Patently demonstrated?

Pally demonstration to Duke of York

There must be a stong temptation for a business hosting a visit from a VIP or a local MP to show off the business’s new thing.  Nothing beats a good demonstration of new technology.  However, if this new technology has not completed any patent application process, there is a danger.

In order to obtain a patent, an invention has to meet certain conditions, which appear deceptively simple :

• the invention must be new;
• it must involve an inventive step;
• it must be capable of industrial application;
• it must not be an invention that consists of :

–  a discovery, scientific theory or mathematical method;
–  a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever;
–  a scheme, rule or method for performing a mental act, playing a game or doing business, or a program for a computer [Note: this is where EU/UK patent law differs materially from, for example, US patent law]; or
–  the presentation of information; or

• the commercial exploitation must not be contrary to public policy or morality.

(From section 1 of the Patents Act 1977, as amended.)

Two recent cases have addressed the question of novelty, which we will come onto shortly.

Traditionally, patent lawyers advise inventors to be secretive about possibly patentable inventions, with any demonstrations or disclosures limited as much as reasonably practicable.  Where demonstrations or disclosures have to be made, the advice is generally to make sure that there is a confidentiality or non-disclosure agreement in place.  The reason for this approach is that if any details of the invention make it into the public domain, there is a risk that the details may be deemed to be part of the “prior art”, essentially general knowledge to anyone skilled in the relevant area.  If something becomes part of the prior art, then it cannot be considered to be new.

The most well-known example of the novelty principle being applied, certainly in my home area of Portsmouth and Hayling Island, is the case Windsurfing International Inc v Tabur Marine (GB) Ltd. 1985 RPC 59.  This involved a dispute between the owners of the US windsurfing patent filed by the American inventors of windsurfers Drake and Hoyle in 1968 and granted in 1970, and the UK company, which was a licensee.  Extremely fortuitously for Tabur Marine’s patent lawyers, the found evidence in a local newspaper that a Hayling Island schoolboy, Peter Chilvers, had invented a board and sail combination, with the key element of a universal joint at the foot of the mast, in 1958. So this was prior art, which, if you can bear the pun, shot the American’s patent out of the water.  With the US patent then declared invalid, Tabur Marine could stop paying Windsurfing International royalties.  The original tests for novelty set out in Windsurfing International are still applied, albeit slightly amended by the later Court of Appeal case Pozzoli Spa v BDMO SA & Anor [2007] EWCA Civ 588.

So, why the picture of the Duke of York standing by a set of boxes on a pallet?  This pallet was no ordinary pallet, but a combination dolly and pallet (no, I didn’t know what a dolly was either – a wheeled platform).  It was the subject of a patent application when the Duke was shown round the new Sheffield factory of Loadhog Limited, who then went on to challenge the application made by Polymer Logistics BV on novelty as well as other grounds.  The hearing officer at the Intellectual Property Office decided, not unreasonably, that the demonstration to the Duke did not destroy its novelty:

But unless he had got down on his hand and knees, or turned the Pally prototype upside down to see how the mechanism operated, the most that he could have taken away from the demonstration is the idea of a single device that can function as a dolly and a pallet, and which can be converted between the two states by means of a foot pedal.  …. There was no suggestion that the Duke did get down on his hand and knees to inspect the prototype more closely, … (Paragraph 48)

The hearing officer was merely applying the High Court ruling in a similar case, Folding Attic Stairs Ltd v The Loft Stairs Company and another [2009] EWHC 1221.  As the case name implies, this was all about folding attic ladders.  A prototype ladder had been seen by a press photographer for the Irish Times and the visiting Irish Minister for Trade and Tourism.  It was not demonstrated to the visitors, but was caught in the background of published photographs of the visit.  Fortunately only the lower part of the prototype was shown in the published photographs, and the High Court found that there was no evidence that the photographer or Minister had inspected the prototype, nor that either of them were persons skilled in the art.  It was therefore ruled the prototype was not in the public domain or made accessible to the public to become part of the prior art.

So the lesson?  If you have to demonstrate a prototype to a visiting VIP, you should be okay. Just make sure that by some bad luck the VIP isn’t knowledgeable in the relevant area and that you have some control over any photographers accompanying the VIP.

Stop, in the name of the (trade mark) law

We recently learned through Twitter of the “cease and desist” letter received by ThinkGeek from the lawyers for the National Pork Board, Faegre & Benson.  This type of letter, more accurately described under English civil procedures as a “letter before action”, usually sets out how the sender of the letter believes that the recipient is infringing the sender’s intellectual property rights.  A typical letter demands that the infringing stop and requires the alleged infringer to enter into undertakings about its future behaviour, under a threat of legal action if the matter is not resolved (hence, “cease & desist”).  In the ThinkGeek and National Pork Board case, the intellectual property rights at issue were various trade marks, including “The Other White Meat”.  ThinkGeek had marketed their canned unicorn meat under the slogan “Unicorn – the new white meat”.

As ThinkGeek point out in their blog, the letter they received from Faegre & Benson was “officially our best-ever cease and desist letter”.  It should be pointed out that the product was put on sale on 1 April.  There was, is and never will be, of course, an actual unicorn meat product.  So is this just an example of another trigger-happy American law firm (or client, to be fair to Faegre & Benson) wasting ridiculous amounts of law fees, or could this happen in the UK, too?

Firstly, the National Pork Board’s registered mark is “The Other White Meat”.  The mark used by ThinkGeek was “the new white meat”.  So we are considering non-identical, similar marks for similar goods (if you are willing to believe that there is such a thing as unicorn meat).  The forms of infringement for which a registered trade mark holder can bring an action under English law are set out at section 10 of the Trade Marks Act 1994 (TMA 1994), which we summarise in the table below:

Type of Mark	Type of Goods	Other Conditions	TMA 1994 Ref
Identical mark	Identical goods		s.10(1)
Identical mark	Similar goods	Likelihood of confusion	s.10(2(a)
Similar mark	Identical or similar goods	Likelihood of confusion	s.10(2)(b)
Identical or similar mark	Any goods	Registered mark with a reputation. Infringing mark used without cause, taking unfair advantage or is detrimental to distinctive character or reputation of the registered mark	s.10(3)

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So the ThinkGeek case would have to involve there being a likelihood of confusion, which would in most cases have to be proved by the claimant (National Pork Board). However, the courts have said that they can make their own judgement on the likelihood of confusion, so that evidence of actual confusion is not always necessary (Mont Blanc Simplo GmbH v Sepia Products Inc (2000) Times, 2 February).  A court would consider whether confusion was likely at the time when the relevant goods were offered for sale (remember, 1 April) as well as all the surrounding circumstances. Given the facts of an April Fool’s Day sale of unicorn meat, you’d hope an English court would throw this out as not likely to confuse anyone. That leaves the similar mark, unfair advantage or detrimental use infringement.  Again, you would hope an English court would not entertain that a fictitious product not intended for actual sale takes unfair advantage of anyone, or is in any way detrimental.  Given this analysis, we would expect an English intellectual property lawyer to advise against any cease and desist letter or letter before action.

This does raise another issue, if this ThinkGeek case were considered under English law.  ThinkGeek have only published the first page of the 12-page letter they got from the National Pork Board’s lawyers. We therefore don’t know what the tone of the rest of the letter was, or what type of undertakings were demanded in the letter.  Cease and desist letters must be prepared carefully in England, as otherwise a sender of a letter risks being found to have threatened infringement proceedings, which itself is actionable (see  s.21 TMA 1994). This includes the solicitors (as senders) of a cease and desist letter.  We’ll never know if the National Pork Board or its lawyers crossed the line in this respect.

Perhaps, all things considered, the National Pork Board should have let this one go by.  After all, pigs will fly before real unicorn meat can be sold, whether as other white meat or not.

A never ending story

The Neverending Story by Michael Ende

There are some words or phrases that have been in use for so long within certain types of contracts that you would think everyone knew what they meant.  Sadly, this is not case.   BMS Computer Solutions Limited and AB Agri Limited ended up taking their dispute over the meaning of one key word to the High Court, each being advised by specialist solicitors, leading counsel (i.e. QCs – the really expensive ones) and junior counsel (itself a misleading term as junior in this context means “not a QC”, and should not be read to imply someone straight out of bar school). This must have been expensive.

So what was the word at issue: PERPETUAL.  You or I would naturally expect something that was perpetual to last forever or be never ending.   Surely that is what the word means?  In the hands of lawyers, though, perpetual can mean “operating without limit of time”.  It’s a subtle distinction, but “operating without limit of time” implies that other types of limit can apply.

So to our High Court case’s facts (see the full judgement here). The licensor of certain software granted a licence in a variation agreement with the following term:

The Program Licence will be extended to be a UK-wide perpetual licence usable on any processor or PC at all ABN UK operations including the compound animal feed operations of Cereal Industries as per the existing Agreement of 21 March 2000 up to a maximum aggregate annual tonnage of 2.45 million compound feed tonnes as defined in the Agreements.”

Nothing remarkable about that, except that it was in a variation agreement.  This was varying a licence agreement where the licence to use the Program Licence was not stated to be perpetual.  The licence agreement had an associated software technical support agreement.  The agreements were arranged so that if the support agreement was terminated, the licence agreement also terminated.  All perfectly standard.

However, by sticking the word “perpetual” into the licence term in the variation agreement, there was raised the inevitable question, does the software licence terminate when/if the support agreement is terminated? Sales J ruled that perpetual meant, as stated above, operating without limit of time, so as, in the context of the variation clause set out above, to grant a licence for an indefinite duration, but subject to any other contractual provisions in the licence agreement, including the terms governing termination upon termination of the support agreement.

It would appear from the judgement that there was never any clear intention that the variation agreement was to grant a never ending licence, but having a never ending software licence with only limited support is not uncommon.  Perhaps this is an example of contracting (or strictly, varying a contract) at speed and repenting at leisure?

Help me, Obi-Wan Jacobi; you're my only hope!

A long time ago in a galaxy far, far away… well, in 1976 California, Lucasfilm began developing Star Wars.  The iconic Imperial stormtrooper helmets and uniforms were made by Andrew Ainsworth and his company Shepperton Design Studios Limited in England.  He kept the moulds for the vacuum-forming of the plastic parts.  In 2004 he began selling stormtrooper helmets, including helmets to a value of approximately $14,500 to some US customers.

As a result, a copyright infringement, unfair competition and trade mark infringement action was brought by Lucasfilm Limited and the associated rights holders (together, “Lucasfilm”) against Ainsworth in a District Court in California.  That action succeeded, with Lucasfilm awarded $5m damages for copyright infringement, $5m for trade mark infringement and unfair competition, together with an additional $10m compensatory damages.

Lucasfilm sought to have the US judgement enforced in the UK, as well as bringing a UK copyright infringement action.  In a High Court judgement given on 31 July 2008, Lucasfilm largely failed. They appealed. Lord Justice Jacob gave the Court of Appeal judgement yesterday. It should not be a surprise to Star Wars fans that the lone crusader overcame the might of the Lucasfilm “Empire”, but how did the Court of Appeal save the “plucky Brit” from certain bankruptcy and ruin?

UK Copyright

Part of the Lucasfilm claim was that the helmets were a sculpture.  A sculpture is an “artistic work” within the meaning of s.4(1)(a) of the Copyright, Designs and Patents Act 1988, which, by s.4(2)(b), includes a cast or model made for purposes of sculpture.  If Lucasfilm were able to show that the prototype helmet was a sculpture, then copyright in it would have been protected for 70 years from the death of the author/sculptor (s.12(2)).  If the helmet was not a sculpture, then protection of the drawings of the helmet in which Lucasfilm held the copyright would only be for a period of 15 years from the first marketing of reproductions, a period that has expired.  How the period of protection ends up being 15 years is set out in the High Court judgement; it is largely the result of transitional provisions in the 1988 Act, so that the 15 years protection in s.10 of the Copyright Act 1956 applies.  If the helmets had been reproduced after the effective date of the relevant provision in the 1988 Act, s.52 (1 August 1989), then the protection period would have been 25 years.

The Court of Appeal upheld the High Court judgement that the prototype helmet was not a sculpture.  

The Court of Appeal upheld the application of the s.51 defence by the High Court, which permits the making or copying of an article to a copyright design document for anything other than an artistic work or typeface.  It also upheld the application of the s.52 defence, which allows anyone to copy an article after a set period from when the article has been subject to mass production under an industrial process and marketed by a copyright owner (or licensee).  In applying the defence of s.52, it was noted that Lucasfilm had licensed the reproduction of the helmet design in toy stormtroopers, so that the defence applied. 

Lucasfilm’s UK copyright actions therefore failed.

US Copyright

It was clear that the Court of Appeal was not minded to allow Lucasfilm to enforce US copyright in the UK.  Having determined that it was not bound by any binding authority, the Court of Appeal decided that foreign, non-EU (or Lugano Convention) copyrights are non-justiciable in England and that the application of forum non conveniens did not apply to international copyright cases.  This part of the judgement was well argued, as it is one of the points in the judgement that is more likely to be appealed to the Supreme Court by Lucasfilm. 

It was also clear that the UK courts were not sympathetic to the plea by Lucasfilm to enforce the US copyright judgement, particularly as the damages awarded under the US system were massively out of step with what a UK court would award.  This came down to the fact that Andrew Ainsworth had no physical presence in the US, and his website offering the sale of the helmets, although priced in £ and US$ with shipping charges for the US (and Canada), was not determined to be directed at the US, even though there was some advertising of it in the US.  This is an interesting finding for all internet and web-related cases.  The Court of Appeal was not persuaded that owning and operating a website meant that the website owner has a presence in another jurisdiction.

Possible Appeal

As has been noted in other blogs, Star Wars features have tended to come in threes.  Given that we’ve had a High Court Star Wars I and Court of Appeal Star Wars II, we only need the Supreme Court appeal to make the set.  Given the importance of the legal principles raised in the judgements, and the willingness of Lucasfilm to defend its rights in all aspects of the Star Wars films by whatever means, it is to be expected that there will be a Star Wars III.

HADOPI II – Danger internautes

It is not often that we resurrect our GCSE/O Level French (or bug our bi- or tri-lingual colleagues – thank you Elora and Emanuela) to read a French language statute, but HADOPI II is an exception. This is the French “three strikes” copyright protection law, nicknamed HADOPI II after the acronym for the Haute Autorité pour la Diffusion des Œuvres et la Protection des droits sur Internet, the new regulatory body created by the law.  The “three strikes” relates to suspending internet access to subscribers who are deemed to have breached copyright, e.g. filesharers, after two previous warnings.  HADOPI I was killed off by the Constitutional Court in June for the lack of any judicial intervention in the procedure to cut off internet access.  HADOPI II was passed by a narrow majority (285 v 225) in the French National Assembly yesterday.  Suspension can be for up to one year, and the subscriber can also be fined up to €5,000.

The only material difference in the new law is the introduction of a judicial step before the final “strike”, but this uses the l’ordannance pénale procedure.  Whilst this is obviously not our specialist area, we understand that this is a light touch criminal procedure.  It means that HADOPI will be able to draft a judicial order, including any penalties, for issue by a magistrate.  The order becomes final after a certain period, unless the defendant appeals the order, in which case there is a trial.

Why is this important in the UK?  Two reasons: the Government has announced that it is looking at similar legislation, and the possible inclusion of a three strikes provision is one of the outstanding matters holding up the passing of the reform of the Framework Directive and the other six-pack electronic communications directives. 

[We would welcome any informed comment on the l’ordannance pénale procedure – is our summary above accurate?]