For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Saturday, 20 September 2014

Copyright exceptions and user rights in Case C-117/13 Ulmer: a couple of observations

Should you have the right
to digitise your cat's paws?
Last week this blog reported on the latest addition to the copyright collection of the Court of Justice of the European Union (CJEU), this being the decision in Case C-117/13 Technische Universität Darmstadt v Eugen Ulmer KG.

In this case the Court ruled that Article 5(3)(n) of the InfoSoc Directive, read in conjunction with Article 5(2)(c) of the same directive, must be interpreted as allowing Member States to grant – at certain conditions – publicly accessible libraries the right to digitise the works contained in their collections.


This reference for a preliminary ruling was made in proceedings between the Technical University of Darmstadt (TU Darmstadt) and publisher Eugen Ulmer KG (Ulmer). 

In 2009 a library of TU Darmstadt scanned a book whose rights were held by the publisher, Ulmer. The library did so to allow its electronic consultation from dedicated terminals, where users could also print out on paper or store on a USB stick – in part or as a whole – the works made available for consultation there on a one-book-one-user basis. Having unsuccessfully offered the university the possibility of purchasing its own ebooks, Ulmer started proceedings for copyright infringement over unauthorised scanning of that book and other works.

Following partial victory before the Landgericht of Frankfurt am Main (Frankfurt District Court), both parties appealed before the Bundesgerichtshof (Germany's Federal Court of Justice). It was uncertain whether TU Darmstadt could actually rely on the exception pursuant to Article 52b UrhG, by which Germany had transposed Article 5(3)(n) of the InfoSoc Directive into its own copyright law and that reads as follows:

"So far as there are no contractual provisions to the contrary, it shall be permissible to make published works available from the stocks of publicly accessible libraries, museums or archives, which neither directly nor indirectly serve economic or commercial purposes, exclusively on the premises of the relevant institution at terminals dedicated to the purpose of research and for private study. In principle, reproduction of a work in excess of the number stocked by the institution shall not be made simultaneously available at such terminals. Equitable remuneration shall be paid in consideration of their being made available. The claim may only be asserted by a collecting society."

The court decided to stay the proceedings and refer the following questions to the CJEU:

1. Is use subject to purchase or licensing terms within the meaning of Article 5(3)(n) of Directive 2001/29/EC where the rightholder offers to conclude with the estab­lishments referred to therein licensing agreements for the use of works on appropriate terms? 

2. Does Article 5(3)(n) of Directive 2001/29/EC entitle the Member States to confer on the establishments the right to digitise the works contained in their collections, if that is necessary in order to make those works available on terminals? 

3. May the rights which the Member States lay down pursuant to Article 5(3)(n) of Directive 2001/29/EC go so far as to enable users of the terminals to print out on paper or store on a USB stick the works made available there? 

Mere offer is not enough --
acceptance is also needed
The Court's assessment

As regards the first question, the Court compared the language versions of Article 5(3)(n) and concluded that the EU legislature used the concept ‘terms’, which refers to contractual terms actually agreed, not mere contractual offers (as it was the case of Ulmer). It then recalled the rationale of Article 5(3)(n), which is to promote the public interest in encouraging research and private study through the dissemination of knowledge, this being the core mission of publicly accessible libraries. From these considerations it follows that the mere act of offering to conclude a licensing agreement does not rule out the application of Article 5(3)(n).

Turning to the second question, the CJEU noted that, while the exception in Article 5(3)(n) relates to Articles 2 and 3 of the directive, this provision limits the use of works to their ‘communication or making available’. An establishment that gives access to a work contained in its collection to a ‘public’, namely all of the individual members of the public using the dedicated terminals installed on its premises for the purpose of research or private study, communicates that work for the purposes of Article 3(1). The exception in Article 5(3)(n) would be meaningless if such an establishment did not also have an ancillary right to digitise the work in question. Such right would exist under Article 5(2)(c) the InfoSoc Directive 2001/29, provided that ‘specific acts of reproduction’ are involved. This means that, as a general rule and also in compliance with the three-step test in Article 5(5) of the same directive, the establishment in question may not digitise its entire collection.

With regard to the final question, the Court noted that acts such as the printing out of a work on paper or its storage on a USB stick are acts of reproduction, not communication/making available to the public. As such they fall outwith the scope of Article 5(3)(n) exception. They are not allowed under Article 5(2)(c) either, as they are not necessary for the purpose of making a certain work available to the users by dedicated terminals. However, such acts may be allowed under national legislation transposing the exceptions or limitations within Article 5(2)(a) or (b) of the InfoSoc Directive. In any case, the conditions set out in Article 5(5) must be respected.

Kurt is puzzled:
how can Article 5(3)(n) exception
be effective if a Member State does
not also transpose Article 5(2)(c)?
Can you have one and not the other? The fragmented system of EU exceptions

This decision, which largely follows the Opinion [here -- finally available in English] of Advocate General Jääskinen on 5 June 2014, shows how interdependent exceptions and limitations in Article 5 of the InfoSoc Directive are. 

Yet, their optional nature allows Member States to determine the actual shape and scope of any given resulting national exception. In a case like the one at hand, how effective would a national exception pursuant to Article 5(3)(n) be in a Member State that did not also provide in its national law for an exception pursuant to Article 5(2)(c)? Publicly accessible libraries would only have the ‘right’ to communicate/make available digitised works in their collections to the public, but would lack the pre-requisite to that, ie the ‘right’ to digitise them in the first place. 

When there are exceptions and limitations that are so closely linked that they depend on each other to be effective, one may wonder indeed whether it makes sense to maintain a system of exceptions and limitations like that in Article 5 of the InfoSoc Directive. The list contained in this provision is so fragmented and über-specific as regards possible permitted uses to be misleading as to the actual importance of individual exceptions, if considered (and adopted) on their own. 

Exceptions or rights?

It is also interesting to note that in this decision the CJEU employed a language which is not really that of exceptions or limitations (provided that exceptions are actually different from limitations, as both Advocate General Sharpston and the CJEU appeared instead to suggest in VG Wort). 

The Court spoke in fact of an ‘ancillary right’ to digitise works that would stem from the exception in Article 5(3)(n). 

Whether use of the term ‘right’ together or instead of ‘exceptions’, ‘limitations’, ‘permitted uses’, etc, has any practical implications remains to be seen. 

Yet, it is not excluded that it may have a bearing in future interpretations of the three-step test pursuant to Article 5(5). 

In this case the Court ruled that the three-step test prevented the ‘right’ to digitise from being intended as allowing digitisation of the entire collection of a library, in that this would be against the first step, ie ‘special cases’. 

However in future cases the reference to ‘right(s)’ may be used to achieve more relaxed interpretations of – in particular – the final step of the three-step test, which mandates upon exceptions and limitations not to cause an unreasonable prejudice to the legitimate interests of the rightholder. This is because also the legitimate interests ('rights' as opposed to mere 'exceptions'/'limitations') of users relying should not be unduly compressed.

What do readers think?

AIPPI Congress Report 7: The one where the second medical use resolution is adopted

As much as the AmeriKat adores
administrative AIPPI issues, a much needed
bubble bath was required in preparation for
the Gala Dinner
After an intense morning of IPKat posting and editing, the AmeriKat wandered down to the final Executive Committee (ExCo) with a creamy Second Cup chai tea latte in her paw.  As she walked in, she noted a distinct lack of energy amongst the audience.  It could have been because many were still recovering from their Tuesday late night parties or because they were still in the midst of the first of two hours of administrative issues that needed to be discussed.  Whatever it was, the AmeriKat decided that further Kat posts and some client meetings required her attention (as well as a rare relaxing bath before the Gala Dinner).  In her absence, the AmeriKat's colleague Eibhlin Vardy continues her report on the fate of the second medical use question in the plenary and Wednesday's ExCo:  
"The plenary session on Q238: “Second medical use and other second indication claims” was chaired by Ian Karet (Linklaters, UK), who used humour and diplomacy to maintain authority over the AIPPI troops in attendance.

Claire Baldock (Boult Wade Tennant, UK) introduced the session by outlining the tremendous patient benefit that can be achieved from incremental innovation such as a second medical use discovery. Second medical use drugs have the added benefit that their toxicology profile is likely to have already been assessed for previous indications, and much more will be known about the drug than new compounds. Despite these benefits, significant enforcement challenges remain, and it can difficult to determine when a second medical use claim has been infringed.
Sarah Matheson (Allens, Australia) gave an overview of the 43 national reports that were submitted on Q238. These reports are available on the AIPPI website. The national reports formed the basis for the proposed resolution.

Around 85% of reports confirmed that some form of second medical use claims were permitted. There was more controversy as regards the permissibility of certain types of claim, such as new dosage regimes, or a patient class. Most jurisdictions reported some limitation on the form of claims allowed, with 75% allowing EPC 2000 style purpose limited product claims, in comparison with only 35% for Swiss form claims.

In relation to identifying the particular parties who might be liable for infringement of a full label product that explicitly covers a patented second medical use, 100% of jurisdictions reported that the drug manufacturer would be liable. By way of comparison, 80% of jurisdictions were of the view that dispensing pharmacists would be liable, 45% of jurisdictions thought that the prescribing physician would be liable and 12.5% of jurisdictions were of the opinion that the patient would be liable.  However, Matheson noted that there were significant grey areas in these responses, and many jurisdictions did not have case law on these specific issues. 95% of responses agreed that harmonisation was desirable, and many emphasized the need for the regulatory framework and patent law to operate together. Another key theme included uncertainty regarding enforcement by patentees in relation to skinny label products, with a carve out for the patented indication.

Andri Hess (Homburger, Switzerland) who chaired the working committee explained that every resolution had passed in the working committee with very high majorities. The resolution is broadly composed of three parts: (1) patent eligible subject matter; (2) infringement; and (3) regulatory issues. 
Several amendments were proposed in the plenary session, including a request from the French delegation to delete paragraph 12 which provides that "injunctive relief for infringement of a patented second medical use should not be denied solely because such relief could prevent a pharmaceutical from being commercialised for non-patented uses. Consideration should be given to all the circumstances of the case, including the interests of the involved parties”. The concern was that the resolution did not give Courts sufficient discretion to refuse an injunction. However, the proposed amendment was rejected, suggesting that the wording was sufficiently flexible to refuse an injunction if that was appropriate on the facts of a particular case.

The final resolution on Q238 was adopted at the Executive Committee session on Wednesday afternoon, with 185 votes in favour, 4 against, and 4 abstentions.

This writer wonders whether the final resolution will be used by international or national AIPPI groups to bring these issues to the attention of the relevant authorities and, as a consequence, whether the authorities will take any action."

AIPPI Congress Report 6: The big privilege problem

Unlike the AmeriKat's photo of Toronto, lawyers can only
wish that the issue of privilege was so black and white
"When in Rome" the AmeriKat's colleague said as she drizzled some Canadian maple syrup over a small stack of pancakes during their morning catch-up breakfast.  The phrase attributed to Ambrose advises that a person, when in a different environment or location, should behave as those around them.  It is generally easy to "do as the Romans do" when you are in fact in Rome or in London or in Delhi.   You know you are there and you act accordingly.  In this case "when in Rome" demanded that we devour a stack of pancakes.   However, it is harder to know how to act when you could find yourself simultaneously in Rome and London and Delhi.  Sound impossible?  Not really - us lawyers and our clients have to do so all the time when facing tricky issues of privilege.  That's why, while the AmeriKat was busy immersing herself in the biosimilars Pharma Day session on Tuesday morning, her colleague Lorraine Neale (A&O) was, along with the rest of the workshop on "Client Attorney privilege – issues for harmonisation”, trying to figure out what the Romans should do when it comes to legal privilege.  Lorraine reports:
"After several cups of coffee and cake, practitioners and academics alike piled into the conference room keen to discuss the crucial issue of the protection from forced global disclosure afforded to confidential client-IP adviser communications.  Whilst IP law is progressively more harmonised internationally, and IP practice is increasingly global (with multi-jurisdictional parallel actions and a growth in parallel filings), there is a troubling lack of international harmonisation in respect of the protection granted to the confidential communications between non-lawyer IP advisors and their clients.  Many countries do not afford this communication the protection from forced disclosure during litigation. The workshop set out to focus the underlying substantive issues which may impede harmonisation in this area and discuss ways to overcome them.  
Steven Garland (Smart & Biggar, Canada and Chair of the AIPPI Standing Committee on Privilege), who moderated the workshop, launched the debate by highlighting the fact that this lack of harmonisation often led to conflicts in cross-border scenarios, where even though the communication might have been considered privileged in the jurisdiction where it was created, it might not be considered privileged in the jurisdiction where the litigation is taking place. Steven gave an example of the Canadian Federal Court case of Lilly Icos v Pfizer Ireland Pharmaceuticals (2006) FC 1465, where communications between Pfizer and a UK patent attorney was held not to be privileged.  It was subsequently ordered to be produced in the Canadian litigation, despite the UK privilege position. 
Steven questioned whether there was a solution to this troublesome state of events. At the international level, WIPO’s Standing Committee on the Law of Patents (SCP) had been considering the issues of confidentiality of client-IP adviser communications since June 2008. However despite significant work on identifying the problems that exist globally, there was no resolution or solution. Steven was pleased to note, however, that there was now a renewed interest from the WIPO Group B (industrialised countries) Governments, led by the Swiss, Swedish and UK delegations, who had announced their intention to consider the issue separately from WIPO/SCP. In June 2013 a Colloquium organised by AIPPI, FICPI and AIPLA, was held in Paris to assist the latter to develop a model framework for the international protection of confidentiality in IP professional advice. Steven was glad to announce that this has resulted in a joint proposal for a multilateral agreement, with the operative clause stating that: 
“…A communication made for the purpose of, or in relation to, an intellectual property advisor providing professional advice on or relating to intellectual property rights to a client, shall be confidential to the client and shall be protected from disclosure to third parties, unless it is or has been made public with the authority of that client” 
The Group B countries will now discuss this at the Group BWIPO Plenary Session on the 23 September 2014. 
Pravin Anand (Anand and Anand, India) gave an overview of the common law doctrine of privilege, focusing his presentation primarily on India. Noting that the client-attorney privilege is the oldest privilege known to the common law (arguably deriving from 16th Century England), Pravin briefly outlined some well-established features of this species of privilege: that it belonged to the client and not to the attorney (although the latter can claim privilege on behalf of his client), could only be waived by the client and that it survived the client’s death.  The grant of privilege was not discretionary (Three Rivers District Council and Others v The Governor and Company of the Bank of England [2004] UKHL 48), and confidentiality in itself was not sufficient to render a communication privileged.  In India “legal professional advisers” were covered by privilege, with the term being very narrowly construed as extending to practicing advocates, possibly to in-house attorneys (there was conflicting supporting case law), but probably not to Government law officers (as a result of governmental officials being subject to the Right to Information Act 2005). It did not extend to chartered accountants (although the Indian Chartered Accountant Act rendered a disclosure by a chartered accountant a misconduct), to domestic or foreign patent agents, nor to technical witnesses. There was no case law as to whether foreign lawyers were covered. Included within the definition of “Client” were the employees of a corporation authorised to deal with external lawyers ( see the Three Rivers case), and arguably law firms, although there was as yet no case law supporting the latter. 
Pravin emphasised, as his co-speakers would do in turn, the need for privilege to extend to all IP advisers. Patent litigation was getting increasingly specialised.  As a consequence, there was a greater requirement for technical adviser.  Pravin expressed the concern that frank discussions between clients and patent agents would not be possible unless afforded the protection of privilege. Pravin also reiterated the problems arising from the lack of harmonisation of privilege in multi-jurisdictional litigation, stating that this had given rise to “privilege forum shopping” with clients filing proceedings in other jurisdictions with the sole aim of destroying privilege. 
Professor John Cross (University of Louisville, USA) pointed out that in the US, unlike in India, the problem was not a lack of privilege protection.  The US has both an attorney-client privilege, as well as the more limited “work product” (litigation privilege). Furthermore, the US currently applied the stricter attorney-client privilege to communications with non-attorney patent agents, as well. The difficulties with the US system instead stemmed from two practical phenomena: a large number of parallel filings and the very broad scope of discovery. With respect to discovery, Professor Cross briefly reminded the audience that US litigation permits a significant amount of information gathering after a case is commenced, with the basic determinant/standard being whether the information is “relevant” to the litigation. Professor Cross noted that the Courts routinely find information involving even foreign patents to be relevant (as long as they relate to the same invention). In relation to patent agents, a US patent agent always has privilege, whilst in relation to foreign agents the courts differ: if the foreign agent is dealing with a US patent application there is no privilege, but if the foreign agent is dealing with a foreign application, most US courts will recognise privileges available under foreign law. However Professor Cross pointed out that in reality matters are not so clear cut.  For any given invention an agent may be involved in both a US and foreign filing. In these cases courts tended to apply a “touch base” standard; that is, if the agent’s work has a significant connection with the US patent then US privilege law applies. 
Dr. Michael Kompter (Senior Patent Counsel, IP Awareness and Enforcement, Boehringer Ingelheim, Germany) considered the issue of privilege from the standpoint of a civil law jurisdiction, as well as providing an in-house counsel’s perspective. Dr. Kompter started off by outlining a potential IP Owner’s “wish list” with regards to privileged communications.  Such a wish list would include an ability to talk openly and frankly about his IP with his adviser secure in the knowledge that this advice will not be discoverable in litigation, criminal proceedings, or in relation to regulatory action.  IP owners would also wish that privilege be waivable only by the IP owner.  IP “advisers” would include any professional who gives advice in IP matters.  Privilege should also extend to in-house lawyers as well as those in private practice. 
Dr Kompter noted that in Germany, a civil law jurisdiction, there is no tradition of discovery and hence privilege in IP matters. However, with the increasing globalisation of litigation, Dr Kompter said that there is an increasing need for a formal recognition of privilege in order to prevent the scenario outlined by Steven. In practice, the German Federal Regulations concerning both lawyers (s. 43a BRAO) and Patent Attorneys (s.39a PAO) afforded a reasonable level of protection, obliging both to uphold a duty of professional secrecy, bolstered by the possibility of the imposition of monetary and penal sanctions under the German Criminal Code for violation of professional secrecy. 
Furthermore under the Civil Code there existed the right to a “refusal to testify” in cases where the interest of the client is put in jeopardy. In relation to European Patent Attorneys, Dr. Kompter pointed out that following Rule 153 (1) EPC, all communications with the latter were protected as “permanently privileged from disclosure in proceedings before the EPO, unless such privilege is expressly waived by the client”. Dr. Kompter noted that the reason for this rule was clearly to give the profession protection against discovery in US proceedings, as the US authorities, and in particular the USPTO, would likely respect the profession’s privilege before their European counterpart. Although this rule currently only protects proceedings in front of the EPO, and not national European courts, Dr. Kompter noted that there is “some light at the end of the tunnel” in the form of the future Unified Patent Court system. Dr Kompter was happy to note that under the current draft Rules of Procedure for the Unified Patent Court, Rule 278 provides “everything that is needed” - granting inter alia, protection to both external and in-house “lawyers” and their work product.  The term “lawyer” is defined to include all registered UPC lawyers as well as any other lawyers qualified to act in their country in the same way as under the UPC and patent attorneys including both national and European patent attorneys. 
However turning back to current situation in Germany in relation to in-house IP Advisers, Dr Kompter noted that this was unfortunately far from satisfactory, with no duty of professional secrecy or the deterrence of criminal sanctions. Furthermore the case law of the CJEU (albeit in the field of competition law) appeared to support this national position, with the case of Akzo Nobel Chemicals & Akcros Chemicals (2011) rendering it clear that professional privilege is available to independent lawyers, who are not bound to the client by a relationship of employment, and that the privilege must relate to the client’s right of defence. 
In the light of the above, Dr Kompter concluded his excellent and informative presentation with a series of practical and important tips for the in house adviser, the “In-house adviser’s privilege “DO’s and DON’T’s”: 
• DO ask external lawyer for a management summary instead
• DO provide legal advise in-house verbally in meetings, or via telecons or videocons only
• DO advise all employees that anything in writing is potentially discoverable
• DO keep privileged documents in separate files marked –“Legally Privileged & Confidential” or even better externally.• DO NOT summarize or comment on external advise"

Friday, 19 September 2014

Friday fantasies

Forthcoming events. Do please remember to check the IPKat's ever-changing Forthcoming Events page for interesting bits and pieces that are coming your way.  One such event, about which this Kat will have more to say at the beginning of next week, is IBC's 6th annual conference on International Patent Litigation, which takes place on 4 and 5 December, and which is offering a pleasantly tempting 15% registration fee reduction for IPKat readers who quote the VIP KatCode FKW82525IPKE (click here for details). There are plenty of other events listed which offer special rates for blog readers and other privileged categories of humanity, so make the most of them!

Taking policy to Brussels? Talking of forthcoming events, fellow Kat and copyright star Eleonora, of e-LAWnora fame, is taking her increasingly popular current copyright issue seminars to Brussels. "The Wonderful Life of EU Copyright Law and Policy" is taking place there, in the very Citadel of Policy, on 28 October.  Spaces are limited, as ever, so don't forget to book quickly if you're attending. Further explanation and details can be found here.

Good for networking ...
Due diligence as you've never known it?  Despite years of familiarity with the Licensing Executives Society and almost as many years being schooled in the niceties of political correctness, this Kat still cannot look at the domain name of the British and Irish chapter of that excellent organisation ( without imagining that it has something to do with sexual orientation and a good deal of uninhibited partying. Though neither of those topics might be of prime relevance to its content, the forthcoming LES Scotland meeting, "The Benefits of an IP Audit?", promises to be an exciting, vibrant event with unparalleled opportunities for networking. Details are available here.

Patent Box event back on.  Management Forum's "Patent Box: Tips and Predictions" seminar was supposed to run earlier this month, but it was postponed till 22 October once it was discovered that the original date was just ahead of the crucial OECD report on harmful taxing practices.  The OECD report is now out, giving the UK's Patent Box scheme a pretty clean bill of health, and details of the reorganised seminar can be found here.  IPKat readers are entitled to a 20 per cent discount.

MOCA survey: please respond!  The MOCA, the Ministry of Copyright, Cultural, Creators' Assets, is a highly specialised consultancy agency that offers over 25 years expertise and media industry advice on copyright policy and legislation, rights management and business development. It's also a body with a mission:
"By October this year copyright legislation [in the United Kingdom] will change so that authorised legal entities will be able to reuse and collect payments for re-use of creators' works even if they are not members of a collecting society. This change in legalisation (ECL [= Extended Copyright Licensing, explained by the UK government here]) will affect all creators in the UK whether they have published their works or made these available via social media sites. Creators who are not happy with this arrangement will have the opportunity to opt out (a) all schemes prior to an ECL commencement or (b) specific licences which may or may not contain your work within 21 days from the published notice".
With this in view, MOCA is running a voluntary independent survey to give everyone an opportunity to have their say about ECL, what they would expect of an Opt-Out procedure and how they think it may affect their business. All information gathered from this survey will be reported back to relevant parties such as rights holders, collecting societies and the UK Intellectual Property Office. This questionnaire should take less than five minutes to complete [Merpel has just been sent to bed without her tea for daring to suggest that, the more often you complete it, the less time it takes. Naughty Kat!]. Surveys will be collected up till 25 October 2014.

Conference looking for a speaker. Might it be you?  The IPKat is currently looking, on behalf of a reputable international organisation, for a in-house intellectual property who is able to say something interesting about the issued faced by his or her company in coping with situations in which there is an overlap between trade mark rights and copyrights.  The conference takes place in early December on the European mainland; it will be well attended and the speaker will be treated to two very comfortable nights in a jolly good hotel.  If you think you might be that person, can you please email the IPKat at with the subject line "IP overlap", ideally giving a short explanation of why the speaker at this prestigious event should be you.  All applications will be treated in confidence and will be forwarded to the conference organisers, who will deal directly with you.  Thanks!

China, paper. IP Key is calling for abstracts of papers, of which the lucky ones that get selected will be presented at a conference, “Economic impacts of IP-centred government incentives in Europe and China”, in Beijing from 4 to 5 December 2014. This event is organised by IP Key in partnership with the Chinese Academy of Sciences Institute of Policy and Management and all accepted papers will be combined into a published book. The exciting news, though, is this:
"Very limited research funding (maximum of 5,000 Euros per selected researcher) is also available for up to three researchers, to be awarded based on the relevance of the paper to the objectives of the conference, novelty of the research proposal, as well as subject evidence that the researcher has a strong record of producing relevant high-quality research. Researchers should indicate in their submission due by 26 September 2014 [in other words, next Friday] if they would like to be considered for such funding".
For further information and a chance to be one of the lucky few, click here.

Does Twitter portend the demise of IP protection for advertising?

This Kat from time to time engages in feline fretting about how tech trends may impact on the future face of IP. His most recent fret recently occurred as he read an article on, "Brand-Building with F-Bombs," by Kristen Schweizer, regarding the use of Twitter, as it is being made by for promotional purposes by small businesses, here. The advertising world of Mad Men on Madison Avenue here and the myriad of small businesses, all of whom have sought to promote their goods and services, both in print and over the air, in text and through visuals and sound, have provided a rich reservoir of issues for generations of IP practitioners. Does Twitter threatens to put paid to this cozy relationship? Consider the following two examples as described in the article.
1. A patron named Richard Easton attributes his recent attraction to the mixed grill special at Mangal 2, a family-owned Turkish restaurant located in the East London neighborhood of Dalston, to “the sassy, profanity-laden commentary on the restaurant’s Twitter feed. “ As Easton observed, the feeds are “very focused on London life and making fun of groups like hipsters.” Other such feeds from Mangal 2 are-- “Don’t be too surprised when Facebook buys your Mum for $3 billion,” and another (during the Winter Olympics) -- “Today’s special is the Sochi Kebab: same kebab but served ice cold. Gay customers get 40 percent off. Putin’s not welcome.” The overall effect of these feeds, in the words of Mangal 2’s Twitter meister, is that the tweets are “real and it’s got a voice instead of just Instagramming food images and saying today’s special is so and so.”

2. A half-hour away by foot from Mangal 2 is the Dolphin pub. A devoted patron of the pub (and a former writer at MTV), David Levin, created @The_Dolphin_pub and tweeted such humorous feeds as “FYI: for the price of a gym membership, you could take a skipping rope to the pub three times a week and drink gin while you work out.” While the pub itself has its own Twitter account, Levin continues to tweet with the blessing of the pub and has tens of thousands of followers. Numerous new patrons reportedly first made their way to the Dolphin after encountering the pub via Levin’s tweets. As Levin observes, “Twitter is now part of the equation for branding.” As for Levin himself, he has gone on to tweet for Adidas, L'Oréal and IKEA.
The theme that derives from these anecdotes is that the 140-character tweet may serve as an alternative to traditional forms of advertising, perhaps supplanting these forms entirely for certain kinds of small businesses and even encroaching on the advertising activities of mega-brands. If these trends persist, and Twitter becomes an established part of the advertising firmament, they may well have a disruptive effect (or even destructive impact) on certain kinds of IP practices. Think of the range of possible IP issues in the traditional advertising context: the text of the ad itself; the look and feel of the ad; the trade marks and slogans accompanying the ad; the visual component of the ad; the accompanying music (original or secured from rights holders or collecting societies); and disputes about copyright ownership as between the advertiser and the commissioned ad agency and staff.

The question that arises is how many of these IP issues will survive a Twitter-driven advertising world? On first Kat-blush, the answer would seem to be—not much, if anything. Perhaps the content of a given tweet might attract copyright, if it meets the threshold for originality, but the nature of such tweets, generated under the mantra of “be punchy in your text”, casts doubt on the extent to which copyright will provide a useful tool for possible third-party challenge. More promising is, perhaps, the use by the tweet of a third-party’s trade mark, the rights to which have already been secured by registration or substantial prior use. But even if unauthorized copyright or trade mark rights might be found in a given tweet, the immediacy of tweets makes enforcement difficult, if not well-nigh impossible. In this dystopian IP world, traditional IP may become a rare, if not extent legal species.

If this be so (and not without a judicious degree of irony), perhaps the IP community should be cheering for Twitter’s demise. Consider the recent observations reportedly made, here, by Peter Thiel, the legendary Silicon Valley investor, here. Thiel is skeptical about Twitter’s ultimate place in the social media landscape. Thiel does not deny that Twitter has potential. But to realize it, “[y]ou’d have to fire everybody and start over,” Thiel said. “It [Twitter] feels like it’s vastly underperforming its potential. It’s a horribly mismanaged company -- probably a lot of pot-smoking going on there.” But for every Thiel there are presumably savvy Silicon Valley types who are sanguine about Twitter’s long term perspectives. Good for Twitter, but perhaps less good for IP practitioners.

Thursday, 18 September 2014

BREAKING NEWS: Spanish court refers new case to CJEU on private copying levies

Wait a moment: who should bear
the levy system?
From enthusiastic and invariably helpful Katfriend Fidel Porcuna (Bird&Bird) comes the news that the Spanish Supreme Court has just referred two questions to the Court of Justice of the European Union (CJEU), in the context of an administrative appeal filed by a number of collecting societies (VEGAP, EGEDA and DAMA) and concerning the legitimacy of Spanish system of private copying levies. 

The two questions referred are:

A – Is a copyright levy system, that - taking as a basis the estimation of the actual damage - is financed through the State budget thus not making possible to guarantee that the costs of this compensation are only supported by the users of the private copies (as opposed to the non-users), compliant with Article 5(2)(b)b) of Directive 2001/29?

B – If the answer is in the affirmative, is it compliant with Article 5(2)(b) of Directive 2001/29 that the total quantity set aside by the government for this compensation, which is calculated in view of the estimation of the actual damage, is set within [or conditioned by] the budget restrictions for each financial year?

Fidel adds: "As you know reform of current Spanish Intellectual Property Law was passed by the lower chamber of Parliament on 26 July 2014 and was now at the high chamber's agenda for a definitive approval that everyone took it for granted."

The Royal-Decree 20/2011, in force as of 1 January 2012, established  that compensation for private copying would no longer be obtained through a levy on reproduction devices but rather from the State budget (fixed at EUR 5m per each year 2012 and 2013), thus suppressing the collecting obligations for the industry. It may be difficult to determine now how this calculation would be made. A basic principle is to set a fair balance according to the harm caused to copyright owners as a result of copying by individuals for private use, but not for professional or business use. Calculation and payment have been left for the implementing regulations to define. Objective criteria were nonetheless set by Royal Decree 1657/2012 in force as of 8 December 2012, whose draft was discussed here.

Will this new CJEU reference prevent final approval of Spanish IP reform? Readers will remember in fact that one of the main points of proposed reform concern private copying and the levy system.

In its press release the Spanish Ministry of Education has stated that, no, this new reference will not have any effect on the final stage of the legislative process. However, rumours reported in the El Cultural and El Confidencial suggest that, yes, this new reference means that, not only were proceedings stayed before the Supreme Court, but also approval of IP reform could be now stayed pending the decision of the CJEU.

More press coverage herehere, and here.

The KatChat (or was it a PatChat?): Christopher Rennie-Smith and Darren Smyth discuss EPO proceedings

With apologies for the length of time that it has taken to transcribe his paw-written notes and to fill in the gaps with some creative memory, this Kat offers the following summary of the KatChat that took place on 4 September between the redoubtable Christopher Rennie-Smith (right, now returned from a lengthy tour of duty in the European Patent Office's Boards of Appeal) and our blogging colleague, practising patent attorney and Darren Smyth (EIP). The venue was the congenial office of London-based solicitors Collyer Bristow, whose hospitality was greatly appreciated by all and whose current display of contemporary art was greatly appreciated by a handful of cognoscenti who spotted that it was indeed a current display of contemporary art ...

Following welcomes by Patrick Wheeler and IPKat blogmeister Jeremy, the pattern of the event emerged as Darren subtly lobbed some deceptively simple questions at Christopher, who had a quick think about them and then subtly lobbed some deceptively simple answers back.  For the purposes of this blogpost, the European Patent Office is referred to as Eponia the EPO, Board of Appeal becomes 'BoA', Christopher is abbreviated to 'CR' and Darren is the 'Kat'. This blogger's additions are contained in bold red square parenthesis like [this] and words which appear in quotation marks in Christopher's answers are either (i) what Christopher said or (ii) what this blogger thought he said

The dialogue, broadly speaking, went like this:
Kat: I'll open with a chatty question: how does the EPO cope with three official languages?
One logo, three languages
CR: It's not a difficult problem. In the Biotech Board, 90% or more of what goes on is in English. EPO staff must speak the two other languages [French and German], If you speak one, they teach you the other -- but it does make recruitment [of linguistically challenged Brits] difficult.

Kat: EPO statistics suggest that UK-ish people are under-represented. Why?
CR: There are several reasons. The German and Dutch are over-represented because of location [of EPO operations in Munich and The Hague]. It's also hard to recruit BoA members from outside the EPO itself: such people are typically in their forties or early fifties, discontented with their current employment and willing to move.

Kat: How does the work of legally qualified BoA members differ from that of technically qualified ones?
CR: Once the formalities officer has processed the earliest stages of an appeal and the rapporteur has prepared it, all members of the BoA, whether legally or technically qualified, have the same role and the same vote. The legal BoA deals with "pre-grant incidentals" and its decisions are really quite dull; its members don't actually have that much to do.

Kat: What happens in the lead-up to the BoAs making their decisions?
CR: First, the admissibility of appeals is checked (this is done by the Board's legal member). If an appeal is not admissible, it won't be heard.  The appeal then goes into limbo till the rapporteur picks it up; unless the appeal is accelerated, it just waits for that to happen.  The rapporteur may write a preliminary internal opinion, to guide the Board's opinion or stimulate discussion. Other Board members rarely express any disagreement with the rapporteur's provisional view since they are all so busy.

Then comes the summons to attend the oral proceedings.  A week to 10 days before the oral proceedings, all the BoA members read the case in detail, discuss it and form their opinions. "It's not a very good system, but there's no better one".  A day or two before the hearing, the Board forms both individual and collective expectations as to what arguments it might hear and what their outcome might be -- but often the BoA is surprised by the points made in the oral proceedings.

Kat: It's a characteristic of BoA proceedings that the Board decides cases on the same day, having sent the parties out in order for the BoA members to deliberate. What happens when the parties go out?
CR: [having revealed the real or alleged secrets of one Board which kept a supply of coffee under the table for consumption at this point] The BoA may confirm its provisional decision, or it may choose to ask some further questions of the parties.

Kat: The chair of an EPO Examining Division once said that oral proceedings aren't there to change the outcome -- they exist only to give the parties a chance to be heard. Is that correct? 
CR: "For the record, I disagree". In the light of "eloquence, persuasion and clarity" of a presentation in the oral proceedings, the Board's provisional decision can be changed.

Kat: [having noted the presence of a "mixed audience" of solicitors, patent attorneys and barristers, all of whom have rights of audience of one sort or another in UK patent proceedings] do the arguments submitted by patent attorneys, barristers and so on tend to lead to different outcomes?
CR: "Yes -- and no".  There are good advocates and bad advocates in all tribunals. The quality of advocacy at the Bar is good, but the best patent attorneys are on a par with barristers in BoA proceedings. There is however a clear difference in approach between advocates of different nationalities. "There are some good ones elsewhere, but the British -- even the solicitors -- are the best [this sentiment appeared to go down well with the members of the audience, among whom could be discerned no expression of dissent. At this point Andrea Brewster, from the floor, gave an enthusiastic plug for the CIPA course on EPO Oral Proceedings which, she hoped, would be pursued by "everyone in the patent profession"].

Kat: Turning now to substantive matters, when it comes to the issue of added subject matter the BoAs are very strict and seem to be getting stricter. Are there any signs that they may become more lenient in the future?
CR: I think things are going to stay the way they are, unless the EPO's Enlarged Board of Appeal can be persuaded to make an across-the-board ruling.  Some Boards are criticised, particularly by the Americans, for their "bewildering or incomprehensible attitude to added matter".  But things are likely to stay the way they are for the foreseeable future.

Kat: Turning to consistency, between the BoAs per se and between the BoAs and First Instance, there seem to be substantial differences regarding procedural matters like the handling of late-filed claims, the application of the new rules on handwritten submissions and the delivery of opinions. Does not the independence of the BoAs lead to uncertainty?
CR: "I don't know how truly inconsistent the Boards are" [... but readers of this blog do, murmurs Merpel] "and I'm not convinced the problem is so big".  Apart from the treatment of added matter, there's not much difference between the Boards when it comes to substantive issues. There are some procedural differences, notably with regard to late filing, but the 2003 amendment of the Rules of Procedure "did some good".  As for the First Instance, there aren't actually any procedural rules.

Some BoAs issue preliminary opinions, while others don't.  In principle some sort of preliminary opinion is good, if it helps set the agenda for the oral proceedings. However, they do involve more work.  An impressive argument against making preliminary opinions available to the parties [which, it seems, some BoAs do but others don't] is that this practice gives encouragement to one or other party to believe that the Board favours one side or the other, and the Boards are "terrified at showing bias". Judges in civil litigation in the national courts may pre-read cases and show their inclination towards one side or another, but the Boards are scared to do so.

Kat: Patent judges in Europe get together to chat.  Do BoA chairmen do the same?
CR: "Jein" [this being a contraction of the German words "ja" and nein", = "yes" and "no"].  They sometimes go to judges' meetings. While chairmen don't get together, even with Board members in the same technical field, the legally qualified members do: "it can only increase consistency, or at least understanding". Actually, there was one [chairmen's meeting ...].

Kat: Let's look at the doctrine of precedent. The EPO doesn't have it, but has published its own book on the case law of the EPO ...
CR: The case law book is very useful because "it summarises the options and major trends. It is not precedent as we know it" and, "unless there is a way of reporting and cataloguing important cases, it isn't going to happen". In Eponglish [that's "EPO English", the lingua Franca of Eponia], "the established case law of the Boards of Appeal" does not mean the same thing as "precedent". In terms of principles of law it doesn't mean "there isn't a chance of the BoAs going against it", but rather "you will find a reference to it in the case law book".

Kat: In contrast with "established case law", some concepts are thrown up by one Board and then studiously ignored by the others. Where do these 'outliers' come from and what can be done about them?
CR: With 2,000+ decisions a year, one must expect a few rogue decisions: "the inconsistent are eliminated fairly quickly".

Kat: Double patenting seems to be creeping in ...
CR: The system allows it to happen: "if people want it and are prepared to pay for it, let them have it".  Double patenting "will stay till it's legislated against".

Kat: What about second appeal on substantive issues?
CR: No.  The Enlarged Board "is just there for the thorny issues".  Petitions for review are "something of a lost opportunity" and it would have been good to get past admissibility issues and on to the substantive ones"

Kat: There is no IP gathering that doesn't seem to mention the new European Patent system. Will BoA members serve as judges in the Unitary Patent Court?
CR: There has been some interest. However the European Patent Convention would need to be amended -- unless the BoA members in question resign first.

Kat: What's it like to be on the Enlarged Board?
CR: It's a different experience, with seven members of the Board, of which five are legally qualified.  Questions before it are thorny, and usually procedural, requiring "examination of both established and disestablished case law".
The KatChat was then brought to its conclusion by the prospect of a generously over-catered reception by our hosts at Collyer Bristow, to whom we again express our thanks.

Wednesday, 17 September 2014

AIPPI Congress Report 5: 'A' stands for "Arbitration" and "Aereo"

There was so many 'A' things going on on Monday afternoon
the AmeriKat's 45th chai tea latte of the day
was adopting its shape
While the AmeriKat was ramping up her third day of the AIPPI Congress marathon with an ever-increasing influx of caffeine into her veins with back-to-back meetings from contacts around the world, her colleague Lorraine Neale was herself having a marathon afternoon in the Land of 'A' - arbitration and Aereo.  Lorraine brings you the details:
"Following a busy morning meeting old work colleagues and exploring interesting collaborative opportunities with new ones, this AIPPI newbie settled in for an afternoon of workshops. The first was a mock International IP arbitration.  The mock trial fast becoming a regular feature of the AIPPI Congress following the first mock patent trial at the 2008 Boston Congress.  This year's mock centred on the validity and infringement of industrial design rights in glassware. It showcased the typical procedural, evidentiary, legal and tactical issues that may arise in international IP arbitrations, and was excellently executed by the skilful international team of arbitrators and litigators representing the 3-person Tribunal, the Plaintiff team, the Defendant Team, and each sides’ expert witness (the amusing Argentinian expert Ivan Poli for the plaintiff and the Italian expert Mario Franzosi for the Defendant). The facts of the dispute mirrored those of a case decided by the Federal Court of Canada in 2012, Bodum USA v Trudeau Corporation (1889) Inc.

From arbitrating designs to litigating copyright, the chosen follow-on workshop entitled “Aereo – copyright lessons for the US and beyond” provided an engaging debate surrounding the US Federal Supreme Court’s decision in ABC v Aereo, handed down in June 2014.

John Carson Partner (Knobbe Martens, US) and a member of the AIPPI standing Copyright Committee, moderated the debate.  Before launching into proceedings, John provided the audience with a helpful summary of the case. Aereo, a TV-over-the-internet service, had introduced a disruptive business model, using thousands of very small antennas stored in a warehouse, to stream broadcast signals which they had encoded into packets, directly into the homes of users. It was sued by the broadcasters (originally including 21st Century Fox, CBS, NBC and ABC) for infringement of their copyright in public performance. Aereo defended its actions claiming that all it did was to provide a device to watch a programme that was already available. The Supreme Court decided 6-3 in favour of the broadcasters, ruling that Aereo and its cloud-based technology was too similar to a traditional cable company to say that its service did not infringe. Justice Scalia, however, writing for the minority felt that this legal underpinning ("looks like-cable -TV") was flawed and would “sow confusion for years to come”.

In the opinion of Mitch Stoltz (Electronic Frontier Foundation), the Supreme Court had got it wrong! Up front about his organisation’s amicus brief submission in support of Aereo, Mitch was of the view that Aereo was fulfilling a market need that was not met elsewhere, i.e. for people to receive their local suite of broadcast channels (local news, sport, commercial), live or nearly live on a mobile device. This case was as much about competition as anything else. Furthermore, the case highlighted the important question as to who should make technology policy - the courts, the legislature, or should it be left to the market?  The court had felt able to engage in a free form construction of industrial policy, whereas Justice Scalia had recognised that this was the remit of the legislature. In Mitch’s opinion the markets are always the better determinants of whether a policy is promoting or prohibiting competition.

Elizabeth Valentina, Vice President Content Protection for Fox Entertainment Group, (speaking on her own behalf as Fox was still litigating the case), pointed out that Aereo’s business model involved the streaming of broadcast content obtained without permission, authorisation or license, and for which service Aereo were charging their subscribers. This business model was harming that of the broadcasters and content owners, by devaluing their content, interfering with exclusive deals for content to be delivered over the internet and to mobile devices, as well as diverting eyeballs from TV advertising revenue. It was a harm clearly recognised by Judge Nathan at first instance, in the broadcasters’ motion for a preliminary injunction.

The case was now back in this District Court on remand, with Judge Nathan considering the scope of the injunction. Furthermore in an interesting shift in business and legal strategy, Aero has raised a section 111 US Copyright Act defence. Aero is arguing that, as the Supreme Court thought that it acted like a cable system and should be treated in the same manner as cable system for all purposes, it should also be entitled to carry the signals of TV stations pursuant to the statutory licence granted to cable systems by section 111 of the US Copyright Act.

Sanna Wolk (Associate Professor at University of Uppsala, Sweden and co-chair of AIPPI’s copyright committee) compared the US position with that adopted in the EU where the CJEU in March 2013 ruled that online near-live streaming by the UK Company, TV Catchup, was an unauthorised "communication to the public" within the meaning of Article 3(1) of Directive 2001/29 (InfoSoc Directive) and therefore an actionable infringement of copyright. The CJEU concluded that as TV Catchup was making the works in the original “terrestrial” TV broadcast available over the internet, and hence using different technical means to retransmit the broadcast, this retransmission was a “communication” within the meaning of the Article 3(1). Furthermore in the circumstances the court did not have to consider whether communication was to a “new public”, as the new transmission required an individual and separate authorisation from the copyright owners. 
In the following Svensson case (Case C-466/12) an Article 267 TFEU reference from the Svea Court of Appeal in Sweden, the CJEU however reiterated that under Article 3(1) every act of communication of a work, by the same technical means, to a “new” public (“a public that was not taken into account by the copyright holders when they authorised the initial communication to the public” SGAE), has to be authorised by the copyright holder. The CJEU held however that making the works available by means of a clickable link does not lead to the works being communicated to a “new” public and does not therefore need authorisation. The CJEU emphasised that the position is different where the hyperlink permits users to circumvent restrictions and access works not freely available elsewhere. In these circumstances, circumvention makes the works available to a “new” public (as defined above) and requires authorisation. Sanna noted that we should now be looking out for the decision in another reference to the CJEU from Sweden, C More Entertainment AB v Linus Sandberg, this time from the Hogsta Domstolen. Sanna hoped that this case would offer some clarification as to the status of “the new public” criteria.

Finally Andrea Rush (Blaney McMurtry, Canada), provided the Canadian perspective drawing the audience's attention to an important case on technological neutrality that is currently being appealed to the Supreme Court of Canada - Canadian Broadcasting Corporation v Sodrac 2003 Inc. In 2012 the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) invoked section 70.2 of the Copyright Act and asked the Copyright Board of Canada (the Board) to settle a licensing dispute with CBC. The latter had taken issue with the fact that SODRAC requires producers to pay for the right to incorporate musical works into their productions even in cases where a project is commissioned by a SODRAC –licensed broadcaster. The Broadcasters argued that requiring each link in the distribution chain to pay for the right to make copies of a musical work is inconsistent with the prevailing industry model. 
The Board, however, found for SODRAC on the basis that the copy-dependent technology adds value to the businesses of producers and broadcasters because it allows them to remain competitive. The Broadcasters appealed the decision, with their primary legal argument being that the Board’s decision flew in the face of the principle of technical neutrality in copyright matters. They contended that copies of musical works that are made purely out of technological necessity should not attract royalties and that to hold otherwise would impede technological innovation and efficiency. The Board had grounded its reasoning in the Supreme Court decision in Bishop v Stevens (1990) which held that the use of ephemeral recordings is not implied in the right to broadcast a work, and that the right to copy and exploit a copyrightable work was the exclusive remit of the copyright holder. The Federal Court of Appeal upheld the Board’s decision and it was this decision that is currently under appeal. "

Puss In (Infringed?) Boots

On September 8, Judge Wright from the Central District of California dismissed Plaintiff Deckers Outdoor Corporation’s trade-dress infringement claim against retailer J.C. Penney over the sale of allegedly infringing boots, but allowed the patent infringement claim to proceed. The case is Deckers Outdoor Corporation v. J.C. Penney, No. 2:14-cv-02565.

Plaintiff Deckers Outdoor Corporation makes and distributes the UGG® boots, which had their fashion moment in the early 21st century. As stated in the amended complaint, “UGG® sheepskin boots have become a high fashion luxury item and can be found on  fashion runways around the world.” The UGG® boots are made out of sheepskin, and are worn with the fleece inside of the boots, which make them quite warm to the tootsies. They were very popular in the cold U.S. Northeast, but it also became quite a look on the West Coast to wear them bare legged with a short or a mini skirt.

Plaintiff owns several  patent designs for the UGG® “Bailey Button” boots, including design patent D599,999 for the Bailey Button Single boot (the patent is for a “[p]ortion of a footwear upper”) and design patent D616,189 for the Bailey Button Triplet boot (the patent is for “[t]he ornamental design for a portion of a footwear upper.”)

The Bailey Buttons boots are a bit different than the UGG® boots which became popular in the U.S. a decade or so ago, as these did not have a button as part of their design. As explained in the Amended Complaint, the front and rear panels of the Bailey Button boots overlap on the lateral side of the boot’s shaft, the overlapping panels have curved top edges, and the edges have exposed fleece-type linings. Also, one or more buttons are “prominently featured on the lateral side of the boot shaft adjacent the overlapping panels.” The Plaintiff claimed that these elements are non-functional and serve primarily to identify UGG® as the source of the product.

As a reminder, U.S. copyright law does not allow for the protection of useful items, which has left fashion designers with the options of protecting their work either with a design patent, or by claiming that a particular design is a trade dress, as it has acquired secondary meaning and can thus protected by trademark law.

Indeed, when Plaintiff found out that Defendant J.C. Penney was selling boots that Plaintiffs believed were knocking off its Bailey Button boots design, it filed suit for infringement, false designation of origin, unfair competition, and patent infringement. J.C. Penney moved to dismiss.

Plaintiff claimed in its amended complaint that “[e]lements of [the] Bailey Button Boot Trade Dress are nonfunctional and [that] its inherently distinctive quality has achieved a high degree of consumer recognition and serves to identify Plaintiff as the source of high-quality goods,” and that defendant’s use of Plaintiff’s trade dress is likely to cause consumers’ confusion. Plaintiff also claimed that such unauthorized use of its trade dress constituted false designations of origins and unfair competition.

Defendants argued  that the court should dismiss the false designations of origin claim, quoting the DastarCorp. v. Twentieth Century Fox Supreme Court case, where the Court held that the “origin of the goods” provision of §43(a) of the Trademark Act refers to the producer of the goods offered for sale, not “to the author of any idea, concept, or communication embodies in those goods.” Defendants interpreted Dastar as meaning that there is no violation of the Trademark Act if Defendant produces goods which are alleged to infringe Plaintiff’s rights, even if these goods embody Plaintiff’s ideas and concepts. Here, J.C. Penney argues that it never presented Plaintiff as being the producer of the boots sold at the J.C. Penney store.
You should have patented this
 non functional design, but
now the Ogre sells them! 

Dastar was a reverse passing-off case, where a defendant affixed its own mark on goods produced by plaintiff, while here Plaintiff was claiming passing-off. Judge Wright nevertheless granted defendant’s motion to dismiss Plaintiff’s  false designation of origin claim, as J.C. Penney is indeed at the origin of its own goods, the allegedly infringing boots it sells at its stores, and, as such, is indeed the producer of the goods it offers for sale.

However, Judge Wright did not dismiss Plaintiff’s design-patent infringement claim. He dismissed  however Plaintiff’s willful patent infringement claim, because Plaintiff had not shown that Defendant had actual knowledge of the patent. Merely claiming that Defendant knew about the patents because  the boots are so popular meets only a constructive knowledge standard, not the actual knowledge standard necessary to establish willful infringement. 

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