From March to September 2016 the team is joined by Guest Kats Emma Perot and Mike Mireles.

From April to September 2016 the team is also joined by InternKats Eleanor Wilson and Nick Smallwood.

Friday, 27 May 2016

BREAKING: EU Council unanimously adopts EU Trade Secrets Directive

Just as the AmeriKat was ready to
leave for the Bank Holiday weekend
the EU Council surprises her...
(c) Joe Delaney
This morning the EU Council unanimously adopted the EU Trade Secrets Directive.  The EU Trade Secrets Directive provides for a common framework of minimum standards that Member States must provide for the protection of trade secrets.  For background on the Directive see previous Kat posts here.  The vote had originally been scheduled for yesterday's meeting but was postponed until today.

In its press release, the Council addressed concerns that the provisions provided for in the Directive would impact free speech, whistle-blowers or mobility of employees.  The measures provided by the Directive "fully ensure that investigative journalism can be exercised without any limitations including with regard to the protection of journalistic sources".  In particular Recital 19 of the Directive provides that:
"While this Directive provides for measures and remedies which can consist of preventing the disclosure of information in order to protect the confidentiality of trade secrets, it is essential that the exercise of the right to freedom of expression and information which encompasses media freedom and pluralism as reflected in Article 11 of the Charter ofFundamental Rights of the European Union, (‘the Charter’) not be restricted, in particular with regard to investigative journalism and the protection of journalistic sources."
As to whistle-blowers, the EU Council commented that in line with Recital 11:
"Persons acting in good faith that reveal trade secrets for the purpose of protecting the general public interest, commonly known as “whistle-blowers”, will enjoy adequate protection. It will be up to national competent judicial authorities to judge whether the disclosure of a commercial secret was necessary to denounce a misconduct, wrongdoing or illegal activity."
Article 5 backs up these principles by providing that Member States will dismiss applications for measures, procedures and remedies under the Directive where the alleged misuse or disclosure of a trade secret was carried out:
"(a)  for exercising the right to freedom of expression and information as set out in the Charter, including respect for the freedom and pluralism of the media;  
(b) for revealing misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest;  
(c) disclosure by workers to their representatives as part of the legitimate exercise by those representatives of their functions in accordance with Union or national law, provided that such disclosure was necessary for that exercise;  
(d) for the purpose of protecting a legitimate interest recognised by Union or national law."
After the Directive is published in the Official Journal of the EU and it comes into force (i.e. the 20th day following its publication in the OJEU under Article 20), Member States will have a maximum of two years to incorporate the new provisions into domestic law.

The Council's adoption of the Trade Secrets Directive comes only a couple of weeks after President Obama signed the Defend Trade Secrets Act into law.  For discussion on what the coincident timing of these two trade secrets laws might mean for companies, see the AmeriKat's recent conversation with Jim Pooley here.
Kat pats go to Holger Andreas Kastler (Morrison & Foerster) and Gunther Meyer (Eversheds) for alerting the AmeriKat to the news this morning.  

The life and death of the PRINCE Bill

The recent passing of Prince left many fans in mourning and potential heirs clambering for a piece of his estate. The singer, who died intestate, left behind a wealth of copyright protected works. His right to publicity, however, did not survive him, as the common law right in Minnesota, where Prince was domiciled, only applies to the living.

The Minnesota State Legislature hastily attempted to pass a bill to change this, by creating a post-mortem right of publicity. On May 9, the Bill, entitled Personal Rights in Names Can Endure Act, was put forward, two weeks before the end of the Legislature’s session on May 23. The bill was subsequently pulled amid concerns that it was not properly thought out and could have unintended consequences, but this Kat commends the carefully created name. 






The current law in Minnesota

Minnesota recognises a common law right of publicity and the tort of appropriation of name and likeness. Even though the right of publicity is not statutory, Minnesota’s common law approach provides extensive protection as it is not delimited to specific personal attributes. Instead, the right protects against unauthorised uses of ‘identity’ for commercial purposes. This can extend to the names of characters portrayed by an individual, as occurred in the case of McFarland v. E & K. Corp., 1991 WL 13728 (D. Minn. 1991) where the plaintiff successfully claimed for use of his character name ‘Spanky’.

The potential for a broad interpretation of ‘identity’ is best illustrated by the Californian case of White v. Samsung Electronics Am., Inc., 971 F.2s 1395 (9th Cir. 1992). In this case, Wheel of Fortune presenter Vanna White claimed that Samsung had infringed her right of publicity by creating an advertisement featuring a robot, wearing a dress, standing next to a replica of the ‘Wheel of Fortune’ board. White claimed this was an unauthorised use of her likeness for a commercial purpose. The 9th Circuit Court of Appeals dismissed White’s appeal as they opined that the robot did not constitute likeness within the meaning of the California publicity statute. However, the found her common law right of publicity infringed as the advertisement evoked her ‘identity’.


Labour theory

The theoretical justification behind Minnesota’s law is Lockean labour theory, as the court in McFarland stated that [2] “A celebrity’s identity, embodied in his name, likeness, and other personal characteristics, is the “fruit of his labor” and becomes a type of property entitled to legal protection.” Labour theory is often cited as a justification for persona protection in US courts, and was advanced by Nimmer in his seminal 1954 article, published the year after the right of publicity was first recognised. This theory has been criticised by Madow as it does not take into account that fame does not result solely from the efforts of the individual. Stylists, publicists and producers crafted Prince into the superstar that he was. Also, Prince undoubtedly worked hard to achieve his stardom, but the Minnesota right applies to every individual, regardless of fame. There is no labour requirement, which means even celebrities who have rose to the spotlight through luck or connections, benefit from this protection.

Implications of a post-mortem right

The Bill proposed a duration of 50 years post-mortem. Since Minnesota’s common law approach gives a broad interpretation to ‘identity’, Prince’s estate would be able to require authorisation for any use which evokes Prince. This broad protection would have chilling effects on posthumous memorabilia and advertising uses, even where his attributes have not been directly used. In the meantime, it is likely that the merchandising industry will capitalise on his death.

The Bill has been shelved for now, but may be reconsidered next year.
If the Bill passes into law, it would give new meaning to the lyrics from Prince’s song, ‘Let’s go Crazy’:
But I’m here to tell you
There’s something else
The afterworld


Sir Terence Etherton to be next Master of the Rolls

Sir Terence Etherton
The IPKat is indefatigable in scouring news sources for information about developments relating to IP law.  However, it is his first time, he thinks, to cite Pink News as the source for the identity of the next Master of the Rolls, to replace Lord Dyson in October 2016.  The Master of the Rolls is the head of the Civil Division of the Court of Appeal of England and Wales, and this rol[l]e is to be assumed by Sir Terence Etherton, currently Chancellor of the High Court (head of the Chancery Division, of which the Patents Court is a part).  Sir Terence was the first out gay senior judge in the UK, and so this Kat hopes that IP Inclusive and IP Out will be as thrilled as he is at the news.

Although he never sat in the Patents Court, Sir Terence has an impressive record of IP-related decisions, many (possibly all?) of which have been lovingly reported here on the IPKat.  Highlights include:


  • Lambretta v Teddy Smith, where Etherton J in the High Court ruled that there was no design right or copyright in the colourways of a track top
  • Jacobson & Sons v Globe GB was a trade mark case relating to the flash on the side of Gola shoes - the registrations were held by Etherton J to be valid and infringed
  • In Cook Biotech Incorporated v Edwards Lifesciences AG, Etherton LJ in the Court of Appeal gave the leading judgment rejecting the appeal and affirming the first instance decision of Kitchin J that Cook's patent for an artificial heart valve was invalid and not infringed
  • In Microsoft v Motorola Etherton LJ again gave the leading judgment, upholding Arnold J and finding Motorola's patent relating to synchronisation of message statuses across multiple messaging devices invalid
  • Etherton LJ also gave the leading judgment in rejecting Lundbeck's request (in their dispute against Resolution relating to escitalopram) that Arnold J recuse himself on the grounds that one of the expert witnesses had been the supervisor of his undergraduate chemistry research project at Oxford University
  • In Generics v Yeda, on an aspect of the case relating to professional conflict for in-house lawyers, Ward L.J. had to adjudicate between what he called "the characteristically forceful common sense judgment of Sir Robin Jacob" and "the characteristically erudite judgment of Etherton L.J."  The former advocated a strict application of a conflict rule for in-house lawyers, the latter a more relaxed one.  Erudition and Sir Terence won the day.
  • Turning his had to copyright, Etherton LJ gave the leading judgment in  Football Association Premier League v QC Leisure, allowing the use of foreign decoding devices in pubs in this country.
Sir Terence has also sat giving concurring judgments in a number of other IP cases. This Kat is delighted to see a judge with such diverse experience in all areas of intellectual property as the head of the civil judiciary in England and Wales, and congratulates Sir Terence on his appointment.

Threatening someone with IP infringement? Law Commission explains what you need to know about the new IP (Unjustified Threats) Bill

The AmeriKat's reaction to being threatened...
The Intellectual Property (Unjustified Threats) Bill was introduced in the House of Lords last week (see Kat post here).  For those of you who have not really been following this legislation, do not fear.  The Law Commission lawyer leading the project, Julia Jarzabkowski,  has written a short piece just for the IPKat explaining what is in the Bill, what is new and what it will mean for the UK IP profession.  Over to Julia:
"On 19 May 2016 the Intellectual Property (Unjustified Threats) Bill was introduced in the House of Lords and will now follow the special procedure for Law Commission Bills. This brings our project, Patents, Trade Marks and Designs: Unjustified Threats, to its end stages. If implemented, the Bill will change the law for patents, European patents, trade marks, European Union trade marks, registered designs, design right and Community designs. 
The new threats provisions are almost identical for each of the rights, save for a few small tweaks. The first 6 clauses of the Bill substitute new provisions for old within the Acts or regulations in which they are currently found. The Bill will also apply the threats provisions to Unitary Patents by amending Schedule A3 of the Patents Act 1977, once that schedule has been inserted into the Act by the Patents (European patent with Unitary Effect and Unified Court) Order 2016 (SI 2016/388). 
The substance of the reform is in 5 parts. In a nutshell, the first sets out the test for whether a communication contains a threat. It is based on the current law with one change. As now, the test is concerned with how a recipient would view the communication. What the sender intended by it is irrelevant. The test is whether a reasonable person, in the position of a recipient of the communication: 
  • would understand it to mean that a right exists (no change);
  • that someone intends to bring infringement proceedings against someone else (no change);
  • for an act done in the UK, or if done, would be done in the UK (new). 
The last requirement will ensure the provisions can apply to European patents that come within the jurisdiction of the UPC. 
The second part determines whether a person aggrieved (no change in definition) can bring a threats actions. A threats action cannot be brought for: 
  • Threats that refer only to specified acts, such as manufacture or importation that have been done (no change) or if done, would be one of these acts (new).
  • Any threats made to those who have done one of those acts (no change for patents, but new for the other rights) or who intend to (new).
  • Implied threats contained in a permitted communication (new). 
The third part introduces the concept of permitted communication between parties where one would ordinarily be entitled to bring a threats action. Where information in a communication amounts to an implied threat, a threats action cannot be brought where the information was given for a permitted purpose, was necessary for that purpose and the person making the communication reasonably believed what is said is true. There is guidance on what is, or is not, a permitted purpose and on what types of information might be necessary.

The fourth part deals with remedies (no change) and defences. The justification defence remains, but without the reference to the defence not being available where the right is shown to be invalid. It is not mentioned because it is obvious, and leaving it out does not prevent anyone from raising it anyway. A defence currently only available for patents is extended to all the rights. It is a defence to show that all reasonable steps (changed from best endeavours) have been taken to identify the source of the infringement (e.g. manufacturer) without success. The recipient of the threat must be told what those steps were before or at the time the threat is made. 
The fifth part provides a shield for professional advisers – it does not create a loophole for their clients as their liability is unaffected. No threats action can be brought against a professional adviser acting for a client in a professional capacity providing legal or attorney services for which they are regulated. 
Once again, we would like to take this opportunity to thank all those who have worked with us and been so generous with their time and effort during the project."

Thursday, 26 May 2016

IP wrangling (briefly) delays Mourinho's anointment as new Manchester United manager

This Kat was busy obtaining his daily fix of sports news on the BBC website when he spotted an unusual headline - 'Jose Mourinho Image Rights Hold Up Manchester United Deal.' 

Jose Mourinho and his agent (driving a
hard bargain).
The story broke on Wednesday and has been widely reported (see articles by the Daily Telegraph, ESPN, The Independent, The Guardian and many more).

This Kat's favourite response came from satirical website NewsThump, which suggested that Jose Mourinho might have no choice but to wear a balaclava next season in order to remain on the right side of the law. So, what happened?

Mourinho on the touchline next year? 
Image Rights (courtesy of Guest Kat Emma Perot)

The delay in negotiations was partly down to Mourinho’s personal endorsement deals with rival companies of Man United’s sponsors. (Mourinho has deals with Jaguar, Swiss watch company Hublot & South Korean casino operator Paradise Co, while United is sponsored by Chevrolet, American watch company Bulova, and Asian casino and leisure resort, Donaco International).

‘Image rights’ is the popular term in the UK for these types of endorsement deals. These ‘rights’ are created by contract as they do not exist in the UK. However, they do exist in the countries of the companies which Mourinho has deals with. In the US, in the absence of federal law, states have developed statutory publicity rights or use the proprietary tort of appropriation of name or likeness, both of which have an economic focus. In Korea, the right of publicity was first recognised in the 1997 case of Marcus D. Winslow Jr. v. Good People Inc., et al., (94Gahab13831) (Seoul Western Branch Ct., Aug. 29, 1997). 'Personality rights' are also protected under the Swiss Constitution.

Regardless of the terminology used, these rights generally allow the individual to control the commercialisation of personal attributes. The consequence of Mourinho’s move to United is that the club will want to control his ‘image rights’ in a way that satisfies their sponsors. As such, they will likely seek an exclusive license for use of Mourinho’s attributes in the watch, car and casino industries.

It is unlikely that Mourinho will assign his rights altogether, as he may want to continue pursuing valuable personal endorsement deals. However, Mourinho will have to terminate his existing relationships which conflict with Man United’s sponsors. If United’s sponsors were to use Mourinho’s ‘image’ before he terminated his existing arrangements, they would potentially be liable for infringement of exclusive licences in countries where ‘image rights’ have a proprietary basis.

Trade Marks

Another common thread picked up in the press and on social media was that Chelsea (who Mourinho has managed in two separate spells) still own a trade mark for 'Jose Mourinho.'

Bottom of the class for IP reporting is ESPN, which comments that 'Chelsea still own the copyright to the Portuguese's name.' Top marks, however, to Mark Critchley at The Independent for citing the EUTM registration in his piece. It shows that Chelsea filed an application to register the Mourinho mark in 2005, covering a range of different goods.

Twitter had fun with this: 'gonna kick back in my Mourinho lingerie, crack a few nuts and stick Mourinho on the gramophone' quipped one user.  It's not as silly as it sounds! The registered specification covers a wide range of goods; however, it's unlikely that Chelsea ever actually marketed underwear, nutcrackers or gramophones bearing the Mourinho name.

Chelsea Football Club Limited owns a number of active trade mark registrations associated with their former manager, including:

 - A registered EUTM for his signature.
 - Registered UK, Australian and Norwegian marks for his name

So, how did United and Chelsea resolve the trade mark issue? One option for United would have been to obtain a licence to use the marks. Another would have been for United (or Mourinho himself) to make an offer to Chelsea for a full assignment of the trade marks. It's rather surprising that Mourinho doesn't own the 'Jose Mourinho' mark himself - that would give him an option to licence the rights to his employers (which for a successful manager change rather frequently...)

Whatever it is that held up that deal here (it's not exactly clear), congratulations to the IP lawyers who burned the midnight oil to hasten The Special One's arrival at the Theatre of Dreams.

To tub, or not to tub? Last chance to comment on Civil Justice Council's expert hot-tubbing survey

Baths are scary enough without
interlopers...
Hot-tubbing.  Warm water.  Fresh air.  View of the mountains.  Bubbles disguising any flabby bits.  What is not to love?  Nothing or possibly everything when viewed in the context of expert evidence.  The practice of "hot-tubbing" or "concurrent evidence" has long been a topic of intrigue for us in the UK.  The practice is more common in Australia and allows the judges and trial lawyers to question experts together.  Experts are also able to directly challenge each other's evidence, which can make it easier to identify the issues in contention.  As Lord Justice Jackson explained
"the general view [from the Australian experience] is that this procedure is beneficial for four reasons: 
(i) The procedure is quicker and more focused than the traditional sequential format. 
(ii) Experts find this procedure easier; they give evidence better and sometimes more impartially than under the traditional sequential format. 
(iii) Judges find it easier to understand complex technical evidence when it is given in this way. 
(iv) The procedure achieves a significant saving of both trial time and cost."
Following the Jackson review, hot-tubbing was introduced to legal proceedings in England and Wales.  The process is set out in Practice Direction 35 which states that at any stage of the proceedings the Court may order hot-tubbing.  Paragraph 11.2 of PD 35 and onward sets out the procedure.  Importantly the judge initiates and leads questions addressed to each expert witness and may invite the other expert to comment.   The parties' representatives then get their turn, but only insofar as it tests the correctness of an expert's view or clarifies it.  The judge then summarizes the views expressed.

So, what has happened?  Well, as far as the AmeriKat is aware, nothing in the Patents Court.  This is despite Sir Robin Jacob commenting in his recent book, IP and Other Things, that there should be "no formal reason why it should not happen in England and Wales", despite lawyers obviously being resistant to the idea.  Cross-examination of your expert is scary enough, why make it scarier with having the other side's expert having a crack at it?  Or so, the complaint would go.

Lord Neuberger described this state of affairs in a recent speech he gave to the Royal Society last November on "Science and Law:  Contrasts and Cooperation" in which he stated:
"Nonetheless, when it comes to expert evidence, I can see considerable attraction in the notion of the experts giving their evidence at a somewhat more informal basis, at a hearing which is more like a meeting chaired by the judge. Court rules now permit such concurrent evidence, or hot-tubbing as it was dubbed by the Australians who developed the concept, and who now, I understand, adopt it in most civil cases. However, it is currently little used in this country, owing no doubt to what is, depending on your view, appropriate scepticism or innate conservatism on the part of lawyers and judges.

Lawyers may fear that concurrent evidence would result in a loss of control on their part, and judges may fear that it would involve greater preparation and early understanding of the issues on their part. Both fears are justified in fact, but do not represent good reasons to avoid hottubbing. So far as the justice system is concerned, lawyers are there to assist on getting the right answer. The fear of the judges may, at least in some cases, be partly attributable to the fact that there are very few judges, other than those who specialised in patent law when in practice, with any significant scientific education!
Lord Neuberger goes on to discuss the fact that "scientific ignorance has not prevented some judges with no significant scientific education proving themselves to be very find judges of scientific issues" and some other great quotes worthy of a read.

The Civil Litigation Review Working Group of the Civil Justice Council is conducting a survey of the practice, with responses due this Tuesday, 31 May 2016.  A full report of the findings of the survey will be published in July 2016.  The survey is focused on those legal representatives who have actually bee involved in hot-tubbing - either in England and Wales or in another jurisdiction.  Those who have not had experience are immediately ushered to Question 10 which reads as follows:
"For legal representatives who have not used "hot-tubbing" as part of legal proceedings, please feel free to make any comments about the process in the box below (including whether you may have proposed the use of hot-tubbing in a particular case, but the court declined to make that direction)."  
Views on Question 10 will be "most helpful" to the Civil Litigation Review Working Group, so if you want the Courts to direct more hot-tubbing or not, perhaps now is your chance.

To complete the survey, click here.

With a Kat pat to Alisa Carter of Gowling WLG for bringing this to the Kat's attention.

Thursday Thingies

Information Technology has seen the most innovation this year
Thomson Reuters 2016 State of Innovation Study. Innovation is moving forward at a record pace, according to this year's report from Thomson Reuters. Global innovation year on year is in the double-digits (at 14%), with Information Technology dominating the landscape, but substantial increases also observed in Medical Devices, Home Appliances, and Aerospace and Defense. The report combines analysis of patent applications with research of global scientific literature to put these innovations in context; worldwide patent volume grew at an annualized rate of 13.7 percent in 2015, driving the overall growth rate for patents to over 100 percent since the State of Innovation study was launched six years ago.

Vin Caraher, the president of Intellectual Property and Science at Thomson Reuters, said:
“The last year has been marked by a series of epic breakthroughs: the first autonomous cars tested on public highways, the longest-ever human space mission, the first biosimilar drug approval – all of these were made possible by disrupting conventional boundaries and testing the limits of human creativity. By consistently benchmarking innovation with concrete metrics on global patent and scientific literature production, we’re able to get a clear outlook on future growth areas.”
You can see the press release here and download the full report here.



India's National IPR policy. India's recently unveiled new IPR policy is intended to promote "a holistic and conducive ecosystem to catalyse the full potential of intellectual property for India's economic growth and socio-cultural development, while protecting public interest". The main objectives involve such broadbrush aims as increasing IP awareness and creating a stronger framework for IP generation, legislation, administration and commercialization. The policy has been received sceptically optimistically by the US Chamber of Commerce’s Global Intellectual Property Center (GIPC), with the Executive Director of International Intellectual Property, Patrick Kilbride saying:
“We hope today’s announcement is a precursor to the concrete, structural changes that are necessary if India is to implement a strong IP-led innovation model. Words are empty without action, and we need to see the Modi administration’s expressed commitment to IP matched by decisive legal reforms..."
Critics have described the policy as rather vague and a missed opportunity for meaningful reform - we are grateful to Katfriend and former Indian Government Patent Examiner, R.S. Praveen Raj for drawing it our attention and for his comments in the Deccan Chronicle here.



ACID & Boult Wade Tennant IP Seminar and Drinks. Anti Copying In Design and Boult Wade Tennant cordially invite us to a seminar about proactive IP protection strategy and how to get the most out of the CTM before this September 2016. All will be revealed in the Boult Wade Tennant's Grays Inn offices on 22 June. For more information and to register, go here.




WIPO and Queen Mary University of London's School of Arbitration are organising a seminar on 30 June 2016 on the theme of 'SEP/FRAND Mediation and Arbitration.'

The event will be hosted at Allen & Overy, 1 Bishop's Square, London, E1 6AD. Topics will include:
  • The Standardisation process
  • How litigation resolves SEP/FRAND disputes
  • SEP/FRAND mediation and arbitration
  • Calculation of FRAND rate
The seminar will be co-chaired by Professor Julian D M Lew QC (Head of the School of International Arbitration; Barrister, 20 Essex Street) and Ignacio de Castro (Deputy Director, WIPO Arbitration and Mediation Center).

You can read more about the programme here and register for the event here.

WIPO Roving Seminars. More from WIPO - Roving Seminars are coming up on 7 and 9 June in Paris and Lille. More info here.




Kosher McDonald's are to be rebranded as McKosher
- and possibly confused with traditional Scottish fare
Man with 'McKosher' ancestry loses trade mark battle with McDonald's. Mark Glaser was definitely not lovin' it when his mark was refused. He had been hoping to get the name registered for his exotic-sounding Scottish and Jewish restaurant (in Maclean, the "Scottish capital of Australia"). McDonald's relied on calls by some Rabbinical leaders to rebrand kosher-friendly McDonald's restaurants to "McKosher" (in Israel..), and pointed to their veritable catalogue of protected "Mc-" marks. As a result, Glaser was not able to get his mark registered, with the trade mark office ruling that "McKosher" risks confusion with the international franchise. More on the story here.



Are UGGs really Australian? Or an American Trademark. Back down under we go! And the classic phrase "as Australian as UGGs" [which this Kat should confess to having never heard of before] may be in jeopardy. (US-based) Clothing company Deckers is bringing a lawsuit against Australian Leather Pty Ltd for selling flat-soled sheepskin boots with an 'Ugg' label. The case will raise jurisdiction issues and it seems likely that Uggs are at risk of "genericide", with the original brand mark being now virtually synonymous with the trendy, comfy boots themselves. A full report is here.


What really goes on at CIPA? IPKat is delighted to be able to report that the "Not So Secret Diary of Andrea Brewster" is back, with its unique Presidential insights and CIPA commentary. Enjoy! 

Wednesday, 25 May 2016

Chief Master Marsh calms fears of IPEC overburdening with new transfer and triage process

The AmeriKat lost in thought
about how to value an IP claim
(c) Joe Delaney
Last week, the Kat published a guest post from James Sweeting (Lewis Silken) on the transfer and triage processes introduced by the new Chancery Guide (see post here).  The concern was that with the new "triage" process, whereby the Court will decide whether an action started in the High Court should remain or be transferred to the IPEC, there may be a tendency to transfer any claim less than £500,000 to IPEC.  James stated:
"However, the Masters in the Chancery Division are, at the moment, conducting the triage process a) as soon as the particulars of claim are lodged (in accordance with the Chancellor’s statement here) and b) with reference only to the ascribed value of the claim. It seems like their fairly hard and fast approach is this: anything less than £500,000, regardless of any other aspect of the transfer guidelines (eg “whether the facts, legal issues, remedies or procedures involved are simple or complex”), the IPEC Court Guide, the scale of disclosure, the number of witnesses etc is automatically transferred to IPEC."
Earlier this week, the Kat received an email from Chief Master Marsh in the Chancery Division who stated that all was not to be feared.  He explained as follows:
"I hope the following comments will allay the fears expressed by your contributor about a flood of transfers to the IPEC resulting from the early triage system in the Chancery Division:

1. The transfer guidelines in the Chancery Guide at para 14.19 make it clear that an order for transfer out will only be made if the value of the claim is ascertainable.

2. Since the early triage procedure was instituted in January 2016 only seven orders for transfer to the IPEC have been made at the early triage stage.

3. Every order for transfer contains the usual rubric permitting a party to apply to set aside the order."
Does this solve the fears outlined by James? James responded as follows:
"The whole point is that the value of IP claims are almost always unascertainable until there has been Island v Tring disclosure and that never takes place until after the issue of liability has been determined."
Which begs the perennial question - how do you value an IP claim when it comes to the Claim Form?  Is the amount always unascertainable?  And, if not, can the figure on the form always be believed?  The UPC Preparatory Committee's guidelines on calculating value-based fees suggests a way forward  for patent claims (see here), but what about other forms of IP?  

SCHHH ... it's not a single brand

The IPKat is very grateful to David Pellisé and Juan Carlos Quero of Pellisé Abogados in Barcelona, for telling him about a new reference that is fizzing its way to the Court of Justice of the European Union. 

Interested in the limits of parallel importation? Then pour yourself a stiff G&T and read on. The Barcelona Commercial Court (nº 8) in Spain has essentially asked the CJEU to rule on what happens when the owner of a trademark right has caused uncertainty as to the function of origin.

The famous SCHWEPPES trade mark: it looks
the same worldwide, but ownership varies
from one EEA country to another
The dispute relates to parallel imports of soft drinks bearing the famous SCHWEPPES trademark. The defendant, Red Paralela SL (for whom Pellisé Abogados acted), imported SCHWEPPES drinks into Spain from other European Economic Area (EEA) countries, most notably from the UK. The plaintiff, Schweppes SL, took action as the exclusive licensee of its sister company, Schweppes International Limited, which owns the Spanish trademark registration for SCHWEPPES.


The imported products were genuine UK-branded SCHWEPPES drinks, but the trademark rights are divided across the EEA, and not (Red Paralela would argue) in the most transparent way. Apparently, in 1999, Schweppes International sold the trademark rights in many EEA countries, the UK among them, to the Coca-Cola Group. However, for some countries, such as Spain, the trademark rights were retained by Schweppes International and licensed within the group, while in yet other countries such as the Netherlands, Schweppes International retained ownership but licensed the rights to Coca-Cola.


The IPKat understands this to mean that in any given EEA country, one can buy genuine SCHWEPPES tonic water, but this might have been produced:

  • by a Schweppes International subsidiary such as Schweppes SL in Spain

  • by Coca-Cola as the trademark owner, as in the UK, with no involvement of Schweppes International or any associated company, or

  • by Coca-Cola as the licensee of Schweppes International, as in the Netherlands


Presumably, Schweppes International can only object to parallel importation in the second of these cases, but the question now raised is whether it should even be able to object in the second case, particularly in view of the "global brand image" issue. Schweppes International promotes a “global brand image” (as the Barcelona Court puts it) which is associated with the United Kingdom, from where the brand originates. The IPKat understands this as referring to the fact that both Schweppes International and Coca-Cola promote the SCHWEPPES-branded products as being in a direct lineage from the invention of the soft drink in 1783 by Jacob Schweppe. 

Confused yet? The IPKat suggests you have a G&T.


The Spanish subsidiary, Schweppes SL, has apparently been pretty successful until now in enforcing this market division between different EEA countries, having successfully brought many infringement actions on the basis of the Spanish registration, obtaining more than forty injunctions and favourable decisions of first instance from different Spanish Courts.


However, in view of the arguments raised by the defendant Red Paralela SL, the Barcelona Commercial Court (nº 8) has decided to refer four questions to the EU Court of Justice. Two of these four questions deal specifically with the limits of the trademark function of origin.


The first question asks:


  • Is it incompatible with Article 36 of the Treaty on the Functioning of the European Union and Article 7.1 of Directive 2008/95/EC and Article 15.1 of the Directive (EU) 2015/2436 for the holder of a trademark in one or more Member States to prevent parallel importation or marketing of products, bearing a virtually identical trademark owned by a third party, from another Member State, when the holder has promoted a global brand image associated to the Member State from which the products intended to be prohibited came?


The second question asks:


  • Is it incompatible with Article 36 of the Treaty on the Functioning of the European Union and Article 7.1 of Directive 2008/95/EC and Article 15.1 of the Directive (EU) 2015/2436 for the holder of a well-known trademark to use it in a manner that generates confusion in the average consumer regarding the corporate origin of the product?


As David & Juan Carlos observe, the answers of the EU Court of Justice to these questions may impose additional burdens on trademark owners with regard to the correct use of a trade mark to fulfil the function of origin. 

The IPKat thinks that Schweppes and Coca-Cola have done a pretty good job in marketing SCHWEPPES as a single global brand ... so much so that until hearing of this case he had no idea that the tonic water sold in Spain was from a different corporate stable than that sold in the UK. Looking at the respective websites would not have cured the IPKat of this misconception, referring as they both do to the same genesis story from 1783. So should a brand owner who sells off the brand rights in some countries be treated differently according to whether the brand continues to be marketed seamlessly to consumers as a single global brand? Is the function of origin of a trade mark fulfilled in these circumstances, and if not, what are the consequences for enforcing the trade mark rights?

Tuesday, 24 May 2016

What does the timing of the US Defend Trade Secrets Act and EU Trade Secrets Directive really mean for companies?

The AmeriKat listening intently to trade secrets
expert, Jim Pooley
With President Obama signing the Defend Trade Secrets Act into law a couple of weeks ago and the imminent adoption of the European Trade Secrets Directive by the European Council (assumingly, see post here), 2016 seems to be the year for trade secrets.  The timing of the two laws could not be more perfect for trade secret owners, not least given the emphatic and helpful statements made by legislators regarding the value and importance of trade secrets to both economies.  Given all the excitement, the AmeriKat has been in continual correspondence with Kat friend James Pooley.  For readers who do not know, James is recognized as one of the world's leading trade secret scholars and practitioners.  His recent induction to the IP Hall of Fame says as much (see here).

James was actively involved in the passage of the US Defend Trade Secrets Act, testifying before Congress on the legislation last year (see previous post here).  So with two new trade secrets laws on both sides of the Atlantic, what does this really mean for companies seeking to protect and enforce their valuable trade secrets?  Here is what James has to say: 
"Do you see synergy for clients in managing their trade secrets on a global basis in light of the two laws?
Secrecy is a right that derives from a promise of confidence, rather than registration with a government. It exists wherever the business relationship does. So companies have always operated internationally to coordinate their disclosures and confidential projects in part based on whether any given country’s laws and courts provided realistic remedies in case something went wrong. The Trade Secrets Directive will improve what has been a patchwork of laws within Europe by providing for minimum standards of protection, making it easier for companies to predictably manage their global information assets. In that sense one could say that the simultaneous appearance of these two laws will allow clients to more closely align their internal protection schemes in the U.S. and Europe.
But given that the misappropriation of trade secrets is now, more often than not, digital with information crossing state and international borders at a click of a button, how far do these laws really go?
I believe that these coincident efforts on both sides of the Atlantic reflect a common concern of business that the global, networked economy relies in part on robust protection for industrial secrets. From the company viewpoint, having one law that supplies equivalent remedies worldwide would be ideal. That’s not going to happen soon, if ever, but in the meantime every step towards harmonization reduces friction and increases efficiency. We’ve already seen substantial work put into the relevant articles of  the Trans-Pacific Partnership agreement (TPP) (Articles 18.74 and 18.78), and I would be surprised if the same focus were not brought to bear in the ongoing Transatlantic Trade Investment Partnership (TTIP) negotiations.

James Pooley
What should European-based companies keep in mind when they now come to enforce their trade secrets under the DTSA? 
Just last December a US jury awarded $75 million to a U.K. company that alleged its secrets had been stolen by Caterpillar, a major U.S. manufacturer. So European companies should not be concerned that they will be unfairly treated in a contest with a US defendant. But they need to be ready for the broad discovery that characterizes US litigation. And in a trade secrets case, the plaintiff often faces a more difficult discovery burden than the defendant, because its “reasonable efforts” in protecting the information will be at issue, along with damage claims that depend on a complex history of its development of the purloined technology. They need to prepare themselves for a much more aggressive fight than is typical of European litigation. That said, European companies that have a well-prepared case can get direct access to facts – through discovery – that may well have eluded them in a domestic lawsuit. 
What about the pleading requirements?  In the UK, litigants can encounter difficulty in particularizing the trade secrets that have been subject to misuse because they do not know the extent of what has been taken.  Even if they do, they are concerned about disclosing highly sensitive information to the very people that they know/suspect of stealing their trade secrets.  Nevertheless, claimants have to particularize their case well enough to be able to survive a strike out or summary judgment application.  
Importantly, the US standard for pleading trade secret cases recognizes that much of what happened will likely be unknown to the plaintiff at the outset; it is enough to have a reasonable suspicion that the misappropriation occurred. Of course, it helps to be very specific in pleading the circumstantial evidence that is known. But there should be no worry about disclosing the trade secrets themselves in a public complaint; this is typically addressed later, and the plaintiff’s description of its secrets will be protected by a protective order, even limiting access to litigation counsel for the most sensitive information,
In circumstances where the claimant doesn't have as much information as they would like to meet the pleading requirements, will the ex parte seizure mechanism under the DTSA assist? Or will the in-built safeguards deter this type of practice?  
The ex parte seizure will seldom be used, because it is so difficult to obtain. And in any event the seized information is provided only to the court in the first instance.  I suspect that extracting it from that process will be more cumbersome than obtaining the information through normal discovery.
Will there be a "long arm" of the DTSA, like there arguably is under Article 3(5) of the European Trade Secrets Directive?  
Regarding the DTSA, one area of interest – both for U.S. and European firms – will be the willingness of federal courts to apply the law to behavior that happens entirely or mostly outside of the U.S. but causes substantial impact in this country. Some have speculated that an existing provision of the Economic Espionage Act (the criminal statute that the DTSA amended to add a civil cause of action) indicates an intent that the law should apply extraterritorially. But that portion of the Economic Espionage Act (18 U.S.C. § 1837) speaks in terms of the “offense” and the “offender,” making it an awkward fit with a civil cause of action. 
The long arm of trade secrets laws...
However, the DTSA expressly requires the USPTO Director to prepare a detailed bi-annual report to Congress on the “theft of the trade secrets of United States companies occurring outside of the United States” (see Section 4).  We can assume that the legislators were focused on that kind of conduct. But in my view, the result in any given case will have less to do with statutory arguments than constitutional questions of in personam jurisdiction that examine the fairness of requiring a foreign defendant to appear in the US.  The DTSA will allow these questions to be put to federal judges who as a group are more experienced with handling international disputes. 
Given this potential for federal judges to wrestle with possible extra-territorial trade secret theft, this might make the US an even more attractive forum for trade secret litigants.  And of course, those big damages awards help....
I expect that European companies would find it attractive to sue in the US to take advantage of our broad discovery rights and generous damages law. And since they would most likely be suing defendants who are physically present in the US and who have allegedly benefited by using the information, there should be no significant jurisdiction issue, even if most of the relevant transactional facts occurred outside the country. 
Returning to Europe, the legislative process there was driven largely by legitimate concerns of industry and policymakers about European competitiveness. But from my outsider’s perspective, the Directive was mistakenly seen by some as a corporate threat to personal liberties and the mobility of labor. The end result, in my view, did not go far enough in guaranteeing robust enforcement, and it also created some extremely broad exceptions. Looking forward, I think the EU eventually will have to confront the fact that a trade secret plaintiff needs access to facts that are usually known only to the defendant. While that doesn’t necessarily require US-style discovery, there should be some way to address that need within the framework of civil law systems.
It seems a shame that the EU Trade Secrets Directive missed a trick, then.   Although I can imagine that many of the same arguments about the threat to personal liberties/mobility of labor would be employed against an introduction of disclosure measures.  However, it must be remembered that sometimes disclosure also shows the opposite - there was no trade secret misuse.  It can cut both ways.  In any event, ever looking for solutions, perhaps given the ongoing IP Enforcement Directive consultation there is scope for amendment so that it applies to trade secrets as well (in particular the measures in Section 2). 
Well, I am certainly no expert in European political procedures, but clearly businesses will not enjoy full practical enforcement of trade secret rights until they have a way to get at important facts that are under exclusive control of the target. Whether that happens by fixing the TS Directive so that it incorporates the Enforcement Directive, or by some other route, I would of course not venture a guess or make a recommendation.
I was intrigued by the recent news of US Steel Corp asking the US government to ban imports of what would be "infringing goods" under the EU Trade Secrets Directive from Chinese steel importers under Section 337 of the Tariff Act of 1930 .  US Steel alleged that Chinese hackers stole their trade secrets. The intersection of cybersecurity laws and trade secrets will be undoubtedly be increasingly important in the future, but will this mean the DTSA and civil recourse will be underused?   
Cyberespionage is one of many ways that secrets leak in the globalized, digitized economy. (More losses occur through careless employees and sloppy management of transactions.) We can expect that as information assets become increasingly valuable and vulnerable, companies will become increasingly sophisticated concerning both loss prevention and the pursuit of remedies after the fact. Although barring importation of tainted goods under Section 337 is one way to deal with trade secret theft, it only works against the goods themselves. If you want to recover damages for loss or prevent further leakage, you need to sue the wrongdoer, and the DTSA will be widely used to do just that.
Thanks, James!"  

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