Update: IT/IP

It is with no regret that there have been no new major IP statutes or legislative changes. Business needs stability and the constant plethora of new IP/IT and indeed other laws emanating from Brussels and Westminster at times seems never ending. Although the Patents Act 1977, Copyright, Designs and Patents Act 1988, Trade Marks Act 1994 and the Registered Designs Act 1949, all as amended, remain the principal IP legislation, there have been some changes since the last IP update.

New rules

First we have a set of new rules that mean applicants supply the European Patent Office with fewer documents. The EPO enables companies to make one application for patent protection in up to 40 European countries rather than making separate applications in each country.

The new arrangements mean applicants will no longer have to supply the EPO with the results of searches already done by the Intellectual Property Office. Instead the IPO will automatically supply the information from its records and around 5,000 applications a year will benefit from this change. It is estimated the patent backlog costs businesses as much as £7.65bn each year.

R&D developments

Many IP lawyers are involved in drafting research and development agreements, often cooperation between a university and the private sector. These joint R&D agreements should comply with the EU competition law block exemption in this field. The new year brings with it the new EU block exemptions which are now in force, applying to joint research and development agreements and the second to specialisation agreements. In addition, in December the new EU horizontal agreements guidelines were finalised.

Although perhaps the Cinderella of the EU competition law block exemptions as it is not used as much as those relating to technology transfer, the R&D block exemption is relevant for those who are involved with many agreements. The guidelines have a wider scope and cover what forms of cooperation breach the competition rules.

A common question for competition lawyers is what information companies can exchange, what discussions are permitted and what anonymous data trade associations may exchange. Until now only the UK OFT's Guidelines for Trade Associations and case law had provided assistance, but now the revised horizontal guidelines contain a section on information exchange for the first time. In addition the guidelines amend the section on standards setting.

Standard-setting organisations may wish to provide for their members unilaterally to disclose, before setting a standard, the maximum rate they would charge for their IPRs if those were to be included in a standard.

The commission has extended the scope of the R&D Block Exemption Regulation, which now not only covers R&D activities carried out jointly but also so-called 'paid-for research' agreements, where one party finances the R&D activities carried out by the other party. In addition, the new regulation gives parties more scope jointly to exploit the R&D results. Examples of horizontal agreements recently investigated by the commission include Oneworld, Ship Classification and IPCom. The issue of 'patent ambush' was investigated by the commission in the Rambus case.

The rules will be relevant to those involved with the purchase of intellectual property and joint projects, and more generally to any purchasing manager worried about the extent to which cooperation and information exchange with competitors is allowed within the EU competition rules under article 101 of the TFEU and the chapter I prohibition in the Competition Act 1998.

Independent IP review

Professor Ian Hargreaves has now published details of what exactly the review he is leading into IP reform will consider. Particular focus will be on how the IP system affects small and medium-sized businesses, with two key questions being considered:

• Supporting new business models: as technology and society changes, so do ways of doing business. Does the IP system help or hinder businesses as they seek to adapt to the digital age?
• Breaking down barriers: new entrants often find it difficult to break into established markets, which can inhibit growth. Does IP form part of the barrier to new entrants? What barriers prevent the effective exploitation of IP rights in creating growth?

The review team is seeking responses with economic data and related evidence as well as case studies. The evidence should focus on the economic effects of alternative IP systems and the contribution they could make to growth in the UK.

Graphical user interface

In Bezpečnostní softwarová asociace '“ Svaz softwarové ochrany v Ministerstvo kultury (Case C 393/09, 22 December 2010) the Court of Justice of the EU ruled that, although a graphical user interface (GUI) could not be protected by the EU software directive, it can be protected under the information society directive.

The court stated that that the information society directive and other EU findings had held that there was copyright in addition in original creations. There is no overall harmonisation law on copyright unlike trademarks under EU law, but it was clear that there was copyright in a GUI in EU law.

EC sued

The General Court of the European Union has held that the European Commission breached copyright. It has ordered the commission to pay translation software firm SYSTRAN liquidated damages of ‚¬12,001,000.

In a case which took more than ten years and was in court for four years, it was decided that SYSTRAN Group did own the SYSTRAN software. The case is an illustration of the importance not only for private sector bodies but also for state bodies to respect copyright ownership.

AG on ads

In an opinion on L'Oreal v eBay that is likely to be followed this year by the Court of Justice, advocate general Jääskinen said that eBay is generally not liable for trademark infringements committed by its users on its electronic marketplace.

This is the same decision as in the UK ebay case. However, if eBay has been notified of the infringing use of a trademark, and the same user continues or repeats that infringement, the internet marketplace company can be held liable for it.

His view is that although eBay does not sell goods itself, it nevertheless offers an alternative source for buying them which coexists with the distribution network of the trademark proprietor. Therefore, by reserving L'Oréal's trademarks as keywords, leading customers to its internet marketplace, eBay does use these trademarks in relation to goods marketed by L'Oréal under these signs.

He found that in cases where the advert itself is not misleading, the function of the trademark is not likely to be jeopardised. The AG also made it clear that if the use complained of by the trademark proprietor consisted of the display of the sign on the website of an operator of an electronic marketplace itself rather than in a sponsored link of a search engine, it cannot be deemed as use of the trademark in relation to goods by the marketplace operator, but by the users of the marketplace. In effect, eBay merely allows its clients to use signs which are identical with trademarks without using those signs itself. So, if anyone is liable at all it would be the person who was using and had paid for the adword.

Finally, the AG discussed the interpretation given by the court in the Google case according to which an information service provider storing information at the request of its client is exempted from liability for this information only if it remains neutral in relation to the hosted data. While noting that eBay may not be neutral in this sense, he did not consider that such an involvement in the preparation of the clients' listings should result in losing the protection granted to businesses storing information uploaded by users.

Jääskinen pointed out that while eBay is generally exempted from liability for information stored by its clients on its website, it still remains liable for the content of data it communicates as an advertiser to a search engine operator. The exemption from liability does not apply either in cases where the electronic marketplace operator has been notified of the infringing use of a trademark, and the same user continues or repeats the same infringement.

In that latter case, a judicial injunction can also be given against the electronic marketplace operator to prevent the continuation or repetition of the infringement.

Competition and IP lawyers receive frequent enquiries from clients about adwords and internet marketing, so it is an area in which all those with clients in these fields need to keep up to date.

News clippings

The High Court has ruled that users of a newspaper clipping service by email do require an IP licence. Newspaper publishers have won their case against Meltwater which had taken out a licence itself but argued that its clients did not need one to read the material Meltwater sent to them. The Newspaper Licensing Agency (NLA) represents newspapers and collects revenue from licence income. Meltwater sends customers emails with headlines, extracts and links to stories concerning its clients.

The court also looked at what copyright protection there is for just the headlines in newspapers, stating that some would be capable of being literary works.

In an earlier EU case involving Infopaq, the Court of Justice had held that extracts as short as 11 words could attract copyright protection. In conclusion, the court stated: 'When an end user receives an email containing Meltwater News, a copy is made on the end user's computer and remains there until deleted. Further, when the end user views Meltwater News via Meltwater's website on screen, a copy is made on that computer'¦ therefore the end user makes copies of the headline and the text extract in those two situations and there is prima facie infringement.'

In practice, websites often also have terms and conditions preventing commercial use which is an additional restriction to copyright infringement issues. However, the court found that that the arguments on whether or not there was an implied licence were not clearly enough made in the case.

The next issue was exceptions to copyright infringement. The exception for transient copying could not apply. 'The exception cannot have been intended to legitimise all copies made in the course of browsing or users would be permitted to watch pirated films and listen to pirated music,' states the judgment. 'The kind of circumstance where the defence may be available is where the purpose of the copying is to enable efficient transmission in a network between third parties by an intermediary, typically an internet service provider.'

Readers will also know of the fair dealing for review or criticism and reporting the news exceptions. Neither of these applied and neither did the more general principles of fair dealing. Users will have to obtain a licence from the NLA.