Tuesday, 22 February 2011

Patentability of dosage regime invention in the form of Swiss-type claim under Chinese patent law

Author: HE Huaiwen (Lecturer and Researcher in IP Laws of Zhejiang University Guanghua Law School)

Merck & Co Inc. v Patent Reexamination Board of State Intellectual Property Office of People's Republic of China (PRC) (2008) Gaoxing-zhongzi No. 378

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpq219, first published online 11 February 2011

Whether a dosage regime invention is patentable under Chinese law is uncertain. In September 2008 the Beijing Higher People's Court held in Merck v Patent Reexamination Board of State Intellectual Property Office of PRC that a dosage regime invention in the form of Swiss-type claim was patentable, and that the dosage may serve as a technical feature—which limited the claim—to be taken into account in assessing novelty and inventiveness. However, the revised Guideline for Examination promulgated by State Intellectual Property Office of PRC, effective from 1 February 2010, takes the opposite approach. It is unknown which of the positions the Chinese courts will take.

Legal context

Chinese Patent Law (as revised in 2000, effective from 1 July 2010), Art. 25 (1), provides that ‘The following shall not be granted a patent: … (3) Method for the diagnosis or for the treatment of diseases ….’ The law as revised in 2008 and effective from 1 October 2009 has this same provision.

The Guideline for Examination (2006) promulgated by the State Intellectual Property Office (SIPO), Part II, Chapter 10, Sec. 4.5.2, which dealt with medical use of a substance, states:
An application relating to the medical use of a substance shall not be granted if its claim is drafted in the wording “use of substance X for the treatment of diseases”, “use of substance X for diagnosis of diseases” or “use of substance X as a medicament”, because such claim is one for “method for the diagnosis or for the treatment of diseases” as referred to in Art. 25.1(3). However, since a medicament and a method for the manufacture thereof are patentable according to the Patent Law, it shall not be contrary to Art. 25.1(3) if an application for the medical use of a substance adopts a pharmaceutical claim or use claim in the form of method for preparing a pharmaceutical, such as “use of substance X for the manufacturing of a medicament”, “use of substance X for the manufacturing of a medicament for the treatment of a disease” and so on. 
The above-mentioned use claim in the form of method for manufacturing a medicament may be drafted as “use of compound X for manufacturing a medicament for the treatment of disease Y” or the like.
The Guideline for Examination (2006) Part II, Chapter 10, Sec. 5.4, which dealt with novelty of a new use of a known product, adds:
A known product is not rendered novel merely because a new application thereof has been put forward … a known product does not destroy the novelty of its new use if the new use per se is an invention. This is because such use invention is an invention of method of application, and the substance of the invention lies in how to apply the product rather than the product per se.
….
As for a medical-use invention relating to a chemical product, the following aspects shall be taken into consideration when the examination of novelty is carried out: … (4) Whether or not the features relating to use, such as the object, mode, route, usage amount, interval of administration can define the procedure of manufacture of a pharmaceutical? The distinguishing features merely present in the course of administration do not enable the use to possess novelty [emphasis added].
The corresponding parts of the revised Guideline for Examination (effective from 1 February 2010) remain the same as its predecessor.

Facts

The patent in suit was named ‘Method of Treating Androgenic Alopecia With 5-Alpha Reductase Inhibitors’ (no. ZL941944 71.9). It was filed by Merck with the former Patent Office of PRC on 11 October 1994. The patent was granted on 25 December 2002.

In June 2004 Henan Topfond Pharmaceutical Co. Ltd filed a request with the Patent Reexamination Board (PRB) of the State Intellectual Property Office of PRC, claiming that the patent should be declared invalid, in particular for lack of novelty and inventiveness. The claim 1 of the patent in suit, the focal point of the dispute, states:
The use of 17β-(N-tert-butylcarbamoy1-)-4-aza-5α-androst-1-ene-3-one for the preparation of a medicament adapted for oral administration useful for the treatment of androgenic alopecia in a person and wherein said medicament comprises about 0.05-3.0 mg dosage amount of 17β-(N-tert-butylcarbamoy1-)-4-aza-5α-androst-1-ene-3-one.
PRB made no decision until February 2007, when the Guideline for Examination (2006) took effect. In Decision No. 9508, PRB found that the two features claimed—‘0.05–3.0 mg dosage amount’ and ‘oral administration’—were comprised in the prior art. PRB, however, did not consider that both of them ‘limit’ the preparation of the medicament, constituting technical features to be considered in assessing novelty and inventiveness: preparation of a medicament is a distinct process from its administration and only such features as the starting materials, manufacturing steps and conditions, and ingredients limited the preparation for a given medicament. However, where particular features of administering a drug require a particular method of preparation, the features can be technical features limiting the preparation of the drug. In this case, PRB recognized that oral administration was a technical feature limiting the preparation for the drug, but denied that the dosage feature could do the same. The board upheld the novelty of the patent in respect of only one feature—‘oral administration’—considering the prior art document cited. The patent, however, was declared invalid because this very distinguishing feature was obvious to a person of ordinary skill in the art.

Merck appealed to the Beijing No. 1 Intermediate People's Court, which upheld the decision, but on different grounds. The court reasoned that the claimed dosage feature, the limitation of which was not completely reflected in the preparation of the drug, covered treating measures by physicians. As required by public policy and the legislative purpose behind Art. 25.1(3), the protection scope for a Swiss-type claim should not cover a physician's practice treating a patient with a medicament in a certain dosage. Otherwise, the grant of this kind of patent would restrict a physician's freedom in treating patients. Therefore the dosage feature claimed was not a part of the preparation of the medicament, but a technical feature of treatment for the disease, forbidden by patent law. The court thus affirmed the PRB decision, holding that dosage feature in a Swiss-type claim should be deemed as non-existent in assessing novelty and non-obviousness.

Merck appealed further to the Beijing Higher People's Court, which reversed the decision. In doing this, the court first pointed out that the claim was drafted in Swiss form, which is adopted to take out of the exception to patentability—method for treating disease unpatentable—claims of ‘use of compound X for the treatment of disease Y’. What is protected by a Swiss-type claim is essentially the medical use of a compound. An invention of a medical use is an invention of a process. The features of administering a drug, ie dosage form and amount, are technical features for using the compound and should thus be considered as elements comprising the claim. These ‘administration features’ can often produce unexpected technical results. The court added that the preparation of a medicament is not merely the preparation of the active ingredients or raw medicament, but should include all the steps before packaging of the medicament, including the administration features such as specification of dosage form and amount. The court commented that taking no consideration of administration features in a Swiss-type claim would be detrimental to the development of medical industry and the needs of public health, contrary to the legislative purpose of the Chinese Patent Law.

In refuting the reasoning taken by the court below, the Higher Court commented that the concern was unnecessary, recognizing ‘administration features’ in a Swiss-type claim might restrict a physician's freedom to cure diseases. First, a physician's treatment of a disease is not for business purposes, and thus never infringes. Secondly, a claim for a medical use comprises features of the compound, of its preparation and of indications to be applied. A physician's treatment never touches upon features of the preparation of a drug, and thus can never infringe a Swiss-type claim.

Analysis

This case is outstanding because the reviewing courts for PRB—Beijing No. 1 Intermediate People's Court for the first instance and Beijing Higher People's Court for the second instance—normally rubber-stamp PRB decisions. Further, the Higher Court in this case even disregarded the provisions in the Guideline for Examination (2006): It did not say a single word about Part II, Chapter 10, Sec. 5.4, as cited above. This is indeed quite rare under the Chinese patent system.

Sadly, the legal grounds for the final judgment are not solid. It can be said that the final judgment of this case is comparable to the Decision of the Enlarged Board of Appeal dated 19 February 2010 (G 2/08). But unlike the European Patent Convention (EPC), Chinese Patent Law (CPL) does not lend such strong support for the final judgment as the EPC does to the decision cited above, even though CPL borrowed much from the EPC. Unlike the EPC, the exceptions to patentability in CPL were—and are—provided in such general terms that there is absolutely no legal foundation for recognizing Swiss-type claims. It is the practice—established mainly by the Guideline for Examination—that gives life to Swiss-type claims under the Chinese legal system. The Higher Court, in rendering the decision, while recognizing a Swiss-type claim provided in the guideline, refused to apply Part II, Chapter 10, Sec. 5.4 of the same legal document, which denies patents to dosage regimes. Aware of this lethal weakness, the court invoked in vain the public policy and the legislative purpose of the patent law, which is not defined clearly, only to draw more criticisms.

Further, the ruling of the Higher Court was unnecessarily broad in commenting that a physician's treatment is not for ‘business purposes’ and thus never infringes. It appeared to interpret CPL Art. 11, which provides that ‘After the grant of the patent right for an invention or utility model, except as otherwise provided for in this law, without the authorization of the patentee, no entity or individual may, for production or business purposes, exploit the patent ….’ The unintended effect of these comments is that hospitals and health institutions might claim exceptions to patent infringement in general on grounds of non-business purposes as interpreted by the Higher Court in this case.

Practical significance

The significance of the case discussed here remains uncertain. Although decided in 2008, this case is of current interest. First, its counterpart in Europe was only decided in 2010. The two cases take similar positions, though on different legal grounds. According to G 2/08, ‘where it is already known to use a medicament to treat an illness, Article 54(5) EPC does not exclude that this medicament be patented for use in a different treatment by therapy of the same illness’. The Chinese case basically said the same. But G 2/08 added: ‘where the subject-matter of a claim is rendered novel only by a new therapeutic use of a medicament, such claim may no longer have the format of a so-called Swiss-type claim as instituted by decision G 5/83’. In the Chinese case, however, the Higher Court held essentially that dosage features should be drafted as Swiss-type claims for them to be taken out of the exception to patentability as provided by CPL Art. 25 (3) and to be considered in assessing novelty and inventiveness. In sum, by this case, the Chinese judicial system shows its willingness to support dosage regime patents and strong patent protection.

Second, the case is current in view of the recently promulgated Guideline for Examination (2010) published by SIPO, in which the Part II, Chapter 10, Sec. 5.4 remained unchanged, in the face of the final judgment. To make matters more complicated, Sec. 5.4 was adopted consciously to solve conflicting approaches to dosage features in Swiss-type claim of patent applications. Before the Guideline for Examination (2006), some were granted, for instance, patents ZL98805686.0 and ZL95193441.4; some were denied, for example, patent ZL 97122526.5. Because the Guideline for Examination (2010) takes the same approach as its predecessor in the face of the judgment on this case and Chinese courts are not bound by precedent, legal clouds remain to be cleared.

Wednesday, 16 February 2011

Is comparison of the non-verifiable misleading comparative advertising?

Author: Shalini Bengani

Lidl SNC v Vierzon Distribution SA, Case C-159/09 Court of Justice of the European Union (Fourth Chamber), 18 November 2010

Journal of Intellectual Property Law & Practice, first published online February 11, 2011

This judgment will cause consternation to companies embarking on comparative advertising in Europe as the Court has raised the bar for verifiability, holding that the description of competing products should be sufficiently clear to enable consumers to identify them in order to test the accuracy of the prices shown in the advertisement.

Legal context

This ruling deals with the interpretation of Article 3a of Council Directive 84/450/EEC on Misleading and Comparative Advertising as amended by Directive 97/55/EC.

Facts

The two supermarkets battling it out in this case are Lidl and Vierzon Distribution (which sells everyday consumer goods under the name ‘Leclerc’). The battleground was an advertisement circulated by the latter in 2006 which reproduced till receipts listing, by means of general descriptions, accompanied by their weight or volume, 34 products, in the main foodstuffs, purchased from Vierzon and Lidl respectively. It compared a total cost of EUR 46.30 for Vierzon products as against EUR 51.40 for those of Lidl. It also included the slogans ‘Not everybody can be E. Leclerc! Low prices – And the proof is E. Leclerc is still the cheapest’ and ‘In English, they say “hard discount” – in French they say “E. Leclerc”.’

In 2007 Lidl brought an action before the Bourges Commercial Court seeking damages on the ground of unfair competition and publication of extracts from this judgment in the press and on posters in its store. It contended that the advertisement deceived and/or misled consumers on three counts:
* Reproduction alone of till receipts showing the list of the products compared did not enable consumers to perceive the specific characteristics of those products or understand the reasons for the differences in prices since the advertisement was based on a selection of a limited number of foodstuffs marketed by Lidl and Vierzon which were identified by generic names.

* Vierzon selected only products which placed it in an advantageous position after aligning its prices with those of Lidl.

* The products were not comparable, since their qualitative and quantitative differences meant that they did not meet the same needs.
The Bourges Commercial Court decided to stay the proceedings and refer the following question to the Court of Justice for a preliminary ruling:
Is Article 3a of Directive 84/450 to be interpreted as meaning that it is unlawful to engage in comparative advertising on the basis of the price of products meeting the same needs or intended for the same purpose, that is to say, products which are sufficiently interchangeable, on the sole ground that, in regard to food products, the extent to which consumers would like to eat those products or, in any case, the pleasure of consuming them, is completely different according to the conditions and the place of production, the ingredients used and the experience of the producer?
Analysis

Referring to its recent L'Oréal v Bellure judgment, the Court reiterated that the purpose of the various conditions listed in Article 3a(1) is to achieve a balance between the different interests which may be affected by allowing comparative advertising. It is apparent from a reading of Recitals 2, 7 and 9 in the preamble to Directive 97/55 that the aim of Article 3a is to stimulate competition between suppliers of goods and services to the consumer's advantage, by allowing competitors to highlight objectively the merits of various comparable products, while prohibiting practices which may distort competition, be detrimental to competitors and have an adverse effect on consumer choice.

Thereafter, the court drew up a taxonomy of the different subsections of this Article, interpretation of which were critical for this case.

Article 3a(1)(b)

While elaborating on Article 3a(1)(b), the court relied on Lidl Belgium and De Landtsheer Emmanuel (ie cases relating to food products) and held that the goods being compared must display a sufficient degree of interchangeability. Further, Recital 9 in the preamble lends credence to the fact that only comparisons between ‘competing’ goods meeting the same needs or intended for the same purpose should be permitted. The Court added that the rationale for this Article is to be found under Article 2(2a) in the identification of a ‘competitor’ of the advertiser or of the goods which it offers and the affirmation that whether undertakings are competing undertakings depends on the substitutable nature of the goods. However, the court cautioned that an individual and specific assessment of the products is necessary and this falls within the jurisdiction of the national courts. The Court of Justice expressed its inability to do so as the national Court had not provided the Court with any information allowing the precise identification of those products and of their specific characteristics or, a fortiori, referred any question of interpretation relating to such specific data.

Article 3a(1)(a)

Citing heavily from Lidl Belgium, the Court held that it is for the national courts to ascertain whether the advertisement may be misleading by taking into account the perception of an average consumer of the products who is reasonably well informed, observant and circumspect, as the impugned advertisement was not addressed to a specialist public but to end consumers who purchase their basic consumables in a chain of stores.

Expounding further, the Court held that an advertisement could first be misleading, if the national Court were to find that the decision to buy on the part of a significant number of consumers may be made in the mistaken belief that the selection of goods made by the advertiser is representative of the general level of his prices as compared with those charged by his competitor and that they will therefore make savings of the kind claimed by the advertisement by buying their goods from the advertiser rather than from the competitor, or in the mistaken belief that all of the advertiser's products are cheaper than those of his competitor.

Second, if it is found that, for the purposes of the price based comparison in the advertisement, food products were selected which are in fact objectively different and the differences are capable of significantly affecting the buyer's choice. If such differences are not disclosed, such advertising, may be perceived by the average consumer as claiming, by implication, that the other characteristics of the products in question, which may also have a significant effect on the choices made by such a consumer, are equivalent. The Court has already held that, where the brand name of the products may significantly affect the buyer's choice and the comparison concerns rival products whose respective brand names differ considerably, omission of the better-known brand name goes against Article 3a(1)(a). The same may be true, with regard to other features of the products compared, such as their composition or the method or place of production, where it is apparent that such features may, by their nature, have a significant effect on the buyer's choice. In such cases the consumer may be under the impression that he will obtain an economic advantage because of the competitive nature of the advertiser's offer and not because of objective differences between the products being compared.

Article 3a(1)(c)

The Court stated that it is for the national Court to verify whether the description of the products compared, is sufficiently clear to enable the consumer to identify the products so as to check the accuracy of the prices shown in the advertisement. That objective would be thwarted if the stores referred to in the advertisement marketed a number of food products which might tally with the descriptions given on the till receipts reproduced on that advertisement, so that it is not possible to identify precisely the goods thus compared.

Practical significance

This was a much awaited decision of this Court, which had received so much flak for its earlier judgment of L'Oréal v Bellure on the issue of comparative advertising. However, this case yet again makes it difficult for companies to comparatively advertise while being on the right side of law. Although at one end, the court's ambition is to promote an interpretation in favour of the promotion of comparative advertising, its hair-splitting interpretation (raising the condition of verifiability) serves little purpose because the till receipts usually have an itemized description of the store's products. In my opinion, the courts should either be a little indulgent in cases such as this or develop a range of legal standards that can be applied to lend greater certainty for companies indulging in comparative advertising. Until then, companies across the European Community should either aim at giving the consumers the unvarnished truth while comparatively advertising or tumble into the litigation abyss.

Tuesday, 15 February 2011

The Panda Plan and the March issue

The March 2011 issue of the Journal of Intellectual Property Law & Practice (JIPLP) is now available online to subscribers.  The contents -- which are available to everyone -- can be viewed here.  The Editorial for this issue takes a look at recent IP-oriented developments in the world's fastest-growing economy, China. It reads like this:
"The panda plan: China's path to progress

The world now knows—or should know—that China's legions are on the march. On 27 October, the fifth plenary session of the 17th Chinese Communist Party Central Committee considered and passed a set of Proposals for the National 12th Five-Year Plan for Economic and Social Development. The Proposals emphasize the importance of invention and creativeness, both of which are said to be essential for China's continued economic success. Special mention was given to the role of independent innovation, especially in core and common technologies, to help promote scientific and technological breakthrough. The Chinese, taking a leaf from the USA and some other developed jurisdictions, also plan to make the machinery of enterprise run more smoothly by fostering market and industry–research–university partnerships.

Protection of IP rights was mentioned too, as playing a ‘vital role’ in ‘encouraging independent innovation and optimising a favourable environment for innovation and invention’. Protection is not surprisingly ‘also beneficial to reducing international IP conflicts’.

IP policy in China is a bit like the panda. Both IP and the panda are perpetually under threat, and both survive on a highly specialized diet: the panda eats nothing but bamboo shoots, while IP is fuelled by an often scarce commodity called enforcement. Also, pandas seem to manage to reproduce quite well in China but do not do so well abroad; likewise, many Western luxury and high-tech goods have a high rate of reproduction in China but are rarely economical to mass-produce abroad. Curiously, Chinese management of pandas in the overseas market is not dissimilar to IP exploitation: they are leased out at a reported rate of $1 million per annum and all rights in them and in their genetic material are believed to be reserved to the Chinese.

Most significantly, Chinese IP policy in the 12th Five Year Plan resembles the panda in that both have their black spots. However, while those on the panda are part of its aesthetic charm, those in the Plan need attention. Two such black spots deal with expectations. However good may be the intentions of the Chinese Communist Party Central Committee, there remains a commonly held expectation on the part of foreign IP owners that their rights are difficult or impossible to enforce and that forging a joint venture with a local enterprise is not so much a golden opportunity to grow and share wealth but a sort of damage limitation exercise. There also appears to be an expectation on the part of many talented and successful Chinese entrepreneurs that, since they are creators of employment and prosperity at the local and national level, the various measures of enforcement that might be brought against them will be more in the manner of measures of admonition and light compensation than serious impediments to their continued trading.

This may no longer matter. The sheer momentum of China's ascent to a pinnacle of manufacturing and innovation excellence, and the ample availability of local capital, have done more to free China from undesirable foreign influences than did decades of isolationism. Moreover, the Chinese can increasingly point to litigation in which local businesses have successfully sued foreign infringers and recovered handsome damages. The infusion of non-Chinese investment cash and know-how into the Shenzhen technology transfer zone and similar destinations in the 1980s, plus the absorption of commercial skills from Hong Kong and Macau in the 1990s, may have triggered the movement towards China's technological emancipation, but the subsequent chain reaction has left the achievements of those early days far behind.

While criticisms may still be heard of the IP enforcement process in China (and how many countries escape such criticism?), it is probable that China will visibly raise the level of its IP protection at the point at which the demand for it is spearheaded by the Chinese themselves, when it is they who regularly complain of shoddy counterfeits and grey imports, the difficulties of obtaining adequate pre-trial relief, the invalidity of each other's granted rights, and the refusal of competitors to divulge information concerning their manufacturing processes. Once this happens, the rising tide of protection should come to the aid of foreign rights holders too—if by then they are still in business".

Monday, 14 February 2011

JIPLP cited in the ECJ

Joined Cases C‑446/09 and C-495/09 Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd; Far East Sourcing Ltd, Röhlig Hong Kong Ltd and Röhlig Belgium NV and Nokia Corporation v Her Majesty’s Commissioners of Revenue and Customs are currently pending before the Court of Justice of the European Union, and eleven days ago Advocate General Villalon handed down his Opinion.

JIPLP was delighted to note that an article published in its first ever issue, ‘Trade Mark use in transit: EU-phony or cacophony?’ by Olivier Vrins and Marius Schneider (Journal of Intellectual Property Law and Practice, 2005, vol. 1, No 1, pp. 45 and 46) was cited in this Opinion.  We think this is the first time the journal has been cited in the Court of Justice.  Well done, Olivier and Marius!

Friday, 11 February 2011

Court of Appeal delivers key judgment on contributory patent infringement

Author: Graham Burnett-Hall (Marks & Clerk Solicitors LLP)

Grimme Landmaschinenfabrik GmbH & Co KG v Derek Scott (trading as Scotts Potato Machinery [2010] EWCA Civ 1110, 15 October 2010

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr009, first published online 9 February 2011

The Court of Appeal has delivered a strongly pro-patentee judgment that, in addition to allowing the patentee's appeal regarding validity, has clarified the approach under English law to indirect or contributory patent infringement and the interpretation of section 60(2) Patents Act 1977.

Legal context



The statutory tort of ‘indirect’ or ‘contributory’ patent infringement in the United Kingdom is set out in section 60(2) Patents Act 1977:
Subject to the following provisions of this section, a person (other than the proprietor of the patent) also infringes a patent for an invention if, while the patent is in force and without the consent of the proprietor, he supplies or offers to supply in the United Kingdom a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the United Kingdom.
This section closely follows the wording of Article 26 Community Patent Convention and, by section 130 Patents Act 1977, has the same meaning. That Convention never came into force but it has nevertheless had a harmonizing effect, in that the laws of key European countries regarding contributory patent infringement, most notably Germany (discussed below), also follow Article 26.

In this case the legal questions before the Court were: (i) can the ‘means’ consist of a complete machine, or must they be something less, such as a component part, and (ii) what is required to satisfy the knowledge requirement of section 60(2), in particular, that the supplier ‘knows … that those means … are intended to put the invention into effect’?

Facts

European Patent (UK) No. 730 399, as amended, related to potato separators—machines for separating potatoes from unwanted materials such as weeds, earth, clods, stones and plant stalks. The patent described a potato-separating apparatus comprising a number of pairs of counter-rotating rollers. Important features of the apparatus, reflected in the wording of claim 1 of the patent, were that the first roller in each group had a cross-sectional form which exerted ‘amplified forward feed’ at least once in each rotation and had on its periphery ‘at least one conveyor lip, rib or like extension part projecting beyond the contours of the cylindrical shell part’ of the roller. The rollers were also required to comprise ‘an elastically deformable shell part’.

The patentee (Grimme) claimed that Scott had, by reason of his sales of his ‘Evolution’ potato separator, directly infringed the patent. Scott argued that there was no infringement and that the patent was invalid. A further issue arose because the Evolution separator comprised pairs of ‘spiral’ and ‘clod’ rollers and the latter could be either rubber or steel. If the requirement that the rollers comprised an elastically deformable shell part applied to all the rollers in each group, machines with steel clod rollers would not directly infringe. Grimme argued that sales of such machines would nevertheless constitute contributory infringement under section 60(2), as the steel clod rollers could be replaced with rubbers ones and, indeed, Scott promoted this as a selling feature.

Analysis

First instance

At first instance Floyd J held that claim 1 of the patent to be invalid, due to obviousness over a prior art machine known as the ‘Rollastar’. This hinged on certain findings by the judge regarding construction, in particular that the ‘conveyor lip, rib or like extension part’ could include a series of rotating star wheels with protruding ‘fingers’ and that these fingers protruded ‘beyond the contours of the cylindrical shell part’ of the roller. However, Floyd J held that a dependent claim was both valid and infringed. A further construction finding—that all of the rollers in each group had to have an elastically deformable shell part—meant that contributory infringement by machines with steel clod rollers remained a live issue. The judge dealt with it very shortly, holding that there was infringement under section 60(2) in that Scott knew, and it was obvious to a reasonable person in the circumstances, that the steel-rollered machines were both suitable for running with at least two pairs of rubber rollers, and so intended.

Both parties appealed: Grimme on the validity of claim 1 and Scott on both the validity of the dependent claims that had been held valid and on the question of contributory infringement.

Validity


The Court of Appeal allowed Grimme's appeal and dismissed Scott's cross-appeal. The Court agreed with Grimme's submissions regarding the construction of claim 1 and held that Floyd J had read the claim too widely. In doing so the Court noted that neither of the parties' experts had thought that the Rollastar machine had a ‘lip, rib or like extension’ that extended ‘beyond the contours of the cylindrical shell part’ of the roller. While the court was not bound by the views of experts, it was a ‘strong thing’ for the court to depart from a view which they shared.

The result was that the Rollastar ‘fingers’ no longer fell within the scope of claim 1. Having come to a different view to the trial judge on construction, the Court of Appeal reconsidered the obviousness of claim 1 over the Rollastar, concluding that it was not obvious. Neither was claim 1 obvious over any of the other prior art relied upon by Scott. Thus the patent was wholly valid and claim 1 directly infringed by Scott's (rubber-rollered) Evolution machine.

Contributory infringement

This still left the question whether the patent was indirectly infringed by Scott's steel-rollered machines. The Court of Appeal conducted a thorough review of the development of the Convention and of section 60(2). However, the common law, US law and the travaux préparatoires for Art. 26 provided no assistance as to the meaning of the provisions of Art. 26/section 60(2). The Court therefore had to rely simply on the wording of Art. 26 and such case-law as there was.

The Court had no hesitation in holding that there was nothing in Scott's argument that the ‘means’ in section 60(2) had to relate to something less than a complete machine. The fact that a steel-rollered Evolution machine was capable of lawful use and did not itself directly infringe was irrelevant to the question. On the contrary, the supply of a steel-rollered machine, which was designed and indeed promoted to enable the steel rollers to be changed for rubber rollers, was plainly the supply of means essential for the purpose of putting the claimed invention into effect.

More tricky was the interpretation of the knowledge requirement of section 60(2). Specific questions be addressed were: (i) Whose intention was relevant? That of the supplier, the immediate customer or the ultimate user? (ii) How specific must the intention be? Must a person have formed a definite intention to put the claimed invention into effect or is it sufficient that the person knows that he can do so and might at some point wish to do so? (iii) Must the intention exist at a specific time, eg the time of the actual supply or offer to supply the means?

The Court reviewed existing UK case law in KCI Licensing v Smith & Nephew [2010] EWHC 1487 (Pat), Cranway v Playtech [2009] EWHC 1588 (Pat), Chapman v McAnulty (Unreported, 19 February 1996, British Library SRIS C/20/96) and numerous German authorities on indirect patent infringement, of which the leading case was Deckenheizung, a decision of the Supreme Court (BGH X ZR 153/03, 13 June 2006).

The Court felt that the intention of the supplier could be ruled out: the necessary intention was to put the invention into effect, which was something the supplier himself did not intend to do. The question was what the supplier knew or ought to know about the intention of the person who is in a position to put the invention into effect. However, it was clear that the tort created by section 60(2) could apply where there had only been an offer to supply the relevant ‘means’. At such a time there may be no settled intention by any specific person to directly infringe. The Court concluded that (as Grimme argued) what was required was a finding, made in the light of all the circumstances and on the balance of probabilities, that either the supplier knew, or it was obvious in the circumstances, that some ultimate users would intend to use or modify the ‘means’ so as to directly infringe.

The BGH in Deckenheizung expressly considered the case where the supplier had himself proposed the infringing use, concluding that this would usually lead to a finding that the supplier knew, or it was obvious to him, that the means would be intended to put the invention into effect. This was apposite to the present case, in that Scott had made a selling point of the fact that his steel clod rollers could be substituted with rubber ones.

Practical significance

This case now forms the leading authority on the proper interpretation of section 60(2) Patents Act 1977 and was almost immediately relied upon by the Court of Appeal in the subsequent case of KCI Licensing v Smith & Nephew [2010] EWCA Civ 1260 and this later judgment (see paragraph 53) contains a useful summary of the Court of Appeal's conclusions as to the scope of section 60(2).

In short, the question is what the supplier knows or ought to know about the intention of the person who is in a position to put the invention into effect, ie the end-user. If, at the time of the supply or offer, the supplier knows, or it is obvious in the circumstances, that some ultimate users will intend to put the invention into effect (assessed on the balance of probabilities and disregarding maverick or unlikely uses), there will be contributory infringement.

This decision will be welcomed by patentees, since it dispels any requirement that the patentee must prove a settled intention to directly infringe at the time of any supply or offer. Conversely, parties concerned about the possibility of being sued for contributory infringement will need to consider carefully whether they have taken appropriate steps to ensure that the circumstances in which they supply or offer their products are such that it is not obvious that any end-users will intend to infringe.

Finally, legal practitioners should note the strong direction given by the Court of Appeal (see paragraphs 79–80 of its judgment) that it should have its attention drawn to decisions of the courts of other members states of the EPC or CPC on points of patent law of general importance, and that the UK courts should in general seek to follow the reasoning of an important and authoritative decision given in another country, only departing from it if the UK court is convinced that the reasoning is erroneous. The desire of the Court of Appeal to seek harmonization as far as possible on points of patent law is clear.

Tuesday, 8 February 2011

Butterworths’ book of sand

The Modern Law of Patents, Ashley Roughton, Phillip Johnson and Trevor Cook (eds)., LexisNexis Butterworths, 2010, ISBN: 9781405745185, Hard cover, 1921 pp. + ccxxxvi Price: £300

Reviewer: Christopher Wadlow (Professor of Law, UEA Law School, University of East Anglia, Norwich, England).

Let no one say the book reviews in this Journal are anything other than scrupulously objective. (I live alone in a fifth-floor apartment on Calle Belgrano, in Buenos Aires.) Butterworths’ Modern Law of Patents has 1921 numbered pages, of which 915 make up the appendices. (One evening a few months ago, I heard a knock at my door.) The front matter runs to an additional ccxxxvi (236) pages. (I opened it and a stranger stepped in.) It weighs 1.48 kg and is 4.5 cm thick. (Everything about him spoke of honest poverty: he was dressed in gray and carried a gray valise.) Comparable figures for the current (16th) edition of Terrell on Patents are 1206 numbered pages (of which 494 pages is statutory materials; there are also civx pages of front matter). Its weight is 1.86 kg and it is 6.8 cm thick.
‘I sell Bibles’, he said at last.
‘In this house’, I replied, not without a somewhat stiff, pedantic note, ‘there are several English bibles, including the first one, Wyclif's. I also have Cipriano de Valera's, Luther's (which, is in literary terms, the worst of the lot) and a Latin copy of the Vulgate. As you see, it isn't exactly Bibles I might be needing.’
After a brief silence, he replied, ‘It's not only Bibles I sell. I can show you a sacred book that might interest a man like yourself. I came by it in northern India, in Bikaner.’
He opened the valise and brought out the book. He laid it on the table. It was a clothbound octavo volume that had clearly passed through many hands. I examined it: the unusual heft of it surprised me. On the spine was printed ‘Holy Writ’, and then ‘Bombay.’
The key to the sheer extent of the Modern Law of Patents is surprisingly mundane, since its production has not been outsourced to India, nor its composition to the Deity. It is printed on unusually thin paper, so that all those thousands of pages can be accommodated in a single volume. Hence, the extent and comprehensiveness of the collection of primary legislative materials runs to 625 pages. Almost everything one could reasonably expect to find is here, and quite a few things one might not. The reader's interests in patents would have to be fairly esoteric, or directed outside the UK and Europe, before it could be said that anything significant was lacking, though your reviewer notices the absence of the text of one of his personal favourites, the 1963 Strasbourg Convention on the Unification of the Substantive Law of Patents for Inventions. There is also a useful selection of pleadings and precedents, though only contentious ones, yet the whole book is no thicker or heavier than Butterworths’ Intellectual Property Handbook. The Handbook, of course, is a great deal cheaper to buy, and the primary texts are more conveniently available online, so it is by the usefulness of the commentary, and not for the legislative materials, that the Modern Law of Patents is likely to be judged. The production and presentation are excellent, once one has accustomed oneself to the flimsiness of the paper, and there is a very useful pair of ribbon place-holders.
I opened it at random. The characters were unfamiliar to me. The pages, which seemed worn and badly set, were printed in double columns, like a Bible. The text was cramped, and composed into versicles. At the upper corner of each page were Arabic numerals. I was struck by an odd fact: the even-numbered page would carry the number 40,514, let us say, while the odd-numbered page that followed it would be 999. I turned the page; the next page bore an eight-digit number. It also bore a small illustration, like those one sees in dictionaries: an anchor drawn in pen and ink, as though by the unskilled hand of a child.
It was at that point that the stranger spoke again.
‘Look at it well. You will never see it again.’
There was a threat in the words, but not in the voice.
I took note of the page, and then closed the book. Immediately, I opened it again. In vain I searched for the figure of the anchor, page after page. To hide my discomfiture, I tried another tack.
‘This is a version of Scripture in some Hindu language, isn't that right?’
‘No,’ he replied.
When Butterworths stunned the profession by selling off the major part of their list to Tottel (now Bloomsbury Professional) in 2004, they kept back some of their IP titles, and even extended the range. First there had been the Modern Law of Copyright by Hugh Laddie, Peter Prescott, and Mary Vitoria in 1980, then Christopher Morcom's Modern Law of Trade Marks in 1999, and finally the Modern Law of Patents by Michael Fysh, Ashley Roughton, Trevor Cook, and Michael Spence in 2005. As for the future, the Modern Law of Passing-off is altogether too oxymoronic to frighten your reviewer.
Then he lowered his voice, as though entrusting me with a secret.
‘I came across this book in a village on the plain, and I traded a few rupees and a Bible for it. The man who owned it didn't know how to read. I suspect he saw the Book of Books as an amulet. He was of the lowest caste; people could not so much as step on his shadow without being defiled. He told me his book was called the Book of Sand because neither sand nor this book has a beginning or an end.’
He suggested I try to find the first page.
I took the cover in my left hand and opened the book, my thumb and forefinger almost touching. It was impossible: several pages always lay between the cover and my hand. It was as though they grew from the very book.
‘Now try to find the end.’
I failed there as well.
‘This can't be,’ I stammered, my voice hardly recognizable as my own.
‘It can't be, yet it is,’ the Bible peddler said, his voice little more than a whisper. ‘The number of pages in this book is literally infinite. No page is the first page; no page is the last. I don't know why they're numbered in this arbitrary way, but perhaps it's to give one to understand that the terms of an infinite series can be numbered any way whatever.’
Butterworths’ previous effort to break the monopoly of Sweet & Maxwell in patent law was the loose-leaf Patent Law of Europe and the United Kingdom of 1978, by Anthony Walton and Hugh Laddie, which simultaneously demonstrated the almost infinite erudition of Anthony Walton QC, and the utter futility of trying to explain the post-1977 regime in terms of pre-1977 English case law. It was abandoned in the early 1980s. But monopolies do not last for ever, and each of Butterworths’ three ‘Modern’ textbooks had a target, and an agenda to match. Laddie, Prescott and Vitoria was meant to be everything which Copinger was not, and succeeded brilliantly, at least in its first two editions, before it became more bloated than Copinger itself. Morcom hardly pretended to be the nemesis of Kerly, despite the latter's slowness to adapt to the 1994 Act, but it did establish itself as a viable alternative. So which of these two models does the Modern Law of Patents seek to follow?

The target of the Modern Law of Patents is obviously Terrell, and the defining feature of Terrell is its sense of continuity. The editors of the 16th edition can trace their succession back in line unbroken to Thomas Terrell himself and the first edition of 1884—a genealogy which many royal houses would envy. This gives Terrell its characteristic flavour. There is a pleasant musty odour to it, as of an ancient library filled with leather-bound codices and incunabula, all engrossed on parchment or printed on vellum. A library which has not been disturbed by too many modern accessions or accretions, and where all that subversive European stuff is kept decently out of sight in an annex, to be brought in by one of the servitors when needed.

In contrast to the aristocratic virtues and ancestral vices of Terrell, the Modern Law of Patents most definitely lives up to its name, and with a vengeance. Not only is it of the 21st century through and through, but the original revolution of 2005 has devoured its children, and in its second edition the book has already repudiated its founders and rewritten most of its own brief history. Several of the editors and contributing authors are new in their posts, more than a few of the old have been retired, and the text has been almost entirely recast, despite the absence of any really significant legislative changes. Though only 5 years old, it exemplifies anything but a regal succession from one generation to the next, unless the royal house in question be that of the Russian Tzars, or the early Roman Emperors.

The present edition of the Modern Law of Patents retains Michael Fysh as Consultant Editor, but the real work seems to have been done by the editorial team of Ashley Roughton, Phillip Johnson, and Trevor Cook. Named contributors to individual chapters are Mark Anderson and Victor Warner (transactions and licensing), Richard Davis (claim drafting), Johanna Gibson (future development), Ian Karet (claim construction), and Michael Spence (theory). This list gives some idea of the ambitions of the book, whose scope extends well beyond the familiar areas of patentability, validity, infringement, and defences, to include detailed coverage of office procedure (at Newport, in Munich, and under the PCT), ownership and employee compensation, enforcement and litigation procedure (including international issues), and an interesting new chapter on arbitration. There are chapters on border controls and SPCs, as well as European competition law. In all, the editors seem to have taken infinite pains to anticipate every patent-related problem which might occur in every kind of patent-related practice, and have set themselves to provide a correspondingly wide range of answers.
As we talked I continued to explore the infinite book.
‘Had you intended to offer this curious specimen to the British Museum, then?’ I asked with feigned indifference.
‘No,’ he replied, ‘I am offering it to you,’ and he mentioned a great sum of money.
I told him, with perfect honesty, that such an amount of money was not within my ability to pay. But my mind was working; in a few moments I had devised my plan.
‘I propose a trade,’ I said. ‘You purchased the volume with a few rupees and the Holy Scripture; I will offer you the full sum of my pension, which I have just received, and Wyclif's black-letter Bible. It was left to me by my parents.’
‘A black-letter Wyclif!’ he murmured.
I went to my bedroom and brought back the money and the book. With a bibliophile's zeal he turned the pages and studied the binding.
‘Done,’ he said.
The reduction in the number of active contributors, and their shared responsibility for the majority of the substantive chapters, seems to have improved the sense of purpose, and the consistency of treatment. Compared, especially, to Terrell, the focus is strikingly modern and Euro-centric. Most pre-1977 authority is simply discarded, though a short and unattributed history of patents and their institutions has been included as an Appendix, along with essays on theory and future developments, all of which are admirably brief and to the point. In the main body of the text, the preferred technique is to start with the European Patent Convention and the European (EPO) authorities where possible, and to fit the treatment of the Patents Act 1977 and the post-1977 English cases in around these. As a random example, at paragraph 2.22 the question of when a document becomes available to the public is addressed by reference to no fewer than 12 decisions of the EPO boards of appeal, but with no reference to the classic English case of Humpherson v Syer.1 It is only for areas where the EPO is silent, as for claim construction, liability for infringement, and litigation procedure, that UK law and practice necessarily takes prominence. One may wonder whether this reversal of the Terrell order of things is dictated primarily by the desire to be as ‘modern’ as possible, or whether the underlying rationale is that patent attorneys constitute a far more numerous readership than barristers and solicitors.

The authorial technique also differs from Terrell in the way it treats decided cases. Terrell, like many texts in the common law tradition, is often written around extended quotations from cases which are accepted as particularly important or authoritative. Perhaps because decisions of the EPO do not typically lend themselves to this kind of treatment, it is rarely adopted in the Modern Law of Patents, except in the chapter on claim construction, which is almost inevitably dominated by the direct quotation of lengthy passages from Lord Hoffmann in Amgen, if only because no one has yet worked out what they actually mean. One can hardly blame Ian Karet for that state of affairs, but, while we are on claim construction, some of his more gnomic utterances could surely do with more explanation and justification, such as that at section 4.12, where it is contemplated that the ‘factual matrix’ for interpreting a claim will not only include the common general knowledge, but may go further and include ‘matters … [not in the common general knowledge] yet were known to and taken into account by the skilled person’.

Taken as a whole, the Modern Law of Patents lives up to its name. It reads well, and consistently impresses with its grasp of detail, which is matched with a sense for structure. It is impossible on short acquaintance to say how accurate it is, as that must await the judgment of practical experience, but it promises well. It states its own case for a place on the practitioner's bookshelf, but its relatively compact dimensions would make it a useful companion at court, where the extensive primary materials would come into their own, or on one's travels.
I thought of putting the Book of Sand in the space left by the Wyclif, but I chose at last to hide it behind some imperfect volumes of the Thousand and One Nights.
I went to bed but could not sleep. At three or four in the morning I turned on the light. I took out the impossible book and turned its pages. On one, I saw an engraving of a mask. There was a number in the corner of the page—I don't remember now what it was—raised to the ninth power.
I showed no one my treasure. To the joy of possession was added the fear that it would be stolen from me, and to that, the suspicion that it might not be truly infinite. Those two points of anxiety aggravated my already habitual misanthropy. I had but few friends left, and those, I stopped seeing. A prisoner of the Book, I hardly left my house.
By what I am sure must be a coincidence, the number of pages of the main text of Butterworths’ Modern Law of Patents is the magical 1001, neither more nor less.2
Summer was drawing to a close, and I realized that the book was monstrous. It was cold consolation to think that I, who looked upon it with my eyes and fondled it with my ten flesh-and-bone fingers, was no less monstrous than the book. I felt it was a nightmare thing, an obscene thing, and that it defiled and corrupted reality.
I considered fire, but I feared that the burning of an infinite book might be similarly infinite, and suffocate the planet in smoke.
I remembered reading once that the best place to hide a leaf is in the forest. Before my retirement I had worked in the National Library, which contained nine hundred thousand books; I knew that to the right of the lobby a curving staircase descended into the shadows of the basement, where the maps and periodicals are kept. I took advantage of the librarians’ distraction to hide the Book of Sand on one of the library's damp shelves; I tried not to notice how high up, or how far from the door.
But there is no need to go anywhere near the National Library of Argentina, and perhaps it is safer not to do so. The Modern Law of Patents may not quite be as all-encompassing as Borges’ Book of Sand,3 nor does it even contain the equivalent of 900,000 volumes, but it is remarkably close to being a library in one volume, and it can be yours for a very reasonable £300. Just don't swap your Terrell for it, because Terrell, like Wycliffe, is part of our heritage too, and Luther's is not the only translation of the Bible, nor the best.


Footnotes

1 (1887) RPC 407, CA. Nor is Humpherson v Syer cited in the Table of Cases.

2 The main text (excluding front and end matter, and appendices) ends on page 1003, but as the first two pages are blank, and the text starts on what is supposed to be page 3, the page count is 1001 precisely.

3 The italicized quotations are all from Jorge Luis Borges, in Andrew Hurley (tr), The Book of Sand (Penguin Modern Classics, 2001). With apologies to the IPKat, , but your reviewer thought of the analogy independently. Great (feline) minds think alike.

Tuesday, 1 February 2011

Initial interest confusion recognized by the English courts

Authors: Peter O'Byrne and Ben Allgrove (Baker & McKenzie LLP)

Och-Ziff Management Europe Ltd and Anor v Och Capital LLP & Ors [2010] EWHC 2599 (Ch), 20 October 2010

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpq202, first published online 27 January 2011

Confusion prior to sale of services or goods has been recently accepted by the High Court of England and Wales as actionable in passing off and trade mark infringement, materially expanding the scope of these causes of action in English law.

Legal context

Under Article 9(1)(b) of the Community Trade Mark Regulation (207/2009/EC) (CTMR), holders of a Community trade mark (CTM) can prevent others from using a similar sign for similar goods or services to those for which the CTM is registered and which causes a likelihood of confusion among the relevant public. The CTMR also provides for infringement to be established under Article 9(1)(a) where a sign identical to a CTM is used for identical goods, and under Article 9(1)(c) which provides for owners of CTMs with a reputation to prevent use of a similar sign for any goods or services where such use without due cause among other things is detrimental to the distinctive character or the repute of the CTM. There are various defences to infringement, including under Article 12(a) where a defendant uses its own name or address in accordance with honest commercial practices.

Further, under the English law tort of passing off, goodwill can be protected where the following three elements are established (Reckitt & Colman v Borden [1990] 1 WLR 491, 499):

  • Goodwill: the claimant must establish that he has goodwill in the market in respect of his goods and services and that he has established that goodwill through the use of distinguishing feature(s).
  • Misrepresentation: the defendant must have made, or engaged in conduct which amounts to, a misrepresentation that leads (or is likely to lead) relevant members of the public to be confused about the trade origins of the goods or services in respect of which the misrepresentation is made.
  • Damage: the claimant must have suffered, or be likely to suffer loss or damage as a result of that confusion

Before the present case, the position in English law was that the confusion required by the second limb was confusion at the point of sale.

Facts

The present dispute arose in the financial services industry. Och-Ziff Management Europe Ltd was a global asset management group founded in 1994 and had relevant CTM registrations for OCH-ZIFF and OCH. Och Capital LLP was subsequently established by a Mr Ochoki and was in the very early stages of commencing business as an investment house when Och-Ziff commenced proceedings for trade mark infringement and passing off. Arnold J concluded that Och Capital had infringed both the OCH-ZIFF and OCH CTMs under Article 9(1)(b) CTMR and by passing off, but dismissed infringement claims under Article 9(1)(a) and (c). In so ruling the Court dismissed Och Capital's arguments that it had an own-name defence under Article 12(a).

Analysis

Initial interest confusion in trade mark infringement

The High Court reviewed comprehensively the law in relation to initial interest confusion, which the International Trade mark Association defined as:
a doctrine which has been developing in U.S. trademarks cases since the 1970s, which allows for a finding of liability where a plaintiff can demonstrate that a consumer was confused by a defendant's conduct at the time of interest in a product or service, even if that initial confusion is corrected by the time of purchase.
Reviewing the US case law, including the central cases of Brookfield Communications, Inc v West Coast Entertainment Corp 174F. 3rd 1036 (9th Cir., 1999) and Grotrian, Helfferich, Schultz., Th. Steinweg Nachf. v Steinway & Sons 523 F2d 1331 (2nd Cir., 1975), the Court concluded that the doctrine is ‘increasingly accepted’ in US law but controversial in application and scope. Classically the cases are successful in so-called ‘bait and switch’ scenarios where a competitor's trade mark is used to attract a consumer whom the trader can then try and switch to the trader's own product. The High Court had recently indicated the potential for the doctrine to cross the pond into English law in Whirlpool Corp v Kenwood Ltd [2008] EWHC 1930 (Ch), where it accepted that this classic bait and switch activity can be prevented under Article 9(1)(b).

Och-Ziff was, however, arguing more broadly that, for trade mark infringement requiring a likelihood of confusion, initial interest confusion should be actionable under Article 9(1)(b). Given that the potential infringing acts in the CTMR included use in advertising it was clear that the relevant likelihood of confusion could occur pre-sale. Further, recent Court of Justice of the EU case law supported its case. The Court agreed with this view: an advertisement causing confusion is clearly capable of causing damage to the trade mark owner even if there is no confusion at the point of a later sale. Even without diversion of sales, a confusing advertisement may tarnish the reputation of the trade mark owner's goods, and may dilute the distinctiveness of its brand.

Initial interest confusion in passing off

Having concluded there was likelihood of confusion for CTM infringement purposes, the High Court ruled that initial interest confusion was also actionable in passing off. The Court adopted with approval an analysis from Professor Wadlow, emphasising that the principles underpinning passing off held good whether or not the misrepresentation was made deliberately or innocently:

  • There can be passing off with liability for substantial damages merely by advertising goods for sale, even if none are in fact sold.
  • There are few a priori limits on what the misrepresentation causing damage to the claimant's goodwill may be or how the damage may arise. The case in which the defendant's goods are sold as and for the goods of the claimant is only a ‘special instance of a more general rule’.
  • Bait & switch selling involves a process in which the making of the misrepresentation is an essential step and can arise from a misrepresentation even if the deception has been dispelled by the conclusion of the transaction.
  • The general principle is that, if the defendant successfully induces the public to do business with him by making a misrepresentation, it ought not to matter that the falsity of the representation becomes apparent at some stage and there is no confusion at the point of sale.

The result is that, according to Arnold J at least, initial interest confusion can constitute an actionable misrepresentation in passing off, but Och-Ziff still needed to establish that damage resulted to its goodwill. The Court concluded that damage to Och-Ziff's goodwill was likely through consumers believing that the Och Capital's business was connected with it. Damage was also likely through erosion of the distinctiveness of Och-Ziff's brand, this conclusion being reached even without an equivalent finding of dilution in relation to Och-Ziff's Article 9(1)(c) infringement claim.

Practical significance

This case materially expands the scope of situations in which businesses in the UK can successfully prevent competitors from trading in a manner which damages their trade marks and/or goodwill. Such actions are not restricted to situations of confusion at point of sale, but now clearly encompass pre-sale confusion, at least where classic bait and switch conduct is involved. This result will please brand owners and reflects a growing acceptance of trade marks and brands having functions and protectable value beyond the core indication of origin function (see, Allgrove & O'Byrne, ‘Pre-sale misrepresentations in passing off: an idea whose time has come or unfair competition by the back door?’ (2006) 1(6) JIPLP 413 where the application of initial interest confusion in English law was canvassed).

This decision confirms judicial indications in recent years that passing off is not a static doctrine and that misrepresentations which create confusion pre-sale should, in appropriate situations, be actionable. It also brings the UK more into line with US case law and its doctrine of initial interest confusion. The flow of the Court's reasoning shows an acceptance that the common law tort of passing off has to take into account the nature of European trade mark law and evolve with it where the same mischief is being addressed and legislative policy has clearly been expressed.

An outstanding question is whether misrepresentations leading to damage in the absence of actual confusion (whether at the point of sale or otherwise) should be actionable in passing off. However, the argument that where trade mark protection had expanded to encompass a form of statutory unfair competition (ie taking unfair advantage without due cause under Article 9(1)(c) CTMR), the law of passing off may legitimately follow to encompass damaging misrepresentations in the absence of confusion was expressly rejected by the Court of Appeal in L'Oreal & Ors v Bellure & Ors [2007] EWCA Civ 936. Och-Ziff indicates that this is a door that is still worth pushing at on the right facts.