From forum-shopping to the UPC: 10 IP issues to watch in 2017

16-02-2017

From forum-shopping to the UPC: 10 IP issues to watch in 2017

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With a busy year ahead for IP owners, WIPR has picked ten IP developments that all practitioners should be following in 2017.

1  US: You’ve been Trump’d

On January 20, Donald Trump was sworn in as the 45th president of the US. But what does this mean for intellectual property in the country? At this point, nobody is quite sure.

At the end of January, Trump nominated Neil Gorsuch to take up the vacant ninth position at the US Supreme Court.

According to Heather Blaise, founding partner of Blaise & Nitschke, Gorsuch “is known to be intellectually brilliant and very conservative”.

She adds that in copyright cases, Gorsuch has never found in favour of the owner, while out of three trade secret cases, he has twice found in favour of the owner.

What does seem clear is Trump’s stance on China, which according to Blaise means the coming year could see Trump taking protectionist measures to punish the country, “perhaps even measures that violate our various trade agreements and traditional foreign diplomacy efforts”.

The US has witnessed “rampant” trademark and copyright infringement by China in recent years, says Blaise, and China has been found to have violated the TRIPS Agreement repeatedly.

Blaise adds: “Trump’s treatment of trade and protectionist measures for US IP may be one of the most significant undertakings of his presidency and it may be a way to win over Hollywood, considering Chinese piracy is reported to cost the motion picture industry more than $250 million per year.”   

2  EU: Brexit and eating cake

In March this year, the UK government will trigger article 50, setting in motion the UK’s exit from the EU.

In January, Prime Minister Theresa May conducted her first interview of the year with Sky News. According to the BBC’s coverage of the interview, May said that the UK cannot keep “bits of EU membership”.

Brexit has arguably triggered more questions than answers for IP owners and could mean that the ownership of patents, trademarks and copyright is affected.

Gordon Harris, head of IP at Gowling WLG, says: “I do think we are picking and choosing. In relation to IP, we appear to be … having our cake and eating it.

“I wonder sometimes if this is one of those areas that is perceived to be so small that it kind of slips underneath many people’s radar, and therefore the government can get away with this because it’s not an area of excitement for the sort of press who are pushing for the hard Brexit,” he adds.

3  India: A decade of innovation

The ten-year period up to 2020 has been declared the “decade of innovation” by India’s government, so it’s no surprise that IP was high on the agenda.

In May last year, the Department of Industrial Policy and Promotion unveiled its national IP rights policy with the slogan “Creative India; Innovative India”.

It aims to integrate IP as a strategic tool at the national level to enable creators and inventors to realise their potential, according to Vidisha Garg, partner at Anand & Anand.

So far, so good. In October, the Cell for Intellectual Property Rights Promotion and Management (CIPAM) was established to address the seven objectives of the IP policy.

CIPAM has been working actively to increase IP awareness and train the police, judiciary, students and industry.

“On the implementation front, patent offices have geared up to reduce their pendency,” explains Garg, who adds that trademark filing in India increased “significantly”—by 35%—in 2015/16.

Prime Minister Narendra Modi also announced that new commercial courts are being set up to resolve IP disputes.

Garg adds: “At present the IP environment in India is very positive. The initiatives taken by government and implementation agencies have started showing results which are reflected by the increased filings in IP offices.”

4  US: A nosedive in software patents

A report released in September 2016 by Patexia, an online patent research platform, found that software patents in the US had taken a nosedive since the 2014 US Supreme Court decision in Alice v CLS Bank.

The Supreme Court held that claims directed to an electronic escrow service for facilitating financial transactions were ineligible for patent protection because the claims were directed to an abstract idea, but the Alice decision didn’t provide a clear test for what should be an abstract idea.

Patexia said that although software patent suits have declined heavily, the fall wasn’t equal across the software patent classification codes.

Ozzie Farres, counsel at Hunton & Williams, says: “The Supreme Court’s Alice decision has dramatically altered how innovators need to conceptualise and draft software patent applications.

“No longer is it enough to describe a software invention as a series of programmed steps for performing a stated function—applicants now need to describe the problems solved by the claimed function, how the claimed function differs from other known approaches, and any hardware and other technical improvements afforded by the software.

“While providing no guarantee, including these details in the application will go a long way to persuading the US Patent and Trademark Office (USPTO) to grant a patent,” he adds.

5  UK: Unified Patent Court challenges

The Unified Patent Court (UPC) was a hot topic for WIPR last year and the future of the court was still very much up in the air after the UK voted to leave the EU in June.

In November 2016, former UK minister of state for IP, Baroness Neville-Rolfe, made the announcement that the UK will implement the unitary patent and UPC, despite the Brexit vote.

Neville-Rolfe said in a statement at the time that the new system will “provide an option for businesses that need to protect their inventions across Europe”.

But she warned that the decision to proceed with ratification “should not be seen as pre-empting the UK’s objectives or position in the forthcoming negotiations with the EU”.

Joel Smith, partner at law firm Herbert Smith Freehills, tells WIPR: “It’s a positive move for the UK that it has decided to ratify the UPC and be part of the UPC arrangement, and it will be seen as an investment in research and development protecting IP for UK businesses.

“The difficulty is seeing how this will evolve. In the short term we would see the UK ratifying perhaps by the end of April and if that happens then the only thing left to happen for the UPC to go live is for Germany also to ratify.”

He adds that a remaining challenge is what will happen when Brexit negotiations start between the EU and the UK, and what that means for the UK’s future role as part of the UPC.

6  US: An end to forum-shopping?

The popularity of the US District Court for the Eastern District of Texas, an in-demand destination for patent claims, may fall after the US Supreme Court agreed to hear an appeal concerning restrictions on where patent claims can be filed.

Just before Christmas, the court granted TC Heartland’s writ of certiorari in a case stemming from a patent infringement lawsuit brought by Kraft Foods.

Kraft sued at the US District Court for the District of Delaware, and TC Heartland unsuccessfully asked the judge to transfer the case to the US District Court for the Southern District of Indiana.

TC Heartland then appealed against the decision to the US Court of Appeals for the Federal Circuit but the petition for a writ of mandamus was denied.

Michael Sandonato, partner at Fitzpatrick, Cella, Harper & Scinto, says: “It is of course exciting to think about TC Heartland at the policy level, as the Supreme Court’s chance to put an end to forum-shopping, and deal a blow to patent trolls.”

According to Sandonato, forum-shopping cannot be denied: “More than 40% of patent cases are being brought in the Eastern District of Texas, and 65% are being brought in just five of the almost 100 district courts in the US.”

Kraft acknowledged in its opposition brief that there is a need for reform. 

However, Sandonato adds that the issues at play involve “more mundane questions of statutory interpretation”, including the impact that the 2011 amendments to the general venue statute (28 USC section 1391) should have on the interpretation of the patent venue statute (28 USC section 1400[b]).

In granting certiorari, the Supreme Court has surely recognised that there is a “groundswell against forum-shopping”, says Sandonato, but whether it finds that the statutory language supports the restrictions it is being asked to put into place is “much more of an open question”.

7  Brazil: Reducing ‘biopiracy’

In 2015, Brazil introduced a new biodiversity law, number 13,123/2015, with the purpose of promoting and encouraging research and development.

The law, which resulted from a process involving universities, companies, traditional communities, indigenous people and the government, replaced a provisional measure which had been “the object of complaints”, according to Flávia Merola, partner at Bhering Advogados.

“While the provisional measure was in effect, many companies gave up on using Brazilian biodiversity resources in their research, or substituted Brazilian native substances for similar ones from other countries,” she explains.

Now, activities making use of genetic heritage or traditional knowledge can be registered online. Prior to this, you needed to submit an application to the Genetic Heritage Management Council, accompanied by extensive documentation.

The law has brought about “major advances”, facilitating the activities of research in universities and companies, and promoting the legislation on access and sharing of benefits.

Merola adds: “Researchers studying Brazilian biodiversity, including microbial organisms, will have an easier time to proceed legally and therefore will no longer need to be ‘biopirates’.”

This year, researchers are expected to focus on national biodiversity, as well as encourage its conservation, sustainable use and the sharing of benefits arising from use of such biodiversity.

Europe: Unrest at the EPO

The European Patent Office (EPO) had its fair share of unrest last year, with troubles seemingly set to continue into 2017. 

Throughout 2016, WIPR reported on numerous demonstrations held by staff members in support of dismissed workers.

In November, the Administrative Tribunal of the International Labour Organization, a UN agency, set aside two decisions made by the EPO and criticised the Administrative Council (AC) in the process.

This was quickly followed by Benoît Battistelli, the president of the EPO, allegedly asking the AC to adopt an amendment allowing him to make additional appointments to the appeals committee.

The unrest is likely to continue this year, with challenges ahead for Battistelli (pictured, bottom left) and the EPO.

9  US: Disparaging trademarks and free speech

In September last year, the US Supreme Court announced that it would review the Lee v Tam trademark dispute, a case which centres on rock band The Slants.

In January, the Supreme Court heard the first day of oral arguments in the case. Whichever way the court votes, it could have an impact on future trademark disputes, including Pro-Football v Blackhorse.

The Lee dispute began when The Slants (pictured above) filed a trademark for their name, which is a slang word for Asian people, at the USPTO.

After numerous lower court rulings, the USPTO filed a writ of certiorari and asked the Supreme Court to provide guidance on whether disparaging terms can be registered as trademarks or whether refusing registration is a violation of First Amendment rights.

Greg Chinlund, chair of the trademarks and copyrights practice at law firm Marshall Gerstein & Borun, says: “The court has been asked to decide whether the prohibition of registration for disparaging marks is facially invalid under the free speech clause of the First Amendment. If answered in the affirmative, then Simon Tam [the band’s founder] can register ‘The Slants’.

“Registration provides a number of benefits not available under common law. Not inconsequentially, the Washington Redskins’ marks (Pro-Football) would also be cleared for (re)registration should the court strike down the statutory prohibition.”

He adds that an affirmative answer would result in a seismic shift in US trademark law.

10  China: Fighting trademark squatting

Trademark squatting in China is still a big problem for IP owners.

In 2015, WIPR reported that Apple, Tesla and Pfizer were just some of the companies battling allegedly bad faith trademark registrations for their company name or product.

How will the country cope with the problem in 2017?

George Chan, partner at law firm Simmons & Simmons in Beijing, says: “Trademark squatting continues to be a serious problem in China. Although China has improved its laws in some aspects to counter trademark squatting, it remains that trademark owners still need to invest a significant amount of time, resources and money to deal with this problem, which far outweigh the costs that a trademark squatter would incur for filing a trademark application.

“China follows a first-to-file system for securing trademark rights, and we always suggest filing trademark applications at the earliest opportunity, in order to avoid losing a trademark right to a squatter,” he adds. 

10 IP issues to watch in 2017, Donald Trump, Brexit, India, innovation, trademark, copyright, patent, Alice v CLS Bank, Unified Patent Court,

WIPR