Top ten developments for 2015: Spider-Man, SEPs and shoes
A complex web
The US Supreme Court is set to delve into the complex web of patent law this year as it rules on a long-running dispute between the inventor of a Spider-Man themed toy and entertainment company Marvel.
Marvel, the licence holder for comics and films related to several superheroes including Spider-Man, and inventor Stephen Kimble have been at war for more than 20 years over the toy and royalty payments from its sales.
In 1990 Kimble created and patented a toy that allows users to shoot web-like material from the palm of their hands.
Marvel rejected Kimble’s proposal for the company to sell his toy and then began selling a similar product. In 2001, Kimble successfully won a contractual claim and was awarded 3.5% royalties on past, present and future sales. Marvel argued that royalties would no longer be due after the patent expired in 2010. After a district and appeals court sided with Marvel on this point, the Supreme Court has agreed to hear the case this year.
Michael Oblon, partner at law firm Perkins Coie in Washington, DC, says: “Instead of overturning the existing law, the Supreme Court might narrow its scope and clarify how the parties can accomplish a ‘hybrid’ licence. For Kimble, the question is whether the court will provide clarity that helps everyone else going forward, or whether it will grant relief for this specific situation.”
Football trademark faceoff
Few intellectual property lawyers in the US (and elsewhere) will need reminding that professional American football team the Washington Redskins was stripped of six trademarks last year after a decision by the US Patent and Trademark Office’s Trademark Trial and Appeal Board.
The term ‘Redskin’—a slang word for a Native American and variations of which were used in all six trademarks—was deemed offensive.
In response to the ruling, the team filed a lawsuit against the Native Americans who initiated the challenge, in an attempt to keep its trademarks. The Native Americans, unable to dismiss the suit, will face off with the club at the US District Court for the Eastern District of Virginia this year.
Ron Coleman, partner at US law firm Goetz Fitzpatrick, says: “The drafters of the Lanham Act [the US’s federal trademark statute] never considered whether a registration could be revoked retroactively upon a finding that, when applied for, the trademark was not eligible for registration because late-coming petitioners succeeded in proving that it was derogatory of an ethnic group.”
Could Spain throw a spanner in the UPC works?
The launch of the unitary patent and the associated Unified Patent Court (UPC) has been delayed to the point where the estimated implementation date keeps getting later and later (it’s 2016/17 at the moment).
But the plans were given a boost late in 2014 following a decision by Advocate General (AG) Yves Bot at the Court of Justice of the European Union (CJEU). Bot dismissed a potentially damaging challenge from Spain to the exclusion of the Spanish language from translation arrangements and disputes at the UPC.
Kevin Mooney, partner at law firm Simmons & Simmons and chair of the expert committee that drafts the UPC’s rules of procedure, told WIPR that while most observers had welcomed the AG’s opinion, some criticisms had been expressed.
“These included the AG’s view that the failure of other member states to ratify the UPC agreement would breach the principle of sincere cooperation,” he says.
Although the AG’s opinion is not binding, Mooney says he expects the CJEU to follow it. “Were the CJEU to ignore the opinion and annul the regulations, the package could not proceed,” he adds.
China’s IP courts
Even in 2013 there were whispers that China was set to implement a dedicated IP court. But it was not until November 2014 that the plans came to fruition. That month, Wang Chuang, vice-president of the IP division at the Supreme People’s Court, said he was confident that a court would be set up by the end of 2014.
The result, says Horace Lam, partner at law firm DLA Piper in Beijing, was China’s first IP court, which opened in Beijing later that month. A second IP court opened in Guangzhou on December 16, and on December 28 a third opened in Shanghai. The Shanghai-based court began accepting cases on the first working day of 2015. According to Lam, it was reported that 18 cases were filed on that day.
“The establishment of the IP courts is a positive development for IP right owners to protect, enforce and commercialise their rights in China,” Lam says.
“The courts are reported to have selected quality judges with deep experience in IP matters. With a number of cases filed so far, 2015 is looking like a very busy year for the IP courts.”
Plant dispute
In Brazil, one of the hot IP talking points for 2015 is a case on plant variety protection that involves two of the country’s cellulose production companies, Fíbria Celulose and Eldorado Brasil Celulose. According to Paulo Parente, partner at law firm Di Blasi Parente & Associados in Rio de Janeiro, the pair have been in a dispute since 2013. It looks set to reach a climax this year.
At the heart of the dispute is the validity of a report by DNA analysis company Heréditas Laboratory that Fíbria submitted after it alleged Eldorado had misused its eucalyptus-registered plant variety. Parente explains that in 2014 the Brazilian Superior Court of Justice rejected an appeal filed by Eldorado that disputed the report’s findings. The report said there was a 99.9% probability that five out of six Eldorado eucalyptus samples were genetically identical to the protected Fíbria variety.
Eldorado challenged Heréditas’s impartiality and alleged a possible conflict of interest because the same company had been responsible for a previous analysis requested by Fíbria. Parente adds: “If the judge’s decision is favourable to Fíbria, then the company will be able to carry on its unprecedented request for compensation.” He says that compensation could reach millions of Brazilian reals (1 real = $0.38).
Novartis v Cipla
Pharmaceutical disputes are again making headlines in India. This case, Novartis v Cipla, pits India-based Cipla against Novartis of Switzerland, and centres on the European company’s drug Onbrez (indacaterol), which is used to treat pulmonary disease.
The drug is protected by five patents in India, all of which, says Ashwani Balayan, partner at ALG India Law, have been under scrutiny by the Indian government.
In October 2014, in a submission to India’s health ministry, Cipla requested a compulsory licence or the patent’s revocation. Cipla claimed that Novartis was not ‘working’ its patents in India and that only a small quantity of the product was being made available despite a large demand for it.
In response to a generic version of the drug later launched by Cipla, Novartis sued the company for patent infringement. The Delhi High Court then barred Cipla from selling the generic.
This decision, according to Balayan, is expected to be followed by appeals. “The case might become interesting if Cipla presses hard on its compulsory licence application, in which case we could expect some clarifications in terms of ‘working of patents in India’, the criteria for revocation of patents and conditions for the grant of a compulsory licence.
“Since there is a direct impact of these provisions on the patentee’s rights, any outcome would be exciting to watch,” he adds.
Converse seeks to kick rivals into touch
When US shoe brand Converse sued 31 retailers for allegedly infringing the design of its Chuck Taylor All Star shoe, it may have seemed as though it was going slightly overboard.
The Nike-owned brand sued the retailers at the US District Court for the Eastern District of New York and successfully convinced the International Trade Commission (ITC) to carry out an investigation into the accused companies, which included Walmart, Fila, Skechers and others.
If the ITC finds, as Converse claims, that the company has the rights to the design features of a toe bumper and a toe cap, as well as an upper strike and/or a lower stripe on the Chuck Taylor shoes, then rivals could be barred from importing their shoes into the US.
Marc Rachman, partner at law firm Davis & Gilbert, tells WIPR there is little question that Converse’s Chuck Taylor shoe design is iconic, but that the critical issue is whether the elements of that design are protectable and not functional components of the shoe.
“The stakes here could be high,” says Rachman, noting that sports brand Adidas was previously successful in a trademark infringement action against footwear retailer Payless concerning its sneaker design and obtained more than $300 million.
Download dilemma
In 2014 the UK government made several alterations to copyright law by tweaking the country’s Copyright, Designs and Patents Act 1988. The changes were described by the government as “small but important”, so you could be forgiven for thinking that the changes would slip by unnoticed.
But UK music industry representatives The Musicians’ Union, the British Academy of Songwriters, Composers and Authors, and UK Music filed for a judicial review against one of the changes. In a review submitted to the English High Court, they said the scrapping of a provision that made it illegal for people to download a legally-purchased CD onto a laptop, smartphone or MP3 was against EU law. They added that right owners should be compensated for a potential loss in sales. If the review is granted, the court will examine the government’s decision to ensure it was lawful.
Akash Sachdeva, partner at law firm Cooley, says meeting the thresholds required for showing grounds for a judicial review is “notoriously difficult”.
“The government’s position in omitting right holder compensation from the UK legislation was that as consumers have already paid to enjoy the music, right owners have already been adequately compensated and should not seek to ‘double dip’.
“In my view, the claimants face an uphill battle to succeed in their judicial review application since they will have to point to a serious deficiency in the decision-making process,” he adds.
Australia gears up for website blocking
Before Christmas 2014, and after months of speculation, the Australian government confirmed it would introduce new legislation enabling (from the start of 2015) right owners to apply for court orders that could lead to the blocking of websites deemed to be infringing copyright.
Michael Williams, partner at Australian law firm Gilbert + Tobin, says Australia has been slow in recent years to develop a legislative policy in response to online infringement. He adds that although details of the legislation have not yet been revealed, the attorney general has said it could be based on section 97A of the UK’s Copyright, Designs and Patents Act, a provision giving the High Court the power to grant an injunction against an internet service provider if it has knowledge of another person using its service to infringe copyright.
Miriam Stiel, an IP litigator at law firm Allens in Sydney, adds: “Based on the international experience in countries that already have similar injunctive powers for website blocking, we can expect to see right owners in Australia moving swiftly to take advantage of the new measures.”
Fair use of SEPs
Throughout 2014 there was a flurry of interest in standard-essential patents (SEPs) and the fair, reasonable and non-discriminatory (FRAND) terms on which they should be licensed.
"If the CJEU adopts the recommendation there is the prospect for a degree of harmonisation in a currently diverse European landscape.”
In one of the closely followed cases two major players in the Chinese mobile phone industry battled it out at Europe’s highest court, the CJEU, which is set to decide the dispute. Huawei had sued ZTE at the Regional Court of Düsseldorf in 2014, seeking an injunction for the alleged infringement of an SEP covering long term evolution, a standard technology for mobiles. In response, ZTE claimed that an application for an injunction based on an SEP would be an abuse of a dominant market position.
AG Melchior Wathelet said the CJEU should adopt a ruling that is a “middle course” between the arguments and admitted that seeking an injunction on an SEP could amount to an abuse of dominance.
Philipp Cepl, senior associate at law firm Allen & Overy, explains that the AG’s approach provides “practical guidance” for the industry. “If the CJEU adopts the recommendation there is the prospect for a degree of harmonisation in a currently diverse European landscape.”
