25 July 2016

Tripping: TripAdvisor v Handsam

Handsam Ltd. describes itself as "a leading provider of online management systems, consultancy services and advice to both the business and education sectors." Its specialisms include health and safety management, policy writing and advice in all areas, security, fire, training and data protection. It has recently extended its online services to include a school trip planning system. Its systems claim to offer its clients guaranteed compliance, audit trails or chain of evidence collection and peace of mind for leaders, directors and managers.

By an application dated the 15 July 2014 Handsam applied to register the following sign as a trade mark for the following goods and services.

The specified goods and services were:
Class 16: Magazines; Books; Leaflets; Printed guides; Printed manuals; Printed matter for educational purposes; Teaching materials for education; Printed matter for instructional purposes.
Class 35: Business advice; Business management advisory services; Advice relating to business information systems; Consultancy relating to business management; Business advisory services for educational establishments.
Class 41: Advisory services relating to education; Advisory services relating to the organisation of events; Advisory services relating to the organisation of field trips and visits.
Class 45: Consultancy services relating to health and safety; Information services relating to health and safety; Fire safety consultancy services.

The application was opposed by TripAdvisor LLP under s.5 (2) (b), s. 5 (3), s. 5 (4) (a) and s. 3 (6) of the Trade Marks Act 1994.  TripAdvisor relied on its registration of three Community (now European Union) trade marks:
  • CTM 6441381
  • CTM 11884137, and
  • CTM 6989404
Under CTM 6441381 TripAdvisor had registered the word TRIPADVISOR for the following goods and services:
Class 38: Providing on-line electronic bulletin boards for transmission of messages among computer users in the field of travel.
Class 39: Travel information services; providing an online computer database in the field of travel information services; providing online travel information in the form of reviews of travel service providers, travel destinations, and local attractions.
Class 42: Computer services, namely, providing search engines for obtaining travel data on a global computer network; hosting a website containing reviews of hotel accommodations and travel service providers, travel destinations, and local attractions.
Class 43: Providing lodging information services; providing online accommodation information in the form of reviews of hotel accommodations.
Under CTM 11884137 TripAdvisor had registered the word TRIPADVISOR for a wide range of services in classes 35, 41 and 45, which inclided “education” “education information” and various entertainment services.

Under CTM 6989404 TripAdvisor has registered the device for the goods and services that are listed below.

The specified goods and services were:
Class 38: Providing on-line electronic bulletin boards for transmission of messages among computer users in the field of travel.
Class 39: Travel information services; providing an online computer database in the field of travel information services; providing online travel information in the form of reviews of travel service providers, travel destinations, and local attractions.
Class 42: Computer services, namely, providing search engines for obtaining travel data on a global computer network; hosting a website containing reviews of hotel accommodations and travel service providers, travel destinations, and local attractions.
Class 43: Providing lodging information services; providing online accommodation information in the form of reviews of hotel accommodations
The opposition came on before Mr Oliver Morris who delivered his decision on the 15 Dec 2016 (see Re Handsam Ltd's Trade Mark Application, TripAdvisor LLP v Handsam Ltd. BL 0/590/15 15 Dec 2015). Mr Morris allowed the opposition in respect of magazines, books, leaflets, printed guides in c lass 16 and advisory services relating to the organisation of events, advisory services relating to the organisation of field trips and visits in class 41 but rejected it in respect of everything else.

In reaching his decision on s.5 (2) Mr Morris reminded himself of the case law of the Court of Justice of the European Union and the English Courts, He compared the goods and services for which Handsam had sought to register its sign with those for which TripAdvisor's marks had been registered. He considered the attention that would be given to the signs sought to be registered by the average consumer. He compared Handsam's sign with each of the earlier marks and assessed the likelihood of confusion.

As to s.5 (3), the hearing officer considered the decisions of the Court of Justice in General Motors Corp v Yplon SA(Chevy) [1999] ETMR 122 and [2000] RPC 572 and Intel Corporation Inc v CPM (UK) Ltd[2009] ETMR 13, [2009] Bus LR 1079, [2009] RPC 15, [2008] EUECJ C-252/07, [2008] ECR I-8823 as to the degree of similarity or link between the mark to be registered and the earlier mark. In respect of the goods and services that he had not found to be similar to those for which the mark had been registered he could find no link and held that the opposition failed on that ground alone.

He also considered the opposition under s.5 (4) and found that it added nothing to the claim under s.5 (2). As to the allegation of registration in bad faith he concluded:
"It cannot be an act of bad faith, absent any other circumstance, to apply to register a trade mark that is neither confusingly similar to the opponent’s earlier mark, which does not take unfair advantage of, or is not detrimental to, the distinctive character or the repute of the earlier trade mark, or which does not misrepresent itself as being associated with the opponent’s goodwill. To borrow a saying, this is a case of no harm, no foul."
TripAdvisor appealed to the Chancery Division against the decision. It complained that the hearing officer had failed to conduct the necessary global assessment required by s. 5 (2) and that he had incorrectly applied the case law when considering the link necessary to bring the opposition within section 5 (3). The case came on before Mr Justice Warren who dismissed the appeal in Tripadvisor LLC v Handsam Ltd [2016] EWHC 1659 (Ch) (7 July 2016).

As to the appeal under s.5 (2), the judge understood the principal complaint to be that the hearing officer had
"carried out an improperly truncated global assessment in respect of the allowed goods and services, which resulted in relevant factors being entirely, omitted, not simply being given too little weight." 
TripAdvisor's grounds of appeal identified number of instances where such shortcomings were said to have occurred though its skeleton argument was said to have focused on only two of them.  One of those alleged shortcomings was that the hearing officer concentrated on the differences between TripAdvisor's mark and Hardsam's instead of the similarities. His Lordship considered that criticism to be misplaced. In the judge's view the hearing officer was entitled to find that the differences between the marks were ample to avoid the marks from being directly mistaken for one another.

As to the appeal under s.5 (3) Mr Justice Warren concluded at para [70]:
"(i) First, Mr Morris effectively concluded (see [76]) that the use of the Handsam mark would not take unfair advantage of, or be detrimental to, the distinctive character or the repute of TripAdvisor's marks. Those were not his precise words, but it is clear that he was addressing the last part of section 5(3), making a finding that there was no detriment.
ii) Secondly, I am of the view that, in reaching his decision concerning the absence of the necessary link in relation to the allowed goods, Mr Morris did not make any distinct and material error of principle; further, he was not clearly wrong to reach the conclusion which he did, indeed, I would have reached the same view."
Both decisions are worth reading but the painstaking decision of the hearing officer on every possible point is likely to be the more useful for practitioners. Mr Morris reviewed the jurisprudence on s.5 (2), (3) and (4) and s.3 (6) very carefully and I have already incorporated his reasoning on bad faith into an opinion. It is in fact very difficult to understand Mr Justice Warren's judgment without a very close reading of Mr Morris's decision.

Should anyone wish to discuss this case note or trade mark oppositions in general he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.

18 July 2016

Injunctions against ISPs: The Cartier Appeal

Cartier Watch
Author Noop1958
Creative Commons Licence
Source Wikipedia

Cartier International AG and Others v British Sky Broadcasting Ltd and Others [2016] EWCA Civ 658 (6 July 2016) 

In  Cartier International AG and Others v British Sky Broadcasting Ltd and Others [2015] ETMR 1, [2015] 1 All ER 949, [2014] EWHC 3354 (Ch), [2015] RPC 7, [2014] WLR(D) 464, [2015] 1 All ER (Comm) 641, [2015] BUS LR 298, [2015] EMLR 10 Mr Justice Arnold ordered the five leading internet service providers to block access to certain websites that offered counterfeit Cartier goods for sale under s.37 (1) of the Senior Courts Act 1981. I discussed the case in Injunctions against ISPs Part VIII: Cartier International AG and Others v British Sky Broadcasting Ltd and Others 6 Jan 2015. This was not the first time a court had ordered an ISP to block access to a website that infringed a claimant's intellectual property rights.  A number of earlier cases had already been brought under s.97A of the Copyright, Designs and Patents Act 1988. The significance of this case is that it had been brought under s.37 (1) because there is no equivalent to s.97A in the Trade Marks Act 1994 or any of the other IP statute.

In my case note I observed:
"None of the orders made by Mr Justice Arnold or other judges in the earlier cases has ever been appealed successfully and it is unlikely that anyone will appeal or apply to vary this order."
Contrary to my expectations the ISPs did appeal. Their appeal came on before Lords Justices Jackson, Kitchin and Bruggs in Cartier International AG and Others v British Sky Broadcasting Ltd and Others [2016] EWCA Civ 658 (6 July 2016).  The appeal was unsuccessful. All three Lord Justices found against the ISPs though Lord Justice Briggs would have ordered the rights holders to bear the costs of "obtaining valuable injunctive relief for the better exploitation of its intellectual property."

The ISPs' grounds of appeal were summarized by Lord Justice Kitchin at paragraph [7] of his judgment:
"They contend, in broad outline, that they are wholly innocent parties and are not alleged to be wrongdoers; that the court had no jurisdiction to make any such order; that if the court did have jurisdiction, the jurisdictional threshold requirements were not satisfied in the circumstances of these cases; that the judge failed properly to identify the correct principles that should be applied in deciding whether or not to make an order; that the orders made were disproportionate having regard to the evidence before the court; and that the judge fell into error in making the orders that he did in relation to costs."
The Open Rights Group also made written submissions on the position of third parties who are potentially affected by website blocking orders which Lord Justice Kitchin said he found very helpful.

As to jurisdiction, the ISPs argued that they were entirely innocent of any wrongdoing, they do not owe  any duty to prevent trade mark infringement committed by third parties, including those who operate websites offering counterfeit goods for sale, either under the Trade Marks Act 1994 or at common law, that s.37 (1) gave the courts no power to grant injunctions where none existed before the Act was passed, that it is a fundamental feature of the court's practice that it is not generally possible to obtain injunctive relief against a party without a substantive cause of action against it and that the Norwich Pharmacal exception should not be extended.  The Court of Appeal accepted that the ISPs were not guilty of any wrongdoing and that they did not owe a common law duty of care to take reasonable care to ensure that their services are not used by the operators of the offending websites but rejected the rest of their argument.

All three Lord Justices agreed that Mr Justice Arnold had been right to hold that he had power to grant blocking orders under s.37 (1).  That power arose upon a proper construction of the statute even without reference to art art 11 of the Enforcement Directive (Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (L195/16 2.6.2004)) but art 11 reinforced the position in national law. That article requires EU member states to ensure inter alia that:
"rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive 2001/29/EC."
The scope of that provision had been referred to the Court of Justice of the European Union in Case C-324/09 L'Oreal SA and Others v eBay International AG and Others [2012] Bus LR 1369, [2011] RPC 27, [2011] ETMR 52, [2012] All ER (EC) 501, ECLI:EU:C:2011:474, [2011] ECR I-6011, [2012] EMLR 6, [2011] EUECJ C-324/09, EU:C:2011:474. The CJEU held that:
 "art.11 of Directive 2004/48 must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade."
Accordingly Lord Justice Kitchin concluded at para [65] of his judgment:
"It seems to me to be clear from this guidance that Article 11 does indeed provide a principled basis for extending the practice of the court in relation to the grant of injunctions to encompass, where appropriate, the services of an intermediary, such as one of the ISPs, which have been used by a third party to infringe a registered trade mark. There is no dispute that the ISPs are intermediaries within the meaning of Article 11 and accordingly, subject to the threshold conditions to which I shall shortly come, I believe that this court must now recognise pursuant to general equitable principles that this is one of those new categories of case in which the court may grant an injunction when it is satisfied that it is just and convenient to do so."
Having decided that the court did have jurisdiction to make the orders appealed against, the Lord Justices considered whether Mr Justice Arnold had exercised his jurisdiction correctly.

The first objection was that the orders limited the ISPs freedom to conduct their business under art 16 of the Charter of Fundamental Rights of the European Union and their customers' freedom of expression under art 11. Art 52 (1) of the Charter provides:
"Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others."
The ISPs had argued that the limitations were not provided for by law and that Mr Justice Arnold's orders allowed the claimants to require the ISPs to extend the scope of those orders without reference to the court. The argument that the limitations were not provided for by law fell with the Court's decision on jurisdiction. As for the second, Lord Justice Kitchin said at [78]:
"I accept that the orders were likely to have the effect of blocking access to the websites of third parties. But this was a matter of which the judge was acutely conscious and his orders were carefully framed to deal with it. Specifically, the orders provide that where a server hosting a target website also hosts another website, then an ISP which is required to adopt IP address blocking measures is only required to block the target website's IP address where Richemont or its agents certify that the third party site is engaged in unlawful activity and that, if the website has disclosed a means of contact, appropriate notice has been sent to the operator of that site informing it of, inter alia, the order, why it is appropriate for the website to be blocked and that it may move the website to a different server. In my judgment this is a regime which deals in an entirely proportionate and appropriate way with the necessary mechanics of making a blocking order effective without interfering with the legitimate interests of other operators. It does not involve any activity which is not provided for by law."
 The Court of Appeal endorsed Mr Justice Arnold's finding that the following threshold conditions which must be satisfied before a website blocking order is made.
"First, the ISPs must be intermediaries within the meaning of the third sentence of Article 11. Secondly, either the users or the operators of the website must be infringing the claimant's trade marks. Thirdly, the users or the operators of the website must use the services of the ISPs. Fourthly, the ISPs must have actual knowledge of this."
The Court held that all four conditions had been satisfied.

It finally addressed the principles to be applied in considering whether to make a website blocking order which Mr Justice Arnold had listed as follows:

  • The relief must be necessary; 
  • It must be effective; 
  • It must be dissuasive; 
  • It must not be unnecessarily complicated or costly; 
  • It must avoid barriers to legitimate trade; 
  • It must be fair and equitable and strike a "fair balance" between the applicable fundamental rights; a
  • It must be proportionate;
  • It must have regard for the substitutability of other websites for the target websites; and 
  • Remedies should be applied in such a manner as to provide safeguards against their abuse.

The Court of Appeal endorsed all those principles, considered whether the judge below had applied them correctly and considered that he had.

Between paragraphs [23] and [31] of his judgment Lord Justice Kitchin set out the legislation that he had to apply which included the E-Commerce Directive (Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market L 178 , 17/07/2000 P. 1 - 16) as well as the Enforcement Directive and Charter which have been mentioned above. The Charter will fall away altogether and Parliament will cease to be bound by the Directives when the UK leaves the EU. It is therefore worth considering whether the decision will continue to be good law after our departure. In my view it probably will because the Senior Courts Act will not be affected by Brexit. Art 11 merely reinforced the Court's power under s.37 (1). Future cases will probably be decided purely on the balance of convenience with which the threshold conditions and applicable principles will be completely compatible. The absence of a European dimensions should simplify judicial decision making as it will no longer be necessary to refer to the Charter or underlying directives.

If anyone wishes to discuss this article or applications against ISPs generally, he or she should call me on 0202 7404 5252 during office hours or send me a message through my contact form.

    07 July 2016

    The Trade Secrets Directive

    The adoption by the Council and European Parliament of Directive (EU) 2016/943 of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ 15.6.2016 L 157/1) ("the Trade Secrets Directive") seems to have been overlooked in the furore over Brexit. The directive lays down rules on the protection against the unlawful acquisition, use and disclosure of trade secrets and is due to be implemented by 9 June 2018. As the negotiation of a withdrawal agreement is likely to take some time and our incoming prime minister seems to be in no hurry to begin such negotiations there is every chance that the UK will still be in the EU by that date.

    Even though we are on the way out of the EU I hope we implement the Trade Secrets Directive for two reasons. The first is that it is an opportunity to codify our trade secrets law. Something that has already been done in the USA where 47 states and several territories have enacted the Uniform Trade Secrets Act, Canada where the Uniform Law Conference of Canada has drafted its own Uniform Trade Secrets Act and the Dubai International Financial Centre (see my article DIFC Law of Confidence 27 Jan 2011 NIPC Gulf). The second is that it will bring our law closer to those of our neighbours which should at least remove one objection to continued commercial and academic collaboration between British and continental researchers that already shows signs of weakening (see Ian Sample UK scientists dropped from EU projects because of post-Brexit funding fears 12 July 2916 The Guardian).

    The need for harmonization of trade secrets law is summarized in para (8) of the recitals to the directive:
    "The differences in the legal protection of trade secrets provided for by the Member States imply that trade secrets do not enjoy an equivalent level of protection throughout the Union, thus leading to fragmentation of the internal market in this area and a weakening of the overall deterrent effect of the relevant rules. The internal market is affected in so far as such differences lower the incentives for businesses to undertake innovation-related cross-border economic activity, including research cooperation or production cooperation with partners, outsourcing or investment in other Member States, which depends on the use of information that enjoys protection as trade secrets. Cross-border network research and development, as well as innovation-related activities, including related production and subsequent cross-border trade, are rendered less attractive and more difficult within the Union, thus also resulting in Union-wide innovation-related inefficiencies."

    The basic obligation is for member states is to ensure that those who lawfully control trade secrets ("trade secret holders") can obtain redress for any unlawful acquisition, use or disclosure of their trade secrets (see art 4 (1) of the directive).  Art 2 (1) defines a trade secret as information that meets the following three conditions:

    • First, he information is secret in the sense that it is not generally known among or readily accessible to persons who normally deal with the kind of information in question.
    • Secondly, the information has commercial value because it is secret.
    • Thirdly, the trade secret holder takes reasonable steps to keep the information secret.

    "Unlawful use or disclosure" is defined by art 4 (3) of the directive as use or disclosure of a trade secret carried out, without the consent of the trade secret holder, by a person who is found to meet any of the following conditions:

    • he or she acquired the trade secret unlawfully;
    • he or she was in breach of a confidentiality agreement or any other duty not to disclose the trade secret; or 
    • he or she was in breach of a contractual or any other duty to limit the use of the trade secret.
    For these purposes art 4 (2) defines "unlawful acquisition" as

    "acquisition of a trade secret without the consent of the trade secret holder ...... whenever carried out by:
    (a) unauthorised access to, appropriation of, or copying of any documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced;
    (b) any other conduct which, under the circumstances, is considered contrary to honest commercial practices."
    Art 4 (4) adds that the acquisition, use or disclosure of a trade secret should also be considered unlawful whenever a person, at the time of the acquisition, use or disclosure, knew or ought, under the circumstances, to have known, that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully within the meaning of art 4 (3). Art 4 (5) provides that the production, offering or placing on the market of goods, or the importation, export or storage of infringing goods for those purposes, shall also be considered an unlawful use of a trade secret where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was being used unlawfully within the meaning of art 4 (3). "Infringing goods" are defined by art 2 (4) as "goods, the design, characteristics, functioning, production process or marketing of which significantly benefits from trade secrets unlawfully acquired, used or disclosed."

    Art 6 (1) of the Trade Secrets Directive requires member states to provide for the measures, procedures and remedies necessary to ensure the availability of civil redress against the unlawful acquisition, use and disclosure of trade secrets. Such measures, procedures and remedies must be be fair and equitable, not unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays and be effective and dissuasive. They may include final and interim injunctions, damages and orders for delivery up. Art 14 requires damages for the unlawful acquisition, use or disclosure of a trade secret to be assessed in very much the same way as in  art 13 of the enforcement directive (Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004on the enforcement of intellectual property rights (OJ L195/16 2.6.2004)):
    "1. Member States shall ensure that the competent judicial authorities, upon the request of the injured party, order an infringer who knew or ought to have known that he, she or it was engaging in unlawful acquisition, use or disclosure of a trade secret, to pay the trade secret holder damages appropriate to the actual prejudice suffered as a result of the unlawful acquisition, use or disclosure of the trade secret.
    Member States may limit the liability for damages of employees towards their employers for the unlawful acquisition, use or disclosure of a trade secret of the employer where they act without intent.
    2. When setting the damages referred to in paragraph 1, the competent judicial authorities shall take into account all appropriate factors, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the trade secret holder by the unlawful acquisition, use or disclosure of the trade secret.
    Alternatively, the competent judicial authorities may, in appropriate cases, set the damages as a lump sum on the basis of elements such as, at a minimum, the amount of royalties or fees which would have been due had the infringer requested authorisation to use the trade secret in question."

    Although it is no doubt abundantly clear from the context ,"infringer" is defined by art 2 (3) as "any natural or legal person who has unlawfully acquired, used or disclosed a trade secret."

    No action can lie against anyone acquiring, using or disclosing a trade secret lawfully. Art 3 (2) provides that the acquisition, use or disclosure of a trade secret shall be considered lawful to the extent that such acquisition, use or disclosure is required or allowed by EU or national law. Art 3 (1) adds that
    "the acquisition of a trade secret shall be considered lawful when the trade secret is obtained by any of the following means:
    (a) independent discovery or creation;
    (b) observation, study, disassembly or testing of a product or object that has been made available to the public or that is lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret;
    (c) exercise of the right of workers or workers' representatives to information and consultation in accordance with Union law and national laws and practices;
    (d) any other practice which, under the circumstances, is in conformity with honest commercial practices."
    It will also be a defence under art 5 where the alleged acquisition, use or disclosure of the trade secret was carried out in any of the following cases:
    (a) for exercising the right to freedom of expression and information as set out in the Charter of Fundamental Rights and Freedoms of the EU (OJ 18.12.2000 C354/1) including respect for the freedom and pluralism of the media;
    (b) for revealing misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest;
    (c) disclosure by workers to their representatives as part of the legitimate exercise by those representatives of their functions in accordance with Union or national law, provided that such disclosure was necessary for that exercise;
    (d) for the purpose of protecting a legitimate interest recognised by EU or national law.

    Member states are required by art 8 (1) to lay down rules on the limitation periods applicable to substantive claims and actions for the application of the measures, procedures and remedies provided for in this directive.  Such limitation period may not exceed 6 years.

    Our trade secrecy law is governed by the law of confidence. Its basic principles were summarized by Mr Justice Megarry in Coco v AN Clark (Engineers) Ltd. [1968] F.S.R. 415 [1969] R.P.C. 41:
    "In my judgment, three elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself, in the words of Lord Greene, M.R. in the Saltman case on page 215, must “have the necessary quality of confidence about it”. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."

    It was the opinion of the European Scrutiny Committee that "the protection of trade secrets under the UK's common and contract law is consistent with the terms of the proposed draft Directive" (see Documents considered by the Committee on 12 February 2014 - European Scrutiny Committee Protection of trade secrets).

    Should anyone wish to discuss this article, the directive or trade secrets law in general, he or she should call me on 020 7404 5252 during office hours or use my contact form. I shall be discussing this directive in more detail at seminars on IP and Brexit which will take place in Liverpool on 14 Sept 2016 and London 15 Sept 2016.

    03 July 2016

    What Sort of IP Framework do we need after Brexit and what are we likely to get?

    The UK and the remaining Member States of the EU
    Source Wikipedia

    There was a bad reason for voting to leave the European Union and a good one. The bad reason, which was probably the one for which most leavers voted, was that art 45 of the Treaty of the Functioning of the European Union stimulated competition in the labour market. The good reason, of which I was and remain highly sceptical but which I hope turns out to be right, is that Union law imposed a break on British enterprise and that its disappearance once art 50 (3) of the Treaty on European Union takes effect will stimulate business. I premise this article in the hope that our people and politicians genuinely seek economic expansion.

    Introduction to IP

    Intellectual property ("IP") is the collective name for the bundle of rights that protect investment in intellectual assets ("IA"), that is to say branding, design, technology and works or art and literature which nowadays include such things as broadcasts, computer programs, films, sound recordings and arrangements of data. IP protects such investment by conferring monopolies, such as patents and rights in registered designs, or rights to prevent certain acts, such as copying, on the person who created the IA (the inventor, author, designer or entrepreneur) or who derived title from that person. Violation of the monopoly or other right is known as an infringement.  Although some infringements  are criminal offences, primary responsibility for their enforcement lies with the rights holder. He or she enforces his or her rights through proceedings in the civil courts. Litigation is expensive particularly in common law countries such as England and the United States. In Commonwealth common law countries such as England it is also risky because the losing party has to contribute towards the successful party's costs. The risk and cost of enforcement in the UK is widely believed to be a reason why the UK regularly trails not just Germany and France in the number of European patent applications but also the Netherlands and Switzerland with one third and one eighth of our population respectively (see Jane Lambert Why IP Yorkshire 10 Sept 2008 IP Yorkshire).

    IP Treaties

    Since the formation of the World Trade Organization ("WTO") on 1 Jan 1995, countries seeking preferential access to the world's richest markets have been required to grant minimum IP protection for IA in their territories in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS").  Long before then, however. the world's leading economies recognized the need to protect the IP rights ("IPR") of each other's nationals and entered a series of treaties to protect brands, designs and technology known as the Paris Convention for the Protection of Industrial Property of 20 March 1883 ("Paris Convention"), literary and artistic works known as the Berne Convention for the Protection of Literary and Artistic Works of 9 Sept 1886 ("Berne Convention") and broadcasts, performances and sound recordings known as the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations of 26 Oct 1961 ("Rome Convention"). These treaties have been supplemented by a number of other international agreements including some such as the European Patent Convention ("EPC") which apply only to specific regions of the world.  States such as the UK that are party to such conventions are obliged to bring their national laws into conformity with those treaties and other international agreements.

    EU Legislation

    As most IPR are granted by national governments differences in national IP laws can constitute non-tariff barriers to trade.  The member states and Parliament have addressed that difficulty in two ways. First, by harmonizing national IP laws by a series of directives and, secondly, by providing for new EU wide IPR by the European Trade Mark Regulation (Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark), Community Design Regulation (Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ EC No L 3 of 5.1.2002, p. 1)) and the Community Plant Variety Regulation (Council Regulation (EC) NO 2100/94 of 27 July 1994 on Community plant variety rights Official journal NO. L 227 , 01/09/1994 P. 1 - 30)). Each of those Regulations confers EU wide jurisdiction on designated courts in each of the EU member states so that a final judgment on say a Community design in one country applies throughout the whole EU (see for example Samsung Electronics (UK) Ltd v Apple Inc [2012] EWCA Civ 1339 (18 Oct 2012) [2013] FSR 9, [2013] FSR 9, [2013] ECDR 2, [2012] [2013] EMLR 10). This has greatly reduced the cost and difficulty of enforcing EU wide IP rights.

    European Patent

    The one area of IP law that has never been harmonized has been patents even though attempts  to establish one have been made since 1975. However, all the EU member states as well as several states outside the EU are members of the EPC which establishes a European Patent Office ("EPO") to grant patents (known as European patents) for each of its contracting parties on behalf of the contracting governments as an alternative to patents granted by national patent offices,

    Unitary Patent

    On 19 Feb 2013, an agreement was signed by most of the member states of the EU including the UK to establish a Unified Patent Court ("UPC") (a section of the central division  of which was to sit in London) to determine disputes over European patents including those to be granted for the territories of several EU member states including France, Germany and the UK to be known as unitary patents. HM government has long pressed for a pan-European patent court either within the framework of the EU or the EPC. Parliament has actually authorized the Secretary of State to ratify the UPC agreement by s.17 of the Intellectual Property Act 2014.

    The British IP Framework

    The British IP framework is a patchwork of law, most statutory but some, such as the obligation of confidence and the right to bring an action for passing off, are derived from common or judge made law. The main statutes are The Patents Act 1977, The Copyright, Designs and Patents Act 1988 ("the CDPA")The Trade Marks Act 1994 ("the TMA") and The Registered Designs Act 1949 ("the RDA"). The TMA was enacted to give effect to the predecessor of the current Trade Marks Directive (Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (OJ L 299, 8.11.2008, p. 25–33) and the CDPA and the RDA have been amended substantially by other EU directives. The EU trade mark, Community design and Community plant variety rights apply as much in the UK as everywhere else in the EU. All our laws have to comply with the relevant IP treaties and our Patents Act 1977 with the EPC.

    Is the Present Framework Right for the UK?

    I would not be so Panglossian as to say that such framework is the best of all possible worlds but I would agree with the Minister for Intellectual Property and TaylorWessing that it is pretty good. In a speech on National and International-level concerns and developments regarding the IP landscape that she gave to the British group of the Union of European Practitioners in Intellectual Property on 29 June 2016 Baroness Neville-Rolfe said:
    "I was delighted to read the latest Taylor Wessing’s Global Intellectual Property Index (GIPI5), in which the UK came out well. On patents we are ranked first in the world. The overall result - third - was a good one - but as sportsmen always rightly say you are only as good as your last performance. We will do our best to maintain our strong position."
    I am not sure how TaylorWessing came to their assessment but on the assumption that businesses need clarity in the definition and determination of their rights, comprehensive protection for their IA and effective enforcement of their rights at a reasonable cost I think they are probably right.

    What we need after Brexit

    The rest of the EU may be growing less strongly than some other parts of the world but it is still a market of several hundred million of the world's most affluent consumers and we shall wish to continue trading with, and investing in, it. It is therefore in our interests to disrupt our relations with the remaining member states as little as possible.

    The most pressing issue is the unitary patent. Even though it would cease to apply to the UK after it leaves the EU, a single patent that covers France, Germany and many of the remaining EU states with a single court for the resolution of disputes over such patents would still be attractive to businesses around the world including many in this country. It is not therefore in our national interests to block it. The statutory instrument to implement s.17 of the Intellectual Property Act 2014 has been drafted and partially debated. There is no reason why we should not ratify the UPC agreement and allow our businesses to benefit from it in the two or more years that remain before art 50 takes effect.

    We should also legislate to convert the EU trade mark and registered Community designs into national trade marks and registered designs. In the case of registered Community designs the commencement of the protection should be backdated to the date upon which an application for a registered Community design was filed with the EU Intellectual Property Office ("EUIPO"). In the case of applications to invalidate the registration of such rights novelty and individual character should be considered from the date of the application to the EUIPO.

    As President Battistelli said in his statement on the referendum of 24 June 2016 "the outcome of the referendum has no consequence on the membership of the UK to the European Patent Organisation, nor on the effect of the European Patents in the UK." I see no reason to repeal or amend substantially any part of the Patents Act 1977 or indeed any of the other IP statutes. I would hope that UK enters an arrangement with the rest of the EU similar to the Lugano Convention to ensure continuity in jurisdiction and enforcement of judgments in civil and commercial matters. Although the continental approach to statutory construction is different from ours I would hope that judgments of the Court of Justice of the European Union and indeed the EFTA Court the to have high persuasive authority.

    Looking beyond Europe I would hope that HMG would support efforts at patent harmonization with regard to our main trading partners in North America and East Asia. There is no reason why we should not ratify the Hague Agreement on industrial designs. We should seek to improve the functioning of the Patent Co-operation Treaty and Madrid Agreement.  We should play an active part in the WTO and other international IP forums to promote out interests.

    What we are likely to get

    In her speech to the Union of European Practitioners in Intellectual Property which I mentioned above Lady Neville-Rolf said:
    "You can continue to expect outstanding, professionally delivered rights granting services including design rights; and copyright owners can expect that the framework will support creativity. The UK will continue to be envied around the world for the quality of its enforcement environment. We will continue to lead in international IP discussions. We will continue our work to build an environment that allows innovative and creative businesses across the UK to develop their ideas and exploit them effectively."
    Fine words indeed if those promises can be delivered. Unfortunately, the Minister could not give her audience any comfort on the unitary patent or UPC. These developments are in danger of stalling the longer if they are allowed to drift.


    Brexit was probably a grave disservice to British business but it need not be the end of the world. South Korea with an even smaller population, land area and GDP than ours shows that it is possible for a small country to flourish outside economic blocs by relying upon the creativity and inventiveness of its people. The next few years will be very uncomfortable for everyone in these islands but if we get our IP framework right we can recover

    Further Reading

    Jane Lambert
    26 July 2016
    IP East
    14 July 2016
    IP North West
    10 July 2016
    4-5 IP and Tech
    5 July 2016
    NIPC Inventors’ Club