise howsoever) from infringing copyright in or relating to the following motion pictures and television programmes:
(i) Those identified in the lists provided to the Defendant on 21 May 2008, 29 May 2009 and 8 April 2010;
(ii) Those identified in any other written list provided in electronic form to the Defendant or its solicitors hereafter;
(iii) Those identified in any list that is made available on-line at any URL of which the Defendant or its solicitors are notified in writing hereafter.

3. The Defendant shall ensure that users of its Newzbin Website or any other service its provides cannot, by use of the said website or service, infringe copyright in or relating to the following motion pictures and television programmes, episodes and series:
(i) Those identified in the lists provided to the Defendant on 21 May 2008, 29 May 2009 and 8 April 2010;
(ii) Those identified in any other written list provided in electronic form to the Defendant or its solicitors hereafter;
(iii) Those identified in any list that is made available on-line at any URL of which the Defendant or its solicitors are notified in writing hereafter."
The MPAA had sought a broader order under s.97A of the Copyright, Designs and Patents Act 1988 restraining Newzbin Ltd "from including in its indices or databases entries identifying any material posted to or distributed through any Usenet group in infringement of copyright". That section provides as follows:
"(1) The High Court (in Scotland, the Court of Session) shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.
(2) In determining whether a service provider has actual knowledge for the purpose of this section, a court shall take into account all matters which appear to it in the particular circumstances to be relevant and, amongst other things, shall have regard to B
(a) whether a service provider has received a notice through a means of contact made available in accordance with regulation 6(1)(c) of the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013); and
(b) the extent to which any notice includes -
(i) the full name and address of the sender of the notice;
(ii) details of the
infringement in question.
(3) In this section "service provider" has the meaning given to it by regulation 2 of the Electronic Commerce (EC Directive) Regulations 2002."
Mr. Justice Kitchin refused to make that order for the following reasons:
"First, it is apparent from the terms of Directive 2001/29/EC that it is contemplating the grant of an injunction upon the application of rights holders, yet the claimants are seeking an injunction to restrain activities in relation to all binary and all text materials in respect of which they own no rights and about which I have heard little or no evidence. Second, I do not accept that the defendant has actual knowledge of other persons using its service to infringe all such rights. Therefore I am not persuaded I have the jurisdiction to grant such an injunction in any event. Third, the rights of all other rights holders are wholly undefined and consequently the scope of the injunction would be very uncertain. In my judgment the scope of any injunction under section 97A(2) [sic] should extend no further than that to which I have already concluded the claimants are entitled, namely an injunction to restrain the defendant from infringing the claimants' copyrights in relation to their repertoire of films."
After the action Newzbin went into creditors' voluntary liquidation. Its website continued until 17 May 2010 and then disappeared.

Shortly afterwards a new Newzbin service ("Newzbin II") appeared hosted on Swedish servers at the previous URL the domain name of which is registered in the Seychelles. On 23 Sept 2010 the MPAA asked BT to block access to the new Newzbin service or at least not oppose an application under s.97A of the Act. BT refused to block access to the site on the ground that it would face legal liability on a number a fronts without an order and that it could not decide whether or not to oppose the order without seeing the papers. On being served with the claim form and application notice BT decided to oppose the application. It has to be said that it did so with considerable vigour making every point that could reasonably be made in that regard.

This action has raised considerable interest not just among intellectual property lawyers or even the entertainment industry but among the public at large. It was one of the few IP cases to make the news headlines when Mr. Justice Arnold gave judgment on 28 July 2011 (Twentieth Century Fox Film Corp. and Others v British Telecommunications Plc [2011] EWHC 1981). There are two reasons for such interest. The first is that the Digital Economy Act 2010 ("DEA") was passed in the dying days of the last government after considerable lobbying from the media industry. The second is that Professor Hargreaves has delivered his report "Digital Economy: A Review of Intellectual Property and Growth" which I discussed on 24 June 2011 in "IP Policy: Does Hargreaves sayanything new?"

The DEA and Hargreaves represent different approaches to the problem of on-line piracy which Mr. Justice Arnold summarized at paragraph [23] of his judgment:
"A number of solutions to the problem of online copyright infringement have been proposed. In EMI v UPC at [34]-[49] Charleton J described and assessed three different potential technical solutions, including the CopySense system produced by Audible Magic referred to below. The Digital Economy Act 2010, and similar laws in other countries such as France's HADOPI (Haute Autorité pour la diffusion des œuvres et la protection des droits sur internet) law, represent another approach. In Digital Britain Professor Hargreaves listed at paragraph 8.24 eight different categories of measures for tackling digital piracy which rightholders had advocated to his Review, one of which was "working with ISPs as gatekeepers to the internet to ensure legitimate businesses do not suffer at the hands of illegal services". At paragraph 8.45 he concluded that "we need a combination of enforcement, education and a big push to expand the legitimate market for digital content."
Coincidentally, Dr. Vince Cable, the Secretary of State for Business Innovation and Skills is due to speak on HM government's policy on the implementation of the DEA and the Hargreaves report at the British Library today upon the publication of the government's response to Hargreaves. That will be the subject of yet another post from me in the next few days.

Mr. Justice Arnold acceded to the MPAA's request.

First, unlike Mr. Justice Kitchin in the passage from his judgment in the April hearing that I have quoted above, Mr. Justice Arnold believed that he had jurisdiction to make an order under s.97A. In response to the argument that there was no use of BT's service to infringe copyright, he said at paragraph [100]:
"The question here is whether, when a BT subscriber who is a member of Newzbin2 visits the Newzbin2 website, downloads an NZB file and then downloads an infringing copy of a film or a television programme, that subscriber is using BT's service to infringe copyright. BT contends that the subscriber is not using its service, but the service provided by Newzbin2. In my view this is a false dichotomy. It is common ground that the subscriber uses the Newzbin2 website to infringe, but it does not necessarily follow that the subscriber is not using BT's service to infringe. The subscriber may be using both services to infringe."
After considering BT's arguments he reviewed the case law from the Court of Justice of the European Union and the courts of other member states on the European legislation that s.97A of the CDPA is intended to implement. Relying particularly Case C324-09 L'Oreal SA and others v eBay International AG [2011] EUECJ C-324/09 which he referred to Luxembourg the judge concluded at paragraph [156]:
"Section 97A must be interpreted and applied consistently with the Court of Justice's guidance in L'Oréal v eBay. In my judgment the Court's reasoning demonstrates that the jurisdiction is not confined to the prevention of the continuation, or even repetition, of infringements of which the service provider has actual knowledge. On the contrary, an injunction may be granted requiring the service provider "to take measures which contribute to … preventing further infringements of that kind". Although such measures may consist of an order suspending the subscriber's account or an order for disclosure of the subscriber's identity, the Court of Justice makes it clear at [143] that these examples are not exhaustive, and that other kinds of measures may also be ordered."
The other ground upon which Mr. Justice Kitchin refused to make an order under s.97A was that the MPAA did not own the copyrights in all the matter that could be accessed through the Newzbin website. Without trying too hard I was able to find at least a few last year such as Eisenstein's Battleship Potemkin which are out of copyright. "Why should honest cinema buffs be denied the pleasure of those?" I argued. His lordship answered the point this way at paragraph [185]:
"In my judgment, subject to the points that remain to be considered, the Studios have established their entitlement to an injunction under section 97A. It appears from the evidence that the Studios form the biggest single group of rightholders interested in obtaining such relief. In any event, it is clear that the Studios' rights are being infringed on a massive scale. In those circumstances, I consider that they have a sufficient interest to justify the making of the order sought. It is true that the order sought will also benefit other rightholders, but I do not regard this as a reason for refusing the order. On the contrary, I consider that it supports the making of the order. So far as the groups of rightholders referred to in paragraph 4 above are concerned, they all support the application. It is immaterial that they have not formally joined in the application. So far as other rightholders are concerned, their rights under Article 1 of the First Protocol are also engaged and there is no reason to believe that they would not be equally supportive of the application."
The judge recognized at paragraph [186] that the order sought would potentially prevent BT subscribers from making use of Newzbin2 for non-infringing uses. On the evidence, however, the incidence of such uses is de minimis.

The Protocol to which the judge referred in the above extract was to the Convention on Human Rights. It was in answer to the argument that the order would sought would infringe the right to freedom of expression guaranteed under art 10. I derive a certain amount of personal satisfaction from that last sentence of paragraph [185] as I once argued unsuccessfully that the right to enjoyment of intellectual property was protected by Art 1 of the Protocol and had to be balanced against other Convention rights in the Manchester applications court before His Hon. Judge Haworth shortly after the Human Rights Act 1998 came into force.

The judge dealt very quickly with the remaining points on BT's liability to multiple claims, efficacy, proportionality and whether there should be a justice to the Court of Justice.

Ofcom has today published a redacted report on site blocking. The technology that BT will be required to operate to implement this order is known as "Cleanfeed". It is currently used to block pornography, terrorist and other criminal sites. Mr. Justice Arnold described it at paragraph [70] of his judgment. No doubt other ISPs across the land will be receiving letters from the MPAA's solicitors asking for the use of this or similar technology. Ofom has also reported on the costs of the various options.

Should any of those ISPs, their professional advisers or anyone else require amplification or clarification of this long and difficult judgment they should not hesitate to call me on 0800 862 0055 or use my contact form.