Friday, 27 July 2012

Border Measures, a second edition

The second edition of Enforcement of Intellectual Property Rights through Border Measures, edited by Olivier Vrins and Marius Schneider, has now been published by Oxford University Press.


The Journal of Intellectual Property Law & Practice (JIPLP) is particularly pleased to be associated with this title.  Marius Schneider is a member of the journal's editorial board and an indefatigable supporter and Olivier is one of its most distinguished contributors.  A piece jointly authored by Olivier and Marius appeared in the inaugural issue of JIPLP and it was Marius who penned the first article from the journal to be cited in an Opinion of the Advocate General of the Court of Justice of the European Union. 


But the JIPLP connection with this book goes even further. Several chapters have been written by JIPLP authors and board members past and present, including a somewhat provocative chapter by JIPLP Editor in Chief Jeremy Phillips.


JIPLP thanks Marius and Olivier for their support and wishes them the best of luck with their second edition.


Further information concerning this title is available here

Thursday, 26 July 2012

The dental surgery, the hotel bedroom and ‘communication to the public’

Author: Alex Freelove and Joel Smith (Herbert Smith LLP, London)

Società Consortile Fonografici (SCF) v Marco Del Corso (Case C-135/10) and Phonographic Performance (Ireland) Ltd v Ireland and another (Case C-162/10), Court of Justice of the European Union (ECJ), 15 March 2012

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps100, first published online: July 23, 2012

The ECJ has ruled in two cases on the meaning of ‘communication to the public’, finding that the free broadcasting of phonograms as background music in a private dental practice was not a ‘communication to the public’, but that the broadcasting of phonograms in a hotel bedroom was.

Legal context

The ECJ handed down judgment on the same day in relation to two cases, which required the ECJ to discuss the concept of ‘communication to the public’. The concept of ‘communication to the public’ appears not only in Article 8(2) of the Rental Directive (Directive 92/100), which provides for users of commercial phonograms to pay remuneration when they communicate them to the public, but also in Article 3(1) of the Copyright Directive (Directive 2001/29), which provides authors with the exclusive right to authorize or prohibit any communication to the public of their works.

The ECJ highlighted that the concept of ‘communication to the public’ in these two provisions is used in differing contexts and pursues objectives which, while similar, are different to some extent: Article 8(2) of Rental Directive is compensatory in nature, whereas Article 3(1) of the Copyright Directive is preventative in nature.

Facts

Società Consortile Fonografici v Marco Del Corso

This case was referred to the ECJ by the Turin Court of Appeal, Italy, following a dispute between a royalty collection agency for phonogram producers, Società Consortile Fonografici (‘SCF’), and Mr Del Corso, the owner of a private dental practice in which background music was played whilst patients were being treated.

SCF brought proceedings against Mr Del Corso seeking a declaration that his playing of background music constituted a ‘communication to the public’ of phonograms for the purposes of Article 8(2) of the Rental Directive and that therefore this activity required a royalty to be paid to SCF for distribution to its members.

Phonographic Performance (Ireland) Limited v Ireland and another

Phonographic Performance (Ireland) Limited (‘PPL’) is a collecting society which represents the rights which phonogram producers hold over sound recordings or phonograms in Ireland. PPL brought an action against Ireland seeking a declaration that Ireland had acted in breach of Union law in exempting hotel operators from the obligation to pay equitable remuneration for the use of phonograms in hotel bedrooms in Ireland.

The Irish High Court referred several questions, which required the ECJ to consider the concept of ‘communication to the public’ in relation to Article 8(2) of the Rental Directive in relation to sound recordings and phonograms heard by guests in hotel bedrooms.

Analysis

Società Consortile Fonografici v Marco Del Corso

As mentioned above, the ECJ highlighted that the concept of ‘communication to the public’ in Article 8(2) of the Rental Directive and in Article 3(1) of the Copyright Directive is used in differing contexts and pursues objectives which, while similar, are different to some extent.

Even though the reference from the Turin Court of Appeal related to Article 8(2) of the Rental Directive, the ECJ relied on recent ECJ judgments on Article 3(1) of the Copyright Directive to highlight relevant criteria in the assessment of whether a communication to the public has taken place:
  • The indispensable role of the ‘user’: in light of ECJ judgments in SGAE v Rafael Hoteles (Case C-306/05) and FAPL v QC Leisure (Case C-403/08), the ECJ established that the operator of a hotel or public house makes a communication to the public within the meaning of Article 3(1) of the Copyright Directive when it intervenes, in full knowledge of the consequences of its action, to give access to a broadcast containing the protected work to its customers.
  • The concept of ‘public’: the term ‘public’ (a) refers to an indeterminate number of potential listeners and (b) implies a fairly large number of persons. The ECJ suggested that the concept of ‘public’ encompasses a certain de minimis threshold, which excludes groups of persons which are too small or insignificant. In determining such a threshold, it is relevant not only to know how many persons have access to the same work at the same time, but also it is also necessary to know how many of them have access to it in succession.
  • The profit-making nature of the communication: as the ECJ had previously held in FAPL v QC Leisure, this was a relevant consideration in determining whether a ‘communication’ had taken place. It is not enough for the communication to ‘catch’ the public by chance, the public must be both targeted by the user, and receptive to that communication.
In light of these criteria, the ECJ found that a dentist who broadcasts phonograms, free of charge, in dental practices for the benefit of his patients and enjoyed by them without any active choice on their part is not making a ‘communication to the public’. Such broadcasts did not therefore entitle the phonogram producers to the payment of remuneration.

Phonographic Performance (Ireland) Limited v Ireland and another

As seen in the ECJ's approach in SCF v Del Corso, even though reference from the Irish High Court related to the Rental Directive, the ECJ relied on its previous judgments that were based on Article 3(1) of the Copyright Directive in reaching its decision.

The ECJ referred to the criteria highlighted in SCF v Del Corso (above) and held that whether a hotel operator provided guest bedrooms with (a) televisions and/or radios to which it distributes a broadcast signal or (b) apparatus other than a television or radio and phonograms in a physical or digital format capable of being broadcast or heard by means of that apparatus, the hotel operator, in each case, was a ‘user’ making a ‘communication to the public’ of a phonogram.

The hotel operator was therefore obliged to pay ‘equitable remuneration’ under Article 8(2) of the Rental Directive for the transmission of those phonograms.

Practical significance

The ECJ handed down judgment on two cases brought by collecting societies representing phonogram producers that sought to collect equitable remuneration for the playing of phonograms. Whilst the playing of background music in a dental surgery was found not to be a communication to the public, the provision of televisions and/or radios to which a hotel operator distributes a broadcast signal was.

These cases, the latest in which the ECJ has discussed the concept of ‘communication to the public’ following the ECJ's decision in FAPL v QC Leisure in October 2011, show that ‘communication to the public’ should be construed broadly and that the courts are robust in finding that copyright infringement is established where a business is exploiting the work by communicating it to a number of people.

Wednesday, 25 July 2012

More books for review

Here's yet another batch of books which have been received for review in the Journal of Intellectual Property Law & Practice.  If you believe that you are suitably qualified to review one of these books and would like to do so, please email Sarah Harris by not later than Friday 27 July and let her know.

JIPLP reminds prospective reviewers that they will be expected to review the book within a reasonable time. If they are unable to do so, they will be asked to return the book so that it can be sent to someone else to review.


Keeping Secrets: a Practical Introduction to Trade Secret Law and Strategy
Authors: Darin W. Snyder and David S. Almeling
Publisher: Oxford University Press, New York, USA.
"... an accessible primer on all things trade secret. It examines the audacious schemes of trade secret thieves by presenting dozens of case studies and the lessons to learn from them. It also offers best practices for protecting trade secrets from theft, investigating a suspected breach, and enforcing a trade secret in court and other forums. Preeminent intellectual property lawyers, Darin Snyder and David Almeling have written this book for anyone who wants to learn about trade secrets: including corporate executives and engineers, judges and students, even attorneys not practicing trade secret law who need general information on the subject".
Further information available here


Patents as Protection of Traditional Medical Knowledge?
Author: Petra Ebermann
Publisher: Intersentia
"The protection of the knowledge and practises of local and indigenous groups has been discussed in various forums in recent times. International agreements such as the Convention on Biological Diversity address the importance of protecting traditional knowledge and practises, recognizing that this knowledge bears immense value in terms of its contribution to the conservation of biological diversity and its inputs to R&D in various fields. Experiences of the past, prominently the use of the Neem tree and the Turmeric plant, show that the benefits of traditional knowledge applications are allocated mainly to the follow-on developers and rarely to the original suppliers of the knowledge and practises. In the long term, this may result in restricted access to traditional knowledge to the detriment of social welfare. The book examines traditional knowledge protection in the area of traditional medical knowledge, often utilised in contemporary medicine, and consequently subject to patent protection. It provides a comparative view of the current patent regimes in major economies, specifically the US and the EU, and the consequences of the application of these laws to traditional medical knowledge and follow-on innovation, as well as the impact on underlying economic principles and opposing interests. The economic analysis of law is used to evaluate the current situation by comparing the effects of adapted patent regimes to alternative liability regimes or contractual agreements. This comparative and interdisciplinary approach taken gives valuable insights and inputs for future discussion".
Further information available here 


Intellectual Property, Antitrust and Cumulative Innovation in the EU and the US
Author: Thorsten Käseberg
Publisher: Hart Publishing, Oxford
"Taking an integrated view of both IP and antitrust rules – in particular on refusals to deal based on IP – the book assesses policy levers under European and US patent, copyright and trade secrecy laws, such as the bar for and scope of protection as well as research exemptions, compulsory licensing regimes and misuse doctrines. It analyses what the allocation of tasks is and should be between these IP levers and antitrust rules, in particular the law on abuse of dominance (Article 102 TFEU) and monopolisation (Section 2 Sherman Act), while particular attention is paid to the essential facilities doctrine, including pricing methodologies for access to IP".
Further information available here.


Intellectual Property and Private International Law, Comparative Perspectives
Editor: Toshiyuki Kono
Publisher: Hart Publishing, Oxford
"'Intellectual property and private international law' was one of the subjects discussed at the 18th International Congress of Comparative Law held in Washington (July 2010). This volume contains the General Report and 20 National Reports covering Canada, US, Japan, Korea, India and a number of European countries (Austria, France, Germany, UK, Spain etc). The General Report was prepared on the basis of National Reports".
Further information available here


Enforcement of Intellectual Property Rights through Border Measures (Second edition)
Editors: Olivier Vrins and Marius Schneider
Publisher: Oxford University Press, Oxford, England
"Fully updated in the second edition to include the two more recent Member States of Bulgaria and Romania, the work provides important guidance for intellectual property rights-holders on the practical application of border measures in these two Member States. Coverage of the legislation and guidance is also updated to include commentary on Commission Regulation 1172/2007, which created a new application for action form for the applications based on a "Community right", as well as the DG TAXUD manual for filing applications for action under Regulation 1381/2003. Updates to case law include important recent decisions in relation to goods in transit, sanctions against traffickers when a case has been settled under the simplified procedure, Community applications for action, and the ECJ's Advocate-General's opinion on the use of information provided to an intellectual property rights-holder during a border seizure of goods.This second edition also considers the UK HMRC's fundamental changes to its detention and seizure procedures in respect of goods infringing trade mark and copyright".
Further information available here

Tuesday, 24 July 2012

Damages inquiry: the tail-end of a long-running dispute

Authors: Paul Joseph and Ben Mark (RPC, London)

Fabio Perini S.P.A v (1) LPC Group Plc (2) Paper Converting Machine Company Italia (3) Paper Converting Machine Company Limited (4) LPC (UK) Limited [2012] EWHC 911 (Ch), Patents Court, England and Wales, 4 April 2012

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps101, first published online: July 23, 2012

Intellectual property cases in England and Wales are tried on a split trial basis. The court first deals with liability and, depending on the outcome, a second action is then commenced to assess the level of damages that should be awarded. The High Court has recently assessed the level of damages in a patent infringement action (following the initial trial and subsequent appeal on liability). It is unusual for a damages inquiry to reach the formal court stage, as parties usually settle the level of damages following the trial on liability. This case therefore provides rare guidance on the application of the applicable principles, although it should be borne in mind that inquiries of this nature are fact specific. The decision also raises interesting patent issues and deals with wider principles such as reliability of evidence.

Legal context

The basic principles underlying the assessment of damages in patent cases derive from a relatively small number of cases over the past 100 years or so. The principles can be summarized as follows:

  • The patentee should be restored to the position he would have occupied if the infringer had not acted improperly provided always that the loss is foreseeable, caused by the wrong and is not excluded on public policy grounds (General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1976] RPC 197).
  • The patentee must adduce evidence to show that it is probable that, if it were not for the infringer's act, the loss for which the patentee seeks compensation would not have occurred.
  • The court recognizes and then values the loss of the chance by the patentee to make sales itself.
  • The assessment requires the court to construct and value hypotheses. It requires the court to form a view as to what might have happened absent the infringement. In this context, as Mr Justice Norris put it, ‘one cannot expect much in the way of accuracy’.
  • In certain circumstances it may be possible for the patentee to recover damages in the form of lost profits not only on the sale of the patented product but also those goods commonly sold together with the patented product (Gerber Garment Technology v Lectra Systems [1997] RPC 443).
  • Ultimately, the task of the court is to compensate the patentee and not to punish the infringer.

Facts

In 2009 Mr Justice Floyd held that PCMC, a major competitor of Perini in the paper converting industry, was jointly liable with LPC (a customer of PCMC) for infringing Perini's '929 patent (a method for gluing the loose end or ‘tail’ of rolls of paper) by the use of the PCMC ‘tailsealer’. A ‘tailsealer’ forms part of a line of machinery known as a ‘converting line’ which converts an industrial roll of paper into smaller rolls of kitchen and toilet tissue.

Following an unsuccessful appeal by PCMC/LPC to the Court of Appeal, the inquiry as to damages (first ordered by Mr Justice Floyd in 2009), came to be determined by Mr Justice Norris in October 2011.

Analysis

While the judge's findings as to the level of damages are largely fact-specific, the following points of general interest arise from the court's judgment:

Res judicata

Res judicata (a Latin term for ‘a matter already judged’) is an English legal doctrine which prevents a matter from being raised in the same or a different court after it has already been determined. In this case, despite the fact that relevant new documents had come to light, Perini's argument that PCMC had infringed the '929 patent by supplying the infringing tailsealers in the UK was rejected on the basis that the issue had been determined in the main proceedings with the benefit of the supply contracts. The judge held that it would have been an abuse of process to advance the supply argument in the inquiry.

Strength of evidence

The judge commented on the artificial nature of the damages evidence, which was isolated from contemporaneous decisions (dating back over six years ago). Evidence of this type needed to viewed with caution.

Establishing a causal link

Perini, the patentee, had to demonstrate that the infringing act of PCMC/LPC had resulted in the loss of a contract to supply the relevant third party customers, namely LPC and Georgia Pacific (or the chance to supply) with its tailsealer product, which embodied the patented process. In assessing whether any such causal link had been established, the judge made the following observations:

  • Where the infringing act relates to the use of a process, a patentee is not excluded, in principle, from claiming for loss of a contract to the extent that the infringing process is specifically written into the supply contract of the infringing apparatus, the premise being that such promotion of the infringing use could cause the patentee to lose a contract employing its patented method.
  • No distinction in principle can be drawn between the infringement of a process patent as contrasted with a product patent. PCMC/LPC had argued that, where a customer is paying to achieve a result (ie, a glued paper roll), he may not care how that result was achieved (in effect saying that there was no causal link), whereas with a product, this was different as the customer would have specifically wanted that product. The judge dismissed this argument on the basis that in either case the infringer would still be seeking a competitive advantage and so there was a causal link sufficient to ground the damages claim.

Total damages

The amount of damages awarded to Perini was quite substantial given that (according to PCMC/LPC) the infringing tailsealer accounted for only six per cent of the total cost of the entire converting line. Based upon the evidence before the judge, Perini had successfully argued that it had lost the chance of a sale of the whole converting line (in which the tailsealer was one module) and not just the tailsealer itself.

Practical significance

While there is a body of case law setting out the general principles governing an assessment of damages, it is evident that there is still a great deal of uncertainty surrounding the accuracy of any final determination. This is certainly true in this case, where the witnesses are forced to recall and hypothesise about events that took place many years ago. It is likely that this is one of the main reasons why most assessments settle before reaching trial—if parties want certainty, settlement is the only option.

Monday, 23 July 2012

Calling would-be authors

Legal writing has
moved on a bit since
the days of Justinian
With many readers of this weblog shortly to start their vacations or enjoying a period of comparative quiet before everyone else gets back to work after the Olympic season, I'd like to take this opportunity to remind aspiring authors  that JIPLP welcomes the submission of articles on any intellectual property topic and from any jurisdiction -- particularly if they have some useful practical content to them.

Instructions for authors can be found on the official JIPLP website here.  There's nothing in the instructions that says that articles have to be fun, and indeed they do not. But, before you send an anything in, do take the trouble to ask yourself whether, if someone else had written what you were submitting, you'd really want to read it yourself.

If you are planning to submit an article or Current Intelligence piece but are not sure how to format it, you can view a sample issue by clicking here. If you think that JIPLP might already have received a piece on the subject on which you'd like to write -- and this is quite likely if it's on a popular topic or is intended as a Current Intelligence piece on an important recent judicial decision or statute -- you should check first by emailing Sarah Harris here.

Sunday, 22 July 2012

Books for review

Here's the latest batch of books which have been received for review in the Journal of Intellectual Property Law & Practice.  If you believe that you are suitably qualified to review one of these books and would like to do so, please email Sarah Harris by not later than Wednesday 25 July and let her know.

JIPLP reminds prospective reviewers that they will be expected to review the book within a reasonable time. If they are unable to do so, they will be asked to return the book so that it can be sent to someone else to review.


Making Laws for Cyberspace.
Author: Chris Reed
Publisher: Oxford University Press, Oxford, England
"Providing a scholarly analysis of how to govern and make the right kinds of laws for cyberspace, in this work, Professor Reed investigates the vast majority of cyberspace users who wish to act lawfully and asks whether the current state of law in cyberspace makes it possible for them to do so. If not, why not, and what is the cure?"
Further details available here


Relocating the Law of Geographical Indications
Author: Dev Gangjee
Publisher: Cambridge University Press, Cambridge, England
"There is considerable variation in the nature, scope and institutional forms of legal protection for valuable geographical brands such as Champagne, Colombian coffee and Darjeeling tea. While regional products are increasingly important for producers, consumers and policy makers, the international legal regime under the TRIPS Agreement remains unclear. Adopting a historical approach, Dev Gangjee explores the rules regulating these valuable geographical designations within international intellectual property law. He traces the emergence of geographical indications as a distinct category while investigating the key distinguishing feature of the link between regional products and their places of origin. The research addresses long-standing puzzles, such as the multiplicity of regimes operating in this area; the recognition of the link between product and place and its current articulation in the TRIPS definition; the varying scope of protection; and the extent to which geographical indications ought to be treated as a category distinct from trade marks".
Further details available here


Hollywood’s Copyright Wars
Author: Peter Decherney
Publisher: Columbia, University Press, New York.
"Peter Decherney shows that the history of intellectual property in Hollywood has not always mirrored the evolution of the law. Many landmark decisions have barely changed the industry’s behavior, while some quieter policies have had revolutionary effects. His most remarkable contributions uncover Hollywood’s reliance on self-regulation. Rather than involve congress, judges, or juries in settling copyright disputes, studio heads and filmmakers have often kept such arguments “in house,” turning to talent guilds and other groups for solutions. Whether the issue has been battling piracy in the 1900s, controlling the threat of home video, or managing modern amateur and noncommercial uses of protected content, much of Hollywood’s engagement with the law has occurred offstage, in the larger theater of copyright. Decherney’s unique history recounts these extralegal solutions and their impact on American media and culture".
Further details available here


Breach of Confidence: social origins and modern developments 
Authors: Megan Richardson, Michael Bryan, Martin Vranken and Katy Barnett
Publisher: Edward Elgar, Cheltenham, England
"The authors show that despite its humble beginnings, stilted development and air of quaintness the doctrine has modern relevance and influence, its sense of ‘trust and confidence’ still resonating with the information society of today. Topical chapters include, ‘Inventing an equitable doctrine’, ‘Privacy and publicity in early Victorian Britain’, ‘Searching for balance in the employment relationship’, as well as many others".
Further information available here

Friday, 20 July 2012

Federal Circuit clarifies three-step recapture rule for analysis of reissued claims

Author: Charles R. Macedo, Michael J. Kasdan and Addie A. Bendory (Amster, Rothstein & Ebenstein LLP)

In re Youman, No. 2011-1136, US Court of Appeals for the Federal Circuit, 2012 US App LEXIS 9346, 8 May 2012 (‘Youman II’)

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps108, first published online: July 19, 2012

The US Court of Appeals for the Federal Circuit provided an important clarification regarding the application of the so-called ‘recapture rule’ during a broadening reissue proceeding before the US Patent and Trademark Office (USPTO). Under the recapture rule, a patentee may not recapture in a reissue proceeding that which was given up during original prosecution. Significantly, Youman II confirms that some broadening of even previously narrowed claim elements is permitted.

Legal context

Under US patent law, a patentee may use a reissue proceeding to fix errors made in the original grant of a US Patent. Under this procedure, when a reissue proceeding is commenced within two years after issuance of the original US patent, the patentee may obtain claims that are potentially broader in scope and/or narrower in scope than the issued claims. However, a significant limit placed on a patentee is that it may not recapture subject matter in a reissue proceeding that was given up in the original proceeding in order to obtain the original patent. In Youman II, the Federal Circuit addressed how the recapture rule should apply when a reissue claim sought is broader than the issued claim but narrower than the originally filed claim that was narrowed during original prosecution.

Facts

The Youman patent covers an electronic programme schedule system for a television that allows users to search for a list of programme titles. As originally filed, the claim provided for users to ‘select’ a title from the list. During the original prosecution, the claim was modified to require a user to ‘cycle’ through the list, rather than ‘select’ a title from the list, in order to obtain allowance of the claim. It was undisputed that the requirement in the issued claim to ‘cycle’ through the list is narrower than the original claim merely requiring a user to ‘select’ a title. Nor was it disputed that this narrowing amendment was at least arguably used to traverse potential prior art rejections.

Within the two-year window after issuance of the original patent, the patentee submitted a reissue application which sought to broaden the issued claims from having the user ‘cycle’ through the list to having the user ‘change’ characters on the menu using remote control keys. It was undisputed that while the proposed reissue claims requiring the user to ‘change’ characters were narrower than the original claims requirement of the user to ‘select’ from a list, they were broader than the issued claims requiring the user to ‘cycle’ through it.

In the reissue proceeding, the examiner rejected the claims under 35 USC §251 because the reissue claims improperly recaptured subject matter that was surrendered in the application for the original patent. The patentee appealed the rejection to the US Board of Patent Appeals and Interferences, which subsequently affirmed the examiner's rejections of the reissue claims (Ex parte Youman, No 2010-007029, 2010 Pat App LEXIS 13302 (BPAI 8 September 2010), ‘Youman I’). According to the Board, because the reissue claim broadened the claim to an intermediate scope, it constituted an impermissible recapture of surrendered subject matter.

The patentee appealed to the Federal Circuit.

Analysis

On appeal, in a split decision, the Federal Circuit vacated and remanded the Board's rejections of multiple claims in the reissue patent application. Youman II held that the Board improperly applied the recapture rule. According to the majority, the recapture rule permits reissue claims of intermediate scope, namely those between the scope of the original claim in the application and the issued claim.

The reissue statute allows a patentee to broaden claims in its original patent if the patentee can show ‘error without any deceptive intention’ (35 USC §251). However, the recapture rule bars reissue applications that broaden claims in order to recapture subject matter surrendered during the original prosecution.

In Youman II, the Federal Circuit applied a three-step recapture rule analysis in determining whether an applicant's reissue claims violate the recapture rule:
The reissue claims are compared to the patented claims to determine whether and in what aspect the reissue claims are broader than the patented claims.

It is then determined whether the broader aspects of the reissue claims relate to surrendered subject matter.

If the reissue claims are broader relative to the patented claims in a manner related to the surrendered subject matter, it must be determined whether the surrendered subject matter has crept into the reissue claim.
The Federal Circuit then held that the Board improperly applied the recapture rule by comparing the reissue claims to the patented claims, rather than to the original claims. In particular, the court held that ‘[i]f the patentee modifies the added limitation such that it is broader than the patented claim yet still materially narrows relative to the original claim, the recapture rule does not bar reissue’ (Youman II, 2012 US App LEXIS 9346, para 26). However, as Youman II further explained, ‘[u]nless the claims are materially narrowed in a way that avoids substantial or whole recapture of the surrendered subject matter, the surrendered subject matter has crept into the reissue claims and they are barred under the recapture rule’ (ibid, para 19).

Youman II explained its rationale for comparing the reissue claims to the original claims, and not merely the patented claims, as follows: ‘By measuring material narrowing relative to the original claim, which was deliberately surrendered during the original prosecution, we are ensuring that the patentee is unable to recapture what it surrendered deliberately, but allowing room for error, as required by the reissue statute’ (ibid, para 22, emphasis in original).

The Federal Circuit remanded the case to the USPTO with instructions to properly apply the recapture rule analysis to the claims at issue and make necessary findings of fact.

Practical significance

In Youman II, the Federal Circuit clarified that the recapture rule does not per se bar claims in a reissue patent which are broader than the patented claims but narrower than the original claims, even when narrowed in an original prosecution to obtain allowance. Rather, Youman II looks to the practical significance of the amendment in the original application and determines if that significance is undermined by the broadening claim in reissuance. In other words, some broadening of previously narrowed claim elements will be acceptable in reissuance proceedings, as long as the surrendered subject matter has not crept into the reissue claim. This may present patentees with more opportunities to use reissue practice to their strategic advantage. No doubt, the Federal Circuit will have further opportunities in the future to address how this rule should be applied.

Friday, 13 July 2012

August JIPLP now online -- with an editorial on IP and commoditization

The August 2012 issue of the Journal of Intellectual Property Law & Practice (JIPLP) is now available in full to subscribers of its electronic version. Subscribers and non-subscribers alike can check out the contents of this issue here.  Articles already published and those which, while not yet out in print, are available online under OUP's Advance Access service, can be read on a pay-per-access basis.

This month's Editorial takes a look at commoditization: is it really such a dreadful think?
‘Bundle them high, protect them cheap’: IP and commoditization

Viewed from the perspective of the intellectual property creator or owner, every intellectual asset is unique. In the case of copyright protection for authors' works, the subject matter of the protecting right is, generally speaking, an emanation of the author's personality, an embodiment of a message to the world; much the same can be said of design rights. Many trade marks are personal in yet another way, being the actual name or likeness of a designer, manufacturer or celebrity. Uniqueness is incorporated into patents in another way: while identical or highly similar copyright works can be independently created by like-minded authors, and the same sign can be registered by different people for different classes of goods and services, no two inventions can, legally speaking, occupy the same space, since the earlier will destroy the objectively measured novelty of the latter.

When it comes to dealing with intellectual property rights, they often lose their individuality. Thus copyright collecting societies license entire bundles of protected musical works, lyrics, recordings and performing rights to bulk licensees; this makes sense because so many copyright works are short and the transaction costs of licensing each one separately for use by a broadcasting company, for example, would be oppressively high. In contrast, patents may be bundled together for large-scale collective licensing because their specifications are so long and their claims so complex that the transaction costs of evaluating each one separately to see if it even requires a licence can make bespoke licensing an intolerable burden. Likewise, the fair, reasonable and non-discriminatory (FRAND) licensing of technologies that are deemed to be essential if compliance with global industrial standards is sought can also be a form of commoditization: one buys the whole package not just because it saves time and effort and reduces the risk of an unexpected infringement action but because the licensed IP appears to be generally regarded by the businesses comprising the standard-setting group as being the relevant IP, thus saving prospective licensees the hassle of having to re-invent the wheel, as it were, by trying out all available alternatives before deciding which they do in fact need.

In some areas of IP, transactions have yet to show a high degree of commoditization. The trade mark is perhaps the best example, though if brand owners ever learn to harness the power of the internet as effectively as its service providers do, we may see the dawn of a new era in which trade marks are collectively licensed and commoditized, too. Is it too remote a scenario to imagine a day when businesses such as Google, eBay and Amazon will take bulk licences to use registered trade marks as keywords for regular online search or for enabling consumers to navigate their way around the labyrinths in which their customers' web pages lurk?

Anyway, having entered the world as a solitary entity, then having been bundled together and commoditized, it is the lot of the IP right to revert to its individualized, non-commoditized status at its point of expiry. Each patent, copyright and design slips quietly away either at the end of its predestined time or on the occurrence of a premature termination through cancellation, revocation, surrender or lapse, as the case may be. The trade mark has the option of eternal life, but that is a subject for another editorial.

Where does litigation fit into the commoditisation of intellectual property? While IP rights may be held in a portfolio, commercialized and securitized in bulk, they are most often litigated individually since the nature and scope of protection available to each separate protected work defines the scope of its own protection. But opportunities for some commoditization remain. Thus, in seeking a blocking order as a means of preventing access to a website used for the purposes of infringing copyright or selling counterfeit products, it would be an unproductive and unhelpful exercise for the separate orders to be made in respect of each infringed work, by each IP owner: ‘bundle them high and protect them cheap’ should be an attainable objective.

Thursday, 12 July 2012

Legal formalism, delusion and reality: time for debate

One of the most powerful pieces so far published in JIPLP is "Ensuring greater legal certainty in OHIM decision-taking by abandoning legal formalism" by Rhys Morgan, a critical view of the manner in which the law relating to Community trade marks has been allowed to dominate the apparent reality of the real world in which we live. This article has already been placed on open access, so that subscribers and non-subscribers alike can read it and ponder its most telling points.

Rhys is a barrister who works at the Office, and who therefore has had the opportunity to study OHIM legal decision-making at close quarters. He is not however the only person who holds views of this nature.  David Keeling, currently a Board of Appeal member at the European Patent Office but previously with the OHIM Boards of Appeal, agrees with him and calls for a debate on the "deluded belief" of many lawyers that the application of the right rule to the right facts delivers the right result.  He explains:
"Rhys Morgan’s article on legal formalism is possibly the best article on the subject of trade mark law since Frank Schechter’s seminal piece published in the Harvard Law Journal in 1927. It should be compulsory reading for the President and senior managers of OHIM, their equivalents in the Member States, the judges at the European Court of Justice and General Court, judges in national courts in the EU, and anyone else with an interest in trade mark law ... 
. ... I find it astonishing that people can spend years at university studying law and come away with the deluded belief that law can be reduced to a set of simple rules and formulas and that for each legal problem there is a single correct solution that can be reached by carefully applying those rules and formulas. Surely Oliver Wendell Holmes demonstrated the folly of such an idea when he wrote “The life of the law has not been logic; it has been experience”".
David's fully articulated thoughts on the subject can be read here.

Tuesday, 10 July 2012

How to identify fine Cognac: BNIC returns to Finland

Author: Pessi Honkasalo (Krogerus Attorneys, Helsinki, Finland)

Bureau National Interprofessionnel du Cognac v Oy Gust. Ranin, KHO 2011:120, Supreme Administrative Court of Finland, 30 December 2011

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps103, first published online: July 10, 2012

A trade mark for the sales denomination of a Cognac, containing the term in the vernacular, was held to convey a false impression as to the origin of the drink under Article 16(c) of Regulation 110/2008.

Legal context

In accordance with Article 16(c) of Regulation 110/2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks, and repealing Council Regulation 1576/89, the geographical indications registered in Annex III of the Regulation are protected against any ‘false or misleading indication as to the provenance, origin, nature or essential qualities on the description, presentation or labelling of the product, liable to convey a false impression as to its origin’. Under the said Annex III, the denomination ‘Cognac’, among others, is a geographical indication in product category No 4, wine spirits, the country of origin of which is France. Unlike Council Regulation 1576/89 laying down general rules on the definition, description and presentation of spirit drinks, Regulation 110/2008 contains a provision, Article 23(1), that the registration of a trade mark which contains or consists of an annexed geographical indication is to be refused or invalidated if its use would lead to any of the situations referred to in Article 16. The Regulation applies from 20 May 2008.

Sections 14(1)(1), (2) and (11) of the Finnish Trade Marks Act (7/1964, as amended by Law 56/2000) provide that a trade mark is not registered if it is contrary to law and order, or to morality; if it is liable to mislead the public; or if there is an obstacle to registration within the meaning of Council Regulation on the protection of geographical indications and designations of origin for agricultural products and foodstuffs. Under s 21(1) of the Act, after an opposition, the registering authority must revoke a trade mark registration to the extent there is an obstacle to registration. What the Act used to be silent about, however, is the relation between trade marks and the protection of geographical indications for spirit drinks; Regulation No 2081/92 to which the national statute refers does not, by virtue of Article 1(1), apply to such products. As of 1 January 2011, s 14(1)(11) was amended so that the list now includes also an obstacle to registration within the meaning of Article 23 of Regulation 110/2008.

Facts

Gust. Ranin Oy applied to the Finnish registration authority on 19 December 2001 for registration of a trade mark in the form of a bottle label. The pictorial mark consisted of words ‘COGNAC L&P V.S. HIENOA KONJAKKIA Lignell & Piispanen 40% Vol. Product of France 500ml’ (see Figure 1). ‘Lignell & Piispanen’ is the auxiliary trade name of Oy Gust. Ranin and ‘L&P’ is the abbreviation thereof. HIENOA KONJAKKIA is the Finnish expression for ‘fine cognac’ and, as any connoisseur of French brandy would know, the three-star appellation ‘VS’, or very special, indicates that the youngest eau-de-vie in the blend has aged for at least two years. By decision of 31 January 2003, the authority registered the mark under No 226350.

Figure 1
The Bureau National Interprofessionnel du Cognac (‘BNIC’) opposed the registration, but the registering authority dismissed BNIC's opposition and confirmed the validity of the mark. The Board of Appeals at the National Board of Patents and Registration of Finland similarly dismissed BNIC's appeal. BNIC then brought proceedings before the Supreme Administrative Court. Owing to the adoption of Regulation 110/2008 while the action was pending, the Supreme Administrative Court stayed the proceedings and referred the matter to the Court of Justice for a preliminary ruling. The case was consolidated with another reference and decided as Joined Cases C-4 and 27/10 Bureau National Interprofessionnel du Cognac [2011] ETMR 53 (discussed by Miguel Angel Medina González, ‘Protection of Geographical Indications against Translation, Generic Use, Evocation, and Other Potential Enemies’ (2012) 7 JIPLP 20).

The Court of Justice (First Chamber) ruled, inter alia, that subject to the limitations set forth in Article 23(2) Regulation 110/2008 is applicable to the assessment of the validity of the registration of a trade mark containing a geographical indication protected by the Regulation irrespective of whether that registration took place before or after the Regulation entered into force (para 37), and that Article 23(1) of the Regulation is directly effective (para 45).

Analysis

The Supreme Administrative Court started its legal assessment by reiterating that independently of the protection it enjoys under French law, the term ‘Cognac’ has been protected as a geographical indication under EU law since 15 June 1989, the date on which Regulation No 1576/89 entered into force. The trade mark at issue was registered after 1 January 1996, so that the limited derogation provided for in Article 23(2) of Regulation 110/2008 was inapplicable.

Consequently, it was to be decided whether the use of the mark led to any of the situations referred to in Article 16 of the Regulation. The Court noted that the intervening party's mark contained a geographical indication registered in Annex III, ‘Cognac’, as well as a common noun for and a translation of that indication in the partitive case (‘KONJAKKIA’). The proprietor of the trade mark had argued that in Finnish language the term ‘konjakki’ describes the kind of the product. However, it follows from Article 15(3) of the Regulation that the geographical indication ‘Cognac’ may not—as in cannot—become generic; names that have become generic may not be registered in Annex III. Under Article 14(2), the geographical indication Cognac ‘shall not be translated on the label nor in the presentation of the spirit drink’.

The trade mark had been registered for a wine spirit drink which, as such, complies with the specifications of the technical file provided for the geographical indication at issue. Notwithstanding, the mark also contained the Finnish expression HIENOA KONJAKKIA and adverted to the auxiliary trade name of a Finnish company, but did not mention the producer of the drink. This, held the Court, was liable to convey a false impression as to its origin. According to the Court, the inscription ‘Product of France’ in small characters did not tone down the impression that the product designated by the trade mark would be of Finnish origin. The trade mark was therefore considered a misleading indication within the meaning of Article 16(c) of the Regulation.

On those grounds the Supreme Administrative Court annulled the decisions of the registration authority and of the Board of Appeals at the National Board of Patents and Registration of Finland, and returned the matter to the former for cancellation of the registration of mark No 226350.

Practical significance

KHO 2011:120 serves as an effectual reminder of the legal effect of European Union regulations. By Article 288 of the Consolidated Version of the Treaty on the Functioning of the European Union:
A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.
From the date that an EU regulation enters into force, it automatically forms part of the domestic legal order of each Member State and requires no implementing legislation at national level. Unless there is an explicit requirement to that effect, it is actually illegitimate for a Member State to adopt national execution measures (see Case 39/72 Commission v Italy [1973] ECR 101; Case 34/73 Fratelli Variola v Amministrazione italiana delle Finanze [1973] ECR 981). In accordance with settled case law of the Court of Justice, regulations ‘operate to confer rights on individuals which the national courts have a duty to protect’ (Bureau National Interprofessionnel du Cognac, para 40).

Figure 2
In the proceedings that formed the other limb of Joined Cases C-4 and 27/10 between the same parties, KHO 2011:119, the Supreme Administrative Court rendered its judgment on the same day. This case concerned a pictorial trade mark including the endorsement ‘KAHVI-KONJAKKI Cafe Cognac Likööri – Likör – Liqueur 21% Vol Lignell & Piispanen 500 ml’ (see Figure 2). In English, KAHVI-KONJAKKI reads ‘café cognac’; likööri and likör are the Finnish and Swedish words for liqueur, respectively. The Court, following the advice it had received from Luxembourg, noted that the product for which the trade mark had been registered did not meet the specifications set for the used indication. The use of the mark was therefore held to exploit the reputation of Cognac's registration under Regulation 110/2008 seeing that consumers, when confronted with the name of the product, would trigger in their mind an image of the product whose designation is protected. Oy Gust. Ranin's trade mark fell foul of both Articles 16(a) and (b) of the Regulation by being a direct commercial use and evocation of the geographical indication for which the BNIC acts as a watchdog.

In both judgments the Supreme Administrative Court emphasized that because the trade marks at issue were in violation of Article 16 of the Regulation and their registrations therefore had to be invalidated under Article 23(1) of the same, it was unnecessary to consider whether there would be any grounds for cancellation on the basis of national law alone.

Friday, 6 July 2012

Second Circuit clarifies the scope of ‘safe harbor’ in the Digital Millennium Copyright Act

Author: Eddy D. Ventose (Faculty of Law, University of the West Indies, Cave Hill Campus, Barbados)

Email: eddy.ventose@cavehill.uwi.edu

Viacom International Inc v YouTube Inc (2nd Cir 2012), 5 April 2012

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps106, first published online: July 4, 2012

The Court of Appeals for the Second Circuit has clarified the scope of the ‘safe harbor’ provision in the Digital Millennium Copyright Act (DMCA) in respect of website operators that permits users to post materials on their website.

Legal context and facts

YouTube was founded in February 2005. In November 2006, Google acquired YouTube in a stock-for-stock transaction valued at $1.65 billion. The basic function of the YouTube website is to permit users to upload and view video clips free of charge. The plaintiff, Viacom, an American media conglomerate, and various Viacom affiliates, filed suit against YouTube in March 2007, alleging direct and secondary copyright infringement based on the public performance, display and reproduction of their audiovisual works on the YouTube website.

The district court denied the plaintiff's motions and granted summary judgment to the defendant, finding that YouTube qualified for Digital Millennium Copyright Act (DMCA) safe harbour protection with respect to all claims of direct and secondary copyright infringement. Although noting that the DMCA safe harbour provision protected the defendant's action, the court held that, based on the plaintiffs' summary judgment submissions, a jury could find that the defendants were not only generally aware of, but welcomed, copyright-infringing material being placed on their website.

However, the district court also noted that the defendants had properly designated an agent pursuant to section 512(c)(2), and when they received specific notice that a particular item infringed a copyright, they swiftly removed it. It also held that held that the phrases ‘actual knowledge that the material or an activity’ is infringing, and ‘facts or circumstances’ indicating infringing activity, described knowledge of specific and identifiable infringements of particular individual items. In addition, the district court rejected the plaintiff's argument that, first, the replication, transmittal and display of YouTube videos were functions that fell outside the protection section 512(c)(1) afforded for ‘infringement of copyright by reason of … storage at the direction of the user’; and, second, YouTube was ineligible for safe harbour protection under the control provision, holding that the ‘right and ability to control’ infringing activity under section 512(c)(1)(B) required ‘item-specific’ knowledge thereof, because the provider must know of the particular case before he can control it.

Analysis

Actual or constructive knowledge

In the view of the Second Circuit, the first and most important question was whether the DMCA safe harbour under section 512(c)(1)(A) at issue required ‘actual knowledge’ or ‘awareness’ of facts or circumstances indicating ‘specific and identifiable infringements’. Under section 512(c)(1)(A), safe harbour protection is available only if the service provider
(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material …
The Second Circuit agreed with the conclusion of the district court that the statutory phrases ‘actual knowledge that the material … is infringing’ and ‘facts or circumstances from which infringing activity is apparent’ referred to ‘knowledge of specific and identifiable infringements’, noting that it was the text of the statute that compelled its conclusion. It was persuaded that the basic operation of section 512(c) required knowledge or awareness of specific infringing activity. In other words, the nature of the removal obligation contemplates knowledge or awareness of specific infringing material, because expeditious removal was possible only if the service provider knew with particularity which items to remove.

After examining the few decisions of the Federal Circuits, including the decision of UMG Recordings Inc v Shelter Capital Partners LLC, 667 F 3d 1022 (9th Cir 2011), the Second Circuit was of the view that the difference between actual and red flag knowledge was not between specific and generalized knowledge, but instead between a subjective and an objective standard. In other words, the actual knowledge provision turned on whether the provider actually or ‘subjectively’ knew of specific infringement, while the red flag provision turned on whether the provider was subjectively aware of facts that would have made the specific infringement ‘objectively’ obvious to a reasonable person. It continued that the red flag provision, because it incorporated an objective standard, was not absorbed within the actual knowledge provision under its construction of the section 512(c) safe harbour. The Second Circuit accepted that both provisions did independent work, and both applied only to specific instances of infringement. Therefore, based on the text of section 512(c)(1)(A), as well as the limited case law on point, it affirmed the district court's holding that actual knowledge or awareness of facts or circumstances that indicated specific and identifiable instances of infringement would disqualify a service provider from the safe harbour provision.

Application to the facts

Specific knowledge or awareness

Having so construed section 512(c)(1)(A), the Second Circuit next considered whether the district court had erred in granting summary judgment to YouTube on the record presented. The plaintiffs argued that, even under the district court's construction of the safe harbour, the record raised material issues of fact regarding YouTube's actual knowledge or ‘red flag’ awareness of specific instances of infringement, for example, the percentage of infringing content on the YouTube website. The Second Circuit responded that such estimates were insufficient, standing alone, to create a triable issue of fact as to whether YouTube actually knew, or was aware of facts or circumstances that would indicate the existence of particular instances of infringement. The plaintiff also relied upon internal YouTube communications that referred to particular clips or groups of clips. After reviewing the record, the Second Circuit was persuaded that the plaintiffs might have raised a material issue of fact regarding YouTube's knowledge or awareness of specific instances of infringement. In its view, based on the facts, a reasonable juror could conclude that YouTube had actual knowledge of specific infringing activity, or was at least aware of facts or circumstances from which specific infringing activity was apparent. As a result, the Second Circuit held that summary judgment to YouTube on all clips-in-suit, especially in the absence of any detailed examination of the extensive record on summary judgment, was premature.

Wilful blindness

The plaintiffs also argued that the district court erred in granting summary judgment to the defendants despite evidence that YouTube was ‘wilfully blind’ to specific infringing activity. The Second Circuit, therefore, had to consider the application of the common law wilful blindness doctrine in the DMCA context. It noted that the DMCA did not mention wilful blindness and that, as a general matter, it would interpret a statute to abrogate a common law principle only if the statute speaks directly to the question addressed by the common law. The Second Circuit claimed that a person is ‘wilfully blind’ or engages in ‘conscious avoidance’ amounting to knowledge where the person was aware of a high probability of the fact in dispute and consciously avoided confirming that fact. The relevant DMCA provision is section 512(m) which provides that safe harbour protection shall not be conditioned on ‘a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, except to the extent consistent with a standard technical measure complying with the provisions of subsection (i).’

The Second Circuit held that this meant that DMCA safe harbour protection could not be conditioned on affirmative monitoring by a service provider. As a result, section 512(m) was incompatible with a broad common law duty to monitor or otherwise seek out infringing activity based on general awareness that infringement may be occurring. The Second Circuit therefore held that the wilful blindness doctrine might be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA. Since the district court only cited section 512(m) for the proposition that safe harbour protection did not require affirmative monitoring, and did not expressly address the principle of wilful blindness or its relationship to the DMCA safe harbours, it concluded that the question of whether the defendant had made a ‘deliberate effort to avoid guilty knowledge’ remained a factual question for the district court to consider on remand.

Control and benefit

The section safe harbour also provides that an eligible service provider must ‘not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity’: section 512(c)(1)(B). The Second Circuit rejected, as fatally flawed, the parties' competing constructions of the ‘right and ability to control’ infringing activity in favour of a fact-based inquiry to be conducted in the first instance by the district court. The defendant's argument, which the district court accepted, was that the provider must know of the particular case before he can control it. This approach was adopted by the Ninth Circuit in Shelter Capital. Rejecting this approach, the Second Circuit explained that such a construction, which imported a specific knowledge requirement into section 512(c)(1)(B), would render the control provision duplicative of section 512(c)(1)(A): any service provider that had item-specific knowledge of infringing activity and thereby obtained financial benefit would already be excluded from the safe harbour under section 512(c)(1)(A) for having specific knowledge of infringing material and failing to effect its expeditious removal. In the Second Circuit's view, this would also mean that no additional service provider would be excluded by section 512(c)(1)(B) that was not already excluded by section 512(c)(1)(A).

The plaintiff, however, argued that the control provision codified the common law doctrine of vicarious copyright liability. The Second Circuit clarified that, to adopt that principle in the DMCA context would render the statute internally inconsistent. Section 512(c) presumed that service providers had the ability to ‘block … access’ to infringing material; further, a service provider who had knowledge or awareness of infringing material or who received a takedown notice from a copyright holder was required to ‘remove, or disable access to, the material’ in order to claim the benefit of the safe harbour; and, third, in taking such action, the service provider would—in the plaintiff's analysis—be admitting the ‘right and ability to control’ the infringing material. As a result, the prerequisite to safe harbour protection under sections 512(c)(1)(A)(iii) and (C) would simultaneously be a disqualifier under section 512(c)(1)(B).

In rejecting the reasoning of the Ninth Circuit in Shelter Capital, the Second Circuit held that the ‘right and ability to control’ infringing activity under section 512(c)(1)(B) ‘requires something more than the ability to remove or block access to materials posted on a service provider's website’. The Second Circuit, therefore, ruled that in light of its holding that that section did not include a specific knowledge requirement, it was prudent to remand to the district court to consider in the first instance whether the plaintiffs had adduced sufficient evidence to allow a reasonable jury to conclude that YouTube had (i) the right and ability to control the infringing activity and (ii) received a financial benefit directly attributable to that activity.

By reason of storage

The section 512(c) safe harbour is only available when the infringement occurs ‘by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider’. The district court held that YouTube's software functions fell within the safe harbour for infringements that occurred ‘by reason of’ user storage, noting that a contrary holding would confine the word ‘storage’ too narrowly to meet the statute's purpose. The Second Circuit claimed that service providers seeking safe harbour under section 512(c) were not limited to merely storing material: the structure of the statute distinguishes between so-called ‘conduit only’ functions under section 512(a) and the functions addressed by section 512(c) and the other subsections. In the absence of a parallel limitation on the ability of a service provider to modify user-submitted material, section 512(c) was clearly meant to cover more than mere electronic storage lockers.

The Second Circuit opined that Shelter Capital makes clear that the section 512(c) safe harbour extended to software functions performed ‘for the purpose of facilitating access to user-stored material’. The two software functions at issue here, transcoding (converting videos into a standard playable format) and playback (delivering videos to a user's browser cache in response to a request), were expressly considered in Shelter Capital, which held that liability arising from these functions occurred ‘by reason of the storage at the direction of a user’. The Second Circuit noted that the district court correctly found that to exclude these automated functions from the safe harbour would eviscerate the protection afforded to service providers by section 512(c). It held that the related videos function (the process by which a YouTube computer algorithm identified and displayed ‘thumbnails’ of clips that were ‘related’ to the video selected by the user) was also protected by the section 512(c) safe harbour. However, it noted that the final software function at issue—third-party syndication—was the closest case. This occurred where YouTube, in 2007, transcoded a select number of videos into a format compatible with mobile devices and ‘syndicated’ or licensed the videos to Verizon Wireless and other companies. The Second Circuit, in order to avoid rendering an advisory opinion on the outer boundaries of the storage provision, remanded to the district court for fact-finding on the question of whether any of the clips-in-suit were in fact syndicated to any other third party.

Practical significance

This decision provides important guidance for service providers: first, it is now settled law that the service provider must have knowledge of specific and identifiable infringements. General awareness by the service provider that infringements take place will not be sufficient. Secondly, where the service provider becomes subjectively aware of facts that would have made the specific infringement ‘objectively’ obvious to a reasonable person, he would be held to have specific knowledge. In addition, the Second Circuit has made it clear that adducing evidence of wilful blindness can show specific knowledge. This occurs where a person is aware of a high probability of the fact in dispute and consciously avoided confirming that fact. In respect of the right and ability to control the infringing activity, the Second Circuit, rejecting the Ninth Circuit requirement of evidence of item-specific knowledge, clarified that the law requires something more than the ability to remove or block access to materials posted on a service provider's website. Service providers have been given the green light on the activities they can engage in, for example, transcoding, playback and posting links, without falling outside the safe harbour provision. It is still an open question whether syndicating videos fall within the section 512(c) safe harbour. This also means that service providers will now spend significant amounts of monies to close those loopholes that would prevent them from getting section 512(c) safe harbour protection. This is perhaps due to the unwieldy nature of that provision, which means that if a service provider does not satisfy every element, protection is lost completely.

Thursday, 5 July 2012

The cite that's right

The Bluebook is a grand old US institution.  As its website proudly states:
"Generations of law students, lawyers, scholars, judges, and other legal professionals have relied on The Bluebook's unique system of citation in their writing. In a diverse and rapidly changing legal profession, The Bluebook continues to provide a systematic method by which members of the profession communicate important information to one another about the sources and legal authorities upon which they rely in their work".
Users of the Bluebook will find the Journal of Intellectual Property Law & Practice cited as “J. Intell. Prop. L. & Pract.” -- which conforms to the Bluebook's system. But that's not the form of citation which this journal employs.  Since its inception in 2005 the journal has been abbreviated to the letters "JIPLP", generally pronounced "jip-lip". JIPLP is not the only journal that does not refer to itself by reference to the Bluebook methodology. The European Intellectual Property Review prefers EIPR to "Eur. Intell. Prop. Rev." and the International Trademark Association's Trademark Reporter, which recently celebrated its centenary, cites itself as TMR, not “Trademark Rep.”

While there is much to be said for the adoption of a standard form of citation, there is also a good deal to be said for respecting the goodwill that has been accrued over the years in which a non-Bluebook form of citation has been used by a journal's readers, publishers, editors and contributors. If you are in doubt as to whether to adopt Bluebook citations or not, it's prudent and simple to check before you create your footnotes.

Avast, ye file sharers! The Pirate Bay is sunk

Author: Darren Meale (SNR Denton UK LLP)

Dramatico Entertainment Ltd and others v British Sky Broadcasting Ltd and others [2012] EWHC 1152 (Ch), Chancery Division, England and Wales, 2 May 2012

Journal of Intellectual Property Law & Practice (2012) : jps104 doi: 10.1093/jiplp/jps104, first published online: July 4, 2012

Three months after the High Court unsurprisingly found the world's most notorious BitTorrent tracker to have infringed copyright, the UK's largest ISPs are ordered to prevent their users from accessing the website after the majority yielded to the music industry's request for a blocking order.

Legal context

How do you solve a problem like the internet? Download a simple BitTorrent client, navigate to your favourite tracker like The Pirate Bay (TPB), type the name of a film or music track, click the appropriate link and in minutes you have an infringing but otherwise perfect copy of the work in question. Thousands if not millions of infringing copies of works are made in this way by as many individual infringers every day. Few of the world's legal systems provide practical mechanisms for rightsholders to address this rampant piracy. The most effective approach to date appears to be to ignore the individual infringers themselves but instead go after the service providers, like ISPs, without which those individuals could not infringe in the first place.

Facts

This is a follow-up to a Current Intelligence piece published in February (Journal of Intellectual Property Law & Practice, 2011, 6(12): 854–857). Section 97A of the UK's Copyright, Designs and Patents Act 1988 (CDPA) provides that
‘The High Court … shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.’ 
This provision, implemented to comply with the Information Society Directive (2001/29), was first used successfully by the film industry in NewzBin2 [2010] EWHC 608 (Ch). Having found that an online service called NewzBin2 infringed copyright on a significant scale, the High Court ordered BT, a major ISP, to block its subscribers from accessing the service. Encouraged by this success, the music industry was next to seek a block, this time of TPB—a very high-profile offender. A group of record companies sought blocks against six ISPs which together provided 94 per cent of UK consumers with fixed-line Internet access.

In February 2012 Mr Justice Arnold ruled in a preliminary hearing that the users and operators of TPB infringe the record companies' copyright. That was not a surprising decision. TPB openly and proudly advertised its lack of regard for copyright law. What was novel about the decision was that it was obtained by the record companies without any opposition: neither TPB nor any of its users were parties, and the ISPs declined to oppose the claim.

The case was due to conclude this summer with a hearing to decide whether, following the finding of infringement, the ISPs should be ordered to block TPB. But the parties acted ahead of time, and it appears that after some negotiation five of the six ISPs yielded and either agreed to consent to the industry's request for a block or not to oppose it. At the time of writing, no conclusion had been reached as regards the sixth ISP, BT.

Analysis

With little or no opposition to the order sought, Mr Justice Arnold's task was modest. He needed only to confirm his jurisdiction, note his discretion and content himself that this was a case in which he should exercise it.

He found that the requirements of s 97A of the CDPA were all satisfied: TPB had been found to infringe; the ISPs were ‘service providers’ within the meaning of the e-Commerce Directive (2000/31); and the ISPs were aware of TPB's infringement (not least as a result of the findings from the preliminary hearing).

For completeness, Arnold J also considered whether the judgments of the Court of Justice of the European Union (the ECJ) in Scarlet Case C-70/10 [2011] ECT I-000 and Netlog Case C-360/10 [2012] ECR I-0000 should cause him to come to a different conclusion in this case than he did in NewzBin (which predated those decisions). Scarlet and Netlog were cases in which SABAM, an organization representing Belgian rightsholders, had sought orders against service providers (an ISP in the former, a social network in the latter) requiring them to put filters in place to prevent the users of those services from infringing copyright. The ECJ found that such orders, if granted, would breach European law. This included the Charter of Fundamental Rights of the European Union, in particular Article 11, which includes the right to receive and impart information and ideas. The judge determined that those decisions did not affect his conclusion in the NewzBin cases and should not affect his conclusion here.

Arnold J was also content to exercise his discretion and grant the orders, having satisfied himself that they were proportionate. He noted that with the aid of professional representation, some of the parties had negotiated and agreed the terms of consent orders; it may therefore be assumed that those orders were proportionate between the parties. However, he added that it did not necessarily follow that the orders were proportionate as between the record companies and the users of the ISPs' services, who would be directly affected by the orders. In such a case, he remarked, the court should not simply ‘rubber stamp’ a consent order but independently consider its proportionality. He did so and was satisfied that the case for ordering a block was an even stronger one here than it was in NewzBin2.

Practical significance

As the author noted following the first judgment in this case, once TPB was found to infringe, it was hard to see what outcome there would be other than an order against the ISPs to block access. BT raised and lost all the arguments against a block in the NewzBin litigation, and perhaps the ISPs saw the writing on the wall and consented so as to save themselves the costs of fighting a losing battle. Arnold J's second judgment does not deal with costs, and we look forward to discovering how much of the burden is ultimately placed on the ISPs, given that overall they have done little to resist the record companies' application.

Cost may now be the key to determining how often this seemingly highly effective (at least from a legal perspective) remedy is deployed by the content industries. The NewzBin litigation was fairly hard work. A full case was fought against the first NewzBin, which was shut down as a result only to return a short while later as NewzBin2. There was then a new application against BT for a block, which BT fiercely resisted, and even after BT lost, there was a further battle on the nature of the block and who should pay for it. But, with that test case now completed, the TPB litigation appears to have been markedly less painful (and undoubtedly much cheaper), from the rightsholders' perspective at least.

As such there seems no reason for the content industries to stop here. If enough successful applications can be brought in an economical manner, the trouble of defending (or at least dealing with) them may persuade ISPs to start being more proactive about preventing their users from accessing pirate material. At present, most take the view that they have no duty to act until they are in receipt of a court order (which is largely true under English law). However, one too many s 97A applications may encourage them to start doing so voluntarily.

ISPs have so far been the only target of blocking orders. In the ECJ cases referred to above, SABAM sought broad filters against both an ISP and a social networking service provider. Section 97A injunctions are available (in theory) against any ‘service provider’, which has a fairly broad definition which includes, for example, search engines. The world's most popular, Google, has been a target of the music industry for some time, which has accused it of profiting from piracy and failing to censor links to infringing content. Perhaps the industry may now have found the mechanism by which it may force the search giant to do so.