The year ahead: ten IP cases to watch out for in 2016

1  US: Good news for the Washington Redskins

The US Court of Appeals for the Federal Circuit handed the Washington Redskins a possible gift in a trademark dispute shortly before Christmas 2015. In December, the court ruled in a separate case, In re Tam, which was brought by rock band The Slants. It said that the disparagement provision within section 2(a) of the Lanham Act was unconstitutional.

Since the Trademark Trial and Appeal Board revoked six of the Washington Redskins’ trademarks in June 2014 on the basis that they are disparaging to Native Americans, the National Football League club has argued fiercely that its First Amendment right has been violated.

“The constitutional arguments will likely gain some traction, especially given the recent decision by the federal circuit vacating its decision in In re Tam,” says Ralph Cathcart, partner at law firm Ladas & Parry.

Cathcart says that given the “obvious” comparisons and issues between the two cases, “it may be that the present climate favours a broader interpretation of free speech that will ultimately result in a portion of the Lanham Act being overturned”.

It’s now the turn of the US Court of Appeals for the Fourth Circuit to have its say on the Redskins dispute, but given the public interest in the divisive nature of the case, it may not end there.

2  UK: Design wars

The Trunki—a carry-on suitcase that a child can ride—has proved to be something of a modern day fairytale for inventor Rob Law. In 2006 the entrepreneurs on the BBC television show “Dragons' Den” declined to invest in the product but Law, undeterred, continued to sell it.

It is a blessing for parents, but Law’s living dream soon turned into a nightmare after a rival product was manufactured and sold by Essex-based PMS. Law claimed it infringed his registered Community design, and initially the English High Court agreed. However, last year the English Court of Appeal reversed the decision and now it’s the task of the UK Supreme Court to offer its view on the case; a decision is due out later this year.

Design cases rarely reach the UK’s highest court, notes John Coldham, director at law firm Wragge Lawrence Graham & Co (to be renamed Gowling WLG in February).

“The regulations state that a design can cover a number of aspects, including shape, colour and texture … but if a designer wants to protect just the shape, how does he or she represent that?” Coldham asks.

“If the answer is the absence of any other details, then the Supreme Court may have to determine that Apple v Samsung was wrongly decided.”

3  India: Clarity for section 3(d)

The importance of the pharmaceutical industry in India is perhaps reflected in Prime Minister Narendra Modi’s resolve to improve intellectual property rights in the country. It is also perhaps why many have been closely watching the Roche v Cipla case.

In November 2015, the Delhi High Court ruled in favour of Roche in its battle against Cipla over the alleged infringement of its patent covering cancer drug Tarceva (erlotinib). The decision provided further clarity on the scope of protection for minor improvements to an already patented compound, explaining how far a polymorphic form is covered under section 3(d) of the Patents Act, 1970.

“The case is important as the high court held that Roche’s patented compound may exist in several polymorphic forms, but any and all such forms will be subsumed within this patent,” says Lucy Rana, partner at law firm SS Rana & Co.

“The court brought clarity to section 3(d) and observed that it is a positive provision that in fact recognises incremental innovation while cautioning that the incremental steps may sometimes be so little that the resultant product is no different from the original,” she adds.

Cipla was given 90 days from the ruling to file a petition to the Indian Supreme Court, with many expecting it to appeal. While clarity has been welcomed, there may well be another twist in this story.

4  EU: The nanny state spreads

It was Australia that started the trend, and a number of EU countries are looking to follow. Plain packaging laws, some politicians argue, will contribute to a reduction in the number of people smoking and improve public health overall. Tobacco companies counter that such packaging laws are imposed at the expense of their legally obtained trademark rights.

The Court of Justice of the European Union is due to issue its own opinion on the legality of Directive 2014/40/EU, which allows member states to introduce plain packaging laws, later this year. However, we already have a hint of what that decision may be, after Advocate-General Juliane Kokott advised the court to rule that the directive is lawful.

While health campaigners may be celebrating, Simon Clark, partner at law firm Berwin Leighton Paisner, says tobacco companies have a genuine grievance.

“They are suddenly faced with the risk of losing very valuable assets in the form of their registered trademarks, in which they have invested substantial sums over the years.”

Clark is concerned about such laws overriding various IP treaties, questioning “where the dividing line should then be drawn on the use of restrictions over valid IP rights to police consumer behaviour”. It’s a slippery slope, he argues.

5  US: Damage limitation

In February, the US Supreme Court is due to hear two cases concerning the “rigid” standard applied by courts in awarding enhanced damages in patent cases. In Halo Electronics v Pulse Electronics and Stryker v Zimmer, the Supreme Court has been asked to overturn the two-part test used by US district courts to determine wilful infringement.

You may be forgiven for thinking we’ve been here before. In 2014, the Supreme Court rejected the seemingly high standard for awarding attorneys’ fees in Octane Fitness v Icon Health & Fitness. And as with the court’s rejection in that case, many are expecting a similar result.

“Under current federal circuit law, it is extremely difficult for patent owners to prevail at trial to obtain enhanced damages, because the legal requirements to do so are very burdensome,” says Steven Auvil, partner at law firm Squire Patton Boggs.

If the test is rejected, Auvil says, “it is likely the court will adopt a more flexible test for district courts to use in determining whether to enhance damages”.

In Auvil’s opinion, the rejection of the two-part test is highly likely. But while the net effect may be patent owners seeking increased damages, the Electronic Frontier Foundation fears that small to medium-sized enterprises may be hit with punitive claims. It is now the task of the Supreme Court to balance those issues.

6  China: Jordan loses trademark match

Retired basketball player Michael Jordan (pictured left) has long been a popular figure in China. His days of scoring slam dunks for the Chicago Bulls are fondly remembered, and have undoubtedly contributed to the popularity of the sport in the country.

However, Jordan has struggled to obtain the rights to the trademark for ‘Qiaodan’, the Pinyin transliteration of his surname. A sporting goods company obtained the mark first and Jordan has complained that this is an attempt to trade unfairly on the goodwill of his name.

The China Trademark Office and Beijing Higher People’s Court have both rejected Jordan’s claim. He alleged that the registration of the mark is detrimental to socialist morals and that it was acquired through unfair means, but this was not enough to convince the court.

Laura Young, partner at law firm Wang & Wang, says the case is a reminder for foreign brand owners that “early registration in China is an essential investment to protecting their rights in the future, and that China is a market and export platform that can’t be ignored”.

The case is now heading to the Supreme People’s Court.

7  UK: More trolls on the way?

The activity of non-practising entities (NPEs), some of which are characterised as ‘patent trolls’, is perceived predominantly to be a US issue. But in the UK, Unwired Planet sued Samsung and Huawei for allegedly infringing a number of standard-essential patents that Unwired had purchased from Ericsson. The defendants argued that the deal was an abuse of anti-competition law, but the English High Court was not convinced.

The court pencilled in six trials: five to determine infringement and the other to deal with anti-competition claims asserted by Samsung. Round one went to Unwired while round two went to Samsung. The final trial is due to end in October 2016.

Philip Horler and Simon Kahn, a patent attorney and partner at law firm Boult Wade Tennant, say an important factor in this dispute is that there are patents with “a strong pedigree” acquired from a well-established telecommunications company (Ericsson), unlike the “less credible” patents that can be more common in US NPE litigation.

They add that a favourable outcome for Unwired may result “in more extensive NPE activity in the UK”.

8  US: Upload now, pay later

Online streaming services Pandora, Deezer and Spotify have been touted as the antidote to piracy. By providing access to a huge database of music on a digital platform at an affordable price, it is believed they will answer consumers’ thirst for the latest and most well-known music.

But many argue that musicians lose out in this deal. Industry associations and artists have complained about receiving no royalties for the inclusion of their works on these services.

Musicians David Lowery and Melissa Ferrick sued Spotify for copyright infringement within weeks of each other over Christmas and the New Year. They have both asked US district courts to grant them class action status.

Spotify says it is often difficult to identify the copyright owner and has established a reserve fund to pay the musicians once they assert themselves. But Lowery and Ferrick are not satisfied with this ‘upload now, pay later’ business model.

Hillel Parness, partner at Parness Law Firm, says that “ultimately, it seems that parties on all sides are in agreement that there is an industry-level data management problem”.

“The question is whether responsibility for that problem will be laid at the feet of Spotify,” he adds.

9  Brazil: The battle for 'Einstein'

While Albert Einstein’s trademark formula E=mc² is known and undisputed the world over (if seldom understood), his name is at the centre of a trademark battle in Brazil.

Hospital Albert Einstein is a highly esteemed medical institution, and judging by the size of its reputation, it is perhaps understandable that it has previously sought trademark protection for medical and other services at the Brazilian Patent and Trademark Office (INPI).

However, the INPI rejected several applications and annulled one registration containing Einstein’s name, saying the hospital was not authorised to register them as trademarks. After the hospital attempted to overturn the ruling in court, the Federal Court of Rio de Janeiro upheld the decision in March 2015.

The hospital argued that it already owns several trademarks covering the name and that Hans Albert Einstein, the late son of the eminent scientist, had authorised the trademark use. The federal court rejected the hospital’s case and the institution has appealed to the Superior Court of Justice and to the Supreme Federal Court, with a hearing possible this year.

Paulo Parente Marques Mendes, partner at law firm Di Blasi, Parente & Associados, says the INPI and the court correctly interpreted the law but there is still an issue.

“As Hospital Albert Einstein owns trademarks for the term ‘Albert Einstein’, it should be able to obtain new trademark registrations as an extension of the previous rights. This case brings to light major conflicts at the constitutional level regarding the right of property and the personal rights to a name.”

10  US: More Mayo fallout

The dispute between Ariosa and Sequenom was among the most talked-about patent cases in the biotechnology industry last year. This was arguably because it revived many people’s hope that it would reverse the trend of invalidating patents covering diagnostic methods that was started by the US Supreme Court’s 2012 Mayo v Prometheus decision.

In July, despite rejecting Sequenom’s “meritorious” patent, which covered a method of detecting paternally inherited cell-free foetal DNA in maternal plasma, Judge Richard Linn sparked a debate by decrying the “broad language” of the relied-on Mayo decision.

In December, the US Court of Appeals for the Federal Circuit declined to review the case en banc. While counsel for both Sequenom and Ariosa were not surprised by the outcome, many are expecting the case to head to the Supreme  Court.

Sequenom has confirmed that it will appeal against the decision.

Kevin O’Connor, partner at law firm Neal Gerber Eisenberg, says many lawyers had hoped that a decision in favour of Sequenom “would reverse the trend of cases finding that diagnostic method claims are patent-ineligible subject matter”.

He continues: “One of the most troubling aspects of the Sequenom decision is that the sweeping application of Mayo leads to the seemingly inconsistent result that a claim is non-obvious or inventive, but nevertheless may lack an inventive concept to confer patent eligibility.”