Cases of the year: 12 from 2012

Apple v Samsung

In a closely watched trial that highlighted a bitter feud between the world’s leading smartphone makers, a US jury ordered Samsung to pay Apple $1.05 billion for infringing patents covering its smartphones and tablets. The jury ruled that the South Korean firm had infringed five of Apple’s design and utility patents, but dismissed two other claims. The case is still pending, with post-legal motions being heard in December. These could still overturn some of the claims and amend the damages.

There have been numerous other cases between the companies in other jurisdictions; both sides have claimed victories in these. Asked how the August ruling will affect licensing deals between the companies, Paul Sutton, partner at Sutton Magidoff in New York, said: “The simple answer is ‘we don’t know’, because the companies may have planned for this in their written licence deals.

“I would be very surprised if the case affects existing licence agreements because they probably relate to different and distinct technologies,” he went on. “If I were a betting man, I would say the August ruling will have no effect upon the companies’ unrelated agreements. I would also guess that there will be a settlement of these disputes, so the companies can co-exist in the marketplace under a financial arrangement.”

Apple v Proview

In July Apple was forced to pay Shenzhen Proview Technology $60 million for the ‘iPad’ name in China. The US company said it had bought rights to the name in several countries when it paid an affiliate of the company $35,000 in 2009.

But in December 2011, a Chinese court ruled that the rights in China had not been transferred to Apple. Following further legal wrangling, the Guangdong High People’s Court confirmed in July 2012 that the case with Proview had ended. According to one of Proview’s lawyers, the company had hoped for at least $400 million but settled for $60 million because it is desperate to pay other debts.

The case shows that trademark squatters have acquired a lot more knowledge on both the laws and practice in China, said Annie Tsoi, partner at Deacons in Hong Kong. “In situations where an assignor is a ‘hostile’ party, there will not be any second chance of rectifying the necessary documents to transfer the trademark.

"Purchasers must be extremely cautious at every step of the process, from the first approach to the assignor, to due diligence, to final execution and submission of documents. The PRC Trademark Office is very rigid and will not exercise any discretion if there is an obvious mistake.”

The Pirate Bay

The UK’s High Court ruled that six British Internet service providers (ISPs) must block their users from accessing notorious file-sharing website The Pirate Bay. In a ruling of April 30, Mr Justice Arnold said ISPs Sky, Everything Everywhere, TalkTalk, O2, Virgin Media and BT must implement the blocks. All ISPs had adhered to the ruling in June.

The order followed a ruling in February that users and the operators of The Pirate Bay were committing copyright infringement against UK companies. It also came after similar orders implemented in countries across Europe: in January 2012 a court in the Netherlands demanded two ISPs block access to the site. Only days after the ruling in the UK, five more Dutch ISPs were told to implement blocking systems.

Analysing the UK case, Adam Rendle of Taylor Wessing, said: “The injunction was the most high-profile attempt by the creative industries to reduce the appeal and threat of unlawful P2P services. The UK government and parliament have both welcomed the decision. A recent study into use of BitTorrent has, however, doubted its effectiveness. Nonetheless, rights holders will continue to seek such injunctions, alongside enlisting the help of other intermediaries.”

Neurim

Europe’s highest court issued a landmark ruling on the law governing supplementary protection certificates (SPCs) in the EU. SPCs extend a patentee’s monopoly when it is experiencing delays in marketing its patented products owing to the need to obtain regulatory approval. They apply only to patents covering human or veterinary medicines, or plant protection products.

National patent offices have previously granted SPCs only to the first (approved) product containing a particular active ingredient. But in July, the Court of Justice of the EU (CJEU) said Neurim Pharmaceuticals can obtain an SPC for melatonin (to treat insomnia in humans), regardless of earlier (veterinary) authorisations for products containing that active ingredient.

In May, the Advocate General (AG) had said Neurim should not be precluded from having an SPC for melatonin. However, the AG’s reasons were different from the court’s. “The court’s reasoning focuses on the active ingredient’s ‘different application’, and the need for it to fall within the protective scope of the patent,” said Mike Snodin, partner at law firm Potter Clarkson.

“This might suggest that an SPC can cover any new, patented use of an active ingredient (once authorised). However, it is unclear when you consider the context of the CJEU’s prior case law, which states the use of an active ingredient does not form part of its definition for the purposes of an SPC application.”

IP Translator

Trademark applicants must specify the goods or services they wish to protect “with sufficient clarity or precision”, the CJEU ruled in June. In the so-called IP Translator case, the CJEU backed the UK’s Chartered Institute of Patent Attorneys (CIPA), which had applied for a trademark (later rejected) for its IP Translator program.

The Nice Agreement was designed to provide a streamlined approach to registering trademarks. But different interpretations of the agreement, which places products into classes labelled with headings indicating products in that group, could have left trademark owners holding different rights across the EU.

Some authorities assume an application to register goods under a class heading automatically applies protection to all products in that class. Others will grant protection only to the specific goods or services mentioned in an application. While the IP Translator ruling has provided some clarity, questions remain over how it will work in practice. “I am relatively happy with the judgment,” said Marques chair and senior trademark attorney at DSM, Nunzia Varricchio, “but the challenge lies in interpretation and implementation. Marques is concerned about the interpretation of the CJEU’s implication that if an applicant wants to cover all good or services in a particular class, he simply recites the class heading with a declaration indicating such. In Marques’s view, this clearly contradicts the notion of ‘sufficient clarity and precision’.”

Myriad gene patent ruling

For the second time, the US Court of Appeals for the Federal Circuit ruled in August that Myriad Genetics can patent two human genes that are strongly linked to most forms of breast and ovarian cancer. The court backed Myriad’s claims over the isolation and detection of the BRCA1 and BRCA2 genes, which allow the company exclusively to perform tests that could help determine future treatment of the cancerous genes. The court ruled in Myriad’s favour in July 2011.

Following an appeal, the US Supreme Court remanded the case back to the appeals court in March 2012 following its decision in Mayo v Prometheus (where the court invalidated two patents covering blood monitoring and medical tests).

On August 16, the appeal court reversed the decision that Myriad’s composition claims to ‘isolated’ DNA molecules cover patent-ineligible products of nature, saying each of the claimed molecules represents a “non-naturally occurring composition of matter”.

It also reversed the decision that Myriad’s method claim to screening potential cancer therapeutics via changes in cell growth rates of transformed cells is directed to a patent-ineligible scientific principle. The court backed the view, however, that Myriad’s method claims directed to comparing or analysing DNA sequences cannot be patented.

Jennifer Camacho, shareholder at Greenberg Traurig, said: “The case has been a call to the biotech industry to recognise the value of inventions that go well beyond the newlydiscovered gene, and the strength of patent protection covering novel, but sometimes narrow, uses and modifications of such genes.”

Megaupload

The US Department of Justice shut down popular file-sharing website Megaupload in January and accused its operators of infringing copyright on a “massive” scale. A US court indicted the site’s owner, a man calling himself Kim Dotcom, and six other individuals on January 5.

According to US authorities, the site unlawfully reproduced and distributed infringing copies of copyrighted movies, music and television programmes. Charges against the two corporations and seven individuals in the suit include engaging in a racketeering conspiracy, conspiring to commit copyright infringement and money laundering, and two substantive counts of criminal copyright infringement. The US is trying to extradite the men.

Mark Dennis, senior associate at Taylor Wessing, said Megaupload shows the US’s willingness to use bilateral agreements to pursue the overseas operators of websites that it considers are damaging its creative industries.

“Megaupload was a substantial, multi-million dollar business and its owners allegedly wilfully infringed copyright in the US by storing infringing copies of copyright materials on servers based in the US. While some have been critical of the US’s stance, it arguably brings a wider benefit to the world’s creative industries, by promoting and enhancing anti-piracy enforcement globally.”

Mayo v Prometheus

The US Supreme Court invalidated two bloodmonitoring patents held by Prometheus Laboratories, a therapeutics and diagnostics company owned by Nestlé. The court reversed a previous ruling by the US Court of Appeals for the Federal Circuit, which had itself overturned a ruling in a district court. Prometheus owned patents for blood-monitoring medical tests that could help to decide the correct dosage of a drug for a particular patient.

Until 2004, Mayo Clinic was a customer of Prometheus, paying to use its tests. Mayo then revealed it would use an improved version of the test, at which point Prometheus sued for patent infringement. The district court ruled in Mayo’s favour before the appeals court reversed the ruling, saying the patent constituted a transformative process. But in March the Supreme Court invalidated the patents, saying their claims merely inform a relevant audience about certain laws of nature.

“I think it has introduced needed clarity to this area of patent law,” said Jonathan Fisher, principal at Fish & Richardson. “While the dividing lines will remain the subject of litigation for years to come, the Supreme Court has laid down the framework for analysis. And while that framework is the subject of controversy—perhaps because it was unexpected— controversy is not the same as confusion.”

Louboutin

Fashion designer Christian Louboutin obtained trademark protection for its red soled-shoes combined with different coloured tops, a US court ruled in September. In the dispute with rival designer Yves Saint Laurent (YSL), Louboutin sued the French brand last year over a pair of redsoled shoes.

A federal judge rejected the claims but the Second US Circuit Court of Appeals in New York said Louboutin can protect its red soles, only if the rest of the shoe uses a contrasting colour. It clarified that YSL’s all-red shoes do not infringe Louboutin’s marks, meaning that YSL and other brand owners can continue to make monochromatic shoes in a wide variety of colours, including red. Both sides claimed victory.

Doug Rettew, attorney at law at Finnegan, Henderson, Farabow & Dunner in Washington, DC, said companies should be allowed to trademark colours in certain cases. “As long as the colour meets the requirements for protectability— it is non-functional and distinctive—then it can be protected. Like ‘traditional’ word trademarks, colour marks are important assets that protect a company’s goodwill, while serving as information shortcuts for consumers.”

Golan v Holder

In January the US Supreme Court ruled that US Congress has the authority to withdraw formerly copyrighted works from the public domain and place them back under a protective shield. The national legislature had the power to do this under a federal law, passed in 1994, which implemented agreements arising from the so-called Uruguay Round Agreement (trade negotiations).

Copyright owners had mostly asserted their rights under this law by 1998, when they claimed back around 40,000 works. In 2001, a group of orchestra conductors, performers and film archivists mounted a wide-ranging challenge to the law. However, following a long-running dispute, the Supreme Court ruled (6-2) that no-one has the right to copy or perform a work just because its copyright has expired. Therefore, no-one can object if the copyright is restored.

The challenge failed on all accounts, including on the point that the law violated the First Amendment’s rights of people who formerly had free access to protected works.

Hillel Parness, partner at Robins, Kaplan, Miller & Ciresi in New York, said: “The impact of the case itself is essentially confined to those ‘restored’ works for which notices were received by August 1998. It is reflective, however, of the Supreme Court’s view that Congress is permitted to adjust the scope of US copyright protection to satisfy legitimate governmental interests.”

Compulsory licensing in India

In the first ruling of its kind in India, the controller of patents granted a compulsory licence (CL) to Indian generic pharma company Natco that allows it to market its version of Bayer’s patented anticancer drug Naxavar. Natco had applied for the CL because it argued German-owned Bayer had not made its drug available at an affordable price.

Bayer was charging $5,500 per patient per month, while Natco offered its version at $175. Bayer appealed against the decision to the Intellectual Property Appellate Board, which refused to suspend (in the interim) the CL in September. A full hearing on the ruling is pending.

“The ruling has several far-reaching implications for pharma companies,” said Aditya Gupta, associate at Anand & Anand in New Delhi.

“The most significant finding relates to the working of inventions, with the controller holding that the Patents Act imposes a ‘local working’ requirement. This finding is a major cause of concern since it implies that pharma companies (in fact patentees across all fields of technology) must establish manufacturing facilities in India to avoid compulsory licensing.

"Such local manufacture is not only impractical but also cost-inefficient. The cost incurred from local manufacturing undercuts the patentee’s ability to provide medicines at a lower cost, and undermines the entire purpose of the compulsory licensing regime,” he said.

Lego bricks in Switzerland

Lego cannot trademark the shape of its toy building bricks in Switzerland, the Federal Supreme Court ruled in July. After a 12-year legal battle, the Swiss court said the shape of Lego bricks is technically necessary—and cannot be protected, regardless of whether the shape has acquired distinctiveness.

Shapes of goods are technically necessary if there are no alternative shapes or if there is none that is economically reasonable in the interests of functioning competition. An alternative shape is not economically reasonable if it is either less solid or triggers higher production costs.

Matthias Bebi, attorney-at-law with Isler & Pedrazzini in Zürich, said the “enormous” efforts to determine whether acceptable alternatives existed were “remarkable”. For example, Lego provided 50 alternative forms to the court. He added: “This final decision clarifies that slightly higher costs in the production of functionally equivalent forms are sufficient to exclude them as acceptable alternatives. This makes it even more difficult to show acceptable alternatives to achieve the same technical effect of a shape.

“As a result of this litigation it will be more difficult to obtain trademark protection for such shapes or to defend registrations of marks whose validity are attacked.”